As filed with the Securities and Exchange Commission on January 28, 2000.
File Nos.
33-44132
811-6481
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post Effective Amendment No. 14 (x)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16 (x)
FRANKLIN MUNICIPAL SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (650) 312-2000
MURRAY L. SIMPSON, 777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Name and Address of Agent for Service of Process)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on February 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date), pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
"The Registrant's prospectus dated October 1, 1999, and Statement of Additional
Information dated October 1, 1999, as amended January 1, 2000, as filed with the
Securities and Exchange Commission under Form Type 497 on October 4, 1999 and
December 21, 1999, respectively (File Nos. 33-44132 and 811-6481), are hereby
incorporated by reference."
o MUN P-4
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE PROSPECTUS OF
FRANKLIN MUNICIPAL SECURITIES TRUST
DATED OCTOBER 1, 1999
The prospectus is amended as follows:
I. As of February 1, 2000, the Franklin California High Yield Municipal Fund
offers three classes of shares: Class A, Class B and Class C.
II. The section "Performance" for the California High Yield Fund, found on
page 8, is replaced with the following:
[Insert graphic of bull and 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 6 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
Best
Quarter:
Q1 '95
8.28%
Worst
Quarter:
Q1 '94
-4.86%
[Insert bar graph]
94 95 96 97 98 99
- -6.07% 18.96% 6.17% 11.71% 7.35% -6.68%
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (5/3/93)
<S> <C> <C> <C>
Franklin California High Yield Municipal Fund - Class A2 -10.65% 6.23% 4.70%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 5.40%
</TABLE>
SINCE
INCEPTION
1 YEAR (5/1/96)
Franklin California High Yield Municipal Fund - Class C2 -8.91% 4.39%
Lehman Brothers Municipal Bond Index3 -2.06% 5.27%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last
five years as part of a deal of over $50 million and with a maturity of at
least two years. It includes reinvested interest. One cannot invest directly
in an index, nor is an index representative of the fund's portfolio.
III. The section "Fees and Expenses" for the California High Yield Fund,
found on page 9, is replaced with the following:
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)
CLASS A CLASS B 1 CLASS C
- ------------------------------------------------------------------------------
Maximum sales charge (load) as a
percentage of offering price 4.25% 4.00% 1.99%
Load imposed on purchases 4.25% None 1.00%
Maximum deferred sales charge (load) None 2 4.00% 3 0.99% 4
Exchange fee None None None
Please see "Choosing a Share Class" on page 25 for an explanation of how and
when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (expenses deducted from fund assets)
CLASS A CLASS B 1 CLASS C
- ------------------------------------------------------------------------------
Management fees 5 0.53% 0.53% 0.53%
Distribution and service (12b-1) fees 0.10% 0.65% 0.65%
Other expenses 0.08% 0.08% 0.08%
---------------------
Total annual fund operating expenses 5 0.71% 1.26% 1.26%
=====================
1. The fund began offering Class B shares on February 1, 2000. Annual fund
operating expenses are based on the expenses for Class A and C for the
fiscal year ended May 31, 1999. The distribution and service (12b-1) fees
are based on the maximum fees allowed under Class B's Rule 12b-1 plan.
2. Except for investments of $1 million or more (see page 25).
3. Declines to zero after six years.
4. This is equivalent to a charge of 1% based on net asset value.
5. For the fiscal year ended May 31, 1999, the manager had agreed in advance
to limit its management fees. With this reduction, management fees were
0.26% and total annual fund operating expenses were 0.44% for Class A and
0.99% for Class C, and would have been 0.99% for Class B. The manager may
end this arrangement at any time upon notice to the fund's Board of Trustees.
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:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o 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 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
If you sell your shares at the end of the period:
CLASS A $494 1 $642 $803 $1,270
CLASS B $528 $700 $892 $1,371 2
CLASS C $325 $496 $785 $1,607
If you do not sell your shares:
CLASS B $128 $400 $692 $1,371 2
CLASS C $227 $496 $785 $1,607
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.
IV. The management team for the California High Yield Fund on page 11 is
replaced with the following:
The team responsible for the fund's management is:
SHEILA AMOROSO, SENIOR VICE PRESIDENT OF ADVISERS
Ms. Amoroso has been an analyst or portfolio manager of the fund since its
inception. She is the co-Director of Franklin's Municipal Bond Department. She
joined the Franklin Templeton Group in 1986.
BERNARD SCHROER, SENIOR VICE PRESIDENT OF ADVISERS
Mr. Schroer has been an analyst or portfolio manager of the fund since its
inception. He joined the Franklin Templeton Group in 1987.
JOHN WILEY, VICE PRESIDENT OF ADVISERS
Mr. Wiley has been an analyst or portfolio manager of the fund since its
inception. He joined the Franklin Templeton Group in 1989.
V. The section "Performance" for the Tennessee Fund, found on page 19, is
replaced with the following:
[Insert graphic of bull and 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 5 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
- -------------------------------------------------------------------------------
Best
Quarter:
Q1 '95
7.98%
Worst
Quarter:
Q1 '97
-4.48%
[Insert bar graph]
95 96 97 98 99
18.38% 9.57% 5.88% 6.62% -6.40%
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (5/10/94)
Franklin Tennessee Municipal Bond Fund 2 -10.41% 5.59% 4.72%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 5.96%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last
five years as part of a deal of over $50 million and with a maturity of at
least two years. It includes reinvested interest. One cannot invest directly
in an index, nor is an index representative of the fund's portfolio.
VI. The management team for the Tennessee Fund on page 21 is replaced with
the following:
The team responsible for the fund's management is:
SHEILA AMOROSO, SENIOR VICE PRESIDENT OF ADVISERS
Ms. Amoroso has been an analyst or portfolio manager of the fund since its
inception. She is the co-Director of Franklin's Municipal Bond Department. She
joined the Franklin Templeton Group in 1986.
