As filed with the Securities and Exchange Commission on September 30, 1998
1933 Act File No. 333-_____
1940 Act File No. 811-08271
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. / 11 /
FRANKLIN FLOATING RATE TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD. SAN MATEO, CA 94404
(Address of Principal Executive Office)
Registrant's Telephone Number, Including Area Code (650) 312-2000
Harmon E. Burns, 777 Mariners Island Blvd., San Mateo, CA 94404
(NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS)
With a copy to:
Merrill R. Steiner, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public offering: October 12, 1998
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan check
the following box. [x]
It is proposed that this filing will become effective (check
appropriate box)
[ ] when declared effective pursuant to section 8 (c)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on October 12, 1998, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a) of Rule 486
[ ] This post-effective amendment designates a new effective date for a
previously filed registration statement.
[ ] This Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities
Act registration statement number of the earlier effective
registration statement for the same offering is _________.
This Registration incorporates a combined prospectus pursuant to Rule 429
which relates to earlier registration statements filed by the Registrant on
June 27, 1997, as amended to date (File No. 333-30131), on May 8, 1998, as
amended to date (File No. 333-52119), and on June 26, 1998, as amended to
date (File No. 333-57757).
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
Being Amount Being Price Offering Registration
Registered Registered Per Unit Price Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Common Stock
par value $0.01 (1) 35,000,000 shares $ 9.98 (3) $349,300,000 $103,044.00
- --------------------------------------------------------------------------------
Common Stock
par value $0.01 (2) 15,000,000 shares $10.05(4) $150,750,000 $ 44,471.25
- --------------------------------------------------------------------------------
Common Stock,
par value $0.01 (2) 10,000,000 shares $10.05(5) $100,500,000 $ 29,647.50
- --------------------------------------------------------------------------------
(1) Currently being registered
(2) Previously registered
(3) Calculated pursuant to Rule 457 (d) based on the net asset value
per share of $ 9.98 as of September 24, 1998.
(4) Calculated pursuant to Rule 457(d) based on the net asset value per
share of $10.05 as of June 15, 1998
(5) Calculated pursuant to Rule 457(d) based on the net asset value per
share of $10.05 as of May 1, 1998
FRANKLIN FLOATING RATE TRUST
PROSPECTUS
FORM N-2 CROSS REFERENCE SHEET
PART A - N-2
ITEM
NUMBER CAPTION PROSPECTUS CAPTION
1. Outside Front Cover Outside Front Cover of Prospectus
2. Inside Front and Outside Not Applicable
Back Cover Page
3. Fee Table and Synopsis Expense Summary; Prospectus Summary
4. Financial Highlights Financial Highlights
5. Plan of Distribution Outside Front Cover; Prospectus Summary;
How to Buy Common Shares; Description of
Common Shares
6. Selling Shareholders Not Applicable
7. Use of Proceeds Use of Proceeds from Sales of Common
Shares; What Kinds of Securities Does
the Fund Purchase?; Prospectus Summary
8. General Description of the Prospectus Summary; Information About
Registrant the Fund; What Kinds of Securities Does
the Fund Purchase?; What are the Risks
of Investing in the Fund; Description of
Common Shares
9. Management Who Manages the Fund?; Description of
Common Shares
10. Capital Stock, Long-Term Dividends and Distributions to
Debt, and Other Securities Shareholders; How Taxation Affects the
Fund and its Shareholders; Description
of Common Shares
11. Defaults and Arrears on Not Applicable
Senior Securities
12. Legal Proceedings Not Applicable
13. Table of Contents of the Table of Contents of Statement of
Statement of Additional Additional Information
Information
FRANKLIN FLOATING RATE TRUST
STATEMENT OF ADDITIONAL INFORMATION
FORM N-2 CROSS REFERENCE SHEET
PART B - N-2
ITEM
NUMBER CAPTION SAI CAPTION
14. Cover Page Cover Page
15. Table of Contents Table of Contents
16. General Information and Not Applicable
History
17. Investment Objective and How Does the Fund Invest its Assets?;
Policies What are the Risks of Investing in the
Fund?; Investment Restrictions
18. Management Officers and Trustees; Investment
Management and Other Services
19. Control Persons and Miscellaneous Information
Principal Holders of
Securities
20. Investment Advisory and Investment Management and Other Services
Other Services
21. Brokerage Allocation and How Does the Fund Buy Securities for its
Other Practices Portfolio?
22. Tax Status Additional Information on Distributions
and Taxes
23. Financial Statements Financial Statements
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
The Registrant's prospectus dated April 1, 1998, as amended July 10, 1998, as
filed with the Securities and Exchange Commission in a Registration Statement
on Form N-2 on June 26, 1998 (File Nos. 333-57757 and 811-08271) is hereby
incorporated by reference. The Registrant's statement of additional
information as filed with the SEC under Rule 497(c) on April 6, 1998, (File
Nos. 333-30131 and 811-08271) is hereby incorporated by reference.
020 *P3
SUPPLEMENT DATED OCTOBER 12, 1998
TO THE PROSPECTUS OF
FRANKLIN FLOATING RATE TRUST
DATED APRIL 1, 1998 AS AMENDED JULY 10, 1998
The prospectus is amended as follows:
I. All references in the prospectus to the number of Common Shares of the
Franklin Floating Rate Trust (the "fund") registered with the SEC are amended
to reflect the registration of an additional 35,000,000 Common Shares
bringing the total number of registered Common Shares of the fund to
70,000,000.
II. The second paragraph on the inside front cover and the five bullet
points following the paragraph are replaced with the following:
The fund began offering its Common Shares and began investment operations
on October 10, 1997. The fund engages in a continuous offering of Common
Shares. The fund has registered 70,000,000 Common Shares and is authorized
as a business trust to issue an unlimited number of Common Shares. Common
Shares are offered at a price equal to the next determined Net Asset Value
per share which, as of September 29, 1998 was $9.98 per share. There is
no initial front-end sales charge on purchases of Common Shares. An Early
Withdrawal Charge of 1% will be imposed on Common Shares purchased after
March 31, 1998, that are held less than twelve months and that are
accepted by the fund for repurchase in a Tender Offer. Certain waivers of
this charge may apply. See "Early Withdrawal Charge." The price of Common
Shares will fluctuate depending upon the fund's Net Asset Value per share.
Proceeds of all offerings estimated at $700,254,609.75 to be invested
by the fund over the course of the continuous offering.
Offering expenses of $61,603 deducted from net proceeds to fund upon
completion of the initial offering of 10,000,000 Common Shares
commenced on October 10, 1997; offering expenses of $40,197.50 deducted
from net proceeds to fund upon completion of a subsequent offering of
an additional 10,000,000 Common Shares commenced on or after May 15,
1998; offering expenses of $60,046.25 deducted from net proceeds to
fund upon completion of a subsequent offering of an additional
15,000,000 Common Shares commenced on or after July 10, 1998; offering
expenses of $133,543.50 deducted from net proceeds to fund upon
completion of a subsequent offering of an additional 35,000,000 Common
Shares commencing on or after October 12, 1998.
