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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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TEMPLETON GROWTH FUND, INC.
500 EAST BROWARD BOULEVARD
FORT LAUDERDALE, FLORIDA 33394-3091
April 24, 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 June 15, 2000 at
11:00 a.m. Eastern time at the Hyatt Regency Pier 66, Panorama Ballroom, 2301
S.E. 17th Street Causeway, Fort Lauderdale, Florida 33316. 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
(Sub-Proposals 3(a) - 3(e));
4. Reclassification of the Fund's fundamental investment policies and'
certain fundamental investment restrictions to non-fundamental
policies and restrictions (Sub-Proposals 4(a) - 4(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 or any
adjournments thereof (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(R)
(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, DATE AND RETURN THE PROXY CARD TODAY.
Sincerely,
Mark G. Holowesko
President
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TELEPHONE, FACSIMILE AND INTERNET VOTING
FOR YOUR CONVENIENCE, YOU MAYBE ABLE TO VOTE BY TELEPHONE, FACSIMILE OR THROUGHT
THE INTERNET, 24 HOURS A DAY. IF YOUR ACCOUNT IS ELIGIBLE, A CONTROL NUMBER AND
SEPARATE INSTRUCTIONS ARE ENCLOSED.
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TEMPLETON GROWTH FUND, INC.
500 East Broward Boulevard
Fort Lauderdale, Florida 33394-3091
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
June 15, 2000
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of TEMPLETON
GROWTH FUND, INC. (the "Fund") will be held at the Hyatt Regency Pier 66,
Panorama Ballroom, 2301 S.E. 17th Street Causeway, Fort Lauderdale, Florida
33316, on June 15, 2000 at 11:00 a.m.
Eastern time (the "Meeting") 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
(Sub-Proposals 3(a) - 3(e));
4. Reclassification of the Fund's fundamental investment policies and
certain fundamental investment restrictions to non-fundamental policies
and restrictions (Sub-Proposals 4(a) - 4(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 or any
adjournments thereof (Proposal 7).
Shareholders of record at the close of business on March 28, 2000 are entitled
to notice of, and to vote at, the Meeting.
By Order of the Board of Directors,
Barbara J. Green
Secretary
April 24, 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
PAGE
----
Questions and Answers.................................................... 1
Proposal 1: Election of Directors........................................ 5
Proposal 2: Ratification or rejection of selection of independent
auditors.................................................... 14
Introduction to Proposals 3, 4 and 5....................................... 15
Proposal 3: Amendment of certain of the Fund's fundamental
investment restrictions..................................... 16
3(a) Borrowing....................................................... 16
3(b) Underwriting.................................................... 18
3(c) Lending......................................................... 19
3(d) Industry concentration.......................................... 20
3(e) Investment in other investment companies........................ 21
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))....... 23
Proposal 5: Elimination of one of the Fund's fundamental
investment restrictions..................................... 27
Proposal 6: Amendment and restatement of the Fund's articles of
incorporation............................................... 28
Proposal 7: Other business................................................. 31
Information about the Fund................................................. 32
Further Information about Voting and the Meeting........................... 33
Exhibit A: Fundamental Investment Policies and Restrictions
Proposed to be Amended or Reclassifed........................ A-1
Exhibit B: Articles of Amendment and Restatement........................... B-1
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 June 15, 2000 at 11:00 a.m. Eastern time at the
Hyatt Regency Pier 66, Panorama Ballroom, 2301 S.E. 17th Street Causeway, Fort
Lauderdale, Florida 33316. The record date for the Meeting is the close of
business on March 28, 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
(Sub-Proposals 3(a) - 3(e));
4. Reclassification of the Fund's fundamental investment policies and
certain fundamental investment restrictions to non-fundamental policies
and restrictions (Sub-Proposals 4(a) - 4(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 or any
adjournments thereof (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
1
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 policies 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.
