SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240-14a-11(c) or ss.240-14a-12
Franklin Templeton Global Trust
(Name of Registrant as Specified In its Charter)
Franklin Templeton Global Trust
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to
Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
IMPORTANT INFORMATION FOR SHAREHOLDERS OF
FRANKLIN TEMPLETON GLOBAL TRUST
The attached materials include a proxy statement and your proxy card for the
upcoming shareholders' meeting on August 28, 1996. The proxy card serves as a
ballot, allowing you to express your views regarding certain aspects of the
Trust's operations. Please fill out and sign the proxy card, and return it in
the enclosed postage-prepaid envelope to the Trust and we will vote the proxy
exactly as you tell us at the shareholders' meeting. If you simply sign and
return the proxy card, we will vote as described on page [ ].
By completing and signing the proxy card, and mailing it to the Trust, you
reduce the possibility that the Trust will need to conduct additional or
follow-up solicitations of shareholders.
When you review the attached proxy statement, you will discover that the Trust
is requesting your vote on 5 specific matters, including a change in the place
of organization for the Trust, amendments to the Declaration of Trust, and
revisions to each Fund's fundamental investment restrictions.
TABLE OF CONTENTS
A Letter from the President.............................................
Notice of Special Meeting of Shareholders...............................
The Proxy Statement.....................................................
Proposal I - To approve a change of the Trust's place of organization from
a Massachusetts business trust to a Delaware business trust
Proposal II - To approve amendments to the Trust's Declaration of Trust,
to be made only if the Reorganization is not approved, which would permit
the Trustees to create additional series or classes of shares
Proposal III - To amend and change the Fund's investment policy regarding
investing in restricted securities or other illiquid securities from
fundamental to non-fundamental
Proposal IV - To remove the Fund's fundamental restriction regarding
time deposits
Proposal V - To amend the Fund's fundamental policy regarding lending
transactions
Other Information
Appendix A
Appendix B
Appendix C
A LETTER FROM THE PRESIDENT
Dear Shareholders:
My purpose in writing is to request that you consider specific matters that
relate to your ownership of shares in the Franklin Templeton Global Trust (the
"Trust"). The Board of Trustees of the Trust asks that you cast your proxies on
five specific issues as listed in the notice of a special meeting of
shareholders and described in the proxy statement.
As you review the proxy statement for the 1996 Special Meeting of Shareholders,
you will discover that it includes explanatory notes (in italics) that are
designed to provide you with a simpler and more concise explanation of certain
issues. While much of the information that must be furnished in the proxy
statement is technical and required by the Trust's regulator, we hope that the
use of these explanations will be helpful to you.
The vote of each shareholder is important to the Trust. On behalf of the
Trustees, thank you in advance for the consideration that I am confident you
will give to these issues as you read the proxy statement and execute your proxy
card.
...... Sincerely,
...... DONALD GOULD
...... President
THE NOTICE, SET FORTH BELOW, CONSTITUTES THE FORMAL AGENDA FOR THE SPECIAL
MEETING OF SHAREHOLDERS. THE NOTICE SPECIFIES WHAT ISSUES WILL BE CONSIDERED
BY SHAREHOLDERS, AND THE TIME AND LOCATION OF THE MEETING.
All shareholders are cordially invited to attend the Meeting in person. If you
do not expect to attend the Meeting, please indicate your voting instructions on
the proxy card, which appears at the end of these materials, date and sign it,
and return it in the envelope provided, which is addressed for your convenience
and needs no postage if mailed in the United States. In order to avoid the
additional expense to the Trust of further solicitation, please mail in your
executed proxy promptly.
FRANKLIN TEMPLETON GLOBAL TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 28, 1996
To the Shareholders of Franklin Templeton Global Trust:
Notice is hereby given that the Special Meeting of Shareholders (the "Meeting")
of Franklin Templeton German Government Bond Fund, Franklin Templeton Global
Currency Fund, Franklin Templeton Hard Currency Fund, and Franklin Templeton
High Income Currency Fund (all four series may collectively be referred to as
the "Funds" or the "Current Funds" or individually a "Fund" or a "Current
Fund"), series of Franklin Templeton Global Trust (the "Trust" or the
"Massachusetts Trust") will be held at the offices of the Trust, 777 Mariners
Island Blvd., San Mateo, California, 94404 at 10:00 a.m. Pacific time, on August
28, 1996, for the following purposes:
I. To approve a change of the Trust's place and form of organization
from a Massachusetts business trust to a Delaware business trust;
II. To approve amendments to the Trust's Declaration of Trust, to be
made only if the Reorganization is not approved, which would permit the
Trustees to create additional series or classes of shares
III. To amend and change the Fund's investment policy regarding
investing in restricted securities or other illiquid securities
from fundamental to non-fundamental
IV. To remove the Fund's fundamental restriction regarding time
deposits
V. To eliminate the Fund's fundamental investment restriction
requiring a Fund to invest at least 25% of its assets in securities of
companies primarily engaged in the financial services industry
To consider any other business as may properly come before the Meeting.
Proposals I, II, III affect all series of the Trust and will be voted on by
shareholders of all four series. Proposals IV and V affect only the Franklin
Templeton Global Currency Fund, Franklin Templeton Hard Currency Fund, and
Franklin Templeton High Income Currency Fund (the "Currency Funds") and will be
voted by on by shareholders of each of the Currency Funds.
As provided in the Trust's By-Laws, the Board of Trustees has fixed the close of
business on June 19, 1996, as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting. Only shareholders
of record at that time will be entitled to vote at the Meeting or any
adjournment thereof.
By Order of the Board of Trustees,
DEBORAH R. GATZEK
Secretary
San Mateo, California
Dated: July 8, 1996
- -------------------------------------------------------------------------------
PLEASE RETURN YOUR PROXY CARD PROMPTLY
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
- -------------------------------------------------------------------------------
THE PROXY STATEMENT IS DESIGNED TO FURNISH SHAREHOLDERS WITH THE INFORMATION
NECESSARY TO VOTE ON THE MATTERS LISTED IN THE NOTICE. CERTAIN OF THE
INFORMATION IN THE PROXY STATEMENT MUST BE INCLUDED BECAUSE OF REQUIREMENTS OF
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THE TRUST'S REGULATOR.
SOME OF THIS INFORMATION MAY BE TECHNICAL.
FRANKLIN TEMPLETON GLOBAL TRUST
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 28, 1996
SOLICITATION, REVOCATION AND VOTING OF PROXIES
The enclosed proxy is solicited by and on behalf of the management of Franklin
Templeton Global Trust (the "Trust" or the "Massachusetts Trust") in connection
with the special meeting of shareholders of Franklin Templeton Global Currency
Fund ("Global Currency Fund"), Franklin Templeton Hard Currency Fund ("Hard
Currency Fund"), and Franklin Templeton High Income Currency Fund ("High Income
Fund"), and Franklin Templeton German Government Bond Fund ("German Fund") to be
held August 28, 1996 (the "Meeting"). The funds may be collectively referred to
as the "Funds" or the "Current Funds" or individually a "Fund" or a "Current
Fund". The Global Currency Fund, Hard Currency Fund Fund and High Income Fund
may also be collectively referred to as the "Currency Funds." You may revoke
your previously granted proxy at any time before it is exercised by delivering a
written notice to the Trust expressly revoking your proxy, by signing and
forwarding to the Trust a later-dated proxy, or by attending the Meeting and
casting your votes in person.
The Trust will request broker-dealer firms, custodians, nominees and fiduciaries
to forward proxy material to the beneficial owners of the shares of record by
such persons. The Trust may reimburse such broker-dealer firms, custodians,
nominees and fiduciaries for their reasonable expenses incurred in connection
with such proxy solicitation. The cost of soliciting these proxies will be borne
by the Trust. In addition to solicitations by mail, some of the officers and
employees of the Trust, the Trust investment adviser, Franklin Advisers, Inc.,
and its affiliates, without any extra compensation, may conduct additional
solicitations by telephone, telegraph and personal interviews. The Trust has
engaged Shareholder Communications Corporation to solicit proxies from brokers,
banks, other institutional holders and individual shareholders for an
approximate fee, including out-of-pocket expenses, ranging between $6,056 and
$13,469. It is expected that this proxy statement will be first mailed to
shareholders on or about July 8, 1996.
Not all of the five proposals contained in this proxy statement affect all Funds
in the Trust and consequently all Trust shareholders will not be voting on
Proposals IV and V. The table below indicates which Fund's shareholders will be
voting on each of the five proposals.
PROPOSAL SUMMARY FUND SHAREHOLDERS SOLICITED
I. To approve a change of the Trust's German Fund
place of organization from a Global Currency Fund
Massachusetts business trust to a Hard Currency Fund
Delaware business trust High Income Fund
II. To approve amendments to the German Fund
Trust's Declaration of Trust, to be Global Currency Fund
made only if the Reorganization is Hard Currency Fund
not approved, which would permit High Income Fund
the Trustees to create additional
series or classes of shares
III. To amend and change the Fund's German Fund
investment policy regarding Global Currency Fund
investing in restricted securities Hard Currency Fund
or other illiquid securities from High Income Fund
fundamental to non-fundamental
IV. To remove the Fund's fundamental Global Currency Fund
restriction regarding time deposits Hard Currency Fund
High Income Fund
V. To eliminate the Fund's fundamental Global Currency Fund
investment restriction requiring a Hard Currency Fund
Fund to invest at least 25% of its High Income Fund
assets in securities of companies
primarily engaged in the financial
services industry
The proxyholders will vote all proxies received. It is the present intention
that, absent contrary instructions, the enclosed proxy will be voted: FOR the
approval of a change in the Trust's place of organization from a Massachusetts
business trust to a Delaware business trust; FOR the amendments to the Trust's
Declaration of Trust, to be made only if the Reorganization is not approved,
which would permit the trustees to create additional series or classes of
shares; FOR the approval of the amendment and change to the Fund's investment
policy regarding investing in restricted securities or other illiquid securities
from fundamental to non-fundamental; FOR the removal of the Fund's fundamental
restriction regarding time deposits; FOR the elimination of the Fund's
fundamental investment restriction requiring a Fund to invest at least 25% of
its assets in securities of companies primarily engaged in the financial
services industry; and in the discretion of the proxyholders upon such other
business not now known or determined as may legally come before the Meeting.
Under relevant state law and the Trust's charter documents, abstentions and
broker non-votes will be included for purposes of determining whether a quorum
is present at the Meeting, but will be treated as votes not cast and, therefore,
will not be counted for purposes of determining whether matters to be voted upon
at the Meeting have been approved.
VOTING OF SECURITIES
Approval of Proposals I and II in this proxy statement requires the vote of a
majority of all of the shareholders of the Trust as a group. In addition,
because approval of the Reorganization described in Proposal I will be treated
as approvals for certain purposes under the Investment Company Act of 1940, as
amended (the "1940 Act"), the Reorganization must be approved separately by a
majority of the shareholders of each series of the Trust. If less than a
majority of the shareholders of any single series votes for the Reorganization,
it will not be approved.
Only shareholders of record at the close of business on June 19, 1996, are
entitled to vote at the Meeting or any adjournment thereof. On that date, the
number of shares of beneficial interest of each series of the Trust was:
SERIES SHARES
Global Currency Fund
Hard Currency Fund
High Income Currency Fund
German Fund
From time to time, the number of shares of a Fund held in the "street name"
accounts of various securities dealers for the benefit of their clients may
exceed 5% of the total shares outstanding. To the Trust's knowledge, no person
beneficially owns more than 5% of the Fund's outstanding shares.
PROPOSAL I: TO APPROVE A CHANGE OF THE TRUST'S PLACE OF ORGANIZATION FROM A
MASSACHUSETTS BUSINESS TRUST TO A DELAWARE BUSINESS TRUST
SUMMARY OF THE PROPOSAL
THE TRUSTEES RECOMMEND THAT YOU APPROVE A CHANGE IN THE PLACE AND FORM OF
ORGANIZATION OF FRANKLIN TEMPLETON GLOBAL TRUST (THE "MASSACHUSETTS TRUST" FROM
A MASSACHUSETTS BUSINESS TRUST TO A DELAWARE BUSINESS TRUST. THE PROPOSED CHANGE
WILL BE REFERRED TO IN THIS PROXY STATEMENT AS THE "REORGANIZATION."
WHAT WILL THE REORGANIZATION MEAN FOR THE MASSACHUSETTS TRUST AND ITS
SHAREHOLDERS?
THE REORGANIZATION INVOLVES THE CONTINUATION OF THE MASSACHUSETTS TRUST IN THE
FORM OF A NEWLY CREATED DELAWARE BUSINESS TRUST ALSO NAMED "FRANKLIN TEMPLETON
GLOBAL TRUST" (REFERRED TO IN THIS PROXY STATEMENT AS THE "DELAWARE TRUST"),
WHICH WILL ISSUE FOUR SEPARATE SERIES OF SHARES (COLLECTIVELY THE "NEW FUNDS"
AND INDIVIDUALLY THE "NEW GERMAN FUND," "NEW GLOBAL CURRENCY FUND," "NEW HARD
CURRENCY FUND," AND "NEW HIGH INCOME FUND") HAVING THE SAME NAMES AND ATTRIBUTES
AS THE FOUR EXISTING SERIES OF SHARES OF THE MASSACHUSETTS TRUST (THE "CURRENT
FUNDS").
UNDER THE REORGANIZATION, THE INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS OF
EACH CURRENT FUND WILL BE THE SAME AS THOSE OF THE CORRESPONDING NEW FUND; THE
PORTFOLIO SECURITIES OF EACH CURRENT FUND WILL BE TRANSFERRED TO THE
CORRESPONDING NEW FUND; AND SHAREHOLDERS WILL OWN INTERESTS IN EACH NEW FUND
THAT ARE EQUIVALENT TO THEIR INTERESTS IN THE CURRENT FUNDS ON THE CLOSING DATE
OF THE REORGANIZATION. THE TRUSTEES, OFFICERS AND EMPLOYEES OF THE MASSACHUSETTS
TRUST WILL BECOME THE TRUSTEES, OFFICERS AND EMPLOYEES OF THE DELAWARE TRUST,
AND WILL OPERATE THE NEW FUNDS IN THE SAME MANNER AS THEY PREVIOUSLY OPERATED
THE CURRENT FUNDS. IN ESSENCE, YOUR INVESTMENT IN THE MASSACHUSETTS TRUST WILL
NOT CHANGE FOR ALL PRACTICAL PURPOSES.
WHY ARE THE TRUSTEES RECOMMENDING THAT I APPROVE THE REORGANIZATION?
THE TRUSTEES BELIEVE THAT MUTUAL FUNDS FORMED AS DELAWARE BUSINESS TRUSTS HAVE
ADVANTAGES IN ADDITION TO THOSE EXISTING UNDER MASSACHUSETTS LAW. IN SUM,
DELAWARE LAW CONTAINS FAVORABLE PROVISIONS REGARDING SHAREHOLDER AND SERIES
LIABILITY, PERMITS AN UNCOMPLICATED STRUCTURE AND ALLOWS SUBSTANTIAL FLEXIBILITY
IN A FUND'S BUSINESS OPERATIONS, AS WELL AS FAVORABLE STATE TAX TREATMENT.
DELAWARE LAW CONTAINS PROVISIONS SPECIFICALLY DESIGNED FOR MUTUAL FUNDS, WHICH
TAKE INTO ACCOUNT THEIR UNIQUE STRUCTURE AND OPERATIONS, AND ALLOWS FUNDS TO
SIMPLIFY THEIR OPERATIONS BY REDUCING ADMINISTRATIVE BURDENS TO GENERALLY
OPERATE MORE EFFICIENTLY. FOR EXAMPLE, AS WITH MASSACHUSETTS TRUSTS, FUNDS
ORGANIZED AS DELAWARE BUSINESS TRUSTS ARE NOT REQUIRED TO HOLD ANNUAL
SHAREHOLDER MEETINGS IF MEETINGS ARE NOT OTHERWISE REQUIRED BY THE FEDERAL
SECURITIES LAWS, AND SUCH FUNDS MAY CREATE NEW SERIES OR CLASSES OF SUCH SERIES
WITHOUT HAVING TO OBTAIN THE APPROVAL OF SHAREHOLDERS AT A SHAREHOLDERS MEETING.
UNLIKE MASSACHUSETTS LAW, DELAWARE LAW SPECIFICALLY ALLOWS A FUND'S GOVERNING
DOCUMENT TO PROVIDE THAT THE ASSETS OF ONE SERIES OF SHARES WILL BE PROTECTED
AGAINST CLAIMS OF CREDITORS OF A DIFFERENT SERIES OF SHARES.