Because Distributors will pay all sales commissions to selected
Securities Dealers from its own or affiliates' assets, net proceeds of the
offering will be available to the fund for investment.
Expenses payable by fund incurred to organize fund estimated at $124,000
Organizational expenses to remain liability of the fund and be gradually
reduced in equal installments over period not to exceed 60 months from the
date fund commenced investment operations on October 10, 1997.
III. The section entitled "Financial Highlights" is replaced in its entirety
with the following:
This table summarizes the fund's financial history. The information has
been audited by PricewaterhouseCoopers LLP, the fund's independent
auditor. The audit report covering the period shown below appears in the
fund's Annual Report to Shareholders for the fiscal year ended July 31,
1998. The Annual Report to Shareholders also includes more information
about the fund's performance. For a free copy, please call Fund
Information.
PERIOD ENDED
JULY 31, 1998*
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income 0.48
Net realized and unrealized gains 0.04
Total from investment operations 10.52
Less distributions from net investment income (0.48)
------
Net asset value, end of period $10.04
======
Total return** 5.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $168,537
Ratios to average net assets:
Expenses 1.32%***
Expenses excluding waiver and payments by affiliate 1.76%***
Net investment income 6.06%***
Portfolio turnover rate 45.32%
*For the period October 10, 1997 (commencement of operations) to July,
1998.
**Total return does not reflect the Early Withdrawal Charge and is not
annualized.
***Annualized
IV. Each reference in the prospectus to Corporate Loans and Corporate Debt
Securities of U.S. subsidiaries of non-U.S. Borrowers is amended to include
Corporate Loan and Corporate Debt Securities of foreign Borrowers, as
described in this supplement.
V. The section "U.S. SUBSIDIARIES OF NON-U.S. BORROWERS," found under
"What Kinds of Securities Does the Fund Purchase?", is replaced with the
following:
FOREIGN BORROWERS The fund may invest in Corporate Loans and Corporate
Debt Securities which are made to, or issued by, foreign Borrowers. For
purposes of this prospectus, Corporate Loans and Corporate Debt
Securities of foreign Borrowers include such loans or debt securities that
have one or more of the following characteristics: (1) the principal
trading market of the loan or security is in a foreign country; (2) at
least 50% of the revenue of the Borrower is generated from goods produced
or sold, investments made, or services performed in a foreign country; (3)
the Borrower is organized under the laws of a foreign country; or (4) at
least 50% of the assets of the Borrower are situated in a foreign country.
The fund normally invests primarily in U.S. Borrowers, but may invest up
to 65% of its assets in foreign Borrowers in developed foreign countries.
The fund may from time to time invest in foreign Borrowers in emerging
market countries, but currently does not intend to invest more than 35% of
its assets in foreign Borrowers in emerging market countries. The fund
considers a country to be an emerging market country if it is defined as a
country with an emerging or developing economy by any one of the
following: the International Bank for Reconstruction and Development
(commonly known as the World Bank), the International Finance Corporation,
or the United Nations or its agencies or authorities.
Advisers will evaluate the creditworthiness of foreign Borrowers by using
the same analysis as it uses for U.S. Borrowers.
The fund will invest in Corporate Loans and Corporate Debt Securities of
foreign Borrowers, provided that the loans and securities are U.S.
dollar-denominated, or the fund uses a foreign currency swap for payments
in U.S. dollars. U.S. dollar-denominated loans and securities are loans
and securities for which the fund pays in U.S. dollars and the Borrower
pays principal, interest, dividends or distributions in U.S. dollars. The
fund may invest in a Corporate Loan or Corporate Debt Security that is not
denominated in U.S. dollars if the fund arranges for payments in U.S.
dollars by entering into a foreign currency swap. See "Foreign Currency
Swaps."
Loans to, and securities issued by, foreign Borrowers may involve risks
not typically involved in domestic investments and loans to, and
securities issued by, foreign Borrowers in emerging market countries
involve additional risks. See "What Are the Risks of Investing in the
Fund? - Foreign Investments."
VI. The section "FOREIGN INVESTMENTS," found under "What Are the Risks of
Investing in the Fund?", is replaced with the following:
FOREIGN INVESTMENTS As noted above, the fund may invest in Corporate Loans
and Corporate Debt Securities that are made to, or issued by, foreign
Borrowers, provided that any such Borrower passes the same
creditworthiness analysis that Advisers uses for U.S. Borrowers and the
loans and securities are U.S. dollar-denominated, or the fund uses a
foreign currency swap for payments in U.S. dollars. These obligations may
involve risks not typically involved in domestic investments and the risks
can be significantly magnified for investments in foreign countries that
are emerging market countries.
CURRENCY FLUCTUATIONS. To the extent the fund uses foreign currency swaps
for Corporate Loans or Corporate Debt Securities, transactions in foreign
securities may be conducted in local currencies, so U.S. dollars must
often be exchanged for another currency when an obligation is bought or
sold or a dividend is paid. Likewise, security price quotations and total
return information reflect conversion into U.S. dollars. Fluctuations in
foreign exchange rates can significantly increase or decrease the U.S.
dollar value of a foreign investment, boosting or offsetting its local
market return. Currency risk cannot be eliminated entirely.
INCREASED COSTS. It is more expensive for the fund to purchase and sell
Corporate Loans and Corporate Debt Securities in foreign markets than in
the U.S. markets. Investment companies, such as the fund, offer an
efficient way for individuals to invest abroad, but the overall expense
ratios of international investment companies are usually higher than the
overall expense ratios of investment companies that invest in U.S.
obligations.
POLITICAL AND ECONOMIC FACTORS. The economies, markets, and political
structures of a number of the countries in which the fund can invest do
not compare favorably with the U.S. and other mature economies in terms of
wealth and stability. Therefore, investments in these countries will
entail greater risk and may be subject to erratic and abrupt price
movements. This is especially true for emerging market countries.
LEGAL, REGULATORY, AND OPERATIONAL. Certain foreign countries may impose
restrictions on foreign investors, such as the fund. These restrictions
may take the form of prior governmental approval, limits on the amount and
type of obligations held by foreigners, limits on moving monies or other
assets out of the country and limits on the types of companies in which
foreigners may invest. Diplomatic developments could affect the fund's
investments in these countries. In certain foreign countries, there is the
possibility that the government or a government agency may take over the
assets of the fund for political or economic reasons or impose taxation
that is so heavy that it amounts to confiscation of the assets taxed.
Certain foreign countries lack uniform accounting, auditing, and financial
reporting standards, have less governmental supervision of financial
markets than in the United States, do not honor legal rights enjoyed in
the United States, and have settlement practices, such as delays, which
could subject the fund to risks not customary in the United States.
Information about foreign Borrowers may differ from that available for
U.S. Borrowers, since foreign companies are not generally subject to
uniform accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to U.S. Borrowers. In
addition, the markets for Corporate Loans and Corporate Debt Securities in
foreign countries have substantially lower trading volumes than U.S.
markets, resulting in less liquidity and more volatility than in the
United States.
