As filed with the Securities and Exchange Commission December 29, 1998
File Nos.
2-11346
811-537
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post Effective Amendment No. 79 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 (X)
FRANKLIN CUSTODIAN FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
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)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (Date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (Date) pursuant to paragraph (a)(2)of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Being Registered:
Shares of Common Stock of:
FRANKLIN CUSTODIAN FUNDS, INC.
Growth Series - Class A
Growth Series - Class B
Growth Series - Class C
Utilities Series - Class A
Utilities Series - Class B
Utilities Series - Class C
DynaTech Series - Class A
DynaTech Series - Class C
Income Series - Class A
Income Series - Class B
Income Series - Class C
U.S. Government Securities Series - Class A
U.S. Government Securities Series - Class B
U.S. Government Securities Series - Class C
The Registrant's statement of additional information dated February 1, 1998, as
filed with the Securities and Exchange Commission ("SEC") under Form Type
485BPOS on January 29, 1998, and the Registrant's Class A & C prospectus dated
February 1, 1998, as amended August 3, 1998, as filed with the SEC under Form
Type 497 on July 22, 1998, are hereby incorporated by reference. (File Nos.
2-11346 and 811-537.)
o FCF *P1
SHARE CLASS REDESIGNATION
EFFECTIVE JANUARY 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
SUPPLEMENT DATED JANUARY 1, 1999
TO THE PROSPECTUS OF
FRANKLIN CUSTODIAN FUNDS, INC.
DATED FEBRUARY 1, 1998, AS AMENDED AUGUST 3, 1998
The prospectus is amended as follows:
I. As of January 1, 1999, Growth, Income, U.S. Government Securities and
Utilities Series each offers four classes of shares: Class A, Class B,
Class C and Advisor Class. DynaTech Series offers two classes of shares:
Class A and Class C. Before January 1, 1999, Class A shares were designated
Class I and Class C shares were designated Class II. All references in the
prospectus to Class I shares are replaced with Class A, and all references
to Class II shares are replaced with Class C.
II. The second paragraph on the cover of the prospectus is replaced with the
following:
This prospectus describes Class A and C shares of DynaTech Series and Class
A, B and C shares of Growth, Income, U.S. Government Securities and
Utilities Series of Franklin Custodian Funds, Inc. ("Custodian Funds"). The
Growth, Income, U.S. Government Securities and Utilities Series each
currently offers another share class with a different sales charge and
expense structure, which affects performance.
III. The section "Expense Summary" is replaced with the following:
This table is designed to help you understand the costs of investing in the
fund. It is based on the fund's historical expenses for the fiscal year
ended September 30, 1997. The fund's actual expenses may vary.
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
GROWTH UTILITIES INCOME SECURITIES DYNATECH
SERIES SERIES SERIES SERIES SERIES
---------------------------------------------------------------------------------------------------------------
A. SHAREHOLDER TRANSACTION EXPENSES1
CLASS A 2
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (as a
percentage of Offering Price) 5.75% 4.25% 4.25% 4.25% 5.75%
Paid at time of purchase 3 5.75% 4.25% 4.25% 4.25% 5.75%
Paid at redemption 4 NONE NONE NONE NONE NONE
Exchange Fee (per transaction) 5 NONE NONE NONE NONE NONE
CLASS B 6
Maximum Sales Charge (as a
percentage of Offering Price) 4.00% 4.00% 4.00% 4.00% --
Paid at time of purchase 3 NONE NONE NONE NONE --
Paid at redemption 4 4.00% 4.00% 4.00% 4.00% --
Exchange Fee (per transaction) 5 NONE NONE NONE NONE --
CLASS C 2
Maximum Sales Charge (as a
percentage of Offering Price) 1.99% 1.99% 1.99% 1.99% 1.99%
Paid at time of purchase 3 1.00% 1.00% 1.00% 1.00% 1.00%
Paid at redemption 4 0.99% 0.99% 0.99% 0.99% 0.99%
Exchange Fee (per transaction) 5 NONE NONE NONE NONE NONE
B. ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
CLASS A 2
Management Fees 0.48% 0.46% 0.46% 0.45% 0.60%
Rule 12b-1 Fees 7 0.23% 0.13% 0.15% 0.09% 0.22%
Other Expenses 0.18% 0.16% 0.11% 0.10% 0.22%
----------------------------------------------------------------
Total Fund Operating Expenses 0.89% 0.75% 0.72% 0.64% 1.04%
================================================================
CLASS B 6
Management Fees 0.48% 0.46% 0.46% 0.45% --
Rule 12b-1 Fees 7 1.00% 0.65% 0.65% 0.65% --
Other Expenses 0.18% 0.16% 0.11% 0.10% --
----------------------------------------------------------------
Total Fund Operating Expenses 1.66% 1.27% 1.22% 1.20% --
================================================================
CLASS C 2
Management Fees 0.48% 0.46% 0.46% 0.45% 0.60%
Rule 12b-1 Fees 7 1.00% 0.65% 0.65% 0.65% 1.00%
Other Expenses 0.18% 0.16% 0.11% 0.10% 0.22%
----------------------------------------------------------------
Total Fund Operating Expenses 1.66% 1.27% 1.22% 1.20% 1.82%
================================================================
</TABLE>
C. EXAMPLE
Assume the annual return for each class is 5%, operating expenses are as
described above, and you sell your shares after the number of years shown.
These are the projected expenses for each $10,000 that you invest in the
fund.
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
GROWTH UTILITIES INCOME SECURITIES DYNATECH
SERIES SERIES SERIES SERIES SERIES
-----------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C> <C>
1 Year8 .................... $ 661 $ 498 $ 495 $ 488 $ 675
3 Years .................... $ 843 $ 654 $ 645 $ 621 $ 887
5 Years .................... $ 1,040 $ 824 $ 809 $ 767 $ 1,116
10 Years ................... $ 1,608 $ 1,315 $ 1,281 $ 1,189 $ 1,773
CLASS B
Assuming you sold your shares
at the end of the period
1 Year ..................... $ 569 $ 529 $ 524 $ 522 $ ---
3 Years .................... $ 823 $ 703 $ 687 $ 681 $ ---
5 Years .................... $ 1,102 $ 897 $ 870 $ 860 $ ---
10 Years9 .................. $ 1,760 $ 1,390 $ 1,339 $ 1,299 $ ---
Assuming you stayed in the
fund
1 Year ..................... $ 169 $ 129 $ 124 $ 122 $ ---
3 Years .................... $ 523 $ 403 $ 387 $ 381 $ ---
5 Years .................... $ 902 $ 697 $ 670 $ 660 $ ---
10 Years9 .................. $ 1,760 $ 1,390 $ 1,339 $ 1,299 $ ---
CLASS C
1 Year10 ................... $ 365 $ 326 $ 321 $ 319 $ 381
3 Years .................... $ 618 $ 499 $ 483 $ 477 $ 667
5 Years .................... $ 993 $ 790 $ 764 $ 753 $ 1,075
10 Years ................... $ 2,046 $ 1,619 $ 1,563 $ 1,540 $ 2,216
</TABLE>
THIS IS JUST AN EXAMPLE. IT DOES NOT REPRESENT PAST OR FUTURE EXPENSES OR
RETURNS. ACTUAL EXPENSES AND RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN.
The fund pays its operating expenses. The effects of these expenses are
reflected in the Net Asset Value or dividends of each class and are not
directly charged to your account.
1. If your transaction is processed through your Securities Dealer, you may
be charged a fee by your Securities Dealer for this service.
2. Before January 1, 1999, Class A shares were designated Class I and Class
C shares were designated Class II.
3. There is no front-end sales charge if you invest $1 million or more in
Class A shares. Although Class B and C have a lower front-end sales charge
than Class A, their Rule 12b-1 fees are higher. Over time you may pay more
for Class B and C shares. Please see "How Do I Buy Shares? - Choosing a
Share Class."
4. A Contingent Deferred Sales Charge of 1% may apply to Class A purchases
of $1 million or more if you sell the shares within one year and to any
Class C purchase if you sell the shares within 18 months. A Contingent
Deferred Sales Charge of up to 4% may apply to any Class B purchase if you
sell the shares within six years. A Contingent Deferred Sales Charge may
also apply to purchases by certain retirement plans that qualify to buy
Class A shares without a front-end sales charge. The charge is based on the
value of the shares sold or the Net Asset Value at the time of purchase,
whichever is less. The number in the table shows the charge as a percentage
of Offering Price. While the percentage for Class C is different depending
on whether the charge is shown based on the Net Asset Value or the Offering
Price, the dollar amount you would pay is the same. See "How Do I Sell
Shares? - Contingent Deferred Sales Charge" for details.
5. There is a $5 fee for exchanges by Market Timers. The DynaTech Series
does not allow investments by Market Timers.
6. The fund began offering Class B shares on January 1, 1999. Annual fund
operating expenses are based on the expenses for Class A and C for the
fiscal year ended September 30, 1997. The Rule 12b-1 fees are based on the
maximum fees allowed under Class B's Rule 12b-1 plan.
7. For Utilities, Income and U.S. Government Securities Series, these fees
may not exceed 0.15% for Class A and 0.65% for Class B and C. For Growth
Series, these fees may not exceed 0.25% for Class A and 1.00% for Class B
and C. For DynaTech Series, these fees may not exceed 0.25% for Class A and
1.00% for Class C. The combination of front-end sales charges and Rule
12b-1 fees could cause long-term shareholders to pay more than the economic
equivalent of the maximum front-end sales charge permitted under the NASD's
rules.
8. Assumes a Contingent Deferred Sales Charge will not apply.
9. Assumes conversion of Class B shares to Class A shares after eight
years, lowering your annual expenses from that time on.
10. For the same Class C investment, you would pay projected expenses of
$267 (Growth Series), $228 (Utilities Series), $223 (Income Series), $221
(U.S. Government Securities Series) and $283 (DynaTech Series) if you did
not sell your shares at the end of the first year. Your projected expenses
for the remaining periods would be the same.
IV. The following information is added to the section "Financial Highlights":
<TABLE>
<CAPTION>
GROWTH SERIES YEAR ENDED
SEPTEMBER 30, 1998*
-----------------------------------------
CLASS A CLASS C
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $27.09 $26.70
-----------------------------------------
Income from investment operations:
Net investment income .49 .29
Net realized and unrealized gains 1.71 1.66
-----------------------------------------
Total from investment operations 2.20 1.95
-----------------------------------------
Less distributions from:
Net investment income (.47) (.30)
Net realized gains (.24) (.24)
-----------------------------------------
Total distributions (.71) (.54)
-----------------------------------------
Net asset value, end of year $28.58 $28.11
=========================================
Total return** 8.22% 7.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $1,635,780 $189,572
Ratios to average net assets:
Expenses .88% 1.65%
Net investment income 1.78% 1.02%
Portfolio turnover rate .58% .58%
UTILITIES SERIES YEAR ENDED
SEPTEMBER 30, 1998*
-----------------------------------------
CLASS A CLASS C
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $10.04 $10.02
-----------------------------------------
Income from investment operations:
Net investment income .52 .46
Net realized and unrealized gains 1.58 1.60
-----------------------------------------
Total from investment operations 2.10 2.06
-----------------------------------------
Less distributions from:
Net investment income (.52) (.47)
Net realized gains (.26) (.26)
-----------------------------------------
Total distributions (.78) (.73)
-----------------------------------------
Net asset value, end of year $11.36 $11.35
=========================================
Total return** 21.71% 21.24%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $2,054,546 $40,628
Ratios to average net assets:
Expenses .76% 1.28%
Net investment income 4.73% 4.19%
Portfolio turnover rate 11.77% 11.77%
INCOME SERIES YEAR ENDED
SEPTEMBER 30, 1998*
-----------------------------------------
CLASS A CLASS C
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $2.49 $2.49
-----------------------------------------
Income from investment operations:
Net investment income .17 .16
Net realized and unrealized gains (losses) (.11) (.11)
-----------------------------------------
Total from investment operations .06 .05
-----------------------------------------
Less distributions from:
Net investment income (.18) (.17)
Net realized gains (.03) (.03)
-----------------------------------------
Total distributions (.21) (.20)
-----------------------------------------
Net asset value, end of year $2.34 $2.34
=========================================
Total return** 2.23% 1.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $7,704,983 $1,014,634
Ratios to average net assets:
Expenses .72% 1.22%
Net investment income 6.83% 6.35%
Portfolio turnover rate 22.01% 22.01%
U.S. GOVERNMENT SECURITIES SERIES YEAR ENDED
SEPTEMBER 30, 1998*
-----------------------------------------
CLASS A CLASS C
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $6.89 $6.87
-----------------------------------------
Income from investment operations:
Net investment income .46 .42
Net realized and unrealized gains .10 .10
-----------------------------------------
Total from investment operations .56 .52
-----------------------------------------
Less distributions from net investment income (.46) (.42)
-----------------------------------------
Net asset value, end of year $6.99 $6.97
=========================================
Total return** 8.41% 7.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $9,049,829 $271,665
Ratios to average net assets:
Expenses .65% 1.21%
Net investment income 6.67% 6.10%
Portfolio turnover rate*** 25.98% 25.98%
DYNATECH SERIES YEAR ENDED
SEPTEMBER 30, 1998*
-----------------------------------------
CLASS A CLASS C
-----------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year $18.48 $18.30
-----------------------------------------
Income from investment operations:
Net investment income .27 .15
Net realized and unrealized gains .23 .17
-----------------------------------------
Total from investment operations .50 .32
-----------------------------------------
Less distributions from:
Net investment income (.17) (.12)
Net realized gains (.97) (.97)
-----------------------------------------
Total distributions (1.14) (1.09)
-----------------------------------------
Net asset value, end of year $17.84 $17.53
=========================================
Total return** 3.06% 2.03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $215,864 $12,358
Ratios to average net assets:
Expenses 1.02% 1.79%
Net investment income 1.55% .81%
Portfolio turnover rate 10.84% 10.84%
</TABLE>
* This information has been audited by PricewaterhouseCoopers LLP, the
funds' independent auditor. The audit report appears in the Annual Report
to Shareholders for the fiscal year ended September 30, 1998. ** Total
return does not reflect sales commissions or the Contingent Deferred Sales
Charge, and is not annualized. ***Maturity of U.S. government issues and
the reinvestment of the proceeds thereof are considered as purchases and
sales of securities in computing the portfolio turnover rate.
