-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fAP+fQcg3Q++nHl/67WSm7XhqYHjm0H0iJJovHOE4BOwtC6Ch8DwAI0bh6JW1xKC Dn6Tv8s+Yfx0tgUy2AKfcA== 0000854856-95-000003.txt : 19950607 0000854856-95-000003.hdr.sgml : 19950607 ACCESSION NUMBER: 0000854856-95-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950526 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRANKLIN MULTI INCOME TRUST CENTRAL INDEX KEY: 0000854856 STANDARD INDUSTRIAL CLASSIFICATION: STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05873 FILM NUMBER: 95542534 BUSINESS ADDRESS: STREET 1: 777 MARINERS ISLAND BLVD CITY: SAN MATEO STATE: CA ZIP: 94404 BUSINESS PHONE: 4155703000 MAIL ADDRESS: STREET 1: FRANKLIN MULTI INCOME TRUST STREET 2: 777 MARINERS ISLAND BLVD CITY: SAN MATEO STATE: CA ZIP: 94404 N-30D 1 MESSAGE FROM THE CHAIRMAN ================================================================================ TABLE OF CONTENTS
PAGE Message from the Chairman................................................................. 1 Manager's Discussion...................................................... 2 Performance Summary....................................................... 5 Portfolio Operations...................................................... 6 Dividend Reinvestment Plan..................................................................... 7 Statement of Investments.................................................. 9 Financial Statements...................................................... 15 Notes to Financial Statements............................................................... 17 Report of Independent Auditors................................................................. 22
May 15, 1995 Dear Shareholder: We're pleased to bring you the annual report of the Franklin Multi-Income Trust for the period ended March 31, 1995. In the pages that follow, you'll find a discussion of the factors that affected the Trust's performance over the reporting period, as well as a summary of the Trust's distributions and total returns. As always, we thank you for your continued support of the Franklin Multi-Income Trust and look forward to serving your investment needs in the years to come. Sincerely, /s/C. B. Johnson Charles B. Johnson Chairman 1 MANAGER'S DISCUSSION ================================================================================ TRUST OBJECTIVE: The Franklin Multi-Income Trust seeks to provide high current income consistent with preservation of capital, as well as growth of income through dividend increases and capital appreciation. In seeking to achieve these objectives, the Trust invests primarily in lower rated, higher yielding bonds and utilities securities. Overall, 1994 reminded us that volatility is a fundamental market condition. Not only did we see an unprecedented six interest rate increases during the year, we also witnessed the largest municipal bankruptcy filing in history by Orange County, California. Stock markets declined over the year, but rebounded following a small December rally. Not surprisingly, bonds of all qualities and maturities, from high yield corporate bonds to U.S. Treasury bonds, experienced significant price volatility in 1994. The first three months of 1995, however, brought welcome news. Recent economic data seems to indicate that the Federal Reserve Board may have successfully engineered its much sought-after "soft landing" -- higher interest rates have slowed the economy and curbed inflation without sending the economy back into recession. As a result, it appears that further substantial interest rate increases may be unnecessary -- an impression that has bolstered the performance of both the stock and bond markets. The Dow Jones Industrial Average(R), for example, topped the 4,000 mark for the first time in February, and bond markets rallied in the opening months of 1995. Additionally, long-term interest rates, as measured by the 30-year Treasury bond, declined during the past few months, from 7.99% on November 30, 1994, to 7.44% on March 31, 1995. Recent strength in the utilities and corporate bond markets is especially encouraging in light of the weakness in these markets throughout most of 1994. For instance, the Dow Jones Utilities Index reported a total return of -4.17% for the six months ended September 30, 1994, while the return for the six months ended March 31, 1995, was +7.08%. Likewise, the corporate bond market, as measured by the Merrill Lynch Corporate Master Index, experienced much the same over the past year. Total return for the first six months was -4.69%, while the last six months exhibited improvement, turning in a total return of +2.00%. As the Trust invests in both utilities and corporate bonds, volatility in those markets hurt the Trust's performance during the first six months of the Trust's fiscal year. For the six months 2 ================================================================================ ended September 30, 1994, the Trust's total return based on the change in net asset value was -0.34%. From October 1994 to March 31, 1995, the Trust's performance improved as the utility and corporate bonds markets rallied. For this period, the Trust reported a total return of +9.23%, based on net asset value, a significant improvement over the first six months. While performance suffered in the first half of the fiscal year, the Trust's strategic positioning in industries that performed well helped boost the fund's performance in the last half of the fiscal year. In the healthcare sector, investments in National Medical Enterprises and Abbey Healthcare Group, Inc., performed well in response to the continuing trend toward consolidation in that industry. The Trust's healthcare holdings rose to 8.6% of total net assets on March 31, 1995, from 6.4% at the beginning of the fiscal year. The Trust also benefited in recent months from its positions in the cable television and gaming/ leisure industries. Cable television performed well in response to consolidation movements within that industry and, as a result, holdings in this sector increased to 10.6% on March 31, 1995, from 6.5% on March 31, 1994. Our holdings in the gaming/leisure sector increased to 6.1% of total net assets on March 31, 1995, up from 1.4% at the start of the fiscal year. FRANKLIN MULTI-INCOME TRUST Top 10 Holdings on 3/31/95 As a percentage of total portfolio holdings
