As filed with the Securities and Exchange Commission on September 12, 1995
File Nos.
33-39088
811-6243
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 16 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 19 (X)
FRANKLIN STRATEGIC SERIES
Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BOULEVARD, SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (415) 312-2000
HARMON E. BURNS, 777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Name and Address of Agent for Service of Process)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on October 1, 1995 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24F-2. The issuer has registered an indefinite
number or amount of securities under the Securities Act of 1933 pursuant to
Section 24f-2 under the Investment Company Act of 1940. The Rule 24f-2 Notice
for the issuer's most recent fiscal year was filed on June 27, 1995.
FRANKLIN STRATEGIC SERIES
CROSS REFERENCE SHEET
FORM N-1A
PART A: INFORMATION REQUIRED IN THE PROSPECTUS
(Franklin Small Cap Growth Fund)
N-1A Location in
ITEM NO. ITEM REGISTRATION STATEMENT
1. Cover Page Cover Page
2. Synopsis Expense Table
3. Condensed Financial Information "Financial Highlights";
"Performance"
4. General Description "About the Fund";
"Investment Objective and
Policies of the Fund";
"General Information"
5. Management of the Fund "Management of the Fund";
"Portfolio Operations"
5A. Management's Discussion of Fund Contained in Registrant's
Performance Annual Report to
Shareholders
6. Capital Stock and Other "Distributions to
Securities Shareholders"; "Taxation
of the Fund and Its
Shareholders"; "General
Information"
7. Purchase of Securities Being "How to Buy Shares of the
Offered Fund"; "Purchasing Shares
of the Fund in Connection
with Retirement Plans
Involving Tax-Deferred
Investments"; "Other
Programs and Privileges
Available to Fund
Shareholders"; "Exchange
Privilege"; "Telephone
Transactions"; "Valuation
of Fund Shares"
8. Redemption or Repurchase "Exchange Privilege"; "How
to Sell Shares of the
Fund"; "Telephone
Transactions"; "How to Get
Information Regarding an
Investment in the Fund"
9. Pending Legal Proceedings Not Applicable
FRANKLIN STRATEGIC SERIES
CROSS REFERENCE SHEET
FORM N-1A
Part B: Information Required in the
STATEMENT OF ADDITIONAL INFORMATION
(Franklin Small Cap Growth Fund)
N-1A Location in
ITEM NO. ITEM REGISTRATION STATEMENT
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information and History Cover Page; About the Fund
(see also the Prospectus
"About the Fund"; "General
Information"
13. Investment Objectives and "The Fund's Investment
Policies Objective and Restrictions"
(See also the Prospectus
"Investment Objective and
Policies of the Fund")
14. Management of the Fund "Officers and Trustees"
15. Control Persons and Principal "Officers and Trustees"
Holders of Securities
16. Investment Advisory and Other "Investment Advisory and
Services Other Services" (See also
the Prospectus "Management
of the Fund")
17. Brokerage Allocation "The Fund's Policies
Regarding Brokers Used on
Portfolio Transactions"
18. Capital Stock and Other Securities See "General Information"
and "About the Fund" in the
Prospectus
19. Purchase, Redemption and Pricing "Additional Information
of Securities Regarding Fund Shares" (See
also the Prospectus "How to
Buy Shares of the Fund",
"How to Sell Shares of the
Fund", "Valuation of Fund
Shares")
20. Tax Status "Additional Information
Regarding Taxation"
21. Underwriters "The Fund's Underwriter"
22. Calculation of Performance Data "General Information"
23. Financial Statements "Financial Statements"
98 P
SUPPLEMENT DATED OCTOBER 1, 1995
TO THE PROSPECTUS FOR
FRANKLIN SMALL CAP GROWTH FUND
Franklin Strategic Series
dated September 1, 1995
INTRODUCTION. As of October 1, 1995, the Franklin Small Cap Growth Fund (the
"Fund") offers two classes of shares to its investors: Franklin Small Cap Growth
Fund - Class I ("Class I") and Franklin Small Cap Growth Fund - Class II ("Class
II"). Investors can choose between Class I shares, which generally bear a higher
front-end sales charge and lower ongoing Rule 12b-1 distribution fees ("Rule
12b-1 fees"), and Class II shares, which generally have a lower front-end sales
charge and higher ongoing Rule 12b-1 fees. Investors should consider the
differences between the two classes, including the impact of sales charges and
distribution fees, in choosing the more suitable class given their anticipated
investment amount and time horizon. See "Differences Between Class I and Class
II" below.
This Supplement must be read in conjunction with the Prospectus for this Fund.
All investment objectives and policies described in the Prospectus apply equally
to both classes of shares in the new multiclass structure. Further, all
operational procedures apply equally to both classes, unless otherwise specified
in the following discussion. See "Deciding Which Class to Purchase" below.
THE NEW APPLICATION FORM INCLUDED WITH THIS SUPPLEMENT MUST BE USED FOR ALL
PURCHASES. DO NOT USE THE APPLICATION FORM INCLUDED IN THE PROSPECTUS.
MULTICLASS FUND STRUCTURE. The Fund has two classes of shares available for
investment: Class I and Class II. ALL FUND SHARES OUTSTANDING BEFORE THE
IMPLEMENTATION OF THE MULTICLASS STRUCTURE HAVE BEEN REDESIGNATED AS CLASS I
SHARES, AND WILL RETAIN THEIR PREVIOUS RIGHTS AND PRIVILEGES. Voting rights of
each class will be the same on matters affecting the Fund as a whole, but each
will vote separately on matters affecting its class. See the Prospectus for more
details about Class I shares. Class II shares are explained in detail in the
following discussion. Except as described below, shares of both classes
represent identical interests in the Fund's investment portfolio.
EXPENSE TABLE
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder will bear directly or indirectly in
connection with an investment in the Fund. The figures are based on aggregate
operating expenses of the Class I shares (before fee waivers) for the fiscal
year ended April 30, 1995.
<TABLE>
<CAPTION>
CLASS I CLASS II
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.50% 1.00%^
Deferred Sales Charge NONE^^ 1.00%+
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (before fee waiver) 0.63%* 0.63%*
Rule 12b-1 Fees 0.20%** 1.00%**
Other Expenses:
Reports to Shareholders 0.11% 0.11%
Shareholder Servicing Costs 0.10% 0.10%
Other 0.12% 0.12%
Total Other Expenses 0.33% 0.33%
-------- -------
Total Fund Operating Expenses 1.16%* 1.96%*
========= ========
</TABLE>
^Although Class II has a lower front-end sales charge than Class I, over time
the higher Rule 12b-1 fee for Class II may cause shareholders to pay more for
Class II shares than for Class I shares. Given the maximum front-end sales
charge and the rate of Rule 12b-1 fees of each class, it is estimated that this
will take less than six years for shareholders who maintain total shares valued
at less than $100,000 in the Franklin Templeton Funds. Shareholders with larger
investments in the Franklin Templeton Funds will reach the crossover point more
quickly. See "How to Buy Shares of the Fund - Purchase Price of Fund Shares" for
the definition of Franklin Templeton Funds and similar references.
^^Class I investments of $1 million or more are not subject to a front-end sales
charge; however, a contingent deferred sales charge of 1% is generally imposed
on certain redemptions within a "contingency period" of 12 months of the
calendar month following such investments. See "How to Sell Shares of the Fund -
Contingent Deferred Sales Charge."
+Class II shares redeemed within a "contingency period" of 18 months of the
calendar month of such investments are subject to a 1% contingent deferred sales
charge. See "How to Sell Shares of the Fund - Contingent Deferred Sales Charge."
*Represents the amount that would have been payable to the investment manager
before any fee waiver by the investment manager. The investment manager agreed
in advance, however, to waive a portion of its management fees. With this fee
waiver, management fees and total operating expense for Class I represented
0.16% and 0.69%, respectfully, of the Fund's average net assets.
**Consistent with National Association of Securities Dealers, Inc.'s rules, it
is possible that the combination of front-end sales charges and Rule 12b-1 fees
could cause long-term shareholders to pay more than the economic equivalent of
the maximum front-end sales charges permitted under those same rules.
Investors should be aware that the above table is not intended to reflect in
precise detail the fees and expenses associated with an individual's own
investment in the Fund. Rather the table has been provided only to assist
investors in gaining a more complete understanding of fees, charges and
expenses. For a more detailed discussion of these matters, investors should
refer to the appropriate sections of the Prospectus and this Supplement.
EXAMPLE
As required by SEC regulations, the following example illustrates the expenses,
including the maximum front-end sales charge, that apply to a $1,000 investment
in the Fund over various time periods assuming (1) a 5% annual rate of return
and (2) redemption at the end of each time period.
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
CLASS I $56* $80 $106 $180
CLASS II $30 $71 $115 $236
*assumes that a contingent deferred sales charge will not apply to Class I
shares
A Class II shareholder would pay the following expenses on the same investment,
assuming no redemption:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
$30 $71 $115 $236
THIS EXAMPLE IS BASED ON THE AGGREGATE OPERATING EXPENSES, BEFORE FEE WAIVERS,
SHOWN ABOVE AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. The operating expenses are
borne by the Fund and only indirectly by shareholders as a result of their
investment in the Fund. In addition, federal securities regulations require the
example to assume an annual return of 5%, but the Fund's actual return may be
more or less than 5%.
DECIDING WHICH CLASS TO PURCHASE. Investors should carefully evaluate their
anticipated investment amount and time horizon prior to determining which class
of shares to purchase. Generally, an investor who expects to invest less than
$100,000 in the Franklin Templeton Funds and who expects to make substantial
redemptions within approximately six years or less of investment should consider
purchasing Class II shares. However, the higher annual Rule 12b-1 fees on Class
II shares will result in slightly higher operating expenses and lower income
dividends for Class II shares, which will accumulate over time to outweigh the
difference in front-end sales charges. For this reason, Class I shares may be
more attractive to long-term investors even if no sales charge reductions are
available to them.
Investors who qualify to purchase Class I shares at reduced sales charges should
seriously consider purchasing Class I shares, especially if they intend to hold
their shares for approximately six years or more. Investors who qualify to
purchase Class I shares at reduced sales charges but who intend to hold their
shares less than approximately six years should evaluate whether it is more
economical to purchase Class I shares through a Letter of Intent or under Rights
of Accumulation or other means rather than purchasing Class II shares. INVESTORS
INVESTING $1 MILLION OR MORE IN A SINGLE PAYMENT AND OTHER INVESTORS WHO QUALIFY
TO PURCHASE CLASS I SHARES AT NET ASSET VALUE MAY NOT PURCHASE CLASS II SHARES.
See "How to Buy Shares of the Fund" in the Prospectus.
Each class represents the same interest in the investment portfolio of the Fund
and has the same rights, except that each class has a different sales charge,
bears the separate expenses of its Rule 12b-1 distribution plan, and has
exclusive voting rights with respect to such plan. The two classes also have
separate exchange privileges.
DIFFERENCES BETWEEN CLASS I AND CLASS II. The differences between Class I and
Class II shares are primarily in their front-end and contingent deferred sales
charges and Rule 12b-1 fees as described below.
A separate Plan of Distribution has been approved and adopted for each class
("Class I Plan" and "Class II Plan," respectively) pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended ("1940 Act"). The Rule 12b-1 fees
charged to each class will be based solely on the distribution and servicing
fees attributable to that particular class. Any portion of fees remaining from
the Class I Plan after distribution to securities dealers of up to the maximum
amount permitted may be used by the class to reimburse Franklin Templeton
Distributors, Inc. ("Distributors") for routine ongoing promotion and
distribution expenses incurred with respect to that class, whereas the Class II
Plan is a compensation plan. See "Plan of Distribution" in the Prospectus for a
description of such expenses.
CLASS I. Class I shares are generally subject to a variable sales charge upon
purchase and not subject to any sales charge upon redemption. Class I shares are
subject to Rule 12b-1 fees of up to an annual maximum of .25% of average daily
net assets of such shares. With this multiclass structure, Class I shares have
higher front-end sales charges than Class II shares and comparatively lower Rule
12b-1 fees. See the sections "How to Buy Shares of the Fund", "Management of the
Fund", and "How to Sell Shares of the Fund" in the Prospectus.
CLASS II. Class II shares are subject to a front-end sales charge of 1% of the
amount invested and a contingent deferred sales charge of 1% if shares are
redeemed within 18 months of the calendar month following purchase. In addition,
Class II shares are subject to Rule 12b-1 fees of up to a maximum of 1% of
average daily net assets of Class II shares.
