Members of the Audit Committee are: David W. Niemiec, Ann
Torre Bates and Constantine D. Tseretopoulos.
Item
6. Schedule of Investments.
N/A
Item
7
. Disclosure of Proxy Voting
Policies and Procedures for Closed-End Management Investment Companies.
The board of trustees of the Fund
has delegated the authority to vote proxies related to the portfolio securities
held by the Fund to the Fund's investment manager,
Templeton
Asset Management Ltd. (Asset Management)
, in accordance with the Proxy
Voting Policies and Procedures (Policies) adopted by the investment manager.
RESPONSIBILITY OF THE INVESTMENT
MANAGER TO VOTE PROXIES
Templeton Asset Management Ltd.
(hereinafter the "Investment Manager") has delegated its
administrative duties with respect to voting proxies for securities to the
Proxy Group within Franklin Templeton Companies, LLC (the "Proxy
Group"), a wholly-owned subsidiary of Franklin Resources, Inc. Franklin Templeton
Companies, LLC provides a variety of general corporate services to its
affiliates, including, but not limited to, legal and compliance activities.
Proxy duties consist of analyzing proxy statements of issuers whose stock is
owned by any client (including both investment companies and any separate
accounts managed by the Investment Manager) that has either delegated proxy
voting administrative responsibility to the Investment Manager or has asked for
information and/or recommendations on the issues to be voted. The Investment
Manager will inform Advisory Clients that have not delegated the voting
responsibility but that have requested voting advice about the Investment
Manager's views on such proxy votes. The Proxy Group also provides these
services to other advisory affiliates of the Investment Manager.
The Proxy Group will process proxy
votes on behalf of, and the Investment Manager votes proxies solely in the best
interests of, separate account clients, the Investment Manager-managed
investment company shareholders, or shareholders of funds that have appointed
Franklin Templeton International Services S.à.r.l. (“FTIS S.à.r.l.”) as the
Management Company, provided such funds or clients have properly delegated such
responsibility in writing, or, where employee benefit plan assets subject to
the Employee Retirement Income Security Act of 1974, as amended, are involved
(“ERISA accounts”), in the best interests of the plan participants and
beneficiaries (collectively, "Advisory Clients"), unless (i) the power
to vote has been specifically retained by the named fiduciary in the documents
in which the named fiduciary appointed the Investment Manager or (ii) the
documents otherwise expressly prohibit the Investment Manager from voting
proxies. The Investment Manager recognizes that the exercise of voting rights
on securities held by ERISA plans for which the Investment Manager has voting
responsibility is a fiduciary duty that must be exercised with care, skill,
prudence and diligence.
In certain circumstances, Advisory
Clients are permitted to direct their votes in a solicitation pursuant to the
Investment Management Agreement. An Advisory Client that wishes to direct its
vote shall give reasonable prior written notice to the Investment Manager
indicating such intention and provide written instructions directing the Investment
Manager or the Proxy Group to vote regarding the solicitation. Where such prior
written notice is received, the Proxy Group will vote proxies in accordance
with such written notification received from the Advisory Client.
The Investment Manager has adopted
and implemented Proxy Voting Policies and Procedures (“Proxy Policies”) that it
believes are reasonably designed to ensure that proxies are voted in the best
interest of Advisory Clients in accordance with its fiduciary duties and rule
206(4)-6 under the Investment Advisers Act of 1940. To the extent that the
Investment Manager has a subadvisory agreement with an affiliated investment
manager (the “Affiliated Subadviser”) with respect to a particular Advisory Client,
the Investment Manager may delegate proxy voting responsibility to the
Affiliated Subadviser. The Investment Manager may also delegate proxy voting
responsibility to a subadviser that is not an Affiliated Subadviser in certain limited
situations as disclosed to fund shareholders (e.g., where an Investment Manager
to a pooled investment vehicle has engaged a subadviser that is not an
Affiliated Subadviser to manage all or a portion of the assets).
*
Rule 38a-1 under the Investment Company Act
of 1940 (“1940 Act”) and Rule 206(4)-7 under the Investment Advisers Act of
1940 (“Advisers Act”) (together the “Compliance Rule”) require registered
investment companies and registered investment advisers to, among other things,
adopt and implement written policies and procedures reasonably designed to
prevent violations of the federal securities laws (“Compliance Rule Policies
and Procedures”).