WHAT IS INVOLVED IN THE PROCESS OF REORGANIZING THE MASSACHUSETTS TRUST?
THE REORGANIZATION INVOLVES A LEGAL TRANSACTION THROUGH WHICH THE MASSACHUSETTS
TRUST WILL BE REORGANIZED INTO THE DELAWARE TRUST, AND THE DELAWARE TRUST, AS
THE SUCCESSOR, WILL CONTINUE THE BUSINESS OF THE MASSACHUSETTS TRUST FOR THE
MASSACHUSETTS TRUST'S SHAREHOLDERS. AS OUTLINED IN AN AGREEMENT AND PLAN OF
REORGANIZATION APPROVED BY THE TRUSTEES, THE MASSACHUSETTS TRUST WILL TRANSFER
SUBSTANTIALLY ALL OF THE ASSETS OF EACH CURRENT FUND, SUBJECT TO ANY
LIABILITIES, TO THE DELAWARE TRUST. IN EXCHANGE, THE DELAWARE TRUST WILL ISSUE
SHARES OF THE NEW FUNDS TO THE MASSACHUSETTS TRUST, WHICH WILL BE DISTRIBUTED TO
THE SHAREHOLDERS OF THE MASSACHUSETTS TRUST SO THAT SHAREHOLDERS RECEIVE
INTERESTS IN THE NEW FUNDS THAT ARE EQUIVALENT TO THEIR INTERESTS IN THE CURRENT
FUNDS ON THE EFFECTIVE DATE OF THE REORGANIZATION. AFTER THE TRANSFERS, THE
MASSACHUSETTS TRUST WILL BE DISSOLVED AND GO OUT OF EXISTENCE.
THE DELAWARE TRUST WAS FORMED FOR THE SOLE PURPOSE OF BECOMING THE SUCCESSOR TO
THE MASSACHUSETTS TRUST AFTER THE MASSACHUSETTS TRUST'S TRUSTEES APPROVED THE
REORGANIZATION THIS PAST MAY. AT THAT TIME, THE OFFICERS AND TRUSTEES OF THE
MASSACHUSETTS TRUST WERE APPOINTED AS THE OFFICERS AND TRUSTEES OF THE DELAWARE
TRUST, AND THE TRUSTEES TOOK ALL THE ACTIONS NECESSARY SO THAT THE DELAWARE
TRUST NOW STANDS READY TO TAKE OVER THE MASSACHUSETTS TRUST'S BUSINESS. FOR
EXAMPLE, THE TRUSTEES APPROVED AN INVESTMENT MANAGEMENT AGREEMENT WITH ADVISERS
FOR EACH SERIES OF THE DELAWARE TRUST, AND A SUBADVISORY AGREEMENT WITH
TEMPLETON INVESTMENT COUNSEL, INC. ("TICI") FOR EACH OF THE NEW FUNDS, AND SUCH
AGREEMENTS ARE SUBSTANTIALLY IDENTICAL TO THE EXISTING INVESTMENT MANAGEMENT AND
SUBADVISORY AGREEMENTS FOR THE CURRENT FUNDS. IF SHAREHOLDERS APPROVE THE
REORGANIZATION, THE DELAWARE TRUST WILL ALSO ADOPT THE MASSACHUSETTS TRUST'S
REGISTRATION STATEMENT (WHICH INCLUDES THE PROSPECTUSES FOR THE CURRENT FUNDS)
AS ITS OWN, WITH AMENDMENTS TO SHOW THE NEW STRUCTURE.
IF SHAREHOLDERS APPROVE THE REORGANIZATION, THE DELAWARE TRUST WILL BECOME YOUR
MUTUAL FUND. YOU WILL OWN EXACTLY THE SAME AMOUNT OF SHARES OF EACH NEW FUND
THAT YOU OWNED IN THE CORRESPONDING CURRENT FUND AND THEY WILL BE WORTH EXACTLY
THE SAME DOLLAR AMOUNT AS YOUR SHARES OF THE CURRENT FUND ON THE CLOSING DATE OF
THE REORGANIZATION. AFTERWARDS, THE DELAWARE TRUST WILL OPERATE IN THE SAME WAY
THAT THE MASSACHUSETTS TRUST OPERATED.
WHAT IS THE EFFECT OF MY "YES" VOTE?
BY VOTING "YES" TO THE REORGANIZATION, YOU WILL BE AGREEING TO BECOME A
SHAREHOLDER OF A MUTUAL FUND ORGANIZED AS A DELAWARE BUSINESS TRUST WITH ITS
TRUSTEES, INDEPENDENT AUDITORS, INVESTMENT MANAGEMENT AGREEMENT, SUBADVISORY
AGREEMENT AND DISTRIBUTION PLAN ALREADY IN PLACE, AND ALL SUCH ARRANGEMENTS ARE
SUBSTANTIALLY IDENTICAL TO THOSE OF THE MASSACHUSETTS TRUST. THESE ARE ITEMS
WHICH ARE USUALLY SEPARATELY APPROVED BY SHAREHOLDERS EITHER PERIODICALLY OR, IF
THERE ARE CHANGES, MORE OFTEN AS REQUIRED BY THE FEDERAL SECURITIES LAWS.
THIS PROXY STATEMENT CONTAINS DETAILED INFORMATION ABOUT THE TRUSTEES UNDER
"INFORMATION CONCERNING THE BOARD OF TRUSTEES;" THE INDEPENDENT AUDITORS UNDER
"INFORMATION CONCERNING THE INDEPENDENT AUDITORS;" THE INVESTMENT MANAGER AND
MANAGEMENT AGREEMENT UNDER "INFORMATION CONCERNING ADVISERS AND THE MANAGEMENT
AGREEMENT;" THE SUBADVISOR AND SUBADVISORY AGREEMENT UNDER "INFORMATION
CONCERNING TICI AND THE SUBADVISORY AGREEMENT;" AND THE DISTRIBUTION PLAN FOR
EACH NEW FUND UNDER "INFORMATION CONCERNING THE DISTRIBUTION PLAN."
ARE THERE ANY TAX CONSEQUENCES FOR SHAREHOLDERS?
THE REORGANIZATION IS DESIGNED TO BE TAX FREE FOR FEDERAL INCOME TAX PURPOSES SO
THAT SHAREHOLDERS DO NOT EXPERIENCE A TAXABLE GAIN OR LOSS WHEN THE
REORGANIZATION IS COMPLETED.
WHAT IF I CHOOSE TO SELL MY SHARES AT ANY TIME?
ANY REQUEST TO SELL (REDEEM) YOUR SHARES RECEIVED AND PROCESSED PRIOR TO THE
REORGANIZATION WILL BE TREATED AS A REDEMPTION OF SHARES OF THE MASSACHUSETTS
TRUST. ANY REQUEST TO SELL (REDEEM) SHARES RECEIVED OR PROCESSED AFTER THE
REORGANIZATION WILL BE TREATED AS A REQUEST FOR THE REDEMPTION OF THE SAME
NUMBER OF SHARES OF THE DELAWARE TRUST.
WHAT VOTE IS REQUIRED TO APPROVE THE REORGANIZATION?
APPROVAL OF THIS PROPOSAL REQUIRES THE VOTE OF A MAJORITY OF THE MASSACHUSETTS
TRUST'S OUTSTANDING SHARES, WHICH MEANS A MAJORITY OF THE SHARES OF ALL OF THE
CURRENT FUNDS COMBINED. IN ADDITION, BECAUSE THE REORGANIZATION WILL INVOLVE A
NEW INVESTMENT MANAGEMENT AGREEMENT, SUBADVISORY AGREEMENT AND DISTRIBUTION PLAN
FOR EACH NEW FUND, A MAJORITY OF THE OUTSTANDING SHARES OF EACH CURRENT FUND
MUST SEPARATELY APPROVE THE PROPOSAL.
* * *
At its meeting on May 14, 1996, the Board of Trustees (the "Board") of the
Massachusetts Trust approved, subject to the approval of the Massachusetts
Trust's shareholders, the concept of the Reorganization, pursuant to which the
Massachusetts Trust's place and form of organization would be changed from a
Massachusetts business trust to a Delaware business trust. At the meeting, the
Board also approved an Agreement and Plan of Reorganization (the "Agreement and
Plan"), in substantially the form attached hereto as Appendix A, which provides
for the reorganization of the Massachusetts Trust into the Delaware Trust.
Advisers will be responsible for the investment of the assets of each of the New
Funds, subject to supervision by the Delaware Trust's Board of Trustees, under
an investment management agreement substantially identical to the current
agreement between the Massachusetts Trust and Advisers for the Current Funds.
For a discussion of the current and proposed agreement with Advisers, see
"Information Concerning Advisers and the Management Agreement." TICI will serve
as subadvisor for each New Fund under a subadvisory agreement with Advisers that
is substantially identical to the subadvisory agreement between Advisers and
TICI currently in place with respect to each Current Fund. Under the subadvisory
agreement, TICI will provide the day-to-day portfolio management for the New
Funds. For further discussion about the subadvisory arrangements, see
"Information Concerning TICI and the Subadvisory Agreement."
The Delaware Trust will enter into an agreement with Franklin/Templeton Investor
Services, Inc. for transfer agency and shareholder servicing which is
substantially identical to the agreement currently in effect for the
Massachusetts Trust. Franklin/Templeton Distributors, Inc. ("Distributors") will
act as the Delaware Trust's principal underwriter under a distribution agreement
between Distributors and the Delaware Trust, which is substantially identical to
the distribution agreement currently in effect for the Massachusetts Trust. The
Delaware Trust has adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act relating to each of the New Funds that is substantially identical to
the plan currently in place for each Current Fund. More detailed information
about the service provider arrangements and the distribution plan is outlined
below.
REASONS FOR THE REORGANIZATION
WHY ARE THE TRUSTEES RECOMMENDING THAT I APPROVE THE REORGANIZATION?
The Trustees unanimously recommend conversion of the Massachusetts Trust into a
Delaware business trust, because they have determined that Delaware law affords
advantages to the operations of a mutual fund in addition to those available
under Massachusetts business trust law. The Reorganization would also increase
uniformity among the mutual funds within the Franklin Group of Funds(R) and the
Templeton Group (collectively referred to as the "Franklin Templeton Group of
Funds") which currently have several Delaware business trust funds, and for
which the Delaware business trust form has been chosen for new funds over the
past five years. Increased uniformity among the funds, many of which share
common trustees, officers and service providers, is expected to reduce the costs
and resources devoted to compliance with varying state corporate laws and also
reduce administrative burdens.
The advantages of the Delaware business trust structure for mutual funds arise
from the fact that the Delaware Business Trust Act (the "Delaware Act") allows
substantial operational flexibility and favorable state tax treatment for mutual
funds. As under Massachusetts trust law, the Delaware Act permits a
uncomplicated structure for mutual funds and allows flexibility in drafting a
fund's governing documents, which can result in greater efficiencies of
operation and savings for a fund and its shareholders. The Delaware Act does, in
addition, provide more statutory guidance for funds organized as trusts as
compared to the Massachusetts trust law. This guidance results in greater ease
of compliance with relevant laws, and assists funds in drafting the appropriate
governing documents.
While both Massachusetts and Delaware law would permit a fund's trustees to
create additional series or classes of shares without obtaining shareholder
approval, the Massachusetts Trust's Declaration of Trust currently does not
allow the Trustees to create a new class of shares without seeking shareholder
approval of an amendment to its Declaration of Trust. Because the Trustees and
officers have determined that it may be in the best interests of the
Massachusetts Trust to issue additional classes of shares (as described further
below under "Capitalization and Structure"), therefore requiring a shareholder
vote, management is proposing the Reorganization into a Delaware business trust
at this time. The Delaware Trust's Declaration of Trust will allow the Trustees
to create new classes of shares.
The Delaware Act contains certain provisions specifically designed for mutual
funds. For example, unlike Massachusetts trust law, the Delaware Act provides
that the shareholders of a Delaware business trust shall not be subject to
liability for the obligations of the Delaware Trust. Also, the Delaware Act
provides that separate series of a Delaware business trust shall not be liable
for the debts of another series, provided certain conditions are met. While the
risk of shareholder or series liability is remote under Massachusetts trust law,
the Trustees have determined that the Delaware Act provides greater protection
for shareholders.
As under Massachusetts Trust law, mutual funds organized as Delaware business
trusts are not required to hold annual meetings of shareholders, which can
result in substantial savings for funds. In addition, a fund organized as a
Delaware business trust is not required to seek and obtain shareholder approval
before taking actions for which shareholder approval would not be required under
the 1940 Act, if the fund's trustees and officers believe that shareholder
approval is not necessary. This flexibility under the Delaware Act allows a
fund, for example, to issue new series or classes of its shares or to change its
name or the name of one of its series without seeking a shareholder vote. Of
course, shareholder voting is still required for certain fundamental matters and
matters affecting the rights or interests of particular shareholders.
A comparison of the Delaware Act and the Massachusetts trust law applicable to
the Massachusetts Trust and the Delaware Trust, respectively, as well as a
comparison of relevant provisions of the governing documents of the Delaware
Trust and the Massachusetts Trust, is included in Appendix B, which is entitled
"DIFFERENCES BETWEEN THE LEGAL STRUCTURE OF A DELAWARE BUSINESS TRUST AND A
MASSACHUSETTS BUSINESS TRUST."
PROCEDURES FOR REORGANIZATION
WHAT IS INVOLVED IN THE PROCESS OF REORGANIZING THE MASSACHUSETTS TRUST?
As stated in the Agreement and Plan, on the closing date of the Reorganization,
the Massachusetts Trust will transfer substantially all of the portfolio
securities of the Current Funds and any other assets, subject to any
liabilities, to the Delaware Trust. In exchange for such assets and the
assumption of such liabilities, the Delaware Trust will issue its own shares to
the Massachusetts Trust, in exactly the same dollar amount as the total of the
assets and liabilities that it received from the Massachusetts Trust. The
Massachusetts Trust will then distribute those Delaware Trust shares pro rata to
its shareholders, so that its shareholders receive exactly the same number and
dollar amount of shares of the New Funds as the amounts that they previously
held in the corresponding Current Funds.
Upon completion of the Reorganization, the Delaware Trust will continue the
Massachusetts Trust's business and each New Fund will have the same investment
objectives and policies; will hold the same portfolio of securities; and will be
operated under substantially identical overall management, investment
management, distribution and administrative arrangements as the corresponding
Current Fund. As the successor to the Massachusetts Trust's operations, the
Delaware Trust will adopt the Massachusetts Trust's existing registration
statement (which includes the Prospectuses of the Current Funds) under the
Securities Act of 1933 and the 1940 Act, with amendments to show the new
Delaware business trust structure. Completion of the Reorganization, in the
opinion of Stradley, Ronon, Stevens & Young, LLP, counsel to both trusts, will
not result in the recognition of income, gain or loss for federal income tax
purposes by the Massachusetts or Delaware Trusts or their respective
shareholders. See "FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION."
The Agreement and Plan provides that after the closing of the Reorganization,
the officers and Directors of the Massachusetts Trust will file Articles of
Dissolution on behalf of the Massachusetts Trust in the Commonwealth of
Massachusetts, after which the Massachusetts Trust's legal existence will be
terminated. As part of the Reorganization, the Delaware Trust will become
responsible for all the liabilities and obligations of the Massachusetts Trust
and the liabilities of the Massachusetts Trust or of its shareholders, trustees,
or officers shall not be affected by the Reorganization, nor shall the right of
the creditors thereof or any persons dealing with such persons or any liens upon
the property of such persons be impaired by the Reorganization. The
Reorganization is subject to a number of conditions which are customary in
reorganizations of this kind. The Agreement and Plan may be terminated and the
Reorganization abandoned at any time prior to the closing date of the
Reorganization by the Board of Trustees of the Massachusetts Trust.
At present, it appears that the most advantageous time to complete the
Reorganization is on or before ___________________, 1996. However, if the
Reorganization is approved by shareholders, the Reorganization will be completed
on such date as the Trustees deem advisable and in the best interest of
shareholders. If the Reorganization is not approved or if the Trustees determine
to terminate or abandon the Reorganization, the Massachusetts Trust will
continue to operate as a Massachusetts business trust.
EFFECT OF SHAREHOLDER APPROVAL OF THE REORGANIZATION
WHAT IS THE EFFECT OF MY "YES" VOTE?
