o 020 P-5
SUPPLEMENT DATED SEPTEMBER 1, 2000
TO THE PROSPECTUS OF
FRANKLIN FLOATING RATE TRUST
DATED DECEMBER 1, 1999
(REPLACES SUPPLEMENT DATED JULY 3, 2000)
As in the prospectus, terms beginning with a capital letter or having all
capitals are explained in the Useful Terms and Definitions section at the end
of the prospectus.
The prospectus is amended as follows:
I. All references to Franklin Templeton Trust Company in this prospectus are
replaced with Franklin Templeton Bank & Trust.
II. All references in the prospectus to the number of Common Shares of the
fund registered with the SEC are amended to reflect the registration of an
additional 200,000,000 Common Shares, bringing the total number of registered
Common Shares of the fund to 520,000,000.
III. The second and third paragraphs and the footnote on the inside front
cover 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 is authorized as a business trust to issue an unlimited number of
Common Shares and has registered 520,000,000 Common Shares. Common Shares are
offered at a price equal to the next determined Net Asset Value per share,
which, as of June 15, 2000, was $9.86 per share. There is no front-end sales
charge on purchases of Common Shares. An Early Withdrawal Charge of 1% will
be imposed on Common Shares 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. Please see "Early Withdrawal Charge." The price of
Common Shares will fluctuate, depending upon the fund's Net Asset Value per
share.
The proceeds to the fund of the offering of the 200,000,000 Common Shares
most recently registered by the fund are estimated at $1,972,000 and, subject
to expenses of issuance and distribution1 and any repurchases, will be
invested by the fund over the course of the continuous offering.
1. The expenses of issuance and distribution for such Common Shares are
estimated at $8,624,293 which includes, in addition to other expenses,
$670,293 for government and self-regulatory organization filing fees and
$7,888,000 for accounting and transfer agent fees. The fund incurred
organizational expenses that remain a liability of the fund and are gradually
reduced in equal installments over a period of 60 months from the date the
fund commenced investment operations on October 10, 1997. The remaining
liability, as of May 31, 2000, is $55,865 and the amount of the monthly
reduction is $2,067. The foregoing expenses that are incurred during the
annual period as described in "Expense Summary" below are included in the
total annual fund operating expenses described in such summary.
IV. The following information is added to the section "Financial Highlights"
on page 4:
SIX MONTHS
ENDED
JANUARY 31,
2000
(UNAUDITED)/1/
----------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $9.98
----------------
Income from investment operations:
Net investment income 0.40
Net realized and unrealized gains (losses) (0.02)
----------------
Total from investment operations 0.38
----------------
Less distributions from net investment income (0.40)
----------------
Net asset value, end of period $9.96
----------------
Total return2 3.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $1,773,356
Ratios to average net assets:
Expenses 1.40%/3/
Expenses excluding waiver and payments by 1.42%/3/
affiliate
Net investment income 8.08%/3/
Portfolio turnover rate 41.84%
1. Based on average shares outstanding.
2. Total return does not reflect the Early Withdrawal Charge and is not
annualized.
3. Annualized.
V. The section "Opening Your Account" on page 40 is replaced with the
following:
To open your account, please follow the steps below. This will help avoid any
delays in processing your request. PLEASE KEEP IN MIND THAT THE FUND DOES NOT
CURRENTLY ALLOW INVESTMENTS BY MARKET TIMERS.
1. Read this prospectus carefully.
2. Determine how much you would like to invest. The fund's minimum
investments are:
o To open an account $1,000
o To open a custodial account for a minor
o (an UGMA/UTMA account) $ 100
o To open an account with an automatic investment
o plan ($25 for an Education IRA) $ 50
o To add to an account $ 50
We reserve the right to change the amount of these minimums for certain
purchases. We also reserve the right to restrict or refuse any order to buy
Common Shares, including any purchase under the exchange privilege.
3. Carefully complete and sign the enclosed account application, including
the optional shareholder privileges section. To save time, you can sign up
now for services you may want on your account by completing the appropriate
sections of the application (see "Services to Help You Manage Your Account"
on page 61). For example, if you would like to link one of your bank accounts
to your fund account so that you may use electronic fund transfers to and
from your bank account to buy and sell shares,
please complete the bank information section of the application. We will keep
your bank information on file for future purchases and redemptions.
4. Make your investment using the table below.
METHOD STEPS TO FOLLOW
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BY MAIL For an initial investment:
Return the application to the fund with your
check made payable to the fund.
For additional investments:
Send a check made payable to the fund. Please
include your account number on the check.
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BY WIRE 1. Call Shareholder Services or, if that number is
busy, call 1-650/312-2000 collect, to receive a
wire control number and wire instructions. You
need a new wire control number every time you
wire money into your account. If you do not
have a currently effective wire control number,
we will return the money to the bank, and we
will not credit the purchase to your account.
2. For an initial investment you must also return
your signed application to the fund.
