SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section.240-14a-11(c) or
Section.240-14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
FRANKLIN UNIVERSAL TRUST
(Name of Registrant as Specified in its Charter)
FRANKLIN UNIVERSAL TRUST
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(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 UNIVERSAL TRUST
IMPORTANT SHAREHOLDER INFORMATION
We have enclosed important information about the Annual Shareholders' Meeting
(the "Meeting") of Franklin Universal Trust (the "Fund") scheduled for Friday,
March 14, 2008, at 2:00 p.m., Pacific Time. These materials discuss the
proposals to be voted on at the meeting.
THIS MEETING IS VERY IMPORTANT BECAUSE A GROUP OF DISSIDENT SHAREHOLDERS CALLED
BULLDOG INVESTORS HAS FILED A PROXY STATEMENT TO ELECT THEIR OWN NOMINEES TO THE
BOARD OF THE FUND AT THE MEETING. BASED ON THEIR PROXY STATEMENT, WE BELIEVE
THAT IF THE DISSIDENT NOMINEES ARE ELECTED, THE FUND WOULD NOT CONTINUE TO
OPERATE AS A CLOSED-END FUND - IT MAY BE LIQUIDATED, OPEN-ENDED OR SIGNIFICANTLY
DIMINISHED THROUGH A TENDER OFFER. IN ADDITION, ANOTHER SHAREHOLDER OF THE FUND
HAS SUBMITTED A PROPOSAL REQUESTING THAT THE FUND MERGE INTO AN OPEN-END FUND.
YOUR BOARD WANTS TO KEEP THE FUND AS A CLOSED-END FUND BECAUSE THE BOARD
BELIEVES THAT THE FUND'S CURRENT STRUCTURE PROVIDES YOU WITH A NUMBER OF REAL
BENEFITS THAT ARE NOT AVAILABLE TO OPEN-END FUNDS. FOR THESE REASONS, WE ARE
ASKING YOU TO VOTE FOR YOUR FUND'S CURRENT BOARD OF TRUSTEES, AND AGAINST THE
SHAREHOLDER PROPOSAL.
These materials also contain the Notice of Meeting, proxy statement and proxy
card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells
us how you wish to vote on important issues relating to the Fund. If you
complete, sign and return the proxy card, we'll vote it as you indicated. If you
simply sign, date and return the enclosed WHITE proxy card, but do not specify a
vote on the proposals, your proxy will be voted FOR the election of the nominees
to the position of Trustee (Proposal 1) and AGAINST the shareholder proposal
(Proposal 2).
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS VERY IMPORTANT. WE URGE
YOU TO VOTE FOR YOUR BOARD'S NOMINEES (PROPOSAL 1) AND AGAINST THE SHAREHOLDER
PROPOSAL (PROPOSAL 2) BY COMPLETING, SIGNING AND DATING THE ENCLOSED WHITE PROXY
CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID envelope. Returning your proxy
card does not preclude you from attending the meeting or later changing your
vote prior to its being cast.
PLEASE DO NOT SEND BACK ANY GREEN PROXY CARD YOU RECEIVE FROM BULLDOG INVESTORS,
EVEN TO VOTE AGAINST THE DISSIDENT NOMINEES AS THIS MAY CANCEL YOUR PRIOR VOTE
FOR YOUR FUND'S NOMINEES. IF YOU HAVE ALREADY RETURNED BULLDOG INVESTORS' GREEN
PROXY CARD, YOU CAN STILL SUPPORT YOUR BOARD BY RETURNING THE ENCLOSED WHITE
PROXY CARD. ONLY YOUR LATEST DATED PROXY CARD WILL COUNT.
If you have any questions, please call the Fund's proxy solicitor, The Altman
Group, at (800) 336-5159.
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FRANKLIN UNIVERSAL TRUST
NOTICE OF 2008 ANNUAL SHAREHOLDERS' MEETING
The Annual Shareholders' Meeting (the "Meeting") of Franklin Universal Trust
(the "Fund") will be held at the Fund's offices, One Franklin Parkway, San
Mateo, California 94403, on Friday, March 14, 2008, at 2:00 p.m., Pacific Time.
During the Meeting, shareholders of the Fund will vote on the following
proposals:
o The election of a Board of Trustees of the Fund.
o If properly presented, a shareholder proposal.
o Such other matters as may properly come before the Meeting.
The Board of Trustees has fixed January 14, 2008, as the record date for the
determination of shareholders entitled to vote at the Meeting.
YOUR VOTE IS EXTREMELY IMPORTANT, ESPECIALLY IN LIGHT OF THE DISSIDENT NOMINEES
AND THE SHAREHOLDER PROPOSAL, BOTH OF WHICH ARE UNANIMOUSLY OPPOSED BY YOUR
FUND'S BOARD. Whether or not you plan to attend the Meeting, and regardless of
the number of shares you own, we urge you to vote FOR your Board's nominees
(Proposal 1) and AGAINST the shareholder proposal (Proposal 2) by promptly
completing, signing, dating and returning the enclosed WHITE proxy card.
PLEASE DO NOT SEND BACK ANY GREEN PROXY CARD YOU RECEIVE FROM BULLDOG INVESTORS,
EVEN TO VOTE AGAINST THE BULLDOG NOMINEES AS THIS MAY CANCEL YOUR PRIOR VOTE FOR
YOUR FUND'S NOMINEES. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE MEETING.
If you have any questions or need additional information, please contact The
Altman Group, Inc., the Fund's proxy solicitors, at 60 East 42nd Street, Suite
405, New York, NY 10165, or toll-free by telephone at (800) 336-5159.
By Order of the Board of Trustees,
Karen L. Skidmore
SECRETARY
San Mateo, California
Dated: January [__], 2008
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1
FRANKLIN UNIVERSAL TRUST
PROXY STATEMENT
INFORMATION ABOUT VOTING
WHO IS ASKING FOR MY VOTE?
In this proxy statement for the Annual Meeting of Shareholders (the
"Meeting") of Franklin Universal Trust (the "Fund"), the Fund's Trustees are
unanimously asking you to vote:
o FOR the election of your Board's eleven nominees to the position of
---
Trustee (Proposal 1), and
o AGAINST the shareholder proposal to merge into an open-end fund
-------
(Proposal 2),
by promptly completing, signing, dating and returning the enclosed WHITE
proxy card.
WHY DO THE FUND'S TRUSTEES OPPOSE THE CHANGES TO THE FUND ADVOCATED BY THE
DISSIDENT NOMINEES?
A group of dissident shareholders called Bulldog Investors has filed a proxy
statement to elect their own nominees to the Fund's Board at the Meeting.
Bulldog Investors has said that it wants to "permanently eliminate the
Trust's persistent double-digit discount to net asset value ("NAV") through
open-ending, liquidation or conducting a self-tender offer for 100% of the
Trust's shares at NAV."
IF THE DISSIDENT NOMINEES ARE ELECTED, WE STRONGLY BELIEVE THAT YOUR TRUST
WOULD NOT CONTINUE TO OPERATE AS A CLOSED-END FUND - IT MAY BE LIQUIDATED,
OPEN-ENDED OR SIGNIFICANTLY DIMINISHED THROUGH A TENDER OFFER.
Your Board wants to keep the Trust as a closed-end fund because the Board
believes that the Trust's current structure provides you with real benefits.
For that reason, we urge you to vote FOR your Board's nominees by promptly
completing, signing, dating and returning the enclosed WHITE proxy card.
WHY DO THE FUND'S TRUSTEES RECOMMEND THAT I VOTE AGAINST THE SHAREHOLDER
PROPOSAL (PROPOSAL 2)?
The shareholder proposal requests that the Fund's Board of Trustees promptly
take the steps necessary to merge the Fund into the Franklin Income Fund, an
open-end fund, or otherwise enable shareholders to realize net asset value
for their shares. The Fund's Trustees oppose the shareholder proposal because
they believe it is in your best interests to retain the Fund's closed-end
structure. Closed-end funds do not have to keep sufficient cash on hand to
meet possible redemptions as do open-end funds, so they can be fully invested
at all times for the benefit of the shareholders. Also, no other closed-end
fund offers your Fund's combination of investments in both high yield bonds
and utility stocks, which provides investors with both high current income as
well as the potential for capital appreciation. Combining this investment
strategy with leverage and low cash balances, your Fund has delivered
consistently strong market returns to investors over time. The Trustees
believe strongly that your Fund remains viable in its closed-end form, but
may not be able to provide the same benefits to shareholders if merged into
Franklin Income Fund or another open-end fund.
WHAT SHOULD I DO WITH THE GREEN PROXY CARD I RECEIVED FROM BULLDOG
INVESTORS?
We urge you to vote the Fund's WHITE proxy card and discard the GREEN proxy
from Bulldog Investors. If you have already sent back the GREEN proxy card,
you can still change your vote and we ask that you promptly complete, sign,
date and return the enclosed WHITE proxy card because that will replace the
GREEN proxy card you previously sent. If you have already sent in the WHITE
proxy card, please do not send back any GREEN card you receive, even to vote
against Bulldog's nominees. Doing so will cancel out your prior vote on the
WHITE card.