JOHN POMEROY, VICE PRESIDENT OF ADVISERS
Mr. Pomeroy has been an analyst or portfolio manager of the fund since its
inception. He joined the Franklin Templeton Group in 1986.
FRANCISCO RIVERA, PORTFOLIO MANAGER OF ADVISERS
Mr. Rivera has been an analyst or portfolio manager of the fund since 1996.
He joined the Franklin Templeton Group in 1994.
JOHN WILEY, VICE PRESIDENT OF ADVISERS
Mr. Wiley has been an analyst or portfolio manager of the fund since its
inception. He joined the Franklin Templeton Group in 1989.
VII. In the section "Choosing A Share Class", which begins on page 25, the
following changes are made:
(a) The first chart on page 25 is replaced with the following:
CLASS B (CALIFORNIA CLASS C (CALIFORNIA
CLASS A HIGH YIELD FUND ONLY) HIGH YIELD FUND ONLY)
o Initial sales o No initial o Initial sales
charge of 4.25% or sales charge charge of 1%
less
o Deferred sales o Deferred sales o Deferred sales
charge of 1% on charge of 4% on charge of 1% on
purchases of $1 shares you sell shares you sell
million or more sold within the first within 18 months
within 12 months year, declining
to 1% within six
years and
eliminated after
that
o Lower annual expenses o Higher annual o Higher annual
than Class B or C due expenses than expenses than Class A
to lower distribution Class A (same as (same as Class B) due
fees Class C) due to to higher distribution
higher fees. No conversion to
distribution Class A shares, so
fees. Automatic annual expenses do not
conversion to decrease.
Class A shares
after eight
years, reducing
future annual
expenses.
THE CALIFORNIA HIGH YIELD FUND BEGAN OFFERING CLASS B SHARES ON FEBRUARY 1,
2000.
(b) The following is added before the discussion of Class C sales charges on
page 26:
SALES CHARGES - CLASS B
IF YOU SELL YOUR SHARES THIS % IS DEDUCTED FROM
WITHIN THIS MANY YEARS AFTER BUYING THEM YOUR PROCEEDS AS A CDSC
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
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 below). 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 invest 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.
DISTRIBUTION AND SERVICE (12B-1) FEES CLASS B has a distribution plan,
sometimes known as a Rule 12b-1 plan, that allows the fund to pay
distribution and other fees of up to 0.65% 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.
(c) The section "Contingent Deferred Sales Charge (CDSC) - Class A & C" on
page 26 is renamed "Contingent Deferred Sales Charge (CDSC) - Class A, B &
C."
(d) The section "Sales Charge Waivers" on page 28 is replaced with the
following:
SALES CHARGE WAIVERS Class A shares may be purchased without an initial
sales charge or CDSC by various individuals and institutions 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. A list of available sales charge waivers also may be
found in the Statement of Additional Information (SAI).
VIII. The following sentence is added after the minimum investments table on
page 29:
Please note that you may only buy shares of a fund eligible for sale in your
state or jurisdiction.
IX. The footnote in the section "Distribution Options" on page 31 is replaced
with the following:
*Class B and C shareholders may reinvest their distributions in Class A
shares of any Franklin Templeton money fund.
X. The following is added after the second paragraph in the section "Exchange
Privilege" on page 32:
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.
XI. The second paragraph of the "By Mail" section in the Selling Shares chart
on page 34 is replaced with the following:
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.
XII. The section "Statements and Reports" on page 35 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.
XIII. The section "Dealer Compensation" on page 37 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 (%) -- 3.00 2.00
Investment under $100,000 4.00 -- --
$100,000 but under $250,000 3.25 -- --
$250,000 but under $500,000 2.25 -- --
$500,000 but under $1 million 1.85 -- --
$1 million or more up to 0.75 1 -- --
12b-1 fee to dealer 0.10 0.15 2 0.65 3
A dealer commission of up to 1% may be paid 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. Dealers may be eligible to receive up to 0.15% 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.
3. Dealers may be eligible to receive up to 0.15% during the first year
after purchase and may be eligible to receive the full 12b-1 fee starting in
the 13th month.
Please keep this supplement for future reference.
o MUN SA-1
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN MUNICIPAL SECURITIES TRUST
DATED OCTOBER 1, 1999, AS AMENDED JANUARY 1, 2000
The Statement of Additional Information is amended as follows:
I. As of February 1, 2000, the Franklin California High Yield Municipal Fund
offers three classes of shares: Class A, Class B and Class C.
II. The second paragraph in the section "Organization, Voting Rights and
Principal Holders" is replaced with the following:
The California High Yield Fund currently offers three classes of shares,
Class A, Class B and Class C. The fund began offering Class B shares on
February 1, 2000. The full title of each class is:
o Franklin California High Yield Municipal Fund - Class A
o Franklin California High Yield Municipal Fund - Class B
o Franklin California High Yield Municipal Fund - Class C
III. The following is added to the section "Organization, Voting Rights and
Principal Holders":
As of January 3, 2000, the officers and board members, as a group, owned of
record and beneficially less than 1% of the outstanding shares of each fund
and class.
IV. The first sentence of the section "Initial sales charges" on page 15 is
revised to read:
The maximum initial sales charge is 4.25% for Class A and 1% for Class C.
There is no initial sales charge for Class B.
V. The last sentence of the first waiver category in the section "Waivers for
investments from certain payments" on page 16 is revised to read:
This waiver category also applies to Class B and C shares.
VI. The following is added after the first paragraph in the section
"Contingent deferred sales charge (CDSC)" on page 18:
For Class B shares, there is a CDSC if you sell your shares within six
years, as described in the table below. The charge is based on the value of
the shares sold or the net asset value at the time of purchase, whichever is
less.