2
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 of incorporation
no longer reflect the broadest flexibility which legislative changes in Maryland
have made available to Corporations. The proposed Articles of Amendment and
Restatement 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 Articles of
Amendment and Restatement, 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, each of the Proposals and Sub-Proposals will become effective
immediately.
Q. WHO IS ASKING FOR MY VOTE?
A. The Board of Directors requests that you sign, date 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. If you are eligible to vote by telephone or through
the internet, a control number and separate instructions are enclosed. To vote
by mail, sign, date and send us the enclosed proxy voting card in the envelope
provided. To vote by telephone, call 1-800-597-7836. You can fax your vote by
signing the proxy voting card and faxing both sides of the card to 631-231-7999.
Or, you can vote in person at the Meeting on June 15, 2000.
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 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, 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.
3
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4
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 the Hyatt Regency Pier 66,
Panorama Ballroom, 2301 S.E. 17th Street Causeway, Fort Lauderdale, Florida
33316 on June 15, 2000 at 11:00 a.m. Eastern time, and any adjournments thereof.
This Proxy Statement and related materials are being mailed to shareholders
starting on or about April 24, 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 6.
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
5
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.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IN THE
FUND SHARES FRANKLIN TEMPLETON
BENEFICIALLY OWNED GROUP OF FUND
AND % OF TOAL (INCLUDING THE FUND)
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES AS OF
DURING PAST FIVE YEARS AND AGE AS OF MARCH 28, 2000 DECEMBER 31, 1999
- ------------------------------- --------------------- ------------------
<S> <C> <C>
HARRIS J. ASHTON (Age 67) 0 1,509,048
Director since 1992
Director, RBC Holdings, Inc. (bank holding company) and Bar-S Foods (meat
packing company); director or trustee, as the case may be, of 48 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers) (until 1998).
*NICHOLAS F. BRADY (Age 70) 50,173** 57,649
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 oil and gas), C2, 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), Chairman of the Board, Dillon, Read & Co., Inc.
(investment banking) (until 1988) and U.S. Senator, New Jersey (April
1982-December 1982).
</TABLE>
6
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IN THE
FUND SHARES FRANKLIN TEMPLETON
BENEFICIALLY OWNED GROUP OF FUND
AND % OF TOAL (INCLUDING THE FUND)
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES AS OF
DURING PAST FIVE YEARS AND AGE AS OF MARCH 28, 2000 DECEMBER 31, 1999
- ------------------------------- --------------------- ------------------
<S> <C> <C>
FRANK J. CROTHERS (Age 55) 0 6,696
Chairman, Caribbean Electric Utility Services Corporation and Atlantic Equipment
& Power Ltd.; Vice Chairman, Caribbean Utilities Co., Ltd.; President, Provo
Power Corporation; director of various other business and nonprofit
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) 17,891** 583,059
Director since 1992
Member of the law firm of Pitney, Hardin, Kipp & Szuch; and director or trustee,
as the case may be, of 50 of the investment companies in the Franklin Templeton
Group of Funds.
JOHN WM. GALBRAITH (Age 78) 146,378** 3,047,720
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).
ANDREW H. HINES, JR. (Age 77) 15,375** 49,727
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>
7
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IN THE
FUND SHARES FRANKLIN TEMPLETON
BENEFICIALLY OWNED GROUP OF FUND
AND % OF TOAL (INCLUDING THE FUND)
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES AS OF
DURING PAST FIVE YEARS AND AGE AS OF MARCH 28, 2000 DECEMBER 31, 1999
- ------------------------------- --------------------- ------------------
<S> <C> <C>
EDITH E. HOLIDAY (Age 48) 1,798** 7,775
Director, Amerada Hess Corporation (exploration and refining of oil and 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. (manufacture and distribution of titanium) (July
1999-present); director or trustee, as the case may be, of 25 of the investment
companies in the Franklin Templeton Group of Funds; and FORMERLY, 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 67) 562** 22,129,667
Director and Vice President since 1992,
Chairman since 1995
Chairman of the Board, Chief Executive Officer, Member - Office of the Chairman
and Director, Franklin Resources, Inc.; Chairman of the Board and Director,
Franklin Investment Advisory Services, Inc.; Chairman of the Board, Franklin
Advisers, Inc.; Vice President, 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 49 of the investment
companies in the Franklin Templeton Group of Funds.