V. The following paragraphs are added under "What Are the Risks of Investing
in the Fund?" (the section "Euro Risk" does not apply to U.S. Government
Securities Series):
YEAR 2000. When evaluating current and potential portfolio positions, Year
2000 is one of the factors the investment manager considers.
The investment manager will rely upon public filings and other statements
made by companies about their Year 2000 readiness. Issuers in countries
outside the U.S., particularly in emerging markets, may not be required to
make the same level of disclosure about Year 2000 readiness as is required
in the U.S. The investment manager, of course, cannot audit each company
and its major suppliers to verify their Year 2000 readiness.
If a company in which the fund is invested is adversely affected by Year
2000 problems, it is likely that the price of its security will also be
adversely affected. A decrease in the value of one or more of the fund's
portfolio holdings will have a similar impact on the price of the fund's
shares. Please see "Year 2000 Problem" under "Who Manages the Fund?" for
more information.
EURO RISK. 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.
VI. In the section "Who Manages the Fund?",
(a) the following is added after the "Administrative Services" section:
YEAR 2000 PROBLEM. The fund's business operations depend on a worldwide
network of computer systems that contain date fields, including securities
trading systems, securities transfer agent operations and stock market
links. Many of the systems currently use a two digit date field to
represent the date, and unless these systems are changed or modified, they
may not be able to distinguish the Year 1900 from the Year 2000 (commonly
referred to as the Year 2000 problem). In addition, the fact that the Year
2000 is a non-standard leap year may create difficulties for some systems.
When the Year 2000 arrives, the fund's operations could be adversely
affected if the computer systems used by the investment manager, its
service providers and other third parties it does business with are not
Year 2000 ready. For example, the fund's portfolio and operational areas
could be impacted, including securities trade processing, interest and
dividend payments, securities pricing, shareholder account services,
reporting, custody functions and others. The fund could experience
difficulties in effecting transactions if any of its foreign subcustodians,
or if foreign broker-dealers or foreign markets are not ready for Year
2000.
The investment manager and its affiliated service providers are making a
concerted effort to take steps they believe are reasonably designed to
address their Year 2000 problems. Of course, the fund's ability to reduce
the effects of the Year 2000 problem is also very much dependent upon the
efforts of third parties over which the fund and the investment manager may
have no control.
(b) the first sentence under "The Rule 12b-1 Plans" is replaced with the
following:
Each class has a separate distribution or "Rule 12b-1" plan under which the
fund shall pay or may reimburse Distributors or others for the expenses of
activities that are primarily intended to sell shares of the class.
(c) and the following paragraphs are added to the section "The Rule 12b-1
Plans":
Under the Class B plan, Growth Series pays Distributors up to 0.75% per
year and Income, U.S. Government Securities and Utilities Series each pay
Distributors up to 0.50% per year of Class B's average daily net assets to
pay Distributors for providing distribution and related services and
bearing certain Class B expenses. All distribution expenses over this
amount will be borne by those who have incurred them. Securities Dealers
are not eligible to receive this portion of the Rule 12b-1 fees associated
with the purchase.
Growth Series may also pay a servicing fee of up to 0.25% per year and
Income, U.S. Government Securities and Utilities Series each may pay a
servicing fee of up to 0.15% per year of Class B's average daily net assets
under the Class B plan. This fee may be used to pay Securities Dealers or
others for, among other things, helping to establish and maintain customer
accounts and records, helping with requests to buy and sell shares,
receiving and answering correspondence, monitoring dividend payments from
the fund on behalf of customers, and similar servicing and account
maintenance activities. Securities Dealers may be eligible to receive this
portion of the Rule 12b-1 fees from the date of purchase. After 8 years,
Class B shares convert to Class A shares and Securities Dealers may then
receive the Rule 12b-1 fees applicable to Class A.
The expenses relating to the Class B plan are also used to pay Distributors
for advancing the commission costs to Securities Dealers with respect to
the initial sale of Class B shares. Further, the expenses relating to the
Class B plan may be used by Distributors to pay third party financing
entities that have provided financing to Distributors in connection with
advancing commission costs to Securities Dealers.
VII. Under "How Is the Fund Organized?",
(a) the first paragraph is replaced with the following:
Each fund is a diversified series of Custodian Funds, an open-end
management investment company, commonly called a mutual fund. Custodian
Funds was incorporated under the laws of Delaware in 1947, reincorporated
under the laws of Maryland in 1979, and is registered with the SEC. The
Growth, Income, U.S. Government Securities Series and Utilities Series each
offers four classes of shares: Growth Series - Class A, Growth Series -
Class B, Growth Series - Class C and Growth Series - Advisor Class; Income
Series - Class A, Income Series - Class B, Income Series - Class C and
Income Series - Advisor Class; U.S. Government Securities Series - Class A,
U.S. Government Securities Series - Class B, U.S. Government Securities
Series - Class C and U.S. Government Securities Series - Advisor Class; and
Utilities Series - Class A, Utilities Series - Class B, Utilities Series -
Class C and Utilities Series - Advisor Class. The DynaTech Series offers
two classes of shares: DynaTech Series - Class A and DynaTech Series -
Class C. Additional series and classes of shares may be offered in the
future.
(b) and the last paragraph is replaced with the following:
As of December 7, 1998, Trust Company, as trustee for ValuSelect, owned of
record and beneficially more than 25% of the outstanding shares of the Advisor
Class of Utilities, Income and U.S. Government Securities Series, and Franklin
Templeton Moderate Target Fund owned of record and beneficially more than 25% of
the outstanding shares of the Advisor Class of U.S. Government Securities
Series.
VIII. The sections "Choosing a Share Class" and "Purchase Price of Fund Shares,"
found under "How Do I Buy Shares?", are replaced with the following:
CHOOSING A SHARE CLASS
Each class has its own sales charge and expense structure, allowing you
to choose the class that best meets your situation. Your investment
representative can help you decide.
<TABLE>
<CAPTION>
CLASS A* CLASS B* CLASS C*
(Not applicable to DynaTech
Series)
-----------------------------------------------------------------------------
<S> <C> <C>
o Front-end sales o No front-end sales o Front-end sales
charge of 5.75% charge charge of 1%
or less (Growth
and DynaTech
Series) or 4.25%
or less (Income,
U.S. Government
Securities and
Utilities Series)
o Contingent o Contingent Deferred o Contingent Deferred
Deferred Sales Sales Charge of 4% or Sales Charge of 1% on
Charge of 1% on less on shares you shares you sell within
purchases of $1 sell within six years 18 months
million or more
sold within one
year
o Lower annual o Higher annual o Higher annual
expenses than expenses than Class A expenses than Class A
Class B or C due (same as Class C) due (same as Class B) due
to lower Rule to higher Rule 12b-1 to higher Rule 12b-1
12b-1 fees fees. Automatic fees. No conversion to
conversion to Class A Class A shares, so
shares after eight annual expenses do not
years, reducing future decrease.
annual expenses.
o No maximum o Maximum purchase o Maximum purchase
purchase amount amount of $249,999. We amount of $999,999. We
invest any investment invest any investment
of $250,000 or more in of $1 million or more
Class A shares, since in Class A shares,
a reduced front-end since there is no
sales charge is front-end sales charge
available and Class and Class A's annual
A's annual expenses expenses are lower.
are lower.
</TABLE>
*Before January 1, 1999, Class A shares were designated Class I and
Class C shares were designated Class II. The fund began offering Class B
shares on January 1, 1999. Class B shares are not available to all
retirement plans. Class B shares are only available to IRAs (of any
type), Trust Company 403(b) plans, and Trust Company qualified plans
with participant or earmarked accounts.
PURCHASE PRICE OF FUND SHARES
For Class A shares, the sales charge you pay depends on the dollar
amount you invest, as shown in the table below. The sales charge for
Class C shares is 1% and, unlike Class A, does not vary based on the
size of your purchase. There is no front-end sales charge for Class B
shares.
TOTAL SALES CHARGE AMOUNT PAID TO
AS A PERCENTAGE OF DEALER
---------------------------- AS A
AMOUNT OF PURCHASE OFFERING NET AMOUNT PERCENTAGE OF
AT OFFERING PRICE PRICE INVESTED OFFERING PRICE
---------------------------------------------------------------------------
CLASS A - GROWTH AND
DYNATECH SERIES
Under $50,000 5.75% 6.10% 5.00%
$50,000 but less than
$100,000 4.50% 4.71% 3.75%
$100,000 but less than 3.50% 3.63% 2.80%
$250,000
$250,000 but less than 2.50% 2.56% 2.00%
$500,000
$500,000 but less than 2.00% 2.04% 1.60%
$1,000,000
$1,000,000 or more* None None None
CLASS A - INCOME, U.S.
GOVERNMENT SECURITIES AND
UTILITIES SERIES
Under $100,000 4.25% 4.44% 4.00%
$100,000 but less than 3.50% 3.63% 3.25%
$250,000
$250,000 but less than 2.50% 2.56% 2.25%
$500,000
$500,000 but less than 2.00% 2.04% 1.85%
$1,000,000
$1,000,000 or more* None None None
CLASS B* (Not applicable None None None
to DynaTech Series)
CLASS C - ALL FUNDS
Under $1,000,000* 1.00% 1.01% 1.00%
*A Contingent Deferred Sales Charge of 1% may apply to Class A purchases of
$1 million or more and any Class C purchase. A Contingent Deferred Sales
Charge of up to 4% may apply to any Class B purchase. Please see "How Do I
Sell Shares? - Contingent Deferred Sales Charge." Please also see "Other
Payments to Securities Dealers" below for a discussion of payments
Distributors may make out of its own resources to Securities Dealers for
certain purchases.
IX. In the section "Sales Charge Waivers," found under "How Do I Buy Shares? -
Sales Charge Reductions and Waivers,"
(a) the first paragraph is replaced with the following:
SALES CHARGE WAIVERS. If one of the following sales charge waivers applies
to you or your purchase of fund shares, you may buy shares of the fund
without a front-end sales charge or a Contingent Deferred Sales Charge. All
of the sales charge waivers listed below apply to purchases of Class A
shares only, except for items 1 and 2 which also apply to Class B and C
purchases.
(b) the second waiver category is replaced with the following:
2. Redemption proceeds from the sale of shares of any Franklin Templeton
Fund. The proceeds must be reinvested in the same class of shares,
except proceeds from the sale of Class B shares will be reinvested in
Class A shares.
If you paid a Contingent Deferred Sales Charge when you sold your
Class A or C shares, we will credit your account with the amount of
the Contingent Deferred Sales Charge paid but a new Contingent
Deferred Sales Charge will apply. For Class B shares reinvested in
Class A, a new Contingent Deferred Sales Charge will not apply,
although your account will not be credited with the amount of any
Contingent Deferred Sales Charge paid when you sold your Class B
shares. If you own both Class A and B shares and you later sell your
shares, we will sell your Class A shares first, unless otherwise
instructed.
Proceeds immediately placed in a Franklin Bank CD also may be
reinvested without a front-end sales charge if you reinvest them
within 365 days from the date the CD matures, including any rollover.
This waiver does not apply to shares you buy and sell under our
exchange program. Shares purchased with proceeds from a money fund may
be subject to a sales charge.
(c) and the following new category 12 is added to the end of the second
list of sales charge waiver categories:
12. Qualified registered investment advisors who buy through a
broker-dealer or service agent who has entered into an agreement with
Distributors
X. The section "How Do I Buy Shares in Connection with Retirement Plans?",
found under "How Do I Buy Shares?", is replaced with the following:
HOW DO I BUY SHARES IN CONNECTION WITH RETIREMENT PLANS?
Your individual or employer-sponsored retirement plan may invest in the
fund. 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. These plans require separate applications and
their policies and procedures may be different than those described in this
prospectus. For more information, including a free retirement plan brochure
or application, please call Retirement Plan Services.
Please consult your legal, tax or retirement plan specialist before
choosing a retirement plan. Your investment representative or advisor can
help you make investment decisions within your plan.
XI. The section "How Do I Buy Shares? - Other Payments to Securities Dealers"
is replaced with the following:
OTHER PAYMENTS TO SECURITIES DEALERS
The payments described below may be made to Securities Dealers who initiate
and are responsible for Class B and C purchases and certain Class A
purchases made without a sales charge. 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. Class A purchases of $1 million or more - up to 1% of the amount
invested (Growth and DynaTech Series) or up to 0.75% of the amount
invested (Income, U.S. Government Securities and Utilities Series).
2. Class B purchases - up to 4% of the amount invested (Growth and
DynaTech Series) or up to 3% of the amount invested (Income, U.S.
Government Securities and Utilities Series).
3. Class C purchases - up to 1% of the purchase price.
4. Class A purchases made without a front-end sales charge by certain
retirement plans described under "Sales Charge Reductions and Waivers
- Retirement Plans" above - up to 1% of the amount invested.