IF YOU SELL YOUR CLASS B SHARES WITHIN THIS % IS DEDUCTED FROM YOUR PROCEEDS
THIS MANY YEARS AFTER BUYING THEM AS A CDSC
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
VII. The section "The Class C plan," found under "Distribution and service
(12b-1) fees" on page 21, is replaced with the following:
THE CLASS B AND C PLANS. Under the Class B and C plans of the California
High Yield Fund, the fund pays Distributors up to 0.50% per year of the
class's average daily net assets, payable monthly, to pay Distributors or
others for providing distribution and related services and bearing certain
expenses. All distribution expenses over this amount will be borne by those
who have incurred them. The fund also may pay a servicing fee of up to 0.15%
per year of the class's average daily net assets, payable monthly. This fee
may be used to pay securities dealers or others for, among other things,
helping to establish and maintain customer accounts and records, helping
with requests to buy and sell shares, receiving and answering
correspondence, monitoring dividend payments from the fund on behalf of
customers, and similar servicing and account maintenance activities.
The expenses relating to each of the Class B and C plans also are used to
pay Distributors for advancing the commission costs to securities dealers
with respect to the initial sale of Class B and C shares. Further, the
expenses relating to the Class B plan may be used by Distributors to pay
third party financing entities that have provided financing to Distributors
in connection with advancing commission costs to securities dealers.
VIII. The section "The Class A and C plans," found under "Distribution and
service (12b-1) fees" on page 21, is renamed "The Class A, B and C plans."
Please keep this supplement for future reference.
FRANKLIN MUNICIPAL SECURITIES TRUST
FILE NOS. 33-44132 &
811-6481
FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
The following exhibits are incorporated by reference to the previously
filed documents indicated below, except as noted:
(a) Agreement and Declaration of Trust
(i) Agreement and Declaration of Trust dated December 10, 1991
Filing: Post-Effective Amendment No. 7 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(ii) Certificate of Trust dated December 10, 1991 Filing:
Post-Effective Amendment No. 7 to Registration Statement on
Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(iii)Certificate of Amendment to Certificate of Trust dated May 14,
1992
Filing: Post-Effective Amendment No. 7 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(b) By-Laws
(i) By-Laws
Filing: Post-Effective Amendment No. 7 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(ii) Amendment to By-Laws dated April 19, 1994
Filing: Post-Effective Amendment No. 8 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: February 28, 1996
(c) Instruments Defining Rights of Security Holders
Not Applicable
(d) Investment Advisory Contracts
(i) Management Agreement between Registrant and Franklin Advisers,
Inc. dated February 26, 1992
Filing: Post-Effective Amendment No. 7 to
Registration Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(ii) Amendment to Management Agreement between Registrant and
Franklin Advisers, Inc. dated August 1, 1995
Filing: Post-Effective Amendment No. 8 to
Registration Statement on Form N-1A
File No. 33-44132
Filing Date: February 28, 1996
(e) Underwriting Contracts
(i) Amended and Restated Distribution Agreement between Registrant
and Franklin/Templeton Distributors, Inc. dated April 23, 1995
Filing: Post-Effective Amendment No. 7 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(ii) Forms of Dealer Agreements between Franklin/Templeton
Distributors, Inc. and Securities Dealers
Filing: Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 23, 1999
(iii)Amendment of Amended and Restated Distribution Agreement
between Registrant and Franklin/Templeton Distributors, Inc.
dated January 12, 1999
Filing: Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 23, 1999
(f) Bonus or Profit Sharing Contracts
Not Applicable
(g) Custodian Agreements
(i) Master Custody Agreement between Registrant and Bank of New
York dated February 16, 1996
Filing: Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 23, 1999
(ii) Terminal Link Agreement between Registrant and
Bank of New York dated February 16, 1996
Filing: Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 23, 1999
(iii)Amendment, dated May 7, 1997, to the Master Custody Agreement
between Registrant and Bank of New York dated February 16, 1996
Filing: Post-Effective Amendment No. 12 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 22, 1998
(iv) Amendment, dated February 27, 1998, to Exhibit A of the Master
Custody Agreement between Registrant and Bank of New York
dated February 16, 1996
Filing: Post-Effective Amendment No. 12 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 22, 1998
(v) Amendment dated September 16, 1999 to Exhibit A of the Master
Custody Agreement
(h) Other Material Contracts
(i) Subcontract for Fund Administrative Services dated October 1,
1996 and Amendment thereto dated December 1, 1998 between
Franklin Advisers, Inc. and Franklin Templeton Services, Inc.
Filing: Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 23, 1999
(i) Legal Opinion
(i) Opinion and Consent of Counsel dated July 14, 1998
Filing: Post-Effective Amendment No. 12 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 22, 1998
(j) Other Opinions
(i) Consent of Independent Auditors
(k) Omitted Financial Statements
Not Applicable
(l) Initial Capital Agreements
(i) Letters of Understanding dated February 11, 1992 and March 6,
1992
Filing: Post-Effective Amendment No. 7 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: July 31, 1995
(m) Rule 12b-1 Plan
(i) Amended and Restated Distribution Plan between Registrant, on
behalf of Franklin California High Yield Municipal Fund, and
Franklin/Templeton Distributors, Inc. dated July 1, 1993
Filing: Post-Effective Amendment No. 3 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: April 30, 1993
(ii) Distribution Plan between Registrant, on behalf of Franklin
Tennessee Municipal Bond Fund, and Franklin/Templeton
Distributors, Inc. dated May 10, 1994
Filing: Post-Effective Amendment No. 5 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: March 11, 1994
(iii)Class II Distribution Plan pursuant to Rule 12b-1 between
Registrant, on behalf of Franklin California High Yield
Municipal Fund, and Franklin/Templeton Distributors, Inc.
dated March 22, 1996
Filing: Post-Effective Amendment No. 10 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: September 27, 1996
(iv) Form of Class B Distribution Plan pursuant to Rule 12b-1
between Registrant, on behalf of Franklin California High
Yield Municipal Fund and Franklin/Templeton Distributors, Inc.
