SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for
use of the
Commission only
(as permitted
Rule 14a-6(e)(2)
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
(Name of Registrant as Specified in Its Charter)
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
(Name of Person(s) Filing Proxy Statement)
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
O-11.
(1) Title of each class of securities to which transaction
applies:
(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:
(5) Total fee paid:
[ ] Fee paid previously with preliminary material.
[ ] 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
Franklin Templeton Logo
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
IMPORTANT SHAREHOLDER INFORMATION
This document announces the date, time and location of the annual shareholders
meeting, identifies the proposals to be voted on at the meeting, and contains
your 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 your fund. If you complete and sign the proxy, we'll vote it exactly
as you tell us. If you simply sign the proxy, we'll vote it in accordance with
the Trustees' recommendations on pages 1 and 2.
WE URGE YOU TO SPEND A FEW MINUTES WITH THE PROXY STATEMENT REVIEWING THE
PROPOSALS AT HAND. THEN, FILL OUT YOUR PROXY CARD AND RETURN IT TO US. WHEN
SHAREHOLDERS DON'T RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO INCUR
THE EXPENSE OF FOLLOW-UP SOLICITATIONS, WHICH CAN COST YOUR FUND MONEY. WE WANT
TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR COMMENTS. PLEASE TAKE A FEW
MINUTES WITH THESE MATERIALS AND RETURN YOUR PROXY TO US. IF YOU HAVE ANY
QUESTIONS, CALL THE FUND INFORMATION DEPARTMENT AT 1-800/DIAL BEN.
Franklin Templeton Logo
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting ("Meeting") of shareholders of Templeton Global Governments
Income Trust (the "Trust") will be held at 500 East Broward Blvd., 12th Floor,
Ft. Lauderdale, Florida 33394-3091 on Tuesday, March 25, 1997 at 10:00 A.M.
(EST).
During the Meeting, shareholders of the Trust will vote on four proposals:
1. The election of Trustees of the Trust to hold office for the terms specified;
2. The ratification or rejection of the selection of McGladrey & Pullen, LLP as
independent auditors of the Trust for the fiscal year ending August 31, 1997;
3. The approval or rejection of a shareholder proposal to amend the Trust's
Declaration of Trust to convert the Trust from a closed-end investment
company to an open-end investment company; and
4. The transaction of any other business that may properly come before the
Meeting.
By order of the Board of Trustees,
Barbara J. Green,
Secretary
February 10, 1997
- --------------------------------------------------------------------------------
MANY SHAREHOLDERS HOLD SHARES IN MORE THAN ONE TEMPLETON FUND AND WILL RECEIVE
PROXY MATERIAL FOR EACH FUND OWNED. PLEASE SIGN AND PROMPTLY RETURN EACH PROXY
CARD IN THE SELF-ADDRESSED ENVELOPE REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
- --------------------------------------------------------------------------------
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
PROXY STATEMENT
o INFORMATION ABOUT VOTING:
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on December 27, 1996 are
entitled to be present and to vote at the Meeting or any adjourned Meeting. Each
share of record is entitled to one vote on all matters presented at the Meeting.
The Notice of Meeting, the proxy, and the proxy statement were mailed to
shareholders of record on or about February 10, 1997.
ON WHAT ISSUES AM I BEING ASKED TO VOTE?
You are being asked to vote on four proposals:
1. The election of four nominees to the position of Trustee;
2. The ratification or rejection of the selection of McGladrey & Pullen, LLP as
independent auditors of the Trust for the fiscal year ending August 31, 1997;
3. The approval or rejection of a shareholder proposal to amend the Trust's
Declaration of Trust to convert the Trust from a closed-end investment
company to an open-end investment company; and
4. The transaction of any other business that may properly come before the
Meeting.
HOW DO THE TRUST'S TRUSTEES RECOMMEND THAT I VOTE?
The Trustees recommend that you vote:
1. FOR the election of nominees;
2. FOR the ratification of the selection of McGladrey & Pullen, LLP as
independent auditors of the Trust;
1
3. AGAINST the amendment of the Trust's Declaration of Trust to convert the
Trust from a closed-end investment company to an open-end investment company;
and
4. FOR the proxyholders to vote, at their discretion, on any other business that
may properly come before the Meeting.
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
attached proxy. Proxies that are signed, dated and received by the close of
business on Monday, March 24, 1997 will be voted as specified. If you specify a
vote for any of Proposals 1 through 4, your proxy will be voted as you
indicated. If you simply sign and date the proxy, but don't specify a vote for
any of Proposals 1 through 4, your shares will be voted in favor of the nominees
for Trustee (Proposal 1), in favor of ratifying the selection of McGladrey &
Pullen, LLP as independent auditors (Proposal 2), against the amendment of the
Trust's Declaration of Trust to convert the Trust from a closed-end investment
company to an open-end investment company (Proposal 3), and/or in accordance
with the discretion of the persons named in the proxy as to any other matters
(Proposal 4).
CAN I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted by (1) delivering a
written revocation to the Secretary of the Trust, (2) forwarding to the Trust a
later-dated proxy that is received by the Trust at or prior to the meeting, or
(3) attending the Meeting and voting in person.
2
o THE PROPOSALS:
1. ELECTION OF TRUSTEES:
HOW ARE NOMINEES SELECTED?
The Board of Trustees of the Trust (the "Board") established a Nominating and
Compensation Committee (the "Committee") consisting of Andrew H. Hines, Jr. and
Gordon S. Macklin. The Committee is responsible for the selection, nomination
for appointment and election of candidates to serve as Trustees of the Trust.
The Committee will review shareholders' nominations to fill vacancies on the
Board, if these nominations are in writing and addressed to the Committee at the
Trust's offices. However, the Committee expects to be able to identify from its
own resources an ample number of qualified candidates.
WHO ARE THE NOMINEES AND TRUSTEES?
The Board is divided into three classes, each class having a term of three
years. Each year the term of office of one class expires. Betty P. Krahmer,
Nicholas F. Brady, Charles B. Johnson and Edith E. Holiday have been nominated
for three-year terms, set to expire at the 2000 Annual Meeting of Shareholders.
These terms continue, however, until successors are duly elected and qualified.
All of the nominees are currently members of the Board and all of the current
Trustees are also directors or trustees of other investment companies in the
Franklin Group of Funds and the Templeton Group of Funds (the "Franklin
Templeton Group of Funds").
Certain nominees and Trustees of the Trust hold director and/or officer
positions with Franklin Resources, Inc. ("Resources") and its affiliates.
Resources is a publicly owned holding company, the principal shareholders of
which are Charles B. Johnson and Rupert H. Johnson, Jr. who own approximately
20% and 16%, respectively, of its outstanding shares. Resources is primarily
engaged, through various subsidiaries, in providing investment management, share
distribution, transfer agent and administrative services to a family of
investment companies. Resources is a New York Stock Exchange, Inc. ("NYSE")
listed holding company (NYSE: BEN). The Trust's investment manager and fund
administrator are wholly owned subsidiaries of Resources. There are no family
relationships among any of the Trustees or nominees for Trustee other than
Charles B. Johnson and Rupert H. Johnson, Jr., who are brothers.
Each nominee is currently available and has consented to serve if elected. If
any of the nominees should become unavailable, the persons named in the proxy
will vote in their discretion for another person or other persons who may be
nominated as Trustees.
3
Listed below, for each nominee and Trustee, is a brief description of recent
professional experience as well as each such person's ownership of shares of the
Trust and shares of all funds in the Franklin Templeton Group of Funds:
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
NOMINEES TO SERVE UNTIL 2000 ANNUAL MEETING OF SHAREHOLDERS:
BETTY P. KRAHMER Director or trustee of various 100 (**) 75,812
Trustee since 1990 civic associations; formerly,
economic analyst, U.S.
government; and director or
trustee of 23 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 67.
NICHOLAS F. BRADY* Chairman of Templeton Emerging -0- 14,626
Trustee since 1993 Markets Investment Trust PLC;
chairman of Templeton Latin
America Investment Trust PLC;
chairman of Darby Overseas
Investments, Ltd. (an
investment firm)
(1994-present); chairman and
director of Templeton Central
and Eastern European Fund;
director of the Amerada Hess
Corporation, Christiana
Companies, and the H.J. Heinz
Company; formerly, Secretary
of the United States
Department of the Treasury
(1988-1993) and chairman of
the board of Dillon, Read &
Co. Inc. (investment banking)
prior to 1988; and director or
trustee of 23 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 66.
4
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
CHARLES B. JOHNSON* President, chief executive 1,000 (**) 1,088,337
Chairman of the Board since officer, and director of
1995 and Vice President Franklin Resources, Inc.;
since 1992 chairman of the board and
director of Franklin Advisers,
Inc. and Franklin Templeton
Distributors, Inc.; director
of General Host Corporation
(nursery and craft centers),
Franklin Templeton Services,
Inc. and Franklin Templeton
Investor Services, Inc.; and
officer and/or director,
trustee or managing general
partner, as the case may be,
of most other subsidiaries of
Franklin Resources, Inc. and
57 of the investment companies
in the Franklin Templeton
Group of Funds. Age 64.
EDITH E. HOLIDAY Director (1993-present) of -0- -0-
Trustee since 1996 Amerada Hess Corporation and
Hercules Incorporated;
director of Beverly
Enterprises, Inc.
(1995-present) and H. J. Heinz
Company (1994-present);
chairman (1995-present) and
trustee (1993-present) of
National Child Research
Center; 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); and director or
trustee of 15 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 44.
5
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
TRUSTEES SERVING UNTIL 1999 ANNUAL MEETING OF SHAREHOLDERS:
FRED R. MILLSAPS Manager of personal -0- 445,471
Trustee since 1990 investments (1978-present);
director of various other
business and nonprofit
organizations; formerly,
chairman and chief executive
officer of Landmark Banking
Corporation (1969-1978),
financial vice president of
Florida Power and Light
(1965-1969), and vice
president of The Federal
Reserve Bank of Atlanta
(1958-1965); and director or
trustee of 24 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 67.
JOHN Wm. GALBRAITH President of Galbraith -0- 3,117,234
Trustee since 1995 Properties, Inc. (personal
investment company); director
of Gulf West Banks, Inc. (bank
holding company)
(1995-present); formerly,
director of Mercantile Bank
(1991-1995); vice chairman of
Templeton, Galbraith &
Hansberger Ltd. (1986-1992),
and chairman of Templeton
Funds Management, Inc.
(1974-1991); and director or
trustee of 22 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 75.
5
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
RUPERT H. JOHNSON, JR. Executive vice president and -0- 11,060,625
Trustee and Vice President director of Franklin
since 1992 Resources, Inc. and Franklin
Templeton Distributors, Inc.;
president and director of
Franklin Advisers, Inc.;
director of Franklin Templeton
Investor Services, Inc. and
Franklin Templeton Services,
Inc.; and officer and/or
director, trustee or managing
general partner, as the case
may be, of most other
subsidiaries of Franklin
Resources, Inc.; and officer
and/or director or trustee of
61 of the various investment
companies in the Franklin
Templeton Group of Funds. Age
56.
TRUSTEES SERVING UNTIL 1998 ANNUAL MEETING OF SHAREHOLDERS:
HARRIS J. ASHTON Chairman of the board, 500 (**) 290,183
Trustee since 1992 president and chief executive
officer of General Host
Corporation (nursery and craft
centers); a director of RBC
Holdings (U.S.A.) Inc. (a bank
holding company) and Bar-S
Foods; and director or trustee
of 55 of the investment
companies in the Franklin
Templeton Group of Funds. Age
64.