5. Class A purchases by trust companies and bank trust departments,
Eligible Governmental Authorities, and broker-dealers or others on
behalf of clients participating in comprehensive fee programs - up to
0.25% of the amount invested.
6. Class A purchases by Chilean retirement plans - up to 1% of the amount
invested.
A Securities Dealer may receive only one of these payments for each
qualifying purchase. Securities Dealers who receive payments in connection
with investments described in paragraphs 1, 3 or 6 above or a payment of up
to 1% for investments described in paragraph 4 will be eligible to receive
the Rule 12b-1 fee associated with the purchase starting in the thirteenth
calendar month after the purchase.
FOR BREAKPOINTS THAT MAY APPLY AND INFORMATION ON ADDITIONAL COMPENSATION
PAYABLE TO SECURITIES DEALERS IN CONNECTION WITH THE SALE OF FUND SHARES,
PLEASE SEE "HOW DO I BUY, SELL AND EXCHANGE SHARES? - OTHER PAYMENTS TO
SECURITIES DEALERS" IN THE SAI.
XII. The second and third paragraphs under "May I Exchange Shares for Shares of
Another Fund?" are replaced with the following:
If you own Class A shares, you may exchange into any of our money funds
except Franklin Templeton Money Fund. Franklin Templeton Money Fund is the
only money fund exchange option available to Class B and C shareholders.
Unlike our other money funds, shares of Franklin Templeton Money Fund may
not be purchased directly and no drafts (checks) may be written on Franklin
Templeton Money Fund accounts.
Before making an exchange, please read the prospectus of the fund you are
interested in. This will help you learn about the fund, its investment goal
and policies, and its rules and requirements for exchanges. For example,
some Franklin Templeton Funds do not accept exchanges and others may have
different investment minimums. Some Franklin Templeton Funds do not offer
Class B or C shares.
XIII.In the section "Contingent Deferred Sales Charge," found under "May I
Exchange Shares for Shares of Another Fund? - Will Sales Charges Apply to
My Exchange?",
(a) the following sentence is added to the end of the first paragraph:
The purchase price for determining a Contingent Deferred Sales Charge on
exchanged shares will be the price you paid for the original shares.
(b) and the third paragraph is replaced with the following:
If you exchange Class A shares into one of our money funds, the time your
shares are held in that fund will not count towards the completion of any
Contingency Period. If you exchange your Class B or C shares for the same
class of shares of Franklin Templeton Money Fund, however, the time your
shares are held in that fund will count towards the completion of any
Contingency Period.
XIV. The first and second bulleted items in the section "Exchange Restrictions,"
found under "May I Exchange Shares for Shares of Another Fund?", are
replaced with the following:
o You may only exchange shares within the same class, except as noted
below. If you exchange your Class B shares for the same class of
shares of another Franklin Templeton Fund, the time your shares are
held in that fund will count towards the eight year period for
automatic conversion to Class A shares.
o Generally exchanges may only be made between identically registered
accounts, unless you send written instructions with a signature
guarantee. You may, however, exchange shares from a fund account
requiring two or more signatures into an identically registered money
fund account requiring only one signature for all transactions. PLEASE
NOTIFY US IN WRITING IF YOU DO NOT WANT THIS OPTION TO BE AVAILABLE ON
YOUR ACCOUNT. Additional procedures may apply. Please see "Transaction
Procedures and Special Requirements."
XV. In the "By Phone" section of the chart under "How Do I Sell Shares?",
(a) the first bulleted item is replaced with the following:
o If the request is $100,000 or less. Institutional accounts may exceed
$100,000 by completing a separate agreement. Call Institutional
Services to receive a copy.
(b) and the third bulleted item is deleted.
XVI. In the section "Contingent Deferred Sales Charge," found under "How Do I
Sell Shares?",
(a) the following is added after the second paragraph:
For Class B shares, there is a Contingent Deferred Sales Charge if you sell
your shares within six years, as described in the table below. The charge
is based on the value of the shares sold or the Net Asset Value at the time
of purchase, whichever is less.
THIS % IS DEDUCTED FROM YOUR
IF YOU SELL YOUR CLASS B SHARES PROCEEDS AS A CONTINGENT
WITHIN THIS MANY YEARS AFTER BUYING THEM DEFERRED SALES CHARGE
----------------------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
(b) and the section "Waivers" is replaced with the following:
WAIVERS. We waive the Contingent Deferred Sales Charge for:
o Account fees
o Sales of Class A shares purchased without a front-end sales charge by
certain retirement plan accounts if (i) the account was opened before
May 1, 1997, or (ii) the Securities Dealer of record received a
payment from Distributors of 0.25% or less, or (iii) Distributors did
not make any payment in connection with the purchase, or (iv) the
Securities Dealer of record has entered into a supplemental agreement
with Distributors
o Redemptions by the fund when an account falls below the minimum
required account size
o Redemptions following the death of the shareholder or beneficial owner
o Redemptions through a systematic withdrawal plan set up before
February 1, 1995
o Redemptions through a systematic withdrawal plan set up on or after
February 1, 1995, up to 1% monthly, 3% quarterly, 6% semiannually or
12% annually of your account's Net Asset Value depending on the
frequency of your plan
o Redemptions by Trust Company employee benefit plans or employee
benefit plans serviced by ValuSelect(R) (not applicable to Class B)
o Distributions from IRAs due to death or disability or upon periodic
distributions based on life expectancy (for Class B, this applies to
all retirement plan accounts, not only IRAs)
o Returns of excess contributions (and earnings, if applicable) from
retirement plan accounts
o Participant initiated distributions from employee benefit plans or
participant initiated exchanges among investment choices in employee
benefit plans (not applicable to Class B)
XVII.The third paragraph under "What Distributions Might I Receive From the
Fund?" is replaced with the following:
Dividends and capital gains are calculated and distributed the same way for
each class. The amount of any income dividends per share will differ,
however, generally due to the difference in the Rule 12b-1 fees of each
class.
XVIII. Distribution option 3 and the paragraph following it 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."
Distributions may be reinvested only in the same class of shares, except as
follows: (i) Class C shareholders who chose to reinvest their distributions
in Class A shares of the fund or another Franklin Templeton Fund before
November 17, 1997, may continue to do so; and (ii) Class B and C
shareholders may reinvest their distributions in shares of any Franklin
Templeton money fund.
XIX. Under "Transaction Procedures and Special Requirements",
(a) the section "Joint Accounts" is replaced with the following:
JOINT ACCOUNTS. For accounts with more than one registered owner, the fund
accepts 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.
Please keep in mind that if you have previously told us that you do not
want telephone exchange or redemption privileges on your account, then we
can only accept written instructions to exchange or redeem shares if they
are signed by all registered owners on the account.
(b) the reference to $50,000 in the section "Signature Guarantees" is
replaced with $100,000.
(c) and the section "Trust Company Retirement Plan Accounts," found under
"Telephone Transactions", is deleted.
XX. In the section "Services to Help You Manage Your Account":
(a) the second sentence under "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.
(b) the second paragraph under "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 account 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.
(c) the section "Electronic Fund Transfers - Class I Only" is replaced with
the following:
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.
(d) the third bulleted item under "TeleFACTS(R)" is replaced with the
following:
o exchange shares (within the same class) between identically registered
Franklin Templeton Class A, B or C accounts; and
(e) and the last sentence and the chart under "TeleFACTS(R)" are replaced
with the following:
The code numbers for Class A, B and C are:
CLASS A CLASS B CLASS C
------------------------------------------------------------------
DynaTech Series 108 --- 208
Growth Series 106 306 206
Income Series 109 309 209
U.S. Government Securities 110 310 210
Series
Utilities Series 107 307 207
XXI. In the "Useful Terms and Definitions" section:
(a) the definition of "Class I, Class II and Advisor Class" is replaced
with the following:
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - Growth, Income, U.S.
Government Securities and Utilities Series each offer four classes of
shares, designated "Class A," "Class B," "Class C" and "Advisor Class." The
DynaTech Series offers two classes of shares, designated "Class A" and
"Class C". The classes have proportionate interests in the fund's
portfolio. They differ, however, primarily in their sales charge and
expense structures.
(b) and the following definitions are revised:
CONTINGENCY PERIOD - For Class A shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. The contingency period is six
years for Class B shares and 18 months for Class C shares. The holding
period begins on the day you buy your shares. For example, if you buy
shares on the 18th of the month, they will age one month on the 18th day of
the next month and each following month.
CONTINGENT DEFERRED SALES CHARGE (CDSC) - A sales charge of 1% that may
apply if you sell your Class A or C shares within the Contingency Period.
For Class B, the maximum CDSC is 4% and declines to 0% after six years.
OFFERING PRICE - The public offering price is based on the Net Asset Value
per share of the class and includes the front-end sales charge. The maximum
front-end sales charge is 5.75% for Class A of Growth and DynaTech Series,
4.25% for Class A of Income, U.S. Government Securities and Utilities
Series and 1% for Class C. There is no front-end sales charge for Class B.
We calculate the offering price to two decimal places using standard
rounding criteria.
Please keep this supplement for future reference.
o FCF *SA
SHARE CLASS REDESIGNATION
Effective January 1, 1999
Class A - Formerly Class I
Class B - New Share Class
Class C - Formerly Class II
SUPPLEMENT DATED JANUARY 1, 1999
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN CUSTODIAN FUNDS, INC.
DATED FEBRUARY 1, 1998
The Statement of Additional Information is amended as follows:
I. As of January 1, 1999, Growth, Income, U.S. Government Securities and
Utilities Series each offers four classes of shares: Class A, Class B,
Class C and Advisor Class. DynaTech Series offers two classes of shares:
Class A and Class C. Before January 1, 1999, Class A shares were designated
Class I and Class C shares were designated Class II. All references in the
Statement of Additional Information to Class I shares are replaced with
Class A, and all references to Class II shares are replaced with Class C.
II. The first paragraph on page 2 is replaced with the following:
This SAI describes Class A and C shares of DynaTech Series and Class A, B
and C shares of Growth, Income, U.S. Government Securities and Utilities
Series. The Growth, Income, U.S. Government Securities and Utilities Series
each currently offers another share class with a different sales charge and
expense structure, which affects performance. To receive more information
about the Funds' other share class, contact your investment representative
or call 1-800/DIAL BEN.
III. The following is added to the "Officers and Directors" section:
As of December 7, 1998, the officers and Board members, as a group, owned of
record and beneficially the following shares of the Fund: approximately 4,636
shares of Growth Series - Class A, 10,858 shares of Growth Series - Advisor
Class, 111 shares of Utilities Series - Class A, 9,986 shares of Utilities
Series - Advisor Class, 50,197 shares of DynaTech Series - Class A, 81,951
shares of Income Series - Class A, 17,949 shares of Income Series - Advisor
Class, 51,634 shares of U.S. Government Securities Series - Class A, or less
than 1% of the total outstanding Class A shares of each Fund and Advisor Class
shares of Growth, Utilities, and Income Series, and 124,499 shares of U.S.
Government Securities Series - Advisor Class or 4.50% of U.S. Government
Securities Series' Advisor Class shares.
IV. The first sentence in the section "Additional Information on Exchanging
Shares," found under "How Do I Buy, Sell and Exchange Shares?", is replaced
with the following:
If you request the exchange of the total value of your account, declared
but unpaid income dividends and capital gain distributions will be
reinvested in the Fund and exchanged into the new fund at Net Asset Value
when paid.
V. In the section "The Rule 12b-1 Plans," found under "The Fund's
Underwriter,"
(a) the first sentence is replaced with the following:
Each class has a separate distribution or "Rule 12b-1" plan that was
adopted pursuant to Rule 12b-1 of the 1940 Act.
(b) the following paragraphs are added after the section "The Class I
Plans":
THE CLASS B PLANS. Under the Class B plan, Growth Series pays Distributors
up to 0.75% per year and Income, U.S. Government Securities and Utilities
Series each pay Distributors up to 0.50% per year of the class's average
daily net assets, payable quarterly, to pay Distributors or others for
providing distribution and related services and bearing certain expenses.
All distribution expenses over this amount will be borne by those who have
incurred them. Growth Series may also pay a servicing fee of up to 0.25%
per year and Income, U.S. Government Securities and Utilities Series each
may pay a servicing fee of up to 0.15% per year of the class' average daily
net assets, payable quarterly. This fee may be used to pay Securities
Dealers or others for, among other things, helping to establish and
maintain customer accounts and records, helping with requests to buy and
sell shares, receiving and answering correspondence, monitoring dividend
payments from the Fund on behalf of customers, and similar servicing and
account maintenance activities.
The expenses relating to the Class B plan are also used to pay Distributors
for advancing the commission costs to Securities Dealers with respect to
the initial sale of Class B shares. Further, the expenses relating to the
Class B plan may be used by Distributors to pay third party financing
entities that have provided financing to Distributors in connection with
advancing commission costs to Securities Dealers.
(c) and the section "The Class I and Class II Plans" is renamed "The Class
A, B and C Plans."
VI. The following information is added to the applicable sections under "How
Does the Fund Measure Performance?" (the Class A performance figures for
the Growth and DynaTech Series have been restated to reflect the Funds'
current, maximum 5.75% initial sales charge):
TOTAL RETURN
The average annual total returns for the indicated periods ended September
30, 1998, were:
1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------
CLASS A
DynaTech Series -2.87% 15.11% 15.28%
Growth Series 2.01% 15.79% 13.45%
Income Series -2.10% 7.15% 10.89%
U.S. Government Securities 3.75% 5.86% 8.03%
Series
Utilities Series 16.49% 7.45% 11.20%
-------------------------------------------------------------
1 YEAR SINCE INCEPTION*
-------------------------------------------------------------
CLASS C
DynaTech Series 0.09% 17.64%
Growth Series 5.32% 17.53%
Income Series -0.44% 10.16
U.S. Government Securities 5.77% 7.75%
Series
Utilities Series 19.05% 15.09%
*The inception date is 5/1/95 for each Fund except DynaTech and 9/16/96 for
DynaTech.
