SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
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[ ] 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)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
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[ ] 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:
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(4) Date Filed:
FRANKLIN UNIVERSAL TRUST
IMPORTANT SHAREHOLDER INFORMATION
These materials are for the annual shareholders' meeting scheduled for Thursday,
February 14, 2002 at 1:00 p.m. Pacific time. They discuss the proposal to be
voted on at the meeting, and contain your proxy statement and proxy card. A
proxy card is, in essence, a ballot. When you vote your proxy, it tells us how
you wish to vote on important issues relating to your fund. If you complete and
sign the proxy, we'll vote it exactly as you tell us. If you simply sign the
proxy, we'll vote it in accordance with the Trustees' recommendation on page 1
of the proxy statement.
WE URGE YOU TO SPEND A FEW MINUTES REVIEWING THE PROPOSAL IN THE PROXY
STATEMENT. THEN, FILL OUT THE PROXY CARD AND RETURN IT TO US SO THAT WE KNOW HOW
YOU WOULD LIKE TO VOTE. WHEN SHAREHOLDERS RETURN THEIR PROXIES PROMPTLY, THE
FUND MAY BE ABLE TO SAVE MONEY BY NOT HAVING TO CONDUCT ADDITIONAL MAILINGS.
WE WELCOME YOUR COMMENTS. IF YOU HAVE ANY QUESTIONS, CALL FUND INFORMATION AT
1-800/DIAL BEN(R) (1-800/342-5236).
TELEPHONE AND INTERNET VOTING
FOR YOUR CONVENIENCE, YOU MAY BE ABLE TO VOTE BY TELEPHONE OR THROUGH THE
INTERNET, 24 HOURS A DAY. IF YOUR ACCOUNT IS ELIGIBLE, A CONTROL NUMBER AND
SEPARATE INSTRUCTIONS ARE ENCLOSED.
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FRANKLIN UNIVERSAL TRUST
NOTICE OF 2002 ANNUAL SHAREHOLDERS' MEETING
The Annual Shareholders' Meeting ("Meeting") of Franklin Universal Trust (the
"Fund") will be held at the Fund's offices, One Franklin Parkway, San Mateo,
California, 94403 on Thursday, February 14, 2002 at 1:00 p.m. Pacific time.
During the Meeting, shareholders of the Fund will vote on the following
proposal:
o The election of a Board of Trustees of the Fund
The Board of Trustees has fixed December 14, 2001 as the record date for the
determination of shareholders entitled to vote at the Meeting.
By Order of the Board of Trustees,
Murray L. Simpson
SECRETARY
San Mateo, California
Dated: January 10, 2002
PLEASE SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE SELF-ADDRESSED ENVELOPE
(OR RETURN YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET, IF YOU ARE ELIGIBLE
TO DO SO) REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
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FRANKLIN UNIVERSAL TRUST
PROXY STATEMENT
INFORMATION ABOUT VOTING:
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on December 14, 2001 are
entitled to be present and to vote at the Meeting or any adjourned meeting.
Each share of record is entitled to one vote on each matter presented at the
Meeting. The Notice of Meeting, the proxy card, and the proxy statement were
mailed to shareholders of record on or about January 10, 2002.
On what issues am I being asked to vote?
You are being asked to vote on one proposal:
o The election of nine nominees to the position of Trustee;
HOW DO THE FUND'S TRUSTEES RECOMMEND THAT I VOTE?
The Trustees unanimously recommend that you vote FOR the election of the nine
nominees to the position of trustee.
HOW DO I ENSURE THAT MY VOTE IS ACCURATELY RECORDED?
You may attend the Meeting and vote in person or you may complete and return
the enclosed proxy card. If you are eligible to vote by telephone or through
the Internet, a control number and separate instructions are enclosed.
Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote for the Proposal,
your proxy will be voted as you indicated. If you simply sign and date the
proxy card, but don't specify a vote for the Proposal, your shares will be
voted IN FAVOR of the nominees for Trustee.
CAN I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by the
Fund at or prior to the Meeting, or by attending the Meeting and voting in
person.
THE PROPOSAL: ELECTION OF TRUSTEES
WHO ARE THE NOMINEES?
Frank H. Abbott, III, Harris J. Ashton, Robert F. Carlson, S. Joseph
Fortunato, Edward B. Jamieson, Charles B. Johnson, Rupert H.
Johnson, Jr., Frank W.T. LaHaye, and Gordon S. Macklin have been
nominated to be Trustees of the Fund, to hold office until the next
Annual Shareholders' Meeting, and until their successors are duly
elected and qualified to serve. All of the nominees are currently
members of the Board of Trustees (the "Board"). In addition, all of
the current nominees are also directors and/or trustees of other
U.S. registered mutual funds of Franklin Templeton Investments
(collectively "Franklin Templeton funds.")
