TORONTO, Sept. 24, 2014 /CNW/ - Franklin Templeton Investments Corp. today announced proposed mergers for six Corporate Class funds. These changes will be voted on at special meetings of investors to be held on or around November 28, 2014 in Toronto.
These mergers are due to certain tax law changes announced by the federal government in 2013. After December 31, 2014, income earned by Yield Class funds via forward contracts will be treated as ordinary income rather than capital gains.
In addition, with the changes to the tax position of the Yield Class funds within Franklin Templeton Corporate Class Ltd., it has also been determined that merging Franklin Bissett Bond Corporate Class into its underlying fund is appropriate to decrease the amount of ordinary interest income earned within the corporation.
With each of the proposed mergers, transitioning to a mutual fund trust structure would allow investors to own substantially similar assets in a more tax-efficient manner.
Pending investor and regulatory approvals, five Corporate Class funds will merge into their corresponding mutual fund trust versions, which have investment objectives that are substantially similar to that of the terminating funds; and Franklin Bissett Money Market Yield Class will merge into its corresponding Corporate Class version.
The proposed mergers include:
- Franklin Bissett Bond Yield Class and Franklin Bissett Bond Corporate Class will merge into Franklin Bissett Bond Fund;
- Franklin Bissett Canadian Short Term Bond Yield Class will merge into Franklin Bissett Canadian Short Term Bond Fund;
- Franklin Bissett Corporate Bond Yield Class will merge into Franklin Bissett Corporate Bond Fund;
- Franklin Bissett Money Market Yield Class will merge into Franklin Bissett Money Market Corporate Class; and
- Templeton Global Bond Hedged Yield Class will merge into Templeton Global Bond Fund.
Franklin Templeton is proposing to merge Templeton Global Bond Hedged Yield Class with its reference fund, Templeton Global Bond Fund, which does not use currency forwards to help eliminate the impact of currency fluctuations between the US and Canadian dollar. Accordingly, securityholders in Templeton Global Bond Hedged Yield Class who wish to maintain exposure to a US dollar hedge have the option of initiating a switch to Templeton Global Bond Fund (Hedged) any time before the merger, or shortly thereafter. Franklin Templeton does not charge any fees for such switches.
The above mergers will occur after the close of business on or around December 12, 2014, pending investor and regulatory approvals.
The management and fixed administration fees will remain the same and the management expense ratios (MERs) will remain the same or be lower in the continuing funds. Each proposed merger will be realized on a taxable basis, with the exception of the merger of Franklin Bissett Money Market Yield Class into Franklin Bissett Money Market Corporate Class, which will be executed on a tax-deferred basis.
Series I Termination
In addition, prior to the merger of Franklin Bissett Canadian Short Term Bond Yield Class into Franklin Bissett Canadian Short Term Bond Fund, the Yield Class fund's Series I will be terminated on or around December 5, 2014, and shares will be liquidated at fair market value. Investors will have the option to switch funds or redeem shares before the termination of Series I, or remain in the series until the termination is complete. Other series within Franklin Bissett Canadian Short Term Yield Class will be merged into the corresponding series of Franklin Bissett Short Term Bond Fund as noted above, pending investor and regulatory approvals.
Securityholders of Franklin Bissett Bond Yield Class, Franklin Bissett Bond Corporate Class, Franklin Bissett Canadian Short Term Bond Yield Class, Franklin Bissett Corporate Bond Yield Class, Franklin Bissett Money Market Yield Class, Franklin Bissett Money Market Corporate Class and Templeton Global Bond Hedged Yield Class will receive an information circular in early November 2014 detailing the proposed mergers.
Investors are encouraged to speak with their investment advisor about any of these changes and review their options. For more information on the funds, please visit franklintempleton.ca.
About Franklin Templeton Investments
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 150 countries. Through specialized teams, the Company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The Company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, including Canada, the California-based company has more than 65 years of investment experience and over US$922 billion (over C$1,002 billion) in assets under management as of August 31, 2014. For more information, please visit franklintempleton.ca.
For more information, please visit franklintempleton.ca or connect with Franklin Templeton on Twitter @FTI_Global. Read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world and the Investment Adventures in Emerging Markets blog from Mark Mobius (@MarkMobius), executive chairman of Templeton Emerging Markets Group.
SOURCE: Franklin Templeton Investments Corp.
For further information:
Sarah Kingdon, Corporate Communications, Franklin Templeton Investments, 416.957.6191
Amie Lauder, Corporate Communications, Franklin Templeton Investments, 416.957.6560