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OMB APPROVAL
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OMB NUMBER: 3235-0360
EXPIRES: JUNE 30, 1997
ESTIMATED AVERAGE BURDEN
HOURS PER RESPONSE 0.05
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-17F-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
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1. Investment Company Act File Number: Date examination completed:
811-5103 August 31, 2001
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2. State identification Number:
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AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. Exact name of investment company as specified in registration statement:
Franklin Capital Corporation
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4. Address of principal executive office (number, street, city, state, zip
code):
450 Park Avenue, 10th Floor, New York, New York 10022
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INSTRUCTIONS
This Form must be completed by investment companies that have custody of
securities or similar investments.
INVESTMENT COMPANY
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance with
Rule 17f-2 under the Act and applicable state law, examines securities and
similar investments in the custody of the investment company.
ACCOUNTANT
3. Submit this Form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the
original and one copy with the Securities and Exchange Commission's
principal office in Washington, D.C., one copy with the regional office for
the region in which the investment company's principal business operations
are conducted, and one copy with the appropriate state administrator(s), if
applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
SEC 2198 (8-95)
[Logo] ERNST & YOUNG
[] ERNST & YOUNG LLP [] Phone: (212) 773-3000
787 Seventh Avenue wwe.ey.com
New York, New York 10019
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Franklin Capital Corporation
We have examined management's assertion about Franklin Capital Corporation's
(the "Company's") compliance with the requirements of subsections (b) and (c) of
Rule 17f-2 under the Investment Company Act of 1940 ("the Act") as of August 31,
2001 included in the accompanying Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940. Management is
responsible for the Company's compliance with those requirements. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Company's compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of August 31, 2001, and with respect to agreement of security
purchases and sales, for the period from May 17, 2001 (the date of our last
examination) through August 31, 2001.
o Count and inspection of all securities located in the vault of The Bank of
New York, 575 Madison Avenue, New York, NY 10022 without prior notice to
management;
o Confirmation of all securities out for transfer with brokers;
o Reconciliation of all such securities to the books and records of the
Company;
o Agreement of 24 security sales and 4 security purchases since our last
report from the books and records of the Company or the broker
confirmations.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Company's compliance
with specified requirements.
In our opinion, management's assertion that Franklin Capital Corporation was in
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 of the
Investment Company Act of 1940 as of August 31, 2001 with respect to securities
reflected in the investment account of the Company is fairly stated, in all
material respects.
This report is intended solely for the information and use of management of
Franklin Capital Corporation and the Securities and Exchange Commission and
should not be used for any other purpose.
/s/ ERNST & YOUNG LLP
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ERNST & YOUNG LLP
New York, New York
August 31, 2001
Ernst & Young LLP is a member of Ernst & Young International, Ltd.