7
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
GORDON S. MACKLIN Chairman of White River 2,000 (**) 273,717
Trustee since 1993 Corporation (information
services); director of Fund
America Enterprises Holdings,
Inc., MCI Communications
Corporation, Fusion Systems
Corporation, Infovest
Corporation, MedImmune, Inc.,
Source One Mortgage Services
Corporation and Shoppers
Express, Inc. (on-line
shopping service); formerly,
chairman of Hambrecht and
Quist Group, director of H&Q
Healthcare Investors and
Lockheed Martin Corporation,
and president of the National
Association of Securities
Dealers, Inc.; and director of
52 of the investment companies
in the Franklin Templeton
Group of Funds. Age 68.
ANDREW H. HINES, JR. Consultant for the Triangle 163 (**) 30,158
Trustee since 1990 Consulting Group; chairman and
director of Precise Power
Corporation; executive-in-
residence of Eckerd College
(1991-present); and a director
of Checkers Drive-In
Restaurants, Inc.; formerly,
chairman of the board and
chief executive officer of
Florida Progress Corporation
(1982-1990) and director of
various of its subsidiaries;
and director or trustee of 24
of the investment companies in
the Franklin Templeton Group
of Funds. Age 73.
8
SHARES
BENEFICIALLY
OWNED IN THE
FRANKLIN
SHARES BENEFICIALLY TEMPLETON
OWNED IN THE TRUST GROUP OF FUNDS
PRINCIPAL OCCUPATION AND % OF TOTAL (INCLUDING THE
NAME AND OFFICES DURING PAST FIVE OUTSTANDING AS OF TRUST) AS OF
WITH THE TRUST YEARS AND AGE DECEMBER 15, 1996 DECEMBER 15, 1996
- ----------------------------- ------------------------------------ ------------------- ------------------
S. JOSEPH FORTUNATO Member of the law firm of Pitney, 100 (**) 371,828
Trustee since 1992 Hardin, Kipp & Szuch; and a
director of General Host
Corporation (nursery and craft
centers); and director or
trustee of 57 of the
investment companies in the
Franklin Templeton Group of
Funds. Age 64.
<FN>
* Nicholas F. Brady, Charles B. Johnson and Rupert H. Johnson, Jr. are
"interested persons" as defined by the Investment Company Act of 1940 (the
"1940 Act"). The 1940 Act limits the percentage of interested persons that
can comprise a fund's board of trustees. Charles B. Johnson and Rupert H.
Johnson, Jr., are interested persons due to their ownership interest in
Resources. Mr. Brady's status as an interested person results from his
business affiliations with Resources and Templeton Global Advisors Limited.
Mr. Brady and Resources are both limited partners of Darby Overseas Partners,
L.P. ("Darby Overseas"). Mr. Brady established Darby Overseas in February
1994, and is Chairman and shareholder of the corporate general partner of
Darby Overseas. In addition, Darby Overseas and Templeton Global Advisors
Limited are limited partners of Darby Emerging Markets Fund, L.P. The
remaining nominees and Trustees of the Trust are not interested persons (the
"Independent Trustees").
** Less than 1%.
</FN>
HOW OFTEN DO THE TRUSTEES MEET AND WHAT ARE THEY PAID?
The Trustees generally meet quarterly to review the operations of the Trust and
other funds within the Franklin Templeton Group of Funds. Each fund pays its
independent directors and Mr. Brady an annual retainer and/or fees for
attendance at board and committee meetings. This compensation is based on the
total net assets in each fund. Accordingly, the Trust pays the Independent
Trustees and Mr. Brady an annual retainer of $1,000 and a fee of $100 per
meeting of the Board and its portion of a flat fee of $2,000 for each Audit
Committee meeting and/or Nominating and Compensation Committee meeting attended.
Independent Trustees also are reimbursed by the Trust for any expenses incurred
in attending Board meetings.
During the fiscal year ended August 31, 1996, there were four meetings of the
Board, one meeting of the Nominating and Compensation Committee, and one meeting
of the Audit Committee. Each of the Trustees then in office attended at least
75% of the total number of meetings of the Board and the Audit Committee
throughout the year. There was 100% attendance at the meeting of the Nominating
and Compensation Committee.
9
Certain Trustees and Officers of the Trust are shareholders of Resources and may
receive indirect remuneration due to their participation in management fees and
other fees received from the Franklin Templeton Group of Funds by Templeton
Investment Counsel, Inc., the Trust's investment manager, and its affiliates.
Templeton Investment Counsel, Inc. or its affiliates pays the salaries and
expenses of the Officers. No pension or retirement benefits are accrued as part
of Trust expenses.
The following table shows the compensation paid to Independent Trustees and Mr.
Brady by the Trust and by the Franklin Templeton Group of Funds:
AGGREGATE NUMBER OF BOARDS WITHIN THE TOTAL COMPENSATION FROM
COMPENSATION FROM THE FRANKLIN TEMPLETON GROUP OF THE FRANKLIN TEMPLETON
NAME OF TRUSTEE TRUST* FUNDS ON WHICH TRUSTEE SERVES GROUP OF FUNDS**
- --------------------- --------------------- ----------------------------- -----------------------
Harris J. Ashton $1,500 55 $339,592
F. Bruce Clarke*** 1,643 -0- 69,500
Andrew H. Hines, Jr. 1,710 24 130,525
Hasso-G von 700 -0- 66,375
Diergardt-Naglo****
Betty P. Krahmer 1,500 23 119,275
Fred R. Millsaps 1,643 24 130,525
S. Joseph Fortunato 1,500 57 356,412
Gordon S. Macklin 1,567 52 331,542
John Wm. Galbraith 1,443 22 102,475
Nicholas F. Brady 1,500 23 119,275
Edith E. Holiday***** -0- 15 15,450
<FN>
* For the fiscal year ended August 31, 1996.
** For the calendar year ended December 31, 1996.
*** Mr. Clarke resigned as a Trustee on October 20, 1996.
**** Mr. von Diergardt did not stand for re-election at the February 20, 1996 shareholders meeting.
***** Ms. Holiday was elected to the Board on December 3, 1996.
</FN>
WHO ARE THE EXECUTIVE OFFICERS OF THE TRUST?
Officers of the Trust are appointed by the Trustees and serve at the pleasure of
the Board. Listed below, for each Executive Officer, is a brief description of
recent professional experience:
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH TRUST DURING PAST FIVE YEARS AND AGE
- -------------------------------- -----------------------------------------------
CHARLES B. JOHNSON See Proposal 1, "Election of Trustees".
Chairman since 1995 and Vice
President since 1992
10
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH TRUST DURING PAST FIVE YEARS AND AGE
- -------------------------------- -----------------------------------------------
GREGORY E. McGOWAN Director and executive vice president of
President since 1996 Templeton Investment Counsel, Inc.; executive
vice president-international development and
chief international general counsel of
Templeton Worldwide, Inc.; executive vice
president, director and general counsel of
Templeton International, Inc.; executive vice
president and secretary of Templeton Global
Advisors Limited; formerly, senior attorney for
the U.S. Securities and Exchange Commission;
and an officer of 4 of the investment companies
in the Franklin Templeton Group of Funds. Age
47.
SAMUEL J. FORESTER, JR. Vice president of 10 of the investment
Vice President since 1996 companies in the Franklin Templeton Group of
Funds; formerly, president of Templeton Global
Bond Managers division of Templeton Investment
Counsel, Inc.; founder and partner of Forester,
Hairston Investment Management (1989-1990);
managing director (Mid-East Region) of Merrill
Lynch, Pierce, Fenner & Smith, Inc.
(1987-1988); advisor for Saudi Arabian Monetary
Agency (1982-1987). Age 48.
RUPERT H. JOHNSON, JR. See Proposal 1, "Election of Trustees".
Vice President since 1996
HARMON E. BURNS Executive vice president, secretary and
Vice President since 1996 director of Franklin Resources, Inc.; director
and executive vice president of Franklin
Templeton Distributors, Inc.; executive vice
president of Franklin Advisers, Inc.; and an
officer and/or director, as the case may be, of
other subsidiaries of Franklin Resources, Inc.;
and officer and/or director or trustee of 61 of
the investment companies in the Franklin
Templeton Group of Funds. Age 51.
CHARLES E. JOHNSON Senior vice president and director of Franklin
Vice President since 1996 Resources, Inc.; senior vice president of
Franklin Templeton Distributors, Inc.;
president and chief executive officer of
Templeton Worldwide, Inc.; president and
director of Franklin Institutional Services
Corporation; chairman of the board of Templeton
Investment Counsel, Inc.; officer and/or
director, as the case may be, of other
subsidiaries of Franklin Resources, Inc.;
officer and/or director or trustee of 41 of the
investment companies in the Franklin Templeton
Group of Funds. Age 40.
11
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH TRUST DURING PAST FIVE YEARS AND AGE
- -------------------------------- -----------------------------------------------
DEBORAH R. GATZEK Senior vice president and general counsel of
Vice President since 1996 Franklin Resources, Inc.; senior vice president
of Franklin Templeton Distributors, Inc.; vice
president of Franklin Advisers, Inc.; and
officer of 61 of the investment companies in
the Franklin Templeton Group of Funds. Age 48.
MARK G. HOLOWESKO President and director of Templeton Global
Vice President since 1989 Advisors Limited; chief investment officer of
global equity research for Templeton Worldwide,
Inc.; president or vice president of the
Templeton Funds; formerly, investment
administrator with Roy West Trust Corporation
(Bahamas) Limited (1984-1985); and officer of
23 of the investment companies in the Franklin
Templeton Group of Funds. Age 36.
MARTIN L. FLANAGAN Senior vice president, treasurer and chief
Vice President since 1989 financial officer of Franklin Resources, Inc.;
director and executive vice president of
Templeton Investment Counsel, Inc.; director
and president of Franklin Templeton Services,
Inc.; member of the International Society of
Financial Analysts and American Institute of
Certified Public Accountants; formerly, with
Arthur Andersen & Company (1982-1983); and
officer and/or director or trustee of 61 of the
investment companies in the Franklin Templeton
Group of Funds. Age 36.
Executive vice president of the Templeton
NEIL S. DEVLIN Global Bond Managers division of Templeton
Vice President since 1993 Investment Counsel, Inc.; formerly, portfolio
manager and bond analyst for Constitution
Capital Management (1985-1987); bond trader and
research analyst for Bank of New England
(1982-1985); and officer of 4 of the investment
companies in the Franklin Templeton Group of
Funds. Age 39.
JOHN R. KAY Vice president and treasurer of Templeton
Vice President since 1994 Worldwide, Inc.; assistant vice president of
Franklin Templeton Distributors, Inc.;
formerly, vice president and controller of the
Keystone Group, Inc.; and officer of 27 of the
investment companies in the Franklin Templeton
Group of Funds. Age 56.
12
NAME AND OFFICES PRINCIPAL OCCUPATION
WITH TRUST DURING PAST FIVE YEARS AND AGE
- -------------------------------- -----------------------------------------------
ELIZABETH M. KNOBLOCK General counsel, secretary and a senior vice
Vice President--Compliance president of Templeton Investment Counsel,
since 1996 Inc.; formerly, vice president and associate
general counsel of Kidder Peabody & Co. Inc.
(1989-1990), assistant general counsel of
Gruntal & Co., Inc. (1988), vice president and
associate general counsel of Shearson Lehman
Hutton Inc. (1988) and E.F. Hutton & Co. Inc.
(1986-1988), and special counsel of the
Division of Investment Management of the U.S.
Securities and Exchange Commission (1984-1986);
and officer of 23 of the investment companies
in the Franklin Templeton Group of Funds. Age
41.