BETTY P. KRAHMER (Age 70) 7,499** 152,881
Director since 1990
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>
8
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IN THE
FUND SHARES FRANKLIN TEMPLETON
BENEFICIALLY OWNED GROUP OF FUND
AND % OF TOAL (INCLUDING THE FUND)
NAME AND PRINCIPAL OCCUPATION OUTSTANDING SHARES AS OF
DURING PAST FIVE YEARS AND AGE AS OF MARCH 28, 2000 DECEMBER 31, 1999
- ------------------------------- --------------------- ------------------
<S> <C> <C>
GORDON S. MACKLIN (Age 71) 2,746** 443,627
Director since 1993
Director, Martek Biosciences Corporation, MCI WorldCom, Inc. (information
services), MedImmune, Inc. (biotechnology), Overstock.com (internet services),
White Mountains Insurance Group, Ltd. (holding company) and Spacehab, Inc.
(aerospace services); director or trustee, as the case may be, of 48 of the
investment companies in the Franklin Templeton Group of Funds; and FORMERLY,
Chairman, White River Corporation (financial services) (until 1998) and
Hambrecht & Quist Group (investment banking) (until 1992), and President,
National Association of Securities Dealers, Inc. (until 1987).
FRED R. MILLSAPS (Age 71) 8,369** 261,803
Director since 1990
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 17,875** 91,220
(Age 46)
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%.
9
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.
<TABLE>
<CAPTION>
NUMBER OF BOARDS
AGGREGATE WITHIN THE FRANKLIN TOTAL COMPENSATION
COMPENSATION TEMPLETON GROUP OF FROM THE
FROM FUNDS ON WHICH FRANKLIN TEMPLETON
NAME OF DIRECTOR THE FUND* DIRECTOR SERVES** GROUP OF FUNDS***
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harris J. Ashton $16,500 48 $363,165
Nicholas F. Brady 16,500 19 138,700
S. Joseph Fortunato 16,500 50 363,238
John Wm. Galbraith 18,963 18 144,200
Andrew H. Hines, Jr. 18,826 20 203,700
Betty P. Krahmer 16,500 19 138,700
Gordon S. Macklin 16,500 48 363,165
Fred R. Millsaps 18,634 20 201,700
</TABLE>
10
* 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.
11
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.
<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
President since 1994 Investment 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 40.
RUPERT H. JOHNSON, JR. Vice Chairman, Member - Office of the Chairman and
Vice President since 1996 Director, Franklin Resources, Inc.; Executive Vice
President and Director, Franklin Templeton
Distributors, Inc.; Director, Franklin Advisers, Inc.,
Franklin Investment Advisory Services, Inc. and
Franklin/Templeton Investor Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and
officer and/or director or trustee, as the case may be,
of most of the other subsidiaries of Franklin Resources,
Inc. and of 52 of the investment companies in the
Franklin Templeton Group of Funds. Age 59.
HARMON E. BURNS Vice Chairman, Member - Office of the Chairman and
Vice President since 1996 Director, Franklin Resources, Inc.; Executive Vice
President and Director, 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 52 of the investment companies in the
Franklin Templeton Group of Funds. Age 55.
CHARLES E. JOHNSON President, Member - Office of the President and
Vice President since 1996 Director, Franklin Resources, Inc.; Senior Vice
President, Franklin Templeton Distributors, Inc.;
President and Director, Templeton Worldwide, Inc. and
Franklin Advisers, Inc.; Director, Templeton Investment
Counsel, Inc.; President, Franklin Investment Advisory
Services, 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 33 of the investment companies in the Franklin
Templeton Group of Funds. Age 43.
