SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section.240-14a-11(c) or Section.240-
14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Franklin Universal Trust
(Name of Registrant as Specified In Its Charter)
Franklin Universal Trust
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary material.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
IMPORTANT INFORMATION
FOR SHAREHOLDERS OF
FRANKLIN UNIVERSAL TRUST
The enclosed materials include your proxy statement and proxy card. The proxy
card serves as a ballot which allows you to express your views regarding certain
aspects of Franklin Universal Trust's (the "Fund") operations. To assure that
your votes are cast in accordance with your preferences, please fill out and
sign the proxy card, and return it in the accompanying postage-paid envelope to
the Fund.
The Fund requests your vote on five matters -- the election of a Board of
Trustees, the confirmation of the Board of Trustees' appointment of the
independent auditors for the Fund - which are annually presented to the Fund's
shareholders for their consideration and three changes to the Fund's fundamental
investment restrictions. Please complete, sign and mail the proxy card to the
Fund to reduce the expenses associated with conducting additional or follow-up
solicitations of shareholders.
We look forward to receiving your votes on the proposed matters. Please take a
moment to review these materials and return your proxy to the Fund.
TABLE OF CONTENTS
A Letter from the Chairman
Proxy Information ............................... 1
Q&A ............................................. 2
Notice Of Annual Meeting ........................ 5
The Proxy Statement ............................. 7
Proposal 1 ...................................... 7
Proposal 2 ...................................... 12
Proposal 3 ...................................... 13
Proposal 4 ...................................... 13
Proposal 5 ...................................... 14
Other Information ............................... 15
A Letter from the Chairman
Dear Fellow Shareholders:
I am writing to request that you consider five matters that relate to your
Franklin Universal Trust (the "Fund"). The Board of Trustees (the "Board") of
the Fund asks that you cast your vote in favor of:
1. Electing a Board of Trustees;
2. Ratifying the appointment by the Trustees of PricewaterhouseCoopers LLP
as the independent auditors for the Fund for its current fiscal year; and
3. Eliminating or revising three fundamental investment restrictions.
Each year, in accordance with legal requirements, the Fund, in connection with
or as part of its annual meeting, submits the election of Trustees and the
approval of the Fund's auditors to a shareholder vote. As in past years, we urge
you to confirm the Board's recommendations by electing the proposed Trustees and
ratifying the selection of the auditors.
We have also proposed eliminating certain fundamental investment restrictions.
These restrictions were once required by various states' "Blue Sky Laws," but
because of Congressional action last year are no longer mandatory. With respect
to the third restriction regarding lending, we believe that the recommended
changes will provide additional investment opportunities to the Fund. We urge
you to approve these proposals which are designed to benefit all shareholders by
providing the Fund with greater flexibility in pursuing its investment
objectives.
The proxy statement includes explanatory notes (in italics) and a
question-and-answer format designed to provide you with a simpler and more
concise explanation of certain issues. While much of the information in the
proxy statement is technical and required by the various regulations that govern
the Fund, we hope that this format will be helpful to you.
Each shareholder's vote is important to the Fund. On behalf of the Trustees,
thank you in advance for considering these issues and for promptly returning
your proxy card.
Sincerely,
CHARLES B. JOHNSON
Chairman of the Board
PROXY INFORMATION
Franklin Universal Trust (the "Fund") will host its Annual Shareholders Meeting
on August 26, 1998, at our Headquarters at 777 Mariners Island Blvd., San Mateo,
California 94404. The purpose is to vote on some important matters affecting the
Fund.
The first few pages of this booklet summarize the Fund's proposals and explain
the proxy process -- including how to cast your vote(s). Before you vote, please
read the full text of the proxy statement for a complete understanding of the
proposals.
PROPOSALS 1 AND 2: ELECTION OF A BOARD OF TRUSTEES;
RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITORS
In accordance with certain legal requirements, the Fund is required to hold an
annual shareholders meeting to elect a board of trustees and ratify the
appointment by the Fund's board of the Fund's independent auditors for the
current fiscal year.
PROPOSALS 3, 4 AND 5: THREE CHANGES TO
FUNDAMENTAL INVESTMENT RESTRICTIONS
We would like to make a number of minor changes to the Fund's fundamental
investment restrictions. These proposals would eliminate prohibitions against
investment in oil, gas, mineral and real estate interests (although the Fund has
no present intention in doing so) and engaging in short sales of securities; and
permit investment in a broader range of commercial loans. By eliminating or
revising these fundamental investment restrictions, the Fund will gain added
flexibility to pursue its investment objectives without affecting current
operations. The Fund will continue to be subject to the Investment Company Act
of 1940, as amended, and Board oversight with respect to the proposed
transactions.