HOW DO I ENSURE THAT MY VOTE IS ACCURATELY RECORDED?
You may attend the Meeting and vote in person or you may complete and return
the enclosed WHITE proxy card. The Fund's management needs you to return the
WHITE proxy card so that they can count your shares as present at the
Meeting, so please do not return the GREEN proxy card, even if you are
withholding votes on the dissident nominees and voting against the
shareholder proposal.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on January 14, 2008, are
entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each share of record is entitled to one vote (and a proportionate fractional
vote for each fractional share) on each matter presented at the Meeting. The
Notice of Meeting, the proxy card, and the proxy statement were first mailed
to shareholders of record on or about January 14, 2008.
HOW WILL MY WHITE PROXY CARD BE VOTED?
WHITE proxy cards that are properly signed, dated and received at or prior to
the Meeting will be voted as specified. If you specify a vote for the
proposals, your proxy will be voted as you indicate. If you simply sign, date
and return the proxy card, but don't specify a vote on the proposals, your
shares will be voted FOR the election of the Fund's eleven nominees for
Trustee (Proposal 1) and AGAINST the shareholder proposal (Proposal 2).
MAY I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by the
Fund at or prior to the Meeting, or by attending the Meeting and voting in
person.
Returning the GREEN proxy card to Bulldog Investors will revoke any
previously returned WHITE proxy card that you sent to the Fund, even if you
withheld votes on the dissident nominees and voted against the shareholder
proposal on the GREEN proxy card. Therefore, PLEASE DISCARD THE GREEN PROXY
CARD AND ONLY RETURN THE WHITE PROXY CARD.
WHAT IF MY SHARES ARE HELD IN A BANK OR BROKERAGE ACCOUNT?
If your shares are held by your bank or broker, then in order to vote in
person at the Meeting, you will need to obtain a "Legal Proxy" from your bank
or broker and present it to the Inspector of Election at the Meeting.
PROPOSAL 1: ELECTION OF TRUSTEES
WHO ARE THE FUND'S NOMINEES?
The Fund's nominees and the current Trustees of the Fund are Harris J.
Ashton, Robert F. Carlson, Sam Ginn, Edith E. Holiday, Edward B. Jamieson,
Charles B. Johnson, Rupert H. Johnson, Jr., Frank W.T. LaHaye, Frank A.
Olson, Larry D. Thompson and John B. Wilson. As described more fully
below, these nominees have significant experience managing investment
vehicles. Many of the Fund's nominees have been Trustees since the Fund
was launched in 1988, and are also on the Boards of other open-end and
closed-end funds in Franklin Templeton Investments. They have had
experience as senior officers and directors of major business corporations,
and some have also held senior positions in state and federal government.
The Fund's nominees believe that the Fund's current structure provides you
with real benefits, and are committed to keeping the Fund as a closed-end
fund for the following reasons, as discussed further under Proposal 2 below:
o The Fund has had competitive market price performance, with a total
return of 9.20% for the year ended December 31, 2007 (based on change in
net asset value).
o The Fund's discount is cyclical, not permanent - for more than 2
years between 2001 and 2003, it traded at a premium.
o The Fund's Board has already taken affirmative steps to help reduce
the discount, including extending the Fund's open-market share repurchase
program.
o The Fund's combination of investments in utility stocks and high
yield bonds is unique in the marketplace - there is no other closed-end or
open-end fund quite like it.
o The Fund can use leverage in the form of debt securities to help
increase returns; open-end funds cannot.
o The Fund is almost always fully invested because it does not have to
meet redemptions; if the Fund were to open-end, it would rarely be fully
invested because it would need to keep cash on hand to pay for
redemptions.
o The Fund trades throughout the day on the New York Stock Exchange;
mutual funds are only priced once a day.
HOW ARE FUND NOMINEES SELECTED?
The Board of Trustees of the Fund (the "Board" or the "Trustees") has a
Nominating Committee consisting of Harris J. Ashton, Robert F. Carlson, Sam
Ginn, Edith E. Holiday, Frank W.T. LaHaye, Frank A. Olson, Larry D.
Thompson and John B. Wilson, none of whom is an "interested person" of the
Fund as defined by the Investment Company Act of 1940, as amended (the
"1940 Act"). Trustees who are not interested persons of the Fund are
referred to as "Independent Trustees," and Trustees who are interested
persons of the Fund are referred to as "Interested Trustees."
The Nominating Committee is responsible for selecting candidates to serve as
Trustees and recommending such candidates (a) for selection and nomination as
Independent Trustees by the incumbent Independent Trustees and the full
Board; and (b) for selection and nomination as Interested Trustees by the
full Board. In considering a candidate's qualifications, the Nominating
Committee generally considers the potential candidate's educational
background, business or professional experience, and reputation. In addition,
the Nominating Committee has established as minimum qualifications for Board
membership as an Independent Trustee (1) that such candidate be independent
from relationships with the Fund's investment manager and other principal
service providers both within the terms and the spirit of the statutory
independence requirements specified under the 1940 Act and the rules
thereunder; (2) that such candidate demonstrate an ability and willingness to
make the considerable time commitment, including personal attendance at Board
meetings, believed necessary to his or her function as an effective Board
member; and (3) that such candidate have no continuing relationship as a
director, officer or board member of any U.S. registered investment company
other than those within the Franklin Templeton Investments fund complex or a
closed-end business development company primarily investing in non-public
entities.
When the Board has or expects to have a vacancy, the Nominating Committee
receives and reviews information on individuals qualified to be recommended
to the full Board as nominees for election as Trustees, including any
recommendations by "Qualifying Fund Shareholders" (as defined below). Such
individuals are evaluated based upon the criteria described above. To date,
the Nominating Committee has been able to identify, and expects to continue
to be able to identify, from its own resources an ample number of qualified
candidates. The Nominating Committee will, however, review recommendations
from Qualifying Fund Shareholders to fill vacancies on the Board if these
recommendations are submitted in writing and addressed to the Nominating
Committee at the Fund's offices and are presented with appropriate background
material concerning the candidate that demonstrates his or her ability to
serve as a Trustee, including as an Independent Trustee, of the Fund. A
Qualifying Fund Shareholder is a shareholder who (i) has continuously owned
of record, or beneficially through a financial intermediary, shares of the
Fund having a net asset value of not less than two hundred and fifty thousand
dollars ($250,000) during the twenty-four month period prior to submitting
the recommendation; and (ii) provides a written notice to the Nominating
Committee containing the following information: (a) the name and address of
the Qualifying Fund Shareholder making the recommendation; (b) the number of
shares of the Fund which are owned of record and beneficially by such
Qualifying Fund Shareholder and the length of time that such shares have been
so owned by the Qualifying Fund Shareholder; (c) a description of all
arrangements and understandings between such Qualifying Fund Shareholder and
any other person or persons (naming such person or persons) pursuant to which
the recommendation is being made; (d) the name, age, date of birth, business
address and residence address of the person or persons being recommended; (e)
such other information regarding each person recommended by such Qualifying
Fund Shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the U.S. Securities and Exchange
Commission ("SEC") had the nominee been nominated by the Board; (f) whether
the shareholder making the recommendation believes the person recommended
would or would not be an "interested person" of the Fund, as defined in the
1940 Act; and (g) the written consent of each person recommended to serve as
a Trustee of the Fund if so nominated and elected/appointed.
The Nominating Committee may amend these procedures from time to time,
including the procedures relating to the evaluation of nominees and the
process for submitting recommendations to the Nominating Committee. The Board
has adopted and approved a formal written charter for the Nominating
Committee. A copy of the charter is attached hereto as "Appendix A."
WHAT IS THE BACKGROUND OF THE FUND NOMINEES?
Harris J. Ashton, Robert F. Carlson, Sam Ginn, Edith E. Holiday, Edward B.
Jamieson, Charles B. Johnson, Rupert H. Johnson, Jr., Frank W.T. LaHaye,
Frank A. Olson, Larry D. Thompson and John B. Wilson have been nominated to
be Trustees of the Fund, to hold office until the next Annual Shareholders'
Meeting, and until their successors are duly elected and qualified to
serve. Among the nominees, Edward B. Jamieson, Charles B. Johnson and
Rupert H. Johnson, Jr. are deemed to be "interested persons" of the Fund
for purposes of the 1940 Act. All of the nominees are currently members of
the Board; however, Messrs. Ginn and Thompson are standing for election by
shareholders of the Fund for the first time. Incumbent Independent
Trustees nominated Messrs. Ginn and Thompson for consideration by the
Nominating Committee as nominees for Trustee. In addition, all of the
nominees are directors and/or trustees of other investment companies within
the Franklin Templeton Investments fund complex.
