File No. 811-7638
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2 (X)
MIDCAP GROWTH PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Address of Principal Executive Offices (Zip Code)
Registrant's Telephone Number, Including Area Code (415) 312-2000
DEBORAH R. GATZEK, 777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404
(Name and Address of Agent for Service of Process)
---------------
Please Send Copy of Communications to:
Mark H. Plafker, Esq.
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, Pennsylvania 19102
(MIDCAP GROWTH PORTFOLIO
FORM N-1A, Part A:
Item
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
4. General Description of Registrant
About the Fund
The MidCap Growth Portfolio (the "Fund") is a no-load, open-end, diversified
management investment company, or mutual fund, registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the
"1940 Act") and organized as a Delaware business trust on February 26, 1993. The
Fund issues shares of beneficial interest with a par value of $.01 per share
without any sales charge.
Investment Objective and Polices of the Fund
The Fund's investment objective is to seek capital growth by investing primarily
in a broadly diversified portfolio of medium capitalization stocks. The Fund's
performance goal is to annually exceed the return of the Standard and Poor's
MidCap 400 Index* (the "Benchmark") on a total return basis.
The Fund seeks to accomplish its objective by investing primarily in the common
stocks of companies selected by means of a structured quantitative investment
strategy. The Fund will not attempt to replicate the Benchmark with its
portfolio composition. Under normal market conditions, the Fund will invest 50%
to 100% of its assets in the common stocks of companies represented in the
Benchmark. The Fund's investments will be distributed across the broad industry
sectors represented in the Benchmark including the industrial, utilities,
financial and transportation sectors. The Fund's investment manager will
regularly determine which stocks in the Benchmark and outside of the Benchmark
should be included in the Fund's portfolio for the purpose of outperforming the
Benchmark. The Fund intends to invest at least 65% of its assets in common
stocks of medium capitalization companies which are either included in the
Benchmark or have the characteristics described below.
The Fund will implement a structured quantitative stock selection strategy. The
Fund is not limited to stocks in the Benchmark as long as the total portfolio
maintains similar systematic characteristics of the Benchmark, such as
capitalization, beta and economic sector weightings. To avoid any potential
conflict of interest, the Fund will not purchase securities of issuers with
which it is affiliated. This includes, but is not limited to, the common shares
of Franklin Resources, Inc. The latter policy does not apply to the Fund's
short-term investments. (See "Investment Objectives and Policies of the Fund -
Short-Term Investments.")
The Fund may invest up to 50% of its assets in stocks not represented in the
Benchmark, and in other securities and derivative instruments. The securities
selected from outside of the Benchmark will be primarily medium capitalization
stocks, which the Fund's manager believes have superior prospects for return
relative to the Benchmark. Medium capitalization companies in which the Fund
will invest generally have a market capitalization between $200 million and $5
billion. Market capitalization is defined as the total market value of a
company's outstanding common stock. If the purchase of a company's common stock
is not appropriate in light of current market factors or if sufficient shares of
its common stock are not available for purchase, the Fund may purchase such
company's outstanding convertible preferred stock. The Fund may also purchase
options on stocks and stock indices, and futures and options on futures
contracts on stock indices as a hedge against changes in the values of its
securities or securities which it intends to purchase resulting from market
conditions and, to the extent consistent therewith, to accommodate cash flows.
Consistent with its objective, the Fund attempts to be fully invested at all
times in equity securities and, under normal market conditions, its assets will
be invested primarily in a broadly diversified portfolio of medium
capitalization stocks.
The Fund's portfolio will overweight, relative to the Benchmark, stocks that are
attractive on the basis of their valuation and growth prospects. The Fund's
manager has developed a proprietary stock selection model that combines certain
valuation and growth factors to create a composite rank score. The valuation
factors include, but are not limited to: earnings momentum, estimate revision,
earnings surprise, consensus growth estimates and return on equity. Value
characteristics deemed to be important include, but are not limited to: dividend
discount model expected returns, price to earnings ratio, price to book ratio,
price to cash flow ratio and price to sales ratio. The proprietary stock
selection model dynamically weights these individual factors, based on their
relative attractiveness and stock selection potential. The Fund's manager
believes that a diversified portfolio of stocks that are favorably ranked based
on its proprietary stock selection model is consistent with the objective of
exceeding the performance of the Benchmark.
The Fund's manager will diversify the portfolio of stocks by generally holding
at least 50 stocks at all times, selected with the assistance of quantitative
modeling that includes specific risk management technology. The Fund's manager
believes that this diversification will increase the likelihood that the Fund
will meet its objective. Although the majority of the Fund's assets will be held
in stocks with attractive scores based upon the proprietary stock selection
model used by the Fund, the risk management technology will sometimes require
the holding of stocks that are less attractive but comprise a substantial weight
in the Benchmark.
The Benchmark. The performance Benchmark is the S&P Midcap 400 Index, which
consists of 400 stocks chosen for market size (the median capitalization of the
companies comprising the index as of July 29, 1994 was approximately $901
million), liquidity and industry group representation. It is a market value
weighted index with each stock affecting the index in proportion to its market
value. The Benchmark is the property of Standard & Poor's, which makes all the
decisions with respect to its composition.
On July 29, 1994, the Benchmark consisted of 270 companies listed on the New
York Stock Exchange (4 of which were NYSE-listed Canadian companies), 10
companies listed on the American Stock Exchange and 120 NASDAQ companies. The
broad sector weights in the Benchmark on that date were approximately as
follows: Industrials 65%; Utilities 15%; Financial 18%; and Transportation 2%.
These weights will change in accordance with relative price movements of the
individual stocks. The Fund will attempt to maintain a sector weighting similar
to the Benchmark.
The Benchmark is designed to capture growth companies, with less of an emphasis
on current income. As such, the Benchmark may experience greater price
volatility than broad market averages. In addition, there is no guarantee that
the Fund's performance will be similar to that of the Benchmark.
Rebalancing Considerations. The Fund is re-balanced periodically based on new
scores resulting from the proprietary stock selection model in an attempt to
weight the portfolio so as to exceed the performance of the Benchmark. It is the
manager's reasonable expectation that there will be a close correlation between
the Fund's performance on a total return basis and that of the Benchmark in both
rising and falling markets. The Fund is managed to outperform the Benchmark in
both rising and falling markets.
The Fund's ability to outperform the Benchmark may be affected by, among other
things, changes in the security markets, daily execution price of stocks
purchased or sold compared to the closing price of the stocks comprising the
Benchmark, the manner in which the Benchmark is calculated, and the extent and
timing of purchases and redemptions of Fund shares. Occasionally, stock
positions may not be sold from the Fund when to do so may involve adverse tax
consequences, excessive portfolio turnover or other expenses, restrictions
imposed by the SEC, or when it may require the disposition of such position
under circumstances which do not reflect the typical market for such stocks. The
Fund's trading strategy is designed to minimize portfolio turnover and
transaction costs. The Fund attempts to do this by buying or selling stock
positions that are under or overvalued, which would improve performance relative
to the Benchmark, and by restricting Fund trades to only round-lot or large
block trades.
Investment Risk Considerations. Historically, the medium market capitalization
stocks, which will constitute the majority of the investments of the Fund, have
been more volatile in price than the larger capitalization stocks. Among the
reasons for greater price volatility of these securities are the less certain
growth prospects of smaller firms, the lower degree of liquidity in the market
for such stocks, and the greater sensitivity of small and medium size companies
to changing economic conditions. Besides exhibiting greater volatility, medium
and small company stocks may fluctuate independently of larger company stocks.
Medium and small company stocks may decline in price as large company stocks
rise or vice versa. Investors should therefore expect that the value of the
Fund's shares may be more volatile than the shares of a fund that invests in
larger capitalization stocks. In addition, medium size companies in which the
Fund invests may have products and management which have not been thoroughly
tested by time or by the marketplace. These companies may also be more dependent
on a limited number of key personnel and their financial resources may not be as
substantial as those of more established companies. Adversity which leads to a
decline in the value of such a security will have a negative impact on the
Fund's share price as well.
If the Fund experiences difficulty in achieving its performance goal due to the
size of the Fund's net assets and excessive portfolio re-balancing brought on by
purchases and redemptions of Fund shares, the Fund reserves the right to limit
or discontinue the sale of Fund shares. If the sale of shares to prospective
investors were to be discontinued, current shareholders would continue to be
permitted to invest their dividends and distributions in Fund shares.
The investment objective of the Fund is fundamental and may not be changed
without the approval of the majority of the Fund's outstanding shares.
The Fund should not be considered suitable for investors who are unable or
unwilling to assume the risks of loss inherent in such a program, nor should
investment in the Fund be considered a balanced or complete investment program.
The Fund cannot guarantee that it will achieve its investment objective.
Other Investment Policies of the Fund
Loans of Portfolio Securities. As approved by the Board of Trustees and subject
to the following conditions, the Fund may lend its portfolio securities to
qualified securities dealers or other institutional investors, provided that
such loans do not exceed 20% of the value of the Fund's total assets at the time
of the most recent loan, and further provided that the borrower deposits 102%
collateral for the benefit of the Fund. The lending of securities is a common
practice in the securities industry. The Fund will engage in security loan
arrangements with the primary objective of increasing the Fund's income either
through investing cash collateral in short-term, interest bearing obligations or
by receiving a loan premium from the borrower. The Fund will continue to be
entitled to all dividends or interest on any loaned securities. As with any
extension of credit, there are risks of delay in recovery and loss of rights in
the collateral should the borrower of the securities fail financially.
Borrowing. As a fundamental policy, the Fund does not borrow money or mortgage
or pledge any of its assets, except that the Fund may borrow from banks up to
10% of its total asset value to meet redemption requests and for other temporary
or emergency purposes. While borrowings exceed 5% of the Fund's total assets,
the Fund will not make any additional investments.
Illiquid Investments. It is the policy of the Fund that illiquid securities
(securities that cannot be disposed of within seven days in the normal course of
business at approximately the amount at which the Fund has valued the
securities, including illiquid equity securities, securities with legal or
contractual restrictions on resale, repurchase agreements of more than seven
days duration, illiquid real estate investment trusts, securities of issuers
with less than 3 years continuous operation and other securities which are not
readily marketable) may not constitute, at the time of purchase, more than 10%
of the value of the total net assets of the Fund. The Fund's Board of Trustees
has authorized the Fund to invest in restricted securities (securities not
registered with the SEC, which might otherwise be considered illiquid) where
such investment is consistent with the Fund's investment objective and has
authorized such securities to be considered liquid (and thus not subject to the
foregoing 10% limitation), to the extent the manager determines on a daily basis
that there is a liquid institutional or other market for such securities.
Notwithstanding the manager's determination in this regard, the Fund's Board of
Trustees will remain responsible for such determinations and will consider
appropriate action, consistent with the Fund's investment objective and
policies, if a security should become illiquid subsequent to its purchase. In
this regard, if qualified institutional buyers become uninterested in purchasing
restricted securities previously designated as liquid or if the market for these
securities contracts, these securities will be redesignated as illiquid and
subject to the 10% limitation.
Securities Industry Related Investments. To the extent it is consistent with the
Fund's investment objective and certain limitations under the 1940 Act, the Fund
may invest its assets in securities issued by companies engaged in securities
related businesses, including such companies that are securities brokers,
dealers, underwriters or investment advisers. Such companies are considered part
of the financial services industry sector.
In accordance with ss.12(d)(3) under the 1940 Act and Rule 12d3-1 thereunder,
the Fund may not acquire a security or any interest in a securities related
business, to the extent such acquisition would exceed certain limitations. The
Fund does not believe that these limitations will impede the attainment of its
investment objective.
Short-Term Investments. The Fund may temporarily invest its cash, including cash
resulting from purchases and sales of Fund shares, in short-term debt
instruments, including high grade commercial paper, repurchase agreements and
other money market equivalents and, subject to the receipt of an order of
exemption from the SEC, the shares of affiliated money market funds which invest
primarily in short-term debt securities. Such temporary investments will only be
made with cash held to maintain liquidity or pending investment and will be
consistent with the Fund's overall policy of being fully invested.
Options and Financial Futures. The Fund may write covered put and call options
and purchase put and call options which trade on securities exchanges and in the
over-the-counter market. The Fund may purchase and sell futures and options on
futures with respect to securities indices and enter into futures and options to
"close out" futures and options it may have purchased or sold. The Fund will not
enter into any futures contract or related option (except for closing
transactions) if, immediately thereafter, the sum of the amount of its initial
deposits and premiums on open contracts and options would exceed 5% of the
Fund's total assets (taken at current value). The Fund will not engage in any
stock options or stock index options if the option premiums paid, regarding its
open option positions, exceed 5% of the value of the Fund's total assets.
The Fund's option and futures investments involve certain risks. Such risks
include the risk that the effectiveness of an options and futures strategy
depends on the degree to which price movements in the underlying index or
securities correlate with price movements in the relevant portion of the Fund's
portfolio. The Fund bears the risk that the prices of its portfolio securities
will not move in the same amount as the option or future it has purchased, or
that there may be a negative correlation which would result in a loss on both
such securities and the option or future.
Positions in exchange traded options and futures may be closed out only on an
exchange which provides a secondary market. There may not always be a liquid
secondary market for a futures or option contract at a time when the Fund seeks
to "close out" its position. If the Fund were unable to "close out" a futures or
option position, and if prices moved adversely, the Fund would have to continue
to make daily cash payments to maintain its required margin, and if the Fund had
insufficient cash, it might have to sell portfolio securities at a
disadvantageous time. In addition, the Fund might be required to deliver the
stocks underlying futures or options contracts it holds. Over-the-counter
Options ("OTC" options) may not be closed out on an exchange and the Fund may be
able to realize the value of an OTC option it has purchased only by exercising
it or entering into a closing sale transaction with the dealer that issued it.
There can be no assurance that a liquid secondary market will exist for any
particular option or futures contract at any specific time. Thus, it may not be
possible to close such an option or futures position. The Fund will enter into
an option or futures position only if there appears to be a liquid secondary
market for such option or futures.
The Fund understands the current position of the staff of the SEC to be that
purchased OTC options are illiquid securities and that the assets used to cover
the sale of an OTC option are considered illiquid. The Fund and the Fund's
manager disagree with this position. Nevertheless, pending a change in the
staff's position, the Fund will treat OTC options and "cover" assets as subject
to the Fund's limitation on illiquid securities. (See "Investment Objectives and
Policies of the Fund - Illiquid Investments.")
In addition, adverse market movements could cause the Fund to lose up to its
full investment in a call option contract and/or to experience substantial
losses on an investment in a futures contract. There is also the risk of loss by
the Fund of margin deposits in the event of the bankruptcy of a broker with whom
the Fund has an open position in a futures contract or option.
Repurchase Agreements. The Fund may engage in repurchase transactions, in which
the Fund purchases a U.S. government security subject to resale to a bank or
dealer at an agree-upon price and date. The transaction requires the
collateralization of the seller's obligation by the transfer of securities with
an initial market value, including accrued interest, equal to at least 102% of
the dollar amount invested by the Fund in each agreement, with the value of the
underlying security marked to market daily to maintain coverage of at least
100%. A default by the seller might cause the Fund to experience a loss or delay
in the liquidation of the collateral securing the repurchase agreement. The Fund
might also incur disposition costs in liquidating the collateral. The Fund,
however, intends to enter into repurchase agreements only with government
securities dealers recognized by the Federal Reserve Board or with member banks
of the Federal Reserve System. Under the 1940 Act, a repurchase agreement is
deemed to be the loan of money by the Fund to the seller, collateralized by the
underlying security. The U.S. government security subject to resale (the
collateral) will be held pursuant to a written agreement and the Fund's
custodian will take title to, or actual delivery of, the security. The Fund may
not enter into a repurchase agreement with more than seven days duration if, as
a result, more than 10% of the market value of the Fund's total assets would be
invested in such repurchase agreement.
Portfolio Turnover. The Fund anticipates that its annual portfolio turnover rate
generally will not exceed 100% but this rate should not be construed as a
limiting factor in the operation of the Fund's portfolio. High portfolio
turnover increases transaction costs which must be paid by the Fund.
General Information
The Fund is an open-end, management investment company, commonly called a
"mutual fund", organized as a Delaware business trust on February 26, 1993 and
registered with the SEC under the 1940 Act. The Fund is authorized to issue an
unlimited number of shares of beneficial interest, with a par value of $.01 per
share. The Fund currently has one series of shares. All shares of the Fund have
one vote and, when issued, are fully paid, non-assessable, and redeemable.
Additional series may be added in the future by the Board of Trustees, the
assets and liabilities of which will be separate and distinct from any other
series.
Investments in the Fund may not be transferred. An investor may, however,
withdraw all or any portion of an investment at any time, at net asset value.
Investors in the Fund will each be liable for all obligations of the Fund. The
risk of an investor in the Fund incurring financial loss on account of such
liability, however, is limited to circumstances in which both inadequate
insurance exists and the Fund itself is unable to meet its obligations.
The organization expenses of the Fund are being amortized over a period of five
years from the effective date of the Fund's registration statement under the
1940 Act. In the event any initial shares of the Fund purchased by Franklin
Institutional Services Corporation or Franklin Strategic Series' Franklin MidCap
Growth Fund are redeemed during the amortization period, such redemption will be
reduced by a pro rata portion of any of the then unamortized organization
expenses. Such portion is to be calculated by dividing the number of initial
shares redeemed by the aggregate number of remaining initial shares at the time
of redemption. Investors purchasing shares of the Fund during the amortization
period bear such expenses only as they are amortized against the Fund's income.
5. Management of the Fund
Management of the Fund
The Board of Trustees has the primary responsibility for the overall management
of the Fund and for electing the officers of the Fund who are responsible for
administering its day-to-day operations.
Templeton Quantitative Advisors, Inc. ("TQA" or "Manager"), 31 West 52nd St.,
10th Floor, New York, New York 10019, serves as the Fund's investment manager.
TQA is an indirect wholly-owned subsidiary of Franklin Resources Inc.
("Resources"), a publicly owned holding company, the principal shareholders of
which are Charles B. Johnson and Rupert H. Johnson, Jr., who own approximately
20% and 16%, respectively, of Resources' outstanding shares. Through its
subsidiaries, Resources is engaged in various aspects of the financial services
industry.
Pursuant to the management agreement, the Manager supervises and implements the
Fund's investment activities and provides certain administrative services and
facilities which are necessary to conduct the Fund's business.
The Fund is responsible for its own operating expenses including, but not
limited to, the Manager's fee; taxes, if any; custodian, legal and auditing
fees; fees and expenses of trustees who are not members of, affiliated with, or
interested persons of the Manager; salaries of any personnel not affiliated with
the Manager; insurance premiums; trade association dues; expenses of obtaining
quotations for calculating the value of the Fund's net assets; printing and
other expenses which are not expressly assumed by the Manager.
Under the management agreement dated August 16, 1994, the Fund is obligated to
pay the Manager a fee computed at the close of business on the last business day
of each month equal to an annual rate of 0.50% of the Fund's average daily net
assets. The management agreement specifies that the management fee will be
reduced to the extent necessary to comply with the most stringent limits on the
expenses which may be borne by the Fund as prescribed by any state in which the
Fund's shares are offered for sale. Currently, the most restrictive of such
provisions limits a fund's allowable expenses as a percentage of its average net
assets for each fiscal year to 2.5% of the first $30 million in assets, 2% of
the next $70 million, and 1.5% of assets in excess of $100 million.
Among the responsibilities of the Manager under the management agreement is the
selection of brokers and dealers through whom transactions in the Fund's
portfolio securities will be effected. The Manager tries to obtain the best
execution on all such transactions. If it is felt that more than one broker is
able to provide the best execution, the Manager will consider the furnishing of
quotations and of other market services, research, statistical and other data
for the Manager and its affiliates, as well as the sale of shares of the Fund,
as factors in selecting a broker. Further information is included under
"Execution of Portfolio Transactions."
Shareholder accounting and many of the clerical functions for the Fund are
performed by Franklin/Templeton Investor Services, Inc. ("Investor Services" or
"Shareholder Services Agent"), 777 Mariners Island Blvd., San Mateo, CA 94404,
in its capacity as transfer agent and dividend-paying agent. Investor Services
is a wholly-owned subsidiary of Resources.
6. Capital Stock and Other Securities
The Fund is organized as a trust under Delaware law. Under the anticipated
method of operation of the Fund as a partnership for federal tax purposes, it
will not be subject to any federal income tax. Accordingly, an investor in the
Fund will be treated as a partner in the Fund and will take into account its
distributive share of income, gain, loss and expense in accordance with the
governing instruments of the Fund in determining such investor's income tax
liability. The determination of such distributive share will be made in
accordance with the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder.
The Fund's taxable year-end will be April 30. Although the Fund will not be
subject to federal income tax, as described above, it will file appropriate
income tax returns.
It is intended that the Fund's assets, income and distributions will be managed
in such a way that an investor in the Fund will be able to satisfy the
requirements of Subchapter M of the Code, assuming the investor invested all of
its assets in the Fund.
There are certain tax issues that will be relevant only to investors that are
tax-exempt, investors that are segregated asset accounts and investors who
contribute assets rather than cash to the Fund. It is intended that
contributions of assets will not be taxable provided certain requirements are
met. Such investors are advised to consult their own tax advisors as to the tax
consequences of an investment in the Fund.
The Fund will inform shareholders of the source of dividends and distributions
at the time they are paid and will, promptly after the close of each calendar
year, advise shareholders of the tax status for federal income tax purposes of
such dividends and distributions.
Additional information in response to this item is contained under the
discussion captioned "General Information" in Item 4, above.
7. Purchase of Securities Being Offered
The Fund's shares have not been registered under the Securities Act of 1933 (the
"1933 Act"), which means that Fund shares may not be sold publicly. The Fund
may, however, sell its shares through private placements pursuant to available
exemptions from the 1933 Act.
Shares of the Fund may only be purchased by other investment companies, with a
minimum initial investment of $5,000,000 and no minimum on subsequent
investments. All shares are sold at the net asset value (without a sales charge)
next computed after receipt of an order in proper form. All investments in the
Fund are credited to the shareholder's account in the form of full and
fractional shares of the Fund (rounded to the nearest 1/1000 of a share). The
Fund does not issue share certificates.
Valuation of Fund Shares
The net asset value per share of the Fund is determined as of 1:00 p.m. Pacific
time each day that the New York Stock Exchange (the "Exchange") is open for
trading. The net asset value per share of the Fund is calculated by adding the
value of the portfolio holdings (i.e. shares of the Portfolio in which the Fund
invests) and other assets, deducting the Fund's liabilities and dividing the
result by the number of shares of the Fund outstanding at the time.
For the purpose of determining the aggregate net assets of the Fund, cash and
receivables are valued at their realizable amounts. Interest is recorded as
accrued and dividends are recorded on the ex-dividend date. Portfolio securities
listed on a securities exchange or on the NASDAQ National Market System for
which market quotations are readily available are valued at the last quoted sale
price of the day or, if there is no such reported sale, within the range of the
most recent quoted bid and ask price. Over the counter securities are valued
within the range of the most recent quoted bid and ask price. Portfolio
securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market as
determined by the Manager. Portfolio securities underlying actively traded call
options are valued at their market price as determined above. The current market
value of any option held by the Fund is its last sales price on the relevant
exchange prior to the time when assets are valued. Lacking any sales that day or
if the last sale price is outside the bid and ask prices, the options are valued
within the range of the current closing bid and ask prices if such valuation is
believed to fairly reflect the contract's market value. Other securities for
which market quotations are readily available are valued at the current market
price, which may be obtained from a pricing service, based on a variety of
factors, including recent trades, institutional size trading in similar types of
securities (considering yield, risk and maturity) and/or developments related to
specific issues. Securities and other assets for which market prices are not
readily available are valued at fair value as determined following procedures
approved by the Board of Trustees. With the approval of the trustees, the Fund
may utilize a pricing service, bank or securities dealer to perform any of the
above described functions.
