Schedule 14A Information
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[ ] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material under Section 240.14a-12
Templeton Global Income Fund
(Name of Registrant as Specified in its Charter)
Name of Person(s) Filing Proxy Statement, other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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PRELIMINARY PROXY STATEMENT—SUBJECT TO SEC COMMENT AND COMPLETION
TEMPLETON GLOBAL INCOME FUND
IMPORTANT SHAREHOLDER INFORMATION
These materials are for the Annual Meeting of Shareholders (the “Meeting”) of Templeton Global Income Fund (the “Fund”) scheduled for Monday, [●], 2022 at 11:00 a.m., Eastern time.
THIS MEETING IS VERY IMPORTANT BECAUSE AN ACTIVIST HEDGE FUND, SABA CAPITAL MANAGEMENT, L.P. (“SABA”), IS TRYING TO TAKE OVER YOUR FUND, POTENTIALLY DEPRIVING YOU OF AN INVESTMENT VEHICLE. SABA HAS TAKEN A LARGE POSITION IN YOUR FUND AND IS ATTEMPTING TO TAKE COMPLETE CONTROL OF THE BOARD OF TRUSTEES OF THE FUND (THE “BOARD”) FOR ITS OWN BENEFIT WITHOUT REGARD FOR OTHER SHAREHOLDERS. SABA ALSO ANNOUNCED ITS INTENTION TO PRESENT A PROPOSAL TO FIRE THE FUND’S MANAGER AT THE MEETING, WHICH MAY LEAD TO SABA NAMING ITSELF AS THE MANAGER, ADDING TO SABA’S GROWING LIST OF CONFLICTS.
TO PROTECT YOUR INVESTMENT, WE ARE ASKING YOU TO VOTE FOR YOUR FUND’S NOMINEES, EACH OF WHOM IS A CURRENT TRUSTEE OF THE FUND (PROPOSAL 1), AND AGAINST SABA’S SHAREHOLDER PROPOSAL (PROPOSAL 3).
The enclosed materials discuss the proposals (the “Proposals” or each, a “Proposal”) to be voted on at the Meeting, and contain the Notice of Meeting, proxy statement and proxy card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells us how you wish to vote on important issues relating to the Fund. If you specify a vote on a Proposal, your proxy will be voted as you indicate. If you specify a vote on a Proposal, but not all Proposals, your proxy will be voted as specified on such Proposal and, on the Proposal for which no vote is specified, your proxy will be voted, to the extent not specified, FOR such Proposals 1 and 2 and AGAINST proposal 3. If you simply sign, date and return the WHITE proxy card, but do not specify a vote on any Proposal, your proxy will be voted FOR Proposals 1 and 2 and AGAINST Proposal 3.
We urge you to spend a few minutes reviewing the Proposals in the proxy statement. Then, please fill out and sign the WHITE proxy card and return it to us so that we know how you would like to vote. When shareholders return their proxies promptly, the Fund may be able to save money by not having to conduct additional mailings. YOUR FUND NEEDS ALL OF ITS SHAREHOLDERS TO VOTE BY RETURNING THE WHITE PROXY CARD – FAILURE TO VOTE HELPS SABA AND COULD RESULT IN YOU LOSING YOUR INVESTMENT VEHICLE.
PLEASE DO NOT SEND BACK THE GOLD PROXY CARD YOU MAY RECEIVE FROM SABA, EVEN TO WITHHOLD VOTES ON SABA’S NOMINEES OR TO VOTE AGAINST THEIR PROPOSAL, AS THIS MAY CANCEL YOUR PRIOR VOTE FOR YOUR FUND’S NOMINEES. IF YOU HAVE ALREADY RETURNED SABA’S GOLD PROXY CARD, YOU CAN STILL SUPPORT YOUR BOARD AND THE FUND BY RETURNING THE ENCLOSED WHITE PROXY CARD. ONLY YOUR LATEST DATED PROXY CARD WILL COUNT.
In light of the COVID-19 pandemic, we are urging all shareholders to take advantage of voting by mail, Internet or telephone (separate instructions are listed on the enclosed proxy card to vote by telephone or through the Internet). Additionally, while we anticipate that the Meeting will occur as planned on [●], 2022, there is a possibility that, due to the COVID-19 pandemic, the Meeting may be postponed or the location or approach may need to be changed, including the possibility of holding a virtual meeting for the health and safety of all Meeting participants. Should this occur, we will notify you by issuing a press release and filing an announcement with the U.S. Securities and Exchange Commission as definitive additional soliciting material. If you plan to attend the Meeting in person, please note that we will be holding the Meeting in accordance with any recommended and required social distancing and safety guidelines, as applicable.
We welcome your comments. If you have any questions, call Fund Information at (800) DIAL BEN®/342-5236.
TELEPHONE AND INTERNET VOTING
For your convenience, you may be able to vote by telephone or through the Internet, 24 hours a day. If your account is eligible, instructions are enclosed. |
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TEMPLETON GLOBAL
INCOME FUND
NOTICE OF 2022 ANNUAL
MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders (the “Meeting”) of
Templeton Global Income Fund (the “Fund”) will be held at the Fund’s offices,
300 S.E. 2nd Street, Fort Lauderdale, Florida 33301-1923 on
Monday, [●], 2022 at 11:00 a.m., Eastern time.
During the Meeting, shareholders of the
Fund will vote on the following Proposals:
1.
The re-election of four Trustees
of the Fund to hold office for the terms specified.
2.
The ratification of the selection
of PricewaterhouseCoopers LLP as the independent registered public accounting
firm for the Fund for the fiscal year ending December 31, 2022.
3.
If properly presented, a
shareholder proposal from Saba.
4.
Such other matters as may properly
come before the Meeting.
YOUR VOTE IS EXTREMELY IMPORTANT, ESPECIALLY
IN LIGHT OF SABA’S NOMINEES AND SHAREHOLDER PROPOSAL, BOTH OF WHICH ARE OPPOSED
BY ALL OF THE TRUSTEES NOT ASSOCIATED WITH SABA. Whether or not you plan to
attend the Meeting, and regardless of the number of shares you own, we urge you
to vote FOR your Fund’s nominees (Proposal 1), FOR
the ratification of PricewaterhouseCoopers LLP as the independent registered
public accounting firm for the Fund (Proposal 2), and AGAINST the
Saba shareholder proposal (Proposal 3), and by promptly completing, signing,
dating, and returning the enclosed WHITE proxy card in
the self-addressed envelope.
PLEASE DO NOT SEND BACK THE GOLD PROXY
CARD YOU MAY RECEIVE FROM SABA, EVEN TO WITHHOLD VOTES ON THE NOMINEES OR TO
VOTE AGAINST THEIR SHAREHOLDER PROPOSAL, AS THIS MAY CANCEL YOUR PRIOR VOTE FOR
YOUR FUND’S NOMINEES. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE
MEETING.
If you have any questions regarding this
information or the proxy materials, please contact AST Fund Solutions
(“AST”), our proxy solicitor
assisting us in connection with the Meeting. Shareholders may call toll-free at
[·]. Banks and brokers may call collect at [·].
By Order of the Board of Trustees,
Lori A. Weber
Vice President and Secretary
April
[●], 2022
Please sign and promptly return the proxy card or
voting instruction form in the enclosed self-addressed envelope regardless of
the number of shares you own. If you have any questions, call Fund Information
at (800) DIAL BEN®/342-5236.
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON [●], 2022
The Fund’s Notice
of Annual Meeting of Shareholders, Proxy Statement and form of Proxy are
available on the Internet at https://vote.proxyonline.com/franklin/docs/gim2022.pdf.
The form of Proxy on the Internet site cannot be used to cast your vote.
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
|
Some
of the statements herein may include forward-looking statements that reflect
our current views with respect to future events, financial performance and
market conditions. Such statements are provided under the “safe harbor”
protection of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include all statements that do not relate solely
to historical or current facts and generally can be identified by words or
phrases written in the future tense and/or preceded by words such as
“anticipate, “believe,” “could,” “depends,” “estimate,” “expect,” “intend,”
“likely,” “may,” “plan,” “potential,” “preliminary,” “seek,” “should,”
“will,” “would,” or other similar words or variations thereof, or the
negative thereof, but these terms are not the exclusive means of identifying
such statements.
Forward-looking
statements involve a number of known and unknown risks, uncertainties and
other important factors that may cause actual results and outcomes to differ
materially from any future results or outcomes expressed or implied by such
forward-looking statements, including pandemic-related risks, market and
volatility risks, investment performance and reputational risks, global
operational risks, competition and distribution risks, third-party risks,
technology and security risks, human capital risks, cash management risks,
and legal and regulatory risks. While forward-looking statements are our best
prediction at the time that they are made, you should not rely on them and
are cautioned against doing so. Forward-looking statements are based on our
current expectations and assumptions regarding our business, the economy and
other possible future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks and changes
in circumstances that are difficult to predict. They are neither statements
of historical fact nor guarantees or assurances of future performance.
Factors or events that could cause our actual results to differ may emerge from
time to time, and it is not possible for us to predict all of them.
These and other risks, uncertainties and other important factors are
described in more detail in our recent filings with the U.S. Securities and
Exchange Commission. If a circumstance occurs that causes any of our
forward-looking statements to be inaccurate, whether as a result of new
information, future developments or otherwise, we undertake no obligation to
announce publicly the change to our expectations, or to make any revision to
our forward-looking statements, to reflect any change in assumptions, beliefs
or expectations, or any change in events, conditions or circumstances upon
which any forward-looking statement is based, unless required by law.
|
TEMPLETON GLOBAL INCOME FUND
PROXY STATEMENT
◆ INFORMATION
ABOUT VOTING
Who is asking for my vote?
The Board of Trustees of Templeton Global Income Fund
(the “Fund”), in connection with the Fund’s Annual Meeting of Shareholders (the
“Meeting”), has requested your vote.
Who is eligible to vote?
Shareholders of record at the close of business on
April 1, 2022, are entitled to be present and to vote at the Meeting or any
adjourned Meeting. Each share of record is entitled to one vote (and a
proportionate fractional vote for each fractional share) on each matter
presented at the Meeting. The Notice of Meeting, the proxy statement, and the
proxy card were first mailed to shareholders of record on or about April
[●], 2022.
On what issues am I being asked to vote?
You are being asked to vote on three Proposals
on the enclosed WHITE proxy card:
1.
The re-election of four Trustees
of the Fund;
2.
The ratification of the selection
of PricewaterhouseCoopers LLP (“PwC”) as the independent registered public
accounting firm for the Fund for the fiscal year ending December 31, 2022; and
3.
If properly presented, a
shareholder proposal from Saba.
Saba may send you a
gold proxy card and ask you to vote on their four nominees and their
shareholder proposal. PLEASE DO NOT SEND BACK THE GOLD PROXY CARD YOU MAY
RECEIVE FROM SABA, EVEN TO WITHHOLD VOTES ON THE NOMINEES
OR TO VOTE AGAINST THEIR PROPOSAL, AS THIS MAY CANCEL YOUR PRIOR VOTE FOR YOUR
FUND’S NOMINEES.
How do the Fund’s Trustees recommend that I vote?
The majority of the Trustees (and all of the Trustees
not associated with Saba) recommend that you vote FOR the re-election of
the Fund’s four nominees for Trustee, FOR the ratification of the
selection of PwC as the independent registered public accounting firm for the
Fund for the fiscal year ending December 31, 2022, and AGAINST the
proposal anticipated to be presented by Saba.
Who are the Fund’s Nominees (Proposal 1)?
The Fund’s nominees are Mary C. Choksi,
Larry D. Thompson, Rupert H. Johnson, Jr., and Gregory E. Johnson, each
of whom, as described more fully below, has significant experience overseeing
the Fund and other Franklin Templeton open-end and closed-end funds.
The Fund’s nominees, together
with the other Fund-nominated Trustees on the Board, are focused on honoring
their fiduciary obligations and continuing to enhance value for all shareholders by achieving the Fund’s goal
of providing investors with high, current income, with a secondary goal of
capital appreciation. Under their leadership, the Fund has delivered on
its mandate to deliver high current income in a portfolio focused on global
sovereign bonds. In
addition, your Board has recently taken a number of pro-active steps to improve
the Fund’s performance, minimize
the Fund’s discount to net asset value, and provide liquidity to investors,
including 1) establishing a managed distribution plan with an 8% annualized
distribution rate, 2) conducting a 70% tender offer in order to provide
liquidity, 3) authorizing share repurchases, and 4) reaching an agreement with
the Fund’s investment manager to implement a short-term fee waiver to reduce
the Fund’s investment management fee. Your Board has taken these steps to ensure that your Fund
operates in a responsible manner to protect and advance the interests of all
shareholders, and not just a select few whose interests are in direct conflict
to the Fund’s long-term objectives. For those
reasons, we urge you to vote FOR your Fund’s nominees,
and not the Saba nominees, by promptly completing, signing, dating and
returning the enclosed WHITE proxy card.
Why do the Fund’s Trustees recommend that
I vote for the Fund’s Nominees (Proposal 1)?