Certain Trustees of the Fund 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 owned approximately
17.86% and 15.54%, respectively, of its outstanding shares as of December
4, 2007. Resources, a global investment management organization operating
as Franklin Templeton Investments, is primarily engaged, through its
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). Charles B. Johnson, Chairman of the
Board and Trustee of the Fund, and Rupert H. Johnson, Jr., Trustee and
Senior Vice President of the Fund, are brothers.
Each nominee is currently available and has consented to serve if elected. If
any of the nominees should become unavailable, the designated proxy holders
will vote in their discretion for another person or persons who may be
nominated as Trustees.
Listed below, for each nominee, is his or her name, year of birth and
address, as well as position and length of service with the Fund, a brief
description of recent professional experience, the number of portfolios in
the Franklin Templeton Investments fund complex that he or she oversees, and
other directorships held.
NOMINEES FOR INDEPENDENT TRUSTEE
-----------------------------------------------------------------
NUMBER
OF
PORTFOLIOS
IN FUND
COMPLEX
NAME, YEAR LENGTH OVERSEEN OTHER
OF BIRTH AND OF TIME BY DIRECTORSHIPS
ADDRESS POSITION SERVED TRUSTEE* HELD
-----------------------------------------------------------------
Harris J. Trustee Since 141 Bar-S Foods
Ashton (1932) 1988 (meat packing
One Franklin company).
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
-----------------------------------------------------------------
Robert F. Trustee Since 121 None
Carlson 2000
(1928)
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration,
California Public Employees Retirement Systems (CALPERS); and FORMERLY, member
and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board,
Blue Shield of California; and Chief Counsel, California Department of
Transportation.
-----------------------------------------------------------------
Sam Ginn Trustee Since 121 Chevron
(1937) April Corporation
One Franklin 2007 (global energy
Parkway company) and ICO
San Mateo, Global
CA 94403-1906 Communications
(Holdings) Limited
(satellite company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC
(wireless company); Chairman of the Board and Chief Executive Officer, AirTouch
Communications (cellular communications) (1993-1998) and Pacific Telesis Groups
(telephone holding company) (1988-1994).
-----------------------------------------------------------------
Edith E. Trustee Since 141 Hess Corporation
Holiday 2004 (exploration and
(1952) refining of oil
One Franklin and gas), H.J.
Parkway Heinz Company
San Mateo, (processed foods
CA 94403-1906 and allied
products), RTI
International
Metals, Inc.
(manufacture and
distribution of
titanium),
Canadian
National Railway
(railroad) and
White Mountains
Insurance Group,
Ltd. (holding
company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and Public
Liaison-United States Treasury Department (1988-1989).
-----------------------------------------------------------------
Frank W.T. Trustee Since 121 Center for
LaHaye (1929) 1988 Creative Land
One Franklin Recycling
Parkway (brownfield
San Mateo, redevelopment).
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and formerly, Chairman,
Peregrine Venture Management Company (venture capital).
-----------------------------------------------------------------
Frank A. Trustee Since 141 Hess Corporation
Olson (1932) 2005 (exploration and
One Franklin refining of oil
Parkway and gas) and
San Mateo, Sentient Jet
CA 94403-1906 (private jet
service).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of
the Board (1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY,
Chairman of the Board, President and Chief Executive Officer, UAL Corporation
(airlines).
-----------------------------------------------------------------
Larry D. Trustee Since 141 None
Thompson April
(1945) 2007
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (credit card provider)
(1997-2001); Senior Fellow of The Brookings Institution (2003-2004); Visiting
Professor, University of Georgia School of Law (2004); and Deputy Attorney
General, U.S. Department of Justice (2001-2003).
-----------------------------------------------------------------
John B. Trustee Since 121 None
Wilson (1959) 2006
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private
equity investing); serves on private and non-profit boards; and FORMERLY, Chief
Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000);
Chief Financial Officer and Executive Vice President - Finance Strategy,
Staples, Inc. (office supplies) (1992-1996); Executive Vice President -
Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice
President and Partner, Bain & Company (consulting firm) (1986-1990).
-----------------------------------------------------------------
INTERESTED NOMINEES FOR TRUSTEE
-----------------------------------------------------------------
NUMBER
OF
PORTFOLIOS
IN FUND
COMPLEX
NAME, YEAR LENGTH OVERSEEN OTHER
OF BIRTH AND OF TIME BY DIRECTORSHIPS
ADDRESS POSITION SERVED TRUSTEE* HELD
-----------------------------------------------------------------
**Edward B. Trustee, Trustee, 1 None
Jamieson President President
(1948) and Chief since
One Franklin Executive 1993 and
Parkway Officer - Chief
San Mateo, Investment Executive
CA 94403-1906 Management Officer -
Investment
Management
since
2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Chief Investment Officer and Director, Franklin Advisers, Inc.;
Executive Vice President, Franklin Templeton Institutional, LLC; and officer
and/or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of four of the investment companies in Franklin
Templeton Investments.
-----------------------------------------------------------------
**Charles B. Trustee and Trustee 141 None
Johnson Chairman of since
(1933) the Board 1988 and
One Franklin Chairman
Parkway of the
San Mateo, Board
CA 94403-1906 since
1993
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin
Resources, Inc.; Director; Templeton Worldwide, Inc.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 42 of the investment companies in Franklin
Templeton Investments.
-----------------------------------------------------------------
**Rupert H. Trustee and Since 56 None
Johnson, Jr. Senior Vice 1988
(1940) President
One Franklin
Parkway
San Mateo,
CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources,
Inc.; Director, Franklin Advisers, Inc. and Templeton Worldwide, Inc.; Senior
Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 44 of the investment companies in Franklin Templeton
Investments.
-----------------------------------------------------------------
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or affiliated
investment managers.
** Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be
interested persons of the Fund under the federal securities laws due to their
positions as officers and directors and major shareholders of Franklin
Resources, Inc., which is the parent company of the Fund's investment manager
and distributor. Edward B. Jamieson is considered to be an interested person
of the Fund under the federal securities laws due to his position as officer
and director of the Fund's investment manager.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
Board members historically have followed a policy of having substantial
investments in one or more of the funds in Franklin Templeton Investments, as
is consistent with their individual financial goals. In February 1998, this
policy was formalized through adoption of a requirement that each board
member invest one-third of fees received for serving as a director or trustee
of a Templeton fund (excluding committee fees) in shares of one or more
Templeton funds and one-third of fees received for serving as a director or
trustee of a Franklin fund (excluding committee fees) in shares of one or
more Franklin funds until the value of such investments equals or exceeds
five times the annual retainer and regular board meeting fees paid such board
member. Investments in the name of family members or entities controlled by a
board member constitute fund holdings of such board member for purposes of
this policy, and a three year phase-in period applies to such investment
requirements for newly elected board members. In implementing such policy, a
board member's fund holdings existing on February 27, 1998, were valued as of
such date with subsequent investments valued at cost.
The following tables provide the dollar range of equity securities of the
Fund and of all funds overseen by the Trustees in the Franklin Templeton
Investments fund complex beneficially owned by the Trustees as of December
31, 2007.
INDEPENDENT TRUSTEES DOLLAR
RANGE OF EQUITAGGREGATE
DOLLAR RANGE OF EQUITY SECURITIES IN ALL FUNDS OVERSEEN
SECURITIES IN THE BY THE TRUSTEE IN THE FRANKLIN
NAME FUND TEMPLETON INVESTMENTS FUND COMPLEX
--------------------------------------------------------------------------------
Harris J. Ashton $1-$10,000 Over $100,000
Robert F. Carlson None Over $100,000
Sam Ginn None Over $100,000
Edith E. Holiday None Over $100,000
Frank W.T. LaHaye $10,001-$50,000 Over $100,000
Frank A. Olson None Over $100,000
Larry D. Thompson None Over $100,000
John B. Wilson None Over $100,000
INTERESTED TRUSTEES
INDEPENDENT TRUSTEES DOLLAR
RANGE OF EQUITAGGREGATE
DOLLAR RANGE OF EQUITY SECURITIES IN ALL FUNDS OVERSEEN
SECURITIES IN THE BY THE TRUSTEE IN THE FRANKLIN
NAME FUND TEMPLETON INVESTMENTS FUND COMPLEX
--------------------------------------------------------------------------------
Edward B. Jamieson None Over $100,000
Charles B. Johnson $1-$10,000 Over $100,000
Rupert H. Johnson, Jr $1-$10,000 Over $100,000
INTERESTED TRUSTEES
HOW OFTEN DO THE TRUSTEES MEET AND WHAT ARE THEY PAID?
The role of the Trustees is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of all
shareholders. The Trustees anticipate meeting at least nine times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Trustees also oversee the services furnished to
the Fund by Franklin Advisers, Inc., the Fund's investment manager (the
"Investment Manager"), and various other service providers. The Fund's
Independent Trustees constitute the sole Independent Trustees of 28 funds in
the Franklin Templeton Investments fund complex, for which each Independent
Trustee currently is paid a $232,000 annual retainer, together with a $7,000
per meeting fee for attendance at regularly scheduled board meetings, a
portion of which is allocated to the Fund. The Fund's lead independent
trustee is paid an annual supplemental retainer of $25,000 for service to
such investment companies, a portion of which is allocated to the Fund.