Certain Trustees of the Fund hold director and/or officer positions
with Franklin Resources, Inc. ("Resources") and its affiliates.
Resources is a publicly owned holding company, the principal
shareholders of which are Charles B. Johnson and Rupert H. Johnson,
Jr., who own approximately 17.9% and 14.6%, respectively, of its
outstanding shares. Resources is primarily engaged, through its
various subsidiaries, in providing investment management, share
distribution, transfer agent and administrative services to a family
of investment companies. Resources is a New York Stock Exchange,
Inc. ("NYSE") listed holding company (NYSE: BEN). Charles B.
Johnson, the Chairman of the Board of the Fund, and Rupert H.
Johnson, Jr., a Vice President of the Fund, are brothers.
Each nominee is currently eligible and has consented to serve if elected. If
any of the nominees should become unavailable, the persons named in the proxy
card will vote in their discretion for another person or persons who may be
nominated as Trustees.
Listed below, for each nominee, is a brief description of recent professional
experience, ownership of shares of the Fund and shares of all Franklin
Templeton funds.
Shares
Fund Shares Beneficially
Beneficially Owned of
Owned and % Franklin
Name and Offices Principal Occupation of Total Templeton funds
with the Fund During Past Five Years Outstanding (including
and Age Shares on the Fund)as of
November 30, November 30,
2001 2001
- -------------------------------------------------------------------------------
FRANK H. ABBOTT, III President and Director, None 1,111,964
TRUSTEE SINCE 1988 Abbott Corporation (an
investment company);
director or trustee, as
the case may be, of 28 of
the investment companies in
Franklin Templeton
Investments; and formerly,
Director, MotherLode Gold
Mines Consolidated (gold
mining) (until 1996) and
Vacu-Dry Co. (food
processing) (until 1996).
Age 80.
HARRIS J. ASHTON Director, RBC Holdings, 1,352 503,780
TRUSTEE SINCE 1988 Inc. (bank holding
company) and Bar-S Foods
(meat packing company);
director or trustee, as
the case may be, of 48 of
the investment companies
in Franklin Templeton
Investments; and
formerly, President,
Chief Executive Officer
and Chairman of the
Board, General Host
Corporation (nursery and
craft centers) (until
1998). Age 69.
ROBERT F. CARLSON Vice President and past None 166,588
TRUSTEE SINCE 2000 President, Board of
Administration,
California Public
Employees Retirement
Systems (CALPERS);
director or trustee, as
the case may be, of 12 of
the investment companies
in Franklin Templeton
Investments; and
formerly, member and
Chairman of the Board,
Sutter Community
Hospitals, member,
Corporate Board, Blue
Shield of California, and
Chief Counsel, California
Department of
Transportation.
Age 73.
S. JOSEPH FORTUNATO Member of the law firm of 2,365 832,249
TRUSTEE SINCE 1989 Pitney, Hardin, Kipp &
Szuch; and director or
trustee, as the case may
be, of 49 of the
investment companies in
Franklin Templeton
Investments. Age 69.
*EDWARD B. JAMIESON Executive Vice President None 236,486
PRESIDENT AND and Portfolio Manager,
TRUSTEE Franklin Advisers, Inc.;
SINCE 1993 officer of other
subsidiaries of Franklin
Resources, Inc.; and
officer and trustee of
five of the investment
companies in Franklin
Templeton Investments.
Age 53.
*CHARLES B. JOHNSON Chairman of the Board, 1,000 9,052,193
CHAIRMAN OF THE Chief Executive Officer,
BOARD SINCE 1993 AND Member - Office of the
TRUSTEE SINCE 1988 Chairman and Director,
Franklin Resources, Inc.;
Vice President, Franklin
Templeton Distributors,
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 48 of the
investment companies in
Franklin Templeton
Investments. Age 68.
*RUPERT H. JOHNSON, Vice Chairman, Member - 1,000 28,851,821
JR. Office of the Chairman
SENIOR VICE and Director, Franklin
PRESIDENT AND Resources, Inc.; Vice
TRUSTEE SINCE 1988 President and Director,
Franklin Templeton
Distributors, Inc.;
Director, Franklin
Advisers, Inc. and
Franklin Investment
Advisory Services, Inc.;
Senior Vice President,
Franklin Advisory
Services, LLC; and
officer and/or director
or trustee, as the case
may be, of most of the
other subsidiaries of
Franklin Resources, Inc.
and of 51 of the
investment companies in
Franklin Templeton
Investments.