The Fund’s nominees, Mary C. Choksi, Larry D. Thompson, Rupert
H. Johnson, Jr., and Gregory E. Johnson, have significant experience managing
investment vehicles, including the Fund. In contrast, the nominees
nominated by Saba have limited (if any) experience with closed-end funds or
global bond strategies. In addition, their association with Saba has the
potential to compromise their ability to make decisions that benefit ALL
shareholders. For those reasons, we urge you to
vote FOR your Fund’s nominees, and not the Saba
nominees, by promptly completing, signing, dating and returning the
enclosed WHITE proxy card.
Why do the Fund’s Trustees recommend that
I vote against the Saba shareholder proposal (Proposal 3)?
The Fund’s nominees, together
with the other Fund-nominated Trustees on the Board, strongly oppose
terminating the investment management agreement (the “Agreement”) with the
Fund’s investment manager, Franklin Advisers, Inc. (the “Manager”) because to
do so would be detrimental to the Fund shareholders by depriving Fund
shareholders of the strong performance and global expertise that the Manager
provides and introduce uncertainty, by leaving the Fund without an experienced
and proven investment manager to manage its assets. Accordingly, and as
described more fully below, the majority of the Fund’s Trustees recommend that
you vote AGAINST the Saba shareholder proposal.
What should I do with other proxy cards I
receive?
We urge you to vote the
Fund’s WHITE proxy card and discard the gold proxy card
you may receive from Saba. If you have already sent back the gold proxy
card, you can still change your vote – by promptly completing, signing, dating
and returning the enclosed WHITE proxy card, which will
replace the gold proxy card you previously completed. If you have already
sent in the enclosed WHITE proxy card, please do not
send back the gold proxy card you may receive from Saba, even to withhold votes
from Saba’s nominees because doing so will cancel out your prior vote on the
enclosed WHITE proxy card.
How do I ensure that my vote is accurately
recorded?
You may attend the Meeting
and vote in person or you may complete and return the enclosed WHITE proxy
card. Proxy cards that are properly signed, dated and received at or prior to
the Meeting will be voted as specified. If you specify a vote on any of the
Proposals, your proxy will be voted as you indicate. The Fund’s management
strongly urges you to return the enclosed WHITE proxy
card so that the Fund’s management can count your shares as present at the
Meeting. Please do not return the gold proxy card you may receive from Saba,
even if you are withholding votes on Saba’s nominees and voting against the
shareholder proposal. If you are eligible to vote by telephone or through the
Internet, separate instructions are enclosed.
How will
my WHITE proxy card be voted?
WHITE proxy cards that are properly
signed, dated and received at or prior to the Meeting will be voted as
specified. If you specify a vote for the Proposals, your proxy will be voted as
you indicate. If you simply sign, date and return the WHITE proxy
card, but don’t specify a vote on the Proposals, your shares will be
voted FOR the re-election of the Fund’s four nominees
for Trustee (Proposal 1), FOR the ratification of the selection
of PwC as the independent registered public accounting firm for the Fund for the
fiscal year ending December 31, 2022 (Proposal 2), and AGAINST the
shareholder proposal from Saba (Proposal 3).
May I revoke my proxy?
You may revoke your proxy at
any time before it is voted by forwarding a written revocation or a later-dated
proxy to the Fund, which must be received by the Fund at or prior to the
Meeting, or by attending the Meeting and voting in person.
Returning Saba’s gold proxy
card will revoke any WHITE proxy card previously
returned to the Fund, even if you withhold votes on Saba’s nominees and vote
against the shareholder proposal on the gold proxy card. Therefore, PLEASE
DISCARD THE GOLD PROXY CARD FROM SABA AND ONLY RETURN THE ENCLOSED WHITE PROXY
CARD.
What does it mean if I
receive more than one proxy card?
Many of our shareholders hold their shares in more than
one account and may receive separate proxy cards or voting instructions forms
for each of those accounts. If you receive more than one WHITE proxy card, your
shares are registered in more than one name or are registered in different
accounts. Please sign, date and return or otherwise submit your proxy with
respect to each WHITE proxy card to ensure that all of your shares are voted.
Additionally, please note that Saba has stated its
intention to take control of the Board and present a proposal to fire the
Fund’s Manager at the Meeting. If Saba proceeds with its proposal, you may
receive proxy solicitation materials from Saba, including an opposition proxy
statement and a GOLD proxy card. All of the Trustees not associated with Saba
recommend that you disregard and do NOT return any GOLD proxy card you receive
from Saba.
Voting to “WITHHOLD”
with respect to any Saba nominee on a GOLD proxy card sent to you by Saba is
NOT the same as voting for the Board nominees because a vote to “WITHHOLD” with respect to any Saba
nominee on its GOLD proxy card will revoke any proxy you previously submitted.
If you
have already voted using Saba’s GOLD proxy card, you have every right to change
your vote and revoke your prior proxy card by signing and dating the enclosed
WHITE proxy card and returning it in the postage-paid envelope provided or by
voting via the Internet and/or by telephone by following the instructions
provided on the enclosed WHITE proxy card. Only the latest dated proxy card you
submit will be counted. If you have any question or need assistance voting,
please call AST, the Fund’s proxy solicitor. Shareholders may call toll-free at
[·].Banks and brokers may call collect at [·].
Who should I call if I have questions or
need assistance voting my shares?
If you have any questions or
need assistance in voting your shares, please call AST at [NUMBER]
May I attend the Meeting in Person?
Shareholders of record at the close of business on
April 1, 2022 are entitled to attend the Meeting. Eligible shareholders who
intend to attend the Meeting in person will need to bring proof of share
ownership, such as a shareholder statement or a letter from a custodian or
broker-dealer confirming ownership, as of April 1, 2022 and a valid picture
identification, such as a driver’s license or passport, for admission to the
Meeting. Seating is limited. Shareholders without proof of ownership and
identification will not be admitted.
In light of the COVID-19
pandemic, we are urging all shareholders to take advantage of voting by mail,
Internet or telephone (separate instructions are listed on the enclosed proxy
card to vote by telephone or through the Internet). Additionally, while we
anticipate that the Meeting will occur as planned on [●], 2022, there is
a possibility that, due to the COVID-19 pandemic, the Meeting may be postponed
or the location or approach may need to be changed, including the possibility
of holding a virtual meeting for the health and safety of all Meeting
participants. Should this occur, we will notify you by issuing a press release
and filing an announcement with the U.S Securities and Exchange Commission
(“SEC”) as definitive additional soliciting material. If you plan to attend
the Meeting in person, please note that we will be holding the Meeting in
accordance with any recommended and required social distancing and safety
guidelines, as applicable.
What if
my shares are held in a brokerage account?
If your shares are held by your broker, then in order
to vote in person at the Meeting, you will need to obtain a “Legal Proxy” from
your broker and present it to the Inspector of Election at the Meeting. Also,
in order to revoke your proxy, you may need to forward your written revocation
or a later-dated proxy card or voting instruction form to your broker rather
than to the Fund.
◆ BACKGROUND
OF SOLICITATION
Saba also nominated four individuals for the Fund’s
2021 Annual Meeting of Shareholders and submitted a shareholder proposal to amend the Fund’s Bylaws to introduce a
mandatory tender offer requirement (the “Amendment”). The Board supported
the Fund’s nominees and opposed the Saba
nominees because the Fund’s nominees had significant experience managing
investment vehicles, including the Fund. In addition, the Board opposed the
Amendment because it believed that (1) the Amendment could cause the Fund to
repeatedly lose assets to the point where it may no longer be able to operate
as a closed-end fund investment, and (2) the Amendment was unlawful under the
Fund’s governing instruments and applicable Delaware law. At the Fund’s
2021 Annual Meeting of Shareholders, the Saba nominees were elected but the Saba
shareholder proposal was not approved by Fund shareholders.
In January 2022, the Board created a
Special Committee of the Board comprised of independent Trustees who were not
nominated by Saba in connection with the 2021 Annual Meeting of Shareholders and
are independent of the Manager (the “Special Committee”) to review and consider
the Saba nominations and proposal for the Meeting. The Special Committee met
with Saba on February 17, 2022 to give Saba the opportunity to discuss their
proposals, including their views on how the Fund would be managed if the Agreement
were terminated, including how Saba would change the Fund’s investment goals
and policies. Saba did not provide any additional information with respect to
their proposals, but instead asserted that the Board should make those
decisions after the Meeting.
After careful and thorough consideration,
the Special Committee recommended that the Board recommend that shareholders
vote against the Saba proposal to terminate the Agreement and re-elect Mary C.
Choksi, Larry D. Thompson, Rupert H. Johnson, Jr., and Gregory E. Johnson.
Specifically, the Special Committee noted (i) the complete lack of information
from Saba with respect to how they think the Fund should be managed following a
termination of the Agreement; (ii) the information provided by the Manager with
respect to the potential continuation of the current Agreement; and (iii) the
Manager’s short-term fee waiver to reduce the Fund’s investment management fee.
The Special Committee also noted the extensive experience and knowledge of Mary
C. Choksi, Larry D. Thompson, Rupert H. Johnson, Jr., and Gregory E. Johnson.
PROPOSAL 1: ELECTION OF
TRUSTEES
Why should shareholders support the Fund’s
nominees?
Each of the Fund’s nominees, Mary C. Choksi, Larry D. Thompson, Rupert
H. Johnson, Jr., and Gregory E. Johnson, has experience serving as a Trustee of
the Fund and is also on the boards of other open-end and closed-end funds in
the Franklin Templeton/Legg Mason fund complex.
Accordingly, these nominees have significant experience managing investment
vehicles, including the Fund. Each of the Fund’s nominees also has
substantial corporate and/or government professional experience that makes it
appropriate for him or her to serve on the Board of Trustees of the Fund (the
“Board” or the “Trustees”).
In contrast, the nominees
nominated by Saba have limited (if any) experience with closed-end funds or
global bond strategies. In addition, their association with Saba has the
potential to compromise their ability to make decisions that benefit ALL
shareholders. Historically, Saba has taken actions that are damaging to
closed-end funds and detrimental to the Fund’s long-term shareholders such as
attempting to take over funds, forcing expensive proxy contests, and pressuring
funds into holding liquidity events (such as tender offers, open-ending or
liquidating) for its own immediate profit and that of its private hedge fund clients.
In addition, Saba has had four hand-picked Trustees serving on the Fund’s Board
since May 2021 (the “Saba Trustees”) (three of whom are officers of Saba) who
have been responsible in part for the oversight of the Fund. During that time,
neither the Saba Trustees nor Saba itself have suggested any initiatives for
the Fund. In fact, Saba and the Saba Trustees have declined to support actions
that the Manager has proposed in an effort to improve the performance of the
Fund, such as the use of a credit facility.
The Fund-nominated Trustees
on the Board believe that electing Saba’s nominees and voting for Proposal 3
would essentially turn the Fund over to Saba when it has provided no
information as to 1) its intentions or qualifications, or 2) the expected
impact of any planned changes on your investment. Saba followed a similar
takeover playbook for another income oriented closed-end fund, the Voya Prime
Rate Trust, in 2021 by 1) aggressively investing in the fund, 2) electing a
majority of its nominees to the board, 3) causing the termination of the fund’s
investment adviser and hiring itself to manage the fund, and 4) radically
changing the fund’s investment policies so that it now invests a substantial
portion of its assets in high risk, speculative assets such as special purpose
acquisition companies, also known as SPACs. Unlike the Manager, who has a long
history in international investing over 70 years ago, Saba does not appear to
have any significant relevant experience in managing a global bond fund and is
therefore not qualified to manage the Fund. This would
deprive you of your ability to invest in the Fund with its global income
strategy and world class global bond manager.
As a result, the Board
intends to vigorously contest the election of Saba’s nominees. We urge you to
vote FOR your Fund’s nominees by promptly completing,
signing, dating and returning the enclosed WHITE proxy
card. PLEASE DISCARD THE GOLD PROXY CARD FROM SABA.
How are nominees selected?
The Board has a Nominating Committee consisting of
Edith E. Holiday (Chairperson), J. Michael Luttig and Larry D. Thompson, none
of whom is an “interested person” of the Fund as defined by the Investment
Company Act of 1940, as amended (the “1940 Act”). Trustees who are not
interested persons of the Fund are referred to as the “Independent Trustees,”
and Trustees who are interested persons of the Fund are referred to as the
“Interested Trustees.”