8. Redemption or Repurchase
How to Sell Shares of the Fund
As stated above in response to Item 7, "Purchase of Securities Being Offered,"
the Fund's shares have not been registered under the 1933 Act, which means that
its shares are restricted securities which may not be sold unless they are
registered or sold pursuant to an available exemption from the 1933 Act.
Redemptions are processed on any day the Fund is open for business and are
effected at the Fund's net asset value next determined after receipt of a
redemption request in proper form.
Payment for redeemed shares will be made within seven days after receipt of the
redemption request in proper form. The right of redemption, however, may be
suspended or the date of payment postponed in accordance with the 1940 Act.
Redemptions are taxable events and the amount received upon redemption may be
more or less than the amount invested by the shareholder, depending on
fluctuations in the market value of the securities owned by the Fund.
9. Pending Legal Proceedings
Not Applicable
Part B:
10. Cover Page
Not Applicable
11. Table of Contents
Not Applicable
12. General Information and History
Not Applicable
13. Investment Objective and Policies
As noted in response to Item 4, the Fund's investment objective is to seek
capital growth by investing primarily in a broadly diversified portfolio of
medium capitalization stocks. The Fund's performance goal is to annually exceed
the return of the Fund's Benchmark, Standard and Poor's MidCap 400 Benchmark, on
a total return basis. In addition to the policies stated in response to Item 4,
the Fund has adopted the following restrictions (except as noted) as fundamental
policies, which means that they may not be changed without the approval of a
majority of the Fund's outstanding shares. The Fund may not:
1. Borrow money or mortgage or pledge any of its assets, except that
borrowings (and a pledge of assets therefor) to satisfy redemption requests and
for other temporary or emergency purposes may be made from banks in any amount
up to 10% of the Fund's total asset value (including the amount borrowed) based
on the lesser of cost or market, less liabilities (not including the amount
borrowed) at the time the borrowing is made. While borrowings exceed 5% of the
Fund's total assets, the Fund will not make any additional investments.
2. Make loans, except (a) through the purchase of debt securities in accordance
with the investment objective and policies of the Fund, (b) to the extent the
entry into a repurchase agreement is deemed to be a loan, or (c) by the loan of
its portfolio securities in accordance with the policies described above.
3. Invest in any issuer for purposes of exercising control or management.
4. Buy any securities "on margin" or sell any securities "short," except that it
may use such short-term credits as are necessary for the clearance of
transactions.
5. Purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition, or reorganization.
6. Invest more than 25% of its assets in securities of any industry, although
for purposes of this limitation, U.S. government obligations are not considered
to be part of any industry.
7. Act as underwriter of securities issued by other persons except insofar as
the Fund may technically be deemed an underwriter under the federal securities
laws in connection with the disposition of portfolio securities.
8. Purchase securities from or sell to the Fund's officers and trustees, or any
firm of which any officer or trustee is a member, as principal, or retain
securities of any issuer if, to the knowledge of the Fund, one or more of the
Fund's officers, trustees or investment adviser own beneficially more than 1/2
of 1% of the securities of such issuer and all such officers and trustees
together own beneficially more than 5% of such securities.
9. Acquire, lease or hold real estate, provided that this limitation shall not
prohibit the purchase of securities secured by real estate or interests therein.
10. Invest in commodities and commodity contracts (except that the Fund may
engage in financial futures, including stock index futures, and options on stock
index futures), or interests in oil, gas, or other mineral exploration or
development programs, or invest in excess of 5% of its total assets in options
unrelated to the Fund's transactions in futures, including puts, calls,
straddles, spreads, or any combination thereof.
In addition to these fundamental policies, it is the policy of the Fund, which
may be changed without the approval of shareholders, not to invest in real
estate limited partnerships, except the Fund may invest in marketable securities
issued by real estate investment trusts. The Fund's restriction against
investment in interests in oil, gas, or other mineral leases, exploration or
development does not include publicly traded equity securities.
In order to change any of the foregoing restrictions which are fundamental
policies, the lesser of (i) 67% or more of the voting securities present at a
meeting of shareholders if the holders of more than 50% of the Fund's voting
securities are represented at that meeting, or (ii) more than 50% of the
outstanding voting securities of the Fund must vote to make the change. If a
percentage restriction contained herein is adhered to at the time of investment,
a later increase or decrease in the percentage resulting from a change in the
value of portfolio securities or the amount of the Fund's assets will not be
considered a violation of any of the foregoing restrictions.
14. Management of the Registrant
Officers and Trustees
The Board of Trustees has the responsibility for the overall management of the
Fund, including general supervision and review of its investment activities. The
trustees, in turn, elect the officers of the Fund who are responsible for
administering the day-to-day operations of the Fund. The affiliations of the
officers and trustees and their principal occupations for the past five years
are listed below. Trustees who are deemed to be "interested persons" of the
Fund, as defined in the 1940 Act, are indicated by an asterisk (*).
Positions and Offices Principal Occupations
Name and Address with the Fund During Past Five Years
Frank H. Abbott, III
1045 Sansome St.
San Francisco, CA 94111
Trustee
President and Director, Abbott Corporation (an investment company); and
director, trustee or managing general partner, as the case may be, of 31 of the
investment companies in the Franklin Group of Funds.
Harris J. Ashton
General Host Corporation
Metro Center, 1 Station Place
Stamford, CT 06904-2045
Trustee
President, Chief Executive Officer and Chairman of the Board, General Host
Corporation (nursery and craft centers); Director, RBC Holdings, Inc. (a bank
holding company) and Bar-S Foods; and director, trustee or managing general
partner, as the case may be, of 56 of the investment companies in the Franklin
Templeton Group of Funds.
*Harmon E. Burns
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Trustee
Executive Vice President, Secretary and Director, Franklin Resources, Inc.;
Executive Vice President and Director, Franklin Templeton Distributors, Inc.;
Executive Vice President, Franklin Advisers, Inc.; Director, Franklin/Templeton
Investor Services, Inc.; officer and/or director, as the case may be, of other
subsidiaries of Franklin Resources, Inc.; and officer and/or director or trustee
of 43 of the investment companies in the Franklin Templeton Group of Funds.
S. Joseph Fortunato
Park Avenue at Morris County
P. O. Box 1945
Morristown, NJ 07962-1945
Trustee
Member of the law firm of Pitney, Hardin, Kipp & Szuch; Director of General Host
Corporation; director, trustee or managing general partner, as the case may be,
of 58 of the investment companies in the Franklin Templeton Group of Funds.
David W. Garbellano
111 New Montgomery St., #402
San Francisco, CA 94105
Trustee
Private Investor; Assistant Secretary/Treasurer and Director, Berkeley Science
Corporation (a venture capital company); and director, trustee or managing
general partner, as the case may be, of 30 of the investment companies in the
Franklin Group of Funds.
*Charles B. Johnson
777 Mariners Island Blvd.
San Mateo, CA 94404
Chairman of the Board and Trustee
President and Director, Franklin Resources, Inc.; Chairman of the Board and
Director, Franklin Advisers, Inc. and Franklin Templeton Distributors, Inc.;
Director, Franklin/Templeton Investor Services, Inc. and General Host
Corporation; and officer and/or director, trustee or managing general partner,
as the case may be, of most other subsidiaries of Franklin Resources, Inc. and
of 57 of the investment companies in the Franklin Templeton Group of Funds.
*Rupert H. Johnson, Jr.
777 Mariners Island Blvd.
San Mateo, CA 94404
President and Trustee
Executive Vice President and Director, Franklin Resources, Inc. and Franklin
Templeton Distributors, Inc.; President and Director, Franklin Advisers, Inc.;
Director, Franklin/Templeton Investor Services, Inc.; and officer and/or
director, trustee or managing general partner, as the case may be, of most other
subsidiaries of Franklin Resources, Inc. and of 43 of the investment companies
in the Franklin Templeton Group of Funds.
Frank W. T. LaHaye
20833 Stevens Creek Blvd.
Suite 102
Cupertino, CA 95014
Trustee
General Partner, Peregrine Associates and Miller & LaHaye, which are General
Partners of Peregrine Ventures and Peregrine Ventures II (venture capital
firms); Chairman of the Board and Director, Quarterdeck Office Systems, Inc.;
Director, FischerImaging Corporation; and director or trustee, as the case may
be, of 26 of the investment companies in the Franklin Group of Funds.
Gordon S. Macklin
8212 Burning Tree Road
Bethesda, MD 20817
Trustee
Chairman, White River Corporation (information services); Director, Fund
American Enterprises Holdings, Inc., Lockheed Martin Corporation, MCI
Communications Corporation, MedImmune, Inc. (biotechnology), InfoVest
Corporation (information services), and Fusion Systems Corporation (industrial
technology); and director, trustee or managing general partner, as the case may
be, of 53 of the investment companies in the Franklin Templeton Group of Funds;
and formerly held the following positions: Chairman, Hambrecht and Quist group;
Director, H & Q Healthcare Investors; and president, National Association of
Securities Dealers, Inc..
Kenneth V. Domingues
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President - Financial Reporting and Accounting Standards
Senior Vice President, Franklin Resources, Inc., Franklin Advisers, Inc., and
Franklin Templeton Distributors, Inc.; officer and/or director, as the case may
be, of other subsidiaries of Franklin Resources, Inc.; and officer and/or
managing general partner, as the case may be, of 37 of the investment companies
in the Franklin Group of Funds.
Martin L. Flanagan
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Chief Financial Officer
Senior Vice President, Chief Financial Officer and Treasurer, Franklin
Resources, Inc.; Executive Vice President, Templeton Worldwide, Inc.; Senior
Vice President and Treasurer, Franklin Advisers, Inc. and Franklin Templeton
Distributors, Inc.; Senior Vice President, Franklin/Templeton Investor Services,
Inc.; officer of most other subsidiaries of Franklin Resources, Inc.; and
officer of 61 of the investment companies in the Franklin Templeton Group of
Funds.
Deborah R. Gatzek
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President and Secretary
Senior Vice President - Legal, Franklin Resources, Inc. and Franklin Templeton
Distributors, Inc.; Vice President, Franklin Advisers, Inc. and officer of 37 of
the investment companies in the Franklin Group of Funds.
Charles E. Johnson
777 Mariners Island Blvd.
San Mateo CA 94404
Vice President
Senior Vice President and Director, Franklin Resources, Inc.; Senior Vice
President, Franklin Templeton Distributors, Inc.; President and Director,
Templeton Worldwide, Inc. and Franklin Institutional Services Corporation;
officer and/or director, as the case may be, of some of the subsidiaries of
Franklin Resources, Inc. and officer and/or director or trustee, as the case may
be, of 24 of the investment companies in the Franklin Templeton Group of Funds.
Diomedes Loo-Tam
777 Mariners Island Blvd.
San Mateo, CA 94404
Treasurer and Principal Accounting Officer
Employee of Franklin Advisers, Inc.; and officer of 37 of the investment
companies in the Franklin Group of Funds.
Edward V. McVey
777 Mariners Island Blvd.
San Mateo, CA 94404
Vice President
Senior Vice President/National Sales Manager, Franklin Templeton Distributors,
Inc.; and officer of 32 of the investment companies in the Franklin Group of
Funds.
Trustees not affiliated with the investment manager ("nonaffiliated trustees")
may be but are not currently paid fees or expenses incurred in connection with
attending meetings. As indicated above, certain of the Trust's nonaffiliated
trustees also serve as directors, trustees or manageing general partners of
other investment companies in the Franklin Group of Funds(R) and the Templeton
Group of Funds (the "Franklin Templeton Group of Funds") from which they may
receive fees for their services. The following table indicates the total fees
paid to nonaffiliated trustees by the Trust and by other funds in the Franklin
Templeton Group of Funds.
<TABLE>
<CAPTION>
Number of Boards in the
Franklin Templeton Group of
Total Fees Received from Funds on Which Each Serves**
the Franklin Templeton
Group of Funds*
Name
<S> <C> <C>
Frank H. Abbott, III $176,870 31
Harris J. Ashton 319,925 56
S. Joseph Fortunato 336,065 58
David Garbellano 153,300 30
Frank W.T. LaHaye 150,817 26
Gordon S. Macklin 303,685 53
</TABLE>
* For the calendar year ended December 31, 1994.
** The number of boards is based on the number of registered investment
companies in the Franklin Templeton Group of Funds and does not include the
total number of series or funds within each investment company for which the
directors are responsible. The Franklin Templeton Group of Funds currently
includes 61 registered investment companies, consisting of more than 162 U.S.
based mutual funds or series.
No officer or trustee received any other compensation directly from the Fund.
Certain officers or trustees who are shareholders of Franklin Resources, Inc.
may be deemed to receive indirect remuneration by virtue of their participation,
if any, in the fees paid to its subsidiaries. Many of the Fund's trustees also
own shares in various of the other funds in the Franklin Templeton Group of
Funds. Charles E. Johnson is the son and nephew, respectively, of Charles B.
Johnson and Rupert H. Johnson, Jr., who are brothers.
15. Control Persons and Principal Holders of Securities
Not applicable.
16. Investment Advisory and Other Services
Investment Advisory and Other Services
The investment manager of the Fund is Templeton Quantitative Advisors, Inc.
("TQA" or "Manager"). TQA is an indirect wholly-owned subsidiary of Resources, a
publicly owned holding company whose shares are listed on the New York Stock
Exchange ("Exchange"). Resources owns several other subsidiaries which are
involved in investment management and shareholder services. The Manager and
other subsidiary companies of Resources currently manage over $125 billion in
assets for more than 3.8 million shareholders.
Pursuant to the management agreement, the Manager provides investment research
and portfolio management services, including the selection of securities for the
Fund to purchase, hold or sell and the selection of brokers through whom the
Fund's portfolio transactions are executed. The Manager's activities are subject
to the review and supervision of the Fund's Board of Trustees to whom the
Manager renders periodic reports of the Fund's investment activities. The
Manager, at its own expense, furnishes the Fund with office space and office
furnishings, facilities and equipment required for managing the business affairs
of the Fund; maintains all internal bookkeeping, clerical, secretarial and
administrative personnel and services; and provides certain telephone and other
mechanical services. The Manager is covered by fidelity insurance on its
officers, trustees and employees for the protection of the Fund. The Fund bears
all of its expenses not assumed by the Manager.
Pursuant to the management agreement, the Fund is obligated to pay the Manager a
fee computed at the close of business on the last business day of each month
equal to an annual rate of 0.50% of the Fund's average daily net assets.
The management agreement is in effect until April 30, 1996. Thereafter, it may
continue in effect for successive annual periods, provided such continuance is
specifically approved at least annually by a vote of the Fund's Board of
Trustees or by a vote of the holders of a majority of the Fund's outstanding
voting securities, and in either event by a majority vote of the Fund's trustees
who are not parties to the management agreement or interested persons of any
such party (other than as trustees of the Fund), cast in person at a meeting
called for that purpose. The management agreement may be terminated without
penalty at any time by the Fund or by the Manager on 60 days' written notice and
will automatically terminate in the event of its assignment, as defined in the
1940 Act. During the fiscal year ended April 30, 1995, the Manager agreed in
advance to waive all of its management fees and to make certain payments to
reduce expenses of the Fund.
Franklin/Templeton Investor Services, Inc. ("Investor Services" or "Shareholder
Services Agent"), a wholly-owned subsidiary of Resources, is the shareholder
servicing agent for the Fund and acts as the Fund's transfer agent and
dividend-paying agent. Investor Services is compensated on the basis of a fixed
fee per account.
Bank of America NT & SA, 555 California Street, 4th Floor, San Francisco,
California 94104, acts as custodian of the securities and other assets of the
Fund. Citibank Delaware, One Penn's Way, New Castle, Delaware 19720, acts as
custodian in connection with transfer services through bank automated clearing
houses. The custodians do not participate in decisions relating to the purchase
and sale of portfolio securities.
Coopers & Lybrand, 333 Market Street, San Francisco, California 94105, are the
Fund's independent auditors. During the fiscal year ended April 30, 1995, their
auditing services consisted of rendering an opinion of the financial statements
of the Fund included with this registration statement.
17. Brokerage Allocation
Execution of Portfolio Transactions
Under the current management agreement with TQA, the selection of brokers and
dealers to execute transactions in the Fund's portfolio is made by the Manager
in accordance with criteria set forth in the management agreement and any
directions which the Fund's Board of Trustees may give.
When placing a portfolio transaction, the Manager attempts to obtain the best
net price and execution of transaction. On portfolio transactions which are done
on a securities exchange, the amount of commission paid by the Fund is
negotiated between the Manager and the broker executing the transaction. The
Manager seeks to obtain the lowest commission rate available from brokers which
are felt to be capable of efficient execution of the transactions. The
determination and evaluation of the reasonableness of the brokerage commissions
paid in connection with portfolio transactions are based to a large degree on
the professional opinions of the persons responsible for the placement and
review of such transactions. These opinions are formed on the basis of, among
other things, the experience of these individuals in the securities industry and
information available to them concerning the level of commissions being paid by
other institutional investors of comparable size. The Manager will ordinarily
place orders for the purchase and sale of over-the-counter securities on a
principal rather than an agency basis, with a principal market maker unless, in
the opinion of the Manager, a better price and execution can otherwise be
obtained. Purchases of portfolio securities from underwriters will include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers will include a spread between the bid and ask price. As a general
rule, the Fund does not purchase bonds in underwritings where it is not given
any choice, or only limited choice, in the designation of dealers to receive
commissions. The Fund will seek to obtain prompt execution of orders at the most
favorable net price.
The amount of commission is not the only relevant factor to be considered in the
selection of a broker to execute a trade. If it is felt to be in the Fund's best
interests, the Manager may place portfolio transactions with brokers who provide
the types of services described below, even if it means the Fund will have to
pay a higher commission than would be the case if no weight were given to the
broker's furnishing of these services. This will be done only if, in the opinion
of the Manager, the amount of any additional commission is reasonable in
relation to the value of the services. Higher commissions will be paid only when
the brokerage and research services received are bona fide and produce a direct
benefit to the Fund or assist the Manager in carrying out its responsibilities
to the Fund, or when it is otherwise in the best interest of the Fund to do so,
whether or not such data may also be useful to the Manager in advising other
clients.
When it is felt that several brokers are equally able to provide the best net
price and execution, the Manager may decide to execute transactions through
brokers who provide quotations and other services to the Fund, specifically
including the quotations necessary to determine the value of the Fund's net
assets, in such amount of total brokerage as may reasonably be required in light
of such services, and through brokers who supply research, statistical and other
data to the Fund and Manager in such amount of total brokerage as may reasonably
be required.
It is not possible to place a dollar value on the special executions or on the
research services received by TQA from dealers effecting transactions in
portfolio securities. The allocation of transactions in order to obtain
additional research services permits TQA to supplement its own research and
analysis activities and to receive the views and information of individuals and
research staff of other securities firms. As long as it is lawful and
appropriate to do so, the Manager and its affiliates may use this research and
data in their investment advisory capacities with other clients. Provided that
the Fund's officers are satisfied that the best execution is obtained, the sale
of Fund shares may also be considered as a factor in the selection of securities
dealers to execute the Fund's portfolio transactions.
Franklin/Templeton Distributors, Inc. ("Distributors"), an affiliate of the
Fund's Manager, is a member of the National Association of Securities Dealers,
and may sometimes be entitled to obtain certain fees when the Fund tenders
portfolio securities pursuant to a tender-offer solicitation. As a means of
recapturing brokerage for the benefit of the Fund, any portfolio securities
tendered by the Fund will be tendered through Distributors if it is legally
permissible to do so. In turn, the next management fee payable to TQA under the
management agreement will be reduced by the amount of any fees received by
Distributors in cash, less any costs and expenses incurred in connection
therewith.
If purchases or sales of securities for the Fund and one or more other
investment companies or clients supervised by the Manager are considered at or
about the same time, transactions in such securities will be allocated among the
several investment companies and clients in a manner deemed equitable to all by
the Manager, taking into account the respective sizes of the funds and the
amount of securities to be purchased or sold. It is recognized that in some
cases this procedure could possibly have a detrimental effect on the price or
volume of the security so far as the Fund is concerned. In other cases it is
possible that the ability to participate in volume transactions and to negotiate
lower brokerage commissions will be beneficial to the Fund.
18. Capital Stock and Other Securities
The information provided in response to this item is in addition to the
information provided in response to Item 4 in Part A.
All shares of the Fund have equal voting, dividend and liquidation rights. The
shares have noncumulative voting rights, which means that holders of more than
50% of the shares voting for the election of trustees can elect 100% of the
trustees if they choose to do so. Shares have no preemptive, subscription or
conversion rights.
The Fund does not intend to hold annual shareholders' meetings. It may, however,
hold a meeting for such purposes as changing fundamental investment
restrictions, approving a new management agreement or any other matters which
are required to be acted on by shareholders under the 1940 Act. A meeting may
also be called by a majority of the Board of Trustees or by shareholders holding
at least ten percent of the shares entitled to vote at the meeting. Shareholders
may receive assistance in communicating with other shareholders in connection
with the election or removal of trustees similar to the provisions contained in
Section 16(c) of the 1940 Act.
Shares for an initial investment as well as subsequent investments, including
the reinvestment of dividends and capital gain distributions, are generally
credited to an account in the name of an investor on the books of the Fund.
Shareholders will receive confirmation statements each time there is a
transaction which affects an account, including the reinvestment of dividends.
These statements will also show the total number of Fund shares owned by a
shareholder, including the number of shares in "plan balance" for the account of
the shareholder.
SHAREHOLDERS MAY RELY ON THE CONFIRMATION STATEMENTS IN LIEU OF CERTIFICATES
WHICH ARE NOT NECESSARY. CERTIFICATES REPRESENTING SHARES OF THE FUND WILL NOT
BE ISSUED.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank; further, such shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Shares of the Fund involve investment risks, including the possible loss of
principal.
19. Purchase, Redemption and Pricing of Securities
The information provided in response to this item is in addition to the
information provided in response to Items 7 and 8 in Part A.
All purchases of shares of the Fund will be credited to the shareholder in full
and fractional shares (rounded to the nearest 1/1000 of a share) in an account
maintained for the shareholder. To open an account in the name of a corporation,
a resolution of the corporation's Board of Directors will be required.
The Fund reserves the right to reject any order for the purchase of shares of
the Fund and to waive minimum investment requirements. In addition, the offering
of shares of the Fund may be suspended by the Fund at any time and resumed at
any time thereafter.
The Fund will attempt to make payment for all shares redeemed within one
business day, but in no event later than seven days after receipt by the Fund of
the redemption request in proper form. The right of redemption may be suspended
or the date of payment postponed if the Exchange is closed (other than customary
closing) or upon the determination of the SEC that trading on the Exchange is
restricted or an emergency exists, or if the SEC permits it, by order, for the
protection of shareholders. At various times, the Fund may be requested to
redeem shares for which it has not yet received proper payment. Accordingly, the
Fund may delay the sending of redemption proceeds until such time as it has
assured itself that proper payment has been collected for the purchase of such
shares.