BARBARA J. GREEN Senior vice president of Templeton Worldwide,
Secretary since 1996 Inc. and an officer of other subsidiaries of
Templeton Worldwide, Inc.; formerly, deputy
director of the Division of Investment
Management, executive assistant and senior
advisor to the Chairman, counselor to the
Chairman, special counsel and attorney fellow,
U.S. Securities and Exchange Commission
(1986-1995), attorney, Rogers & Wells, and
judicial clerk, U.S. District Court (District
of Massachusetts); and secretary of 23 of the
investment companies in the Franklin Templeton
Group of Funds. Age 49.
JAMES R. BAIO Certified public accountant; senior vice
Treasurer since 1994 president of Templeton Worldwide, Inc. and
Templeton Funds Trust Company; formerly, senior
tax manager with Ernst & Young (certified
public accountants) (1977-1989); and treasurer
of 23 of the investment companies in the
Franklin Templeton Group of Funds. Age 42.
2. RATIFICATION OR REJECTION OF INDEPENDENT AUDITORS:
HOW IS AN INDEPENDENT AUDITOR SELECTED?
The Board has established a standing Audit Committee consisting of Messrs.
Galbraith, Hines, and Millsaps, all of whom are Independent Trustees. The Audit
Committee reviews generally the maintenance of the Trust's records and the
safekeeping arrangements of the Trust's custodian, reviews both the audit and
non-audit work of the Trust's independent auditor, and submits a recommendation
to the Board as to the selection of an independent auditor.
13
WHICH INDEPENDENT AUDITOR DID THE BOARD OF TRUSTEES SELECT?
For the current fiscal year, the Board selected as auditors the firm of
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York 10017. McGladrey &
Pullen, LLP has been the auditors of the Trust since its inception in 1988, and
has examined and reported on the fiscal year-end financial statements, dated
August 31, 1996, and certain related Securities and Exchange Commission filings.
Neither the firm of McGladrey & Pullen, LLP nor any of its members have any
material direct or indirect financial interest in the Trust.
Representatives of McGladrey & Pullen, LLP are not expected to be present at the
Meeting, but have been given the opportunity to make a statement if they wish,
and will be available should any matter arise requiring their presence.
3. SHAREHOLDER PROPOSAL TO AMEND THE DECLARATION OF TRUST TO CONVERT THE TRUST
FROM A CLOSED-END INVESTMENT COMPANY TO AN OPEN-END INVESTMENT COMPANY:
WHAT IS BEING CONSIDERED UNDER THIS ITEM?
At the meeting, a shareholder of the Trust will ask you to vote on his proposal
to amend the Trust's Declaration of Trust to convert the Trust from a closed-end
investment company to an open-end investment company. THE TRUSTEES UNANIMOUSLY
RECOMMEND THAT YOU VOTE AGAINST THIS PROPOSAL. This recommendation is based on
the Trustees' view that, as a closed-end fund, the Trust has significant
investment and other advantages.
If the shareholder proposal is approved, the conversion would result in a
"delisting" of the Trust's shares from the NYSE, where the shares currently may
be bought or sold at the prevailing market price. After conversion, the shares
would become redeemable from the Trust at net asset value.
WHAT IS THE SHAREHOLDER PROPOSAL?
The Trust has been informed by John M. Cunningham, John M. Cunningham, Inc., 200
Eagle Road, Wayne, Pennsylvania 19087, a shareholder who claims beneficial
ownership of 5,200 shares of the Trust as of September 25, 1996, that he will
present the following proposal:
"RESOLVED, that the Trust's Declaration of Trust
be amended to convert the Trust to an open-end
investment company."
14
Mr. Cunningham has requested that the following statement be included in
the proxy statement in support of his proposal:
"I recommend that shareholders approve the
proposal because I believe that it will provide
shareholders with the benefits of the open-end
investment company form of organization. As
shareholders in an open-end investment company,
shareholders will be able to redeem their Shares
at net asset value. In contrast, shares of
Templeton Global Governments Income Trust ("TGG")
are not redeemable but may be traded on the New
York Stock Exchange or in the over-the-counter
secondary markets. While such trading can result
in shares trading at a premium, shares of TGG
frequently have traded at a substantial discount
to net asset value. During the past sixteen weeks
the discount has averaged in excess of 10%. On
December 12, 1996, the closing price per TGG share
represented a discount of 13%."
WHAT IS THE RECOMMENDATION OF THE TRUSTEES?
THE TRUSTEES RECOMMEND A VOTE AGAINST ADOPTING THE SHAREHOLDER PROPOSAL.
THE TRUSTEES BELIEVE THAT THE CLOSED-END NATURE OF THE TRUST IS VERY IMPORTANT
AT THIS TIME IN PROVIDING THE TRUST WITH FLEXIBILITY TO PURSUE ITS LONG-TERM
INVESTMENT OBJECTIVE. THE TRUSTEES ALSO BELIEVE THAT CONVERSION OF THE TRUST TO
OPEN-END STATUS WOULD LIKELY INCREASE ITS OPERATING EXPENSES AND POTENTIALLY
RESULT IN ADVERSE TAX CONSEQUENCES AT THIS TIME.
The Trustees review on an on-going basis the operations of the Trust in order to
serve the best interests of the Trust and its shareholders. The Trustees have
considered and will continue to consider at regularly scheduled Board meetings
the appropriateness of the Trust remaining a closed-end investment company.
WHY DO THE TRUSTEES RECOMMEND A VOTE AGAINST THIS PROPOSAL?
The Trustees recommend a vote against adopting the shareholder proposal for
the following reasons:
1. Investment Flexibility.
THE TRUST WAS ORGANIZED AS A CLOSED-END INVESTMENT COMPANY BECAUSE THIS
STRUCTURE PROVIDES THE INVESTMENT MANAGER WITH THE FLEXIBILITY TO STRUCTURE THE
TRUST'S PORTFOLIO IN A MANNER BELIEVED MOST LIKELY TO BENEFIT ITS SHAREHOLDERS.
At the present time, in seeking
15
higher yields, the Trust invests principally in global bonds and, to a lesser
extent, in emerging market bonds. Its present portfolio composition is 57% in
global bonds of issuers in non-U.S. developed markets, 15% in emerging market
bonds, 27% in U.S. bonds, and 1% in money market instruments. Continuing the
Trust's closed-end structure, so that the Trust need not maintain a buffer of
cash and highly liquid assets to meet redemptions, permits the Investment
Manager to maintain or increase these percentages as opportunities for higher
yields arise, especially in the case of emerging market bonds. In this regard,
the Investment Manager has advised the Board that it presently intends to
continue to adjust the Trust's portfolio composition with a target by year-end
1997 of 50% in global bonds of issuers in non-U.S. developed markets, 30% in
emerging market bonds, 18% in U.S. bonds, and 2% in money market instruments.
Another aspect of the Trust's current investment strategy, which the Investment
Manager believes enhances the opportunities for higher yields, is to assume a
two year horizon on investments that the Trust makes. As a closed-end investment
company, the Trust is not subject to irregular cash flows associated with sales
and redemptions, and it can more easily take this long-term investment view
intended to maximize its investment returns. In particular, the Trust is
protected from the possibility that redemption requests might require it to sell
portfolio securities at a time when their market prices are temporarily
depressed. In this regard, the Investment Manager has advised the Board that the
liquidity of global and particularly emerging market bonds, which together
aggregate 72% of the Trust's current portfolio, tends to become reduced at times
of generally declining market prices. If the Trust were to sell portfolio
securities in these circumstances, the decline in their market prices could be
exaggerated, causing a reduction in the value realized by the Trust on the sale.
The Trustees recognize that the Trust's performance will not be determined
entirely by the closed-end nature of the Trust and that other key factors
include the quality of Trust management and the timeliness of the Trust's
investment strategy. The Trustees are, however, in agreement with the Investment
Manager, who has advised the Board that at this time the closed-end structure is
important to enable the Trust to pursue future investment strategies intended
best to enable the Trust to achieve its investment objective. Accordingly,
although the Trust's shares have traded at a discount since the fourth calendar
quarter of 1993, the Trustees do not now believe that eliminating the
possibility of the Trust's shares trading at a discount from their net asset
value justifies the fundamental changes to the Trust's portfolio management and
operations that would be required if the Trust were to convert to open-end fund
status. The Trustees believe that converting the Trust would only benefit those
shareholders who actually then redeem their shares at net asset value.
Longer-term shareholders who prefer to retain their investment would be
disadvantaged because the Trust would have less investment flexibility.
16
2. Increased Operating Expenses.
The Trustees believe that retaining the closed-end status of the Trust is likely
to help it maintain its current low operating expense ratio. Based upon the
experience of other closed-end funds which have converted to an open-end
structure, the Investment Manager has advised the Board that, were it to
convert, the Trust would likely experience substantial redemptions. In order to
protect against the possibility that, as a much smaller fund, it might have a
higher expense ratio, the Trust would be required to engage in a continuous
public offering intended at a minimum to offset redemptions. This in turn would
subject the Trust to further expenses and a corresponding reduction in the
Trust's return to shareholders. For example, in order to market the Trust's
shares effectively, it would be necessary for the Trust to conform generally to
sales practices of competing dealer-sold funds. For this reason, the Trustees
would likely recommend that shareholders approve the adoption of a distribution
plan under Rule 12b-1 of the 1940 Act. Currently, Rule 12b-1 fees for the
open-end investment companies in the Franklin Templeton Group of Funds range
from an annual rate of 0.25% to 1.0% of a fund's average net assets.
Further, a continuous public offering would require the Trust to maintain
current registrations under federal and state securities laws, which involves
additional costs, and also to incur printing costs and other expenses in
connection with maintaining a current prospectus.
If the continuous offering were not successful in raising substantial new assets
for the Trust, and redemptions were significantly more than new sales, the
Trust's expense ratio likely would increase from its current level.
3. Tax Ramifications.
If the Trust converts to an open-end structure, it may be required to sell
portfolio securities to meet redemption requests. In the event of a very large
amount of redemptions, the Trust might be required to sell appreciated
securities to meet redemption requests, and capital and/or ordinary gains might
be generated, which would increase the amount of taxable distributions to
shareholders. If, on the other hand, the Trust were required to sell depreciated
securities, the Trust would incur a loss, which might otherwise have been
avoided had the Trust been able to retain the securities. Moreover, losses
realized on the sale of a security generally reduce amounts distributable to
shareholders. In either event, if the Trust is required to dispose of a
significant amount of its assets to satisfy very large redemption requests, it
may be unable to satisfy certain diversification requirements applicable for tax
purposes.
17
4. New York Stock Exchange Listing.
Conversion to an open-end fund would result in the loss of the Trust's current
listing on the NYSE. This would eliminate the possibility of the Trust's shares
ever trading at a discount or premium to net asset value. The Investment Manager
also has advised the Board that loss of the NYSE listing could be
disadvantageous for the Trust because some investors, particularly foreign
investors and certain institutional investors subject to restrictions with
respect to their portfolios, are believed to consider a listing on the NYSE to
be an important factor in their decision to buy or retain shares of the Trust.
Delisting would save the Trust the annual NYSE fees of approximately $32,000,
but as an open-end company the Trust would pay federal and state registration
and notification fees on sales of new shares, which could offset or even exceed
that savings.
5. Reinvestment of Dividends and Distributions.
Shareholders of the Trust currently have the option of participating in the
Trust's Dividend Reinvestment Plan, under which cash distributions paid by the
Trust are generally reinvested through the purchase of additional shares at
market prices (which currently reflect a discount from net asset value). At
times when the Trust's shares are trading at a premium over their net asset
value, reinvestments are made at the higher of net asset value or 95% of market
value. If the Trust retains its closed-end status, shareholders will continue to
be able to reinvest dividends in this manner.