Age 61.
FRANK W.T. LAHAYE President, Las Olas 2,378 648,613
TRUSTEE SINCE 1988 (Asset Management);
Director, The California
Center for Land Recycling
(redevelopment); director
or trustee, as the case may
be, of 28 of the investment
companies in Franklin
Templeton Investments; and
formerly, Chairman, Peregrine
Venture Management Company
(venture capital); General
Partner, Miller & LaHaye and
Peregrine Associates, the
general partners of Peregrine
Venture funds. Age 72.
GORDON S. MACKLIN Deputy Chairman, White None 464,402
TRUSTEE SINCE 1993 Mountains Insurance
Group, Ltd. (holding
company); Director,
Martek Biosciences
Corporation, WorldCom,
Inc. (communications
services), MedImmune,
Inc. (biotechnology),
Overstock.com (Internet
services), and Spacehab,
Inc. (aerospace
services); director or
trustee, as the case may
be, of 48 of the
investment companies in
Franklin Templeton
Investments; and
formerly, Chairman, White
River Corporation
(financial services)
(until 1998) and
Hambrecht & Quist Group
(investment banking)
(until 1992), and
President, National
Association of Securities
Dealers, Inc. (until
1987). Age 73.
- ------------------------------------------------------------------------
*Edward B. Jamieson, Charles B. Johnson and Rupert H. Johnson, Jr. are
"interested persons" as defined in the Investment Company Act of 1940,
as amended, (the "1940 Act"). The 1940 Act limits the percentage of
interested persons that can comprise a fund's board of trustees. Mr.
Edward B. Jamieson is an interested person due to his employment
affiliation with Resources. Mr. Charles B. Johnson and Mr. Rupert H.
Johnson, Jr. are interested persons due to their ownership interest in
Resources, their employment affiliation with Resources and their
positions with the Fund. The remaining Trustees of the Fund are not
interested persons of the Fund (the "Independent Trustees").
**Less than 1% of the outstanding shares of the Fund.
HOW OFTEN DO THE TRUSTEES MEET AND WHAT ARE THEY PAID?
The role of the 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 anticipate meeting at least 11 times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Trustees also oversee the services furnished to
the Fund by Franklin Advisers, Inc., the Fund's investment manager (the
"Investment Manager"), and various other service providers. The Fund pays the
Independent Trustees $225 per month plus $120 per meeting attended. Board
members who serve on the Audit Committee of the Fund and other Franklin
Templeton funds are paid by the Fund an aggregate per diem compensation of
$2,000 for attending a meeting of the Audit Committee on a day when a Board
meeting is not held.
During the fiscal year ended August 31, 2001, there were 11 meetings of the
Board and two meetings of the Audit Committee. Each of the Trustees attended
at least 75% of the total number of meetings of the Board. There was 100%
attendance at the meetings of the Audit Committee.
Certain Trustees and Officers of the Fund are shareholders of Resources and
may be deemed to receive indirect remuneration due to their participation in
the management fees and other fees received from the Franklin Templeton funds
by the Investment Manager and its affiliates. The Investment Manager or its
affiliates pay the salaries and expenses of the Officers. No pension or
retirement benefits are accrued as part of Fund expenses.
NUMBER OF
TOTAL FEES BOARDS WITHIN THE
AGGREGATE RECEIVED FROM THE FRANKLIN TEMPLETON
COMPENSATION FRANKLIN TEMPLETON FUNDS ON WHICH
NAME OF TRUSTEE FROM THE FUND* FUNDS** TRUSTEE SERVES***
- -------------------------------------------------------------------------------
Frank H. Abbott, III $3,109 $163,675 28
Harris J. Ashton 3,212 353,221 48
Robert F. Carlson 4,020 93,240 12
S. Joseph Fortunato 3,004 352,380 49
Frank W.T. LaHaye 3,109 154,197 28
Gordon S. Macklin 3,212 353,221 48
*For the fiscal year ended August 31, 2001.
**For the calendar year ended December 31, 2001
***We base the number of boards on the number of registered Franklin
Templeton 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 funds currently includes 52 registered
investment companies, with approximately 156 U.S. based funds or series.
The table above indicates the total fees paid to Trustees by the Fund
individually and all of the Franklin Templeton funds. These Trustees also
serve as directors or trustees of other Franklin Templeton funds, many of
which hold meetings at different dates and times. The Trustees and the Fund's
management believe that having the same individuals serving on the boards of
many of the Franklin Templeton 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.