COMPANY % OF INDUSTRY PORTFOLIO - - ------------------------------------------------------------------------------- Southern Company 2.67% Utility (stocks) - - ------------------------------------------------------------------------------- Dominion Resources, Inc. 2.57% Utility (stocks) - - ------------------------------------------------------------------------------- Allegheny Power System Inc. 2.35% Utility (stocks) - - ------------------------------------------------------------------------------- Occidental Petroleum Corp. 2.03% Energy (stocks) - - ------------------------------------------------------------------------------- Central & South West Corp. 2.01% Utility (stocks) - - ------------------------------------------------------------------------------- Comcast Cellular Corp. 1.99% Wireless Communication (bonds) - - ------------------------------------------------------------------------------- FPL Group, Inc. 1.94% Utility (stocks) - - ------------------------------------------------------------------------------- CINergy Corp. 1.82% Utility (stocks) - - ------------------------------------------------------------------------------- American Electric Power Co., Inc. 1.78% Utility (stocks) - - ------------------------------------------------------------------------------- Dr. Pepper/7-Up 1.74% Food & Beverage (bonds) - - -------------------------------------------------------------------------------
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 7 OF THIS REPORT. 3 ================================================================================ Utility securities also responded positively to slightly declining long-term interest rates. However, this was a sector that we continued to underweight due to better prospects in other investment sectors. As a result, the portfolio's utility holdings changed little over the reporting period, accounting for 26.0% of total net assets on March 31, 1995, compared to 25.0% on March 31, 1994. We continue to emphasize those utility holdings that we believe have the best long-term total return prospects, and those that should benefit from a more competitive environment. We sold three lower-quality electric utility companies (Florida Progress, Houston Industries and Ohio Edison) and repositioned the assets into higher quality growth electric utilities (DPL, Inc., Duke Power and Wisconsin Energy). As of March 31, 1995, the Trust was well-diversified with 102 positions from various industries. Its 10 largest holdings, as the table on page 3 illustrates, represent both utility stocks and corporate bonds. Recent economic data suggests the best of both worlds -- moderate growth with inflation well under control. This should prove positive for financial markets overall, and for the high yield corporate bond and utility equity markets in particular. With prospects for a recession in the near term appearing fairly slim, the majority of domestic corporations should continue to experience further improvement in their financial condition as well as increased earnings potential. This should also positively affect the high yield corporate bond market. Furthermore, last year's correction in utility stocks appears to be behind us. While the sustainability of this year's rally in this sector remains to be seen, signs are considerably more promising than at any point in the recent past. 4 PERFORMANCE SUMMARY The Franklin Multi-Income Trust reported a cumulative total return of +2.77% for the one-year period ended March 31, 1995. Total return reflects the change in the New York Stock Exchange (NYSE) price of an investment. Based on the change in net asset value (as opposed to market price), the one-year total return for the same period was +8.86%. All total return calculations assume reinvestment of dividends and capital gains according to the terms specified in the Trust's Dividend Reinvestment Plan. The Trust's closing price on the NYSE declined $1.00 per share from $9.75 on March 31, 1994, to $8.75 on March 31, 1995, and its net asset value per share declined $0.37 from $9.97 on March 31, 1994, to $9.60 on March 31, 1995. During the reporting period, shareholders received combined distributions totaling $1.07 per share, including 78.8 cents ($0.788) per share in dividend income, 25.87 cents ($0.2587) per share in long-term capital gains, and 2.33 cents ($0.0233) per share in short-term capital gains. In response to reduced income earned by the fund during the reporting period, your monthly dividend was adjusted from 6.9 cents ($0.069) per share to 6.4 cents ($0.064) per share, effective with the August 1994 distribution. Dividends will vary based on the Trust's earnings and any profits realized from the sale of securities in the portfolio. Past distributions are not indicative of future trends. Based on an annualization of the current monthly dividend of 6.4 cents ($0.064) per share and the NYSE closing price of $8.75 on March 31, 1995, the Trust's distribution rate was 8.78%. While the Trust is bound to encounter short-term volatility, we believe that its performance will be rewarding for long-term investors. During the five years ended March 31, 1995, the Trust reported a total return of +93.74% in market-price terms, as shown in the table below. FRANKLIN MULTI-INCOME TRUST Cumulative Total Returns* Period Ended March 31, 1995
SINCE INCEPTION 1-YEAR 5-YEAR (10/09/89) - - ------------------------------------------------------------------------------ Based on change 8.86% 103.67% 97.90% in net asset value Based on change 2.77% 93.74% 67.58% in market value Distribution Rate** 8.78%
*Total return calculations are based on the change in net asset value, assuming reinvestment of dividends and capital gains according to the terms specified in the Trust's Dividend Reinvestment Plan. **Based on an annualization of the current 6.4 cent per share monthly dividend and the New York Stock Exchange closing price of $8.75 on March 31, 1995. High yields reflect the higher credit risks associated with certain lower-rated securities in the Trust's portfolio and, in some cases, the lower market price for these securities. Past performance is not predictive of future results. 5 PORTFOLIO OPERATIONS ================================================================================ The following persons are primarily responsible for the day-to-day management of the Trust's portfolio: Edward Jamieson since 1989 and Chris Molumphy since 1991. EDWARD JAMIESON Senior Vice President Franklin Advisers, Inc. - - -------------------------------------------------------------------------------- Mr. Jamieson holds a Bachelor of Arts degree in sociology from Bucknell University and a master's degree in accounting and finance from the University of Chicago Graduate School of Business. He has been with Advisers since 1987 and for the two years prior thereto, he was treasurer of Beatrice Consumer Products, Inc. and an executive with Pepsico, Inc.'s Corporate Treasury where he served as Director of International Treasury. He is a member of several securities industry-related committees and associations. CHRIS MOLUMPHY Portfolio Manager Franklin Advisers, Inc. - - -------------------------------------------------------------------------------- Mr. Molumphy holds a bachelor of arts degree in economics from Stanford University and a master's degree in finance from the University of Chicago. He has been with Advisers since 1988. He is a Chartered Financial Analyst (CFA) and a member of several securities industry associations. 