FRANKLIN STRATEGIC SERIES, 497, 2000-09-05

FRANKLIN STRATEGIC SERIES
497, 2000-09-05

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Prospectus

FRANKLIN

STRATEGIC

SERIES

INVESTMENT STRATEGY

GROWTH FRANKLIN BIOTECHNOLOGY DISCOVERY FUND - CLASS A
Franklin Technology Fund - Class A, B & C

GLOBAL GROWTH FRANKLIN GLOBAL HEALTH CARE FUND - CLASS A, B & C

GLOBAL GROWTH FRANKLIN GLOBAL COMMUNICATIONS FUND - CLASS A, B & C
& INCOME

GROWTH & INCOME FRANKLIN NATURAL RESOURCES FUND - CLASS A

SEPTEMBER 1, 2000

[Insert Franklin Templeton Ben Head]
FRANKLIN TEMPELTON INVESTMENTS

The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUNDS

[Begin callout]
Information about each Fund you should know before investing
[End callout]

2 Franklin Biotechnology Discovery Fund

12 Franklin Technology Fund

21 Franklin Global Health Care Fund

33 Franklin Global Communications Fund

44 Franklin Natural Resources Fund

55 Distributions and Taxes

YOUR ACCOUNT

[Begin callout]
Information about sales charges, account transactions and services
[End callout]

56 Choosing a Share Class

61 Buying Shares

64 Investor Services

67 Selling Shares

69 Account Policies

73 Questions

FOR MORE INFORMATION

[Begin callout]
Where to learn more about each Fund
[End callout]

Back Cover

THE FUNDS

FRANKLIN BIOTECHNOLOGY DISCOVERY FUND

[Insert graphic of bullseye and arrows]GOAL AND STRATEGIES

GOAL The Fund's investment goal is to seek capital appreciation.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests at
least 65% of its assets in equity securities of biotechnology companies and
discovery research firms located anywhere in the world. The Fund invests a
substantial portion of its assets in smaller capitalization companies, which are
generally companies with a market capitalization of less than $1.5 billion at
the time of the Fund's investment, and may invest a small portion of its assets
in private or illiquid securities, such as late stage venture capital
financings.

[Begin callout]

The Fund normally invests at least 65% of its assets in equity securities of
biotechnology companies.

[End callout]

For the Fund's investment purposes, a biotechnology company is one that has at
least 50% of its earnings derived from biotechnology activities, or at least 50%
of its assets devoted to such activities, based on the company's most recent
fiscal year. Biotechnology activities are research, development, manufacture,
and distribution of various biotechnological or biomedical products, services,
and processes. This may include companies involved with genomics, genetic
engineering, and gene therapy. It also includes companies involved in the
application and development of biotechnology in areas such as health care,
pharmaceuticals, and agriculture. In addition to its equity investments in
biotechnology companies, the Fund may also invest up to 35% of its assets in
equity or debt securities of any type of foreign or U.S. issuer.

An equity security, or stock, represents a proportionate share of the ownership
of a company; its value is based on the success of the company's business, any
income paid to stockholders, the value of its assets, and general market
conditions. Common stocks and preferred stocks are examples of equity
securities. The Fund engages in naked short sales and short sales against the
box of equity securities when it believes that the sales present favorable
opportunities. In a naked short sale, the Fund sells a security that it does not
own to a purchaser at a specified price, while in a short sale against the box,
the Fund actually holds in its portfolio the securities which it has sold short.
The Fund will not sell any securities short if, after the sale, the total market
value of its open naked short positions would exceed 50% of its assets.

The Fund anticipates that under normal conditions, it will invest more of its
assets in U.S. securities than in securities of any other single country,
although the Fund may have more than 50% of its total assets in foreign
securities. The Fund may buy foreign securities that are traded in the U.S. or
in foreign markets, as well as American, European, and Global Depositary
Receipts. Depositary receipts are certificates typically issued by a bank or
trust company that give their holders the right to receive securities issued by
a foreign or domestic company.

The Fund does not accept any new accounts, other than retirement plan accounts.
If you are a shareholder of record, you may continue to add to your existing
account through new purchases, including purchases through reinvestment of
dividends or capital gains distributions. The Fund reserves the right to modify
this policy at any time.

PORTFOLIO SELECTION The manager is a research driven, fundamental investor,
pursuing a growth strategy. As a "bottom-up" investor focusing primarily on
individual securities, the manager chooses companies that it believes are
positioned for rapid growth in revenues, earnings or assets. The manager relies
on a team of analysts to provide in-depth industry expertise and uses both
qualitative and quantitative analysis to evaluate companies for distinct and
sustainable competitive advantages. Such advantages as a particular marketing
niche, proven technology, strong management and industry leadership are all
factors the manager believes point to strong growth potential.

TEMPORARY INVESTMENTS When the manager believes market or economic conditions
are unfavorable for investors, the manager may invest up to 100% of the Fund's
assets in a temporary defensive manner or hold a substantial portion of its
assets in cash, cash equivalents or other high quality short-term investments.
Temporary defensive investments generally may include money market fund shares,
money market instruments and short-term debt securities. The manager also may
invest in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity. In these circumstances, the
Fund may be unable to achieve its investment goal.

[Insert graphic of chart with line going up and down] MAIN RISKS

BIOTECHNOLOGY INDUSTRY By focusing on the biotechnology industry, the Fund
carries much greater risks of adverse developments than a fund that invests in a
wider variety of industries. Prices often change collectively without regard to
the merits of individual companies. The biotechnology industry is subject to
extensive government regulation. The industry will be affected by government
regulatory requirements, regulatory approval for new drugs and medical products,
patent considerations, product liability, and similar matters. For example, in
the past several years, the U.S. Congress has considered legislation concerning
health care reform and changes to the U.S. Food and Drug Administration's (FDA)
approval process. If such legislation is enacted it may affect the biotechnology
industry. In addition, this industry is characterized by competition and rapid
technological developments which may make a company's products or services
obsolete in a short period of time. As these factors impact the biotechnology
industry, the value of your shares may fluctuate significantly over relatively
short periods of time.

[Begin callout]
Because the securities the Fund holds fluctuate significantly in price, the
value of your investment in the Fund will go up and down. This means you could
lose money over short or even extended periods. The Fund's investments are
speculative and may drop sharply in value in response to adverse research and
development, regulatory, or market events.
[End callout]

Investors tend to react quickly to developments that affect the biotechnology
industry. In the past, the biotechnology sector has experienced considerable
volatility in reaction to research and other business developments which may
affect only one, or a few companies within the sector. In comparison to more
developed industries, there may be a thin trading market in biotechnology
securities, and adverse developments in the biotechnology industry may be more
likely to result in decreases in the value of biotechnology stocks.

Biotechnology companies are often small, start-up ventures whose products are
only in the research stage. Only a limited number of biotechnology companies
have reached the point of approval of products by the FDA and subsequent
commercial production and distribution of such products. Therefore, the market
value of investments in the biotechnology industry is often based upon
speculation and expectations about future products, research progress, and new
product filings with regulatory authorities.

There can be no assurance that the Fund will continue to have access to adequate
investment opportunities on terms that the manager believes to be favorable. The
Fund's investments are speculative and may drop sharply in value in response to
adverse research and development, regulatory, or market events.

The Fund's performance at times in the past has been positively affected by
highly favorable investment conditions in the biotechnology industry that are
likely not sustainable. Investors should not expect similar performance in the
future.

STOCKS While stocks historically have outperformed other asset classes over the
long term, they tend to go up and down more dramatically over the short term.
These price movements may result from factors affecting individual companies,
industries or the securities market as a whole.

SMALLER COMPANIES Smaller companies involve greater risks than larger, more
established companies and should be considered speculative. Historically,
smaller company securities have been more volatile in price than larger company
securities, especially over the short term. Among the reasons for the greater
price volatility are the less certain growth prospects of smaller companies, the
lower degree of liquidity in the markets for such securities, and the greater
sensitivity of smaller companies to changing economic conditions.

In addition, smaller companies may lack depth of management, may be unable to
generate funds necessary for growth or development, or may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Smaller companies may be particularly affected by
interest rate increases, as they may find it more difficult to borrow money to
continue or expand operations, or may have difficulty in repaying any loans
which are floating rate.

Initial public offerings (IPOs) of securities issued by unseasoned companies
with little or no operating history are risky and their prices are highly
volatile, but they can result in very large gains in their initial trading.
Attractive IPOs are often oversubscribed and may not be available to the Fund,
or only in very limited quantities. Thus, when the Fund's size is smaller, any
gains from IPOs will have an exaggerated impact on the Fund's reported
performance than when the Fund is larger. Although IPO investments have had a
positive impact on the Fund's performance in the past, there can be no assurance
that the Fund will have favorable IPO investment opportunities in the future.

CURRENCY EXCHANGE RATES. Foreign securities may be issued and traded in foreign
currencies. As a result, their values may be affected by changes in exchange
rates between foreign currencies and the U.S. dollar, as well as between
currencies of countries other than the U.S. For example, if the value of the
U.S. dollar goes up compared to a foreign currency, an investment traded in that
foreign currency will go down in value because it will be worth less U.S.
dollars. The impact of the euro, a relatively new currency adopted by certain
European countries to replace their national currencies, is unclear at this
time.

POLITICAL AND ECONOMIC DEVELOPMENTS. The political, economic and social
structures of some foreign countries may be less stable and more volatile than
those in the U.S. Investments in these countries may be subject to the risks of
internal and external conflicts, currency devaluations, foreign ownership
limitations and tax increases. It is possible that a government may take over
the assets or operations of a company or impose restrictions on the exchange or
export of currency or other assets. Some countries also may have different legal
systems that may make it difficult for the Fund to vote proxies, exercise
shareholder rights, and pursue legal remedies with respect to its foreign
investments.

TRADING PRACTICES. Brokerage commissions and other fees generally are higher for
foreign securities. Government supervision and regulation of foreign stock
exchanges, currency markets, trading systems and brokers may be less than in the
U.S. The procedures and rules governing foreign transactions and custody
(holding of the Fund's assets) also may involve delays in payment, delivery or
recovery of money or investments.

AVAILABILITY OF INFORMATION. Foreign companies may not be subject to the same
disclosure, accounting, auditing and financial reporting standards and practices
as U.S. companies. Thus, there may be less information publicly available about
foreign companies than about most U.S. companies.

LIMITED MARKETS. Certain foreign securities may be less liquid (harder to sell)
and more volatile than many U.S. securities. This means the Fund may at times be
unable to sell foreign securities at favorable prices.

SHORT SALES The Fund engages in naked short sales. In a naked short sale of a
security, the Fund must borrow the security to deliver it to the purchaser, and
later buy the same security in the market in order to return it to the lender.
Naked short sales carry risks of loss if the price of the security sold short
increases after the sale and the Fund must pay more for the security than it has
received from the purchaser in the short sale.

LIQUIDITY The Fund may invest up to 15% of its net assets in securities with a
limited trading market. Reduced liquidity may have an adverse impact on market
price and the Fund's ability to sell particular securities when necessary to
meet the Fund's liquidity needs or in response to a specific economic event.

DIVERSIFICATION The Fund is a non-diversified fund. It may invest a greater
portion of its assets in the securities of one issuer than a diversified fund.
The Fund may be more sensitive to economic, business, political or other changes
affecting similar issuers or securities, which may result in greater fluctuation
in the value of the Fund's shares. The Fund, however, intends to meet certain
tax diversification requirements.

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

[Begin callout]
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and are not insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other agency of the U.S. government. Mutual
fund shares involve investment risks, including the possible loss of principal.
[End callout]

[Insert graphic of a bull and a bear] PERFORMANCE

This bar chart and table show the volatility of the Fund's returns, which is one
indicator of the risks of investing in the Fund. The bar chart shows changes in
the Fund's returns from year to year over the past 2 calendar years. The table
shows how the Fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.

