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The Nominating Committee, however, will review recommendations from Qualifying Fund Shareholders to fill
vacancies on the Board if these recommendations are submitted in writing and addressed to the Nominating
Committee at the Fund’s offices and are presented with appropriate background material concerning the
candidate that demonstrates his or her ability to serve as a Director, including as an Independent Director, of the
Fund. A Qualifying Fund Shareholder is a shareholder who (i) has continuously owned of record, or beneficially
through a financial intermediary, shares of the Fund having a net asset value of not less than two hundred fifty
thousand dollars ($250,000) during the twenty-four month period prior to submitting the recommendation; and
(ii) provides a written notice to the Nominating Committee containing the following information: (a) the name
and address of the Qualifying Fund Shareholder making the recommendation; (b) the number of shares of the
Fund which are owned of record and beneficially by the Qualifying Fund Shareholder and the length of time that
the shares have been owned by the Qualifying Fund Shareholder; (c) a description of all arrangements and
understandings between the Qualifying Fund Shareholder and any other person or persons (naming such person
or persons) pursuant to which the recommendation is being made; (d) the name, age, date of birth, business
address and residence address of the person or persons being recommended; (e) such other information regarding
each person recommended by the Qualifying Fund Shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the U.S. Securities and Exchange Commission (“SEC”) had the
nominee been nominated by the Board; (f) whether the 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 Director 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 was included in the Fund’s proxy statement for its 2011 Annual Meeting of Shareholders.

Who are the nominees and Directors?

The Board is divided into three classes. Each class has a term of three years. Each year, the term of office of
one class expires. This year, the terms of three Directors expire: Edith E. Holiday, Frank A. Olson and Robert E.
Wade. In addition, Charles B. Johnson resigned as Chairman of the Board, Director and Vice President of the
Fund effective June 13, 2013. In his place, Rupert H. Johnson, Jr. was appointed as Chairman of the Board and
Director of the Fund effective as of that date to complete the remainder of Mr. Charles B. Johnson’s term. Rupert
H. Johnson, Jr. has been a Vice President of the Fund since 1996. These individuals have been nominated for
three-year terms, set to expire at the 2016 Annual Meeting of Shareholders. These terms continue, however, until
their successors are duly elected and qualified. The nominees are: Edith E. Holiday, Frank A. Olson, Robert E.
Wade and Rupert H. Johnson, Jr. All of the nominees are currently members of the Board, however, Rupert H.
Johnson, Jr., is standing for election by shareholders of the Fund for the first time. Among these nominees,
Rupert H. Johnson, Jr. is deemed to be an Interested Director. The remaining nominees are deemed to be
Independent Directors. In addition, all of the current nominees and Directors are also directors or trustees of
other investment companies within the Franklin Templeton Investments fund complex.

Interested Directors of the Fund hold director and/or officer positions with Franklin Resources, Inc.
(“Resources”) and its affiliates. Resources is a publicly owned company, the principal stockholders of which are

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Charles B. Johnson and Rupert H. Johnson, Jr., who beneficially owned approximately 17.1% and 16.9%,
respectively, of its outstanding shares as of March 31, 2013. The shares deemed to be beneficially owned by
Charles B. Johnson include certain shares held by two private charitable foundations, of which he disclaims
beneficial ownership. The shares deemed to be beneficially owned by Rupert H. Johnson, Jr. include certain
shares held by a private charitable foundation or by his spouse, of which he disclaims beneficial ownership.
Resources, a global investment management organization operating as Franklin Templeton Investments, is
primarily engaged, through various subsidiaries, in providing investment management, share distribution,
transfer agent and administrative services to a family of investment companies. Resources is a New York Stock
Exchange (“NYSE”) listed holding company (NYSE: BEN). Rupert H. Johnson, Jr., Chairman of the Board,
Director and Vice President of the Fund, is the uncle of Gregory E. Johnson, a Director of the Fund, and is the
brother of Charles B. Johnson. There are no other family relationships among the Directors or nominees for
Director.

Each nominee currently is 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 to serve as Directors.

