SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[X] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TEMPLETON GROWTH FUND, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-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 O-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined.):
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
-----------------------------------------------------------------
[ ] 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:
-----------------------------------------------------------------
TEMPLETON GROWTH FUND, INC.
500 EAST BROWARD BOULEVARD
FORT LAUDERDALE, FLORIDA 33394-3091
__________, 2000
Dear Shareholders:
I am writing to inform you of the upcoming Special Meeting of Shareholders of
the Templeton Growth Fund, Inc. (the "Fund") to be held on _______, 2000 at
[10:00] a.m. Eastern time at [place]. The enclosed materials discuss the
proposals to be voted on at the meeting, and contain your proxy statement and
proxy card.
At this meeting, you will be asked to vote on important proposals affecting the
Fund. THE BOARD OF DIRECTORS OF THE FUND BELIEVES THAT THESE PROPOSALS ARE IN
THE BEST INTEREST OF THE FUND AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU
APPROVE EACH OF THEM.
At the meeting, you will be asked to vote on the following proposals:
1. Election of Directors of the Fund (Proposal 1);
2. Ratification or rejection of the selection of the independent
auditors (Proposal 2);
3. Amendment of certain of the Fund's fundamental investment
restrictions (Proposals 3(a)-3(d));
4. Reclassification of the Fund's fundamental investment policies and
certain fundamental investment restrictions to non-fundamental
policies and restrictions (Proposals 4(a)-(j));
5. Elimination of one of the Fund's fundamental investment restrictions
(Proposal 5);
6. Amendment and restatement of the Fund's Articles of Incorporation
(Proposal 6); and
7. Any other business that may properly come before the meeting
(Proposal 7).
Some key points about these proposals are described below. In addition, I
encourage you to review the questions and answers included in the proxy
statement summary to help understand how these proposals will affect you as a
shareholder. Finally, the proposals are described in more detail in the full
text of the proxy statement, which you should read before you vote.
Your Board of Directors believes the proposed changes will enhance the Fund's
ability to compete effectively and give the Fund greater flexibility in the
future, without altering the basic character of the Fund.
REMEMBER: IF YOU HAVE QUESTIONS, PLEASE CALL US AT 1-800/DIAL BEN
(1-800/342-5236).
ABOUT PROPOSAL 1:
Your Board proposes to re-elect the existing Directors of the Fund, and to elect
three additional Directors to the Fund's Board of Directors.
ABOUT PROPOSAL 2:
Your Board proposes that you ratify the selection of PricewaterhouseCoopers LLP
as independent auditors of the Fund.
ABOUT PROPOSALS 3, 4 AND 5:
Your Board proposes that the Fund's investment policies and certain investment
restrictions, which currently are fundamental and cannot be changed without
shareholder approval, be amended, reclassified as non-fundamental, or
eliminated. PLEASE NOTE THAT THE FUND CURRENTLY DOES NOT INTEND TO MAKE ANY
SUBSTANTIVE CHANGES TO ANY OF ITS INVESTMENT POLICIES AND RESTRICTIONS. If
approved, the proposed changes to the Fund's investment policies and
restrictions are not expected to affect the Fund's investment program.
ABOUT PROPOSAL 6:
Your Board proposes to amend and restate the Fund's Articles of Incorporation to
enhance the Fund's operational flexibility. These enhancements clarify the
Board's broad authority to act on behalf of the Fund in setting procedures and
policies relating to the Fund's operations, and generally update the Fund's
charter to reflect recent developments affecting the Fund. The proposed
amendments are also intended to assist the Board in responding to trends in the
fund industry and to enable the Fund to remain competitive.
* * *
I am sure that you, like most people, lead a busy life and are tempted to put
this proxy aside for another day. Please don't. When shareholders do not return
their proxies, additional expenses are incurred to pay for follow-up mailings
and telephone calls. PLEASE TAKE THE TIME TO REVIEW THE PROXY STATEMENT AND SIGN
AND RETURN THE PROXY CARD TODAY.
Sincerely,
Mark G. Holowesko
President
- -------------------------------------------------------------------------------
TELEPHONE, FACSIMILE AND INTERNET VOTING
FOR YOUR CONVENIENCE, YOU MAY BE ABLE TO VOTE BY TELEPHONE, FACSIMILE OR
THROUGH THE INTERNET, 24 HOURS A DAY. IF YOUR ACCOUNT IS ELIGIBLE, A CONTROL
NUMBER AND SEPARATE INSTRUCTIONS ARE ENCLOSED.
- -------------------------------------------------------------------------------
TEMPLETON GROWTH FUND, INC.
500 EAST BROWARD BOULEVARD
FORT LAUDERDALE, FLORIDA 33394-3091
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
____________, 2000
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of TEMPLETON
GROWTH FUND, INC. (the "Fund") will be held at [place], on ________, 2000 at
[10:00] a.m. Eastern time to vote on the following proposals:
1. Election of Directors of the Fund (Proposal 1);
2. Ratification or rejection of the selection of the independent
auditors (Proposal 2);
3. Amendment of certain of the Fund's fundamental investment
restrictions (Proposals 3(a)-3(d));
4. Reclassification of the Fund's fundamental investment policies and
certain fundamental investment restrictions to non-fundamental
policies and restrictions (Proposals 4(a)-(j));
5. Elimination of one of the Fund's fundamental investment restrictions
(Proposal 5);
6. Amendment and restatement of the Fund's Articles of Incorporation
(Proposal 6);
7. Any other business that may properly come before the meeting
(Proposal 7).
Shareholders of record at the close of business on _______, 2000 are entitled to
notice of, and to vote at, the meeting.
By Order of the Board of Directors,
Barbara J. Green
Secretary
_______________, 2000
PLEASE RESPOND - YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
ENVELOPE SO THAT YOU WILL BE REPRESENTED AT THE MEETING.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Questions and Answers .................................................................. 1
Proposal 1: Election of Directors ...................................................... 4
Proposal 2: Ratification or rejection of selection of independent auditors .............. 13
Introduction to Proposals 3, 4 and 5 .................................................... 14
Proposal 3: To approve amendments to certain of the Fund's Fundamental
Investment Restrictions ..................................................... 15
3(a) Borrowing ............................................................... 15
3(b) Underwriting ............................................................ 16
3(c) Lending ................................................................. 17
3(d) Industry concentration .................................................. 19
3(e) Investment in other investment companies ................................ 19
Proposal 4: Reclassification of fundamental investment policies and certain
fundamental investment restrictions as non-fundamental policies
and restrictions (this Proposal involves separate votes on
on Sub-Proposals 4(a) - 4(j)) ............................................. 21
Proposal 5: To eliminate one of the Fund's fundamental investment restrictions ........ 24
Proposal 6: Amendment and Restatement of the Fund's Articles of Incorporation ......... 25
Proposal 7: Other business ............................................................ 28
Information about the Fund ............................................................. 28
Information about voting and the Meeting ............................................... 29
Exhibit A .............................................................................. A-1
Exhibit B .............................................................................. B-1
</TABLE>
PROXY STATEMENT SUMMARY
The following is a brief summary of the proposals to be considered at the
meeting. The information below is qualified in its entirety by the more detailed
information contained in the proxy statement. Accordingly, please read the
enclosed proxy materials before voting.
- QUESTIONS & ANSWERS -
Q. WHEN WILL THE MEETING BE HELD? WHO IS ELIGIBLE TO VOTE?
A. The meeting will be held on ___________, 2000 at [10:00] a.m.
Eastern time at [place]. The record date for the Meeting is the close of
business on _______, 2000. Only shareholders who owned shares at that time are
entitled to vote at the meeting.
Q. WHAT IS BEING VOTED ON AT THE MEETING?
A. The Board of Directors is recommending that shareholders consider
the following proposals affecting the Fund:
1. Election of Directors of the Fund (Proposal 1);
2. Ratification or rejection of the selection of the independent
auditors (Proposal 2);
3. Amendment of certain of the Fund's fundamental investment
restrictions (Proposals 3(a)-3(d));
4. Reclassification of the Fund's fundamental investment policies
and certain fundamental investment restrictions to non-
fundamental policies and restrictions (Proposals 4(a)-(j));
5. Elimination of one of the Fund's fundamental investment
restrictions (Proposal 5);
6. Amendment and restatement of the Fund's Articles of
Incorporation (Proposal 6);
7. Any other business that may properly come before the meeting
(Proposal 7).
Q. HOW DO THE DIRECTORS RECOMMEND THAT YOU VOTE ON THESE PROPOSALS?
A. The Board recommends that you vote "FOR" each proposal.
Q. ARE THERE ANY PROPOSALS THAT WILL IMPACT THE FUND'S INVESTMENT
POLICIES OR LIMITATIONS?
A. Yes. Although no substantive changes to the Fund's investment
program are currently contemplated, it is proposed that the Fund's investment
policies and certain restrictions that are "fundamental" (that is, those that
cannot be changed without shareholder approval) be amended, reclassified as
non-fundamental, or eliminated. If these proposals are approved by shareholders,
the Fund's Board of Directors will have the flexibility to respond to future
developments by changing the Fund's investment policies and restrictions in a
manner intended to achieve the Fund's investment objective of long-term capital
growth without obtaining shareholder approval. Shareholders, of course, will be
informed of any significant changes to the Fund's investment policies or
restrictions. These proposals are intended only to eliminate the cost and delay
of seeking shareholder approval for changes in investment policies and
restrictions that would not otherwise require convening a shareholder meeting.
Shareholder approval of these proposals is not expected to affect the Fund's
investment program or overall level of risk at the present time.
Q. WHY AM I BEING ASKED TO APPROVE AMENDING CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS?
A. Certain of the Fund's fundamental investment restrictions were
adopted in response to state laws which are no longer applicable, or to market
conditions that no longer exist, and thus may be overly restrictive. Approval of
the proposed amendment of these fundamental restrictions will provide the Fund
with greater investment flexibility within the boundaries imposed by applicable
law. The proposed changes are not expected to have any immediate effect on the
manner in which the Fund is managed.
Q. WHY AM I BEING ASKED TO APPROVE RECLASSIFYING THE FUND'S FUNDAMENTAL
INVESTMENT POLICIES AND CERTAIN INVESTMENT RESTRICTIONS AS NON-FUNDAMENTAL?
A. Although the change of certain of the Fund's fundamental investment
policies and restrictions to non-fundamental polices and restrictions initially
will not result in changes to the way the Fund is managed, the change is
proposed to provide the Fund with greater flexibility to respond to future
developments, and to avoid additional costs that would otherwise have to be
incurred by obtaining shareholder approval to change policies and restrictions
that are not required by law to be fundamental.
Q. WHY AM I BEING ASKED TO APPROVE ELIMINATING CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS?
A. Several of the Fund's current fundamental investment restrictions
reflect past regulatory, business or industry conditions, and practices or
requirements which are outdated, unnecessary and potentially burdensome in the
future. Approval of this proposal to eliminate certain restrictions initially
will not result in changes to the management of the Fund, but will provide the
Fund with greater flexibility to pursue its investment goal of long-term capital
growth.
Q: WHY AM I BEING ASKED TO APPROVE THE AMENDMENT AND RESTATEMENT OF
THE FUND'S ARTICLES OF INCORPORATION?
A. The Fund's current Articles of Incorporation were initially adopted
in 1986 and have been amended or supplemented seven times. The Articles no
longer reflect the broadest flexibility which legislative changes in Maryland
have made available to Corporations. The proposed Articles are designed to take
advantage of the changes since 1986. Specifically, the Board's broad authority
over the Fund's operations is proposed to be clarified to enhance the Fund's
flexibility and ensure that it remains competitive with other similar funds. By
approving the proposed amendment and restatement of the Fund's Articles of
Incorporation, shareholders would ratify and endorse the Board's continued
efforts to maximize the Fund's flexibility and competitiveness.
Q. WHEN WILL THE PROPOSALS TAKE EFFECT IF THEY ARE APPROVED?
A. If approved, the election of the nominees to serve on the Board of
Directors will be effective on ______________, 2000. If approved, each of the
other Proposals and Sub-proposals will become effective immediately.
Q. WHO IS ASKING FOR MY VOTE?
A. The Board of Directors requests that you sign and return the
enclosed proxy so your vote can be cast at the meeting. In the event the meeting
is adjourned, your proxy would also be voted at the reconvened meeting.
Q. HOW DO I VOTE MY SHARES?
A. You may vote your shares in one of several ways. You can vote by
mail, fax, or in person at the meeting. f you are eligible to vote by telephone
or through the internet, a control number and separate instructions are
enclosed. To vote by mail, sign and send us the enclosed proxy voting card in
the envelope provided. To vote by telephone, call _______________. You can fax
your vote by signing the proxy voting card and faxing both sides of the card to
_______________. Or, you can vote in person at the meeting on ___________, 2000.
[CONFIRM WITH SOLICITOR.]
Q. IF I SEND MY PROXY IN NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER?
A. You may revoke your proxy at any time before it is voted by sending
to the Fund a written revocation or a later-dated proxy that is received at or
before the meeting, or by attending the meeting and voting in person. Even if
you plan to attend the meeting and vote in person, we ask that you return the
enclosed proxy. This will help us ensure that an adequate number of shares are
present for the meeting to be held.
* * *
TEMPLETON GROWTH FUND, INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Templeton Growth Fund, Inc. (the "Fund")
for a Special Meeting of Shareholders to be held at [place] on _______, 2000 at
[10:00] a.m. Eastern time, and any adjournments thereof. This Proxy Statement
and related materials are being mailed to shareholders starting on or about
______, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS APPROVAL OF PROPOSAL 1.
HOW ARE NOMINEES SELECTED?
The Board of Directors of the Fund (the "Board") has a Nominating and
Compensation Committee (the "Committee") consisting of Andrew H. Hines, Jr. and
Gordon S. Macklin both of whom are independent Directors. The Committee is
responsible for the selection and nomination of candidates to serve as Directors
of the Fund. The Committee will review shareholders' nominations to fill
vacancies on the Board, if these nominations are submitted in writing and
addressed to the Committee at the Fund's offices. However, the Committee expects
to be able to identify from its own resources an ample number of qualified
candidates.
WHO ARE THE NOMINEES AND DIRECTORS?
The nominees to serve as Directors are listed in the chart beginning on Page
[5]. With the exception of Frank J. Crothers, Edith E. Holiday, and Constantine
D. Tseretopoulos, all of the nominees currently are members of the Board. The
terms of all nominees will continue until their successors are duly elected and
qualified. In addition, all of the current nominees are also directors or
trustees of other investment companies in the Franklin Group of Funds (R) and/or
the Templeton Group of Funds (collectively, the "Franklin Templeton Group of
Funds").