ANNUAL TOTAL RETURNS(1)

[Begin callout]
BEST
QUARTER:

Q4 '99
61.33%

WORST QUARTER:

Q3 '98
-10.57%
[End callout]

[Insert bar graph]

10.73% 97.91%
---------------- -------------
98 99

YEAR

AVERAGE ANNUAL TOTAL RETURNS

For the periods ended December 31, 1999

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (9/15/97)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Franklin Biotechnology Discovery Fund(2) 86.54% 32.99%
S&P 500(R) Index(3) 21.04% 24.26%
AMEX Biotechnology Index(4) 111.44% 46.27%
</TABLE>

1. Figures do not reflect sales charges. If they did, returns would be lower. As
of June 30, 2000, the Fund's year-to-date return was 61.73%.

2. Figures reflect sales charges.

All Fund performance assumes reinvestment of dividends and capital gains.

3. Source: Standard & Poor's Micropal. The S&P 500(R) Index is an unmanaged
group of widely held common stocks covering a variety of industries. It includes
reinvested dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

4. The unmanaged AMEX Biotechnology Index is an equal-dollar weighted index. It
is designed to measure the performance of a cross section of companies in the
biotechnology industry that are involved primarily in the use of biological
processes to develop products or provide services. It does not include
reinvested dividends.

FEES AND EXPENSES
[Insert graphic of percentage sign]

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Maximum sales charge (load) as a percentage of offering price 5.75%
Load imposed on purchases 5.75%
Maximum deferred sales charge (load) None(1)

Please see "Choosing a Share Class" on page 56 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

CLASS A
------------------------------------------------------------------------------
Management fees 0.47%
Distribution and service 0.31%

(12b-1) fees
Other expenses 0.35%
--------------------
Total annual Fund operating expenses 1.13%
--------------------

1. Except for investments of $1 million or more (see page 56) and purchases by
certain retirement plans without an initial sales charge.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year; and

- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

1. Assumes a contingent deferred sales charge (CDSC) will not apply.

MANAGEMENT

[Insert graphic of briefcase]

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94403, is the Fund's investment manager. Together, Advisers and its affiliates
manage over $229 billion in assets.

The team responsible for the Fund's management is:

KURT VON EMSTER CFA, VICE PRESIDENT OF ADVISERS

Mr. von Emster has been a manager of the Fund since 1997. He joined Franklin
Templeton Investments in 1989.

EVAN MCCULLOCH CFA, VICE PRESIDENT OF ADVISERS

Mr. McCulloch has been a manager of the Fund since 1997. He joined Franklin
Templeton Investments in 1992.

PAUL WALKER, PORTFOLIO MANAGER OF ADVISERS

Mr. Walker has been a manager of the Fund since May 2000. He joined Franklin
Templeton Investments in 1996.

The Fund pays Advisers a fee for managing the Fund's assets. For the fiscal year
ended April 30, 2000, the Fund paid 0.47% of its average daily net assets to the
manager for its services.

FINANCIAL HIGHLIGHTS

[Insert graphic of dollar bill]

This table presents the Fund's financial performance since its inception. This
information has been audited by PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
CLASS A YEAR ENDED APRIL 30,
------------------------------------------------
2000 1999 1998(1)
---------- ---------- ----------
PER SHARE DATA ($)
<S> <C> <C> <C>
Net asset value, beginning of year 23.41 26.89 25.00
---------- ---------- ----------
Net investment loss(2) (.23) (.10) (.05)
Net realized and unrealized gains (losses) 37.32 (2.96) 1.99
---------- ---------- ----------
Total from investment operations 37.09 (3.06) 1.94
---------- ---------- ----------
Distributions from net realized gains (.06) (.42) (.05)
---------- ---------- ----------
Net asset value, end of year 60.44 23.41 26.89
---------- ---------- ----------
Total return (%)(3) 158.78 (11.46) 7.78

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 918,473 69,450 73,546
Ratios to average net assets: (%)
Expenses 1.13 1.52 1.50(4)
Expenses excluding waiver and payments by affiliate 1.13 1.52 1.61(4)
Net investment loss (.40) (.40) (.44)(4)
Portfolio turnover rate (%) 40.87 97.62 75.50
</TABLE>

1. For the period September 15, 1997 (effective date) to April 30, 1998.

2. Based on average shares outstanding effective year ended April 30, 2000.

3. Total return does not include sales charges, and is not annualized.

4. Annualized.

FRANKLIN TECHNOLOGY FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES

GOAL The Fund's investment goal is capital appreciation.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests at
least 65% of its total assets in equity securities of companies expected to
benefit from the development, advancement, and use of technology.
These may include, for example, companies in the following areas:

- Information technology services, including Internet services, data
processing, technology consulting and implementation, and electronics
distributors;

- Computer software;

- Computing hardware, peripherals, and electronic components;

- Semiconductors, semiconductor fabrication equipment, and precision
instruments;

- Telecommunications, including communications equipment and services;

- Media and information services, including cable television,
broadcasting, satellite and media content;

- Health-care technology and biotechnology; and

- Aerospace and defense technologies.

The Fund may invest in companies of any size, and may, from time to time, invest
a significant portion of its assets in smaller companies. The Fund may invest up
to 35% of its total assets in foreign securities.

[Begin callout]

The Fund concentrates in equity securities of technology companies.

[End callout]

TEMPORARY INVESTMENTS When the manager believes market or economic conditions
are unfavorable for investors, the manager may invest up to 100% of the Fund's
assets in a temporary defensive manner or hold a substantial portion of its
assets in cash, cash equivalents or other high quality short-term investments.
Temporary defensive investments generally may include money market fund shares,
money market instruments or short-term debt securities. The manager also may
invest in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity. In these circumstances, the
Fund may be unable to achieve its investment goal.

[Insert graphic of chart with line going up and down] MAIN RISKS

Technology companies are subject to significant competitive pressures, such as
new market entrants, aggressive pricing, and competition for market share, and
the potential for falling profit margins. These companies also face the risks
that new services, equipment or technologies will not be accepted by consumers
and businesses or will become rapidly obsolete. These factors can affect the
profitability of technology companies and, as a result, the value of their
securities. In addition, many internet-related companies are in the emerging
stage of development and are particularly vulnerable to the risks of rapidly
changing technologies. Prices of these companies' securities historically have
been more volatile than other securities, especially over the short term.

[Begin callout]
Because the securities the Fund holds fluctuate in price, the value of your
investment in the Fund will go up and down. This means you could lose money over
short or even extended periods.
[End callout]

STOCKS While stocks historically have outperformed other asset classes over the
long term, they tend to go up and down more dramatically over the short-term.
These price movements may result from factors affecting individual companies,
industries or securities markets as a whole.

GROWTH STYLE STOCK INVESTING Growth stock prices reflect projections of future
earnings or revenues, and can, therefore, fall dramatically if the company fails
to meet those projections. Growth stocks may also be more expensive relative to
their earnings or assets compared to value or other stocks. Because the Fund's
manager uses an aggressive growth strategy, an investment in the Fund involves
greater risk and more volatility than an investment in a growth Fund investing
entirely in proven growth stocks.

For example, smaller companies may lack depth of management, may be unable to
generate funds necessary for growth or development, or may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Smaller companies may be particularly affected by
interest rate increases, as they may find it more difficult to borrow money to
continue or expand operations, or may have difficulty in repaying any loans
which are floating rate.

FOREIGN SECURITIES. Investing in foreign securities, including depositary
receipts, typically involves more risks than investing in U.S. securities.
Certain of these risks also may apply to securities of U.S. companies with
significant foreign operations. These risks can increase the potential for
losses in the Fund and affect its share price.

LIQUIDITY. The Fund may invest up to 15% of its net assets in securities with a
limited trading market. Reduced liquidity may have an adverse impact on market
price and the Fund's ability to sell particular securities when necessary to
meet the Fund's liquidity needs or in response to a specific economic event.

DIVERSIFICATION. The Fund is a non-diversified fund. It may invest a greater
portion of its assets in the securities of one issuer than a diversified fund.
The Fund may be more sensitive to economic, business, political or other changes
affecting similar issuers or securities, which may result in greater fluctuation
in the value of the Fund's shares. The Fund, however, intends to meet certain
tax diversification requirements.

PORTFOLIO TURNOVER. Because of the Fund's emphasis on technology stocks, the
Fund's portfolio turnover rate may exceed 100% annually, which may involve
additional expenses to the Fund, including portfolio transaction costs.

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

[Insert graphic of a bull and a bear] PERFORMANCE

Because the Fund is new, it does not have a full calendar year of performance.

[Insert graphic of percentage sign] FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) as a percentage of offering 5.75% 4.00% 1.99%
price
Load imposed on purchases 5.75% None 1.00%
Maximum deferred sales charge (load) None(1) 4.00%(2) 0.99%(3)
</TABLE>

Please see "Choosing a Share Class" on page 56 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)(4)

(12b-1) fees 0.35% 1.00% 1.00%
Other expenses 0.57% 0.57% 0.57%
--------------------------------------------------
Total annual Fund operating expenses 1.47% 2.12% 2.12%
--------------------------------------------------
</TABLE>

1. Except for investments of $1 million or more (see page 56) and purchases by
certain retirement plans without an initial sales charge.

2. Declines to zero after six years.

3. This is equivalent to a charge of 1% based on net asset value.

4. The management fees and distribution and service (12-b1)fees shown are based
on the Fund's maximum contractual amount. Other expenses are estimated.

5. The manager and administrator have agreed in advance to waive or limit their
respective fees and assume as their own expense certain expenses otherwise
payable by the Fund so that total annual Fund operating expenses do not exceed
1.40% for Class A, 2.05% for Class B and 2.05% for Class C for the current
fiscal year. After April 30, 2001, the manager and administrator may end this
arrangement at any time.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year; and

- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-----------------------------------------------------------------------------------
If you sell your shares at the end of the period:
<S> <C> <C>
CLASS A $716(1) $1,013
CLASS B $615 $ 964
CLASS C $412 $ 757
If you do not sell your shares:
CLASS B $215 $ 664
CLASS C $313 $ 757
</TABLE>

1. Assumes a contingent deferred sales charge (CDSC) will not apply.

[Insert graphic of briefcase] MANAGEMENT

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., P.O. Box 7777,
San Mateo, California 94403-7777, is the Fund's investment manager. Together,
Advisers and its affiliates manage over $229 billion in assets.

The team responsible for the Fund's management is:

CANYON CHAN CFA, VICE PRESIDENT OF ADVISERS

Mr. Chan has been a manager of the Fund since its inception. He joined Franklin
Templeton Investments in 1991.

CONRAD HERRMANN CFA, SENIOR VICE PRESIDENT OF ADVISERS

Mr. Herrmann has been a manager of the Fund since its inception. He joined
Franklin Templeton Investments in 1989.

IAN LINK CFA, Vice President of Advisers

Mr. Link has been a manager of the Fund since its inception. He joined Franklin
Templeton Investments in 1989.

The Fund pays Advisers a fee for managing the Fund's assets. The fee is equal to
an annual rate of:

- 0.550% of the value of net assets up to and including $500 million;

- 0.450% of the value of net assets over $500 million, up to and
including $1 billion;

- 0.400% of the value of net assets over $1 billion, up to and including
$1.5 billion;

- 0.350% of the value of net assets over $1.5 billion, up to and
including $6.5 billion;

- 0.325% of the value of net assets over $6.5 billion, up to and
including $11.5 billion;

- 0.300% of the value of net assets over $11.5 billion, up to and
including $16.5 billion;

- 0.290% of the value of net assets over $16.5 billion, up to and
including $19 billion;

- 0.280% of the value of net assets over $19 billion, up to and including
$21.5 billion; and

- 0.270% of the value of net assets over $21.5 billion.

FRANKLIN GLOBAL
HEALTH CARE FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES

GOAL The Fund's investment goal is to seek capital appreciation.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests at
least 70% of its total assets in the equity securities of health care companies
located throughout the world. The Fund will seek to invest in companies that
have, in the opinion of the manager, the potential for above average growth in
revenues and/or earnings. The Fund invests a substantial portion of its assets
in smaller capitalization companies, which are generally companies with a market
capitalization of less than $1.5 billion at the time of the Fund's investment.