The Nominating Committee is responsible for selecting
candidates to serve as Trustees and recommending such candidates (a) for
selection and nomination as Independent Trustees by the incumbent Independent
Trustees and the full Board; and (b) for selection and nomination as
Interested Trustees by the full Board. In considering a candidate’s qualifications,
the Nominating Committee generally considers the potential candidate’s
educational background, business or professional experience, and reputation. In
addition, the Nominating Committee has established as minimum qualifications
for Board membership as an Independent Trustee: (1) that such candidate be
independent from relationships with the Fund’s investment manager and other
principal service providers both within the terms and the spirit of the
statutory independence requirements specified under the 1940 Act and the rules
thereunder; (2) that such candidate demonstrate an ability and willingness
to make the considerable time commitment, including personal attendance at
Board meetings, believed necessary to his or her function as an effective Board
member; and (3) that such candidate have no continuing relationship as a
director, officer or board member of any U.S. registered investment company
other than those within the Franklin Templeton/Legg Mason fund complex or a
closed-end business development company primarily investing in non-public
entities. Mr. Thompson recused himself from the Nominating Committee selection
with regard to his own nomination. The Nominating Committee has not adopted any
specific policy on the issue of diversity, but will consider diversity among
other factors such as experience, education and skill sets, in its
consideration of new candidates to the Board.
When the Board has or expects to have a vacancy, the
Nominating Committee receives and reviews information on individuals qualified
to be recommended to the full Board as nominees for election as Trustees,
including any recommendations by “Qualifying Fund Shareholders” (as defined
below). Such individuals are evaluated based upon the criteria described above.
To date, the Nominating Committee has been able to identify, and expects to
continue to be able to identify, from its own resources an ample number of
qualified candidates. The Nominating Committee, however, will review
recommendations from Qualifying Fund Shareholders to fill vacancies on the
Board if these recommendations are submitted in writing and addressed to the
Nominating Committee at the Fund’s offices and are presented with appropriate
background material concerning the candidate that demonstrates his or her ability
to serve as a Trustee, including as an Independent Trustee, of the Fund. A
Qualifying Fund Shareholder is a shareholder who (i) has continuously
owned of record, or beneficially through a financial intermediary, shares of
the Fund having a net asset value of not less than two hundred fifty thousand
dollars ($250,000) during the twenty-four month period prior to submitting the
recommendation; and (ii) provides a written notice to the Nominating
Committee containing the following information: (a) the name and address
of the Qualifying Fund Shareholder making the recommendation; (b) the
number of shares of the Fund which are owned of record and beneficially by the
Qualifying Fund Shareholder and the length of time that the shares have been
owned by the Qualifying Fund Shareholder; (c) a description of all
arrangements and understandings between the Qualifying Fund Shareholder and any
other person or persons (naming such person or persons) pursuant to which the
recommendation is being made; (d) the name, age, date of birth, business
address and residence address of the person or persons being recommended;
(e) such other information regarding each person recommended by the
Qualifying Fund Shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the U.S. Securities and Exchange
Commission (“SEC”) had the nominee been nominated by the Board;
(f) whether the Qualifying Fund Shareholder making the recommendation
believes the person recommended would or would not be an “interested person” of
the Fund, as defined in the 1940 Act; and (g) the written consent of each
person recommended to serve as a Trustee of the Fund if so nominated and
elected/appointed.
The Nominating Committee may amend these procedures
from time to time, including the procedures relating to the evaluation of
nominees and the process for submitting recommendations to the Nominating
Committee.
The Board has adopted and approved a formal written
charter for the Nominating Committee. A
copy of the charter is attached as Exhibit A to this proxy statement.
Who are the nominees and Trustees?
The Board is divided into three classes. Each class
has a term of three years. Each year, the term of office of one class expires.
This year, the terms of four Trustees expire: Mary C. Choksi, Larry D. Thompson, Rupert H. Johnson, Jr.,
and Gregory E. Johnson. These individuals
have been nominated for three-year terms, set to expire at the 2025 Annual
Meeting of Shareholders. These terms continue, however, until their successors
are duly elected and qualified. All of the nominees are currently members of
the Board and Ms. Choksi and Mr. Thompson are deemed to be Independent
Trustees. In addition, all of the current nominees and Trustees are also
directors or trustees of other investment companies within the Franklin
Templeton/Legg Mason fund complex.
Interested Trustees of the Fund hold director and/or
officer positions with, or are principal stockholders of, Franklin Resources,
Inc. (“Resources”) and its affiliates. Resources is a publicly owned holding
company, a principal stockholder of which is Rupert H. Johnson, Jr., who
beneficially owned approximately 20.7% of its outstanding shares as of
December 31, 2021. The shares deemed to be beneficially owned by Rupert H.
Johnson, Jr. include certain shares held by a private charitable foundation or
by his spouse, of which he disclaims beneficial ownership. Resources, a global
investment management organization operating as Franklin Templeton, is
primarily engaged, through various subsidiaries, in providing investment
management, share distribution, transfer agent and administrative services to a
family of investment companies. Resources is a New York Stock Exchange
(“NYSE”) listed holding company (NYSE: BEN). Rupert H. Johnson, Jr., Chairman
of the Board, Trustee and Vice President of the Fund, is the uncle of Gregory
E. Johnson, a Trustee of the Fund. There are no other family relationships
among the Trustees or nominees for Trustee.
Each nominee currently is available and has consented
to serve if re-elected. If any of the nominees should become unavailable, the
designated proxy holders will vote in their discretion for another person or
persons who may be nominated to serve as Trustees.
In addition to personal qualities, such as integrity,
in considering candidates for the Board, the Nominating Committee seeks to find
persons of good reputation whose experience and background evidence that such
person has the ability to comprehend, discuss and critically analyze materials
and issues presented, in exercising judgments and reaching informed conclusions
relevant to fulfillment of a Fund Trustee’s duties and fiduciary obligations.
Information on the business activities of the nominees and other Trustees
during the past five years and beyond appears below and it is believed that the
specific background of each Trustee evidences such ability and is appropriate
to his or her serving on the Board. As indicated, Larry D. Thompson has a legal
background, including high level legal positions with departments of the U.S.
Government; Mary C. Choksi has an extensive background in asset management,
including founding an investment management firm; and Rupert H. Johnson, Jr.
and Gregory E. Johnson are both high ranking executive officers of Resources.
Listed below with the business activities of the
nominees and Trustees are their names and years of birth, their positions and
length of service with the Fund and the number of portfolios in the Franklin
Templeton/Legg Mason fund complex that they oversee.
Independent Trustees serving until 2023 Annual Meeting
of Shareholders:
Name, Year of Birth and
Address
|
Position
|
Length of
Time Served
|
Number of
Portfolios in
Franklin
Templeton/
Legg Mason
Fund Complex
Overseen
by Trustee*
|
Other Directorships Held During
at Least the Past Five Years
|
Edith E. Holiday (1952)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923
|
Lead Independent Trustee
|
Trustee since 1996 and Lead Independent Trustee
since 2007
|
121
|
Hess
Corporation (exploration of oil and gas) (1993-present), Santander Consumer
USA Holdings, Inc. (consumer finance) (2016-present); Santander Holdings USA
(holding company) (2019-present); and formerly, Canadian National
Railway (railroad) (2001-2021), White Mountains Insurance Group, Ltd.
(holding company) (2004-May 2021), RTI International Metals, Inc.
(manufacture and distribution of titanium) (1999-2015) and H.J. Heinz Company
(processed foods and allied products) (1994-2013).
|
Principal Occupation
During at Least the Past 5 Years:
|
Director
or Trustee of various companies and trusts; and formerly, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and
Public Liaison-United States Treasury Department (1988-1989).
|
J. Michael Luttig (1954)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923
|
Trustee
|
Since 2009
|
121
|
Boeing Capital Corporation
(aircraft financing) (2006-2010).
|
Principal Occupation
During at Least the Past 5 Years:
|
Private
investor; and formerly, Counselor and Senior Advisor to the Chairman,
CEO, and Board of Directors, of The Boeing Company (aerospace company), and
member of the Executive Council (May 2019-January 1, 2020); Executive Vice
President, General Counsel and member of the Executive Council, The Boeing
Company (2006-2019); and Federal Appeals Court Judge, United States Court of
Appeals for the Fourth Circuit (1991-2006).
|
Constantine D. Tseretopoulos (1954)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923
|
Trustee
|
Since 1999
|
20
|
None
|
Principal Occupation
During at Least the Past 5 Years:
|
Physician,
Chief of Staff, owner and operator of the Lyford Cay Hospital (1987-present);
director of various nonprofit organizations; and formerly, Cardiology
Fellow, University of Maryland (1985-1987); and Internal Medicine Resident,
Greater Baltimore Medical Center (1982-1985).
|
|
|
|
|
|
|
|
|
|
Independent Trustees serving until 2024 Annual Meeting
of Shareholders:
Name, Year of Birth and
Address
|
Position
|
Length of
Time Served
|
Number of
Portfolios in
Franklin
Templeton/
Legg Mason
Fund Complex
Overseen
by Trustee*
|
Other Directorships Held During
at Least the Past Five Years
|
Aditya Bindal (1976)
405 Lexington Avenue, 58th Fl.
New York, NY 10174
|
Trustee
|
Since May 2021
|
1
|
Voya Prime Rate Trust (closed-end Management
investment company) (2020-present).
|
Principal Occupation During at Least the Past 5
Years:
|
Chief Risk Officer, Saba Capital Management, L.P.
(hedge fund) (2018-present); and formerly, Chief Risk Officer, Water Island
Capital,
LLC (hedge fund) (2015-2018).
|
Frederic
P. Gabriel (1974)
464 Hudson Street, #259
New York, NY 10014
|
Trustee
|
Since May 2021
|
1
|
None
|
Principal Occupation During at Least the Past 5
Years:
|
Founder
and Chief Executive Officer, Orion Realty NYC LLC (real estate)
(2014-present).
|
Paul C. Kazarian (1984)
405
Lexington Avenue, 58th Fl.
New York,
NY 10174
|
Trustee
|
Since May 2021
|
1
|
None
|
Principal Occupation During at Least the Past 5
Years:
|
Managing
Director, Saba Capital Management, L.P. (hedge fund) (2013-present).
|
Pierre Weinstein (1974)
405
Lexington Avenue, 58th Fl.
New York,
NY 10174
|
Trustee
|
Since May 2021
|
1
|
None
|
Principal Occupation During at Least the Past 5
Years:
|
Partner,
Saba Capital Management, L.P. (hedge fund) (2009-present).
|
The following tables provide the dollar range of the
equity securities of the Fund and of all U.S. registered funds in the Franklin
Templeton/Legg Mason fund complex beneficially owned by the Trustees as of
April 1, 2022:
|
|
|
Independent Trustees:
Name of Trustee
|
Dollar Range of Equity
Securities in the Fund(1)
|
Aggregate Dollar Range of Equity
Securities in all Funds in the
Franklin Templeton/Legg Mason
Fund Complex
|
Aditya Bindal..................................................................................................................................................................................................................
|
[None]
|
[None]
|
Mary C. Choksi...............................................................................................................................................................................................................
|
[None]
|
Over $100,000
|
Frederic Gabriel..............................................................................................................................................................................................................
|
[None]
|
[None]
|
Edith E. Holiday.............................................................................................................................................................................................................
|
[$1—$10,000]
|
Over $100,000
|
Paul Kazarian..................................................................................................................................................................................................................
|
[None]
|
[None]
|
J. Michael Luttig.............................................................................................................................................................................................................
|
[None]
|
Over $100,000
|
Larry D. Thompson........................................................................................................................................................................................................
|
[$1—$10,000]
|
Over $100,000
|
Constantine D. Tseretopoulos......................................................................................................................................................................................
|
[None]
|
Over $100,000
|
Pierre Weinstein..............................................................................................................................................................................................................
|
[None]
|
[None]
|
Interested Trustees:
Name of Trustee
|
Dollar Range of Equity
Securities in the Fund(1)
|
Aggregate Dollar Range of Equity
Securities in all Funds in the
Franklin Templeton/Legg Mason
Fund Complex
|
Rupert H. Johnson, Jr.....................................................................................................................................................................................................
|
[None]
|
Over $100,000
|
Gregory E. Johnson........................................................................................................................................................................................................
|
[None]
|
Over $100,000
|
(1) Dollar range based on NYSE closing price on April 1, 2022.
How often do the Trustees meet and what
are they paid?
The role of the Trustees is to provide general
oversight of the Fund’s business and to ensure that the Fund is operated for
the benefit of all of the Fund’s shareholders. The Trustees anticipate meeting
at least five times during the current fiscal year to review the operations of
the Fund and the Fund’s investment performance, and will meet more frequently
as necessary. The Trustees also oversee the services furnished to the Fund by
Franklin Advisers, Inc., the Fund’s investment manager (the “Manager”), and
various other service providers.
The Fund’s Independent Trustees who are not nominated
by or associated with Saba constitute the sole independent Board members of 11
investment companies in the Franklin
Templeton/Legg Mason fund complex. As of
January 1, 2018, each of these Independent Trustee is paid a $245,000
annual retainer fee, together with a $7,000 per meeting fee for attendance at
each regularly scheduled Board meeting, a portion of which fees are allocated
to the Fund. To the extent held, compensation also may be paid for attendance
at specially called Board meetings. The Fund’s Lead Independent Trustee is paid
an annual supplemental retainer of $50,000 for service to such investment
companies, a portion of which is allocated to the Fund. Board members who serve
on the Audit Committee of the Fund and such other investment companies receive
a $10,000 annual retainer fee, together with a $3,000 fee per Audit Committee
meeting attended, a portion of which is allocated to the Fund. Mary C. Choksi,
who serves as Chair of the Audit Committee of the Fund, receives an additional
$15,000, for a total retainer fee of $25,000 per year, a portion of which is
allocated to the Fund. As a Trustee of only one fund within the Franklin Templeton/Legg Mason fund complex, Mr.