Board members historically have followed a policy of having substantial
investments in one or more Franklin Templeton funds, as is consistent with
their individual financial goals. In February 1998, this policy was
formalized through adoption of a requirement that each board member invest
one-third of fees received for serving as a director or trustee of a
Templeton fund in shares of one or more Templeton funds and one-third of fees
received for serving as a director or trustee of a Franklin fund in shares of
one or more Franklin funds until the value of such investments equals or
exceeds five times the annual fees paid such board member. Investments in the
name of family members or entities controlled by a board member constitute
fund holdings of such board member for purposes of this policy, and a three
year phase-in period applies to such investment requirements for newly
elected board members. In implementing such policy, a board member's fund
holdings existing on February 27, 1998, are valued as of such date with
subsequent investments valued at cost.
WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?
OFFICERS OF THE FUND ARE APPOINTED BY THE TRUSTEES AND SERVE AT THE PLEASURE
OF THE BOARD. LISTED BELOW, FOR EACH EXECUTIVE OFFICER, IS A BRIEF
DESCRIPTION OF RECENT PROFESSIONAL EXPERIENCE:
Name and Offices with the Fund Principal Occupation During Past
Five Years and Age
- ---------------------------------------------------------------------------
HARMON E. BURNS Vice Chairman, Member - Office of
VICE PRESIDENT SINCE 1988 the Chairman and Director, Franklin
Resources, Inc.; Vice President and
Director, Franklin Templeton
Distributors, Inc.; Executive Vice
President, Franklin Advisers, Inc.;
Director, Franklin Investment
Advisory 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 51 of the
investment companies in Franklin
Templeton Investments. Age 56.
MARTIN L. FLANAGAN President, Member - Office of the
VICE PRESIDENT AND CHIEF FINANCIAL President, Chief Financial Officer
OFFICER SINCE 1995 and Chief Operating Officer,
Franklin Resources, Inc.; Senior Vice
President and Chief Financial Officer,
Franklin Mutual Advisers, LLC; Executive
Vice President, Chief Financial Officer
and Director, Templeton Worldwide, Inc.;
Executive Vice President and Chief
Operating Officer, Templeton Investment
Counsel, LLC; Executive Vice President and
Director, Franklin Advisers, Inc.;
Executive Vice President, Franklin
Investment Advisory Services, Inc. and
Franklin Templeton Investor Services, LLC;
Chief Financial Officer, Franklin Advisory
Services, LLC; Chairman, Franklin
Templeton Services, LLC; 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 51 of the investment companies
in Franklin Templeton Investments. Age 41.
DAVID GOSS Associate General Counsel, Franklin
VICE PRESIDENT SINCE 2000 Templeton Investments; President,
Chief Executive Officer and
Director, Property Resources, Inc.
and Franklin Properties, Inc.;
officer and director of some of the
other subsidiaries of Franklin
Resources, Inc.; officer of 52 of
the investment companies in
Franklin Templeton Investments; and
FORMERLY, President, Chief
Executive Officer and Director,
Franklin Real Estate Income Fund
and Franklin Advantage Real Estate
Income Fund (until 1996), Property
Resources Equity Trust (until 1999)
and Franklin Select Realty
Trust(until 2000). Age 54.
BARBARA J. GREEN Vice President and Deputy General
VICE PRESIDENT SINCE 2000 Counsel, Franklin Resources, Inc.;
Senior Vice President, Templeton
Worldwide, Inc.; officer of 52 of
the investment companies in
Franklin Templeton Investments; and
FORMERLY, Deputy Director, Division
of Investment Management, Executive
Assistant and Senior Advisor to the
Chairman, Counselor to the
Chairman, Special Counsel and
Attorney Fellow, U.S. Securities
and Exchange Commission
(1986-1995), Attorney, Rogers &
Wells (until 1986), and Judicial
Clerk, U.S. District Court
(District of Massachusetts) (until
1979). Age 54.
EDWARD B. JAMIESON See Proposal 1, "Election of
PRESIDENT AND TRUSTEE SINCE 1993 Trustees"
CHARLES B. JOHNSON See Proposal 1, "Election of
CHAIRMAN OF THE BOARD SINCE 1993 AND Trustees"
TRUSTEE SINCE 1988
RUPERT H. JOHNSON, JR. See Proposal 1, "Election of
SENIOR VICE PRESIDENT AND TRUSTEE Trustees"
SINCE 1988
EDWARD V. MCVEY Senior Vice President, Franklin
VICE PRESIDENT SINCE 1988 Templeton Distributors, Inc.;
officer of one of the other
subsidiaries of Franklin Resources,
Inc. and of 29 of the investment
companies in Franklin Templeton
Investments. Age 64.