- - Q & A -
Q. Who is asking for my vote?
A. Trustees of Franklin Universal Trust (the "Fund") in connection with the
annual shareholders meeting to be held August 26, 1998 (the "Meeting"), have
asked that you vote on several matters. It is expected that this proxy statement
will be first mailed to shareholders on or about July 17, 1998.
Q. Why do I need to vote?
A. Your vote makes a difference. Shareholders, like any other business owner,
should express their opinions about the Fund's Board and auditors, and its
operations. Further, if numerous shareholders fail to vote their proxies, the
Fund may not receive enough votes to go forward with its meeting. If this
happens, we will need to mail proxies again -- a costly proposition for your
Fund which you will ultimately bear in part. We encourage all shareholders to
participate in the governance of the Fund.
Q. Who gets to vote?
A. Any person who owned shares of beneficial interest ("Shares") of the Fund on
the "record date," which was June 25, 1998, gets to vote at the Meeting and any
adjournments, even if the investor later sold the Shares. Shareholders are
entitled to cast one vote for each proposal, for each Share owned on the record
date. Your completed and signed proxy will be voted in accordance with your
instructions. If you sign the proxy, but do not mark a preference, your Shares
will be voted in accordance with the Trustees' recommendations.
Q. How can I vote?
A. You can vote in any one of four ways:
o By mail, with the enclosed ballot.
o In person at the Meeting.
o Through Shareholder Communications Corporation ("SCC"), a proxy
solicitor, by calling 1-800/733-8481, ext. 403 or faxing your
completed ballot to SCC at 1-800/733-1885.
Whichever method you choose, please take the time to read the full text of the
proxy statement before you vote.
Q. I plan to vote by mail or fax. How should I sign my proxy card?
A. If you are an individual account owner, please sign exactly as your name
appears on the proxy card. If you are an owner of a joint account, both owners
must sign the proxy card. You should sign proxy cards for other types of
accounts in a way that indicates your authority.
Q. How does the Board of Trustees suggest that I vote?
A. After careful consideration, the Board of Trustees unanimously recommends
that you vote your Fund Shares FOR:
1. The election of all nominees as trustees;
2. The ratification of the selection of PricewaterhouseCoopers LLP, as
independent auditors;
3. The elimination to the Fund's fundamental investment restriction regarding
the purchase and sale of oil, gas, mineral and/or real estate interests;
4. The elimination to the Fund's fundamental investment restriction regarding
short sales of securities; and
5. The amendment to the Fund's fundamental investment restriction regarding
lending.
Q. How can I get more information about the Fund?
A. A copy of the Fund's annual report has previously been mailed to
shareholders. If you would like to have copies of the Fund's most recent annual
and semi-annual reports sent to you free of charge, please call us toll free at
1-800/DIAL BEN(R) or write to the Fund at 777 Mariners Island Blvd., P.O. Box
7777, San Mateo, CA 94403-7777
Q. Whom do I call if I have questions?
A. Please call us at 1-800/DIAL BEN(R) or SCC at 1-800/733-8481, ext. 403.
The Notice, set forth below, constitutes the formal agenda for the Annual
Shareholders Meeting. The Notice specifies what issues will be considered by
shareholders, and the time and location of the Meeting.
All shareholders are cordially invited to attend the Meeting in person. If
you do not expect to attend the Meeting, please indicate your voting
instructions on the proxy card, which is included with these materials, date
and sign it, and return it in the envelope provided. This is addressed for
your convenience and needs no postage if mailed in the U.S. You may also
vote by telephone or fax, if preferred, by following the directions on page
2. In order to avoid the additional expense to the Fund of further
solicitation, please mail in your executed proxy or vote promptly.
FRANKLIN UNIVERSAL TRUST
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO BE HELD AUGUST 26, 1998
To the Shareholders of Franklin Universal Trust:
Notice is hereby given that the Annual Shareholders Meeting (the "Meeting") of
Franklin Universal Trust (the "Fund") will be held at the offices of the Fund,
777 Mariners Island Blvd., San Mateo, California, 94404 at 10:00 a.m. Pacific
time, on August 26, 1998, to consider the following matters:
1. To elect a Board of Trustees of the Fund.
2. To ratify the selection of PricewaterhouseCoopers LLP, as independent
auditors for the Fund for the current fiscal year.
3. To eliminate the Fund's fundamental investment restriction regarding
the purchase and sale of oil, gas, mineral and/or real estate
interests.
4. To eliminate the Fund's fundamental investment restriction regarding
short sales of securities.
5. To amend the Fund's fundamental investment restriction regarding
lending.
6. To consider any other business (none being known to the Board as of
the date of this Notice) as may properly come before the Meeting.
By Order of the Board of Trustees,
DEBORAH R. GATZEK
Secretary
San Mateo, California
Dated: July 17, 1998
PLEASE RETURN YOUR PROXY CARD PROMPTLY
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
The proxy statement, which begins below, is designed to furnish shareholders
with the information necessary to vote on the matters coming before the
meeting. If you have any questions, please call us at our toll free number:
1-800/DIAL BEN(R).