[Begin callout]
The Fund normally invests at least 70% of its total assets in the equity
securities of U.S. and foreign health care companies.
[End callout]

For the Fund's investment purposes, a health care company is one that derives at
least 50% of its earnings or revenues from health care activities, or has
devoted at least 50% of its assets to such activities, based on the company's
most recent fiscal year. Health care activities include research, development,
production, or distribution of products and services in industries such as
pharmaceutical, biotechnology, health care facilities, medical supplies, medical
technology, managed care companies, health care related information systems,
and personal health care products. The manager believes that a portfolio of
global securities may provide a greater potential for investment participation
in present and future opportunities that may present themselves in the health
care related industries. In addition to its equity investments in health care
companies, the Fund may also invest up to 30% of its assets in equity or debt
securities of any type of foreign or U.S. issuer.

The Fund invests in securities of issuers in at least three different countries.
The Fund will not invest more than 40% of its net assets in any one country
other than the U.S. The Fund expects that a significant portion of its
investments will be in securities of domestic issuers. The Fund may buy
American, European, and Global Depositary Receipts. Depositary receipts are
certificates typically issued by a bank or trust company that give their holders
the right to receive securities issued by a foreign or domestic company.

TEMPORARY INVESTMENTS When the manager believes market or economic conditions
are unfavorable for investors, the manager may invest up to 100% of the Fund's
assets in a temporary defensive manner or hold a substantial portion of its
assets in cash, cash equivalents or other high quality short-term investments.
Temporary defensive investments generally may include money market fund shares,
money market instruments and short-term debt securities. The manager also may
invest in these types of securities or hold cash while looking for
suitable investment opportunities or to maintain liquidity. In these
circumstances, the Fund may be unable to achieve its investment goal.

[Insert graphic of chart with line going up and down] MAIN RISKS

HEALTH CARE INDUSTRY By focusing on the health care industry, the Fund carries
much greater risks of adverse developments than a fund that invests in a wider
variety of industries. The activities of health care companies are strongly
affected by government activities, regulation and legislation. Health care
companies may be funded or subsidized by federal and state governments. If
government subsidies are discontinued or reduced, the profitability of these
companies could be adversely affected. Stocks held by the Fund will be affected
by government policies on health care reimbursements, regulatory approval for
new drugs and medical instruments, and similar matters. Health care companies
are also subject to legislative risk, which is the risk of changes in the health
care system through legislation. Health care companies may face lawsuits related
to product liability issues. Also, many products and services provided by health
care companies are subject to rapid obsolescence. Price changes among stocks in
the health care sector are often affected by developments pertaining only to one
or a few companies and the value of an investment in the Fund may fluctuate
significantly over relatively short periods of time.

The Fund's investments in the health care industry include investments in
biotechnology companies. Investors tend to react quickly to developments that
affect the biotechnology industry. In comparison to more developed industries,
there may be a thin trading market in biotechnology securities, and adverse
developments in the biotechnology industry may be more likely to result in
decreases in the value of biotechnology stocks. Biotechnology companies are
often small, start-up ventures whose products are only in the research stage.
Only a limited number of biotechnology companies have reached the point of
approval of products by the U.S. Food and Drug Administration and subsequent
commercial production and distribution of such products. Therefore, the market
value of investments in the biotechnology industry is often based upon
speculation and expectations about future products, research progress, and new
product filings with regulatory authorities.

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

PERFORMANCE

[Insert graphic of bull and bear]

This bar chart and table show the volatility of the Fund's returns, which is one
indicator of the risks of investing in the Fund. The bar chart shows changes in
the Fund's returns from year to year over the past 7 calendar years. The table
shows how the Fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.

CLASS A ANNUAL TOTAL RETURNS(1)

[Begin callout]
BEST
QUARTER:

Q3 '95
22.17%

WORST QUARTER:

Q3 '98
-17.73%

[End callout]

[Insert bar graph]

YEAR

AVERAGE ANNUAL TOTAL RETURNS

For the periods ended December 31, 1999

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (2/14/92)
-------------------------------------------------------------------------------------------------------------------
Franklin Global Health
<S> <C> <C> <C>
Care Fund - Class A(2) -6.50% 11.40% 9.83%
S&P 500(R) Index(3) 21.04% 28.56% 20.22%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR
----------------------------------------------------------------------------------------------
<S> <C>
Franklin Global Health Care Fund - Class B(2) -5.47%
S&P 500(R) Index(3) 21.04%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (9/3/96)
-------------------------------------------------------------------------------- ------------------------------------
<S> <C> <C>
Franklin Global Health Care Fund - Class C(2) -3.39% 0.92%
S&P 500(R) Index(3) 21.04% 29.52%
</TABLE>

1. Figures do not reflect sales charges. If they did, returns would be lower. As
of June 30, 2000, the Fund's year-to-date return was 46.85% for Class A.

2. Figures reflect sales charges.

All Fund performance assumes reinvestment of dividends and capital gains.

FEES AND EXPENSES

[Insert graphic of percentage sign]

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load)
as a percentage of offering price 5.75% 4.00% 1.99%
Load imposed on purchases 5.75% None 1.00%
Maximum deferred sales charge (load) None(1) 4.00%(2) 0.99%(3)
</TABLE>

Please see "Choosing a Share Class" on page 56 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

(12b-1) fees
Other expenses 0.66% 0.66% 0.66%
----------------------------------------------------
Total annual Fund operating expenses 1.53% 2.28% 2.28%
----------------------------------------------------
Management fee waiver(4) (0.01%) (0.01%) (0.01%)
----------------------------------------------------
Net annual Fund operating expenses(4) 1.52% 2.27% 2.27%
----------------------------------------------------
</TABLE>

1. Except for investments of $1 million or more (see page 56) and purchases by
certain retirement plans without an initial sales charge.

2. Declines to zero after six years.

3. This is equivalent to a charge of 1% based on net asset value.

4. For the fiscal year ended April 30, 2000, the manager had agreed in advance
to reduce its fees to reflect reduced services resulting from the Fund's
investment in a Franklin Templeton money fund. This reduction is required by the
Fund's Board of Trustees and an order by the Securities and Exchange Commission.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year; and

- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------------------------------------
If you sell your shares at the end of the period:
<S> <C> <C> <C> <C>
CLASS A $721(1) $1,028 $1,356 $2,283
CLASS B $630 $1,009 $1,415 $2,417(2)
CLASS C $427 $ 802 $1,303 $2,679
If you do not sell your shares:
CLASS B $230 $ 709 $1,215 $2,417(2)
CLASS C $328 $ 802 $1,303 $2,679
</TABLE>

1. Assumes a contingent deferred sales charge (CDSC) will not apply.

2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.

MANAGEMENT

[Insert graphic of briefcase]

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94403, is the Fund's investment manager. Together, Advisers and its affiliates
manage over $229 billion in assets.

The team responsible for the Fund's management is:

KURT VON EMSTER CFA, VICE PRESIDENT OF ADVISERS

Mr. von Emster has been a manager of the Fund since 1992. He joined Franklin
Templeton Investments in 1989.

EVAN MCCULLOCH CFA, VICE PRESIDENT OF ADVISERS

Mr. McCulloch has been a manager of the Fund since 1994. He joined Franklin
Templeton Investments in 1992.

RUPERT H. JOHNSON, JR., PRESIDENT OF ADVISERS

Mr. Johnson has been a manager of the Fund since 1992. He joined Franklin
Templeton Investments in 1965.

The Fund pays Advisers a fee for managing the Fund's assets. For the fiscal year
ended April 30, 2000, management fees, before any advance waiver, were 0.62% of
the Fund's average daily net assets for its services. Under an agreement by the
manager to reduce its fees to reflect reduced services resulting from the Fund's
investment in a Franklin Templeton money fund, the Fund paid 0.61% of its
average daily net assets to the manager for its services. This reduction is
required by the Fund's Board of Trustees and an order by the Securities and
Exchange Commission.

FINANCIAL HIGHLIGHTS

[Insert graphic of dollar bill]

This table presents the Fund's financial performance for the past five years.
This information has been audited by PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
CLASS A YEAR ENDED APRIL 30,
2000 1999(1) 1998 1997(2) 1996
---------- ---------- ---------- ---------- ----------
PER SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 13.88 19.28 16.11 19.34 11.45
---------- ---------- ---------- ---------- ----------
Net investment income (loss)(3) (.12) (.16) (.14) (.06) .11
Net realized and unrealized
gains (losses) 6.53 (5.23) 4.58 (2.75) 8.96
---------- ---------- ---------- ---------- ----------
Total from investment operations 6.41 (5.39) 4.44 (2.81) 9.07
---------- ---------- ---------- ---------- ----------
Less dividends from net
investment income -- -- (.09) (.04) (.13)
Less distributions from net
realized gains -- (.01) (1.18) (.38) (1.05)
---------- ---------- ---------- ---------- ----------
Total distributions -- (.01) (1.27) (.42) (1.18)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year 20.29 13.88 19.28 16.11 19.34
========== ========== ========== ========== ==========
Total return (%)(4) 46.18 (27.95) 28.22 (14.71) 82.78

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 90,563 74,252 176,545 150,653 108,914
Ratios to average net assets: (%)
Expenses 1.52 1.34 1.15 1.14 .73
Expenses excluding waiver and
payments by affiliate 1.52 1.34 1.15 1.14 1.16
Net investment income (loss) (.70) (.72) (.67) (.39) .50
Portfolio turnover rate (%) 123.48 66.54 66.84 73.17 54.78
</TABLE>

CLASS B

<TABLE>
PER SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of year 13.84 16.97
------- -------
Net investment loss(3) (.26) (.03)
Net realized and unrealized gains 6.51 (3.10)
------- -------
Total from investment operations 6.25 (3.13)
Net asset value, end of year 20.09 13.84
------- -------
Total return (%)(4) 45.16 (18.44)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 3,037 208
Ratios to average net assets: (%)
Expenses 2.27 1.84(5)
Net investment loss (1.44) (1.22)(5)
Portfolio turnover rate (%) 123.48 66.54
</TABLE>

<TABLE>
<CAPTION>
CLASS C YEAR ENDED APRIL 30,

2000 1999 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PER SHARE DATA ($)
Net asset value, beginning of year 13.71 19.17 16.07 17.37
---------- ---------- ---------- ----------
Net investment loss(3) (.23) (.29) (.20) (.07)
Net realized and unrealized
gains (losses) 6.41 (5.16) 4.48 (.85)
---------- ---------- ---------- ----------
Total from investment operations 6.18 (5.45) 4.28 (.92)
---------- ---------- ---------- ----------
Less distributions from net
realized gains (.01) (1.18) (.38)
---------- ---------- ---------- ----------
Net asset value, end of year 19.89 13.71 19.17 16.07
========== ========== ========== ==========
Total return (%)(4) 45.08 (28.42) 27.22 (5.47)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 20,398 13,747 25,321 10,099
Ratios to average net assets: (%)
Expenses 2.27 2.07 1.90 1.92(5)
Net investment loss (1.44) (1.45) (1.44) (1.29)(5)
Portfolio turnover rate (%) 123.48 66.54 66.84 73.17
</TABLE>

1. For the period January 1, 1999 (effective date) to April 30, 1999, for Class
B.

2. For the period September 3, 1996 (effective date) to April 30, 1997, for
Class C.

3. Based on average shares outstanding effective year ended April 30, 2000.

4. Total return does not include sales charges, and is not annualized.

5. Annualized.

FRANKLIN GLOBAL
COMMUNICATIONS FUND

PRIOR TO NOVEMBER 15, 1999, THE FUND'S NAME WAS "FRANKLIN GLOBAL UTILITIES
FUND."

[Insert graphic of bullseye and arrows]GOAL AND STRATEGIES

GOAL The Fund's investment goal is to seek to provide total return, without
undue risk. Total return consists of both capital appreciation and current
dividend and interest income.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests at
least 65% of its total assets in equity securities of U.S. and non-U.S.
companies that are involved in the development, manufacture or sale of
communications services and communications equipment (communications companies).
These may include, for example, companies that provide:

- local and long distance telephone services or equipment;

- cellular and other wireless communications, paging, and local and wide
area network services or equipment;

- satellite, microwave, cable and other pay television services or
equipment; and

- internet-related services or equipment, including internet service
providers, web hosting and web content providers and internet portals.

