Members of the Audit Committee are: David W. Niemiec, Ann
Torre Bates, J. Michael Luttig 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, Franklin
Advisers, Inc., in accordance with the Proxy Voting Policies and Procedures
(Policies) adopted by the investment manager.
Franklin Templeton
Investment Solutions, a separate investment group within Franklin Templeton,
comprised of investment personnel from the SEC-registered investment advisers
listed on Appendix A (hereinafter individually an “Investment Manager” and
collectively the "Investment Managers") have delegated the
administrative duties with respect to voting proxies for securities to the Franklin
Templeton 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 disseminating proxy materials and analyses of issuers
whose stock is owned by any client (including both investment companies and any
separate accounts managed by the Investment Managers) that has either delegated
proxy voting administrative responsibility to the Investment Managers or has
asked for information and/or recommendations on the issues to be voted. The Investment
Managers will inform Advisory Clients that have not delegated the voting
responsibility but that have requested voting advice about the Investment
Managers’ views on such proxy votes. The Proxy Group also provides these
services to other advisory affiliates of the Investment Managers.
The Proxy Group will process
proxy votes on behalf of, and the Investment Managers vote proxies solely in
the best interests of, separate account clients, the Investment
Managers’-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 Managers or (ii) the documents otherwise expressly prohibit the
Investment Managers from voting proxies. The Investment Managers recognize that
the exercise of voting rights on securities held by ERISA plans for which the
Investment Managers have 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
Managers indicating such intention and provide written instructions directing
the Investment Managers 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 Managers
have adopted and implemented Proxy Voting Policies and Procedures (“Proxy
Policies”) that they believe are reasonably designed to ensure that proxies are
voted in the best interest of Advisory Clients in accordance with their
fiduciary duties and rule 206(4)-6 under the Investment Advisers Act of 1940.
To the extent that the Investment Managers have a subadvisory agreement with an
affiliated investment manager (the “Affiliated Subadviser”) with respect to a particular
Advisory Client, the Investment Managers may delegate proxy voting
responsibility to the Affiliated Subadviser. The Investment Managers 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).
HOW THE INVESTMENT
MANAGERS VOTE PROXIES
All proxies received by
the Proxy Group will be voted based upon the Investment Managers’ instructions
and/or policies. To assist it in analyzing proxies of equity securities, the
Investment Managers subscribe 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 Managers subscribe 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 Managers
subscribe 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 Managers do not
consider recommendations from a Proxy Service or any third-party to be
determinative of the Investment Managers’ ultimate decision. Rather, the
Investment Managers exercise their independent judgment in making voting
decisions. As a matter of policy, the officers, directors and employees of the
Investment Managers 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 Managers’ 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.
All conflicts of interest
will be resolved in the best interests of the Advisory Clients. The Investment
Managers are affiliates 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 Managers
take the position that relationships between certain affiliates that do not use
the “Franklin Templeton” name (“Independent Affiliates”) and an issuer (e.g.,
an investment management relationship between an issuer and an Independent
Affiliate) do not present a conflict of interest for an Investment Manager in
voting proxies with respect to such issuer because: (i) the Investment Managers
operate as an independent business unit from the Independent Affiliate business
units, and (ii) informational barriers exist between the Investment Managers
and the Independent Affiliate business units.
Material
conflicts of interest could arise in a variety of situations, including as a
result of the Investment Managers’ or an affiliate’s (other than an Independent
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
Managers or an affiliate (other than an Independent Affiliate as described
above) and an issuer may exist: (1) the Investment Managers 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 Managers; 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 Managers or one of
its affiliates (other than Independent 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 Managers’ recommendation regarding the vote for approval.
To address certain affiliate conflict situations, the Investment Managers will
employ pass-through voting or mirror voting when required pursuant to a fund’s
governing documents or applicable law.
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 Managers and
affiliated Investment Managers (other than Independent
Affiliates) in accordance with the instructions of one or more of the Advisory
Clients.
The Investment Managers
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 Managers may consider various factors
in deciding whether to vote such proxies, including the Investment Managers’
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 Managers
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.”
Weight Given
Management Recommendations
One of the primary
factors the Investment Managers consider 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 Managers consider in determining how proxies should be
voted. However, the Investment Managers do not consider recommendations from
management to be determinative of the Investment Managers’ ultimate decision.
Each issue is considered on its own merits, and the Investment Managers 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 Managers
believe that engagement with issuers is important to good corporate governance
and to assist in making proxy voting decisions. The Investment Managers 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 Managers 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 Managers’ 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 Managers’ 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 Managers have 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 Managers’ research
analysts, 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 an 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 Managers understand their fiduciary duty to vote proxies and that
proxy voting decisions may affect the value of shareholdings. Therefore, the
Investment Managers will generally attempt to process every proxy it receives
for all domestic and foreign securities. However, there may be situations in
which the Investment Managers 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 an 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 Managers 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 Managers’ intended vote is
not correctly submitted; (x) the Investment Managers believe 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
Managers use 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 Managers do not have sufficient notice; or (c)
the exercise by the issuer of its discretion to reject the vote of the
Investment Managers. In addition, despite the best efforts of the Proxy Group
and its agents, there may be situations where the Investment Managers’ votes
are not received, or properly tabulated, by an issuer or the issuer’s agent.