6 DIVIDEND REINVESTMENT PLAN ================================================================================ The Trust's Dividend Reinvestment Plan offers you a prompt and simple way to reinvest dividends and capital gain distributions in shares of the Trust. The Shareholder Services Group ("TSSG" or "Plan Agent"), c/o Corporate Securities, 53 State St., Boston, Massachusetts 02109, acts as your Plan Agent in administering the Plan. All reinvestments are in full and fractional shares, carried to three decimal places. The complete Terms and Conditions of the Dividend Reinvestment Plan are contained in the Trust's prospectus, dated October 24, 1989, used in connection with its initial public offering. A copy of that prospectus may be obtained from the Trust at the address on the cover of the report. You are automatically enrolled in the Plan unless you elect to receive dividends or distributions in cash. If you own shares in your own name, you should notify the Plan Agent, in writing, if you wish to receive dividends or distributions in cash. If the Trust declares a dividend or capital gain distribution, you, as a participant in the Plan, will automatically receive an equivalent amount of shares of the Trust purchased on your behalf by the Plan Agent in the open market. All reinvestments are in full and fractional shares. The Trust does not issue new shares in connection with the Plan. There is no direct charge to participants for reinvesting dividends and distributions, since the Plan Agent's fees are paid by the Trust. Whenever shares are purchased through the exchange on which they are listed, each participant will pay a pro rata portion of brokerage commissions. The automatic reinvestment of dividends and distributions does not relieve shareholders of liability for any taxes which may be payable on dividends or distributions. Generally, income and capital gains, resulting from dividends and distributions received in the form of shares of the Trust, are realized notwithstanding the fact that cash is not received by shareholders. 7 ================================================================================ You will receive an annual account statement from the Plan Agent, showing total dividends and distributions, date of investment, shares acquired and price per share, and total shares of record held by you and by the Plan Agent for you. You are entitled to vote all shares of record, including shares purchased for you by the Plan Agent, and, if you vote by proxy, your proxy will include all such shares. As long as you participate in the Plan, the Plan Agent will hold the shares it has acquired for you in safekeeping, in non-certificated form. This convenience provides added protection against loss, theft or inadvertent destruction of certificates. You may withdraw from the Plan at any time, without penalty, by notifying the Plan Agent, in writing, at the address above. If you withdraw from the Plan, you will received a certificate issued in your name for all full shares and the Plan Agent will convert any fractional shares you hold at the time of withdrawal to cash at the then-current market price and send you a check for the proceeds. If you prefer, the Plan Agent will sell all of your full and fractional shares upon your withdrawal and send you the proceeds. If you hold shares in your own name, please address all notices, correspondence, questions, or other communications regarding the Plan to the Plan Agent at the address noted previously. If shares are not held in your name, you should contact your brokerage firm, bank, or other nominee for more information. 8 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995
VALUE SHARES (NOTE 3) - - -------------------------------------------------------------------------------------------------------------------- COMMON STOCKS 34.5% ENERGY 1.6% 33,300 Ultramar Corp. .................................................................... $ 865,800 ----------- GAMING/LEISURE 526 (a)Host Marriott Corp. ............................................................... 6,246 526 Marriott International, Inc. ...................................................... 18,279 ----------- 24,525 ----------- INDUSTRIAL 518 (a)Thermadyne Industries, Inc. ....................................................... 7,576 ----------- UTILITIES 32.9% 74,000 Allegheny Power System, Inc. ...................................................... 1,674,250 40,000 American Electric Power Co., Inc. ................................................. 1,270,000 59,000 Central & South West Corp. ........................................................ 1,430,750 52,200 CINergy Corp. ..................................................................... 1,298,475 51,000 Dominion Resources, Inc. .......................................................... 1,836,000 45,600 DPL, Inc........................................................................... 951,900 28,000 Duke Power Co...................................................................... 1,078,000 38,000 FPL Group, Inc. ................................................................... 1,382,250 46,200 Pacific Gas & Electric Co. ........................................................ 1,149,225 50,000 PacifiCorp ........................................................................ 968,750 25,000 Puget Sound Power & Light Co. ..................................................... 525,000 34,000 San Diego Gas & Electric Co. ...................................................... 705,500 15,500 SCEcorp ........................................................................... 242,188 93,600 Southern Co. ...................................................................... 1,907,100 36,000 Texas Utilities Co. ............................................................... 1,143,000 33,700 Wisconsin Energy Corp. ............................................................ 914,113 ----------- 18,476,501 ----------- TOTAL COMMON STOCKS (COST $17,560,831)....................................... 19,374,402 ----------- PARTNERSHIP UNITS .4% FINANCIALS 1 (b,d)PG Partners I, L.P. (Cost $57,500)................................................. 194,155 ----------- PREFERRED STOCKS 8.3% AUTOMOTIVE .9% 6,000 Ford Motor Co., $4.20 cum. cvt. exch. pfd., Series A............................... 529,500 ----------- CONSUMER GOODS .8% 70,000 RJR Nabisco Holdings Corp., $0.83 cvt. pfd., Series A.............................. 446,250 -----------
The accompanying notes are an integral part of these financial statements. 9 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995 (CONT.)