</TABLE>
12
<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- -------------------------------------------------------------------------------
<S> <C>
MARTIN L. FLANAGAN President, Member - Office of the President, Chief
Vice President since 1990 Financial Officer and Chief Operating Officer Franklin
Resources, Inc.; Director, Franklin Templeton Services,
Inc.; Executive Vice President, Chief Financial
Officer and Director, Templeton Worldwide, Inc.;
Executive Vice President, Chief Operating Officer and
Director, Templeton Investment Counsel, Inc.; Executive Vice
President and Chief Financial Officer, 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 52 of the
investment companies in the Franklin Templeton Group of
Funds. Age 39.
JOHN R. KAY Vice President, Templeton Worldwide, Inc.; Assistant
Vice President since 1994 Vice 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.
MURRAY L. SIMPSON Executive Vice President and General Counsel,
Vice President since February 2000 Franklin Resources, Inc.; officer of 53 of the
investment companies in the Franklin Templeton Group
of Funds; and formerly, Chief Executive Officer and
Managing Director, Templeton Franklin Investment
Services (Asia) Limited (until January 2000) and
Director, Templeton Asset Management Ltd. (until
1999). Age 62.
BARBARA J. GREEN Vice President and Deputy General Counsel, Franklin
Secretary since 1996 and Resources, Inc.; Senior Vice President, Templeton
Vice President since Worldwide, Inc. and Templeton Global Investors, Inc.;
February 2000 officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 53 of the investment companies
in the Franklin Templeton Group of Funds; and FORMERLY,
Deputy Director, Division of Investment Management,
Executive Assistant and Senior Advisor to the Chairman,
Counselor to the Chairman, Special Counsel and Attorney
Fellow, U.S. Securities and Exchange Commission
(1986-1995), Attorney, Rogers & Wells (until 1986), and
Judicial Clerk, U.S. District Court (District of
Massachusetts) (until 1979). Age 52.
DAVID P. GOSS President, Chief Executive Officer and Director,
Vice President since February 2000 Franklin Select Realty Trust, Property Resources, Inc.,
Property Resources Equity Trust and Franklin Real
Estate Management, Inc. and Franklin Properties, Inc.;
director and officer of some of the other subsidiaries of
Franklin Resources, Inc.; officer of 53 of the
investment companies in the Franklin Templeton Group of
Funds; and FORMERLY, President, Chief Executive
Officer and Director, Franklin Real Estate Income Fund and
Franklin Advantage Real Estate Income Fund (until 1996).
Age 52.
</TABLE>
13
<TABLE>
<CAPTION>
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH THE FUND DURING PAST FIVE YEARS AND AGE
- -------------------------------------------------------------------------------
<S> <C>
ELIZABETH M. KNOBLOCK General Counsel, Secretary and Senior Vice President,
Vice President - Compliance Templeton Investment Counsel, Inc.; Senior Vice
since 1996 President, Templeton Global Investors, Inc.; officer of
other subsidiaries of Franklin Resources, Inc. and 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, Division
of Investment Management, U.S. Securities and
Exchange Commission (1984-1986). Age 45.
JAMES R. BAIO Certified Public Accountant; Senior Vice President,
Treasurer Since 1994 Templeton 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 46.
</TABLE>
PROPOSAL 2: RATIFICATION OR REJECTION OF
INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
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. 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 as auditors of the
Fund. 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.
14
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 became
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
15
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: AMENDMENT OF CERTAIN OF THE FUND'S FUNDAMENTAL INVESTMENT
RESTRICTIONS (THIS PROPOSAL INVOLVES SEPARATE VOTES ON SUB-
PROPOSALS 3(A) - 3(E))
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS APPROVAL OF EACH SUB-PROPOSAL 3(A) - 3(E).