An investment company registered under the 1940 Act is required by the 1940 Act
to: (1) submit the selection of the company's independent auditors to all
shareholders for their ratification; (2) provide for the election of the
company's directors (or trustees) by all shareholders; (3) submit the investment
management agreement and any subadvisory agreements relating to each series of
the investment company to the shareholders of the particular series for
approval; and (4) submit any plan of distribution relating to each series
adopted pursuant to Rule 12b-1 under the 1940 Act with respect to such company
to the shareholders of the particular series for approval.
The Trustees of the Massachusetts Trust believe that it is in the interest of
the Massachusetts Trust's shareholders (who will become the Delaware Trust's
shareholders if the Reorganization is approved) to avoid the considerable
expense of another shareholders' meeting to obtain the shareholder approvals
described above shortly after the closing of the Reorganization. The Trustees
also believe that it is not in the interest of the shareholders to carry out the
Reorganization if the surviving Delaware Trust would not have a board of
trustees, independent auditors, management agreement, subadvisory agreement or
distribution plan complying with the 1940 Act.
The Trustees will, therefore, consider that approval of the Reorganization by
the requisite vote of the shareholders will also constitute, for the purposes of
the 1940 Act: (1) ratification of the selection of Coopers & Lybrand L.L.P.,
previously selected as the Massachusetts Trust's independent auditors, to be the
Delaware Trust's independent auditors; (2) election of the Trustees of the
Massachusetts Trust who are in office at the time of the Reorganization as
Trustees of the Delaware Trust after the closing of the Reorganization; (3)
approval by the shareholders of each Current Fund of a new investment management
agreement between the Delaware Trust and Advisers for the particular
corresponding New Fund, which is substantially identical to the agreement
currently in place between the Massachusetts Trust and Advisers for such Current
Fund; (4) approval by the shareholders of each Current Fund of a new subadvisory
agreement between Advisers and TICI for the particular corresponding New Fund,
which is substantially identical to the subadvisory agreement currently in place
for such Current Fund; and (5) approval by the shareholders of each Current Fund
of a distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act for the
particular corresponding New Fund, which is substantially identical to the plan
currently in place for such Current Fund.
The Delaware Trust will issue a single share of each Current Fund to the
Massachusetts Trust, and, assuming approval of the Reorganization by
shareholders of the particular Current Fund, the officers of the Massachusetts
Trust, prior to the Reorganization, will cause the Massachusetts Trust, as the
sole shareholder of the Delaware Trust, to vote such shares "FOR" the matters
specified in the above paragraph. The Massachusetts Trust will then consider the
requirements of the 1940 Act referred to above to have been satisfied.
CAPITALIZATION AND STRUCTURE
The Massachusetts Trust was created on November 6, 1985 pursuant to the
Massachusetts trust law under the name International Cash Portfolios, which was
later changed to Franklin Templeton Global Trust. The Massachusetts Trust has an
unlimited number of shares of beneficial interest authorized, which may be
issued with or without a par value, and the shares have been divided by the
Board of Trustees into four separate series called Franklin Templeton Global
Currency Fund, Franklin Templeton Hard Currency Fund, Franklin Templeton High
Income Currency Fund and Franklin Templeton German Government Bond Fund, each
with a par value of $0.01 per share.
The Delaware Trust was created on May 14, 1996 pursuant to the Delaware Act. The
Delaware Trust has an unlimited number of shares of beneficial interest
authorized, all of which have a par value of $0.01 per share. Four series of
shares the Delaware Trust have been authorized by the Trustees to correspond to
the four existing series of the Massachusetts Trust, and an unlimited number of
shares have been allocated to each such series. Shares of the Delaware Trust may
be further divided into classes (or sub-series) of such series.
Shares of the respective series of the Massachusetts Trust and the Delaware
Trust have equal dividend rights, are fully paid, non-assessable, and freely
transferable and have no conversion, preemptive or subscription rights. Shares
of both the Massachusetts Trust and the Delaware Trust have equal voting and
liquidation rights and have one vote per share. The Delaware Trust will have the
same fiscal year as the Massachusetts Trust.
The Trustees and management intend to implement a multiple classes structure
under which each series of the Massachusetts Trust (or the Delaware Trust in the
event the Reorganization is approved) would designate all of the currently
outstanding shares of each series as "Class I" shares of such series, and create
a second "Class Z" class of shares of each series. The Class Z shares are
intended initially to be sold solely to a separate mutual fund within the
Franklin Templeton Group of Funds, which will only purchase shares of other
Franklin Templeton funds. If the Reorganization is approved, the Trustees of the
Delaware Trust will likely implement the multiple classes structure and create
the Class Z shares. In the event that the Reorganization is not approved,
management is recommending in Proposal II that shareholders approve an amendment
to the Massachusetts Trust's trust document, which would allow the Trustees to
implement the multiple classes structure. The proposed Class Z shares are
further described under the section of this Proxy Statement describing Proposal
II.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
ARE THERE ANY TAX CONSEQUENCES FOR SHAREHOLDERS?
It is anticipated that the transaction contemplated by the Agreement and Plan
will be tax-free for federal income tax purposes. Consummation of the
Reorganization is subject to receipt of an opinion of Messrs. Stradley, Ronon,
Stevens & Young, LLP, counsel to the Delaware Trust and the Massachusetts Trust,
that under the Internal Revenue Code of 1986, as amended, the Reorganization
will not give rise to the recognition of a gain or loss for federal income tax
purposes to the Massachusetts Trust, the Delaware Trust or shareholders of the
Massachusetts Trust or the Delaware Trust. A shareholder's adjusted basis for
tax purposes in the shares of the Delaware Trust after the closing of the
Reorganization will be the same as their adjusted basis for tax purposes in the
shares of the Massachusetts Trust immediately before the closing of the
Reorganization. Each shareholder should consult their own tax adviser with
respect to the details of these tax consequences and with respect to state and
local tax consequences of the proposed transaction.
TEMPORARY WAIVER OF CERTAIN INVESTMENT RESTRICTIONS
Certain of the Massachusetts Trust's present investment restrictions would
preclude the Massachusetts Trust from carrying out the Reorganization.
Specifically, such investment restrictions prohibit the Massachusetts Trust from
acquiring control of any company or purchasing more than a certain percentage of
ownership of another investment company or other company. Shareholder approval
of the Reorganization would be deemed to be a waiver of these restrictions for
the specific purpose of engaging in the Reorganization.
INFORMATION CONCERNING THE BOARD OF TRUSTEES OF THE DELAWARE TRUST
IF YOU VOTE "YES" TO APPROVE THE REORGANIZATION, YOUR VOTE WILL ALSO HAVE
THE EFFECT OF ELECTING THE CURRENT TRUSTEES OF THE MASSACHUSETTS TRUST AS
THE TRUSTEES OF THE DELAWARE TRUST.
THE ROLE OF THE TRUSTEES IS TO PROVIDE GENERAL OVERSIGHT OF THE DELAWARE
TRUST'S BUSINESS, AND TO ENSURE THAT THE DELAWARE TRUST IS OPERATED FOR
THE BENEFIT OF SHAREHOLDERS. THE TRUSTEES MEET QUARTERLY AND REVIEW THE
INVESTMENT PERFORMANCE OF EACH SERIES OF THE DELAWARE TRUST. THE TRUSTEES
ALSO OVERSEE THE SERVICES FURNISHED TO THE DELAWARE TRUST BY ITS
INVESTMENT MANAGER, SUBADVISOR AND VARIOUS OTHER SERVICE PROVIDERS.
If the Reorganization is approved by a majority of the shareholders of the
Massachusetts Trust, the Massachusetts Trust will vote the share of beneficial
interest it holds in each of the New Funds for the election of the persons set
forth below as Trustees of the Delaware Trust, who are each currently members of
the Board of Trustees of the Massachusetts Trust. Each Trustee shall serve as
such until the next election or until his term is terminated as provided in the
Delaware Trust's governing instrument. The Trustees and their principal
occupations for the past five years are listed below. Trustees who are
considered to be "interested persons" of the Delaware Trust, as defined in the
1940 Act, are indicated by an asterisk.
The principal executive officers of the Delaware Trust and their principal
occupations for the past five years are also listed below. All of the principal
executive officers of the Delaware Trust currently serve as principal executive
officers of the Massachusetts Trust.
POSITION(S)
TO BE HELD
WITH THE PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS DELAWARE TRUST DURING PAST FIVE YEARS
Frank H. Abbott, III Trustee President and Director, Abbott
Age 75 Corporation (an investment company);
1045 Sansome St. and director, trustee or managing
San Francisco, CA 94111 general partner, as the case may be,
of 31 of the investment companies in
the Franklin Templeton Group of
Funds. Trustee of the Massachusetts
Trust since 1993.
Harris J. Ashton Trustee President, Chief Executive Officer
Age 63 and Chairman of the Board, General
General Host Corporation Host Corporation (nursery and craft
Metro Center, 1 Station centers); Director, RBC Holdings,
Place Inc. (a bank holding company) and
Stamford, CT 06904-2045 Bar-S Foods; and director, trustee
or managing general partner, as the
case may be, of 56 of the investment
companies in the Franklin Templeton
Group of Funds. Trustee of the
Massachusetts Trust since 1993.
David K. Eiteman Trustee Since 1959, Professor of Finance in
Age 66 the John E. Anderson Graduate School
HC2, Box 8076 of Management, University of
Frazier Park, CA 93225 California, Los Angeles. From 1988
to June 1993, a Trustee of the
Huntington Investment Trust. Trustee
of the Massachusetts Trust or its
predecessors since 1985.
S. Joseph Fortunato Trustee Member of the law firm of Pitney,
Age 63 Hardin, Kipp & Szuch; Director of
Park Avenue at Morris General Host Corporation; director,
County trustee or managing general partner,
P.O. Box 1945 as the case may be, of 58 of the
Morristown, NJ investment companies in the Franklin
07962-1945 Templeton Group of Funds. Trustee of
the Massachusetts Trust since 1993.
David W. Garbellano Trustee Private Investor; Assistant
Age 81 Secretary/ Treasurer and Director,
111 New Montgomery St., Berkeley Science Corporation (a
#402 venture capital company); and
San Francisco, CA 94105 director, trustee or managing
general partner, as the case may be,
of 30 of the investment companies in
the Franklin Templeton Group of
Funds. Trustee of the Massachusetts
Trust since 1993.
*Donald P. Gould President and Managing Director, Templeton
Age 38 Trustee Worldwide, Inc.; from November 1993
777 Mariners Island to present, Executive Vice
Boulevard President, Franklin Institutional
San Mateo, CA 94404 Services Corporation; from January
1995 to present, Senior Vice
President of Templeton Franklin
Investment Services, Inc.; from
February 1992 to November 1993,
independent consultant to the Trust;
and from February 1992 to June 1993,
independent consultant to Huntington
Investment Trust. From December 1985
to February 1992, Chairman of the
Board of the Trust. From 1988 to
June 1993, President and Trustee,
from 1988 to February 1992, Chairman
of the Board, Huntington Investment
Trust. From October 1985 to February
1992, President and Director of
Huntington Advisers, Inc., a mutual
fund investment adviser, and
President of Huntington Investment,
Inc., a mutual fund underwriter.
President and Trustee of the
Massachusetts Trust or its
predecessors since 1985.
Gerald R. Healy Trustee Since April 1994, a private
Age 55 consultant. From July 1993 to March
5917 Cleveland Street 1994, Director of Corporate
Morton Grove, IL 60053 Management Resources of Alliance
Imaging, Inc. From 1989, Executive
Vice President of Capital Health
Services Corp. Prior to that time, a
private investor. From 1988 to June
1993, a Trustee of the Huntington
Investment Trust. Trustee of the
Massachusetts Trust or its
predecessors since 1985.
*Charles B. Johnson Chairman of the President and Director, Franklin
Age 63 Board and Trustee Resources, Inc.; Chairman of the
777 Mariners Island Blvd. Board and Director, Advisers, Inc.
San Mateo, CA 94404 and Franklin Templeton Distributors,
Inc.; Director, Franklin/Templeton
Investor Services, Inc. and General
Host Corporation; and officer and/or
director, trustee or managing
general partner, as the case may be,
of most other subsidiaries of
Franklin Resources, Inc. and of 57
of the investment companies in the
Franklin Templeton Group of Funds.
Chairman of the Board and Director
of the Massachusetts Trust since
1976. Trustee and Chairman of the
Board of the Massachusetts Trust
since 1993.
*Rupert H. Johnson, Jr. Vice President Executive Vice President and
Age 55 and Trustee Director, Franklin Resources, Inc.
777 Mariners Island and Franklin Templeton Distributors,
Boulevard Inc.; President and Director,
San Mateo, CA 94404 Advisers, Inc.; Director,
Franklin/Templeton Investor
Services, Inc.; and officer and/or
director, trustee or managing
general partner, as the case may be,
of most other subsidiaries of
Franklin Resources, Inc. and of 61
of the investment companies in the
Franklin Templeton Group of Funds.
Vice President and Trustee of the
Massachusetts Trust since 1993.
David P. Kraus Trustee Since 1981, an attorney with various
Age 38 private law firms in Los Angeles.
Bet Tzedek Legal Services Also, since October 1995, an
145 South Fairfax Avenue attorney with Bet Tzedek Legal
Suite 200 Services. Trustee of the
Los Angeles, CA Massachusetts Trust or its
90036-2166 predecessors since 1985.
Frank W. T. LaHaye Trustee General Partner, Peregrine
Age 67 Associates and Miller & LaHaye,
20833 Stevens Creek which are General Partners of
Boulevard Peregrine Ventures and Peregrine
Suite 102 Ventures II (venture capital firms);
Cupertino, CA 95014 Chairman of the Board and Director,
Quarterdeck Office Systems, Inc.;
Director, FischerImaging
Corporation; and director or
trustee, as the case may be, of 26
of the investment companies in the
Franklin Templeton Group of Funds.
Trustee of the Massachusetts Trust
since 1993.
Gordon S. Macklin Trustee Chairman, White River Corporation
Age 68 (information services); Director,
8212 Burning Tree Road Fund American Enterprises Holdings,
Bethesda, MD 20817 Inc., MCI Communications
Corporation, MedImmune, Inc.
(biotechnology), InfoVest
Corporation (information services),
Fusion Systems Corporation
(industrial technology) and Source
One Mortgage Corporation
(information services); and
director, trustee or managing
general partner, as the case may be,
of 53 of the investment companies in
the Franklin Templeton Group of
Funds; and formerly held the
following positions: Chairman,
Hambrecht and Quist Group; Director,
H & Q Healthcare Investors; and
President, National Association of
Securities Dealers, Inc. Trustee of
the Massachusetts Trust since 1993.
The executive officers of the Delaware Trust other than those listed above are:
POSITION(S) TO PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS BE HELD WITH DURING PAST FIVE YEARS
DELAWARE TRUST
Harmon E. Burns Vice President Executive Vice President, Secretary
Age 51 and Director, Franklin Resources,
777 Mariners Island Blvd. Inc.; Executive Vice President and
San Mateo, CA 94404 Director, Franklin Templeton
Distributors, Inc.; Executive Vice
President, Advisers, Inc.; Director,
Franklin/Templeton Investor
Services, Inc.; officer and/or
director, as the case may be, of
other subsidiaries of Franklin
Resources, Inc.; and officer and/or
director or trustee of 61 of the
investment companies of the Franklin
Templeton Group of Funds. Vice
President of the Massachusetts Trust
since 1993.
Kenneth V. Domingues Vice Senior Vice President, Franklin
Age 63 President- Resources, Inc., Advisers, Inc., and
777 Mariners Island Blvd. Financial Franklin Templeton Distributors,
San Mateo, CA 94404 Reporting Inc.; officer and/or director, as
and the case may be, of other
Accounting subsidiaries of Franklin Resources,
Standards Inc., and officer and/or managing
general partner, as the case may be,
of 37 of the investment companies in
the Franklin Group of Funds. Vice
President-Financial Reporting and
Accounting Standards of the
Massachusetts Trust since 1995.
Martin L. Flanagan Vice President Senior Vice President, Chief
Age 36 and Chief Financial Officer and Treasurer,
777 Mariners Island Blvd. Financial Franklin Resources, Inc.; Executive
San Mateo, CA 94404 Officer Vice President, Templeton Worldwide,
Inc.; Senior Vice President and
Treasurer, Advisers, Inc. and
Franklin Templeton Distributors,
Inc.; Senior Vice President,
Franklin/Templeton Investor
Services, Inc.; officer, director
and/or trustee of most other
subsidiaries of Franklin Resources,
Inc.; and officer, director and/or
trustee of 61 of the investment
companies of the Franklin Templeton
Group of Funds. Vice President and
Chief Financial Officer of the
Massachusetts Trust since 1995.