HOW THE INVESTMENT MANAGER VOTES
PROXIES
All proxies received by the Proxy
Group will be voted based upon the Investment Manager's instructions and/or
policies. To assist it in analyzing proxies of equity securities, the Investment
Manager subscribes to Institutional Shareholder Services Inc.
("ISS"), an unaffiliated third-party corporate governance research
service that provides in-depth analyses of shareholder meeting agendas and vote
recommendations. In addition, the Investment Manager subscribes to ISS’s Proxy
Voting Service and Vote Disclosure Service. These services include receipt of
proxy ballots, custodian bank relations, account maintenance, vote execution,
ballot reconciliation, vote record maintenance, comprehensive reporting
capabilities, and vote disclosure services. Also, the Investment Manager
subscribes to Glass, Lewis & Co., LLC ("Glass Lewis"), an
unaffiliated third-party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies, as
well as a limited subscription to its international research. Although analyses
provided by ISS, Glass Lewis, and/or another independent third-party proxy
service provider (each a “Proxy Service”) are thoroughly reviewed and
considered in making a final voting decision, the Investment Manager does not
consider recommendations from a Proxy Service or any third-party to be determinative
of the Investment Manager's ultimate decision. Rather, the Investment Manager
exercises its independent judgment in making voting decisions. As a matter of
policy, the officers, directors and employees of the Investment Manager and the
Proxy Group will not be influenced by outside sources whose interests conflict
with the interests of Advisory Clients.
For ease of reference, the Proxy
Policies often refer to all Advisory Clients. However, our processes and
practices seek to ensure that proxy voting decisions are suitable for
individual Advisory Clients. In some cases, the Investment Manager’s evaluation
may result in an individual Advisory Client or Investment Manager voting
differently, depending upon the nature and objective of the fund or account,
the composition of its portfolio, whether the Investment Manager has adopted a
specialty or custom voting policy, and other factors.
Circumstances Where the
Investment Manager May Generally Rely on the Recommendations of a Proxy Service
Certain of the Investment Manager’s
clients’ accounts are separate accounts or funds (or a portion thereof) that
follow a smart beta strategy, are passively managed to track a particular
securities index, or employ a quantitative strategy. These accounts include
certain client accounts managed by Franklin Templeton Investment Solutions
(“FTIS”), a business unit of the Investment Manager that are managed
systematically to either (i) track a specified securities index (including but
not limited to exchange traded funds (“ETFs”)) or (ii) seek to achieve other
stated investment objectives.
In the case of accounts managed to
track an index, the primary criteria for determining whether a security should
be included (or continue to be included) in an investment portfolio is whether
such security is a representative component of the securities index that the
account is seeking to track. For other systematically-managed accounts that do
not track a specific index, FTIS’s proprietary methodologies rely on a
combination of quantitative, qualitative, and behavioral analysis rather than
fundamental security research and analyst coverage that an actively-managed
portfolio would ordinarily employ. Accordingly, absent client direction, in
light of the high number of positions held by such accounts and the considerable
time and effort that would be required to review proxy statements and ISS or
Glass Lewis recommendations, the Investment Manager may review ISS’s non-US
Benchmark guidelines, ISS’s specialty guidelines (in particular, ISS’s
Sustainability guidelines), or Glass Lewis’s US guidelines ( the “the ISS and
Glass Lewis Proxy Voting Guidelines”) and determine, consistent with the best
interest of its clients, to provide standing instructions to the Proxy Group to
vote proxies according to the recommendations of ISS or Glass Lewis.
The Investment Manager, however,
retains the ability to vote a proxy differently than ISS or Glass Lewis
recommends if the Investment Manager determines that it would be in the best
interests of Advisory Clients (for example, where an issuer files additional
solicitation materials after a Proxy Service has issued its voting
recommendations but sufficiently before the vote submission deadline and these
materials would reasonably be expected to affect the Investment Manager’s
voting determination).