Purchases of Class II shares are limited to amounts below $1 million. Any
purchase of $1 million or more will automatically be invested in Class I shares,
since that is more beneficial to the investor. Purchases of $1 million or more
in Class I shares, however, may be subject to a contingent deferred sales
charge. Investors may exceed $1 million in Class II shares by cumulative
purchases over a period of time. Investors who intend to make investments
exceeding $1 million, however, should consider purchasing Class I shares through
a Letter of Intent instead of purchasing Class II shares. See "How to Buy Shares
of the Fund" in the Prospectus for more information.
PLAN OF DISTRIBUTION. Class II's operating expenses will generally be higher
under the Class II Plan. During the first year following a purchase of Class II
shares, Distributors will retain a portion of Class II's Rule 12b-1 fees equal
to 0.75% per annum of Class II's average daily net assets to partially recoup
fees Distributors pays to securities dealers. Distributors, or its affiliates,
may pay, from its own resources, a commission of up to 1% of the amount invested
to securities dealers who initiate and are responsible for purchases of Class II
shares.
CONTINGENT DEFERRED SALES CHARGE. Unless a waiver applies, a contingent deferred
sales charge of 1% will be imposed on Class II shares redeemed within 18 months
of the calendar month of their purchase. See "Contingent Deferred Sales Charges"
under "How to Sell Shares of the Fund" in this Supplement.
MANAGEMENT OF THE FUND
The Board of Trustees (the "Board")has carefully reviewed the multiclass
structure to ensure that no material conflicts exist between the two classes of
shares. Although the Board does not expect to encounter material conflicts in
the future, the Board will continue to monitor the Fund and will take
appropriate action to resolve such conflicts if any should later arise.
In developing the multiclass structure, the Fund has retained the authority to
establish additional classes of shares. It is the Fund's present intention to
offer only two classes of shares, but new classes may be offered in the future.
For more information regarding the responsibilities of the Board and the
management of the Fund, please see "Management of the Fund" in the Prospectus.
CLASS II PLAN OF DISTRIBUTION
Under the Class II Plan, the Fund pays to Distributors for distribution expenses
and related expenses up to 0.75% per annum of Class II shares' daily net assets,
payable quarterly. Such fees may be used in order to compensate Distributors or
others for providing distributions and related services and bearing certain
expenses of the Class. All expenses of distribution, marketing and related
services over that amount will be borne by Distributors or others who have
incurred them, without reimbursement by the Fund. In addition, the Class II Plan
provides for an additional payment by the Fund of up to 0.25% per annum of Class
II's average daily net assets as a servicing fee, payable quarterly. This fee
will be used to pay securities dealers or others for, among other things,
assisting in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; receiving and answering
correspondence; monitoring dividend payments from the Fund on behalf of
customers, or similar activities related to furnishing personal services and/or
maintaining shareholder accounts.
The Class II Plan also covers any payments to or by the Fund, Advisers,
Distributors, or other parties on behalf of the Fund, Advisers or Distributors,
to the extent such payments are deemed to be for the financing of any activity
primarily intended to result in the sale of Class II shares issued by the Fund
within the context of Rule 12b-1. The payments under the Plan are included in
the maximum operating expenses which may be borne by Class II of the Fund.
During the first year following the purchase of Class II shares, Distributors
will retain 0.75% per annum of Class II's average daily net assets to partially
recoup fees Distributors pays to securities dealers. Distributors or its
affiliates may pay, from its own resources, a commission of up to 1% of the
amount invested to securities dealers who initiate and are responsible for
purchases of Class II shares.
See the "Plan of Distribution" discussion in the "Management of the Fund"
section in the Prospectus and "Distribution Plans" in the SAI for more
information about both Class I and Class II Plans.
DISTRIBUTIONS TO SHAREHOLDERS
According to the requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), dividends and capital gains will be calculated and distributed in
the same manner for Class I and Class II shares. The per share amount of any
income dividends will generally differ only to the extent that each class is
subject to different Rule 12b-1 fees.
Unless otherwise requested, income dividends and capital gain distributions, if
any, will be automatically reinvested in the shareholder's account in the form
of additional shares, valued at the closing net asset value (without a front-end
sales charge) on the dividend reinvestment date. Dividend and capital gain
distributions are only eligible for reinvestment at net asset value into the
same class of another fund in the Franklin Templeton Funds, to a Class I
Franklin Templeton Money Market Fund, to another person, or directly to a
checking account. See "Distributions to Shareholders" in the Prospectus and the
SAI for more information.
HOW TO BUY SHARES OF THE FUND
The following discussion supplements the one included in the Prospectus under
"How to Buy Shares of the Fund." The subsections entitled "Quantity Discounts in
Sales Charges", "Group Purchases" and "Description of Special Net Asset Value
Purchases" in the Prospectus only apply to Class I shares. Although sales
charges on Class II shares may not be reduced through a Letter of Intent or
Rights of Accumulation as described under "Quantity Discounts in Sales Charges",
the value of Class II shares owned by an investor may be included in determining
the appropriate sales charge for Class I shares. THE APPLICATION FORM INCLUDED
WITH THIS SUPPLEMENT MUST ACCOMPANY ANY PURCHASE OF SHARES. DO NOT USE THE
APPLICATION INCLUDED IN THE PROSPECTUS.
PURCHASE PRICE OF FUND SHARES
Shares of both classes of the Fund are offered at their respective public
offering prices, which are determined by adding the net asset value per share
plus a front-end sales charge, next computed (1)after the shareholder's
securities dealer receives the order which is promptly transmitted to the Fund,
or (2) after receipt of an order by mail from the shareholder directly in proper
form (which generally means a completed Shareholder Application accompanied by a
negotiable check).
CLASS I. The sales charge for Class I shares is a variable percentage of the
offering price depending upon the amount of the sale. See "How to Buy Shares of
the Fund - Purchase Price of Fund Shares" in the Prospectus.
CLASS II. Unlike Class I shares, the front-end sales charges and dealer
concessions for Class II shares do not vary depending on the amount of purchase.
See table below:
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
AS A PERCENTAGE OF DEALER CONCESSION AS
SIZE OF TRANSACTION AT AS A PERCENTAGE OF NET AMOUNT INVESTED A PERCENTAGE OF
OFFERING PRICE OFFERING PRICE OFFERING PRICE*
<S> <C> <C> <C>
Any amount (less
than $1 million) 1.00% 1.01% 1.00%
</TABLE>
* Distributors, or one of its affiliates, may make additional payments to
securities dealers, from its own resources, of up to 1% of the amount invested.
During the first year following a purchase of Class II shares, Distributors will
keep a portion of the Rule 12b-1 fees equal to 0.75% per annum, of Class II
shares average net assets assessed to Class II shares to partially recoup fees
Distributors pays to securities dealers.
Class II shares redeemed within their contingency period will be assessed a
contingent deferred sales charge of 1% on the lesser of the then-current net
asset value or the net asset value of such shares at the time of purchase,
unless such charge is waived as described under "How to Sell Shares of the Fund
- Contingent Deferred Sales Charge."
PURCHASES AT NET ASSET VALUE
The section in the Prospectus titled "Purchases at Net Asset Value" only applies
to Class I shares, with the exception of the second and third paragraphs, which
are replaced with the following:
For either Class I or Class II, the same class of shares of the Fund may be
purchased at net asset value by persons who have redeemed, within the previous
365 days, their shares of the Fund or another of the Franklin Templeton Funds
which were purchased with a front-end sales charge or assessed a contingent
deferred sales charge on redemption. If a different class of shares is
purchased, the full front-end sales charge must be paid at the time of purchase
of the new shares. An investor may reinvest an amount not exceeding the
redemption proceeds. While credit will be given for any contingent deferred
sales charge paid on the shares redeemed and subsequently repurchased, a new
contingency period will begin. Matured shares will be reinvested at net asset
value and will not be subject to a new contingent deferred sales charge. Shares
of the Fund redeemed in connection with an exchange into another fund (see
"Exchange Privilege") are not considered "redeemed" for this privilege. In order
to exercise this privilege, a written order for the purchase of shares of the
Fund must be received by the Fund or the Fund's Shareholder Services Agent
within 365 days after the redemption. The 365 days, however, do not begin to run
on redemption proceeds placed immediately after redemption in a Franklin Bank
Certificate of Deposit ("CD") until the CD (including any rollover) matures.
Reinvestment at net asset value may also be handled by a securities dealer or
other financial institution, who may charge the shareholder a fee for this
service. The redemption is a taxable transaction but reinvestment without a
sales charge may affect the amount of gain or loss recognized and the tax basis
of the shares reinvested. If there has been a loss on the redemption, the loss
may be disallowed if a reinvestment in the same fund is made within a 30-day
period. Information regarding the possible tax consequences of such a
reinvestment is included in the tax section of the Prospectus and the SAI.
For either Class I or Class II, the same class of shares of the Fund or of
another of the Franklin Templeton Funds may be purchased at net asset value and
without a contingent deferred sales charge by persons who have received
dividends and capital gain distributions in cash from investments in that class
of shares of the Fund within 365 days of the payment date of such distribution.
To exercise this privilege, a written request to reinvest the distribution must
accompany the purchase order. Additional information may be obtained from
Shareholder Services at 1-800/632-2301. See "Distributions in Cash" under
"Distributions to Shareholders" in the Prospectus.
PURCHASING CLASS I AND CLASS II SHARES
When placing purchase orders, investors should clearly indicate which class of
shares they intend to purchase. A purchase order that fails to specify a class
will automatically be invested in Class I shares. There are no conversion
features attached to either class of shares.
OTHER PROGRAMS AND PRIVILEGES AVAILABLE TO FUND SHAREHOLDERS
With the exception of Systematic Withdrawal Plans, all programs and privileges
detailed under the discussion of "Other Programs and Privileges Available to the
Fund Shareholders" will remain in effect as described in the Prospectus for the
new multiclass structure. For a complete discussion of these programs, see
"Other Programs and Privileges Available to Fund Shareholders" in the
Prospectus.
SYSTEMATIC WITHDRAWAL PLANS. Subject to the requirements outlined in the
Prospectus, a shareholder may establish a Systematic Withdrawal Plan for his or
her account. With respect to Class I shares, the contingent deferred sales
charge is waived for redemptions through a Systematic Withdrawal Plan set up
prior to February 1, 1995. With respect to Systematic Withdrawal Plans set up on
or after February 1, 1995, the applicable contingent deferred sales charge is
waived for Class I and Class II share redemptions of up to 1% monthly of an
account's net asset value (12% annually, 6% semi-annually, 3% quarterly). For
example, if a Class I account maintained an annual balance of $1,000,000, only
$120,000 could be withdrawn through a once-yearly Systematic Withdrawal Plan
free of charge; any amount over that $120,000 would be assessed a 1% (or
applicable) contingent deferred sales charge. Likewise, if a Class II account
maintained an annual balance of $10,000, only $1,200 could be withdrawn through
a once-yearly Systematic Withdrawal Plan free of charge.
EXCHANGE PRIVILEGE
Shareholders are entitled to exchange their shares for the same class of shares
of other Franklin Templeton Funds which are eligible for sale in the
shareholder's state of residence and in conformity with such fund's stated
eligibility requirements and investment minimums. Some funds, however, may not
offer Class II shares. Class I shares may be exchanged for Class I shares of any
Franklin Templeton Funds. Class II shares may be exchanged for Class II shares
of any Franklin Templeton Funds. No exchanges between different classes of
shares will be allowed. A contingent deferred sales charge will not be imposed
on exchanges. If, however, the exchanged shares were subject to a contingent
deferred sales charge in the original fund purchased and shares are subsequently
redeemed within 12 months (Class I shares) or 18 months (Class II shares) of the
calendar month of the original purchase date, a contingent deferred sales charge
will be imposed. Before making an exchange, investors should review the
prospectus of the fund they wish to exchange from and the fund they wish to
exchange into for all specific requirements or limitations on exercising the
exchange privilege, for example, minimum holding periods or applicable sales
charges.
EXCHANGES OF CLASS II SHARES
When an account is composed of Class II shares subject to the contingent
deferred sales charge, and Class II shares that are not, the shares will be
transferred proportionately into the new fund. Shares received from reinvestment
of dividends and capital gains are referred to as "free shares," shares which
were originally subject to a contingent deferred sales charge but to which the
contingent deferred sales charge no longer applies are called "matured shares,"
and shares still subject to the contingent deferred sales charge are referred to
as "CDSC liable shares." CDSC liable shares held for different periods of time
are considered different types of CDSC liable shares. For instance, if a
shareholder has $1,000 in free shares, $2,000 in matured shares, and $3,000 in
CDSC liable shares, and the shareholder exchanges $3,000 into a new fund, $500
will be exchanged from free shares, $1,000 from matured shares, and $1,500 from
CDSC liable shares. Similarly, if CDSC liable shares have been purchased at
different periods, a proportionate amount will be taken from shares held for
each period. If, for example, a shareholder holds $1,000 in shares bought 3
months ago, $1,000 bought 6 months ago, and $1,000 bought 9 months ago, and the
shareholder exchanges $1,500 into a new fund, $500 from each of these shares
will be deemed exchanged into the new fund.