In addition to personal qualities, such as integrity, in considering candidates for the Fund Board, the
Nominating Committee seeks to find persons of good reputation whose experience and background evidence that
such person has the ability to comprehend, discuss and critically analyze materials and issues presented, in
exercising judgments and reaching informed conclusions relevant to fulfillment of a Fund Director’s duties and
fiduciary obligations. Information on the business activities of the nominees and other Directors during the past
five years and beyond appears below and it is believed that the specific background of each Director evidences
such ability and is appropriate to his or her serving on the Fund’s Board. As indicated, Harris J. Ashton and
Frank A. Olson have both served as chief executive officers of NYSE listed public corporations; Larry D.
Thompson and Edith E. Holiday each have legal backgrounds, including high level legal positions with
departments of the U.S. Government; David W. Niemiec and Ann Torre Bates each have been chief financial
officers of major corporations; J. Michael Luttig has fifteen years of judicial experience as a Federal Appeals
Court Judge; Robert E. Wade has over thirty years of experience as a practicing attorney; Constantine D.
Tseretopoulos has professional and executive experience as founder and Chief of Staff of a hospital; Frank J.
Crothers has served as the chief executive officer of several foreign closely held corporations; and Rupert H.
Johnson, Jr. and Gregory E. Johnson are both high ranking executive officers of Resources.

Listed below with the business activities of the nominees and Directors are their names and years of birth,
their positions and length of service with the Fund and the number of portfolios in the Franklin Templeton
Investments fund complex that they oversee.

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Manager that provide ongoing services to the Fund, which engagements relate directly to the operations and
financial reporting of the Fund. The fees for these services were $39,194 for the fiscal year ended March 31,
2013, and $152,414 for the fiscal year ended March 31, 2012. The services for which these fees were paid
include preparation and review of materials provided to the Board in connection with the investment
management contract renewal process.

Aggregate Non-Audit Fees. The aggregate fees paid to PwC for non-audit services provided by PwC to
the Fund, to the Investment Manager or to any entity controlling, controlled by, or under common control with
the Investment Manager that provides ongoing services to the Fund were $43,794 for the fiscal year ended
March 31, 2013, and $227,450 for the fiscal year ended March 31, 2012. The aggregate non-audit fees for the
fiscal year ended March 31, 2013, include the amounts shown under Audit-Related Fees ($0); Tax Fees
(including services provided to the Investment Manager and its control entities ($4,600)) and All Other Fees
(including services provided to the Investment Manager and its control entities ($39,194)).

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 Pre-Approval Policies and Procedures. As of the date of this proxy statement, the Audit
Committee has not adopted written pre-approval policies and procedures. As a result, all such services described
above and provided by PwC must be pre-approved by the Audit Committee.

Audit Committee Charter. The Board has adopted and approved a formal written charter for the Audit
Committee which sets forth the Audit Committee’s responsibilities. A copy of the charter was included in the
Fund’s proxy statement for its 2011 Annual Meeting of Shareholders.

As required by the charter, the Audit Committee reviewed the Fund’s audited financial statements and met
with management, as well as with PwC, the Fund’s independent auditors, to discuss the financial statements.

Audit Committee Report. The Audit Committee received the written disclosures and the letter from PwC
required by the applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s
communications with the Audit Committee concerning independence. The Audit Committee also received the
report of PwC regarding the results of their audit. In connection with the Audit Committee’s review of the
financial statements and PwC’s report, the members of the Audit Committee discussed with representatives of
PwC, PwC’s independence, as well as the following: PwC’s responsibilities in accordance with generally
accepted auditing standards; PwC’s responsibilities for information prepared by management that accompanies
the Fund’s audited financial statements and any procedures performed and the results; the initial selection of, and
whether there were any changes in, significant accounting policies or their application; management’s judgments
and accounting estimates; whether there were any significant audit adjustments; whether there were any
disagreements with management; whether there was any consultation with other accountants; whether there were
any major issues discussed with management prior to PwC’s retention; whether the auditors encountered any
difficulties in dealing with management in performing the audit; and PwC’s judgments about the quality of the
Fund’s accounting principles.

Based on its review and discussions with management and PwC, the Audit Committee did not become
aware of any material misstatements or omissions in the financial statements. Accordingly, the Audit Committee

15

recommended to the Board that the audited financial statements be included in the Fund’s Annual Report to
Shareholders for the fiscal year ended March 31, 2013, for filing with the SEC.

AUDIT COMMITTEE

David W. Niemiec (Chairman)
Ann Torre Bates
Frank J. Crothers
Constantine D. Tseretopoulos

/ADDITIONAL INFORMATION ABOUT THE FUND’S BOARD OF DIRECTORS

Board Role in Risk Oversight. The Board, as a whole, considers risk management issues as part of its
general oversight responsibilities throughout the year at regular Board meetings, through regular reports that
have been developed by management in consultation with the Board and its counsel. These reports address
certain investment, valuation and compliance matters. The Board also may receive special written reports or
presentations on a variety of risk issues, either upon the Board’s request or upon the Investment Manager’s
initiative. In addition, the Audit Committee of the Board meets regularly with the internal audit group to review
reports on their examinations of functions and processes within Franklin Templeton Investments that affect the
Fund.