(o) Rule 18f-3 Plan
(i) Multiple Class Plan on behalf of Franklin California High
Yield Municipal Fund dated March 21, 1996
Filing: Post-Effective Amendment No. 10 to Registration
Statement on Form N-1A
File No. 33-44132
Filing Date: September 27, 1996
(ii) Form of Multiple Class Plan on behalf of Franklin California
High Yield Municipal Fund
(p) Power of Attorney
(i) Power of Attorney
(ii) Certificate of Secretary
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
None
ITEM 25. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a Court of appropriate jurisdiction the question whether
such indemnification is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The officers and directors of the Registrant's manager also serve as officers
and/or directors for (1) the manager's corporate parent, Franklin Resources,
Inc., and/or (2) other investment companies in the Franklin Templeton Group
of Funds. In addition, Mr. Charles B. Johnson was formerly a director of
General Host Corporation. For additional information please see Part B and
Schedules A and D of Form ADV of the Funds' Investment Manager (SEC File
801-26292), incorporated herein by reference, which sets forth the officers
and directors of the Investment Manager and information as to any business,
profession, vocation or employment of a substantial nature engaged in by
those officers and directors during the past two years.
ITEM 27. PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., ("Distributors") also acts as
principal underwriter of shares of:
Franklin Asset Allocation Fund
Franklin California Tax-Free Income Fund, Inc.
Franklin California Tax-Free Trust
Franklin Custodian Funds, Inc.
Franklin Equity Fund
Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund
Franklin Floating Rate Trust
Franklin Gold Fund
Franklin High Income Trust
Franklin Investors Securities Trust
Franklin Managed Trust
Franklin Money Fund
Franklin Mutual Series Fund Inc.
Franklin New York Tax-Free Income Fund
Franklin New York Tax-Free Trust
Franklin Real Estate Securities Trust
Franklin Strategic Mortgage Portfolio
Franklin Strategic Series
Franklin Tax-Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund Trust
Franklin Templeton Variable Insurance Products Trust
Franklin Value Investors Trust
Institutional Fiduciary Trust
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
Templeton Variable Products Series Fund
b) The information required by this Item 29 with respect to each director
and officer of Distributors is incorporated by reference to Part B of this
N-1A and Schedule A of Form BD filed by Distributors with the Securities and
Exchange Commission pursuant to the Securities Act of 1934 (SEC File No.
8-5889).
c) Not Applicable. Registrant's principal underwriter is an affiliated
person of an affiliated person of the Registrant.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section
31 (a) of the Investment Company Act of 1940 are kept by the Trust or its
shareholder services agent, Franklin/Templeton Investor Services, Inc., both
of whose address is 777 Mariners Island Blvd., San Mateo, CA. 94404.
ITEM 29. MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 30. UNDERTAKINGS
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securuties Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Mateo and the State of California, on the 27th day
of February, 2000.
FRANKLIN MUNICIPAL SECURITIES TRUST
(Registrant)
By: Rupert H. Johnson, Jr.
Rupert H. Johnson, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Rupert H. Johnson, Jr.* Trustee and Principal
Rupert H. Johnson, Jr. Executive Officer
Dated: January 27, 2000
Martin L. Flanagan* Principal Financial Officer
Martin L. Flanagan Dated: January 27, 2000
Kimberley H. Monasterio* Principal Accounting Officer
Kimberley H. Monasterio Dated: January 27, 2000
Frank H. Abbott, III* Trustee
Frank H. Abbott, III Dated: January 27, 2000
Harris J. Ashton* Trustee
Harris J. Ashton Dated: January 27, 2000
Harmon E. Burns* Trustee
Harmon E. Burns Dated: January 27, 2000
S. Joseph Fortunato* Trustee
S. Joseph Fortunato Dated: January 27, 2000
Edith E. Holiday* Trustee
Edith E. Holiday Dated: January 27, 2000
Charles B. Johnson* Trustee
Charles B. Johnson Dated: January 27, 2000
Frank W. T. LaHaye* Trustee
Frank W. T. LaHaye Dated: January 27, 2000
Gordon S. Macklin* Trustee
Gordon S. Macklin Dated: January 27, 2000
Hayato Tanaka* Trustee
Hayato Tanaka Dated: January 27, 2000
*By /s/ David P. Goss
David P. Goss, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN MUNICIPAL SECURITIES TRUST
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.a(i) Agreement and Declaration of Trust *
dated December 10, 1991
EX-99.a(ii) Certificate of Trust dated *
December 10, 1991
EX-99.a(iii) Certificate of Amendment to *
Certificate of Trust dated May
14, 1992
EX-99.b(i) By-Laws *
EX-99.b(ii) Amendment to the By-Laws dated *
April 19, 1994
EX-99.d(i) Management Agreement between *
Registrant and Franklin Advisers,
Inc. dated February 26, 1996
EX-99.d(ii) Amendment to Management Agreement *
between Registrant and Franklin
Advisers, Inc. dated August 1, 1995
EX-99.e(i) Amended and Restated Distribution *
Agreement between Registrant and
Franklin/Templeton Distributors,
Inc. dated April 23, 1995
EX-99.e(ii) Forms of Dealer Agreements between *
Franklin/Templeton Distributors,
Inc. and Securities Dealers
EX-99.e(iii) Amendment of Amended and Restated *
Distribution Agreement between
Registrant and Franklin/Templeton
Distributors, Inc. dated
January 12, 1999
EX-99.g(i) Master Custody Agreement between *
Registrant and Bank of New York
dated February 16, 1996
EX-99.g(ii) Terminal Link Agreement between *
Registrant and Bank of New York
dated February 16, 1996
EX-99.g(iii) Amendment, dated May 7, 1997, to *
the Master Custody Agreement between
Registrant and Bank of New York
dated February 16, 1996
EX-99.g(iv) Amendment, dated February 27, 1998, *
to Exhibit A of the Master Custody
Agreement between Registrant and
Bank of New York dated February 16,
1996
EX-99.g(v) Amendment dated September 16, 1999 to Attached
Exhibit A of the Master Custody
Agreement
EX-99.h(i) Subcontract for Fund Administrative *
Services dated October 1, 1996 and
Amendment thereto dated December 1,
1998 between Franklin Advisers, Inc.
and Franklin Templeton Services,
Inc.