FRANKLIN UNIVERSAL TRUST
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING
To Be Held August 26, 1998
PROPOSAL 1: TO ELECT A BOARD OF TRUSTEES
The role of trustees is to provide general oversight of the Fund's business and
to ensure that the Fund is operated for the benefit of shareholders. The
trustees meet monthly and review the Fund's investment performance. The trustees
also oversee the services furnished to the Fund by its investment adviser and
various other service providers. The Board of Trustees (the "Board") recommends
that you vote for the election of each nominee as a Trustee.
The following persons, who make up the current Board have been nominated to be
Trustees of the Fund, to hold office until the next Annual Shareholders Meeting,
and until their successors are elected and qualified to serve: Frank H. Abbott,
III, Harris J. Ashton, S. Joseph Fortunato, Edward B. Jamieson, Charles B.
Johnson, Rupert H. Johnson, Jr., Frank W.T. LaHaye, and Gordon S. Macklin.
All of the nominees have consented to serve as Trustees if elected. However, if
any nominee is not available for election at the time of the Meeting, the
person(s) named in the proxy may vote for any other person in their discretion,
or they may choose not to elect or vote to elect anyone to fill the position.
Provided that a quorum is present, the eight nominees receiving the greatest
number of votes will be elected. Trustees who are "interested persons" of the
Fund, as defined in the Investment Company Act of 1940, as amended, (the "1940
Act") are designated by an asterisk(*).
Shares Beneficially
Owned in the
Fund Shares Franklin Templeton
Beneficially Group of Funds
Name, Age, Address and Length of Owned as of (including the Fund)
Five-Year Business Experience Service June 16, 1998 as of June 16, 1998
- --------------------------------------------------------------------------------
Frank H. Abbott, III (77) Trustee since None 613,974
1045 Sansome Street June 1988
San Francisco, CA 94111
Trustee
President and Director, Abbott Corporation (an investment company); director or
trustee, as the case may be, of 27 of the investment companies in the Franklin
Templeton Group of Funds; and formerly, Director, MotherLode Gold Mines
Consolidated (gold mining) and Vacu-Dry Co. (food processing).
Harris J. Ashton (66) Trustee since None 861,572
191 Clapboard Ridge Road June 1988
Greenwich, CT 06830
Trustee
Director, RBC Holdings, Inc. (a bank holding company) and Bar-S Foods (a meat
packing company); director or trustee, as the case may be, of 49 of the
investment companies in the Franklin Templeton Group of Funds; and formerly,
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers).
S. Joseph Fortunato (65) Trustee since 2,365 359,946
Park Avenue at Morris County March 1989
P.O. Box 1945
Morristown, NJ 07962-1945
Trustee
Member of the law firm of Pitney, Hardin, Kipp & Szuch; director or trustee, as
the case may be, of 51 of the investment companies in the Franklin Templeton
Group of Funds; and formerly, Director, General Host Corporation (nursery and
craft centers).
*Edward B. Jamieson (49) Trustee since None 181,521
777 Mariners Island Blvd. September 1993
San Mateo, CA 94404
President and Trustee
Executive Vice President and Portfolio Manager, Franklin Advisers, Inc.; and
officer and trustee of four of the investment companies in the Franklin
Templeton Group of Funds.
*Charles B. Johnson (65) Trustee since 1,000 1,474,371
777 Mariners Island Blvd. June 1988
San Mateo, CA 94404
Chairman of the Board and Trustee
President, Chief Executive Officer and Director, Franklin Resources, Inc.;
Chairman of the Board and Director, Franklin Advisers, Inc., Franklin Advisory
Services, Inc., Franklin Investment Advisory Services, Inc. and Franklin
Templeton Distributors, Inc.; Director, Franklin/Templeton Investor Services,
Inc. and Franklin Templeton Services, Inc.; officer and/or director or trustee,
as the case may be, of most of the other subsidiaries of Franklin Resources,
Inc. and of 50 of the investment companies in the Franklin Templeton Group of
Funds; and formerly, Director, General Host Corporation (nursery and craft
centers).
*Rupert H. Johnson, Jr. (57) Trustee since 1,000 18,253,246
777 Mariners Island Blvd. June 1988
San Mateo, CA 94404
Senior Vice President and Trustee
Executive Vice President and Director, Franklin Resources, Inc. and Franklin
Templeton Distributors, Inc.; President and Director, Franklin Advisers, Inc.;
Senior Vice President and Director, Franklin Advisory Services, Inc. and
Franklin Investment Advisory Services, Inc.; Director, Franklin/Templeton
Investor Services, Inc.; and officer and/or director or trustee, as the case
may be, of most of the other subsidiaries of Franklin Resources, Inc. and of 53
of the investment companies in the Franklin Templeton Group of Funds.