All conflicts of interest will be
resolved in the best interests of the Advisory Clients. The Investment Manager
is an affiliate of a large, diverse financial services firm with many affiliates
and makes its best efforts to mitigate conflicts of interest. However, as a general matter, the Investment Manager takes the
position that relationships between certain affiliates acquired as a result of
the Legg Mason transaction that do not use the “Franklin Templeton” name (“Legg
Mason Affiliates”) and an issuer (e.g., an investment management relationship
between an issuer and a Legg Mason Affiliate) do not present a conflict of
interest for the Investment Manager in voting proxies with respect to such
issuer because: (i) the Investment Manager operates as an independent business
unit from the Legg Mason Affiliate business units, and (ii) informational
barriers exist between the Investment Manager and the Legg Mason Affiliate
business units. Franklin Templeton employees are under an obligation to bring
any conflicts of interest, including conflicts of interest which may arise
because of an attempt by a Legg Mason Affiliate business unit or officer or
employee to influence proxy voting by the Investment Manager to the attention
of Franklin Templeton’s compliance department.
Material
conflicts of interest could arise in a variety of situations, including as a
result of the Investment Manager’s or an affiliate’s (other than a Legg Mason
Affiliate as described above): (i) material business relationship with an
issuer or proponent, (ii) direct or indirect pecuniary interest in an issuer or
proponent; or (iii) significant personal or family relationship with an issuer
or proponent.
Material conflicts of interest are identified by the Proxy Group
based upon analyses of client, distributor, broker dealer, and vendor lists,
information periodically gathered from directors and officers, and information
derived from other sources, including public filings. The Proxy Group gathers
and analyzes this information on a best efforts basis, as much of this
information is provided directly by individuals and groups other than the Proxy
Group, and the Proxy Group relies on the accuracy of the information it
receives from such parties.
Nonetheless, even though a potential
conflict of interest between the Investment Manager or
an affiliate (other than a Legg Mason Affiliate as described above) and an
issuer may exist: (1) the Investment Manager may vote in opposition to the
recommendations of an issuer’s management even if contrary to the recommendations
of a third-party proxy voting research provider; (2) if management has made no
recommendations, the Proxy Group may defer to the voting instructions of the
Investment Manager; and (3) with respect to shares held by Franklin Resources,
Inc. or its affiliates for their own corporate accounts, such shares may be
voted without regard to these conflict procedures.
Otherwise,
in
situations where a
material conflict of interest is identified between the Investment Manager or
one of its affiliates (other than Legg Mason
Affiliates) and an issuer, the Proxy Group may vote consistent with the
voting recommendation of a Proxy Service or send the proxy directly to the
relevant Advisory Clients with the Investment Manager’s recommendation
regarding the vote for approval.
Where the Proxy Group refers a
matter to an Advisory Client, it may rely upon the instructions of a
representative of the Advisory Client, such as the board of directors or trustees,
a committee of the board, or an appointed delegate in the case of a U.S.
registered investment company, a conducting officer in the case of a fund that
has appointed FTIS S.à.r.l as its Management Company, the Independent Review
Committee for Canadian investment funds, or a plan administrator in the case of
an employee benefit plan. A quorum of the board of directors or trustees or of
a committee of the board can be reached by a majority of members, or a majority
of non-recused members. The Proxy Group may determine to vote all shares held
by Advisory Clients of the Investment Manager and affiliated Investment
Managers (other than Legg Mason Affiliates) in
accordance with the instructions of one or more of the Advisory Clients.
The Investment Manager may also
decide whether to vote proxies for securities deemed to present conflicts of
interest that are sold following a record date, but before a shareholder
meeting date. The Investment Manager may consider various factors in deciding
whether to vote such proxies, including the Investment Manager’s long-term view
of the issuer’s securities for investment, or it may defer the decision to vote
to the applicable Advisory Client. The Investment Manager also may be unable to
vote, or choose not to vote, a proxy for securities deemed to present a
conflict of interest for any of the reasons outlined in the first paragraph of
the section of these policies entitled “Proxy Procedures.”
Where a material conflict of
interest has been identified, but the items on which the Investment Manager’s
vote recommendations differ from a Proxy Service relate specifically to (1)
shareholder proposals regarding social or environmental issues, (2) “Other
Business” without describing the matters that might be considered, or (3) items
the Investment Manager wishes to vote in opposition to the recommendations of
an issuer’s management, the Proxy Group may defer to the vote recommendations
of the Investment Manager rather than sending the proxy directly to the
relevant Advisory Clients for approval.
To avoid certain potential conflicts
of interest, the Investment Manager will employ echo voting or pass-through
voting, if possible, in the following instances: (1) when a Franklin Templeton
U.S. registered investment company invests in an underlying fund in reliance on
any one of Sections 12(d)(1)(F), or (G) of the Investment Company Act of 1940,
as amended, (“1940 Act”), the rules thereunder, or pursuant to a U.S.