Redemptions by the Fund
The Fund reserves the right to redeem, involuntarily, at net asset value, the
shares of any shareholder whose account has a value less than a specified
minimum amount, but only where the value of such account has been reduced by the
shareholder's prior voluntary redemption of shares. Until further notice, it is
the present policy of the Fund not to exercise this right with respect to any
shareholder whose account has a value of $1,000,000 or more. In any event,
before the Fund redeems such shares and sends the proceeds to the shareholder,
it will notify the shareholder that the value of the shares in the account is
less than the minimum amount and allow the shareholder 30 days to make an
additional investment in an amount which will increase the value of the account
to at least $1,000,000.
Calculation of Net Asset Value
As noted elsewhere in this registration statement, the Fund generally calculates
net asset value as of 1:00 p.m. Pacific time each day that the Exchange is open
for trading. As of the date of this registration statement, the Fund is informed
that the Exchange observes the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The Fund's portfolio securities are valued as stated elsewhere in this
registration statement. Generally, trading in corporate bonds, U.S. government
securities and money market instruments is substantially completed each day at
various times prior to the close of the Exchange. The values of such securities
used in computing the net asset value of the Fund's shares are determined as of
such times. Occasionally, events affecting the values of such securities may
occur between the times at which they are determined and 1:00 p.m. Pacific time
which will not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as determined
in good faith by the Board of Trustees.
Reinvestment Date
The dividend reinvestment date is the date on which additional shares are
purchased for the investor who has elected to have dividends reinvested. This
date will vary from month to month, based on operational considerations, and is
not necessarily the same date as the record date or the payable date for cash
dividends.
20. Tax Status
The information provided in response to this item is in addition to the
information provided in response to Item 6 in Part A.
The Fund's taxable year-end is April 30. The Fund currently intends to continue
to use the April 30 tax year; however, the entry of a significant investor with
a different tax year may cause the Fund to adopt the tax year of such new
investor.
Each investor will be subject to federal income tax on the investor's
distributive share of the Fund's income for the tax year of the investor which
includes the last day of the Fund's taxable year (e.g., April 30). An investor
that is a regulated investment company will take into account its distributive
share of the Fund's daily allocations of ordinary income and capital gain net
income for purposes of determining the investor's required distribution
necessary to avoid the 4% excise tax on the undistributed income of a regulated
investment company.
The Fund's investment in certain options and futures may be limited by the Code
in order for its investors to satisfy Subchapter M qualification requirements.
The Fund's investment in certain options and futures involving actual or short
sales or foreign exchange gains or losses are also subject to special tax rules
and may affect the amount and character of distributive share items.
Investors should consult with their tax or financial advisors with respect to
federal, state, local, or foreign income taxes that might apply to an investment
in the Fund.
21. Underwriters
Not Applicable
22. Calculation of Performance Data
Not Applicable
23. Financial Statements
Audited Statement of Assets and Liabilities for the Midcap Growth Portfolio,
dated April 30, 1995, and note thereon is incorporated by reference to the Form
485APOS filed on July 3, 1995 by Registrant, Franklin Strategic Series, CIK #
0000872625, SEC File Nos. 033-39088, 811-6243.
* "Standard & Poor's MidCap 400 Index" and "S&P MidCap 400 Index" are
trademarks of Standard & Poor's Corporation. The Fund is not sponsored,
endorsed, sold or promoted by S&P.
MIDCAP GROWTH PORTFOLIO
File No. 811-7638
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
a) Financial Statement:
Audited Statement of Assets and Liabilities for the Midcap Growth
Portfolio, dated April 30, 1995, and note thereon is incorporated by
reference to the Form 485APOS filed on July 3, 1995 by Registrant,
Franklin Strategic Series, CIK # 0000872625, SEC File
Nos. 033-39088, 811-6243.
b) Exhibits:
The following exhibits, where applicable, are herewith attached to the
filing:
(1) copies of the charter as now in effect;
(i) Agreement and Declaration of Trust dated January 13, 1993
(ii) Certificate of Trust dated January 13, 1993
(iii) Certificate of Amendment to the Certificate of Trust dated
April 8, 1993
(iv) Certificate of Amendment of Agreement and Declaration of Trust
dated April 18, 1995
(2) copies of the existing Bylaws or instruments corresponding thereto;
(i) Bylaws
(3) copies of any voting trust agreement with respect to more than five
percent of any class of equity securities of the Registrant;
Not applicable
(4) specimens or copies of each security issued by the Registrant,
including copies of all constituent instruments defining the rights of the
holders of such securities, and copies of each security being registered;
Not applicable
(5) copies of all investment advisory contracts relating to the management
of the assets of the Registrant;
(i) Management Agreement between Registrant and Templeton
Quantitative Advisors, Inc. dated August 16, 1994
(6) copies of each underwriting or distribution contract between the
Registrant and a principal underwriter, and specimens or copies of all
agreements between principal underwriters and dealers;
Not applicable
(7) copies of all bonus, profit sharing, pension or other similar
contracts or arrangements wholly or partly for the benefit of trustees or
officers of the Registrant in their capacity as such; any such plan that
is not set forth in a formal document, furnish a reasonably detailed
description thereof;
Not applicable
(8) copies of all custodian agreements and depository contracts under
Section 17(f) of the 1940 Act, with respect to securities and similar
investments of the Registrant, including the schedule of remuneration;
(i) Custody Agreement between Registrant and Bank of America NT &
SA dated April 13, 1993
(ii) Amendment to Custody Agreement between Registrant and Bank of
America dated April 12, 1995
(9) copies of all other material contracts not made in the ordinary course
of business which are to be performed in whole or in part at or after the
date of filing the Registration Statement;
Not applicable.
(10) an opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will, when sold, be
legally issued, fully paid and nonassessable;
Not applicable
(11) copies of any other opinions, appraisals or rulings and consents to
the use thereof relied on in the preparation of this registration
statement and required by Section 7 of the 1933 Act;
N/A
(12) all financial statements omitted from Item 23;
Not applicable
(13) copies of any agreements or understandings made in consideration for
providing the initial capital between or among the Registrant, the
underwriter, adviser, promoter or initial stockholders and written
assurances from promoters or initial stockholders that their purchases
were made for investment purposes without any present intention of
redeeming or reselling;
(i) Letters of Understanding relating to initial capital dated
April 13, 1993
(14) copies of the model plan used in the establishment of any retirement
plan in conjunction with which Registrant offers its securities, any
instructions thereto and any other documents making up the model plan.
Such form(s) should disclose the costs and fees charged in connection
therewith;
Not applicable
(15) copies of any plan entered into by Registrant pursuant to Rule 12b-1
under the 1940 Act, which describes all material aspects of the financing
of distribution of Registrant's shares, and any agreements with any person
relating to implementation of such plan;
Not applicable
(16) schedule for computation of each performance quotation provided in
the registration statement in response to Item 22 (which need not be
audited);
Not applicable
(17) Power of Attorney
(i) Power of Attorney dated June 29, 1995
(ii) Certificate of Secretary dated June 29, 1995
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
TITLE OF CLASS as of April 30, 1995
--------------
Shares of Beneficial Interest
of:
MidCap Growth Portfolio 2
ITEM 27. INDEMNIFICATION.
Reference is made to Article VI of the Registrant's Bylaws (Exhibit 2),
which is incorporated herein by reference. Pursuant to Rule 484 under the
Securities Act of 1933, as amended, the Registrant furnishes the following
undertaking:
"Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue."
Notwithstanding the provisions contained in the Registrant's Bylaws, in
the absence of authorization by the appropriate court on the merits pursuant to
Section 5 of Article VI of said Bylaws, any indemnification under said Article
shall be made by Registrant only if authorized in the manner provided in either
subsection (a) or (b) of Section 6 of Article VI.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Templeton Quantitative Advisors, Inc., the investment manager for the
Registrant, is an indirect wholly-owned subsidiary of Franklin Resources, Inc.
and is the investment manager for other registered investment companies in the
Franklin\Templeton Group of Funds. The officers and directors of the
Registrant's investment adviser also serve as officers and/or directors, and/or
portfolio managers for (1) the adviser's corporate parent, Franklin Resources,
Inc., and/or (2) other investment companies in the Franklin/Templeton Group of
Funds. In addition, Charles B. Johnson and Harris J. Ashton are directors of
General Host Corporation. For additional information please see Part B and
Schedules A and D of Form ADV of the Fund's investment manager (SEC File
801-40142), incorporated herein by reference, which sets forth the officers and
directors of the investment manager and information as to any business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not Applicable
ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS.
The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
will be kept by the Registrant or its shareholder services agent,
Franklin/Templeton Investor Services, Inc., at their respective principal
business offices, both of which are at 777 Mariners Island Blvd., San Mateo,
California 94404.
ITEM 31. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Part A
or Part B.
ITEM 32. UNDERTAKING.
The Registrant hereby undertakes to promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee or trustees when requested in writing to do so by the record holders of
not less than 10 per centum of the Registrant's outstanding shares and to assist
its shareholders in accordance with the requirements of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San Mateo,
the State of California, on the 29th day of August, 1995.
MIDCAP GROWTH PORTFOLIO
Registrant
By: RUPERT H. JOHNSON, JR.*
Rupert H. Johnson, Jr.
President
RUPERT H. JOHNSON, JR.* Principal Executive Officer and Trustee
Rupert H. Johnson, Jr. Dated: August 29, 1995
FRANK H. ABBOTT, III* Trustee
- ---------------------
Frank H. Abbott, III Dated: August 29, 1995
HARRIS J. ASHTON Trustee
- ----------------
Harris J. Ashton Dated: August 29, 1995
HARMON E. BURNS* Trustee
- ----------------
Harmon E. Burns Dated: August 29, 1995
S. JOSEPH FORTUNATO* Trustee
- --------------------
S. Joseph Fortunato Dated: August 29, 1995
DAVID W. GARBELLANO* Trustee
- --------------------
David W. Garbellano Dated: August 29, 1995
CHARLES B. JOHNSON* Trustee
- -------------------
Charles B. Johnson Dated: August 29, 1995
FRANK W. T. LAHAYE* Trustee
- -------------------
Frank W. T. LaHaye Dated: August 29, 1995
GORDON S. MACKLIN* Trustee
- ------------------
Gordon S. Macklin Dated: August 29, 1995
DIOMEDES LOO-TAM Principal Accounting Officer
Diomedes Loo-Tam Dated: August 29, 1995
MARTIN L. FLANAGAN* Principal Financial Officer
Martin L. Flanagan Dated: August 29, 1995
By:/s/ Deborah R. Gatzek
*Deborah R. Gatzek, Attorney in Fact
pursuant to a Power of Attorney
filed herewith.
FRANKLIN MONEY FUND
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION PAGE NO. IN
SEQUENTIAL
NUMBERING SYSTEM
EX-99.B1(i) Agreement and Declaration of Trust Attached
dated January 13, 1993
EX-99.B1(ii) Certificate of Trust dated January Attached
13, 1993
EX-99.B1(iii) Certificate of Amendment to the Attached
Certificate of Trust dated April 8,
1993
EX-99.B1(iv) Certificate of Amendment of Attached
Agreement and Declaration of Trust
dated April 18, 1995
EX-99.B2(i) By-Laws Attached
EX-99.B5(i) Administration Agreement between Attached
Registrant and Templeton
Quantitative Advisors, Inc.. dated
August 16, 1994
EX-99.B8(i) Custody Agreement between Registrant Attached
and Bank of America NT & SA
dated April 13, 1993
EX-99.B8(ii) Amendment to Custody Agreement Attached
Registrant and Bank of America dated
April 12, 1995
EX-99.B13(i) Letters of Understanding relating to Attached
initial capital dated April 13, 1993
EX-99.B17(i) Power of Attorney dated June 29, 1995 Attached
EX-99.B17(ii) Certificate of Secretary dated June Attached
29, 1995
* Incorporated by Reference
AGREEMENT AND DECLARATION OF TRUST
of
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
a Delaware Business Trust
Principal Place of Business:
777 Mariners Island Boulevard
San Mateo, California 94404
TABLE OF CONTENTS
ARTICLE I
Name and Definitions
Section 1. Name
Section 2. Definitions
(a) Book Capital Account
(b) By-Laws
(c) Commission and Principal Underwriter
(d) Declaration of Trust
(e) Exchange
(f) General Assets
(g) Holder
(h) Investment Manager
(i) Interest Person
(j) 1940 Act
(k) Person
(1) Series
(m) Shares
(n) Trust
(o) Trustees or Board of Trustees
(p) Trust Property
ARTICLE II Purpose of Trust
ARTICLE III Shares
Section 1. Division of Beneficial Interest
Section 2. Ownership of Shares
Section 3. Investments in the Trust
Section 4. Non-Transferability
Section 5. Status of Shares and Limitation of Personal Liability
Section 6. Power of Board of Trustees to Change Provisions Relating to Shares
Section 7. Establishment and Designation of Shares
(a) Assets Held with Respect to a Particular Series
(b) Liabilities Held with Respect to a Particular Series
(c) Dividends, Distributions, Redemption, and Repurchases
(d) Voting
(e) Equality
(f) Fractions
(g) Exchange Privilege
(h) Combination of Series
(i) Elimination of Series
Section 8. Determination of Book Capital Account Balances, Net Income and
Distributions
(a) Book Capital Account Balances
(b) Distribution and Allocations to Holders
Section 9. Indemnification of Holders
ARTICLE IV
The Board of Trustees
Section 1. Number, Election and Tenure
Section 2. Effect of Death, Resignation, etc. of a Trustee
Section 3. Powers
Section 4. Payment of Expenses by the Trust
Section 5. Payment of Expenses by Holders
Section 6. Ownership of Assets of the Trust
Section 7. Service Contracts
ARTICLE V Holders' Voting Powers and Meetings
Section 1. Voting Powers
Section 2. Voting Power and Meetings
Section 3. Quorum and Required Vote
Section 4. Action by Written Consent
Section 5. Record Dates
Section 6. Additional Provisions
ARTICLE VI Distributions and Redemptions
Section 1. Determination of Net Income and Distributions
Section 2. Decreases and Withdrawals
Section 3. Redemptions at the Option of the Trust
ARTICLE VII
Compensation and Limitations of Liability
Section 1. Compensation of Trustees
Section 2. Indemnification and Limitation of Liability With Respect to
Trustees and Officers
Section 3. Liability of Holders
Section 4. Trustee's Good Faith Action, ExpertAdvice, No Board or Surety
Section 5. Insurance
ARTICLE VIII
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees
Section 2. Termination of Trust or Series
Section 3. Merger and Consolidation
Section 4. Amendments
Section 5. Filing of Copies, References, Headings
Section 6. Applicable Law
Section 7. Provisions in Conflict With Law or Regulations
Section 8. Business Trust Only
Section 9. Use of the name "Franklin"
AGREEMENT AND DECLARATION OF TRUST
OF
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST is made and entered
into as of the date set forth below by the Trustees named hereunder for the
purpose of forming a Delaware business trust in accordance with the provisions
hereinafter set forth,
NOW, THEREFORE, the Trustees hereby direct that a Certificate of
Trust be filed with the Office of the Secretary of State of the State of
Delaware and do hereby declare that the Trustees will hold IN TRUST all cash,
securities and other assets which the Trust now possesses or may hereafter
acquire from time to time in any manner and manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the Holders of
Shares in this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This trust shall be known as "FRANKLIN STRATEGIC
MIDCAP GROWTH FUND" and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Book Capital Account" has the meaning given to it in Article III,
Section 8(a).
(b) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time and incorporated herein by reference;
(c) The terms "Commission" and "Principal Underwriter" shall have the
respective meanings given them in Section 2(a)(7) and Section (2)(a)(29) of the
1940 Act;
(d) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(e) "Exchange" has the meaning given to it in Article VI, Section 2.
(f) "General Assets" has the meaning given to it in Article III,
Section 7(a).
(g) "Holder" means a record owner of outstanding Shares;
(h) "Investment Manager" or "Manager" means a party furnishing
services to the Trust pursuant to any contract described in Article IV, Section
7(a) hereof;
(i) The term "Interested Person" has the meaning given it in Section
2(a)(19) of the 1940 Act;
(j) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time.
References herein to specific sections of the 1940 Act shall be deemed to
include such Rules and Regulations as are applicable to such sections as
determined by the Trustees or their designees;
(k) "Person" means and includes individuals, corporations,
partnerships, trusts, foundations, plans, associations, joint ventures, estates
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign;
(1) "Series" refers to each series of Shares established and
designated under or in accordance with the provisions of Article III and shall
mean an entity such as that described in Section 18(f)(2) of the 1940 Act, and
subject to Rule 18f-2 thereunder.
(m) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares. The beneficial interest of a Holder
in the Trust (expressed as a percentage) shall be determined by calculating the
ratio of each Holder's Book Capital Account balance to the total of all Holders'
Book Capital Account balances;
(n) The "Trust" refers to the Delaware business trust established by
this Agreement and Declaration of Trust, as amended from time to time;
(o) "Trustees" or "Board of Trustees" refers to the persons who have
signed this Agreement and Declaration of Trust, so long as they continue in
office in accordance with the terms hereof, and all other persons who may from
time to time be duly elected or appointed to serve on the Board of Trustees in
accordance with the provisions hereof and reference herein to a Trustee or the
Trustees shall refer to such person or persons in their capacity as trustees
hereunder;
(p) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust, including without limitation the rights referenced in Article
VIII, Section 9 hereof;
ARTICLE II.
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities.
ARTICLE III.
Shares
Section 1. Division of Beneficial Interest. The beneficial interest
in the Trust shall at all times be divided into an unlimited number of Shares,
with a par value of $ .01 per Share. The Trustees may authorize the division of
Shares into separate Series and the division of Series into separate classes of
Shares. The different Series shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series shall be fixed and determined, by the Trustees. If only one or no Series
(or classes) shall be established, the Shares shall have the rights and
preferences provided for herein and in Article III, Section 7 hereof to the
extent relevant and not otherwise provided for herein, and all references to
Series (and classes) shall be construed (as the context may require) to refer to
the Trust.
Subject to the provisions of Section 7 of this Article III, each
Share shall have voting rights as provided in Article V hereof, and Holders of
the Shares of any Series shall be entitled to receive dividends when, if and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions of the Trust or
otherwise. All dividends and distributions shall be made ratably among all
Holders of a particular (class of a) Series from the assets held with respect to
such Series according to the number of Shares of such (class of such) Series
held of record by such Holder on the record date for any dividend or
distribution or on the date of termination of the Trust, as the case may be.
Holders shall have no preemptive or other right to subscribe to any additional
Shares or other securities issued by the Trust or ANY Series. The Trustees may
from time to time divide or combine the Shares of any particular Series into a
greater or lesser number of Shares of that Series without thereby materially
changing the proportionate beneficial interest of the Shares of that Series in
the assets held with respect to that Series or materially affecting the rights
of Shares of any other Series.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series (or
class). No certificates evidencing the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the transfer of Shares of
each Series (or class) and similar matters. The record books of the Trust as
kept by the Trust or any transfer or similar agent, as the case may be, shall be
conclusive as to the identity of the Holders of each Series (or class) and as to
the number of Shares of each Series (or class) held from time to time by each
Holder.
Section 3. Investments in the Trust. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize. Each investment
shall be credited to the Holder's account in the form of full and fractional
Shares of the Trust, in such Series (or class) as the purchaser shall select;
provided, however, that the Trustees may, in their sole discretion, impose a
sales charge upon investments in the Trust.
Section 4. Non-Transferability. Shares shall not be transferable.
Section 5. Status of Shares. Shares shall be deemed to be personal
property giving only the rights provided in this instrument. Every Holder by
virtue of having become a Holder shall be held to have expressly assented and
agreed to the terms hereof and to have become a party hereto. The death,
disability, incompetency, incapacity or bankruptcy of a Holder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Holder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but shall entitle such
representative only to the rights of said Holder under this Trust. Ownership of
Shares shall not entitle a Holder to any title in or to the whole or any part of
the Trust Property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the Holders as
partners or joint venturers.
Section 6. Power of Board of Trustees to Change Provisions Relating
to Shares. Notwithstanding any other provision of this Declaration of Trust to
the contrary, and without limiting the power of the Trustees to amend the
Declaration of Trust as provided elsewhere herein, the Trustees shall have the
power to amend this Declaration of Trust, at any time and from time to time, in
such manner as the Trustees may determine in their sole discretion, without the
need for Holder action, so as to add to, delete, replace or otherwise modify any
provisions relating to the Shares contained in this Declaration of Trust,
provided that before adopting any such amendment without Holder approval the
Trustees shall determine that it is consistent with the fair and equitable
treatment of all Holders or that Holder approval is not otherwise required by
the 1940 Act or other applicable law. If Shares have been issued, Holder
approval shall be required to adopt any amendments to this Declaration of Trust
which would adversely affect to a material degree the rights and preferences of
the Shares of any Series (or class) or to increase or decrease the par value of
the Shares of any Series (or class).
Subject to the foregoing Paragraph, the Trustees may amend the
Declaration of Trust to amend any of the provisions set forth in paragraphs (a)
through (i) of Section 7 of this Article III.
Section 7. Establishment and Designation of Shares. The
establishment and designation of any Series (or class) of Shares shall be
effective upon the adoption by the Trustees, of a resolution which sets forth
such establishment and designation and the relative rights and preferences of
such Series (or class). Each such resolution shall be incorporated herein by
reference upon adoption.
Shares of each Series (or class) established pursuant to this
Section 7, unless otherwise provided in the resolution establishing such Series
(or class), shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, including dividends and distributions paid by, and reinvested
in, such Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof from
whatever source derived, including, without limitation, any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be,
shall irrevocably be held with respect to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon the books of
account of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds, in
whatever form the same may be, are herein referred to as "assets held with
respect to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Asset so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Holders of all Series for all purposes.
(b) Liabilities Held with Respect to a Particular Series. The assets
of the Trust held with respect to each particular Series shall be charged with
the liabilities of the Trust held with respect to that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities of the Trust which are not readily identifiable as being held with
respect to any particular Series shall be allocated and charged by the Trustees
to and among any one or more Series in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges, and reserves so charged to a Series are herein
referred to as "liabilities held with respect to" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Holders of all Series for all purposes. All
Persons who have extended credit which has been allocated to a particular
Series, or who have a claim or contract which has been allocated to any
particular Series, shall look exclusively to the assets held with respect to
such Series for payment of such credit, claim, or contract. In the absence of an
express agreement so limiting the claims of such creditors, claimants and
contracting parties, each creditor, claimant and contracting party shall be
deemed nevertheless to have agreed to such limitation unless an express
provision to the contrary has been incorporated in the written contract or other
document establishing the contractual relationship.
(c) Dividends, Distributions, Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution including, without
limitation, any distribution paid upon termination of the Trust or of any Series
(or class) with respect to, nor any redemption or repurchase of, the Shares of
any Series (or class) shall be effected by the Trust other than from the assets
held with respect to such Series, nor shall any Holder of any particular Series
otherwise have any right or claim against the assets held with respect to any
other Series except to the extent that such Holder has such a right or claim
hereunder as a Holder of such other Series. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to determine which
items shall be treated as income and which items as capital; and each such
determination shall be conclusive and binding upon the Holders.
(d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote separately by Series (and, if applicable, by class): that is, the
Holders of each Series (or class) shall have the right to approve or disapprove
matters affecting the Trust and each respective Series (or class) as if the
Series (or classes) were separate companies. There are, however, two exceptions
to voting by separate Series (or classes). First, if the 1940 Act requires all
Shares of the Trust to be voted in the aggregate without differentiation between
the separate Series (or classes), then all the Trust's Shares shall be entitled
to vote on a one-vote-per-Share basis. Second, if any matter affects only the
interests of some but not all Series (or classes), then only the Holders of such
affected Series (or classes) shall be entitled to vote on the matter.