VALUE SHARES (NOTE 3) - - ------------------------------------------------------------------------------------------------------------------------ PREFERRED STOCKS (CONT.) ENERGY 4.3% 9,100 (c)Diamond Shamrock, 5.00%, cvt. pfd......................................................... $ 497,088 14,000 Noble Drilling Corp., $2.25 cvt. exch. pfd................................................ 455,000 19,000 (c)Occidental Petroleum Corp., $3.875 cvt. pfd. ............................................. 1,021,250 8,200 Occidental Petroleum Corp., $3.00 cvt. pfd., Series A..................................... 426,400 ----------- 2,399,738 ----------- FINANCIALS 1.8% 10,000 First Nationwide Bank, 11.50%, pfd. ...................................................... 1,011,250 ----------- RESTAURANTS .5% 15,100 Flagstar Cos., $2.25 cvt. pfd., Series A ................................................. 271,800 ----------- TOTAL PREFERRED STOCKS (COST $4,388,463)............................................ 4,658,538 ----------- FACE AMOUNT ------ BONDS 82.5% AUTOMOTIVE 1.6% $ 850,000 SPX Corp., senior sub. notes, 11.75%, 06/01/02............................................ 888,250 ----------- CABLE TELEVISION 11.1% 1,500,000 (e)Bell Cablemedia, Plc., senior disc. notes, zero coupon to 07/15/99, (original accretion rate 11.95%), 11.95% thereafter, 07/15/04 ............................................... 909,375 850,000 Cablevision Industries Corp., guaranteed senior sub. disc. deb., 10.75%, 01/30/02......... 898,875 500,000 Century Communications Corp., senior notes, 9.50%, 03/01/05............................... 485,000 500,000 Continental Cablevision, Inc., senior sub. deb., 11.00%, 06/01/07......................... 535,025 500,000 Continental Cablevision, Inc., senior sub. deb., 9.00%, 09/01/08.......................... 477,500 1,500,000 (e)Diamond Cable Communications Co., senior disc. notes, zero coupon to 09/30/99, (original accretion rate 13.25%), 13.25% thereafter, 09/30/04............................ 858,750 300,000 Le Groupe Videotron Ltee, senior notes, 10.625%, 02/15/05................................. 306,750 600,000 (f)Rogers Cable System, Ltd., senior secured deb. (Canada), 9.65%, 01/15/14 ................. 355,956 1,000,000 Tele-Communications, Inc., senior sub. deb., 9.80%, 02/01/12 ............................. 1,010,561 500,000 Turner Broadcasting Systems, Inc., senior deb., 8.40%, 02/01/24 .......................... 403,125 ----------- 6,240,917 ----------- CHEMICALS 3.4% 1,000,000 (e)Harris Chemical North America, Inc., senior secured disc. notes, zero coupon to 01/15/96, (original accretion rate 10.25%),10.25% thereafter, 07/15/01 .................. 875,000 100,000 IMC Global, Inc., senior deb., 9.45%, 12/15/11............................................ 98,250 400,000 IMC Global, Inc., senior notes, 9.25%, 10/01/00........................................... 405,000 300,000 IMC Global, Inc., senior notes, Series B, 10.125%, 06/15/01............................... 312,000 200,000 IMC Global, Inc., senior notes, Series B, 10.75%, 06/15/03................................ 214,500 ----------- 1,904,750 -----------
The accompanying notes are an integral part of these financial statements. 10 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995 (CONT.)
FACE VALUE AMOUNT (NOTE 3) - - ---------------------------------------------------------------------------------------------------------------- BONDS (CONT.) CONSUMER PRODUCTS 3.4% $1,000,000 Revlon Consumer Products Corp., senior sub. notes, 10.50%, 02/15/03 ............ $ 945,000 500,000 RJR Nabisco, Inc., senior notes, 9.25%, 08/15/13................................ 482,500 500,000 Sealy Corp., senior sub. notes, 9.50%, 05/01/03................................. 502,500 ---------- 1,930,000 ---------- CONTAINERS/PACKAGING 3.5% 1,000,000 Owens-Illinois, Inc., senior sub. notes, 9.75%, 08/15/04 ....................... 975,000 800,000 Stone Container Corp., senior notes, 9.875%, 02/01/01........................... 779,000 200,000 Stone Container Corp., senior notes, 11.50%, 10/01/04........................... 212,000 ---------- 1,966,000 ---------- ENERGY 2.7% 1,000,000 Gulf Canada, senior sub. notes, 9.25%, 01/15/04................................. 940,110 500,000 Pennzoil Co., senior cvt. deb., 6.50%, 01/15/03................................. 590,000 ---------- 1,530,110 ---------- FINANCIALS 1.3% 1,000,000 (c)Peregrine Investment Finance, cvt., guaranteed, 4.50%, 12/01/00................. 727,500 ---------- FOOD & BEVERAGES 5.6% 200,000 Curtice-Burns Foods, Inc., senior sub. notes, 12.25%, 02/01/05 ................. 209,750 1,268,000 (c)Del Monte Corp., sub. notes, PIK, 12.25%, 09/01/02.............................. 1,084,140 100,000 Dr Pepper Bottling Co. of Texas, senior sub. notes, 10.25%, 02/15/00 ........... 101,500 1,441,000 (e)Dr Pepper/Seven-Up Cos., Inc., senior sub. disc. notes, zero coupon to 11/01/97, (original accretion rate 11.50%), 11.50% thereafter, 11/01/02 ............... 1,244,664 500,000 PMI Acquisition Corp., senior sub. notes, 10.25%, 09/01/03...................... 488,750 ---------- 3,128,804 ---------- FOOD RETAILING 6.0% 1,000,000 Pathmark Stores, Inc., senior sub. notes, 9.625%, 05/01/03...................... 940,000 1,000,000 Penn Traffic Co., senior sub. notes, 10.375%, 10/01/04.......................... 1,025,000 500,000 Pueblo Xtra International, senior notes, 9.50%, 08/01/03........................ 442,500 1,000,000 Ralphs Grocery Co., S.F., senior sub. deb., 10.25%, 07/15/02 ................... 997,500 ---------- 3,405,000 ---------- FOREST/PAPER PRODUCTS 5.4% 500,000 Fort Howard Corp., senior sub. notes, 9.00%, 02/01/06 .......................... 438,750 500,000 Fort Howard Corp., sub. notes, 10.00%, 03/15/03................................. 481,250 500,000 REPAP Wisconsin, Inc., senior secured notes, 9.25%, 02/01/02.................... 472,500
The accompanying notes are an integral part of these financial statements. 11 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995 (CONT.)