Gabriel is paid a pro rata portion of the fees described above, based on the
Fund’s size within the larger complex.
During the fiscal year
ended December 31, 2021, there were seven meetings of the Board, five
meetings of the Audit Committee, and three meetings of the Nominating
Committee. Each Trustee then in office attended at least 75% of the aggregate
of the total number of meetings of the Board and the total number of meetings
held by all committees of the Board on which the Trustee served. The Fund does
not currently have a formal policy regarding Trustees’ attendance at the annual
shareholders’ meeting. No Trustees attended the Fund’s last annual meeting held
on May 7, 2021.
Independent Trustees are also reimbursed for expenses
incurred in connection with attending Board meetings. The Interested Trustees
and certain officers of the Fund who are shareholders of Resources are not
compensated by the Fund for their services, but may receive indirect
remuneration due to their participation in management fees and other fees
received by the Manager and its affiliates from the funds within Franklin
Templeton. The Manager or its affiliates pay the salaries and expenses of the
officers and the Interested Trustees. No pension or retirement benefits are
accrued as part of Fund expenses.
The table below indicates the total fees paid to the
Independent Trustees by the Fund individually and by all of the funds in the
Franklin Templeton/Legg Mason fund complex. These Trustees also serve as
directors or trustees of other funds in Franklin Templeton, many of which hold
meetings at different dates and times. The Trustees and the Fund’s management
believe that having the same individuals serving on the boards of multiple
funds in Franklin Templeton enhances the ability of each fund to obtain, at a
relatively modest cost to each separate fund, the services of high caliber,
experienced and knowledgeable Independent Trustees who can bring their experience
and talents to, and effectively oversee the management of, several funds.
|
|
|
|
Name of Trustee
|
Aggregate
Compensation
from the Fund(1)
|
Total Compensation from
Franklin Templeton/Legg Mason
Fund Complex(2)
|
Number of Boards within
Franklin Templeton/Legg Mason
Fund Complex
on which Trustee Serves(3)
|
Harris J. Ashton(4)............................................................................................................................................................................................................
|
$4,509
|
$640,317
|
35
|
Ann Torre Bates(4)...........................................................................................................................................................................................................
|
$4,721
|
$654,070
|
14
|
Aditya Bindal..................................................................................................................................................................................................................
|
$0
|
$0
|
1
|
Mary C. Choksi...............................................................................................................................................................................................................
|
$10,869
|
$684,367
|
36
|
Frederic
Gabriel……………………………………………..
|
$3,683
|
$3,683
|
1
|
Edith E. Holiday.............................................................................................................................................................................................................
|
$8,541
|
$774,000
|
36
|
Paul Kazarian………………………………………………...
|
$0
|
$0
|
1
|
J. Michael Luttig.............................................................................................................................................................................................................
|
$10,954
|
$706,001
|
36
|
David W. Niemiec(4)........................................................................................................................................................................................................
|
$4,864
|
$603,878
|
14
|
Larry D. Thompson........................................................................................................................................................................................................
|
$7,521
|
$684,000
|
36
|
Constantine D. Tseretopoulos......................................................................................................................................................................................
|
$10,933
|
$309,001
|
12
|
Robert E. Wade(4)............................................................................................................................................................................................................
|
$4,569
|
$556,317
|
14
|
Pierre Weinstein..............................................................................................................................................................................................................
|
$0
|
$0
|
1
|
(1) Compensation
received for the fiscal year ended December 31, 2021.
(2) Compensation
received for the 12 months ended December 31, 2021.
(3) We
base the number of boards on the number of U.S. registered investment companies
in the Franklin Templeton/Legg Mason fund complex. This number does not include
the total number of series or funds within each investment company for which
the Board members are responsible. The Franklin Templeton/Legg Mason fund
complex includes 55 U.S. registered investment companies, with approximately
300 U.S. based funds or series.
(4) Messrs. Ashton, Niemiec, and Wade and Ms.
Bates served on the Board until the 2021 Annual Meeting of Shareholders.
Board members historically have followed a policy of
having substantial investments in one or more of the funds within Franklin
Templeton, as is consistent with their individual financial goals. This policy
was formalized in February 1998, and revised in May 2019, through the adoption
of a requirement that each Board member annually invest one-third of the fees
received for serving as a director or trustee of a Templeton fund (excluding
committee fees) in shares of one or more Templeton funds (which may include the
Fund) until the value of such investments equals or exceeds three times the
annual retainer and regular Board meeting fees paid to such Board member.
Investments in the name of family members or entities controlled by a Board
member constitute fund holdings of such Board member for purposes of this
policy, and a three-year phase-in period applies to such investment
requirements for newly elected Board members. In implementing such policy, a
Board member’s fund holdings existing on February 27, 1998, were valued as
of such date with subsequent investments valued at cost. All of the current
members of the Board that are not associated with Saba, including the Fund’s
nominees, are compliant with this policy.
The Trustees nominated by or associated with Saba do
not have investments in the Fund or in the Franklin Templeton/Legg Mason
Fund Complex.
Who are
the Executive Officers of the Fund?
Officers of the Fund are appointed by the
Trustees and serve at the pleasure of the Board. Listed below, for the
Executive Officers, are their names, years of birth and addresses, as well as
their positions and length of service with the Fund, and principal occupations
during at least the past five years.
|
|
|
Name, Year of Birth and Address
|
Position
|
Length of Time Served
|
Rupert H. Johnson, Jr.
|
Chairman of the Board, Trustee and Vice
President
|
Chairman of the Board and Trustee since
2013 and Vice President since 1996
|
|
Please refer to the table “Nominees for Interested Trustee to serve
until 2025 Annual Meeting of Shareholders” for additional information about
Mr. Rupert H. Johnson, Jr.
|
Alison E. Baur (1964)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Vice President and
Assistant Secretary
|
Since 2012
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Deputy General Counsel,
Franklin Templeton; and officer of some of the other subsidiaries of Franklin
Resources, Inc. and of certain funds in the Franklin Templeton/Legg Mason
fund complex.
|
Breda M. Beckerle (1958)
280 Park Avenue
New York, NY 10017
|
Chief Compliance Officer
|
Since 2020
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Chief Compliance Officer,
Fiduciary Investment Management International, Inc., Franklin Advisers, Inc.,
Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and
officer of certain funds in the Franklin Templeton/Legg Mason fund complex.
|
Steven J. Gray (1955)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Vice President and
Assistant Secretary
|
Since 2009
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Senior Associate General
Counsel, Franklin Templeton; Vice President, FASA, LLC; Assistant Secretary,
Franklin Distributors, LLC; and officer of certain funds in the Franklin
Templeton/Legg Mason fund complex.
|
Michael J. Hasenstab (1973)
One Franklin Parkway
San Mateo, CA 94403-1906
|
President and Chief Executive
Officer—Investment Management
|
Since 2018
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Executive Vice President,
Franklin Advisers, Inc.; and officer of some of the other subsidiaries of
Franklin Resources, Inc. and officer of certain funds in the Franklin
Templeton/Legg Mason fund complex.
|
Matthew T. Hinkle (1971)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Chief Executive Officer—Finance and Administration
|
Since 2017
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Senior Vice President,
Franklin Templeton Services, LLC; officer of certain funds in the Franklin
Templeton/Legg Mason fund complex; and formerly, Vice President,
Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin
Templeton (2009-2017).
|
Susan Kerr (1949)
620 Eighth Avenue
New York, NY 10018
|
Vice President—
AML Compliance
|
Since July 2021
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Senior Compliance Analyst,
Franklin Templeton; Chief Anti-Money Laundering Compliance Officer, Legg
Mason & Co., or its affiliates; and officer of certain funds in the
Franklin Templeton/Legg Mason fund complex.
|
Christopher Kings (1974)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Chief Financial Officer,
Chief Accounting Officer and Treasurer
|
Since January 2022
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Treasurer, U.S. Fund
Administration & Reporting; and officer of certain funds in the
Franklin Templeton/Legg Mason fund complex.
|
Name, Year of Birth and Address
|
Position
|
Length of Time Served
|
Navid J. Tofigh (1972)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Vice President and
Assistant Secretary
|
Since 2015
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Senior Associate General Counsel,
Franklin Templeton; and officer of certain funds in the Franklin
Templeton/Legg Mason fund complex.
|
Craig S. Tyle
(1960)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Vice President and
Assistant Secretary
|
Since 2005
|
|
Principal Occupation During at Least
the Past 5 Years:
|
General Counsel and
Executive Vice President, Franklin Resources, Inc.; and officer of some of
the other subsidiaries of Franklin Resources, Inc. and of certain funds in
the Franklin Templeton/Legg Mason fund complex.
|
Lori A. Weber
(1964)
300 S.E. 2nd Street
Fort Lauderdale, FL 33301-1923
|
Vice President and
Secretary
|
Vice President since 2011 and
Secretary since 2013
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Senior Associate General Counsel,
Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice
President and Secretary, Templeton Investment Counsel, LLC; and officer of
certain funds in the Franklin Templeton/Legg Mason fund complex.
|
Christine Zhu
(1975)
One Franklin Parkway
San Mateo, CA 94403-1906
|
Vice President
|
Since 2018
|
|
Principal Occupation During at Least
the Past 5 Years:
|
Vice President, Franklin
Advisers, Inc.; and officer of certain funds in the Franklin Templeton/Legg
Mason fund complex.
|
PROPOSAL 2: RATIFICATION
OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
How are independent auditors selected?
The Board has a standing Audit Committee currently
comprised of Mary C. Choksi, J. Michael Luttig and Constantine D. Tseretopoulos,
all of whom are Independent Trustees and considered to be “independent” as that
term is defined by the NYSE’s listing standards. The Audit Committee is
responsible for the appointment, compensation and retention of the Fund’s
independent registered public accounting firm (“independent auditors”),
including evaluating their independence, recommending the selection of the
Fund’s independent auditors to the full Board, and meeting with such
independent auditors to consider and review matters relating to the Fund’s
financial reports and internal controls.
Which independent auditors did the Board
select?
The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP (“PwC”) as the independent auditors for the
Fund for the current fiscal year. PwC has examined and reported on the fiscal
year-end financial statements dated December 31, 2021, and certain related
SEC filings. You are being asked to ratify the Board’s selection of PwC for the
current fiscal year ending December 31, 2022. Services to be performed by the
independent auditors include examining and reporting on the fiscal year-end
financial statements of the Fund and certain related filings with the SEC.
The selection of PwC as the independent auditors for
the Fund for the fiscal year ending December 31, 2022, was recommended by the
Audit Committee and approved by the Board on February 27, 2022. PwC’s reports
on the financial statements of the Fund for the fiscal years for which it has
served as auditors did not contain an adverse opinion or a disclaimer of
opinion, nor were qualified or modified as to uncertainty, audit scope or
accounting principles.
The
Audit Committee and the Board have been advised by PwC that neither PwC nor any
of its members have any material direct or indirect financial interest in the
Fund. Representatives of PwC are not expected to be present at the Meeting, but
will have the opportunity to make a statement if they wish, and will be
available to respond to appropriate questions.
◆ AUDITOR
INFORMATION
Audit Fees. The aggregate fees paid to PwC
for professional services rendered by PwC for the audit of the Fund’s annual
financial statements or for services that are normally provided by PwC in
connection with statutory and regulatory filings or engagements were $55,508
for the fiscal year ended December 31, 2021, and $64,942 for the fiscal year
ended December 31, 2020.
Audit-Related Fees. There were no fees paid to PwC
for assurance and related services rendered by PwC to the Fund that are reasonably
related to the performance of the audit of the Fund’s financial statements and
are not reported under “Audit Fees” above for the fiscal years ended
December 31, 2021, and December 31, 2020.
In addition, the Audit Committee pre-approves PwC’s
engagement for audit-related services to be provided to the Manager and any
entity controlling, controlled by, or under common control with the Manager
that provides ongoing services to the Fund, which engagements relate directly
to the operations and financial reporting of the Fund. For the fiscal years
ended December 31, 2021, and December 31, 2020, there were no fees
paid to PwC for such services.
Tax Fees. There
were no fees paid to PwC for professional services rendered by PwC to the Fund
for tax compliance, tax advice and tax planning (“tax services”) for the fiscal
years ended December 31, 2021, and December 31, 2020.
In addition, the Audit Committee pre-approves PwC’s
engagement for tax services to be provided to the Manager and any entity
controlling, controlled by, or under common control with the Manager that
provides ongoing services to the Fund, which engagements relate directly to the
operations and financial reporting of the Fund. There were no fees paid to PwC
for such services for the fiscal years ended December 31, 2021, and
December 31, 2020.