WHAT ADDITIONAL MEASURES WOULD BE TAKEN IN CONNECTION WITH CONVERSION TO
OPEN-END STATUS?
In the event that shareholders vote to convert the Trust from a closed-end fund
to an open-end fund, a number of additional actions would need to be taken not
only to effect the conversion of the Trust to an open-end investment company but
also to allow the Trust to operate effectively as an open-end investment
company. These actions would include executing and filing an amended and
restated Declaration of Trust (the proposed text of which is attached as Exhibit
A) and reviewing carefully the investment objectives and policies of the Trust
to ensure that they conform to investment objectives and policies applicable to
open-end investment companies.
The Trustees also would consider the adoption of a distribution agreement and a
distribution plan. In the event the Trustees approve a distribution plan,
shareholder approval for the plan also would be required. The Investment Manager
would likely recommend that Franklin Templeton Distributors, Inc., an affiliate
of the Investment Manager and principal underwriter for the Franklin Templeton
Group of Funds, serve as principal underwriter for the shares of the Trust.
18
If the Trustees believe that immediately following a conversion to open-end
status there would likely be significant redemptions of shares that would
disrupt long-term portfolio management of the Trust and dilute the interests of
the remaining shareholders, the Trustees may determine to impose a temporary
redemption fee. Imposition of a redemption fee may deter certain redemptions and
would compensate remaining long-term shareholders for the costs of the
liquidation of a significant percentage of the Trust's portfolio. The Trust
would notify shareholders in writing prior to the imposition of any temporary
redemption fee.
The Trustees also would consider whether the Trust should reserve the right to
meet redemptions by delivering portfolio securities rather than paying
redemption proceeds in cash.
THE TRUSTEES BELIEVE THAT THE CONTINUED OPERATION OF THE TRUST AS A CLOSED-END
INVESTMENT COMPANY IS IN YOUR BEST LONG-TERM INTEREST, AND UNANIMOUSLY RECOMMEND
A VOTE AGAINST THIS PROPOSAL.
4. OTHER BUSINESS:
The Trustees know of no other business to be presented at the Meeting. However,
if any additional matters should be properly presented, proxies will be voted as
specified. Proxies reflecting no specification will be voted in accordance with
the judgment of the persons named in the proxy.
o INFORMATION ABOUT THE TRUST
The Trust's last audited financial statements and annual report, dated August
31, 1996, are available free of charge. To obtain a copy, please call 1-800/DIAL
BEN or send a written request to Franklin Templeton Investor Services, Inc.,
P.O. Box 33030, St. Petersburg, Florida 33733-8030.
As of December 15, 1996, the Trust had 22,842,821 shares outstanding and assets
of $190,021,615. The Trust's shares are listed on the NYSE (symbol: TGG). From
time to time, the number of shares held in "street name" accounts of various
securities dealers for the benefit of their clients may exceed 5% of the total
shares outstanding. To the knowledge of the Trust's management, as of December
15, 1996, there are no other entities holding beneficially or of record more
than 5% of the Trust's outstanding shares.
In addition, to the knowledge of the Trust's management, as of December 15,
1996, no
19
nominee or Trustee of the Trust owned 1% or more of the outstanding shares of
the Trust, and the Officers and Trustees of the Trust owned, as a group, less
than 1% of the outstanding shares of the Trust.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. U.S. securities laws
require that the Trust's shareholders owning more than 10% of outstanding
shares, Trustees, and Officers, as well as affiliated persons of its investment
manager, report their ownership of the Trust's shares and any changes in that
ownership. During the fiscal year ended August 31, 1996, the filing dates for
these reports were met except that the Statements of Changes in Beneficial
Ownership filed on behalf of Fred R. Millsaps and Samuel J. Forester, Jr. were
inadvertently filed late due to administrative error. In making this disclosure,
the Trust relied upon the written representations of the persons affected and
copies of their relevant filings.
THE INVESTMENT MANAGER. The investment manager of the Trust is Templeton Global
Bond Managers, a division of Templeton Investment Counsel, Inc. ("TICI"), a
Florida corporation with offices at Broward Financial Centre, 500 East Broward
Blvd., Suite 2100, Ft. Lauderdale, Florida 33394-3091. Pursuant to an investment
management agreement dated October 30, 1992 and amended and restated as of
December 6, 1994, TICI manages the investment and reinvestment of Trust assets.
TICI is an indirect, wholly-owned subsidiary of Resources.
THE ADMINISTRATOR. The administrator of the Trust is Franklin Templeton
Services, Inc. ("FTSI"), with offices at Broward Financial Center, 500 East
Broward Blvd., Suite 2100, Ft. Lauderdale, Florida 33394-3091. FTSI is an
indirect, wholly-owned subsidiary of Resources. Pursuant to an administration
agreement dated October 1, 1996, FTSI performs certain administrative functions
for the Trust.
THE TRANSFER AGENT. The transfer agent, registrar and dividend disbursement
agent for the Trust is Dean Witter Trust Company, Two Montgomery Street, Jersey
City, New Jersey 07302, pursuant to a service agreement dated October 2, 1989.
THE CUSTODIAN. The custodian for the Trust is The Chase Manhattan Bank, 1 Chase
Manhattan Plaza, New York, New York 10081, pursuant to a custody agreement dated
October 22, 1988 and amended July 5, 1996.
o FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDERS MEETING:
SOLICITATION OF PROXIES. The cost of soliciting proxies, including the fees of a
proxy soliciting agent, are borne by the Trust. The Trust reimburses brokerage
firms and
20
others for their expenses in forwarding proxy material to the beneficial owners
and soliciting them to execute proxies. In addition, the Trust may retain a
professional proxy solicitation firm to assist with any necessary solicitation
of proxies. The Trust expects that the solicitation would be primarily by mail,
but also may include telephone or oral solicitations. If professional proxy
solicitors are retained, it is expected that soliciting fees and expenses would
be approximately $8,000. The Trust does not reimburse Trustees, Officers, and
regular employees and their agents involved in the solicitation of proxies.
VOTING BY BROKER-DEALERS. The Trust expects that, before the Meeting,
broker-dealer firms holding shares of the Trust in "street name" for their
customers and clients will request voting instructions from their customers and
clients. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Trust understands that
the NYSE permits the broker-dealers to vote on behalf of their customers and
clients only with regard to Proposals 1 and 2.
QUORUM. A majority of the shares entitled to vote--present in person or
represented by proxy--constitutes a quorum at the Meeting. The shares over which
broker-dealers have discretionary voting power, the shares that broker-dealers
have declined to vote ("broker non-votes") and the shares whose proxies reflect
an abstention on any item are all counted as shares present and entitled to vote
for purposes of determining whether the required quorum of shares exists.
METHODS OF TABULATION. Proposal 1, the election of Trustees, requires the
affirmative vote of the holders of a plurality of the Trust's shares present and
voting on the Proposal at the Meeting. Proposal 2, ratification of the selection
of the independent auditors, requires the affirmative vote of a majority of the
Trust's shares present and voting on the Proposal at the Meeting. Proposal 3,
the shareholder proposal to amend the Declaration of Trust to convert the Trust
to an open-end investment company, requires the affirmative vote of the holders
of the lesser of either (A) 67% or more of the Trust's shares present at the
Meeting, if the holders of more than 50% of the outstanding shares of the Trust
are present or represented by proxy, or (B) more than 50% of the Trust's shares.
Proposal 4, the transaction of any other business, is expected to require the
affirmative vote of a majority of the Trust's shares present and voting on the
Proposal at the Meeting. Abstentions and broker "non-votes" will be treated as
votes not cast. Accordingly, abstentions and broker non-votes will have no
effect on Proposals 1, 2, and 4, for which the required vote is a plurality or
majority of the shares present and voting, but generally will have the effect of
a vote against Proposal 3.
SIMULTANEOUS MEETINGS. The Meeting is to be held at the same time as the meeting
of shareholders of Templeton Global Income Fund, Inc. It is anticipated that the
meetings will be held simultaneously. If any shareholder at the Meeting objects
to the holding of a
21
simultaneous meeting and moves for an adjournment of the Meeting to a time
promptly after the simultaneous meetings, the persons named as proxies will vote
in favor of such adjournment.
ADJOURNMENT. If a sufficient number of votes in favor of the proposals contained
in the Notice of Annual Meeting and Proxy Statement is not received by the time
scheduled for the Meeting, the persons named in the proxy may propose one or
more adjournments of the Meeting to permit further solicitation of proxies with
respect to any such proposals. Any proposed adjournment requires the affirmative
vote of a majority of shares present and voting at the Meeting. Proxies will be
voted as specified. Those proxies reflecting no specification will be voted in
accordance with the judgment of the persons named in the proxy.
SHAREHOLDER PROPOSALS. The Trust anticipates that its next annual meeting will
be held in February 1998. Shareholder proposals to be presented at the next
annual meeting must be received at the Trust's offices, 500 East Broward Blvd.,
Ft. Lauderdale, Florida 33394-3091, no later than October 13, 1997.
By order of the Board of Trustees,
Barbara J. Green,
Secretary
February 10, 1997
22
EXHIBIT A
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
DECLARATION OF TRUST
AMENDED AND RESTATED
, 1997
TABLE OF CONTENTS
PAGE
--------
ARTICLE I--Name and Definitions ................................................... A-1
Section 1.1 Name A-1
Section 1.2 Definitions A-1
ARTICLE II--Trustees .............................................................. A-2
Section 2.1 Number of Trustees A-2
Section 2.2 Election and Term A-2
Section 2.3 Resignation and Removal A-3
Section 2.4 Vacancies A-3
Section 2.5 Delegation of Power to Other Trustees A-4
ARTICLE III--Powers of Trustees ................................................... A-4
Section 3.1 General A-4
Section 3.2 Investments A-4
Section 3.3 Legal Title A-6
Section 3.4 Issuance and Repurchase of Shares A-6
Section 3.5 Delegation; Committees A-6
Section 3.6 Collection and Payment A-6
Section 3.7 Expenses A-6
Section 3.8 Manner of Acting; By-laws A-6
Section 3.9 Miscellaneous Powers A-7
Section 3.10 Principal Transactions A-7
ARTICLE IV--Investment Adviser, Distributor and Transfer Agent .................... A-8
Section 4.1 Investment Adviser and Administrator A-8
Section 4.2 Underwriting Contract A-8
Section 4.3 Transfer Agent A-8
Section 4.4 Parties to Contract A-8
Section 4.5 Compliance with 1940 Act A-9
ARTICLE V--Limitations of Liability of Shareholders, Trustees and Others .......... A-9
Section 5.1 No Personal Liability of Shareholders, Trustees, Etc. A-9
Section 5.2 Non-Liability of Trustees, Etc. A-9
Section 5.3 Mandatory Indemnification A-10
Section 5.4 Permissive Indemnification A-11
Section 5.5 Insurance; Rights to Continue A-11
Section 5.6 No Bond Required of Trustees A-11
Section 5.7 Execution of Trust Instruments, Etc. A-11
Section 5.8 No Duty of Investigation; Notice in Trust Instruments, Etc. A-11
Section 5.9 Reliance on Experts, Etc. A-12
ARTICLE VI--Shares of Beneficial Interest ......................................... A-12
Section 6.1 Beneficial Interest A-12
Section 6.2 Rights of Shareholders A-12
Section 6.3 Trust Only A-12
i
PAGE
--------
Section 6.4 Issuance of Shares A-13
Section 6.5 Register of Shares A-13
Section 6.6 Transfer of Shares A-13
Section 6.7 Notices A-14
Section 6.8 Treasury Shares A-14
Section 6.9 Voting Powers A-14
Section 6.10 Meetings of Shareholders A-15
Section 6.11 Series Designation A-15
Section 6.12 Class Designation A-16
ARTICLE VII--Redemption and Repurchase of Shares .................................. A-18
Section 7.1 Redemption of Shares A-18
Section 7.2 Price A-18
Section 7.3 Payment A-18
Section 7.4 Effect of Suspension of Determination of Net Asset Value A-18
Section 7.5 Repurchase by Agreement A-18
Section 7.6 Redemption of Shareholder's Interest A-19
Section 7.7 Redemption of Shares in Order to Qualify as Regulated A-19
Investment Company; Disclosure of Holding
Section 7.8 Reductions in Number of Outstanding Shares Pursuant to Net A-19
Asset Value Formula
Section 7.9 Suspension of Right of Redemption A-19
ARTICLE VIII--Determination of Net Asset Value, Net Income and Distributions ...... A-20
Section 8.1 Net Asset Value A-20
Section 8.2 Distributions to Shareholders A-20
Section 8.3 Determination of Net Income A-21
Section 8.4 Allocation Between Principal and Income A-21
Section 8.5 Power to Modify Foregoing Procedures A-22
ARTICLE IX--Duration; Termination of Trust; Amendment; Mergers, Etc. .............. A-22
Section 9.1 Duration A-22
Section 9.2 Termination of Trust A-22
Section 9.3 Amendment Procedure A-23
Section 9.4 Incorporation and Reorganization A-24
Section 9.5 Vote Required for Certain Actions A-24
ARTICLE X--Reports to Shareholders ................................................ A-24
ARTICLE XI--Miscellaneous ......................................................... A-25
Section 11.1 Filing A-25
Section 11.2 Governing Law A-25
Section 11.3 Counterparts A-25
Section 11.4 Reliance by Third Parties A-25
Section 11.5 Provisions in Conflict With Law or Regulations A-25
Section 11.6 Appointment of Resident Agent A-26
ii
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST
THIS DECLARATION OF TRUST, made October 13, 1988 by the Trustees hereunder
(together with all other persons from time to time duly elected, qualified and
serving as Trustees in accordance with the provisions of Article II hereof, the
"Trustees") and amended , 1997 by the Shareholders hereunder;
WHEREAS the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS the Trustees desire that the beneficial interest in the trust assets
be divided into transferable shares of beneficial interest, as hereinafter
provided;
THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time, of the shares of beneficial
interest issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. The name of the trust created hereby, until and unless
changed by the Trustees as provided in Section 9.3(a) hereof, is "Templeton
Global Governments Income Trust."