PRICING. Corporate Loans and Corporate Debt Securities may be purchased or
sold on days (such as Saturdays) when the fund does not account for their
prices in calculating its Net Asset Value. As a result, the fund's Net
Asset Value may change significantly on days when shareholders cannot
purchase Common Shares, or for repurchases of Common Shares, between the
date on which a shareholder tenders Common Shares for repurchase by the
fund and the date on which the repurchase price of the Common Shares is
determined. See "Periodic Offers By the Fund to Repurchase Common Shares
From Shareholders."
Please keep this supplement for future reference.
020 *SA1
SUPPLEMENT DATED OCTOBER 12, 1998
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN FLOATING RATE TRUST
DATED APRIL 1, 1998
The Statement of Additional Information is amended as follows:
I. The section "Officers and Trustees" is revised to add the following:
As of September 11, 1998, the officers and Board members, as a group,
owned of record and beneficially approximately 262,185 shares, or 1.04% of
the fund's total outstanding shares.
II. The fourth paragraph in the section "Miscellaneous Information" is
revised as follows:
As of September 11, 1998, the principal shareholders of the fund,
beneficial or of record were as follows:
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
Franklin Resources, Inc. 3,793,532.338 15.109%
Templeton Investment
Counsel Inc. 2,500,000.000 9.957%
III. The following is added to the section titled "Financial Statements"
The audited financial statements contained in the Annual Report to
Shareholders of the fund, for the fiscal year ended July, 31, 1998,
including the auditor's report, are incorporated herein by reference.
FRANKLIN FLOATING RATE TRUST
FORM N-2
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Included in Part A: Financial Highlights
Included in Part B:
a) Financial Statements incorporated herein by reference to
the Registrant's Annual Report to Shareholders dated July
31, 1998 as filed with the SEC on Form Type N-30D on
September 30, 1998:
(i) Financial Highlights
(ii) Statement of Investments - July 31, 1998
(iii) Statement of Assets and Liabilities - July 31, 1998
(iv) Statement of Operations - for the period October 10,
1997 (effective date) to July 31, 1998
(v) Statements of Changes in Net Assets - for the period
October 10, 1997 (effective date) to July 31, 1998
(vi) Notes to Financial Statements
(vii) Independent Auditor's Report
(2) Exhibits:
The following exhibits are incorporated by reference, except
exhibits (j)(3), (j)(4), (l), (n), (s)(1) and (s)(2) which are
attached herewith.
(a) (1) Agreement and Declaration of Trust
Filing: Registration Statement on Form N-2
File No. 333-30131
Filing Date: June 27, 1997
(2) Certificate of Trust
Filing: Post-Effective Amendment No. 1
Registration Statement on Form N-2
File No. 333-30131
Filing Date: December 8, 1997
(b) By-Laws
Filing: Registration Statement on Form N-2
File No. 333-30131
Filing Date: June 27, 1997
(c) Not Applicable
(d) Not Applicable
(e) Not Applicable
(f) Not Applicable
(g) (1) Management Agreement
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form 486BPOS
File No. 333-30131
Filing Date: June 27, 1997
(2) Fund Administration Agreement
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form 486BPOS
File No. 333-30131
Filing Date: June 27, 1997
(h) (1) Distribution Agreement
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form 486BPOS
File No. 333-30131
Filing Date: June 27, 1997
(2) Form of Dealer Agreement between Franklin/Templeton
Distributors, Inc. and Securities Dealers
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form 486BPOS
File No. 333-30131
Filing Date: June 27, 1997
(i) Not Applicable
(j) (1) Custodian Agreement
Filing: Registration Statement on Form N-2
File No. 333-30131
Filing Date: March 6, 1998
(2) Amendment dated May 7, 1997 to Master Custody
Agreement between Registrant and Bank of New York
dated February 16, 1996
Filing: Registration Statement on Form N-2
File No. 333-30131
Filing Date: March 6, 1998
(3) Amendment dated February 27, 1998 to Master Custody
Agreement between Registrant and Bank of New York
dated Febraury 16, 1998
(4) Foreign Master Custody Agreement between Registrant
and Bank of New York made as of July 30, 1998,
effective as of February 27, 1998
(k) Not Applicable
(l) Opinion and Consent of Counsel
(m) Not Applicable
(n) Consent of Independent Accountants
(o) Not Applicable
(p) Form of Letter of Investment Intent
Filing: Post-Effective Amendment No. 3 to
Registration Statement on Form 486BPOS
File No. 333-30131
Filing Date: June 27, 1997
(q) Not Applicable
(r) Not Applicable
(s) (1) Power of Attorney dated June 16, 1998
(2) Certificate of Secretary dated June 16, 1998
ITEM 25. MARKETING ARRANGEMENTS
None
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be incurred in
connection with the offering described in this Registration Statement:
Securities and Exchange Commission Fees................... $207,465.25
Printing and Engraving Expenses........................... 8,800.00
Legal Fees................................................ 120,000.00
Accounting Expenses....................................... 4,000.00
Blue Sky Filing Fees and Expenses......................... 12,000.00
National Association of Securities Dealers Fees........... 67,125.00
Total..................................................... $419,390.25
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not Applicable
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
3,700 record holders as of August 31, 1998.
ITEM 29. INDEMNIFICATION
Under Article III, Section 7 of Registrant's Agreement and Declaration
of Trust, if any shareholder or former shareholder of Registrant (each, a
"Shareholder") shall be exposed to liability by reason of a claim or demand
relating to his or her being or having been a Shareholder, and not because of
his or her acts or omissions, the Shareholder or former Shareholder (or his
or her heirs, executors, administrators, or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled to be held harmless from and indemnified out of
the assets of the Registrant against all loss and expense arising from such
claim or demand.
Under Article VII, Section 2 of Registrant's Agreement and Declaration
of Trust, the Trustees of Registrant (each, a "Trustee," and collectively,
the "Trustees") shall not be responsible or liable in any event for any
neglect or wrong-doing of any officer, agent, employee, the investment
manager or principal underwriter of the Registrant, nor shall any Trustee be
responsible for the act or omission of any other Trustee, and the Registrant
out of its assets shall indemnify and hold harmless each and every Trustee
from and against any and all claims and demands whatsoever arising out of or
related to each Trustee's performance of his or her duties as a Trustee of
the Registrant; provided that nothing contained in Registrant's Agreement and
Declaration of Trust shall indemnify, hold harmless or protect any Trustee
from or against any liability to the Registrant or any Shareholder to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act") 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 1933 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 or appropriate
jurisdiction the question whether such indemnification is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Franklin Advisers, Inc.
See "Who Manages the Fund?"
The officers and directors of the Registrant's investment adviser also serve
as officers and/or directors for (1) the investment adviser's corporate
parent, Franklin Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA
94404 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, Metro Center, One Station Place, Stamford, CT
06904-2045. For additional information please see Schedules A and D of Form
ADV of the Registrant's investment adviser (SEC File 801-26292) incorporated
herein by reference, which sets forth the officers and directors of the
Registrant's investment adviser 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 31. 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, as amended, are kept by the
Registrant or its shareholder services agent, Franklin/Templeton Investor
Services, Inc., both of whose address is 777 Mariners Island Blvd., San
Mateo, CA 94404.