KIMBERLEY MONASTERIO Senior Vice President, Franklin
TREASURER AND PRINCIPAL Templeton Services, LLC; and
ACCOUNTING OFFICER SINCE 1999 officer of 33 of the investment
companies in Franklin Templeton
Investments. Age 38.
MURRAY L. SIMPSON Executive Vice President and
VICE PRESIDENT & SECRETARY SINCE General Counsel, Franklin
2000 Resources, Inc.; officer and/or
director of some of the
subsidiaries of Franklin Resources,
Inc.; officer of 52 of the
investment companies in Franklin
Templeton Investments; and
formerly, Chief Executive Officer
and Managing Director, Templeton
Franklin Investment Services (Asia)
Limited (until 2000) and Director,
Templeton Asset Management Ltd.
(until 1999). Age 64.
INFORMATION ABOUT THE FUND
THE INVESTMENT MANAGER. The Investment Manager is Franklin Advisers, Inc.
("Advisers"), whose principal address is One Franklin Parkway, San Mateo,
California 94403. Advisers is a wholly owned subsidiary of Resources, a
publicly owned holding company.
THE FUND ADMINISTRATOR. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), whose principal address is also One Franklin
Parkway, San Mateo, CA 94403. Under an agreement with Advisers, FT Services
performs certain administrative functions for the Fund. FT Services is a
wholly owned subsidiary of Resources.
THE TRANSFER AGENT. The transfer agent, registrar and dividend
disbursement agent for the Fund is PFPC, Inc., P.O. Box 8030,
Boston, MA 02266-8030.
THE CUSTODIAN. Bank of New York, Mutual Funds Division, 90 Washington Street,
New York, NY 10286, acts as custodian of the Fund's securities and other
assets.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS. The Fund's last audited
financial statements and annual report, dated August 31, 2001, are available
free of charge. To obtain a copy, please call 1-800/DIAL BEN(R) or forward a
written request to Franklin/Templeton Investor Services, LLC, P.O. Box
997151, Sacramento, CA 95899-9983.
PRINCIPAL SHAREHOLDERS. As of December 14, 2001, the Fund had 27,261,626.903
shares outstanding and total net assets of $186,379,065.29. The Fund's shares
are listed on the NYSE (symbol: FT). From time to time, the number of shares
held in "street name" accounts of various securities dealers for the benefit
of their clients may exceed 5% of the total shares outstanding. To the
knowledge of the Fund's management, as of December 31, 2001, there were no
other entities holding beneficially or of record more than 5% of the Fund's
outstanding shares.
In addition, to the knowledge of the Fund's management, as of December 31,
2001, no Trustee of the Fund owned 1% or more of the outstanding shares of
the Fund, and the Officers and Trustees of the Fund owned, as a group, less
than 1% of the outstanding shares of the Fund.
AUDIT COMMITTEE
The Board has a standing Audit Committee consisting of Messrs. LaHaye
(Chairman), Abbott and Carlson, all of whom are Independent Trustees and also
are considered to be "independent" as that term is defined by the NYSE's
listing standards. The Audit Committee reviews the maintenance of the Fund's
records and the safekeeping arrangements of the Fund's custodian, reviews
both the audit and non-audit work of the Fund's independent auditors, and
submits a recommendation to the Board as to the selection of independent
auditors.
SELECTION OF INDEPENDENT AUDITORS. Upon the recommendation of the Audit
Committee, the Board selected the firm of PricewaterhouseCoopers LLP ("PwC")
as independent auditors of the Fund for the current fiscal year.
Representatives of PwC are not expected to be present at the Meeting, but
will have the opportunity to make a statement if they wish, and will be
available should any matter arise requiring their presence.
AUDIT FEES. The aggregate fees paid to PwC in connection with the annual
audit of the Fund's financial statements for the fiscal year ended August 31,
2001 were $29,500.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. PwC did not
render any services with respect to financial information systems design and
implementation during the fiscal year ended December 3l, 2001 to the Fund or
entities affiliated with the Fund that provide services to the Fund. The
Audit Committee of the Fund has determined that provision of these services
is compatible with maintaining the independence of PwC.
ALL OTHER FEES. The aggregate fees billed for all other non-audit services,
including fees for tax-related services, rendered by PwC to the Fund or
entities affiliated with the Fund that provide services to the Fund for the
fiscal year ended August 31, 2001 were $970. The Audit Committee of the Fund
has determined that provision of these non-audit services is compatible with
maintaining the independence of PwC.