Frank W.T. LaHaye (69) Trustee since 2,250 745,011
20833 Stevens Creek Blvd. June 1988
Suite 102
Cupertino, CA 95014
Trustee
General Partner, Miller & LaHaye, which is the General Partner of Peregrine
Ventures II (venture capital firm); Chairman of the Board and Director,
Quarterdeck Corporation (software firm); Director, Digital Transmission
Systems, Inc. (wireless communications); director or trustee, as the case may
be, of 27 of the investment companies in the Franklin Templeton Group of Funds;
and formerly, Director, Fischer Imaging Corporation (medical imaging systems)
and General Partner, Peregrine Associates, which was the General Partner of
Peregrine Ventures (venture capital firm).
Gordon S. Macklin (70) Trustee since 3,000 458,864
8212 Burning Tree Road January 1993
Bethesda, MD 20817
Trustee
Director, Fund American Enterprises Holdings, Inc., MCI Communications
Corporation, MedImmune, Inc. (biotechnology), Spacehab, Inc. (aerospace
services) and Real 3D (software); director or trustee, as the case may be, of
49 of the investment companies in the Franklin Templeton Group of Funds; and
formerly, Chairman, White River Corporation (financial services) and Hambrecht
and Quist Group, and President, National Association of Securities Dealers,
Inc.
The trustees who are not affiliated with the Fund's investment manager are paid
a fixed fee from the Fund for serving on the Board. Each of the trustees also
serve as trustees or directors of other investment companies in the Franklin
Templeton Group of Funds. There is one committee of the Board-the Audit
Committee-which furnishes the Board with recommendations regarding the selection
of auditors.
As of June 1, 1998, Trustees not affiliated with the investment manager
("nonaffiliated trustees") are paid fees of $225 per month plus $120 per meeting
attended and are reimbursed for expenses incurred in connection with attending
such meetings. Each fund in the Franklin Templeton Group of Funds for which they
serve as director or trustee pays a share of these expenses.
As indicated above, each of the Fund's nonaffiliated trustees also serve as
directors or trustees of certain other investment companies in the Franklin
Templeton Group of Funds. The trustees and the Fund's investment manager believe
that having the same individuals serving on the boards of many of the funds in
the Franklin Templeton Group of Funds enhances the ability of each fund to
obtain, at a relatively modest cost to each separate fund, the services of high
caliber, experienced and knowledgeable independent trustees who can more
effectively oversee the management of the funds. They may receive fees for their
services from other funds, as well. Many meetings of such other funds are on
different days and times. The fees payable to nonaffiliated members of the Board
by the Fund are subject to reductions resulting from fee caps limiting the
amount of fees payable to trustees who serve on other boards within the Franklin
Templeton Group of Funds. The following table indicates the total fees paid to
nonaffiliated trustees by the Fund AND by other funds in the Franklin Templeton
Group of Funds.
Number of Boards
Total Fees in the Franklin
Total Fees Received from the Templeton Group of
Received from Franklin Templeton Funds on Which
Name the Fund** Group of Funds*** Each Serves****
- --------------------------------------------------------------------------------
Frank H. Abbott, III $3,500 $165,937 27
Harris J. Ashton 3,500 344,642 49
S. Joseph Fortunato 3,500 361,562 51
David W. Garbellano* 3,300 91,317 N/A
Frank W.T. LaHaye 3,400 141,433 27
Gordon S. Macklin 3,500 337,292 49
*Deceased September 27, 1997
**For the fiscal year ended August 31, 1997.
***For the calendar year ended December 31, 1997.
****We base the number of boards on the number of registered investment
companies in the Franklin Templeton Group of Funds. This number does not include
the total number of series or funds within each investment company for which the
Board members are responsible. The Franklin Templeton Group of Funds currently
includes 56 registered investment companies, with approximately 169 U.S. based
funds or series.
No officer or trustee received any other compensation directly from the Fund.
Certain officers or trustees who are shareholders of Franklin Resources, Inc.
("Resources") may be deemed to receive indirect remuneration by virtue of their
participation in the fees received by subsidiaries of Resources.
During the last fiscal year, there were 11 meetings of the Board. All of the
Trustees attended at least 75% of such meetings. In addition, there were a total
of 367 meetings of other fund boards of the Franklin Templeton Group of Funds at
different dates and times. Messrs. Abbott and LaHaye compose the Audit Committee
of the Board with the function of making recommendations to the full Board with
respect to the selection of auditors. The Audit Committee did not meet during
the fiscal year ended August 31, 1997.
The executive officers of the Fund other than those listed above are:
Name, Age, Address and Five-Year Business Experience
- -------------------------------------------------------------------------------
Harmon E. Burns (53)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Executive Vice President and Director, Franklin Resources, Inc.; and Franklin
Templeton Distributors, Inc. and Franklin Templeton Services, Inc.; Executive
Vice President, Franklin Advisers, Inc.; Director, Franklin/Templeton Investor
Services, Inc.; officer and/or director or trustee, as the case may be, of most
of the other subsidiaries of Franklin Resources, Inc. and of 53 of the
investment companies in the Franklin Templeton Group of Funds.