[Begin callout]
The Fund concentrates in equity securities of U.S. and non-U.S. communications
companies.
[End callout]

In addition to its equity investments in communications companies, the Fund may
also invest up to 30% of its assets in equity or debt securities of any type of
foreign or U.S. issuer.

The Fund may buy communications companies anywhere in the world, including
emerging markets, but generally invests a greater percentage of its assets in
U.S. companies than any other single country. The Fund may also buy American,
European, and Global Depositary Receipts. Depositary receipts are certificates
typically issued by a bank or trust company that give their holders the right to
receive securities issued by a foreign or domestic company.

PORTFOLIO SELECTION The manager is a research driven, fundamental investor,
pursuing a disciplined investment strategy. Relying on a team of analysts to
provide in-depth industry expertise, the manager looks for companies that will
position the Fund to benefit from potential future technological advances in and
increasing worldwide demand for communications services and communications
equipment. As a "bottom-up" investor focusing primarily on individual
securities, the Fund's manager will focus on the market price of a company's
securities relative to its evaluation of the company's long-term earnings, asset
value and cash flow potential.

[Insert graphic of chart with line going up and down] MAIN RISKS

COMMUNICATIONS INDUSTRIES By concentrating in the industries in a single sector,
the Fund carries much greater risk of adverse developments affecting these
companies than a fund that invests in companies from a wide variety of
industries. The securities of communications companies may experience more price
volatility than securities of companies in other industries. For example,
communications companies are subject to significant competitive pressures, such
as new market entrants, aggressive pricing and competition for
market share and the potential for falling profit margins. These companies also
face the risks that new services, equipment or technologies will not be accepted
by consumers and businesses or will become rapidly obsolete. These factors can
affect the profitability of communications companies and, as a result, the value
of their securities. In addition, many wireless telecommunication and
internet-related companies are in the emerging stage of development and are
particularly vulnerable to the risks of rapidly changing technologies and market
conditions. Prices of these companies' securities historically have been more
volatile than other securities, especially over the short term. Portions of the
communications industry is also subject to government regulation which may
affect company profitability and share price.

[Begin callout]
Because the securities the Fund holds fluctuate in price with global market
conditions, currencies, and interest rate movements, the value of your
investment in the Fund will go up and down. This means you could lose money over
short or even extended periods.
[End callout]

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

PERFORMANCE

[Insert graphic of bull and bear]

This bar chart and table show the volatility of the Fund's returns, which is one
indicator of the risks of investing in the Fund. The bar chart shows changes in
the Fund's returns from year to year over the past 7 calendar years. The table
shows how the Fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.

CLASS A ANNUAL TOTAL RETURNS(1)

[Begin callout]
BEST
QUARTER:

Q4 '99
34.38%

WORST QUARTER:

Q3 '98
-12.94%
[End callout]

[Insert bar graph]

YEAR

AVERAGE ANNUAL TOTAL RETURNS

For the periods ended December 31, 1999

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (7/2/92)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Global Communications Fund - Class A(2) 42.85% 23.14% 18.54%
S&P 500(R) Index(3) 21.04% 28.56% 21.22%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR
-------------------------------------------------------------------------------------------
<S> <C>
Franklin Global Communications Fund - Class B(2) 46.44%
S&P 500(R) Index(3) 21.04%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (5/1/95)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Global Communications Fund - Class C(2) 47.91% 23.74%
S&P 500(R) Index(3) 21.04% 27.51%
</TABLE>

1. Figures do not reflect sales charges. If they did, returns would be lower. As
of June 30, 2000, the Fund's year-to-date return was -0.15% for Class A.

2. Figures reflect sales charges.

All Fund performance assumes reinvestment of dividends and capital gains.

FEES AND EXPENSES

[Insert graphic of percentage sign]

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum sales charge (load) as a percentage of offering price 5.75% 4.00% 1.99%
Load imposed on purchases 5.75% None 1.00%
Maximum deferred sales charge (load) None(1) 4.00%(2) 0.99%(3)
</TABLE>

Please see "Choosing a Share Class" on page 56 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management fees 0.54% 0.54% 0.54%
Distribution and service
(12b-1) fees 0.25% 1.00% 1.00%
Other expenses 0.22% 0.22% 0.22%
Total annual Fund operating expenses 1.01% 1.76% 1.76%
Management fee waiver(4) 0.02% 0.02% 0.02%
----------------------------------------------------
Net annual Fund operating expenses(4) 0.99% 1.74% 1.74%
====================================================
</TABLE>

1. Except for investments of $1 million or more (see page 56) and purchases by
certain retirement plans without an initial sales charge.

2. Declines to zero after six years.

3. This is equivalent to a charge of 1% based on net asset value.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year; and

- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS

If you sell your shares at the end of the period:
<S> <C> <C> <C> <C>
CLASS A $670(1) $872 $1,091 $1,718
CLASS B $577 $848 $1,144 $1,853(2)
CLASS C $374 $643 $1,034 $2,131
If you do not sell your shares:
CLASS B $177 $548 $ 944 $1,853(2)
CLASS C $275 $643 $1,034 $2,131
</TABLE>

1. Assumes a contingent deferred sales charge (CDSC) will not apply.

2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.

MANAGEMENT

[Insert graphic of briefcase]

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94403, is the Fund's investment manager. Together, Advisers and its affiliates
manage over $229 billion in assets.

The team responsible for the Fund's management is:

ALEX PETERS, PORTFOLIO MANAGER OF ADVISERS

Mr. Peters has been a manager of the Fund since 1998. He joined Franklin
Templeton Investments in 1992.

ALAN MUSCHOTT, PORTFOLIO MANAGER OF ADVISERS

Mr. Muschott has been a manager of the Fund since March 2000. He joined Franklin
Templeton Investments in 1998.

The Fund pays Advisers a fee for managing the Fund's assets. For the fiscal year
ended April 30, 2000, management fees, before any advance waiver, were 0.54% of
the Fund's average daily net assets. Under an agreement by the manager to reduce
its fees to reflect reduced services resulting from the Fund's investment in a
Franklin Templeton money fund, the Fund paid 0.52% of its average daily net
assets to the manager for its services. This reduction is required by the Fund's
Board of Trustees and an order by the Securities and Exchange Commission.

FINANCIAL HIGHLIGHTS

[Insert graphic of dollar bill]

This table presents the Fund's financial performance for the past five years.
This information has been audited by PricewaterhouseCoopers LLP.

<TABLE>
<CAPTION>
CLASS A YEAR ENDED APRIL 30,
-------------------------------------------------------------------------------------------------------------------------------
2000 1999(1) 1998 1997 1996
---------- ---------- ---------- ---------- ----------
PER SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 16.97 17.36 14.46 14.28 12.23
---------- ---------- ---------- ---------- ----------
Net investment income(2) .13 .27 .33 .42 .37
Net realized and unrealized
gains 6.20 .31 4.69 1.35 2.39
---------- ---------- ---------- ---------- ----------
Total from investment operations 6.33 .58 5.02 1.77 2.76
---------- ---------- ---------- ---------- ----------
Less dividends from net
investment income (.35) (.19) (.37) (.38) (.39)
Less distributions from net
realized gains (2.97) (.78) (1.75) (1.21) (.32)
---------- ---------- ---------- ---------- ----------
Total distributions (3.32) (.97) (2.12) (1.59) (.71)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year 19.98 16.97 17.36 14.46 14.28
========== ========== ========== ========== ==========
Total return (%)(3) 38.93 4.02 37.02 12.94 23.27

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 291,103 199,824 226,594 174,023 167,225
1,000) 3 4 4 3
Ratios to average net assets: (%)
Expenses .99 1.05 1.03 1.00 1.04
Net investment income .64 1.55 2.02 2.82 2.85
Portfolio turnover rate (%) 132.25 68.50 45.51 47.55 50.51
</TABLE>

<TABLE>
<CAPTION>
CLASS B 2000 1999
------------------------------------------------------------------

PER SHARE DATA ($)
<S> <C> <C>
Net asset value, beginning of year 16.92 15.84
-------- --------
Net investment income (loss)(2) (.08) .02
Net realized and unrealized gains 6.25 1.06
-------- --------
Total from investment operations 6.17 1.08
Less distributions from:
Net investment income (.32) --
Net realized gains (2.97) --
-------- --------
Total distributions (3.29) --
-------- --------
Net asset value, end of year 19.80 16.92
-------- --------

Total return (%)(3) 37.98 6.82

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 4,338 79
Ratios to average net assets: (%)
Expenses 1.74 1.80(4)
Net investment income (loss) (.38) .83(4)
Portfolio turnover rate (%) 132.25 68.50
</TABLE>

<TABLE>
<CAPTION>
CLASS C YEAR ENDED APRIL 30,

2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------

PER SHARE DATA ($)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 16.85 17.25 14.37 14.24 12.23
--------- --------- --------- --------- ---------
Net investment income (loss)(2) (.03) .14 .24 .32 .37
Net realized and unrealized gains 6.16 .32 4.66 1.33 2.32
--------- --------- --------- --------- ---------
Total from investment operations 6.13 .46 4.90 1.65 2.69
--------- --------- --------- --------- ---------
Less dividends from net
investment income (.22) (.08) (.27) (.31) (.36)
Less distributions from net
realized gains (2.97) (.78) (1.75) (1.21) (.32)
--------- --------- --------- --------- ---------
Total distributions (3.19) (.86) (2.02) (1.52) (.68)
--------- --------- --------- --------- ---------
Net asset value, end of year 19.79 16.85 17.25 14.37 14.24
========= ========= ========= ========= =========
Total return (%)(3) 37.93 3.19 36.21 12.04 22.63

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 33,216 16,807 16,324 8,467 2,727
Ratios to average net assets: (%)
Expenses 1.74 1.80 1.78 1.77 1.81
Net investment income (loss) (.14) .81 1.29 1.98 2.10
Portfolio turnover rate (%) 132.25 68.50 45.51 47.55 50.51
</TABLE>

1. For the period January 1, 1999 (effective date) to April 30, 1999.

2. Based on average shares outstanding effective year ended April 30, 2000.

3. Total return does not include sales charges, and is not annualized.

4. Annualized.

FRANKLIN NATURAL
RESOURCES FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES

GOAL The Fund's investment goal is to seek to provide high total return. Total
return consists of both capital appreciation and current dividend and interest
income.

MAIN INVESTMENT STRATEGIES Under normal market conditions, the Fund invests at
least 65% of its assets in the equity and debt securities of U.S. and foreign
companies in the natural resources sector. The Fund invests a substantial
portion of its assets in smaller capitalization companies, which are generally
companies with a market capitalization of less than $1.5 billion at the time of
the Fund's investment.

[Begin callout]
The Fund normally invests at least 65% of its assets in the equity and debt
securities of U.S. and foreign companies in the natural resources sector.
[End callout]

The Fund invests most of its assets in equity securities and in debt securities
convertible into equity securities. An equity security, or stock, represents a
proportionate share of the ownership of a company; its value is based on the
success of the company's business, any income paid to stockholders, the value of
its assets, and general market conditions. Common stocks and preferred stocks
are examples of equity securities. Debt securities represent the obligation of
the issuer to repay a loan of money to it, and generally pay interest to the
holder. Bonds, notes, and debentures are examples of debt securities.

Convertible securities have characteristics of both debt securities (which is
frequently the form in which they are first issued) and equity securities (which
is what they can be converted into).

The Fund expects to invest more of its assets in U.S. securities than in
securities of any other single country, but the Fund may invest more than 50% of
its total assets in foreign securities, including emerging market securities.
The Fund may also buy American Depositary Receipts. Depositary receipts are
certificates typically issued by a bank or trust company that give their holders
the right to receive securities issued by a foreign or domestic company.