(e) Equality. All the Shares of each particular Series shall
represent an equal proportionate undivided interest in the assets held with
respect to that Series (subject to the liabilities held with respect to that
Series and such rights and preferences as may have been established and
designated with respect to classes of Shares within such Series), and each Share
of any particular Series shall be equal to each other Share of that Series.
(f) Fractions. Any fractional Share of a Series shall have
proportionately all the rights and obligations of a whole share of such Series,
including rights with respect to voting, receipt of dividends and distributions
and redemption of Shares and termination of the Trust.
(g) Exchange Privilege. The Trustees shall have the authority to
provide that the Holders of Shares of any Series shall have the right to
exchange such Shares for Shares of one or more other Series in accordance with
such requirements and procedures as may be established by the Trustees.
(h) Combination of Series. The Trustees shall have the authority,
without the approval of the Holders of any Series unless otherwise required by
applicable law, to combine the assets and liabilities held with respect to any
two or more Series into assets and liabilities held with respect to a single
Series.
(i) Elimination of Series. At any time that there are no Shares
outstanding of any particular Series (or class) previously established and
designated, the Trustees may by resolution abolish that Series (or class) and
rescind the establishment and designation thereof.
Section 8. Determination of Book Capital Account Balances, Net Income and
Distributions.
(a) Book Capital Accounts. The Book Capital Account balances of
Holders evidence their beneficial interest in the Trust and shall be determined
daily at such time or times as the Trustees may determine. All determinations of
Book Capital Accounts shall be in accordance with Section 704(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury regulations
promulgated thereunder. The Trustees shall adopt resolutions setting forth the
method of determining the Book Capital Account balances for each Holder. The
power and duty to make calculations pursuant to such resolutions may be
delegated by the Trustees to the Investment Adviser, Administrator, custodian,
or such other person as the Trustees may determine.
(b) Distributions and Allocations to Holders. The Trustees shall
agree to the method for determining (i) the daily allocation of income or loss
to each Holder of the Trust, (ii) the payment of distributions to Holders and
(iii) upon liquidation, the final distribution of items of taxable income and
expense. Such agreement shall provide for such allocations and distributions in
accordance with the Sections 704(b) and (c) of the Code, and the Treasury
regulations promulgated thereunder, and shall be set forth in written
instructions directed to the Trust's accountants specifying the method by which
the Trust will comply with the Code and/or Treasury regulations. The Trustees
may amend the agreement and instructions adopted pursuant to this Section 8(b)
from time to time to the extent necessary to comply with the Code and/or the
Treasury regulations promulgated thereunder.
Section 9. Indemnification of Holders. If any Holder or former
Holder shall be exposed to liability by reason of a claim or demand relating to
his, her or it being or having been a Holder, and not because of his, her or its
acts or omissions, the Holder or former Holder (or his or her heirs, executors,
administrators, or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor or representative)
shall be entitled to be held harmless from and indemnified out of the assets of
the Trust against all loss and expense arising from such claim or demand.
ARTICLE IV.
The Board of Trustees
Section 1. Number, Election and Tenure. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted meeting, by
the Trustees, provided, however, that the number of Trustees shall in no event
be less than one (1) nor more than fifteen (15). Subject to the requirements of
Section 16(a) of the 1940 Act, the Trustees, by action at a duly constituted
meeting, may fill vacancies in the Board of Trustees or remove Trustees with or
without cause. Each Trustee shall serve during the continued existence of the
Trust until he or she dies, declines to serve, resigns, is declared bankrupt or
incompetent by a court of competent jurisdiction, or is removed, or, if sooner,
until the next meeting of Holders called for the purpose of electing Trustees
and until the election and qualification of his or her successor. Any Trustee
may resign at any time by written instrument signed by him and delivered to any
officer of the Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages or other payment on account of such removal. The Holders may
fix the number of Trustees and elect Trustees at any meeting of Holders called
by the Trustees for that purpose. Any Trustee may be removed at any meeting of
Holders by a vote of two-thirds of the outstanding Shares of the Trust. A
meeting of Holders for the purpose of electing or removing one or more Trustees
may be called (i) by the Trustees upon their own vote, or (ii) upon the demand
of Holders owning 10% or more of the Shares of the Trust in the aggregate.
Section 2. Effect of Death, Resignation, etc. of a Trustee. The
death, disability, declination, resignation, retirement, removal, incompetency,
incapacity or bankruptcy of one or more Trustees, or all of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration of Trust. Whenever a vacancy in the Board of
Trustees shall occur, until such vacancy is filled as provided in Article IV,
Section 1, the Trustees in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by this Declaration of Trust.
Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and such
Trustees shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in securities transactions of all
kinds on behalf of the Trust. Trustees, in all instances, shall act as
principals, and are and shall be free from the control of the Holders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts, documents and instruments that they may
consider desirable, necessary or appropriate in connection with the
administration of the Trust. Without limiting the foregoing, the Trustees may:
adopt By-Laws not inconsistent with this Declaration of Trust providing for the
regulation and management of the affairs of the Trust and may amend and repeal
them to the extent that such By-Laws do not reserve that right to the Holders;
fill vacancies in or remove from their number, and may elect and remove such
officers and appoint and terminate such agents as they consider appropriate;
appoint from their own number and establish and terminate one or more committees
consisting of two or more Trustees who may exercise the powers and authority of
the Trustees to the extent that the Trustees determine; employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities or with a Federal Reserve
Bank, retain a transfer agent or a shareholder servicing agent, investment
manager or both; provide for the issuance and distribution of Shares by the
Trust directly or through one or more Principal Underwriters or otherwise;
redeem, repurchase and transfer Shares pursuant to applicable law; set record
dates for the determination of Holders with respect to various matters; declare
and pay dividends and distributions to Holders of each Series from the assets of
such Series; establish from time to time, in accordance with the provisions of
Article III, Section 7 hereof, any Series (or class) of Shares, each such Series
(or class) to operate as a separate and distinct investment medium and with
separately defined investment objectives and policies and distinct investment
purpose; and in general delegate such authority as they consider desirable to
any officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian, transfer or shareholder
servicing agent, investment manager or Principal Underwriter. Any determination
as to what is in the interests of the Trust made by the Trustees in good faith
shall be conclusive. In construing the provisions of this Declaration of Trust,
the presumption shall be in favor of a grant of power to the Trustees and unless
otherwise specified or required by law, any action by the Trustees shall be
deemed effective if approved or taken by a majority of the Trustees or a
majority of any duly constituted committee of Trustees. Any action required or
permitted to be taken at any meeting of the Trustees, or any committee thereof,
may be taken without a meeting if all of the Trustees or committee (as the case
may be) consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board of Trustees, or committee, except as
otherwise provided in the 1940 Act.
Without limiting the foregoing, the Trust shall have power and
authority:
(a) To invest and reinvest cash and cash items, to hold cash
uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write
options on, lend or otherwise deal in or dispose of contracts for the future
acquisition or delivery of all types of securities, future contracts and options
thereon, and forward currency contracts of every nature and kind, including,
without limitation, all types of bonds, debentures, stocks, preferred stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality or organization, or by any bank or savings institution, or by
any corporation or organization organized under the laws of the United States or
of any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or in "when issued" contracts for
any such securities, futures contracts and options thereon and forward currency
contracts to change the investments of the assets of the Trust; and to exercise
any and all rights, powers, and privileges of ownership or interest in respect
of any and all such investments of every kind and description, including,
without limitation, the right to consent and otherwise act with respect thereto,
with power to designate one or more Persons, to exercise any of said rights,
powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease,
or write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series, subject to any
requirements of the 1940 Act;
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating that
it is trust property, whether in bearer, unregistered or other negotiable form,
or in its own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise or to authorize the custodian or a subcustodian or a
nominee or nominees to deposit the same in a securities depository, subject in
each case to the applicable provisions of the 1940 Act proper safeguards
according to the usual practice of investment companies or any rules or
regulations applicable thereto;
(f) To consent to, or participate in, any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to pay
calls or subscriptions with respect to any security held in the Trust;
(g) To join with other security Holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(h) To litigate, compromise, arbitrate, settle or otherwise adjust
claims in favor of or against the Trust or a Series or any matter in
controversy, including but not limited to claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust or
Series exclusively for Trust purposes;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary, desirable or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust or payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Holders,
Trustees, officers, employees, agents, investment advisers, Principal
Underwriters, or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of holding Shares,
holding, being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such Person as Trustee,
officer, employee, agent, investment adviser, Principal Underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such Person against liability; and
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trust shall not in any way be bound or limited by any present or future law or
custom in regard to investment by fiduciaries. The Trust shall not be required
to obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. Subject to the
provisions of Article III, Section 7(b), the Trustees are authorized to pay or
cause to be paid out of the principal or income of the Trust or Series (or
class), or partly out of the principal and partly out of income, and to charge
or allocate the same to, between or among such one or more of the Series (or
classes) that may be established or designated pursuant to Article III, Section
7, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust or Series (or classes), or in
connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser or manager, principal
underwriter, auditors, counsel, custodian, transfer agent, Holder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur.
Section 5. Payment of Expenses by Holders. The Trustees shall have
the power, as frequently as they may determine, to cause each Holder, or each
Holder of any particular Series, to pay directly, in advance or arrears, for
charges of the Trust's custodian or transfer, Holder servicing or similar agent,
an amount fixed from time to time by the Trustees, by setting off such charges
due from such Holder from declared but unpaid dividends owed such Holder and/or
by reducing the number of shares in the account of such Holder by that number of
full and/or fractional Shares which represents the outstanding amount of such
charges due from such Holder.
Section 6. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on such terms
as the Trustees may determine. Upon the death, declination, resignation,
retirement, removal, incompetency, incapacity or bankruptcy of a Trustee he or
she shall automatically cease to have any such title in any of the Trust
Property, and the title of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered. The Trustees may determine that the Trust or the Trustees, acting for
and on behalf of the Trust, shall be deemed to hold beneficial ownership of any
income earned on the securities owned by the Trust, whether domestic or foreign.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set
forth in the By-Laws, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory, management and/or
administrative services for the Trust or for any Series with any Person and any
such contract may contain such other terms as the Trustees may determine,
including without limitation, authority for the Investment Manager or
administrator to determine from time to time without prior consultation with the
Trustees what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments, or such other activities as may specifically
be delegated to such Person.
(b) The Trustees may also, at any time and from time to time,
contract with any Persons appointing such Persons exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of one or more of the Series
(or classes) or other securities to be issued by the Trust. Every such contract
shall comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any Persons appointing such Persons to serve as
custodian, transfer agent and/or shareholder servicing agent for the Trust or
one or more of its Series. Every such contract shall comply with such
requirements and restrictions as may be set forth in the By-Laws or stipulated
by resolution of the Trustees.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any Persons to provide such other services to the Trust
or one or more of the Series, as the Trustees determine to be in the best
interests of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Holders, Trustees, or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee,
Manager, adviser, Principal Underwriter, distributor, or affiliate
or agent of or for any Person with which an advisory, management or
administration contract, or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of
service contract may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a Holder
or has an interest in the Trust, or that
(ii) any Person with which an advisory, management or
administration contract or Principal Underwriter's or distributor's
contract, or transfer, shareholder servicing or other type of
service contract may have been or may hereafter be made also has an
advisory, management or administration contract, or Principal
Underwriter's or distributor's contract, or transfer, shareholder
servicing or other service contract with one or more other
corporations, trust, associations, or other organizations, or has
other business or interests with any other Person,
shall not affect the validity of any such contract or disqualify any Holder,
Trustee or officer of the Trust from voting upon or executing the same, or
create any liability or accountability to the Trust or its Holders, provided
approval of each such contract is made pursuant to the applicable requirements
of the 1940 Act.
ARTICLE V.
Holders' Voting Powers and Meetings
Section 1. Voting Powers. Subject to the provisions of Article III,
Sections 6 and 7(d), the Holders shall have power to vote only (i) for the
election or removal of Trustees as provided in Article IV, Section 1, and (ii)
with respect to such additional matters relating to the Trust as may be required
by the applicable provisions of the 1940 Act, including Section 16(a) thereof,
this Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the Trust receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a Holder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
Section 2. Voting Power and Meetings. Meetings of the Holders may be
called by the Trustees for the purpose of electing Trustees as provided in
Article IV, Section 1 and for such other purposes as may be prescribed by law,
by this Declaration of Trust or by the By-Laws. Meetings of the Holders may also
be called by the Trustees from time to time for the purpose of taking action
upon any other matter deemed by the Trustees to be necessary or desirable. A
meeting of Holders may be held at any place designated by the Trustees. Written
notice of any meeting of Holders shall be given or caused to be given by the
Trustees by delivering personally or mailing such notice at least seven (7) days
before such meeting, postage prepaid, stating the time and place of the meeting,
to each Holder at the Holder's address as it appears on the records of the
Trust. Whenever notice of a meeting is required to be given to a Holder under
this Declaration of Trust or the By-Laws, a written waiver thereof, executed
before or after the meeting by such Holder or his or her attorney thereunto
authorized and filed with the records of the meeting, or actual attendance at
the meeting of Holders in person or by proxy, shall be deemed equivalent to such
notice.
Section 3. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
forty percent (40%) of the Shares entitled to vote on a matter shall constitute
a quorum at a Holders' meeting. When any one or more Series (or classes) is to
vote as a single class separate from any other Shares, forty percent (40%) of
the Shares of each such Series (or classes) entitled to vote shall constitute a
quorum at a Holder's meeting of that Series. Any meeting of Holders may be
adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of Article III, Section 7(d), when a quorum is present at any
meeting, a majority of the Shares voted shall decide any questions and a
plurality shall elect a Trustee, except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law.
Section 4. Action by Written Consent. Any action taken by Holders
may be taken without a meeting if Holders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the
By-Laws) and holding a majority (or such larger proportion as aforesaid) of the
Shares of any Series (or class) entitled to vote separately on the matter
consent to the action in writing and such written consents are filed with the
records of the meetings of Holders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Holders.
Section 5. Record Dates. For the purpose of determining the Holders
of any Series (or class) who are entitled to vote or act at any meeting or any
adjournment thereof, the Trustees may from time to time fix a time, which shall
be not more than ninety (90) days before the date of any meeting of Holders, as
the record date for determining the Holders of such Series (or class) having the
right to notice of and to vote at such meeting and any adjournment thereof, and
in such case only Holders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date. For the purpose of determining the Holders of any Series (or class)
who are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a date, which shall be
before the date for the payment of such dividend or distribution, as the record
date for determining the Holders of such Series (or class) having the right to
receive such dividend or distribution. Without fixing a record date the Trustees
may for voting and/or distribution purposes close the register or transfer books
for one or more Series for all or any part of the period between a record date
and a meeting of Holders or the payment of a distribution. Nothing in this
Section shall be construed as precluding the Trustees from setting different
record dates for different Series (or classes).
Section 6. Additional Provisions. The By-Laws may include further
provisions for Holders' votes and meetings and related matters.
ARTICLE VI.
Distributions and Redemptions
Section 1. Determination of Net Income and Distributions. Subject to
Article III, Section 7 hereof, the Trustees, in their absolute discretion, may
prescribe and shall set forth in the By-laws or in a duly adopted resolution of
the Trustees such bases and time for determining the net income attributable to
the Shares of any Series (or class), or the declaration and payment of dividends
and distributions on the Shares of any Series (or class), as they may deem
necessary or desirable.
Section 2. Decreases and Withdrawals. A Holder shall have the
authority to decrease or withdraw its interest in the Trust, at such Holder's
option, subject to the terms and conditions provided in this Article VI. The
Trust shall, upon application of any Holder or pursuant to authorization from
any Holder, and subject to this Article VI, Section 2, decrease or withdraw such
Holder's interest for an amount equal to such Holder's positive Book Capital
Account balance (as determined after taking into account all Book Capital
Account adjustments for the period since the Holders' Book Capital Accounts were
last adjusted); if so authorized by the Trustees, the Trust may, at any time and
from time to time, charge fees for effecting such decrease or withdrawal, at
such rates as the Trustees may establish, and may, at any time and from time to
time, suspend such right of decrease or withdrawal. The procedures for effecting
decreases or withdrawals shall be as determined by the Trustees from time to
time.
Payment for said Shares shall be made by the Trust to the Holder
within seven days after the date on which the request is made in proper form.
The obligation set forth in this Section 2 is subject to the provision that in
the event that any time the New York Stock Exchange (the "Exchange") is closed
for other than weekends or holidays, or if permitted by the Rules of the
Commission during periods when trading on the Exchange is restricted or during
any emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets held with respect to such Series or during any other period permitted by
order of the Commission for the protection of investors, such obligations may be
suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid in cash or
wholly or partly in kind if the Trustees determine that such payment is
advisable in the interest of the remaining Holders of the Series for which the
Shares are being redeemed. Subject to the foregoing, the fair value, selection
and quantity of securities or other property so paid or delivered as all or part
of the redemption price may be determined by or under authority of the Trustees.
In no case shall the Trust be liable for any delay of any corporation or other
Person in transferring securities selected for delivery as all or part of any
payment in kind.
Section 3. Redemptions at the Option of the Trust. The Trust shall
have the right at its option and at any time to redeem Shares of any Holder for
an amount equal to the Holder's positive Book Capital Account balance in a
manner consistent with Section 2 of this Article VI: (i) if at such time such
Holder has a Book Capital Account balance of less than an amount determined from
time to time by the Trustees prior to the acquisition of said Shares; or (ii) to
the extent that such Holder owns Shares of a particular Series equal to or in
excess of a percentage of the outstanding Shares of that Series determined from
time to time by the Trustees; or (iii) to the extent that such Holder owns
Shares equal to or in excess of a percentage, determined from time to time by
the Trustees, of the outstanding Shares of the Trust or of any Series.
ARTICLE VII.
Compensation, Limitations of Liability, and
Liability of Holders
Section 1. Compensation of Trustees. The Trustees as such shall be
entitled to reasonable compensation from the Trust, and they may fix the amount
of such compensation from time to time. Nothing herein shall in any way prevent
the employment of any Trustee to provide advisory, management, legal,
accounting, investment banking or other services to the Trust and to be
specially compensated for such services by the Trust.
Section 2. Indemnification and Limitation of Liability with Respect
to Trustees and Officers. The Trustees shall not be responsible or liable in any
event for any neglect or wrong-doing of any officer, agent, employee, Investment
Manager or Principal Underwriter of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee, and, subject to the
provisions of the Bylaws, the Trust out of its assets shall indemnify and hold
harmless each and every Trustee and officer of the Trust from and against any
and all claims, demands, costs, losses, expenses, and damages whatsoever arising
out of or related to such Trustee's or officer's performance of his or her
duties as a Trustee or officer of the Trust; provided that nothing herein
contained shall indemnify, hold harmless or protect any Trustee or officer from
or against any liability to the Trust or any Holder to which he or she would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever issued, executed or done by or on behalf
of the Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
Section 3. Liability of Holders. Each Holder of a particular Series
shall be jointly and severally liable (with rights of contribution inter se in
proportion to their respective interests in the Series) for the liabilities and
obligations of the Series in the event that the Series fails to satisfy such
liabilities and obligations; provided, however, that, to the extent assets are
available in the Series, the Series shall indemnify and hold each Holder
harmless from and against any claim or liability to which such Holder may become
subject by reason of his being or having been a Holder to the extent that such
claim or liability imposes on the Holder an obligation or liability which, when
compared to the obligations and liabilities imposed on other Holders, is greater
than his interest (proportionate share), and shall reimburse such Holder for all
legal and other expenses reasonably incurred by him in connection with any such
claim or liability. The rights accruing to a Holder under this Section 3, shall
not exclude any other right to which such Holder may be lawfully entitled, nor
shall anything herein contained restrict the right of a particular Series to
indemnify or reimburse a Holder in any appropriate situation even though not
specifically provided herein. Notwithstanding the indemnification procedure
described above, it is intended that each Holder shall remain jointly and
severally liable to the Series' creditors as a legal matter.
Section 4. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested in or dealing with the Trust. A
Trustee shall be liable to the Trust and to any Holder solely for his or her own
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and shall not be liable
for errors of judgment or mistakes of fact or law. The Trustees may take advice
of counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act or omission in
accordance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.
Section 5. Insurance. The Trustees shall be entitled and empowered
to the fullest extent permitted by law to purchase with Trust assets insurance
for liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust, whether or not the Trust would have the power
to indemnify him or her against such liability under the provisions of this
Article.
ARTICLE VIII.
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No
Person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
Section 2. Termination of Trust or Series. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by vote of a majority of the Shares of each Series
entitled to vote, voting separately by Series, or by the Trustees by written
notice to the Holders. Any Series may be terminated at any time by vote of a
majority of the Shares of that Series or by the Trustees by written notice to
the Holders of that Series.
Upon termination of the Trust (or any Series, as the case may be),
after paying or otherwise providing for all charges, taxes, expenses and
liabilities held, severally, with respect to each Series (or the applicable
Series, as the case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets held,
severally, with respect to each Series (or the applicable Series, as the case
may be), to distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds held with respect to each
Series (or the applicable Series, as the case may be), to the Holders of that
Series, as a Series, in accordance with each Holder's Positive Book Capital
Account balance in a manner consistent with Article VI, Section 2.
Section 3. Merger and Consolidation. The Trustees may cause (i) the
Trust or one or more of its Series to the extent consistent with applicable law
to be merged into or consolidated with another Trust or Person, (ii) the Shares
of the Trust or any Series (or class) to be converted into beneficial interests
in another Series (or class) or business trust (or series thereof), or (iii) the
Shares to be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. Such merger or consolidation, Share conversion or Share
exchange must be authorized by vote of a majority of the outstanding Shares of
the Trust, as a whole, or any affected Series (or class), as may be applicable;
provided that in all respects not governed by statute or applicable law, the
Trustees shall have power to prescribe the procedure necessary or appropriate to
accomplish a sale of assets, merger or consolidation including the power to
create one or more separate business trusts to which all or any part of the
assets, liabilities, profits or losses of the Trust may be transferred and to
provide for the conversion of Shares of the Trust or any Series into beneficial
interests in such separate business trust or trusts (or series thereof).
Section 4. Amendments. This Declaration of Trust may be restated
and/or amended at any time by an instrument in writing signed by a majority of
the Trustees and, if required, by approval of such amendment by Holders in
accordance with Article V, Section 3 hereof. Any such restatement and/or
amendment hereto shall be effective immediately upon execution and approval. The
Certificate of Trust of the Trust may be restated and/or amended by a similar
procedure, and any such restatement and/or amendment shall be effective
immediately upon filing with the Office of the Secretary of State of the State
of Delaware or upon such future date as may be stated therein.
Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each restatement and/or amendment hereto shall be
kept at the office of the Trust where it may be inspected by any Holder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendment,
references to this instrument, and all expressions like "herein," "hereof" and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such restatements and/or amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. Whenever the
singular number is used herein, the same shall include the plural; and the
neuter, masculine and feminine genders shall include each other, as applicable.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.
Section 6. Applicable Law. This Agreement and Declaration of Trust
is created under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the Delaware Business Trust
Act, as amended from time to time (the "Act"). The Trust shall be a Delaware
business trust pursuant to such Act, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
business trust.
Section 7. Provisions in Conflict with Law or Regulations.
(a) The provisions of the Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have constituted
a part of the Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of the Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination.
(b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.
Section 8. Business Trust Only. It is the intention of the Trustees
to create a business trust pursuant to the Delaware Business Trust Act, as
amended from time to time (the "Act"), and thereby to create only the
relationship of trustee and beneficial owners within the meaning of such Act
between the Trustees and each Holder. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment, joint venture or any form of legal relationship other
than a business trust pursuant to such Act. Nothing in this Declaration of Trust
shall be construed to make the Holders, either by themselves or with the
Trustees, partners or members of a joint stock association.