EX-99.i(i) Opinion and Consent of Counsel *
dated July 14, 1998
EX-99.j(i) Consent of Independent Auditors Attached
EX-99.l(i) Letters of Understanding dated *
February 11, 1992 and March 6, 1992
EX-99.m(i) Amended and Restated Distribution *
Plan between Registrant, on behalf
of Franklin California High Yield
Municipal Fund, and
Franklin/Templeton Distributors,
Inc. dated July 1, 1993
EX-99.m(ii) Distribution Plan between Registrant, *
on behalf of Franklin Tennessee
Municipal Bond Fund, and
Franklin/Templeton Distributors,
Inc. dated May 10, 1994
EX-99.m(iii) Class II Distribution Plan pursuant *
to Rule 12b-1 between Registrant, on
behalf of Franklin California High
Yield Municipal Fund, and
Franklin/Templeton Distributors, Inc.
dated March 22, 1996
EX-99.m(iv) Form of Class B Distribution Plan Attached
pursuant to Rule 12b-1 between
Registrant, on behalf of Franklin
California High Yield Municipal Fund
and Franklin/Templeton Distributors,
Inc.
EX-99.o(i) Multiple Class Plan on behalf of *
Franklin California High Yield
Municipal Fund dated March 21, 1996
EX-99.o(ii) Form of Multiple Class Plan on behalf Attached
of Franklin California High Yield
Municipal Fund
EX-99.p(i) Power of Attorney Attached
EX-99.p(ii) Certificate of Secretary Attached
* Incorporated by reference
MASTER CUSTODY AGREEMENT
EXHIBIT A
The following is a list of the Investment Companies and their respective
Series for which the Custodian shall serve under the Master Custody Agreement
dated as of February 16, 1996.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustable Rate Securities Delaware Business U.S. Government Adjustable Rate Mortgage
Portfolios Trust Portfolio
Franklin Asset Allocation Fund Delaware Business
Trust
Franklin California Tax-Free Maryland Corporation
Income
Fund, Inc.
Franklin California Tax-Free Massachusetts Franklin California Insured Tax-Free
Trust Business Trust Income Fund
Franklin California Tax-Exempt Money Fund
Franklin California Intermediate-Term
Tax-Free
Income Fund
Franklin Custodian Funds, Inc. Maryland Corporation Growth Series
Utilities Series
Dynatech Series
Income Series
U.S. Government Securities Series
Franklin Equity Fund California
Corporation
Franklin Federal Money Fund California
Corporation
Franklin Federal Tax- Free California
Income Fund Corporation
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
Franklin Gold Fund California
Corporation
Franklin High Income Trust Delaware Business AGE High Income Fund
Trust
Franklin Investors Securities Massachusetts Franklin Global Government Income Fund
Trust Business Trust Franklin Short-Intermediate U.S. Govt
Securities Fund
Franklin Convertible Securities Fund
Franklin Adjustable U.S. Government
Securities Fund
Franklin Equity Income Fund
Franklin Bond Fund
Franklin Managed Trust Delaware Business Franklin Rising Dividends Fund
Trust
Franklin Money Fund California
Corporation
Franklin Municipal Securities Delaware Business Franklin California High Yield Municipal
Trust Trust Fund
Franklin Tennessee Municipal Bond Fund
Franklin Mutual Series Fund Maryland Corporation Mutual Shares Fund
Inc. Mutual Beacon Fund
Mutual Qualified Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin New York Tax-Free Delaware Business
Income Fund Trust
Franklin New York Tax-Free Massachusetts Franklin New York Tax-Exempt Money Fund
Trust Business Trust Franklin New York Intermediate-Term
Tax-Free
Income Fund
Franklin New York Insured Tax-Free
Income Fund
Franklin Real Estate Delaware Business Franklin Real Estate Securities Fund
Securities Trust Trust
Franklin Strategic Mortgage Delaware Business
Portfolio Trust
Franklin Strategic Series Delaware Business Franklin California Growth Fund
Trust Franklin Strategic Income Fund
Franklin MidCap Growth Fund
Franklin Global Utilities Fund
Franklin Small Cap Growth Fund
Franklin Global Health Care Fund
Franklin Natural Resources Fund
Franklin Blue Chip Fund
Franklin Biotechnology Discovery Fund
Franklin U.S. Long-Short Fund
Franklin Large Cap Growth Fund
Franklin Aggressive Growth Fund
Franklin Tax-Exempt Money Fund California
Corporation
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
Franklin Tax-Free Trust Massachusetts Franklin Massachusetts Insured Tax-Free
Business Trust Income Fund
Franklin Michigan Insured Tax-Free
Income Fund
Franklin Minnesota Insured Tax-Free
Income Fund
Franklin Insured Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income
Fund
Franklin Puerto Rico Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income
Fund
Franklin High Yield Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Texas Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund
Franklin Alabama Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin North Carolina Tax-Free Income
Fund
Franklin New Jersey Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Federal Intermediate-Term
Tax-Free Income
Fund
Franklin Arizona Insured Tax-Free Income
Fund
Franklin Florida Insured Tax-Free Income
fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Templeton Fund Delaware Business Franklin Templeton Conservative Target
Allocator Series Trust Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Global Trust Delaware Business Franklin Templeton Global Currency Fund
Trust Franklin Templeton Hard Currency Fund
Franklin Templeton Delaware Business Templeton Pacific Growth Fund
International Trust Trust Templeton Foreign Smaller Companies Fund
Franklin Templeton Money Fund Delaware Business Franklin Templeton Money Fund
Trust Trust
Franklin Value Investors Trust Massachusetts Franklin Balance Sheet Investment Fund
Business Trust Franklin MicroCap Value Fund
Franklin Value Fund
Franklin Templeton Variable Massachusetts Franklin Money Market Fund
Insurance Products Trust Business Trust Franklin Growth and Income Fund
Franklin Natural Resources Securities
Fund
Franklin Real Estate Fund
Franklin Global Communications
Securities Fund
Franklin High Income Fund
Templeton Global Income Securities Fund
Franklin Income Securities Fund
Franklin U.S. Government Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
Franklin Rising Dividends Securities Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Templeton Variable Massachusetts Templeton Pacific Growth Fund
Insurance Products Trust Business Trust Templeton International Equity Fund
(cont.) Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton Global Asset Allocation Fund
Franklin Small Cap Fund
Franklin Large Cap Growth Securities Fund
Templeton International Smaller
Companies Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Franklin Global Health Care Securities
Fund
Franklin Value Securities Fund
Franklin Aggressive Growth Securities
Fund
- -----------------------------------------------------------------------------------------------
Institutional Fiduciary Trust Massachusetts Money Market Portfolio
Business Trust Franklin U.S. Government Securities
Money Market
Portfolio
Franklin Cash Reserves Fund
The Money Market Portfolios Delaware Business The Money Market Portfolio
Trust The U.S. Government Securities Money
Market Portfolio
Templeton Variable Products Franklin Growth Investments Fund
Series Fund Mutual Shares Investments Fund
Mutual Discovery Investments Fund
Franklin Small Cap Investments Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
CLOSED END FUNDS:
Franklin Multi-Income Trust Massachusetts
Business Trust
Franklin Universal Trust Massachusetts
Business Trust
Franklin Floating Rate Trust Delaware Business
Trust
- -----------------------------------------------------------------------------------------------
Revised: 9/16/99
</TABLE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No.