FACE VALUE AMOUNT (NOTE 3) - - ---------------------------------------------------------------------------------------------------------------- BONDS (CONT.) FOREST/PAPER PRODUCTS (CONT.) $ 600,000 (c)S.D. Warren Co., senior sub. notes, 12.00%, 12/15/04............................ $ 639,000 1,000,000 Tjiwi Kimia International, guaranteed senior notes, 13.25%, 08/01/01 ........... 1,007,500 ---------- 3,039,000 ---------- GAMING/LEISURE 6.1% 1,000,000 Aztar Corp., senior sub. notes, 13.75%, 10/01/04 ............................... 1,082,500 500,000 Harrah's Jazz Co., first mortgage, 14.25%, 11/15/01 ............................ 538,750 276,000 Host Marriott Hospitality, senior notes, Series L, 11.00%, 05/01/07 ............ 281,175 500,000 Red Roof Inns, senior notes, 9.625%, 12/15/03................................... 480,000 1,000,000 Showboat, Inc., senior sub. notes, 13.00%, 08/01/09............................. 1,040,000 ---------- 3,422,425 ---------- HEALTH CARE 8.6% 1,000,000 Abbey Healthcare Group, Inc., senior sub. notes, 9.50%, 11/01/02................ 1,035,000 350,000 Amerisource Corp., senior deb., PIK, 11.25%, 07/15/05........................... 372,750 900,000 Healthtrust, Inc. - The Hospital Co., sub. notes, 10.75%, 05/01/02 ............. 983,250 630,000 (c)Medical Care America, Inc., cvt. sub. deb., 6.75%, 10/01/06 .................... 563,850 800,000 National Medical Enterprises, senior sub. notes, 10.125%, 03/01/05 ............. 824,000 1,000,000 OrNda Healthcorp., guaranteed senior sub. notes, 11.375%, 08/15/04 ............. 1,065,000 ---------- 4,843,850 ---------- INDUSTRIAL 3.6% 350,000 American Standard, Inc., senior deb., 11.375%, 05/15/04......................... 379,750 500,000 American Standard, Inc., senior sub. notes, 9.875%, 06/01//01................... 502,625 600,000 Inter-City Products Corp., senior secured notes, 9.75%, 03/01/00................ 547,500 259,000 Thermadyne Industries, Inc., senior notes, 10.25%, 05/01/02 .................... 247,344 359,000 Thermadyne Industries, Inc., sub. notes, 10.75%, 11/01/03 ...................... 339,254 ---------- 2,016,473 ---------- MEDIA/BROADCASTING 2.8% 500,000 American Media Operation, senior sub. notes, 11.625%, 11/15/04.................. 530,000 1,000,000 New World Television, Inc., senior notes, 11.00%, 06/30/05...................... 1,030,000 ---------- 1,560,000 ---------- METALS & MINING 1.9% 1,000,000 (e)Acme Metals, Inc., senior secured disc. notes, zero coupon to 08/01/97, (original accretion rate 13.50%), 13.50% thereafter, 08/01/04........................... 742,500 300,000 (c)Ucar Global Enterprises, Inc., senior sub. notes, 12.00%, 01/15/05 ............. 316,124 ---------- 1,058,624 ----------
The accompanying notes are an integral part of these financial statements. 12 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995 (CONT.)
FACE VALUE AMOUNT (NOTE 3) - - ---------------------------------------------------------------------------------------------------------------- BONDS (CONT.) RESTAURANTS 2.5% $1,000,000 Flagstar Corp., senior sub. deb., 11.375%, 09/15/03............................. $ 848,750 700,000 Foodmaker, Inc., S.F., senior sub. notes, 9.25%, 03/01/99....................... 582,750 ----------- 1,431,500 ----------- RETAIL .5% 240,000 (c)Danka Business Systems, Plc., cvt. sub. notes, 6.75%, 04/01/02.................. 258,300 ----------- TECHNOLOGY/INFORMATION SYSTEMS 3.2% 1,000,000 ADT Operations, guaranteed senior sub. notes, 9.25%, 08/01/03................... 978,750 500,000 Anacomp, Inc., S.F., senior sub. notes, 15.00%, 11/01/00 ....................... 482,500 400,000 Storage Technology Corp., cvt. sub. deb., 8.00%, 05/31/15....................... 340,000 ----------- 1,801,250 ----------- TEXTILES/APPAREL 3.0% 957,000 JPS Textiles Group, Inc., S.F., sub. disc. notes, 10.85%, 06/01/99 ............. 784,740 1,000,000 WestPoint Stevens, Inc., senior sub. deb., 9.375%, 12/15/05 .................... 921,250 ----------- 1,705,990 ----------- TRANSPORTATION 2.0% 1,000,000 Delta Air Lines, Inc., S.F., pass through equipment trust, 10.50%, 04/30/16 .... 1,122,964 ----------- UTILITIES .9% 500,000 Midland Funding II, S.F., senior lease obligation, Series A, 11.75%, 07/23/05 .. 495,992 ----------- WIRELESS COMMUNICATION 3.4% 2,000,000 (e)Comcast Cellular Corp., Series B, (original accretion rate 11.37%), 0.00%, 03/05/00........................................................................ 1,420,000 ----------- 500,000 Rogers Cantel Mobile Communications, Inc., S.F., guaranteed senior secured notes, 10.75%, 11/01/01 ...................................................... 516,250 ----------- 1,936,250 ----------- TOTAL BONDS (COST $46,138,013)............................................ 46,413,949 ----------- FOREIGN GOVERNMENT AGENCIES .7% 2,175,000 (f)ESCOM, E168, utility deb. (South Africa), 11.00%, 06/01/08 (Cost $509,367) ..... 425,740 ----------- TOTAL COMMON STOCKS, PARTNERSHIP UNITS, PREFERRED STOCKS, BONDS AND FOREIGN GOVERNMENT AGENCIES (COST $68,654,174)........................... 71,066,784 ----------- (g,h)RECEIVABLES FROM REPURCHASE AGREEMENTS .5% 280,538 Joint Repurchase Agreement, 6.27%, 04/03/95 (Maturity Value $282,715) (COST $282,567) Collateral: U.S. Treasury Notes, 5.00% - 9.25%, 08/31/96 - 12/31/99 ......... 282,567 ----------- TOTAL INVESTMENTS (COST $68,936,741) 126.9% ......................... 71,349,351 LIABILITIES IN EXCESS OF OTHER ASSETS, NET (26.9)%................... (15,118,872) ----------- NET ASSETS 100.0%.................................................... $56,230,479 ===========
The accompanying notes are an integral part of these financial statements. 13 FRANKLIN MULTI-INCOME TRUST ================================================================================ STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS, MARCH 31, 1995 (CONT.)