Deborah R. Gatzek Vice President Senior Vice President and General
Age 47 and Secretary Counsel, Franklin Resources, Inc.
777 Mariners Island Blvd. and Franklin Templeton Distributors,
San Mateo, CA 94404 Inc.; Vice President, Franklin
Advisers, Inc.; and officer of 61 of
the investment companies in the
Franklin Templeton Group of Funds.
Vice President and Secretary of the
Massachusetts Trust since 1993.
Charles E. Johnson Vice President Senior Vice President and Director,
Age 40 Franklin Resources, Inc.; Senior
777 Mariners Island Vice President, Franklin Templeton
Boulevard Distributors, Inc.; President and
San Mateo, CA 94404 Director, Templeton Worldwide, Inc.
and Franklin Institutional Services
Corporation; officer and/or
director, as the case may be, of
some of the subsidiaries of Franklin
Resources, Inc. and officer and/or
director or trustee, as the case may
be, of 40 of the investment
companies in the Franklin Templeton
Group of Funds. Vice President of
the Massachusetts Trust since 1993.
Diomedes Loo-Tam Treasurer and Employee of Advisers, Inc.; and
Age 57 Principal officer of 37 of the investment
777 Mariners Island Blvd. Accounting companies in the Franklin Group of
San Mateo, CA 94404 Officer Funds. Treasurer and Principal
Accounting Officer of the
Massachusetts Trust since 1995.
Edward V. McVey Vice President Senior Vice President/National Sales
Age 58 Manager, Franklin Templeton
777 Mariners Island Blvd. Distributors, Inc.; and officer of
San Mateo, CA 94404 32 of the investment companies in
the Franklin Group of Funds. Vice
President of the Massachusetts Trust
since 1993.
Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the father and
uncle, respectively, of Charles E. Johnson.
THE NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES OF THE DELAWARE TRUST WILL BE
PAID FEES FROM THE DELAWARE TRUST FOR SERVING ON THE BOARD AS THEY ARE PAID
CURRENTLY FOR SERVING ON THE BOARD OF THE MASSACHUSETTS TRUST. CERTAIN OF THE
NOMINEES FOR ELECTION TO THE BOARD OF TRUSTEES ALSO SERVE AS DIRECTORS OR
TRUSTEES OF OTHER INVESTMENT COMPANIES IN THE FRANKLIN TEMPLETON GROUP OF FUNDS.
Trustees of the Massachusetts Trust who are not affiliated with Advisers are
currently paid fees of $800 per year plus $800 per meeting attended. The
nonaffiliated Trustees of the Delaware Trust will be compensated in the same
manner. Certain of the nonaffiliated Trustees also serve as directors, trustees
or managing general partners of other investment companies in the Franklin
Templeton Group of Funds from which they may receive fees for their services.
The following table indicates the total fees paid to nonaffiliated trustees by
the Massachusetts Trust and by other funds in the Franklin Templeton Group of
Funds.
TOTAL
COMPENSATION
AGGREGATE NUMBER OF BOARDS IN FROM FRANKLIN
COMPENSATION THE FRANKLIN TEMPLETON GROUP
FROM TEMPLETON GROUP OF OF FUNDS,
MASSACHUSETTS FUNDS ON WHICH EACH INCLUDING THE
TRUST* SERVES** MASSACHUSETTS
TRUST***
NAME
- -------------------------------------------------------------------------------
Frank H. Abbott, III $5,000 31 $162,420
Harris J. Ashton 5,000 56 327,925
David K. Eiteman 3,400 1 2,400
S. Joseph Fortunato 5000 58 344,745
David Garbellano 5,000 30 146,100
Gerald R. Healy 4,200 1 4,000
David P. Kraus 5,000 1 4,800
Frank W.T. LaHaye 5,000 26 143,200
Gordon S. Macklin 5,000 53 321,525
*For the fiscal year ended October 31, 1995
**The number of boards is based on the number of registered investment companies
in the Franklin Templeton Group of Funds. This number does not include the total
number of series or funds within each investment company for which the Board
members are responsible. The Franklin Templeton Group of Funds currently
includes 61 registered investment companies, with approximately 165 U.S. based
funds or series.
***For the calendar year ended December 31, 1995
The nonaffiliated Trustees of the Massachusetts Trust are also reimbursed for
expenses incurred in connection with attending Board meetings, paid pro rata by
each fund in the Franklin Templeton Group of Funds for which they serve as a
director or trustee. The nonaffiliated Trustees of the Delaware Trust will also
be reimbursed in the same manner for expenses incurred in connection with
attending Board meetings.
During the fiscal year ended October 31, 1995, the Massachusetts Trust held five
meetings of the Board of Trustees. All of the Trustees attended at least 75% of
the meetings, except Mr. Eiteman who attended 60% of such meetings.
The Board of Trustees of the Delaware Trust and the Massachusetts Trust each
have an audit committee. The audit committee of each Board is composed of
Messrs. Frank H. Abbott, III, David Garbellano, and Frank W.T. LaHaye. The
function of the audit committee is to make recommendations to the full Boards
with respect to the selection of auditors. Neither the Delaware Trust or the
Massachusetts Trust have a standing nominating or compensation committee of
their respective Boards of Trustees. The Massachusetts Trust held one audit
committee meeting during its fiscal year ended October 31, 1995.
INFORMATION CONCERNING THE INDEPENDENT AUDITORS OF THE DELAWARE TRUST
IF YOU VOTE TO APPROVE THE REORGANIZATION, YOUR VOTE WILL ALSO HAVE THE
SAME EFFECT AS A VOTE RATIFYING THE SELECTION OF COOPERS & LYBRAND L.L.P.
("COOPERS") AS THE INDEPENDENT AUDITORS FOR THE DELAWARE TRUST FOR THE
CURRENT FISCAL YEAR. COOPERS IS ONE OF THE COUNTRY'S PREEMINENT ACCOUNTING
FIRMS, AND PRESENTLY SERVES AS THE INDEPENDENT AUDITORS FOR THE
MASSACHUSETTS TRUST.
At a meeting held on May 14, 1996, the Board of Trustees of the Delaware Trust
selected Coopers to serve as the independent auditors to audit the books and
accounts of the Delaware Trust for the fiscal year ending October 31, 1996. If
the Reorganization is approved by a majority of shareholders of the
Massachusetts Trust, the Massachusetts Trust will vote the share of beneficial
interest it holds in each of the New Funds for ratification of the selection of
Coopers as the independent auditors of the Delaware Trust. A representative of
Coopers is not expected to be present at the meeting.
INFORMATION CONCERNING ADVISERS AND THE MANAGEMENT AGREEMENT
IF THE REORGANIZATION IS APPROVED BY A MAJORITY OF THE MASSACHUSETTS
TRUST'S SHAREHOLDERS, INCLUDING A MAJORITY OF THE SHAREHOLDERS OF EACH
CURRENT FUND INDIVIDUALLY, THE APPROVAL WILL ALSO HAVE THE SAME EFFECT AS
A SHAREHOLDER VOTE APPROVING THE NEW INVESTMENT MANAGEMENT AGREEMENT
BETWEEN THE DELAWARE TRUST AND ADVISERS FOR EACH OF THE NEW FUNDS, WHICH
IS SUBSTANTIALLY IDENTICAL TO THE AGREEMENT CURRENTLY IN PLACE FOR EACH OF
THE CURRENT FUNDS. THE INVESTMENT MANAGEMENT AGREEMENT ESTABLISHES THE
RELATIONSHIP BETWEEN A MUTUAL FUND AND ITS INVESTMENT MANAGER, AND
OUTLINES THE RESPONSIBILITIES OF THE MANAGER AND THE COMPENSATION TO BE
PAID BY THE FUND FOR THE MANAGEMENT OF ITS ASSETS.
INCLUDED BELOW IS DETAILED INFORMATION ABOUT ADVISERS, AS WELL AS THE
CURRENT AND PROPOSED INVESTMENT MANAGEMENT AGREEMENTS.
If the Reorganization is approved, the Massachusetts Trust will vote the share
of beneficial interest it holds in each of the Current Fund for approval of the
management agreement between the Delaware Trust and Advisers for each of the New
Funds.
ADVISERS
Advisers, whose principal address is 777 Mariners Island Boulevard, San Mateo,
California 94404, serves as the investment manager of the Delaware Trust and is
proposed to serve as manager of each series of the Massachusetts Trust. Advisers
is a registered investment adviser and a wholly-owned subsidiary of Franklin
Resources, Inc. ("Resources"), whose principal address is 777 Mariners Island
Boulevard, San Mateo, California 94404. Through its subsidiaries, Resources is
engaged in various aspects of the financial services industry.
Advisers also provides advisory and management services to 36 investment
companies (121 separate series) in the Franklin Templeton Group of Funds which
collectively have aggregate assets over $80 billion. Charles B. Johnson is
Chairman of the Board of Advisers and Rupert H. Johnson, Jr. is President and
Director of Advisers and each beneficially own approximately 20% and 16%,
respectively, of Resources' outstanding voting securities, whose shares are
traded on the New York Stock Exchange. See "Information Concerning the Board of
Trustees of the Delaware Trust" which also sets forth the officers of the
Delaware Trust and the Massachusetts Trust who are officers of Advisers. The
address of each officer and director of Advisers is the office of Advisers
stated above.
Certain officers and directors of the Delaware Trust and the Massachusetts
Trust, respectively, are shareholders of Resources and may be deemed to receive
indirect remuneration by virtue of their participation in management fees,
underwriting commissions, or 12b-1 distribution fees received or to be received
by Advisers, TICI or Distributors, the Massachusetts Trust's principal
underwriter. Distributors' principal address is 777 Mariners Island Boulevard,
San Mateo, California 94404.
MANAGEMENT AGREEMENT WITH THE DELAWARE TRUST
Under the management agreement with the Delaware Trust for each of the New
Funds, which is substantially identical to the management agreement currently in
effect for each of the Current Funds, Advisers will provide investment research
and portfolio management services, including the selection of securities for the
New Funds to purchase, hold or sell and the selection of, brokers through whom
the New Funds' portfolio transactions are executed. Advisers' activities will be
subject to the review and supervision of the Delaware Trust's Board of Trustees
to whom Advisers will render periodic reports of the New Funds' investment
activities. Advisers, at its own expense, will furnish the Delaware Trust with
office space and office furnishings, facilities and equipment reasonably
required for managing the business affairs of the Delaware Trust; will maintain
all internal bookkeeping, clerical, secretarial and executive personnel and
services; and will provide certain telephone and other mechanical services.
Advisers is covered by fidelity insurance on its officers, directors and
employees for the protection of the Delaware Trust. The Delaware Trust will bear
all of its expenses not assumed by Advisers.
Pursuant to the management agreement, the Delaware Trust will be obligated to
pay Advisers a fee computed as of the close of business on the first business
day of each month equal to an annual rate of 0.55% of the value of the average
daily net assets of the New German Fund and 0.65% of the value of average daily
net assets of the New Global Currency Fund, New Hard Currency Fund, and New High
Income Fund. The management agreement specifies that the management fee will be
reduced or eliminated to the extent necessary to comply with the most stringent
limits on the expenses which may be borne by the Delaware Trust as prescribed by
any state in which the Delaware Trust's shares are registered. The most
stringent current limit requires Advisers to reduce or eliminate its fee to the
extent that aggregate operating expenses of the Delaware Trust (excluding
interest, taxes, brokerage commissions and extraordinary expenses such as
litigation costs) would otherwise exceed in any fiscal year 2.5% of the first
$30 million of average net assets of the Delaware Trust, 2.0% of the next $70
million of average net assets of the Delaware Trust and 1.5% of average net
assets of the Delaware Trust in excess of $100 million. Expense reductions with
respect to the Massachusetts Trust have not been necessary based on state
requirements.
Advisers intends to continue its agreement to voluntarily waive a portion of its
management fees and to make certain payments to reduce operating expenses that
would otherwise be payable by the New Funds, in the same manner (described
below) that it presently waives fees and reimburses expenses of the Current
Funds. However, this arrangement by Advisers, as in the case of the German Fund,
may be terminated by Advisers at any time and in the case of the Global Currency
Fund, Hard Currency Fund, and High Income Fund, at any time after October 31,
1996.
The management agreement for the Delaware Trust was approved by the Board of
Trustees at a meeting held on March 21, 1996. Once the agreement is formalized
in connection with the Reorganization, it will be in effect for an initial
period of two years and thereafter, it may continue in effect for successive
annual periods with respect to any series of the Delaware Trust, providing such
continuance is specifically approved at least annually by a vote of the Delaware
Trust's Board of Trustees or by a vote of the holders of a majority of the
particular series' outstanding voting securities, and in either event by a
majority vote of the Delaware Trust's Board of Trustees who are not parties to
the management agreement or interested persons of any such party (other than as
Trustees of the Delaware Trust), cast in person at a meeting called for that
purpose. The management agreement may be terminated without penalty at any time
with respect to any series of the Delaware Trust, by the (1) vote of the Board
of Trustees of the Delaware Trust or vote of the holders of a majority of the
outstanding voting securities of the Delaware Trust, on 60 days' written notice
to Advisers or (2) Advisers, on 60 days' written notice to the Delaware Trust,
and will automatically terminate in the event of its assignment as defined in
the 1940 Act.
MANAGEMENT AGREEMENT WITH THE MASSACHUSETTS TRUST
The management agreement between the Massachusetts Trust and Advisers relating
to each series of the Massachusetts Trust, dated November 12, 1993, was most
recently renewed by the Board of Trustees of the Massachusetts Trust on February
13, 1996, and separately by a majority of the shareholders of each series of the
Massachusetts Trust at a special shareholders meeting held on October 25, 1993,
and is in effect until February 28, 1997. The terms of the Massachusetts Trust's
management agreement relating to the various series are the same in all material
respects as the Delaware Trust's management agreement with Advisers, except for
the effective and termination dates. Advisers has agreed to waive all or a
portion of its management fees and/or to reimburse expenses to the Current Funds
in order to reduce expenses so that each Current Funds' aggregate annual
operating expenses do not exceed 1.25% of each Current Funds' average net assets
for the current fiscal year.
As a result, during the previous fiscal year ended October 31, 1995, management
fees paid by the Global Currency and Hard Currency Funds each totaled the
contractual amount of 0.65%, or $379,524 and $634,188, respectively. During the
same fiscal year, the High Income Fund paid 0.45% or $57,812 (after waiver)
instead of the contractual amount of 0.65% or $82,819. After October 31, 1996,
Adviser may terminate this arrangement at any time. During the previous fiscal
year ended October 31, 1995, the Current German Fund paid management fees of
0.51% of the average monthly net assets of the Current German Fund, or $97,957,
which represented a waiver of $6,337. Absent any waivers or reimbursement,
management fees and total operating expenses would have represented 0.55% and
1.29%, respectively. Management fees paid, absent any waiver, would have totaled
$104,096. After October 31, 1996, Advisers may terminate this arrangement at any
time.
INFORMATION CONCERNING TICI AND THE SUBADVISORY AGREEMENT
IF THE REORGANIZATION IS APPROVED BY A MAJORITY OF THE MASSACHUSETTS TRUST'S
SHAREHOLDERS, INCLUDING A MAJORITY OF THE SHAREHOLDERS OF EACH CURRENT FUND
INDIVIDUALLY, THE APPROVAL WILL ALSO HAVE THE SAME EFFECT AS A VOTE BY THE
SHAREHOLDERS OF EACH NEW FUND APPROVING THE SUBADVISORY AGREEMENT BETWEEN
ADVISERS AND TICI WITH RESPECT TO THE MANAGEMENT OF EACH OF THE NEW FUNDS, WHICH
IS SUBSTANTIALLY IDENTICAL TO THE SUBADVISORY AGREEMENT CURRENTLY IN PLACE FOR
EACH OF THE CURRENT FUNDS. THROUGH THE SUBADVISORY AGREEMENT, ADVISERS DELEGATES
SOME OF ITS INVESTMENT MANAGEMENT RESPONSIBILITIES TO TICI AS SUBADVISOR, AND
PAYS TICI A PORTION OF THE MANAGEMENT FEE. INCLUDED BELOW IS MORE DETAILED
INFORMATION ABOUT TICI, AS WELL AS THE CURRENT AND PROPOSED SUBADVISORY
AGREEMENTS.