The cumulative total returns for the indicated periods ended September 30,
1998, were:
1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------
CLASS A
DynaTech Series -2.87% 102.12% 314.59%
Growth Series 2.01% 108.16% 253.37%
Income Series -2.10% 41.27% 181.15%
U.S. Government Securities 3.75% 32.92% 116.58%
Series
Utilities Series 16.49% 43.22% 189.16%
1 YEAR SINCE INCEPTION*
-------------------------------------------------------------
CLASS C
DynaTech Series 0.09% 39.23%
Growth Series 5.32% 73.63%
Income Series -0.44% 39.19%
U.S. Government Securities 5.77% 29.05%
Series
Utilities Series 19.05% 61.63%
*The inception date is 5/1/95 for each Fund except DynaTech and 9/16/96
for DynaTech.
YIELD
The yields for the 30-day period ended September 30, 1998, were:
-------------------------------------------
CLASS A
Income Series 7.31%
U.S. Government Securities 5.98%
Series
Utilities Series 4.34%
CLASS C
Income Series 7.10%
U.S. Government Securities 5.64%
Series
Utilities Series 3.98%
CURRENT DISTRIBUTION RATE
The current distribution rates for the 30-day period ended September 30,
1998, were:
-------------------------------------------
CLASS A
Income Series 7.38%
U.S. Government Securities 6.08%
Series
Utilities Series 4.42%
CLASS C
Income Series 7.08%
U.S. Government Securities 5.76%
Series
Utilities Series 4.42%
VII. Under "Miscellaneous Information," the following is added:
The Information Services & Technology division of Resources established a
Year 2000 Project Team in 1996. This team has already begun making
necessary software changes to help the computer systems that service the
Fund and its shareholders to be Year 2000 compliant. After completing these
modifications, comprehensive tests are conducted in one of Resources' U.S.
test labs to verify their effectiveness. Resources continues to seek
reasonable assurances from all major hardware, software or data-services
suppliers that they will be Year 2000 compliant on a timely basis.
Resources is also beginning to develop a contingency plan, including
identification of those mission critical systems for which it is practical
to develop a contingency plan. However, in an operation as complex and
geographically distributed as Resources' business, the alternatives to use
of normal systems, especially mission critical systems, or supplies of
electricity or long distance voice and data lines are limited.
As of December 7, 1998, the principal shareholders of the Fund, beneficial
or of record, were as follows:
NAME AND ADDRESS SHARE AMOUNT PERCENTAGE
- ------------------------------------------------------------------------
GROWTH SERIES - ADVISOR CLASS
FTTC Trust Services FBO 122,585.721 6.03%
Vivian J. Palmieri
P.O. Box 7519
San Mateo, CA 94403-7519
FTTC Trust Services FBO 175,541.806 8.64%
FBO Rupert Johnson IRA
P.O. Box 7519
San Mateo, CA 94403-7519
FTTC TTEE for ValuSelect 218,578.728 10.76%
Franklin Templeton 401K
Attn: Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
FTTC TTEE for ValuSelect 179,227.249 8.82%
Franklin Resources PSP
Attn: Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
FT Fund Allocator 211,042.852 10.38%
Conservative Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo, CA 94404-2470
FT Fund Allocator 401,843.289 19.77%
Moderate Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo, CA 94404-2470
FT Fund Allocator 459,996.056 22.63%
Growth Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo, CA 94404-2470
UTILITIES SERIES - ADVISOR CLASS
FIRST MAR & CO 2 144,115.414 11.66%
101 W. Washington St.
P.O. Box 580
Marquette, MI 49855
The Washington Trust Company 132,668.980 10.73%
Attn. Trust Dept.
23 Broad St.
Westerly, RI 02891
FTTC TTEE for ValuSelect 413,265.371 33.44%
Franklin Resources PSP
Attn Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
FT Fund Allocator 151,231.272 12.24%
Moderate Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo CA, 94404-2470
FT Fund Allocator 214,320.948 17.34%
Growth Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo CA, 94404-2470
INCOME SERIES - ADVISOR CLASS
FTTC TTEE for ValuSelect 2,068,787.793 21.55%
Franklin Templeton 401K
Attn Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
FTTC TTEE for ValuSelect 2,544,072.391 26.50%
Franklin Resources PSP
Attn Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
U.S. GOVERNMENT SECURITIES
SERIES - ADVISOR CLASS
FT Fund Allocator 256,043.898 9.25%
Conservative Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo CA, 94404-2470
FT Fund Allocator 694,247.527 25.07%
Moderate Target Fund
C/O Fund Accounting Department
Kimberley Monasterio
1810 Gateway 3rd Floor
San Mateo CA, 94404-2470
FTTC TTEE for ValuSelect 272,434.960 9.84%
Franklin Templeton 401K
Attn Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
FTTC TTEE for ValuSelect 766,352.471 27.67%
Franklin Resources PSP
Attn Trading
P.O. Box 2438
Rancho Cordova, CA 95741-2438
VIII. The following is added to the section "Financial Statements":
The audited financial statements contained in the Annual Report to
Shareholders of Custodian Funds, for the fiscal year ended September 30,
1998, including the auditor's report, are incorporated herein by reference.
IX. In the "Useful Terms and Definitions" section, the definitions of "Class I,
Class II and Advisor Class" and "Offering Price" are replaced with the
following:
CLASS A, CLASS B, CLASS C AND ADVISOR CLASS - Growth, Income, U.S.
Government Securities and Utilities Series each offers four classes of
shares, designated "Class A," "Class B," "Class C" and "Advisor Class." The
DynaTech Series offers two classes of shares, designated "Class A" and
"Class C". The classes have proportionate interests in the Fund's
portfolio. They differ, however, primarily in their sales charge and
expense structures.
OFFERING PRICE - The public offering price is based on the Net Asset Value
per share of the class and includes the front-end sales charge. The maximum
front-end sales charge is 5.75% for Class A of Growth and DynaTech Series,
4.25% for Class A of Income, U.S. Government Securities and Utilities
Series and 1% each Fund's for Class C. There is no front-end sales charge
for Class B. We calculate the offering price to two decimal places using
standard rounding criteria.
Please keep this supplement for future reference.
FRANKLIN CUSTODIAN FUNDS, INC.
FILE NOS. 2-11346
& 811-537
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24 FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statements
(1) Financial Statements incorporated herein by reference to
the Registrant's Annual Report to Shareholders dated
September 30, 1997 as filed with the SEC electronically
on Form Type N-30D on December 10, 1997
(i) Financial Highlights
(ii) Statement of Investments, September 30, 1997
(iii) Statements of Assets and Liabilities - September 30, 1997
(iv) Statements of Operations - for the year ended September
30, 1997
(v) Statements of Changes in Net Assets - for the years
ended September 30, 1997 and 1996
(vi) Notes to Financial Statements
(vii) Report of Independent Accountants
(2) Financial Statements incorporated herein by reference to
the Registrant's Annual Report to Shareholders dated
September 30, 1998 as filed with the SEC electronically
on Form Type N-30D on November 19, 1998
(i) Financial Highlights
(ii) Statement of Investments, September 30, 1998
(iii) Statements of Assets and Liabilities - September 30, 1998
(iv) Statements of Operations - for the year ended September
30, 1998
(v) Statements of Changes in Net Assets - for the years
ended September 30, 1998 and 1997
(vi) Notes to Financial Statements
(vii) Independent Auditors' Report
b) Exhibits:
The following exhibits are incorporated herein by reference,
except exhibit 9(ii), 11(i), 15(ix), 15(x), 17(i), 17(ii), 18(i),
18(ii), 18(iv), 18(v) which are attached herewith.
(1) Copies of the charter as now in effect;
(i) Articles of Incorporation dated October 9, 1979
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(ii) Agreement and Articles of Merger dated November 7, 1979
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iii) Certificate of Amendment to Articles of Incorporation
dated October 4, 1985
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iv) Articles of Amendment dated October 14, 1985
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(v) Certificate of Amendment to Articles of Incorporation
dated February 24, 1989
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(vi) Certificate of Amendment to Articles of Incorporation
dated March 21, 1995
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(vii) Articles Supplementary to the Charter dated June 29, 1995
Filing: Post-Effective Amendment No. 72 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 30, 1995
(viii) Articles Supplementary to the Charter dated July 19, 1996
Filing: Post-Effective Amendment No. 75 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: December 31, 1996
(ix) Certificate of Correction to the Articles Supplementary
to the Charter dated August 22, 1996
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(x) Articles Supplementary to the Charter dated November 4,
1996
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(xi) Articles Supplementary to the Charter dated January 22,
1997
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(2) Copies of the existing By-Laws or instruments corresponding
thereto;
(i) By-Laws
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(3) Copies of any voting trust agreement with respect to more than
five percent of any class of equity securities of the Registrant;
Not Applicable
(4) Specimens or copies of each security issued by the Registrant,
including copies of all constituent instruments, defining the
rights of the holders of such securities, and copies of each
security being registered;
Not Applicable
(5) Copies of all investment advisory contracts relating to the
management of the assets of the Registrant;
(i) Management Agreement between the Registrant on behalf of
the DynaTech Series and Franklin Advisers, Inc. dated
May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(ii) Management Agreement between the Registrant on behalf of
the Income Series and FranklinAdvisers, Inc. dated May
1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iii) Management Agreement between the Registrant on behalf of
the U.S. Government Securities Series and Franklin
Advisers, Inc. dated May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iv) Management Agreement between the Registrant on behalf of
the Utilities Series and Franklin Advisers, Inc. dated
May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(v) Management Agreement between Registrant on behalf of the
Growth Series and Franklin Investment Advisory Services,
Inc. dated July 1, 1997
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(6) Copies of each underwriting or distribution contract between the
Registrant and a principal underwriter, and specimens or copies
of all agreements between principal underwriters and dealers;
(i) Amended and Restated Distribution Agreement between
Registrant and Franklin/Templeton Distributors, Inc.
dated March 29, 1995
Filing: Post-Effective Amendment No. 72 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 30, 1995
(ii) Forms of Dealer Agreements between Franklin/Templeton
Distributors, Inc. and Securities Dealers
Filing: Post-Effective Amendment No. 78 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 27, 1998
(7) Copies of all bonus, profit sharing, pension or other similar
contracts or arrangements wholly or partly for the benefit of
directors or officers of the Registrant in their capacity as
such; any such plan that is not set forth in a formal document,
furnish a reasonably detailed description thereof;
Not Applicable
(8) Copies of all custodian agreements and depository contracts under
Section 17(f) of the 1940 Act, with respect to securities and
similar investments of the Registrant, including the schedule of
remuneration;
(i) Master Custody Agreement between Registrant and Bank of
New York dated February 16, 1996
Filing: Post-Effective Amendment No. 74 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: August 19, 1996
(ii) Terminal Link Agreement between Registrant and Bank of
New York dated February 16, 1996
Filing: Post-Effective Amendment No. 74 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: August 19, 1996
(iii) Amendment dated May 7, 1997 to the Master Custody
Agreement dated February 16, 1996 between the Registrant
and Bank of New York
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(iv) Amendment dated February 27, 1998 to Exhibit A of the
Master Custody Agreement between the Registrant and Bank
of New York dated February 16, 1996
Filing: Post-Effective Amendment No. 78 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 27, 1998
(v) Foreign Custody Manager Agreement between the Registrant
and Bank of New York made as of July 30, 1998, effective
as of February 27, 1998
Filing: Post-Effective Amendment No. 78 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 27, 1998
(9) Copies of all other material contracts not made in the ordinary
course of business which are to be performed in whole or in part
at or after the date of filing the Registration Statement;
(i) Subcontract for Fund Administrative Services
dated October 1, 1996 and Amendment thereto
dated April 30, 1998 between Franklin Advisers,
Inc. and Franklin Templeton Services, Inc.
Filing: Post-Effective Amendment No. 78 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 27, 1998
(ii) Subcontract for Fund Administrative Services
dated October 1, 1996 and Amendment thereto
dated July 1, 1997 between Franklin Investment
Advisory Services, Inc. and Franklin Templeton
Services, Inc.
(10) An opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will when
sold be legally issued, fully paid and nonassessable;
(i) Opinion and Consent of Counsel dated November 6, 1998
Filing: Post-Effective Amendment No. 78 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 27, 1998
(11) Copies of any other opinions, appraisals or rulings and consents
to the use thereof relied on in the preparation of this
Registration Statement and required by Section 7 of the 1933 Act;
(i) Consent of Independent Auditors
(12) All financial statements omitted from Item 23;
Not Applicable
(13) Copies of any agreements or understandings made in consideration
for providing the initial capital between or among the
Registrant, the underwriter, adviser, promoter or initial
stockholders and written assurances from promoters or initial
stockholders that their purchases were made for investment
purposes without any present intention of redeeming or reselling;
(i) Letter of Understanding dated April 12, 1995
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(ii) Subscription Agreement for DynaTech Series - Class II
dated September 13, 1996
Filing: Post-Effective Amendment No. 75 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: December 31, 1996
(14) Copies of the model plan used in the establishment of any
retirement plan in conjunction with which Registrant offers its
securities, any instructions thereto and any other documents
making up the model plan. Such form(s) should disclose the costs
and fees charged in connection therewith;
Not Applicable
(15) Copies of any plan entered into by Registrant pursuant to Rule
12b-1 under the 1940 Act, which describes all material aspects of
the financing of distribution of Registrant's shares, and any
agreements with any person relating to implementation of such
plan.