Certain Directors of the Fund hold director and/or officer positions with
Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are Charles
B. Johnson and Rupert H. Johnson, Jr., who own approximately [19]% and [15]%,
respectively, of its outstanding shares. Resources is primarily engaged, through
various subsidiaries, in providing investment management, share distribution,
transfer agent and administrative services to a family of investment companies.
Resources is a New York Stock Exchange, Inc. ("NYSE") listed holding company
(NYSE: BEN). Charles E. Johnson, a Vice President of the Fund, is the son and
nephew, respectively, of brothers Charles B. Johnson, the Chairman of the Board
and a Vice President of the Fund, and Rupert H. Johnson, Jr., a Vice President
of the Fund. There are no other family relationships among any of the Directors
or nominees for Director.
Each nominee is currently available and has consented to serve if elected. If
any of the nominees should become unavailable, the persons named in the proxy
card will vote in their discretion for another person or persons who may be
nominated as Directors.
Listed below, for each nominee, is a brief description of recent professional
experience. [To be updated prior to
filing.]
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
FUND SHARES OWNED IN THE
BENEFICIALLY OWNED FRANKLIN TEMPLETON
AND % OF TOTAL GROUP OF FUNDS
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES (INCLUDING THE FUND)
DURING PAST FIVE YEARS AND AGE AS OF [ ], 2000 AS OF [ ], 2000
- ------------------------------------------------------------------ -------------------------- ------------------------
<S> <C> <C>
HARRIS J. ASHTON (Age [67]) __________** __________
DIRECTOR SINCE [1992]
Director, RBC Holdings, Inc. (bank holding company) and Bar-S Foods (a meat
packing company); director or trustee, as the case may be, of 47 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers).
NICHOLAS F. BRADY*(Age [69]) __________** __________
DIRECTOR SINCE [1993]
Chairman, Templeton Emerging Markets Investment Trust PLC, Templeton Latin
America Investment Trust PLC, Darby Overseas Investments, Ltd. And Darby
Emerging Markets Investments LDC (investment firms) (1994-present); Director,
Templeton Global Strategy Funds, Amerada Hess Corporation (exploration and
refining of natural gas), Christiana Companies, Inc. (operating and investment
companies), and H.J. Heinz Company (processed foods and allied products);
director or trustee, as the case may be, of 19 of the investment companies in
the Franklin Templeton Group of Funds; and FORMERLY, Secretary of the United
States Department of the Treasury (1988-1993) and Chairman of the Board, Dillon,
Read & Co., Inc. (investment banking) (until 1988).
</TABLE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
FUND SHARES OWNED IN THE
BENEFICIALLY OWNED FRANKLIN TEMPLETON
AND % OF TOTAL GROUP OF FUNDS
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES (INCLUDING THE FUND)
DURING PAST FIVE YEARS AND AGE AS OF [ ], 2000 AS OF [ ], 2000
- ------------------------------------------------------------------ -------------------------- ------------------------
<S> <C> <C>
FRANK J. CROTHERS (Age [ ]) __________** __________
DIRECTOR SINCE _____________
Chairman, Atlantic Equipment & Power Ltd.; Vice Chairman, Caribbean Utilities
Co., Ltd.; President, Provo Power Corporation; director of various other
business and non-profit organizations; and director or trustee, as the case may
be, of 11 of the investment companies in the Franklin Templeton Group of Funds
S. JOSEPH FORTUNATO (Age [67]) __________** __________
DIRECTOR SINCE [1992]
Member of the law firm of Pitney, Hardin, Kipp & Szuch; director or trustee, as
the case may be, of 49 of the investment companies in the Franklin Templeton
Group of Funds.
JOHN Wm. GALBRAITH (Age [78]) __________** __________
DIRECTOR SINCE [1995]
President, Galbraith Properties, Inc. (personal investment company); Director
Emeritus, Gulf West Banks, Inc. (bank holding company) (1995-present); director
or trustee, as the case may be, of 18 of the investment companies in the
Franklin Templeton Group of Funds; and FORMERLY, Director, Mercantile Bank
(1991-1995), Vice Chairman, Templeton, Galbraith & Hansberger Ltd. (1986-1992),
and Chairman, Templeton Funds Management, Inc. (1974-1991). Age [78].
ANDREW H. HINES, JR. (Age [76]) __________** __________
DIRECTOR SINCE [1992]
Consultant, Triangle Consulting Group; Executive-in-Residence, Eckerd College
(1991-present); director or trustee, as the case may be, of 20 of the investment
companies in the Franklin Templeton Group of Funds; and FORMERLY, Chairman and
Director, Precise Power Corporation (1990-1997), Director, Checkers Drive-In
Restaurant, Inc. (1994-1997), and Chairman of the Board and Chief Executive
Officer, Florida Progress Corporation (holding company in the energy area)
(1982-1990) and director of various of its subsidiaries.
</TABLE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
FUND SHARES OWNED IN THE
BENEFICIALLY OWNED FRANKLIN TEMPLETON
AND % OF TOTAL GROUP OF FUNDS
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES (INCLUDING THE FUND)
DURING PAST FIVE YEARS AND AGE AS OF [ ], 2000 AS OF [ ], 2000
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
EDITH E. HOLIDAY (Age [ ]) __________** __________
DIRECTOR SINCE ______________
Director, Amerada Hess Corporation (exploration and refining of natural gas)
(1993-present), Hercules Incorporated (chemicals, fibers and resins)
(1993-present), Beverly Enterprises, Inc. (health care) (1995-present), H.J.
Heinz Company (processed foods and allied products) (1994-present) and RTI
International Metals, Inc. (metal mill products) (July 1999-present); director
or trustee, as the case may be, of 24 of the investment companies in the
Franklin Templeton Group of Funds; and formerly, Chairman (1995-1997) and
Trustee (1993-1997), National Child Research Center, Assistant to the President
of the United States and Secretary of the Cabinet (1990-1993), General Counsel
to the United States Treasury Department (1989-1990), and Counselor to the
Secretary and Assistant Secretary for Public Affairs and Public Liaison-United
States Treasury Department (1988-1989).
CHARLES B. JOHNSON* (Age [66]) __________** __________
DIRECTOR SINCE [1992], CHAIRMAN SINCE [1995]
AND VICE PRESIDENT SINCE ____
President, Chief Executive Officer and Director, Franklin Resources, Inc.;
Chairman of the Board and Director, Franklin Advisers, Inc., Franklin Investment
Advisory Services, Inc. and Franklin Templeton Distributors, Inc.; Director,
Franklin/Templeton Investor Services, Inc. and Franklin Templeton Services,
Inc.; officer and/or director or trustee, as the case may be, of most of the
other subsidiaries of Franklin Resources, Inc. and of 48 of the investment
companies in the Franklin Templeton Group of Funds. Age [66].
BETTY P. KRAHMER (Age [70]) __________** __________
DIRECTOR SINCE [1991]
Director or trustee of various civic associations; director or trustee, as the
case may be, of 19 of the investment companies in the Franklin Templeton Group
of Funds; and FORMERLY, Economic Analyst, U.S. government.
</TABLE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
FUND SHARES OWNED IN THE
BENEFICIALLY OWNED FRANKLIN TEMPLETON
AND % OF TOTAL GROUP OF FUNDS
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES (INCLUDING THE FUND)
DURING PAST FIVE YEARS AND AGE AS OF [ ], 2000 AS OF [ ], 2000
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
GORDON S. MACKLIN (Age [71]) __________** __________
DIRECTOR SINCE 1993
Director, Fund American Enterprises Holdings, Inc. (holding company), Martek
Biosciences Corporation, MCI WorldCom (information services), MedImmune, Inc.
(biotechnology), Spacehab, Inc. (aerospace services) and Real 3D (software);
director or trustee, as the case may be, of 47 of the investment companies in
the Franklin Templeton Group of Funds; and formerly, Chairman, White River
Corporation (financial services) and Hambrecht and Quist Group (investment
banking), and President, National Association of Securities Dealers, Inc.
FRED R. MILLSAPS (Age [70]) __________** __________
DIRECTOR SINCE [1991]
Manager of personal investments (1978-present); director of various business and
nonprofit organizations; director or trustee, as the case may be, of 20 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
Chairman and Chief Executive Officer, Landmark Banking Corporation (1969-1978),
Financial Vice President, Florida Power and Light (1965-1969), and Vice
President, Federal Reserve Bank of Atlanta (1958-1965).
CONSTANTINE D. TSERETOPOULOS (Age [ ]) __________** __________
DIRECTOR SINCE ____________
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit
organizations; director or trustee, as the case may be, of 11 of the investment
companies in the Franklin Templeton Group of Funds; and FORMERLY, Cardiology
Fellow, University of Maryland (1985-1987) and Internal Medicine Intern, Greater
Baltimore Medical Center (1982-1985).
</TABLE>
- ----------------------------------
* Nicholas F. Brady and Charles B. Johnson are "interested persons" as defined
by the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940
Act limits the percentage of interested persons that can comprise a fund's
board of directors. Mr. Johnson is an interested person due to his ownership
interest in Resources, his employment affiliation with Resources and his
position with the Fund. Mr. Brady's status as an interested person results
from his business affiliations with Resources and Templeton Global Advisors
Limited, the Fund's investment manager ("Investment Manager"). Mr. Brady and
Resources are both limited partners of Darby Overseas Partners, L.P. ("Darby
Overseas"). Mr. Brady is Chairman and shareholder of Darby Emerging Markets
Investments LDC, which is the corporate general partner of Darby Overseas. In
addition, Darby Overseas and Templeton Global Advisors Limited are limited
partners of Darby Emerging Markets Fund, L.P. The remaining nominees and
Directors of the Fund are not interested persons of the Fund (the "Independent
Directors").
** Less than 1%.
HOW OFTEN DO THE DIRECTORS MEET AND WHAT ARE THEY PAID?
The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of
shareholders. The Directors anticipate meeting at least five times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Directors also oversee the services furnished to the
Fund by the Investment Manager, and various other service providers. The Fund
currently pays the Independent Directors and Mr. Brady an annual retainer of
$12,000 and a fee of $900 per Board meeting attended. Directors serving on the
Audit Committee of the Fund and other investment companies in the Franklin
Templeton Group of Funds receive a flat fee of $2,000 per Audit Committee
meeting attended, a portion of which is allocated to the Fund. Members of a
committee are not compensated for any committee meeting held on the day of a
Board meeting.
During the fiscal year ended August 31, 1999, there were five meetings of the
Board, four meetings of the Audit Committee, and one meeting of the Nominating
and Compensation Committee. Each of the Directors attended at least 75% of the
total number of meetings of the Board and the total number of meetings held by
all committees of the Board on which the Directors served. There was 100%
attendance at the meetings of the Audit Committee and the Nominating and
Compensation Committee.
Certain Directors and Officers of the Fund are shareholders of Resources and may
receive indirect remuneration due to their participation in management fees and
other fees received from the Franklin Templeton Group of Funds by the Investment
Manager and its affiliates. The Investment Manager or its affiliates pay the
salaries and expenses of the Fund's Officers. No pension or retirement benefits
are accrued as part of Fund expenses.
[To be updated]
<TABLE>
<CAPTION>
NUMBER OF BOARDS
WITHIN THE FRANKLIN TOTAL COMPENSATION
AGGREGATE TEMPLETON GROUP OF FROM THE
COMPENSATION FROM FUNDS ON WHICH FRANKLIN TEMPLETON
NAME OF DIRECTOR THE FUND* DIRECTOR SERVES** GROUP OF FUNDS***
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harris J. Ashton $ 47 $
Nicholas F. Brady 19
Frank J. Crothers 11
S. Joseph Fortunato 49
John Wm. Galbraith 18
Andrew H. Hines, Jr. 20
Edith E. Holiday 24
Betty P. Krahmer 19
Gordon S. Macklin 47
Fred R. Millsaps 20
Constantine D. Tseretopoulos 11
</TABLE>
- ---------------------------
* Compensation received for the fiscal year ended August 31, 1999.
** We base the number of boards 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 53 registered investment companies, with
approximately 155 U.S. based funds or series.
*** For the calendar year ended December 31, 1999.
The table above indicates the total fees paid to Directors by the Fund
individually and by all of the funds in the Franklin Templeton Group of Funds.
These Directors also serve as directors or trustees of other investment
companies in the Franklin Templeton Group of Funds, many of which hold meetings
at different dates and times. The Directors and the Fund's management believe
that having the same individuals serving on the boards of many of the funds in
the Franklin Templeton Group of Funds enhances the ability of each fund to
obtain, at a relatively modest cost to each separate fund, the services of high
caliber, experienced and knowledgeable Independent Directors who can more
effectively oversee the management of the funds.
Board members historically have followed a policy of having substantial
investments in one or more of the funds in the Franklin Templeton Group of
Funds, as is consistent with their individual financial goals. In February 1998,
this policy was formalized through adoption of a requirement that each board
member invest one-third of fees received for serving as a director or trustee of
a Templeton fund in shares of one or more Templeton funds and one-third of fees
received for serving as a director or trustee of a Franklin fund in shares of
one or more Franklin funds until the value of such investments equals or exceeds
five times the annual fees paid to such board member. Investments in the name of
family members or entities controlled by a board member constitute fund holdings
of such board member for purposes of this policy, and a three year phase-in
period applies to such investment requirements for newly elected board members.
In implementing such policy, a board member's fund holdings existing on February
27, 1998, are valued as of such date with subsequent investments valued at cost.
WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?
Officers of the Fund are appointed by the Directors and serve at the pleasure of
the Board. Listed below, for each Executive Officer, is a brief description of
recent professional experience.
[update]
<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- ------------------------------------------------- --------------------------------------------------------------------
<S> <C>
CHARLES B. JOHNSON See Proposal 1, "Election of Directors."
CHAIRMAN SINCE [1995] AND
VICE PRESIDENT SINCE [1992]
MARK G. HOLOWESKO President, Templeton Global Advisors Limited; Chief Investment
PRESIDENT SINCE [1994] Officer, Global Equity Group, Executive Vice President and
Director, Templeton Worldwide, Inc.; officer of 19 of the
investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, Investment Administrator, RoyWest Trust
Corporation (Bahamas) Limited (1984-1985). Age [39].
RUPERT H. JOHNSON, JR. Executive Vice President and Director, Franklin Resources, Inc.
VICE PRESIDENT SINCE [1996] and Franklin Templeton Distributors, Inc.; President and Director,
Franklin Advisers, Inc. and Franklin Investment Advisory
Services, Inc.; Senior Vice President and Director, Franklin
Advisory Services LLC; Director, Franklin/Templeton Investor
Services, Inc.; and officer and/or director or trustee, as the
case may be, of most of the other subsidiaries of Franklin
Resources, Inc. and of 51 of the investment companies in
the Franklin Templeton Group of Funds. Age [59].