ITEM 32. MANAGEMENT SERVICES
Not Applicable
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend the offering of its shares until
it amends its Prospectus if-
(a) subsequent to the effective date of this Registration
Statement, the net asset value declines more than 10% from
its net asset value as of the effective date of the
Registration Statement; or
(b) The net asset value increases to an amount greater than its
net proceeds as stated in the Prospectus.
(2) Registrant undertakes:
(a) to file, during any period in which offers or sales are
being made, a post-effective amendment to the registration
statement:
(1) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended
(the "Act");
(2) to reflect in the prospectus any facts or
events after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(3) to include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
(b) that, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of those
securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(3) Registrant further undertakes to send by first class mail or
other means designed to ensure equally prompt delivery, within
two business days of receipt of a written or oral request, any
Statement of Additional Information.
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 486(b) under the Securities 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 30th day of September, 1998.
FRANKLIN FLOATING RATE TRUST
(Registrant)
BY RUPERT H. JOHNSON, JR.*, PRESIDENT
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:
SIGNATURE TITLE DATE
CHARLES B. JOHNSON* Trustee & September 30, 1998
Charles B. Johnson Chairman of
the Board
FRANK H. ABBOTT, III* Trustee September 30, 1998
Frank H. Abbott, III
HARRIS J. ASHTON* Trustee September 30, 1998
Harris J. Ashton
RUPERT H. JOHNSON, JR.* Trustee September 30, 1998
Rupert H. Johnson, Jr. & Principal Executive
Officer
MARTIN L. FLANAGAN* Principal September 30, 1998
Martin L. Flanagan Financial Officer
DIOMEDES LOO-TAM* Principal September 30, 1998
Diomedes Loo-Tam Accounting Officer
S. JOSEPH FORTUNATO* Trustee September 30, 1998
S. Joseph Fortunato
EDITH E. HOLIDAY* Trustee September 30, 1998
Edith E. Holiday
FRANK W. T. LAHAYE* Trustee September 30, 1998
Frank W. T. LaHaye
GORDON S. MACKLIN* Trustee September 30, 1998
Gordon S. Macklin
*BY /s/ Larry L. Greene, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN FLOATING RATE TRUST
REGISTRATION STATEMENT
EXHIBIT INDEX
Exhibit No. Description Location
EX-99.2(a)(1) Agreement and Declaration of Trust *
EX-99.2(a)(2) Certificate of Trust *
EX-99.2(b) By-Laws *
EX-99.2(g)(1) Management Agreement *
EX-99.2(g)(2) Fund Administration Agreement *
EX-99.2(h)(1) Distribution Agreement *
EX-99.2(h)(2) Form of Dealer Agreement between *
Franklin/Templeton Distributors, Inc.
and Securities Dealers
EX-99.2(j)(1) Custodian Agreement *
EX-99.2(j)(2) Amendment dated May 7, 1997 to Master *
Custody Agreement between Registrant
and Bank of New York dated February
16, 1996
EX-99.2(j)(3) Amendment dated February 27, 1998 to Attached
Master Custody Agreement between
Registrant and Bank of New York dated
February 16, 1998
EX-99.2(j)(4) Foreign Master Custody Agreement Attached
between Registrant and Bank of New
York made as of July 30, 1998,
effective as of February 27, 1998
EX-99.2(l) Opinion and Consent of Counsel Attached
EX-99.2(n) Consent of Independent Accountants Attached
EX-99.2(p) Letter of Investment Intent *
EX-99.2(s)(1) Power of Attorney dated June 16, 1998 Attached
EX-99.2(s)(2) Certificate of Secretary dated June Attached
16, 1998
*Incorporated by Reference
Amendment to Master Custody Agreement
Effective February 27, 1998, The Bank of New York and each of the Investment
Companies listed in the Attachment appended to this Amendment, for themselves
and each series listed in the Attachment, hereby amend the Master Custody
Agreement dated as of February 16, 1996 by:
1. Replacing Exhibit A with the attached; and
2. Only with respect to the Investment Companies and series thereof listed
in the Attachment, deleting paragraphs (a) and (b) of Subsection 3.5 and
replacing them with the following:
(a) Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian Proper Instructions specifying with
respect to each such purchase: (a) the Series to which such Securities
are to be specifically allocated; (b) the name of the issuer and the
title of the Securities; (c) the number of shares or the principal
amount purchased and accrued interest, if any; (d) the date of purchase
and settlement; (e) the purchase price per unit; (f) the total amount
payable upon such purchase; (g) the name of the person from whom or the
broker through whom the purchase was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom payment is to be
made. The Custodian shall, upon receipt of Securities purchased by or
for the Fund, pay to the broker specified in the Proper Instructions
out of the money held for the account of such Series the total amount
payable upon such purchase, provided that the same conforms to the
total amount payable as set forth in such Proper Instructions.
(b) Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian Proper Instructions specifying with respect to
each such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount sold, and
accrued interest, if any; (d) the date of sale; (e) the sale price per
unit; (f) the total amount payable to the Fund upon such sale; (g) the
name of the broker through whom or the person to whom the sale was
made, and the name of the clearing broker, if any; and (h) the name of
the broker to whom the Securities are to be delivered. The Custodian
shall deliver the Securities specifically allocated to such Series to
the broker specified in the Proper Instructions against payment of the
total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in such Proper
Instructions.
Investment Companies The Bank of New York
By: /s/ Elizabeth N. Cohernour By: /s/ Stephen E. Grunston
Name: Elizabeth N. Cohernour Name: Stephen E. Grunston
Title: Authorized Officer Title: Vice President
Attachment
INVESTMENT COMPANY SERIES
Franklin Mutual Series Fund Inc. Mutual Shares Fund
Mutual Qualified Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual European Fund
Mutual Discovery Fund
Franklin Valuemark Funds Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Templeton Variable Products Mutual Shares Investments Fund
Series Fund Mutual Discovery Investments Fund
<TABLE>
<CAPTION>
THE BANK OF NEW YORK
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.
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
<S> <C> <C>
Adjustable Rate Securities Portfolios Delaware Business Trust U.S. Government Adjustable Rate Mortgage Portfolio
Adjustable Rate Securities Portfolio
Franklin Asset Allocation Fund Delaware Business Trust
Franklin California Tax-Free Income Maryland Corporation
Fund, Inc.