Section 1.2 Definitions. Wherever they are used herein, the following terms
have the following respective meanings:
(a) "Administrator" means a party furnishing administrative services to
the Trust pursuant to a contract described in Section 4.1 hereof.
(b) "By-Laws" means the By-laws referred to in Section 3.8 hereof, as from
time to time amended.
(c) The terms "Commission," "Interested Person" and "Majority Shareholder
Vote" have the meanings given them in the 1940 Act.
(d) "Custodian" means any person other than the Trust who has custody of
any Trust Property as required by Section 17(f) of the 1940 Act, but does not
include a system for the central handling of securities described in Section
17(f).
(e) "Declaration" means this Declaration of Trust as amended from time to
time. Reference in this Declaration of Trust to "Declaration," "hereof,"
"herein" and "hereunder" shall be deemed to refer to this Declaration rather
than the article or section in which such words appear.
(f) "Distributor" means the party or parties, other than the Trust, to the
contract described in Section 4.2 hereof.
A-1
(g) "Investment Adviser" means a party furnishing services to the Trust
pursuant to the contract described in Section 4.1 hereof.
(h) The "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations thereunder, as amended from time to time.
(i) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign.
(j) "Shareholder" means a record owner of outstanding Shares.
(k) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all series which may be established by the
Trustees, and includes fractions of Shares as well as whole Shares.
"Outstanding Shares" means those Shares shown from time to time on the books
of the Trust or its Transfer Agent as then issued and outstanding, but shall
not include Shares which have been redeemed or repurchased by the Trust and
which are at the time held in the Treasury of the Trust.
(l) "Transfer Agent" means any person other than the Trust who maintains
the Shareholder records of the Trust such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(m) The "Trust" means the trust created hereby.
(n) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(o) The "Trustees" means the persons who have signed the Declaration, so
long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected, qualified
and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in their capacity as Trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1 Number of Trustees. The number of Trustees shall initially be one
(1), and thereafter shall be such number as shall be fixed from time to time by
a written instrument signed by a majority of the Trustees, provided, however,
that the number of Trustees shall in no event be less than one (1) nor more than
fifteen (15). No reduction in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term unless the
Trustee is specifically removed pursuant to Section 2.3 of this Article II at
the time of the decrease.
Section 2.2 Election and Term. Except for the Trustees named herein,
designated by such Trustees prior to the issuance of Shares, or appointed to
fill vacancies pursuant to
A-2
Section 2.4 hereof, the Trustees shall be elected by the Shareholders owning
of record a plurality of the Shares voting at a meeting of Shareholders called
for that purpose. Except in the event of resignation or removal pursuant to
Section 2.3 hereof, each Trustee shall hold office until the next such meeting
of Shareholders and until his successor is duly elected and qualified.
Section 2.3 Resignation and Removal. Any Trustee may resign his trust
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein. Any of the
Trustees may be removed (i) with cause, by the action of two-thirds of the
remaining Trustees, specifying the date when such removal shall become effective
(provided that the aggregate number of Trustees after such removal shall not be
less than the number required by Section 2.1 hereof); or (ii) by vote of holders
of two-thirds of the outstanding Shares of the Trust, either by declaration in
writing or at a meeting called for such purposes. The Trust shall call a meeting
of Shareholders for the purpose of voting upon the question of removal of a
Trustee or Trustees when requested to do so by the holders of at least ten
percent (10%) of the outstanding Shares. Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning or removed Trustee. Upon the incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
Section 2.4 Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, declination, resignation,
removal, retirement, bankruptcy, adjudicated incompetence or other incapacity to
perform the duties of the office of a Trustee. No such vacancy shall operate to
annul the Declaration or to revoke any existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees. Subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their discretion
shall see fit, made by a written instrument signed by a majority of the Trustees
then in office. Any such appointment shall not become effective, however, until
the person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made by the Trustees then in
office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided herein, the Trustees in office, regardless of
their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by the Declaration. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy.
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Section 2.5 Delegation of Power to Other Trustees. Any Trustee may, by power
of attorney, delegate his power for a period not exceeding six (6) months at any
one time to any other Trustee or Trustees; provided that in no case shall less
than two (2) Trustees personally exercise the powers granted to the Trustees
under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1 General. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust to the same extent as
if the Trustees were the sole owners of the Trust Property and business in their
own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees shall have power to conduct the business of the Trust
and carry on its operations in any and all of its branches and maintain offices
both within and without the Commonwealth of Massachusetts, in any and all states
of the United Sates of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments and
to do all such other things and execute all such instruments as the Trustees
deem necessary, proper or desirable in order to promote the interests of the
Trust, including such things as may not be herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of the
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2 Investments.
(a) The Trustees shall have the power:
(i) To operate as and carry on the business of an open-end management
investment company, as defined in the 1940 Act, and exercise all of the
powers necessary or appropriate to the conduct of such operations;
(ii) To invest and reinvest cash, and hold cash uninvested;
(iii) To invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; warrants; bonds, debentures,
bills, time notes and all other evidences of indebtedness; negotiable
or non-negotiable instruments; general and limited partnership
interests; government securities, including securities of any state,
municipality or other political subdivision thereof, or any
governmental or quasi-governmental agency or instrumentality; and money
market instruments including bank certificates of deposit, finance
paper, commercial paper, bankers acceptances, interests in bank sweep
accounts and all kinds of repurchase agreements, of any corporation,
company, trust, association, firm or other business organization
however
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established, and of any country, state, municipality or other political
subdivision, or any governmental or quasi-governmental agency or
instrumentality;
(iv) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell,
to sell or otherwise dispose of, to lend and to pledge any such
securities, to enter into repurchase agreements and forward foreign
currency exchange contracts, to purchase and sell futures contracts and
options on futures contracts of all descriptions, and to engage in all
types of hedging and risk management transactions;
(v) To exercise all rights, powers and privileges of ownership or interest
in all securities and property included in the Trust Property,
including the right to vote thereon and otherwise act with respect
thereto and to do all acts for the preservation, protection,
improvement and enhancement in value of all such securities and
property;
(vi) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property,
real or personal; provided that the Trustees shall not purchase or sell
real estate, except that the Trustees may purchase or sell securities
secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein;
(vii) To borrow money or otherwise obtain credit and in this connection issue
notes or other evidence of indebtedness; secure borrowings by
mortgaging, pledging or otherwise subjecting as security the Trust
Property; endorse, guarantee, or undertake the performance of any
obligation, contract or engagement of any other Person and to lend
Trust Property;
(viii)To aid by further investment any corporation, company, trust,
association, general or limited partnership or firm, any obligation of
or interest in which is included in the Trust Property or in the
affairs of which the Trustees have any direct or indirect interest; to
do all acts and things designed to protect, preserve, improve or
enhance the value of such obligation or interest; to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes,
debentures and other obligations of or interests in any such
corporation, company, trust, association, general or limited
partnership or firm; and
(ix) To carry on any other business in connection with or incidental to any
of the foregoing powers, do everything necessary, suitable or proper
for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, and do every
other act or thing incidental or appurtenant to or connected with the
aforesaid purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees.
(b) The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
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Section 3.3 Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office, resignation, removal or death of a Trustee he
shall automatically cease to have any right, title or interest in any of the
Trust Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 3.4 Issuance and Repurchase of Shares. The Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in Shares and, subject to the
provisions set forth in Articles VII and VIII hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the particular series of the Trust with respect to which
such Shares are issued, whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the 1940 Act and the laws of the
Commonwealth of Massachusetts governing business corporations.
Section 3.5 Delegation; Committees. The Trustees shall have power to delegate
from time to time to such of their number or to officers, employees or agents of
the Trust the doing of such things and the execution of such instruments either
in the name of the Trust or the names of the Trustees or otherwise as the
Trustees may deem expedient, to the same extent as such delegation is not
prohibited by the 1940 Act.
Section 3.6 Collection and Payment. The Trustees shall have power to collect
all property due to the Trust; to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust Property; to foreclose any security interest securing any
obligations by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
Section 3.7 Expenses. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of the Declaration, and to pay reasonable
compensation from the funds of the Trust to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees.
Section 3.8 Manner of Acting; By-laws. Except as otherwise provided herein or
in the By-laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, or by written consents of all the Trustees. The
Trustees may adopt By-laws not inconsistent with this Declaration to provide for
the conduct of the business of the Trust and may amend or repeal such By-laws to
the extent such power is not reserved to the Shareholders.
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Notwithstanding the foregoing provisions of this Section 3.8 and in addition
to such provisions or any other provision of this Declaration or of the By-laws,
the Trustees may by resolution appoint a committee consisting of one or more
Trustees and less than the whole number of Trustees then in office, which
committee may be empowered to act for and bind the Trustees and the Trust, as if
the acts of such committee were the acts of all the Trustees then in office,
with respect to the institution, prosecution, dismissal, settlement, review or
investigation of any action, suit or proceeding which shall be pending or
threatened to be brought before any court, administrative agency or other
adjudicatory body.