Trustees who serve on the Audit Committee of the Fund and such other funds
receive a flat fee of $3,000 per Committee meeting attended in person and
$2,000 per telephonic meeting, a portion of which is allocated to the Fund.
John B. Wilson, who serves as chairman of the Audit Committee of the Fund and
such other funds, receives an additional fee of $40,000 per year, a portion
of which is allocated to the Fund. Members of a committee are not separately
compensated for any committee meeting held on the day of a Board meeting.
Independent Trustees are also reimbursed for expenses incurred in connection
with attending Board meetings. The foregoing fee arrangements went into
effect after June 1, 2007, and the table below reflects fees paid prior to
such date under arrangements then in effect.
During the fiscal year ended August 31, 2007, there were nine meetings of the
Board, three meetings of the Nominating Committee, and four meetings of the
Audit Committee. Each of the Trustees attended at least 75% of the aggregate
of the total number of meetings of the Board and the total number of meetings
held by all committees of the Board on which the Trustee served.
The Fund does not currently have a formal policy regarding Trustees'
attendance at the annual shareholders' meeting. None of the Trustees attended
the Fund's last annual meeting held on March 30, 2007.
Certain Trustees and officers of the Fund are shareholders of Resources and
may receive indirect remuneration due to their participation in the
management fees and other fees received from the Franklin Templeton funds by
the Investment Manager and its affiliates. The Investment Manager or its
affiliates pay the salaries and expenses of the officers. No pension or
retirement benefits are accrued as part of Fund expenses.
The following table indicates the aggregate compensation paid to the
Independent Trustees by the Fund individually and by all of the funds in
Franklin Templeton Investments. These Trustees also serve as directors or
trustees of other funds in Franklin Templeton Investments, many of which hold
meetings at different dates and times. The Trustees and the Fund's management
believe that having the same individuals serving on the boards of many of the
funds in Franklin Templeton Investments enhances the ability of each fund to
obtain, at a relatively modest cost to each separate fund, the services of
high caliber, experienced and knowledgeable Independent Trustees who can more
effectively oversee the management of the funds.
TOTAL COMPENSATION NUMBER OF BOARDS WITHIN
AGGREGATE FROM FRANKLIN FRANKLIN TEMPLETON
NAME OF COMPENSATION TEMPLETON INVESTMENTS INVESTMENTS FUND COMPLEX
TRUSTEE FROM THE FUND(1) FUND COMPLEX (2) ON WHICH TRUSTEE SERVES(3)
-----------------------------------------------------------------------------
Harris J. Ashton $1,612 $426,918 42
Robert F. Carlson 3,882 264,576 28
S. Joseph
Fortunato(4) 0 0 0
Sam Ginn(5) 760 217,873 28
Edith E. Holiday 1,566 469,566 42
Frank W.T. LaHaye 3,601 291,028 28
Gordon S.
MACKLIN(6) 77 462,349 42
Frank A. Olson 1,874 462,349 42
Larry D.
THOMPSON(5) 760 386,461 42
John B. Wilson 3,899 294,848 28
----------------------------
1. Compensation received for the fiscal year ended August 31, 2007.
2. Estimated compensation received for the calendar year ended December
31, 2007.
3. We base the number of boards on the number of U.S. registered
investment companies in the Franklin Templeton Investments fund complex.
This number does not include the total number of series or funds within
each investment company for which the Board members are responsible.
Franklin Templeton Investments currently includes 46 U.S. registered
investment companies, with approximately 155 U.S. based funds or series.
4. Mr. Fortunato retired effective September 6, 2006. 5. Trustee
since April 2007. 6. Mr. Macklin retired effective September 12, 2006.
WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?
Officers of the Fund are appointed by the Trustees and serve at the pleasure
of the Board. Listed below, for each Executive Officer, are his or her name,
year of birth, address, a brief description of his or her recent professional
experience, and his or her position and length of service with the Fund:
----------------------------------------------------------
NAME, YEAR OF POSITION LENGTH OF TIME
BIRTH AND ADDRESS SERVED
----------------------------------------------------------
**Edward B. Trustee, Trustee, President
Jamieson (1948) President and since 1993 and
One Franklin Chief Executive Chief Executive
Parkway Officer - Officer -
San Mateo, CA Investment Investment
94403-1906 Management Management since
2002
----------------------------------------------------------
**Charles B. Trustee and Trustee since 1988
Johnson (1933) Chairman of the and Chairman of the
One Franklin Board Board since 1993
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
**Rupert H. Trustee and Since 1988
Johnson, Jr. Senior Vice
(1940) President
One Franklin
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
James M. Davis Chief Compliance Since 2004
(1952) Officer
One Franklin
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
Laura Fergerson Treasurer Since 2004
(1962)
One Franklin
Parkway
San Mateo,
CA 94403-1906
----------------------------------------------------------
Jimmy D. Gambill Senior Vice Since 2002
(1947) President and
500 East Broward Chief Executive
Blvd. Officer -Finance
Suite 2100 Fort and
Lauderdale, FL Administration
33394-3091
----------------------------------------------------------
David P. Goss Vice President Since 2000
(1947)
One Franklin
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
Karen L. Skidmore Vice President Since 2006
(1952) and Secretary
One Franklin
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
NAME, YEAR OF POSITION LENGTH OF TIME
BIRTH AND ADDRESS SERVED
----------------------------------------------------------
Craig S. Tyle Vice President Since 2005
(1960)
One Franklin
Parkway
San Mateo, CA
94403-1906
----------------------------------------------------------
Galen G. Vetter Chief Financial Since 2004
(1951) Officer and
500 East Broward Chief Accounting
Blvd. Officer
Suite 2100 Fort
Lauderdale, FL
33394-3091
----------------------------------------------------------
WHO ARE THE DISSIDENT NOMINEES?
A group of dissident shareholders called Bulldog Investors has filed a proxy
statement to elect their own nominees to the Fund's Board at the Meeting.
Bulldog Investors has said that it wants to "permanently eliminate the
Trust's persistent double-digit discount to net asset value ("NAV") through
open-ending, liquidation or conducting a self-tender offer for 100% of the
Trust's shares at NAV."
IF THE DISSIDENT NOMINEES ARE ELECTED, WE STRONGLY BELIEVE THAT YOUR TRUST
WOULD NOT CONTINUE TO OPERATE AS A CLOSED-END FUND - IT MAY BE LIQUIDATED,
OPEN-ENDED OR SIGNIFICANTLY DIMINISHED THROUGH A TENDER OFFER.
The dissident nominees all sit on the Board of Directors of the Mexico Equity
and Income Fund, Inc. (NYSE: MXE), a publicly traded closed-end fund. As of
December 31, 2007, MXE was trading at a discount of 14.30%, so the dissident
nominees do not appear to have had any more success preventing "persistent
double-digit discounts" in MXE than have the current Trustees of the Fund.
This is not surprising, given that discounts tend to be cyclical and driven
by market forces beyond the control of any single closed-end fund.
As discussed in Proposal 2 below, the Fund's current Board believes that it
is in shareholders' best interests to maintain the Fund as a closed-end fund.
As a result, the Fund's current Board intends to vigorously contest the
election of the dissident nominees. We urge you to vote FOR your Board's
nominees by promptly completing, signing, dating and returning the enclosed
WHITE proxy card.
PROPOSAL 2: A SHAREHOLDER PROPOSAL
A shareholder (the "Shareholder Proponent") has submitted the following
proposal (the "Shareholder Proposal") to be included in this proxy statement:
RESOLVED: The shareholders ask the Trustees to take the steps
necessary to merge the Franklin Universal Trust (FT) into the Franklin
Income Fund (FKINX), an open-end fund, or otherwise permit shareholders to
realize net asset value (NAV) for their shares.
OPPOSITION STATEMENT OF FRANKLIN UNIVERSAL TRUST
YOUR FUND'S BOARD UNANIMOUSLY OPPOSES THE SHAREHOLDER PROPOSAL AND BELIEVES
IT IS IN YOUR BEST INTERESTS TO RETAIN THE FUND'S CLOSED-END STRUCTURE. No
other closed-end fund offers your Fund's combination of investments in both
high yield bonds and utility stocks, which provides investors with both high
current income as well as the potential for capital appreciation. Combining
this investment strategy with leverage and low cash balances, your Fund has
delivered consistently strong market returns to investors over time. The
Board believes strongly that your Fund remains viable in its closed-end form,
but may not be able to provide the same benefits to shareholders if merged
into Franklin Income Fund or another open-end fund. THE BOARD THEREFORE
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE SHAREHOLDER
PROPOSAL.