[Insert graphic of chart with line going up and down] MAIN RISKS

NATURAL RESOURCES SECTOR By focusing on the natural resources sector, the Fund
carries much greater risks of adverse developments than a fund that invests in a
wider variety of industries. The securities of companies in the natural
resources sector may experience more price volatility than securities of
companies in other industries. Some of the commodities which these industries
use or provide are subject to limited pricing flexibility because of supply and
demand factors. Others are subject to broad price fluctuations as a result of
the volatility of the prices for certain raw materials and the instability of
supplies of other materials. These factors can affect the profitability of
companies in the natural resources sector and, as a result, the value of their
securities.

The Fund's concentration in the securities of companies with substantial natural
resource assets will expose the Fund to the price movements of natural resources
to a greater extent than a more broadly diversified mutual fund. Because the
Fund invests primarily in this economic sector, there is the risk that the Fund
will perform poorly during an economic downturn or a slump in demand for natural
resources.

SMALLER COMPANIES Smaller companies involve greater risks than larger, more
established companies and should be considered speculative. Historically,
smaller company securities have been more volatile in price than larger company
securities, especially over the short term. Among the reasons for the greater
price volatility are the less certain growth prospects of smaller companies, the
lower degree of liquidity in the markets for such securities and the greater
sensitivity of smaller companies to changing economic conditions.

FOREIGN SECURITIES Investing in foreign securities, including depositary
receipts, typically involves more risks than investing in U.S. securities.
Certain of these risks also may apply to securities of U.S. companies with
significant foreign operations. These risks can increase the potential for
losses in the Fund and affect its share price. In the natural resources sector,
many companies whose securities trade in the U.S. are nevertheless impacted by
many of these risks because they have operations in foreign countries, or may be
dependent upon commodities supplied by foreign countries.

CONVERTIBLE SECURITIES The value of convertible securities may rise and fall
with the market value of the underlying stock or, like a debt security, vary
with changes in interest rates and the credit quality of the issuer. A
convertible security tends to perform more like a stock when the underlying
stock price is high (because it is assumed it will be converted) and more like a
debt security when the underlying stock price is low (because it is assumed it
will not be converted). Because its value can be influenced by many different
factors, a convertible security is not as sensitive to interest rate changes as
a similar non-convertible debt security, and generally has less potential for
gain or loss than the underlying stock.

INCOME Since the Fund can only distribute what it earns, the Fund's
distributions to shareholders may decline when interest rates fall.

CREDIT An issuer of securities may be unable to make interest payments and repay
principal. Changes in an issuer's financial strength or in a security's credit
rating may affect a security's value and, thus, impact Fund performance.

INTEREST RATE When interest rates rise, debt security prices fall. The opposite
is also true: debt security prices rise when interest rates fall. In general,
securities with longer maturities are more sensitive to these price changes.

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

PERFORMANCE

[Insert graphic of bull and bear]

This bar chart and table show the volatility of the Fund's returns, which is one
indicator of the risks of investing in the Fund. The bar chart shows changes in
the Fund's returns from year to year over the past 4 calendar years. The table
shows how the Fund's average annual total returns compare to those of a
broad-based securities market index. Of course, past performance cannot predict
or guarantee future results.

CLASS A ANNUAL TOTAL RETURNS(1)

[Begin callout]
BEST
QUARTER:

Q2 '99
21.12%

WORST QUARTER:

Q3 '98
-19.58%
[End callout]

[Insert bar graph]
<TABLE>
<CAPTION>

YEAR

AVERAGE ANNUAL TOTAL RETURNS

For the periods ended December 31, 1999
<TABLE>
<CAPTION>

<S> <C> <C>
1 YEAR SINCE INCEPTION
(6/5/95)
--------------------------------------------------------------------------------
Franklin Natural Resources Fund - 25.85% 9.15%
Class A(2)
S&P 500(R)Index(3) 21.04% 26.95%
</TABLE>

1. Figures do not reflect sales charges. If they did, returns would be lower. As
of June 30, 2000, the Fund's year-to-date return was 19.87%.

2. Figures reflect sales charges.

All Fund performance assumes reinvestment of dividends and capital gains.

FEES AND EXPENSES

[Insert graphic of percentage sign]

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>

CLASS A
--------------------------------------------------------------------------------
<S> <C>
Maximum sales charge (load) as a
percentage of offering price 5.75%
Load imposed on purchases 5.75%
Maximum deferred sales charge (load) None(1)
</TABLE>

Please see "Choosing a Share Class" on page 56 for an explanation of how and
when these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>

CLASS A
--------------------------------------------------------------------------------
<S> <C>
Management fees(2) 0.62%
Distribution and service 0.33%
(12b-1) fees
Other expenses 0.49%
Total annual Fund operating expenses(2) 1.44%
Management fee waiver(2) 0.01%
-------------------
Net annual Fund operating expenses(2) 1.43%
===================
</TABLE>

1. Except for investments of $1 million or more (see page 56) and purchases by
certain retirement plans without an initial sales charge.

2. For the fiscal year ended April 30, 2000, the manager had agreed in advance
to limit its management fees. The manager also had agreed in advance to reduce
its fees to reflect reduced services resulting from the Fund's investment in a
Franklin Templeton money fund. With these reductions, management fees were 0.16%
and total annual fund operating expenses were 0.98%. The manager may end this
arrangement at any time upon notice to the Fund's Board of Trustees. The
manager, however, is required by the Fund's Board of Trustees and an order by
the Securities and Exchange Commission to reduce its fees if the Fund invests in
a Franklin Templeton money fund.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year; and

- The Fund's operating expenses remain the same.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
<TABLE>
<CAPTION>

1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
If you sell your shares at the end of the period:
CLASS A $712(1) $1,001 $1,312 $2,190
</TABLE>

1. Assumes a contingent deferred sales charge (CDSC) will not apply.

MANAGEMENT

[Insert graphic of briefcase]

Franklin Advisers, Inc. (Advisers), 777 Mariners Island Blvd., San Mateo, CA
94403, is the Fund's investment manager. Together, Advisers and its affiliates
manage over $229 billion in assets.

The team responsible for the Fund's management is:

MICHAEL R. WARD, PORTFOLIO MANAGER OF ADVISERS

Mr. Ward has been a manager of the Fund since 1999. He joined Franklin Templeton
Investments in 1992.

STEVE LAND, PORTFOLIO MANAGER OF ADVISERS

Mr. Land has been a manager of the Fund since 1999. He joined Franklin Templeton
Investments in 1997.

The Fund pays Advisers a fee for managing the Fund's assets. For the fiscal year
ended April 30, 2000, management fees, before any advance waiver, were 0.62% of
the Fund's average daily net assets. Under an agreement by the manager to limit
its fees and to reduce its fees to reflect reduced services resulting from the
Fund's investment in a Franklin Templeton money fund, the Fund paid 0.16% of its
average daily net assets to the manager for its services. The manager may end
this arrangement at any time upon notice to the Fund's Board of Trustees.

FINANCIAL HIGHLIGHTS

[Insert graphic of dollar bill]

This table presents the Fund's financial performance since its inception. This
information has been audited by PricewaterhouseCoopers LLP.
<TABLE>
<CAPTION>

CLASS A YEAR ENDED APRIL 30,
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996(1)
---------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of year 13.25 15.46 14.07 13.14 10.00
---------------------------------------------------------------------
Net investment income(2) .05 .12 .10 .09 .08
Net realized and unrealized gains (losses)

2.52 (2.21) 2.26 1.25 3.22
---------------------------------------------------------------------
Total from investment operations 2.57 (2.09) 2.36 1.34 3.30
---------------------------------------------------------------------
Dividends from net investment income (.08) (.12) (.09) (.09) (.06)
Distributions from net realized gains -- -- (.88) (.32) (.10)
---------------------------------------------------------------------
Total distributions (.08) (.12) (.97) (.41) (.16)

Net asset value, end of year 15.74 13.25 15.46 14.07 13.14
======================================================================
Total return (%)(3) 19.47 (13.42) 17.57 10.23 33.36

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year ($ x 1,000) 41,106 44,014 62,274 45,386 9,909
Ratios to average net assets: (%)
Expenses .98 .97 .96 .98 .99(4)
Expenses excluding waiver and payments
by affiliate 1.43 1.47 1.31 1.31 1.77(4)
Net investment income .39 .97 .67 .72 1.16(4)
Portfolio turnover rate (%) 81.52 74.03 72.93 46.31 59.0(4)
</TABLE>

For the period June 5, 1995 (effective date) to April 30, 1996.

Based on average shares outstanding effective year ended April 30, 2000.

3. Total return does not include sales charges, and is not annualized.

4. Annualized.

[Insert graphic of dollar

signs and stacks of coins] DISTRIBUTIONS AND TAXES

INCOME AND CAPITAL GAINS DISTRIBUTIONS Each Fund intends to pay a dividend at
least annually representing substantially all of its net investment income and
any net realized capital gains. The amount of these distributions will vary and
there is no guarantee the Funds will pay dividends.

To receive a distribution, you must be a shareholder on the record date. The
record dates for the Funds' distributions will vary. Please keep in mind that if
you invest in a Fund shortly before the record date of a distribution, any
distribution will lower the value of the Fund's shares by the amount of the
distribution and you will receive some of your investment back in the form of a
taxable distribution. If you would like information on upcoming record dates for
the Funds' distributions, please call 1-800/DIAL BEN(R).

TAX CONSIDERATIONS In general, Fund distributions are taxable to you as either
ordinary income or capital gains. This is true whether you reinvest your
distributions in additional Fund shares or receive them in cash. Any capital
gains a Fund distributes are taxable to you as long-term capital gains no matter
how long you have owned your shares.

[Begin callout]
Backup Withholding

By law, a Fund must withhold 31% of your taxable distributions and redemption
proceeds if you do not provide your correct social security or taxpayer
identification number and certify that you are not subject to backup
withholding, or if the IRS instructs a Fund to do so.

[End callout]

Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.

When you sell your shares of a Fund, you may have a capital gain or loss. For
tax purposes, an exchange of your Fund shares for shares of a different Franklin
Templeton fund is the same as a sale.

Fund distributions and gains from the sale or exchange of your shares generally
will be subject to state and local taxes. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax advisor about the
federal, state, local or foreign tax consequences of your investment in a Fund.

YOUR ACCOUNT

[Insert graphic of pencil marking an "X"] CHOOSING A SHARE CLASS

Each class has its own sales charge and expense structure, allowing you to
choose the class that best meets your situation. Your investment representative
can help you decide.
<TABLE>
<CAPTION>

CLASS A CLASS B CLASS C
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
- Initial sales charge of - No initial sales charge - Initial sales charge of
5.75% or less 1%

- Deferred sales charge of - Deferred sales charge of - Deferred sales charge of
1% on purchases of $1 million 4% on shares you sell within 1% on shares you sell within
or more sold within 12 months the first year, declining to 18 months
1% within six years and
eliminated after that

- Lower annual expenses than - Higher annual expenses - Higher annual expenses
Class B or C due to lower than Class A (same as Class than Class A (same as Class
distribution fees C) due to higher B) due to higher
distribution fees. Automatic distribution fees. No
conversion to Class A shares conversion to Class A
after eight years, reducing shares, so annual expenses
future annual expenses. do not decrease.
</TABLE>

SALES CHARGES - CLASS A
<TABLE>
<CAPTION>

THE SALES CHARGE MAKES UP THIS % WHICH EQUALS THIS % OF
WHEN YOU INVEST THIS AMOUNT OF THE OFFERING PRICE YOUR NET INVESTMENT
--------------------------- -------------------------------- ---------------------
<S> <C> <C>
Under $50,000 5.75 6.10
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 2.50 2.56
$500,000 but under $1 million 2.00 2.04
</TABLE>

INVESTMENTS OF $1 MILLION OR MORE If you invest $1 million or more, either as a
lump sum or through our cumulative quantity discount or letter of intent
programs (see page 59), you can buy Class A shares without an initial sales
charge. However, there is a 1% contingent deferred sales charge (CDSC) on any
shares you sell within 12 months of purchase. The way we calculate the CDSC is
the same for each class (please see page 58).