HARMON E. BURNS Executive Vice President and Director, Franklin Resources, Inc.,
VICE PRESIDENT SINCE [1996] Franklin Templeton Distributors, Inc. and Franklin Templeton
Services, Inc.; Executive Vice President, Franklin Advisers, Inc.;
Director, Franklin Investment Advisory Services, Inc. and
Franklin/Templeton Investor Services, Inc.; and officer and/or
director or trustee, as the case may be, of most of the other
subsidiaries of Franklin Resources, Inc. and of 51 of the
investment companies in the Franklin Templeton Group of Funds. Age
[54].
CHARLES E. JOHNSON Senior Vice President and Director, Franklin Resources, Inc.;
VICE PRESIDENT SINCE [1996] Senior Vice President, Franklin Templeton Distributors, Inc.;
President and Director, Templeton Worldwide, Inc.; Chairman and
Director, Templeton Investment Counsel, Inc.; Vice President, Franklin
Advisers, Inc.; officer and/or director of some of the other
subsidiaries of Franklin Resources, Inc.; and officer and/or director
or trustee, as the case may be, of 32 of the investment companies in the
Franklin Templeton Group of Funds. Age [43].
MARTIN L. FLANAGAN Senior Vice President and Chief Financial Officer, Franklin
VICE PRESIDENT SINCE [19__] Resources, Inc., President and Director, Franklin Templeton
Services, Inc.; Executive Vice President and Director,
Templeton Worldwide, Inc. and Templeton Investment Counsel, Inc.;
Executive Vice President, Franklin Advisers, Inc.; officer and/or director
of a number of the other subsidiaries of Franklin Resources, Inc.; and
officer and/or director or trustee, as the case may be, of 51 of the
investment companies in the Franklin Templeton Group of Funds. Age [39].
JOHN R. KAY Vice President, Templeton Worldwide, Inc.; Assistant Vice
VICE PRESIDENT SINCE [1994] President, Franklin Templeton Distributors, Inc.; officer of 24 of
the investment companies in the Franklin Templeton Group of Funds;
and FORMERLY, Vice President and Controller, Keystone Group, Inc.
Age [59].
ELIZABETH M. KNOBLOCK General Counsel, Secretary and Senior Vice President, Templeton
VICE PRESIDENT - COMPLIANCE SINCE [1996] Investment Counsel, Inc.; Senior Vice President, Templeton Global
Investors, Inc.; officer of 23 of the investment companies in the
Franklin Templeton Group of Funds; and FORMERLY, Vice President
and Associate General Counsel, Kidder Peabody & Co. Inc.
(1989-1990), Assistant General Counsel, Gruntal & Co., Inc.
(1988), Vice President and Associate General Counsel, Shearson
Lehman Hutton Inc. (1988), Vice President and Assistant General
Counsel, E.F. Hutton & Co. Inc. (1986-1988), and Special Counsel
of the Division of Investment Management, U.S. Securities and
Exchange Commission (1984-1986). Age [44].
JAMES R. BAIO Certified Public Accountant; Senior Vice President, Templeton
TREASURER SINCE [1994] Worldwide, Inc., Templeton Global Investors, Inc. and Templeton
Funds Trust Company; officer of 20 of the investment companies
in the Franklin Templeton Group of Funds; and FORMERLY, Senior Tax
Manager, Ernst & Young (certified public accountants) (1977-1989).
Age [45].
BARBARA J. GREEN Vice President and Deputy General Counsel, Franklin Resources,
SECRETARY SINCE [1996] Inc.; officer of 19 of the investment companies in the Franklin
Templeton Group of Funds; and FORMERLY, Deputy Director of
the Division of Investment Management, Executive Assistant and
Senior Advisor to the Chairman, Counselor to the Chairman, Special
Counsel and Attorney Fellow, U.S. Securities and Exchange Commission
(1986-1995), Attorney, Rogers & Wells, and Judicial Clerk, U.S. District
Court (District of Massachusetts). Age [52].
</TABLE>
PROPOSAL 2: RATIFICATION OR REJECTION OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE
INDEPENDENT DIRECTORS OF THE FUND, RECOMMENDS
APPROVAL OF PROPOSAL 2.
HOW ARE INDEPENDENT AUDITORS SELECTED?
The Board has a standing Audit Committee consisting of Messrs. Galbraith, Hines
and Millsaps, all of whom are Independent Directors. The Audit Committee reviews
the maintenance of the Fund's records and the safekeeping arrangements of the
Fund's custodian, reviews both the audit and non-audit work of the Fund's
independent auditors, and submits a recommendation to the Board as to the
selection of independent auditors.
WHICH INDEPENDENT AUDITORS DID THE BOARD SELECT?
Upon the recommendation of the Audit Committee, the Board selected the firm of
PricewaterhouseCoopers LLP, 333 Market Street, San Francisco, CA 94105, as
auditors of the Fund for the current fiscal year. PricewaterhouseCoopers LLP has
examined and reported on the fiscal year-end financial statements, dated August
31, 1999, and certain related U. S. Securities and Exchange Commission filings.
You are being asked to ratify the Board's selection of PricewaterhouseCoopers
LLP for the current fiscal year. Services to be performed by the auditors
include examining and reporting on the fiscal year-end financial statements of
the Fund and certain related filings with the U.S. Securities and Exchange
Commission.
McGladrey & Pullen, LLP resigned as independent auditors of the Fund on August
13, 1999. McGladrey & Pullen, LLP served as the Fund's auditors for more than
the past twenty years and the fiscal year ended August 31, 1998. There have not
been any disputes or disagreements with McGladrey & Pullen, LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures. H&R Block, a public company, acquired certain assets of
McGladrey & Pullen, LLP on August 2, 1999. Following the acquisition by a public
company, McGladrey & Pullen, LLP elected to not continue servicing clients in
the mutual fund business. As a result, the partners and professional staff who
were previously responsible for auditing the Fund's financial statements are now
associated with PricewaterhouseCoopers LLP.
Neither the firms of PricewaterhouseCoopers LLP and McGladrey & Pullen, LLP nor
any of their members have any material direct or indirect financial interest in
the Fund.
Representatives of PricewaterhouseCoopers LLP and McGladrey & Pullen, LLP are
not expected to be present at the Meeting, but will have the opportunity to make
a statement if they wish, and will be available should any matter arise
requiring their presence.
INTRODUCTION TO PROPOSALS 3, 4 AND 5.
WHY IS THE FUND RECLASSIFYING ITS FUNDAMENTAL INVESTMENT POLICIES AND CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS TO NON-FUNDAMENTAL, AND AMENDING OR
ELIMINATING CERTAIN OF ITS OTHER FUNDAMENTAL INVESTMENT RESTRICTIONS?
The Fund's investment activities are governed by its investment policies and
investment restrictions. Under the 1940 Act, certain investment restrictions are
required to be "fundamental" which means that they can only be changed by a
shareholder vote. An investment company may designate additional investment
policies and restrictions that are fundamental, and it may also adopt
"non-fundamental" policies and restrictions, which may be changed by the
Directors without shareholder approval.
After the Fund was formed, certain legal and regulatory requirements applicable
to mutual funds changed. For example, certain restrictions imposed by state laws
and regulations were eliminated by the National Securities Markets Improvement
Act of 1996 ("NSMIA") and therefore are no longer applicable to funds. As a
result of NSMIA, the Fund currently is subject to fundamental investment
restrictions that are either more restrictive than required under current law,
or which are no longer required at all. Accordingly, the Directors recommend
that the Fund's shareholders approve the reclassification, amendment or
elimination of certain of the Fund's current fundamental investment policies or
restrictions. The proposed restrictions satisfy current federal regulatory
requirements and are written to provide flexibility to respond to future legal,
regulatory, market or technical changes.
By reducing the total number of investment restrictions that can be changed only
by a shareholder vote, management of the Fund believes that the Fund may be able
to minimize the costs and delays associated with holding future shareholder
meetings to revise fundamental policies that become outdated or inappropriate.
The management of the Fund also believes that the Investment Manager's ability
to manage the Fund's assets in a changing investment environment will be
enhanced, and that investment management opportunities may increase as a result
of these changes.
The proposed changes will not affect the Fund's investment objective of
long-term capital growth. Although the proposed changes in fundamental
investment policies and restrictions will provide the Fund greater flexibility
to respond to future investment opportunities, the Investment Manager does not
anticipate that the changes, individually or in the aggregate, will result in a
material change in the level of investment risk associated with investment in
the Fund. The Investment Manager does not anticipate that the proposed changes
will materially affect the manner in which the Fund is managed.
The fundamental investment policies and fundamental investment restrictions
proposed for amendment or reclassification, together with the recommended
changes to these policies and restrictions, are detailed in Exhibit A.
Shareholders are requested to vote on each Sub-Proposal in Proposals 3 and 4
separately.
PROPOSAL 3: TO APPROVE AMENDMENTS TO CERTAIN OF THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS (THIS PROPOSAL INVOLVES SEPARATE VOTES ON
SUB-PROPOSALS 3(A)-3(D))
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS
OF THE FUND, RECOMMENDS APPROVAL OF EACH SUB-PROPOSAL 3(A) - 3(D).
SUB-PROPOSAL 3(A): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING BORROWING.
The 1940 Act requires investment companies to impose certain limitations on
borrowing activities. The limitations on borrowing are generally designed to
protect shareholders and their investment by restricting a fund's ability to
subject its assets to the claims of creditors who might have a claim to the
fund's assets that would take precedence over the claims of shareholders. A
fund's borrowing restriction must be fundamental.
Under the 1940 Act, a fund may borrow from banks up to one-third of its total
assets (including the amount borrowed). In addition, a fund may borrow up to 5%
of its total assets for temporary purposes from any person, provided that such
borrowing is privately arranged. Under German law, which the Fund is subject to
as a result of registering its securities for sale there, a fund may borrow up
to 10% of its total assets. Funds typically borrow money to meet redemptions in
order to avoid forced, unplanned sales of portfolio securities. This technique
allows a fund greater flexibility to buy and sell portfolio securities for
investment or tax considerations, rather than for cash flow considerations.
WHAT IS THE FUND'S CURRENT BORROWING RESTRICTION?
The Fund's current borrowing restriction states that the Fund may not:
BORROW MONEY FOR ANY PURPOSE OTHER THAN REDEEMING ITS SHARES OR
PURCHASING ITS SHARES FOR CANCELLATION, AND THEN ONLY AS A TEMPORARY
MEASURE TO AN AMOUNT NOT EXCEEDING 5% OF THE VALUE OF ITS TOTAL ASSETS,
OR PLEDGE, MORTGAGE, OR HYPOTHECATE ITS ASSETS OTHER THAN TO SECURE
SUCH TEMPORARY BORROWINGS, AND THEN ONLY TO SUCH EXTENT NOT EXCEEDING
10% OF THE VALUE OF ITS TOTAL ASSETS AS THE BOARD OF DIRECTORS MAY BY
RESOLUTION APPROVE. (FOR THE PURPOSES OF THIS RESTRICTION, COLLATERAL
ARRANGEMENTS WITH RESPECT TO MARGIN FOR A STOCK INDEX FUTURES CONTRACT
ARE NOT DEEMED TO BE A PLEDGE OF ASSETS.)
WHAT EFFECT WILL AMENDING THE CURRENT BORROWING RESTRICTION HAVE ON THE FUND?
The Fund is limited by U.S. Federal law and German law and by guidance from the
U. S. Securities and Exchange Commission (and its staff) (the "SEC") with
respect to its ability to borrow. However, the current fundamental restriction
overly restricts the Fund's ability to borrow. Although the Fund historically
has seldom made any borrowings, the Board proposes to implement a less
restrictive fundamental restriction regarding borrowing, as set forth below.
The proposed restriction also permits the Fund to borrow cash from affiliated
investment companies. The SEC recently granted an exemptive order to the Fund,
together with other funds in the Franklin Templeton Group of Funds, permitting
the Fund to borrow money from affiliated Franklin and Templeton funds. The
proposed borrowing restriction would permit the Fund, under certain
circumstances, to borrow money from other Franklin and Templeton funds at rates
which are more favorable than those the Fund would receive if it borrowed from
banks or other lenders.
Since the proposed borrowing restriction would provide the Fund with greater
borrowing flexibility, the Fund may be subject to additional costs, as well as
the risks inherent to borrowing, such as reduced total return.
WHAT IS THE FUND'S PROPOSED BORROWING RESTRICTION?
If approved by shareholders, the borrowing restriction will be revised to state
that the Fund may not:
BORROW MONEY, EXCEPT THAT THE FUND MAY BORROW MONEY FROM BANKS OR
AFFILIATED INVESTMENT COMPANIES TO THE EXTENT PERMITTED BY THE 1940
ACT, OR ANY EXEMPTIONS THEREFROM WHICH MAY BE GRANTED BY THE U.S.
SECURITIES AND EXCHANGE COMMISSION AND THEN ONLY FOR TEMPORARY PURPOSES
AND IN AN AMOUNT NOT EXCEEDING 10% OF THE VALUE OF THE FUND'S TOTAL
ASSETS (INCLUDING THE AMOUNT BORROWED) AND WITH THE CONSENT OF THE
FUND'S CUSTODIAN TO THE TERMS OF THE BORROWING.
PLEDGE, MORTGAGE, HYPOTHECATE OR OTHERWISE ENCUMBER THEIR ASSETS EXCEPT
TO SECURE INDEBTEDNESS PERMITTED UNDER ITS BORROWING POLICY.
SUB-PROPOSAL 3(B): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING UNDERWRITING.
Under the 1940 Act, the Fund's policy concerning underwriting is required to be
fundamental. Under U.S. Federal securities laws, a person or company generally
is considered an underwriter if it participates in the public distribution of
securities of other issuers, usually by purchasing the securities from the
issuer with the intention of re-selling the securities to the public. From time
to time, a mutual fund may purchase a security for investment purposes which it
later sells or redistributes to institutional investors or others under
circumstances where the Fund could possibly be considered to be an underwriter
under the technical definition of underwriter contained in U. S. Federal
securities laws. For example, funds often purchase securities in private
securities transactions where a resale could raise a question relating to
whether or not the fund is technically acting as an underwriter. However, recent
SEC interpretations clarify that re-sales of privately placed securities by
institutional investors do not make the institutional investor an underwriter in
these circumstances. The proposed restriction encompasses these SEC positions.
The Fund's current restriction relating to underwriting is combined with
restrictions relating to other issues in investment restriction 4. The adoption
of this Sub-Proposal would result in the separation of the Fund's underwriting
restriction from the others currently contained in the Fund's fundamental
investment restriction 4. These restrictions relate to (i) the issuance of
senior securities and (ii) the purchase of securities on margin or selling
short, which are not proposed to be amended, reclassified or eliminated.
