SUPPLEMENT DATED APRIL 30, 1998
TO THE PROSPECTUS OF
FRANKLIN FLOATING RATE TRUST
DATED APRIL 1, 1998
The prospectus is amended as follows:
I. The third sentence under the subsection "Opening Your Account" on page 36 is
deleted.
II. The following new subsection is added to the bottom of page 37.
MAY I BUY COMMON SHARES IN CONNECTION WITH RETIREMENT PLANS?
Retirement plan investors should be aware of the following features of the
Fund which may impact their decision as to whether the Fund is an
appropriate investment for the retirement plan. Common Shares are not
liquid; unlike open end fund shares, they are not redeemable on each day
that the Fund is open for business; and unlike traditional closed end
funds, shares of the Fund do not trade on any exchange and thus cannot
readily be sold. Although the Fund has adopted policies to provide
quarterly Tender Offers, these Tender Offers may not provide shareholders
with the degree of liquidity they desire or may require for tax purposes.
Additionally, even during a Tender Offer a shareholder may not be able to
have all of the shares it wishes to tender be repurchased by the Fund. If
the number of shares tendered by all shareholders exceeds the repurchase
amount authorized by the Board, the Fund may not be able to repurchase all
shares submitted and thus may repurchase shares on a pro rata basis. The
Fund also imposes an Early Withdrawal Charge on the proceeds payable to
shareholders from the Fund's repurchase of Common Shares tendered by
shareholders within 12 months of their purchase.
The features described above could result in a retirement plan paying an
Early Withdrawal Charge and/or not being able to comply with mandatory
distribution requirements. Accordingly, retirement plan investors may wish
to limit the percentage of plan assets, for example to 10%, that are
invested in the Fund.
The Fund does not monitor retirement plan requirements for any investor.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan or electing to invest in the Fund through a
retirement plan. Your investment representative or advisor can help you
make investment decisions within your plan.
Plan documents are required for all retirement plans. Trust Company can
provide the plan documents for you and serve as custodian or trustee.
Trust Company can provide you with brochures containing important
information about its plans. To establish a Trust Company retirement plan,
you will need an application other than the one included in this
prospectus. For a retirement plan brochure or application, call Retirement
Plan Services.
III. The subsection titled "PAYMENTS TO SECURITIES DEALERS" on page 38 is
replaced in its entirety with the following.
The payments described below may be made to Securities Dealers who
initiate and are responsible for purchases of Common Shares. The payments
are subject to the sole discretion of Distributors, and are paid by
Distributors or one of its affiliates and not by the Fund or its
shareholders.
1. For purchases of Common Shares - 1.00% of the dollar amount of Common
Shares sold by the Securities Dealers. This payment consists of 0.75%
of sales commission and 0.25% of service fee (for the first year's
services). For purchases of $3 million or more where the Securities
Dealer has waived this payment, the Common Shares purchased will
qualify for a waiver of the Early Withdrawal Charge. In these
circumstances Distributors, at its discretion, may pay Securities
Dealers up to 0.50%, paid over the initial six months of investment, of
the dollar amount invested. [ARE WE SURE WE WANT TO GIVE THE BROKER A
CHOICE SINCE ONE ALTERNATIVE WOULD RESULT IN A POTENTIAL CHARGE TO THE
SHAREHOLDER? - WILL THIS POSE A FIDUCIARY PROBLEM FOR THE
BROKER/DEALER?]
2. Purchases by trust companies and bank trust departments, and Eligible
Governmental Authorities - up to 0.25% of the amount invested
A Securities Dealer may receive only one of these payments for each
qualifying purchase. For Securities Dealers who receive payments described
in paragraph 1 above, if Common Shares remain outstanding for at least
twelve months from the date of their original purchase, Distributors will,
beginning in the thirteenth month, compensate the Securities Dealers
quarterly at an annual rate of 0.50% of the value of the Common Shares
sold by the Securities Dealers and remaining outstanding.
The total compensation paid to selected Securities Dealers and
Distributors, including, but not limited to, the compensation paid at the
time of purchase, the quarterly payments mentioned above and the Early
Withdrawal Charge will not amount to more than 8.00% of the initial gross
proceeds of the offering and will comply with the NASD Conduct Rule
regarding sales charges of open-end investment companies.
IV. The following is added as the third bullet point on page 44 under the
subsection "WAIVERS OF THE EARLY WITHDRAWAL CHARGE" (that begins on page
43).
Purchases of $3 million or more if the Securities Dealer of record
received a payment from Distributors of 0.50% or less in connection
with the purchase.
V. The following definition is added to the section "Glossary - Useful Terms
and Definitions" beginning on page 58.
TRUST COMPANY - Franklin Templeton Trust Company. Trust Company is an
affiliate of Distributors and both are wholly owned subsidiaries of
Resources.