Section 9. Use of the name "Franklin". The name "Franklin" and all
rights to the use of the name "Franklin" belongs to Franklin Resources, Inc.
("Franklin"), the sponsor of the Trust. Franklin has consented to the use by the
Trust of the identifying word "Franklin" and has granted to the Trust a
non-exclusive license to use the name "Franklin" as part of the name of the
Trust and the name of any Series of Shares. In the event Franklin or an
affiliate of Franklin is not appointed as Investment Manager and/or Principal
Underwriter or ceases to be the Investment Manager and/or Principal Underwriter
of the Trust or of any Series using such names, the non-exclusive license
granted herein may be revoked by Franklin and the Trust shall cease using the
name "Franklin" as part of its name or the name of any Series of Shares, unless
otherwise consented to by Franklin or any successor to its interests in such
names.
[The remainder of this page has been left blank intentionally.]
IN WITNESS WHEREOF, the Trustees named below do hereby make and
enter into this Declaration of Trust as of the 13th day of January, 1993.
/s/ Frank H. Abbott /s/ Charles B. Johnson
Frank H. Abbott Charles B. Johnson
1045 Sansome Street 777 Mariners Island Blvd.
San Francisco, CA 94111 San Mateo, CA 94404
/s/ Harris J. Ashton /s/ Rupert H. Johnson, Jr.
Harris J. Ashton Rupert H. Johnson, Jr.
Metro Center, 1 Station Place 777 Mariners Island Blvd.
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
Park Avenue at Morris County 111 New Montgomery Street
P.O. Box 1945 San Francisco, CA 94105
/s/ Frank W. T. LaHaye /s/ Henry L. Jamieson
Frank W. T. LaHaye Henry L. Jamieson
20833 Stevens Creek Blvd. 777 Mariners Island Blvd.
/s/ Gordon S. Macklin
Gordon S. Macklin
8212 Burning Tree Road
Bethesda, MD 20817
THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS
777 Mariners Island Boulevard, San
Mateo, California 94404
CERTIFICATE OF TRUST
OF
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
a Delaware Business Trust
THIS Certificate of Trust of FRANKLIN STRATEGIC MIDCAP GROWTH
FUND ( the "Trust"), dated as of this 13th day of January, 1993 is being duly
executed and filed, in order to form a business trust pursuant to the
Delaware Business Trust Act (the "Act"), Del. Code Ann. tit. 12, Section
3801-3819.
1. NAME. The name of the business trust formed hereby is
"Franklin Strategic MIDCAP GROWTH FUND."
2. REGISTERED OFFICE AND REGISTERED AGENT. The Trust will become,
prior to the issuance of beneficial interests, a registered investment company
under the Investment Company Act of 1940, as amended. Therefore, in accordance
with section 3807(b) of the Act, the Trust has and shall maintain in the State
of Delaware a registered office and registered agent for service of process.
(a) REGISTERED OFFICE. The registered office of the Trust
in Delaware is the Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801.
(b) REGISTERED AGENT. The registered agent for service of
process on the Trust in Delaware is The Corporation Trust Company.
3. LIMITATION ON LIABILITY. Pursuant to section 3804 of the Act, in
the event that the Trust's governing instrument, as defined in section 3801(f)
of the Act, creates one or more series as provided in section 3806(b)(2) of the
Act, the debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and not against the assets
of the Trust generally.
IN WITNESS WHEREOF, the Trustees named below do hereby execute this
Certificate of Trust as of the date first-above written.
/s/ Frank H. Abbott, III /s/ Charles B. Johnson
Frank H. Abbott, III Charles B. Johnson
1045 Sansome Street 777 Mariners Island Blvd.
San Francisco, CA 94111 San Mateo, CA 94404
/s/ Harris J. Ashton /s/ Rupert H. Johnson, Jr.
Harris J. Ashton Rupert H. Johnson, Jr.
Metro Center, 1 Station Place 777 Mariners Island Blvd.
Stamford, CT 06904-2045 San Mateo, CA 94404
/s/ S. Joseph Fortunato /s/ David W. Garbellano
S. Joseph Fortunato David W. Garbellano
Park Avenue at Morris County 111 New Montgomery Street
P.O. Box 1945 No. 402
Morristown, NJ 07962-1945 San Francisco, CA 94105
/s/ Frank W. T. LaHaye /s/ Henry L. Jamieson
Frank W. T. LaHaye Henry L. Jamieson
20833 Stevens Creek Blvd. 777 Mariners Island Blvd.
Suite 102 San Mateo, CA 94404
/s/ Gordon S. Macklin
Gordon S. Macklin
8212 Burning Tree Road
Bethesda, MD 20817
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF TRUST
OF
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
The undersigned certifies that:
1. The name of the business trust is FRANKLIN STRATEGIC MIDCAP GROWTH
FUND (the "Business Trust").
2. The amendment to the Certificate of Trust of the Business Trust set
forth below has been duly authorized by the Board of Trustees of the
Business Trust.
The First Article of the Certificate of Trust is hereby amended to
read as follows:
"The name of the Business Trust is "MIDCAP GROWTH PORTFOLIO."
3. Pursuant to 12 Del. Code Section 3810(b)(1)c, this Certificate of
Amendment to the Certificate of Trust of the Business Trust shall
become effective immediately upon filing with the Office of the
Secretary of State of the State of Delaware.
4. This Amendment is made pursuant to the Fourth Article of the
Certificate of Trust which reserves to the Trustees the right to
amend, alter, change or repeal any provisions contained in the
Certificate of Trust.
IN WITNESS WHEREOF, the undersigned, being a trustee of the Business
Trust, has duly executed this Certificate of amendment this 8th day of
April 1993.
/s/ Charles B. Johnson
CERTIFICATE OF AMENDMENT
OF
AGREEMENT AND DECLARATION OF TRUST
OF
MIDCAP GROWTH PORTFOLIO
The undersigned certify that:
1. They constitute a majority of the Board of Trustees of MIDCAP GROWTH
PORTFOLIO, a Delaware business trust (the "Trust").
2. They hereby adopt the following amendment to the Agreement and
Declaration of Trust of the Trust (the "Declaration of Trust):
3. This amendment is made pursuant to Article VIII, Section 4 of the
Declaration of Trust which empowers the Trustees to restate and/or amend
such Declaration of Trust at any time by an instrument in writing signed
by a majority of the then Trustees.
IN WITNESS WHEREOF, the Trustees named below do hereby set their hands as
of the 18th day of April, 1995.
/s/ Frank H. Abbott, III /s/ Charles B. Johnson
Frank H. Abbott, III Charles B. Johnson
/s/ Harris J. Ashton /s/ Rupert H. Johnson, Jr.
Harris J. Ashton Rupert H. Johnson, Jr.
/s/ Harmon E. Burns /s/ Frank W.T. LaHaye
Harmon E. Burns Frank W.T. LaHaye
/s/ S. Joseph Fortunato /s/ Gordon S. Macklin
S. Joseph Fortunato Gordon S. Macklin
/s/ David W. Garbellano
David W. Garbellano
BY-LAWS
For the regulation, except as
otherwise provided by statute or
the Agreement and Declaration of Trust of
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
a Delaware Business Trust
TABLE OF CONTENTS
BY-LAWS
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
ARTICLE I OFFICES
1. PRINCIPAL OFFICE
2. DELAWARE OFFICE
3. OTHER OFFICES
ARTICLE II MEETINGS OF HOLDERS
1. PLACE OF MEETINGS
2. CALL OF MEETING
3. NOTICE OF HOLDERS' MEETING
4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
5. ADJOURNED MEETING; NOTICE
6. VOTING
7. WAIVER OF NOTICE BY CONSENT OF ABSENT HOLDERS
8. HOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
9. RECORD DATE FOR HOLDER NOTICE, VOTING AND GIVING CONSENTS
10. PROXIES
11. INSPECTORS OF ELECTION
ARTICLE III TRUSTEES
1. POWERS
2. NUMBER OF TRUSTEES
3. VACANCIES
4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE
5. REGULAR MEETINGS
6. SPECIAL MEETINGS
7. QUORUM
8. WAIVER OF NOTICE
9. ADJOURNMENT
10. NOTICE OF ADJOURNMENT
11. ACTION WITHOUT A MEETING
12. FEES AND COMPENSATION OF TRUSTEES
13. DELEGATION OF POWER TO OTHER TRUSTEES
ARTICLE IV COMMITTEES
1. COMMITTEES OF TRUSTEES
2. MEETINGS AND ACTION OF COMMITTEES
ARTICLE V OFFICERS
1. OFFICERS
2. ELECTION OF OFFICERS
3. SUBORDINATE OFFICERS
4. REMOVAL AND RESIGNATION OF OFFICERS
5. VACANCIES IN OFFICES
6. CHAIRMAN OF THE BOARD
7. PRESIDENT
8. VICE PRESIDENTS
9. SECRETARY
10. TREASURER
ARTICLE VI INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
1. AGENTS, PROCEEDINGS AND EXPENSES
2. ACTIONS OTHER THAN BY TRUST
3. ACTIONS BY THE TRUST
4. EXCLUSION OF INDEMNIFICATION
5. SUCCESSFUL DEFENSE BY AGENT
6. REQUIRED APPROVAL
7. ADVANCE OF EXPENSES
8. OTHER CONTRACTUAL RIGHTS
9. LIMITATIONS
10. INSURANCE
11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN
ARTICLE VII RECORDS AND REPORTS
1. MAINTENANCE AND INSPECTION OF SHARE REGISTER
2. MAINTENANCE AND INSPECTION OF BY-LAWS
3. MAINTENANCE AND INSPECTION OF OTHER RECORDS
4. INSPECTION BY TRUSTEES
5. FINANCIAL STATEMENTS
ARTICLE VIII GENERAL MATTERS
1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS
2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED
3. CERTIFICATES FOR SHARES
4. LOST CERTIFICATES
5. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST
6. FISCAL YEAR
ARTICLE IX AMENDMENTS
1. AMENDMENT BY HOLDERS
2. AMENDMENT BY TRUSTEES
3. INCORPORATION BY REFERENCE INTO AGREEMENT AND DECLARATION OF TRUST OF THE
TRUST
BY-LAWS
OF
FRANKLIN STRATEGIC MIDCAP GROWTH FUND
A Delaware Business Trust
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Trustees shall fix and,
from time to time, may change the location of the principal executive office of
Franklin Strategic MidCap Growth Fund (the "Trust") at any place within or
outside the State of Delaware.
Section 2. DELAWARE OFFICE. The Board of Trustees shall establish a
registered office in the State of Delaware and shall appoint as the Trust's
registered agent for service of process in the State of Delaware an individual
resident of the State of Delaware or a Delaware corporation or a foreign
corporation authorized to transact business in the State of Delaware; in each
case the business office of such registered agent for service of process shall
be identical with the registered Delaware office of the Trust.
Section 3. OTHER OFFICES. The Board of Trustees may at any time
establish branch or subordinate offices at any place or places where the Trust
intends to do business.
ARTICLE II
MEETINGS OF HOLDERS
Section 1. PLACE OF MEETINGS. Meetings of holders of the shares of
beneficial interest of the Trust (the "holders") shall be held at any place
designated by the Board of Trustees. In the absence of any such designation,
holders' meetings shall be held at the principal executive office of the Trust.
Section 2. CALL OF MEETING. A meeting of the holders may be called
at any time by the Board of Trustees or by the Chairman of the Board or by the
President.
Section 3. NOTICE OF HOLDERS' MEETING. All notices of meetings of
holders shall be sent or otherwise given in accordance with Section 4 of this
Article II not less than seven (7) nor more than seventy-five (75) days before
the date of the meeting. The notice shall specify (i) the place, date and hour
of the meeting, and (ii) the general nature of the business to be transacted.
The notice of any meeting at which Trustees are to be elected also shall include
the name of any nominee or nominees whom at the time of the notice are intended
to be presented for election.
If action is proposed to be taken at any meeting for approval of (i)
a contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Agreement and Declaration of Trust of the
Trust, (iii) a reorganization of the Trust, or (iv) a voluntary dissolution of
the Trust, the notice shall also state the general nature of that proposal.
Section 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of
any meeting of holders shall be given either personally or by first-class mail
or telegraphic or other written communication, charges prepaid, addressed to the
holder at the address of that holder appearing on the books of the Trust or its
transfer agent or given by the holder to the Trust for the purpose of notice. If
no such address appears on the Trust's books or is given, notice shall be deemed
to have been given if sent to that holder by first-class mail or telegraphic or
other written communication to the Trust's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where that office is located. Notice shall be deemed to have been given at the
time when delivered personally or deposited in the mail or sent by telegram or
other means of written communication.
If any notice addressed to a holder at the address of that holder
appearing on the books of the Trust is returned to the Trust by the United
States Postal Service marked to indicate that the Postal Service is unable to
deliver the notice to the holder at that address, all future notices or reports
shall be deemed to have been duly given without further mailing if these shall
be available to the holder on written demand of the holder at the principal
executive office of the Trust for a period of one year from the date of the
giving of the notice.
An affidavit of the mailing or other means of giving any notice of
any holder's meeting shall be executed by the Secretary, Assistant Secretary or
any transfer agent of the Trust giving the notice and shall be filed and
maintained in the minute book of the Trust.
Section 5. ADJOURNED MEETING; NOTICE. Any holder's meeting, whether
or not a quorum is present, may be adjourned from time to time by the vote of
the majority of the shares represented at that meeting, either in person or by
proxy.
When any meeting of the holders is adjourned to another time or
place, notice need not be given of the adjourned meeting at which the
adjournment is taken, unless a new record date of the adjourned meeting is fixed
or unless the adjournment is for more than sixty (60) days from the date set for
the original meeting, in which case the Board of Trustees shall set a new record
date. Notice of any such adjourned meeting shall be given to each holder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 3 and 4 of this Article II. At any adjourned meeting, the
Trust may transact any business which might have been transacted at the original
meeting.
Section 6. VOTING. The holders entitled to vote at any meeting of
holders shall be determined in accordance with the provisions of the Agreement
and Declaration of Trust of the Trust, as in effect at such time. The holders'
vote may be by voice vote or by ballot, provided, however, that any election for
Trustees must be by ballot if demanded by any holder before the voting has
begun. On any matter other than elections of Trustees, any holder may vote part
of the shares in favor of the proposal and refrain from voting the remaining
shares or vote them against the proposal, but if the holder fails to specify the
number of shares which the holder is voting affirmatively, it will be
conclusively presumed that the holder's approving vote is with respect to the
total shares that the holder is entitled to vote on such proposal.
Section 7. WAIVER OF NOTICE BY CONSENT OF ABSENT HOLDERS. The
transactions of the meeting of holders, however called and noticed and wherever
held, shall be as valid as though had at a meeting duly held after regular call
and notice if a quorum be present either in person or by proxy and if either
before or after the meeting, each person entitled to vote who was not present in
person or by proxy signs a written waiver of notice or a consent to a holding of
the meeting or an approval of the minutes. The waiver of notice or consent need
not specify either the business to be transacted or the purpose of any meeting
of holders.
Attendance by a person at a meeting shall also constitute a waiver
of notice of that meeting, except when the person objects at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at the beginning
of the meeting.
Section 8. HOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any
action which may be taken at any meeting of holders may be taken without a
meeting and without prior notice if a consent in writing setting forth the
action so taken is signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
that action at a meeting at which all shares entitled to vote on that action
were present and voted. All such consents shall be filed with the Secretary of
the Trust and shall be maintained in the Trust's records. Any holder giving a
written consent or the holder's proxy holders or a transferee of the shares or a
personal representative of the holder or their respective proxy holders may
revoke the consent by a writing received by the Secretary of the Trust before
written consents of the number of shares required to authorize the proposed
action have been filed with the Secretary.
If the consents of all holders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such holders
shall not have been received, the Secretary shall give prompt notice of the
action approved by the holders without a meeting. This notice shall be given in
the manner specified in Section 4 of this Article II. In the case of approval of
(i) contracts or transactions in which a Trustee has a direct or indirect
financial interest, (ii) indemnification of agents of the Trust, and (iii) a
reorganization of the Trust, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
Section 9. RECORD DATE FOR HOLDER NOTICE, VOTING AND GIVING
CONSENTS. For purposes of determining the holders entitled to notice of any
meeting or to vote or entitled to give consent to action without a meeting, the
Board of Trustees may fix in advance a record date which shall not be more than
ninety (90) days nor less than seven (7) days before the date of any such
meeting as provided in the Agreement and Declaration of Trust of the Trust.
If the Board of Trustees does not so fix a record date:
(a) The record date for determining holders entitled to notice of
or to vote at a meeting of holders shall be at the close of
business on the business day next preceding the day on which
notice is given or if notice is waived, at the close of
business on the business day next preceding the day on which
the meeting is held.
(b) The record date for determining holders entitled to give
consent to action in writing without a meeting, (i) when no
prior action by the Board of Trustees has been taken, shall be
the day on which the first written consent is given, or (ii)
when prior action of the Board of Trustees has been taken,
shall be at the close of business on the day on which the
Board of Trustees adopt the resolution relating to that action
or the seventy-fifth day before the date of such other action,
whichever is later.
Section 10. PROXIES. Every person entitled to vote for Trustees or
on any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the Secretary of the Trust. A proxy shall be deemed signed if the holder's name
is placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the holder or the holder's attorney-in-fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it
before the vote pursuant to that proxy by a writing delivered to the Trust
stating that the proxy is revoked or by a subsequent proxy executed by or
attendance at the meeting and voting in person by the person executing that
proxy; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the Trust before the vote pursuant to that proxy is
counted; provided however, that no proxy shall be valid after the expiration of
eleven (11) months from the date of the proxy unless otherwise provided in the
proxy.
Section 11. INSPECTORS OF ELECTION. Before any meeting of holders,
the Board of Trustees may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may and on
the request of any holder or a holder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3). If inspectors are appointed at a meeting on the request of one or
more holders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, the Chairman of the meeting may and on the request of
any holder or a holder's proxy shall appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the
existence of a quorum and the authenticity, validity and
effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all holders.
ARTICLE III
TRUSTEES
Section 1. POWERS. Subject to the applicable provisions of the
Agreement and Declaration of Trust of the Trust and these By-Laws relating to
action required to be approved by the holders or by the outstanding shares, the
business and affairs of the Trust shall be managed and all powers shall be
exercised by or under the direction of the Board of Trustees.
Section 2. NUMBER OF TRUSTEES. The exact number of Trustees within
the limits specified in the Agreement and Declaration of Trust of the Trust
shall be fixed from time to time by a written instrument signed or a resolution
approved at a duly constituted meeting by a majority of the Board of Trustees.
Section 3. VACANCIES. Vacancies on the Board of Trustees may be
filled by a majority of the remaining Trustees, though less than a quorum, or by
a sole remaining Trustee, unless the Board of Trustees calls a meeting of
holders for the purposes of electing Trustees. In the event that at any time
less than a majority of the Trustees holding office at that time were so elected
by the holders of the outstanding voting securities of the Trust, the Board of
Trustees shall forthwith cause to be held as promptly as possible, and in any
event within sixty (60) days, a meeting of such holders for the purpose of
electing Trustees to fill any existing vacancies on the Board of Trustees,
unless such period is extended by order of the United States Securities and
Exchange Commission.
Notwithstanding the above, whenever and for so long as the Trust is
a participant in or otherwise has in effect a Plan under which the Trust may be
deemed to bear expenses of distributing its shares as that practice is described
in Rule 12b-1 under the Investment Company Act of 1940, then the selection and
nomination of the Trustees who are not interested persons of the Trust (as that
term is defined in the Investment Company Act of 1940) shall be, and is,
committed to the discretion of such disinterested Trustees.
Section 4. PLACE OF MEETINGS AND MEETINGS BY TELEPHONE. All meetings
of the Board of Trustees may be held at any place that has been designated from
time to time by resolution of the Board. In the absence of such a designation,
regular meetings shall be held at the principal executive office of the Trust.
Any meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all Trustees participating in the meeting
can hear one another and all such Trustees shall be deemed to be present in
person at the meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Board of
Trustees shall be held without call at such time as shall from time to time be
fixed by the Board of Trustees. Such regular meetings may be held without
notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Board of
Trustees for any purpose or purposes may be called at any time by the Chairman
of the Board or the President or any Vice President or the Secretary or any two
(2) Trustees.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each Trustee or sent by first-class mail or
telegram, charges prepaid, addressed to each Trustee at that Trustee's address
as it is shown on the records of the Trust. In case the notice is mailed, it
shall be deposited in the United States mail at least seven (7) calendar days
before the time of the holding of the meeting. In case the notice is delivered
personally or by telephone or to the telegraph company or by express mail or
similar service, it shall be given at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the Trustee or to a person at the office
of the Trustee who the person giving the notice has reason to believe will
promptly communicate it to the Trustee. The notice need not specify the purpose
of the meeting or the place if the meeting is to be held at the principal
executive office of the Trust.
Section 7. QUORUM. A majority of the authorized number of Trustees
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 10 of this Article III. Every act or decision done or made
by a majority of the Trustees present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Trustees, subject to the
provisions of the Agreement and Declaration of Trust of the Trust. A meeting at
which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of Trustees if any action taken is approved by at
least a majority of the required quorum for that meeting.
Section 8. WAIVER OF NOTICE. Notice of any meeting need not be given
to any Trustee who either before or after the meeting signs a written waiver of
notice, a consent to holding the meeting, or an approval of the minutes. The
waiver of notice or consent need not specify the purpose of the meeting. All
such waivers, consents, and approvals shall be filed with the records of the
Trust or made a part of the minutes of the meeting. Notice of a meeting shall
also be deemed given to any Trustee who attends the meeting without protesting
before or at its commencement the lack of notice to that Trustee.
Section 9. ADJOURNMENT. A majority of the Trustees present, whether
or not constituting a quorum, may adjourn any meeting to another time and place.
Section 10. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given unless the meeting is adjourned
for more than forty-eight (48) hours, in which case notice of the time and place
shall be given before the time of the adjourned meeting in the manner specified
in Section 7 of this Article III to the Trustees who were present at the time of
the adjournment.
Section 11. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Trustees may be taken without a meeting if
a majority of the members of the Board of Trustees shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a majority vote of the Board of
Trustees. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board of Trustees.
Section 12. FEES AND COMPENSATION OF TRUSTEES. Trustees and members
of committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Trustees. This Section 12 shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those services.
Section 13. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may,
by power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall fewer than two (2) Trustees personally exercise the powers granted to
the Trustees under this Agreement and Declaration of Trust of the Trust except
as otherwise expressly provided herein or by resolution of the Board of
Trustees. Except where applicable law may require a Trustee to be present in
person, a Trustee represented by another Trustee pursuant to such power of
attorney shall be deemed to be present for purposes of establishing a quorum and
satisfying the required majority vote.
ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF TRUSTEES. The Board of Trustees may by
resolution adopted by a majority of the authorized number of Trustees designate
one or more committees, each consisting of two (2) or more Trustees, to serve at
the pleasure of the Board. The Board may designate one or more Trustees as
alternate members of any committee who may replace any absent member at any
meeting of the committee. Any committee to the extent provided in the resolution
of the Board, shall have the authority of the Board, except with respect to:
(a) the approval of any action which under applicable law also
requires approval of the holders or approval of the
outstanding shares, or requires approval by a majority of the
entire Board or certain members of said Board;
(b) the filling of vacancies on the Board of Trustees or in any
committee;
(c) the fixing of compensation of the Trustees for serving on the
Board of Trustees or on any committee;
(d) the amendment or repeal of the Agreement and Declaration of
Trust of the Trust or of the By-Laws or the adoption of new
By-Laws;
(e) the amendment or repeal of any resolution of the Board of
Trustees which by its express terms is not so amendable or
repealable;
(f) a distribution to the holders of the Trust, except at a rate or
in a periodic amount or within a designated range determined
by the Board of Trustees; or
(g) the appointment of any other committees of the Board of
Trustees or the members of these committees.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by and held and taken in accordance with the
provisions of Article III of these By-Laws, with such changes in the context
thereof as are necessary to substitute the committee and its members for the
Board of Trustees and its members, except that the time of regular meetings of
committees may be determined either by resolution of the Board of Trustees or by
resolution of the committee. Special meetings of committees may also be called
by resolution of the Board of Trustees. Alternate members shall be given notice
of meetings of committees and shall have the right to attend all meetings of
committees. The Board of Trustees may adopt rules for the governance of any
committee not inconsistent with the provisions of these By-Laws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the Trust shall be a President,
a Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Board of Trustees, a Chairman of the Board, one or more Vice Presidents, one or
more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the Trust, except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the Board of Trustees, and
each shall serve at the pleasure of the Board of Trustees, subject to the
rights, if any, of an officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS. The Board of Trustees may appoint
and may empower the President to appoint such other officers as the business of
the Trust may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in these ByLaws or as the
Board of Trustees may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the
rights, if any, of an officer under any contract of employment, any officer may
be removed, either with or without cause, by the Board of Trustees at any
regular or special meeting of the Board of Trustees or by the principal
executive officer or by such other officer upon whom such power of removal may
be conferred by the Board of Trustees.
Any officer may resign at any time by giving written notice to the
Trust. Any resignation shall take effect at the date of the receipt of that
notice or at any later time specified in that notice; and unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Trust under any contract to which the officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or other cause shall be filled in
the manner prescribed in these By-Laws for regular appointment to that office.
The President may make temporary appointments to a vacant office pending action
by the Board of Trustees.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such
an Officer is elected, shall if present preside at meetings of the Board of
Trustees, shall be the Chief Executive Officer of the Trust and shall, subject
to the control of the Board of Trustees, have general supervision, direction and
control of the business and the Officers of the Trust and exercise and perform
such other powers and duties as may be from time to time assigned to him by the
Board of Trustees or prescribed by the By-Laws.
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as
may be given by the Board of Trustees to the Chairman of the Board, if there be
such an officer, the President shall be the chief operating officer of the Trust
and shall, subject to the control of the Board of Trustees and the Chairman,
have general supervision, direction and control of the business and the officers
of the Trust. He shall preside at all meetings of the holders and in the absence
of the Chairman of the Board or if there be none, at all meetings of the Board
of Trustees. He shall have the general powers and duties of management usually
vested in the office of President of a corporation and shall have such other
powers and duties as may be prescribed by the Board of Trustees or these
By-Laws.
Section 8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Trustees or if not ranked, the Executive Vice President (who shall be
considered first ranked) and such other Vice Presidents as shall be designated
by the Board of Trustees, shall perform all the duties of the President and when
so acting shall have all powers of and be subject to all the restrictions upon
the President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Trustees or the President or the Chairman of the Board or by these
By-Laws.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept
at the principal executive office of the Trust or such other place as the Board
of Trustees may direct a book of minutes of all meetings and actions of
Trustees, committees of Trustees and holders with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given,
the names of those present at Trustees' meetings or committee meetings, the
number of shares present or represented at holders' meetings, and the
proceedings.
The Secretary shall keep or cause to be kept at the principal
executive office of the Trust or at the office of the Trust's transfer agent or
registrar, a share register or a duplicate share register showing the names of
all holders and their addresses, the number and classes of shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings
of the holders and of the Board of Trustees required to be given by these
By-Laws or by applicable law and shall have such other powers and perform such
other duties as may be prescribed by the Board of Trustees or by these By-Laws.
Section 10. TREASURER. The Treasurer shall be the chief financial
officer and chief accounting officer of the Trust and shall keep and maintain or
cause to be kept and maintained adequate and correct books and records of
accounts of the properties and business transactions of the Trust, including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital, retained earnings and shares. The books of account shall at all
reasonable times be open to inspection by any Trustee.
The Treasurer shall deposit all monies and other valuables in the
name and to the credit of the Trust with such depositaries as may be designated
by the Board of Trustees. He shall disburse the funds of the Trust as may be
ordered by the Board of Trustees, shall render to the President and Trustees,
whenever they request it, an account of all of his transactions as chief
financial officer and of the financial condition of the Trust and shall have
other powers and perform such other duties as may be prescribed by the Board of
Trustees or these By-Laws.
ARTICLE VI
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS AND EXPENSES. For the purpose of this
Article, "agent" means any person who is or was a Trustee, officer, employee or
other agent of this Trust or is or was serving at the request of this Trust as a
Trustee, director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise or was a
Trustee, director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor of another enterprise at the request of such
predecessor entity; "proceeding" means any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative;
and "expenses" includes without limitation attorney's fees and any expenses of
establishing a right to indemnification under this Article.
Section 2. ACTIONS OTHER THAN BY TRUST. This Trust shall indemnify
any person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of this Trust) by reason of
the fact that such person is or was an agent of this Trust, against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with such proceeding, if it is determined that person acted in
good faith and reasonably believed: (a) in the case of conduct in his official
capacity as a Trustee of the Trust, that his conduct was in the Trust's best
interests and (b) in all other cases, that his conduct was at least not opposed
to the Trust's best interests and (c) in the case of a criminal proceeding, that
he had no reasonable cause to believe the conduct of that person was unlawful.
The termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of this Trust or that the
person had reasonable cause to believe that the person's conduct was unlawful.
Section 3. ACTIONS BY THE TRUST. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action by or in the right of this Trust to
procure a judgment in its favor by reason of the fact that that person is or was
an agent of this Trust, against expenses actually and reasonably incurred by
that person in connection with the defense or settlement of that action if that
person acted in good faith, in a manner that person believed to be in the best
interests of this Trust and with such care, including reasonable inquiry, as an
ordinarily prudent person in a like position would use under similar
circumstances.
Section 4. EXCLUSION OF INDEMNIFICATION. Notwithstanding any
provision to the contrary contained herein, there shall be no right to
indemnification for any liability arising by reason of willful misfeasance, bad
faith, gross negligence, or the reckless disregard of the duties involved in the
conduct of the agent's office with this Trust.
No indemnification shall be made under Sections 2 or 3 of this
Article:
(a) In respect of any claim, issue, or matter as to which that
person shall have been adjudged to be liable on the basis that
personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(b) In respect of any claim, issue or matter as to which that
person shall have been adjudged to be liable in the
performance of that person's duty to this Trust, unless and
only to the extent that the court in which that action was
brought shall determine upon application that in view of all
the circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or
(c) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
or of expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval, unless the required approval set forth in Section 6
of this Article is obtained.
Section 5. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent
of this Trust has been successful on the merits in defense of any proceeding
referred to in Sections 2 or 3 of this Article or in defense of any claim, issue
or matter therein, before the court or other body before whom the proceeding was
brought, the agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board of
Trustees, including a majority who are disinterested, non-party Trustees, also
determines that based upon a review of the facts, the agent was not liable by
reason of the disabling conduct referred to in Section 4 of this Article.
Section 6. REQUIRED APPROVAL. Except as provided in Section 5 of
this Article, any indemnification under this Article shall be made by this Trust
only if authorized in the specific case on a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:
(a) A majority vote of a quorum consisting of Trustees who are not
parties to the proceeding and are not interested persons of
the Trust (as defined in the Investment Company Act of 1940);
or
(b) A written opinion by an independent legal counsel.
Section 7. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by this Trust before the final disposition of the
proceeding (a) receipt of a written affirmation by the Trustee of his good faith
belief that he has met the standard of conduct necessary for indemnification
under this Article and a written undertaking by or on behalf of the agent, such
undertaking being an unlimited general obligation to repay the amount of the
advance if it is ultimately determined that he has not met those requirements,
and (b) a determination that the facts then known to those making the
determination would not preclude indemnification under this Article.
Determinations and authorizations of payments under this Section must be made in
the manner specified in Section 6 of this Article for determining that the
indemnification is permissible.
Section 8. OTHER CONTRACTUAL RIGHTS. Nothing contained in this
Article shall affect any right to indemnification to which persons other than
Trustees and officers of this Trust or any subsidiary hereof may be entitled by
contract or otherwise.
Section 9. LIMITATIONS. No indemnification or advance shall be made
under this Article, except as provided in Sections 5 or 6 in any circumstances
where it appears:
(a) That it would be inconsistent with a provision of the
Agreement and Declaration of Trust of the Trust, a resolution
of the holders, or an agreement in effect at the time of
accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other
amounts were paid which prohibits or otherwise limits
indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
Section 10. INSURANCE. Upon and in the event of a determination by
the Board of Trustees of this Trust to purchase such insurance, this Trust shall
purchase and maintain insurance on behalf of any agent of this Trust against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such, but only to the extent that this Trust would
have the power to indemnify the agent against that liability under the
provisions of this Article and the Agreement and Declaration of Trust of the
Trust.
Section 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. This Article does
not apply to any proceeding against any Trustee, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. This Trust
shall keep at its principal executive office or at the office of its transfer
agent or registrar, if either be appointed and as determined by resolution of
the Board of Trustees, a record of its holders, giving the names and addresses
of all holders and the number and series of shares held by each holder.
Section 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust shall
keep at its principal executive office the original or a copy of these By-Laws
as amended to date, which shall be open to inspection by the holders at all
reasonable times during office hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The
accounting books and records and minutes of proceedings of the holders and the
Board of Trustees and any committee or committees of the Board of Trustees shall
be kept at such place or places designated by the Board of Trustees or in the
absence of such designation, at the principal executive office of the Trust. The
minutes shall be kept in written form and the accounting books and records shall
be kept either in written form or in any other form capable of being converted
into written form. The minutes and accounting books and records shall be open to
inspection upon the written demand of any holder or holder of a voting trust
certificate at any reasonable time during usual business hours for a purpose
reasonably related to the holder's interests as a holder or as the holder of a
voting trust certificate. The inspection may be made in person or by an agent or
attorney and shall include the right to copy and make extracts.
Section 4. INSPECTION BY TRUSTEES. Every Trustee shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the Trust. This
inspection by a Trustee may be made in person or by an agent or attorney and the
right of inspection includes the right to copy and make extracts of documents.
Section 5. FINANCIAL STATEMENTS. A copy of any financial statements
and any income statement of the Trust for each quarterly period of each fiscal
year and accompanying balance sheet of the Trust as of the end of each such
period that has been prepared by the Trust shall be kept on file in the
principal executive office of the Trust for at least twelve (12) months and each
such statement shall be exhibited at all reasonable times to any holder
demanding an examination of any such statement or a copy shall be mailed to any
such holder.
The quarterly income statements and balance sheets referred to in
this section shall be accompanied by the report, if any, of any independent
accountants engaged by the Trust or the certificate of an authorized officer of
the Trust that the financial statements were prepared without audit from the
books and records of the Trust.
ARTICLE VIII
GENERAL MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All checks,
drafts, or other orders for payment of money, notes or other evidences of
indebtedness issued in the name of or payable to the Trust shall be signed or
endorsed in such manner and by such person or persons as shall be designated
from time to time in accordance with the resolution of the Board of Trustees.
Section 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The Board of
Trustees, except as otherwise provided in these By-Laws, may authorize any
officer or officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the Trust and this authority may be
general or confined to specific instances; and unless so authorized or ratified
by the Board of Trustees or within the agency power of an officer, no officer,
agent, or employee shall have any power or authority to bind the Trust by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
Section 3. CERTIFICATES FOR SHARES. A certificate or certificates
for shares of beneficial interest in any series of the Trust may be issued to a
holder upon his request when such shares are fully paid. All certificates shall
be signed in the name of the Trust by the Chairman of the Board or the President
or Vice President and by the Treasurer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
series of shares owned by the holders. Any or all of the signatures on the
certificate may be facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed on a certificate
shall have ceased to be that officer, transfer agent, or registrar before that
certificate is issued, it may be issued by the Trust with the same effect as if
that person were an officer, transfer agent or registrar at the date of issue.
Notwithstanding the foregoing, the Trust may adopt and use a system of issuance,
recordation and transfer of its shares by electronic or other means.
Section 4. LOST CERTIFICATES. Except as provided in this Section 4,
no new certificates for shares shall be issued to replace an old certificate
unless the latter is surrendered to the Trust and cancelled at the same time.
The Board of Trustees may in case any share certificate or certificate for any
other security is lost, stolen, or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the Board of Trustees
may require, including a provision for indemnification of the Trust secured by a
bond or other adequate security sufficient to protect the Trust against any
claim that may be made against it, including any expense or liability on account
of the alleged loss, theft, or destruction of the certificate or the issuance of
the replacement certificate.
Section 5. REPRESENTATION OF SHARES OF OTHER ENTITIES HELD BY TRUST.
The Chairman of the Board, the President or any Vice President or any other
person authorized by resolution of the Board of Trustees or by any of the
foregoing designated officers, is authorized to vote or represent on behalf of
the Trust any and all shares of any corporation, partnership, trusts, or other
entities, foreign or domestic, standing in the name of the Trust. The authority
granted may be exercised in person or by a proxy duly executed by such
designated person.
Section 6. FISCAL YEAR. The fiscal year of the Trust shall be fixed
and refixed or changed from time to time by resolution of the Trustees. The
fiscal year of the Trust shall be the taxable year of each Series of the Trust.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY HOLDERS. These By-Laws may be amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise provided by applicable
law or by the Agreement and Declaration of Trust of the Trust or these By-Laws.
Section 2. AMENDMENT BY TRUSTEES. Subject to the right of holders as
provided in Section 1 of this Article to adopt, amend or repeal By-Laws, and
except as otherwise provided by applicable law or by the Agreement and
Declaration of Trust of the Trust, these By-Laws may be adopted, amended, or
repealed by the Board of Trustees.
Section 3. INCORPORATION BY REFERENCE INTO AGREEMENT AND DECLARATION
OF TRUST OF THE TRUST. These By-Laws and any amendments thereto shall be
incorporated by reference into the Agreement and Declaration of Trust of the
Trust.
MIDCAP GROWTH PORTFOLIO
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made between MIDCAP GROWTH PORTFOLIO, a
Delaware business trust ( the "Trust"), and TEMPLETON QUANTITATIVE ADVISORS,
INC., a Delaware corporation (the "Manager").
WHEREAS, the Trust has been organized and intends to operate as an
investment company registered under the Investment Company Act of 1940 (the
"1940 Act") for the purpose of investing and reinvesting its assets in
securities, as set forth in its Agreement and Declaration of Trust, its By-Laws
and its Registration Statements under the 1940 Act and the Securities Act of
1933, all as heretofore and hereafter amended and supplemented.
WHEREAS, the Trust desires to avail itself of the services, information,
advice, assistance and facilities of an investment manager and to have an
investment manager perform various management, statistical, research, investment
advisory and other services; and,
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, is engaged in the business of rendering
management, investment advisory, counseling and supervisory services to
investment companies and other investment counseling clients, and desires to
provide these services to the Trust;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
l. Employment of the Manager. The Trust hereby employs the Manager to
manage the investment and reinvestment of the Trust's assets and to administer
its affairs, subject to the direction of the Board of Trustees and the officers
of the Trust, for the period and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth for the compensation
herein provided. The Manager shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust.
2. Obligations of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to
assume the following obligations:
A. Investment Management Services.
(a) The Manager shall manage the Trust's assets subject to and
in accordance with the investment objectives and policies of the Trust and any
directions which the Trust's Board of Trustees may issue from time to time. In
pursuance of the foregoing, the Manager shall make all determinations with
respect to the investment of the Trust's assets and the purchase and sale of its
investment securities, and shall take such steps as may be necessary to
implement the same. Such determinations and services shall include determining
the manner in which any voting rights, rights to consent to corporate action and
any other rights pertaining to the Trust's investment securities shall be
exercised. The Manager shall render or cause to be rendered regular reports to
the Trust, at regular meetings of its Board of Trustees and at such other times
as may be reasonably requested by the Trust's Board of Trustees, of (i) the
decisions made with respect to the investment of the Trust's assets and the
purchase and sale of its investment securities, (ii) the reasons for such
decisions and (iii) the extent to which those decisions have been implemented.
(b) The Manager, subject to and in accordance with any
directions which the Trust's Board of Trustees may issue from time to time,
shall place, in the name of the Trust, orders for the execution of the Trust's
securities transactions. When placing such orders, the Manager shall seek to
obtain the best net price and execution for the Trust, but this requirement
shall not be deemed to obligate the Manager to place any order solely on the
basis of obtaining the lowest commission rate if the other standards set forth
in this section have been satisfied. The parties recognize that there are likely
to be many cases in which different brokers or dealers are equally able to
provide such best price and execution and that, in selecting among such brokers
and dealers with respect to particular trades, it is desirable to choose those
brokers or dealers who furnish research, statistical, quotations and other
information to the Trust and the Manager in accord with the standards set forth
below. Moreover, to the extent that it continues to be lawful to do so and so
long as the Board of Trustees determines that the Trust will benefit, directly
or indirectly, by doing so, the Manager may place orders with a broker who
charges a commission for that transaction which is in excess of the amount of
commission that another broker would have charged for effecting that
transaction, provided that the excess commission is reasonable in relation to
the value of "brokerage and research services" (as defined in Section 28(e) (3)
of the Securities Exchange Act of 1934) provided by that broker.
Accordingly, the Trust and the Manager agree that the Manager
shall select brokers for the execution of the Trust's transactions from among:
(i) Those brokers and dealers who provide quotations
and other services to the Trust, specifically
including the quotations necessary to determine
the Trust's net assets, in such amount of total
brokerage as may reasonably be required in light
of such services; and
(ii) Those brokers and dealers who supply research,
statistical and other data to the Manager or
its affiliates which the Manager or its
affiliates may lawfully and appropriately use
in their investment advisory capacities, which
relate directly to securities, actual or
potential, of the Trust, or which place the
Manager in a better position to make decisions
in connection with the management of the
Trust's assets and securities, whether or not
such data may also be useful to the Manager and
its affiliates in managing other portfolios or
advising other clients, in such amount of total
brokerage as may reasonably be required.
(c) It is acknowledged that the Manager may contract with one
or more firms to undertake some or all of the manager's investment management
services as set forth herein pursuant to an agreement which is subject to
substantially the same provisions as contained in paragraphs 6, 7 and 10 herein.
(d) When the Manager has determined that the Trust should
tender securities pursuant to a "tender offer solicitation," Franklin/Templeton
Distributors, Inc. ("Distributors") shall be designated as the "tendering
dealer" so long as it is legally permitted to act in such capacity under the
federal securities laws and rules thereunder and the rules of any securities
exchange or association of which Distributors may be a member. Neither the
Manager nor Distributors shall be obligated to make any additional commitments
of capital, expense or personnel beyond that already committed (other than
normal periodic fees or payments necessary to maintain its corporate existence
and membership in the National Association of Securities Dealers, Inc.) as of
the date of this Agreement. This Agreement shall not obligate the Manager or
Distributors (i) to act pursuant to the foregoing requirement under any
circumstances in which they might reasonably believe that liability might be
imposed upon them as a result of so acting, or (ii) to institute legal or other
proceedings to collect fees which may be considered to be due from others to it
as a result of such a tender, unless the Trust shall enter into an agreement
with the Manager and/or Distributors to reimburse them for all such expenses
connected with attempting to collect such fees, including legal fees and
expenses and that portion of the compensation due to their employees which is
attributable to the time involved in attempting to collect such fees.
(e) The Manager shall render regular reports to the Trust, not
more frequently than quarterly, of how much total brokerage business has been
placed by the Manager, on behalf of the Trust, with brokers falling into each of
the categories referred to above and the manner in which the allocation has been
accomplished.
(f) The Manager agrees that no investment decision will be
made or influenced by a desire to provide brokerage for allocation in accordance
with the foregoing, and that the right to make such allocation of brokerage
shall not interfere with the Manager's paramount duty to obtain the best net
price and execution for the Trust.
B. Provision of Information Necessary for Preparation of
Securities Registration Statements, Amendments and Other Materials.
The Manager, its officers and employees will make available
and provide accounting and statistical information required by the Trust in the
preparation of registration statements, reports and other documents required by
federal and state securities laws and with such information as the Trust may
reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the underwriting and distribution of the
Trust's shares.
C. Other Obligations and Services.
The Manager shall make its officers and employees available to
the Board of Trustees and officers of the Trust for consultation and discussions
regarding the management of the Trust and its investment activities.
3. Expenses of the Trust. It is understood that the Trust will pay all of
its own expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Trust shall include:
A. Fees and expenses paid to the Manager as provided herein;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, custodian, dividend
disbursing agent and shareholder record-keeping services, including the expenses
of issue, repurchase or redemption of shares;
D. Expenses of obtaining quotations for calculating the value of
the Trust's net assets;
E. Salaries and other compensations of executive officers of
the Trust who are not officers, directors, stockholders or employees of the
Manager or its affiliates;
F. Taxes levied against the Trust;
G. Brokerage fees and commissions in connection with the
purchase and sale of securities for the Trust;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of the Board of Trustees and
shareholders of the Trust, reports to the Trust's shareholders, the filing of
reports with regulatory bodies and the maintenance of the Trust's legal
existence;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
K. Trustees' fees and expenses to trustees who are not
directors, officers, employees or stockholders of the Manager or any of its
affiliates;
L. Costs and expense of registering and maintaining the
registration of the Trust and its shares under federal and any applicable
state laws; including the printing and mailing of prospectuses to their
shareholders;
M. Trade association dues; and
N. The Trust's pro rata portion of fidelity bond, errors and
omissions, and trustees and officer liability insurance premiums.
4. Compensation of the Manager. The Trust shall pay a monthly management
fee in cash to the Manager based upon a percentage of the value of the Trust's
net assets, calculated as set forth below, on the first business day of each
month in each year as compensation for the services rendered and obligations
assumed by the Manager during the preceding month. The initial management fee
under this Agreement shall be payable on the first business day of the first
month following the effective date of this Agreement, and shall be reduced by
the amount of any advance payments made by the Trust relating to the previous
month.
A. For purposes of calculating such fee, the value of the net assets
of the Trust shall be the average daily net assets during the month for which
the payment is being made, determined in the same manner as the Trust uses to
compute the value of its net assets in connection with the determination of the
daily net asset value of its shares, all as set forth more fully in the Trust's
current prospectus. The annual rate of the management fee payable by the Trust
shall be .50% of the Trust's average daily net assets.
B. The management fee payable by the Trust shall be reduced or
eliminated to the extent that Distributors has actually received cash payments
of tender offer solicitation fees less certain costs and expenses incurred in
connection therewith and to the extent necessary to comply with the limitations
on expenses which may be borne by the Trust as set forth in the laws,
regulations and administrative interpretations of those states in which the
Trust's shares are registered. The Manager may, from time to time, voluntarily
reduce or waive any management fee due to it hereunder.