Franklin California Tax-Free Trust Massachusetts Business Franklin California Insured Tax-Free Income Fund
Trust 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 Income Fund California Corporation
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
Franklin Gold Fund California Corporation
Franklin Government Securities Trust Massachusetts Business
Trust
Franklin High Income Trust Delaware Business Trust AGE High Income Fund
Franklin Investors Securities Trust Massachusetts Business Franklin Global Government Income Fund
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 Adjustable Rate Securities Fund
Franklin Managed Trust Massachusetts Business Franklin Corporate Qualified Dividend Fund
Trust Franklin Rising Dividends Fund
Franklin Investment Grade Income Fund
Franklin Money Fund California Corporation
Franklin Municipal Securities Trust Delaware Business Trust Franklin Hawaii Municipal Bond Fund
Franklin California High Yield Municipal Fund
Franklin Washington Municipal Bond Fund
Franklin Tennessee Municipal Bond Fund
Franklin Arkansas Municipal Bond Fund
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
Franklin Mutual Series Fund Inc. Maryland Corporation Mutual Shares Fund
Mutual Qualified Fund
Mutual Beacon Fund
Mutual Financial Services Fund
Mutual European Fund
Mutual Discovery Fund
Franklin New York Tax-Free Income Delaware Business Trust
Fund
Franklin New York Tax-Free Trust Massachusetts Business Franklin New York Tax-Exempt Money Fund
Trust Franklin New York Intermediate-Term Tax-Free
Income Fund
Franklin New York Insured Tax-Free Income Fund
Franklin Real Estate Securities Trust Delaware Business Trust Franklin Real Estate Securities Fund
Franklin Strategic Mortgage Portfolio Delaware Business Trust
Franklin Strategic Series Delaware Business Trust Franklin California Growth Fund
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 Tax-Exempt Money Fund California Corporation
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
Franklin Tax-Free Trust Massachusetts Business Franklin Massachusetts Insured Tax-Free Income Fund
Trust 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 Indiana 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
Franklin Michigan Tax-Free Income Fund
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
Franklin Templeton Fund Delaware Business Trust Franklin Templeton Conservative Target Fund
Allocator Series Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Global Trust Delaware Business Trust Franklin Templeton German Government Bond Fund
Franklin Templeton Global Currency Fund
Franklin Templeton Hard Currency Fund
Franklin Templeton High Income Currency Fund
Franklin Templeton International Trust Delaware Business Trust Templeton Pacific Growth Fund
Templeton Foreign Smaller Companies Fund
Franklin Templeton Money Fund Trust Delaware Business Trust Franklin Templeton Money Fund II
Franklin Value Investors Trust Massachusetts Business Franklin Balance Sheet Investment Fund
Trust Franklin MicroCap Value Fund
Franklin Value Fund
Franklin Valuemark Funds Massachusetts Business Money Market Fund
Trust Growth and Income Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Global Utilities Securities Fund
High Income Fund
Templeton Global Income Securities Fund
Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 2010
Rising Dividends Fund
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
Franklin Valuemark Funds (cont.) Massachusetts Business Templeton Pacific Growth Fund
Trust Templeton International Equity Fund
Templeton Developing Markets Equity Fund
Templeton Global Growth Fund
Templeton Global Asset Allocation Fund
Small Cap Fund
Capital Growth Fund
Templeton International Smaller Companies Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Global Health Care Securities Fund
Value Securities Fund
Institutional Fiduciary Trust Massachusetts Business Money Market Portfolio
Trust Franklin U.S. Government Securities Money Market
Portfolio
Franklin U.S. Treasury Money Market Portfolio
Franklin Institutional Adjustable U.S. Government
Securities Fund
Franklin Institutional Adjustable Rate Securities Fund
Franklin U.S. Government Agency Money Market Fund
Franklin Cash Reserves Fund
The Money Market Portfolios Delaware Business Trust The Money Market Portfolio
The U.S. Government Securities Money Market Portfolio
Templeton Variable Products Series Fund Mutual Shares Investments Fund
Mutual Discovery Investments Fund
Franklin Growth Investments Fund
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
CLOSED END FUNDS:
Franklin Multi-Income Trust Massachusetts Business
Trust
Franklin Principal Maturity Trust Massachusetts Business
Trust
Franklin Universal Trust Massachusetts Business
Trust
INTERVAL FUND
Franklin Floating Rate Trust Delaware Business Trust
- -------------------------------------------- ---------------------------- ---------------------------------------------------------
</TABLE>
FOREIGN CUSTODY MANAGER AGREEMENT
AGREEMENT made as of July 30, 1998, effective as of February 27, 1998
(the "Effective Date"), between Each of the Investment Companies Listed on
Schedule I attached hereto (each a "Fund") and The Bank of New York ("BNY").
WITNESSETH:
WHEREAS, the Fund desires to appoint BNY as a Foreign Custody Manager
on the terms and conditions contained herein;
WHEREAS, BNY desires to serve as a Foreign Custody Manager and perform
the duties set forth herein on the terms and condition contained herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Fund and BNY hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "BOARD" shall mean the board of directors or board of trustees,
as the case may be, of the Fund.
2. "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning provided in
the Rule.
3. "MONITORING SYSTEM" shall mean a system established by BNY to
fulfill the Responsibilities specified in clauses l(b)(i) and l(b)(ii) and
l(d) of Article III of this Agreement.
4. "QUALIFIED FOREIGN BANK" shall have the meaning provided in the
Rule.
5. "RESPONSIBILITIES" shall mean the responsibilities delegated to
BNY as a Foreign Custody Manager with respect to each Specified Country and
each Eligible Foreign Custodian selected by BNY, as such responsibilities are
more fully described in Article III of this Agreement.
6. "RULE" shall mean Rule 17f-5 under the Investment Company Act of
1940, as amended, as such Rule became effective on June 16, 1997.
7. "SECURITIES DEPOSITORY" shall mean any securities depository or
clearing agency within the meaning of Section (a)(1)(ii) or (a)(1)(iii) of
the Rule.
8. "COMPULSORY DEPOSITORY" shall mean a Securities Depository the
use of which is mandatory by law or regulation or because securities cannot
be withdrawn from such Securities Depository, or because maintaining
securities outside the Securities Depository would not permit purchases and
sales of these securities to occur in accordance with routine settlement
timing and procedures in the relevant market.
9. "SPECIFIED COUNTRY" shall mean each country listed on Schedule 2
attached hereto and each country, other than the United States, constituting
the primary market for a security with respect to which the Fund has given
settlement instructions to The Bank of New York as custodian (the
"Custodian") under its Custody Agreement with the Fund.
ARTICLE II
BNY AS A FOREIGN CUSTODY MANAGER
1. The Fund on behalf of its Board hereby delegates to BNY with
respect to each Specified Country the Responsibilities.
2. BNY accepts the Board's delegation of Responsibilities with
respect to each Specified Country and agrees in performing the
Responsibilities as a Foreign Custody Manager to exercise reasonable care,
prudence and diligence such as a person having responsibility for the
safekeeping of the Fund's assets would exercise.
3. BNY shall provide to the Board at such times as the Board deems
reasonable and appropriate based on the circumstances of the Fund's foreign
custody arrangements written reports notifying the Board of the placement of
assets of the Fund with a particular Eligible Foreign Custodian within a
Specified Country and of any material change in the arrangements (including,
in the case of Qualified Foreign Banks, any material change in any contract
governing such arrangements and in the case of Securities Depositories, any
material change in the established practices or procedures of such Securities
Depositories) with respect to assets of the Fund with any such Eligible
Foreign Custodian.