WHAT IS THE FUND'S CURRENT UNDERWRITING RESTRICTION?
The Fund's current restriction relating to underwriting states, in relevant
part, that the Fund may not "Act as an underwriter..."
WHAT EFFECT WILL AMENDING THE CURRENT UNDERWRITING RESTRICTION HAVE ON THE FUND?
The proposed restriction relating to underwriting is substantially similar to
the current restriction. However, the proposed underwriting restriction
clarifies that the Fund may sell its own shares without being deemed an
underwriter. Under the 1940 Act, a mutual fund will not be considered an
underwriter if it sells its own shares pursuant to a written distribution plan
that complies with certain provisions of the 1940 Act.
The proposed restriction also specifically permits the Fund to resell restricted
securities in those instances where there may be a question as to whether the
Fund is technically acting as an underwriter. By separating the proposed
underwriting restriction from several other issues, the investment restrictions
on the Fund would be clarified. It is not anticipated that adoption of the
proposed restriction would involve any additional risk as the proposed
restriction would not affect the way the Fund is currently managed.
WHAT IS THE FUND'S PROPOSED UNDERWRITING RESTRICTION?
If approved by shareholders, the Fund's underwriting restriction will be revised
to state that the Fund may not:
ACT AS AN UNDERWRITER EXCEPT TO THE EXTENT THE FUND MAY BE DEEMED TO BE
AN UNDERWRITER WHEN DISPOSING OF SECURITIES IT OWNS OR WHEN SELLING ITS
OWN SHARES.
SUB-PROPOSAL 3(C): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING LENDING.
Under the 1940 Act, a fund's policy regarding lending must be fundamental.
Certain investment techniques could, under certain circumstances, be considered
to be loans. For example, if the Fund invests in debt securities, such
investments might be considered to be loans from the Fund to the issuer of the
debt securities. In order to ensure that the Fund may invest in certain debt
securities or repurchase agreements, which could technically be characterized as
the making of loans, the Fund's current fundamental investment restriction
specifically carves out such policies from its prohibitions.
In addition, the Fund's current fundamental investment restriction presently
explicitly permits the Fund to lend its portfolio securities. Securities lending
is a practice that has become common in the mutual fund industry and involves
the temporary loan of portfolio securities to parties who use the securities for
the settlement of securities transactions. The collateral delivered to the Fund
in connection with such a transaction is then invested to provide the Fund with
additional income it might not otherwise have. Securities lending involves
certain risks if the borrower fails to return the securities.
WHAT IS THE FUND'S CURRENT LENDING RESTRICTION?
The Fund's lending restriction currently states that the Fund may not:
LOAN MONEY, APART FROM THE PURCHASE OF A PORTION OF AN ISSUE OF
PUBLICLY DISTRIBUTED BONDS, DEBENTURES, NOTES AND OTHER EVIDENCES OF
INDEBTEDNESS, ALTHOUGH THE FUND MAY BUY U.S. GOVERNMENT OBLIGATIONS
WITH A SIMULTANEOUS AGREEMENT BY THE SELLER TO REPURCHASE THEM WITHIN
NO MORE THAN SEVEN DAYS AT THE ORIGINAL PURCHASE PRICE PLUS ACCRUED
INTEREST.
WHAT EFFECT WILL AMENDING THE CURRENT LENDING RESTRICTION HAVE ON THE FUND?
The proposed restriction would provide the Fund with greater lending
flexibility. While the proposed restriction retains the carve-outs in the
existing restriction, it also would permit the Fund to invest in loan
participations and direct corporate loans which recently have become more common
as investments for investment companies. The proposed restriction also would
provide the Fund additional flexibility to make loans to affiliated investment
companies. The Franklin Templeton Group of Funds, including the Fund, recently
received an exemptive order from the SEC that permits the Fund to lend cash to
other Franklin and Templeton funds. The proposed restriction permits the Fund,
under certain conditions, to lend cash to other Franklin or Templeton funds at
rates higher than those which the Fund would receive if the Fund loaned cash to
banks through short-term lendings such as repurchase agreements. The Board
anticipates that this additional flexibility to lend cash to affiliated
investment companies would provide additional investment opportunities, and
would enhance the Fund's ability to respond to changes in market, industry or
regulatory conditions.
WHAT IS THE FUND'S PROPOSED LENDING RESTRICTION?
If approved by shareholders, the Fund's lending restriction will be revised to
state that the Fund may not:
MAKE LOANS TO OTHER PERSONS EXCEPT (A) THROUGH THE LENDING OF ITS
PORTFOLIO SECURITIES, (B) THROUGH THE PURCHASE OF DEBT SECURITIES, LOAN
PARTICIPATIONS AND/OR ENGAGING IN DIRECT CORPORATE LOANS IN ACCORDANCE
WITH ITS INVESTMENT OBJECTIVES AND POLICIES, AND (C) TO THE EXTENT THE
ENTRY INTO A REPURCHASE AGREEMENT IS DEEMED TO BE A LOAN. THE FUND MAY
ALSO MAKE LOANS TO AFFILIATED INVESTMENT COMPANIES TO THE EXTENT
PERMITTED BY THE 1940 ACT OR ANY EXEMPTIONS THEREFROM WHICH MAY BE
GRANTED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION.
SUB-PROPOSAL 3(D): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING CONCENTRATION OF THE FUND'S INVESTMENTS IN THE SAME INDUSTRY.
Under the 1940 Act, a fund's policy of concentrating its investments in
securities of companies in the same industry must be fundamental. Under U.S.
Federal securities laws, a mutual fund "concentrates" its investments if it
invests more than 25% of its "net" assets (exclusive of certain items such as
cash, U.S. government securities, securities of other investment companies, and
tax-exempt securities) in a particular industry or group of industries. A fund
is not permitted to concentrate its investments in a particular industry unless
it so states.
WHAT IS THE FUND'S CURRENT RESTRICTION REGARDING INDUSTRY CONCENTRATION?
The Fund's current restriction regarding concentration states that the Fund may
not "INVEST MORE THAN 25% OF THE FUND'S TOTAL ASSETS IN A SINGLE INDUSTRY."
WHAT EFFECT WILL AMENDING THE CURRENT RESTRICTION REGARDING INDUSTRY
CONCENTRATION HAVE ON THE FUND?
The Fund's existing fundamental restriction number 10 recites the Fund's
concentration policy, stating that the Fund may not invest more than 25% of its
total assets in a single industry. The proposed restriction provides the Fund
with added flexibility because, consistent with the 1940 Act, it exempts from
the 25% limitation (i) securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities, and (ii) the securities of other
investment companies. It also recites the current U. S. Federal securities law
requirement with respect to concentration that limits investments to "net"
assets as opposed to "total" assets. This investment flexibility may help the
Fund respond to future legal, regulatory, market or technical changes. However,
adoption of the proposed restriction is not expected to change materially the
way in which the Fund is currently managed as the Fund does not intend to begin
concentrating in shares of the U.S. government or any of its agencies or
instrumentalities or of other investment companies.
WHAT IS THE FUND'S PROPOSED RESTRICTION REGARDING INDUSTRY CONCENTRATION?
If approved by shareholders, the Fund's restriction relating to concentration
will be revised to state that the Fund may not:
CONCENTRATE (INVEST MORE THAN 25% OF ITS NET ASSETS) IN SECURITIES OF
ISSUERS IN A PARTICULAR INDUSTRY (OTHER THAN SECURITIES ISSUED OR
GUARANTEED BY THE U.S. GOVERNMENT OR ANY OF ITS AGENCIES OR
INSTRUMENTALITIES OR SECURITIES OF OTHER INVESTMENT COMPANIES).
SUB-PROPOSAL 3(E): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
REGARDING INVESTMENT IN OTHER INVESTMENT COMPANIES.
The Fund's current investment restriction prohibits the Fund from investing in
other open-end investment companies. This restriction, which is inconsistent
with the 1940 Act provisions in this regard, was originally included in the
Fund's fundamental investment restrictions in response to various state law
requirements. Under NSMIA, however, the Fund is no longer legally required to
retain such a policy as a fundamental restriction.
Upon elimination of this restriction, the Fund would remain subject to the 1940
Act restrictions and other applicable law (or any exemption from such
restrictions) relating to a fund's ability to invest in other open-end funds.
The 1940 Act restrictions state that a fund may not purchase more than 3% of
another fund's total outstanding voting stock, commit more than 5% of its total
assets to the purchase of another fund's securities, or have more than 10% of
its total assets invested in securities of all other funds. Pursuant to German
securities laws, the Fund may not invest more than 5% of its net assets in
another open-end investment company and may not invest at all in closed-end
investment companies.
WHAT IS THE FUND'S CURRENT RESTRICTION REGARDING INVESTMENT IN OTHER INVESTMENT
COMPANIES?
The Fund's current restriction regarding investment in other investment
companies states that the Fund may not "INVEST IN OTHER OPEN-END INVESTMENT
COMPANIES OR, AS AN OPERATING POLICY APPROVED BY THE BOARD OF DIRECTORS, INVEST
IN CLOSED-END INVESTMENT COMPANIES."
WHAT EFFECT WILL AMENDING THE CURRENT RESTRICTION REGARDING INVESTMENT IN OTHER
INVESTMENT COMPANIES HAVE ON THE FUND?
Elimination of this restriction should not have an impact on the day-to-day
management of the Fund as the Fund does not intend to begin pursuing its
investment objective through the purchase of other open-end investment company
securities. Elimination of the restriction would, however, permit the Fund to
invest cash held at the end of the day in money market funds. The Fund, together
with other funds in the Franklin Templeton Group of Funds, has obtained an
exemptive order from the SEC (the "Cash Sweep Order") to permit the Franklin and
Templeton funds to invest their uninvested cash balances in one or more Franklin
or Templeton money market funds. Eliminating the Fund's current restriction
would permit the Fund to take advantage of the investment opportunities
presented by the Cash Sweep Order, since the Cash Sweep Order contemplates
relief from the 1940 Act restrictions relating to the permissible percentage of
investment in other investment companies in these limited circumstances.
WHAT IS THE FUND'S PROPOSED RESTRICTION REGARDING INVESTMENT IN OTHER INVESTMENT
COMPANIES?
If approved by shareholders, the Fund's restriction relating to investment in
other investment companies will be revised to state that the Fund may not:
INVEST IN THE SECURITIES OF ANY OTHER DOMESTIC OR FOREIGN INVESTMENT
COMPANY OR INVESTMENT FUND OR OTHER INVESTMENT VEHICLE WHICH IS INVESTED
ACCORDING TO THE PRINCIPLE OF RISK-SPREADING IRRESPECTIVE OF THE LEGAL
STRUCTURE OF SUCH INVESTMENT VEHICLE (COLLECTIVELY REFERRED TO AS
"INVESTMENT VEHICLES") EXCEPT IN CONNECTION WITH A PLAN OF MERGER OR
CONSOLIDATION WITH OR ACQUISITION OF SUBSTANTIALLY ALL OF THE ASSETS OF
SUCH INVESTMENT VEHICLE AND WITH THE FURTHER EXCEPTION THAT UP TO 5% OF THE
NET ASSET VALUE OF A SERIES MAY BE INVESTED IN AN INVESTMENT VEHICLE
CONSISTING OF SECURITIES PROVIDED IT OFFERS ITS UNITS TO THE PUBLIC WITHOUT
LIMITATION ON THE NUMBER OF UNITS AND FURTHER PROVIDED THE HOLDERS OF THESE
UNITS HAVE THE RIGHT TO REDEEM THEIR UNITS.
PROPOSAL 4: RECLASSIFICATION OF FUNDAMENTAL INVESTMENT POLICIES AND CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS AS NON-FUNDAMENTAL POLICIES AND
RESTRICTIONS (THIS PROPOSAL INVOLVES SEPARATE VOTES ON SUB-PROPOSALS
4(A)-4(J))
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS
OF THE FUND, RECOMMENDS APPROVAL OF EACH SUB-PROPOSAL 4(A) - 4(J).
By making the Fund's investment policies and certain restrictions
non-fundamental, the Board and Fund management will have greater flexibility to
modify Fund policies, as appropriate and consistent with the Fund's investment
objective, in response to changing markets and in light of new investment
opportunities and instruments. Further, the Fund in the future will be able to
avoid the costs and delays associated with a shareholder meeting should the Fund
desire to make changes to the non-fundamental investment policies. Although
these proposed changes will allow the Fund greater investment flexibility to
respond to future investment opportunities, the Board currently does not
anticipate substantially changing any investment policy or restriction.
Shareholders, of course, would be notified of any future material change to the
Fund's investment policies or restrictions.
The Fund's fundamental investment policies and restrictions currently are set
forth in full under the caption "Fundamental Investment Policies and
Restrictions" in the Fund's statements of additional information. The Board
proposes that the fundamental investment policies and restrictions set forth
below be changed to non-fundamental investment policies.
SUB-PROPOSAL 4(A)
To change the following fundamental investment policy to a non-fundamental
investment policy:
THE FUND SEEKS TO ACHIEVE ITS INVESTMENT GOAL OF LONG-TERM CAPITAL GROWTH
THROUGH A FLEXIBLE POLICY OF INVESTING IN STOCKS AND DEBT OBLIGATIONS OF
COMPANIES AND GOVERNMENTS OF ANY NATION.
SUB-PROPOSAL 4(B)
To change the following fundamental investment policy to a non-fundamental
investment policy:
ALTHOUGH THE FUND GENERALLY INVESTS IN COMMON STOCK, IT MAY ALSO INVEST IN
PREFERRED STOCKS AND CERTAIN DEBT SECURITIES (WHICH MAY INCLUDE STRUCTURED
INVESTMENTS, AS DESCRIBED UNDER "GOAL AND STRATEGIES STRUCTURED
INVESTMENTS"), RATED OR UNRATED, SUCH AS CONVERTIBLE BONDS AND BONDS
SELLING AT A DISCOUNT.
SUB-PROPOSAL 4(C)
To change the following fundamental investment policy to a non-fundamental
investment policy:
WHENEVER, IN THE JUDGMENT OF THE MANAGER, MARKET OR ECONOMIC CONDITIONS
WARRANT, THE FUND MAY, FOR TEMPORARY DEFENSIVE PURPOSES, INVEST WITHOUT
LIMIT IN U.S. GOVERNMENT SECURITIES, BANK TIME DEPOSITS IN THE CURRENCY OF
ANY MAJOR NATION AND COMMERCIAL PAPER MEETING THE QUALITY RATINGS SET FORTH
UNDER "GOAL AND STRATEGIES - TEMPORARY INVESTMENTS," AND PURCHASE FROM
BANKS OR BROKER-DEALERS CANADIAN OR U.S. GOVERNMENT SECURITIES WITH A
SIMULTANEOUS AGREEMENT BY THE SELLER TO REPURCHASE THEM WITHIN NO MORE THAN
SEVEN DAYS AT THE ORIGINAL PURCHASE PRICE PLUS ACCRUED INTEREST.