With respect to investment risk, the Board receives regular written reports describing and analyzing the
investment performance of the Fund. In addition, the portfolio managers of the Fund meet regularly with the
Board to discuss portfolio performance, including investment risk. To the extent that the Fund changes a
particular investment strategy that could have a material impact on the Fund’s risk profile, the Board generally is
consulted with respect to such change. To the extent that the Fund invests in certain complex securities, including
derivatives, the Board receives periodic reports containing information about exposure of the Fund to such
instruments. In addition, the Investment Manager’s investment risk personnel meet regularly with the Board to
discuss a variety of issues, including the impact on the Fund of the investment in particular securities or
instruments, such as derivatives.

With respect to valuation, the Fund’s administrator provides regular written reports to the Board that enable
the Board to monitor the number of fair valued securities in the Fund’s portfolio, the reasons for the fair
valuation and the methodology used to arrive at the fair value. Such reports also include information concerning
illiquid securities within the Fund’s portfolio. The Board also reviews dispositional analysis information on the
sale of securities that require special valuation considerations such as illiquid or fair valued securities. In
addition, the Fund’s Audit Committee reviews valuation procedures and results with the Fund’s independent
auditors in connection with such Committee’s review of the results of the audit of the Fund’s year-end financial
statements.

With respect to compliance risks, the Board receives regular compliance reports prepared by the Investment
Manager’s compliance group and meets regularly with the Fund’s Chief Compliance Officer (“CCO”) to discuss
compliance issues, including compliance risks. In accordance with SEC requirements, the Independent Directors
meet regularly in executive session with the CCO and the CCO prepares and presents an annual written
compliance report to the Board. The Fund’s Board adopts compliance policies and procedures for the Fund and

16

Quorum. A majority of the Fund’s shares entitled to vote at the Meeting—present in person or represented
by proxy—constitutes a quorum at the Meeting. 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 will all be counted as shares present and entitled to vote at the Meeting for purposes of
determining whether the required quorum of shares exists.

Method of Tabulation. Provided a quorum is present or represented at the Meeting, Proposal 1, the
election of Directors, requires the affirmative vote of the holders of a plurality of the Fund’s shares present (in
person or represented by proxy) and voting on the proposal at the Meeting. Proposal 2, ratification of the
selection of the independent registered public accounting firm, requires the affirmative vote of a majority of the
votes cast. Abstentions and broker non-votes will be treated as votes present at the Meeting, but will not be
treated as votes cast and, therefore, will not be counted for purposes of obtaining approval of either proposal.

Adjournment. The holders of a majority of shares entitled to vote at the Meeting and present in person or
by proxy, whether or not sufficient to constitute a quorum, or any officer present entitled to preside or act as
Secretary of the Meeting may adjourn the Meeting. Such authority to adjourn the Meeting may be used in the
event that a quorum is not present at the Meeting or in the event that a quorum is present but sufficient votes have
not been received to approve the Proposals or to permit further solicitation of proxies or for any other reason
consistent with Maryland law and the Fund’s Articles of Incorporation and By-Laws. Unless otherwise instructed
by a shareholder granting a proxy, the persons designated as proxies may use their discretionary authority to vote
as instructed by management of the Fund on questions of adjournment and on any other proposals raised at the
Meeting to the extent permitted by the SEC’s proxy rules, including proposals for which management of the
Fund did not have timely notice, as set forth in the SEC’s proxy rules and the Fund’s proxy statement for the
2012 annual meeting.

Shareholder Proposals. The Fund anticipates that its 2014 Annual Meeting of Shareholders will be held
on or about August 29, 2014. A shareholder who wishes to submit a proposal for consideration for inclusion in
the Fund’s proxy statement for the 2014 Annual Meeting of Shareholders must send such written proposal to the
Fund’s offices, at 300 S.E. 2^nd Street, Fort Lauderdale, Florida 33301-1923, Attention: Secretary, so that it is
received no later than March 4, 2014, in order to be included in the Fund’s proxy statement and proxy card
relating to that meeting and presented at the meeting.

A shareholder of the Fund who has not submitted a written proposal for inclusion in the Fund’s proxy
statement by March 4, 2014, as described above, may nonetheless present a proposal at the Fund’s 2014 Annual
Meeting of Shareholders if such shareholder notifies the Fund in writing, at the Fund’s offices, of such proposal
by May 18, 2014. If a shareholder fails to give notice by this date, then the persons designated as proxies for the
2014 Annual Meeting of Shareholders may exercise discretionary voting power with respect to any such
proposal.

A shareholder proposal may be presented at the 2014 Annual Meeting of Shareholders only if such proposal
concerns a matter that may be properly brought before the meeting under applicable federal proxy rules and state
law.

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TLTRF PROXY 07/13