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
16
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
that 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.
17
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 ITS 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 ITS 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 reselling 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 resales 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."
18
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 Fund's investment
restrictions 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.
19
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
20
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.
21
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:
22
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 THE FUND 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,
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 statement of additional information. The Board
proposes that the fundamental investment policies and restrictions set forth
below be changed to non-fundamental investment policies.
23
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:
24
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 1/2 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
25
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 within seven days for the price at
which the Fund has valued the securities), 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.
26
PROPOSAL 5: ELIMINATION OF ONE OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
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 was originally drafted in
response to state laws and regulations, which, due to NSMIA, is 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 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. The Fund has not previously engaged 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
27
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. 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 enter into joint repurchase agreements
for cash management purposes that could be considered to be a joint trading
account. The proposed elimination of the restriction would permit the Fund,
under circumstances prescribed by the SEC order, to engage in joint repurchase
agreements with other funds in the Franklin and Templeton Group of Funds at
rates that are more favorable than those the Fund would receive if it were to
enter into repurchase agreements on its own.
PROPOSAL 6: AMENDMENT AND RESTATEMENT OF THE FUND'S ARTICLES OF INCORPORATION
THE BOARD OF DIRECTORS OF THE FUND, INCLUDING THE INDEPENDENT DIRECTORS,
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
28
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
29
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).
30
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 New Articles. 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.
31
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 94404. 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, St. Petersburg, Florida
33716-1205.
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 and unaudited financial statements and semi-annual report
dated February 29, 2000 are available free of charge. To obtain copies, 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 698,627,321 shares outstanding of Class A,
2,924,324 shares outstanding of Class B, 54,870,375 shares outstanding of Class
C, and 6,489,645 shares outstanding of Advisor Class, and total net assets of
$14,472,905,675. 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 a class of the Fund's outstanding
shares, except as shown for Advisor Class in the following table:
32
<TABLE>
<CAPTION>
TITLE OF CLASS AND
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter Norton TTEE Advisor Class 19%
Norton Family CRU Trust 1,241,533
DTD 02/15/92 225 Arizona Ave, 2nd Fl W
Santa Monica, CA 91401-1210
T. Rowe Price TTEE Advisor Class 15%
FBO Honeywell 958,271
10090 Red Run Blvd.
Owings Mills, MD 21117
FFTC TTEE for ValuSelect Advisor Class 13%
Franklin Templeton 401K 842,458
PO Box 2438
Rancho Cordova, CA 95741-2438
Peter Norton TTEE Advisor Class 7%
Norton Family Foundation Trust 429,786
DTD 12/12/88 225 Arizona Ave, 2nd Fl W
Santa Monica, CA 91401-1210
FFTC TTEE for ValuSelect Advisor Class 6%
Franklin Resources Profit Sharing Plan 364,469
PO Box 2438
Rancho Cordova, CA 95741-2438
Jupiter & Co. Advisor Class 5%
C/O Investors Bank & Trust 328,430
PO Box 9130 FPG 90
Boston, MA 02117-9130
</TABLE>
In addition, to the knowledge of the Fund's management, as of March 28, 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.
FURTHER INFORMATION ABOUT VOTING
AND THE MEETING
RECORD DATE. Shareholders of record at the close of business on March 28, 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 are being
mailed to shareholders of record on or about April 24, 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.
33
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 (Sub-Proposals 3(a) - 3(e)), IN FAVOR of
reclassifying the Fund's fundamental investment policies and certain of the
fundamental investment restrictions to non-fundamental investment policies and
restrictions (Sub-Proposals 4(a) - 4(j)), 0IN FAVOR of eliminating one 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 or any adjournments
thereof (Proposal 7).
REVOCATION OF PROXIES. You may revoke your proxy at any time 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.