Section 3.9 Miscellaneous Powers. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable for the
transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted by any such person in
such capacity, whether or not constituting negligence, or whether or not the
Trust would have the power to indemnify such person against such liability; (e)
establish pension, profit sharing, share purchase and other retirement,
incentive and benefit plans for any Trustees, officers, employees or agents of
the Trust; (f) to the extent permitted by law, and in addition to the mandatory
indemnification required by Section 5.3, indemnify any Person with whom the
Trust has dealings, including the Investment Adviser, Distributor, Transfer
Agent and selected dealers to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
Section 3.10 Principal Transactions. Except in transactions not permitted by
the 1940 Act or rules and regulations adopted by the Commission, the Trustees
may, on behalf of the Trust, buy any securities from or sell any securities to,
or lend any assets of the Trust to, any Trustee or officer of the Trust or any
firm of which any such Trustee or officer is a member acting as principal, or
have any such dealings with persons acting as Investment Adviser, administrator,
Distributor or Transfer Agent or with any interested Person of such Person; and
the Trust may employ any such Person, or firm or company in which such Person is
an Interested Person, as broker, legal counsel, registrar, Transfer Agent,
dividend disbursing agent or Custodian upon customary terms.
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ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR AND TRANSFER AGENT
Section 4.1 Investment Adviser and Administrator. Subject to a Majority
Shareholder Vote, the Trustees may in their discretion from time to time enter
into one or more investment advisory or management contracts whereby a party to
such contract shall undertake to furnish the Trust or to one or more of its
series such administrative, management, investment advisory, statistical and
research facilities and services, and such other facilities and services, if
any, as the Trustees shall from time to time consider desirable and all upon
such terms and conditions as the Trustees may in their discretion determine.
Notwithstanding any provisions of the Declaration, the Trustees may delegate to
the Investment Adviser or Administrator authority (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of assets of the Trust on behalf of the
Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of the
Investment Adviser (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees.
Section 4.2 Underwriting Contract. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of the Shares to net the Trust not less than
the amount provided for in Section 8.1 of Article VIII hereof, whereby the
Trustees may either agree to sell the Shares to the other party to the contract
or appoint such other party their sales agent for the Shares, and in either case
on such terms and conditions as may be prescribed in the By-laws, if any, and
such further terms and conditions as the Trustees may in their discretion
determine not inconsistent with the provisions of this Article IV or of the
By-laws; and such contract may also provide for the repurchase of the Shares by
such other party as agent of the Trustees.
Section 4.3 Transfer Agent. The Trustees may in their discretion from time to
time enter into a transfer agency and shareholder service contract whereby the
other party to such contract shall undertake to furnish transfer agency and
shareholder services to the Trust. The contract shall have such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the Declaration or the By-laws. Such services may be provided by one or
more Persons.
Section 4.4 Parties to Contract. Any contract of the character described in
Section 4.1, 4.2 or 4.3 of this Article IV or any Custodian contract, as
described in the Bylaws, may be entered into with any Person, although one or
more of the Trustees or officers of the Trust may be an officer, partner,
director, trustee, shareholder or member of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship; nor shall any Person holding such
relationship be disqualified from voting upon or executing any such contract;
nor shall any Person holding such relationship be liable merely by reason of
such relationship for any loss or expense to the Trust under or by reason of
said contract or be held accountable for any profit realized
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directly or indirectly therefrom, provided that the contract when entered into
was not inconsistent with the provisions of this Article IV or the By-laws. The
same Person may be the other party to contracts entered into pursuant to
Sections 4.1, 4.2 and 4.3 above or Custodian contracts, and any Person may be
financially interested or otherwise affiliated with Persons who are parties to
any or all of the contracts mentioned in this Section 4.4.
Section 4.5 Compliance with 1940 Act. Any contract entered into pursuant to
Sections 4.1 or 4.2 shall be consistent with and subject to the requirements of
the Investment Company Act of 1940 (including any amendment thereof or other
applicable Act of Congress hereafter enacted) with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
Section 5.1 No Personal Liability of Shareholders, Trustees, Etc.
(a) No Shareholder shall be subject to any personal liability whatsoever to
any Person in connection with Trust Property or the acts, obligations or affairs
of the Trust solely by reason of his being or having been a Shareholder and not
because of his or her acts or omissions in any other capacity. The Trust shall
indemnify and hold each Shareholder harmless from and against all claims and
liabilities to which such Shareholder may become subject by reason of his being
or having been a Shareholder, and shall reimburse such Shareholder for all legal
and other expenses reasonably incurred by him in connection with any such claim
or liability provided that any such expenses shall be paid solely out of the
funds and property of the series of the Trust with respect to which such
Shareholder's Shares are issued. The rights accruing to a Shareholder under this
Section 5.1 shall not exclude any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided for herein.
(b) Any Person extending credit to, contracting with or having any claim
against the Trust shall look only to the Trust Property for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this Declaration of
Trust shall protect any former or acting Trustee or officer against any
liability to which such Trustee or officer would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 5.2 Non-Liability of Trustees, Etc. No Trustee, officer, employee or
agent of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, investment adviser, employee or agent thereof for
any action or failure to act (including without limitation the failure to compel
in any way any former or acting Trustee to redress any breach of trust) except
for his own bad faith, willful misfeasance, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
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Section 5.3 Mandatory Indemnification.
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by law
against all liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having
been a Trustee or officer, and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, administrative
or other, including appeals), actual or threatened; and the words "liability"
and "expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office or agency;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b)(i) or (b)(ii) resulting in a
payment by a Trustee or officer, unless there has been either a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office or agency by the court or other body approving the
settlement or other disposition or a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) Expenses for preparation and presentation of a defense to any
claim, action, suit, or proceeding of the character described in paragraph
(a) of this Section 5.3 shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 5.3; provided that either:
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(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out
of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3, a "Disinterested Trustee" is one who (i) is not
an "Interested Person" of the Trust (including anyone who has been exempted from
being an "Interested Person" by any rule, regulation or order of the
Commission); and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
Section 5.4 Permissive Indemnification. The Board of Trustees may authorize
or ratify, either by contract or resolution, indemnification of employees and
agents of the Trust, including the Investment Adviser or underwriters of the
Shares, to the full extent permitted under applicable law.
Section 5.5 Insurance; Rights to Continue. The rights of indemnification and
advancement of expenses provided in this Declaration of Trust may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee, officer, investment adviser,
Shareholder, employee or agent may now or hereafter be entitled, shall continue
as to a Person who has ceased to be such Trustee, officer, Shareholder,
Investment Adviser, employee or agent and shall inure to the benefit of the
heirs, executors, administrators, and assigns of such Person. Nothing contained
herein shall affect any rights to indemnification to which any Person may be
otherwise entitled under law.
Section 5.6 No Bond Required of Trustees. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
Section 5.7 Execution of Trust Instruments, Etc. Every obligation, contract,
instrument, certificate, Share, other security of the Trust or undertaking, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under the Declaration or in their capacity as
officers, employees or agents of the Trust.
Section 5.8 No Duty of Investigation; Notice in Trust Instruments, Etc. No
purchaser, lender, Transfer Agent or other Person dealing with the Trustees or
any officer, employee or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, instrument,
certificate, Share, other security of the Trust or undertaking, and every other
act or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under
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this Declaration or in their capacity as officers, employees or agents of the
Trust. Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or undertaking made or issued by the Trustees may recite
that the same is executed or made by them not individually, but as Trustees
under this Declaration, and that the obligations of the Trust under any such
instrument are not binding upon any of the Trustees or Shareholders
individually, but bind only the estate of the Trust, and may contain any further
recital which they or he may deem appropriate, but the omission of such recital
shall not operate to bind the Trustees individually. The Trustees may maintain
insurance for the protection of the Trust Property, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 5.9 Reliance on Experts, Etc. Each Trustee and officer or employee of
the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by the Investment Adviser, the Administrator, the
Distributor, Transfer Agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1 Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable Shares which may be divided into one or more
separate and distinct series, or classes thereof, as the Trustees shall from
time to time create and establish. The number of Shares of beneficial interest
authorized hereunder is unlimited and each Share shall have a par value of
$0.01. All Shares issued hereunder including, without limitation, Shares issued
in connection with a dividend in Shares or a split of Shares, shall be fully
paid and nonassessable.
Section 6.2 Rights of Shareholders. The ownership of the Trust Property and
the property of each series of the Trust of every description and the right to
conduct any business hereinbefore described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, and they shall have no right to
call for any partition or division of any property, profits, rights or interests
of the Trust nor can they be called upon to share or assume any losses of the
Trust or suffer any assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights in the
Declaration specifically set forth. The Shares shall not entitle the holder to
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to any series of Shares or class thereof.
Section 6.3 Trust Only. It is the intention of the Trustees to create only
the relationship of trustee and beneficiary between the Trustees and each
Shareholder from time
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to time. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation, bailment
or any form of legal relationship other than a trust. Nothing in the Declaration
shall be construed to make the Shareholders, either by themselves or with the
Trustees, partners and members of a joint stock association.
Section 6.4 Issuance of Shares. The Trustees in their discretion may, from
time to time without vote of the Shareholders, issue Shares, in addition to the
then issued and Outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to liabilities and in connection with the assumption of
liabilities) and businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the treasury and Shares
may be issued in separate series as provided in Section 6.11 hereof. The
Trustees may from time to time divide or combine the Shares into a greater or
lesser number without thereby changing the proportionate beneficial interests in
the Trust or any series. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or l-l,000ths of a Share or
integral multiples thereof. The Trustees, the Distributor or any other Person
the Trustees may authorize for the purpose may, in their discretion, reject any
application for the issuance of Shares.
Section 6.5 Register of Shares. A register shall be kept at the principal
office of the Trust or at an office of the Transfer Agent which shall contain
the names and addresses of the Shareholders and the number of Shares held by
them respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him as herein or in the
By-laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of Share
certificates and promulgate appropriate rules and regulations as to their use.
Section 6.6 Transfer of Shares. Shares shall be transferable on the records
of the Trust only by the record holder thereof or by his agent thereunto duly
authorized in writing, upon delivery to the Trustees or the Transfer Agent of a
duly executed instrument of transfer, together with any certificate or
certificates (if issued) for such Shares or such evidence of the genuineness of
each such execution and authorization and of other matters as may reasonably be
required. Upon such delivery the transfer shall be recorded on the registrar of
the Trust. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer, employee or agent
of the Trust shall be affected by any notice of the proposed transfer.
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Any Person becoming entitled to any Shares in consequence of the death,
bankruptcy or incompetence of any Shareholder, or otherwise by operation of law,
shall be recorded on the register of Shares as the holder of such Shares upon
production of the proper evidence thereof to the Trustees or the Transfer Agent;
but until such record is made, the Shareholder of record shall be deemed to be
the holder of such Shares for all purposes hereunder and neither the Trustees
nor any Transfer Agent or registrar nor any officer or agent of the Trust shall
be affected by any notice of such death, bankruptcy or incompetence, or other
operation of law.
Section 6.7 Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust; provided, however, that
annual reports and proxy statements need not be sent to a Shareholder if either
of the following have been mailed to such Shareholder's address and have been
returned undelivered:
(i) an annual report and a proxy statement for two consecutive annual
meetings, or
(ii) all, and at least two, checks (if sent by first class mail) in
payment of dividends on Shares during a twelve-month period.
However, delivery of such annual reports and proxy statements shall resume once
the Shareholder's current address is determined.
