UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-17f-2
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OMB APPROVAL
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OMB Number: 3235-0360
Certificate of Accounting of Securities and Similar Expires: June 30, 1997
Investments in the Custody of Estimated average burden
Management Investment Companies hours per response 0.05
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Pursuant to Rule 17f-2[17 CFR 270.17f-2]
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1. Investment Company Act File Number: Date Examination completed:
811-5103 December 1, 1998
2. State Identification Number:
AL AK AZ AR CA CO
CT DE DC FL GA HI
ID IL IN IA KS KY
LA ME MD MA MI MN
MS MO MT NE NV NH
NJ NM NY NC ND OH
OK OR PA RI SC SD
TN TX UT VT VA WA
WV WI WY PUERTO RICO
Other (specify):
3. Exact name of investment company as specified in registration statement:
Franklin Capital Corporation
4. Address of principal executive office (number, street, city,
state, zip code): 450 Park Avenue, 10th Floor, New York, New
York 10022
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INSTRUCTIONS
This form must be completed by investment companies that have custody of
securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance
with Rule 17f-2 under the Act and applicable state law, examines
securities and similar investments in the custody of the investment
company.
Accountant
3. Submit this form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the
original and one copy with the Securities and Exchange Commission's
principal office in Washington, D.C., one copy with the regional office
for the region in which the investment company's principal business
operations are conducted, and one copy with the appropriate state
administrator(s), if applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
SEC 2198 (8-95)
800889.1
Independent Auditor's Report
To the Board of Directors and Stockholders of
Franklin Capital Corporation
We have examined management's assertion about Franklin Capital Corporation's
(the "Company's") compliance with the requirements of subsections (b) and (c) of
Rule 17f-2 under the Investment Company Act of 1940 ("the Act") as of December
1, 1998 included in the accompanying Management Statement Regarding Compliance
with Certain Provisions of the Investment Company Act of 1940. Management is
responsible for the Company's compliance with those requirements. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of December 1, 1998, and with respect to agreement of security
purchases and sales, for the period from November 6, 1998 (the date of our last
examination) through December 1, 1998.
o Count and inspection of all securities located in the vault of The Bank of
New York, 575 Madison Avenue, New York, NY 10022 without prior notice to
management;
o Confirmation of all securities out for transfer with brokers;
o Reconciliation of all such securities to the books and records of the
Company;
o Agreement of two security purchases and one security sale since our last
report from the books and records of the Company or the broker
confirmations.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Company's compliance
with specified requirements.
In our opinion, management's assertion that Franklin Capital Corporation was in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of December 1, 1998 with respect to securities
reflected in the investment account of the Company is fairly stated, in all
material respects.
This report is intended solely for the information and use of management of
Franklin Capital Corporation and the Securities and Exchange Commission and
should not be used for any other purpose.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
December 1, 1998
800866.1