The only money market fund exchange option available to Class II shareholders is
the Franklin Templeton Money Fund II ("Money Fund II"), a series of the Franklin
Templeton Money Fund Trust. No drafts (checks) may be written on Money Fund II
accounts, nor may shareholders purchase shares of Money Fund II directly. Class
II shares exchanged for shares of Money Fund II will continue to age and a
contingent deferred sales charge will be assessed if CDSC liable shares are
redeemed. No other money market funds are available for Class II shareholders
for exchange purposes. Class I shares may be exchanged for shares of any of the
money market funds in the Franklin Templeton Funds except Money Fund II. Draft
writing privileges and direct purchases are allowed on these other money market
funds as described in their respective prospectuses.
To the extent shares are exchanged proportionately, as opposed to another
method, such as first-in first-out, or free-shares followed by CDSC liable
shares, the exchanged shares may, in some instances, be CDSC liable even though
a redemption of such shares, as discussed elsewhere herein, may no longer be
subject to a CDSC. The proportional method is believed by management to more
closely meet and reflect the expectations of Class II shareholders in the event
shares are redeemed during the contingency period. For federal income tax
purposes, the cost basis of shares redeemed or exchanged is determined under the
Code without regard to the method of transferring shares chosen by the Fund.
TRANSFERS
Transfers between identically registered accounts in the same fund and class are
treated as non-monetary and non-taxable events, and are not subject to a
contingent deferred sales charge. The transferred shares will continue to age
from the date of original purchase. Shares of each class will be transferred on
the same basis as described for exchanges.
CONVERSION RIGHTS
It is not presently anticipated that Class II shares will be converted to Class
I shares. A shareholder may, however, sell the Class II shares and use the
proceeds to purchase Class I shares, subject to all applicable sales charges.
See "Exchange Privilege" in the Prospectus for more information.
HOW TO SELL SHARES OF THE FUND
For a discussion regarding the sale of either class of Fund shares, refer to the
section in the Prospectus titled "How to Sell Shares of the Fund." In addition,
the charges described in this Supplement will also apply to the sale of all Fund
shares. The subsection titled "Contingent Deferred Sales Charge" in the
Prospectus is replaced with the following:
CONTINGENT DEFERRED SALES CHARGE
In order to recover commissions paid to securities dealers on Class I
investments of $1 million or more and any Class II investments redeemed within
the contingency period of 12 months (Class I) or 18 months (Class II)of the
calendar month following their purchase will be assessed a contingent deferred
sales charge, unless one of the exceptions described below applies. The charge
is 1% of the lesser of the net asset value of the shares redeemed (exclusive of
reinvested dividends and capital gain distributions) or the net asset value at
the time of purchase of such shares, and is retained by Distributors. The
contingent deferred sales charge is waived in certain instances. See below and
"Purchases at Net Asset Value" under "How To Buy Shares of the Fund."
In determining if a contingent deferred sales charge applies, shares not subject
to a contingent deferred sales charge are deemed to be redeemed first, in the
following order: (i) A calculated number of shares representing amounts
attributable to capital appreciation of those shares held less than the
contingency period (12 months in the case of Class I shares and 18 months in the
case of Class II shares); (ii) shares purchased with reinvested dividends and
capital gain distributions; and (iii) other shares held longer than the
contingency period; and followed by any shares held less than the contingency
period, on a "first in, first out" basis. For tax purposes, a contingent
deferred sales charge is treated as either a reduction in redemption proceeds or
an adjustment to the cost basis of the shares redeemed.
The contingent deferred sales charge on each class of shares is waived, as
applicable, for: exchanges; any account fees; distributions to participants or
their beneficiaries in Trust Company individual retirement plan accounts due to
death, disability or attainment of age 59 1/2; tax-free returns of excess
contributions from employee benefit plans; distributions from employee benefit
plans, including those due to termination or plan transfer; redemptions through
a Systematic Withdrawal Plan set up for shares prior to February 1, 1995, and
for Systematic Withdrawal Plans set up thereafter, redemptions of up to 1%
monthly of an account's net asset value (3% quarterly, 6% semiannually or 12%
annually); redemptions initiated by the Fund due to a shareholder's account
falling below the minimum specified account size; and redemptions following the
death of the shareholder or the beneficial owner.
All investments made during a calendar month, regardless of when during the
month the investment occurred, will age one month on the last day of that month
and each subsequent month.
Requests for redemptions for a SPECIFIED DOLLAR amount will result in additional
shares being redeemed to cover any applicable contingent deferred sales charge,
while requests for redemption of a SPECIFIC NUMBER of shares will result in the
applicable contingent deferred sales charge being deducted from the total dollar
amount redeemed.
VALUATION OF FUND SHARES
The following paragraph is added to the end of this section.
Each class will bear, pro-rata, all of the common expenses of the Fund. The net
asset value of all outstanding shares of each class of the Fund will be computed
on a pro-rata basis for each outstanding share based on the proportionate
participation in the Fund represented by the value of shares of such classes,
except that the Class I and Class II shares will bear the Rule 12b-1 expenses
payable under their respective plans. Due to the specific distribution expenses
and other costs that will be allocable to each class, the dividends paid to each
class of the Fund may vary.
HOW TO GET INFORMATION REGARDING AN INVESTMENT IN THE FUND
Franklin Class I and Class II share codes for the Fund, which will be needed to
access system information, are 198 and 298, respectively. The system's automated
operator will prompt the caller with easy to follow step-by-step instructions
from the main menu. Other features may be added in the future.
PERFORMANCE (CLASS II)
Because Class II shares were not offered prior to October 1, 1995, no
performance data is available for these shares. After a sufficient period of
time has passed, Class II performance data as described in the "Performance"
section of the Prospectus will be available.
GENERAL INFORMATION
With the exception of Voting Rights, all rights and privileges detailed under
the discussion of "General Information" will remain in effect as described in
the Prospectus for the new multiclass structure. For a complete discussion of
these rights and privileges, see "General Information" in the Prospectus.
VOTING RIGHTS. Shares of each class represent proportionate interests in the
assets of the Fund and have the same voting and other rights and preferences as
the other class of the Fund for matters that affect the Fund as a whole. For
matters that only affect a certain class of the Fund's shares, however, only
shareholders of that class will be entitled to vote. Therefore, each class of
shares will vote separately on matters (1) affecting only that class, (2)
expressly required to be voted on separately by the state business trust law, or
(3) required to be voted on separately by the 1940 Act or the rules adopted
thereunder. For instance, if a change to the Rule 12b-1 plan relating to Class I
shares requires shareholder approval, only shareholders of Class I may vote on
changes to the Rule 12b-1 plan affecting that class. Similarly, if a change to
the Rule 12b-1 plan relating to Class II shares requires shareholder approval,
only shareholders of Class II may vote on changes to such plan. On the other
hand, if there is a proposed change to the investment objective of the Fund,
this affects all shareholders, regardless of which class of shares they hold,
and therefore, each share has the same voting rights. For more information
regarding voting rights, see the "Voting Rights" discussion in the Prospectus
under the heading "General Information."
98 S
SUPPLEMENT DATED OCTOBER 1, 1995
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN STRATEGIC SERIES
Franklin Small Cap Growth Fund
dated September 1, 1995
As described in the Prospectus of the Franklin Small Cap Growth Fund (the
"Fund"), the Fund now offers two classes of shares to its investors. This
new structure allows investors to consider, among other features, the
impact of sales charges and distribution fees ("Rule 12b-1 fees") on their
investments in the Small Cap Growth Fund.
ADD THE FOLLOWING AS THE LAST SENTENCE OF THE PARAGRAPH DESCRIBING FEES
PAID TO THE MANAGER UNDER "INVESTMENT ADVISORY AND OTHER SERVICES":
Each class of the Fund will pay its respective share of the fee as
determined by the proportion of the Small Cap Growth Fund that it
represents.
EACH NEW CLASS OF SHARES HAS A SEPARATE DISTRIBUTION PLAN. FOR THIS REASON,
THE FIRST PARAGRAPH OF THE SECTION "THE FUNDS' UNDERWRITER - DISTRIBUTION
PLANS" HAS BEEN REPLACED WITH THE FOLLOWING PARAGRAPH:
DISTRIBUTION PLANS
Each class of the Fund has adopted a plan of distribution ("Class I
Plan" and "Class II Plan," respectively) pursuant to Rule 12b-1 under
the 1940 Act. The distribution plans for each class may be
collectively referred to as the "Plans."
THE FOLLOWING SENTENCE SHOULD BE ADDED AS THE FIRST SENTENCE IN THE NEXT
PARAGRAPH:
Pursuant to the Class I Plan, the Fund may pay up to a maximum of
0.25% per annum (0.25 of 1%) of Class I average daily net assets for
expenses incurred in the promotion and distribution of its shares.
THE PARAGRAPH DESCRIBED ABOVE ONLY CONCERNS THE CLASS I PLAN FOR THE FUND.
THE FOLLOWING PARAGRAPH HAS BEEN ADDED TO THIS SECTION AFTER THE DISCUSSION
OF THE CLASS I PLAN TO DESCRIBE THE CLASS II PLAN:
THE CLASS II PLAN
Under the Class II Plan, the Fund is permitted to pay Distributors or others,
distribution and related expenses of up to 0.75% per annum of Class II shares'
daily net assets payable quarterly. All expenses of distribution, marketing and
related services over that amount will be borne by Distributors or others who
have incurred them, without reimbursement by the Fund. In addition, the Class II
Plan provides for an additional payment by the Fund of up to 0.25% per annum of
Class II's average daily net assets as a servicing fee, payable quarterly. This
fee will be used to pay securities dealers or others for, among other things,
assisting in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; receiving and answering
correspondence; monitoring dividend payments from the Fund on behalf of
customers, or similar activities related to furnishing personal services and/or
maintaining shareholder accounts.
THE SUBSEQUENT PARAGRAPHS IN THE SECTION "DISTRIBUTION PLANS" APPLY EQUALLY
TO THE PLANS, WITH THE EXCEPTION THAT THE SENTENCE REGARDING UNREIMBURSED
EXPENSES DOES NOT REFER TO THE CLASS II PLAN.
THE "PURCHASES AND REDEMPTIONS THROUGH SECURITIES DEALERS" AND "CALCULATION
OF NET ASSET VALUE" SUBSECTIONS ARE MODIFIED TO REFLECT THAT THE NET ASSET
VALUE FOR EACH CLASS IS CALCULATED SEPARATELY FOR EACH CLASS AND THAT THE
NET ASSET VALUE FOR EACH CLASS IS CALCULATED AS OF THE SCHEDULED CLOSING OF
THE NEW YORK STOCK EXCHANGE (GENERALLY 1:00 P.M. PACIFIC TIME).
THE SUBSECTION TITLED "ADDITIONAL INFORMATION REGARDING PURCHASES" DOES NOT
APPLY TO CLASS II.
The current Prospectus and Statement of Additional Information
are incorporated herein by reference to Form Type 497 filed
electronically by Registrant with the U.S. Securities and
Exchange Commission on September 11, 1995, Accession Number 0000872625-
95-0000023.
FRANKLIN STRATEGIC SERIES
File Nos. 33-39088
811-6243
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statements incorporated herein by reference to the
Registrant's Annual Report to Shareholders dated April 30,
1995 as filed with the SEC electronically on Form Type N-30D
on June 26, 1995.
(i) Report of Independent Auditors for Franklin Strategic Series -
June 2, 1995
(ii) Statement of Investments in Securities and Net Assets - April 30,
1995
(iii)Statements of Assets and Liabilities - April 30, 1995
(iv) Statements of Operations - for the year ended April 30, 1995
(v) Statements of Changes in Net Assets - for the years ended April
30, 1995 and 1994
(vi) Notes to Financial Statements
b) Exhibits:
The following exhibits are incorporated by reference, except for
exhibits, 6(iii), 8(iii) and 11(i) which are attached
herewith.