14 to the Registration Statement of Franklin Municipal Securities Trust on
Form N-1A, File No. 33-44132, of our report dated July 1, 1999, on our audit
of the financial statements and financial highlights of Franklin Municipal
Securities Trust, which report is included in the Annual Report to
Shareholders for the year ended May 31, 1999, filed with the Securities and
Exchange Commission pursuant to section 30(d) of the Investment Company Act
of 1940, which is incorporated by reference in the Registration Statement. We
also consent to the reference to our firm under the captions "Financial
Highlights" and "Auditor."
/s/ PricewaterhouseCoopers LLP
San Francisco, California
January 26, 2000
CLASS B DISTRIBUTION PLAN
I. Investment Company: FRANKLIN MUNICIPAL SECURITIES TRUST
II. Fund: FRANKLIN CALIFORNIA HIGH YIELD
MUNICIPAL FUND - CLASS B
III. Maximum Per Annum Rule 12b-1 Fees for Class B Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.50%
B. Service Fee: 0.15%
PREAMBLE TO CLASS B DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class B shares
(the "Class") of the Fund named above ("Fund"), which Plan shall take effect
as of the date Class B shares are first offered (the "Effective Date of the
Plan"). The Plan has been approved by a majority of the Board of Trustees of
the Investment Company (the "Board"), including a majority of the Board
members who are not interested persons of the Investment Company and who have
no direct, or indirect financial interest in the operation of the Plan (the
"non-interested Board members"), cast in person at a meeting called for the
purpose of voting on such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Franklin Advisers, Inc. ("Advisers") and the terms of the Underwriting
Agreement between the Investment Company and Franklin/Templeton Distributors,
Inc. ("Distributors"). The Board concluded that the compensation of
Advisers, under the Management Agreement, and of Distributors, under the
Underwriting Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
The Board recognizes that Distributors has entered into an arrangement
with a third party in order to finance the distribution activities of the
Class pursuant to which Distributors may assign its rights to the fees
payable hereunder to such third party. The Board further recognizes that it
has an obligation to act in good faith and in the best interests of the Fund
and its shareholders when considering the continuation or termination of the
Plan and any payments to be made thereunder.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a monthly fee not to exceed
the above-stated maximum distribution fee per annum of the Class' average
daily net assets represented by shares of the Class, as may be determined by
the Board from time to time.
(b) In addition to the amounts described in (a) above, the Fund
shall pay (i) to Distributors for payment to dealers or others, or (ii)
directly to others, an amount not to exceed the above-stated maximum service
fee per annum of the Class' average daily net assets represented by shares of
the Class, as may be determined by the Investment Company's Board from time
to time, as a service fee pursuant to servicing agreements which have been
approved from time to time by the Board, including the non-interested Board
members.
2. (a) The monies paid to Distributors pursuant to Paragraph 1(a)
above shall be treated as compensation for Distributors' distribution-related
services including compensation for amounts advanced to securities dealers or
their firms or others selling shares of the Class who have executed an
agreement with the Investment Company, Distributors or its affiliates, which
form of agreement has been approved from time to time by the Board, including
the non-interested Board members, with respect to the sale of Class shares.
In addition, such monies may be used to compensate Distributors for other
expenses incurred to assist in the distribution and promotion of shares of
the Class. Payments made to Distributors under the Plan may be used for,
among other things, the printing of prospectuses and reports used for sales
purposes, expenses of preparing and distributing sales literature and related
expenses, advertisements, and other distribution-related expenses, including
a pro-rated portion of Distributors' overhead expenses attributable to the
distribution of Class shares, as well as for additional distribution fees
paid to securities dealers or their firms or others who have executed
agreements with the Investment Company, Distributors or its affiliates, or
for certain promotional distribution charges paid to broker-dealer firms or
others, or for participation in certain distribution channels. None of such
payments are the legal obligation of Distributors or its designee.
