O FSS2 P-3
SUPPLEMENT DATED JANUARY 20, 2000
TO THE PROSPECTUS OF
FRANKLIN STRATEGIC SERIES
(FSS2 - FRANKLIN BIOTECHNOLOGY DISCOVERY, GLOBAL HEALTH CARE,
GLOBAL COMMUNICATIONS AND NATURAL RESOURCES FUNDS)
DATED SEPTEMBER 1, 1999
The prospectus is amended as follows:
I. Under the "Goal and Strategies" discussion for the Biotechnology Fund, the
second paragraph on page 3 is revised to read:
When the fund's assets total $500 million, no new accounts, other than
retirement plan accounts, will be accepted. If you are a shareholder of
record at that time, you will be able to 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.
II. The first paragraph of the section "Income and capital gains
distributions" on page 50 is replaced with the following:
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
any fund will pay dividends.
III. The following sentence is added after the minimum investments table on
page 57:
Please note that you may only buy shares of a fund eligible for sale in your
state or jurisdiction.
IV. In the Selling Shares table on page 63 the section "By Wire" is replaced
with the following:
- ----------------------------------------------------------------------
[Insert graphic You can call or write to have redemption
of three lightning proceeds sent to a bank account. See the
bolts] policies above for selling shares by mail or
phone.
BY ELECTRONIC
FUNDS Before requesting to have redemption proceeds
TRANSFER (ACH) sent to a bank 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
ownership of the bank and fund accounts is
different.
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.
- ----------------------------------------------------------------------
V. The section "Sales charge waivers" on page 56 is replaced with the
following:
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 Plan Services at 1-800/527-2020. A list of available sales charge
waivers also may be found in the Statement of Additional Information (SAI).
VI. The section "Dealer compensation" on page 66 is replaced with the
following:
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.
CLASS A CLASS B CLASS 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 1.001 - -
12B-1 FEE TO DEALER 0.252 0.253 1.004
A dealer commission of up to 1% may be paid on Class A NAV purchases by
certain retirement plans1 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.
1. During the first year after purchase, dealers may not be eligible to
receive the 12b-1 fee.
2. The Biotechnology Fund and Natural Resources 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. The Biotechnology 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.
VII. The section "Statements and reports" on page 64 is replaced with the
following:
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.
Please keep this supplement for future reference.