SUB-PROPOSAL 4(D)
To change the following fundamental investment policy to a non-fundamental
investment policy:
THE FUND MAY INVEST NO MORE THAN 5% OF ITS TOTAL ASSETS IN SECURITIES
ISSUED BY ANY ONE COMPANY OR GOVERNMENT, EXCLUSIVE OF U.S. GOVERNMENT
SECURITIES.
SUB-PROPOSAL 4(E)
To change the following fundamental investment policy to a non-fundamental
investment policy:
THE FUND MAY NOT INVEST MORE THAN 10% OF ITS ASSETS IN SECURITIES WITH A
LIMITED TRADING MARKET.
SUB-PROPOSAL 4(F)
To change the following fundamental investment restriction to a
non-fundamental investment restriction:
[THE FUND MAY NOT:] PURCHASE OR RETAIN SECURITIES OF ANY COMPANY IN WHICH
DIRECTORS OR OFFICERS OF THE FUND OR THE MANAGER, INDIVIDUALLY OWNING MORE
THAN ONE-HALF OF 1% OF THE SECURITIES OF SUCH COMPANY, IN THE AGGREGATE OWN
MORE THAN 5% OF THE SECURITIES OF SUCH COMPANY.
This restriction originally was adopted in response to state law
restrictions or interpretations that no longer apply to the Fund. The Board
believes that the Fund would benefit from the added flexibility that would
result from changing the restriction to a non-fundamental restriction of the
Fund.
SUB-PROPOSAL 4(G)
To change the following fundamental investment restriction to a
non-fundamental investment restriction:
[THE FUND MAY NOT:] PURCHASE MORE THAN 10% OF ANY CLASS OF SECURITIES OF
ANY ONE COMPANY, INCLUDING MORE THAN 10% OF ITS OUTSTANDING VOTING
SECURITIES, OR INVEST IN ANY COMPANY FOR THE PURPOSE OF EXERCISING CONTROL
OR MANAGEMENT.
Although the Fund does not now, or in the immediate future, intend to
invest in companies for the purpose of exercising control or management, the
Fund is not required to make this a fundamental restriction. Additionally, the
Fund's current status as a diversified investment company limits its capacity to
acquire the securities, including the outstanding voting securities, of any
particular issuer. Accordingly, the Board proposes to change current fundamental
investment restriction number 3 to a non-fundamental restriction.
SUB-PROPOSAL 4(H)
To change the following fundamental investment restriction to a
non-fundamental investment restriction:
[THE FUND MAY NOT:] INVEST MORE THAN 5% OF THE VALUE OF THE FUND'S TOTAL
ASSETS IN SECURITIES OF ISSUERS WHICH HAVE BEEN IN CONTINUOUS OPERATION
LESS THAN THREE YEARS.
This fundamental restriction is not required by the 1940 Act. It was
originally adopted in response to state law restrictions or interpretations that
no longer apply to the Fund. Therefore, in order to increase the ability of Fund
management to manage the Fund's assets effectively and efficiently in response
to market and regulatory changes, the Board proposes that this investment
restriction be reclassified as non-fundamental.
SUB-PROPOSAL 4(I)
To change the following fundamental investment restriction to a
non-fundamental investment restriction:
[THE FUND MAY NOT:] INVEST MORE THAN 5% OF THE FUND'S TOTAL ASSETS IN
WARRANTS, WHETHER OR NOT LISTED ON THE NEW YORK STOCK EXCHANGE OR THE
AMERICAN STOCK EXCHANGE, INCLUDING NO MORE THAN 2% OF ITS TOTAL ASSETS
WHICH MAY BE INVESTED IN WARRANTS THAT ARE NOT LISTED ON THOSE EXCHANGES.
WARRANTS ACQUIRED BY THE FUND IN UNITS OR ATTACHED TO SECURITIES ARE NOT
INCLUDED IN THIS RESTRICTION. THIS RESTRICTION DOES NOT APPLY TO OPTIONS ON
SECURITIES INDICES.
This fundamental restriction is not required by the 1940 Act. It was
originally adopted in response to state law restrictions or interpretations that
no longer apply to the Fund. Therefore, the Board proposes that this investment
restriction be reclassified as non-fundamental.
SUB-PROPOSAL 4(J)
To change the following fundamental investment restriction to a
non-fundamental investment restriction:
[THE FUND MAY NOT:] INVEST MORE THAN 15% OF THE FUND'S TOTAL ASSETS IN
SECURITIES OF FOREIGN ISSUERS THAT ARE NOT LISTED ON A RECOGNIZED U.S. OR
FOREIGN SECURITIES EXCHANGE, INCLUDING NO MORE THAN 10% OF ITS TOTAL ASSETS
(INCLUDING WARRANTS) WHICH MAY BE INVESTED IN SECURITIES WITH A LIMITED
TRADING MARKET. THE FUND'S POSITION IN THE LATTER TYPE OF SECURITIES MAY BE
OF SUCH SIZE AS TO AFFECT ADVERSELY THEIR LIQUIDITY AND MARKETABILITY AND
THE FUND MAY NOT BE ABLE TO DISPOSE OF ITS HOLDINGS IN THESE SECURITIES AT
THE CURRENT MARKET PRICE.
Although the Fund's ability to invest in these types of securities may be
restricted by applicable limitations on the Fund's investments in securities
that are not "liquid" (i.e., able to be sold for the price at which the Fund has
valued the securities within seven days), there is no requirement that this
restriction be fundamental. Because this may unduly limit the Fund's ability to
pursue its investment goal, the Board proposes that the investment restriction
be reclassified as a non-fundamental restriction.
PROPOSAL 5: TO ELIMINATE ONE OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS OF
THE FUND, RECOMMENDS APPROVAL OF PROPOSAL 5.
WHICH FUNDAMENTAL INVESTMENT RESTRICTION IS THE BOARD RECOMMENDING THAT THE FUND
ELIMINATE?
One of the Fund's fundamental investment restrictions were originally drafted in
response to state laws and regulations, which, due to NSMIA, are no longer in
accordance with SEC staff positions since the positions have either changed or
are no longer relevant to the Fund. Since NSMIA eliminated the states' ability
to substantively regulate investment companies, the Fund is no longer legally
required to include current restriction number 12 among its fundamental
investment restrictions. Templeton Global Advisors Limited, the Fund's
Investment Manager, has recommended, and the Board has determined, that certain
of this current fundamental investment restriction should be eliminated.
The Fund's current fundamental investment restriction number 12 limits the
Fund's ability to participate on a joint or a joint and several basis in any
trading account in securities. This restriction was originally included in
response to the various state law requirements to which mutual funds were
subject. Under NSMIA, the Fund is no longer legally required to retain such a
policy as a fundamental restriction.
As a general matter, elimination of this fundamental restriction relating to
participation in a securities trading account should not have an impact on the
day-to-day management of the Fund, since the 1940 Act prohibitions on these
types of transactions would continue to apply to the Fund. Joint transactions
are generally prohibited under the 1940 Act, and the Fund would continue to
remain subject to the conditions imposed on joint transactions by the 1940 Act
and by any exemptions granted by the SEC. Finally, the Fund has not previously
engaged, nor does it currently intend to engage, in this investment activity.
WHAT IS THE FUND'S CURRENT RESTRICTION?
The Fund's current restriction regarding joint trading states that the Fund may
not "PARTICIPATE ON A JOINT OR A JOINT AND SEVERAL BASIS IN ANY TRADING ACCOUNT
IN SECURITIES."
WHY IS THE BOARD RECOMMENDING THAT THE RESTRICTION BE ELIMINATED, AND WHAT
EFFECT WILL SUCH ELIMINATION HAVE ON THE FUND?
Eliminating the restriction, as described above, is consistent with current U.S.
Federal securities laws. Further, by reducing the total number of investment
restrictions that can be changed only by a shareholder vote, the management of
the Fund believes that the Fund will be able to minimize the costs and delays
associated with holding future shareholder meetings to revise fundamental
policies that become outdated or inappropriate. Management of the Fund also
believes that eliminating the restriction is in the best interest of the Fund's
shareholders as it will provide the Fund with increased flexibility to pursue
its investment goals.
WHAT ARE THE RISKS, IF ANY, IN ELIMINATING THE RESTRICTION?
It is not anticipated that eliminating the restriction will result in any
additional risk to the Fund. Although the Fund's current restriction, as
drafted, is no longer legally required, the Fund's ability to invest in these
areas will continue to be subject to the limitations of the 1940 Act, and any
exemptive orders granted under the 1940 Act. Further, the Fund has no current
intention to change its present investment practices as a result of eliminating
this restriction.
PROPOSAL 6: AMENDMENT AND RESTATEMENT OF THE FUND'S ARTICLES OF INCORPORATION
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS OF
THE FUND, RECOMMENDS APPROVAL OF PROPOSAL 6.
The Fund was organized as a Maryland corporation on November 10, 1986 by filing
the Fund's articles of incorporation with the State Department of Assessments
and Taxation of the State of Maryland. Since that date, the articles of
incorporation have been amended, supplemented, restated, and corrected on a
number of occasions. As part of the overall modernization of the Fund's
operations, as detailed above in Proposals 3, 4 and 5, and in an effort to
permit the Fund to operate with the greatest amount of flexibility and allow it
to more effectively compete with other funds, the Board proposes that
shareholders of the Fund approve Amended and Restated Articles of Incorporation
for the Fund (the "New Articles"). The full text of the New Articles is attached
as Exhibit B, which qualifies in its entirety the description of the New
Articles set forth in this Proxy Statement.
The primary purpose of the proposed adoption of the New Articles is to fully
reflect the current provisions of Maryland law applicable to open-end investment
companies, such as the Fund, and to remove provisions that are not required to
be part of the Fund's articles of incorporation. Because the Fund will remain a
Maryland corporation, interpretation of the New Articles will continue to be
governed by Maryland law. In addition, the Fund's operations will remain subject
to the provisions of the 1940 Act and the rules thereunder. Certain of the more
significant differences between the current articles of incorporation and the
New Articles are summarized below.
CORPORATE POWERS. The current articles of incorporation set forth an extensive,
but non-exclusive, list of the purposes for which the Fund is created. The New
Articles would replace this provision with a more concise, but equally broad,
statement to the effect that the Fund is formed for the purpose of engaging in
business as a management investment company and, in connection with this
purpose, can do all things permitted by Maryland law in furtherance of this
purpose. Accordingly, while the Board considers the effect and scope of the
statement of corporate purpose in the New Articles to be as broad as the
corresponding statement in the current articles of incorporation, the New
Articles will set forth the corporate purpose of the Fund in a more concise,
understandable manner designed to enhance the Board's, management's, and
shareholders' understanding of the Fund's powers.
MULTIPLE CLASSES OF SHARES. The articles of incorporation currently provide that
the Board, subject to provisions of Maryland corporate law, the articles of
incorporation, and the Fund's By-laws, may exercise all powers conferred upon
the Fund, including the existing provisions pertaining to the Fund's capital
stock. Based on the articles of incorporation and articles supplementary, the
Board has broad authority to act on behalf of the Fund which, in most instances,
is not subject to shareholder approval. If this proposal is approved by
shareholders, the Board would be provided with specific policies and procedures
to control the issuance and use of the Fund's capital stock. By specifying the
Board's authority to determine the policies and procedures regarding capital
stock, the amendments will enhance the Fund's articles of incorporation and make
the Fund itself more flexible.
The Fund currently offers four classes of shares. In general, the proposed
amendments are designed to provide greater clarity with respect to the issuance
of multiple classes of shares. Multi-class funds represent a distinct trend in
the mutual fund industry, as evidenced by the adoption by the SEC of Rule 18f-3
under the 1940 Act (which permits a fund to create multiple classes of shares,
subject to the terms of the rule) and by the number of funds that previously
sought exemptive orders from the SEC to implement multiple classes of shares
prior to the adoption of Rule 18f-3. Through creation of multiple classes of
shares, the Board has been able to respond to the trend in the fund industry
toward offering multiple classes of shares to make the Fund more competitive,
since many of its peers have similar authorization. The creation of multiple
classes of shares enables the Fund to customize service levels for shareholders,
while allocating expenses associated with those services to those who elect to
use them. The Board anticipates that increasing the Fund's flexibility to
provide customized levels of service to different shareholders and to distribute
its shares in a variety of ways may potentially encourage current shareholders
to make additional investments in the Fund, and attract new investors and assets
to the Fund to the benefit of the Fund and its shareholders. Generally, higher
Fund asset levels increase investment flexibility and may decrease some fixed
expenses.
In this regard, the New Articles would:
(1) make explicit the Board's authority to classify and reclassify any
unissued shares of capital stock into one or more additional classes
or series by setting or changing the designations, preferences,
conversion or other rights, voting powers, restrictions, limitations
as to dividends, qualifications or terms of the stock and to increase
or decrease the number of authorized shares of stock;
(2) establish the relative preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of each class
or series of the Fund's stock; and:
(3) authorize the Board, subject to applicable law, to issue shares without
certificates.
DETERMINATION OF NET ASSET VALUE OF SHARES. The current articles of
incorporation provide detailed provisions regarding the determination of the net
asset value of the Fund's shares, while acknowledging that this determination is
subject to the requirements of the 1940 Act. The 1940 Act, rules thereunder, and
SEC staff interpretations provide detailed guidance as to the determination of
the Fund's net asset value per share. The Fund's articles of incorporation are
not required to contain this level of detail, and future changes in applicable
guidance regarding the determination of the Fund's net asset value could
necessitate the expense and delay of seeking shareholder approval to amend the
current articles of incorporation accordingly. In contrast, the New Articles
grant the Board broad authority to establish the basis for determining the value
of the Fund's assets and shares, subject to applicable law.
REDEMPTION OF SHAREHOLDER ACCOUNTS. As permitted by applicable law, the Fund's
articles of incorporation authorize the Fund to redeem shareholder accounts with
a small total account value. The New Articles also retain this provision, and
also authorize the Board's authority to redeem shareholder accounts under
additional circumstances (e.g., for failure to provide a taxpayer identification
number). Currently, the Board has no present intention of exercising this
authority, but may do so in the future.