(b) The monies to be paid pursuant to paragraph 1(b) above shall
be used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include, among
other things, assisting in establishing and maintaining customer accounts and
records; assisting with purchase and redemption requests; arranging for bank
wires; monitoring dividend payments from the Fund on behalf of customers;
forwarding certain shareholder communications from the Fund to customers;
receiving and answering correspondence; and aiding in maintaining the
investment of their respective customers in the Class. Any amounts paid
under this paragraph 2(b) shall be paid pursuant to a servicing or other
agreement, which form of agreement has been approved from time to time by the
Board. None of such payments are the legal obligation of Distributors or its
designee.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, Advisers,
Distributors or other parties on behalf of the Fund, Advisers or Distributors
make payments that are deemed to be payments by the Fund for the financing of
any activity primarily intended to result in the sale of Class shares issued
by the Fund within the context of Rule 12b-1 under the Act, then such
payments shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which include
payments specified in paragraphs 1 and 2, plus any other payments deemed to
be made pursuant to the Plan under this paragraph, exceed the amount
permitted to be paid pursuant to Rule 2830(d) of the Conduct Rules of the
National Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a
quarterly basis, a written report of the monies paid to it and to others
under the Plan, and shall furnish the Board with such other information as
the Board may reasonably request in connection with the payments made under
the Plan in order to enable the Board to make an informed determination of
whether the Plan should be continued.
5. (a) Distributors may assign, transfer or pledge ("Transfer") to
one or more designees (each an "Assignee"), its rights to all or a designated
portion of the fees to which it is entitled under paragraph 1 of this Plan
from time to time (but not Distributors' duties and obligations pursuant
hereto or pursuant to any distribution agreement in effect from time to time,
if any, between Distributors and the Fund), free and clear of any offsets or
claims the Fund may have against Distributors. Each such Assignee's
ownership interest in a Transfer of a specific designated portion of the fees
to which Distributors is entitled is hereafter referred to as an "Assignee's
12b-1 Portion." A Transfer pursuant to this Section 5(a) shall not reduce or
extinguish any claims of the Fund against Distributors.
(b) Distributors shall promptly notify the Fund in writing of each
such Transfer by providing the Fund with the name and address of each such
Assignee.
(c) Distributors may direct the Fund to pay any Assignee's 12b-1
Portion directly to each Assignee. In such event, Distributors shall provide
the Fund with a monthly calculation of the amount to which each Assignee is
entitled (the "Monthly Calculation"). In such event, the Fund shall, upon
receipt of such notice and Monthly Calculation from Distributors, make all
payments required directly to the Assignee in accordance with the information
provided in such notice and Monthly Calculation upon the same terms and
conditions as if such payments were to be paid to Distributors.
(d) Alternatively, in connection with a Transfer, Distributors may
direct the Fund to pay all or a portion of the fees to which Distributors is
entitled from time to time to a depository or collection agent designated by
any Assignee, which depository or collection agent may be delegated the duty
of dividing such fees between the Assignee's 12b-1 Portion and the balance
(such balance, when distributed to Distributors by the depository or
collection agent, the "Distributors' 12b-1 Portion"), in which case only
Distributors' 12b-1 Portion may be subject to offsets or claims the Fund may
have against Distributors.
6. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at least
annually by the Board, including the non-interested Board members, cast in
person at a meeting called for the purpose of voting on the Plan. In
determining whether there is a reasonable likelihood that the continuation of
the Plan will benefit the Fund and its shareholders, the Board may, but is
not obligated to, consider that Distributors has incurred substantial cost
and has entered into an arrangement with a third party in order to finance
the distribution activities for the Class.
7. This Plan and any agreements entered into pursuant to this Plan may
be terminated with respect to the shares of the Class, without penalty, at
any time by vote of a majority of the non-interested Board members of the
Investment Company, or by vote of a majority of outstanding Shares of such
Class. Upon termination of this Plan with respect to the Class, the
obligation of the Fund to make payments pursuant to this Plan with respect to
such Class shall terminate, and the Fund shall not be required to make
payments hereunder beyond such termination date with respect to expenses
incurred in connection with Class shares sold prior to such termination date,
provided, in each case that each of the requirements of a Complete
Termination of this Plan in respect of such Class, as defined below, are
met. For purposes of this Section 7, a "Complete Termination" of this Plan
in respect of the Class shall mean a termination of this Plan in respect of
such Class, provided that: (i) the non-interested Board members of the
Investment Company shall have acted in good faith and shall have determined
that such termination is in the best interest of the Investment Company and
the shareholders of the Fund and the Class; (ii) and the Investment Company
does not alter the terms of the contingent deferred sales charges applicable
to Class shares outstanding at the time of such termination; and (iii) unless
Distributors at the time of such termination was in material breach under the
distribution agreement in respect of the Fund, the Fund shall not, in respect
of such Fund, pay to any person or entity, other than Distributors or its
designee, either the payments described in paragraph 1(a) or 1(b) or in
respect of the Class shares sold by Distributors prior to such termination.
8. The Plan, and any agreements entered into pursuant to this Plan,
may not be amended to increase materially the amount to be spent for
distribution pursuant to Paragraph 1 hereof without approval by a majority of
the outstanding voting securities of the Class of the Fund.
9. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's non-interested Board members shall be committed to the discretion
of such non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and Distributors as evidenced by their
execution hereof.
Date: February 1, 2000
FRANKLIN MUNICIPAL SECURITIES TRUST
By: /s/ Karen L. Skidmore
Karen L. Skidmore
Assistant Vice President
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By: /s/ Harmon E. Burns
Harmon E. Burns
Executive Vice President
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN CALIFORNIA HIGH YIELD MUNICIPAL FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN MUNICIPAL SECURITIES TRUST (the "Investment
Company") for its series, FRANKLIN CALIFORNIA HIGH YIELD MUNICIPAL FUND (the
"Fund"). The Board has determined that the Plan, including the expense
allocation, is in the best interests of each class of the Fund and the
Investment Company as a whole. The Plan sets forth the provisions relating
to the establishment of multiple classes of shares of the Fund, and
supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class
A Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0%
- - 4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%.