(1) copies of the charter as now in effect;
(i) Agreement and Declaration of Trust of Franklin California
250 Growth Index Fund as of January 22, 1991 is Incorporated
herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Certificate of Trust of Franklin California 250 Growth
Index Fund dated January 22, 1991 is Incorporated herein by
reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to Registration
Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iii)Certificate of Amendment to the Certificate of Trust of
Franklin California 250 Growth Index Fund dated November 19,
1991 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to Registration
Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iv) Certificate of Amendment to the Certificate of Trust of
Franklin Strategic Series dated May 14, 1992 is
ncorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to Registration
Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(2) copies of the existing By-Laws or instruments corresponding
thereto;
(i) Amended and Restated By-Laws of Franklin California 250
Growth Index Fund as of April 25, 1991 are Incorporated
herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Amendment to By-Laws dated October 27, 1994 is
Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(3) copies of any voting trust agreement with respect to more than
five percent of any class of equity securities of the Registrant;
Not Applicable
(4) specimens or copies of each security issued by the Registrant,
including copies of all constituentinstruments, defining the
rights of the holders of such securities, and copies of each
security being registered;
Not Applicable
(5) copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(i) Management Agreement between the Registrant on behalf of
Franklin Small Cap Growth Fund, Franklin Global Health Care
Fund, Franklin Global Utilities Fund and Franklin Advisers,
Inc. dated February 24, 1992 is Incorporated herein by
reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Administration Agreement between the Registrant on behalf
of Franklin MidCap Growth Fund and Franklin Advisers, Inc.
dated April 12, 1993 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iii)Administration Agreement between the Registrant on behalf of
FISCO MidCap Growth Fund and Franklin Advisers, Inc. dated
August 17, 1993 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iv) Management Agreement between the Registrant on behalf of
Franklin Strategic Income Fund and Franklin Advisers, Inc.
effective May 24, 1994 is Incorporated herein by reference
to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(v) Subadvisory Agreement between Franklin Advisers, Inc. and
Templeton Investment Counsel, Inc., providing for services
to Franklin Strategic Income Fund dated May 24, 1994 is
Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(vi) Amended and Restated Management Agreement between Franklin
Advisers, Inc. and the Registrant on behalf of Franklin
California Growth Fund effective July 12, 1993 is
Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(6) copies of each underwriting or distribution contract between the
Registrant and a principal underwriter, andspecimens or copies of
all agreements between principal underwriters and dealers;
(i) Amended and Restated Distribution Agreement between the
Registrant on behalf of all Series except Franklin Strategic
Income Series and Franklin/Templeton Distributors, Inc.
dated April 23, 1995 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Amended and Restated Distribution Agreement between the
Registrant on behalf of Franklin Strategic Income Series and
Franklin/Templeton Distributors, Inc. dated March 29, 1995
is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iii)Form of Dealer Agreement between Franklin/Templeton
Distributors, Inc. and Dealers
(7) copies of all bonus, profit sharing, pension or other similar
contracts or arrangements wholly or partly for the benefit of
Trustees or officers of the Registrant in their capacity as such;
any such plan that is not set forth in a formal document, furnish
a reasonably detailed description thereof;
Not Applicable
(8) copies of all custodian agreements and depository contracts
under Section 17(f) of the Investment Company Act of 1940
(the "1940 Act"), with respect to securities and similar
investments of the Registrant, including the schedule of
remuneration;
(i) Custodian Agreement between Registrant and Bank of America
NT & SA dated May 24, 1994 is Incorporated herein by
reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Custodian Agreements between Registrant and Citibank
Delaware
1. Citicash Management ACH Customer Agreement
2. Citibank Cash Management Services Master Agreemen
3. Short Form Bank Agreement - Deposits and
Disbursements of Funds
Registrant: Franklin Premier Return Fund
Filing: Post-Effective Amendment No. 54 to
Registration Statement on Form N-1A
File No. 2-12647
Filing Date: February 22, 1995
(iii)Amendment to Custodian Agreement between Registrant and Bank
of America NT & SA dated April 12, 1995
(9) copies of all other material contracts not made in the
ordinary course of business which are to be performed in
whole or in part at or after the date of filing the
Registration Statement;
Not Applicable
(10) an opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will
when sold be legally issued, fully paid and nonassessable;
Not Applicable
(11) Copies of any other opinions, appraisals or rulings and
consents to the use thereof relied on in the preparation of
this registration statement and required by Section 7 of the
1933 Act;
(i) Consent of Independent Auditors for Franklin Strategic
Series dated September 7, 1995
(12) all financial statements omitted from Item 23;
Not Applicable
(13) copies of any agreements or understandings made in
consideration for providing the initial capital between or
among the Registrant, the underwriter, adviser, promoter or
initial stockholders and written assurances from promoters
or initial stockholders that their purchases were made for
investment purposes without any present intention of
redeeming or reselling;
(i) Letter of Understanding dated August 20, 1991 is
Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Letter of Understanding dated April 12, 1995 is Incorporated
herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(14) copies of the model plan used in the establishment of any
retirement plan in conjunction with which Registrant offers
its securities, any instructions thereto and any other
documents making up the model plan. Such form(s) should
disclose the costs and fees charged in connection therewith;
(i) Copy of Model Retirement Plan is Incorporated herein by
reference to:
Registrant: AGE High Income Fund, Inc.
Filing: Post-effective Amendment No. 26 to
Registration Statement on Form N-1A
File No. 2-30203
Filing Date: August 1, 1989
(15) copies of any plan entered into by Registrant pursuant to
Rule 12b-l under the 1940 Act, which describes all material
aspects of the financing of distribution of Registrant's
shares, and any agreements with any person relating to
implementation of such plan.
(i) Amended and Restated Distribution Plan between Franklin
Strategic Series on behalf of Franklin California Growth
Fund, Franklin Small Cap Growth Fund, Franklin Global Health
Care Fund and Franklin Global Utilities Fund and Franklin
Distributors, Inc. dated July 1, 1993 is Incorporated herein
by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Distribution Plan between Franklin Strategic Series on
behalf of Franklin Global Utilities Fund - Class II and
Franklin/Templeton Distributors, Inc. dated March 30, 1995
is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iii)Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Franklin Strategic Income Fund
and Franklin Distributors, Inc. dated May 24, 1994 is
Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iv) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Franklin Natural Resources Fund
and Franklin/Templeton Distributors, Inc. dated June 1, 1995
is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(16) schedule for computation of each performance quotation
provided in the registration statement in response to Item
22 (which need not be audited).
(i) Schedule for Computation of Performance and Quotations is
Incorporated herein by reference to:
Registrant: Franklin Tax-Advantaged U.S. Government
Securities Fund
Filing: Post-Effective Amendment No. 8 to
Registration Statement on Form N-1A
File No. 33-11963
Filing Date: March 1, 1995
(17) Powers of Attorney
(i) Power of Attorney for Franklin Strategic Series dated
February 16, 1995 is Incorporated herein by Reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(ii) Power of Attorney for MidCap Growth Portfolio dated June 29,
1995 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 15 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: July 3, 1995
(iii)Certificate of Secretary for Franklin Strategic Series dated
February 16, 1995 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 14 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: June 1, 1995
(iv) Certificate of Secretary for MidCap Growth Portfolio dated
June 29, 1995 is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 15 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: July 3, 1995
(18) Copies of any plan entered into by Registrant pursuant to
Rule 18f-3 under the 1940 Act
(i) Form of Multiple Class Plan is Incorporated herein by
reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 15 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: July 3, 1995
(27) Financial Data Schedule Computation
(i) Financial Data Schedule for Franklin Small Cap Growth Fund
is Incorporated herein by reference to:
Registrant: Franklin Strategic Series
Filing: Post-Effective Amendment No. 15 to
Registration Statement on Form N-1A
File No. 33-39088
Filing Date: July 3, 1995
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
As of April 30, 1995 the number of record holders of the only classes of
securities of the Registrant were as follows:
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
CLASS I
Shares of Beneficial Interest:
Franklin Small Cap Growth Fund 8,561
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
CLASS II
Shares of Beneficial Interest:
Franklin Small Cap Growth Fund -0-
ITEM 27 INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court or appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
a) Franklin Advisers, Inc.
The officers and Directors of the Registrant's manager also serve as
officers and/or directors for (1) the manager's corporate parent, Franklin
Resources, Inc., and/or (2) other investment companies in the Franklin
Group of Funds (Registered Trademark). In addition, Mr. Charles B. Johnson
is a director of General Host Corporation. For additional information
please see Part B and Schedules A and D of Form ADV of the Funds'
Investment Manager (SEC File 801-26292), incorporated herein by reference,
which sets forth the officers and directors of the Investment Manager and
information as to any business, profession, vocation or employment of a
substantial nature engaged in by those officers and directors during the
past two years.
b) Templeton Investment Counsel, Inc.
Templeton Investment Counsel, Inc. ("TICI"), an indirect, wholly owned
subsidiary of Franklin Resources, Inc., serves as the Franklin Strategic
Income Fund's Sub-adviser, furnishing to Franklin Advisers, Inc. in that
capacity, portfolio management services and investment research. For
additional information please see Part B and Schedules A and D of Form ADV
of the Franklin Strategic Income Fund's Sub-adviser (SEC File 801-15125),
incorporated herein by reference, which sets forth the officers and
directors of the Sub-adviser and information as to any business,
profession, vocation or employment of a substantial nature engaged in by
those officers and directors during the past two years.
ITEM 29 PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., ("Distributors") also acts
as principal underwriter of shares of AGE High Income Fund, Inc., Franklin
Balance Sheet Investment Fund, Franklin California Tax-Free Income Fund,
Inc., Franklin California Tax-Free Trust, Franklin Custodian Funds, Inc.,
Franklin Equity Fund, Franklin Federal Money Fund, Franklin Federal
Tax-Free Income Fund, Franklin Gold Fund, Franklin International Trust,
Franklin Investors Securities Trust, Franklin Managed Trust, Franklin Money
Fund, Franklin Municipal Securities Trust, Franklin New York Tax-Free
Income Fund, Inc., Franklin New York Tax-Free Trust, Franklin Premier
Return Fund, Franklin Real Estate Securities Trust, Franklin Strategic
Mortgage Portfolio, Franklin Tax-Exempt Money Fund, Franklin Tax-Advantaged
High Yield Securities Fund, Franklin Tax-Advantaged International Bond
Fund, Franklin Tax-Advantaged U.S. Government Securities Fund, Franklin
Tax-Free Trust, Institutional Fiduciary Trust, Templeton American Trust,
Inc., Franklin Templeton Japan Fund, Franklin Templeton Money Fund Trust,
Templeton Capital Accumulator Fund, Inc., Templeton Developing Markets
Trust, Templeton Funds, Inc., Templeton Global Investment Trust, Templeton
Global Opportunities Trust, Templeton Growth Fund, Inc., Templeton Income
Trust, Templeton Institutional Funds, Inc., Templeton Real Estate
Securities Fund, Templeton Smaller Companies Growth Fund, Inc., Templeton
Variable Products Series Fund.
b) The information required by this Item 29 with respect to each
director and officer of Distributors is incorporated by reference to Part B
of this N-1A and Schedule A of Form BD filed by Distributors with the
Securities and Exchange Commission pursuant to the Securities Act of 1934
(SEC File No. 8-5889)
c) Not Applicable. Registrant's principal underwriter is an affiliated
person of an affiliated person of the Registrant.
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 are kept by the Registrant or its
shareholder services agent, Franklin/Templeton Investor Services, Inc., both of
whose address is 777 Mariners Island Blvd., San Mateo, CA 94404.
ITEM 31 MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 32 UNDERTAKINGS
a) The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee or trustees when requested in writing to do so by the record
holders of not less than 10 per cent of the Registrant's outstanding shares
to assist its shareholders in the communicating with other shareholders in
accordance with the requirements of Section 16(c) of the Investment Company
Act of 1940.
b) The Registrant hereby undertakes to comply with the information
requirement in Item 5A of the Form N-1A by including the required
information in the Trust's annual report and to furnish each person to whom
a prospectus is delivered a copy of the annual report upon request and
without charge.
c) The Registrant hereby undertakes to file a post-effective amendment
using financial statements for Franklin Natural Resources Fund which need
not be certified, within four to six months from the effective date of
Registrant's Registration Statement Post-Effective Amendment No. 14 under
the Securities Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of San
Mateo and the State of California, on the 11th day of September 1995.