VALUE (NOTE 3) - - ---------------------------------------------------------------------------------------------------------------- At March 31, 1995, the net unrealized appreciation based on the cost of investments for income tax purposes of $68,936,741 was as follows: Aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost ........................................ $ 4,524,601 ----------- Aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value ........................................ (2,111,991) ----------- Net unrealized appreciation .................................................. $ 2,412,610 ===========
PORTFOLIO ABBREVIATIONS: L.P. - Limited Partnership PIK - Payment-in-Kind S.F. - Sinking Fund (a) Non-income producing. (b) See Note 8 regarding restricted securities. (c) See Note 9 regarding Rule 144A securities. (d) See Note 3(A) regarding securities valued by the Board of Trustees. (e) Zero coupon/step-up bonds. The current effective yield may vary. The original accretion rate will remain constant. (f) Face amount stated in foreign currencies, value in U.S. dollars. (g) Face amount for repurchase agreements is for the underlying collateral. (h) See Note 3(F) regarding Joint Repurchase Agreement. The accompanying notes are an integral part of these financial statements. 14 FRANKLIN MULTI-INCOME TRUST ================================================================================ FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995 Assets: Investments in securities, at value (identified cost $68,654,174) $71,066,784 Receivables from repurchase agreements, at value and cost 282,567 Cash 55,000 Dividend and interest receivables 1,208,653 Unamortized note issuance costs (Note 2) 130,407 ----------- Total assets 72,743,411 ----------- Liabilities: Payables: Notes (Note 2) 16,000,000 Accrued interest (Note 2) 51,200 Distributions to shareholders 374,886 Management fees 51,031 Accrued expenses and other liabilities 35,815 ----------- Total liabilities 16,512,932 ----------- Net assets, at value $56,230,479 =========== Net assets consist of: Accumulated distributions in excess of net investment income $ (44,123) Unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies 2,414,774 Net realized gain from investments and foreign currency transactions 69,048 Capital shares 58,576 Additional paid-in capital 53,732,204 ----------- Net assets, at value $56,230,479 =========== Net asset value per share ($56,230,479 / 5,857,600 shares of beneficial interest outstanding) $9.60 ===========
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1995 Investment income: Dividends $1,547,630 Interest 5,155,645 ---------- Total income $6,703,275 Expenses: Management fees (Note 5) 608,016 Shareholder servicing costs 33,321 Professional fees 30,942 Reports to shareholders 21,780 Trustees' fees and expenses 11,030 Custodian fees 9,581 Amortization of note issuance costs (Note 2) 42,950 Other 30,174 ---------- Operating expenses 787,794 Interest expense (Note 2) 1,356,347 ---------- Total expenses 2,144,141 ---------- Net investment income 4,559,134 ---------- Realized and unrealized gain (loss) from investments and foreign currency: Net realized gain from: Investments 654,191 Foreign currency transactions 4,441 Net unrealized appreciation (depreciation) on: Investments (1,114,477) Translation of assets and liabilities denominated in foreign currencies 3,922 ---------- Net realized and unrealized loss on investments and foreign currency (451,923) ---------- Net increase in net assets resulting $4,107,211 from operations ==========
The accompanying notes are an integral part of these financial statements. 15 FRANKLIN MULTI-INCOME TRUST ================================================================================ FINANCIAL STATEMENTS (CONT.) STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED MARCH 31, 1995 AND 1994
1995 1994 ---------- --------- Increase (decrease) in net assets: Operations: Net investment income $4,559,134 $4,904,935 Net realized gain from investments and foreign currency transactions 658,632 2,958,612 Net unrealized depre- ciation on investments and translation of assets and liabilities denominated in foreign currencies (1,110,555) (7,518,036) ---------- --------- Net increase in net assets resulting from operations 4,107,211 345,511 Distributions to shareholders: From undistributed net investment income (4,567,225) (4,996,967) From distributions in excess of net invest- ment income (48,564)* From net realized capital gain (1,651,843) (3,614,292) ---------- --------- Net decrease in net assets (2,160,421) (8,265,748) Net assets: Beginning of year 58,390,900 66,656,648 ---------- ---------- End of year (including accumulated distribu- tions in excess of net investment income of $44,123 at 3/31/95 and undistributed net investment income of $129,081 at 3/31/94) $56,230,479 $58,390,900 =========== ===========
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 1995 Dividends and interest received $ 6,051,014 Operating expenses paid (879,725) Interest expense paid (2,036,000) ------------ Cash provided - operations 3,135,289 ------------ Investment purchases (346,111,324) Investment sales 349,327,890 ----------- Cash provided - investments 3,216,566 ----------- Issuance of notes 16,000,000 Defeasance of notes (Note 2) (16,000,000) Distribution to shareholders (6,296,920) ----------- Cash used - financing activities (6,296,920) ----------- Net increase in cash 54,935 Cash at beginning of year 65 ----------- Cash at end of year $ 55,000 ===========
The accompanying notes are an integral part of these financial statements. 16 FRANKLIN MULTI-INCOME TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION Franklin Multi-Income Trust (the "Fund") was organized as a Massachusetts business trust on August 22, 1989 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940. The Fund has two classes of securities: senior fixed-rate notes (the "Notes") and shares of beneficial interest (the "Shares"). NOTE 2 - SENIOR FIXED-RATE NOTES At the Annual Meeting of Shareholders of the Fund held on August 16, 1994, the shareholders authorized the issuance of a new class of five-year senior notes (the "New Notes") to be used to defease and retire certain existing notes. On September 15, 1994, the Fund received proceeds of $16,000,000 from the issuance of the New Notes. The proceeds were used to defease and retire the Fund's 91/8%, $16,000,000 Senior Fixed-Rate Notes which matured on October 15, 1994. The New Notes are general unsecured obligations of the Fund and rank senior to all existing or future unsecured indebtedness of the Fund. The New Notes are senior to the Shares and, in any liquidation of the Fund, the New Notes must be paid in full before any payments would be made with respect to the Shares. The New Notes bear interest, payable semi-annually, at the rate of 7.20% per annum, to their maturity on September 15, 1999. The Notes were issued in a private placement, and are not available for resale, therefore, no market value can be obtained for the Notes. Under the Investment Company Act of 1940, the Fund is required to maintain asset coverage for the New Notes of at least 300%. In addition, pursuant to the agreement with respect to the