The Investment Managers
or their affiliates may, on behalf of one or more of the proprietary registered
investment companies advised by the Investment Managers or their affiliates,
make efforts to recall any security on loan where the Investment Manager or
its affiliates (a) learn of a vote on an event that may materially 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 ability to timely recall shares is not entirely within the
control of the Investment Managers. Under certain circumstances, the recall of
shares in time for such shares to be voted may not be possible due to
applicable proxy voting record dates or other administrative considerations.
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.
If several issues are
bundled together in a single voting item, the Investment Managers will assess
the total benefit to shareholders and the extent that such issues should be
subject to separate voting proposals.
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 Managers for each account or fund involved. If
the Proxy Group does not receive voting instructions from the Investment
Managers, the Proxy Group will take no action on the event. The Investment
Managers 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 Managers may nonetheless vote as it deems in the best
interests of its Advisory Clients. The Investment Managers will report such
decisions on an annual basis to Advisory Clients as may be required.
These
Proxy Policies apply to accounts managed by personnel within
Franklin Templeton Investment Solutions,
which includes the following Investment Managers:
Franklin Advisers, Inc. (FAV)
Franklin Advisory Services, LLC (FASL)
Franklin Mutual Advisers LLC (FMA)
Franklin Templeton Investments Corp. (FTIC)
Franklin Templeton Investment Management
Limited (FTIML)
Templeton Asset
Management Ltd. (TAML)
The following Proxy
Policies apply to FAV, FMA, FTIC, FTIML, and TAML only:
HOW THE INVESTMENT
MANAGERS VOTE PROXIES
Certain of the Investment
Managers’ separate accounts or funds (or a portion thereof) are included under
Franklin Templeton Investment Solutions (“FTIS”), a separate investment group
within Franklin Templeton, and employ a quantitative strategy.
For such accounts, 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).
The
following Proxy Policies apply to FASL only:
HOW THE INVESTMENT
MANAGERS VOTE PROXIES
The Franklin LibertyQ
branded smart beta exchange traded funds and other passively managed exchange
traded funds (collectively, “ETFs”), seek to track a particular securities
index. As a result, each ETF may hold the securities of hundreds of issuers.
Because the primary criteria for determining whether a security should be included
(or continued to be included) in an ETF’s investment portfolio is whether such
security is a representative component of the securities index that the ETF is
seeking to track, the ETFs do not require the fundamental security research and
analyst coverage that an actively managed portfolio would require.
Accordingly, in light of the high number of positions held by an ETF 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 “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 rather than
analyze each individual proxy vote. Permitting the Investment Manager of the
ETFs to defer its judgment for voting on a proxy to the recommendations of ISS
or Glass Lewis may result in a proxy related to the securities of a particular
issuer held by an ETF being voted differently from the same proxy that is voted
on by other funds managed by the Investment Managers.
The following Proxy
Policies apply to FTIC, FTIML, and TAML only:
HOW THE INVESTMENT
MANAGERS VOTE PROXIES
For accounts managed by
the Templeton Global Equity Group (“TGEG”), in making voting decisions, the
Investment Manager may consider Glass Lewis’s Proxy Voting Guidelines, ISS’s
Benchmark Policies, ISS’s Sustainability Policy, and TGEG’s custom
sustainability guidelines, which reflect what TGEG believes to be good
environmental, social, and governance practices.
The
following Proxy Policies apply to FTIC only:
RESPONSIBILITY OF THE
INVESTMENT MANAGERS TO VOTE PROXIES
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 or the Investment Manager chooses securities for an Advisory Client’s
portfolios that are recommended by an Affiliated Subadviser, the Investment Manager
may delegate proxy voting responsibility to the Affiliated Subadviser or vote
proxies in accordance with the Affiliated Subadviser’s recommendations.
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.
|
|
|
|
|
|
|
|
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 (1/1/22 - 1/31/22) |
|
|
|
|
Month #2 (2/1/22 - 2/28/22) |
|
|
|
|
Month #3 (3/1/22 - 3/31/22) |
|
|
|
|
Month #4 (4/1/22 - 4/30/22) |
|
|
|
|
Month #5 (5/1/22 - 5/31/22) |
|
|
|
|
Month #6 (6/1/22 - 6/30/22) |
|
|
|
|
|
|
|
|
|
|
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 785,573 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.