All Other Fees. The aggregate fees paid to PwC for products and
services rendered by PwC to the Fund, other than the services reported above,
were $366 for the fiscal year ended December 31, 2021, and $0 for the fiscal
year ended December 31, 2020. The services for which these fees were paid
included review of materials provided to the Fund Board in connection with the
investment management contract renewal process.
In addition, the Audit Committee pre-approves PwC’s
engagement for other services to be provided to the Manager and any entity
controlling, controlled by, or under common control with the Manager that
provides ongoing services to the Fund, which engagements relate directly to the
operations and financial reporting of the Fund. The aggregate fees paid to PwC
for such services were $55,000 for the fiscal year ended December 31, 2021, and
$49,800 for the fiscal year ended December 31, 2020. The services for which
these fees were paid included issuance of an Auditors’ Certificate for South
Korean regulatory shareholder disclosures, professional fees in connection with
determining the feasibility of a U.S. direct lending structure, professional
services relating to the readiness assessment over Greenhouse Gas Emissions and
Energy, and assets under management certification.
Aggregate Non-Audit Fees. The aggregate fees paid to PwC
for non-audit services rendered by PwC to the Fund or to the Manager and to any
entity controlling, controlled by, or under common control with the Manager
that provides ongoing services to the Fund were $55,366 for the fiscal year
ended December 31, 2021, and $49,800 for the fiscal year ended
December 31, 2020.
The Audit Committee has considered whether the
provision of the non-audit services that were rendered to the Manager and to
any entity controlling, controlled by, or under common control with the Manager
that provides ongoing services to the Fund is compatible with maintaining PwC’s
independence.
Audit Committee Pre-Approval Policies and Procedures. As of the date of this proxy
statement, the Audit Committee has not adopted written pre-approval policies
and procedures within the meaning of Rule
2-01(c)(7)(i) of Regulation S-X
promulgated by the SEC. As a result, the services described above that are subject to Audit Committee pre-approval and provided by PwC must be directly pre-approved by
the Audit Committee or by a designated member of the Audit Committee pursuant to delegated authority.
Audit Committee Charter. The Board has adopted and
approved a formal written charter for the Audit Committee which sets forth the
Audit Committee’s responsibilities. A copy of the charter is attached as
Exhibit B to this proxy statement.
As required by the charter, the Audit Committee
reviewed the Fund’s audited financial statements and met with management, as
well as with PwC, the Fund’s independent auditors, to discuss the financial
statements.
Audit Committee Report. The Audit Committee received
the written disclosures and the letter(s) from PwC required by the applicable
requirements of the Public Company Accounting Oversight Board (“PCAOB”)
regarding PwC’s communications with the Audit Committee concerning
independence. The Audit Committee also received the report of PwC regarding the
results of their audit. In connection with the Audit Committee’s review of the
financial statements and PwC’s report, the members of the Audit Committee
discussed with a representative of PwC, PwC’s independence, as well as the
matters required to be discussed by the applicable requirements of the PCAOB
and the SEC, including, but not limited to, the following: PwC’s
responsibilities in accordance with generally accepted auditing standards;
PwC’s responsibilities for information prepared by management that accompanies
the Fund’s audited financial statements and any
procedures performed and the results; the initial selection of, and whether
there were any changes in, significant accounting policies or their
application; management’s judgments and accounting estimates; whether there
were any significant audit adjustments; whether there were any disagreements
with management; whether there was any consultation with other accountants;
whether the auditors encountered any difficulties in dealing with management in
performing the audit; and PwC’s judgments about the quality of the Fund’s
accounting principles.
Based on its review and discussions with management
and PwC, the Audit Committee did not become aware of any material misstatements
or omissions in the financial statements. Accordingly, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Fund’s Annual Report to Shareholders for the fiscal year ended
December 31, 2021, for filing with the SEC.
AUDIT COMMITTEE
Mary C. Choksi
J. Michael Luttig
Constantine D. Tseretopoulos
PROPOSAL 3: A SHAREHOLDER PROPOSAL
Saba has informed the Fund that it intends
to present the shareholder proposal at the Meeting. The shareholder proposal is
set forth below, followed by an explanation of why a majority of the Board of
Trustees opposes the shareholder proposal. All of the Trustees not
associated with Saba recommend that you vote AGAINST the shareholder proposal.
Proposal:
RESOLVED, that the investment management
agreement between Templeton Global
Income Fund, Inc. (the “Fund”) and
Templeton Investment Counsel, LLC, dated as of October
30, 1992, and amended and restated as of
April 1, 1993 and December 6, 1994, and amended
January 1, 2001 (the “Original IM
Agreement”), and subsequently assigned to Franklin Advisers,
Inc. (the “Manager”) pursuant to the
assignment and assumption agreement, dated as of July 25,
2001 (together with the Original IM
Agreement and any amendments thereto, the “Investment
Management Agreement”), and all other
related advisory and management agreements between
the Fund and the Manager be, and hereby
are terminated by the shareholders of the Fund,
pursuant to the right granted thereto
included in the Investment Management Agreement as
required by Section 15(a)(3) of the
Investment Company Act of 1940 (the “1940 Act”), with
such termination to be effective sixty
(60) days following the date hereof.
OPPOSITION STATEMENT OF TEMPLETON GLOBAL
INCOME FUND
ALL OF THE TRUSTEES NOT ASSOCIATED WITH
SABA RECOMMEND THAT SHAREHOLDERS VOTE “AGAINST” PROPOSAL 3.
Saba proposes terminating the investment
management agreement (the “Agreement”) with the Fund’s investment manager, Franklin
Advisers, Inc. (the “Manager”). A majority of the Board of Trustees opposes the
termination of the Agreement (the “Termination”) because the Fund has
historically had strong performance and the Manager’s expertise provides
shareholders with valuable global income exposure. Termination would deny Fund
shareholders of the global proficiency that the Manager provides and introduce
uncertainty, by leaving the Fund without an investment manager to manage its
assets. As discussed in Proposal 1 above, Saba is an activist shareholder that
has a long history of pressuring closed-end funds into taking actions for Saba’s
own immediate profit (and that of its private hedge fund clients), even where
such actions are egregiously harmful to the longer-term interests of other Fund
shareholders. A majority of the Board of Trustees (and all of the Trustees
not associated with Saba) therefore recommends that the Fund’s shareholders
vote AGAINST Proposal 3.
The Termination would deprive the Fund of
the Manager’s skilled expertise. Global fixed income funds require
sophisticated and knowledgeable management. Franklin Templeton is a premier
global bond manager with extensive expertise and an established track record in
managing global bond strategies over the course of multiple decades.
STRONG TEAM: The Fund is managed by CIO Michael
Hasenstab (PhD in economics), Director of Research, Calvin Ho (PhD in
economics) and Director of Portfolio Construction & Trading, Christine Zhu
(MBA; MS in Computer Science and Engineering). This leadership team has worked
together for over 15 years and has a combined average of more than 20 years of
investment experience.
The broader
investment team of 29 includes a highly experienced and credentialed staff of
economists, research analysts, quantitative analysts and traders from 6
continents, with proficiency in 18 different languages. The cultural and
cognitive diversity of the team is one of its greatest strengths. Known for its
expertise in macroeconomic research, the team has invested in more than 50
countries and currencies in multiple regions across the globe. The expertise
and experience that the management team provides to the Fund cannot be
replicated or replaced.
STRONG
LONG-TERM RECORD: The longer-term
track record of the Fund demonstrates its staying power. The Fund has
outperformed the JPM Global Government Bond Index (JGBI), on both an absolute
and risk-adjusted basis over the majority of the rolling three-year (76%),
five-year (78%), seven-year (85%), and ten-year periods (85%) during the last
20 years. The Fund’s relative performance ran into headwinds towards the end of
2019 and in 2020, mainly due to a defensive stance that restricted its
participation in the risk rallies during the pandemic. The Fund has benefitted significantly
from its pivot back towards a higher risk allocation in late 2020. The Fund’s
performance sharply improved and the Fund outperformed the JPM Global
Government Bond Index in 2021. Moreover, in a volatile market environment, the
Fund has continued to outperform its peer average by 8.13%, and the JPM Global
Government Bond Index by 5.70%, year-to-date (as of 3/23/22).
STRONG DOWNSIDE PROTECTION: From a risk management perspective, the Fund has remained within
its risk tolerance bands not only during defensive positioning cycles, but also
during periods of higher risk allocation. Both the Fund’s defensive stance in
2020 and its shift back into risks exposures in 2021 were achieved with a
significantly lower and comparatively more stable annualized volatility than its
peers. Notably, the Fund has historically provided strong relative returns and
meaningful downside protection during sharp escalations in global financial
market volatility, specifically when equities and other risk assets have
sharply declined. The Fund’s downside risk protection is enabled by strong
collaboration with the Franklin Templeton risk management team.
UNCONSTRAINED AND UNCORRELATED: The Fund’s ability to redirect
allocations away from index exposures (unconstrained) and into specially
identified areas of cyclical value across a wide and largely unlimited global
opportunity set are a critical reason for why it has been able to maintain
strong relative performance in 2022 while nearly all corners of the global
financial markets have seen significant negative returns from sharply rising
yields, widening credit spreads and broad volatility across equity markets. The
Fund is a highly attractive strategy as a portfolio diversifier over the
long-term due to its uncorrelation to major asset classes, specifically
equities and core fixed income. The Fund is particularly well-suited for the
broad financial market headwinds associated with the global monetary tightening
cycle in 2022.
UNIQUE FUND CHARACTERISTICS: The Fund’s distribution yield remains
highly competitive among peers at 8.0% of net asset value. Currently, the Fund
holds a high overall portfolio yield on a low overall portfolio duration. This
structure is designed to help mitigate interest-rate risks across the Fund,
while substantially raising the Fund’s risk-adjusted return potential. Yields
are primarily sourced from specific local-currency sovereign bond markets
instead of chasing yield in riskier credit markets or in the lowest credit
tiers. Average credit quality of the Fund is A- (as of February 28, 2022), it’s
yield-to-maturity is 6.3% and its portfolio duration is just 2.6 years. By
comparison, the JPM Government Bond Index has a yield of just 1.1% and a
duration of 8.0 years, exposing it to substantially higher interest-rate risks.
IMPACT OF SABA’S PROPOSALS: Saba’s Termination proposal would be
detrimental to Fund shareholders. Saba’s Termination proposal fails to
acknowledge the tenuous position in which Fund shareholders would find
themselves if the Agreement was terminated. If shareholders chose to terminate
the Agreement, the Manager would be fired, thereby stranding Fund shareholders
without an investment manager to invest their assets in the longer-term. In
instances of the termination of an investment management agreement, the
Investment Company Act of 1940 allows for a temporary investment manager to be
appointed for an interim period of up to 5 months, but the Fund’s Board would
have to identify a new investment manager willing to take over the management
of the Fund and conduct a costly proxy campaign in order to have shareholders
formally vote and approve the new investment manager.
Saba suggests firing the Fund’s investment
manager, yet Saba has had four hand-picked Trustees serving on the Fund’s Board
since May 2021 (the “Saba Trustees”) (three of whom are officers of Saba) who
have been responsible in part for the oversight of the Fund. During that time,
neither the Saba Trustees nor Saba itself have suggested any initiatives for
the Fund. In fact, Saba and the Saba Trustees have declined to support, or even
offer alternatives to, actions that the Manager has proposed in an effort to
improve the performance of the Fund, such as the use of a credit facility. Saba
followed a similar takeover playbook for another closed-end fund, the Voya
Prime Rate Trust, in 2021 by i) aggressively investing in the fund, ii)
electing itself onto the board, iii) causing the investment adviser to be
terminated and hiring itself, and iv) radically changing the fund’s investment
policies so that it now invests a substantial portion of its assets in high
risk, speculative assets such as special purpose acquisition companies, also
known as SPACs.1
Unlike the Manager, who has a long history in international
investing over 70 years ago, Saba does not appear to have any significant
relevant experience in managing a global bond fund and is therefore not
qualified to manage the Fund. This would deprive you of your ability to invest
in the Fund with its global income strategy and world class global bond
manager.
1
Effective after the close of
business on June 4, 2021, the Voya Prime Rate Trust, previously managed by Voya
Financial, became the Saba Capital Income & Opportunities Fund, and Saba
Capital Management, L.P. became the fund’s new investment manager.
When coupled with Saba’s Trustee
nominations, voting for Proposal 3 would be detrimental to shareholders, causing
shareholders to lose the well-performing strategy that the Manager has
established, essentially turning the Fund over to Saba when it has provided no
information as to its intentions or qualifications, or the expected impact of
any planned changes on your investment. For the foregoing reasons, a
majority of the Board of Trustees, and all of the Trustees not associated with
Saba, believes that the Termination proposed by Saba is self-serving and not in
any way beneficial to the Fund’s shareholders, and therefore recommends that
shareholders vote AGAINST Proposal 3.