If the Reorganization is approved, the Massachusetts Trust will vote the share
of beneficial interest it holds of each New Fund for approval of the subadvisory
agreement between Advisers and TICI relating to each New Fund.
INFORMATION ABOUT TICI
TICI, which is an affiliate of Templeton Worldwide, Inc. and an indirect
wholly-owned subsidiary of Resources, is proposed to serve as the subadvisor for
each of the New Funds, under a subadvisory agreement with Advisers which is
substantially identical to the subadvisory agreement currently in place for the
Current Funds. TICI is a Florida corporation whose principal address is 500 E.
Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394-3091. TICI currently
acts as either investment manager or subadvisor for [___________] investment
companies [(________ separate series)] within the Franklin Templeton Group of
Funds, which collectively have aggregate assets of over [$__________] billion.
SUBADVISORY AGREEMENT
The proposed subadvisory agreement between Advisers and TICI for the New Funds,
which is substantially identical to the subadvisory agreement currently in
effect for the Current Funds, is expected to be approved by the Board of
Trustees of the Delaware Trust at its meeting in July, 1996. Under the proposed
subadvisory agreement, TICI will provide a continuous investment program for
each of the New Funds, including allocation of each New Fund's assets among the
various securities markets of the world and investment research and advice with
respect to the securities and investments and cash equivalents in the New Fund.
TICI's subadvisory activities are, at all times, subject to the overall
policies, control, direction and review of the Board and to the instructions and
supervision of Advisers, as investment manager.
Under the proposed subadvisory agreement with Advisers, TICI shall receive a fee
from Advisers equal to an annual rate of 0.25% of the value of the average daily
net assets of each of the New Funds. This fee, as under the current subadvisory
agreement for the Current Funds, is paid by Advisers from the management fees it
receives, and does not represent additional management fees.
The current subadvisory agreement between Advisers and TICI for the Current
Funds dated November 12, 1993 was most recently approved by the Board of
Trustees of the Massachusetts Trust on February 13, 1996, and is in effect until
February 28, 1997. The terms of the current and proposed subadvisory agreements
are the same in all material respects, except for the effective and termination
dates. Advisers paid subadvisory fees to TICI for the fiscal year ended October
31, 1995 with respect to the Global Currency Fund, the High Income Currency
Fund, the Hard Currency Fund, and the German Fund of $ , $ $ and $ ,
respectively.
INFORMATION CONCERNING THE DISTRIBUTION PLAN
IF THE REORGANIZATION IS APPROVED BY A MAJORITY OF THE MASSACHUSETTS
TRUST'S SHAREHOLDERS, INCLUDING A MAJORITY OF THE SHAREHOLDERS OF EACH
CURRENT FUND INDIVIDUALLY, THE APPROVAL WILL ALSO HAVE THE SAME EFFECT AS
A VOTE BY THE SHAREHOLDERS OF EACH NEW FUND APPROVING THE DISTRIBUTION
PLAN PURSUANT TO RULE 12B-1 UNDER THE 1940 ACT (THE "PLAN") THAT WAS
ADOPTED BY THE DELAWARE TRUST FOR EACH OF THE NEW FUNDS, AND WHICH IS
SUBSTANTIALLY IDENTICAL TO THE DISTRIBUTION PLAN CURRENTLY IN PLACE FOR
THE MASSACHUSETTS TRUST.
THE PLAN AUTHORIZES THE DELAWARE TRUST TO REIMBURSE DISTRIBUTORS OR OTHERS
FOR EXPENSES RELATING TO THE DISTRIBUTION OF THE SHARES OF EACH NEW FUND
IN AMOUNTS OF UP TO A MAXIMUM OF 0.25% OF SUCH FUND'S AVERAGE DAILY NET
ASSETS PER YEAR. INCLUDED BELOW IS DETAILED INFORMATION ABOUT THE PLAN
(AND THE EXISTING DISTRIBUTION PLAN CURRENTLY IN PLACE FOR THE
MASSACHUSETTS TRUST), AS WELL AS INFORMATION ABOUT DISTRIBUTORS.
The Plan was approved by the Board of Trustees of the Delaware Trust at a
meeting held on May 14, 1996. If this proposal is approved, the Massachusetts
Trust will vote its shares of beneficial interest in each New Fund for approval
of the Plan.
Under the Plan, Distributors or others will be entitled to be reimbursed each
quarter (up to a maximum of 0.25% per annum) for actual expenses incurred in the
distribution and promotion of the shares of the New Funds, including, but not
limited to, the printing of prospectuses and reports used for sales purposes,
expenses of preparing and distributing sales literature and related expenses,
advertisements, and other distribution-related expenses, including a prorated
portion of Distributors' overhead expenses attributable to the distribution of
the shares of the particular New Fund, as well as any distribution or service
fees paid to securities dealers or their firms or others who have executed a
servicing agreement with the Delaware Trust, Distributors or its affiliates.
In addition to the payments to which Distributors or others are entitled under
the Plan, the Plan also provides that to the extent the Delaware Trust, Advisers
or Distributors or other parties on behalf of the Delaware Trust, Advisers or
Distributors, make payments that are deemed to be payments for the financing of
any activity primarily intended to result in the sale of shares of the New Funds
within the context of Rule 12b-1 under the 1940 Act, then such payments shall be
deemed to have been made pursuant to the Plan. The Plan does not permit
unreimbursed expenses incurred in a particular year to be carried over to or
reimbursed in subsequent years.
Under the Plan, Distributors is required to report in writing to the Board of
Trustees at least quarterly on the amounts and purpose of any payment made under
the Plan and any related agreements, as well as to furnish the Board of Trustees
with such other information as may be reasonably requested in order to enable
the Board of Trustees to make an informed determination of whether the Plan
should be continued. The Plan will be in effect for an initial period in excess
of one year from its adoption, and will be renewable annually by a vote of the
Delaware Trust's Board of Trustees, including a majority vote of the trustees
who are non-interested persons of the Delaware Trust and who have no direct or
indirect financial interest in the operation of the Plan, cast in person at a
meeting called for that purpose. It is also required that the selection and
nomination of such trustees be made by the non-interested trustees. The Plan and
any related agreements may be terminated at any time with respect to any New
Fund, without any penalty, by vote of a majority of the non-interested trustees
on not more than 60 days' written notice, by Distributors on not more than 60
days' written notice, by any act that constitutes an assignment of the
management agreement with Advisers, or by vote of a majority of such Fund's
outstanding shares. Distributors or any dealer or other firm may also terminate
their respective distribution or service agreement at any time upon written
notice.
The Plan and any related agreements may not be amended to increase materially
the amount to be spent for distribution expenses for any of the New Funds,
without approval by a majority of the outstanding shares of such New Fund, and
all material amendments to the Plan or any related agreements shall be approved
by a vote of the non-interested trustees, cast in person at a meeting called for
the purpose of voting on any such amendment.
INFORMATION CONCERNING THE MASSACHUSETTS TRUST'S DISTRIBUTION PLAN
The Massachusetts Trust has also adopted a distribution plan pursuant to Rule
12b-1 under the 1940 Act for each Current Fund. Such plan was adopted on
November 12, 1993 and was most recently approved by the Board of Trustees of the
Massachusetts Trust on February 13, 1996, to continue in effect until February
28, 1997. The distribution plan for each Current Fund is the same in all
material respects as the Plan for each New Fund, including the way in which the
annual fees payable under the Plan are calculated. For the fiscal year ended
October 31, 1995, the total amounts paid by the German Fund, Global Currency
Fund, Hard Currency Fund and High Income Fund were $________, $132,583, $349,101
and $34,722, respectively.
FRANKLIN/TEMPLETON INVESTOR SERVICES, INC.
Franklin/Templeton Investor Services, Inc. ("Investor Services"), a wholly-owned
subsidiary of Resources, is the shareholder servicing agent for the Delaware
Trust and the Massachusetts Trust and also acts as the transfer agent and
dividend-paying agent for the Delaware Trust and the Massachusetts Trust.
Investor Services is compensated on the basis of a fixed fee per account. For
the fiscal year ended December 31, 1995, the Massachusetts Trust paid $27,330 to
Investor Services for its services.
PROPOSAL II: TO APPROVE AMENDMENTS TO THE TRUST'S DECLARATION OF TRUST, TO BE
MADE ONLY IF THE REORGANIZATION IS NOT APPROVED, WHICH WOULD PERMIT THE
TRUSTEES TO CREATE ADDITIONAL SERIES OR CLASSES OF SHARES
The Trustees unanimously recommend that you approve amendments to the
Massachusetts Trust's Declaration of Trust to make certain changes, none of
which will affect an existing shareholder's investment in the Massachusetts
Trust. The purpose of these amendments would be to permit the Trustees to create
additional series of shares (each a separate Fund), and to take advantage of
alternative methods of selling its shares through the creation of multiple
classes of shares within the same series.1
The proposed amendments will only be completed if shareholders do not approve
the Reorganization described in Proposal I, but approve this proposal. Approval
of this proposal requires the vote of a majority of the Massachusetts Trust's
outstanding shares. As a result, the vote of a majority of the shares of any
Current Fund will not necessarily determine whether this proposal is approved,
because the vote of a majority of the shares of all of the Current Funds will
determine the result.
Under a multiple classes structure, different classes of shares may invest in a
single portfolio of securities (a series), but each class can have a different
pricing structure. For example, the existing shares of the Current Funds have
specific sales charges and 12b-1 fees, and any additional classes may have
varying charges and fees, so that investors can choose a pricing structure that
best suits their investment strategy. Different classes would also have
different voting rights, so that each class has sole voting power with respect
to the approval of issues solely affecting such classes, such as Rule 12b-1
plans.
Management of the Massachusetts Trust is currently proposing to implement a
multiple classes structure, which would allow the Massachusetts Trust to create
new "Class Z" shares of each of the Current Funds. The new Class Z shares of the
Current Funds are intended initially to be sold to a new mutual fund within the
Franklin Templeton Group of Funds, which invests its assets solely in shares of
other mutual funds within the Franklin Templeton Group of Funds. The new mutual
fund, which is known as a "fund of funds" in the mutual fund industry, could
purchase the Class Z shares of the Current Funds, as well as Class Z shares of
other Franklin Templeton Group funds. The proposed Class Z shares would be the
second class of shares of each of the Current Funds, and the currently issued
and outstanding shares would be classified as "Class I" shares.
The proposed Class Z shares would be sold by each of the Current Funds to the
new Franklin Templeton "fund of funds" without any sales charges or Rule 12b-1
fees. Shareholders who indirectly purchase shares of the Current Funds' Class Z
shares through the "fund of funds," will bear sales charges and Rule 12b-1 fees
at the "fund of funds" level, under a multiple classes pricing structure which
is similar to that currently offered by many of the Franklin Templeton funds.
The Trustees believe that offering the Class Z shares of the Current Funds to
the "fund of funds" may lead to increased sales of the Current Funds' shares.
This may result in greater investment flexibility for the Current Funds and, to
the extent of any increase in the size of the Current Funds, possible reductions
in operating expense ratios due to economies of scale -- thus benefiting both
existing and future shareholders.
To accomplish the multiple classes structure, it is necessary to amend the
Massachusetts Trust's Declaration of Trust in several respects. First, the
provisions of the Declaration of Trust which divide the interests in the
Massachusetts Trust into shares of beneficial interest would be amended to
provide that such shares may be issued in series or further divided into classes
(sub-series) of such series. In addition, the Declaration of Trust would be
amended to provide for variations in the relative rights and preferences of such
series and classes, including varying voting rights on issues which pertain
solely to a particular series or class, such as issues relating to Rule 12b-1
plans.
The Declaration of Trust currently provides that it may only be amended by the
Trustees after the amendment is approved by shareholders. The proposed
amendments to the Declaration of Trust would authorize the Trustees to amend the
Declaration of Trust to change provisions relating to shares, provided the
Trustees determine that such an amendment is consistent with the fair and
equitable treatment of all shareholders or that shareholder approval is not
required by the 1940 Act or other applicable law. Shareholder approval would
still be required to adopt any amendments to the Declaration of Trust which
would adversely affect to a material degree the rights and preferences, or
increase or decrease the par value, of any shares of the Massachusetts Trust.
If the Reorganization described in Proposal I is approved, no amendment to the
Massachusetts or Delaware Trusts' trust documents will be required in order to
allow the Trustees to create new series or classes, because the surviving
Delaware Trust's trust documents already contain provisions similar to those
being proposed. Please refer to Appendix C of this Proxy Statement, which
contains the full text of the current and proposed provisions of the Declaration
of Trust.
PROPOSAL III: TO AMEND AND CHANGE THE FUND'S INVESTMENT POLICY
REGARDING INVESTING IN RESTRICTED SECURITIES OR OTHER ILLIQUID
SECURITIES FROM FUNDAMENTAL TO NON-FUNDAMENTAL
The Currency Funds' current fundamental policy with regard to buying restricted
and other illiquid securities is as follows:
[Each Fund will not:] 5. . . . invest more than 10% of its net
assets in (a) securities subject to restrictions on disposition
under the Securities Act of 1933 ("restricted securities"), (b)
repurchase agreements providing for settlement in more than seven
days, (c) options which are traded in the over-the-counter market
and investments hedged by such options, or (d) securities which
are not readily marketable . . . .
The Current German Fund's policy regarding these securities is substantially the
same. It reads as follows:
[The Fund may not:] 6. Invest more than 10% of its net assets in
(i) securities subject to restrictions on disposition under the
Securities Act of 1933 ("restricted securities") or other
illiquid securities, (ii) repurchase agreements providing for
settlement in more than seven days, (iii) options which are
traded in the over-the-counter market and investments hedged by
such options, and (iv) other securities which are not readily
marketable, provided that the Fund may invest up to 15% of its
net assets in time deposits of over seven days duration . . . .
Each Fund's current fundamental policy is not required by applicable federal
law. The Board has proposed changing each Fund's investment restriction on
investing in restricted and other illiquid securities from fundamental to
non-fundamental. In addition, the Board has also recommended that references to
restricted securities be dropped from the new policy.
If this proposal is approved by shareholders, each Fund will adopt a
non-fundamental policy, changeable without the approval of shareholders, to the
effect that a Fund may not invest more than 10% of its total assets in
securities that are not readily marketable, including repurchase agreements
maturing in more than seven days, over-the-counter options bought by a Fund and
investments hedged by over-the-counter options. The proposed changes should
provide each Fund with greater flexibility in responding to market and
regulatory developments.
ILLIQUID AND RESTRICTED SECURITIES
An open-end investment company such as a Fund may not hold a significant amount
of illiquid securities because these securities may be difficult to accurately
value and because it may have difficulty selling them in order to pay investors
who sell its securities within seven days as required under the 1940 Act. In
general, the SEC defines an illiquid security as one that cannot be sold in the
ordinary course of business within seven days at approximately the value at
which a Fund has valued the security.
At the time each Fund adopted its current fundamental restriction, open-end
investment companies were effectively prohibited from investing more than 10% of
their assets in illiquid securities by the SEC. The SEC has revised this
position, however, and now open-end investment companies other than money market
funds can invest up to 15% of their total assets in illiquid securities. At this
time, each Fund intends to continue to invest no more than 10% of its assets in
illiquid securities. If shareholders approve this proposal, however, each Fund's
policy will be changeable with the Board's permission and without the approval
of shareholders.
The Board has recommended deletion of any reference to "restricted securities"
in a non-fundamental policy that discusses liquidity because many restricted
securities are now considered liquid. "Restricted securities," which are defined
as securities with legal or contractual restrictions on resale, were
historically considered illiquid securities. Since each Fund's fundamental
policies were adopted, however, active and efficient secondary trading markets
have developed for some of these securities. While these securities cannot be
resold to retail investors, institutional investors such as a Fund may buy and
sell them.
In recognition of the increased size and liquidity of the institutional markets
for unregistered securities and the importance of institutional investors in the
capital formation process, the SEC has adopted rules, including Rule 144A under
the Securities Act of 1933, designed to further facilitate efficient trading
among institutional investors. These rules permit a broader institutional
trading market for securities subject to restriction on resale to the general
public. Accordingly, many restricted securities are now considered
"institutionally liquid" and the Board believes there is no need to refer to
restricted securities in an investment restriction regarding liquidity.