Securities and Exchange Commission (“SEC”) exemptive order thereunder; (2) when
a Franklin Templeton U.S. registered investment company invests uninvested cash
in affiliated money market funds pursuant to the rules under the 1940 Act or
any exemptive orders thereunder (“cash sweep arrangement”); or (3) when
required pursuant to the fund’s governing documents or applicable law. Echo
voting means that the Investment Manager will vote the shares in the same
proportion as the vote of all other holders of the fund’s shares. With respect
to instances when a Franklin Templeton U.S. registered investment company
invests in an underlying fund in reliance on any one of Sections 12(d)(1)(F) or
(G) of the 1940 Act, the rules thereunder, or pursuant to an SEC exemptive
order thereunder, and there are no other unaffiliated shareholders also
invested in the underlying fund, the Investment Manager will vote in accordance
with the recommendation of such investment company’s board of trustees or
directors. In addition, to avoid certain potential conflicts of interest, and
where required under a fund’s governing documents or applicable law, the
Investment Manager will employ pass-through voting when a Franklin Templeton
U.S. registered investment company invests in an underlying fund in reliance on
Section 12(d)(1)(E) of the 1940 Act, the rules thereunder, or pursuant to an
SEC exemptive order thereunder. In “pass-through voting,” a feeder fund will solicit
voting instructions from its shareholders as to how to vote on the master
fund’s proposals. If a Franklin Templeton investment company becomes a holder of
more than 25% of the shares on a non-affiliated fund, as a result of a decrease
in the outstanding shares of the non-affiliated fund, then the Investment
Manager will vote the shares in the same proportion as the vote of all other
holders of the non-affiliated fund.
In addition, with respect to an
open-ended collective investment scheme formed as a Société d'Investissement à
capital variable (SICAV), in accordance with Luxembourg law, if one sub-fund
(the “Acquirer”) has invested in another sub-fund of the SICAV (the “Target”),
then the voting rights attached to the shares of the Target will be suspended
for voting purposes as long as they are held by the Acquirer. Similarly, in
accordance with Canadian law, Canadian mutual funds that are invested in another
proprietary mutual fund are prohibited from voting the units of the underlying
fund.
Weight Given Management
Recommendations
One of the primary factors the
Investment Manager considers when determining the desirability of investing in
a particular company is the quality and depth of that company's management.
Accordingly, the recommendation of management on any issue is a factor that the
Investment Manager considers in determining how proxies should be voted. However,
the Investment Manager does not consider recommendations from management to be
determinative of the Investment Manager's ultimate decision. Each issue is
considered on its own merits, and the Investment Manager will not support the
position of a company's management in any situation where it determines that
the ratification of management's position would adversely affect the investment
merits of owning that company's shares.
The Investment Manager believes that
engagement with issuers is important to good corporate governance and to assist
in making proxy voting decisions. The Investment Manager may engage with issuers
to discuss specific ballot items to be voted on in advance of an annual or
special meeting to obtain further information or clarification on the proposals.
The Investment Manager may also engage with management on a range of
environmental, social or corporate governance issues throughout the year.
The Proxy Group is part of the
Franklin Templeton Companies, LLC Legal Department and is overseen by legal
counsel. Full- time staff members and support staff (which includes individuals
that are employees of affiliates of Franklin Templeton Companies, LLC) are
devoted to proxy voting administration and oversight and providing support and
assistance where needed. On a daily basis, the Proxy Group will review each
proxy upon receipt as well as any agendas, materials and recommendations that
they receive from a Proxy Service or other sources. The Proxy Group maintains a
record of all shareholder meetings that are scheduled for companies whose
securities are held by the Investment Manager's managed funds and accounts. For
each shareholder meeting, a member of the Proxy Group will consult with the
research analyst that follows the security and provide the analyst with the
agenda, analyses of one or more Proxy Services, recommendations and any other
information provided to the Proxy Group. Except in situations identified as
presenting material conflicts of interest, the Investment Manager's research
analyst and relevant portfolio manager(s) are responsible for making the final
voting decision based on their review of the agenda, analyses of one or more
Proxy Services, proxy statements, their knowledge of the company and any other
information publicly available.