DISTRIBUTION AND SERVICE (12B-1) FEES Class A has a distribution plan, sometimes
known as a Rule 12b-1 plan, that allows Biotechnology Discovery Fund, Natural
Resources Fund, and Technology Fund to pay distribution fees of up to 0.35% per
year and Communications Fund and Health Care Fund to pay distribution fees of up
to 0.25% per year to those who sell and distribute Class A shares and
provide other services to shareholders. Because these fees are paid out of Class
A's assets on an on-going basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales charges.

SALES CHARGES - CLASS B -
COMMUNICATIONS FUND, HEALTH CARE FUND AND TECHNOLOGY FUND

IF YOU SELL YOUR SHARES
WITHIN THIS MANY YEARS AFTER THIS % IS DEDUCTED FROM
BUYING THEM YOUR PROCEEDS AS A CDSC
---------------------------- -----------------------
<S> <C>
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
</TABLE>

With Class B shares, there is no initial sales charge. However, there is a CDSC
if you sell your shares within six years, as described in the table above. The
way we calculate the CDSC is the same for each class (please see page 58). After
8 years, your Class B shares automatically convert to Class A shares, lowering
your annual expenses from that time on.

MAXIMUM PURCHASE AMOUNT The maximum amount you may invest in Class B shares at
one time is $249,999. We place any investment of $250,000 or more in Class A
shares, since a reduced initial sales charge is available and Class A's annual
expenses are lower.

RETIREMENT PLANS Class B shares are available to certain retirement plans,
including IRAs (of any type), Franklin Templeton Bank & Trust 403(b) plans, and
Franklin Templeton Bank & Trust qualified plans with participant or earmarked
accounts.

DISTRIBUTION AND SERVICE (12B-1) FEES Class B has a distribution plan, sometimes
known as a Rule 12b-1 plan that allows each Fund to pay distribution and other
fees of up to 1% per year for the sale of Class B shares and for services
provided to shareholders. Because these fees are paid out of Class B's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

SALES CHARGES - CLASS C -

COMMUNICATIONS FUND, HEALTH CARE FUND AND TECHNOLOGY FUND

WHICH EQUALS THIS
THE SALES CHARGE MAKES UP % OF YOUR NET
WHEN YOU INVEST THIS AMOUNT THIS % OF THE OFFERING PRICE INVESTMENT
--------------------------- ------------------------- -------------------------------
<S> <C> <C>
Under $1 million 1.00 1.01
</TABLE>

We place any investment of $1 million or more in Class A shares, since there is
no initial sales charge and Class A's annual expenses are lower.

CDSC There is a 1% contingent deferred sales charge (CDSC) on any Class C shares
you sell within 18 months of purchase. The way we calculate the CDSC is the same
for each class (please see below).

DISTRIBUTION AND SERVICE (12B-1) FEES Class C has a distribution plan, sometimes
known as a Rule 12b-1 plan, that allows each Fund to pay distribution and other
fees of up to 1% per year for the sale of Class C shares and for services
provided to shareholders. Because these fees are paid out of Class C's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

CONTINGENT DEFERRED SALES CHARGE (CDSC) - CLASS A, B & C

The CDSC for each class is based on the current value of the shares being sold
or their net asset value when purchased, whichever is less. There is no CDSC on
shares you acquire by reinvesting your dividends or capital gains distributions.

[Begin callout]
The HOLDING PERIOD FOR THE CDSC begins on the day you buy your shares. Your
shares will age one month on that same date the next month and each following
month.

For example, if you buy shares on the 18th of the month, they will age one month
on the 18th day of the next month and each following month.
[End callout]

To keep your CDSC as low as possible, each time you place a request to sell
shares we will first sell any shares in your account that are not subject to a
CDSC. If there are not enough of these to meet your request, we will sell the
shares in the order they were purchased. We will use this same method if you
exchange your shares into another Franklin Templeton fund (please see page 65
for exchange information).

SALES CHARGE REDUCTIONS AND WAIVERS

If you qualify for any of the sales charge reductions or waivers below, please
let us know at the time you make your investment to help ensure you receive the
lower sales charge.

QUANTITY DISCOUNTS We offer several ways for you to combine your purchases in
Franklin Templeton funds to take advantage of the lower sales charges for large
purchases of Class A shares.

[Begin callout]
FRANKLIN TEMPLETON FUNDS include all of the U.S. registered mutual funds of
Franklin Templeton Investments, except Franklin Templeton Variable Insurance
Products Trust and Templeton Capital Accumulator Fund, Inc.
[End callout]

- CUMULATIVE QUANTITY DISCOUNT - lets you combine all of your shares in
Franklin Templeton funds for purposes of calculating the sales charge. You
also may combine the shares of your spouse, and your children or
grandchildren, if they are under the age of 21. Certain company and
retirement plan accounts also may be included.

- LETTER OF INTENT (LOI) - expresses your intent to buy a stated dollar
amount of shares over a 13-month period and lets you receive the same sales
charge as if all shares had been purchased at one time. We will reserve a
portion of your shares to cover any additional sales charge that may apply
if you do not buy the amount stated in your LOI.

To sign up for these programs, complete the appropriate section of your account
application.

REINSTATEMENT PRIVILEGE If you sell shares of a Franklin Templeton fund, you may
reinvest some or all of the proceeds within 365 days without an initial sales
charge. The proceeds must be reinvested within the same share class, except
proceeds from the sale of Class B shares will be reinvested in Class A shares.

If you paid a CDSC when you sold your Class A or C shares, we will credit your
account with the amount of the CDSC paid but a new CDSC will apply. For Class B
shares reinvested in Class A, a new CDSC will not apply, although your account
will not be credited with the amount of any CDSC paid when you sold your Class B
shares.

Proceeds immediately placed in a Franklin Bank Certificate of Deposit (CD) also
may be reinvested without an initial sales charge if you reinvest them within
365 days from the date the CD matures, including any rollover.

This privilege does not apply to shares you buy and sell under our exchange
program. Shares purchased with the proceeds from a money fund may be subject to
a sales charge.

SALES CHARGE WAIVERS Class A shares may be purchased without an initial sales
charge or CDSC by various individuals , institutions and retirement plans or by
investors who reinvest certain distributions and proceeds within 365 days.
Certain investors also may buy Class C shares without an initial sales charge.
The CDSC for each class may be waived for certain redemptions and distributions.
If you would like information about available sales charge waivers, call your
investment representative or call Shareholder Services at 1-800/632-2301. For
information about retirement plans, you may call Retirement Services at
1-800/527-2020. A list of available sales charge waivers also may be found in
the Statement of Additional Information (SAI).

GROUP INVESTMENT PROGRAM Allows established groups of 11 or more investors to
invest as a group. For sales charge purposes, the group's investments are added
together. There are certain other requirements and the group must have a purpose
other than buying Fund shares at a discount.

[Insert graphic of a paper with lines and someone writing]
BUYING SHARES
<TABLE>
<CAPTION>

MINIMUM INVESTMENTS
--------------------------------------------------------------------------------
<S> <C> <C>
INITIAL ADDITIONAL
--------------------------------------------------------------------------------
Regular accounts $1,000 $50
--------------------------------------------------------------------------------

Automatic investment plans $50 ($25 for an $50 ($25 for an
Education IRA) Education IRA)
--------------------------------------------------------------------------------
UGMA/UTMA accounts $100 $50
--------------------------------------------------------------------------------
Retirement accounts no minimum no minimum
(other than IRAs, IRA rollovers,
Education IRAs or Roth IRAs)
--------------------------------------------------------------------------------
IRAs, IRA rollovers, Education
IRAs or Roth IRAs $250 $50
--------------------------------------------------------------------------------
Broker-dealer sponsored
wrap account programs $250 $50
--------------------------------------------------------------------------------
Full-time employees, officers,
trustees and directors of Franklin Templeton
entities, and their immediate family members $100 $50
--------------------------------------------------------------------------------
</TABLE>

Please note that you may only buy shares of a fund eligible for sale in
your state or jurisdiction.

ACCOUNT APPLICATION The Biotechnology Discovery Fund is closed to new investors,
except retirement plan accounts and broker-dealer sponsored wrap programs. If
you were a shareholder of record as of August 31, 2000, you may continue to add
to your account, subject to your applicable minimum additional investment
amount, or buy additional shares through the reinvestment of dividend or capital
gain distributions. The Fund reserves the right to modify this policy at any
time.

For the remaining Funds, if you are opening a new account, please complete and
sign the enclosed account application. Make sure you indicate the share class
you have chosen. If you do not indicate a class, we will place your purchase in
Class A shares. To save time, you can sign up now for services you may want on
your account by completing the appropriate sections of the application (see
"Investor Services" on page 64). For example, if you would like to link one of
your bank accounts to your Fund account so that you may use electronic fund
transfers to and from your bank account to buy and sell shares, please complete
the bank information section of the application. We will keep your bank
information on file for future purchases and redemptions.
<TABLE>
<CAPTION>

BUYING SHARES
--------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
--------------------------------------------------------------------------------
<S> <C> <C>
[Insert graphic of hands Contact your investment Contact your investment
shaking] representative representative
THROUGH YOUR INVESTMENT
REPRESENTATIVE
-------------------------------------------------------------------------------------------------------------------------------
[Insert graphic of phone] If you have another Franklin Templeton Before requesting a telephone purchase, please make
fund account with your bank account sure we have your bank account information on file. If
BY PHONE information on file, you may open a new we do not have this information, you will need to send
account by phone. written instructions with your bank's name and address,
(Up to $100,000 per day) a voided check or savings account deposit slip, and a
To make a same day investment, please signature guarantee if the bank and Fund accounts do
1-800/632-2301 call us by 1:00 p.m. Pacific time or the not have at least one common owner.
close of the New York Stock Exchange,
whichever is earlier.

To make a same day investment, please call us by 1:00
p.m. Pacific time or the close of the New York Stock
Exchange, whichever is earlier.
-------------------------------------------------------------------------------------------------------------------------------
Make your check payable to the Fund. Make your check payable to the Fund. Include your
account number on the check.
[Insert graphic of Mail the check and your signed
envelope] application to Investor Services. Fill out the deposit slip from your account statement.
If you do not have a slip, include a note with your
BY MAIL name, the Fund name, and your account number.

Mail the check and deposit slip or note to Investor
Services.
------------------------------------------------------------------------------------------------------------------------------------
[Insert graphic of three Call to receive a wire control number Call to receive a wire control number and wire
lightning bolts] and wire instructions. instructions.

Wire the funds and mail your signed To make a same day wire investment, please call us by
BY WIRE application to Investor Services. Please 1:00 p.m. Pacific time and make sure your wire arrives
include the wire control number or your by 3:00 p.m.
1-800/632-2301 new account number on the application.

(or 1-650/312-2000 To make a same day wire investment,
collect) please call us by 1:00 p.m. Pacific time
and make sure your wire arrives by 3:00
p.m.
------------------------------------------------------------------------------------------------------------------------------------
[Insert graphic of two Call Shareholder Services at the number Call Shareholder Services at the number below or our
arrows pointing in below, or send signed written automated TeleFACTS system, or send signed written
opposite directions] instructions. The TeleFACTS system instructions.
cannot be used to open a new account.
BY EXCHANGE
(Please see page 65 for information on (Please see page 65 for information on exchanges.)
exchanges.)
TeleFACTS(R)

1-800/247-1753

(around-the-clock access)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Franklin Templeton Investor Services P.O. Box 997151,
Sacramento, CA 95899-9983
Call toll-free: 1-800/632-2301
(Monday through Friday 5:30 a.m. to 5:00 p.m., Pacific time
Saturday 6:30 a.m. to 2:30 p.m., Pacific time)

[Insert graphic of person with a headset] INVESTOR SERVICES

AUTOMATIC INVESTMENT PLAN This plan offers a convenient way for you to invest in
a Fund by automatically transferring money from your checking or savings account
each month to buy shares. To sign up, complete the appropriate section of your
account application and mail it to Investor Services. If you are opening a new
account, please include the minimum initial investment of $50 ($25 for an
Education IRA) with your application.

AUTOMATIC PAYROLL DEDUCTION You may invest in a Fund automatically by
transferring money from your paycheck to the Fund by electronic funds transfer.
If you are interested, indicate on your application that you would like to
receive an Automatic Payroll Deduction Program kit.