If this proposal is approved by shareholders, the specific types of securities
that may be deemed illiquid will be determined from time to time by management
under the supervision of the Board, with reference to legal, regulatory and
market developments. Approval of this proposal would also allow management to
adjust a Fund's policy on illiquid securities in the future without the possible
delay and expense of seeking further specific approval of its shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT EACH FUND'S SHAREHOLDERS VOTE IN FAVOR OF
AMENDING THAT FUND'S POLICY ON THE PURCHASE OF ILLIQUID SECURITIES AND CHANGING
THE POLICY FROM FUNDAMENTAL TO NON-FUNDAMENTAL.
PROPOSAL IV: TO ELIMINATE THE FUND'S FUNDAMENTAL RESTRICTION
REGARDING TIME DEPOSITS
Currently, each Currency Fund has a fundamental policy regarding the buying of
time deposits that reads as follows:
[As a matter of fundamental policy:] 5. . . . . No Fund may enter
into time deposits maturing in more than seven days and any
Fund's investment in time deposits with maturities of three days
or more may not exceed 10% of the net assets of such Fund.
The Board has proposed that each Currency Fund's fundamental investment
restriction regarding the buying of time deposits be eliminated. The current
restriction is not required by applicable federal law to be fundamental. The
Board has proposed that this restriction be eliminated because it has become
increasingly difficult for management to find time deposits that meet the
specifications described in the investment restriction. In a time deposit
arrangement, a financial institution will hold money for a fixed term or with
the understanding that the depositor can withdraw only by giving notice, and the
depositor will receive interest on that money for that term. In some markets
time deposit rates are more attractive than other short-term investments, such
as U.S. Treasury bills.
If this restriction is eliminated, a Fund will be able to invest an unlimited
amount of its assets in time deposits maturing in LESS THAN seven days. Time
deposits maturing in MORE THAN seven days would be classified as illiquid
investments. As mentioned in the previous proposal, each Fund intends to adopt a
non-fundamental policy that allows only 10% or less of its assets to be invested
in illiquid investments, including time deposits. This policy will thereby limit
a Fund from investing more than 10% of its assets to buy time deposits maturing
in more than seven days.
THE BOARD OF TRUSTEES RECOMMEND THAT EACH CURRENCY FUND'S SHAREHOLDERS VOTE IN
FAVOR OF ELIMINATING THAT FUND'S FUNDAMENTAL POLICY ON INVESTING IN TIME
DEPOSITS.
PROPOSAL V: TO ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION REQUIRING IT TO INVEST AT LEAST 25% OF ITS ASSETS IN
SECURITIES OF COMPANIES PRIMARILY ENGAGED IN THE FINANCIAL
SERVICES INDUSTRY
The Board has proposed that each Currency Fund's fundamental investment
restriction requiring the fund to invest at least 25% of its assets in
securities of companies primarily engaged in the financial services industry be
eliminated. Each Currency Fund's current fundamental policy regarding its
investments in securities of financial services companies reads as follows:
[Each Fund will not:] 8. Invest less than 25% of its assets in securities
issued by companies primarily engaged in the financial services industry
or invest more than 25% of its assets in the securities of issuers in any
other industry, provided that there shall be no limitation on the purchase
of securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. Notwithstanding the foregoing, for temporary defensive
purposes, a Fund may invest less than 25% of its assets in the obligations
of companies primarily engaged in the financial services industry.
This concentration in securities issued by the financial services industry is
not required by applicable law to be fundamental. The Board has proposed the
elimination of this restriction because short-term money market instruments have
become increasingly difficult to find, particularly in Germany, Japan and
Switzerland.
The revised fundamental policy would read substantially as follows:
[Each Fund will not:] invest more than 25% of its assets in the securities
of issuers in any other industry, provided that there shall be no
limitation on the purchase of securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
If the proposed amendment is approved by shareholders, a Fund would have no
fundamental limitation requiring it to invest a certain percentage of its assets
in securities issued by companies primarily engaged in the financial services
industry. Of course, a Fund's investments must still be consistent with its
investment objective and other policies.
THE BOARD OF TRUSTEES RECOMMENDS THAT EACH CURRENCY FUND'S SHAREHOLDERS
VOTE IN FAVOR OF ELIMINATING THAT FUND'S FUNDAMENTAL POLICY REQUIRING INVESTMENT
OF AT LEAST 25% OF ITS ASSETS IN SECURITIES ISSUED BY COMPANIES PRIMARILY
ENGAGED IN THE FINANCIAL SERVICES INDUSTRY.
OTHER MATTERS
The Board of the Trust does not intend to bring any matters before the Meeting
other than Proposals I, II, III, IV, and V described above and is not aware of
any other matters to be brought before the Meeting or any adjournments thereof
by others. If any matters properly come before the Meeting, it is intended that
the accompanying proxy may be voted on such matters in accordance with the best
judgment of the persons named in said proxy.
In the event that sufficient votes in favor of the proposals set forth in the
Notice of Annual Meeting of Shareholders are not received by the date of the
meeting, the proxyholders may propose one or more adjournments of the meeting
for a period or periods of not more than 90 days in the aggregate to permit
further solicitation of proxies, even though a quorum is present. Any such
adjournment will require the affirmative vote of a majority of the votes cast on
the questions, in person or by proxy, at the session of the meeting to be
adjourned. The costs of any such additional solicitation and of any adjourned
session will be borne by the Trust.
OTHER INFORMATION
THE INFORMATION SET OUT BELOW, WHILE NOT DIRECTLY RELATED TO THE PROPOSALS THAT
YOU ARE BEING ASKED TO CONSIDER, IS REQUIRED BY THE SEC TO BE INCLUDED IN THE
PROXY STATEMENT.
SHAREHOLDER PROPOSALS
Any shareholder intending to present any proposal for consideration at the
Trust's next meeting must, in addition to meeting other applicable requirements,
promptly mail such proposal to the Trust.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
The Annual Report to Shareholders of the Fund, including financial statements of
the Fund for the fiscal year ended October 31, 1995, has been mailed to all
shareholders. UPON REQUEST, SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE
ANNUAL REPORT BY WRITING THE TRUST AT THE ADDRESS ABOVE OR CALLING THE TRUST AT
1-800/DIAL BEN.
Respectfully Submitted,
DEBORAH R. GATZEK
Secretary
Dated: July 8, 1996
San Mateo, California
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
FILL IN, DATE AND SIGN THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED PREPAID
ENVELOPE.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, DIRECTOR OR GUARDIAN, GIVE
YOUR FULL TITLE AS SUCH. WHERE STOCK IS HELD JOINTLY, BOTH SIGNATURES ARE
REQUIRED.
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made this
__th day of ______________, 1996 by and between Franklin Templeton Global Trust,
a business trust created under the laws of the Commonwealth of Massachusetts
(the "Massachusetts Trust"), and Franklin Templeton Global Trust, a business
trust created under the laws of the State of Delaware (the
"Delaware Trust").
In consideration of the mutual promises contained herein, and intending to
be legally bound, the parties hereto agree as follows:
PLAN OF REORGANIZATION.
Upon satisfaction of the conditions precedent described
in Section 3 hereof, the Massachusetts Trust will convey, transfer
and deliver to the Delaware Trust at the closing provided for in
Section 2 (hereinafter referred to as the "Closing") all of the
then-existing assets of each of its four series of shares to be
conveyed, transferred and delivered to the corresponding four series
of the Delaware Trust. In consideration thereof, the Delaware Trust
agrees at the Closing (i) to assume and pay, to the extent that they
exist on or after the Closing Date of the Reorganization (as defined
in Section 2 hereof), all of the Massachusetts Trust's obligations
and liabilities, whether absolute, accrued, contingent or otherwise,
including all fees and expenses in connection with the Agreement,
including without limitation costs of legal advice, accounting,
printing, mailing, proxy solicitation and transfer taxes, if any,
the obligations and liabilities allocated to each series of the
Massachusetts Trust to become the obligations and liabilities of the
corresponding series of the Delaware Trust, and (ii) to deliver to
the Massachusetts full and fractional shares of beneficial interest
of the Delaware Trust, par value $0.01, of four separate series of
the Delaware Trust denominated as Franklin Templeton German
Government Bond Fund, Franklin Templeton Global Currency Fund,
Franklin Templeton Hard Currency Fund and Franklin Templeton High
Income Currency Fund (hereinafter collectively referred to as
"Series of the Delaware Trust and individually as a "Series of the
Delaware Trust") equal in number to the number of full and
fractional shares of common stock, with $0.01 par value, of,
respectively, the Massachusetts Trust's four separate series
(hereinafter collectively referred to as "Series of the
Massachusetts Trust" and individually as a "Series of the
Massachusetts Trust") bearing substantially the same names as the
Series of the Delaware Trust outstanding immediately prior to the
Closing Date of the Reorganization. The transactions contemplated
hereby are intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended ("Code").
The Delaware Trust will effect such delivery by
establishing an open account for each shareholder of each Series of
the Massachusetts Trust and by crediting to such account, the exact
number of full and fractional shares of each Series of the Delaware
Trust such shareholder held in the corresponding Series of the
Massachusetts Trust on the Closing Date of the Reorganization.
Fractional shares of each Series of the Delaware Trust will be
carried to the third decimal place. On the Closing Date of the
Reorganization, the net asset value per share of beneficial interest
of each Series of the Delaware Trust shall be deemed to be the same
as the net asset value per share of the corresponding Series of the
Massachusetts Trust. On such date, each certificate representing
shares of a Series of the Massachusetts Trust will represent the
same number of shares of the corresponding Series of the Delaware
Trust. Each shareholder of the Massachusetts Trust will have the
right to exchange his (her) share certificates for share
certificates of the corresponding Series of Delaware Trust. However,
a shareholder need not make this exchange of certificates unless he
(she) so desires. Simultaneously with the crediting of the shares of
the Series of the Delaware Trust to the shareholders of record, the
shares of the Series of the Massachusetts Trust held by such
shareholder shall be canceled.
As soon as practicable after the Closing Date of the
Reorganization, the Massachusetts Trust shall take all necessary
steps under Massachusetts law to terminate the Massachusetts Trust.
CLOSING AND CLOSING DATE OF THE REORGANIZATION. The Closing,
which will involve the transfer of the Massachusetts Trust's assets to the
Delaware Trust, in exchange for the assumption by the Delaware Trust of
the Massachusetts Trust's liabilities and the issuance of the Delaware
Trust's shares to the Massachusetts trust, as described above, together
with related acts necessary to consummate such transactions, shall occur
either on (i) the business day immediately following the later of receipt
of all necessary regulatory approvals or the final adjournment of the
meeting of shareholders of the Massachusetts Trust at which this Agreement
will be considered, or (ii) such later date as the parties may mutually
agree (the "Closing Date of the Reorganization").
CONDITIONS PRECEDENT. The obligations of the Massachusetts
Trust and the Delaware Trust to effectuate the Reorganization hereunder
shall be subject to the satisfaction of each of the following
conditions:
Such authority and orders from the Securities and
Exchange Commission (the "Commission") and state securities
commissions as may be necessary to permit the parties to carry out
the transactions contemplated by this Agreement shall have been
received;
One or more post-effective amendments to the
Massachusetts Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 and the Investment Company Act of 1940,
containing (i) such amendments to such Registration Statement as are
determined by the Directors of the Massachusetts Trust to be
necessary and appropriate as a result of the Agreement, and (ii) the
adoption by the Delaware Trust as its own of such Registration
Statement, as so amended, shall have been filed with the Commission,
and such post-effective amendment or amendments to the Massachusetts
Trust's Registration Statement shall have become effective, and no
stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that purpose
shall have been initiated or threatened by the Commission (other
than any such stop order, proceeding or threatened proceeding which
shall have been withdrawn or terminated);
Confirmation shall have been received from the
Commission or the Staff thereof that Delaware Trust shall, effective
upon or before the Closing Date of the Reorganization, be duly
registered as an open-end management investment company under the
Investment Company Act of 1940, as amended;
Each party shall have received a ruling from the
Internal Revenue Service or an opinion from Messrs. Stradley, Ronon,
Stevens & Young, LLP, Philadelphia, Pennsylvania, to the effect that
the reorganization contemplated by this Agreement qualifies as a
"reorganization" under Section 368(a) of the Code, and, thus, will
not give rise to the recognition of income, gain or loss for federal
income tax purposes to the Massachusetts Trust, the Delaware Trust
or shareholders of the Massachusetts Trust or the Delaware Trust;
Each party shall have received an opinion from Messrs.
Stradley, Ronon, Stevens & Young, LLP, dated the Closing Date of the
Reorganization, addressed to and in form and substance satisfactory
to it, to the effect that (i) this Agreement and the reorganization
provided for herein, and the execution of this Agreement, has been
duly authorized and approved by the Massachusetts Trust and the
Delaware Trust and constitutes a legal, valid and binding agreement
of each such party in accordance with its terms; (ii) the shares of
the Delaware Trust to be issued pursuant to the terms of this
Agreement have been duly authorized and, when issued and delivered
as provided in this Agreement, will have been validly issued and
fully paid and will be non-assessable by the Delaware Trust; (iii)
the Delaware Trust is duly organized and validly existing under the
laws of the State of Delaware; and (iv) the Massachusetts Trust is
duly organized and validly existing under the laws of the
Commonwealth of Massachusetts.
The shares of each Series of the Delaware Trust shall
have been duly qualified for offering to the public in all states of
the United States, the Commonwealth of Puerto Rico and the District
of Columbia so as to permit the transfers contemplated by this
Agreement to be consummated;
This Agreement and the reorganization contemplated
hereby shall have been adopted and approved by an affirmative vote
of at least a majority of all votes entitled to be cast at a meeting
of the Series of the Massachusetts Trust (shares of each Series of
the Massachusetts Trust voting as a single class);
The shareholders of the Massachusetts Trust shall have
voted to direct the Massachusetts Trust to vote, and the
Massachusetts Trust shall have voted, as sole shareholder of the
Delaware Trust, to:
Elect as Trustees of the Delaware Trust (the
"Trustees") the following individuals: Messrs. Abbott,
Ashton, Eiteman, Fortunato, Garbellano, Gould, Healy,
Charles B. Johnson, Rupert H. Johnson, Jr., Kraus, LaHaye
and Macklin;
Select Coopers & Lybrand L.L.P. as the
independent public accountants for the Delaware Trust for
the fiscal year ending October 31, 1997;
Approve a new investment management agreement
between the Delaware Trust on behalf of each of its Series,
and Franklin Advisers, Inc. ("Advisers"), which is
substantially identical to the current investment management
agreement between the Massachusetts Trust on behalf of each of
its Series, and Franklin Advisers, Inc.;
Approve a new subadvisory agreement between
Advisers and Templeton Investment Counsel, Inc. for each
Series of the Delaware Trust, which is substantially identical
to the current subadvisory agreement in place for each Series
of the Massachusetts Trust.
Approve a distribution plan for each Series of
the Delaware Trust, as adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, which is
substantially identical to the current Rule 12b-1 distribution
plan for each Series of the Massachusetts Trust;
The Trustees of the Delaware Trust shall have taken the
following action at a meeting duly called for such purposes:
Approval of the Delaware Trust's Custodian
Agreement;
Selection of Coopers & Lybrand L.L.P. as the
Delaware Trust's independent public accountants for the
fiscal year ending October 31, 1997;
Approval of the investment management agreement
between the Delaware Trust on behalf of each of its Series,
and Advisers, which is substantially identical to the current
investment management agreement between the Massachusetts
Trust on behalf of each of its Series, and Franklin Advisers,
Inc.;
Authorization of the issuance by the Delaware
Trust, prior to the Closing Date of the Reorganization, of one
share of each Series of the Delaware Trust, to the
Massachusetts Trust in consideration for the payment of $10
per share for the purpose of enabling the Massachusetts Trust
to vote on matters referred to in paragraph (h) of this
Section 3;
Submission of the matters referred to in
paragraph (h) of this Section 3 to the Massachusetts Trust as
sole shareholder of each Series of the Delaware Trust; and
Authorization of the issuance by the Delaware
Trust of shares of each Series of the Delaware Trust on the
Closing Date of the Reorganization in exchange for the assets
of each Series of the Massachusetts Trust pursuant to the
terms and provisions of this Agreement.
At any time prior to the Closing Date, any of the foregoing
conditions may be waived by the Board of Trustees of the
Massachusetts Trust if, in the judgment of the Trustees, such waiver
will not have a material adverse effect on the benefits intended
under this Agreement to the shareholders of the Massachusetts Trust.
