B-1 STATEMENT OF ADDITIONAL INFORMATION Dated May 1 ...

4. In determining how to vote, Investment Manager's analysts and relevant portfolio manager(s) willconsider the General Proxy Voting Guidelines set forth above, their in-depth knowledge of thecompany, any readily available information and research about the company and its agenda items,and the recommendations put forth by RiskMetrics, Glass Lewis, or other independent third partyproviders of proxy services.5. The Proxy Group is responsible for maintaining the documentation that supports InvestmentManager's voting position. Such documentation may include, but is not limited to, anyinformation provided by RiskMetrics, Glass Lewis, or other proxy service providers, and,especially as to non-routine, materially significant or controversial matters, memorandadescribing the position it has taken. Additionally, the Proxy Group may include documentationobtained from the research analyst, portfolio manager, legal counsel and/or the Proxy ReviewCommittee.6. After the proxy is completed but before it is returned to the issuer and/or its agent, the ProxyGroup may review those situations including special or unique documentation to determine thatthe appropriate documentation has been created, including conflict of interest screening.7. The Proxy Group will attempt to submit Investment Manager's vote on all proxies to RiskMetricsfor processing at least three days prior to the meeting for U.S. securities and 10 days prior to themeeting for foreign securities. However, in certain foreign jurisdictions it may be impossible toreturn the proxy 10 days in advance of the meeting. In these situations, the Proxy Group will useits best efforts to send the proxy vote to RiskMetrics in sufficient time for the vote to beprocessed.8. The Proxy Group will file Powers of Attorney in all jurisdictions that require such documentationon a best efforts basis.9. The Proxy Group prepares reports for each Advisory Client that has requested a record of votescast. The report specifies the proxy issues that have been voted for the Advisory Client during therequested period and the position taken with respect to each issue. The Proxy Group sends onecopy to the Advisory Client, retains a copy in the Proxy Group’s files and forwards a copy toeither the appropriate portfolio manager or the client service representative. While manyAdvisory Clients prefer quarterly or annual reports, the Proxy Group will provide reports for anytimeframe requested by an Advisory Client.10. If the Franklin Templeton Services, LLC Fund Treasury Department learns of a vote on amaterial event that will affect a security on loan from a proprietary registered investmentcompany, the Fund Treasury Department will notify Investment Manager and obtain instructionsregarding whether Investment Manager desires the Fund Treasury Department to contact thecustodian bank in an effort to retrieve the securities. If so requested by Investment Manager, theFund Treasury Department shall use its best efforts to recall any security on loan and will useother practicable and legally enforceable means to ensure that Investment Manager is able tofulfill its fiduciary duty to vote proxies for Advisory Clients with respect to such loanedsecurities. The Fund Treasury Department will advise the Proxy Group of all recalled securities.11. The Proxy Group, in conjunction with Legal Staff responsible for coordinating Fund disclosure,on a timely basis, will file all required Form N-PXs, with respect to proprietary registeredinvestment company clients, disclose that its proxy voting record is available on the web site, andwill make available the information disclosed in its Form N-PX as soon as is reasonablypracticable after filing Form N-PX with the SEC.12. The Proxy Group, in conjunction with Legal Staff responsible for coordinating Fund disclosure,will ensure that all required disclosure about proxy voting of the proprietary registered investmentcompany clients is made in such clients’ disclosure documents.B-121