◆ ADDITIONAL
INFORMATION ABOUT THE FUND’S BOARD OF TRUSTEES
Board Role in Risk Oversight. The Board, as a whole,
considers risk management issues as part of its general oversight responsibilities
throughout the year at regular Board meetings, through regular reports that
have been developed by management in consultation with the Board and its
counsel. These reports address certain investment, valuation and compliance
matters. The Board also may receive special written reports or presentations on
a variety of risk issues (e.g.,
COVID-19 related issues), either upon the
Board’s request or upon the Manager’s initiative. In addition, the Audit
Committee of the Board meets regularly with the Manager’s internal audit group
to review reports on their examinations of functions and processes within
Franklin Templeton that affect the Fund.
With respect to investment risk, the Board receives
regular written reports describing and analyzing the investment performance of
the Fund. In addition, the portfolio managers of the Fund meet regularly with
the Board to discuss portfolio performance, including investment risk. To the
extent that the Fund changes a particular investment strategy that could have a
material impact on the Fund’s risk profile, the Board generally is consulted
with respect to such change. To the extent that the Fund invests in certain
complex securities, including derivatives, the Board receives periodic reports
containing information about exposure of the Fund to such instruments. In
addition, the Manager’s investment risk personnel meet regularly with the Board
to discuss a variety of issues, including the impact on the Fund of the
investment in particular securities or instruments, such as derivatives and
commodities, if applicable.
With respect to valuation, the Fund’s administrator
provides regular written reports to the Board that enable the Board to monitor
the number of investments fair valued by management appraisal in the Fund’s
portfolio, the reasons for such fair valuation and the methodology used to
arrive at the fair value. Such reports also include information concerning
illiquid investments within the Fund’s portfolio. The Board also reviews
dispositional analysis information on the sale of investments that require
special valuation considerations such as illiquid or certain fair valued
investments. In addition, the Fund’s Audit Committee reviews valuation
procedures and results with the Fund’s independent auditors in connection with
the Committee’s review of the results of the audit of the Fund’s year-end
financial statements.
With respect to compliance risks, the Board receives
regular compliance reports prepared by the Manager’s compliance group and meets
regularly with the Fund’s Chief Compliance Officer (“CCO”) to discuss
compliance issues, including compliance risks. In accordance with SEC rules,
the Independent Trustees meet regularly in executive session with the CCO and
the CCO prepares and presents an annual written compliance report to the Board.
The Board adopts compliance policies and procedures for the Fund and approves
these procedures for the Fund’s service providers. The compliance policies and
procedures are specifically designed to detect and prevent violations of the
federal securities laws.
The Manager periodically provides an enterprise risk
management presentation to the Board to describe the way in which risk is
managed on a complex-wide level. The presentation covers such areas as
investment risk, reputational risk, personnel risk, and business continuity
risk.
Board Structure. Seventy-five percent or more of the Board
members consist of Independent Trustees who are not deemed to be “interested
persons” by reason of their relationship with the Fund’s management or
otherwise as provided under the 1940 Act. While the Chairman of the Board is an
interested person, the Board is also served by a Lead Independent Trustee. The
Lead Independent Trustee, together with independent counsel, reviews proposed
agendas for Board meetings and generally acts as a liaison with Fund management
with respect to questions and issues raised by the Independent Trustees. The
Lead Independent Trustee also presides at separate meetings of Independent
Trustees held in advance of each scheduled Board meeting where various matters,
including those being considered at such Board meeting, are discussed. It is
believed such structure and activities assure that proper consideration is
given at Board meetings to matters deemed important to the Fund and its
shareholders.
◆ ADDITIONAL INFORMATION ABOUT THE FUND
The Investment
Manager. The
Manager of the Fund is Franklin Advisers, Inc., a California corporation with
offices at One Franklin Parkway, San Mateo, California 94403-1906. Pursuant to
an investment management agreement, the Manager manages the investment and
reinvestment of Fund assets. The Manager is a wholly owned subsidiary of
Resources.
The Administrator. The administrator of the Fund
is Franklin Templeton Services, LLC (“FT Services”), with offices at 300
S.E. 2nd Street, Fort Lauderdale, Florida 33301-1923. FT Services is an
indirect, wholly owned subsidiary of Resources and an affiliate of the Manager.
Pursuant to a subcontract for administrative services, FT Services performs
certain administrative functions for the Fund. JPMorgan Chase & Co.
(“JPMC”), 270 Park Avenue, New York, NY 10017, has an agreement with FT
Services to provide certain sub-administrative services for the Fund.
The Transfer Agent. The transfer agent, registrar
and dividend disbursement agent for the Fund is American Stock
Transfer & Trust Company, LLC, 6201 15th Avenue,
Brooklyn, NY 11219.
The Custodian. The custodian for the Fund is JPMorgan Chase
Bank, 270 Park Avenue, New York, New York 10017-2070.
Other Financial Information. The Fund’s latest audited
financial statements and annual report for the fiscal year ended
December 31, 2021, are available free of charge. To obtain a copy, please
call (800) DIAL BEN®/342-5236 or forward a written request to Franklin
Templeton Investor Services, LLC, P.O. Box 33030, St. Petersburg,
Florida 33733-8030.
Principal Shareholders. [As of April 1, 2022, the
Fund had 102,796,927 shares outstanding and total net assets of $550.18
million.] The Fund’s shares are listed on the NYSE (NYSE: GIM). To the
knowledge of the Fund’s management, as of April 1, 2022, there were no entities
holding beneficially or of record more than 5% of the Fund’s outstanding
shares, except as shown in the following table:
Name and Address of Beneficial Ownership
|
Amount and Nature
of Beneficial Ownership
|
Percent of
Outstanding Shares
|
Saba Capital Management, L.P...............................................................................................
|
29,674,178*
|
28.87%
|
405 Lexington Avenue
58th Floor
New
York, NY 10174
|
|
|
* The nature of beneficial ownership is shared
voting and dispositive power as reported on Schedule 13D filed with the SEC on
December 28, 2021.
First Trust Portfolios LP............................................................................................................
|
11,534,340**
|
11.22%
|
120 East Liberty Drive
Suite 400
Wheaton,
IL 60187
|
|
|
** The
nature of beneficial ownership is shared voting and dispositive power as
reported on Schedule 13G, filed with the SEC on February 10, 2022.
[In addition, to the knowledge of the Fund’s
management, as of April 1, 2022, no nominee or Trustee of the Fund owned 1% or
more of the outstanding shares of the Fund, and the Trustees and officers of
the Fund owned, as a group, less than 1% of the outstanding shares of the
Fund.]
Section 16(a) Beneficial Ownership
Reporting Compliance. Section 16 of the Securities Exchange Act of 1934, as
amended, requires that Forms 3, 4, and 5 be filed with the SEC, the relevant
securities exchange and the Fund, by or on behalf of certain persons, including
trustees, certain officers, and certain affiliated persons of the investment adviser.
The Fund believes that these requirements were met for the Fund’s last fiscal
year, with the exception of (i) Form 3 filings for the Saba-nominated Trustees,
Frederic Gabriel, Paul Kazarian, and Pierre Weinstein
and (ii) certain Form 4 filings made by Saba, which appeared to have been filed
late.
Contacting the Board of Trustees. If a shareholder wishes to
send a communication to the Board, such correspondence should be in writing and
addressed to the Board of Trustees at the Fund’s offices, 300 S.E. 2nd Street,
Fort Lauderdale, Florida 33301-1923, Attention: Secretary. The correspondence
will be given to the Board for review and consideration.
◆ OTHER MATTERS
Householding
Under this procedure, registered shareholders who have the same address
and last name will receive one copy of the proxy materials that are delivered
until such time as one of more of these shareholders notifies us that they want
to receive separate copies. Shareholders who participate in householding will
continue to have access to utilize separate proxy voting instructions.
If you are a
registered shareholder and would like to have separate copies of the proxy
materials mailed to you in the future, or you would like to have a single copy
of the proxy materials mailed to you in the future, you must submit a request
in writing to please contact your bank, broker, or other nominee record holder.
If you are a beneficial shareholder, please contact your bank or broker to opt
in or out of householding.
[However, please
note that if you wish to receive a separate WHITE proxy card or vote
instruction form or other proxy materials for purposes of this year’s Meeting,
you should request them by following the instructions listed on the enclosed
WHITE proxy card or listed at [●], by telephoning [●], or by
sending an e-mail to [●] and we will deliver promptly, upon
written or oral request, separate copies of the proxy materials for this year’s
Meeting.]
Trading History
The Fund has not
sold any shares within the past two years. The Fund has purchased shares within
the past two years as follows:
Fund Securities
Purchased (1/1/2020 through 3/1/2022)
Date
|
Number of Shares
|
Nature of Transaction
|
12/8/2021
|
31,347,231
|
Tender offer
|
1/31/2022
|
13,378.00
|
Share
repurchase
|
2/1/2022
|
11,622.00
|
Share
repurchase
|
2/2/2022
|
4,366.00
|
Share
repurchase
|
2/3/2022
|
4,920.00
|
Share
repurchase
|
2/4/2022
|
5,576.00
|
Share
repurchase
|
2/7/2022
|
8,595.00
|
Share
repurchase
|
2/8/2022
|
9,957.00
|
Share
repurchase
|
2/9/2022
|
9,602.00
|
Share
repurchase
|
2/10/2022
|
6,746.00
|
Share
repurchase
|
2/11/2022
|
171
|
Share
repurchase
|
2/14/2022
|
67
|
Share
repurchase
|
◆
FURTHER INFORMATION ABOUT VOTING AND
THE MEETING
Solicitation of
Proxies.
Your vote is being solicited by the Trustees. The cost of soliciting proxies,
including the fees of a proxy soliciting agent, is borne by the Fund. The Fund
reimburses brokerage firms and others for their reasonable expenses in forwarding
proxy material to the beneficial owners and soliciting them to execute proxies.
The Fund has contracted with AST to assist with solicitation of proxies. The
Fund anticipates that the cost of retaining AST will be up to approximately
$90,000, plus reimbursement of reasonable out-of-pocket expenses (which amount
is included in the estimate of total expenses below). AST anticipates
that approximately 50 of its employees or other persons will be involved in
soliciting shareholders of the Fund.
In addition to solicitation
services to be provided by AST, proxies may be solicited by the Fund and its
Trustees and executive officers, and/or regular employees and officers of the
Fund’s Manager, administrator, or any of their affiliates, none of whom will
receive any additional compensation for these solicitations.
The Fund expects that the
solicitation will be primarily by mail, but also may include advertisement,
telephone, telecopy, facsimile transmission, electronic, oral, or other means
of communication, or by personal contacts. If the Fund does not receive your
proxy by a certain time you may receive a telephone call from a proxy
soliciting agent asking you to vote.
Although no precise estimate can be made at the
present time, it is currently estimated that the aggregate amount to be spent
in connection with the solicitation of proxies by the Fund (excluding the
salaries and fees of officers and employees) will be approximately $[
]. To date, approximately $[ ] has been spent on the solicitation.
These estimates include fees for attorneys, accountants, public relations or
financial advisers, proxy solicitors, advertising, printing, transportation,
litigation, and other costs incidental to the
solicitation, but exclude costs normally expended for the election of Trustees in
the absence of a contest, and costs represented by salaries and wages of
regular employees and officers.
Participants. Because Saba has filed
a proxy statement in support of its nominees and, thus, has commenced a proxy
contest, the SEC requires the Fund to provide shareholders with certain
additional information relating to “participants” as defined in the SEC’s proxy
rules. Pursuant to those rules, the Fund’s Trustees and executive officers are
“participants.” For information about the Fund’s Trustees and executive
officers, please refer to Proposal 1 of this Proxy Statement. Certain
regular employees and officers of the Fund’s Manager, administrator, or any of
their affiliates may become “participants” if any such persons solicit proxies.
The address of the participants is the address of the Fund’s principal
executive offices. Except as otherwise disclosed in this Proxy Statement, none
of the participants has a substantial interest in this solicitation, and none
of the participants listed herein have purchased or sold or otherwise acquired
or disposed of any shares of the Fund in the last two years. Information
with respect to the participants’ beneficial ownership of shares of the Fund is
as of April 1, 2022.
Voting by Broker-Dealers. Because the Fund anticipates that the election of Trustees
and the shareholder proposal will be contested, the Fund expects that
broker-dealer firms holding shares of the Fund in “street name” for their
customers will not be permitted by NYSE rules to vote on behalf of their
customers and beneficial owners in the absence of voting instructions from
their customers and beneficial owners. Accordingly, the Fund does not expect to
receive “broker non-votes” (i.e., shares held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) with respect to Proposal 1
or Proposal 3. Broker non-votes have the effect of a vote against
Proposal 2.
Quorum. A
majority of the Fund’s shares entitled to vote at the Meeting—present in person
or represented by proxy—constitutes a quorum at the Meeting.
Method of Tabulation. Provided a quorum is present
or represented at the Meeting, Proposal 1, the election of Trustees, requires
the affirmative vote of a plurality of the Fund’s shares present in person or
represented by proxy and voting on Proposal 1 at the Meeting. This means that
the Trustee nominees receiving the largest number of votes will be elected to
fill the available positions, and a nominee may be elected even if he or she
received the affirmative vote of less than a majority of the outstanding shares
of the Trust voting.