Section 6.8 Treasury Shares. Shares held in the treasury shall, until
reissued pursuant to Section 6.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 6.9 Voting Powers. The Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Section 2.2 hereof; (ii) with
respect to any investment advisory or management contract as provided in Section
4.1; (iii) with respect to termination of the Trust as provided in Section 9.2;
(iv) with respect to any amendment of the Declaration to the extent and as
provided in Section 9.3; (v) with respect to any merger, consolidation,
conversion or sale of assets as provided in Sections 9.4 and 9.5; (vi) with
respect to incorporation of the Trust or series to the extent and as provided in
Section 9.4; (vii) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or any series or class thereof or the Shareholders; and
(viii) with respect to such additional matters relating to the Trust as may be
required by the Declaration, the By-laws or any registration of the Trust as an
investment company under the 1940 Act with the Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that the Trustees may, in conjunction with the
establishment of any series or class of Shares, establish conditions under which
the several series or classes shall have separate voting rights or no voting
rights. There
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shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, the Declaration or the By-laws to be taken by the
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 6.10 Meetings of Shareholders. A meeting of the Shareholders shall be
held at such times, on such day and at such hour as the Trustees may from time
to time determine, either at the principal office of the Trust, or at such other
place as may be designated by the Trustees, for the purposes specified in
Section 2.2 or 2.3 and for such other purposes as may be specified by the
Trustees.
Section 6.11 Series Designation. The Trustees, in their discretion, may
authorize the division of Shares into two or more series, and the different
series shall be established and designated, and the variations in the relative
rights and preferences as between the different series shall be fixed and
determined, by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different series as
to investment objective, purchase price, allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all series as the context may require.
If the Trustees shall divide the Shares of the Trust into two or more series,
the following provisions shall be applicable:
(a) All provisions herein relating to the Trust shall apply equally to each
series of the Trust except as the context requires otherwise.
(b) The number of authorized Shares and the number of Shares of each series
that may be issued shall be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any series
into one or more series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
series), reissue for such consideration and on such terms as they may determine,
or cancel any Shares of any series reacquired by the Trust at their discretion
from time to time.
(c) All consideration received by the Trust for the issue or sale of Shares
of a particular series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that series for
all purposes, subject only to the rights of creditors of such series and except
as may otherwise be required by applicable tax laws, and shall be so recorded
upon the books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular series, the Trustees
shall allocate them among any one or more of the series established and
designated from time to time in such manner and on such basis
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as they, in their sole discretion, deem fair and equitable. Each such allocation
by the Trustees shall be conclusive and binding upon the Shareholders of all
series for all purposes.
(d) The assets belonging to each particular series shall be charged with the
liabilities of the Trust in respect of that series and all expenses, costs,
charges and reserves attributable to that series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees to and among any one or more of the series established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable and no series shall be
liable to any Person except for its allocated share. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders. The assets of
a particular series of the Trust shall, under no circumstances, be charged with
liabilities attributable to any other series of the Trust. All Persons extending
credit to, or contracting with or having any claim against a particular series
of the Trust shall look only to the assets of that particular series for payment
of such credit, contract or claim. No Shareholder or former Shareholder of any
series shall have any claim on or right to any assets allocated or belonging to
any other series.
(e) Each Share of a series of the Trust shall represent a beneficial interest
in the net assets of such series. Each holder of Shares of a series shall be
entitled to receive his pro rata share of distributions of income and capital
gains made with respect to such series. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been a
Shareholder of a series, such Shareholder shall be paid solely out of the funds
and property of such series of the Trust. Upon liquidation or termination of a
series of the Trust, Shareholders of such series shall be entitled to receive a
pro rata share of the net assets of such series. A Shareholder of a particular
series of the Trust shall not be entitled to participate in a derivative or
class action on behalf of any other series or the Shareholders of any other
series of the Trust.
(f) The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
series and the establishment and designation thereof. Except as otherwise
provided in this Article VI, the Trustees shall have the power to determine the
designations, preferences, privileges, limitations and rights, of each class and
series of Shares. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.
Section 6.12 Class Designation. The Trustees, in their discretion, may
authorize the division of the Shares of the Trust, or, if any series be
established, the Shares of any series, into two or more classes, and the
different classes shall be established and designated, and
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the variations in the relative rights and preferences as between the different
classes shall be fixed and determined, by the Trustees; provided, that all
Shares of the Trust or of any series shall be identical to all other Shares of
the Trust or the same series, as the case may be, except that there may be
variations between different classes as to allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several classes shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be Shares of any or all classes as the context may require.
If the Trustees shall divide the Shares of the Trust or any series into two
or more classes, the following provisions shall be applicable:
(a) All provisions herein relating to the Trust, or any series of the Trust,
shall apply equally to each class of Shares of the Trust or of any series of the
Trust, except as the context requires otherwise.
(b) The number of Shares of each class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued Shares of the Trust or any
series or any Shares previously issued and reacquired of any class of the Trust
or of any series into one or more classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any class reacquired by the Trust at their
discretion from time to time.
(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular class may be charged to and borne solely by such
class and the bearing of expenses solely by a class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all classes for all purposes.
(d) The establishment and designation of any class of Shares shall be
effective upon the execution of a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such class, or as otherwise provided in such instrument. The
Trustees may, by an instrument executed by a majority of their number, abolish
any class and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.
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ARTICLE VII
REDEMPTION AND REPURCHASE OF SHARES
Section 7.1 Redemption of Shares. All Shares of the Trust shall be redeemable
at the redemption price determined in the manner set out in this Declaration.
Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares at the price determined as hereinafter set
forth, upon the appropriately verified written application of the record holder
thereof (or upon such other form of request as the Trustees may determine) at
such office or agency as may be designated from time to time for that purpose by
the Trustees. The Trustees may from time to time specify additional conditions,
not inconsistent with the 1940 Act, regarding the redemption of Shares in the
Trust's then effective registration statement or prospectus under the Securities
Act of 1933.
Section 7.2 Price. Shares will be redeemed at their net asset value
determined as set forth in Section 8.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 8.1 hereof after
receipt of such application.
Section 7.3 Payment. Payment for such Shares shall be made in cash or in
property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement or prospectus under the Securities
Act of 1933, subject to the provisions of Section 8.4 hereof.
Section 7.4 Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 8.1 hereof, the Trustees shall declare a suspension of the
determination of net asset value, the rights of Shareholders (including those
who shall have applied for redemption pursuant to Section 7.1 hereof but who
shall not yet have received payment) to have Shares redeemed and paid for by the
Trust shall be suspended until the termination of such suspension is declared.
Any record holder who shall have his redemption right so suspended may, during
the period of such suspension, by appropriate written notice of revocation at
the office or agency where application was made, revoke any application for
redemption not honored and withdraw any certificates on deposit. The redemption
price of Shares for which redemption applications have not been revoked shall be
the net asset value of such Shares next determined as set forth in Section 8.1
after the termination of such suspension, and payment shall be made within seven
(7) days after the date upon which the application was made plus the period
after such application during which the determination of net asset value was
suspended.
Section 7.5 Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per Share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time
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which may be later determined pursuant to Section 8.1 hereof, provided payment
is not made for the Shares prior to the time as of which such net asset value is
determined.
Section 7.6 Redemption of Shareholder's Interest. The Trust shall have the
right at any time to redeem Shares of any Shareholder in accordance with
applicable law, subject to such terms and conditions as the Trustees may
approve.
Section 7.7 Redemption of Shares in Order to Qualify as Regulated Investment
Company; Disclosure of Holding. If the Trustees shall, at any time and in good
faith, be of the opinion that direct or indirect ownership of Shares or other
securities of the Trust has or may become concentrated in any Person to an
extent which would disqualify any series of the Trust as a regulated investment
company under the Internal Revenue Code, then the Trustees shall have the power
by lot or other means deemed equitable by them (i) to call for redemption by any
such Person of a number, or principal amount, of Shares or other securities of
the Trust sufficient to maintain or bring the direct or indirect ownership of
Shares or other securities of the Trust into conformity with the requirements
for such qualification; and (ii) to refuse to transfer or issue Shares or other
securities of the Trust to any Person whose acquisition of the Shares or other
securities of the Trust in question would result in such disqualification. The
redemption shall be effected at the redemption price and in the manner provided
in Section 7.1.
The holders of Shares of the Trust shall, upon demand, disclose to the
Trustees in writing such information with respect to direct and indirect
ownership of Shares of the Trust as the Trustees may deem necessary to comply
with the provisions of the Internal Revenue Code, or to comply with the
requirements of any other taxing authority.
Section 7.8 Reductions in Number of Outstanding Shares Pursuant to Net Asset
Value Formula. The Trust may also reduce the number of Outstanding Shares
pursuant to the provisions of Section 8.3.
Section 7.9 Suspension of Right of Redemption. The Trustees may adopt
procedures under which the Trust may declare a suspension of the right of
redemption or postpone the date of payment on redemption for the whole or any
part of any period (i) during which the New York Stock Exchange is closed other
than customary weekend and holiday closing; (ii) during which trading on the New
York Stock Exchange is restricted; (iii) during which an emergency exists as a
result of which disposal by the Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the Trust fairly
to determine the value of its net assets; or (iv) during any other period when
the Commission may for the protection of security holders of the Trust by order
permit suspension of the right of redemption or postponement of the date on
payment or redemption; provided that applicable rules and regulations of the
Commission shall govern as to whether the conditions prescribed in (ii), (iii),
or (iv) exist. To the extent permitted by the Commission, (i) and (ii) above may
be expanded to include other securities exchanges. Such suspension shall take
effect at such time as the Trust shall specify and there shall be no right of
redemption or payment on redemption until the Trust shall declare the suspension
at an end.
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ARTICLE VIII
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
Section 8.1 Net Asset Value. The value of the assets of any series of the
Trust shall be determined by appraisal of the securities allocated to such
series, such appraisal to be on the basis of the market value of such securities
or, consistent with the rules and regulations of the Commission, by such other
method as shall be deemed to reflect the fair value thereof, determined in good
faith by or under the direction of the Trustees. Money market instruments with
remaining maturities of less than sixty (60) days shall be valued on an
amortized cost basis. From the total value of said assets, there shall be
deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
such series which shall be deemed appropriate. The resulting amount which shall
represent the total net assets of the series shall be divided by the number of
Shares of such series outstanding at the time and the quotient so obtained shall
be deemed to be the net asset value of the Shares of such series (which may be
rounded to the nearest whole cent). The net asset value of the Shares shall be
determined at least once daily on such days and in accordance with the
requirements provided for in applicable rules of the Commission, at such time or
times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Custodian, the Transfer Agent, the business manager or such other Person as the
Trustees may determine. The Trustees may suspend the daily determination of net
asset value to the extent permitted by the 1940 Act.
Section 8.2 Distributions to Shareholders. The Trustees shall from time to
time distribute ratably among the Shareholders of a series such proportion of
the net profits, surplus (including paid-in surplus), capital, or assets of such
series held by the Trustees as they may deem proper. Such distributions may be
made in cash or property (including without limitation any type of obligations
of such series or any assets thereof), and the Trustees may distribute ratably
among the Shareholders additional Shares of such series issuable hereunder in
such manner, at such times, and on such terms as the Trustees may deem proper.
Such distributions may be among the Shareholders of record at the time of
declaring a distribution or among the Shareholders of record at such other date
or time or dates or times as the Trustees shall determine. The Trustees may in
their discretion determine that, solely for the purposes of such distributions,
Outstanding Shares shall exclude Shares for which orders have been placed
subsequent to a specified time on the date the distribution is declared or on
the next preceding day if the distribution is declared as of a day on which the
Transfer Agent for the Trust or applicable series is not open for business. The
Trustees may always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the series or to meet obligations of
the series, or as they may deem desirable to use in the conduct of its affairs
or to retain for future requirements or extensions of the business.
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Inasmuch as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional or lesser amounts
sufficient to enable the Trust or the series to avoid or reduce liability for
taxes.
Section 8.3 Determination of Net Income. The net income of any series shall
consist of (i) all dividend and interest income accrued on portfolio assets of
the series, less (ii) all actual and accrued liabilities determined in
accordance with generally accepted accounting principles and plus or minus (iii)
net realized or net unrealized gains and losses on the assets of the series.