Class B Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of
1.00% of the lesser of the then-current net asset value or the original net
asset value at the time of purchase applies to redemptions of those
investments within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain circumstances,
as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall
be assessed a CDSC of 4% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (b) Class B Shares
redeemed within the third and fourth years of their purchase shall be
assessed a CDSC of 3% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (c) Class B Shares
redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on
the lesser of the then-current net asset value or the original net asset
value at the time of purchase; and (d) Class B Shares redeemed within 6 years
of their purchase shall be assessed a CDSC of 1% on the lesser of the
then-current net asset value or the original net asset value at the time of
purchase. The CDSC is waived in certain circumstances described in the
Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for
expenses incurred in the promotion and distribution of the Class A Shares.
Such expenses include, but are not limited to, the printing of prospectuses
and reports used for sales purposes, expenses of preparing and distributing
sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of the
Distributor's overhead expenses attributable to the distribution of the Class
A Shares, as well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing agreement with
the Investment Company for the Class A Shares, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be
retained by Distributor to compensate Distributor for amounts advanced to
securities dealers or their firms or others with respect to the sale of Class
B Shares. In addition, such payments may be retained by the Distributor to
be used in the promotion and distribution of Class B Shares in a manner
similar to that described above for Class A Shares. The second component is
a shareholder servicing fee to be paid to securities dealers or others who
provide personal assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid
to broker-dealers, banks, trust companies and others who provide personal
assistance to shareholders in servicing their accounts. The second component
is an asset-based sales charge to be retained by the Distributor during the
first year after the sale of shares, and in subsequent years, to be paid to
dealers or retained by the Distributor to be used in the promotion and
distribution of Class C Shares, in a manner similar to that described above
for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and
Class C Shares shall relate to differences in Rule 12b-1 plan expenses, as
described in the applicable Rule 12b-1 Plans; however, to the extent that the
Rule 12b-1 Plan expenses of one Class are the same as the Rule 12b-1 Plan
expenses of another Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A
and Class C Shares. Each Class B Share, however, shall be converted
automatically, and without any action or choice on the part of the holder of
the Class B Shares, into Class A Shares on the conversion date specified, and
in accordance with the terms and conditions approved by the Franklin
Municipal Securities Trust's Board of Trustees and as described, in each
fund's prospectus relating to the Class B Shares, as such prospectus may be
amended from time to time; provided, however, that the Class B Shares shall
be converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares
of another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the 1940 Act and otherwise, will monitor the Fund for
the existence of any material conflicts between the Board members interests
of the various classes of shares. The Board members, including a majority of
the independent Board members, shall take such action as is reasonably
necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority
of the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Karen L. Skidmore, Assistant Secretary of the Franklin Group of
Funds, do hereby certify that this Multiple Class Plan was adopted by
Franklin Municipal Securities Trust, on behalf of its series Franklin
California High Yield Municipal Fund, by a majority of the Trustees of the
Trust on February 1, 2000.
-------------------
Karen L. Skidmore
Assistant Secretary
POWER OF ATTORNEY
The undersigned officers and trustees of FRANKLIN MUNICIPAL SECURITIES
TRUST (the "Registrant") hereby appoint MARK H. PLAFKER, HARMON E. BURNS,
DEBORAH R. GATZEK, KAREN L. SKIDMORE, LEIANN NUZUM, Murray L. Simpson,
Barbara J. Green and David P. Goss (with full power to each of them to act
alone) his attorney-in-fact and agent, in all capacities, to execute, deliver
and file in the names of the undersigned, any and all instruments that said
attorneys and agents may deem necessary or advisable to enable the Registrant
to comply with or register any security issued by the Registrant under the
Securities Act of 1933, as amended, and/or the Investment Company Act of
1940, as amended, and the rules, regulations and interpretations thereunder,
including but not limited to, any registration statement, including any and
all pre- and post-effective amendments thereto, any other document to be
filed with the U.S. Securities and Exchange Commission and any and all
documents required to be filed with respect thereto with any other regulatory
authority. Each of the undersigned grants to each of said attorneys, full
authority to do every act necessary to be done in order to effectuate the
same as fully, to all intents and purposes, as he could do if personally
present, thereby ratifying all that said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in one or more counterparts, each
of which shall be deemed to be an original, and all of which shall be deemed
to be a single document.
The undersigned officers and trustees hereby execute this Power of
Attorney as of the 20th day of January, 2000.
/s/ Rupert H. Johnson, Jr., /s/ Frank H. Abbott, III,
Principal Executive Officer and Trustee Trustee
/s/ Harris J. Ashton, /s/ Harmon E. Burns,
Trustee Trustee
/s/ S. Joseph Fortunato, /s/ Edith E. Holiday,
Trustee Trustee
/s/ Charles B. Johnson, /s/ Frank W.T. LaHaye,
Trustee Trustee
/s/ Gordon S. Macklin, /s/ Hayato Tanaka,
Trustee Trustee
/s/ Martin L. Flanagan, /s/ Kimberley H. Monasterio,
Principal Financial Officer Principal Accounting Officer
CERTIFICATE OF SECRETARY
I, Karen L. Skidmore, certify that I am Assistant Secretary of FRANKLIN
MUNICIPAL SECURITIES TRUST (the "Trust").
As Assistant Secretary of the Trust, I further certify that the following
resolution was adopted by a majority of the Trustees of the Trust present at a
meeting held at 777 Mariners Island Boulevard, San Mateo, California 94404, on
January 20, 2000.
RESOLVED, that a Power of Attorney, substantially in the form of the Power
of Attorney presented to this Board, appointing Harmon E. Burns, Deborah R.
Gatzek, Mark H. Plafker, Karen L. Skidmore, Leiann Nuzum, Murray L.
Simpson, Barbara J. Green and David P. Goss as attorneys-in-fact for the
purpose of filing documents with the Securities and Exchange Commission, be
executed by each Director and designated officer.
I declare under penalty of perjury that the matters set forth in this
certificate are true and correct of my own knowledge.
Dated: 1/27/00 /s/ Karen L. Skidmore
Assistant Secretary