In situations where the Investment
Manager has not responded with vote recommendations to the Proxy Group by the
deadline date, the Proxy Group may vote consistent with the vote recommendations
of a Proxy Service. Except in cases where the Proxy Group is voting consistent
with the voting recommendation of a Proxy Service, the Proxy Group must obtain
voting instructions from the Investment Manager's research analyst, relevant
portfolio manager(s), legal counsel and/or the Advisory Client prior to submitting
the vote. In the event that an account holds a security that the Investment
Manager did not purchase on its behalf, and the Investment Manager does not
normally consider the security as a potential investment for other accounts,
the Proxy Group may vote consistent with the voting recommendations of a Proxy
Service or take no action on the meeting.
The Proxy Group is fully cognizant
of its responsibility to process proxies and maintain proxy records as may be
required by relevant rules and regulations. In addition, the Investment Manager
understands its fiduciary duty to vote proxies and that proxy voting decisions
may affect the value of shareholdings. Therefore, the Investment Manager will
generally attempt to process every proxy it receives for all domestic and
foreign securities. However, there may be situations in which the Investment
Manager may be unable to successfully vote a proxy, or may choose not to vote a
proxy, such as where: (i) a proxy ballot was not received from the custodian
bank; (ii) a meeting notice was received too late; (iii) there are fees imposed
upon the exercise of a vote and it is determined that such fees outweigh the
benefit of voting; (iv) there are legal encumbrances to voting, including
blocking restrictions in certain markets that preclude the ability to dispose
of a security if the Investment Manager votes a proxy or where the Investment
Manager is prohibited from voting by applicable law, economic or other sanctions,
or other regulatory or market requirements, including but not limited to,
effective Powers of Attorney; (v) additional documentation or the disclosure of
beneficial owner details is required; (vi) the Investment Manager held shares
on the record date but has sold them prior to the meeting date; (vii) the
Advisory Client held shares on the record date, but the Advisory Client closed
the account prior to the meeting date; (viii) a proxy voting service is not
offered by the custodian in the market; (ix) due to either system error or
human error, the Investment Manager’s intended vote is not correctly submitted;
(x) the Investment Manager believes it is not in the best interest of the
Advisory Client to vote the proxy for any other reason not enumerated herein;
or (xi) a security is subject to a securities lending or similar program that
has transferred legal title to the security to another person.
Even if the Investment Manager uses
reasonable efforts to vote a proxy on behalf of its Advisory Clients, such vote
or proxy may be rejected because of (a) operational or procedural issues
experienced by one or more third parties involved in voting proxies in such
jurisdictions; (b) changes in the process or agenda for the meeting by the issuer
for which the Investment Manager does not have sufficient notice; or (c) the
exercise by the issuer of its discretion to reject the vote of the Investment Manager.
In addition, despite the best efforts of the Proxy Group and its agents, there
may be situations where the Investment Manager’s votes are not received, or
properly tabulated, by an issuer or the issuer’s agent.
The Investment Manager or its affiliates
may, on behalf of one or more of the proprietary registered investment
companies advised by the Investment Manager or its affiliates, determine to use
its best efforts to recall any security on loan where the Investment Manager or
its affiliates (a) learn of a vote on a material event that may affect a
security on loan and (b) determine that it is in the best interests of such
proprietary registered investment companies to recall the security for voting
purposes. The Investment Manager will not generally make such efforts on behalf
of other Advisory Clients or notify such Advisory Clients or their custodians
that the Investment Manager or its affiliates has learned of such a vote.
There may be instances in certain
non-U.S. markets where split voting is not allowed. Split voting occurs when a
position held within an account is voted in accordance with two differing instructions.
Some markets and/or issuers only allow voting on an entire position and do not
accept split voting. In certain cases, when more than one Franklin Templeton
Investment Manager has accounts holding shares of an issuer that are held in an
omnibus structure, the Proxy Group will seek direction from an appropriate
representative of the Advisory Client with multiple Investment Managers (such
as a conducting officer of the Management Company in the case of a SICAV), or
the Proxy Group will submit the vote based on the voting instructions provided
by the Investment Manager with accounts holding the greatest number of shares
of the security within the omnibus structure.
The Investment Manager may vote
against an agenda item where no further information is provided, particularly
in non-U.S. markets. For example, if "Other Business" is listed on
the agenda with no further information included in the proxy materials, the
Investment Manager may vote against the item as no information has been
provided prior to the meeting in order to make an informed decision. The
Investment Manager may also enter a "withhold" vote on the election
of certain directors from time to time based on individual situations,
particularly where the Investment Manager is not in favor of electing a
director and there is no provision for voting against such director.