ARTICLE III
RESPONSIBILITIES
1 . (a) Subject to the provisions of this Agreement, BNY shall with
respect to each Specified Country select an Eligible Foreign Custodian (other
than a Compulsory Depository) which is not functioning as the Fund's Eligible
Foreign Custodian as of the Effective Date. In connection therewith, BNY
shall: (i) determine that assets of the Fund held by such Eligible Foreign
Custodian will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market in which such Eligible
Foreign Custodian operates, after considering all factors relevant to the
safekeeping of such assets, including, without limitation, those contained in
Section (c)(1) of the Rule; (ii) determine that the Fund's foreign custody
arrangements with each Qualified Foreign Bank are governed by a written
contract with the Custodian (or, in the case of a Securities Depository other
than a Compulsory Depository, by such a contract, by the rules or established
practices or procedures of the Securities Depository, or by any combination
of the foregoing) which will provide reasonable care for the Fund's assets
based on the standards specified in paragraph (c)(1) of the Rule; and (ii)
determine that each contract with a Qualified Foreign Bank shall include the
provisions specified in paragraph (c)(2)(i)(A) through (F) of the Rule or,
alternatively, in lieu of any or all of such (c)(2)(i)(A) through (F)
provisions, such other provisions as BNY determines will provide, in their
entirety, the same or a greater level of care and protection for the assets
of the Fund as such specified provisions.
(b) In addition, subject to the provisions of this Agreement, BNY
shall with respect to each Eligible Foreign Custodian (other than a
Compulsory Depository), regardless of when and by whom selected, (i)
monitor pursuant to the Monitoring System the appropriateness of
maintaining the assets of the Fund with a particular Eligible Foreign
Custodian pursuant to paragraph (c)(1) of the Rule and in the case of a
Qualified Foreign Bank, any material change in the contract governing such
arrangement and in the case of a Securities Depository, any material change
in the established practices or procedures of such Securities Depository;
and (ii) advise the Fund whenever an arrangement (including, in the case of
a Qualified Foreign Bank, any material change in the contract governing
such arrangement and in the case of a Securities Depository, any material
change in the established practices or procedures of such Securities
Depository) described in preceding clause (b)(i) no longer meets the
requirements of the Rule, it being understood that BNY shall provide such
advice promptly upon learning of such noncompliance.
(c) Subject to the provisions of this Agreement, after execution of
this Agreement with respect to each Compulsory Depository which has been
established, as of the Effective Date, in countries in which BNY has
appointed a Subcustodian and thereafter in connection with each new or
additional Compulsory Depository established in countries in which BNY
appoints, or has appointed, as the case may be, a Subcustodian, BNY shall
determine, with respect to each such Compulsory Depository, that:
(i) the Eligible Foreign Custodian which is utilizing the services of
the Compulsory Depository has undertaken to adhere to the rules,
practices and procedures of such Compulsory Depository;
(ii)no regulatory authority with oversight responsibility for the
Compulsory Depository has issued a public notice that the Compulsory
Depository is not in compliance with any material capital, solvency,
insurance or other similar financial strength requirements imposed by
such authority or, in the case of such notice having been issued,
that such notice has been withdrawn or the remedy of such
noncompliance has been publicly announced by the Compulsory
Depository;
(iii) no regulatory authority with oversight responsibility over
the Compulsory Depository has issued a public notice that the
Compulsory Depository is not in compliance with any material internal
controls requirement imposed by such authority or, in the case such
notice having been issued, that such notice has been withdrawn or the
remedy of such noncompliance has been publicly announced by the
Compulsory Depository;
(iv)the Compulsory Depository maintains the assets of the Fund's
Eligible Foreign Custodian which is utilizing the services of the
Compulsory Depository under no less favorable safekeeping conditions
than those that apply generally to other participants in the
Compulsory Depository;
(v) the Compulsory Depository maintains records that segregate the
Compulsory Depository's own assets from the assets of participants in
the Compulsory Depository;
(vi)the Compulsory Depository maintains records that identify the
assets of each of its participants;
(vii) the Compulsory Depository provides periodic reports to its
participants with respect to the safekeeping of assets maintained by
the Compulsory Depository, including, by way of example, notification
of any transfer to or from a participant's account; and
(viii) the Compulsory Depository is subject to periodic review,
such as audits by independent accountants or inspections by
regulatory authorities.
BNY shall make the foregoing determinations (i) with respect to each
Compulsory Depository which has been established as of the Effective Date in
countries in which BNY has appointed a Subcustodian by September 30, 1998 and
(ii) with respect to each new or additional Compulsory Depository established
in countries in which BNY appoints, or has appointed, as the case may be, a
Subcustodian, to the extent feasible in light of the circumstances then
prevailing within ninety (90) days of the date such Compulsory Depository
commences operations; and, in each case, shall advise the Fund and its
investment advisor promptly after each such determination is made.
In the event that the US Securities and Exchange Commission ("SEC")
adopts standards or criteria different from those set forth above, the
above provisions shall be deemed to be amended to conform to the standards
or criteria adopted by the SEC.
(d) Subject to the provisions of this Agreement, with respect to each
Compulsory Depository in which Fund's assets are maintained at any time
during the term of this Agreement, BNY shall monitor, pursuant to the
Monitoring System, each such Compulsory Depository's compliance with the
criteria set forth in clause l(c) of this Article III and, upon determining
that any Compulsory Depository is not in compliance with any of such
criteria, shall promptly advise the Fund and its investment advisor of such
non-compliance.
2. (a) For purposes of clauses (a)(i), (a)(ii) and (c) of preceding
Section I of this Article, BNY's determination with respect to each
Securities Depository will be based upon publicly available information,
which may be limited, plus any other information which is made available by
each such Securities Depository to BNY or its Qualified Foreign Bank.
(b) For purposes of clause (b)(i) of preceding Section I of
this Article, BNY's determination of appropriateness shall not include, nor
be deemed to include, any evaluation of Country Risks associated with
investment in a particular country. For purposes hereof, "Country Risks"
shall mean systemic risks of holding assets in a particular country
including, but not limited to, (i) the use of Compulsory Depositories, (ii)
such country's financial infrastructure, (iii) such country's prevailing
custody and settlement practices, (iv) nationalization, expropriation or
other governmental actions, (v) regulation of the banking or securities
industry, (vi) currency controls, restrictions, devaluations or
fluctuations, and (vii) market conditions which affect the orderly
execution of securities transactions or affect the value of securities.
ARTICLE IV
REPRESENTATIONS
1. The Fund hereby represents that: (a) this Agreement has been duly
authorized, executed and delivered by the Fund, constitutes a valid and
legally binding obligation of the Fund enforceable in accordance with its
terms, and no statute, regulation, rule, order, judgment or contract binding
on the Fund prohibits the Fund's execution or performance of this Agreement;
(b) this Agreement has been approved and ratified by the Board at a meeting
duly called and at which a quorum was at all times present; and (c) the Board
or its investment advisor has considered the Country Risks associated with
investment in each Specified Country and will have considered such risks
prior to any settlement instructions being given to the Custodian with
respect to any other Specified Country.
2. BNY hereby represents that: (a) BNY is duly organized and
existing under the laws of the State of New York, with full power to carry on
its businesses as now conducted, and to enter into this Agreement and to
perform its obligations hereunder; (b) this Agreement has been duly
authorized, executed and delivered by BNY, constitutes a valid and legally
binding obligation of BNY enforceable in accordance with its terms, and no
statute, regulation, rule, order, judgment or contract binding on BNY
prohibits BNY's execution or performance of this Agreement; and (c) BNY has
established the Monitoring System.