Interest income may include discount earned (including both original issue and
market discount) on discount paper accrued ratably to the date of maturity or
determined in such other manner as the Trustees may determine. Expenses of the
series, including the advisory or management fee, shall be accrued each day.
Such net income may be determined by or under the direction of the Trustees as
of such time or times as the Trustees shall determine, and all the net income of
the series, so determined, may be declared as a dividend on the Outstanding
Shares of such series. If, for any reason, the net income of the series
determined at any time is a negative amount, the Trustees shall have the power
(i) to offset each Shareholder's pro rata share of such negative amount from the
accrued dividend account of such Shareholder; or (ii) to reduce the number of
Outstanding Shares of the series by reducing the number of Shares in the account
of such Shareholder by that number of full and fractional Shares which
represents the amount of such excess negative net income; or (iii) to cause to
be recorded on the books of the series an asset account in the amount of such
negative net income, which account may be reduced by the amount, provided that
the same shall thereupon become the property of the series and shall not be paid
to any Shareholder, of dividends declared thereafter upon the Outstanding Shares
on the day such negative net income is experienced, until such asset account is
reduced to zero; or (iv) to combine the methods described in clauses (i) and
(ii) and (iii) of this sentence, in order to cause the net asset value per Share
of the series to remain at a constant amount per Outstanding Share immediately
after each such determination and declaration. The Trustees shall also have the
power to omit to declare a dividend out of net income for the purpose of causing
the net asset value per Share of the series to be increased to a constant
amount. The Trustees shall not be required to adopt, but may at any time adopt,
discontinue or amend a practice of maintaining the net asset value per Share of
a series at a constant amount, in accordance with applicable rules under the
1940 Act.
Section 8.4 Allocation Between Principal and Income. The Trustees shall have
full discretion to determine whether any cash or property received shall be
treated as income or as principal and whether any item of expense shall be
charged to the income or the principal account, and their determination made in
good faith shall be conclusive. In the case of stock dividends received, the
Trustees shall have full discretion to determine, in the light of the particular
circumstances, how much, if any, of the value thereof shall be treated as
income, the balance, if any, to be treated as principal.
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Section 8.5 Power to Modify Foregoing Procedures. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the per Share
net asset value of the series' Shares or net income, or the declaration and
payment of dividends and distributions as they may deem necessary or desirable.
ARTICLE IX
DURATION; TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 9.1 Duration. The Trust shall continue without limitation of time but
subject to the provisions of this Article IX.
Section 9.2 Termination of Trust.
(a) The Trust or any series of the Trust may be terminated (i) by the
affirmative vote of the holders of not less than seventy-five percent (75%) of
the Outstanding Shares entitled to vote at any meeting of Shareholders; or (ii)
by an instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of not less than seventy-five percent
(75%) of such Shares, unless such action has been approved, adopted or
authorized by the affirmative vote of two-thirds of the total number of Trustees
fixed in accordance with the Bylaws, in which case the affirmative vote of a
majority of the Outstanding Shares is required. Upon the termination of the
Trust:
(i) The Trust or any series of the Trust shall carry on no business
except for the purpose of winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
any series of the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust shall have been
wound up, including the power to fulfill or discharge the contracts of the
Trust, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one
or more persons at public or private sale for consideration which may consist
in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided, that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all of the
Trust Property or property of the series of the Trust shall require
Shareholder approval in accordance with Section 9.5 hereof; and
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property, in cash or in kind or partly in cash
and partly in kind, among the Shareholders according to their respective
rights.
(b) After termination of the Trust or any series of the Trust and
distribution to the Shareholders as herein provided, a majority of the Trustees
shall execute and place in the records of the Trust an instrument in writing
setting forth the fact of such termination, and
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the Trustees shall thereupon be discharged from all further liabilities and
duties hereunder, and the rights and interests of all Shareholders shall
thereupon cease.
Section 9.3 Amendment Procedure.
(a) Except as provided in paragraphs (b) and (c) of this Section 9.3, this
Declaration may be amended by a Majority Shareholder Vote or by an instrument in
writing, without a meeting, signed by a majority of the Trustees and consented
to by the holders of not less than a majority of the Outstanding Shares entitled
to vote. The Trustees may also amend this Declaration without the vote or
consent of Shareholders to change the name of the Trust, to supply any omission,
to cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, or if they deem it necessary to conform this Declaration to
the requirements of applicable federal laws or regulations or the requirements
of the regulated investment company provisions of the Internal Revenue Code, but
the Trustees shall not be liable for failing so to do.
(b) No amendment may be made under this Section 9.3 which would change any
rights with respect to any Shares by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of two-thirds
of the Outstanding Shares entitled to vote. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) No amendment may be made under this Section 9.3 which shall amend, alter,
change or repeal any of the provisions of Sections 9.2, 9.3, or 9.5 unless the
amendment effecting such amendment, alteration, change or repeal shall receive
the affirmative vote or consent of seventy-five percent (75%) of the Outstanding
Shares entitled to vote unless such action has previously been approved, adopted
or authorized by the affirmative vote of two-thirds of the total number of
Trustees fixed in accordance with this Declaration, in which case the
affirmative vote of a majority of the Outstanding Shares, as defined in the 1940
Act, shall be required. Such affirmative vote or consent shall be in addition to
the vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
placed in the records of the Trust.
Notwithstanding any other provision hereof, until such time as a registration
statement under the Securities Act of 1933, as amended, covering the first
public offering of securities of the Trust shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
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Section 9.4 Incorporation and Reorganization. With the approval of the
holders of a majority of the Outstanding Shares entitled to vote, or by such
other vote as may be established by the Trustees with respect to any series of
Shares, the Trustees may cause to be organized or assist in organizing a
corporation or corporations under the laws of any jurisdiction, or any other
trust, partnership, association or other organization to take over all of the
Trust Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, convey and transfer the Trust
Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization or any corporation, partnership, association, trust, or
organization in which the Trust holds or is about to acquire shares or any other
interest. The Trustees may also cause a merger or consolidation between the
Trust or any successor thereto and any such corporation, trust, partnership,
association or other organization if and to the extent permitted by law, as
provided under the law then in effect. Nothing contained herein shall be
construed as requiring approval of Shareholders for the Trustees to organize or
assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such organization or entities.
Section 9.5 Vote Required for Certain Actions.
Notwithstanding any other provision of this Declaration, a favorable vote of
the holders of at least seventy-five percent (75%) of the Shares of the Trust
then entitled to be voted on the matter shall be required to approve, adopt or
authorize:
(i) a merger or consolidation of the Trust with another entity;
(ii) a sale of all or substantially all of the assets of the Trust
(other than in the regular course of its investment activities); or
(iii) a liquidation or dissolution of the Trust; unless such action has
previously been approved, adopted or authorized by the affirmative vote of
two-thirds of the total number of Trustees fixed in accordance with this
Declaration, in which case the affirmative vote of a majority of the
Outstanding Shares, as defined in the 1940 Act, shall be required.
ARTICLE X
REPORTS TO SHAREHOLDERS
The Trustees shall at least annually, or as required by the 1940 Act, submit
to the Shareholders a written financial report of the Trust, which may be
included in the Trust's prospectus, of the transactions of the Trust, including
financial statements which shall be certified at least annually by independent
public accountants.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Filing. This Declaration and any amendment hereto shall be filed
in the office of the Secretary of the Commonwealth of Massachusetts and in such
other places as may be required under the laws of Massachusetts and may also be
filed or recorded in such other places as the Trustees deem appropriate. Each
amendment so filed shall be accompanied by a certificate signed and acknowledged
by a Trustee stating that such action was duly taken in a manner provided
herein, and unless such amendment or such certificate sets forth some later time
for the effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, integrating into a single instrument all of
the provisions of the Declaration which are then in effect and operative, may be
executed from time to time by a majority of the Trustees and shall upon filing
with the Secretary of the Commonwealth of Massachusetts, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu of
the original Declaration and the various amendments thereto.
Section 11.2 Governing Law. This Declaration is executed by the Trustees and
delivered in The Commonwealth of Massachusetts and with reference to the laws
thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
Section 11.3 Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
Section 11.4 Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying: (a) the number or identity of Trustees or Shareholders;
(b) the due authorization of the execution of any instrument or writing; (c) the
form of any vote passed at a meeting of Trustees or Shareholders; (d) the fact
that the number of Trustees or Shareholders present at any meeting or executing
any written instrument satisfies the requirements of this Declaration; (e) the
form of any By-laws adopted by or the identity of any officers elected by the
Trustees; or (f) the existence of any fact or facts which in any manner relate
to the affairs of the Trust, shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees and their successors.
Section 11.5 Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed not to constitute and never to have
constituted a part of the Declaration; provided, however, that such
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determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
affect only such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
Section 11.6 Appointment of Resident Agent.
CT Corporation System, 2 Oliver Street, Boston, Massachusetts 02109, is
hereby appointed the resident agent of the Trust in the Commonwealth of
Massachusetts upon whom may be served any notice, process or pleading in any
action or proceeding against the Trust or the Trustees as such.
IN WITNESS WHEREOF, the undersigned have executed this instrument this ______
day of _________, 1997.
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CERTIFICATE
Pursuant to Section 11.1 of the Declaration, the undersigned Trustee hereby
acknowledges and certifies that this Amended and Restated Declaration of Trust
of Templeton Global Governments Income Trust is made in accordance with the
provisions of the Declaration, and shall be effective upon its filing with the
Secretary of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has executed this instrument this ______
day of _________, 1997.
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APPENDIX A
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PROXY TEMPLETON GLOBAL GOVERNMENTS INCOME TRUST PROXY
ANNUAL MEETING OF SHAREHOLDERS, MARCH 25, 1997
PLEASE VOTE PROMPTLY
This Proxy is Solicited on behalf of the Board of Trustees
The undersigned hereby appoints BARBARA J. GREEN and JOHN K. CARTER, and
each of them, with full power of substitution, as proxies to vote for and in the
name, place and stead of the undersigned at the Annual Meeting of Shareholders
of Templeton Global Governments Income Trust (the "Trust") to be held at the
Trust's offices, 500 East Broward Blvd., Ft. Lauderdale, Florida 33394-3091, on
Tuesday, March 25, 1997 at 10:00 A.M., EST, and at any adjournment thereof,
according to the number of votes and as fully as if personally present.
(Continued and to be signed on the other side)
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Please mark boxes [ ] or [X] in blue or black ink.
1. ELECTION OF TRUSTEES: [ ] FOR THE NOMINEES [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
Betty P. Krahmer, Nicholas F. Brady, Charles B. Johnson and Edith E. Holiday
(INSTRUCTION: To withhold authority to vote for any idividual nominee, write that nominee's name on the space provided below.)
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2. Ratification of the selection of McGladrey & Pullen, LLP as independent public accountants for the Trust for the fiscal year
ending August 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To amend the Trust's Declaration of Trust to convert the Trust to an open-end investment company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, the Proxyholders are authorized to vote upon such other matters whcih may legally come before the Meeting or
any adjournments thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This Proxy when properly executed will be voted in the
manner (or not voted) as specified. If no specification is
made, the Proxy will be voted FOR all nominees for Trustee
in Proposal 1, in favor of Proposal 2, AGAINST Proposal 3
and within the discretion of the Proxyholders as to Proposal
4.
Please sign personally. If the shares are registered in more
than one name, each joint owner or each fiduciary should
sign personally. Only authorized officers should sign for
corporations.
Dated _______________________________________________________
_____________________________________________________________
Signature
_____________________________________________________________
Signature