FRANKLIN STRATEGIC SERIES
(Registrant)
By: RUPERT H. JOHNSON, JR., PRESIDENT
Rupert H. Johnson, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Amendment has been signed below by the following persons in the
capacities and on the dates indicated:
RUPERT H. JOHNSON, JR.* Principal Executive Officer and
Rupert H. Johnson, Jr. Trustee
Dated: September 11, 1995
MARTIN L. FLANAGAN* Principal Financial Officer
Martin L. Flanagan Dated: September 11, 1995
DIOMEDES LOO-TAM* Principal Accounting Officer
Diomedes Loo-Tam Dated: September 11, 1995
FRANK H. ABBOTT, III* Trustee
Frank H. Abbott, III Dated: September 11, 1995
HARRIS J. ASHTON* Trustee
Harris J. Ashton Dated: September 11, 1995
HARMON E. BURNS* Trustee
Harmon E. Burns Dated: September 11, 1995
S. JOSEPH FORTUNATO* Trustee
S. Joseph Fortunato Dated: September 11, 1995
DAVID W. GARBELLANO* Trustee
David W. Garbellano Dated: September 11, 1995
CHARLES B. JOHNSON* Trustee
Charles B. Johnson Dated: September 11, 1995
FRANK W.T. LAHAYE* Trustee
Frank W.T. LaHaye Dated: September 11, 1995
GORDON S. MACKLIN* Trustee
Gordon S. Macklin Dated: September 11, 1995
*By /s/ Larry L. Greene
Larry L. Greene, Attorney-in-Fact
(Pursuant to Power of Attorney previously filed)
FRANKLIN STRATEGIC SERIES
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B1(i) Agreement and Declaration of Trust of *
Franklin California 250 Growth Index Fund
as of January 22, 1991
EX-99.B1(ii) Certificate of Trust of Franklin California *
250 Growth Index Fund dated January 22, 1991
EX-99.B1(iii) Certificate of Amendment of Certificate of *
Trust to the Franklin California 250 Growth
Index Fund dated November 19, 1991
EX-99.B1(iv) Certificate of Amendment to the Certificate *
of Trust of Franklin Strategic Series dated
May 14, 1992
EX-99.B2(i) Amended and Restated By-Laws of Franklin *
California250 Growth Index Fund as of April
25, 1991
EX-99.B2(ii) Amendment to By-Laws dated October 27, 1994 *
EX-99.B5(i) Management Agreement between Registrant on *
behalf of Franklin Small Cap Growth Fund,
Franklin Global Healthcare Fund, Franklin
Global Utilities Fund and Franklin
Advisers, Inc. dated February 24, 1992
EX-99.B5(ii) Administration Agreement between Registrant *
on behalf of Franklin MidCap Growth Fund
and Franklin Advisers, Inc. dated April 12,
1993
EX-99.B5(iii) Administration Agreement between Registrant *
on behalf of FISCO MidCap Growth Fund and
Franklin Advisers, Inc. dated August 17,
1993
EX-99.B5(iv) Management Agreement between Registrant on *
behalf of Franklin Strategic Income Fund
and Franklin Advisers, Inc. effective May
24, 1994
EX-99.B5(v) Subadvisory Agreement between Franklin *
Advisers, Inc. and Templeton Investment
Counsel, Inc., providing for services to
Franklin Strategic Income Fund dated May
24, 1994
EX-99.B5(vi) Amended and Restated Management Agreement *
between Franklin Advisers, Inc. and the
Registrant, on behalf of Franklin
California Growth Fund effective July 12,
1993
EX-99.B6(i) Amended and Restated Distribution Agreement *
between Registrant and Franklin/Templeton
Distributors, Inc. on behalf of all Series
except Franklin Strategic Income Series
dated April 23, 1995
EX-99.B6(ii) Amended and Restated Distribution *
Agreements between Registrant and
Franklin/Templeton Distributors, Inc. on
behalf of Franklin Strategic Income Series
dated March 29, 1995
Ex-99.B6(iii) Forms of Dealer Agreements between Attached
Franklin/Templeton Distributors, Inc. and
dealers
EX-99.B8(i) Custodian Agreement between Registrant and *
Bank of America (Franklin Small Cap Growth
Fund) dated May 24, 1994
EX-99.B8(ii) Custodian Agreements between Registrant and *
Citibank Delaware
EX-99.B8(iii) Amendment to Custodian Agreement between Attached
Registrant and Bank of America NT & SA
dated April 12, 1995
EX-99.B11(i) Consent of Independent Auditors for Attached
Franklin Strategic Series dated
September 7, 1995
EX-99.B13(i) Letter of Understanding dated August 20, *
1991
EX-99.B13(ii) Letter of Understanding dated April 12, *
1995
EX-99.B14(i) Copy of Model Retirement Plan *
EX-99.B15(i) mended and Restated Distribution Plan *
between Franklin Strategic Series and
Franklin Templeton Distributors, Inc. on
behalf of Franklin California Growth Fund,
Franklin Small Cap Growth Fund, Franklin
Global Health Care Fund and Franklin Global
Utilities Fund dated July 1, 1993
EX-99.B15(ii) Distribution Plan between Franklin *
Strategic Series and Franklin Templeton
Distributors, Inc. on behalf of Franklin
Global Utilities Fund-Class II dated March
30, 1995
EX-99.B15(iii) Distribution Plan pursuant to Rule 12b-1 *
between Registrant, on behalf of the
Franklin Strategic Income Fund, and
Franklin Distributors, Inc. dated May 24,
1994
EX-99.B15(iv) Distribution Plan pursuant to Rule 12b-1 *
between the Registrant on behalf of the
Franklin Natural Resources Fund and
Franklin/Templeton Distributors, Inc. dated
June 1, 1995
EX-99.B16(i) Schedule for Computation *
EX-99.B17(i) Power of Attorney for Franklin Strategic *
Series dated February 16, 1995
EX-99.B17(ii) Power of Attorney for MidCap Growth *
Portfolio dated June 29, 1995
EX-99.B17(iii) Certificate of Secretary for Franklin *
Strategic Series dated February 16, 1995
EX-99.B17(iv) Certificate of Secretary for MidCap Growth *
Portfolio dated June 29, 1995
EX-99.B18(i) Form of Multiple Class Plan *
EX-27.B(i) Financial Data Schedule for Franklin Small *
Cap Growth Fund
* Incorporated by reference
DEALER AGREEMENT
Effective: May 1, 1995
Dear Securities Dealer:
Franklin/Templeton Distributors, Inc. ("we" or "us") invites you to participate
in the distribution of shares of the Franklin and Templeton mutual funds (the
"Funds") for which we now or in the future serve as principal underwriter,
subject to the terms of this Agreement. We will notify you from time to time of
the Funds which are eligible for distribution and the terms of compensation
under this Agreement. This Agreement supersedes any prior dealer agreements
between us, as stated in paragraph 18, below.
1. Licensing.
(a) You represent that you are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and are presently licensed to
the extent necessary by the appropriate regulatory agency of each state in which
you will offer and sell shares of the Funds. You agree that termination or
suspension of such membership with the NASD, or of your license to do business
by any state or federal regulatory agency, at any time shall terminate or
suspend this Agreement forthwith and shall require you to notify us in writing
of such action. If you are not a member of the NASD but are a dealer subject to
the laws of a foreign country, you agree to conform to the rules of fair
practice of such association. This Agreement is in all respects subject to Rule
26 of the Rules of Fair Practice of the NASD which shall control any provision
to the contrary in this Agreement.
(b) You agree to notify us immediately in writing if at any time you are
not a member in good standing of the Securities Investor Protection Corporation
("SIPC").
2. Sales of Fund Shares. You may offer and sell shares of each Fund and class
only at the public offering price which shall be applicable to, and in effect at
the time of, each transaction. The procedures relating to all orders and the
handling of them shall be subject to the terms of the then current prospectus
and statement of additional information (hereafter, the "prospectus") and new
account application, including amendments, for each such Fund, and our written
instructions from time to time. This Agreement is not exclusive, and either
party may enter into similar agreements with third parties.
3. Duties of Dealer: In General. You agree:
(a) To act as principal, or as agent on behalf of your customers, in all
transactions in shares of the Funds except as provided in paragraph 4 hereof.
You shall not have any authority to act as agent for the issuer (the Funds), for
the Principal Underwriter, or for any other dealer in any respect, nor will you
represent to any third party that you have such authority or are acting in such
capacity.
(b) To purchase shares only from us or from your customers.
(c) To enter orders for the purchase of shares of the Funds only from us
and only for the purpose of covering purchase orders you have already received
from your customers or for your own bona fide investment.
(d) To maintain records of all sales and redemptions of shares made
through you and to furnish us with copies of such records on request.
(e) To distribute prospectuses and reports to your customers in compliance
with applicable legal requirements, except to the extent that we expressly
undertake to do so on your behalf.
(f) That you will not withhold placing customers' orders for shares so as
to profit yourself as a result of such withholding or place orders for shares in
amounts just below the point at which sales charges are reduced so as to benefit
from a higher sales charge applicable to an amount below the breakpoint.
(g) That if any shares confirmed to you hereunder are repurchased or
redeemed by any of the Funds within seven business days after such confirmation
of your original order, you shall forthwith refund to us the full concession
allowed to you on such orders. We shall forthwith pay to the appropriate Fund
our share, if any, of the "charge" on the original sale and shall also pay to
such Fund the refund from you as herein provided. We shall notify you of such
repurchase or redemption within a reasonable time after settlement. Termination
or cancellation of this Agreement shall not relieve you or us from the
requirements of this subparagraph.
(h) That if payment for the shares purchased is not received within the
time customary or the time required by law for such payment, the sale may be
canceled forthwith without any responsibility or liability on our part or on the
part of the Funds, or at our option, we may sell the shares which you ordered
back to the Funds, in which latter case we may hold you responsible for any loss
to the Funds or loss of profit suffered by us resulting from your failure to
make payment as aforesaid. We shall have no liability for any check or other
item returned unpaid to you after you have paid us on behalf of a purchaser. We
may refuse to liquidate the investment unless we receive the purchaser's signed
authorization for the liquidation.
(i) That you shall assume responsibility for any loss to the Funds caused
by a correction made subsequent to trade date, provided such correction was not
based on any error, omission or negligence on our part, and that you will
immediately pay such loss to the Funds upon notification.
(j) That if on a redemption which you have ordered, instructions in proper
form, including outstanding certificates, are not received within the time
customary or the time required by law, the redemption may be canceled forthwith
without any responsibility or liability on our part or on the part of any Fund,
or at our option, we may buy the shares redeemed on behalf of the Fund, in which
latter case we may hold you responsible for any loss to the Fund or loss of
profit suffered by us resulting from your failure to settle the redemption.
4. Duties of Dealer: Retirement Accounts. In connection with orders for the
purchase of shares on behalf of an Individual Retirement Account, Self-Employed
Retirement Plan or other retirement accounts, by mail, telephone, or wire, you
shall act as agent for the custodian or trustee of such plans (solely with
respect to the time of receipt of the application and payments), and you shall
not place such an order until you have received from your customer payment for
such purchase and, if such purchase represents the first contribution to such a
plan, the completed documents necessary to establish the plan. You agree to
indemnify us and Franklin Templeton Trust Company and/or Templeton Funds Trust
Company as applicable for any claim, loss, or liability resulting from incorrect
investment instructions received from you which cause a tax liability or other
tax penalty.
5. Conditional Orders; Certificates. We will not accept from you any conditional
orders for shares of any of the Funds. Delivery of certificates for shares
purchased shall be made by the Funds only against constructive receipt of the
purchase price, subject to deduction for your concession and our portion of the
sales charge, if any, on such sale. No certificates will be issued unless
specifically requested.
6. Dealer Compensation.
(a) On each purchase of shares by you from us, the total sales charges and
your dealer concessions shall be as stated in each Fund's then current
prospectus, subject to NASD rules and applicable state and federal laws. Such
sales charges and dealer concessions are subject to reductions under a variety
of circumstances as described in the Funds' prospectuses. For an investor to
obtain these reductions, we must be notified at the time of the sale that the
sale qualifies for the reduced charge. If you fail to notify us of the
applicability of a reduction in the sales charge at the time the trade is
placed, neither we nor any of the Funds will be liable for amounts necessary to
reimburse any investor for the reduction which should have been effected.
(b) In accordance with the Funds' prospectuses, we or our affiliates may,
but are not obligated to, make payments to dealers from our own resources as
compensation for certain sales which are made at net asset value and are not
subject to any contingent deferred sales charges ("Qualifying Sales"). If you
notify us of a Qualifying Sale, we may make a contingent advance payment up to
the maximum amount available for payment on the sale. If any of the shares
purchased in a Qualifying Sale are redeemed within twelve months of the end of
the month of purchase, we shall be entitled to recover any advance payment
attributable to the redeemed shares by reducing any account payable or other
monetary obligation we may owe to you or by making demand upon you for repayment
in cash. We reserve the right to withhold advances to any dealer, if for any
reason we believe that we may not be able to recover unearned advances from such
dealer. In addition, dealers will generally be required to enter into a
supplemental agreement with us with respect to such compensation and the
repayment obligation prior to receiving any payments.