ARTICLE V
CONCERNING BNY
1 . BNY shall not be liable for any costs, expenses, damages,
liabilities or claims, including attorneys' and accountants' fees, sustained
or incurred by, or asserted against, the Fund except to the extent the same
arises out of the failure of BNY to exercise the care, prudence and diligence
required by Section 2 of Article II hereof. In no event shall BNY be liable
to the Fund, the Board, or any third party for special, indirect or
consequential damages, or for lost profits or loss of business, arising in
connection with this Agreement.
2. The Fund shall indemnify BNY and hold it harmless from and
against any and all costs, expenses, damages, liabilities or claims,
including attorneys' and accountants' fees, sustained or incurred by, or
asserted against, BNY by reason or as a result of any action or inaction, or
arising out of BNY's performance hereunder, provided that the Fund shall not
indemnify BNY to the extent any such costs, expenses, damages, liabilities or
claims arises out of BNY's failure to exercise the reasonable care, prudence
and diligence required by Section 2 of Article II hereof.
3. For its services hereunder, the Fund agrees to pay to BNY such
compensation and out-of-pocket expenses as shall be mutually agreed.
4. BNY shall have only such duties as are expressly set forth
herein. In no event shall BNY be liable for any Country Risks associated
with investments in a particular country.
ARTICLE VI
MISCELLANEOUS
1 This Agreement constitutes the entire agreement between the Fund
and BNY, and no provision in the Custody Agreement between the Fund and the
Custodian shall affect the duties and obligations of BNY hereunder, nor shall
any provision in this Agreement affect the duties or obligations of the
Custodian under the Custody Agreement.
2. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to BNY, shall be sufficiently given if received
by it at its offices at 90 Washington Street, New York, New York 10286, or at
such other place as BNY may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
received by it at its offices at Franklin Resources, 777 Mariners Island
Boulevard, San Mateo, California, 94404, Attn: Deborah R. Gatzek, General
Counsel and Senior Vice President, or at such other place as the Fund may
from time to time designate in writing.
4. In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected thereby. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties. This
Agreement shall extend to and shall be binding upon the parties hereto, and
their respective successors and assigns; provided however, that this
Agreement shall not be assignable by either party without the written consent
of the other.
5. This Agreement shall be construed in accordance with the
substantive laws of the State of New York, without regard to conflicts of
laws principles thereof
6. The parties hereto agree that in performing hereunder, BNY is
acting solely on behalf of the Fund and no contractual or service
relationship shall be deemed to be established hereby between BNY and any
other person.
7. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
8. This Agreement shall terminate simultaneously with the
termination of the Custody Agreement between the Fund and the Custodian, and
may otherwise be terminated by either party giving to the other party a
notice in writing specifying the date of such termination, which shall be not
less than thirty (30) days after the date of such notice.
IN WITNESS WHEREOF, the Fund and BNY have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the
date first above written.
EACH INVESTMENT COMPANY
LISTED ON SCHEDULE 1 ATTACHED
HERETO.
By: /s/ Deborah R. Gatzek
Title: Vice President
Of Each Such Investment Company
THE BANK OF NEW YORK
By: /s/ Stephen E. Grunston
Title: Vice President
SCHEDULE 1
<TABLE>
<CAPTION>
INVESTMENT COMPANY SERIES
<S> <C>
Franklin Gold Fund
Franklin Asset Allocation Fund
Franklin Equity Fund
Franklin High Income Trust AGE High Income Fund
Franklin Custodian Funds, Inc. Growth Series
Utilities Series
DynaTech Series
Income Series
Franklin Investors Securities Trust Franklin Global Government Income Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Bond Fund
Franklin Value Investors Trust Franklin Balance Sheet Investment
Franklin MicroCap Value Fund
Franklin Value Fund
Franklin Strategic Mortgage Portfolio
Franklin Managed Trust Franklin Rising Dividends Fund
Franklin Investment Grade Income Fund
Franklin Strategic Series 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 Templeton International Trust Templeton Pacific Growth Fund
Franklin Real Estate Securities Trust Franklin Real Estate Securities Fund
INVESTMENT COMPANY SERIES
Franklin Valuemark Funds Money Market Fund
Growth and Income Fund
Natural Resources Securities Fund
Real Estate Securities Fund
Global Utilities Securities Fund
High Income Fund
Templeton Global Income Securities Fund
Income Securities Fund
U.S. Government Securities Fund
Zero Coupon Fund - 2000
Zero Coupon Fund - 2005
Zero Coupon Fund - 20 1 0
Rising Dividends Fund
Templeton Pacific Growth Fund
Templeton International Equity Fund
Small Cap Fund
Capital Growth Fund
Mutual Discovery Securities Fund
Mutual Shares Securities Fund
Global Health Care Securities Fund
Value Securities Fund
Franklin Universal Trust
Franklin Multi-Income Trust
Franklin Floating Rate Trust
Franklin Templeton Fund Allocator Series Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
SCHEDULE 2
- ----------------------------------------------------------- ---------------------------------------------------------
Country/ Country/
Market Subcustodian(s) Market Subcustodian(s)
- ----------------------------------------------------------- ---------------------------------------------------------
- ----------------------------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C>
Argentina BankBoston, N.A. Hungary Citibank Budapest Rt.
Australia Conunonwealth Bank of Australia/ Iceland Landsbanki Islands
National Australia Bank Limited
Austria Creditanstalt AG India The Hongkong and Shanghai Banking
Corporation Limited/Deutsche Bank AG
Bahrain The British Bank of the Middle East Indonesia The Hongkong and Shanghai
Banking
Bangladesh Standard Chartered Bank Corporation Limited
Belgium Banque Bruxelles Lambert Ireland Allied Irish Banks, plc
Bermuda Bank of Bermuda Limited Israel Bank Leumi LE - Israel B.M.
Italy Banca Commerciale Italiana/
Botswana Stanbic Bank Botswana Limited Banque Paribas S.A.
Brazil BankBoston, N.A. Ivory Coast Societe Geneale de Banque en Cete d'Ivoire
Bulgaria ING Bank-Sofia
Jamaica CIBC Trust & Merchant Bank Jamaica
Canada Royal Bank of Canada Litd
Chile BankBoston, N.A. Japan The Bank of Tokyo-Mitsubishi Limited/
China Standard Chartered Bank The Fuji Bank, Limited
Colombia Cititrust Colombia S.A. Jordan The British Bank of the Middle East
Costa Rica Banco BCT Kenya Stanbic Bank Kenya Limited
Croatia Pfivredna Banka Zagreb d.d. Latvia Societe Generale Riga
Cyprus Bank of Cyprus Lebanon The British Bank of the Middle East
Czech Republic Ceskoslovenska Obchodni Banka A.S. Lithuania Vilniaus Bankas
Denmark Den Danske Bank Luxembourg Banque Internationale a Luxembourg
Malaysia Hongkong Bank Malaysia Berhad
EASDAQ Banque Bruxelles Lambert Malta Mid-Med Bank Pic
Ecuador Citibank, N.A. Mauritius The Hongkong and Shanghai
Egypt Citibank, N.A. Banking
Estonia Hansabank Limited. Corporation Limited
Euromarket Cedel Bank Mexico Banco Nacional de Mexico
Euromarket Euroclear Morocco Banque Commerciale du Maroc
Finland MeTita Bank Ltd. Namibia Stanbic Bank Namibia Limited
France Banque Paribas S.A./ Netherlands Mees Pierson
Credit Commercial de France New Zealand Australia and New Zealand Banking Group
Germany Dresdner Bank AG
Ghana Merchant Bank (Ghana) Limited Nigeria Stanbic Merchant Bank Nigeria Limited
Greece National Bank of Greece SA Norway Den norske Bank ASA
Oman The British Bank of the Middle East
Hong Kong The Hongkong and Shanghai Banking
Corporation Limited Pakistan Standard Chartered Bank
Portugal Banco Comercial Portugues/ Peru Citibank, N.A.