SHAREHOLDER VOTING. Currently, the Fund's By-laws provide that a majority of
votes entitled to be cast constitutes a quorum at a meeting of the Fund's
shareholders. Consistent with Maryland law, the New Articles would establish
one-third of the shares entitled to vote as a quorum. In addition, the New
Articles would provide that a majority of the Fund's shares entitled to vote on
any matter would be sufficient to approve the matter notwithstanding any
provision of Maryland law that otherwise would require a larger percentage of
the Fund's shares. Of course, shareholder voting requirements would continue to
be subject to the 1940 Act and the rules thereunder. Accordingly, the New
Articles would make it easier for the Fund to establish a quorum for the
transaction of business at a shareholder meeting and obtain shareholder approval
of certain matters presented for the approval of shareholders, such as any
future amendment of the articles of incorporation. In addition, the voting
provisions in the New Articles would make it less likely that the Fund would
have to incur the time delay and expense of adjourning a shareholder meeting and
further soliciting proxies for the conduct of business at the meeting.
DIRECTOR AND OFFICER LIABILITY. The current articles of incorporation generally
provide that no Director or officer of the Fund will be personally liable to the
Fund unless (i) the Director or officer received certain improper benefits, or
(ii) was determined in a proceeding to have acted, or failed to act, on the
basis of active and deliberate dishonesty, and the Director's or officer's
action or failure to act was material to the cause of action adjudicated in the
proceeding. The New Articles contain no comparable provision, as the provision
merely restates applicable Maryland law. Instead, the New Articles generally
disclaim director or officer liability to the extent permitted by applicable
law. In this way, the Fund's directors and officers will continue to be subject
to applicable law, without the Fund having to incur the time delay and expense
of seeking shareholder approval of any necessary amendment of the articles of
incorporation to reflect future changes to the law. Under the Fund's By-laws,
the Fund's Directors and Officers will continue to be indemnified by the Fund to
the extent provided by Maryland law and the 1940 Act. Accordingly, the change
should not affect the current standard of care or rights to indemnification
applicable to the Fund's Directors and Officers.
PROPOSAL 7: OTHER BUSINESS
The Directors know of no other business to be presented at the meeting. However,
if any additional matters should be properly presented, proxies will be voted or
not voted as specified. Proxies reflecting no specification will be voted in
accordance with the judgment of the persons named in the proxy.
INFORMATION ABOUT THE FUND
THE INVESTMENT MANAGER. The Investment Manager of the Fund is Templeton Global
Advisors Limited, located in Lyford Cay, Nassau, Bahamas. Pursuant to an
investment management agreement, the Investment Manager manages the investment
and reinvestment of Fund assets. The Investment Manager is a wholly owned
subsidiary of Resources.
THE ADMINISTRATOR. The administrator of the Fund is Franklin Templeton Services,
Inc. ("FT Services") with offices at 777 Mariners Island Boulevard, San Mateo,
California 94403-7777. FT Services is an indirect, wholly owned subsidiary of
Resources. Pursuant to an administration agreement, FT Services performs certain
administrative functions for the Fund.
THE SHAREHOLDER SERVICING AND TRANSFER AGENT. The shareholder servicing agent,
transfer agent, and dividend disbursement agent for the Fund is
Franklin/Templeton Investor Services, Inc., 100 Fountain Parkway, P.O. Box
33030, St. Petersburg, Florida 33733-8030.
THE CUSTODIAN. The custodian for the Fund is The Chase Manhattan Bank, MetroTech
Center, Brooklyn, New York 11245.
OTHER MATTERS. The Fund's last audited financial statements and annual report,
dated August 31, 1999, are available free of charge. To obtain a copy, please
call 1-800/DIAL BEN(R) or forward a written request to Franklin/Templeton
Investor Services, Inc., P.O. Box 33030, St. Petersburg, Florida 33733-8030.
As of March 28, 2000, the Fund had ___________ shares outstanding of Class A,
___________ shares outstanding of Class B, ___________ shares outstanding of
Class C, and ___________ shares outstanding of Advisor Class, and total net
assets of $________________. From time to time, the number of shares held in
"street name" accounts of various securities dealers for the benefit of their
clients may exceed 5% of the total shares outstanding. To the knowledge of the
Fund's management, as of March 28, 2000, there were no other entities holding
beneficially or of record more than 5% of the Fund's outstanding shares. [TO BE
UPDATED]
In addition, to the knowledge of the Fund's management, as of March ___, 2000,
no nominee or Director of the Fund owned 1% or more of the outstanding shares of
the Fund, and the Directors and Officers of the Fund owned, as a group, less
than 1% of the outstanding shares of the Fund. [TO BE UPDATED]
FURTHER INFORMATION ABOUT VOTING
AND THE SHAREHOLDERS' MEETING
RECORD DATE. Shareholders of record at the close of business on March ___, 2000,
are entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each share of record is entitled to one vote on each matter presented at the
Meeting. The notice of the Meeting, proxy card and proxy statement were mailed
to shareholders of record on or about _______, 2000.
VOTING METHODS. You may attend the Meeting and vote in person or you may
complete and return the enclosed proxy card. If you are eligible to vote by
telephone or through the internet, a control number and separate instructions
are enclosed.
Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote for any of the
Proposals 1 through 7, your proxy will be voted as you indicated. If you simply
sign and date the proxy card, but don't specify a vote for any of the Proposals
1 through 7, your shares will be voted IN FAVOR of the nominees for Director
(Proposal 1), IN FAVOR of ratifying the selection of PricewaterhouseCoopers LLP
as independent auditors (Proposal 2), IN FAVOR of amending certain of the Fund's
fundamental investment restrictions (Proposals 3(a)-3(d)), IN FAVOR of
reclassifying the Fund's fundamental investment policies and certain of the
fundamental investment restrictions to non-fundamental investment policies and
restrictions (Proposals 4(a)-4(j)), IN FAVOR of eliminating certain of the
fundamental investment restrictions of the Fund (Proposal 5), IN FAVOR of
amending and restating the Articles of Incorporation (Proposal 6), and/or IN
ACCORDANCE with the discretion of the persons named in the proxy card as to any
other matters that may properly come before the meeting (Proposal 7).
REVOCATION OF PROXIES. You may revoke your proxy at any time before it is voted
by forwarding a written revocation or a later-dated proxy to the Fund that is
received at or prior to the Meeting, or attending the meeting and voting in
person.
SOLICITATION OF PROXIES. Your vote is being solicited by the Board of Directors
of the Fund. The cost of soliciting proxies, including the fees of a proxy
soliciting agent, is borne by the Fund. The Fund reimburses brokerage firms and
others for their expenses in forwarding proxy material to the beneficial owners
and soliciting them to execute proxies. In addition, the Fund may retain a
professional proxy solicitation firm to assist with any necessary solicitation
of proxies. The Fund expects that the solicitation would be primarily by mail,
but also may include telephone, telecopy or oral solicitations. If the Fund does
not receive your proxy by a certain time you may receive a telephone call from
____________________asking you to vote. If professional proxy solicitors are
retained, it is expected that soliciting fees and expenses would be
approximately $________. The Fund does not reimburse Directors and Officers of
the Fund, or regular employees and agents of the Investment Manager involved in
the solicitation of proxies. The Fund intends to pay all costs associated with
the solicitation and the Meeting.
VOTING BY BROKER-DEALERS. The Fund expects that, before the meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Fund understands that
NYSE rules permit the broker-dealers to vote on certain of the proposals to be
considered at the Meeting on behalf of their customers and beneficial owners.
With respect to certain proposals, a broker-dealer may exercise discretion over
shares held in their name for which no instructions are received by voting these
shares in the same proportion as they vote shares for which they received
instructions.
QUORUM. A majority of the shares entitled to vote - present in person or
represented by proxy - constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that represent
"broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), and the shares whose proxies reflect an
abstention on any item are all counted as shares present and entitled to vote
for purposes of determining whether the required quorum of shares exists.
METHODS OF TABULATION. Approval of the Fund's election of nominees for Director,
as described in Proposal 1, will require the affirmative vote of a plurality of
the Fund's shares present and voting at the meeting. Approval of the selection
of independent auditors, as described in Proposal 2, requires the affirmative
vote of a majority of the Fund's shares present and voting on the Proposal at
the meeting. Amending certain of the Fund's fundamental investment restrictions,
as set forth in Proposals 3(a) through 3(d), reclassifying the Fund's investment
policies and certain fundamental investment restrictions to non-fundamental
policies and restrictions, as set forth in Proposals 4(a) through 4(j), and
eliminating certain of the Fund's fundamental investment restrictions, as set
forth in Proposal 5, will each require the affirmative vote of the lesser of (i)
67% or more of the shares of the Fund present at the meeting, if the holders of
more than 50% of the outstanding shares of the Fund are present in person or by
proxy or (ii) more than 50% of the outstanding shares of the Fund. Proposal 6,
the amendment and restatement of the Articles of Incorporation, requires the
affirmative vote of a majority of the Fund's shares outstanding and entitled to
vote. Proposal 7, for the proxyholders to have discretion to vote on any other
business that may properly come before the meeting, requires the affirmative
vote of a majority of the Fund's shares present and voting on the Proposal at
the meeting. Abstentions and broker non-votes will be treated as votes not cast
and, therefore, will not be counted for purposes of obtaining approval of
Proposal 1, but will have the effect of votes cast against the other Proposals.
ADJOURNMENT. In the event that a quorum is not present at the Meeting, the
Meeting will be adjourned to permit further solicitation of proxies. In the
event that a quorum is present, but sufficient votes have not been received to
approve one or more of the Proposals, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies with respect to those Proposals. The persons named as proxies will vote
in their discretion on questions of adjournment those shares for which proxies
have been received that grant discretionary authority to vote on matters that
may properly come before the meeting.
SHAREHOLDER PROPOSALS. The Fund is not required, and does not intend, to hold
regular annual meetings of shareholders. Shareholders wishing to submit
proposals for consideration for inclusion in a proxy statement for the next
meeting of shareholders should send their written proposals to the Fund's
offices, 500 East Broward Boulevard, Fort Lauderdale, Florida 33394, Attn:
Secretary, so they are received within a reasonable time before any such
meeting. No business other than the matters described above is expected to come
before the Meeting. Should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Fund.
By the Order of the Board of Directors of
Templeton Growth Fund, Inc.
Barbara J. Green
Secretary
[Date]
EXHIBIT A
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
PROPOSED TO BE AMENDED OR RECLASSIFIED
The following fundamental investment policies and investment restrictions have
been proposed for amendment or reclassification:
<TABLE>
<CAPTION>
PROPOSAL OR
SUB-PROPOSAL RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
POLICY RESTRICTION/POLICY RESTRICTION/POLICY
<S> <C> <C> <C>
3(a) Borrowing 6. [The Fund may not:] Borrow money for [The Fund may not:] borrow money, except
Restriction any purpose other than redeeming its that the Corporation or a Series may
shares or purchasing its shares for borrow money from banks or affiliated
cancellation, and then only as a investment companies to the extent
temporary measure to an amount not permitted by the Investment Company Act
exceeding 5% of the value of its total of 1940, or any exemptions therefrom
assets, or pledge, mortgage, or which may be granted by the U.S.
hypothecate its assets other than to Securities and Exchange Commission and
secure such temporary borrowings, and then only for temporary purposes in an
then only to such extent not exceeding amount not exceeding 10% of the value of
10% of the value of its total assets as its total assets (including the amount
the board of directors may by resolution borrowed) and with the consent of the
approve. (For the purposes of this Fund's custodian to the terms of the
restriction, collateral arrangements with borrowing.
respect to margin for a stock index
futures contract are not deemed to be a [The Fund may not:] pledge, mortgage,
pledge of assets.) hypothecate, or otherwise encumber their
assets except to secure indebtedness
permitted under its borrowing policy.
3(b) Underwriting 4. [The Fund may not:] Act as an [The Fund may not:] Act as an
Restriction underwriter... underwriter except to the extent the
fund may be deemed tobe an underwriter
when disposing of securities it owns or
when selling its own shares.
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL OR
SUB-PROPOSAL RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
POLICY RESTRICTION/POLICY RESTRICTION/POLICY
<S> <C> <C> <C>
3(c) Lending 5. [The Fund may not:] Loan money, apart [The Fund may not:] Make loans to other
Restriction from the purchase of a portion of an persons except (a) through the lending
issue of publicly distributed bonds, of its portfolio securities (b) through
debentures, notes and other evidences of the purchase of debt securities, loan
indebtedness, although the fund may buy participations and/or engaging in direct
U.S. government obligations with a corporate loans in accordance with its
simultaneous agreement by the seller to investment objectives and policies, and
repurchase them within no more than seven (c) to the extent the entry into a
days at the original purchase price plus repurchase agreement is deemed to be a
accrued interest. loan. The fund may also make loans to
affiliated investment companies to the
extent permitted by the 1940 Act or any
exemptions therefrom which may be
granted by the U.S. Securities and
Exchange Commission.
3(d) Industry 7. [The Fund may not:] Invest more than [The Fund may not:] Concentrate (invest
Concentration 25% of its total assets in a single more than 25% of its net assets) in
Restriction industry. securities of issuers in a particular
industry (other than securities issued
or guaranteed by the U.S. government or
any of its agencies or instrumentalities
or securities of other investment
companies).
3(e) Investment 1. [The Fund may not:] Invest in other [The Fund may not:] invest in the
Company open-end investment companies or, as an securities of any other domestic or
Restriction operating policy approved by the board of foreign investment company or investment
directors, invest in closed-end fund or other investment vehicle which
investment companies." is invested according to the principle
of risk-spreading irrespective of the
legal structure of such investment vehicle
(collectively referred toas "investment
vehicles") except in connection with a plan
of merger or consolidation with or acquisition
of substantially all of the assets of such
investment vehicle and with the further
exception that up to 5% of the net asset value
of a Series may be invested in an investment
vehicle consisting of securities provided it
offers its units to the public without
limitation on the number of units and further
provided the holders of these units have the
right to redeem their units.
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL OR
SUB-PROPOSAL RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
POLICY RESTRICTION/POLICY RESTRICTION/POLICY
<S> <C> <C> <C>
4(a) The fund seeks to achieve its investment Proposed to be reclassified as
goal of long-term capital growth through non-fundamental.
a flexible policy of investing in stocks and
debt obligations of companies and governments of
any nation.
4(b) Although the fund generally invests in Proposed to be reclassified as
common stock, it may also invest in non-fundamental.
preferred stocks and certain debt securities
(which may include structured investments,
as described under "Goal and Strategies-
Structured Investments"), rated or unrated,
such as convertible bonds and bonds selling
at a discount.