Martin L. Flanagan (38)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Chief Financial Officer
Senior Vice President and Chief Financial Officer, Franklin Resources, Inc.;
Executive Vice President and Director, Templeton Worldwide, Inc.; Executive Vice
President, Chief Operating Officer and Director, Templeton Investment Counsel,
Inc.; Executive Vice President and Chief Financial Officer, Franklin Advisers,
Inc.; Chief Financial Officer, Franklin Advisory Services, Inc. and Franklin
Investment Advisory Services, Inc.; President and Director, Franklin Templeton
Services, Inc.; Senior Vice President and Chief Financial Officer,
Franklin/Templeton Investor Services, Inc.; officer and/or director of some of
the other subsidiaries of Franklin Resources, Inc. and officer and/or director
or trustee, as the case may be, of 53 of the investment companies in the
Franklin Templeton Group of Funds.
Deborah R. Gatzek (49)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Secretary
Senior Vice President and General Counsel, Franklin Resources, Inc.; Senior Vice
President, Franklin Templeton Services, Inc. and Franklin Templeton
Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Vice
President, Franklin Advisory Services, Inc.; Vice President, Chief Legal Officer
and Chief Operating Officer, Franklin Investment Advisory Services, Inc.; and
officer of 53 of the investment companies in the Franklin Templeton Group of
Funds.
Diomedes Loo-Tam (59)
777 Mariners Island Blvd.
San Mateo, CA 94404
Treasurer and Principal Accounting Officer
Senior Vice President, Franklin Templeton Services, Inc.; and officer of 32 of
the investment companies in the Franklin Templeton Group of Funds.
Edward V. McVey (61)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President and National Sales Manager, Franklin Templeton
Distributors, Inc.; and officer of 28 of the investment companies in the
Franklin Templeton Group of Funds.
R. Martin Wiskemann (71)
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President, Portfolio Manager and Director, Franklin Advisers, Inc.;
Senior Vice President, Franklin Management, Inc.; Vice President and Director,
ILA Financial Services, Inc.; and officer and/or director or trustee, as the
case may be, of 15 of the investment companies in the Franklin Templeton Group
of Funds.
All officers serve at the pleasure of the Board.
On June 16, 1998, the trustees and officers as a group beneficially owned 10,967
Shares or less than 1% of the Fund's outstanding Shares. Certain trustees also
own shares in various other funds in the Franklin Templeton Group of Funds.
Charles B. Johnson and Rupert H. Johnson, Jr., are brothers.
Shareholders are entitled to one vote per Share. All voting rights are
non-cumulative, which means that the holders of more than 50% of the Shares
voting for the election of Trustees can elect 100% of such Trustees if they
choose to do so, and in such event, the holders of the remaining Shares so
voting will not be able to elect any Trustees.
PROPOSAL 2: TO RATIFY OR REJECT
THE SELECTION OF INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P. has served as the independent auditors for the Fund
since its inception in 1988. PricewaterhouseCoopers LLP is the successor entity
to a combination of Coopers & Lybrand L.L.P. with Price Waterhouse LLP. The
Board recommends that you vote in favor of the selection of
PricewaterhouseCoopers LLP as auditors for the Fund for the fiscal year ending
August 31, 1998.
The Board is requesting ratification of its selection of PricewaterhouseCoopers
LLP, Certified Public Accountants, as successor entity to Coopers & Lybrand
L.L.P., as independent auditors to audit the books and accounts of the Fund for
the fiscal year ending August 31, 1998. The selection of auditors was approved
at a meeting of the Board on September 16, 1997, and included the favorable vote
of a majority of the trustees who are not interested persons of the Fund. A
representative of PricewaterhouseCoopers LLP is not expected to be present at
the Meeting. During the fiscal year ended August 31, 1997, the auditing services
of Coopers & Lybrand L.L.P. consisted of the rendering of an opinion on the
financial statements of the Fund.
The favorable vote of a majority of the Shares represented at the Meeting, in
person or by proxy, is required to ratify the selection of auditors.
PROPOSAL 3: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING THE PURCHASE AND SALE OF
OIL, GAS, MINERAL AND/OR REAL ESTATE INTERESTS
&
PROPOSAL 4: TO ELIMINATE THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
SHORT SALES OF SECURITIES
A change in a fundamental investment restriction of the Fund requires
shareholder approval. Eliminating the fundamental investment restrictions
against investing in oil, gas, mineral and/or real estate interests and the
prohibition against engaging in short sales of securities will provide added
flexibility for the Fund in seeking to achieve its investment objectives. The
Board recommends that you vote in favor of eliminating these investment
restrictions.