(i) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the DynaTech Series and
Franklin/Templeton Distributors, Inc. dated May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(ii) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Growth Series and
Franklin/Templeton Distributors, Inc. dated May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iii) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Income Series and
Franklin/Templeton Distributors, Inc. dated May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(iv) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the U.S. Government Securities
Series and Franklin/Templeton Distributors, Inc. dated
May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(v) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Utilities Series and
Franklin/Templeton Distributors, Inc. dated May 1, 1994
Filing: Post-Effective Amendment No. 71 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: April 27, 1995
(vi) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Utilities Series, Income
Series and U.S. Government Securities Series - Class II
and Franklin/Templeton Distributors, Inc. dated March
30, 1995
Filing: Post-Effective Amendment No. 72 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 30, 1995
(vii) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the Growth Series - Class II and
Franklin/Templeton Distributors, Inc. dated March 30,
1995
Filing: Post-Effective Amendment No. 72 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: November 30, 1995
(viii) Distribution Plan pursuant to Rule 12b-1 between the
Registrant on behalf of the DynaTech Series - Class II
and Franklin/TempletonDistributors, Inc. dated September
16, 1996
Filing: Post-Effective Amendment No. 75 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: December 31, 1996
(ix) Form of Distribution Plan pursuant to Rule 12b-1 between
Registrant, on behalf of Growth Series - Class B, and
Franklin/Templeton Distributors, Inc.
(x) Form of Distribution Plan pursuant to Rule 12b-1 between
Registrant, on behalf of Utilities Series, Income Series
and U.S. Government Securities Series - Class B, and
Franklin/Templeton Distributors, Inc.
(16) Schedule for computation of each performance quotation provided
in the Registration Statement in response to Item 22 (which need
not be audited)
Not Applicable
(17) Power of Attorney
(i) Power of Attorney dated February 26, 1998
(ii) Certificate of Secretary dated March 5, 1998
(18) Copies of any plan entered into by Registrant pursuant to Rule
18f-3 under the 1940 Act
(i) Form of Multiple Class Plan for Growth Series
(ii) Form of Multiple Class Plan for Utilities Series
(iii) Multiple Class Plan for DynaTech Series Class II dated
June 18, 1996
Filing: Post-Effective Amendment No. 77 to
Registration Statement on Form N-1A
File No. 2-11346
Filing Date: January 29, 1998
(iv) Form of Multiple Class Plan for Income Series
(v) Form of Multiple Class Plan for U.S. Government
Securities Series
(27) Financial Data Schedule
Not Applicable
ITEM 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26 NUMBER OF HOLDERS OF SECURITIES
Not Applicable
ITEM 27 INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, 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 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 director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, 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 Act and will be governed by the final adjudication of such
issue.
Please see the By-Laws, Management, and Distribution Agreements previously filed
as exhibits and incorporated herein by reference.
Notwithstanding the provisions contained in the Registrant's By-Laws, in the
absence of authorization by the appropriate court on the merits pursuant to said
By-Laws, any indemnification under said By-Laws shall be made by Registrant only
if authorized in the manner provided by such By-Laws.
ITEM 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
The officers and directors of the Registrant's managers also serve as officers
and/or directors or trustees for (1) the advisor's corporate parent, Franklin
Resources, Inc., 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. For additional information please see Part B and
Schedules A and D of Forms ADV of the Funds' investment advisors Franklin
Advisers, Inc.(SEC File 801-26292), Franklin Investment Advisory Services, Inc.
(SEC File 801-52152)incorporated herein by reference, which sets forth the
officers and directors of the investment advisor 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 29 PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., ("Distributors") also acts as
principal underwriter of shares of:
Franklin Asset Allocation Fund
Franklin California Tax-Free Income Fund, Inc.
Franklin California Tax-Free Trust
Franklin Equity Fund
Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund
Franklin Floating Rate Trust
Franklin Gold Fund
Franklin High Income Trust
Franklin Investors Securities Trust
Franklin Managed Trust
Franklin Money Fund
Franklin Mutual Series Fund Inc.
Franklin Municipal Securities Trust
Franklin New York Tax-Free Income Fund
Franklin New York Tax-Free Trust
Franklin Real Estate Securities Trust
Franklin Strategic Mortgage Portfolio
Franklin Strategic Series
Franklin Tax-Exempt Money Fund
Franklin Tax-Free Trust
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund Trust
Franklin Value Investors Trust
Institutional Fiduciary Trust
Templeton American Trust, Inc.
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
b) The information required by this item 29 with respect to each director and
officer of Distributors is incorporated by reference to Part B of this N-1A and
Schedule A of Form BD filed by Distributors with the Securities and Exchange
Commission pursuant to the Securities Act of 1934 (SEC File No. 8-5889)
c) Not Applicable. Registrant's principal underwriter is an affiliated person of
an affiliated person of the Registrant.
ITEM 30 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 are kept by the Fund or its
shareholder services agent, Franklin/Templeton Investor Services, Inc., both of
whose address is 777 Mariners Island Blvd., San Mateo, California 94404-1585.
ITEM 31 MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 32 UNDERTAKINGS
a) The Registrant hereby undertakes to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any director or
directors when requested in writing to do so by the record holders of not less
than 10 percent of the Registrant's outstanding shares to assist its
shareholders in accordance with the requirements of Section 16(c) of the
Investment Company Act of 1940.
b) The Registrant hereby undertakes to comply with the information requirement
in Item 5A of the Form N-1A by including the required information in the Fund's
annual report and to furnish each person to whom a prospectus is delivered a
copy of the annual report upon request and without charge.
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
485(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 29th day
of December, 1998
FRANKLIN CUSTODIAN FUNDS, INC.
(Registrant)
By: CHARLES B. JOHNSON*
Charles B. Johnson
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.
CHARLES B. JOHNSON* Principal Executive
Charles B. Johnson Officer and Director
Dated: December 29, 1998
MARTIN L. FLANAGAN* Principal Financial Officer
Martin L. Flanagan Dated: December 29, 1998
DIOMEDES LOO-TAM* Principal Accounting Officer
Diomedes Loo-Tam Dated: December 29, 1998
HARRIS J. ASHTON* Director
Harris J. Ashton Dated: December 29, 1998
S. JOSEPH FORTUNATO* Director
S. Joseph Fortunato Dated: December 29, 1998
EDITH E. HOLIDAY* Director
Edith E. Holiday Dated: December 29, 1998
RUPERT H. JOHNSON, JR.* Director
Rupert H. Johnson, Jr. Dated: December 29, 1998
GORDON S. MACKLIN* Director
Gordon S. Macklin Dated: December 29, 1998
*By /s/ Larry L. Greene
Larry L. Greene, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN CUSTODIAN FUNDS, INC.
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.B1(i) Articles of Incorporation *
dated October 9, 1979
EX-99.B1(ii) Agreement and Articles of Merger *
dated November 7, 1979
EX-99.B1(iii) Certificate of Amendment to *
Articles of Incorporation
dated October 4, 1985
EX-99.B1(iv) Articles of Amendment dated *
October 14, 1985
EX-99.B1(v) Certificate of Amendment to *
Articles of Incorporation dated
February 24, 1989
EX-99.B1(vi) Certificate of Amendment to *
Articles of Incorporation dated
March 21, 1995
EX-99.B1(vii) Articles Supplementary to the *
Charter dated June 29, 1995
EX-99.B1(viii) Articles Supplementary to the *
Charter dated July 19, 1996
EX-99.B1(ix) Certificate of Correction to the *
Articles Supplementary to the
Charter dated August 22, 1996
EX-99.B1(x) Articles Supplementary to the *
Charter dated November 4, 1996
EX-99.B1(xi) Articles Supplementary to the *
Charter dated January 22, 1997
EX-99.B2(i) By-Laws *
EX-99.B5(i) Management Agreement between *
the Registrant on behalf of the
DynaTech Series and Franklin
Advisers, Inc. dated May 1, 1994
EX-99.B5(ii) Management Agreement between *
the Registrant on behalf of the
Income Series and Franklin
Advisers, Inc. dated May 1, 1994
EX-99.B5(iii) Management Agreement between *
the Registrant on behalf of the
U.S. Government Securities
Series and Franklin Advisers,
Inc. dated May 1, 1994
EX-99.B5(iv) Management Agreement between *
the Registrant on behalf of the
Utilities Series and Franklin
Advisers, Inc. dated May 1, 1994
EX-99.B5(v) Management Agreement between *
the Registrant on behalf of the
Growth Series and Franklin
Investment Advisory Services,
Inc. dated July 1, 1997
EX-99.B6(i) Amended and Restated *
Distribution Agreement between
Registrant and Franklin/Templeton
Distributors,
Inc., dated March 29, 1995
EX-99.B6(ii) Forms of Dealer Agreements *
between Franklin/Templeton
Distributors, Inc. and
Securities Dealers
EX-99.B8(i) Master Custody Agreement between *
Registrant and Bank of New York
dated February 16, 1996
EX-99.B8(ii) Terminal Link Agreement between *
Registrant and Bank of New York
dated February 16, 1996
EX-99.B8(iii) Amendment dated May 7, 1997 to *
the Master Custody Agreement
dated February 16, 1996 between
the Registrant and Bank of New
York
EX-99.B8(iv) Amendment dated February 27, 1998 to *
Exhibit A of the Master
Custody Agreement between the
Registrant and Bank of New York
dated February 16, 1996
EX-99.B8(v) Foreign Custody Manager Agreement *
between the Registrant
and Bank of New York made as
of July 30, 1998, effective as
of February 27, 1998
EX-99.B9(i) Subcontract for Fund Administrative *
Services dated October 1, 1996 and
Amendment thereto dated April 30,
1998 between Franklin Advisers, Inc.
and Franklin Templeton Services, Inc.
EX-99.B9(ii) Subcontract for Fund Administrative Attached
Services dated October 1, 1996 and
Amendment thereto dated July 1, 1997
between Franklin Investment Advisory
Services, Inc. and Franklin Templeton
Services, Inc.
EX-99.B10(i) Opinion and Consent of Counsel *
dated November 6, 1998
EX-99.B11(i) Consent of Independent Auditors Attached
EX-99.B13(i) Letter of Understanding dated *
April 12, 1995
EX-99.B13(ii) Subscription Agreement for *
DynaTech Series - Class II dated
September 13, 1996
EX-99.B15(i) Distribution Plan pursuant to *
Rule 12b-1 between the
Registrant on behalf of the
DynaTech Series and
Franklin/Templeton Distributors,
Inc. dated May 1, 1994
EX-99.B15(ii) Distribution Plan pursuant to *
Rule 12b-1 between the
Registrant on behalf of the
Growth Series and
Franklin/Templeton Distributors,
Inc. dated May 1, 1994
EX-99.B15(iii) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
Income Series and
Franklin/Templeton Distributors,
Inc. dated May 1, 1994
EX-99.B15(iv) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
U.S. Government Securities
Series and Franklin/Templeton
Distributors, Inc. dated
May 1, 1994
EX-99.B15(v) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
Utilities Series and
Franklin/Templeton Distributors,
Inc. dated May 1, 1994
EX-99.B15(vi) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
Utilities Series, Income
Series and U.S. Government
Securities Series - Class II
and Franklin/Templeton
Distributors, Inc. dated
March 30, 1995
EX-99.B15(vii) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
Growth Series - Class II and
Franklin/Templeton Distributors,
Inc. dated March 30, 1995
EX-99.B15(viii) Distribution Plan pursuant to *
Rule 12b-1 between the Registrant on
behalf of the
DynaTech Series - Class II and
Franklin/Templeton Distributors,
Inc. dated September 16, 1996
EX-99.B15(ix) Form of Distribution Plan pursuant to Attached
Rule 12b-1 between Registrant, on behalf
of Growth Series - Class B, and
Franklin/Templeton Distributors, Inc.
EX-99.B15(x) Form of Distribution Plan pursuant to Attached
Rule 12b-1 between Registrant, on behalf
of Utilities Series, Income Series and
U.S. Government Securities Series -
Class B, and Franklin/Templeton
Distributors, Inc.
EX-99.B17(i) Power of Attorney dated February Attached
26, 1998
EX-99.B17(ii) Certificate of Secretary dated Attached
March 5, 1998
EX-99.B18(i) Form of Multiple Class Plan for Growth Attached
Series
EX-99.B18(ii) Form of Multiple Class Plan for Attached
Utilities Series
EX-99.B18(iii) Multiple Class Plan for DynaTech Series *
Class II dated June 18, 1996
EX-99.B18(iv) Form of Multiple Class Plan for Income Attached
Series
EX-99.B18(v) Form of Multiple Class Plan for U.S. Attached
Government Securities Series
* Incorporated By Reference
SUBCONTRACT FOR FUND ADMINISTRATIVE SERVICES
This Subcontract for Fund Administrative Services ("Subcontract")
is made as of October 1, 1996 between FRANKLIN INVESTMENT ADVISORY SERVICES,
INC., a Connecticut corporation, hereinafter called the "Investment Manager,"
and FRANKLIN TEMPLETON SERVICES, INC. (the "Administrator").
In consideration of the mutual agreements herein made, the
Administrator and the Investment Manager understand and agree as follows:
I. Prime Contract.
This Subcontract is made in order to assist the Investment Manager in
fulfilling certain of the Investment Manager's obligations under each
investment management and investment advisory agreement ("Agreement") between
the Investment Manager and each Investment Company listed on Exhibit A,
("Investment Company") for itself or on behalf of each of its series listed
on Exhibit A (each, a "Fund"). This Subcontract is subject to the terms of
each Agreement, which is incorporated herein by reference.