If several issues are bundled
together in a single voting item, the Investment Manager will assess the total
benefit to shareholders and the extent that such issues should be subject to
separate voting proposals.
The following describes the standard
procedures that are to be followed with respect to carrying out the Investment
Manager's proxy policy:
1. The Proxy Group will identify
all Advisory Clients, maintain a list of those clients, and indicate those
Advisory Clients who have delegated proxy voting authority in writing to the
Investment Manager. The Proxy Group will periodically review and update this
list. If the agreement with an Advisory Client permits the Advisory Client to
provide instructions to the Investment Manager regarding how to vote the
client’s shares, the Investment Manager will make a best-efforts attempt to
vote per the Advisory Client’s instructions.
2. All relevant information in
the proxy materials received (e.g., the record date of the meeting) will be
recorded promptly by the Proxy Group to maintain control over such materials.
3. The Proxy Group will review
and compile information on each proxy upon receipt of any agendas, materials, reports,
recommendations from a Proxy Service, or other information. The Proxy Group
will then forward (or otherwise make available) this information to the appropriate
research analyst for review and voting instructions.
4. In determining how to vote,
the Investment Manager's analysts and relevant portfolio manager(s) will
consider their in-depth knowledge of the company, any readily available
information and research about the company and its agenda items, and the
recommendations of a Proxy Service.
5. The Proxy Group is responsible
for maintaining the documentation that supports the Investment Manager’s voting
decision. Such documentation may include, but is not limited to, any
information provided by a Proxy Service and, with respect to an issuer that presents
a potential conflict of interest, any board or audit committee memoranda
describing the position it has taken. Additionally, the Proxy Group may include
documentation obtained from the research analyst, portfolio manager and/or
legal counsel; however, the relevant research analyst may, but is not required
to, maintain additional documentation that was used or created as part of the
analysis to reach a voting decision, such as certain financial statements of an
issuer, press releases, or notes from discussions with an issuer’s management.
6. After the proxy is completed
but before it is returned to the issuer and/or its agent, the Proxy Group may
review those situations including special or unique documentation to determine
that the appropriate documentation has been created, including conflict of
interest screening. If the Proxy Group learns that an issuer has filed
additional solicitation materials sufficiently prior to the submission
deadline, the Proxy Group will disseminate this information to the Investment
Manager so that the Investment Manager may consider this information and
determine whether it is material to its voting decision.
7. The Proxy Group will make
every effort to submit the Investment Manager's vote on all proxies to ISS by
the cut-off date. However, in certain foreign jurisdictions or instances where
the Proxy Group did not receive sufficient notice of the meeting, the Proxy
Group will use its best efforts to send the voting instructions to ISS in time
for the vote to be processed.
8. With respect to proprietary
products, the Proxy Group will file Powers of Attorney in all jurisdictions
that require such documentation on a best efforts basis; the Proxy Group does
not have authority to file Powers of Attorney on behalf of other Advisory
Clients. On occasion, the Investment Manager may wish to attend and vote at a
shareholder meeting in person. In such cases, the Proxy Group will use its best
efforts to facilitate the attendance of the designated Franklin Templeton
employee by coordinating with the relevant custodian bank.
9. The Proxy Group prepares
reports for each separate account client that has requested a record of votes
cast. The report specifies the proxy issues that have been voted for the
Advisory Client during the requested period and the position taken with respect
to each issue. The Proxy Group sends one copy to the Advisory Client, retains a
copy in the Proxy Group’s files and forwards a copy to either the appropriate
portfolio manager or the client service representative. While many Advisory Clients
prefer quarterly or annual reports, the Proxy Group will provide reports for
any timeframe requested by an Advisory Client.