Proposal 2, ratification of the selection of the
independent auditors, requires the affirmative vote of (i) sixty-seven
percent (67%) or more of the voting securities present in person or represented
by proxy at the Meeting, if the holders of more than fifty percent (50%) of the
outstanding voting securities of the Fund are present or represented by proxy;
or (ii) more than fifty percent (50%) of the outstanding voting securities
of the Fund, whichever is less.
Provided that a quorum has been
established, Proposal 3, the Saba shareholder proposal, requires the affirmative vote of (i) sixty-seven
percent (67%) or more of the voting securities present in person or represented
by proxy at the Meeting, if the holders of more than fifty percent (50%) of the
outstanding voting securities of the Fund are present or represented by proxy;
or (ii) more than fifty percent (50%) of the outstanding voting securities
of the Fund, whichever is less.
Abstentions will be treated as votes present at the
Meeting, but will not be treated as votes cast for any of the proposals.
Abstentions, therefore, will have no effect on Proposal 1, but may have the
effect of an “against” vote on Proposals 2 and 3.
Adjournment. The Chairman of the Board or an authorized
officer of the Fund for the Meeting, or the holders of a majority of the shares
present (in person or by proxy) and entitled to vote at the Meeting, may
adjourn the Meeting from time to time. Such authority to adjourn the Meeting
may be used in the event that a quorum is not present at the Meeting or, in the
event that a quorum is present but sufficient votes have not been received to
approve the Proposals, or for any other reason consistent with Delaware law and
the Fund’s By-Laws, including to allow for the further solicitation of proxies.
Unless otherwise instructed by a shareholder granting a proxy, the persons
designated as proxies may use their discretionary authority to vote as
instructed by management of the Fund on questions of adjournment and on any
other Proposals raised at the Meeting to the extent permitted by the SEC’s
proxy rules, including Proposals for which management of the Fund did not have
timely notice, as set forth in the SEC’s proxy rules and the Fund’s proxy
statement for the 2021 annual meeting.
Shareholder Proposals. The Fund anticipates that its
2023 Annual Meeting of Shareholders will be held on or about [ ], 2023. A
shareholder who wishes to submit a proposal for consideration for inclusion in
the Fund’s proxy statement for the 2023 Annual Meeting of Shareholders must
send such written proposal to the Fund’s offices at 300 S.E. 2nd Street, Fort
Lauderdale, Florida 33301-1923, Attention: Secretary, so that it is received no
later than [●] in order to be included in the Fund’s proxy statement and
proxy card relating to that meeting and presented at the meeting. Submission of
a proposal by a shareholder does not guarantee that the proposal will be
included in the proxy statement.
A shareholder of the Fund
who has not submitted a written proposal for inclusion in the Fund’s proxy statement
by [●], as described above, may nonetheless present a proposal at the
Fund’s 2023 Annual Meeting of Shareholders if such shareholder notifies the
Fund in writing at the Fund’s offices, of such proposal not earlier than
[●], and not later than [●]. If a shareholder fails to give notice
within these dates, then the matter shall not be eligible for consideration at
the shareholders’ meeting. If, notwithstanding the effect of the foregoing
notice provisions, a shareholder proposal is acted upon at the 2023 Annual
Meeting of Shareholders, the persons designated as proxies for the 2023 Annual
Meeting of Shareholders may exercise discretionary voting power with respect to
any shareholder proposal not received by the Fund at the Fund’s offices by
February 21, 2023. A shareholder proposal may be presented at the 2023 Annual
Meeting of Shareholders only if such proposal concerns a matter that may be
properly brought before the meeting under applicable federal proxy rules and
state law. In addition to the requirements set forth above, a shareholder must
comply with the following:
1. A
shareholder intending to present a proposal must (i) be entitled to vote
at the meeting; (ii) comply with the notice procedures set forth in this
proxy statement and in the Fund’s By-Laws; and (iii) have been a
shareholder of record at the time the shareholder’s notice was received by the
Secretary of the Fund.
2. A
notice regarding a nomination for the election of a Trustee shall set forth in
writing (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice; (ii) the principal
occupation or employment of each such nominee; (iii) the number of
outstanding shares of the Fund which are beneficially owned by each such nominee;
and (iv) all such other information regarding each such nominee as would
have been required to be included in a proxy statement filed pursuant to the
proxy rules of the SEC had each such nominee been nominated by the Trustees of
the Fund. In addition, the shareholder making such nomination shall promptly
provide any other information reasonably requested by the Fund.
3. A
notice regarding a business proposal shall set forth in writing as to each
matter: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting;
(ii) the name and address, as they appear on the Fund’s books, of the
shareholder proposing such business; (iii) the number of shares of the
Fund which are beneficially owned by the shareholder; (iv) any material
interest of the shareholder in such business; and (v) all such other
information regarding each such matter that would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC had
each such matter been proposed by the Trustees of the Fund.
Submission of a proposal by a shareholder does not
guarantee that the proposal will be included in the Fund’s proxy statement or
presented at the meeting.
By Order of the Board of Trustees,
Lori A. Weber
Vice President and Secretary
April
[●], 2022
EXHIBIT A
NOMINATING COMMITTEE CHARTER
I. The Committee.
The Nominating Committee (the “Committee”) is a committee of, and established by, the Board of Directors/Trustees of the Fund (the “Board”). The Committee consists of such number of members as set by the Board from time to time and its members shall be selected by the Board. The Committee shall be comprised entirely of “independent members.” For purposes of this Charter, independent members shall mean members who are not interested persons of the Fund (“Disinterested Board members”) as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”).
II. Board Nominations and Functions.
1. The Committee shall make recommendations for nominations for Disinterested Board members on the Board to the incumbent Disinterested Board members and to the full Board. The Committee shall evaluate candidates’ qualifications for Board membership and the independence of such candidates from the Fund’s investment manager and other principal service providers. Persons selected must be independent in terms of both the letter and the spirit of the 1940 Act. The Committee shall also consider the effect of any relationships beyond those delineated in the 1940 Act that might impair independence, e.g., business, financial or family relationships with investment managers or service providers.
2. The Committee also shall evaluate candidates’ qualifications and make recommendations for “interested” members on the Board to the full Board.
3. The Committee may adopt from time to time specific, minimum qualifications that the Committee believes a candidate must meet before being considered as a candidate for Board membership and shall comply with any rules adopted from time to time by the U.S. Securities and Exchange Commission regarding investment company nominating committees and the nomination of persons to be considered as candidates for Board membership.
4. The Committee shall review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Committee at the Fund’s offices. The Committee shall adopt, by resolution, a policy regarding its procedures for considering candidates for the Board, including any recommended by shareholders.
III. Committee Nominations and Functions.
The Committee shall make recommendations to the full Board for nomination for membership on all committees of the Board.
IV. Other Powers and Responsibilities.
1. The Committee shall meet at least once each year or more frequently in open or executive sessions. The Committee may invite members of management, counsel, advisers and others to attend its meetings as it deems appropriate. The Committee shall have separate sessions with management and others, as and when it deems appropriate.
2. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including authority to retain special counsel and other experts or consultants at the expense of the Fund.
3. The Committee shall report its activities to the Board and make such recommendations as the Committee may deem necessary or appropriate.
4. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may meet in person or by telephone, and the Committee may act by written consent, to the extent permitted by law and by the Fund’s by-laws. In the event of any inconsistency between this Charter and the Fund’s organizational documents, the provisions of the Fund’s organizational documents shall be given precedence.
5. The Committee shall review this Charter at least annually and recommend any changes to the full Board.
ADDITIONAL STATEMENT FOR CLOSED-END FUNDS ONLY
The Committee shall comply with any rules of any stock exchange, if any, applicable to nominating committees of closed-end funds whose shares are registered thereon.
EXHIBIT B
FRANKLIN TEMPLETON
AUDIT COMMITTEE CHARTER
I. The Committee.
The Audit Committee (“Committee”) is a committee of, and established by, the Board of Directors/Trustees of the Fund (the “Board”).1 The Committee shall consist of such number of members as set by the Board from time to time, but in no event fewer than three (NYSE-listed Funds only), and its members shall be selected by the Board. The Committee shall be comprised entirely of members who satisfy the requirements for independence set out in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “1934 Act”) (“Disinterested Board members”).2 Each member of the Committee must be financially literate, as such qualification is interpreted by the Board in its business judgment, or must become financially literate within a reasonable period of time after his or her appointment to the Committee. At least one member of the Committee must be an “audit committee financial expert,” as determined by the Board and as defined in Item 3(b) of U.S. Securities and Exchange Commission (“SEC”) Form N-CSR. The Committee will make recommendations to the Board for its approval with respect to such audit committee financial expert determinations at least annually.
If a Committee member of an NYSE-listed Fund simultaneously serves on the audit committee of more than three public companies, the Board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the Fund’s Committee. When a member serves on multiple boards in the same fund complex, such service will be counted as one board for these purposes (NYSE-listed Funds only).
II. Purposes of the Committee.
The function of the Committee is to assist Board oversight of the Fund’s financial statements and accounting and auditing processes, which shall include being directly responsible for the appointment, compensation, retention and oversight of the work of the Fund’s independent registered public accounting firm (“auditors”) engaged (including resolution of disagreements between management and the auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Fund. It is management’s responsibility to prepare the Fund’s financial statements in accordance with generally accepted accounting principles (“GAAP”) and to maintain appropriate systems for accounting and internal controls.
1 This document serves as the Charter for the Committee of certain U.S. registered investment companies within Franklin Templeton, and each series thereof as applicable (a “Fund”), including the Franklin, Templeton and New Jersey/Alternative Strategies Funds, as well as Franklin Templeton ETF Trust, Franklin ETF Trust, Franklin Templeton Trust, Legg Mason ETF Investment Trust, and ActiveShares® ETF Trust. Exchange-listed Funds are included on Appendix A.
2 Each member of the Committee may not, other than in his or her capacity as a member of the Committee, the Board, or any other Board committee: (A) accept directly or indirectly any consulting, advisory, or other compensatory fee from the Fund or any subsidiary thereof, provided that, unless the rules of the applicable national securities exchange or national securities association provide otherwise, compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Fund (provided that such compensation is not contingent in any way on continued service); or (B) be an “interested person” of the Fund as defined in section 2(a)(19) of the Investment Company Act of 1940.
It is the auditors’ responsibility to express an opinion on the Fund’s financial statements, to plan and carry out an audit in accordance with the standards of the SEC and the Public Company Accounting Oversight Board (“PCAOB”) and to report directly to the Committee. It is not the duty of the Committee to plan or conduct audits or to determine that the Fund’s financial statements are complete and in accordance with GAAP.
Consistent with such allocation of functions, the purposes of the Committee are:
(a) To oversee the Fund’s accounting and financial reporting policies and practices and its internal controls, and to obtain, where it deems appropriate, reports on internal controls of service providers to the Fund;
(b) To oversee or, as appropriate, assist Board oversight of the quality, objectivity and integrity of the Fund’s financial statements and the independent audit thereof;
(c) To oversee or, as appropriate, assist Board oversight of the Fund’s compliance with legal and regulatory requirements (primarily as they relate to the Fund’s accounting and financial reporting, internal control over financial reporting and independent audits);
(d) To approve prior to appointment the engagement of the Fund’s auditors and, in connection therewith, to review and evaluate the auditors’ qualifications, independence and performance, taking into account the opinions of management;
(e) To act as a liaison between the Fund’s auditors and the Board;
(f) to prepare, or authorize the preparation of, the disclosure required by Item 407(d)(3)(i) of Regulation S-K (the “Audit Committee Report”) for inclusion in the Fund’s annual proxy statement (NYSE- and NYSE American-listed Funds only); and
(g) To consider such other matters as it deems appropriate in carrying out its purpose and any other matters that may be assigned to it by the Board.
In addition, the Committee shall serve as the Fund’s Qualified Legal Compliance Committee (“QLCC”) pursuant to Section 205 of the SEC’s Standards of Professional Conduct for Attorneys Appearing and Practicing before the Commission in the Representation of an Issuer (the “Standards”). In this capacity, the Committee is required to adopt and maintain written procedures for the confidential receipt, retention and consideration of any report of evidence of a material violation. “Evidence of a material violation” means credible evidence, based upon which it would be unreasonable, under the circumstances, for a prudent and competent attorney not to conclude that it is reasonably likely that a material violation of an applicable U.S. federal or state securities law, a material breach of fiduciary (or similar) duty to the Fund arising under U.S. federal or state law, or a similar material violation of any U.S. federal or state law has occurred, is ongoing, or is about to occur.
III. Powers and Duties.
The Committee shall have the following powers and duties to carry out its purposes:
(a) To select the auditors, subject to approval both by the Board and by a separate vote of the Disinterested Board members, and, in connection therewith, to evaluate the independence and qualifications of the auditors in accordance with applicable federal securities laws and regulations and the rules and standards of the PCAOB.