Proposal 4 would allow the Fund to engage in short sales of securities as part
of its investment strategy rather than the current restriction limiting such use
solely in connection with the clearance and settlement of securities or futures
and options transactions. Depending on the circumstances, short sales may be an
attractive investment alternative to purchasing securities. The Board believes
that the ability to short securities may benefit the Fund as part of a hedging
strategy and where other available transactions may not be financially
attractive due to transaction costs and market illiquidity.
The existing fundamental investment restrictions identified by Proposals 3 and 4
do not permit the Fund to directly invest in oil, gas, mineral and/or real
estate interests or to engage in short sales. These restrictions on investments
and transactions that the Fund would otherwise be permitted to engage in are
based on the prior law whereby the states regulated open-end investment
companies. Although not subject to state regulation because the Fund is a
closed-end investment company listed and traded on the New York Stock Exchange,
Inc., the Fund for purposes of conformity initially adopted these state
investment restrictions in 1988. In particular, fundamental investment
restrictions in the Fund's prospectus state that the Fund may not:
(1) Purchase or sell interests in oil, gas or mineral exploration or
development programs, or real estate or any interest therein, except that the
Fund may invest in securities issued by companies (including partnerships and
real estate investment funds) that invest in such interests or are engaged in
such activities and in mortgage related securities.
(2) Purchase securities on margin, or make short sales of securities, except
for the use of short-term credit necessary for the clearance of purchases and
sales of portfolio securities and except in connection with options and futures
transactions. (the underlined language would be eliminated as an investment
restriction under this Proposal 4)
The Board in requesting that shareholders approve eliminating these investment
restrictions seeks to conform the Fund's investment restrictions with the 1940
Act and The National Securities Markets Improvement Act of 1996 (the "1996 Act")
which was signed into law on October 11, 1996. One of the significant aspects of
the 1996 Act is that it provides for exclusive federal regulation of registered
investment companies by exempting from state review and registration such
securities offerings.
In light of the foregoing legislative changes and for increased flexibility to
adapt to changing market and economic conditions, the Board believes it would be
appropriate to eliminate the Fund's fundamental investment restrictions as
described in Proposals 3 and 4. By eliminating these unnecessary restrictions,
the Fund would be provided with additional flexibility in the pursuit of its
investment objectives.
The 1940 Act does not prohibit the Fund from engaging in the transactions
currently prohibited, however, the Fund would be required in connection with
short sale transactions to comply with the requirement of section 18(a)(1) of
the 1940 Act. As currently required, the Fund will limit its use of short sales
to 331/3% of the Fund's total assets after giving effect to the amount of the
transaction. Under the requirements of section 18, the Fund, immediately after
entering into any short sale transaction, is required to have asset coverage of
at least 300%. Asset coverage is defined as the ratio which the value of the
total assets of the Fund, less all liabilities and indebtedness not represented
by senior securities (as defined in the 1940 Act), bears to the aggregate amount
of debt.
The elimination of these fundamental investment restrictions would have no
effect on the current operation of the Fund.
PROPOSAL 5: TO AMEND THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING LENDING
A change in a fundamental investment restriction of the Fund requires
shareholder approval. Eliminating the fundamental investment restriction against
outright lending rather than continuing to operate through the current
exceptions available to the Fund for lending portfolio securities, purchasing
debt securities or engaging in repurchase transactions will provide added
flexibility in seeking attractive alternative investments to achieve the Fund's
investment objectives. The Board recommends that you vote in favor of amending
this investment restriction.
The Board also is requesting that shareholders approve an amendment to the
Fund's fundamental investment restriction regarding lending in order to permit
the Fund to directly invest in corporate loans ("Corporate Loans"). The Board
believes it would be appropriate and beneficial for the Fund to have the ability
to engage in Corporate Loans so as to take advantage of significant investment
opportunities that may exist from time to time in commercial lending markets.
An investment in a Corporate Loan would be structured so that the Fund would be
one of a syndicate of lenders typically led by a large banking organization,
which extends substantial credit directly to certain operating companies (the
"corporate borrower"). In a Corporate Loan, the Fund would become a direct
creditor of the corporate borrower. In many cases, such direct loan transactions
are attractive because they typically are made at par, and unlike loan
participations and assignments, do not impose a fee. In addition, to the extent
that attractive investment opportunities were presented to the Fund through
investment in participations in Corporate Loans, the proposed amendment to the
investment restriction would permit the Fund to take advantage of such
opportunities.