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. The Fund has engaged Shareholder
Communications Corporation to solicit proxies from brokers, banks, other
institutional holders and individual shareholders at an anticipated cost,
including out-of-pocket expenses, ranging between $940,000 and $1,215,000. The
Fund expects that the solicitation would be primarily by mail, but also may
include telephone, telecopy or oral solicitations. 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.
Certain broker-dealers 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.
34
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 Sub-Proposals 3(a) through 3(e), reclassifying the Fund's
investment policies and certain fundamental investment restrictions to
non-fundamental policies and restrictions, as set forth in Sub-Proposals 4(a)
through 4(j), and eliminating one 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 or any adjournments thereof, requires the affirmative vote of a majority
of the Fund's shares present and voting on the Proposal at the Meeting or any
adjournments thereof. 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.
35
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
April 24, 2000
36
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- RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
PROPOSAL POLICY RESTRICTION/POLICY RESTRICTION/POLICY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3(a) Borrowing 6. [The Fund may not:] Borrow money for any purpose [The Fund may not:] Borrow money, except that
Restriction other than redeeming its shares or purchasing its the fund may borrow money from banks or
shares for cancellation, and then only as a affiliated investment companies to the extent
temporary measure to an amount not exceeding 5% of permitted by the 1940 Act, or any exemptions
the value of its total assets, or pledge, mortgage, therefrom which may be granted by the U.S.
or hypothecate its assets other than to secure such Securities and Exchange Commission and then
temporary borrowings, and then only to such extent only for temporary purposes and in an amount
not exceeding 10% of the value of its total assets not exceeding 10% of the value of its total
as the board of directors may by resolution approve. assets (including the amount borrowed) and
(For the purposes of this restriction, collateral with the consent of the fund's custodian to
arrangements with respect to margin for a stock the terms of the borrowing.
index futures contract are not deemed to be a
pledge of assets.) [The Fund may not:] Pledge, mortgage,
hypothecate, or otherwise encumber its assets
except to secure indebtedness permitted
under its borrowing policy.
3(b) Underwriting 4. [The Fund may not:] Act as an underwriter. [The Fund may not:] Act as an underwriter
Restriction 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.
</TABLE>
A-1
<TABLE>
<CAPTION>
PROPOSAL
OR SUB- RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
PROPOSAL POLICY RESTRICTION/POLICY RESTRICTION/POLICY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3(c) Lending 5. [The Fund may not:] Loan money, apart from the [The Fund may not:] Make loans to other
Restriction purchase of a portion of an issue of publicly persons except (a) through the lending of its
distributed bonds, debentures, notes and other portfolio securities, (b) through the purchase
evidences of indebtedness, although the fund may of debt securities, loan participations and/or
buy U.S. government obligations with a engaging in direct corporate loans in accord-
simultaneous agreement by the seller to repurchase ance with its investment objective and
them within no more than seven days at the original policies, and (c) to the extent the entry
purchase price plus accrued interest. 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.
3(d) Industry 10. [The Fund may not:] Invest more than 25% of the [The Fund may not:] Concentrate (invest more
Concentration fund's total assets in a single industry. than 25% of its net assets) in securities of
Restriction 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).
</TABLE>
A-2
<TABLE>
<CAPTION>
PROPOSAL
OR SUB- RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
PROPOSAL POLICY RESTRICTION/POLICY RESTRICTION/POLICY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3(e) Investment 1. [The Fund may not:]..invest in other open-end [The Fund may not:] Invest in the securities
Company investment companies or, as an operating policy of any other domestic or foreign investment
Restriction approved by the board of directors, invest in company or investment fund or other investment
closed-end investment companies. 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 the fund 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.
4(a) -- The fund seeks to achieve its investment goal of Proposed to be reclassified as
long-term capital growth through a flexible policy of non-fundamental.
investing in stocks and debt obligations of companies
and governments of any nation.
4(b) -- Although the fund generally invests in common stock, Proposed to be reclassified as
it may also invest in preferred stocks and certain non-fundamental.
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.