Banco Espirito Santo Philippines The Hongkong and Shanghai Banking
Romania ING Bank Bucharest Branch Corporation Limited
Poland Bank Handlowy W Warszawie S.A
Russia Vneshtorgbank (Min Fin Bonds only)/
Credit Suisse First Boston Limited/ Switzerland Union Bank of Switzerland/
Unexim Bank Bank Leu Ltd.
Singapore United Overseas Bank Limited/ Taiwan The Hongkong and Shanghai Banking
The Development Bank of Singapore Ltd Corporation Limited
Slovakia Ceskoslovenska Obchodna Banka, a.s Thailand Standard Chartered Bank
Slovenia Banka Creditsanstalt D.D., Ljubljana Bangkok Bank Public Company Limited
South Africa The Standard Bank of South Africa Tunisia Banque Internationale Arabe de Tunisie
Limited
Turkey Osmanli Bankasi A.S. (Ottoman Bank)
South Korea Standard Chartered Bank Ukraine Bank Ukraina
Spain Banco Bilbao Vizcaya United Kingdom The Bank of New York, N.A./
SriLanka Standard Chartered Bank First Chicago Clearing Center
Swaziland Stanbic Bank Swaziland Limited United States The Bank of New York, N.A.
Sweden Skandinaviska Enskilda Banken Uruguay BankBoston, N.A.
Venezuela Citibank, N.A.
Zambia Stanbic Bank Zambia Limited
Zimbabwe Stanbic Bank Zimbabwe Limited
</TABLE>
Law Offices
STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8024
September 25, 1998
Franklin Floating Rate Trust
777 Mariners Island Boulevard
San Mateo, CA 94404
Re: OFFER AND SALE OF ADDITIONAL 35,000,000 SHARES OF
FRANKLIN FLOATING RATE TRUST
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer
and sale from time to time of an additional 35,000,000 shares of beneficial
interest, par value $.01 per share (the "Common Shares"), of the Franklin
Floating Rate Trust (the "Fund"), registered under the Securities Act of
1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act"), by a fourth Registration Statement on Form N-2
(File No. 811-08271) as amended from time to time (the "Registration
Statement") to be filed with the U.S. Securities and Exchange Commission (the
"Commission").
We have acted as general counsel to the Fund in connection with
its initial organization and its registrations with the Commission, and we
are familiar with the actions taken by its Trustees to authorize previously
the issuance, offer and sale of 35,000,000 Common Shares and currently the
issuance, offer and sale of an additional 35,000,000 Common Shares.
We have examined the Agreement and Declaration of Trust (the
"Trust Agreement") of the Fund, a Delaware business trust organized under
Delaware law, the By-Laws of the Fund, minute books and such other
certificates and documents as deemed necessary for the purpose of this
opinion.
We have examined the Registration Statement and the prospectus
and statement of additional information included therein (the "Prospectus")
relating to the issuance of an additional 35,000,000 Common Shares of the
Fund. We have also examined the Fund's Notification of Registration on Form
N-8A under the 1940 Act. We have assisted in the preparation of the
Registration Statement to be filed with the Commission.
Based upon the foregoing information and examination, it is our
opinion that:
1. The Fund is duly organized and validly existing as a
business trust in good standing under the laws of the State of
Delaware; and
2. The Fund's Common Shares to be offered for sale
pursuant to the Prospectus are duly authorized and, when sold,
issued and paid for as contemplated by the Prospectus, will be
validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and amendments thereto, covering the registration of
the Fund's additional 35,000,000 Common Shares under the 1933 Act and the
1940 Act, and to the applications and registration statements, and amendments
thereto, filed in accordance with the securities laws of the several states
or other like jurisdictions of the United States in which the Fund's Common
Shares are offered and sold. We further consent to reference in the
Prospectus of the Fund to the fact that this opinion has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By: /s/ MARK H. PLAFKER
Mark H. Plafker
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Franklin Floating Rate Trust on Form N-2 of our report dated September 4,
1998, on our audit of the financial statements and financial highlights of
the Franklin Floating Rate Trust, which report is included in the Annual
Report to Shareholders for the fiscal year ended July 31, 1998, which is
incorporated by reference in the Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
September 30, 1998
POWER OF ATTORNEY
The undersigned officers and trustees of FRANKLIN FLOATING RATE TRUST
(the "Registrant"), hereby appoint MARK H. PLAFKER, HARMON E. BURNS, DEBORAH
R. GATZEK, KAREN L. SKIDMORE AND LARRY L. GREENE (with full power to each of
them to act alone) as attorney-in-fact and agent, in all capacities, to
execute, and to file any of the documents referred to below relating to the
Amendments to the Company's Registration Statement on Form N-2 under the
Investment Company Act of 1940 with respect thereto with any 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.
The undersigned officers and trustees hereby execute this Power of
Attorney as of this 16th day of June, 1998.
/S/ RUPERT H. JOHNSON, JR. /S/ CHARLES B. JOHNSON
Rupert H. Johnson, Jr., Charles B. Johnson,
Principal Executive Officer Trustee
and Trustee
/S/ FRANK H. ABBOTT, III /S/ HARRIS J. ASHTON
Frank H. Abbott, III, Harris J. Ashton,
Trustee Trustee
/S/ S. JOSEPH FORTUNATO /S/ EDITH E. HOLIDAY
S. Joseph Fortunato, Edith E. Holiday,
Trustee Trustee
/S/ FRANK W.T. LAHAYE /S/ GORDON S. MACKLIN
Frank W. T. LaHaye, Gordon S. Macklin,
Trustee Trustee
/S/ DIOMEDES LOO-TAM /S/ MARTIN L. FLANAGAN
Diomedes Loo-Tam, Martin L. Flanagan,
Principal Accounting Officer Principal Financial Officer
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, certify that I am Secretary of Franklin Floating
Rate Trust (the "Trust").
As 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, on
June 16, 1998.
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, Karen L. Skidmore, Larry L. Greene
and Mark H. Plafker as attorneys-in-fact for the purpose of
filing documents with the Securities and Exchange Commission, be
executed by each Trustee 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: June 16, 1998 /s/ Deborah R. Gatzek
Deborah R. Gatzek
Secretary