REASONS FOR THE BOARD'S RECOMMENDATION
Your Fund's Board has reviewed and considered the Shareholder Proposal but
believes that it is not in the best interests of the Fund and its
shareholders. For the reasons discussed below, the Board believes that the
Fund's shareholders, and particularly the Fund's long-term shareholders, are
best served by retaining the Fund's closed-end structure.
1. ADVANTAGES OF KEEPING YOUR FUND AS A CLOSED-END FUND
As a closed-end fund, your Fund has particular advantages over open-end
funds, including:
YOUR FUND CAN USE LEVERAGE; OPEN-END FUNDS CANNOT. As a closed-end fund,
your Fund is able to issue debt securities and use the proceeds to make
investments. Your Fund would not be able to do this if it were merged into an
open-end fund. The Fund currently has issued and outstanding $55 million in
5- year notes maturing in August 2008, representing approximately 22% of its
total assets as of December 31, 2007. The Fund pays a fixed rate of interest
on these debt securities at an annual rate of 4.14. While there is no
guarantee that the Fund will be able to obtain similarly favorable terms if
it decides to refinance its leverage in August, 2008, shareholders will still
receive direct benefits from the Fund's use of leverage to the extent that
the total return on portfolio securities purchased with the leverage exceeds
the interest payments on the debt securities. By using leverage, your Fund
has the potential to experience enhanced returns compared to open-end funds.
Moreover, repayment of your Fund's outstanding debt in connection with a
merger into an open-end fund would generate transaction costs and could
require payment of a make-whole premium, which would increase merger costs
for the Fund's shareholders.
YOUR FUND HAS THE ABILITY TO ALWAYS BE FULLY INVESTED; OPEN-END FUNDS DO
NOT. By definition, an open-end fund permits shareholders to redeem their
shares every business day. As a result, open-end funds typically cannot have
their assets fully invested because they need to maintain cash balances to
pay for net redemptions. Alternatively, open-end funds can temporarily borrow
cash to finance net redemptions, but they must pay interest on those
borrowings. In either case, maintaining cash balances or paying interest on
borrowing instead of investing in appreciable assets can reduce an open-end
fund's total return. Similarly, an open-end fund in times of market turmoil,
such as those experienced recently in connection with the turmoil in the
sub-prime mortgage market, may be forced to keep large cash balances or sell
assets at what it believes to be temporarily depressed market prices in order
to process redemptions. A closed-end fund like your Fund, by contrast, does
not generally permit redemptions except in extraordinary circumstances, such
as in a tender offer or liquidation. As a result, your Fund typically
maintains cash balances of less than 1% of total assets, thus potentially
enhancing returns by remaining essentially fully invested at all times. The
Fund is not forced to liquidate securities in order to process redemptions.
For the same reason, your Fund has the ability to invest more extensively in
illiquid securities than open-end funds, although currently it does not do
so.
YOUR FUND HAS THE ABILITY TO TRADE THROUGHOUT THE DAY; MOST OPEN-END FUNDS
DO NOT. Open-end funds typically price their shares once a day, usually just
after the close of trading on the New York Stock Exchange ("NYSE") at 4:00
p.m., Eastern Time. Closed-end funds like your Fund, however, can be traded
throughout the day. That means that a closed-end fund shareholder's buy or
sell order can be executed for the market price prevailing on the exchange at
precisely the time the shareholder's broker-dealer places the trade, rather
than at the very end of the trading day. This may give holders of closed-end
fund shares certain liquidity and trading advantages that are not available
to holders of most open-end fund shares.(1)
2.YOUR FUND'S DISCOUNT IS CYCLICAL, NOT PERMANENT
As with most other closed-end funds, the market price of the Fund's shares
is often lower than the Fund's NAV per share. That is, the Fund's shares
often trade at a discount. Discounts tend to be cyclical, however, often
moving in conjunction with interest rates. Indeed, from March 2001 through
April 2003, your Fund's shares traded at a premium. Based on history, it
should not be assumed that the Fund's current discount will last
indefinitely. Accordingly, the Board believes that the presence of a discount
should not, by itself, necessitate the drastic step of merging your Fund into
an open-end fund.
Your Fund's Board has already taken steps to address the discount,
authorizing the Fund's management in January 2006 and again in December 2007
to implement an open-market share repurchase program that allows the Fund to
purchase up to 10% of its common stock in open-market transactions. As of
October 31, 2007, the share repurchase program has resulted in the repurchase
of approximately 8.9% of the Fund's outstanding shares. The share repurchase
program is intended to benefit shareholders by enabling your Fund to acquire
its own shares at a discount to NAV, thereby increasing the proportionate
interest of each remaining shareholder in the Fund. The Board also hopes that
the share repurchase program will help bring the market price of the Fund's
shares closer to NAV. At the same time, beginning in February 2006, the Board
authorized an increase in your Fund's monthly dividend from 3.5 cents to 3.8
cents per share. Both of these measures were designed by the Board to help
address your Fund's discount.
The Fund's management believes that the Fund's discount is largely
attributable to the broad-based market volatility and unrest that has
generally affected the closed-end fund industry. Indeed, as of
October 31, 2007, the average discount for leveraged and non-leveraged
multi-sector closed-end funds was 10.19% compared to the Fund's discount of
10.43%. (Source: UBS Investment Bank). The Fund's discount is thus in line
with that experienced by multi-sector closed-end funds generally.
Accordingly, the Fund's management views the current discount as a result
of transient market movements unrelated to the Fund's core investment
strategies, and not as a permanent or long-term phenomenon arising from
Fund's investment program. The Fund's management therefore believes that it
would be unwise to recommend a merger with an open-end fund based on market
conditions unrelated to the Fund's overall investment mandate.
3. YOUR FUND'S UNIQUE MARKET POSITION
Despite the Fund's current market price discount to NAV, the Board believes
that your Fund's performance, coupled with its unique position in the
marketplace, justifies retaining your Fund's closed-end structure as in the
best interests of long-term shareholders. For these shareholders, the Fund's
investment approach and long-term market price performance may be more
important than its discount.
Your Fund has a unique strategy and investment parameters that are
different from its closed-end fund competitors, as well as any open-end fund
in the Franklin Templeton complex, including Franklin Income Fund. As stated
in its annual report, the Fund invested approximately 69% of its assets in
high yield debt of U.S. issuers and 29% in utility stocks as of August 31,
2007. Your Fund is the only closed-end fund currently in existence that has
this unique asset mix, which provides investors with both high current income
as well as the potential for price appreciation on both high yield bonds and
utility stocks. This portfolio composition and risk/return profile may
directly appeal to many of the Fund's current long-term shareholders, who
might not be able to find a comparable investment if, for example, the Fund
were to merge with a dissimilar open-end fund such as Franklin Income Fund.
While Franklin Income Fund has a history dating back almost 60 years, it
does not share the same unique investment style as your Fund. Franklin Income
Fund's investment goal is to maximize income, while maintaining prospects for
capital appreciation, by investing in a diversified portfolio of stocks and
bonds. As a general rule, Franklin Income Fund invests in stocks across many
industries, such as technology and healthcare, to a much greater extent than
the Fund. It typically does not invest as great a percentage of its assets in
securities of medium sized companies, utility stocks or high yield bonds as
the Fund, nor does it typically invest in emerging market sovereign debt. Not
surprisingly, the two funds have had different investment performance over
different market cycles.
While Franklin Income Fund is always available as an option for investors
seeking an open-end fund with its investment approach, the Fund's investment
approach is distinctly different. The Shareholder Proposal would deprive both
current and potential shareholders of the unique investment program currently
offered by the Fund.
4. YOUR FUND'S COMPETITIVE PERFORMANCE
Your Fund's long-term performance at market price has been consistently
competitive, both in absolute terms and relative to its Lipper peer group and
benchmark indices, as shown in the table below:
FRANKLIN UNIVERSAL TRUST PERFORMANCE AS OF DECEMBER 31, 2007
---------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN(1) 1-YEAR 3-YEAR 5-YEAR 10-YEAR
---------------------------------------------------------------------
Fund Return Based on Change 6.38% 11.96% 13.76% 4.98%
in Market Price(2)
---------------------------------------------------------------------
Fund Return Based on Change 9.20% 10.20% 16.09% 5.55%
in Net Asset
Value(3)
---------------------------------------------------------------------
Credit Suisse (CS) High Yield 2.65% 5.52% 10.97% 6.10%
Index(4)
---------------------------------------------------------------------
Standard & Poor's (S&P) 500 19.38% 19.06% 21.50% 7.77%
Utilities
Index(5)
---------------------------------------------------------------------
Lipper Closed End High -6.91% 2.70% 13.91% 4.20%
Current Yield Funds
(Leveraged)(6)
---------------------------------------------------------------------
Rank in Lipper Category 1 out 1 out of 3 out of 6 out
Based on Change in of 35 31 23 of 13
NAV(6)
---------------------------------------------------------------------
Franklin Income Fund - Class 5.31% 8.51% 13.42% 8.49%
A Based on Change in NAV
---------------------------------------------------------------------
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE
MAY DIFFER FROM FIGURES SHOWN.