10. If the Franklin Templeton
Services, LLC Global Trade Services learns of a vote that may affect a security
on loan from a proprietary registered investment company, Global Trade Services
will notify the Investment Manager. If the Investment Manager decides that the
vote is material and it would be in the best interests of shareholders to
recall the security, the Investment Manager will advise Global Trade Services
to contact the lending agent in an effort to retrieve the security. If so
requested by the Investment Manager, Global Trade Services shall use its best
efforts to recall any security on loan and will use other practicable and
legally enforceable means to ensure that the Investment Manager is able to vote
proxies for proprietary registered investment companies with respect to such
loaned securities. However, there can be no guarantee that the securities can
be retrieved for such purposes. Global Trade Services will advise the Proxy
Group of all recalled securities. Many Advisory Clients have entered into
securities lending arrangements with agent lenders to generate additional
revenue. Under normal circumstances, the Investment Manager will not make
efforts to recall any security on loan for voting purposes on behalf of other
Advisory Clients or notify such clients or their custodians that the Investment
Manager or its affiliates have learned of such a vote.
11. The Proxy Group participates
in Franklin Templeton Investment’s Business Continuity and Disaster
Preparedness programs. The Proxy Group will conduct disaster recovery testing
on a periodic basis in an effort to ensure continued operations of the Proxy
Group in the event of a disaster. Should the Proxy Group not be fully
operational, then the Proxy Group may instruct ISS to vote all meetings
immediately due per the recommendations of the appropriate third-party proxy
voting service provider.
12. The Proxy Group, in conjunction
with legal staff responsible for coordinating Fund disclosure, on a timely
basis, will file all required Form N-PXs, with respect to proprietary U.S.
registered investment companies, disclose that each U.S.-registered fund’s proxy
voting record is available on the Franklin Templeton web site, and will make
available the information disclosed in each fund’s Form N-PX as soon as is
reasonably practicable after filing Form N-PX with the SEC. The Proxy Group
will work with legal staff in other jurisdictions, as needed, to help support
required proxy voting disclosure in such markets.
13. The Proxy Group, in
conjunction with legal staff responsible for coordinating Fund disclosure, will
ensure that all required disclosure about proxy voting of the proprietary U.S.
registered investment companies is made in such clients’ disclosure documents.
14. The Proxy Group is subject to
periodic review by Internal Audit and compliance groups.
15. The Investment Manager will
review the guidelines of each Proxy Service, with special emphasis on the
factors they use with respect to proxy voting recommendations.
16. The Proxy Group will update
the proxy voting policies and procedures as necessary for review and approval
by legal, compliance, investment officers, and/or other relevant staff.
17. The Proxy Group will
familiarize itself with the procedures of ISS that govern the transmission of
proxy voting information from the Proxy Group to ISS and periodically review how
well this process is functioning. The Proxy Group, in conjunction with the
compliance department, will conduct periodic due diligence reviews of each
Proxy Service via on-site visits or by written questionnaires. As part of the
periodic due diligence process, the Investment Manager assesses the adequacy and
quality of each Proxy Service’s staffing and personnel to ensure each Proxy
Service has the capacity and competency to adequately analyze proxy issues and
the ability to make proxy voting recommendations based on materially accurate information.
In the event the Investment Manager discovers an error in the research or
voting recommendations provided by a Proxy Service, it will take reasonable
steps to investigate the error and seek to determine whether the Proxy Service
is taking reasonable steps to reduce similar errors in the future. In addition,
the Investment Manager assesses the robustness of Proxy Service’s policies
regarding (1) ensuring proxy voting recommendations are based on current and
accurate information, and (2) identifying and addressing any conflicts of
interest. The Investment Manager also considers the independence of each Proxy
Service on an on-going basis.
18. The Proxy Group will
investigate, or cause others to investigate, any and all instances where these
Procedures have been violated or there is evidence that they are not being
followed. Based upon the findings of these investigations, the Proxy Group, if
practicable, will recommend amendments to these Procedures to minimize the likelihood
of the reoccurrence of non-compliance.
19. At least annually, the Proxy
Group will verify that:
a. A sampling of proxies received
by Franklin Templeton Investments has been voted in a manner consistent with
the Proxy Voting Policies and Procedures;
b. A sampling of proxies received
by Franklin Templeton Investments has been voted in accordance with the
instructions of the Investment Manager;
c. Adequate disclosure has been
made to clients and fund shareholders about the procedures and how proxies were
voted in markets where such disclosures are required by law or regulation; and
d. Timely filings were made with
applicable regulators, as required by law or regulation, related to proxy
voting.