The Fund's current fundamental investment restriction as described in the
prospectus prohibits making loans to other persons except through (1) the
lending of its portfolio securities, (2) through the purchase of debt securities
in accordance with its investment objective and policies, and (3) to the extent
the entry into a repurchase agreement is deemed to be a loan. The Board believes
that the ability to directly invest in Corporate Loans will enhance the Fund's
investment flexibility in pursuing its investment objectives without increasing
the Fund's overall risk. Accordingly, the Board is proposing that the following
revision to the current fundamental investment restriction be adopted by
shareholders:
The Fund may not make loans to other persons except through (1) the lending
of its portfolio securities, (2) through the purchase of debt securities,
loan participations and/or engaging in direct corporate loans in accordance
with its investment objective and policies, and (3) to the extent the entry
into a repurchase agreement is deemed to be a loan. (The underlined portion
shows the proposed revision)
OTHER INFORMATION
The SEC requires that the following information be provided to the Fund's
shareholders even though not directly related to the proposals you are being
asked to consider.
Fund Information
As of June 25, 1998, the Fund had 26,779,333.483 Shares outstanding, each Share
being entitled to one vote.
Beneficial Owners
Occasionally, the number of Shares of the Fund held in the "street name"
accounts of various securities dealers for the benefit of their clients may
exceed 5% of the total Shares outstanding. To the Fund's knowledge, no person
beneficially owns more than 5% of the Fund's outstanding Shares.
The Manager
Franklin Advisers, Inc. ("Advisers"), 777 Mariners Island Blvd., San Mateo,
California 94404 serves as the Fund's investment manager. Advisers is a
wholly-owned subsidiary of Resources, a publicly owned holding company.
Resources' principal shareholders are Charles B. Johnson and Rupert H. Johnson,
Jr., who own approximately 19% and 15%, respectively, of Resources' outstanding
shares. Resources is engaged in various aspects of the financial services
industry through its various subsidiaries. Advisers and its affiliates act as
investment manager or administrator to 55 U.S. registered investment companies
(170 separate series) with aggregate assets of over $239.7 billion.
The Administrator
Under an agreement with Advisers, Franklin Templeton Services, Inc. ("FT
Services"), whose principal address is also 777 Mariners Island Blvd., San
Mateo, CA 94404, provides certain administrative services and facilities for the
Fund. FT Services is a wholly owned subsidiary of Resources.
Required Vote
Under Proposal 1, provided that a quorum is present at the Annual Meeting, the
eight nominees receiving the greatest number of votes will be elected. All
voting rights are non-cumulative, which means that the holders of more than 50%
of the Shares voting for the election of trustees can elect 100% of such
trustees if they choose to do so, and in such event, the holders of the
remaining Shares voting will not be able to elect any Trustees. Approval of
Proposal 2 requires the affirmative vote of a majority of all votes cast at the
Annual Meeting.
Approval of Proposals 3,4 and 5 requires the affirmative vote of a majority of
the outstanding shares of the Fund. As defined in the 1940 Act, the vote of a
majority of the outstanding shares means the vote of (1) 67% or more of the
Fund's outstanding shares present at a meeting, if the holders of more than 50%
of the outstanding shares of the Fund are present or represented by proxy; or
(2) more than 50% of the Fund's outstanding shares, whichever is less.
You may revoke your previously granted proxy at any time before it is exercised
(1) by delivering a written notice to the Fund expressly revoking your proxy,
(2) by signing and forwarding to the Fund a later-dated proxy, or (3) by
attending the Meeting and casting your votes in person. The cost of soliciting
these proxies will be borne by the Fund. In addition to solicitations by mail,
some of the officers and employees of the Fund, Advisers and its affiliates,
without extra compensation, may conduct additional solicitations by telephone,
telegraph and personal interviews. The Fund has engaged Shareholder
Communications Corporation to solicit proxies from brokers, banks, other
institutional holders and individual shareholders for an approximate fee,
including out-of pocket expenses, ranging between $17,500 and $25,025.
Abstentions and broker "non-votes" will not be counted for or against the
Proposals but will be counted for purposes of determining whether a quorum is
present. Abstentions and broker non-votes will be counted as votes present for
purposes of determining a "majority of the outstanding voting securities"
present at the Meeting and will therefore have the effect of counting against
Proposals 3,4 and 5. Brokers who hold shares as record owners for beneficial
owners may have the authority under the rules of various stock exchanges to vote
those shares with respect to the Proposals when they have not received
instructions from beneficial owners.
Shareholder Proposals
The Fund anticipates that its next annual meeting will be held in April, 1999.
Any shareholder intending to present any proposal for consideration at the
Fund's next annual meeting must, in addition to meeting other applicable
requirements, mail such proposal to the Fund so that it is received at the
Fund's executive offices not less than 120 days in advance of February 8, 1999.
Reports to Shareholders and Financial Statements
The Annual Report to Shareholders of the Fund, including financial statements of
the Fund for the fiscal year ended August 31, 1997, and Semi-Annual Report for
period ended February 28, 1998, have previously been sent to all shareholders.
Upon request, shareholders may obtain without charge a copy of the Annual Report
and Semi-Annual Report by writing the Fund at the address above or calling the
Fund at 1-800/DIAL BEN.