---------------------------------
(1) Total return calculations represent the cumulative and average annual
changes in value of an investment over the periods indicated.
(2) Source: Bloomberg L.P. Assumes reinvestment of distributions based on the
dividend reinvestment and cash purchase plan.
(3) Source: Lipper Inc. Assumes reinvestment of distributions based on net
asset value.
(4) Source: Credit Suisse. The Credit Suisse High Yield Index is designed to
mirror the investible universe of the U.S. dollar denominated high yield
debt market. The index is unmanaged and includes reinvestment of any
income or distributions. One cannot invest directly in an index, nor is an
index representative of the Fund's portfolio.
(5) Source: S&P's Micropal: The S&P 500 Utilities Index is a market
capitalization weighted index that includes electric utility stocks in the
S&P 500. The index is unmanaged and includes reinvestment of any income or
distributions. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
(6) Source: Lipper Inc. The Lipper Closed-End High Current Yield Fund
(Leveraged) Universe is comprised of the fund and all closed-end debt
leveraged high current yield funds regardless of asset size or primary
channel of distribution. Returns are based on change in net asset value.
5. YOUR FUND CONTINUES TO BE VIABLE AND SUCCESSFUL AS A CLOSED-END FUND
Given the costs of merging your Fund into an open-end fund, the Board would
only recommend this action in the face of compelling circumstances, such as
if there were serious concerns about the continuing viability of the Fund as
a suitable long-term investment for shareholders. The Board does not believe
that these circumstances are present in the case of your Fund.
Rather, the Board believes that your Fund is viably situated as a
closed-end fund. The Fund continues to maintain adequate trading volume,
variable discounts and premiums, and viable size. The Board therefore
believes that a merger of the Fund into an open-end fund would deprive the
Fund's long-term shareholders of the unique characteristics they were seeking
when they originally chose to invest in this closed-end fund instead of any
open-end fund, including Franklin Income Fund.
CONCLUSION
For the reasons stated above, the Board UNANIMOUSLY recommends that
Shareholders vote AGAINST the Shareholder Proposal.
SUPPORTING STATEMENT OF THE SHAREHOLDER PROPONENT
FT shares not only continue to sell at a large discount to NAV, but despite
FT's use of leverage, its performance lags that of the open-end Franklin
Income Fund both on a short-term (6 month) and long-term (five year) basis.
Moreover, FT's relative performance suffers because its expense ratio is more
than twice as high as that of FKINX. A merger into FKINX would significantly
reduce the expense ratio for FT shareholders, allow us to benefit from the
larger size and efficiency of FKINX, and eliminate the FT discount once and
for all.
---------------------------------
The Shareholder Proponent is Walter S. Baer, 344 S. Canyon Views Drive,
Los Angeles, California 90049. Neither the Fund, its Board of Trustees,
nor management is responsible for the contents of the Shareholder Proposal
or the Supporting Statement of the Shareholder Proponent.
ADDITIONAL INFORMATION ABOUT THE FUND
THE INVESTMENT MANAGER. The Investment Manager is Franklin Advisers, Inc., a
California corporation, whose principal address is One Franklin Parkway, San
Mateo, CA 94403. The Investment Manager is a wholly-owned subsidiary of
Resources.
THE ADMINISTRATOR. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), whose principal address is also One Franklin
Parkway, San Mateo, CA 94403. Under an agreement with Advisers, FT Services
performs certain administrative functions, such as portfolio recordkeeping,
for the Fund. FT Services is an indirect, wholly-owned subsidiary of
Resources.
THE TRANSFER AGENT. The transfer agent, registrar and dividend disbursement
agent for the Fund is PFPC Inc., 4400 Computer Drive, Westborough, MA 01850.
THE CUSTODIAN. Bank of New York, Mutual Funds Division, 90 Washington Street,
New York, NY 10286, acts as custodian of the Fund's securities and other
assets.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS. The Fund's last audited
financial statements and annual report for the fiscal year ended August 31,
2007, are available free of charge. To obtain a copy, please call 1-800/DIAL
BEN(R) (1-800/342-5236) or forward a written request to Franklin Templeton
Investor Services, LLC, P.O. Box 997151, Sacramento, CA 95899-9983.
PRINCIPAL SHAREHOLDERS. As of January 14, 2008, the Fund had 25,232,993.788
shares outstanding and total net assets of $xxx,xxx,xxx.xx. The Fund's
shares are listed on the NYSE (symbol: FT). 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 Fund's management, as of January 14, 2008, there were no
other entities holding beneficially or of record more than 5% of the Fund's
outstanding shares, except as shown in the following table:
--------------------------------------------------------------
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OUTSTANDING
BENEFICIAL OWNER OWNERSHIP SHARES
--------------------------------------------------------------
Bulldog Investors General $2,724,437(1) 10.09(2)
Partnership and Phillip
Goldstein
Park 80 West-Plaza
Two, Suite 750
Saddle Brook, NJ 07663
--------------------------------------------------------------
(1) The nature of beneficial ownership is sole voting and dispositive power by
Bulldog Investors General Partnership and Phillip Goldstein, as reported
on Schedule 13D/A, filed with the U.S. Securities and Exchange Commission
as of as of November 16, 2007.
(2) As reported on Schedule 13D/A, filed with the U.S. Securities and Exchange
Commission as of November 16, 2007
In addition, to the knowledge of the Fund's management, as of January 14,
2008, no Trustee of the Fund owned 1% or more of the outstanding shares of
the Fund, and the officers and Trustees of the Fund owned, as a group, less
than 1% of the outstanding shares of the Fund.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. U.S. securities law
requires that the Fund's Trustees, officers and shareholders owning more than
10% of outstanding shares, as well as affiliated persons of its Investment
Manager, report their ownership of the Fund's shares and any changes in that
ownership. Specific due dates for these reports have been established and the
Fund is required to report in this proxy statement any failure to file by
these dates during the fiscal year ended August 31, 2007. Based solely on its
review of copies of such reports or written representations from such
Trustees, officers and 10% shareholders, the Fund believes that, all Section
16(a) filing requirements applicable to its Trustees, officers and 10%
shareholders were complied with during the fiscal year ended August 31, 2007,
except that a Form 3 filing made by Mr. Sam Ginn was inadvertently filed
several days late.
CONTACTING THE BOARD OF TRUSTEES. If a shareholder wishes to send a
communication to the Board, such correspondence should be in writing and
addressed to the Board of Trustees at the Fund's offices, One Franklin
Parkway, San Mateo, California 94403. The correspondence will then be given
to the Board for their review and consideration.
AUDIT COMMITTEE
The Board has a standing Audit Committee currently consisting of Messrs.
Wilson (Chairman), Carlson and LaHaye, all of whom are Independent Trustees
and also are considered to be "independent" as that term is defined by the
NYSE's listing standards. The Fund's Audit Committee is responsible for the
appointment, compensation and retention of the Fund's independent registered
public accounting firm (auditors), including evaluating their independence,
recommending the selection of the Fund's auditors to the full Board, and
meeting with such auditors to consider and review matters relating to the
Fund's financial reports and internal accounting.
SELECTION OF AUDITORS. The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP ("PwC") as auditors of the Fund for the
current fiscal year. Representatives of PwC are not expected to be present at
the Meeting, but will have the opportunity to make a statement if they wish,
and will be available should any matter arise requiring their presence.
AUDIT FEES. The aggregate fees paid to PwC for professional services rendered
by PwC for the audit of the Fund's annual financial statements or for
services that are normally provided by PwC in connection with statutory and
regulatory filings or engagements were $38,082 for the fiscal year ended
August 31, 2007, and $22,209 for the fiscal year ended August 31, 2006.
AUDIT-RELATED FEES. The aggregate fees paid to PwC for assurance and related
services rendered by PwC to the Fund that are reasonably related to the
performance of the audit or review of the Fund's financial statements and are
not reported under "Audit Fees" above were $0 for the fiscal year ended
August 31, 2007, and $8,736 for the fiscal year ended August 31, 2006. The
services for which these fees were paid included attestation services.
There were no fees paid to PwC for assurance and related services rendered by
PwC to the Investment Manager and any entity controlling, controlled by or
under common control with the Investment Manager that provides ongoing
services to the Fund that are reasonably related to the performance of the
audit of its financial statements for the fiscal years ended August 31, 2007,
and August 31, 2006.
TAX FEES. There were no fees paid to PwC for professional services rendered
by PwC to the Fund for tax compliance, tax advice and tax planning for fiscal
years ended August 31, 2007, and August 31, 2006.
The fees paid to PwC for professional services rendered by PwC to the
Investment Manager and any entity controlling, controlled by or under common
control with the Investment Manager that provides ongoing services to the
Fund for tax compliance, tax advice and tax planning were $46,000 for the
fiscal year ended August 31, 2007, and $0 for fiscal year ended August 31,
2006.