DISTRIBUTION OPTIONS You may reinvest distributions you receive from a Fund in
an existing account in the same share class* of the Fund or another Franklin
Templeton fund. Initial sales charges and CDSCs will not apply if you reinvest
your distributions within 365 days. You can also have your distributions
deposited in a bank account, or mailed by check. Deposits to a bank account may
be made by electronic funds transfer.

[Begin callout]
For Franklin Templeton Bank & Trust retirement plans, special forms may be
needed to receive distributions in cash. Please call 1-800/527-2020 for
information.
[End callout]

Please indicate on your application the distribution option you have chosen,
otherwise we will reinvest your distributions in the same share class of the
Fund.

*Class B and C shareholders may reinvest their distributions in Class A shares
of any Franklin Templeton money fund.

RETIREMENT PLANS Franklin Templeton Investments offers a variety of retirement
plans for individuals and businesses. These plans require separate applications
and their policies and procedures may be different than those described in this
prospectus. For more information, including a free retirement plan brochure or
application, please call Retirement Services at 1-800/527-2020.

TELEFACTS(R) Our TeleFACTS system offers around-the-clock access to information
about your account or any Franklin Templeton fund. This service is available
from touch-tone phones at 1-800/247-1753. For a free TeleFACTS brochure, call
1-800/DIAL BEN.

TELEPHONE PRIVILEGES You will automatically receive telephone privileges when
you open your account, allowing you and your investment representative to buy,
sell or exchange your shares and make certain other changes to your account by
phone.

For accounts with more than one registered owner, telephone privileges also
allow the Funds to accept written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone. For all
other transactions and changes, all registered owners must sign the
instructions. In addition, our telephone exchange privilege allows you to
exchange shares by phone from a fund account requiring two or more signatures
into an identically registered money fund account requiring only one signature
for all transactions. This type of telephone exchange is available as long as
you have telephone exchange privileges on your account.

As long as we take certain measures to verify telephone requests, we will not be
responsible for any losses that may occur from unauthorized requests. Of course,
you can decline telephone purchase, exchange or redemption privileges on your
account application.

EXCHANGE PRIVILEGE You can exchange shares between most Franklin Templeton funds
within the same class*, generally without paying any additional sales charges.
If you exchange shares held for less than six months, however, you may be
charged the difference between the initial sales charge of the two funds if the
difference is more than 0.25%. If you exchange shares from a money fund, a sales
charge may apply no matter how long you have held the shares.

*Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange into
Class A without any sales charge. Advisor Class shareholders of another Franklin
Templeton fund also may exchange into Class A without any sales charge. Advisor
Class shareholders who exchange their shares for Class A shares and later decide
they would like to exchange into another fund that offers Advisor Class may do
so.

[Begin callout]
An EXCHANGE is really two transactions: a sale of one fund and the purchase of
another. In general, the same policies that apply to purchases and sales apply
to exchanges, including minimum investment amounts. Exchanges also have the same
tax consequences as ordinary sales and purchases.
[End callout]

Exchanges into Biotechnology Discovery Fund from other Franklin Templeton funds
will be accepted only to add to an existing account and not to establish a new
account, other than a retirement plan account or investors in wrap programs.

Generally exchanges may only be made between identically registered accounts,
unless you send written instructions with a signature guarantee. Any CDSC will
continue to be calculated from the date of your initial investment and will not
be charged at the time of the exchange. The purchase price for determining a
CDSC on exchanged shares will be the price you paid for the original shares. If
you exchange shares subject to a CDSC into a Class A money fund, the time your
shares are held in the money fund will not count towards the CDSC holding
period.

If you exchange your Class B shares for the same class of shares of another
Franklin Templeton fund, the time your shares are held in that fund will count
towards the eight year period for automatic conversion to Class A shares.

Because excessive trading can hurt Fund performance, operations and
shareholders, each Fund, effective November 1, 2000, reserves the right to
revise or terminate the exchange privilege, limit the amount or number of
exchanges, reject any exchange, or restrict or refuse purchases if (i) the Fund
or its manager believes the Fund would be harmed or unable to invest
effectively, or (ii) the Fund receives or anticipates simultaneous orders that
may significantly affect the Fund (please see "Market Timers" on page 70).

*Class Z shareholders of Franklin Mutual Series Fund Inc. may exchange into
Class A without any sales charge. Advisor Class shareholders of another Franklin
Templeton fund also may exchange into Class A of Biotechnology Discovery Fund,
Communications Fund and Health Care Fund without any sales charge. Advisor Class
shareholders who exchange their shares for Class A shares and later decide they
would like to exchange into another fund that offers Advisor Class may do so.

SYSTEMATIC WITHDRAWAL PLAN This plan allows you to automatically sell your
shares and receive regular payments from your account. A CDSC may apply to
withdrawals that exceed certain amounts. Certain terms and minimums apply.
To sign up, complete the appropriate section of your application.

[Insert graphic of a certificate] SELLING SHARES

You can sell your shares at any time. Please keep in mind that a contingent
deferred sales charge (CDSC) may apply if you are a shareholder of the
Biotechnology Discovery Fund. Please also keep in mind that if you sell all the
shares in your account, your account will be closed and you will not be able to
buy additional Fund shares or to reopen your account.

SELLING SHARES IN WRITING Generally, requests to sell $100,000 or less can be
made over the phone or with a simple letter. Sometimes, however, to protect you
and the Fund we will need written instructions signed by all registered owners,
with a signature guarantee for each owner, if:

[Begin callout]
A SIGNATURE GUARANTEE helps protect your account against fraud.

You can obtain a signature guarantee at most banks and securities dealers.

A notary public CANNOT provide a signature guarantee.
[End callout]

- you are selling more than $100,000 worth of shares

- you want your proceeds paid to someone who is not a registered owner

- you want to send your proceeds somewhere other than the address of
record, or preauthorized bank or brokerage firm account

We also may require a signature guarantee on instructions we receive from an
agent, not the registered owners, or when we believe it would protect the Fund
against potential claims based on the instructions received.

SELLING RECENTLY PURCHASED SHARES If you sell shares recently purchased with a
check or draft, we may delay sending you the proceeds until your check or draft
has cleared, which may take seven business days or more. A certified or
cashier's check may clear in less time.

REDEMPTION PROCEEDS Your redemption check will be sent within seven days after
we receive your request in proper form. We are not able to receive or pay out
cash in the form of currency.

Redemption proceeds may be delayed if we have not yet received your signed
account application.

RETIREMENT PLANS You may need to complete additional forms to sell shares in a
Franklin Templeton Bank & Trust retirement plan. For participants under age
59 1/2, tax penalties may apply. Call Retirement Services at 1-800/527-2020 for
details.

SELLING SHARES
--------------------------------------------------------------------------------
TO SELL SOME OR ALL OF YOUR SHARES
--------------------------------------------------------------------------------
[Insert graphic of hands shaking]

Contact your investment representative
<TABLE>
<CAPTION>

THROUGH YOUR INVESTMENT
REPRESENTATIVE
----------------------------------------------------------------------------------------------------------
<S> <C>
[Insert graphic of envelope] Send written instructions and endorsed share certificates (if you
hold share certificates) to Investor Services. Corporate,
BY MAIL partnership or trust accounts may need to send additional documents.

Specify the Fund, the account number and the dollar value or number
of shares you wish to sell. If you own both Class A and B shares,
also specify the class of shares, otherwise we will sell your Class
A shares first. Be sure to include all necessary signatures and any
additional documents, as well as signature guarantees if required.

A check will be mailed to the name(s) and address on the account,
or otherwise according to your written instructions.
----------------------------------------------------------------------------------------------------------
[Insert graphic of phone] As long as your transaction is for $100,000 or less, you do not
hold share certificates and you have not changed your address by
BY PHONE phone within the last 15 days, you can sell your shares by phone.

----------------------------------------------------------------------------------------------------------
[Insert graphic of three lightning You can call or write to have redemption proceeds sent to a bank
bolts] account. See the policies above for selling shares by mail or
phone.

Before requesting to have redemption proceeds sent to a bank
BY ELECTRONIC FUNDS TRANSFER (ACH) account, please make sure we have your bank account information on
file. If we do not have this information, you will need to send
written instructions with your bank's name and address, a voided
check or savings account deposit slip, and a signature guarantee if
the bank and Fund accounts do not have at least one common owner.

If we receive your request in proper form by 1:00 p.m. Pacific
time, proceeds sent by ACH generally will be available within two
to three business days.
----------------------------------------------------------------------------------------------------------
[Insert graphic of two arrows Obtain a current prospectus for the fund you are considering.
pointing in opposite directions]
Call Shareholder Services at the number below or our automated
BY EXCHANGE TeleFACTS system, or send signed written instructions. See the
policies above for selling shares by mail or phone.
TeleFACTS(R) 1-800/247-1753
If you hold share certificates, you will need to return them to the
(around-the-clock access) Fund before your exchange can be processed.
----------------------------------------------------------------------------------------------------------
</TABLE>

[Insert graphic of paper and pen] ACCOUNT POLICIES

CALCULATING SHARE PRICE Each Fund calculates the net asset value per share (NAV)
each business day at the close of trading on the New York Stock Exchange
(normally 1:00 p.m. Pacific time). Each class's NAV is calculated by dividing
its net assets by the number of its shares outstanding.

[Begin callout]
When you buy shares, you pay the offering price. The offering price is the NAV
plus any applicable sales charge.

When you sell shares, you receive the NAV minus any applicable contingent
deferred sales charge (CDSC).
[End callout]

Each Fund's assets are generally valued at their market value. If market prices
are unavailable, or if an event occurs after the close of the trading market
that materially affects the values, assets may be valued at their fair value. If
the Fund holds securities listed primarily on a foreign exchange that trades on
days when the Fund is not open for business, the value of your shares may change
on days that you cannot buy or sell shares.

Requests to buy and sell shares are processed at the NAV next calculated after
we receive your request in proper form.

ACCOUNTS WITH LOW BALANCES If the value of your account falls below $250 ($50
for employee and UGMA/UTMA accounts) because you sell some of your shares, we
may mail you a notice asking you to bring the account back up to its applicable
minimum investment amount. If you choose not to do so within 30 days, we may
close your account and mail the proceeds to the address of record. You will not
be charged a CDSC if your account is closed for this reason.

STATEMENTS AND REPORTS You will receive quarterly account statements that show
all your account transactions during the quarter. You also will receive written
notification after each transaction affecting your account (except for
distributions and transactions made through automatic investment or withdrawal
programs, which will be reported on your quarterly statement). You also will
receive the Fund's financial reports every six months. To reduce Fund expenses,
we try to identify related shareholders in a household and send only one copy of
the financial reports. If you need additional copies, please call 1-800/DIAL
BEN.

If there is a dealer or other investment representative of record on your
account, he or she also will receive copies of all notifications and statements
and other information about your account directly from the Fund.

STREET OR NOMINEE ACCOUNTS You may transfer your shares from the street or
nominee name account of one dealer to another, as long as both dealers have an
agreement with Franklin Templeton Distributors, Inc. We will process the
transfer after we receive authorization in proper form from your delivering
securities dealer.

JOINT ACCOUNTS Unless you specify a different registration, accounts with two or
more owners are registered as "joint tenants with rights of survivorship" (shown
as "Jt Ten" on your account statement). To make any ownership changes to a joint
account, all owners must agree in writing, regardless of the law in your state.

MARKET TIMERS The Natural Resources Fund and Technology Fund may restrict or
refuse purchases or exchanges by Market Timers. The Biotechnology Discovery
Fund, Communications Fund and Health Care Fund do not allow investments by
Market Timers.

You may be considered a Market Timer if you have (i) requested an exchange out
of any of the Franklin Templeton funds within two weeks of an earlier exchange
request out of any fund, or (ii) exchanged shares out of any of the Franklin
Templeton funds more than twice within a rolling 90 day period, or (iii)
otherwise seem to follow a market timing pattern that may adversely affect the
fund. Accounts under common ownership or control with an account that is covered
by (i), (ii), or (iii) are also subject to these limits.

