Fund Currently Managed

Franklin Strategic Srs:Flex Cap Growth Fund/A (FKCGX), lead manager since July, 1993.

Investment Style Overview

Invests primarily in companies with headquarters or the bulk of their operations in California. Fund can buy any size company, but tilts towards small and mid-sized ones. Looks for companies with leading or dominant market positions whose shares are undervalued. Keeps part of assets in small, emerging growth companies, typically in the technology and health care sectors.

Key Stock Selection Criteria

* Strong returns on capital.

* Improving margins.

* Attractive valuations.

Key Sell Criteria

* Stock becomes pricey.

* Company’s financial fundamentals erode.

Biographical Notes

Conrad Herrmann is a senior vice president and portfolio manager with Franklin Advisers Inc., and also is the firm’s director of equity portfolio management. He joined Franklin as an assistant portfolio manager in 1989. Previously, he was a vice president with Aquila Management Corp. He holds a BA from Brown University, an MBA from Harvard University, and is a Chartered Financial Analyst.