ALL OTHER FEES. The aggregate fees paid to PwC for products and services
rendered by PwC to the Fund not reported in previous paragraphs were $0 for
the fiscal year ended August 31, 2007, and $110 for the fiscal year ended
August 31, 2006. The services for which these fees were paid included review
of materials provided to the fund Board in connection with the investment
management contract renewal process.
The aggregate fees paid to PwC for products and services rendered by PwC to
the Investment Manager and any entity controlling, controlled by or under
common control with the Investment Manager that provides ongoing services to
the Fund not reported in previous paragraphs were $0 for the fiscal year
ended August 31, 2007, and $175,751 for the fiscal year ended August 31,
2006. The services for which these fees were paid included review of
materials provided to the Fund's Board in connection with the investment
management contract renewal process.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. As of the date of this
proxy statement, the Audit Committee has not adopted pre-approval policies
and procedures. As a result, all such services described above and provided
by PwC must be directly pre-approved by the Audit Committee.
AGGREGATE NON-AUDIT FEES. The aggregate fees paid to PwC for non-audit
services to the Fund, and to the Investment Manager and any entity
controlling, controlled by, or under common control with the Investment
Manager that provides ongoing services to the Fund, were $46,000 for the
fiscal year ended August 31, 2007, and $184,597 for the fiscal year ended
August 31, 2006.
The Audit Committee has determined that the provision of the non-audit
services that were rendered to the Investment Manager and to any entities
controlling, controlled by, or under common control with the Investment
Manager that provide ongoing services to the Fund is compatible with
maintaining PwC's independence.
AUDIT COMMITTEE REPORT. The Board has adopted and approved a revised formal
written charter for the Audit Committee, which sets forth the Audit
Committee's responsibilities. A copy of the charter was attached as "Appendix
A" to the proxy statement for the Fund's 2006 Annual Shareholders' Meeting.
As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with PwC, the Fund's
auditors, to discuss the financial statements.
The Audit Committee received the written disclosures and the letter from PwC
required by Independence Standards Board Standard No. 1. The Audit Committee
also received the report of PwC regarding the results of their audit. In
connection with their review of the financial statements and the auditors'
report, the members of the Audit Committee discussed with a representative of
PwC, PwC's independence, as well as the following: the auditors'
responsibilities in accordance with generally accepted auditing standards;
the auditors' responsibilities for information prepared by management that
accompanies the Fund's audited financial statements and any procedures
performed and the results; the initial selection of, and whether there were
any changes in, significant accounting policies or their application;
management's judgments and accounting estimates; whether there were any
significant audit adjustments; whether there were any disagreements with
management; whether there was any consultation with other accountants;
whether there were any major issues discussed with management prior to the
auditors' retention; whether the auditors encountered any difficulties in
dealing with management in performing the audit; and the auditors' judgments
about the quality of the Fund's accounting principles.
Based on its review and discussions with management and the Fund's auditors,
the Audit Committee did not become aware of any material misstatements or
omissions in the financial statements.
Accordingly, the Audit Committee recommended to the Board that the audited
financial statements be included in the Fund's Annual Report to Shareholders
for the fiscal year ended August 31, 2007, for filing with the U.S.
Securities and Exchange Commission.
THE AUDIT COMMITTEE
John B. Wilson (Chairman)
Robert F. Carlson
Frank W.T. LaHaye
FURTHER INFORMATION ABOUT VOTING AND THE MEETING
SOLICITATION OF PROXIES. Your vote is being solicited by the Trustees of the
Fund. The cost of soliciting these proxies will be borne in part by the Fund;
however, the Investment Manager will bear half of the costs in excess of the
costs expended on the solicitation of proxies for the Fund's 2007 annual
meeting of shareholders (excluding the salaries and fees of officers and
employees). Subject to the foregoing, the Fund reimburses brokerage firms
and others for their expenses in forwarding proxy materials to the beneficial
owners and soliciting them to execute proxies.
In addition to solicitation services to be provided by The Altman Group, Inc.
("Altman"), as described below, proxies may be solicited by the Fund and its
Trustees, officers and employees (who will receive no compensation therefor
in addition to their regular salaries) and/or regular employees of the Fund's
Investment Manager, administrator, stock transfer agent, or any of their
affiliates.
The Fund has contracted with The Altman Group, Inc. ("Altman")to assist with
solicitation of proxies. The Fund anticipates that the cost of retaining
Altman will be up to approximately $140,000, plus reimbursement of reasonable
out-of-pocket expenses (which amount is included in the estimate of total
expenses below). The Fund has also agreed to indemnify Altman against certain
liabilities and expenses, including liabilities under the federal securities
laws. Altman anticipates that approximately 20 of its employees or other
persons will be involved in soliciting shareholders of the Fund. Altman's
address is 60 East 42nd Street, Suite 405, New York, NY 10165.
The Fund expects that the solicitation will be primarily by mail, but also
may include advertisement, telephone, telecopy, facsimile transmission,
electronic, oral, or other means of communication, or by personal contacts.
If the Fund does not receive your proxy by a certain time you may receive a
telephone call from a proxy soliciting agent asking you to vote.
Although no precise estimate can be made at the present time, it is currently
estimated that the aggregate amount to be spent in connection with the
solicitation of proxies by the Fund (excluding the salaries and fees of
officers and employees) will be approximately $322,000. To date,
approximately $75,000 has been spent on the solicitation. These estimates
include fees for attorneys, accountants, advisers, proxy solicitors,
advertising, printing, distribution and other costs incidental to the
solicitation, but exclude costs normally expended for the election of
Trustees in the absence of a contest. As described above, the Fund and the
Investment Manager intend to pay all costs associated with the solicitation
and the Meeting.
PARTICIPANTS. Because Bulldog Investors has filed a proxy statement in
support of the Bulldog nominees and, thus, has commenced a proxy contest, the
SEC requires the Fund to provide shareholders with certain additional
information relating to "participants" as defined in the SEC's proxy rules.
Pursuant to those rules, the Fund's Trustees are, and certain employees and
agents of the Fund may be, deemed to be "participants." The address of the
participants described below is the address of the Fund's principal executive
offices. None of the participants listed herein have purchased or sold or
otherwise acquired or disposed of any shares of the Fund in the last two
years. Information with respect to the participants' beneficial ownership of
shares of the Fund is as of January 18, 2008.
For information about the Trustees, please refer to Proposal 1 of this Proxy
Statement. In addition, the following persons may also act as participants:
- Greg Johnson is the President and Chief Executive Officer of Franklin
Resources, the parent corporation of the Investment Manager.
- Christopher J. Molumphy is a Director and Executive Vice President of the
Investment Manager. Mr. Molumphy has been a manager of the Fund since 1991.
- Glenn I. Voyles is a Vice President of the Investment Manager. Mr.
Voyles has been a manager of the Fund since 1999.
- Karen L. Skidmore is the Secretary and Vice President of the Fund.
- Craig S. Tyle is a Vice President of the Fund.
- Lisa Gallegos is a Director of Corporate Communications for Resources.
- Matthew Walsh is a Community and Public Relations Consultant for
Resources.
VOTING BY BROKER-DEALERS. Because the Fund anticipates that the election of
Trustees and the Shareholder Proposal will be contested, the Fund expects
that broker-dealer firms holding shares of the Fund in "street name" for
their customers will not be permitted by NYSE rules to vote on the election
of Trustees or the Shareholder Proposal on behalf of their customers and
beneficial owners in the absence of voting instructions from their customers
and beneficial owners.
QUORUM. Forty percent 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
represent "broker non-votes" (i.e., shares held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), 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.
REQUIRED VOTE. Provided that a quorum is present, the election of Trustees
requires a plurality of shares voted, meaning that the eleven nominees
receiving the greatest number of votes shall be elected. All voting rights
are non-cumulative, which means that the holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of such Trustees if
they choose to do so, and in such event, the holders of the remaining shares
voting will not be able to elect any Trustees.
Provided that a quorum has been established, the affirmative vote of a
majority of shares voted at the Meeting is required to approve the
Shareholder Proposal. For purposes of the Shareholder Proposal, abstentions
and broker non-votes, if any, will have no effect on the result of the vote.
The Shareholder Proposal is only a recommendation and, if it is approved by
the required vote, will have no binding effect on the Fund or the Board of
Trustees. In considering whether or not to take action in response to the
proposal, the Board of Trustees will give the request set forth in the
Shareholder Proposal such weight as it believes appropriate based on the
voting of shareholders for the proposal and other relevant factors.
ADJOURNMENT. Whether or not a quorum is present at the Meeting, the Meeting
may be adjourned by a majority vote of the shares represented at the Meeting,
either in person or by proxy, properly cast upon the question of adjournment.
If the Meeting is adjourned, notice need not be given of the adjourned
meeting at which the adjournment is taken, unless a new record date of the
adjourned meeting is fixed or unless the adjournment is for more than 60 days
from the date set for the original Meeting, in which case the Board of
Trustees shall set a new date. At any adjourned Meeting, the Fund may
transact any business which might have been transacted at the original
Meeting.