C. If this Agreement is terminated prior to the end of any month,
the monthly management fee for the Trust shall be prorated for the portion of
any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the fiscal
quarter during which the Agreement is in effect bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
5. Activities of the Manager. The services of the Manager to the Trust
hereunder are not to be deemed exclusive, and the Manager and any of its
affiliates shall be free to render similar services to others. Subject to and in
accordance with the Agreement and Declaration of Trust and By-Laws of the Trust
and Section 10(a) of the 1940 Act, it is understood that trustees, officers,
agents and shareholders of the Trust are or may be interested in the Manager or
its affiliates as directors, officers, agents or stockholders; that directors,
officers, agents or stockholders of the Manager or its affiliates are or may be
interested in the Trust as trustees, officers, agents, shareholders or
otherwise; that the Manager or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Agreement and Declaration of Trust, By-Laws and the 1940 Act.
6. Liabilities of the Manager.
A. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Manager, the Manager shall not be subject to liability to the Trust or to
any shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Trust.
B. Notwithstanding the foregoing, the Manager agrees to reimburse
the Trust for any and all costs, expenses, and counsel and trustees' fees
reasonably incurred by the Trust in the preparation, printing and distribution
of proxy statements, amendments to its Registration Statement, holdings of
meetings of its shareholders or trustees, the conduct of factual investigations,
any legal or administrative proceedings (including any applications for
exemptions or determinations by the Securities and Exchange Commission) which
the Trust incurs as the result of action or inaction of the Manager or any of
its affiliates or any of their officers, directors, employees or stockholders
where the action or inaction necessitating such expenditures (i) is directly or
indirectly related to any transaction or proposed transaction in the stock or
control of the Manager or its affiliates (or litigation related to any pending
or proposed or future transaction in such shares or control) which shall have
been undertaken without the prior, express approval of the Trust's Board of
Trustees; or, (ii) is within the control of the Manager or any of its affiliates
or any of their officers, directors, employees or stockholders. The Manager
shall not be obligated pursuant to the provisions of this Subparagraph 6(B), to
reimburse the Trust for any expenditures related to the institution of an
administrative proceeding or civil litigation by the Trust or a shareholder
seeking to recover all or a portion of the proceeds derived by any stockholder
of the Manager or any of its affiliates from the sale of the stockholder's
shares of the Manager, or similar matters. So long as this Agreement is in
effect, the Manager shall pay to the Trust the amount due for expenses subject
to this Subparagraph 6(B) within 30 days after a bill or statement has been
received by the Manager therefor. This provision shall not be deemed to be a
waiver of any claim the Trust may have or may assert against the Manager or
others for costs, expenses or damages heretofore incurred by the Trust or for
costs, expenses or damages the Trust may hereafter incur which are not
reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect any
trustee or officer of the Trust, or director or officer of the Manager, from
liability in violation of Sections 17(h) and (i) of the 1940 Act.
7. Renewal and Termination.
A. This Agreement shall become effective on the date written below
and shall continue in effect for two (2) years. The Agreement is renewable
annually thereafter, for successive periods not to exceed one (1) year, (i) by a
vote of a majority of the outstanding voting securities of the Trust or by a
vote of the Board of Trustees of the Trust, and (ii) by a vote of a majority of
the Trustees of the Trust who are not parties to the Agreement or interested
persons of any parties to the Agreement (other than as Trustees of the Trust),
cast in person at a meeting called for the purpose of voting on the Agreement.
B. This Agreement:
(i) may at any time be terminated without the payment of any
penalty either by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust on 60 days' written
notice to the Manager;
(ii) shall immediately terminate in the event of its
assignment; and
(iii) may be terminated by the Manager on 60 days' written
notice to the Trust.
C. As used in this Paragraph the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities" shall have
the meanings set forth for any such terms in the 1940 Act.
D. Any notice under this Agreement shall be given in writing
addressed and delivered, or mailed post-paid, to the other party at any office
of such party.
8. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
9. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and effective on the 16th day of August 1994.
MIDCAP GROWTH PORTFOLIO
By: /s/ Harmon E. Burns
Title Vice President
TEMPLETON QUANTITATIVE ADVISORS, INC.
By: /s/ Robert E. Butman
Title President
CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT ("Agreement") is made and entered into as of
April 13, 1993, by and between MIDCAP GROWTH PORTFOLIO, a Delaware business
trust (the "Trust"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
a banking association organized under the laws of the United States (the
"Custodian").
RECITALS
A. The Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act") that
invests and reinvests, on behalf of its series, in Domestic Securities and
Foreign Securities.
B. The Custodian is, and has represented to the Trust that the
Custodian is, a "bank" as that term is defined in Section 2(a)(5) of the
Investment Company Act of 1940, as amended and is eligible to receive and
maintain custody of investment company assets pursuant to Section 17(f) and Rule
17f-2 thereunder.
C. The Trust and the Custodian desire to provide for the retention
of the Custodian as a custodian of the assets of the Trust's current series and
such subsequent series as the parties hereto may determine from time-to-time, on
the terms and subject to the provisions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
Section 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings specified below:
"Agreement" shall mean this Custody Agreement.
"Board of Trustees" shall mean the Board of Trustees of the Trust.
"Business Day" with respect to any Domestic Security means any day,
other than a Saturday or Sunday, that is not a day on which banking institutions
are authorized or required by law to be closed in The City of New York and, with
respect to Foreign Securities, a London Business Day. "London Business Day"
shall mean any day on which dealings and deposits in U.S. dollars are transacted
in the London interbank market.
"Custodian" shall mean Bank of America National Trust and Savings
Association.
"Domestic Securities" shall have the meaning provided in
Subsection 2.1 hereof.
"Executive Committee" shall mean the executive committee of the
Board of Trustees.
"Foreign Custodian" shall have the meaning provided in Section
4.1 hereof.
"Foreign Securities" shall have the meaning provided in Section
2.1 hereof.
"Foreign Securities Depository" shall have the meaning provided in
Section 4.1 hereof.
"Trust" shall mean the Money Market Portfolios and any separate
series of the Trust hereinafter organized.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Securities" shall have the meaning provided in Section 2.1
hereof.
"Securities System" shall have the meaning provided in Section
3.1 hereof.
"Securities System Account" shall have the meaning provided in
Subsection 3.8(a) hereto.
"Shares" shall mean shares of beneficial interest of the Trust.
"Subcustodian" shall have the meaning provided in Subsection 3.7
hereof, but shall not include any Foreign Custodian.
"Transfer Agent" shall mean the duly appointed and acting transfer
agent for the Trust.
"Writing" shall mean a communication in writing, a communication by
telex, the Custodian's Global Custody Instruction System (trademark), facsimile
transmission bankwire or other teleprocess or electronic instruction system
acceptable to the Custodian.
Section 2. APPOINTMENT OF CUSTODIAN; DELIVERY OF ASSETS
2.1 Appointment of Custodian. The Trust hereby appoints and
designates the Custodian as a custodian of the assets of the Trust including
cash, securities the Trust desires to be held within the United States
("Domestic Securities") and securities it desires to be held outside the United
States ("Foreign Securities"). Domestic Securities and Foreign Securities are
sometimes referred to herein, collectively, as "Securities." The Custodian
hereby accepts such appointment and designation and agrees that it shall
maintain custody of the assets of the Trust delivered to it hereunder in the
manner provided for herein.
2.2 Delivery of Assets. The Trust agrees to deliver to the Custodian
Securities and cash owned by the Trust, payments of income, principal or capital
distributions received by the Trust with respect to Securities owned by the
Trust from time to time, and the consideration received by it for such Shares or
other securities of the Trust as may be issued and sold from time to time. The
Custodian shall have no responsibility whatsoever for any property or assets of
the Trust held or received by the Trust and not delivered to the Custodian
pursuant to and in accordance with the terms hereof. All Securities accepted by
the Custodian on behalf of the Trust under the terms of this Agreement shall be
in "street name" or other good delivery form as determined by the Custodian.
2.3 Subcustodians. Upon receipt of Proper Instructions and a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee certified by the Secretary or an Assistant Secretary of the Trust, the
Custodian may from time to time appoint one or more Subcustodians or Foreign
Custodians to hold assets of the Trust in accordance with the provisions of this
Agreement.
2.4 No Duty to Manage. The Custodian, a Subcustodian or a Foreign
Custodian shall not have any duty or responsibility to manage or recommend
investments of the assets of the Trust held by them or to initiate any purchase,
sale or other investment transaction in the absence of Proper Instructions or
except as otherwise specifically provided herein.
Section 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS
OF THE TRUST HELD BY THE CUSTODIAN
3.1 Holding Securities. The Custodian shall hold and physically
segregate from any property owned by the Custodian, for the account of the
Trust, all non-cash property delivered by the Trust to the Custodian hereunder
other than Securities which, pursuant to Subsection 3.8 hereof, are held through
a registered clearing agency, a registered securities depository, the Federal
Reserve's book-entry securities system (referred to herein, individually, as a
"Securities System."), or held by a Subcustodian, Foreign Custodian or in a
Foreign Securities Depository.
3.2 Delivery of Securities. Except as otherwise provided in
Subsection 3.5 hereof, the Custodian, upon receipt of Proper Instructions, shall
release and deliver Securities owned by the Trust and held by the Custodian in
the following cases or as otherwise directed in Proper Instructions:
(a) except as otherwise provided herein, upon sale of such
Securities for the account of the Trust and receipt by the Custodian, a
Subcustodian or a Foreign Custodian of payment therefor;
(b) upon the receipt of payment by the Custodian, a
Subcustodian or a Foreign Custodian in connection with any repurchase agreement
related to such Securities entered into by the Trust;
(c) in the case of a sale effected through a Securities
System, in accordance with the provisions of Subsection 3.8 hereof;
(d) to a tender agent or other authorized agent in connection
with (i) a tender or other similar offer for Securities owned by the Trust, or
(ii) a tender offer or repurchase by the Trust of its own Shares;
(e) to the issuer thereof or its agent when such Securities
are called, redeemed, retired or otherwise become payable; provided, that in any
such case, the cash or other consideration is to be delivered to the Custodian,
a Subcustodian or a Foreign Custodian;
(f) to the issuer thereof, or its agent, for transfer into the
name or nominee name of the Trust, the name or nominee name of the Custodian,
the name or nominee name of any Subcustodian or Foreign Custodian; or for
exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new Securities are to be delivered to the Custodian, a
Subcustodian or Foreign Custodian;
(g) to the broker selling the same for examination in
accordance with the "street delivery" custom;
(h) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, or reorganization of the issuer of such
Securities, or pursuant to a conversion of such Securities; provided that, in
any such case, the new Securities and cash, if any, are to be delivered to the
Custodian or a Subcustodian;
(i) in the case of warrants, rights or similar securities, the
surrender thereof in connection with the exercise of such warrants, rights or
similar Securities or the surrender of interim receipts or temporary Securities
for definitive Securities; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian, a subcustodian or a
Foreign Custodian;
(j) for delivery in connection with any loans of Securities
made by the Trust, but only against receipt by the Custodian, a Subcustodian or
a Foreign Custodian of adequate collateral as determined by the Trust (and
identified in Proper Instructions communicated to the Custodian), which may be
in the form of cash or obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with any loans for
which collateral is to be credited to the account of the Custodian, a
Subcustodian or a Foreign Custodian in the Federal Reserve's book-entry
securities system, the Custodian will not be held liable or responsible for the
delivery of Securities owned by the Trust prior to the receipt of such
collateral;
(k) for delivery as security in connection with any borrowings
by the Trust requiring a pledge of assets by the Trust, but only against receipt
by the Custodian, a Subcustodian or a Foreign Custodian of amounts borrowed;
(1) for delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, a Subcustodian or a Foreign Custodian
and a broker-dealer relating to compliance with the rules of registered clearing
corporations and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Trust;
(m) for delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, a Subcustodian or a Foreign Custodian
and a futures commission merchant, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market, or any similar
organization or organizations, regarding account deposits in connection with
transactions by the Trust;
(n) upon the receipt of instructions from the Transfer Agent
for delivery to the Transfer Agent or to the holders of Shares in connection
with distributions in kind in satisfaction of requests by holders of Shares for
repurchase or redemption; and
(o) for any other proper purpose, but only upon receipt of
Proper Instructions, and a certified copy of a resolution of the Trustees or of
the Executive Committee certified by the Secretary or an Assistant Secretary of
the Trust, specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
3.3 Registration of Securities. securities held by the Custodian, a
Subcustodian or a Foreign Custodian (other than bearer Securities) shall be
registered in the name or nominee name of the Trust, in the name or nominee name
of the Custodian or in the name or nominee name of any Subcustodian or Foreign
Custodian. The Trust agrees to hold the Custodian, any such nominee,
Subcustodian or Foreign Custodian harmless from any liability as a holder of
record of such Securities.
3.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts for the Trust, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement, and shall hold in such
account or accounts, subject to the provisions hereof, all cash received by it
hereunder from or for the account of the Trust, other than cash maintained by
the Trust in a bank account established and used in accordance with Rule 17f-3
under the Investment Company Act. Funds held by the Custodian for the Trust may
be deposited by it to its credit as Custodian in the banking departments of the
Custodian, a Subcustodian or a Foreign Custodian. It is understood and agreed by
the Custodian and the Trust that the rate of interest, if any, payable on such
funds (including foreign currency deposits) that are deposited with the
Custodian may not be a market rate of interest and that the rate of interest
payable by the Custodian to the Trust shall be agreed upon by the Custodian and
the Trust from time to time. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian only in
that capacity.
3.5 Collection of Income; Trade Settlement; Crediting of Accounts.
The Custodian shall collect income payable with respect to Securities owned by
the Trust, settle Securities trades for the account of the Trust and credit and
debit the Trust's account with the Custodian in connection therewith as follows:
(a) Upon receipt of Proper Instructions, the Custodian shall
effect the purchase of a Security by charging the account of the Trust on the
contractual settlement date. The Custodian shall have no liability of any kind
to any person, including the. Trust, if the Custodian effects payment on behalf
of the Trust as provided for herein or in Proper Instructions, and the seller or
selling broker fails to deliver the Securities purchased.
(b) Upon receipt of Proper Instructions, the Custodian shall
effect the sale of a Security by delivering a certificate or other indicia of
ownership, and shall credit the account of the Trust with the proceeds of such
sale on the contractual settlement date. The Custodian shall have no liability
of any kind to any person, including the Trust, if the Custodian delivers such a
certificate(s) or other indicia of ownership as provided for herein or in Proper
Instructions, and the purchaser or purchasing broker fails to effect payment to
the Trust within a reasonable time period, as determined by the Custodian in its
sole discretion. In such event, the Custodian shall be entitled to reimbursement
of the amount so credited to the account of the Trust in connection with such
sale.
(c) The Trust is responsible for ensuring that the Custodian
receives timely and accurate Proper Instructions to enable the Custodian to
effect settlement of any purchase or sale. If the Custodian does not receive
such instructions within the required time period, the Custodian shall have no
liability of any kind to any person, including the Trust, for failing to effect
settlement on the contractual settlement date. However, the Custodian shall use
its best reasonable efforts to effect settlement as soon as possible after
receipt of Proper Instructions.
(d) The Custodian shall credit the account of the Trust with
interest income payable on interest bearing Securities on payable date. Interest
income on cash balances will be credited monthly to the account of the Trust on
the first Business Day (on which the Custodian is open for business) following
the end of each month. Dividends and other amounts payable with respect to
Domestic Securities and Foreign Securities shall be credited to the account of
the Trust when received by the Custodian. The Custodian shall not be required to
commence suit or collection proceedings or resort to any extraordinary means to
collect such income and other amounts payable with respect to Securities owned
by the Trust. The collection of income due the Trust on Domestic Securities
loaned pursuant to the provisions of Subsection 3.2(j) shall be the
responsibility of the Trust. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Trust with such information
or data as may be necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income to which the Trust is entitled. The
Custodian shall have no liability to any person, including the Trust, if the
Custodian credits the account of the Trust with such income or other amounts
payable with respect to Securities owned by the Trust (other than Securities
loaned by the Trust pursuant to Subsection 3.2(j) hereof) and the Custodian
subsequently is unable to collect such income or other amounts from the payors
thereof within a reasonable time period, as determined by the Custodian in its
sole discretion. In such event, the Custodian shall be entitled to reimbursement
of the amount so credited to the account of the Trust.
3.6 Payment of Trust Monies. Upon receipt of Proper Instructions
the Custodian shall pay out monies of the Trust in the following cases or as
otherwise directed in Proper Instructions:
(a) upon the purchase of Securities, futures contracts or
options on futures contracts for the account of the Trust but only, except as
otherwise provided herein, (i) against the delivery of such securities, or
evidence of title to futures contracts or options on futures contracts, to the
Custodian or a Subcustodian registered pursuant to Subsection 3.3 hereof or in
proper form for transfer; (ii) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in Subsection 3.8
hereof; or (iii) in the case of repurchase agreements entered into between the
Trust and the Custodian, another bank or a broker-dealer (A) against delivery of
the Securities either in certificated form to the Custodian or a Subcustodian or
through an entry crediting the Custodian's account at the appropriate Federal
Reserve Bank with such Securities or (B) against delivery of the confirmation
evidencing purchase by the Trust of Securities owned by the Custodian or such
broker-dealer or other bank along with written evidence of the agreement by the
Custodian or such broker-dealer or other bank to repurchase such Securities from
the Trust;
(b) in connection with conversion, exchange or surrender of
Securities owned by the Trust as set forth in Subsection 3.2 hereof;
(c) for the redemption or repurchase of Shares issued by
the Trust;
(d) for the payment of any expense or liability incurred by
the Trust, including but not limited to the following payments for the account
of the Trust: custodian fees, interest, taxes, management, accounting, transfer
agent and legal fees and operating expenses of the Trust whether or not such
expenses are to be in whole or part capitalized or treated as deferred expenses;
and
(e) for the payment of any dividends or distributions
declared by the Board of Trustees with respect to the Shares.
3.7 Appointment of Subcustodians. The Custodian may, upon receipt of
Proper Instructions, appoint another bank or trust company, which is itself
qualified under the Investment Company Act to act as a custodian (a
"Subcustodian"), as the agent of the Custodian to carry out such of the duties
of the Custodian hereunder as a Custodian may from time to time direct;
provided, however, that the appointment of any Subcustodian shall not relieve
the Custodian of its responsibilities or liabilities hereunder.
3.8 Deposit of Securities in Securities Systems. The Custodian may
deposit and/or maintain Domestic Securities owned by the Trust in a Securities
System in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the following
provisions:
(a) the Custodian may hold Domestic Securities of the Trust in
the Depository Trust Company or the Federal Reserve's book entry system or, upon
receipt of Proper Instructions, in another Securities System provided that such
securities are held in an account of the Custodian in the Securities System
("Securities System Account") which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
(b) the records of the Custodian with respect to Domestic
Securities of the Trust which are maintained in a Securities System shall
identify by book-entry those Domestic Securities belonging to the Trust;
(c) the Custodian shall pay for Domestic Securities purchased
for the account of the Trust upon, (i) receipt of advice from the Securities
System that such securities have been transferred to the Securities System
Account, and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Trust. The Custodian
shall transfer Domestic Securities sold for the account of the Trust upon (A)
receipt of advice from the Securities System that payment for such securities
has been transferred to the Securities System Account, and (B) the making of an
entry on the records of the Custodian to reflect such transfer and payment for
the account of the Trust. Copies of all advices from the Securities System of
transfers of Domestic Securities for the account of the Trust shall be
maintained for the Trust by the Custodian and be provided to the Trust at its
request. Upon request, the Custodian shall furnish the Trust confirmation of
each transfer to or from the account of the Trust in the form of a written
advice or notice; and
(d) upon request, the Custodian shall provide the Trust with
any report obtained by the Custodian on the Securities System's accounting
system, internal accounting control and procedures for safeguarding domestic
securities deposited in the Securities System.
3.9 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for and on
behalf of the Trust, into which account or accounts may be transferred cash
and/or Securities, including Securities maintained in an account by the
Custodian pursuant to Section 3.8 hereof, (i) in accordance with the provisions
of any agreement among the Trust, the Custodian and a broker-dealer or futures
commission merchant, relating to compliance with the rules of registered
clearing corporations and of any national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Trust, (ii) for purposes of segregating cash
or securities in connection with options purchased, sold or written by the Trust
or commodity futures contracts or options thereon purchased or sold by the Trust
and (iii) for other proper corporate purposes, but only, in the case of this
clause (iii), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board of Trustees or of the Executive Committee
certified by the Secretary or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring such purposes to be proper
corporate purposes.
3.10 ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Trust held by it and in connection with
transfers of such securities.
3.11 Proxies. The Custodian shall, with respect to the Securities
held hereunder, promptly deliver to the Trust all proxies, all proxy soliciting
materials and all notices relating to such Securities. If the Securities are
registered otherwise than in the name of the Trust or a nominee of the Trust,
the Custodian shall use its best reasonable efforts, consistent with applicable
law, to cause all proxies to be promptly executed by the registered holder of
such Securities in accordance with Proper Instructions.
3.12 Communications Relating to Trust Portfolio Securities. The
Custodian shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of Securities
and expirations of rights in connection therewith and notices of exercise of put
and call options written by the Trust and the maturity of futures contracts
purchased or sold by the Trust) received by the Custodian from issuers of
Securities being held for the Trust. With respect to tender or exchange offers,
the Custodian shall transmit promptly to the Trust all written information
received by the Custodian from issuers of the Securities whose tender or
exchange is sought and from the party (or its agents) making the tender or
exchange offer. If the Trust desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the Trust shall notify
the Custodian at least three Business Days prior to the date of which the
Custodian is to take such action.
3.13 Reports by Custodian. Custodian shall each business day furnish
the Trust with a statement summarizing all transactions and entries for the
account of the Fund for the preceding day. At the end of every month Custodian
shall furnish the Trust with a list of the portfolio securities showing the
quantity of each issue owned, the cost of each issue and the market value of
each issue at the end of each month. Such monthly report shall also contain
separate listings of (a) unsettled trades and (b) when-issued securities.
Custodian shall furnish such other reports as may be mutually agreed upon from
time-to-time.
Section 4. CERTAIN DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE
TRUST HELD OUTSIDE THE-UNITED STATES
4.1 Custody outside the United States. The Trust authorizes the
Custodian to hold Foreign Securities and cash in custody accounts which have
been established by the Custodian with (i) its foreign branches, (ii) foreign
banking institutions, foreign branches of United States banks and subsidiaries
of United States banks or bank holding companies (each a "Foreign Custodian")
and (iii) Foreign Securities depositories or clearing agencies (each a "Foreign
Securities Depository"); provided, however, that the Board of Trustees or the
Executive Committee has approved in advance the use of each such Foreign
Custodian and Foreign Securities Depository and the contract between the
Custodian and each Foreign Custodian and that such approval is set forth in
Proper Instructions and a certified copy of a resolution of the Board of
Trustees or of the Executive Committee certified by the Secretary or an
Assistant Secretary of the Trust. Unless expressly provided to the contrary in
this Section 4, custody of Foreign Securities and assets held outside the United
States by the Custodian, a Foreign Custodian or through a Foreign Securities
Depository shall be governed by Section 3 hereof.
4.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of its foreign branches, Foreign
Custodians and Foreign Securities Depositories to: (i) "foreign securities", as
defined in paragraph (c) (1) of Rule 17f-5 under the Investment Company Act, and
(ii) cash and cash equivalents in such amounts as the Custodian or the Trust may
determine to be reasonably necessary to effect the Trust's Foreign Securities
transactions.
4.3 Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Trust, assets of the Trust shall
be maintained in Foreign Securities Depositories only through arrangements
implemented by the Custodian or Foreign Custodians pursuant to the terms hereof.
4.4 Segregation of Securities. The Custodian shall identify on its
books and records as belonging to the Trust, the Foreign Securities of the Trust
held by each Foreign Custodian.
