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SHARE CLASS REDESIGNATION
Effective January 1, 1999
Class A - Formerly Class I
Class C - Formerly Class II
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SUPPLEMENT DATED APRIL 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN MUNICIPAL SECURITIES TRUST
DATED OCTOBER 1, 1998
The Statement of Additional Information is amended as follows:
I. On January 12, 1999, Franklin Municipal Securities Trust's Board of
Trustees approved proposals to merge the Franklin Arkansas Municipal Bond
Fund, Franklin Hawaii Municipal Bond Fund and Franklin Washington Municipal
Bond Fund into Franklin Federal Tax-Free Income Fund, subject to
shareholder approval. Franklin Federal Tax-Free Income Fund's Board of
Directors also approved the mergers. The investment goal of Franklin
Arkansas Municipal Bond Fund, Franklin Hawaii Municipal Bond Fund and
Franklin Washington Municipal Bond Fund is to maximize income exempt from
federal income taxes and from the personal income taxes, if any, for
resident shareholders of the fund's state to the extent consistent with
prudent investing and the preservation of shareholders' capital. The
investment goal of the Franklin Federal Tax-Free Income Fund is to provide
investors with as high a level of interest income exempt from federal
income taxes as is consistent with prudent investing, while seeking
preservation of shareholders' capital. The Boards believe these proposed
mergers will benefit shareholders.
It is anticipated that in the spring of 1999 shareholders of Franklin
Arkansas Municipal Bond Fund, Franklin Hawaii Municipal Bond Fund and
Franklin Washington Municipal Bond Fund will receive a proxy and proxy
statement requesting their votes on the applicable merger.
Franklin Arkansas Municipal Bond Fund, Franklin Hawaii Municipal Bond Fund
and Franklin Washington Municipal Bond Fund were closed to new investors
after the close of business on January 12, 1999. If you were a shareholder
of record as of the close of business on January 12, 1999, you may continue
to add to your account, subject to your applicable minimum additional
investment amount, or buy additional shares through reinvestment of
dividends or capital gain distributions.
Although you may redeem your shares, please keep in mind that if you sell
all the shares in your account, your account will be closed and you will
not be allowed to buy additional shares of Franklin Arkansas Municipal Bond
Fund, Franklin Hawaii Municipal Bond Fund and Franklin Washington Municipal
Bond Fund or to reopen your account in those funds.
II. As of January 1, 1999, Class I shares are designated Class A and Class II
shares are designated Class C. All references in the Statement of
Additional Information to Class I shares are replaced with Class A, and all
references to Class II shares are replaced with Class C.
III. The following is added to the section "Additional Information on Selling
Shares," found under "How Do I Buy, Sell and Exchange Shares?":
The contingent deferred sales charge will generally be waived for
redemptions of Class A shares by investors who purchased $1 million or more
without an initial sales charge if the Securities Dealer of record waived
its commission in connection with the purchase.
IV. Under "Miscellaneous Information," the following is added:
The Information Services & Technology division of Resources established a
Year 2000 Project Team in 1996. This team has already begun making
necessary software changes to help the computer systems that service the
fund and its shareholders to be Year 2000 compliant. After completing these
modifications, comprehensive tests are conducted in one of Resources' U.S.
test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
Please keep this supplement for future reference.