AUDIT COMMITTEE REPORT. The Fund's Board of Trustees has adopted and approved
a formal written charter for the Audit Committee, which sets forth the Audit
Committee's responsibilities. A copy of the charter is attached as Exhibit
"A" to this proxy statement.
As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with
PricewaterhouseCoopers LLP, the Fund's independent auditors, to discuss the
financial statements.
The Audit Committee received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board No. 1.
The Audit Committee also received the report of PricewaterhouseCoopers LLP
regarding the results of their audit. In connection with its review of the
financial statements and the auditors' report, the members of the Audit
Committee discussed with a representative of PricewaterhouseCoopers LLP,
their independence, as well as the following: the auditors' responsibilities
in accordance with generally accepted auditing principles; the auditors'
responsibilities for information prepared by management that accompanies the
Fund's audited financial statements and any procedures performed and the
results; the initial selection of, and whether there were any changes in,
significant accounting policies or their application; management's judgments
and accounting estimates; whether there were any significant audit
adjustments; whether there were any disagreements with management; whether
there was any consultation with other accountants; whether there were any
major issues discussed with management prior to the auditors' retention;
whether the auditors encountered any difficulties in dealing with management
in performing the audit; and the auditors' judgments about the quality of the
company's accounting principles.
Based on its discussions with management and the Fund's auditors, the Audit
Committee did not become aware of any material misstatements or omissions in
the financial statements. Accordingly, the Audit Committee recommended to the
Board of Trustees that the audited financial statements be included in the
Fund's Annual Report to Shareholders for the fiscal year ended August 31,
2001 for filing with the SEC.
THE AUDIT COMMITTEE
Frank W.T. LaHaye (Chairman)
Frank H. Abbott, III
Robert F. Carlson
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
SOLICITATION OF PROXIES. Your vote is being solicited by the Board of
Trustees of the Fund. The cost of soliciting these proxies will be borne by
the Fund. The Fund reimburses brokerage firms and others for their expenses
in forwarding proxy material to the beneficial owners and soliciting them to
execute proxies. In addition the Fund may retain a professional proxy
solicitation firm to assist with any necessary solicitation of proxies. The
Fund expects that the solicitation will be primarily by mail, but also may
include telephone, telecopy or oral solicitations. The Fund does not
reimburse Trustees and Officers of the Fund, or regular employees and agents
of the Investment Manager involved in the solicitation of proxies. The Fund
intends to pay all costs associated with the solicitation and the Meeting.
VOTING BY BROKER-DEALERS. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and
beneficial owners. If these instructions are not received by the date
specified in the broker-dealer firms' proxy solicitation materials, the Fund
understands that NYSE Rules permit the broker-dealers to vote on the items to
be considered at the Meeting on behalf of their customers and beneficial
owners. Certain broker-dealers may exercise discretion over shares held in
their name for which no instructions are received by voting those shares in
the same proportion as they vote shares for which they received instructions.
QUORUM. Forty percent of the shares entitled to vote - present in person or
represented by proxy - constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that
represent "broker non-votes" (i.e., shares held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), and the shares whose
proxies reflect an abstention on any item are all counted as shares present
and entitled to vote for purposes of determining whether the required quorum
of shares exists.
REQUIRED VOTE. Provided that a quorum is present, the election of Trustees,
requires that the nine nominees receiving the greatest number of votes 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.
Abstentions and broker non-votes will be treated as votes not cast and,
therefore, will not be counted for purposes of obtaining approval of the
Proposal.
ADJOURNMENT. In the event that a quorum is not present at the Meeting, the
Meeting will be adjourned to permit further solicitation of proxies. In the
event that a quorum is present, but sufficient votes have not been received
to approve the Proposal, the persons named as proxies may propose one or more
adjournments of the Meeting to permit the further solicitation of proxies for
a period or periods of not more than 60 days in the aggregate. The persons
named as proxies will vote in their discretion on questions of adjournment
those shares for which proxies have been received that grant discretionary
authority to vote on matters that may properly come before the Meeting.
SHAREHOLDER PROPOSALS. The Fund anticipates that its next Annual
Shareholders' Meeting will be held in February 2003. Shareholder proposals to
be presented at the next Annual Shareholders' Meeting must be received at the
Fund's offices, One Franklin Parkway, San Mateo, CA 94403, no later than
November 1, 2002, in order to be included in the Fund's proxy statement and
proxy card relating to that meeting and presented at that meeting. Submission
of a proposal by a shareholder does not guarantee that the proposal will be
included in the proxy statement. A shareholder who wishes to make a proposal
at the 2003 Annual Shareholders' Meeting without including the proposal in
the Fund's proxy statement must notify the Fund at the Fund's offices, of
such proposal by December 1, 2002. If a shareholder fails to give notice by
this date, then the persons named as proxies in the proxies solicited by the
Board for the 2003 Annual Shareholders' Meeting may exercise discretionary
voting power with respect to any such proposal.