II. Subcontractual Provisions.
(1) The Administrator agrees, during the life of this Agreement, to
provide the following services to each Fund:
(a) providing office space, telephone, office equipment and
supplies for the Fund;
(b) providing trading desk facilities for the Fund, unless
these facilities are provided by the Fund's investment adviser;
(c) authorizing expenditures and approving bills for payment on
behalf of the Fund;
(d) supervising preparation of periodic reports to
shareholders, notices of dividends, capital gains distributions and tax
credits; and attending to routine correspondence and other communications
with individual shareholders when asked to do so by the Fund's shareholder
servicing agent or other agents of the Fund;
(e) coordinating the daily pricing of the Fund's investment
portfolio, including collecting quotations from pricing services engaged by
the Fund; providing fund accounting services, including preparing and
supervising publication of daily net asset value quotations, periodic
earnings reports and other financial data; and coordinating trade settlements;
(f) monitoring relationships with organizations serving the
Fund, including custodians, transfer agents, public accounting firms, law
firms, printers and other third party service providers;
(g) supervising compliance by the Fund with recordkeeping
requirements under the federal securities laws, including the 1940 Act and
the rules and regulations thereunder, and under other applicable state and
federal laws; and maintaining books and records for the Fund (other than
those maintained by the custodian and transfer agent);
(h) preparing and filing of tax reports including the Fund's
income tax returns, and monitoring the Fund's compliance with subchapter M of
the Internal Revenue Code, as amended, and other applicable tax laws and
regulations;
(i) monitoring the Fund's compliance with: 1940 Act and other
federal securities laws, and rules and regulations thereunder; state and
foreign laws and regulations applicable to the operation of investment
companies; the Fund's investment objectives, policies and restrictions; and
the Code of Ethics and other policies adopted by the Investment Company's
Board of Trustees or Directors ("Board") or by the Fund's investment adviser
and applicable to the Fund;
(j) providing executive, clerical and secretarial personnel
needed to carry out the above responsibilities;
(k) preparing and filing regulatory reports, including without
limitation Forms N-1A and NSAR, proxy statements, information statements and
U.S. and foreign ownership reports; and
(l) providing support services incidental to carrying out these
duties.
Nothing in this Agreement shall obligate the Investment Company or any Fund
to pay any compensation to the officers of the Investment Company. Nothing
in this Agreement shall obligate the Administrator to pay for the services of
third parties, including attorneys, auditors, printers, pricing services or
others, engaged directly by the Fund to perform services on behalf of the
Fund.
(2) The Investment Manager agrees to pay to the Administrator as
compensation for such services a monthly fee equal on an annual basis to
0.15% of the first $200 million of the average daily net assets of each Fund
during the month preceding each payment, reduced as follows: on such net
assets in excess of $200 million up to $700 million, a monthly fee equal on
an annual basis to 0.135%; on such net assets in excess of $700 million up to
$1.2 billion, a monthly fee equal on an annual basis to 0.1%; and on such net
assets in excess of $1.2 billion, a monthly fee equal on an annual basis to
0.075%.
From time to time, the Administrator may waive all or a portion of its fees
provided for hereunder and such waiver shall be treated as a reduction in the
purchase price of its services. The Administrator shall be contractually
bound hereunder by the terms of any publicly announced waiver of its fee, or
any limitation of each affected Fund's expenses, as if such waiver or
limitation were fully set forth herein.
(3) This Subcontract shall become effective on the date written above
and shall continue in effect as to each Investment Company and each Fund so
long as (1) the Agreement applicable to the Investment Company or Fund is in
effect and (2) this Subcontract is not terminated. This Subcontract will
terminate as to any Investment Company or Fund immediately upon the
termination of the Agreement applicable to the Investment Company or Fund,
and may in addition be terminated by either party at any time, without the
payment of any penalty, on sixty (60) days' written notice to the other party.
(4) In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Administrator, or of reckless disregard of its
duties and obligations hereunder, the Administrator shall not be subject to
liability for any act or omission in the course of, or connected with,
rendering services hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Subcontract to be executed by their duly authorized officers.
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By: /s/ Deborah R. Gatzek
---------------------
Deborah R. Gatzek
Title: Vice President
& Assistant Secretary
FRANKLIN TEMPLETON SERVICES, INC.
By: /s/ Harmon E. Burns
---------------------
Harmon E. Burns
Title: Executive Vice President
AMENDMENT TO SUBCONTRACT FOR
FUND ADMINISTRATIVE SERVICES
The Subcontract for Fund Administrative Services dated October 1,
1996 between FRANKLIN INVESTMENT ADVISORY SERVICES, INC. and FRANKLIN
TEMPLETON SERVICES, INC. is hereby amended, effective July 1, 1997 to add
Franklin Custodian Funds, Inc., Growth Series to the list of funds in Exhibit
A.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their duly authorized officers.
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By: /s/ Deborah R. Gatzek
---------------------------
Deborah R. Gatzek
Vice President & Assistant Secretary
FRANKLIN TEMPLETON SERVICES, INC.
By: /s/ Harmon E. Burns
---------------------------
Harmon E. Burns
Executive Vice President
SUBCONTRACT FOR FUND ADMINISTRATIVE SERVICES
BETWEEN
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
AND
FRANKLIN TEMPLETON SERVICES, INC.
EXHIBIT A
- --------------------------------------------------------------------------------
INVESTMENT COMPANY SERIES ---(IF APPLICABLE)
- --------------------------------------------------------------------------------
Franklin Custodian Funds, Inc. Growth Series
- --------------------------------------------------------------------------------
(Revised effective 10/1/98)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No. 79
to the Registration Statement of Franklin Custodian Funds, Inc. on Form N-1A
(File No. 2-11346) of our reports dated October 28, 1997 and October 30, 1998 on
our audits of the financial statements and financial highlights of Franklin
Custodian Funds, Inc., which reports were included in the Annual Reports to
Shareholders for the years ended September 30, 1997 and September 30, 1998,
respectively, which are incorporated by reference in the Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Francisco, California
December 18, 1998
CLASS B DISTRIBUTION PLAN
I. Investment Company: FRANKLIN CUSTODIAN FUNDS, INC.
II. Fund: GROWTH SERIES - CLASS B
III. Maximum Per Annum Rule 12b-1 Fees for Class B Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.75%
B. Service Fee: 0.25%
PREAMBLE TO CLASS B DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class B shares
(the "Class") of the Fund named above ("Fund"), which Plan shall take effect as
of the date Class B shares are first offered (the "Effective Date of the Plan").
The Plan has been approved by a majority of the Board of Directors of the
Investment Company (the "Board"), including a majority of the Board members who
are not interested persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the "non-interested
Board members"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Franklin Investment Advisory Services, Inc. ("Advisers") and the terms of
the Underwriting Agreement between the Investment Company and Franklin/Templeton
Distributors, Inc. ("Distributors"). The Board concluded that the compensation
of Advisers, under the Management Agreement, and of Distributors, under the
Underwriting Agreement, was fair and not excessive. The approval of the Plan
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund and its shareholders.
The Board recognizes that Distributors has entered into an arrangement with
a third party in order to finance the distribution activities of the Class
pursuant to which Distributors may assign its rights to the fees payable
hereunder to such third party. The Board further recognizes that it has an
obligation to act in good faith and in the best interests of the Fund and its
shareholders when considering the continuation or termination of the Plan and
any payments to be made thereunder.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a monthly fee not to exceed the
above-stated maximum distribution fee per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund shall
pay (i) to Distributors for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Investment Company's Board from time to time, as a
service fee pursuant to servicing agreements which have been approved from time
to time by the Board, including the non-interested Board members.
2. (a) The monies paid to Distributors pursuant to Paragraph 1(a) above
shall be treated as compensation for Distributors' distribution-related services
including compensation for amounts advanced to securities dealers or their firms
or others selling shares of the Class who have executed an agreement with the
Investment Company, Distributors or its affiliates, which form of agreement has
been approved from time to time by the Board, including the non-interested Board
members, with respect to the sale of Class shares. In addition, such monies may
be used to compensate Distributors for other expenses incurred to assist in the
distribution and promotion of shares of the Class. Payments made to Distributors
under the Plan may be used for, among other things, the printing of prospectuses
and reports used for sales purposes, expenses of preparing and distributing
sales literature and related expenses, advertisements, and other
distribution-related expenses, including a pro-rated portion of Distributors'
overhead expenses attributable to the distribution of Class shares, as well as
for additional distribution fees paid to securities dealers or their firms or
others who have executed agreements with the Investment Company, Distributors or
its affiliates, or for certain promotional distribution charges paid to
broker-dealer firms or others, or for participation in certain distribution
channels. None of such payments are the legal obligation of Distributors or its
designee.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be used
to pay dealers or others for, among other things, furnishing personal services
and maintaining shareholder accounts, which services include, among other
things, assisting in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; arranging for bank wires;
monitoring dividend payments from the Fund on behalf of customers; forwarding
certain shareholder communications from the Fund to customers; receiving and
answering correspondence; and aiding in maintaining the investment of their
respective customers in the Class. Any amounts paid under this paragraph 2(b)
shall be paid pursuant to a servicing or other agreement, which form of
agreement has been approved from time to time by the Board. None of such
payments are the legal obligation of Distributors or its designee.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, Advisers,
Distributors or other parties on behalf of the Fund, Advisers or Distributors
make payments that are deemed to be payments by the Fund for the financing of
any activity primarily intended to result in the sale of Class shares issued by
the Fund within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which include
payments specified in paragraphs 1 and 2, plus any other payments deemed to be
made pursuant to the Plan under this paragraph, exceed the amount permitted to
be paid pursuant to Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies paid to it and to others under the Plan,
and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. (a) Distributors may assign, transfer or pledge ("Transfer") to one or
more designees (each an "Assignee"), its rights to all or a designated portion
of the fees to which it is entitled under paragraph 1 of this Plan from time to
time (but not Distributors' duties and obligations pursuant hereto or pursuant
to any distribution agreement in effect from time to time, if any, between
Distributors and the Fund), free and clear of any offsets or claims the Fund may
have against Distributors. Each such Assignee's ownership interest in a Transfer
of a specific designated portion of the fees to which Distributors is entitled
is hereafter referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant
to this Section 5(a) shall not reduce or extinguish any claims of the Fund
against Distributors.
(b) Distributors shall promptly notify the Fund in writing of each such
Transfer by providing the Fund with the name and address of each such Assignee.
(c) Distributors may direct the Fund to pay any Assignee's 12b-1 Portion
directly to each Assignee. In such event, Distributors shall provide the Fund
with a monthly calculation of the amount to which each Assignee is entitled (the
"Monthly Calculation"). In such event, the Fund shall, upon receipt of such
notice and Monthly Calculation from Distributors, make all payments required
directly to the Assignee in accordance with the information provided in such
notice and Monthly Calculation upon the same terms and conditions as if such
payments were to be paid to Distributors.
(d) Alternatively, in connection with a Transfer, Distributors may
direct the Fund to pay all or a portion of the fees to which Distributors is
entitled from time to time to a depository or collection agent designated by any
Assignee, which depository or collection agent may be delegated the duty of
dividing such fees between the Assignee's 12b-1 Portion and the balance (such
balance, when distributed to Distributors by the depository or collection agent,
the "Distributors' 12b-1 Portion"), in which case only Distributors' 12b-1
Portion may be subject to offsets or claims the Fund may have against
Distributors.
6. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan. In determining whether
there is a reasonable likelihood that the continuation of the Plan will benefit
the Fund and its shareholders, the Board may, but is not obligated to, consider
that Distributors has incurred substantial cost and has entered into an
arrangement with a third party in order to finance the distribution activities
for the Class.
7. This Plan and any agreements entered into pursuant to this Plan may be
terminated with respect to the shares of the Class, without penalty, at any time
by vote of a majority of the non-interested Board members of the Investment
Company, or by vote of a majority of outstanding Shares of such Class. Upon
termination of this Plan with respect to the Class, the obligation of the Fund
to make payments pursuant to this Plan with respect to such Class shall
terminate, and the Fund shall not be required to make payments hereunder beyond
such termination date with respect to expenses incurred in connection with Class
shares sold prior to such termination date, provided, in each case that each of
the requirements of a Complete Termination of this Plan in respect of such
Class, as defined below, are met. For purposes of this Section 7, a "Complete
Termination" of this Plan in respect of the Class shall mean a termination of
this Plan in respect of such Class, provided that: (i) the non-interested Board
members of the Investment Company shall have acted in good faith and shall have
determined that such termination is in the best interest of the Investment
Company and the shareholders of the Fund and the Class; (ii) and the Investment
Company does not alter the terms of the contingent deferred sales charges
applicable to Class shares outstanding at the time of such termination; and
(iii) unless Distributors at the time of such termination was in material breach
under the distribution agreement in respect of the Fund, the Fund shall not, in
respect of such Fund, pay to any person or entity, other than Distributors or
its designee, either the payments described in paragraph 1(a) or 1(b) or in
respect of the Class shares sold by Distributors prior to such termination.
8. The Plan, and any agreements entered into pursuant to this Plan, may not
be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the outstanding
voting securities of the Class of the Fund.
9. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
10. So long as the Plan is in effect, the selection and nomination of the
Fund's non-interested Board members shall be committed to the discretion of such
non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and Distributors as evidenced by their
execution hereof.
Date: October 16, 1998
FRANKLIN CUSTODIAN FUNDS, INC.