TERMINATION. The Board of Trustees of the Massachusetts Trust may
terminate this Agreement and abandon the reorganization contemplated
hereby, notwithstanding approval thereof by the shareholders of the
Massachusetts Trust, at any time prior to the Closing Date of the
Reorganization if, in the judgment of the Trustees, the facts and
circumstances make proceeding with the Agreement inadvisable.
ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the parties and there are no agreements, understandings,
restrictions or warranties among the parties other than those set forth
herein or herein provided for.
FURTHER ASSURANCES. The Massachusetts Trust and the Delaware
Trust shall take such further action as may be necessary or desirable and
proper to consummate the transactions contemplated hereby.
COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.
GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, Franklin Templeton Global Trust and Franklin Templeton
Global Trust have each caused this Agreement and Plan of Reorganization to be
executed on its behalf by its Vice President and its seal to be affixed hereto
and attested by its Secretary, all as of the day and year first-above written.
Attest: Franklin Templeton Global Trust
(a Massachusetts business trust)
By: By:
D.R. Gatzek H.E. Burns
Secretary Vice President
Attest: Franklin Templeton Global Trust
(a Delaware business trust)
By: By:
D.R. Gatzek H.E. Burns
Secretary Vice President
APPENDIX B
DIFFERENCES BETWEEN THE LEGAL STRUCTURE OF
A DELAWARE BUSINESS TRUST AND A MASSACHUSETTS BUSINESS TRUST
This discussion provides a summary of the material differences between the
legal structure of a mutual fund created as a Delaware business trust pursuant
to the Delaware Business Trust Act (the "Delaware Act"), and a fund created as a
Massachusetts business trust under the Massachusetts Statutory Provisions
Governing Business Trusts Act (the "Massachusetts Statute"). The different legal
structures are considered by contrasting the provisions of the trust documents
of Franklin Templeton Global Trust, a Massachusetts business trust (the
"Massachusetts Trust"), with the trust documents of its proposed successor,
Franklin Templeton Global Trust, a Delaware business trust (the "Delaware
Trust"), as well as the respective laws applicable to such entities. One of the
basic differences between the two structures is that the Delaware Act provides a
comprehensive statutory framework for the governance of business trusts, while
the Massachusetts Statute is silent on many of the issues that are addressed in
the Delaware Act.
GOVERNING DOCUMENTS
In order for an entity to constitute a Delaware business trust (a "DBT"),
two requirements must be satisfied: (i) an unincorporated association must be
created by a trust instrument; and (ii) a certificate of trust must be filed in
the Office of the Secretary of State of Delaware. The business and affairs of
the Delaware Trust are governed by its trust instrument, called an Agreement and
Declaration of Trust, as well as its bylaws.
In order to be considered a Massachusetts business trust (a "MBT"), an
entity must file a trust document with the Secretary of State of Massachusetts
and with the clerk of every city or town in Massachusetts where the MBT has a
usual place of business. The business and affairs of the Massachusetts Trust are
governed by its trust instrument, called a Declaration of Trust, as well as its
bylaws.
The governing documents of the Massachusetts and Delaware Trusts may be
referred to herein as the "Massachusetts Declaration" and the "Delaware
Declaration," respectively.
MULTIPLE SERIES AND CLASSES
Mutual funds commonly issue a number of different series of shares of
their stock, each of which has its own investment objective and policies and
represents a different pool of portfolio securities. Investors can purchase
shares of a fund's various series, such as an equity, bond or money market
series, which are generally viewed by shareholders, in effect, as separate
funds.
The Massachusetts Trust currently consists of four series of shares of
beneficial interest. The Massachusetts Declaration allows the Trustees to create
additional series of shares without shareholder approval, but does not provide
for the creation of separate classes of shares of such series. In order for the
Trustees to be able to create classes of shares, which would be allowed under
the Massachusetts Statute, the Massachusetts Declaration would have to be
amended. Under the Delaware Trust's Declaration of Trust, consistent with the
Delaware Act, the Trustees may create additional classes, groups or series
(sub-classes) of beneficial interests, having such relative rights, powers and
duties as the governing instrument may provide. Such additional series and/or
classes of shares, furthermore, may be created by resolution of the Board of
Trustees without requiring shareholder approval.
One area in which the Delaware business trust form offers an advantage
over Massachusetts business trusts relates to the way that liabilities may
affect the series of a fund. Under the Delaware Act, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series of a multiple series investment company
registered under the Investment Company Act of 1940 (the "1940 Act") are
enforceable only against the assets of such series, and not against the assets
of the trust generally, provided that: (i) the governing instrument creates one
or more series; (ii) separate and distinct records are maintained for any such
series; (iii) the series' assets are held and accounted for separately from the
trust's other assets or any series thereof; (iv) notice of the limitation on
liabilities of the series is set forth in the certificate of trust; and (v) the
governing instrument so provides. The Delaware Declaration provides that each
series of the Delaware Trust shall not be charged with the liabilities of
another series. Further, it states that any general assets or liabilities not
readily identifiable as to a particular series will be allocated or charged by
the Trustees of the Delaware Trust to and among any one or more series in such
manner, and on such basis, as the Trustees deem fair and equitable in their sole
discretion.
The Massachusetts Statute does not contain specific statutory provisions
addressing series liability with respect to a multiple series investment
company. Therefore, unless otherwise provided in the declaration of trust for a
MBT, and thereafter enforced by the courts against third persons, the debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular series may be enforceable against the
assets of the MBT generally.
Notwithstanding the foregoing, a court applying federal securities law may
not respect provisions which serve to limit the liability of one series of an
investment company's shares for the liabilities of another series. Several
Federal district court holdings indicate that the provisions relating to series
liability that are contained in either the governing instrument of a DBT or in
the trust document of a Massachusetts business trust may be preempted by the way
in which the courts interpret the 1940 Act. Although provisions relating to
series liability in the governing instrument of a DBT or the or in the trust
document of a Massachusetts business trust may be preempted by judicial
interpretation of the 1940 Act, such provisions in the governing instrument of a
DBT may be more likely to be upheld because the Delaware Act contains an express
statutory provision.
SHAREHOLDER VOTING RIGHTS AND MEETINGS
Shareholders of both a DBT and a MBT are subject to the voting
requirements contained in the 1940 Act in connection with the election and
removal of trustees, the selection of auditors and the approval of investment
advisory agreements and any plan of distribution.
The Delaware Act provides that the governing instrument may grant to, or
withhold from, all or certain trustees or beneficial owners, or a specified
class, group or series of trustees or beneficial owners, the right to vote,
separately or with any or all other classes, groups or series of the trustees or
beneficial owners on any matter. To the extent that voting rights are granted,
the Delaware Declaration provides that all shares entitled to vote on a matter
shall vote without differentiation between the separate series on a
one-vote-per-share basis; each whole share shall be entitled to one vote and
each fractional share shall be entitled to a proportionate fractional vote. If a
matter to be voted on does not affect the interests of all series, then only the
shareholders of the affected series shall be entitled to vote on the matter. The
Delaware Declaration gives the shareholders of the Fund the right to vote only
(i) for the election or removal of trustees; (ii) with respect to additional
matters relating to the trust as may be required by the 1940 Act; and (iii) on
such other matters as the trustees may consider necessary or desirable.
With respect to the election or removal of a trustee, the Delaware
Declaration provides that a meeting of shareholders for the purpose of electing
or removing one or more trustees may be called (i) upon the demand of
shareholders owning 10% or more of the shares of the trust in the aggregate; and
(ii) by the trustees upon their own vote. Any trustee may be removed at any
shareholder meeting by a vote of two-thirds of the outstanding shares of the
trust. In addition, the proposed bylaws provide that a special meeting of
shareholders shall be called by the Secretary upon the written request of the
holders of shares entitled to cast not less than 10% of all votes entitled to be
cast at the meeting.
The Delaware Declaration also states that, if shares have been issued,
shareholder approval is required to adopt any amendments to the declaration of
trust which would adversely affect to a material degree the rights and
preferences of the shares of any series (or class) or to increase or decrease
the par value of the shares of any series (or class). Before adopting any
amendment to the Delaware Declaration relating to shares without shareholder
approval, the trustees are required to determine that it is (i) consistent with
the fair and equitable treatment of all shareholders, and (ii) shareholder
approval is not required by the 1940 Act or other applicable law.
The Massachusetts Statute is largely silent as to shareholder voting
requirements. In similar fashion to the Delaware Act, the Massachusetts Statute
provides the Trustees with a great deal of latitude as to which matters are to
be submitted to a vote of shareholders. The Massachusetts Declaration, however,
specifies matters on which shareholders are entitled to vote, and requires
shareholder approval for any amendment to the Massachusetts Declaration, except
for the creation of series, such that trustees may not create new classes of
shares without seeking a shareholder vote.
GENERAL VOTING REQUIREMENTS. Unless a larger quorum is required by the
applicable provisions of the 1940 Act, the Massachusetts Declaration provides
that a majority of the shares entitled to vote on a matter, present either in
person or by proxy, shall constitute a quorum at a shareholders' meeting.
Consistent with the Massachusetts Declaration, the current bylaws of the
Massachusetts Trust further provide that, when a quorum is present at any
meeting, a majority of the shares voted shall decide any questions, unless the
question is one for which a different vote is required by express provision of
Massachusetts law, the 1940 Act or the Massachusetts Declaration a different
vote is required. With respect to the election of trustees, only a plurality
vote is necessary.
Similar to the Massachusetts Declaration and bylaws for the Massachusetts
Trust, the proposed governing documents of the Delaware Trust provide that the
presence in person or by proxy of the holders of record of a majority of the
shares entitled to vote shall constitute a quorum, except as otherwise provided
by the 1940 Act. When a quorum is present, a majority vote of the shares
entitled to vote held by beneficial owners present in person or by proxy shall
decide any matter, unless the question is one for which some other, the 1940
Act. The proposed bylaws provide that a plurality of the shares present in
person or by proxy shall elect the trustees.
MEETINGS OF SHAREHOLDERS. Under both the Delaware Act and Massachusetts
Statute, annual meetings of a registered investment company's shareholders are
not required to be held. The Delaware Act does not require annual meetings to be
held in any case; however, the Delaware Declaration and proposed bylaws provide
that an annual meeting of shareholders will be held if the 1940 Act so requires.
BENEFICIAL OWNER AND TRUSTEE LIABILITY
One significant difference between the two statutes is that the Delaware
Act addresses beneficial owner and trustee liability, whereas the Massachusetts
Statute does not. The Delaware Act makes clear that the beneficial owners of a
business trust are entitled to the same limitation of personal liability that is
extended to stockholders of private corporations organized for profit. The
Massachusetts Statute does not include an express provision relating to the
limited liability of the beneficial owners of a business trust.
The Delaware Act also statutorily limits trustee liability, whereas the
Massachusetts Statute does not. Specifically, the Delaware Act provides that a
trustee (when acting as such) shall not be "personally liable to any person
other than the business trust or a beneficial owner for any act, omission or
obligation of the business trust or any trustee thereof." While the
Massachusetts Statute does not contain a comparable provision, courts of that
state acknowledge that a trustee's liability may be limited if there is a
provision to that effect in the declaration of trust and the person contracting
with the trustee agrees to look only to the trust assets for satisfaction of the
obligation.
INDEMNIFICATION
Under the Delaware Act, subject to any standards and restrictions as set
forth in the governing instrument, a DBT "shall have the power to indemnify and
hold harmless any trustee or beneficial owner or other person from and against
any and all claims and demands whatsoever." The Delaware Declaration provides
that the trust, subject to its bylaws may indemnify, out of its assets, and hold
harmless each and every trustee and officer from and against any and all claims,
demands, costs, losses, expenses, and damages, arising out of, or related to,
such trustee's performance of his or her duties as a trustee or officer.
Pursuant to the Delaware Declaration, the trust will not indemnify any trustee
or officer from or against any liability to the trust or any shareholder by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
Although the Massachusetts Statute is silent as indemnification of
Trustees and Officers, indemnification is expressly provided for in the
Massachusetts Declaration. The Massachusetts Declaration provides for
indemnification out of the assets of the Fund to the extent such a practice is
not in contravention of the provisions of the 1940 Act.
With respect to actions brought by third parties, the current bylaws of
the Massachusetts Trust provide indemnification if it is determined that (a) in
the case of conduct in his or her official capacity as a trustee and officer of
the Massachusetts Trust, that his conduct was in the Massachusetts Trust's best
interests; (b) in all other cases, that his or her conduct was at least not
opposed to the Massachusetts Trust's best interests; and (c) in the case of a
criminal proceeding, that he or she had no reasonable cause to believe the
conduct of that person was unlawful. With respect to an action by the beneficial
owners of the Massachusetts Trust against the Trustees and officers of the
Massachusetts Trust, the current bylaws provide that the Trust shall indemnify
trustees and officers against expenses actually and reasonably incurred if that
person acted in good faith, in a manner that person believed to be in the best
interests of the Massachusetts Trust and with such care, including reasonable
inquiry, as an ordinarily prudent person in like position would use under
similar circumstances.
INSURANCE
Neither the Delaware Act nor the Massachusetts Statute contain a provision
specifically related to insurance. The Delaware Declaration, however, provides
that the Trustees shall be entitled and empowered to the fullest extent
permitted by law to purchase with trust assets insurance for liability and for
all expenses reasonably incurred or paid or expected to be paid by a trustee or
officer in connection with any claim, action, suit or proceeding in which he or
she becomes involved by virtue of his or her capacity (or former capacity) with
the trust. The Massachusetts Declaration is silent as to insurance coverage,
however it does empower the Trustees to engage in any lawful activity in
carrying out the stated purposes of the Massachusetts Trust.
The foregoing is only a summary of the differences between the governing
instruments of the Massachusetts and Delaware Trusts, and the relevant
provisions of Massachusetts and Delaware law. It is not a complete list of
differences. Shareholders should refer to the provisions of the governing
instruments and relevant law for a more thorough comparison.
APPENDIX C
CURRENT AND PROPOSED PROVISIONS OF DECLARATION OF TRUST
The current text of Article III, Section 1 of the Massachusetts Trust's
Declaration of Trust, which describes the shares of beneficial interest of the
Massachusetts Trust, currently provides:
"SECTION 1. SHARES OF BENEFICIAL INTEREST. The Shares of the Trust
shall be issued in one or more series as the Trustees may, without
Shareholder approval, authorize. Each series shall be preferred over
all other series in respect of the assets allocated to that series.
The beneficial interest in each series at all times shall be divided
into Shares, with or without par value as the Trustees may from time
to time determine, each of which shall represent an equal
proportionate interest in the series with each other Share of the
same series, none having priority or preference over another. The
number of Shares authorized shall be unlimited, and the Shares so
authorized may be represented in part by fractional shares. From
time to time, the Trustees may divide or combine the Shares of any
series into a greater or lesser number without thereby changing the
proportionate beneficial interests in the series."
The proposed text of Article III, Section 1 of the Declaration of Trust, as well
as text of newly proposed sections 6 and 7 of Article III, which all contain
provisions related to the shares of beneficial interest of the Massachusetts
Trust as well as the power of the Trustees to amend the Declaration of Trust,
reads as follows:
"SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest
in the Trust shall at all times be divided into an unlimited number
of Shares, with a par value of $ .01 per Share. The Trustees may
authorize the division of Shares into separate series and the
division of series into separate classes of Shares. The different
series shall be established and designated, and the variations in
the relative rights and preferences as between the different series
shall be fixed and determined, by the Trustees. If only one or no
series (or classes) shall be established, the Shares shall have the
rights and preferences provided for herein and in Article III,
Section 6 hereof to the extent relevant and not otherwise provided
for herein, and all references to series (and classes) shall be
construed (as the context may require) to refer to the Trust.
Subject to the provisions of Section 6 of this Article III, each
Share shall have voting rights as provided in Article V hereof, and
holders of the Shares of any series shall be entitled to receive
dividends, when, if and as declared with respect thereto in the
manner provided in Article VI, Section 1 hereof. No Shares shall
have any priority or preference over any other Share of the same
series with respect to dividends or distributions upon termination
of the Trust or of such series made pursuant to Article VIII,
Section 4 hereof. All dividends and distributions shall be made
ratably among all Shareholders of a particular (class of a) series
from the assets held with respect to such series according to the
number of Shares of such (class of such) series held of record by
such Shareholder on the record date for any dividend or distribution
or on the date of termination, as the case may be. Shareholders
shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or any
series. The Trustees may from time to time divide or combine the
Shares of any particular series into a greater or lesser number of
Shares of that series without thereby materially changing the
proportionate beneficial interest of the Shares of that series in
the assets held with respect to that series or materially affecting
the rights of Shares of any other series."