4.5 Agreements with Foreign Custodians. Each agreement with a
Foreign Custodian shall provide generally that: (a) the Trust's assets will not
be subject to any right, charge, security interest, lien or claim of any kind in
favor of the Foreign Custodian or its creditors, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the Trust's
assets will be freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to the Trust; (d) the independent public
accountants for the Trust, will be given access to the records of the Foreign
Custodian relating to the assets of the Trust or confirmation of the contents of
those records; (e) the disposition of assets of the Trust held by the Foreign
Custodian will be subject only to the instructions of the Custodian or its
agents; (f) the Foreign Custodian shall indemnify and hold harmless the
Custodian and the Trust from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the Foreign Custodian's
performance of its obligations under such agreement; (g) to the extent
practicable, the Trust's assets will be adequately insured in the event of loss;
and (h) the Custodian will receive periodic reports with respect to the
safekeeping of the Trust's assets, including notification of any transfer to or
from the Trust's account.
4.6 Access of Independent Accountants of the Trust. Upon request of
the Trust, the Custodian will use its best reasonable efforts to arrange for the
independent accountants of the Trust to be afforded access to the books and
records of any Foreign Custodian insofar as such books and records relate to the
custody by any such Foreign Custodian of assets of the Trust.
4.7 Transactions in Foreign Custody Accounts. Upon receipt of Proper
Instructions, the Custodian shall instruct the appropriate Foreign Custodian to
transfer, exchange or deliver Foreign Securities owned by the Trust, but, except
to the extent explicitly provided herein, only in any of the cases specified in
Subsection 3.2. Upon receipt of Proper Instructions, the Custodian shall pay out
or instruct the appropriate Foreign Custodian to pay out monies of the Trust in
any of the cases specified in Subsection 3.6. Notwithstanding anything herein to
the contrary, settlement and payment for Foreign Securities received for the
account of the Trust and delivery of Foreign Securities maintained for the
account of the Trust may be effected in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer. Foreign Securities maintained in the custody of a Foreign
Custodian may be maintained in the name of such entity or its nominee name to
the same extent as set forth in Section 3.3 of this Agreement and the Trust
agrees to hold any Foreign Custodian and its nominee harmless from any liability
as a holder of record of such securities.
4.8 Liability of Foreign Custodian. Each agreement between the
Custodian and a Foreign Custodian shall require the Foreign Custodian to
exercise reasonable care in the performance of its duties and to indemnify and
hold harmless the Custodian and the Trust from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
Foreign Custodian's performance of such obligations. At the election of the
Trust, it shall be entitled to be subrogated to the rights of the Custodian with
respect to any claims against a Foreign Custodian as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent that the
Trust has not been made whole for any such loss, damage, cost, expense,
liability or claim.
4.9 Monitoring Responsibilities.
(a) The Custodian will promptly inform the Trust in the event
that the Custodian learns of a material adverse change in the financial
condition of a Foreign Custodian or is notified by (i) a foreign banking
institution employed as a Foreign Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million or that its shareholders' equity has declined below $200 million (in
each case computed in accordance with generally accepted United States
accounting principles) and denominated in U.S. dollars, or (ii) a subsidiary of
a United States bank or bank holding company acting as a Foreign Custodian that
there appears to be a substantial likelihood that its shareholders' equity will
decline below $100 million or that its shareholders' equity has declined below
$100 million (in each case computed in accordance with generally accepted United
States accounting principles) and denominated in U.S. dollars.
(b) The custodian will furnish such information as may be
reasonably necessary to assist the Trust's Board of Trustees in its annual
review and approval of the continuance of all contracts or arrangements with
Foreign Subcustodians.
Section 5. PROPER INSTRUCTIONS
As used in this Agreement, the term "Proper Instructions" means
instructions of the Trust received by the Custodian via telephone or in Writing
which the Custodian believes in good faith to have been given by Authorized
Persons (as defined below) or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Custodian may specify.
Any Proper Instructions delivered to the Custodian by telephone shall promptly
thereafter be confirmed in Writing by an Authorized Person, but the Trust will
hold the Custodian harmless for its failure to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or the Custodian's failure to produce such confirmation at
any subsequent time. Unless otherwise expressly provided, all Proper
Instructions shall continue in full force and effect until cancelled or
superseded. If the Custodian requires test arrangements, authentication methods
or other security devices to be used with respect to Proper Instructions, any
- -Proper Instructions given by the Trust thereafter shall be given and processed
in accordance with such terms and conditions for the use of such arrangements,
methods or devices as the Custodian may put into effect and modify from time to
time. The Trust shall safeguard any testkeys, identification codes or other
security devices which the Custodian shall make available to it. The Custodian
may electronically record any Proper Instructions given by telephone, and any
other telephone discussions, with respect to its activities hereunder. As used
in this Agreement, the term "Authorized Persons" means such officers or such
agents of the Trust as have been designated by a resolution of the Board of
trustees or of the Executive Committee, a certified copy of which has been
provided to the Custodian, to act on behalf of the Trust under this Agreement.
Each of such persons shall continue to be an Authorized Person until such time
as the Custodian receives Proper Instructions that any such officer or agent is
no longer an Authorized Person.
Section 6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Trust:
(a) make payments to itself or others for minor expenses of
handling Securities or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to the Trust;
(b) endorse for collection, in the name of the Trust,
checks, drafts and other negotiable instruments; and
(c) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and other
dealings with the Securities and property of the Trust except as otherwise
provided in Proper Instructions.
Section 7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions
(conveyed by telephone or in Writing), notice, request, consent, certificate or
other instrument or paper believed by it to be genuine and to have been properly
given or executed by or on behalf of the Trust. The Custodian may receive and
accept a certified copy of a resolution of the Board of Trustees or Executive
Committee as conclusive evidence (a) of the authority of any person to act in
accordance with such resolution or (b) of any determination or of any action by
the Board of Trustees or Executive Committee as described in such resolution,
and such resolution may be considered as in full force and effect. until receipt
by the Custodian of written notice by an Authorized Person to the contrary.
Section 8. DUTY OF CUSTODIAN TO SUPPLY INFORMATION
The Custodian shall cooperate with and supply necessary information
in its possession (to the extent permissible under applicable law) to the entity
or entities appointed by the Board of Trustees to keep the books of account of
the Trust and/or compute the net asset value per Share of the outstanding Shares
of the Trust.
Section 9. RECORDS
The Custodian shall create and maintain all records relating to its
activities under this Agreement which are required with respect to such
activities under Section 31 of the Investment Company Act and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Trust and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Trust and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Trust's request, supply the Trust with a tabulation of Securities
owned by the Trust and held by the Custodian and shall, when requested to do so
by the Trust and for such compensation as shall be agreed upon between the Trust
and the Custodian, include certificate numbers in such tabulations.
Section 10. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust and the Custodian.
Section 11. RESPONSIBILITY OF CUSTODIAN
The Custodian shall be responsible for the performance of only such
duties as are set forth herein or contained in Proper Instructions and shall use
reasonable care in carrying out such duties. The Custodian shall be liable to
the Trust for any loss which shall occur as the result of the failure of a
Foreign Custodian or a Foreign Securities Depository engaged by such Foreign
Custodian or the Custodian to exercise reasonable care with respect to the
safekeeping of securities and other assets of the Trust to the same extent that
the Custodian would be liable to the Trust if the Custodian itself were holding
such securities and other assets. In the event of any loss to the Trust by
reason of the failure of the Custodian, a Foreign Custodian or a Foreign
Securities Depository engaged by such Foreign Custodian or the Custodian to
utilize reasonable care, the Custodian shall be-liable to the Trust to the
extent of the Trust's damages, to be determined based on the market value of the
property which is the subject of the loss at the date of discovery of such loss
and without reference to any special conditions or circumstances. The Custodian
shall be held to the exercise of reasonable care in carrying out this Agreement.
The Trust agrees to indemnify and hold harmless the Custodian and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including legal fees and expenses) incurred by any of them in connection with
the performance of this Agreement, except such as may arise from any negligent
action, negligent failure to act or willful misconduct on the part of the
indemnified entity or any Foreign Custodian or Foreign Securities Depository.
The Custodian shall be entitled to rely, and may act, on advice of counsel (who
may be counsel for the Trust) on all matters and shall be without liability for
any action reasonably taken or omitted pursuant to such advice. The Custodian
need not maintain any insurance for the benefit of the Trust.
All collections of funds or other property paid or distributed in
respect of Securities held by the Custodian, agent, Subcustodian or Foreign
Custodian hereunder shall be made at the risk of the Trust. The Custodian shall
have no liability for any loss occasioned by delay in the actual receipt of
notice by the Custodian, agent, Subcustodian or by a Foreign Custodian of any
payment, redemption or other transaction regarding securities in respect of
which the Custodian has agreed to take action as provided in Section 3 hereof.
The Custodian shall not be liable for any action taken in good faith upon Proper
Instructions or upon any certified copy of any resolution of the Board of
Trustees and may rely on the genuineness of any such documents which it may in
good faith believe to be validly executed. The Custodian shall not be liable for
any loss resulting from, or caused by, the direction of the Trust to maintain
custody of any Securities or cash in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, civil disturbance, acts of war or terrorism, insurrection,
revolution, nuclear fusion, fission or radiation or other similar occurrences or
events beyond the control of the Custodian. Finally, the Custodian shall not be
liable for any taxes, including interest and penalties with respect thereto,
that may be levied or assessed upon or in respect of any assets of the Trust
held by the Custodian.
Section 12. LIMITED LIABILITY OF THE TRUST
The Custodian acknowledges that it has received notice of and
accepts the limitations of the Trust's liability as set forth in its Agreement
and Declaration of Trust. The Custodian agrees that the Trust's obligation
hereunder shall be limited to the assets of the Trust, and that the Custodian
shall not seek satisfaction of any such obligation from the shareholders of the
Trust nor from any Trustee, officer, employee, or agent of the Trust.
Section 13. EFFECTIVE PERIOD; TERMINATION
This Agreement shall become effective as of the date of its
execution and shall continue in full force and effect until terminated as
hereinafter provided. This Agreement may be terminated by-the Trust or the
Custodian by 60 days notice in Writing to the other provided that any
termination by the Trust shall be authorized by a resolution of the Board of
Trustees, a certified copy of which shall accompany such notice of termination,
and provided further, that such resolution shall specify the names of the
persons to whom the Custodian shall deliver the assets of the Trust held by it.
If notice of termination is given by the Custodian, the Trust shall, within 60
days following the giving of such notice, deliver to the Custodian a certified
copy of a resolution of the Board of Trustees specifying the names of the
persons to whom the Custodian shall deliver assets of the Trust held by it. In
either case the Custodian will deliver such assets to the persons so specified,
after deducting therefrom any amounts which the Custodian determines to be owed
to it hereunder (including all costs and expenses of delivery or transfer of
Trust assets to the persons so specified). If within 60 days following the
giving of a notice of termination by the Custodian, the Custodian does not
receive from the Trust a certified copy of a resolution of the Board of Trustees
specifying the names of the persons to whom the Custodian shall deliver the
assets of the Trust held by it, the Custodian, at its election, may deliver such
assets to a bank or trust company doing business in the State of California to
be held and disposed of pursuant to the provisions of this Agreement or may
continue to hold such assets until a certified copy of one or more resolutions
as aforesaid is delivered to the Custodian. The obligations of the parties
hereto regarding the use of reasonable care, indemnities and payment of fees and
expenses shall survive the termination of this Agreement.
Section 14. MISCELLANEOUS
14.1 Relationship. Nothing contained in this Agreement shall (i)
create any fiduciary, joint venture or partnership relationship between the
Custodian and the Trust or (ii) be construed as or constitute a prohibition
against the provision by the Custodian or any of its affiliates to the Trust of
investment banking, securities dealing or brokerages services or any other
banking or financial services.
14.2 Further Assurances. Each party hereto shall furnish to the
other party hereto such instruments and other documents as such other party may
reasonably request for the purpose of carrying out or evidencing the
transactions contemplated by this Agreement.
14.3 Attorneys' Fees. If any lawsuit or other action or proceeding
relating to this Agreement is brought by a party hereto against the other party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (including allocated costs and disbursements of
in-house counsel), in addition to any other relief to which the prevailing party
may be entitled.
14.4 Notices. Except as otherwise specified herein, each notice or
other communication hereunder shall be in Writing and shall be delivered to the
intended recipient at the following address (or at such other address as the
intended recipient shall have specified in a written notice given to the other
parties hereto):
if to the Trust:
Midcap Growth Master Portfolio c/o Franklin
Resources, Inc. 777 Mariners Island Blvd. San
Mateo, CA 94404 Attention: Trust Manager
if to the Custodian:
Bank of America NT & SA 1455 Market Street 16th
Floor, Dept. 5014 San Francisco, CA 94104
14.5 Headings. The underlined headings contained herein are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the interpretation
hereof.
14.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original and both of which, when taken
together, shall constitute one agreement.
14.7 Governing Law. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflict of laws).
14.8 Force Majeure. Subject to the provisions of Section 11 hereof
regarding the Custodian's general standard of care, no failure, delay or default
in performance of any obligation hereunder shall constitute an event of default
or a breach of this agreement, or give rise to any liability whatsoever on the
part of one party hereto to the other, to the extent that such failure to
perform, delay or default arises out of a cause beyond the control and without
negligence of the party otherwise chargeable with failure, delay or default;
including, but not limited to: action or inaction of governmental, civil or
military authority; fire; strike; lockout or other labor dispute; flood; war;
riot; theft; earthquake; natural disaster; breakdown of public or common carrier
communications facilities; computer malfunction; or act, negligence or default
of the other party. This paragraph shall in no way limit the right of either
party to this Agreement to make any claim against third parties for any damages
suffered due to such causes.
14.9 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors and assigns, if any.
14.10 Waiver. No failure on the part of any person to exercise any
power, right, privilege or remedy hereunder, and no delay on the part of any
person in the exercise of any power, right, privilege or remedy hereunder, shall
operate as a waiver thereof; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy.
14.11 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of an agreement or instrument
executed on behalf of each of the parties hereto.
14.12 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any person or set of
circumstances, shall be determined to be invalid,-unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
14.13 Parties in Interest. None of the provisions of this Agreement
is intended to provide any rights or remedies to any person other than the Trust
and the Custodian and their respective successors and assigns, if any.
14.14 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter hereof.
14.15 Variations of Pronouns. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the neuter
gender shall include the masculine and feminine genders.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
"Custodian": BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ illegible
Its
"Trust": MIDCAP GROWTH PORTFOLIO
/s/ Charles B. Johnson
Its President
(Franklin logo)
FRANKLIN
RESOURCES, INC.
777 Mariners Island Blvd.
San Mateo, CA 94404
415/312-5818
FAX 415/312-3528
Martin L. Flanagan CPA, CFA
Senior Vice President
Chief Financial Officer
April 12, 1995
Mr. Stephen H. Kilbuck
Vice President Corporate Banking
Bank of America, NT & SA
555 California Street, 41st Floor
San Francisco, CA 94104
Dear Steve:
Various Franklin Funds/Portfolios (the "Funds") and Bank of America,
National Trust and Savings Association ("Bank") are parties to custody
agreements (the "Agreements") as well as separate cash management and deposit
services arrangements.
By this Letter Agreement, each of the Funds and Bank desire to establish
the cash compensation to be paid by each Fund for services rendered to it by
Bank.
Effective April 1, 1995, commencing with the first statement prepared
thereafter each Fund will pay to Bank a monthly fee in cash equal to an annual
rate of 87.5/100 ths. (.875) basis points of the net asset value of each such
Funds domestic portfolios held in custody by Bank and nine and three-tenths
(9.3) basis points of the net asset value of each such Funds international
portfolios held in custody by Bank or held by foreign sub-custodians calculated
as of the last business day of the month. For purposes of calculating the
monthly fee, 000007291 will be used as the monthly factor for the domestic
portfolio and .0000775 will be used as the monthly factor for the international
portfolio. The obligation of each Fund is separate from the obligation of any
other Fund.
The purpose of this Letter of Agreement is to provide for a fair level of
compensation to Bank for its service. The fee is based on the assumption that
each Fund will continue to use services of a type and volume comparable to the
services currently used. The parties agree that any party may initiate
discussions concerning revisions to the terms of this Letter Agreement at any
time it believes the level of compensation to be inappropriate. The parties
further agree that any party may, upon at least sixty (60) days' written notice,
terminate this Letter Agreement with respect to that party. Upon its
termination, if the parties have not agreed to a substitute fee arrangement, any
party may also terminate all or some of the service provided by Bank upon
additional sixty (60) days' written notice.
On an ongoing basis, Bank will continue to prepare the monthly corporate
account analysis statements on behalf of each Fund, which estimates all revenues
and expenses for the parties' relationship. From time to time, Bank and any
Fund(s) may renegotiate the estimated "prices" used in the account analysis
process. The account analysis statement will provide a basis for any
negotiations between the parties on the appropriateness of the fee agreement as
embodied in this Letter Agreement. However, no payment of any kind shall be due
on account of any shortfall on the account analysis statement.
Sincerely,
Authorized Officer for Each Trust/Franklin
Fund Portfolio (List Attached)
By /s/ Martin L. Flanagan
Martin L. Flanagan
Executive Financial Officer
ACCEPTED AND AGREED TO BY:
BANK OF AMERICA, NT & SA
By /s/ Stephen H. Kilbuck
Title: Vice President
MIDCAP GROWTH PORTFOLIO
777 Mariners Island Blvd.
San Mateo, CA 94404
The undersigned hereby subscribes for the purchase of 4000 shares of beneficial
interest of Midcap Growth Portfolio (hereinafter referred to as the
"Portfolio"), at a price of $10.00 per share for a total investment of $40,000
(hereinafter referred to as the "Shares"). In connection with said subscription,
the undersigned hereby represents that:
1. There is no present reason to anticipate any change in circumstances or any
other occasion or event which would cause the undersigned to sell or redeem the
Shares shortly after the purchase thereof.
2. there are no agreements or arrangements between the undersigned and the
Portfolio, or any of its officers, trustees, employees or its investment manager
or any affiliated persons thereof with respect to the resale, future
distribution or redemption of the Shares.
3. The sale of the Shares will only be made by redemption to the Portfolio
and not by a transfer to any third party.
4. The undersigned is aware that in issuing and selling these Shares, the
Portfolio is relying upon the aforementioned representations.
5. The undersigned is fully aware that the organization expenses of the
Portfolio, including the costs and expenses of registration of the Portfolio
under the Investment Company Act of 1940, are being charged to the operation of
the Portfolio over a period of five years commencing from the effective date of
the Portfolio's Registration Statement, and that in the event the undersigned
redeems any portion of these Shares during said amortization period, the
undersigned will reimburse the Portfolio for the Pro rata share of the
unamortized organization expenses (by a reduction of the redemption proceeds) in
the same proportion as the number of Shares being redeemed bear to the total
number of remaining initial Shares acquired by the undersigned hereunder.
FRANKLIN INSTITUTIONAL
SERVICES CORPORATION
Dated: April 13, 1993 By: /s/ Charles E. Johnson
Charles E. Johnson
Title: President
MIDCAP GROWTH PORTFOLIO
777 Mariners Island Blvd.
San Mateo, CA 94404
The undersigned hereby subscribes for the purchase of 6000 shares of beneficial
interest of Midcap Growth Portfolio (hereinafter referred to as the
"Portfolio"), at a price of $10.00 per share for a total investment of $60,000
(hereinafter referred to as the "Shares"). In connection with said subscription,
the undersigned hereby represents that:
1. There is no present reason to anticipate any change in circumstances or any
other occasion or event which would cause the undersigned to sell or redeem the
Shares shortly after the purchase thereof.
2. There are no agreements or arrangements between the undersigned and the
Portfolio, or any of its officers, trustees, employees or its investment manager
or any affiliated persons thereof with respect to the resale, future
distribution or redemption of the Shares.
3. The sale of the Shares will only be made by redemption to the Portfolio
and not by a transfer to any third party.
4. The undersigned is aware that in issuing and selling these Shares, the
Portfolio is relying upon the aforementioned representations.
5. The undersigned is fully aware that the organization expenses of the
Portfolio, including the costs and expenses of registration of the Portfolio
under the Investment Company Act of 1940, are being charged to the operation of
the Portfolio over a period of five years commencing from the effective date of
the Portfolio's Registration Statement, and that in the event the undersigned
redeems any portion of these Shares during said amortization period, the
undersigned will reimburse the Portfolio for the pro rata share of the
unamortized organization expenses (by a reduction of the redemption proceeds) in
the same proportion as the number of Shares being redeemed bear to the total
number of remaining initial Shares acquired by the undersigned hereunder.
FRANKLIN MIDCAP GROWTH FUND
Franklin Strategic Series
Dated: April 13, 1993 By: /s/ Rupert H. Johnson
Rupert H. Johnson
Title: Vice President
Power of Attorney
The undersigned officers and trustees of MIDCAP GROWTH PORTFOLIO (The
"Registrant") hereby appoint HARMON E. BURNS, DEBORAH R. GATZEK, KAREN L.
SKIDMORE, LARRY L. GREENE, and MARK H. PLAFKER (with full power to each of them
to act alone) as their attorney-in-fact and agent, in all capacities, to
execute, and to file any of the documents referred to below relating to
Post-Effective Amendments to the Registrant's registration statement, or the
registration statements of other funds investing all or substantially all of
their assets in shares issued by the Registrant, on Form N-1A under the
Investment Company Act of 1940, as amended, and, in the case of a fund by the
Registrant, the Securities Act of 1933, covering the sale of shares of
beneficial interest by the Registrant or such other fund under prospectuses
becoming effective after the date hereof, including any amendment or amendments
filed for the purpose of updating the prospectus/or SAI, registering securities
to be issued in transactions permitted under the federal securities laws or
increasing or decreasing the amount of securities for all documents required to
be filed with respect thereto with any regulatory authority. Each of the
undersigned grants to each of said attorneys full authority to do every act
necessary to be done in order to effectuate the same as fully, to all intents
and purposes as he could do if personally present, thereby ratifying all that
said attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
The undersigned officers and trustees hereby execute this Power of
Attorneys of this 29th day of June 1995.
/s/ Rupert H. Johnson, Jr. /s/ Charles B. Johnson
Rupert H. Johnson Jr., Principal Charles B. Johnson,
Executive Officer and Trustee Trustee
Frank H. Abbott, III, Trustee Harris J. Ashton, Trustee
/s/ Harmon E. Burns
Harmon E. Burns, Trustee S. Joseph Fortunato, Trustee
David W. Garbellano, Trustee Frank W. T. LaHaye, Trustee
/s/ Gordon S. Macklin
Gordon S. Macklin, Trustee Diomedes Loo-Tam
Principal Accounting Officer
/s/ Martin L Flanagan
Martin L. Flanagan, Principal
Financial Officer
CERTIFICATE OF SECRETARY
I, Larry L. Greene, certify that I am Assistant Secretary of Midcap Growth
Portfolio (the "Fund").
As Assistant Secretary of the Fund, I further certify that the following
resolution was adopted by a majority of the Trustees of the Fund.
RESOLVED, that a Power of Attorney, substantially in the form of the
Power of Attorney presented to this Board, appointing Harmon E. Burns,
Deborah R. Gatzek, Karen L. Skidmore, Larry L. Greene and Mark H.
Plafker as attorneys-in-fact for the purpose of filing documents with
the Securities and Exchange Commission, be executed by each Trustee
and designated officer.
I declare under penalty of perjury that the matters set forth in this
certificate are true and correct of my own knowledge.
Dated: June 29, 1995 /s/ Larry L. Greene
Larry L. Greene
Assistant Secretary