7. Redemptions. Redemptions or repurchases of shares will be made at the net
asset value of such shares, less any applicable deferred sales or redemption
charges, in accordance with the applicable prospectuses. Except as permitted by
applicable law, you agree not to purchase any shares from your customers at a
price lower than the redemption or repurchase prices then computed by the Funds.
You shall, however, be permitted to sell shares for the account of the record
owner to the Funds at the repurchase price then currently in effect for such
shares and may charge the owner a fair commission for handling the transaction.
8. Exchanges. Telephone exchange orders will be effective only for shares in
plan balance (uncertificated shares) or for which share certificates have been
previously deposited and may be subject to any fees or other restrictions set
forth in the applicable prospectuses. You may charge the shareholder a fair
commission for handling an exchange transaction. Exchanges from a Fund sold with
no sales charge to a Fund which carries a sales charge, and exchanges from a
Fund sold with a sales charge to a Fund which carries a higher sales charge may
be subject to a sales charge in accordance with the terms of each Fund's
prospectus. You will be obligated to comply with any additional exchange
policies described in each Fund's prospectus, including without limitation any
policy restricting or prohibiting "Timing Accounts" as therein defined.
9. Transaction Processing. All orders are subject to acceptance by us and by the
Fund or its transfer agent, and become effective only upon confirmation by us.
If required by law, each transaction shall be confirmed in writing on a fully
disclosed basis and if confirmed by us, a copy of each confirmation shall be
sent simultaneously to you if you so request. All sales are made subject to
receipt of shares by us from the Funds. We reserve the right in our discretion,
without notice, to suspend the sale of shares or withdraw the offering of shares
entirely. Telephone orders will be effected at the price(s) next computed on the
day they are received from you if, as set forth in each Fund's current
prospectus, they are received prior to the time the price of its shares is
calculated. Orders received after that time will be effected at the price(s)
computed on the next business day. All orders must be accompanied by payment in
U.S. dollars. Orders payable by check must be drawn payable in U.S. dollars on a
U.S. bank, for the full amount of the investment.
10. Multiple Classes. We may from time to time provide to you written compliance
guidelines or standards relating to the sale or distribution of Funds offering
multiple classes of shares with different sales charges and distribution-related
operating expenses. In addition, you will be bound by any applicable rules or
regulations of government agencies or self-regulatory organizations generally
affecting the sale or distribution of mutual funds offering multiple classes of
shares.
11. Rule 12b-1 Plans. You are also invited to participate in all Plans
adopted by the Funds (the "Plan Funds") pursuant to Rule 12b-1 under the 1940
Act.
To the extent you provide administrative and other services, including, but not
limited to, furnishing personal and other services and assistance to your
customers who own shares of a Plan Fund, answering routine inquiries regarding a
Fund, assisting in changing account designations and addresses, maintaining such
accounts or such other services as a Fund may require, to the extent permitted
by applicable statutes, rules, or regulations, we shall pay you a Rule 12b-1
servicing fee. To the extent that you participate in the distribution of Fund
shares which are eligible for a Rule 12b-1 distribution fee, we shall also pay
you a Rule 12b-1 distribution fee. All Rule 12b-1 servicing and distribution
fees shall be based on the value of shares attributable to customers of your
firm and eligible for such payment, and shall be calculated on the basis and at
the rates set forth in the compensation schedule then in effect. Without prior
approval by a majority of the outstanding shares of a Fund, the aggregate annual
fees paid to you pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in each Fund's prospectus, which amount shall be a
specified percent of the value of the Fund's net assets held in your customers'
accounts which are eligible for payment pursuant to this Agreement (determined
in the same manner as each Fund uses to compute its net assets as set forth in
its effective Prospectus).
You shall furnish us and each Fund with such information as shall reasonably be
requested by the Boards of Directors, Trustees or Managing General Partners
(hereinafter referred to as "Directors") of such Funds with respect to the fees
paid to you pursuant to the Schedule. We shall furnish to the Boards of
Directors of the Plan Funds, for their review on a quarterly basis, a written
report of the amounts expended under the Plans and the purposes for which such
expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Plan Funds' Directors, including such persons
who are not interested persons of the Plan Funds and who have no financial
interest in the Plans or any related agreement ("Rule 12b-1 Directors"). The
Plans or the provisions of this Agreement relating to such Plans may be
terminated at any time by the vote of a majority of the Plan Funds' Boards of
Directors, including Rule 12b-1 Directors, or by a vote of a majority of the
outstanding shares of the Plan Funds, on sixty (60) days' written notice,
without payment of any penalty. The Plans or the provisions of this Agreement
may also be terminated by any act that terminates the Underwriting Agreement
between us and the Plan Funds, and/or the management or administration agreement
between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc. or their
affiliates and the Plan Funds. In the event of the termination of the Plans for
any reason, the provisions of this Agreement relating to the Plans will also
terminate.
Continuation of the Plans and provisions of this Agreement relating to such
Plans are conditioned on Rule 12b-1 Directors being ultimately responsible for
selecting and nominating any new Rule 12b-1 Directors. Under Rule 12b-1,
Directors of any of the Plan Funds have a duty to request and evaluate, and
persons who are party to any agreement related to a Plan have a duty to furnish,
such information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, Plan Funds are permitted to implement or continue Plans or the provisions
of this Agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Boards of Directors are able to conclude that
the Plans will benefit the Plan Funds. Absent such yearly determination the
Plans and the provisions of this Agreement relating to the Plans must be
terminated as set forth above. In addition, any obligation assumed by a Fund
pursuant to this Agreement shall be limited in all cases to the assets of such
Fund and no person shall seek satisfaction thereof from shareholders of a Fund.
You agree to waive payment of any amounts payable to you by us under a Fund's
Plan of Distribution pursuant to Rule 12b-1 until such time as we are in receipt
of such fee from the Fund.
The provisions of the Rule 12b-1 Plans between the Plan Funds and us, insofar as
they relate to Plans, shall control over the provisions of this Agreement in the
event of any inconsistency.
12. Registration of Shares. Upon request, we shall notify you of the states or
other jurisdictions in which each Fund's shares are currently registered or
qualified for sale to the public. We shall have no obligation to register or
qualify, or to maintain registration or qualification of, Fund shares in any
state or other jurisdiction. We shall have no responsibility, under the laws
regulating the sale of securities in any U.S. or foreign jurisdiction, for the
qualification or status of persons selling Fund shares or for the manner of sale
of Fund shares. Except as stated in this paragraph, we shall not, in any event,
be liable or responsible for the issue, form, validity, enforceability and value
of such shares or for any matter in connection therewith, and no obligation not
expressly assumed by us in this Agreement shall be implied. Nothing in this
Agreement, however, shall be deemed to be a condition, stipulation or provision
binding any person acquiring any security to waive compliance with any provision
of the Securities Act of 1933, or of the rules and regulations of the Securities
and Exchange Commission, or to relieve the parties hereto from any liability
arising under the Securities Act of 1933.
13. Additional Registrations. If it is necessary to register or qualify the
shares in any foreign jurisdictions in which you intend to offer the shares of
any Funds, it will be your responsibility to arrange for and to pay the costs of
such registration or qualification; prior to any such registration or
qualification, you will notify us of your intent and of any limitations that
might be imposed on the Funds, and you agree not to proceed with such
registration or qualification without the written consent of the Funds and of
ourselves.
14. Fund Information. No person is authorized to give any information or make
any representations concerning shares of any Fund except those contained in the
Fund's current prospectus or in materials issued by us as information
supplemental to such prospectus. We will supply prospectuses, reasonable
quantities of supplemental sale literature, sales bulletins, and additional
information as issued. You agree not to use other advertising or sales material
relating to the Funds except that which (a) conforms to the requirements of any
applicable laws or regulations of any government or authorized agency in the
U.S. or any other country, having jurisdiction over the offering or sale of
shares of the Funds, and (b) is approved in writing by us in advance of such
use. Such approval may be withdrawn by us in whole or in part upon notice to
you, and you shall, upon receipt of such notice, immediately discontinue the use
of such sales literature, sales material and advertising. You are not authorized
to modify or translate any such materials without our prior written consent.
15. Indemnification. You further agree to indemnify, defend and hold harmless
the Principal Underwriter, the Funds, their officers, directors and employees
from any and all losses, claims, liabilities and expenses arising out of (1) any
alleged violation of any statute or regulation (including without limitation the
securities laws and regulations of the United States or any state or foreign
country) or any alleged tort or breach of contract, in or related to the offer
and sale by you of shares of the Funds pursuant to this Agreement (except to the
extent that our negligence or failure to follow correct instructions received
from you is the cause of such loss, claim, liability or expense), (2) any
redemption or exchange pursuant to telephone instructions received from you or
your agent or employees, or (3) the breach by you of any of the terms and
conditions of this Agreement.
16. Termination; Succession; Amendment. Each party to this Agreement may cancel
its participation in this Agreement by giving written notice to the other
parties. Such notice shall be deemed to have been given and to be effective on
the date on which it was either delivered personally to the other parties or any
officer or member thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other parties' Chief Legal Officers at the
addresses shown herein or in the most recent NASD Manual. This Agreement shall
terminate immediately upon the appointment of a Trustee under the Securities
Investor Protection Act or any other act of insolvency by you. The termination
of this Agreement by any of the foregoing means shall have no effect upon
transactions entered into prior to the effective date of termination. A trade
placed by you subsequent to your voluntary termination of this Agreement will
not serve to reinstate the Agreement. Reinstatement, except in the case of a
temporary suspension of a dealer, will only be effective upon written
notification by us. Unless terminated, this Agreement shall be binding upon each
party's successors or assigns. This Agreement may be amended by us at any time
by written notice to you and your placing of an order or acceptance of payments
of any kind after the effective date and receipt of notice of any such Amendment
shall constitute your acceptance of such Amendment.
17. Setoff; Dispute Resolution. Should any of your concession accounts with us
have a debit balance, we may offset and recover the amount owed from any other
account you have with us, without notice or demand to you. In the event of a
dispute concerning any provision of this Agreement, either party may require the
dispute to be submitted to binding arbitration under the commercial arbitration
rules of the NASD or the American Arbitration Association. Judgment upon any
arbitration award may be entered by any state or federal court having
jurisdiction. This Agreement shall be construed in accordance with the laws of
the State of California, not including any provision which would require the
general application of the law of another jurisdiction.
18. Acceptance; Cumulative Effect. This Agreement is cumulative and supersedes
any agreement previously in effect. It shall be binding upon the parties hereto
when signed by us and accepted by you. If you have a current dealer agreement
with us, your first trade or acceptance of payments from us after receipt of
this Agreement, as it may be amended pursuant to paragraph 16, above, shall
constitute your acceptance of its terms. Otherwise, your signature below shall
constitute your acceptance of its terms.
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By:
Greg Johnson, President
777 Mariners Island Blvd. San Mateo, CA 94404 Attention: Chief Legal Officer
(for legal notices only) 415/312-2000
700 Central Avenue St. Petersburg, Florida 33701-3628 813/823-8712
Dealer: If you have NOT previously signed a Dealer Agreement with us, please
complete and sign this section and return the original to us.
DEALER NAME
By:
(Signature)
Name:
Title:
Address:
Telephone:
NASD CRD #
Franklin Templeton Dealer #
(Internal Use Only)
95.89/104 (05/95)
MUTUAL FUND PURCHASE AND SALES AGREEMENT
FOR ACCOUNTS OF BANK AND TRUST COMPANY CUSTOMERS
Effective: July 1, 1995
1. INTRODUCTION
The parties to this Agreement are a bank or trust company ("Bank") and
Franklin/Templeton Distributors, Inc. ("FTDI"). This Agreement sets forth the
terms and conditions under which FTDI will execute purchases and redemptions of
shares of the Franklin or Templeton mutual funds for which FTDI now or in the
future serves as principal underwriter ("Funds"), at the request of the Bank
upon the order and for the account of Bank's customers ("Customers"). In this
Agreement, "Customer" shall include the beneficial owners of an account and any
agent or attorney-in-fact duly authorized or appointed to act on the owners'
behalf with respect to the account. FTDI will notify Bank from time to time of
the Funds which are eligible for distribution and the terms of compensation
under this Agreement. This Agreement is not exclusive, and either party may
enter into similar agreements with third parties. This Agreement supersedes any
prior agreements between the parties, as stated in paragraph 6(j), below.