By order of the Board of Trustees,
Murray L. Simpson
SECRETARY
Dated: January 10, 2002
San Mateo, California
EXHIBIT A
AUDIT COMMITTEE CHARTER
FOR FRANKLIN UNIVERSAL TRUST AND FRANKLIN MULTI-INCOME TRUST
1. The Audit Committee for Franklin Multi-Income Trust and Franklin
Universal Trust (the "Funds") shall be composed entirely of
independent directors and shall consist of not less than three
such directors. Independent Directors shall mean non-interested
directors/trustees as defined in the Investment Company Act of
1940 (the "Act") and who meet the requirements of Independence
provided in Section 303 of Section 3 of the NYSE Listed Company
Manual, as set forth in greater detail in Exhibit A hereto. Audit
Committee members for each Fund shall be selected by a majority
of the Independent Directors of such Fund.
It shall be a premise of this Charter that the outside auditor for the
Fund is ultimately accountable to the Board of Trustees and the audit
committee of the Fund.
2. The purposes of the Audit Committee are:
(a) assure that outside auditors have been engaged to review such
annual and interim financial statements of the Fund as may from
time to time be required to be reviewed by outside auditors by
rule of the SEC or of the NYSE;
(b) to oversee the Funds' accounting and financial reporting policies
and practices, its internal controls and, as appropriate, the
internal controls of certain service providers;
(c) to oversee the quality and objectivity of the Funds' financial
statements and the independent audit thereof;
(d) to act as a liaison between the Funds' independent auditors and
the full Board of Directors; and
(e) to consider such other matters as may be appropriate in carrying
out the above responsibilities and other matters that may be
assigned it by the Board.
The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control, and the auditor's responsibility to plan and carry out a proper
audit. It is also recognized that the Boards of the Funds normally meet on
a monthly basis and that actions, including those required of independent
directors under the Act, which impact on the integrity of the Funds
financial and other operations, may be effected at such Board meetings
rather than at meetings of the Audit Committee.
3. To carry out its purposes, the Audit Committee shall have the
following duties and powers;
(a) to recommend to the Board of Trustees, the selection, retention or
termination of auditors (or to nominate the outside auditor to be
proposed for shareholder approval in any proxy statement) and, in
connection therewith,
(b) to evaluate the independence of the auditors, by assuring receipt
and review on a periodic basis, of a formal written statement
from the outside auditor, delineating all relationships between
the auditor and the Fund and its management; by actively
engaging in a dialogue with the outside auditor with respect to
any disclosed relationships or services that may impact the
objectivity and independence of the outside auditor. If
necessary, by recommending that the Board of Trustees take
appropriate action in response to the outside auditors' report
to satisfy itself of the outside auditor's independence,
(c) to meet with the Funds' independent auditors, including private
meetings, as necessary (i) to review the arrangements for and
scope of the annual audit and any special audits; (ii) to
discuss any matters of concern relating to the Funds' financial
statements, including any adjustments to such statements
recommended by the auditors, or other results of said audit(s);
(iii) to consider the auditors' comments with respect to the
Funds' financial policies, procedures and internal accounting
controls and management's responses thereto; and (iv) to review
the form of opinion the auditors propose to render to the Board
and shareholders;
(d) to consider the effect upon the Funds of any changes in
accounting principles or practices proposed by management or
the auditors;
(e) to review the fee arrangements of the independent auditors as
negotiated by management;
(f) to investigate improprieties or suspected improprieties in fund
operations; and
(g) to report its activities to the full Board and make such
recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate.
4. The Committee shall have unrestricted access to the Funds' independent
accountants as well as the Funds' treasurer and other financial and
executive officers of the Funds and management.
5. The Committee shall meet as frequently as circumstances require with at
least one meeting being held with the Funds' independent auditors absent
the presence of management.
6. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the appropriate
Funds.
7. The Committee shall review this Charter at least annually and recommend any
changes to the full Board of Directors.
EXHIBIT A TO THE AUDIT COMMITTEE CHARTER
REQUIREMENTS FOR AUDIT COMMITTEE MEMBERS
FINANCIAL LITERACY - Each member of the audit committee shall be financially
literate (or become so within a reasonable period time after appointment) as
determined by the Fund's Board of Trustees in its business judgment. At least
one member of the audit committee must have accounting or related financial
management expertise, as the Board of Trustees interprets such qualification
in its business judgment.