OTHER MATTERS
The Board does not intend to bring any matters before the Meeting other than
Proposals 1, 2, 3, 4 and 5 and is not aware of any other matters to be brought
before the Meeting by others. If any other matters do properly come before the
Meeting, the persons named in the enclosed proxy will use their best judgment in
voting on such matters.
In the event that sufficient votes in favor of the Proposals set forth in the
Notice of Annual Shareholders Meeting are not received by the date of the
Meeting, the persons named in the enclosed proxy may propose one or more
adjournments of the Meeting for a period or periods of not more than 60 days in
the aggregate. This will permit further solicitation of proxies, even though a
quorum is present. Any adjournment will require the affirmative vote of a
majority of the votes cast on the questions, in person or by proxy, at the
session of the Meeting to be adjourned. The costs of any such additional
solicitation and of any adjourned session are paid by the Fund.
Respectfully Submitted,
DEBORAH R. GATZEK
Secretary
Dated: July 17, 1998
San Mateo, California
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
FILL IN, DATE AND SIGN THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PREPAID
ENVELOPE.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE
YOUR FULL TITLE AS SUCH. WHERE SHARESAREHELD JOINTLY, ALL SIGNATURES ARE
REQUIRED.
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94403-7777
FRANKLIN UNIVERSAL TRUST PROXY
ANNUAL SHAREHOLDERS MEETING - AUGUST 26, 1998
The undersigned hereby revokes all previous proxies for his shares and appoints
Harmon E. Burns, Rupert H. Johnson, Jr., Deborah R. Gatzek and Larry L. Greene,
and each of them, proxies of the undersigned with full power of substitution to
vote all shares of Franklin Universal Trust (the "Fund") which the undersigned
is entitled to vote at the Fund's Annual Meeting to be held at 777 Mariners
Island Blvd., San Mateo, California at 10:00 a.m. Pacific time on the 26th day
of August, 1998, including any adjournments thereof, upon such business as may
properly be brought before the Meeting.
- -------------------------------------------------------------------------------
1. Election of Trustees: Frank H. Abbott, o FOR all nominees listed to the
III, Harris J. Ashton, S. Joseph left (except as marked to the
Fortunato, Edward B. Jamieson, Charles B. contrary)
Johnson, Rupert H. Johnson, Jr., Frank
W.T. LaHaye, Gordon S. Macklin o WITHHOLD AUTHORITY (to vote for
all nominees listed to the left)
NOTE: To withhold authority to
vote for any individual nominee,
strike a line through the
nominee's name in the list to the
left.
- -------------------------------------------------------------------------------
2. Ratification of the selection of THE BOARD UNANIMOUSLY RECOMMENDS
PricewaterhouseCoopers LLP, Certified THAT YOU VOTE IN FAVOR OF PROPOSALS
Public Accountants, as the independent 2-5.
auditors for the Fund for the fiscal year
ending August 31, 1998.
- -------------------------------------------------------------------------------
O FOR O AGAINST O ABSTAIN
- -------------------------------------------------------------------------------
3. To eliminate the fundamental investment
restriction regarding the purchase and
sale of oil, gas, mineral and/or real
estate interests.
- -------------------------------------------------------------------------------
O FOR O AGAINST O ABSTAIN
- -------------------------------------------------------------------------------
4. To eliminate the fundamental investment
restriction regarding short sales of
securities.
- -------------------------------------------------------------------------------
O FOR O AGAINST O ABSTAIN
- -------------------------------------------------------------------------------
5. To amend the fundamental investment restriction regarding lending.
- -------------------------------------------------------------------------------
O FOR O AGAINST O ABSTAIN
- -------------------------------------------------------------------------------
Continued and to be signed on reverse side.
- -------------------------------------------------------------------------------
6. To grant the proxy holders the
authority to vote upon any other
business that may legally come before
the meeting.
- -------------------------------------------------------------------------------
O GRANT O WITHHOLD
- -------------------------------------------------------------------------------
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
SHALL BE VOTED IN FAVOR OF ALL PROPOSALS. IF ANY OTHER MATTERS PROPERLY COME
BEFORE THE MEETING ABOUT WHICH THE PROXY HOLDERS WERE NOT AWARE PRIOR TO THE
TIME OF THE SOLICITATION, AUTHORIZATION IS GIVEN THE PROXY HOLDERS TO VOTE IN
ACCORDANCE WITH THE VIEWS OF MANAGEMENT THEREON. THE MANAGEMENT IS NOT AWARE OF
ANY SUCH MATTERS.
Dated__________________
_______________________
Signature
_______________________
Signature
Note: Please sign exactly
as your name appears on
this proxy. If signing for
estates, trusts, or
corporations, title or
capacity should be stated.
If shares are held
jointly, each holder must
sign.