2. REPRESENTATIONS AND WARRANTIES OF BANK
Bank warrants and represents to FTDI and the Funds that:
a) Bank is a "bank" as defined in Section 3(a)(6) of the Securities and
Exchange Act of 1934, as amended (the "34 Act"):
"The term 'bank' means (A) a banking institution organized under the laws
of the United States, (B) a member bank of the Federal Reserve System, (C) any
other banking institution, whether incorporated or not, doing business under the
law of any State or of the United States, a substantial portion of the business
of which consists of receiving deposits or exercising a fiduciary power similar
to those permitted to national banks under the authority of the Comptroller of
the Currency pursuant to the first section of Public Law 87-722 (12 U.S.C. 92a),
and which is supervised and examined by State or Federal authority having
supervision over banks, and which is not operated for the purpose of evading the
provisions of this title, and (D) a receiver, conservator, or other liquidating
agent of any institution or firm included in clauses (A), (B) or (C) of this
paragraph."
b) Bank is authorized to enter into this Agreement, and Bank's performance of
its obligations and receipt of consideration under this Agreement will not
violate any law, regulation, charter, agreement, or regulatory restriction to
which Bank is subject.
c) Bank has received all regulatory agency approvals and taken all legal and
other steps necessary for offering the services Bank will provide to Customers
in connection with this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL UNDERWRITER
FTDI warrants and represents to Bank that:
a) FTDI is a broker/dealer registered under the '34 Act.
b) FTDI is the principal underwriter of the Funds.
4. COVENANTS OF BANK
For each Transaction under this Agreement, Bank will:
a) be authorized to engage in the Transaction;
b) act as agent for the Customer;
c) act solely at the request of and for the account of the Customer;
d) not submit an order unless Bank has already received the order from the
Customer;
e) not submit a purchase order unless Bank has already delivered to the
Customer a copy of the then current prospectus for the Fund(s) whose shares
are to be purchased;
f) not withhold placing any Customer's order for the purpose of profiting
from the delay;
g) have no beneficial ownership of the securities in any purchase Transaction
(the Customer will have the full beneficial ownership), unless Bank is the
Customer (in which case, Bank will not engage in the Transaction unless the
Transaction is legally permissible for Bank); and
h) not accept or withhold any Fee otherwise allowed under Sections 5(d) and (e)
of this Agreement, if prohibited by the Employee Retirement Income Security Act
("ERISA") or trust or similar laws to which Bank is subject, in the case of
purchases or redemptions (hereinafter, "Transactions") of Fund shares involving
retirement plans, trusts, or similar accounts.
i) maintain records of all sales and redemptions of shares made through
Bank and to furnish FTDI with copies of such records on request.
j) distribute prospectuses, statements of additional information and reports to
Bank's customers in compliance with applicable legal requirements, except to the
extent that FTDI expressly undertakes to do so on behalf of Bank.
While this Agreement is in effect, Bank will:
k) not purchase any shares from any person at a price lower than the
redemption price then quoted by the applicable Fund;
l) repay FTDI the full Fee received by Bank under Sections 5(d) and (e) of this
Agreement, for any shares purchased under this Agreement which are repurchased
by the Fund within 7 business days after the purchase; in turn, FTDI shall pay
to the Fund the amount repaid by Bank and will notify Bank of any such
repurchase within a reasonable time;
m) in connection with orders for the purchase of shares on behalf of an
Individual Retirement Account, Self-Employed Retirement Plan or other retirement
accounts, by mail, telephone, or wire, Bank shall act as agent for the custodian
or trustee of such plans (solely with respect to the time of receipt of the
application and payments) and shall not place such an order until Bank has
received from its customer payment for such purchase and, if such purchase
represents the first contribution to such a plan, the completed documents
necessary to establish the plan. Bank agrees to indemnify FTDI and Franklin
Templeton Trust Company and/or Templeton Funds Trust Company as applicable for
any claim, loss, or liability resulting from incorrect investment instructions
received from Bank which cause a tax liability or other tax penalty.
n) be responsible for compliance with all laws and regulations, including
those of the applicable federal and state bank regulatory authorities, with
regard to Bank and Bank's Customers; and
o) immediately notify FTDI in writing at the address given below, should
Bank cease to be a bank as set forth in Section 2(a) of this Agreement.
5. TERMS AND CONDITIONS FOR TRANSACTIONS
a) Price
Transaction orders received from Bank will be accepted only at the public
offering price and in compliance with procedures applicable to each order as set
forth in the then current prospectus and statement of additional information
(hereinafter, collectively, "prospectus") for the applicable Fund. All orders
must be accompanied by payment in U.S. dollars. Orders payable by check must be
drawn payable in U.S. dollars on a U.S. bank, for the full amount of the
investment. All sales are made subject to receipt of shares by FTDI from the
Funds. FTDI reserves the right in its discretion, without notice, to suspend the
sale of shares or withdraw the offering of shares entirely.
b) Orders and Confirmations
All purchase orders are subject to acceptance or rejection by FTDI and by
the Fund or its transfer agent at their sole discretion, and become effective
only upon confirmation by FTDI. Transaction orders shall be made using the
procedures and forms required by FTDI from time to time. Orders received on any
business day after the time for calculating the price of Fund shares as set
forth in each Fund's current prospectus will be effected at the price determined
on the next business day. A written confirming statement will be sent to Bank
and to Customer upon settlement of each Transaction.
c) Multiple Class Guidelines
FTDI may from time to time provide to Bank written compliance guidelines or
standards relating to the sale or distribution of Funds offering multiple
classes of shares with different sales charges and distribution-related
operating expenses. In addition, Bank will be bound by any applicable rules or
regulations of government agencies or self-regulatory organizations generally
affecting the sale or distribution of mutual funds offering multiple classes of
shares.
d) Payments by Bank for Purchases
On the settlement date for each purchase, Bank shall either (i) remit the
full purchase price by wire transfer to an account designated by FTDI, or (ii)
following FTDI's procedures, wire the purchase price less the Fee allowed by
Section 5(e) of this Agreement. Twice monthly, FTDI will pay Bank Fees not
previously paid to or withheld by Bank. Each calendar month, FTDI, as
applicable, will prepare and mail an activity statement summarizing all
Transactions.
e) Fees and Payments
Where permitted by the prospectus for each Fund, a charge, concession, or
fee ("Fee") may be paid to Bank, related to services provided by Bank in
connection with Transactions. The amount of the Fee, if any, is set by the
relevant prospectus. Adjustments in the Fee are available for certain purchases,
and Bank is solely responsible for notifying FTDI when any purchase order is
qualified for such an adjustment. If Bank fails to notify FTDI of the
applicability of a reduction in the sales charge at the time the trade is
placed, neither FTDI nor any of the Funds will be liable for amounts necessary
to reimburse any investor for the reduction which should have been effected.
In accordance with the Funds' prospectuses, FTDI or its affiliates may, but
are not obligated to, make payments from their own resources to banks or dealers
as compensation for certain sales which are made at net asset value and are not
subject to any contingent deferred sales charges ("Qualifying Sales"). If Bank
notifies FTDI of a Qualifying Sale, FTDI may make a contingent advance payment
up to the maximum amount available for payment on the sale. If any of the shares
purchased in a Qualifying Sale are redeemed within twelve months of the end of
the month of purchase, FTDI shall be entitled to recover any advance payment
attributable to the redeemed shares by reducing any account payable or other
monetary obligation FTDI may owe to Bank or by making demand upon Bank for
repayment in cash. FTDI reserves the right to withhold advances to any bank or
dealer, if for any reason it believes that it may not be able to recover
unearned advances from such bank or dealer. In addition, banks and dealers will
generally be required to enter into a supplemental agreement with FTDI with
respect to such compensation and the repayment obligation prior to receiving any
payments.
f) Rule 12b-1 Plans
Bank is also invited to participate in all Plans adopted by the Funds (the
"Plan Funds") pursuant to Rule 12b-1 under the 1940 Act.
To the extent Bank provides administrative and other services, including,
but not limited to, furnishing personal and other services and assistance to
Bank's customers who own shares of a Plan Fund, answering routine inquiries
regarding a Fund, assisting in changing account designations and addresses,
maintaining such accounts or such other services as a Fund may require, to the
extent permitted by applicable statutes, rules, or regulations, FTDI shall pay
Bank Rule 12b-1 fees. All Rule 12b-1 fees shall be based on the value of shares
attributable to customers of Bank and eligible for such payment, and shall be
calculated on the basis and at the rates set forth in the compensation schedule
then in effect. Without prior approval by a majority of the outstanding shares
of a Fund, the aggregate annual fees paid to Bank pursuant to each Plan shall
not exceed the amounts stated as the "annual maximums" in each Fund's
prospectus, which amount shall be a specified percent of the value of the Fund's
net assets held in Bank's customers' accounts which are eligible for payment
pursuant to this Agreement (determined in the same manner as each Fund uses to
compute its net assets as set forth in its effective Prospectus).
Bank shall furnish FTDI and each Fund with such information as shall
reasonably be requested by the Board of Directors, Trustees or Managing General
Partners (hereinafter referred to as "Directors") of such Funds with respect to
the fees paid to Bank pursuant to the Schedule. FTDI shall furnish to the Boards
of Directors of the Plan Funds, for their review on a quarterly basis, a written
report of the amounts expended under the Plans and the purposes for which such
expenditures were made.
The Plans and provisions of any agreement relating to such Plans must be
approved annually by a vote of the Plan Funds' Directors, including such persons
who are not interested persons of the Plan Funds and who have no financial
interest in the Plans or any related agreement ("Rule 12b-1 Directors"). The
Plans or the provisions of this Agreement relating to such Plans may be
terminated at any time by the vote of a majority of the Plan Funds' Boards of
Directors, including Rule 12b-1 Directors, or by a vote of a majority of the
outstanding shares of the Plan Funds, on sixty (60) days' written notice,
without payment of any penalty. The Plans or the provisions of this Agreement
may also be terminated by any act that terminates the Underwriting Agreement
between FTDI and the Plan Funds, and/or the management or administration
agreement between Franklin Advisers, Inc. or Templeton Investment Counsel, Inc.
or their affiliates and the Plan Funds. In the event of the termination of the
Plans for any reason, the provisions of this Agreement relating to the Plans
will also terminate.
Continuation of the Plans and provisions of this Agreement relating to such
Plans are conditioned on Rule 12b-1 Directors being ultimately responsible for
selecting and nominating any new Rule 12b-1 Directors. Under Rule 12b-1,
Directors of any of the Plan Funds have a duty to request and evaluate, and
persons who are party to any agreement related to a Plan have a duty to furnish,
such information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, Plan Funds are permitted to implement or continue Plans or the provisions
of this Agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Boards of Directors are able to conclude that
the Plans will benefit the Plan Funds. Absent such yearly determination, the
Plans and the provisions of this Agreement relating to the Plans must be
terminated as set forth above. In addition, any obligation assumed by a Fund
pursuant to this Agreement shall be limited in all cases to the assets of such
Fund and no person shall seek satisfaction thereof from shareholders of a Fund.
Bank agrees to waive payment of any amounts payable to Bank by FTDI under a
Fund's Plan of Distribution pursuant to Rule 12b-1 until such time as FTDI is in
receipt of such fee from the Fund.
The provisions of the Rule 12b-1 Plans between the Plan Funds and FTDI,
insofar as they relate to Plans, shall control over the provisions of this
Agreement in the event of any inconsistency.
g) Other Distribution Services
From time to time, FTDI may offer telephone and other augmented services in
connection with Transactions under this Agreement. If Bank uses any such
service, Bank will be subject to the procedures applicable to the service,
whether or not Bank has executed any agreement required for the service.
h) Conditional Orders; Certificates
FTDI will not accept any conditional Transaction orders. Delivery of
certificates or confirmations for shares purchased shall be made by the Fund
conditional upon receipt of the purchase price, subject to deduction of any Fee.
