TORONTO, Sept. 24, 2013 /CNW/ - Franklin Templeton Investments Corp. today announced a proposal to establish a fixed rate administration fee for certain series of its mutual funds and Tapestry Private Portfolios (Participating Series). In conjunction with the administration fee proposal, Franklin Templeton is also proposing to change the management fee currently charged to certain Participating Series. If implemented, these changes will provide investors with greater fee transparency and predictability, along with lower or, in some cases, the same management expense ratios (MERs). A special meeting of investors will be held on or about December 9, 2013 in Toronto to vote on these proposed changes.
"The fixed admin model will provide investors with more transparent and consistent fees so that they can understand the ongoing costs of investing in a fund," said Dennis Tew, chief financial officer of Franklin Templeton Investments Corp. "If approved, the new fee structure would result in lower MERs for the majority of our funds, and the remaining funds would have the same MERs as they have today."
Each fund currently pays its own operating expenses, which make up a significant portion of the MER. Operating expenses include such costs as registrar, transfer agency, audit, legal and custodial fees. Under a fixed rate administration fee model, Franklin Templeton will pay the operating expenses of each Participating Series other than certain fund costs, such as directors' fees and expenses and new governmental fees, in exchange for the Participating Series' payment of a fixed rate administration fee. By fixing a large portion of operating expenses at a set percentage, the certainty and transparency of MERs will significantly increase. The adoption of a fixed rate administration fee also offers investors protection against rising MERs triggered by declining markets, periods of net redemptions or increased expenses and costs of services.
The proposals also include a management fee realignment, which is the other key component of a fund's MER. Most of the management fee changes being proposed will decrease what is being charged to a Participating Series. However, in order to align the management fees with those charged across the industry and by other similar Franklin Templeton funds, the company's proposal will result in an increase in the management fee of certain balanced and global equity funds, if approved. The management fee charged to Series A, F, I and T of Franklin Bissett Canadian Balanced Fund and Series A, F and T of Franklin Bissett Canadian Balanced Corporate Class will be increased by 0.10 per cent under the proposal. Once implemented, the combination of the fixed rate administration fee and management fee increase will result in an MER that is either the same or up to 0.23 per cent lower depending on the fund and series. The management fee charged to Series A of Templeton Growth Fund, Ltd. and Templeton Growth Corporate Class will be increased by 0.25 per cent under the proposal, which when combined with the proposed fixed rate administration fee, will result in post-implementation MER decreases of 0.10 per cent and 0.06 per cent, respectively.
A complete list of the Participating Series that are subject to these proposals, along with additional information, is available at franklintempleton.ca.
Franklin Templeton referred the proposals to the Independent Review Committee for the Franklin Templeton funds as well as its Board of Directors, and the Boards of Directors of Franklin Templeton Corporate Class Ltd. and Templeton Growth Fund, Ltd. The Independent Review Committee has considered the proposals from a conflict of interest perspective and made a recommendation that, for the funds for which it acts, the proposals taken together would achieve a fair and reasonable result for the funds. The Boards of Directors of Franklin Templeton Investments Corp., Franklin Templeton Corporate Class Ltd. and Templeton Growth Fund, Ltd. approved the proposals to be mailed to investors.
Investors of the Participating Series will receive an information circular in mid-November 2013 detailing the proposed changes. If the proposals are approved, the fixed rate administration fee and management fee changes will become effective on or about January 1, 2014.
About Franklin Templeton Investments
Franklin Templeton Investments Corp. is a wholly owned subsidiary of Franklin Resources, Inc. (NYSE: BEN), a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management and K2 investment teams. The San Mateo, CA-based company has more than 65 years of investment experience and over US$817 billion (C$861 billion) in assets under management as of August 31, 2013. For more information, please visit franklintempleton.ca.
SOURCE: Franklin Templeton Investments Corp.
For further information:
Sarah Kingdon, Corporate Communications, Franklin Templeton Investments, 416.957.6191