4(c) Whenever, in the judgment of the manager, Proposed to be reclassified as
market or economic conditions warrant, non-fundamental.
the fund may, for temporary defensive purposes,
invest without limit in U.S. Government
securities, bank time deposits in the currency
of any major nation and commercial paper meeting
the quality ratings set forth under "Goal and
Strategies - Temporary Investments," and
purchase from banks or broker-dealers Canadian
or U.S. Government securities with a
simultaneous agreement by the seller to
repurchase them within no more than seven days
at the original purchase price plus accrued
interest.
4(d) The fund may invest no more than 5% of Proposed to be reclassified as
its total assets in securities issued by non-fundamental.
any one company or government, exclusive
of U.S. Government securities.
4(e) The fund may not invest more than 10% of Proposed to be reclassified as
its assets in securities with a limited non-fundamental.
securities with a limited trading market.
4(f) 2. [The Fund may not:] Purchase or retain Proposed to be reclassified as
securities of any company in which non-fundamental.
directors or officers of the fund or the
manager, individually owning more than one-half
of 1% of the securities of such company, in the
aggregate own more than 5% of the securities of
such company.
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL OR
SUB-PROPOSAL RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
POLICY RESTRICTION/POLICY RESTRICTION/POLICY
<S> <C> <C> <C>
4(g) 3. [The Fund may not:] Purchase more than Proposed to be reclassified as
10% of any class of securities of any one
non-fundamental. company, including more than
10% of its outstanding voting securities, or
invest in any company for the purpose of
exercising control or management.
4(h) 7. [The Fund may not:] Invest more than Proposed to be reclassified as
5% of the value of the fund's total non-fundamental.
assets in securities of issuers which have been
in continuous operation less than three years.
4(i) 8. [The Fund may not:] Invest more than Proposed to be reclassified as
5% of the fund's total assets in non-fundamental.
warrants, whether or not listed on the New York
Stock Exchange or the American Stock Exchange,
including no more than 2% of its total assets
which may be invested in warrants that are not
listed on those exchanges. Warrants acquired by
the fund in units or attached to securities are
not included in this restriction. This
restriction does not apply to options on
securities indices.
4(j) 9. [The Fund may not:] Invest more than Proposed to be reclassified as
15% of the fund's total assets in non-fundamental.
securities of foreign issuers that are not
listed on a recognized U.S. or foreign
securities exchange, including no more than 10%
of its total assets (including warrants) which
may be invested in securities with a limited
trading market. The fund's position in the
latter type of securities may be of such size as
to affect adversely their liquidity and
marketability and the fund may not be able to
dispose of its holdings in these securities at
the current market price.
</TABLE>
B-1
EXHIBIT B
[FORM OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION]
TEMPLETON GROWTH FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
TEMPLETON GROWTH FUND, INC., a Maryland corporation (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The text of the Articles of Incorporation ("Charter") of the
Corporation dated November 10, 1986, as subsequently restated, amended,
supplemented, and corrected, is hereby further amended by deleting in their
entirety Articles FIRST, THIRD, FOURTH, FIFTH, SIXTH, SEVENTH, NINTH, TENTH; by
re-numbering Article EIGHTH; and by substituting for the deleted Articles and
adding in lieu thereof Articles FOURTH through NINTH herein, and restated to
read in its entirety as follows:
SECOND: The name of the Corporation is TEMPLETON GROWTH FUND, INC.
THIRD: The duration of the Corporation shall be perpetual.
FOURTH: The purposes for which the Corporation is formed are:
To engage generally in the business of an incorporated
investment company of the management type, and to exercise and enjoy all the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland. The Corporation shall exercise and enjoy
all such powers, rights and privileges to the extent not inconsistent with these
Articles of Incorporation. The foregoing statements of objects and purposes,
except as otherwise expressly provided, shall not be held to limit or restrict
in any manner the powers of the Corporation, and are in furtherance of, and in
addition to, and not in limitation of, the general powers conferred upon the
Corporation by the laws of the State of Maryland or otherwise.
FIFTH: The post office address of the principal office of the
Corporation in this State is c/o The Corporation Trust Incorporated, 300 East
Lombard St., Baltimore, MD 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust Incorporated, and the address
of the resident agent is 300 East Lombard St., Baltimore, MD 21202.
SIXTH: 1. AUTHORIZED SHARES. The total number of shares of stock
which the Corporation shall have the authority to issue is ONE BILLION EIGHT
HUNDRED MILLION (1,800,000,000) shares of Common Stock of the par value of $0.01
per share and having an aggregate par value of ONE MILLION EIGHT HUNDRED
THOUSAND ($1,800,000) dollars, of which the Board of Directors has classified
ONE BILLION TWO HUNDRED MILLION (1,200,000,000) shares as Templeton Growth Fund,
Inc. Class A shares of Common Stock, ONE HUNDRED MILLION (1,000,000) shares as
Templeton Growth Fund, Inc. Class B shares of Common Stock, FOUR HUNDRED MILLION
(400,000,000) shares as Templeton Growth Fund, Inc. Class C shares of Common
Stock, and ONE HUNDRED MILLION (100,000,000) shares as Templeton Growth Fund,
Inc. Advisor Class shares of Common Stock.
2. AUTHORIZATION OF STOCK ISSUANCE. The Board of Directors may
authorize the issuance and sale of capital stock of the Corporation, including
stock of any class or series, from time to time in such amounts and on such
terms and conditions, for such purposes and for such amount or kind of
consideration as the Board of Directors shall determine, subject to any limits
required by then applicable law. All shares shall be issued on a fully paid and
non-assessable basis.
3. POWER TO CLASSIFY. The Board of Directors of the Corporation
may classify or reclassify any unissued shares of capital stock into one or more
additional or other classes or series as may be established from time to time by
setting or changing in any one or more respects the designations, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms of the Corporation's stock and, pursuant to a
classification or reclassification, to increase or decrease the number of
authorized shares of stock, or shares of any existing class or series of stock.
Except as otherwise provided herein, all references to capital stock shall apply
without discrimination to the shares of each class or series of stock.
4. CLASSES AND SERIES - GENERAL. The relative preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of each class
or series of stock of the Corporation shall be as follows, unless otherwise
provided in Articles Supplementary to this Charter, whether dated before or
after the effective date of this provision:
a. ASSETS BELONGING TO CLASS OR SERIES. All consideration
received by the Corporation for the issuance or sale of stock of a particular
series, together with all assets in which the consideration is invested or
reinvested, all income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of assets, and any funds
or payments derived from any reinvestment of the proceeds in whatever form,
shall irrevocably belong to that series for all purposes, subject only to the
rights of creditors and to the terms and conditions of each class (if any) of
that series, and shall be so recorded on the books of account of the
Corporation. Any assets, income, earnings, profits or proceeds thereof, funds or
payments that are not readily attributable to a particular series shall be
allocated to and among any one or more series in a manner and on a basis that
the Board of Directors, in its sole discretion, shall deem fair and equitable,
and items so allocated to a particular series shall belong to that series. Each
allocation shall be conclusive and binding upon the stockholders of all series
for all purposes.
b. LIABILITIES BELONGING TO CLASS OR SERIES. The assets
belonging to each series shall be charged with the liabilities of the
Corporation in respect of that series and with all expenses, costs, charges and
reserves attributable to that series and shall be so recorded on the books of
account of the Corporation; provided, however, that identified costs, expenses,
charges, reserves and liabilities properly allocable to a particular class of a
series shall be charged to and borne solely by that class. Any general
liabilities, expenses, costs, charges or reserves of the Corporation that are
not readily identifiable as belonging to any particular class or series shall be
allocated and charged to and among any one or more of the classes or series in a
manner and on a basis that the Board of Directors in its sole discretion deems
fair and equitable, and any items so allocated to a particular class or series
shall be charged to, and shall be a liability belonging to, that class or
series. Each allocation shall be conclusive and binding upon the stockholders of
all classes and series for all purposes.
c. INCOME. The Board of Directors shall have full
discretion, to the extent not inconsistent with the General Laws of the State of
Maryland and the Investment Company Act of 1940, to determine which items shall
be treated as income and which items shall be treated as capital. Each
determination shall be conclusive and binding.
d. DIVIDENDS AND DISTRIBUTIONS. The holders of each class
or series of capital stock of record as of a date determined by the Board of
Directors from time to time shall be entitled, from funds or other assets
legally available therefor, to dividends and distributions, including
distributions of capital gains, in amounts and at times as may be determined by
the Board of Directors. The Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the purchase and/or payment
or both have not been received by a specified date. Any dividends or
distributions may be declared payable in cash, property or shares of the class
or series, as determined by the Board of Directors or pursuant to a standing
resolution or program adopted or approved by the Board of Directors. Dividends
and distributions may be declared with whatever frequency, including daily, as
the Board of Directors may determine and in any reasonable manner, including by
standing resolution, by resolutions adopted only once or with whatever frequency
as the Board of Directors may determine, or by formula or other similar method
of determination, whether or not the amount of the dividend or distribution so
declared can be calculated at the time of declaration. The Board of Directors
may establish payment dates for dividends and distributions on any basis,
including payment that is less frequent than the effectiveness of the
declarations. The Board of Directors shall have the discretion to designate for
dividends and distributions amounts sufficient to enable the Corporation or any
class or series thereof to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986 or any successor or comparable statute, and
regulations promulgated thereunder (collectively, the "IRC"), and to avoid
liability of the Corporation or any class or series for Federal income tax in
respect of a given year and to make other appropriate adjustments in connection
therewith. Nothing in the foregoing sentence shall limit the authority of the
Board of Directors to designate greater or lesser amounts for dividends or
distributions. The amounts of dividends and distributions declared and paid with
respect to the various classes or series of capital stock and the timing of
declaration and payment of dividends and distributions may vary among classes
and series.
e. EQUALITY. Each share of each series or class shall be
equal to each other share of that class or series and shall represent an equal
proportionate interest in the assets belonging to that series or class, subject
to the liabilities belonging to that series or class. The Board of Directors may
from time to time divide or combine the shares of any particular series or class
into a greater or lesser number of shares of that series or class without
thereby changing the proportionate beneficial interest in the assets belonging
to that series or class or in any way affecting the rights of shares of any
other series or class.
f. CONVERSION OR EXCHANGE RIGHTS. The Board of Directors
shall have the authority to provide that holders of shares of any series or
class shall have the right to convert or exchange shares into shares of one or
more other series or classes in accordance with requirements and procedures
established by the Board of Directors.
g. TAX ELECTIONS. The Board of Directors shall have the
power, in its discretion, to make elections as to the tax status of the
Corporation or any series or class of the Corporation as may be permitted or
required by the IRC without the vote of stockholders of the Corporation or any
series or class.
h. VOTING. On each matter submitted to a vote of
stockholders, each holder of a share of capital stock of the Corporation shall
be entitled to one vote for each full share, and a fractional vote for each
fractional share of stock standing in such holder's name on the books of the
Corporation, irrespective of the class or series thereof. All shares of all
classes and series shall vote together as a single class, provided that (1) when
the Maryland General Corporation Law or the Investment Company Act of 1940
requires that a class or series vote separately with respect to a given matter,
the separate voting requirements of the applicable law shall govern with respect
to the affected class(es) and/or series and other classes and series shall vote
as a single class, and (2) unless otherwise required by those laws, no class or
series shall vote on any matter which does not affect the interest of that class
or series.
i. LIQUIDATION. At any time there are no shares outstanding
for a particular class or series, the Board of Directors may liquidate that
class or series in accordance with applicable law. In the event of the
liquidation or dissolution of the Corporation, or of a class or series thereof
when there are shares outstanding of the Corporation, the stockholders of the
Corporation, or of that class or series, as applicable, shall be entitled to
receive, when and as declared by the Board of Directors, the excess of the
assets attributable to that class or series over the liabilities of that class
or series, determined as provided herein and including assets and liabilities
allocated pursuant to this Charter. Any excess amounts will be distributed to
each stockholder of the applicable class or series in proportion to the number
of outstanding shares of that class or series held by that stockholder and
recorded on the books of the Corporation. Subject to the requirements of
applicable law, dissolution of a class or series may be accomplished by
distribution of assets to stockholders of that class or series as provided
herein, by the transfer of assets attributable to that class or series to
another class or series of the Corporation, by the exchange of shares of that
class or series for shares of another class or series of the Corporation, or in
any other legal manner.
j. TERMINATION OF A CLASS OR SERIES. In addition to, and not
in limitation of the authorization granted above, to the full extent permitted
by applicable law, the Corporation may, without the vote of the shares of any
class or series of capital stock of the Corporation then outstanding and if so
determined by the Board of Directors:
(1) Sell and convey the ssets belonging to a class or
series of capital stock to a trust or another corporation that is a management
investment company (as defined in the Investment Company Act of 1940) for
consideration which may include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, belonging to the class or
series and which may include securities issued by the trust or corporation.
Following the sale and conveyance, and after making provision for the payment of
any liabilities belonging to the class or series that are not assumed by the
purchaser of the assets belonging to the class or series, the Corporation may,
at its option, redeem all outstanding shares of the class or series at the net
asset value thereof as determined by the Board of Directors in accordance with
the provisions of applicable law, less any redemption fee or other charge, if
any, as may be fixed by resolution of the Board of Directors. Notwithstanding
any other provision of these Articles of Incorporation to the contrary, the
redemption price may be paid in any combination of cash or other assets
belonging to the class or series, including but not limited to the distribution
of the securities or other assets belonging to the class or series upon whatever
conditions as the Board of Directors deems, in its sole discretion, to be
appropriate and consistent with applicable law and these Articles of
Incorporation;
(2) Sell and convert the assets belonging to a class
or series of capital stock into money and, after making provision for the
payment of all obligations, taxes and other liabilities, accrued or contingent,
belonging to the class or series the Corporation may, at its option: (i) redeem
all outstanding shares of such class or series at the net asset value thereof as
determined by the Board of Directors in accordance with the provisions of
applicable law, less any redemption fee or other charge, if any, as may be fixed
by resolution of the Board of Directors upon any conditions the Board of
Directors deems, in its sole discretion, to be appropriate and consistent with
applicable law and these Articles of Incorporation; or (ii) combine the assets
belonging to the class or series following the sale and conversion with the
assets belonging to any one or more other class or series of capital stock of
the Corporation pursuant to and in accordance with the sections below; or
(3) Combine the assets belonging to a class or series
of capital stock with the assets belonging to any one or more other classes or
series of capital stock of the Corporation. In connection with any combination
of assets, the shares of any class or series of capital stock of the Corporation
then outstanding may, if so determined by the Board of Directors, be converted
into shares of any other class, classes, or series of capital stock of the
Corporation, or may be redeemed, at the option of the Corporation, at the net
asset value thereof as determined by the Board of Directors in accordance with
the provisions of applicable law, less any redemption fee or other charge, or
conversion cost, if any, as may be fixed by resolution of the Board of Directors
upon any conditions as the Board of Directors deems, in its sole discretion, to
be appropriate and consistent with applicable law and these Articles of
Incorporation. Notwithstanding any other provision of these Articles of
Incorporation to the contrary, any redemption price, or part thereof, paid
pursuant to this subsection may be paid in shares of any other existing or
future class, classes or series of capital stock of the Corporation.
k. QUORUM. The presence in person or by proxy of the holders
of one-third of the shares of stock of the Corporation entitled to vote thereat,
without regard to class or series, shall constitute a quorum at any meeting of
the stockholders, except with respect to any matter which, under applicable
statutes or regulatory requirements, requires approval by a separate vote of one
or more classes or series of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class or series
required to vote as a class on the matter shall constitute a quorum. If at any
meeting of the stockholders there shall be less than a quorum present, the
stockholders present at such meeting may, without further notice, adjourn the
same from time to time until a quorum shall be present.
l. PREEMPTIVE RIGHTS. No stockholder of the Corporation
shall be entitled as of right to subscribe for, purchase, or otherwise acquire
any shares of any classes or series, or any other securities of the Corporation
which the Corporation proposes to issue or sell; and any or all of such shares
or securities of the Corporation, whether now or hereafter authorized or
created, may be issued, or may be reissued or transferred if the same have been
reacquired, and sold to such persons, firms, corporations and associations, and
for such lawful consideration, and on such terms as the Board of Directors in
its discretion may determine, without first offering the same, or any thereof,
to any said stockholder.