No certificates will be issued unless specifically requested.
i) Cancellation of Orders
If payment for shares purchased is not received within the time customary
or the time required by law for such payment, the sale may be canceled without
notice or demand, and neither FTDI nor the Fund(s) shall have any responsibility
or liability for such a cancellation; alternatively, the unpaid shares may be
sold back to the Fund, and Bank shall be liable for any resulting loss to FTDI
or to the Fund(s). FTDI shall have no liability for any check or other item
returned unpaid to Bank after Bank has paid FTDI on behalf of a purchaser. FTDI
may refuse to liquidate the investment unless it receives the purchaser's signed
authorization for the liquidation.
j) Order Corrections
Bank shall assume responsibility for any loss to a Fund(s) caused by a
correction made subsequent to trade date, provided such correction was not based
on any error, omission or negligence on FTDI's part, and Bank will immediately
pay such loss to the Fund(s) upon notification.
k) Redemptions; Cancellation
Redemptions or repurchases of shares will be made at the net asset value of
such shares, less any applicable deferred sales or redemption charges, in
accordance with the applicable prospectuses. As agent, Bank may sell shares for
the account of the record owner to the Funds at the repurchase price then
currently in effect for such shares and may charge the owner a fair fee for
handling the transaction. If on a redemption which Bank has ordered,
instructions in proper form, including outstanding certificates, are not
received within the time customary or the time required by law, the redemption
may be canceled forthwith without any responsibility or liability on the part of
FTDI or any Fund, or at its option FTDI may buy the shares redeemed on behalf of
the Fund, in which latter case it may hold Bank responsible for any loss to the
Fund or loss of profit suffered by FTDI resulting from Bank's failure to settle
the redemption.
l) Exchanges
Telephone exchange orders will be effective only for shares in plan balance
(uncertificated shares) or for which share certificates have been previously
deposited and may be subject to any fees or other restrictions set forth in the
applicable prospectuses. Bank may charge the shareholder a fair fee for handling
an exchange transaction. Exchanges from a Fund sold with no sales charge to a
Fund which carries a sales charge, and exchanges from a Fund sold with a sales
charge to a Fund which carries a higher sales charge may be subject to a sales
charge in accordance with the terms of each Fund's prospectus. Bank will be
obligated to comply with any additional exchange policies described in each
Fund's prospectus, including without limitation any policy restricting or
prohibiting "Timing Accounts" as therein defined.
m) Qualification of Shares; Indemnification
Upon request, FTDI shall notify Bank of the states or other jurisdictions
in which each Fund's shares are currently registered or qualified for sale to
the public. FTDI shall have no obligation to register or qualify, or to maintain
registration or qualification of, Fund shares in any state or other
jurisdiction. FTDI shall have no responsibility, under the laws regulating the
sale of securities in any U.S. or foreign jurisdiction, for the qualification or
status of persons selling Fund shares or for the manner of sale of Fund shares.
Except as stated in this paragraph, FTDI shall not, in any event, be liable or
responsible for the issue, form, validity, enforceability and value of such
shares or for any matter in connection therewith, and no obligation not
expressly assumed by FTDI in this Agreement shall be implied. If it is necessary
to register or qualify shares of any Fund in any foreign jurisdictions in which
Bank intends to offer such shares, it will be Bank's responsibility to arrange
for and to pay the costs of such registration or qualification; prior to any
such registration or qualification Bank will notify FTDI of its intent and of
any limitations that might be imposed on the Funds and Bank agrees not to
proceed with such registration or qualification without the written consent of
the Funds and of FTDI.
Bank further agrees to indemnify, defend and hold harmless the Principal
Underwriter, the Funds, their officers, directors and employees from any and all
losses, claims, liabilities and expenses, arising out of (1) any alleged
violation of any statute or regulation (including without limitation the
securities laws and regulations of the United States or any state or foreign
country) or any alleged tort or breach of contract, in or related to the offer
and sale by Bank of shares of the Funds pursuant to this Agreement (except to
the extent that FTDI's negligence or failure to follow correct instructions
received from Bank is the cause of such loss, claim, liability or expense), (2)
any redemption or exchange pursuant to telephone instructions received from Bank
or its agents or employees, or (3) the breach by Bank of any of the terms and
conditions of this Agreement.
However, nothing in this Agreement shall be deemed to be a condition,
stipulation, or provision binding any person acquiring any security to waive
compliance with any provision of the Securities Act of 1933, or of the rules and
regulations of the Securities and Exchange Commission, or to relieve the parties
hereto from any liability arising under the Securities Act of 1933.
n) Prospectus and Sales Materials; Limit on Advertising
No person is authorized to give any information or make any representations
concerning shares of any Fund except those contained in the Fund's current
prospectus or in materials issued by FTDI as information supplemental to such
prospectus. FTDI will supply prospectuses, reasonable quantities of supplemental
sale literature, sales bulletins, and additional information as issued. Bank
agrees not to use other advertising or sales material relating to the Funds
except that which (a) conforms to the requirements of any applicable laws or
regulations of any government or authorized agency in the U.S. or any other
country, having jurisdiction over the offering or sale of shares of the Funds,
and (b) is approved in writing by FTDI in advance of such use. Such approval may
be withdrawn by FTDI in whole or in part upon notice to Bank, and Bank shall,
upon receipt of such notice, immediately discontinue the use of such sales
literature, sales material and advertising. Bank is not authorized to modify or
translate any such materials without the prior written consent of FTDI.
o) Customer Information
(1) Definition. For purposes of this paragraph 5(h)(iv), 'Customer
Information' means customer names and other identifying information pertaining
to Bank's mutual fund customers which is furnished by Bank to FTDI in the
ordinary course of business under this Agreement. Customer Information shall not
include any information obtained from other sources.
(2) Permitted Uses. FTDI may use Customer Information to fulfill its
obligations under this Agreement, the Distribution Agreements between the Funds
and FTDI, the Funds' prospectuses, or other duties imposed by law. In addition,
FTDI or its affiliates may use Customer Information in communications to
shareholders to market the Funds or other investment products or services,
including without limitation variable annuities, variable life insurance, and
retirement plans and related services. FTDI may also use Customer Information if
it obtains Bank's prior written consent.
(3) Prohibited Uses. Except as stated above, FTDI shall not disclose
Customer Information to third parties, and shall not use Customer Information in
connection with any advertising, marketing or solicitation of any products or
services, provided that Bank offers or soon expect to offer comparable products
or services to mutual fund customers and have so notified FTDI.
(4) Survival; Termination. The agreements described in this paragraph
5(h)(iv) shall survive the termination of this Agreement, but shall terminate as
to any account upon FTDI's receipt of valid notification of either the
termination of that account with Bank or the transfer of that account to another
bank or dealer.
6. GENERAL
a) Successors and Assignments
This Agreement binds Bank and FTDI and their respective heirs, successors
and assigns. Bank may not assign its right and duties under this Agreement
without the advance, written authorization of FTDI.
b) Paragraph Headings
The paragraph headings of this Agreement are for convenience only, and
shall not be deemed to define, limit, or describe the scope or intent of this
Agreement.
c) Severability
Should any provision of this Agreement be determined to be invalid or
unenforceable under any law, rule, or regulation, that determination shall not
affect the validity or enforceability of any other provision of this Agreement.
d) Waivers
There shall be no waiver of any provision of this Agreement except a
written waiver signed by Bank and FTDI. No written waiver shall be deemed a
continuing waiver or a waiver of any other provision, unless the waiver
expresses such intention.
e) Sole Agreement
This Agreement is the entire agreement of Bank and FTDI and supersedes all
oral negotiations and prior writings.
f) Governing Law
This Agreement shall be construed in accordance with the laws of the State
of California, not including any provision which would require the general
application of the law of another jurisdiction, and shall be binding upon the
parties hereto when signed by FTDI and accepted by Bank, either by Bank's
signature in the space provided below or by Bank's first trade entered after
receipt of this Agreement.
g) Arbitration
Should any of Bank's concession accounts with FTDI have a debit balance,
FTDI may offset and recover the amount owed from any other account Bank has with
FTDI, without notice or demand to Bank. Either party may submit any dispute
under this Agreement to binding arbitration under the commercial arbitration
rules of the American Arbitration Association. Judgment upon any arbitration
award may be entered by any state or federal court having jurisdiction.
h) Amendments
FTDI may amend this Agreement at any time by depositing a written notice of
the amendment in the U.S. mail, first class postage pre-paid, addressed to
Bank's address given below. Bank's placement of any Transaction order or
acceptance of any payments after the effective date and receipt of notice of any
such amendment shall constitute Bank's acceptance of the amendment.
i) Term and Termination
This Agreement shall continue in effect until terminated. FTDI or Bank may
terminate this Agreement at any time by written notice to the other, but such
termination shall not affect the payment or repayment of Fees on Transactions
prior to the termination date. Termination also will not affect the indemnities
given under this Agreement.
j) Acceptance; Cumulative Effect
This Agreement is cumulative and supersedes any agreement previously in
effect. It shall be binding upon the parties hereto when signed by FTDI and
accepted by Bank. If Bank has a current agreement with FTDI, Bank's first trade
or acceptance of payments from FTDI after receipt of this Agreement, as it may
be amended pursuant to paragraph 6(h), above, shall constitute Bank's acceptance
of the terms of this Agreement. Otherwise, Bank's signature below shall
constitute Bank's acceptance of these terms.
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By:
Greg Johnson, President
777 Mariners Island Blvd. San Mateo, CA 94404 Attention: Chief Legal Officer
(for legal notices only)
415/312-2000
700 Central Avenue St. Petersburg, Florida 33701-3628
813/823-8712
To the Bank or Trust Company: If you have not previously signed an agreement
with us for the sale of mutual fund shares to your customers, please complete
and sign this section and return the original to us.
BANK or TRUST COMPANY
(Firm's name)
By:
(Signature)
Name:
Title:Address:
Telephone:
(Franklin logo)
FRANKLIN
RESOURCES, INC.
777 Mariners Island Blvd.
San Mateo, CA 94404
415/312-5818
FAX 415/312-3528
Martin L. Flanagan CPA, CFA
Senior Vice President
Chief Financial Officer
April 12, 1995
Mr. Stephen H. Kilbuck
Vice President Corporate Banking
Bank of America, NT & SA
555 California Street, 41st Floor
San Francisco, CA 94104
Dear Steve:
Various Franklin Funds/Portfolios (the "Funds") and Bank of America,
National Trust and Savings Association ("Bank") are parties to custody
agreements (the "Agreements") as well as separate cash management and deposit
services arrangements.
By this Letter Agreement, each of the Funds and Bank desire to establish
the cash compensation to be paid by each Fund for services rendered to it by
Bank.
Effective April 1, 1995, commencing with the first statement prepared
thereafter each Fund will pay to Bank a monthly fee in cash equal to an annual
rate of 87.5/100 ths. (.875) basis points of the net asset value of each such
Funds domestic portfolios held in custody by Bank and nine and three-tenths
(9.3) basis points of the net asset value of each such Funds international
portfolios held in custody by Bank or held by foreign sub-custodians calculated
as of the last business day of the month. For purposes of calculating the
monthly fee, 000007291 will be used as the monthly factor for the domestic
portfolio and .0000775 will be used as the monthly factor for the international
portfolio. The obligation of each Fund is separate from the obligation of any
other Fund.
The purpose of this Letter of Agreement is to provide for a fair level of
compensation to Bank for its service. The fee is based on the assumption that
each Fund will continue to use services of a type and volume comparable to the
services currently used. The parties agree that any party may initiate
discussions concerning revisions to the terms of this Letter Agreement at any
time it believes the level of compensation to be inappropriate. The parties
further agree that any party may, upon at least sixty (60) days' written notice,
terminate this Letter Agreement with respect to that party. Upon its
termination, if the parties have not agreed to a substitute fee arrangement, any
party may also terminate all or some of the service provided by Bank upon
additional sixty (60) days' written notice.
On an ongoing basis, Bank will continue to prepare the monthly corporate
account analysis statements on behalf of each Fund, which estimates all revenues
and expenses for the parties' relationship. From time to time, Bank and any
Fund(s) may renegotiate the estimated "prices" used in the account analysis
process. The account analysis statement will provide a basis for any
negotiations between the parties on the appropriateness of the fee agreement as
embodied in this Letter Agreement. However, no payment of any kind shall be due
on account of any shortfall on the account analysis statement.
Sincerely,
Authorized Officer for Each Trust/Franklin
Fund Portfolio (List Attached)
By /s/ Martin L. Flanagan
Martin L. Flanagan
Executive Financial Officer
ACCEPTED AND AGREED TO BY:
BANK OF AMERICA, NT & SA
By /s/ Stephen H. Kilbuck
Title: Vice President
CONSENT OF INDEPENDENT AUDITORS
To the Board of Trustees
Franklin Strategic Series
We consent to the incorporation by reference in Post-Effective Amendment No. 16
to the Registration Statement of Franklin Strategic Series on Form N-1A (File
Nos. 33-39088 and 811-6243) of our report dated June 2, 1995 on our audit of the
financial statements and financial highlights of Franklin Strategic Series,
which report is included in the Annual Report to Shareholders for the year ended
April 30, 1995, which is incorporated by reference in the Registration
Statement.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Francisco, California
September 7, 1995