Anyone, including the shareholder or the shareholder's agent, who is considered
to be a Market Timer by a Fund, its manager or shareholder services agent, will
be issued a written notice of their status and the Fund's policies. Identified
Market Timers will be required to register with the market timing desk of
Franklin Templeton Investor Services, Inc., and to place all purchase and
exchange trade requests through the desk.

ADDITIONAL POLICIES Please note that each Fund maintains additional policies and
reserves certain rights, including:

- The Funds may restrict or refuse any order to buy shares, including any
purchase under the exchange privilege.

- At any time, the Funds may change their investment minimums or waive or
lower their minimums for certain purchases.

- The Funds may modify or discontinue the exchange privilege on 60 days'
notice.

- In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities
laws.

- For redemptions over a certain amount, each Fund reserves the right, in
the case of an emergency, to make payments in securities or other
assets of the Fund or if the payment of cash proceeds by check, wire or
electronic funds transfer would be harmful to existing shareholders.

- To permit investors to obtain the current price, dealers are
responsible for transmitting all orders to the Funds promptly.

DEALER COMPENSATION Qualifying dealers who sell Fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.

BIOTECHNOLOGY DISCOVERY FUND AND NATURAL RESOURCES FUND
<TABLE>
<CAPTION>

CLASS A
--------------------------------------------------------------------------------
<S> <C>
COMMISSION (%) ---
Investment under $50,000 5.00
$50,000 but under $100,000 3.75
$100,000 but under $250,000 2.80
$250,000 but under $500,000 2.00
$500,000 but under $1 million 1.60
$1 million or more up to 1.00(1)
12b-1 FEE TO DEALER 0.25(2)
</TABLE>

TECHNOLOGY FUND, HEALTH CARE FUND and COMMUNICATIONS FUND
<TABLE>
<CAPTION>

CLASS A CLASS B CLASS C
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMISSION (%) --- 4.00 2.00
Investment under $50,000 5.00 --- ---
$50,000 but under $100,000 3.75 --- ---
$100,000 but under $250,000 2.80 --- ---
$250,000 but under $500,000 2.00 --- ---
$500,000 but under $1 million 1.60 --- ---
$1 million or more up to 1.00(1) --- ---
12b-1 FEE TO DEALER 0.25(2) 0.25(3) 1.00(4)
</TABLE>

A dealer commission of up to 1% may be paid on Class A NAV purchases by certain
retirement plans(1) and on Class C NAV purchases. A dealer commission of up to
0.25% may be paid on Class A NAV purchases by certain trust companies and bank
trust departments, eligible governmental authorities, and broker-dealers or
others on behalf of clients participating in comprehensive fee programs.

MARKET TIMERS. Please note that for Class A NAV purchases by market timers,
including purchases of $1 million or more, dealers are not eligible to receive
the dealer commission. Dealers, however, may be eligible to receive the 12b-1
fee from the date of purchase.

1. During the first year after purchase, dealers may not be eligible to receive
the 12b-1 fee.

2. Biotechnology Discovery Fund, Natural Resources Fund and Technology Fund may
each pay up to 0.35% to Distributors or others, out of which 0.10% generally
will be retained by Distributors for its distribution expenses. Biotechnology
Discovery Fund will not reimburse Distributors the additional 0.10% during
periods when the Fund is closed to new investors.

3. Dealers may be eligible to receive up to 0.25% from the date of purchase.
After 8 years, Class B shares convert to Class A shares and dealers may then
receive the 12b-1 fee applicable to Class A.

4. Dealers may be eligible to receive up to 0.25% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the 13th
month.

[Insert graphic of question mark]QUESTIONS

If you have any questions about the Funds or your account, you can write to us
at P.O. Box 997151, Sacramento, CA 95899-9983. You also can call us at one of
the following numbers. For your protection and to help ensure we provide you
with quality service, all calls may be monitored or recorded.

<TABLE>
<CAPTION>
HOURS (PACIFIC TIME,
DEPARTMENT NAME TELEPHONE NUMBER MONDAY THROUGH FRIDAY)
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Services 1-800/632-2301 5:30 a.m. to 5:00 p.m.
6:30 a.m. to 2:30 p.m.
(Saturday)
Fund Information 1-800/DIAL BEN 5:30 a.m. to 5:00 p.m.
(1-800/342-5236) 6:30 a.m. to 2:30 p.m.
(Saturday)
Retirement Services 1-800/527-2020 5:30 a.m. to 5:00 p.m.
Advisor Services 1-800/524-4040 5:30 a.m. to 5:00 p.m.
Institutional Services 1-800/321-8563 6:00 a.m. to 5:00 p.m.
TDD (hearing impaired) 1-800/851-0637 5:30 a.m. to 5:00 p.m.
</TABLE>

FOR MORE INFORMATION

You can learn more about each Fund in the following documents:

ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS

Includes a discussion of recent market conditions and Fund strategies, financial
statements, detailed performance information, portfolio holdings and the
auditor's report.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

Contains more information about each Fund, its investments and policies. It is
incorporated by reference (is legally a part of this prospectus).

For a free copy of the current annual/semiannual report or the SAI, please
contact your investment representative or call us at the number below.

FRANKLIN(R)TEMPLETON(R)
1-800/DIAL BEN(R) (1-800/342-5236)
TDD (Hearing Impaired) 1-800/851-0637
franklintempleton.com

You also can obtain information about each Fund by visiting the SEC's Public
Reference Room in Washington, D.C. (phone 1-202/942-8090) or the EDGAR Database
on the SEC's Internet site at http://www.sec.gov. You can obtain copies of this
information, after paying a duplicating fee, by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102 or by electronic request at the
following E-mail address: publicinfo(R)sec.gov.

Investment Company Act file #811-6423 FSS2 P 09/00

Prospectus

FRANKLIN
STRATEGIC
SERIES

ADVISOR CLASS

INVESTMENT STRATEGY

GROWTH FRANKLIN TECHNOLOGY FUND

GROWTH & INCOME FRANKLIN NATURAL RESOURCES FUND

SEPTEMBER 1, 2000

[Insert Franklin Templeton Ben Head]
FRANKLIN TEMPLETON INVESTMENTS

The SEC has not approved or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

CONTENTS

THE FUNDS

[Begin callout]
Information about each Fund you should know before investing
[End callout]

2 Franklin Technology Fund

10 Franklin Natural Resources Fund

19 Distributions and Taxes

YOUR ACCOUNT

[Begin callout]
Information about qualified investors, account transactions and services
[End callout]

21 Qualified Investors

23 Buying Shares

25 Investor Services

28 Selling Shares

30 Account Policies

32 Questions

FOR MORE INFORMATION

[Begin callout]
Where to learn more about each Fund
[End callout]

Back Cover

THE FUNDS

FRANKLIN TECHNOLOGY FUND

[Insert graphic of bullseye and arrows] GOAL AND STRATEGIES

GOAL The Fund's investment goal is capital appreciation.

- Information technology services, including Internet services,
data processing, technology consulting and implementation, and
electronics distributors;

- Computer software;

- Computing hardware, peripherals, and electronic components;

- Semiconductors, semiconductor fabrication equipment, and
precision instruments;

- Telecommunications, including communications equipment and
services;

- Media and information services, including cable television,
broadcasting, satellite and media content;

- Health-care technology and biotechnology; and

- Aerospace and defense technologies.

[Begin callout]
The Fund concentrates in equity securities of technology companies.
[End callout]

TEMPORARY INVESTMENTS When the manager believes market or economic conditions
are unfavorable for investors, the manager may invest up to 100% of the Fund's
assets in a temporary defensive manner or hold a substantial portion of its
assets in cash, cash equivalents or other high quality short-term investments.
Temporary defensive investments generally may include money market fund shares,
money market instruments or short-term debt securities. The manager also may
invest in these types of securities or hold cash while looking for suitable
investment opportunities or to maintain liquidity. In these circumstances, the
Fund may be unable to achieve its investment goal.

[Insert graphic of chart with line going up and down] MAIN RISKS

TECHNOLOGY COMPANIES By focusing on technology industries, the Fund carries much
greater risks of adverse developments among such industries than a fund that
invests in a wider variety of industries. Prices often change collectively
without regard to the merits of individual companies. Technology company stocks
can be subject to abrupt or erratic price movements and have been volatile,
especially over the short term, due to the rapid pace of product change and
development affecting such companies. Technology companies are subject to
significant competitive pressures, such as new market entrants, aggressive
pricing, and competition for market share, and the potential for falling profit
margins. These companies also face the risks that new services, equipment or
technologies will not be accepted by consumers and businesses or will become
rapidly obsolete. These factors can affect the profitability of technology
companies and, as a result, the value of their securities. In addition,
many internet-related companies are in the emerging stage of development and are
particularly vulnerable to the risks of rapidly changing technologies. Prices of
these companies' securities historically have been more volatile than other
securities, especially over the short term.

For example, smaller companies may lack depth of management, may be unable to
generate funds necessary for growth or development, or may be developing or
marketing new products or services for which markets are not yet established and
may never become established. Smaller companies may be particularly affected by
interest rate increases, as they may find it more difficult to
borrow money to continue or expand operations, or may have difficulty in
repaying any loans which are floating rate.

POLITICAL AND ECONOMIC DEVELOPMENTS. The political, economic and social
structures of some foreign countries may be less stable and more volatile than
those in the U.S. Investments in these countries may be subject to the risks of
internal and external conflicts, currency devaluations, foreign ownership
limitations and tax increases. It is possible that a government may take over
the assets or operations of a company or impose restrictions on the exchange or
export of currency or other assets. Some countries also may have different legal
systems that may make it difficult for the Fund to vote proxies,
exercise shareholder rights, and pursue legal remedies with respect to its
foreign investments.

PORTFOLIO TURNOVER Because of the Fund's emphasis on technology stocks, the
Fund's portfolio turnover rate may exceed 100% annually, which may involve
additional expenses to the Fund, including portfolio transaction costs.

More detailed information about the Fund, its policies and risks can be found in
the Fund's Statement of Additional Information (SAI).

[Insert graphic of a bull and a bear] PERFORMANCE

Because the Fund is new, it does not have a full calendar year of performance.

[Insert graphic of percentage sign] FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
ADVISOR CLASS
---------------------------------------------------------------------------------------- ----------------------
<S> <C>
Maximum sales charge (load) imposed on purchases None
</TABLE>

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)(1)

<TABLE>
<CAPTION>
ADVISOR CLASS
---------------------------------------------------------------------------------------- ----------------------
<S> <C>
Management fees(2) 0.55%
Distribution and service (12b-1) fees None
Other expenses 0.57%
----------------------
Total annual fund operating expenses(2) 1.12%
======================
</TABLE>

1. The management fees shown are based on the Fund's maximum contractual amount.
Other expenses are estimated.

2. The manager and administrator have agreed in advance to limit their
respective fees and assume as their own expense certain expenses otherwise
payable by the Fund so that total annual Fund operating expenses do not exceed
1.05% for the current fiscal year. After April 30, 2001 the administrator and
manager may end this arrangement at any time.

EXAMPLE

This example can help you compare the cost of investing in the Fund with the
cost of investing in other mutual funds. It assumes:

- You invest $10,000 for the periods shown;

- Your investment has a 5% return each year;

- The Fund's operating expenses remain the same; and

- You sell your shares at the end of the periods shown.

Although your actual costs may be higher or lower, based on these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------------------------------------------------- ------------- --------------
<S> <C> <C>
If you sell your shares at the end of the period:
ADVISOR CLASS $114 $356
</TABLE>

[Insert graphic of briefcase] MANAGEMENT

The team responsible for the Fund's management is:

CANYON CHAN CFA, VICE PRESIDENT OF ADVISERS
Mr. Chan has been a manager of the Fund since its inception. He joined Franklin
Templeton Investments in 1991.

CONRAD HERRMANN CFA, Senior Vice President of Advisers
Mr. Herrmann has been a manager of the Fund since its inception. He joined
Franklin Templeton Investments in 1989.

IAN LINK CFA, Vice President of Advisers
Mr. Link has been a manager of the Fund since its inception. He joined Franklin
Templeton Investments in 1989.