Whether or not a quorum is present, the persons named as proxies may propose
one or more adjournments of the Meeting to permit the further solicitation of
proxies. The persons named as proxies will vote in their discretion on
questions of adjournment those shares for which proxies have been received
that grant discretionary authority to vote on matters that may properly come
before the Meeting, and on any other proposals properly raised at the Meeting
to the extent permitted by the SEC's proxy rules, including proposals for
which management of the Fund did not have timely notice, as set forth in the
SEC's proxy rules.
SHAREHOLDER PROPOSALS. The Fund anticipates mailing this proxy statement on
or about January [__], 2008. The Fund anticipates that its next annual
meeting of shareholders will be held on or about [March 26, 2009].
Shareholder proposals to be presented at the next annual meeting must be
received at the Fund's offices, One Franklin Parkway, San Mateo, California
94403, Attention: Secretary, no later than [ ______ ], in order to be
considered for inclusion in the Fund's proxy statement and proxy card
relating to that meeting and presented at that meeting. Submission of a
proposal by a shareholder does not guarantee that the proposal will be
included in the proxy statement. A shareholder who wishes to make a proposal
at the 2009 Annual Shareholders' Meeting without including the proposal in
the Fund's proxy statement must notify the Fund at the Fund's offices of such
proposal by [ _______ ]. If a shareholder fails to give notice by this date,
then the persons named as proxies in the proxies solicited by the Board for
the 2009 Annual Shareholders' Meeting may exercise discretionary voting power
with respect to any such proposal.
No business other than the matters described above is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the designated proxy holders will vote on such matters in accordance
with the views of management.
By order of the Board of Trustees,
Karen L. Skidmore
SECRETARY
Dated: January [ ], 2008
San Mateo, California
APPENDIX A
NOMINATING COMMITTEE CHARTER
I. THE COMMITTEE.
The Nominating Committee (the "Committee") is a committee of, and
established by, the Board of Directors/Trustees of the Fund (the
"Board"). The Committee consists of such number of members as set by the
Board from time to time and its members shall be selected by the Board.
The Committee shall be comprised entirely of "independent members." For
purposes of this Charter, independent members shall mean members who are
not interested persons of the Fund ("Disinterested Board members") as
defined in Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the "1940 Act").
II. BOARD NOMINATIONS AND FUNCTIONS.
1. The Committee shall make recommendations for nominations for
Disinterested Board members on the Board to the incumbent
Disinterested Board members and to the full Board. The Committee
shall evaluate candidates' qualifications for Board membership and
the independence of such candidates from the Fund's investment
manager and other principal service providers. Persons selected
must be independent in terms of both the letter and the spirit of
the 1940 Act. The Committee shall also consider the effect of any
relationships beyond those delineated in the 1940 Act that might
impair independence, E.G., business, financial or family
----
relationships with investment managers or service providers.
2. The Committee also shall evaluate candidates' qualifications and
make recommendations for "interested" members on the Board to the
full Board.
3. The Committee may adopt from time to time specific, minimum
qualifications that the Committee believes a candidate must meet
before being considered as a candidate for Board membership and shall
comply with any rules adopted from time to time by the U.S.
Securities and Exchange Commission regarding investment company
nominating committees and the nomination of persons to be considered
as candidates for Board membership.
4. The Committee shall review shareholder recommendations for
nominations to fill vacancies on the Board if such recommendations
are submitted in writing and addressed to the Committee at the Fund's
offices. The Committee shall adopt, by resolution, a policy regarding
its procedures for considering candidates for the Board, including
any recommended by shareholders.
III. COMMITTEE NOMINATIONS AND FUNCTIONS.
The Committee shall make recommendations to the full Board for
nomination for membership on all committees of the Board.
IV. OTHER POWERS AND RESPONSIBILITIES.
1. The Committee shall meet at least once each year or more
frequently in open or executive sessions. The Committee may invite
members of management, counsel, advisers and others to attend its
meetings as it deems appropriate. The Committee shall have separate
sessions with management and others, as and when it deems
appropriate.
2. The Committee shall have the resources and authority appropriate
to discharge its responsibilities, including authority to retain
special counsel and other experts or consultants at the expense of
the Fund.
3. The Committee shall report its activities to the Board and make
such recommendations as the Committee may deem necessary or
appropriate.
4. A majority of the members of the Committee shall constitute a quorum
for the transaction of business at any meeting of the Committee. The
action of a majority of the members of the Committee present at a
meeting at which a quorum is present shall be the action of the
Committee. The Committee may meet in person or by telephone, and
the Committee may act by written consent, to the extent permitted
by law and by the Fund's by-laws. In the event of any
inconsistency between this Charter and the Fund's organizational
documents, the provisions of the Fund's organizational documents
shall be given precedence.
5. The Committee shall review this Charter at least annually and
recommend any changes to the full Board.
ADDITIONAL STATEMENT FOR CLOSED-END FUNDS ONLY
The Committee shall comply with any rules of any stock exchange, if any,
applicable to nominating committees of closed-end funds whose shares are
registered thereon.
(1) Certain open-end funds, known as exchange-traded funds or ETFs,
trade on a stock exchange throughout the day, but only as long as a large
institution, such as a bank or broker-dealer, agrees to make a market in the
ETF's securities. Closed-end funds like your Fund, however, will continue to
trade as long as they are listed on a stock exchange, regardless of whether
an institution agrees to make a market in their securities.
PROXY
FRANKLIN UNIVERSAL TRUST
ANNUAL SHAREHOLDERS' MEETING - MARCH 14, 2008
The undersigned hereby revokes all previous proxies for his or her shares and
appoints Craig S. Tyle, David P. Goss, and Karen L. Skidmore, and each of them,
proxies of the undersigned with full power of substitution to vote all shares of
Franklin Universal Trust (the "Fund") that the undersigned is entitled to vote
at the Fund's Annual Shareholders' Meeting (the "Meeting") to be held at One
Franklin Parkway, Building 920, San Mateo, CA 94403 at 2:00 p.m., Pacific Time,
on March 14, 2008, including any postponements or adjournments thereof, upon the
matters set forth on the reverse side, and instructs them to vote upon any other
matters that may properly be acted upon at the Meeting, including matters
related to the conduct, adjournment or postponement of the Meeting.
THE BOARD OF TRUSTEES OF THE FUND SOLICITS THIS PROXY. It will be voted as
specified on the reverse. IF NO SPECIFICATION IS MADE, THIS PROXY SHALL BE VOTED
FOR THE ELECTION OF THE FUND'S NOMINEES TO THE POSITION OF TRUSTEE (PROPOSAL 1)
AND AGAINST THE SHAREHOLDER PROPOSAL (PROPOSAL 2). If any other matters properly
come before the Meeting to be voted on, the proxy holders will vote, act and
consent on those matters in accordance with the views of management. Management
is not aware of any such matters.
You are urged to date and sign this proxy
and return it promptly. This will save the
expense of follow-up letters to shareholders
who have not responded.
Signature(s) and Title(s), if applicable Date
Signature(s) and Title(s), if applicable Date
Sign your name exactly as it appears in the
registration on the proxy card. If the
shares are held jointly, either party
may sign, but the name of the party signing
should conform exactly to the name shown
in the registration on the proxy card. If
signing is by attorney, executor,
administrator, trustee or guardian, please
print your full title below your signature.
-------------------------------------------------------------------
Please sign, date, and complete the reverse side of this proxy card and return
it in the postage paid envelope provided.
IMPORTANT: PLEASE SEND IN YOUR PROXY TODAY.
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. [ X ]
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR ALL
NOMINEES.
1. Proposal: Election of Trustees.
WITHHOLD
FOR ALL FROM ALL
NOMINEES: (NOMINEES) (NOMINEES)
(01) Harris J. Ashton (06) Charles B. Johnson
(02) Robert F. Carlson (07) Rupert H. Johnson, Jr. [ ] [ ]
(03) Sam Ginn (08) Frank W.T. LaHaye
(04) Edith E. Holiday (09) Frank A. Olson
(05) Edward B. Jamieson (10) Larry D. Thompson
(11) John B. Wilson
------------------------------------------------
INSTRUCTION: To withhold authority to vote for
any individual nominee, write that nominee's name
in the space provided above.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE AGAINST PROPOSAL 2.
2. Shareholder Proposal: FOR AGAINST ABSTAIN
RESOLVED: The shareholders ask the
Trustees to take the steps necessary [ ] [ ] [ ]
to merge the Franklin Universal Trust(FT)
into the Franklin Income Fund(FKINX),
an open-end fund, or otherwise permit
shareholders to realize net asset value
(NAV)for their shares.
If you should have any questions about the proxy material or the execution of
your vote, simply call 1-800-336-5159 between the hours of 10 am and 10 pm
Eastern Time. Representatives will be happy to assist you. Please have this
proxy card available at the time of the call.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!