The Proxy Group is responsible for
maintaining appropriate proxy voting records. Such records will include, but
are not limited to, a copy of all materials returned to the issuer and/or its
agent, the documentation described above, listings of proxies voted by issuer
and by client, each written client request for proxy voting policies/records and
the Investment Manager’s written response to any client request for such
records, and any other relevant information. The Proxy Group may use an outside
service such as ISS to support this recordkeeping function. All records will be
retained in either hard copy or electronic format for at least five years, the
first two of which will be on-site. Advisory Clients may request copies of
their proxy voting records by calling the Proxy Group collect at
1-954-527-7678, or by sending a written request to: Franklin Templeton Companies,
LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group.
The Investment Manager does not disclose to third parties (other than ISS) the
proxy voting records of its Advisory Clients, except to the extent such disclosure
is required by applicable law or regulation or court order. Advisory Clients
may review the Investment Manager's proxy voting policies and procedures
on-line at www.franklintempleton.com and may request additional copies by
calling the number above. For U.S. proprietary registered investment companies,
an annual proxy voting record for the period ending June 30 of each year will
be posted to www.franklintempleton.com no later than August 31 of each year.
For proprietary Canadian mutual fund products, an annual proxy voting record
for the period ending June 30 of each year will be posted to
www.franklintempleton.ca no later than August 31 of each year. For proprietary
Australian mutual fund products, an annual proxy voting record for the period
ending June 30 of each year will be posted to www.franklintempleton.com.au no
later than September 30 of each year. The Proxy Group will periodically review
the web site posting and update the posting when necessary. In addition, the
Proxy Group is responsible for ensuring that the proxy voting policies,
procedures and records of the Investment Manager are available as required by
law and is responsible for overseeing the filing of such U.S. registered
investment company voting records with the SEC.
PROCEDURES FOR MEETINGS INVOLVING
FIXED INCOME SECURITIES & PRIVATELY HELD ISSUERS
From time to time, certain
custodians may process events for fixed income securities through their proxy
voting channels rather than corporate action channels for administrative
convenience. In such cases, the Proxy Group will receive ballots for such
events on the ISS voting platform. The Proxy Group will solicit voting
instructions from the Investment Manager for each account or fund involved. If
the Proxy Group does not receive voting instructions from the Investment
Manager, the Proxy Group will take no action on the event. The Investment
Manager may be unable to vote a proxy for a fixed income security, or may
choose not to vote a proxy, for the reasons described under the section
entitled “Proxy Procedures.”
In the rare instance where there is
a vote for a privately held issuer, the decision will generally be made by the
relevant portfolio managers or research analysts.
The Proxy Group will monitor such meetings
involving fixed income securities or privately held issuers for conflicts of
interest in accordance with these procedures. If a fixed income or privately
held issuer is flagged as a potential conflict of interest, the Investment
Manager may nonetheless vote as it deems in the best interests of its Advisory
Clients. The Investment Manager will report such decisions on an annual basis
to Advisory Clients as may be required.
The ISS proxy voting guidelines can
be found at: https://www.issgovernance.com/policy-gateway/voting-policies/.
The Glass Lewis proxy voting
guidelines can be found at: https://www.glasslewis.com/voting-policies-current/.
Item 8. Portfolio Managers
of Closed-End Management Investment Companies. N/A
Item 9. Purchases of Equity
Securities by Closed-End Management Investment Company and Affiliated
Purchasers.
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Total Number of Shares
Purchased |
Average Price Paid per
Share |
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Program |
Maximum Number (or
Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans
or Programs |
Month #1 (9/1/21 - 9/30/21) |
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Month #2 (10/1/21 - 10/31/21) |
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Month #3 (11/1/21 - 11/30/21) |
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Month #4 (12/1/21 - 12/31/21) |
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Month #5 (1/1/22 - 1/31/22) |
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Month #6 (2/1/22 - 2/28/22) |
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The Board previously authorized
an open-market share repurchase program pursuant to which the Fund may purchase,
from time to time, Fund shares in open-market transactions, at the discretion of
management. Effective February 26, 2013, the Board approved a modification to
the Fund’s previously announced open-market share repurchase program to authorize
the Fund to repurchase up to 10% of the Fund’s shares outstanding in open
market transactions as of that date, at the discretion of management. Since the
inception of the program, the Fund had repurchased a total of 2,068,567 shares.
Item 10. Submission of
Matters to a Vote of Security Holders.
There have been no changes to the procedures by which
shareholders may recommend nominees to the Registrant's Board of Trustees that
would require disclosure herein.