INDEPENDENCE. The following restrictions shall apply to every audit committee
member:
(A) Employees. A director who is an employee (including non-employee
executive officers) of the company or any of its affiliates
may not serve on the audit committee until three years
following the termination of his or her employment. In the
event the employment relationship is with a former parent or
predecessor of the company, the director could serve on the
audit committee after three years following the termination
of the relationship between the company and the former
parent or predecessor.
(B) Business Relationship. A director (i) who is a partner,
controlling shareholder, or executive officer of an
organization that has a business relationship with the
company, or (ii) who has a direct business relationship with
the company (e.g., a consultant) may serve on the audit
committee only if the company's Board of Directors
determines in its business judgment that the relationship
does not interfere with the director's exercise of
independent judgment. In making a determination regarding
the independence of a director pursuant to this paragraph,
the Board of Directors should consider, among other things,
the materiality of the relationship to the company, to the
director, and, if applicable, to the organization with which
the director is affiliated.
"Business relationships" can include commercial, industrial, banking,
consulting, legal, accounting and other relationships. A director can
have this relationship directly with the company, or the director can be
a partner, officer or employee of an organization that has such a
relationship. The director may serve on the audit committee without the
above-referenced Board of Directors' determination after three years
following the termination of, as applicable, either (1) the relationship
between the organization with which the director is affiliated and the
company, (2) the relationship between the director and his or her
partnership status, shareholder interest or executive officer position,
or (3) the direct business relationship between the director and the
company.
(C) Cross Compensation Committee Link. A director who is employed as
an executive of another corporation where any of the
company's executives serves on that corporation's
compensation committee may not serve on the audit committee.
(D) Immediate Family. A director who is an Immediate Family member of
an individual who is an executive officer of the company or
any of its affiliates cannot serve on the audit committee
until three years following the termination of such
employment relationship
(E) Notwithstanding the requirements set forth above, one director
who is no longer an employee or who is an Immediate Family
member of a former executive officer of the company or its
affiliates, but is not considered independent pursuant to
these provisions due to the three-year restriction period,
may be appointed, under exceptional and limited
circumstances, to the audit committee if the company's board
of directors determines in its business judgment that
membership on the committee by the individual is required by
the best interests of the corporation and its shareholders,
and the company discloses, in the next annual proxy
statement subsequent to such determination, the nature of
the relationship and the reasons for that determination.
DEFINITIONS
(A) "Immediate Family" includes a person's spouse, parents, children,
siblings, mothers-in-law and fathers-in-law, sons and daughters-in-law,
brothers and sisters-in-law, and anyone (other than employees) who shares
such person's home.
(B) "Affiliate" includes a subsidiary, sibling company, predecessor, parent
company, or former parent company.
(C) "Officer" shall have the meaning specified in Rule 16a-1(f) under the
Securities Exchange Act of 1934, or any successor rule.
PROXY
FRANKLIN UNIVERSAL TRUST
ANNUAL SHAREHOLDERS' MEETING - FEBRUARY 14, 2002
The undersigned hereby revokes all previous proxies for his or her
shares and appoints Harmon E. Burns, Rupert H. Johnson, Jr., Murray Simpson,
Barbara Green, and David Goss 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 One Franklin Parkway, San Mateo, California at 1:00 p.m.
Pacific Time on the 14th day of February, 2002, including any adjournments
thereof, upon such business as may properly be brought before the meeting.
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 FOR
THE PROPOSAL (INCLUDING ALL NOMINEES FOR TRUSTEES). IF ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING TO BE VOTED ON, THE PROXYHOLDERS WILL
VOTE, ACT AND CONSENT ON THOSE MATTERS IN ACCORDANCE WITH THE VIEWS OF
MANAGEMENT.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
X PLEASE MARK VOTES
AS IN THIS EXAMPLE.
Proposal: Election of Trustees.
NOMINEES: (01) Frank H. Abbott, III, (02) Harris J. Ashton,
(03) Robert F. Carlson, (04) S. Joseph Fortunato,
(05) Edward B. Jamieson, (06) Charles B. Johnson,
(07) Rupert H. Johnson, Jr., (08) Frank W.T. LaHaye,
(09) Gordon S. Macklin
FOR WITHHOLD
ALL FROM ALL
NOMINEES NOMINEES
[ ] [ ]
------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided above.)
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
PLEASE SIGN AND PROMPTLY RETURN IN THE
ACCOMPANYING ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE U.S.
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.
Signature: __________________________ Date: ________________
Signature: __________________________ Date: ________________