</TABLE>
A-3
<TABLE>
<CAPTION>
PROPOSAL
OR SUB- RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
PROPOSAL POLICY RESTRICTION/POLICY RESTRICTION/POLICY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4(c) -- Whenever, in the judgment of the manager, market or economic Proposed to be reclassified as
conditions warrant, the fund may, for temporary defensive non-fundamental.
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 it total Proposed to be reclassified as
assets in securities issued by any one company or non-fundamental.
government, exclusive of U.S. government securities.
4(e) -- The fund may not invest more than 10% of its assets in Proposed to be reclassified as
securities with a limited trading market. non-fundamental.
4(f) -- 2. [The Fund may not:] Purchase or retain securities of any Proposed to be reclassified as
company in which directors or officers of the fund or the non-fundamental.
manager, individually owning more than 1/2 of 1% of
the securities of such company, in the aggregate own
more than 5% of the securities of such company.
4(g) -- 3. [The Fund may not:] Purchase more than 10% of any class of Proposed to be reclassified as
securities of any one company, including more than 10% of its non-fundamental.
outstanding voting securities, or invest in any company for the
purpose of exercising control or management.
</TABLE>
A-3
<TABLE>
<CAPTION>
PROPOSAL
OR SUB- RESTRICTION/ CURRENT INVESTMENT PROPOSED INVESTMENT
PROPOSAL POLICY RESTRICTION/POLICY RESTRICTION/POLICY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4(h) -- 7. [The Fund may not:] Invest more than 5% of the value of the Proposed to be reclassified as
fund's total assets in securities of issuers which have been non-fundamental.
in continuous less than three years.
4(i) -- 8. [The Fund may not:] Invest more than 5% of the fund's total Proposed to be reclassified as
assets in warrants, whether or not listed on the New York Stock non-fundamental.
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 15% of the fund's total Proposed to be reclassified as
assets in securities of foreign issuers that are not listed on a non-fundamental.
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>
A-4
EXHIBIT B
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 of the Corporation dated
November 10, 1986, as subsequently restated, amended, supplemented, and
corrected ("Charter"), 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 Maryland General
Corporation Law. The Corporation shall exercise and enjoy all such powers,
rights and privileges to the extent not inconsistent with these Articles of
Amendment and Restatement ("Articles"). 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 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, par value of $0.01 per share,
having an aggregate par value of EIGHTEEN MILLION
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($18,000,000) 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 (100,000,000) 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 these Articles, 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
B-2
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 Maryland General Corporation Law and the Investment
Company Act of 1940, as amended, (the "1940 Act") 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,
B-3
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 shares 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 of shares of the Corporation.
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 Maryland
General Corporation Law or the 1940 Act 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
B-4
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 these
Articles. 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 assets 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 1940 Act) 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 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
B-5
whatever conditions as the Board of Directors deems, in its sole discretion, to
be appropriate and consistent with applicable law and
these Articles;
(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; 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.
Notwithstanding any other provision of these Articles 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 be cast,
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.
B-6
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 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 Maryland General
Corporation Law 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 and the By-Laws of the Corporation
("By-Laws") shall be effective for such purpose, except to the extent otherwise
required by the 1940 Act and rules thereunder; provided that, to the extent
consistent with Maryland General Corporation Law 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 1940 Act.
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
B-7
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 1940 Act, 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, 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 1940
Act. 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 1940 Act, 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.
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.
B-8
9. INVESTMENT LIMITATIONS.
a. Neither the Corporation nor any series of shares 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 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 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 shares 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 shares 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
twelve (12), provided that the By-Laws may, subject to the limitations of
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 elected and
qualified are:
Harris J. Ashton Edith E. Holiday
Nicholas F. Brady Charles B. Johnson
Frank J. Crothers Betty P. Krahmer
S. Joseph Fortunato Gordon S. Macklin
John Wm. Galbraith Fred R. Millsaps
Andrew H. Hines, Jr. Constantine D. Tseretopoulos
B-9
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 or in the By-Laws, exercise the full
extent of powers conferred by Maryland General Corporation Law 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:
1. To make, alter or repeal the By-Laws of the Corporation except as
therein provided, and
2. 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.
