Law Offices
STRADLEY RONON STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
215-564-8000
Samuel K. Goldstein, Esq.
Direct Dial - (215) 564-8128
sgoldstein@stradley.com
September 3, 2008
VIA EDGAR
John C. Grzeskiewicz, Esq.
Christina L. DiAngelo
U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, NE
Washington, DC 20549-4720
Re: Franklin Custodian Funds - Registration Statement on Form N-14
(FILE NO. 333-152780)
Dear Mr. Grzewskiewicz and Ms. DiAngelo:
We are responding to your comments, provided via telephone on August 19,
2008 and August 20, 2008, to the above-captioned registration statement (the
"Registration Statement") filed by Franklin Custodian Funds (the "Trust") on
August 5, 2008. Each of your comments and our responses thereto are set forth
below.
In connection with our responses to your comments, we acknowledge, on
behalf of the Trust, that:
o The Trust is responsible for the adequacy and accuracy of
the disclosure in the Registration Statement;
o Staff comments to or changes to disclosure in response to Staff comments
to the Registration Statement do not foreclose the Securities and Exchange
Commission ("SEC") from taking any action with respect to the Registration
Statement; and
o The Trust may not assert Staff comments as a defense in any proceeding
initiated by the SEC under the federal securities laws of the United
States with respect to the Registration Statement.
1. WHERE THERE IS A DISCUSSION OF THE REORGANIZATION COSTS, ADD SPECIFIC
INFORMATION ABOUT THE PERCENTAGE OF THE COSTS BORNE BY THE FUNDS AND THE
ADVISER AND THE TOTAL DOLLAR AMOUNT OF THE REORGANIZATION COST FOR EACH
TRANSACTION.
RESPONSE: We have revised the discussions of the costs of
the Transactions under the headings, "How will the
Transactions affect me?" and "Who will pay the expenses of
the Transactions?" to read as follows:
FSS, on behalf of each respective Target Fund, will pay 25% of the
expenses resulting from that Target Fund's participation in a Transaction,
including the costs of the proxy solicitation. The Acquiring Trust, on
behalf of DynaTech Fund, will pay 25% of such expenses for each
Transaction. The total amount of such expenses for the Transaction with
Technology Fund is estimated to be $90,078. The total amount of such
expenses for the Transaction with Health Care Fund is estimated to be
$108,057. The total amount of such expenses of the Transaction for
Communications Fund is estimated to be $138,000.
2. WITH REGARD TO THE EXPENSE EXAMPLE FOR HEALTH CARE FUND'S CLASS A
SHARES FOR THE 10-YEAR PERIOD, PLEASE CONFIRM OR CORRECT THE NUMBER SHOWN.
RESPONSE: We have corrected the number shown. It now reads
$1,946.
3. PLEASE CONFIRM THAT THE EXPENSE NUMBERS FOR ALL TABLES REFLECT THE
RESPECTIVE FUND'S MOST RECENT AUDITED FINANCIALS.
RESPONSE: Confirmed.
4. PLEASE MODIFY THE THIRD ASSUMPTION IN THE EXAMPLE ACCOMPANYING THE
FEE TABLE FOR THE FUNDS, WHICH STATES THAT THE FUND'S OPERATING EXPENSES
REMAIN THE SAME, SO THAT IT REFLECTS THAT THE EXPENSES TAKE INTO ACCOUNT
ANY CONTRACTUAL WAIVERS FOR THE APPLICABLE PERIOD.
RESPONSE: We have modified the third assumption to read, "The Fund's
operating expenses remain the same, taking into account any contractual
waivers for the applicable period."
5. IN THE CAPITALIZATION TABLE, DISCLOSE THE DOLLAR AMOUNT OF THE
REORGANIZATION COSTS TO BE BORNE BY THE FUNDS.
RESPONSE: We have added the estimated costs of the Transaction(s) to be
borne by the Funds to the footnotes to the pro forma columns of the
capitalization table as follows:
[Note 2:] Numbers are projected after the Transactions. The projected
capitalization of DynaTech Fund after the Transactions with Target Funds
includes the costs of the Transactions that will be borne by the Target
Funds and DynaTech Fund, which are estimated to be $168,068 and which
would be allocated to the share classes as follows: Class A: $137,375,
Class B: $6,251, Class C: $22,602, Class R: $1,304, and Advisor Class:
$536.
[Note 3:] Numbers are projected after the Transactions with Technology
Fund and Communications Fund. The projected capitalization of DynaTech
Fund after the Transactions with Technology Fund and Communications Fund
includes the costs of the Transactions that will be borne by Technology
Fund, Communications Fund, and DynaTech Fund, which are estimated to be
$114,039, and which would be allocated to the share classes as follows:
Class A: $94,970, Class B: $3,470, Class C: $14,106, Class R: $1,058, and
Advisor Class: $435.
6. IN THE PRO FORMA FINANCIAL STATEMENTS, ADD DISCLOSURE THAT ALL OF THE
INVESTMENTS OF THE TARGET FUNDS COMPLY WITH THE INVESTMENT RESTRICTIONS OF
THE ACQUIRING FUNDS.
RESPONSE: The requested language is already included in note 3 of the
Notes to Pro Forma Combining Financial Statements (Unaudited). That note
states as follows: "None of the securities held by the Franklin Technology
Fund, the Global Communications Fund and the Franklin Global Health Care
Fund as of the closing date will violate the investment restrictions of
the Franklin DynaTech Fund."
7. IN THE PRO FORMA FINANCIAL STATEMENTS, ADD A BRIEF DISCUSSION OF THE
REORGANIZATION COSTS, INCLUDING THE PERCENTAGES AND TOTAL DOLLAR AMOUNTS.
RESPONSE: We have added the following to the Notes to Pro
Forma Combining Financial Statements (Unaudited):
6. REORGANIZATION COSTS
The Franklin Technology Fund, the Franklin Global Health Care Fund, and
the Franklin Global Communications Fund will each pay 25% of their
respective expenses, including the costs of proxy solicitation, resulting
from their participation in a reorganization. The Franklin DynaTech Fund
will pay 25% of such expenses for each reorganization. FAI will pay the
remaining 50% of such expenses for each reorganization. The total amount
of such expenses for the reorganization of the Franklin Technology Fund is
estimated to be $90,078. The total amount of such expenses for the
reorganization of the Franklin Global Health Care Fund is estimated to be
$108,057. The total amount of such expenses for the reorganization of the
Franklin Global Communications Fund is estimated to be $138,000.
8. IN THE PRO FORMA FINANCIAL STATEMENTS, ADD DISCLOSURE REGARDING THE
TAX-FREE STATUS OF THE REORGANIZATIONS.
RESPONSE: The requested language is already included in Note 1 of the
Notes to Pro Forma Combining Financial Statements (Unaudited). That note
includes the following language: "Each reorganization will be accounted
for by the method of accounting for tax-free business combinations of
investment companies."
***
Should you have any questions or concerns regarding any of the above,
please contact me at (215) 564-8128.
Best Regards,
/s/ Samuel K. Goldstein
Samuel K. Goldstein, Esq.
Cc: Bruce Bohan, Esq.
Janet Keltner
Molly Quiceno
Sheila Medeiros
Kristin Ives, Esq.