IMPORTANT DEADLINES: If we receive your call
before 1:00 p.m. Pacific time and the bank
receives the wired funds and reports the receipt
of wired funds to the fund by 3:00 p.m. Pacific
time, we will credit the purchase to your account
that day. If we receive your call after 1:00 p.m.
or the bank receives the wire after 3:00 p.m., we
will credit the purchase to your account the
following business day.
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THROUGH
YOUR DEALER Call your investment representative
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BY PHONE OPENING AN ACCOUNT: If you have another Franklin
(Up to $100,000 Templeton account with your bank account
per day) information on file, you may open a new account by
1-800/632-2301 phone.
To make a same day investment, please call us by
1:00 p.m. Pacific time or the close of the New
York Stock Exchange, whichever is earlier.
ADDING TO AN ACCOUNT: Before requesting a
telephone purchase, please make sure we have your
bank account information on file. If we do not
have this information, you will need to send
written instructions with your bank's name and
address, a voided check or savings account deposit
slip, and a signature guarantee if the bank and
fund accounts do not have at least one common
owner.
To make a same day investment, please call us by
1:00 p.m. Pacific time or the close of the New
York Stock Exchange, whichever is earlier.
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VI. The first sentence of the fourth paragraph of the section "Exchanges" on
page 51 is replaced with the following:
You may request an exchange over the phone (1-800-632-2301) provided that you
do not hold share certificates for the Common Shares or other Franklin
Templeton Fund shares you want to exchange. If your shares are held in street
or nominee name, please contact your Securities Dealer to request an exchange
by telephone. Otherwise, appropriate written instructions, signed by all
registered owners, must accompany your exchange request.
VII. The last two paragraphs of the "Exchanges" section that begins on page
51 are replaced with the following:
Because excessive trading can hurt fund performance, operations and
shareholders, the fund, effective November 1, 2000, reserves the right to
revise or terminate the exchange privilege, limit the amount or number of
exchanges, reject any exchange, or restrict or refuse purchases if (i) the
fund or its manager believes the fund would be harmed or unable to invest
effectively, or (ii) the fund receives or anticipates simultaneous orders
that may significantly affect the fund.
Please refer to "Transaction Procedures and Special Requirements" for other
important information on how to exchange Common Shares.
VIII. The last paragraph of the section "Written Instructions" on page 59 is
replaced with the following:
TENDER OFFERS-TELEPHONE INSTRUCTIONS
Generally, in a Tender Offer, requests to tender Common Shares with a value
of $100,000 or less can be made over the phone (1-800-632-2301) provided that
you do not hold share certificates and you have not changed your address by
phone within the last 15 days. You may not tender over the phone more than
$100,000 in Common Shares during any single Tender Offer period. If your
shares are held in street or nominee name, please contact your Securities
Dealer to tender your Common Shares by telephone. Otherwise, written
instructions with respect to your tender of Common Shares in a Tender Offer
must be completed in the manner described, and on the appropriate forms
included, in the notification to shareholders of the Tender Offer.
If you qualify for a waiver from the Early Withdrawal Charge, please notify
our representative when you request to tender Common Shares over the phone.
If you do not indicate that you qualify for this waiver, the fund cannot
guarantee that you will receive the waiver.
IX. The section "Automatic Investment Plan" on page 61 is replaced with the
following:
AUTOMATIC INVESTMENT PLAN
This plan offers a convenient way for you to invest in the fund by
automatically transferring money from your checking or savings account each
month to buy Common Shares. To sign up, complete the appropriate section of
your account application and mail it to Investor Services. If you are opening
a new account, please include the minimum initial investment of $50 ($25 for
an Education IRA) with your application.
X. The section "Services to Help You Manage Your Account" on page 61 is
amended to add the following:
TELEPHONE PRIVILEGES
You automatically receive telephone privileges when you open your account,
allowing you, your investment representative or your Securities Dealer to
buy, sell or exchange your shares in connection with a Tender Offer and make
certain other changes to your account by phone.
For accounts with more than one registered owner, telephone privileges also
allow the fund to accept written instructions signed by only one owner for
transactions and account changes that could otherwise be made by phone. For
all other transactions and changes, all registered owners must sign the
instructions. In addition, our telephone exchange privilege allows you to
exchange shares by phone from a fund account requiring two or more signatures
into an identically registered money fund account requiring only one
signature for all transactions. This type of telephone exchange is available
as long as you have telephone exchange privileges on your account.
As long as we take certain measures to verify telephone requests, we will not
be responsible for any losses that may occur from unauthorized requests. Of
course, you can decline telephone purchase, exchange, or redemption
privileges by sending your written instruction stating that you decline
telephone exchange or redemption privileges to Investor Services at P.O. Box
997151, Sacramento, CA, 95899-9983.
AUTOMATIC PAYROLL DEDUCTION
You may invest in the Fund automatically by transferring money from your
paycheck to the Fund by electronic funds transfer. If you are interested,
indicate on your application that you would like to receive an Automatic
Payroll Deduction Program kit.
Please keep this supplement for future reference.