(b) To be directly responsible for approving the services to be provided by, and the compensation of, the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided by the auditors to the Fund’s investment adviser or to any entity that controls, is controlled by or is under common control with the Fund’s investment adviser and that provides ongoing services to the Fund where the non-audit services relate directly to the operations or financial reporting of the Fund; and
(iv) if deemed necessary or appropriate, as an alternative to Committee pre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above:
(A) establishment by the Committee of policies and procedures to pre-approve such services, provided the policies and procedures are detailed as to the particular service and the Committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the 1934 Act), to management; or
(B) delegation by the Committee to one or more designated members of the Committee who are Disinterested Board members of authority to pre-approve such services, provided the Committee is informed of the decisions of any member pursuant to such delegated authority no later than its next scheduled meeting;
subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(c) To meet with the auditors, including private meetings, as necessary to (i) review the arrangements for and scope of the annual audit and any special audits; (ii) discuss any matters or concerns relating to the Fund’s financial statements, including any recorded and/or unrecorded adjustments to such statements recommended by the auditors, or other results of audits; (iii) consider the auditors’ comments with respect to the Fund’s financial, accounting and reporting policies, procedures and internal controls and management’s responses thereto; and (iv) to review the form of opinion the auditors propose to render.
(d) To meet to review and discuss the Fund’s annual audited financial statements with management and the auditors, including reviewing the Fund’s disclosures under “Management’s Discussion of Fund Performance” (“MDFP”) in its annual shareholder report (All Funds). To meet to review and discuss the Fund’s semi-annual financial statements with
management, including reviewing the Fund’s MDFP disclosures in its semi-annual shareholder report, as applicable (NYSE-listed Funds and New Jersey/Alternative Strategies Funds only). Such meetings may be telephonic.
(e) To consider the effect upon the Fund of any changes in accounting principles or practices proposed by management or the auditors.
(f) To receive and consider reports from the auditors:
(i) as required by generally accepted accounting standards, including Auditing Standard (“AS”) No. 1301 (Communications with Audit Committees);
(ii) annually and by update as required by SEC Regulation S-X, regarding:
(A) all critical accounting policies and practices of the Fund to be used;
(B) all alternative treatments within GAAP for policies and practices related to material items that have been discussed with management of the Fund, including ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the auditors;
(C) other material written communications between the auditors and management of the Fund, such as any management letter or schedule of unadjusted differences; and
(D) all non-audit services provided to any entity in an investment company complex, as defined in SEC Regulation S-X, that were not pre-approved by the Committee pursuant to SEC Regulation S-X;
(iii) at least annually regarding the auditors’ internal quality-control procedures; and
(iv) at least annually regarding any material issues raised by the most recent internal quality-control review, or peer review, of the auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the auditors, and any steps taken to deal with any such issues.
(g) To review (i) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Fund’s selection or application of accounting principles, and major issues as to the adequacy of the Fund’s internal controls and any special audit steps adopted in light of material control deficiencies; and (ii) analyses prepared by management and/or the auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
(h) In considering the independence of the auditors:
(i) at least annually to receive from the auditors a formal written statement, and other reports as necessary, describing all relationships between the auditors and the Fund, the Fund’s investment adviser and service providers, and other entities advised or serviced by, including any entities controlling, controlled by or under common control with, the investment adviser or any other service providers to the Fund that, in the auditors’ judgment, could be thought to bear upon the auditors’ independence;
(ii) to receive and consider, if applicable, periodic reports from the auditors regarding whether the provision of non-audit services (including tax services) is compatible with maintaining the auditors’ independence;
(iii) to request from the auditors a written affirmation that they are independent auditors under the federal securities laws and standards adopted by the PCAOB; and
(iv) to discuss with the auditors any disclosed relationships or services that may impact the objectivity, impartial judgment, and independence of the auditors and for taking, or recommending that the Board take, appropriate action to oversee the independence of the auditors.
(i) To require that the auditors regularly provide timely information to the Committee with respect to new rules and pronouncements by applicable regulatory and accounting standards agencies, along with an explanation of how such developments may affect the Fund’s financial statements and accounting principles and practices.
(j) To review the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Fund.
(k) To consider any reports of audit problems or difficulties that may have arisen during the course of the audit, including any limitations of the scope of the audit, and management’s response thereto.
(l) To review communications from the Fund’s Chief Executive Officer – Finance and Administration, and Chief Financial Officer and Chief Accounting Officer concerning (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Fund’s ability to
record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Fund’s internal controls over financial reporting, and to review requested communications from management for any other purposes the Committee deems appropriate.
(m) In connection with the preparation of the Audit Committee Report (NYSE and NYSE American-listed Funds only):
(i) to review and discuss the audited financial statements of the Fund with management;
(ii) to discuss with the auditors the matters required to be discussed by the applicable requirements of the PCAOB and the SEC;
(iii) to receive the written disclosures and the letter(s) from the auditors required by applicable requirements of the PCAOB regarding the auditor’s communications with the Committee concerning independence (referred to in paragraph (h) above), and discuss with the auditors the auditor’s independence; and
(iv) based on the review and discussions referred to in paragraphs (i) through (iii) above, to recommend to the Board that the audited financial statements be included in the Fund’s annual report on Form N-CSR for the last fiscal year for filing with the SEC.
(n) To review and discuss, as appropriate, the Fund’s earnings press releases (including the type and presentation of information to be included therein, paying particular attention to any use of “pro forma,” or “adjusted” non-GAAP, information), as well as any financial information and earnings guidance provided to analysts and rating agencies. (NYSE-listed Funds only)
(o) To review and discuss the Fund’s processes with respect to risk assessment and risk management.
(p) To set clear policies relating to the hiring by entities within Franklin Templeton of employees or former employees of the auditors.
(q) To evaluate, as either part of the full Board or as a Committee, its performance at least annually.
(r) To review potential conflict of interest situations where appropriate in connection with the Fund’s ongoing review of all related party transactions.
(s) To inform the chief legal officer (“CLO”) and chief executive officer (“CEO”) of the Fund (or the equivalents thereof) of any report of evidence of a material violation by the Fund, its officers, directors/trustees, employees (if any), or agents (collectively, “affiliates”). In connection therewith, the Committee shall:
(i) determine whether an investigation is necessary regarding any report of evidence of a material violation by the Fund or its affiliates;
(ii) if the Committee determines such an investigation is necessary or appropriate, (A) notify the Board; (B) initiate an investigation, which may be conducted by either the CLO or by outside attorneys; and (C) retain such additional expert personnel as the Committee deems necessary to assist in the investigation;
(iii) at the conclusion of any such investigation, (A) recommend by a majority vote, that the Fund implement an appropriate response (as defined in Section 205.2(b) of the Standards) to evidence of a material violation, and (B) inform the CLO and the CEO and the Board of the results of such investigation and the appropriate remedial measures to be adopted;
(iv) acting by majority vote, take all other appropriate action, including the authority to notify the SEC in the event the Fund fails in any material respect to implement an appropriate response that the Committee has recommended the Fund to take; and
(v) otherwise respond to evidence of a material violation.
IV. Other Functions and Procedures of the Committee.
(a) The Committee shall meet at least twice each year or more frequently, in open or executive sessions, as may be necessary to fulfill its responsibilities. The Committee shall meet as frequently as circumstances require with (i) the auditors as provided in III(c), above; and (ii) management’s internal audit department to review and discuss internal audit functions and reports. The Committee may invite members of management, the auditors, counsel, advisers and others to attend its meetings as it deems appropriate. The Committee shall meet separately, periodically, with management and with the auditors.
(b) The Committee shall establish procedures for (i) the receipt, retention and treatment of complaints received by the Fund or the Fund’s adviser regarding accounting, internal accounting controls, or accounting matters relating to the Fund; and (ii) the confidential, anonymous submission by employees of the Fund or Franklin Resources, Inc. and its subsidiaries of concerns regarding questionable accounting or auditing matters.
(c) The Committee shall have the authority to engage special or independent counsel, experts and other advisers as and when it determines necessary to carry out its duties.
(d) The Fund must provide for appropriate funding, as determined by the Committee in its capacity as a Committee of the Board, for payment of (i) compensation to any auditors engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Fund; (ii) compensation to any advisers employed by the Committee (under paragraph (c) above); and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
(e) The Committee shall have unrestricted access to the Fund’s management and management of the Fund’s adviser, including, but not limited to, their chief executive officer(s), chief financial officer(s), internal auditors and any other executives and financial officers.
(f) The Committee shall report its activities to the Board, including any issues that arise with respect to the quality or integrity of the Fund’s financial statements, the Fund’s compliance with legal or regulatory requirements, or the qualifications, performance and independence of the Fund’s auditors, and make such recommendations as the Committee may deem necessary or appropriate.
(g) The Committee shall review and assess the adequacy of this Charter annually, or more frequently if it chooses, and recommend any changes to the Board. The Board shall adopt and approve this Charter and may amend it on its own motion.
(h) The Committee shall meet jointly with the Audit Committees of the other Funds within the Franklin Templeton Fund complex as may be appropriate, including to attend presentations and review proposals and other matters of common concern to all such Audit Committees.
(i) Pursuant to delegated authority from the Board, and at the request of the applicable investment manager of the Fund (the “Investment Manager”), the Committee, or an appointed delegate of the Committee as applicable, shall provide proxy voting instructions as a representative of the Fund to the Investment Manager in certain situations where the Investment Manager has identified a material conflict of interest between the Investment Manager or one of its affiliates and an issuer (i.e., the Committee or its appointed delegate will approve or disapprove the Investment Manager’s voting recommendation).
(j) To the extent applicable to the Fund, the Committee shall comply with such other rules of the applicable national securities exchanges and the SEC applicable to exchange-listed funds, as such may be adopted and amended from time to time. (Exchange-listed Funds only)
Appendix A
Amended as of October 1, 2021
EXCHANGE-LISTED FUNDS
Funds listed on New York Stock Exchange LLC (“NYSE-listed Funds”)
Franklin Universal Trust
Templeton Dragon Fund, Inc.
Templeton Emerging Markets Fund
Templeton Emerging Markets Income Fund
Templeton Global Income Fund
Fund listed on NYSE American LLC (“NYSE American-listed Fund”)
Franklin Limited Duration Income Trust
Funds listed on NYSE Arca, Inc.
Franklin ETF Trust
Franklin Liberty Short Duration U.S. Government ETF
Franklin Templeton ETF Trust
Franklin FTSE Asia ex Japan ETF
Franklin FTSE Australia ETF
Franklin FTSE Brazil ETF
Franklin FTSE Canada ETF
Franklin FTSE China ETF
Franklin FTSE Europe ETF
Franklin FTSE Europe Hedged ETF
Franklin FTSE France ETF
Franklin FTSE Germany ETF
Franklin FTSE Hong Kong ETF
Franklin FTSE India ETF
Franklin FTSE Italy ETF
Franklin FTSE Japan ETF
Franklin FTSE Japan Hedged ETF
Franklin FTSE Latin America ETF
Franklin FTSE Mexico ETF
Franklin FTSE Russia ETF
Franklin FTSE Saudi Arabia ETF
Franklin FTSE South Africa ETF
Franklin FTSE South Korea ETF
Franklin FTSE Switzerland ETF
Franklin FTSE Taiwan ETF
Franklin FTSE United Kingdom ETF
Franklin Liberty Federal Intermediate Tax-Free Bond Opportunities ETF
Franklin Liberty Federal Tax-Free Bond ETF
Franklin Liberty Investment Grade Corporate ETF
Franklin Liberty Systematic Style Premia ETF
Franklin Liberty Ultra Short Bond ETF
Franklin Liberty U.S. Core Bond ETF
Franklin Liberty U.S. Low Volatility ETF
Franklin Liberty U.S. Treasury Bond ETF
Franklin LibertyQ Emerging Markets ETF
Franklin LibertyQ Global Dividend ETF
Franklin LibertyQ Global Equity ETF
Franklin LibertyQ International Equity Hedged ETF
Funds listed on Cboe BZX Exchange, Inc.
Franklin Templeton ETF Trust
Franklin Disruptive Commerce ETF
Franklin Exponential Data ETF
Franklin Genomic Advancements ETF
Franklin Intelligent Machines ETF
Franklin Liberty High Yield Corporate ETF
Franklin Liberty International Aggregate Bond ETF
Franklin Liberty Senior Loan ETF
Franklin LibertyQ U.S. Equity ETF
Franklin LibertyQ U.S. Mid Cap Equity ETF
Franklin LibertyQ U.S. Small Cap Equity ETF
Legg Mason ETF Investment Trust
Legg Mason International Low Volatility High Dividend ETF
ActiveShares® ETF Trust
ClearBridge Focus Value ESG ETF
Funds listed on The Nasdaq Stock Market LLC
Legg Mason ETF Investment Trust
ClearBridge All Cap Growth ESG ETF
ClearBridge Dividend Strategy ESG ETF
ClearBridge Large Cap Growth ESG ETF
Western Asset Short Duration Income ETF
Western Asset Total Return ETF
Legg Mason Global Infrastructure ETF
Legg Mason Low Volatility High Dividend ETF
Legg Mason Small-Cap Quality Value ETF
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