By:
-----------------------
Deborah R. Gatzek
Vice President &
Assistant Secretary
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By:
-----------------------
Harmon E. Burns
Executive Vice President
CLASS B DISTRIBUTION PLAN
I. Investment Company: FRANKLIN CUSTODIAN FUNDS, INC.
II. Fund: UTILITIES SERIES - CLASS B
INCOME SERIES - CLASS B
U.S GOVERNMENT SECURITIES SERIES - CLASS B
III. Maximum Per Annum Rule 12b-1 Fees for Class B Shares
(as a percentage of average daily net assets of the class)
A. Distribution Fee: 0.50%
B. Service Fee: 0.15%
PREAMBLE TO CLASS B DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class B shares
(the "Class") of each Fund named above ("Fund"), which Plan shall take effect as
of the date Class B shares are first offered (the "Effective Date of the Plan").
The Plan has been approved by a majority of the Board of Directors of the
Investment Company (the "Board"), including a majority of the Board members who
are not interested persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the "non-interested
Board members"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Franklin Advisers, Inc. and the terms of the Underwriting Agreement between
the Investment Company and Franklin/Templeton Distributors, Inc.
("Distributors"). The Board concluded that the compensation of Advisers, under
the Management Agreement, and of Distributors, under the Underwriting Agreement,
was fair and not excessive. The approval of the Plan included a determination
that in the exercise of their reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders.
The Board recognizes that Distributors has entered into an arrangement with
a third party in order to finance the distribution activities of the Class
pursuant to which Distributors may assign its rights to the fees payable
hereunder to such third party. The Board further recognizes that it has an
obligation to act in good faith and in the best interests of each Fund and its
shareholders when considering the continuation or termination of the Plan and
any payments to be made thereunder.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a monthly fee not to exceed the
above-stated maximum distribution fee per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund shall
pay (i) to Distributors for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Investment Company's Board from time to time, as a
service fee pursuant to servicing agreements which have been approved from time
to time by the Board, including the non-interested Board members.
2. (a) The monies paid to Distributors pursuant to Paragraph 1(a) above
shall be treated as compensation for Distributors' distribution-related services
including compensation for amounts advanced to securities dealers or their firms
or others selling shares of the Class who have executed an agreement with the
Investment Company, Distributors or its affiliates, which form of agreement has
been approved from time to time by the Board, including the non-interested Board
members, with respect to the sale of Class shares. In addition, such monies may
be used to compensate Distributors for other expenses incurred to assist in the
distribution and promotion of shares of the Class. Payments made to Distributors
under the Plan may be used for, among other things, the printing of prospectuses
and reports used for sales purposes, expenses of preparing and distributing
sales literature and related expenses, advertisements, and other
distribution-related expenses, including a pro-rated portion of Distributors'
overhead expenses attributable to the distribution of Class shares, as well as
for additional distribution fees paid to securities dealers or their firms or
others who have executed agreements with the Investment Company, Distributors or
its affiliates, or for certain promotional distribution charges paid to
broker-dealer firms or others, or for participation in certain distribution
channels. None of such payments are the legal obligation of Distributors or its
designee.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be used
to pay dealers or others for, among other things, furnishing personal services
and maintaining shareholder accounts, which services include, among other
things, assisting in establishing and maintaining customer accounts and records;
assisting with purchase and redemption requests; arranging for bank wires;
monitoring dividend payments from the Fund on behalf of customers; forwarding
certain shareholder communications from the Fund to customers; receiving and
answering correspondence; and aiding in maintaining the investment of their
respective customers in the Class. Any amounts paid under this paragraph 2(b)
shall be paid pursuant to a servicing or other agreement, which form of
agreement has been approved from time to time by the Board. None of such
payments are the legal obligation of Distributors or its designee.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, Advisers,
Distributors or other parties on behalf of the Fund, Advisers or Distributors
make payments that are deemed to be payments by the Fund for the financing of
any activity primarily intended to result in the sale of Class shares issued by
the Fund within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which include
payments specified in paragraphs 1 and 2, plus any other payments deemed to be
made pursuant to the Plan under this paragraph, exceed the amount permitted to
be paid pursuant to Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies paid to it and to others under the Plan,
and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. (a) Distributors may assign, transfer or pledge ("Transfer") to one or
more designees (each an "Assignee"), its rights to all or a designated portion
of the fees to which it is entitled under paragraph 1 of this Plan from time to
time (but not Distributors' duties and obligations pursuant hereto or pursuant
to any distribution agreement in effect from time to time, if any, between
Distributors and the Fund), free and clear of any offsets or claims the Fund may
have against Distributors. Each such Assignee's ownership interest in a Transfer
of a specific designated portion of the fees to which Distributors is entitled
is hereafter referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant
to this Section 5(a) shall not reduce or extinguish any claims of the Fund
against Distributors.
(b) Distributors shall promptly notify the Fund in writing of each such
Transfer by providing the Fund with the name and address of each such Assignee.
(c) Distributors may direct the Fund to pay any Assignee's 12b-1 Portion
directly to each Assignee. In such event, Distributors shall provide the Fund
with a monthly calculation of the amount to which each Assignee is entitled (the
"Monthly Calculation"). In such event, the Fund shall, upon receipt of such
notice and Monthly Calculation from Distributors, make all payments required
directly to the Assignee in accordance with the information provided in such
notice and Monthly Calculation upon the same terms and conditions as if such
payments were to be paid to Distributors.
(d) Alternatively, in connection with a Transfer, Distributors may
direct the Fund to pay all or a portion of the fees to which Distributors is
entitled from time to time to a depository or collection agent designated by any
Assignee, which depository or collection agent may be delegated the duty of
dividing such fees between the Assignee's 12b-1 Portion and the balance (such
balance, when distributed to Distributors by the depository or collection agent,
the "Distributors' 12b-1 Portion"), in which case only Distributors' 12b-1
Portion may be subject to offsets or claims the Fund may have against
Distributors.
6. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan. In determining whether
there is a reasonable likelihood that the continuation of the Plan will benefit
the Fund and its shareholders, the Board may, but is not obligated to, consider
that Distributors has incurred substantial cost and has entered into an
arrangement with a third party in order to finance the distribution activities
for the Class.
7. This Plan and any agreements entered into pursuant to this Plan may be
terminated with respect to the shares of the Class, without penalty, at any time
by vote of a majority of the non-interested Board members of the Investment
Company, or by vote of a majority of outstanding Shares of such Class. Upon
termination of this Plan with respect to the Class, the obligation of the Fund
to make payments pursuant to this Plan with respect to such Class shall
terminate, and the Fund shall not be required to make payments hereunder beyond
such termination date with respect to expenses incurred in connection with Class
shares sold prior to such termination date, provided, in each case that each of
the requirements of a Complete Termination of this Plan in respect of such
Class, as defined below, are met. For purposes of this Section 7, a "Complete
Termination" of this Plan in respect of the Class shall mean a termination of
this Plan in respect of such Class, provided that: (i) the non-interested Board
members of the Investment Company shall have acted in good faith and shall have
determined that such termination is in the best interest of the Investment
Company and the shareholders of the Fund and the Class; (ii) and the Investment
Company does not alter the terms of the contingent deferred sales charges
applicable to Class shares outstanding at the time of such termination; and
(iii) unless Distributors at the time of such termination was in material breach
under the distribution agreement in respect of the Fund, the Fund shall not, in
respect of such Fund, pay to any person or entity, other than Distributors or
its designee, either the payments described in paragraph 1(a) or 1(b) or in
respect of the Class shares sold by Distributors prior to such termination.
8. The Plan, and any agreements entered into pursuant to this Plan, may not
be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the outstanding
voting securities of the Class of the Fund.
9. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
10. So long as the Plan is in effect, the selection and nomination of the
Fund's non-interested Board members shall be committed to the discretion of such
non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and Distributors as evidenced by their
execution hereof.
Date: October 16, 1998
FRANKLIN CUSTODIAN FUNDS, INC.
By:
------------------------
Deborah R. Gatzek
Vice President &
Assistant Secretary
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By:
------------------------
Harmon E. Burns
Executive Vice President
POWER OF ATTORNEY
The undersigned officers and directors of FRANKLIN CUSTODIAN FUNDS, INC.
hereby appoint BRIAN E. LORENZ, HARMON E. BURNS, DEBORAH R. GATZEK, LARRY L.
GREENE and KAREN L. SKIDMORE (with full power to each of them to act alone) his
attorney-in-fact and agent, in all capacities, to execute, and to file any of
the documents referred to below relating to Company's Registration Statement on
Form N-1A under the Securities Act of 1933, or any amendment to such
Registration Statement, covering the sale of shares by the Company under a
prospectus becoming effective after this date, with all exhibits and any and all
documents required to be filed 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 directors hereby execute this Power of
Attorney as of this 26TH day of FEBRUARY, 1998.
/S/ CHARLES B. JOHNSON /S/ RUPERT H. JOHNSON, JR.
Charles B. Johnson, Rupert H. Johnson, Jr.,
Executive Officer and Director Director
/S/ HARRIS J. ASHTON /S/ S. JOSEPH FORTUNATO
Harris J. Ashton, S. Joseph Fortunato,
Director Director
/S/ EDITH E. HOLIDAY /S/ GORDON S. MACKLIN
Edith E. Holiday, Gordon S. Macklin,
Director Director
/S/ MARTIN L. FLANAGAN /S/ DIOMEDES LOO-TAM
Martin L. Flanagan, Diomedes Loo-Tam,
Principal Financial Officer Principal Accounting Officer
CERTIFICATE OF SECRETARY
I, Brian E. Lorenz, certify that I am Secretary of Franklin Custodian
Funds, Inc. (the "Fund"), and do further certify that the following resolution
was adopted by the Directors of the Fund at a meeting held on February 26, 1998,
which resolution is in full force and effect.
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, Brian E.
Lorenz, Karen L. Skidmore, and Larry L. Greene as
attorneys-in-fact for the purpose of filing the N-14
registration statement and documents relating thereto with
the Securities and Exchange Commission, be executed by each
Director and designated officer.
In witness whereof, I have executed this certificate as of the 5th day of
March, 1998.
/S/ BRIAN E. LORENZ
-------------------
Brian E. Lorenz
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
GROWTH SERIES
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Directors of FRANKLIN CUSTODIAN FUNDS, INC. (the "Investment
Company") for its series, the GROWTH SERIES (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole.
The Plan sets forth the provisions relating to the establishment of multiple
classes of shares of the Fund, and supersedes any Plan previously adopted for
the Fund.
1. The Fund shall offer four classes of shares, to be known as Class
A Shares, Class B Shares, Class C Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging from
0% - 5.75%, and Class C Shares shall carry a front-end sales charge of
1.00%. Class B Shares and the Advisor Class Shares shall not be subject to
any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of
1.00% of the lesser of the then-current net asset value or the original net
asset value at the time of purchase applies to redemptions of those
investments within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain circumstances,
as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall
be assessed a CDSC of 4% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (b) Class B Shares
redeemed within the third and fourth years of their purchase shall be
assessed a CDSC of 3% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (c) Class B Shares
redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on
the lesser of the then-current net asset value or the original net asset
value at the time of purchase; and (d) Class B Shares redeemed within 6 years
of their purchase shall be assessed a CDSC of 1% on the lesser of the
then-current net asset value or the original net asset value at the time of
purchase. The CDSC is waived in certain circumstances described in the
Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the
"Rule 12b-1 Plan") associated with the Class A Shares may be used to
reimburse Franklin/Templeton Distributors, Inc. (the "Distributor") or others
for expenses incurred in the promotion and distribution of the Class A
Shares. Such expenses include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of the
Distributor's overhead expenses attributable to the distribution of the Class
A Shares, as well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing agreement with
the Investment Company for the Class A Shares, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be
retained by Distributor to compensate Distributor for amounts advanced to
securities dealers or their firms or others with respect to the sale of Class
B Shares. In addition, such payments may be retained by the Distributor to
be used in the promotion and distribution of Class B Shares in a manner
similar to that described above for Class A Shares. The second component is
a shareholder servicing fee to be paid to securities dealers or others who
provide personal assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid
to broker-dealers, banks, trust companies and others who provide personal
assistance to shareholders in servicing their accounts. The second component
is an asset-based sales charge to be retained by the Distributor during the
first year after the sale of shares, and in subsequent years, to be paid to
dealers or retained by the Distributor to be used in the promotion and
distribution of Class C Shares, in a manner similar to that described above
for Class A Shares.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class
Shares and, therefore, the Advisor Class Shares shall not be subject to
deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, section 26(d).
5. The only difference in expenses as between Class A, Class B,
Class C, and Advisor Class Shares shall relate to differences in Rule 12b-1
plan expenses, as described in the applicable Rule 12b-1 Plans; however, to
the extent that the Rule 12b-1 Plan expenses of one Class are the same as the
Rule 12b-1 Plan expenses of another Class, such classes shall be subject to
the same expenses.
6. There shall be no conversion features associated with the Class
A, Class C, and Advisor Class Shares. Each Class B Share, however, shall be
converted automatically, and without any action or choice on the part of the
holder of the Class B Shares, into Class A Shares on the conversion date
specified, and in accordance with the terms and conditions approved by the
Franklin Custodian Fund's Board of Directors and as described, in each fund's
prospectus relating to the Class B Shares, as such prospectus may be amended
from time to time; provided, however, that the Class B Shares shall be
converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B, Class C and Advisor Class may be
exchanged for shares of another investment company within the Franklin
Templeton Group of Funds according to the terms and conditions stated in each
fund's prospectus, as it may be amended from time to time, to the extent
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1
Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will monitor the
Fund for the existence of any material conflicts between the Board members
interests of the various classes of shares. The Board members, including a
majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop.
Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be
responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a
majority of the Board members, including a majority of the Board members who
are not interested persons of the Investment Company.
11. I, Brian E. Lorenz, Secretary of the Franklin Custodian Funds,
Inc., do hereby certify that this Multiple Class Plan was adopted on behalf
of the GROWTH SERIES, by a majority of the Directors of the Fund on March 19,
1998.
-------------------
Brian E. Lorenz
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
UTILITIES SERIES
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Directors of FRANKLIN CUSTODIAN FUNDS, INC. (the "Investment
Company") for its series, the UTILITIES SERIES (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole.
The Plan sets forth the provisions relating to the establishment of multiple
classes of shares of the Fund, and supersedes any Plan previously adopted for
the Fund.
1. The Fund shall offer four classes of shares, to be known as Class
A Shares, Class B Shares, Class C Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging from
0% - 4.25%, and Class C Shares shall carry a front-end sales charge of
1.00%. Class B Shares and the Advisor Class Shares shall not be subject to
any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of
1.00% of the lesser of the then-current net asset value or the original net
asset value at the time of purchase applies to redemptions of those
investments within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain circumstances,
as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall
be assessed a CDSC of 4% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (b) Class B Shares
redeemed within the third and fourth years of their purchase shall be
assessed a CDSC of 3% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (c) Class B Shares
redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on
the lesser of the then-current net asset value or the original net asset
value at the time of purchase; and (d) Class B Shares redeemed within 6 years
of their purchase shall be assessed a CDSC of 1% on the lesser of the
then-current net asset value or the original net asset value at the time of
purchase. The CDSC is waived in certain circumstances described in the
Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the
"Rule 12b-1 Plan") associated with the Class A Shares may be used to
reimburse Franklin/Templeton Distributors, Inc. (the "Distributor") or others
for expenses incurred in the promotion and distribution of the Class A
Shares. Such expenses include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of the
Distributor's overhead expenses attributable to the distribution of the Class
A Shares, as well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing agreement with
the Investment Company for the Class A Shares, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be
retained by Distributor to compensate Distributor for amounts advanced to
securities dealers or their firms or others with respect to the sale of Class
B Shares. In addition, such payments may be retained by the Distributor to
be used in the promotion and distribution of Class B Shares in a manner
similar to that described above for Class A Shares. The second component is
a shareholder servicing fee to be paid to securities dealers or others who
provide personal assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid
to broker-dealers, banks, trust companies and others who provide personal
assistance to shareholders in servicing their accounts. The second component
is an asset-based sales charge to be retained by the Distributor during the
first year after the sale of shares, and in subsequent years, to be paid to
dealers or retained by the Distributor to be used in the promotion and
distribution of Class C Shares, in a manner similar to that described above
for Class A Shares.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class
Shares and, therefore, the Advisor Class Shares shall not be subject to
deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, section 26(d).
5. The only difference in expenses as between Class A, Class B,
Class C, and Advisor Class Shares shall relate to differences in Rule 12b-1
plan expenses, as described in the applicable Rule 12b-1 Plans; however, to
the extent that the Rule 12b-1 Plan expenses of one Class are the same as the
Rule 12b-1 Plan expenses of another Class, such classes shall be subject to
the same expenses.
6. There shall be no conversion features associated with the Class
A, Class C, and Advisor Class Shares. Each Class B Share, however, shall be
converted automatically, and without any action or choice on the part of the
holder of the Class B Shares, into Class A Shares on the conversion date
specified, and in accordance with the terms and conditions approved by the
Franklin Custodian Fund's Board of Directors and as described, in each fund's
prospectus relating to the Class B Shares, as such prospectus may be amended
from time to time; provided, however, that the Class B Shares shall be
converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B, Class C and Advisor Class may be
exchanged for shares of another investment company within the Franklin
Templeton Group of Funds according to the terms and conditions stated in each
fund's prospectus, as it may be amended from time to time, to the extent
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1
Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will monitor the
Fund for the existence of any material conflicts between the Board members
interests of the various classes of shares. The Board members, including a
majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop.
Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be
responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a
majority of the Board members, including a majority of the Board members who
are not interested persons of the Investment Company.
11. I, Brian E. Lorenz, Secretary of the Franklin Custodian Funds,
Inc., do hereby certify that this Multiple Class Plan was adopted on behalf
of the UTILITIES SERIES, by a majority of the Directors of the Fund on March
19, 1998.
-------------------
Brian E. Lorenz
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
INCOME SERIES
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Directors of FRANKLIN CUSTODIAN FUNDS, INC. (the "Investment
Company") for its series, the INCOME SERIES (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole.
The Plan sets forth the provisions relating to the establishment of multiple
classes of shares of the Fund, and supersedes any Plan previously adopted for
the Fund.
1. The Fund shall offer four classes of shares, to be known as Class
A Shares, Class B Shares, Class C Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging from
0% - 4.25%, and Class C Shares shall carry a front-end sales charge of
1.00%. Class B Shares and the Advisor Class Shares shall not be subject to
any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of
1.00% of the lesser of the then-current net asset value or the original net
asset value at the time of purchase applies to redemptions of those
investments within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain circumstances,
as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall
be assessed a CDSC of 4% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (b) Class B Shares
redeemed within the third and fourth years of their purchase shall be
assessed a CDSC of 3% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (c) Class B Shares
redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on
the lesser of the then-current net asset value or the original net asset
value at the time of purchase; and (d) Class B Shares redeemed within 6 years
of their purchase shall be assessed a CDSC of 1% on the lesser of the
then-current net asset value or the original net asset value at the time of
purchase. The CDSC is waived in certain circumstances described in the
Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the
"Rule 12b-1 Plan") associated with the Class A Shares may be used to
reimburse Franklin/Templeton Distributors, Inc. (the "Distributor") or others
for expenses incurred in the promotion and distribution of the Class A
Shares. Such expenses include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of the
Distributor's overhead expenses attributable to the distribution of the Class
A Shares, as well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing agreement with
the Investment Company for the Class A Shares, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be
retained by Distributor to compensate Distributor for amounts advanced to
securities dealers or their firms or others with respect to the sale of Class
B Shares. In addition, such payments may be retained by the Distributor to
be used in the promotion and distribution of Class B Shares in a manner
similar to that described above for Class A Shares. The second component is
a shareholder servicing fee to be paid to securities dealers or others who
provide personal assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid
to broker-dealers, banks, trust companies and others who provide personal
assistance to shareholders in servicing their accounts. The second component
is an asset-based sales charge to be retained by the Distributor during the
first year after the sale of shares, and in subsequent years, to be paid to
dealers or retained by the Distributor to be used in the promotion and
distribution of Class C Shares, in a manner similar to that described above
for Class A Shares.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class
Shares and, therefore, the Advisor Class Shares shall not be subject to
deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, section 26(d).
5. The only difference in expenses as between Class A, Class B,
Class C, and Advisor Class Shares shall relate to differences in Rule 12b-1
plan expenses, as described in the applicable Rule 12b-1 Plans; however, to
the extent that the Rule 12b-1 Plan expenses of one Class are the same as the
Rule 12b-1 Plan expenses of another Class, such classes shall be subject to
the same expenses.
6. There shall be no conversion features associated with the Class
A, Class C, and Advisor Class Shares. Each Class B Share, however, shall be
converted automatically, and without any action or choice on the part of the
holder of the Class B Shares, into Class A Shares on the conversion date
specified, and in accordance with the terms and conditions approved by the
Franklin Custodian Fund's Board of Directors and as described, in each fund's
prospectus relating to the Class B Shares, as such prospectus may be amended
from time to time; provided, however, that the Class B Shares shall be
converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B, Class C and Advisor Class may be
exchanged for shares of another investment company within the Franklin
Templeton Group of Funds according to the terms and conditions stated in each
fund's prospectus, as it may be amended from time to time, to the extent
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1
Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will monitor the
Fund for the existence of any material conflicts between the Board members
interests of the various classes of shares. The Board members, including a
majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop.
Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be
responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a
majority of the Board members, including a majority of the Board members who
are not interested persons of the Investment Company.
11. I, Brian E. Lorenz, Secretary of the Franklin Custodian Funds,
Inc., do hereby certify that this Multiple Class Plan was adopted on behalf
of the INCOME SERIES, by a majority of the Directors of the Fund on March 19,
1998.
-------------------
Brian E. Lorenz
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
U.S. GOVERNMENT SECURITIES SERIES
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Directors of FRANKLIN CUSTODIAN FUNDS, INC. (the "Investment
Company") for its series, the U.S. GOVERNMENT SECURITIES SERIES (the
"Fund"). The Board has determined that the Plan, including the expense
allocation, is in the best interests of each class of the Fund and the
Investment Company as a whole. The Plan sets forth the provisions relating
to the establishment of multiple classes of shares of the Fund, and
supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer four classes of shares, to be known as Class
A Shares, Class B Shares, Class C Shares and Advisor Class Shares.
2. Class A Shares shall carry a front-end sales charge ranging from
0% - 4.25%, and Class C Shares shall carry a front-end sales charge of
1.00%. Class B Shares and the Advisor Class Shares shall not be subject to
any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred
sales charge ("CDSC"), except in the following limited circumstances. On
investments of $1 million or more, a contingent deferred sales charge of
1.00% of the lesser of the then-current net asset value or the original net
asset value at the time of purchase applies to redemptions of those
investments within the contingency period of 12 months from the calendar
month following their purchase. The CDSC is waived in certain circumstances,
as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall
be assessed a CDSC of 4% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (b) Class B Shares
redeemed within the third and fourth years of their purchase shall be
assessed a CDSC of 3% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase; (c) Class B Shares
redeemed within 5 years of their purchase shall be assessed a CDSC of 2% on
the lesser of the then-current net asset value or the original net asset
value at the time of purchase; and (d) Class B Shares redeemed within 6 years
of their purchase shall be assessed a CDSC of 1% on the lesser of the
then-current net asset value or the original net asset value at the time of
purchase. The CDSC is waived in certain circumstances described in the
Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
Advisor Class Shares shall not be subject to any CDSC.
4. The distribution plan adopted by the Investment Company pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended, (the
"Rule 12b-1 Plan") associated with the Class A Shares may be used to
reimburse Franklin/Templeton Distributors, Inc. (the "Distributor") or others
for expenses incurred in the promotion and distribution of the Class A
Shares. Such expenses include, but are not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparing and
distributing sales literature and related expenses, advertisements, and other
distribution-related expenses, including a prorated portion of the
Distributor's overhead expenses attributable to the distribution of the Class
A Shares, as well as any distribution or service fees paid to securities
dealers or their firms or others who have executed a servicing agreement with
the Investment Company for the Class A Shares, the Distributor or its
affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two
components. The first component is an asset-based sales charge to be
retained by Distributor to compensate Distributor for amounts advanced to
securities dealers or their firms or others with respect to the sale of Class
B Shares. In addition, such payments may be retained by the Distributor to
be used in the promotion and distribution of Class B Shares in a manner
similar to that described above for Class A Shares. The second component is
a shareholder servicing fee to be paid to securities dealers or others who
provide personal assistance to shareholders in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two
components. The first component is a shareholder servicing fee, to be paid
to broker-dealers, banks, trust companies and others who provide personal
assistance to shareholders in servicing their accounts. The second component
is an asset-based sales charge to be retained by the Distributor during the
first year after the sale of shares, and in subsequent years, to be paid to
dealers or retained by the Distributor to be used in the promotion and
distribution of Class C Shares, in a manner similar to that described above
for Class A Shares.
No Rule 12b-1 Plan has been adopted on behalf of the Advisor Class
Shares and, therefore, the Advisor Class Shares shall not be subject to
deductions relating to Rule 12b-1 fees.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., Article III, section 26(d).
5. The only difference in expenses as between Class A, Class B,
Class C, and Advisor Class Shares shall relate to differences in Rule 12b-1
plan expenses, as described in the applicable Rule 12b-1 Plans; however, to
the extent that the Rule 12b-1 Plan expenses of one Class are the same as the
Rule 12b-1 Plan expenses of another Class, such classes shall be subject to
the same expenses.
6. There shall be no conversion features associated with the Class
A, Class C, and Advisor Class Shares. Each Class B Share, however, shall be
converted automatically, and without any action or choice on the part of the
holder of the Class B Shares, into Class A Shares on the conversion date
specified, and in accordance with the terms and conditions approved by the
Franklin Custodian Fund's Board of Directors and as described, in each fund's
prospectus relating to the Class B Shares, as such prospectus may be amended
from time to time; provided, however, that the Class B Shares shall be
converted automatically into Class A Shares to the extent and on the terms
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
7. Shares of Class A, Class B, Class C and Advisor Class may be
exchanged for shares of another investment company within the Franklin
Templeton Group of Funds according to the terms and conditions stated in each
fund's prospectus, as it may be amended from time to time, to the extent
permitted by the Investment Company Act of 1940 and the rules and regulations
adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1
Plan related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their
fiduciary responsibilities under the 1940 Act and otherwise, will monitor the
Fund for the existence of any material conflicts between the Board members
interests of the various classes of shares. The Board members, including a
majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop.
Franklin Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be
responsible for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a
majority of the Board members, including a majority of the Board members who
are not interested persons of the Investment Company.
11. I, Brian E. Lorenz, Secretary of the Franklin Custodian Funds,
Inc., do hereby certify that this Multiple Class Plan was adopted on behalf
of the U.S. GOVERNMENT SECURITIES SERIES, by a majority of the Directors of
the Fund on March 19, 1998.
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Brian E. Lorenz
Secretary