* * *
"SECTION 6. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS RELATING
TO SHARES. Notwithstanding any other provisions of this Declaration
of Trust and without limiting the power of the Board of Trustees to
amend the Declaration of Trust as provided elsewhere herein, the
Board of Trustees shall have the power to amend this Declaration of
Trust, at any time and from time to time, in such manner as the
Board of Trustees may determine in their sole discretion, without
the need for Shareholder action, so as to add to, delete, replace or
otherwise modify any provisions relating to the Shares contained in
this Declaration of Trust, provided that before adopting any such
amendment without Shareholder approval the Board of Trustees shall
determine that it is consistent with the fair and equitable
treatment of all Shareholders or that Shareholder approval is not
otherwise required by the 1940 Act or other applicable law. If
Shares have been issued, Shareholder approval shall be required to
adopt any amendments to this Declaration of Trust which would
adversely affect to a material degree the rights and preferences of
the Shares of any series (or class) or to increase or decrease the
par value of the Shares of any series (or class).
Subject to the foregoing Paragraph, the Board of Trustees may amend
the Declaration of Trust to amend any of the provisions set forth in
paragraphs (a) through (i) of Section 7 of this Article III."
* * *
"SECTION 7. ESTABLISHMENT AND DESIGNATION OF SHARES. The
establishment and designation of any series (or class) of Shares
shall be effective upon the resolution by a majority of the then
Trustees, adopting a resolution which sets forth such establishment
and designation and the relative rights and preferences of such
series (or class). Each such resolution shall be incorporated herein
by reference upon adoption.
Shares of each series (or class) established pursuant to this
Section 7, unless otherwise provided in the resolution establishing
such series, shall have the following relative rights and
preferences:
(a) ASSETS HELD WITH RESPECT TO A PARTICULAR SERIES. All
consideration received by the Trust for the issue or sale of Shares
of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably be held with respect to that Series
for all purposes, subject only to the rights of creditors, and shall
be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds, in whatever form the same may be,
are herein referred to as "assets held with respect to" that series.
In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the series in
such manner and on such basis as the Trustees, in their sole
discretion, deem fair and equitable, and any General Asset so
allocated to a particular series shall be held with respect to that
series. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all series for all purposes.
(b) LIABILITIES HELD WITH RESPECT TO A PARTICULAR SERIES. The
assets of the Trust held with respect to each particular series
shall be charged against the liabilities of the Trust held with
respect to that series and all expenses, costs, charges and reserves
attributable to that series, and any general liabilities of the
Trust which are not readily identifiable as being held with respect
to any particular series shall be allocated and charged by the
Trustees to and among any one or more of the series in such manner
and on such basis as the Trustees in their sole discretion deem fair
and equitable. The liabilities, expenses, costs, charges, and
reserves so charged to a series are herein referred to as
"liabilities held with respect to" that series. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all series for
all purposes. All Persons who have extended credit which has been
allocated to a particular series, or who have a claim or contract
which has been allocated to any particular series, shall look, and
shall be required by contract to look exclusively, to the assets of
that particular series for payment of such credit, claim, or
contract. In the absence of an express contractual agreement so
limiting the claims of such creditors, claimants and contract
providers, each creditor, claimant and contract provider will be
deemed nevertheless to have impliedly agreed to such limitation
unless an express provision to the contrary has been incorporated in
the written contract or other document establishing the claimant
relationship.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND Repurchases.
Notwithstanding any other provisions of this Declaration of Trust,
including, without limitation, Article VI, no dividend or
distribution including, without limitation, any distribution paid
upon termination of the Trust or of any series (or class) with
respect to, nor any redemption or repurchase of, the Shares of any
series (or class) shall be effected by the Trust other than from the
assets held with respect to such series, nor, except as specifically
provided in Section 7 of this Article III, shall any Shareholder of
any particular series otherwise have any right or claim against the
assets held with respect to any other series except to the extent
that such Shareholder has such a right or claim hereunder as a
Shareholder of such other series. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(d) VOTING. All Shares of the Trust entitled to vote on a
matter shall vote separately by series (and, if applicable, by
class): that is, the Shareholders of each series (or class) shall
have the right to approve or disapprove matters affecting the Trust
and each respective series (or class) as if the series (or classes)
were separate companies. There are, however, two exceptions to
voting by separate series (or classes). First, if the 1940 Act
requires all Shares of the Trust to be voted in the aggregate
without differentiation between the separate series (or classes),
then all the Trust's Shares shall be entitled to vote on a
one-vote-per-Share basis. Second, if any matter affects only the
interests of some but not all series (or classes), then only the
Shareholders of such affected series (or classes) shall be entitled
to vote on the matter.
(e) EQUALITY. All the Shares of each particular series shall
represent an equal proportionate undivided interest in the assets
held with respect to that series (subject to the liabilities held
with respect to that series and such rights and preferences as may
have been established and designated with respect to classes of
Shares within such series), and each Share of any particular series
shall be equal to each other Share of that series.
(f) FRACTIONS. Any fractional Share of a series shall carry
proportionately all the rights and obligations of a whole share of
that Series, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and termination of
the Trust.
(g) EXCHANGE PRIVILEGE. The Trustees shall have the authority
to provide that the holders of Shares of any series shall have the
right to exchange said Shares for Shares of one or more other Series
of Shares in accordance with such requirements and procedures as may
be established by the Trustees.
(h) COMBINATION OF SERIES. The Trustees shall have the
authority, without the approval of the Shareholders of any Series
unless otherwise required by applicable law, to combine the assets
and liabilities held with respect to any two or more series into
assets and liabilities held with respect to a single series.
(i) ELIMINATION OF SERIES. At any time that there are no
Shares outstanding of any particular Series (or class) previously
established and designated, the Trustees may by resolution of a
majority of the then Trustees abolish that Series (or class) and
rescind the establishment and designation thereof."
The current text of Article IX, Section 9 of the Massachusetts Trust's
Declaration of Trust, which relates to the method of amending the Declaration of
Trust currently provides:
"SECTION 9. AMENDMENTS. This Declaration of Trust may be amended at
any time by an instrument in writing signed by a majority of the
then Trustees when authorized so to do by a vote of Shareholders
holding a majority of the Shares of each series entitled to vote,
except that an amendment which shall affect the holders of one or
more series of Shares but not the holders of all outstanding series
shall be authorized by vote of the Shareholders holding a majority
of the Shares entitled to vote of each series affected and no vote
of Shareholders of a series not affected shall be required.
Amendments having the purpose of changing the name of the Trust or
of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder
vote."
The proposed text of Article IX, Section 9, which authorizes certain amendments
to the Declaration of Trust without obtaining shareholder approval, reads as
follows:
AMENDMENTS. This Declaration of Trust may be restated and/or
amended at any time by an instrument in writing signed by a majority
of the then Trustees and, if required, by approval of such amendment
by Shareholders in accordance with Article V, Section 3 hereof. Any
such restatement and/or amendment hereto shall be effective
immediately upon execution and approval. The Certificate of Trust of
the Trust may be restated and/or amended by a similar procedure, and
any such restatement and/or amendment shall be effective immediately
upon filing with the Office of the Secretary of State of the State
of Delaware or upon such future date as may be stated therein."
In addition, Section 2.(g) of Article IV of the current Declaration of Trust,
which provides that the Trustees may allocate assets, liabilities and expenses
of the Massachusetts Trust to particular series of the Massachusetts Trust,
shall be amended to also provide for such allocation among various classes of
any series of the Massachusetts Trust, as follows:
"(g) To allocate assets, liabilities and expenses of the Trust to a
particular series (or class) of Shares or to apportion the same among two or
more series, provided that any liabilities or expenses incurred by a particular
series (or class) of Shares shall be payable solely out of the assets of that
series (or class);"
1 The term "series" in the mutual fund industry is used to refer to shares
that represent interests in a separate portfolio of investments with differing
investment objectives. "Classes" of shares represent sub-divisions of series
with differing preferences, rights and privileges as the Trustees may determine
and, in most circumstances, differing marketing attributes.
Each of the Old and New Funds is a series.
PROXY PROXY
210
FRANKLIN TEMPLETON GERMAN GOVERNMENT BOND FUND
FRANKLIN TEMPLETON GLOBAL TRUST
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 28, 1996
The undersigned hereby revokes all previous proxies for his shares and
appoints Rupert H. Johnson, Jr., Harmon E. Burns, Deborah R. Gatzek, Larry L.
Greene, and each of them proxies of the undersigned with full power of
substitution to vote all shares of Franklin Templeton German Government Bond
Fund (the "Fund") a series of Franklin Templeton Global Trust (the "Trust")
which the undersigned is entitled to vote at the Fund's Special Meeting to be
held at 777 Mariners Island Blvd., San Mateo, California 94404 at 10:00 a.m.
Pacific time on the 28th day of August, 1996, including any adjournments
thereof, upon the matters set forth below.
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY SHALL BE VOTED IN FAVOR OF EACH LISTED PROPOSAL AND WITHIN THE
DISCRETION OF THE PROXYHOLDERS AS TO ANY OTHER BUSINESS WHICH MAY LEGALLY
COME BEFORE THE MEETING.
x____________________________
Signature
x____________________________ Dated:________________, 1996
Signature
Note: please sign exactly as your name appears on the proxy. If signing for
estates, trusts, or corporations, title or capacity should be stated. If
shares are held jointly, each holder must sign.
FOR AGAINST ABSTAIN
I. To approve a change of the Trust's place of
organization from a Massachusetts business trust
to a Delaware business trust
II.- To approve amendments to the Trust's Declaration
of Trust, to be made only if the Reorganization is
not approved, which would permit the Trustees to
create additional series or classes of shares
III. To amend and change the Fund's investment policy
regarding investing in restricted securities or other
illiquid securities from fundamental to non-fundamental
GRANT WITHHOLD
To vote upon any other business which may legally
come before the meeting.
210
PLEASE SIGN AND DATE THE
REVERSE OF THIS CARD
PROXY PROXY
211
FRANKLIN TEMPLETON GLOBAL CURRENCY FUND
FRANKLIN TEMPLETON GLOBAL TRUST
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 28, 1996
The undersigned hereby revokes all previous proxies for his shares and
appoints Rupert H. Johnson, Jr., Harmon E. Burns, Deborah R. Gatzek, Larry L.
Greene, and each of them proxies of the undersigned with full power of
substitution to vote all shares of Franklin Templeton Global Currency Fund
(the "Fund") a series of Franklin Templeton Global Trust (the "Trust") which
the undersigned is entitled to vote at the Fund's Special Meeting to be held
at 777 Mariners Island Blvd., San Mateo, California 94404 at 10:00 a.m.
Pacific time on the 28th day of August, 1996, including any adjournments
thereof, upon the matters set forth below.
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY SHALL BE VOTED IN FAVOR OF EACH LISTED PROPOSAL AND WITHIN THE
DISCRETION OF THE PROXYHOLDERS AS TO ANY OTHER BUSINESS WHICH MAY LEGALLY
COME BEFORE THE MEETING.
x____________________________
Signature
x____________________________ Dated:________________, 1996
Signature
Note: please sign exactly as your name appears on the proxy. If signing for
estates, trusts, or corporations, title or capacity should be stated. If
shares are held jointly, each holder must sign.
FOR AGAINST ABSTAIN
I. To approve a change of the Trust's place of
organization from a Massachusetts business
trust to a Delaware business trust
II. To approve amendments to the Trust's
Declaration of Trust, to be made only if the
Reorganization is not approved, which would
permit the Trustees to create additional series
or classes of shares
III. To amend and change the Fund's investment
policy regarding investing in restricted
securities or other illiquid securities from
fundamental to non-fundamental
IV. To eliminate the Fund's fundamental restriction
regarding time deposits
V. To eliminate the Fund's fundamental investment
restriction requiring it to invest at least 25%
of its assets in securities of companies primarily
engaged in the financial services industry
GRANT WITHHOLD
To vote upon any other business which may legally
come before the meeting.
211
PLEASE SIGN AND DATE THE
REVERSE OF THIS CARD
PROXY PROXY
212
FRANKLIN TEMPLETON HARD CURRENCY FUND
FRANKLIN TEMPLETON GLOBAL TRUST
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 28, 1996
The undersigned hereby revokes all previous proxies for his shares and
appoints Rupert H. Johnson, Jr., Harmon E. Burns, Deborah R. Gatzek, Larry L.
Greene, and each of them proxies of the undersigned with full power of
substitution to vote all shares of Franklin Templeton Hard Currency Fund (the
"Fund") a series of Franklin Templeton Global Trust (the "Trust") which the
undersigned is entitled to vote at the Fund's Special Meeting to be held at
777 Mariners Island Blvd., San Mateo, California 94404 at 10:00 a.m. Pacific
time on the 28th day of August, 1996, including any adjournments thereof,
upon the matters set forth below.
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY SHALL BE VOTED IN FAVOR OF EACH LISTED PROPOSAL AND WITHIN THE
DISCRETION OF THE PROXYHOLDERS AS TO ANY OTHER BUSINESS WHICH MAY LEGALLY
COME BEFORE THE MEETING.
x____________________________
Signature
x____________________________ Dated:________________, 1996
Signature
Note: please sign exactly as your name appears on the proxy. If signing for
estates, trusts, or corporations, title or capacity should be stated. If
shares are held jointly, each holder must sign.
<PAGE>
FOR AGAINST ABSTAIN
I. To approve a change of the Trust's place of
organization from a Massachusetts business
trust to a Delaware business trust
II. To approve amendments to the Trust's
Declaration of Trust, to be made only if the
Reorganization is not approved, which would
permit the Trustees to create additional series
or classes of shares
III. To amend and change the Fund's investment
policy regarding investing in restricted
securities or other illiquid securities from
fundamental to non-fundamental
IV. To eliminate the Fund's fundamental restriction
regarding time deposits
V. To eliminate the Fund's fundamental investment
restriction requiring it to invest at least 25%
of its assets in securities of companies primarily
engaged in the financial services industry
GRANT WITHHOLD
To vote upon any other business which may legally
come before the meeting.
212
PLEASE SIGN AND DATE THE
REVERSE OF THIS CARD
PROXY PROXY
213
FRANKLIN TEMPLETON HIGH INCOME CURRENCY FUND
FRANKLIN TEMPLETON GLOBAL TRUST
SPECIAL MEETING OF SHAREHOLDERS - AUGUST 28, 1996
The undersigned hereby revokes all previous proxies for his shares and
appoints Rupert H. Johnson, Jr., Harmon E. Burns, Deborah R. Gatzek, Larry L.
Greene, and each of them proxies of the undersigned with full power of
substitution to vote all shares of Franklin Templeton High Income Currency
Fund (the "Fund") a series of Franklin Templeton Global Trust (the "Trust")
which the undersigned is entitled to vote at the Fund's Special Meeting to be
held at 777 Mariners Island Blvd., San Mateo, California 94404 at 10:00 a.m.
Pacific time on the 28th day of August, 1996, including any adjournments
thereof, upon the matters set forth below.
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY SHALL BE VOTED IN FAVOR OF EACH LISTED PROPOSAL AND WITHIN THE
DISCRETION OF THE PROXYHOLDERS AS TO ANY OTHER BUSINESS WHICH MAY LEGALLY
COME BEFORE THE MEETING.
x____________________________
Signature
x____________________________ Dated:________________, 1996
Signature
Note: please sign exactly as your name appears on the proxy. If signing for
estates, trusts, or corporations, title or capacity should be stated. If
shares are held jointly, each holder must sign.
FOR AGAINST ABSTAIN
I. To approve a change of the Trust's place of
organization from a Massachusetts business
trust to a Delaware business trust
II. To approve amendments to the Trust's
Declaration of Trust, to be made only if the
Reorganization is not approved, which would
permit the Trustees to create additional series
or classes of shares
III. To amend and change the Fund's investment
policy regarding investing in restricted
securities or other illiquid securities from
fundamental to non-fundamental
IV. To eliminate the Fund's fundamental restriction
regarding time deposits
V. To eliminate the Fund's fundamental investment
restriction requiring it to invest at least 25%
of its assets in securities of companies primarily
engaged in the financial services industry
GRANT WITHHOLD
To vote upon any other business which may legally
come before the meeting.
213
PLEASE SIGN AND DATE THE
REVERSE OF THIS CARD