1. To the maximum extent permitted by Maryland General Corporation Law
as from time to time amended, but subject to any limitations which may be
imposed pursuant to the 1940 Act 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.
2. To the fullest extent permitted by Maryland General Corporation Law
and the 1940 Act, no director or officer of the Corporation shall be liable to
the Corporation or to its stockholders for monetary damages. No amendment to
these Articles 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.
3. In the 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 Maryland General Corporation Law. A person who performs his
duties in accordance with the standards of Article 2-405.1 of 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 are all the provisions of
the Articles currently in effect as herein amended and restated.
B-10
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 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 to be
signed in its name and on its behalf by its President and attested to by its
Secretary on this _____________ day of ____________________________ .
ATTEST: TEMPLETON GROWTH FUND, INC.
By: (seal)
- ------------------------------- -------------------------
Secretary
B-11
PROXY PROXY
TEMPLETON GROWTH FUND, INC.
SPECIAL SHAREHOLDERS' MEETING - JUNE 15, 2000
The undersigned hereby revokes all previous proxies for his or her shares and
appoints BARBARA J. GREEN, JAMES R. BAIO AND BRUCE S. ROSENBERG, 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 the
Hyatt Regency Pier 66, Panorama Ballroom, 2301 S.E. 17th Street Causeway, Fort
Lauderdale, Florida at 11:00 a.m., Eastern time on June 15, 2000, including any
adjournments thereof, upon the matters set forth on the reverse side of this
Oroxy.
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 5 SUB-PROPOSALS), 4
(INCLUDING 10 SUB-PROPOSALS), 5, 6 AND WITHIN THE DISCRETION OF THE
PROXYHOLDERS AS TO ANY OTHER MATTER PURSUANT TO PROPOSAL 7.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
VOTE VIA THE TELEPHONE: 1-800-597-7836
CONTROL NUMBER:
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
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Signature
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Date 10735-TGF
I PLAN TO ATTENT MEETING: YES [ ] NO [ ]
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S. (PLEASE SEE REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 7. TO VOTE,
FILL IN THE BOX COMPLETELY. EXAMPLE []
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Proposal 1 - Election of Directors. To withhold authority to vote for any FOR WITHHOLD FOR ALL NOMINEES
individual nominee, strike a line through the nominee's name in the list below. ALL NOMINEE AUTHOIRTY (EXCEPT AS MARKED
FOR ALL TO THE LEFT)
NOIMINEES
LISTED
[] [] []
<CAPTION>
<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 - Amendments to certain of the Fund's fundamental investment restrictions
(includes 5 Sub-Proposals).
3.a. Borrowing. [] [] []
3.b. Underwriting. [] [] []
3.c. Lending. [] [] []
3.d. Industry concentration. [] [] []
3.e. 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 10 Sub-Proposals).
4.a. Stocks and debt obligations. [] [] []
4.b. Preferred stocks and certain debt securities. [] [] []
4.c. Temporary defensive instruments. [] [] []
4.d. A single issuer. [] [] []
4.e. Securities with a limited trading market. [] [] []
4.f. Companies whoses securities the Fund's Directors and Officers own. [] [] []
4.g. A single class of securities, voting securities or securities of a
company for the purpose of controlling or managing the company [] [] []
4.h. Unseasoned issuers. [] [] []
4.i. Warrants. [] [] []
4.j. Unlisted securities and securities with a limited trading market. [] [] []
Proposal 5 - Elimination of one of the Fund's fundamental investment restrictions. [] [] []
Proposal 6 - Amendment and restatement of the Fund's Articles of Incorporation. [] [] []
Proposal 7 - 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