5. CERTIFICATES. Subject to the requirements of the Maryland
General Corporation Law, the Board of Directors may authorize the issuance of
some or all of the shares of any or all classes or series without certificates
and may establish conditions in connection with the issuance of certificates.
6. AUTHORIZING VOTE. Notwithstanding any provision of the
General Laws of the State of Maryland requiring for any purpose a proportion
greater than a majority of all votes entitled to be cast, the affirmative vote
of the holders of a majority of the total number of shares of the Corporation,
or of a class or series of the Corporation, as applicable, outstanding and
entitled to vote under such circumstances pursuant to these Articles of
Incorporation and the By-Laws of the Corporation shall be effective for such
purpose, except to the extent otherwise required by the Investment Company Act
of 1940 and rules thereunder; provided that, to the extent consistent with the
General Laws of the State of Maryland and other applicable law, the By-Laws may
provide for authorization to be by the vote of a proportion less than a majority
of the votes of the Corporation, or of a class or series.
7. REDEMPTION AND REPURCHASE.
a. The Corporation shall to the extent it has funds or other
property legally available therefor and subject to applicable law permit each
holder of shares of capital stock of the Corporation, or of any class or series,
to require the Corporation to redeem all or any part of the shares standing in
the name of such holder on the books of the Corporation, at the applicable
redemption price of such shares (which may reflect the deduction of such fees
and charges as the Board of Directors may establish from time to time)
determined in accordance with procedures established by the Board of Directors
of the Corporation from time to time in accordance with applicable law. A
shareholder's right to redeem all or any part of the shares standing in the name
of such holder on the books of the Corporation shall at all times be in
accordance with the requirements of the Investment Company Act of 1940.
b. Without limiting the generality of the foregoing, the
Board of Directors may authorize the Corporation, at its option and to the
extent permitted by and in accordance with the conditions of applicable law, to
redeem stock of the Corporation, or of any class or series, owned by any
stockholder under circumstances deemed appropriate by the Board of Directors in
its sole discretion from time to time, such circumstances including but not
limited to (1) failure to provide the Corporation with a tax identification
number and (2) failure to maintain ownership of a specified minimum number or
value of shares of any class or series of stock of the Corporation, such
redemption to be effected at such price, at such time and subject to such
conditions as may be required or permitted by applicable law.
c. Payment for redeemed stock may be made in any form as
permitted by the Investment Company Act of 1940, any elections thereunder, or
other applicable law.
d. All rights of a stockholder with respect to a share
redeemed, including the right to receive dividends and distributions with
respect to such share, shall cease and be determined as of the time as of which
the redemption price to be paid for such shares shall be fixed, in accordance
with applicable law, except the right of such stockholder to receive payment for
such shares as provided herein.
e. Notwithstanding any other provision of these Articles of
Incorporation, the Board of Directors may suspend the right of stockholders of
any or all classes or series of shares to require the Corporation to redeem
shares held by them for such periods and to the extent permitted by, or in
accordance with, the Investment Company Act of 1940. The Board of Directors may,
in the absence of a ruling by a responsible regulatory official, terminate such
suspension at such time as the Board of Directors, in its discretion and to the
extent permitted by, or in accordance with, the Investment Company Act of 1940,
shall deem reasonable, such determination to be conclusive.
f. Shares of any class or series which have been redeemed
shall constitute authorized but unissued shares subject to classification and
reclassification as provided in these Articles of Incorporation.
g. The Board of Directors may authorize the Corporation to
purchase or otherwise acquire, directly or through an agent, shares of any class
or series of its outstanding stock upon such terms and conditions and for such
consideration as permitted by applicable law and determined to be reasonable by
the Board of Directors and to take all other steps deemed necessary in
connection therewith. Shares so purchased or acquired shall have the status of
authorized but unissued shares.
8. VALUATION. Subject to the requirements of applicable law,
the Board of Directors may establish the basis or method, timing and frequency
for determining the value of assets belonging to each class or series and for
determining the net asset value of each share of each class or series for
purposes of sales, redemptions, repurchases or otherwise.
9. INVESTMENT LIMITATIONS.
a. Neither the Corporation nor any Series of the Corporation
may borrow money, except that the Corporation or a Series may borrow money from
banks or affiliated investment companies to the extent permitted by the
Investment Company Act of 1940, or any exemptions therefrom which may be granted
by the U.S. Securities and Exchange Commission and then only for temporary
purposes and in an amount not exceeding 10% of the value of its total assets
(including the amount borrowed) and with the consent of its custodian to the
terms of the borrowing.
b. Neither the Corporation nor any Series of the Corporation
may pledge, mortgage, hypothecate, or otherwise encumber their assets except to
secure indebtedness permitted under Section 9.a. hereof.
c. Neither the Corporation nor any Series of the Corporation
may invest in the securities of any other domestic or foreign investment company
or investment fund or other investment vehicle which is invested according to
the principle of risk-spreading irrespective of the legal structure of such
investment vehicle (collectively referred to as "investment vehicles") except in
connection with a plan of merger or consolidation with or acquisition of
substantially all of the assets of such investment vehicle and with the further
exception that up to 5% of the net asset value of a Series may be invested in an
investment vehicle consisting of securities provided it offers its units to the
public without limitation on the number of units and further provided the
holders of these units have the right to redeem their units.
SEVENTH: DIRECTORS. The number of directors of the Corporation shall
be nine (9), provided that the By-Laws may, subject to the limitations of the
Maryland General Corporation Law, fix a different number of directors and may
authorize a majority of the directors to increase or decrease the number of
directors set by these Articles or the By-Laws within limits set by the By-Laws
and to fill vacancies created by an increase in the number of directors. Unless
otherwise provided by the By-Laws, the directors of the Corporation need not be
stockholders of the Corporation. The names of the directors who shall serve
until the next annual meeting or until their successors are duly chosen and
qualified are:
Harris J. Ashton
Nicholas F. Brady
S. Joseph Fortunato
John Wm. Galbraith
Andrew H. Hines, Jr.
Charles B. Johnson
Betty P. Krahmer
Gordon S. Macklin
Fred R. Millsaps
EIGHTH: POWERS OF DIRECTORS. In addition to any powers
conferred herein or in the By-Laws, the Board of Directors may, subject to any
express limitations contained in these Articles of Incorporation or in the
By-Laws, exercise the full extent of powers conferred by the General Laws of the
State of Maryland or other applicable law upon corporations or directors thereof
and the enumeration and definition of particular powers herein or in the By-Laws
shall in no way be deemed to restrict or otherwise limit those lawfully
conferred powers. In furtherance and without limitation of the foregoing, the
Board of Directors shall have power:
To make, alter or repeal the By-Laws of the Corporation except as
therein provided.
To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose and to
modify or abolish any such reserves in the manner in which it was created.
NINTH: INDEMNIFICATION AND EXCULPATION. To the maximum extent
permitted by the Maryland General Corporation Law as from time to time amended,
but subject to any limitations which may be imposed pursuant to the Investment
Company Act of 1940 or any rule or regulation thereunder, the Corporation shall
indemnify, and pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to, its currently acting and its former directors,
officers and agents and those persons who, at the request of the Corporation,
serve or have served another corporation, joint venture, trust or other
enterprise in one or more of such capacities.
To the fullest extent permitted by the Maryland General Corporation
Law and the Investment Company Act of 1940, no director or officer of the
Corporation shall be liable to the Corporation or to its stockholders for money
damages. No amendment to these Articles of Incorporation or repeal of any
provisions thereof shall limit or eliminate the benefits provided to directors
and officers under this provision with respect to any act or omission that
occurred prior to such amendment or repeal.
In performance of his duties, a director is entitled to rely on any
information, opinion, report, or statement, including any financial statement or
other financial data, prepared by others, to the extent not inconsistent with
the General Laws of the State of Maryland. A person who performs his duties in
accordance with the standards of Article 2-405.1 of the Maryland General
Corporation Law, any successor provision thereto, or otherwise in accordance
with applicable law shall have no liability by reason of being or having been a
director of the Corporation.
TENTH: The provisions set forth in these Articles of Amendment and
Restatement are all the provisions of the Charter currently in effect as herein
amended. The current address of the principal office of the Corporation, the
name and address of the Corporation's current resident agent, the current number
of directors of the Corporation and their names are as set forth herein.
ELEVENTH: The foregoing amendment and restatement of the Charter of
the Corporation was duly and unanimously approved and advised by unanimous
consent of the Board of Directors and approved by the shareholders of the
Corporation as required by law.
TWELFTH: The undersigned President acknowledges these Articles of
Amendment and Restatement to be the corporate act of the Corporation and as to
all matters or facts required to be verified by oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment and Restatement to be signed in its name and on its behalf by its
President and attested to by its Secretary on this ___ day of December, 1999.
ATTEST: TEMPLETON GROWTH FUND, INC.
- ----------------------------- By:________________________________(seal)
Secretary
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY
PROXY PROXY
SPECIAL SHAREHOLDERS' MEETING OF
TEMPLETON GROWTH FUND, INC.
JUNE 15, 2000
The undersigned hereby revokes all previous proxies for his or her shares and
appoints [ ], and each of them, proxies of the undersigned with full power of
substitution to vote all shares of Templeton Growth Fund, Inc. (the "Fund") that
the undersigned is entitled to vote at the Fund's Special Shareholders' Meeting
to be held at [ ] at [10:00] a.m., Eastern time on June 15, 2000, including any
adjournments thereof, upon the matters set forth on the reverse side of this
proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED FOR PROPOSALS
1 (INCLUDING ALL NOMINEES FOR DIRECTORS), 2, 3 (INCLUDING ALL SUB PROPOSALS),4
(INCLUDING ALL SUB PROPOSALS), 5, 6 AND WITHIN THE DISCRETION OF THE
PROXYHOLDERS AS TO ANY OTHER MATTER PURSUANT TO PROPOSAL 7.
NOTE: Please sign exactly as your name appears
on this proxy. If signing for estates, trusts or
corporations, title or capacity should be
stated. If shares are held jointly, each holder
should sign.
----------------------------------------------
Signature
----------------------------------------------
Signature
----------------------------------------------
Date
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY...TODAY
(Please see reverse side)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE REQUIRED IF MAILED IN THE U.S.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 7.
Proposal 1 - Election of Directors. To withhold authority to vote for any
individual nominee, strike a line through the nominee's name in the list below.
<TABLE>
<S> <C> <C> <C>
01 Harris J. Ashton 02 Nicholas F. Brady 03 Frank J. Crothers 04 S. Joseph Fortunato
05 John Wm. Galbraith 05 Andrew H. Hines, Jr. 06 Edith E. Holiday 07 Charles B. Johnson
08 Betty p. Krahmer 09 Gordon S. Macklin 10 Fred R. Millsaps 11 Constantine Dean Tseretopoulos
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposal 2 - Ratification of the selection of PricewaterhouseCoopers LLP as
independent auditors for the Fund. [] [] []
Proposal 3 - To approve amendments to certain of the Fund's fundamental
investment restrictions (includes five (5) Sub Proposals).
3.a. To amend the Fund's fundamental investment restriction regarding
borrowing. [] [] []
3.b. To amend the Fund's fundamental investment restriction regarding
underwriting. [] [] []
3.c. To amend the Fund's fundamental investment restriction regarding
lending. [] [] []
3.d. To amend the Fund's fundamental investment restrictions regardin
industry concentration. [] [] []
3.e. To amend the Fund's fundamental investment restrictions regarding
investments in other investment companies. [] [] []
Proposal 4 - To approve reclassification of fundamental investment policies and
certain fundamental investment restrictions as non-fundamental
policies and restrictions (includes ten (10) Sub Proposals).
4.a. Investment goal. [] [] []
4.b. Structured investments. [] [] []
4.c. Temporary investments. [] [] []
4.d. Invest assets insecurities issued by any one company or government. [] [] []
4.e. Invest more than 10% of its assets in securities with a limited
trading market. [] [] []
4.f. Purchase or retain securities of any company in which directors or
officers of the fund or the manager, individually owning more than
one-half of 1% of the securities of such company, in the aggregate
own more than 5% of the securities of such company. [] [] []
4.g. Purchase more than 10% of any class of securities of any one
company, including more than 10% of its outstanding voting
securities, or invest in any company for the purchase of
exercising control or management. [] [] []
4.h. Invest more than 5% of the value of the fund's total assets in
securities of issuers which have been in continuous operation
less than three years. [] [] []
4.i. Invest more than 5% of the fund's total assets in warrants,
whether or not listed on the New York Stock Exchange or the
American Stock Exchange, including no more than 2% of its total
assets which may be invested in warrants that are not listed on
those exchange. [] [] []
4.j. Invest more than 15% of the funds' total assets in securities of
foreign issuers that are not listed on a recognized U.S or foreign
securities exchange, including no more than 10% of its total assets
(including warrants) which may be invested in securities with a
limited trading market. [] [] []
Proposal 5 - To approve the elimination of one of the Fund's fundamental
investment restrictions. [] [] []
Proposal 6 - To approve the amendment and restatement of the Fund's Articles of
Incorporation. [] [] []
Proposal 7 - To grant the proxyholders authority to vote upon any other business
that may properly come before the Meeting or any adjournments thereof. [] [] []
</TABLE>
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY...TODAY