New Notes, the Fund is required to maintain on a monthly basis a specified discounted asset value for its portfolio that equals or exceeds the Note Basic Maintenance Amount under guidelines established by Standard & Poor's Corporation. The Fund has met these requirements during the year ended March 31, 1995. The costs of $146,250 incurred by the Fund in connection with the issuance of the New Notes are deferred and amortized on a straight-line basis over the term of the New Notes. NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES a. SECURITY VALUATION: Portfolio securities listed on a securities exchange or on the NASDAQ National Market System for which market quotations are readily available are valued at the last quoted sale price of the day or, if there is no such reported sale, within the range of the most recent quoted bid and ask prices. Other securities, for which market quotations are readily available, are valued at current market values obtained from pricing services, which are based on a variety of factors, including recent trades, institutional size trading in similar types of securities (considering yield, risk and maturity) and/or developments related to specific securities. Portfolio securities which are traded both in the over-the-counter market and on a securities exchange are valued according to the broadest and most representative market as determined by the Manager. Other securities for which market quotations are not available, if any, are valued in accordance with procedures established by the Board of Trustees. Securities denominated in foreign currencies and traded on foreign exchanges or in foreign markets are valued in a similar manner, and these values are translated into U.S. dollars at current market quotations of their respective currency against U.S. dollars last quoted by a major bank or, if no such quotation is available, at the rate of exchange determined in accordance with procedures established by the Board of Trustees. The fair values of securities restricted as to resale, if any, are determined following procedures approved by the Board of Trustees - see note 8. 17 FRANKLIN MULTI-INCOME TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS (CONT.) NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONT.) b. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS: Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income and estimated expenses are accrued daily. Bond discount and premium, if any, are amortized as required by the Internal Revenue Code. c. SECURITY TRANSACTIONS: Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses on security transactions are determined on the basis of specific identification for both financial statement and income tax purposes. d. INCOME TAXES: The Fund intends to continue to qualify for the tax treatment applicable to regulated investment companies under the Internal Revenue Code, and to make the requisite distributions to its shareholders which will be sufficient to relieve it from income and excise taxes. Therefore, no income tax provision is required. e. FOREIGN CURRENCY TRANSLATION: The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. Differences between income and expense amounts recorded and collected or paid are recognized when reported by the custodian bank. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales and maturities of short-term securities, sales of foreign currencies, currency gains or losses realized between the trade date and settlement dates on securities transactions, the difference between the amounts of dividends, and interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized depreciation on investments and translation of assets and liabilities denominated in foreign currencies arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in exchange rates. f. REPURCHASE AGREEMENTS: The Fund may enter into a Joint Repurchase Agreement whereby its uninvested cash balance is deposited into a joint cash account to be used to invest in one or more repurchase agreements with government securities dealers recognized by the Federal Reserve Board and/or member banks of the Federal Reserve System. The value and face amount of the Joint Repurchase Agreement are allocated to the Fund based on its pro-rata interest. In a repurchase agreement, the Fund purchases a U.S. government security from a dealer or bank subject to an agreement to resell it at a mutually agreed upon price and date. Such a transaction is accounted for as a loan by the Fund to the seller, collateralized by the underlying security. The transaction requires the initial collateralization of the seller's obligation by U.S. government securities with market value, including accrued interest, of at least 102% of the dollar amount invested by the Fund, with the value of the underlying security marked to market daily to maintain coverage of at least 100%. The collateral is delivered to the Fund's custodian and held until resold to the dealer or bank. At March 31, 1995, the outstanding repurchase agreement held by the Fund had been entered into on that date. g. CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS: Effective September 30, 1994, the Fund adopted AICPA Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, components of net assets have been reclassified to better present financial statement amounts and distributions in accordance with Statement of Position 93-2. Accordingly, amounts as of September 30, 1994 have been restated to reflect an increase in additional paid-in capital of $120,990, and a corresponding decrease in undistributed net investment income. 18 FRANKLIN MULTI-INCOME TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS (CONT.) NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONT.) h. CHANGE IN ACCOUNTING POLICY FOR FOREIGN CURRENCY PRESENTATION: Effective March 31, 1995, the Fund adopted AICPA Statement of Position (SOP) 93-4: Foreign Currency Accounting and Financial Statement Presentation for Investment Companies. The adoption of SOP 93-4 had no effect on net assets for the year ended March 31, 1995, but affected the classification of foreign currency transactions from assets and liabilities other than investments in securities, have been reclassified for the year then ended on the statement of operations. NOTE 4 - DISTRIBUTIONS AND CAPITAL LOSS CARRYFORWARDS At March 31, 1995, for tax purposes, the Fund had accumulated net realized capital gains of $69,048. For tax purposes, the aggregate cost of securities and unrealized appreciation of the Fund are the same as for financial statement purposes at March 31, 1995. Distributions to shareholders differ for financial statement and tax purposes primarily due to timing recognition of actual distributions. NOTE 5 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Franklin Advisers, Inc., under the terms of a management agreement, provides investment advice, administrative services, office space and facilities to the Fund and receives fees computed weekly and payable monthly at an annualized rate of .85% of the Fund's average weekly net assets (total assets less liabilities other than the principal amount of the Notes). Certain officers and trustees of the Fund are also officers and/or