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SUPPLEMENT DATED OCTOBER 1, 1998
TO THE PROSPECTUS OF
FRANKLIN CUSTODIAN FUNDS, INC. - ADVISOR CLASS
dated February 1, 1998
The prospectus is amended as follows:
I. The section "Management Team - Income Series," found under "Who Manages
the Fund?", is revised to add Frederick G. Fromm to the management team,
effective January 1998, and to add the following:
Frederick G. Fromm
Portfolio Manager of Advisers
Mr. Fromm holds a Bachelor of Arts degree in Business Economics from the
University of California, Santa Barbara. He has been with the Franklin
Templeton Group since 1992.
II. The second category under "How Do I Buy Shares? - Minimum Investments,"
discussing minimum investments for qualified registered investment advisors,
is replaced with the following:
2. Qualified registered investment advisors or certified financial
planners who have clients invested in the Franklin Mutual Series
Fund Inc. on October 31, 1996, or who buy through a broker-dealer or
service agent who has entered into an agreement with Distributors,
subject to a $1,000 minimum initial and $50 minimum subsequent
investment requirement
III. The following new item is added under "May I Exchange Shares for Shares
of Another Fund? - Exchange Restrictions":
o You must meet the applicable minimum investment amount of the fund you
are exchanging into, or exchange 100% of your Fund shares.
IV. Distribution option 3 in the section "What Distributions Might I Receive
From the Fund? - Distribution Options" is replaced with the following:
3. RECEIVE DISTRIBUTIONS IN CASH - You may receive dividends, or both
dividend and capital gain distributions in cash. If you have the
money sent to another person or to a checking or savings account,
you may need a signature guarantee. If you send the money to a
checking or savings account, please see "Electronic Fund Transfers"
under "Services to Help You Manage Your Account."
V. The section "Keeping Your Account Open," found under "Transaction
Procedures and Special Requirements," is replaced in its entirety with the
following:
KEEPING YOUR ACCOUNT OPEN
Due to the relatively high cost of maintaining a small account, we may
close your account if the value of your shares is less than $250, or less
than $50 for employee accounts. We will only do this if the value of your
account fell below this amount because you voluntarily sold your shares and
your account has been inactive (except for the reinvestment of
distributions) for at least six months. Before we close your account, we
will notify you and give you 30 days to increase the value of your account
to $1,000, or $100 for employee accounts. These minimums do not apply to
IRAs, accounts managed by the Franklin Templeton Group, the Franklin
Templeton Profit Sharing 401(k) Plan, the series of Franklin Templeton Fund
Allocator Series, or certain defined contribution plans that qualify to buy
shares with no minimum initial investment requirement.
VI. The second sentence in the section "Services to Help You Manage Your
Account - Automatic Investment Plan" is replaced with the following:
Under the plan, you can have money transferred automatically from your
checking or savings account to the Fund each month to buy additional shares.
VII. The second paragraph under "Services to Help You Manage Your Account -
Systematic Withdrawal Plan" is replaced with the following:
If you would like to establish a systematic withdrawal plan, please
complete the systematic withdrawal plan section of the shareholder
application included with this prospectus and indicate how you would like
to receive your payments. You may choose to direct your payments to buy the
same class of shares of another Franklin Templeton Fund or have the money
sent directly to you, to another person, or to a checking or savings
account. If you choose to have the money sent to a checking or savings
account, please see "Electronic Fund Transfers" below. Once your plan is
established, any distributions paid by the Fund will be automatically
reinvested in your account.
VIII. The following new section is added after the section "Services to Help
You Manage Your Account - Systematic Withdrawal Plan":
ELECTRONIC FUND TRANSFERS
You may choose to have dividend and capital gain distributions or payments
under a systematic withdrawal plan sent directly to a checking or savings
account. If the account is with a bank that is a member of the Automated
Clearing House, the payments may be made automatically by electronic funds
transfer. If you choose this option, please allow at least fifteen days for
initial processing. We will send any payments made during that time to the
address of record on your account.
IX. The following paragraphs are added to the end of the section "What Are
the Risks of Investing in the Fund?" and apply to each Fund except the U.S.
Government Securities Series:
EURO. On January 1, 1999, the European Monetary Union (EMU) plans to
introduce a new single currency, the Euro, which will replace the national
currency for participating member countries. If the Fund holds investments
in countries with currencies replaced by the Euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted.
The process to establish the Euro may result in market volatility. It is
not possible to predict the impact of the Euro on the business or financial
condition of European issuers or on the Fund. The transition and the
elimination of currency risk among EMU countries may change the economic
environment and behavior of investors, particularly in European markets.
To the extent the Fund holds non-U.S. dollar (Euro or other) denominated
securities, it will still be exposed to currency risk due to fluctuations
in those currencies versus the U.S. dollar.
Resources has created an interdepartmental team to handle all Euro-related
changes to enable the Franklin Templeton Funds to process transactions
accurately and completely with minimal disruption to business activities.
While there can be no assurance that the Fund will not be adversely
affected, the investment manager and its affiliated service providers are
taking steps that they believe are reasonably designed to address the Euro
issue.
Please keep this supplement for future reference.