directors of Franklin Advisers, Inc., a wholly-owned subsidiary of Franklin Resources, Inc. NOTE 6 - TRUST SHARES At March 31, 1995, there were an unlimited number of shares of $.01 par value authorized. At March 31, 1995, no shares were issued pursuant to the Fund's Dividend Reinvestment Plan; all reinvested dividends were satisfied with previously issued shares purchased in the open market pursuant to such Plan. NOTE 7 - STATEMENT OF CASH FLOWS The Fund's financial statements for the year ended March 31, 1995 include a statement of cash flows in compliance with SFAS 102. Cash provided from operations differs from net investment income because of amortization of bond discount and premiums, amortization of note issuance costs, commissions and discounts, bonds paid-in-kind, stock dividends and year-end income and expense accrual changes amounting to $1,423,845. NOTE 8 - RESTRICTED SECURITIES A restricted security is a security which has not been registered with the Securities and Exchange Commission pursuant to the Securities Act of 1933. The Fund may purchase restricted securities through a private offering, and they cannot be sold without prior registration under the Securities Act of 1933 unless such sale is pursuant to an exemption therefrom. Subsequent costs of registration of such securities are borne by the issuer. A secondary market exists for certain privately placed securities. The Fund values these restricted securities as disclosed in Note 3. At March 31, 1995, the Fund held the following restricted security representing .40% of the Fund's net assets:
Acquisition Unit Security Date Cost Value - - ---- -------- ---- ---- ----- 1 PG Partners I, L.P. ................ 3/31/93 $57,500 $194,155
19 FRANKLIN MULTI-INCOME TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS (CONT.) NOTE 9 - RULE 144A SECURITIES Rule 144A provides a non-exclusive safe harbor exemption from the registration requirements of the Securities Act of 1933 for specified resales of restricted securities to qualified institutional investors. The Fund values these securities as disclosed in Note 3. At March 31, 1995, the Fund held 144A securities with a value aggregating $5,107,252, representing 9.08% of the Fund's net assets. See the accompanying Statement of Investments in Securities and Net Assets for specific information as to such securities. NOTE 10 - CREDIT RISK AND DEFAULTED SECURITIES Although the Fund has a diversified portfolio, 62.18% of its portfolio is invested in lower rated and comparable quality unrated high yield securities. Investments in higher yield securities are accompanied by a greater degree of credit risk, and such lower quality securities tend to be more sensitive to economic conditions than higher rated securities. The risk of loss due to default by the issuer may be significantly greater for holders of high yielding securities, because such securities are generally unsecured and are often subordinated to other creditors of the issuer. NOTE 11 - FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for each share of beneficial interest outstanding, total investment return, ratios to average net assets and other supplemental data. This information has been derived from the information provided in the financial statements and market price data for the Fund's shares.
Year ended March 31, ---------------------------------------------------------------- 1995 1994 1993 1992 1991 ------ ------- ------- ------- ------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year....................... $ 9.97 $11.38 $10.15 $ 8.60 $ 8.61 ------ ------- ------- ------- ------ Net investment income................................... 0.78 0.84 1.00 0.97 1.08 Net gain (loss) on securities (realized and unrealized).............................. (0.08) (0.78) 1.196 1.586 (0.016) ------- ------- ----- ------ ------- Total from investment operations......................... 0.70 0.06 2.196 2.556 1.064 ------- ------- ------ ----- ------ Less dividends and distributions: Dividends from net investment income.................... (0.78) (0.853) (0.966) (0.985) (1.061) Distributions from net realized capital gain............ (0.282) (0.617) -- -- (0.013) Distributions in excess of net investment income........ (0.008) -- -- (0.021) -- ------- -------- ------- -------- ------- Total distributions...................................... (1.07) (1.47) (0.966) (1.006) (1.074) Net asset value, end of year............................. $ 9.60 $ 9.97 $11.38 $10.15 $ 8.60 ====== ======= ======= ======= ======== Market value per share, end of year(1)................... $ 8.75 $ 9.75 $10.625 $ 9.75 $ 8.00 ====== ====== ======= ======= ======== TOTAL INVESTMENT RETURN: Based on market value per share(2)...................... 1.46% 5.47% 19.72% 35.93% 11.25% RATIOS TO AVERAGE NET ASSETS: Expenses................................................ 3.00% 2.90% 2.99% 3.21% 3.43% Net investment income................................... 6.37% 6.00% 7.51% 7.64% 9.79% SUPPLEMENTAL DATA Net assets at end of year (000's omitted)............... $56,230 $58,391 $66,657 $59,470 $50,356 Portfolio turnover rate................................. 29.77% 28.90% 41.22% 22.19% 26.07% Total debt outstanding at end of year (000's omitted)... $16,000 $15,974 $15,926 $15,878 $15,829 Net asset coverage per $1,000 of debt (000's omitted)... $ 3,514 $ 3,655 $ 4,185 $ 3,745 $ 3,181
20 FRANKLIN MULTI-INCOME TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS (CONT.) NOTE 11 - FINANCIAL HIGHLIGHTS (CONT.) (FOR NOTES OUTSTANDING THROUGHOUT EACH YEAR)
FACE OF AVERAGE MONTHLY AVERAGE MONTHLY AVERAGE MONTHLY YEAR NOTES OUTSTANDING FACE OF NOTES NUMBER OF SHARES NOTES PER SHARE ENDED END OF YEAR OUTSTANDING OUTSTANDING DURING THE YEAR - - ----- ----------------- ---------------- ----------------- ---------------- 1991 16,000,000 16,000,000 5,857,600 2.73 1992 16,000,000 16,000,000 5,857,600 2.73 1993 16,000,000 16,000,000 5,857,600 2.73 1994 16,000,000 16,000,000 5,857,600 2.73 1995 16,000,000 16,000,000 5,857,600 2.73
- - -------------------- (1) Based on last sale on the New York Stock Exchange. (2) Total return measures the change in value of an investment. It reflects the change in market value of the capital shares and assumes reinvestment of dividends and capital gains in accordance with the dividend reinvestment plan as stated in the Prospectus. OF THE INCOME DIVIDENDS PAID BY THE FUND FOR THE FISCAL YEAR ENDED MARCH 31, 1995, 26.13% QUALIFIED FOR THE 70% DIVIDENDS RECEIVED DEDUCTIONS FOR CORPORATIONS. 21 FRANKLIN MULTI-INCOME TRUST ================================================================================ REPORT OF INDEPENDENT AUDITORS To the Shareholders and Board of Trustees of Franklin Multi-Income Trust: We have audited the accompanying statement of assets and liabilities of Franklin Multi-Income Trust, including the statement of investments in securities and net assets, as of March 31, 1995, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of March 31, 1995 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Franklin Multi-Income Trust as of March 31, 1995, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. San Francisco, California April 28, 1995 22 -----END PRIVACY-ENHANCED MESSAGE-----