Franklin Templeton Investments Corp. and Bissett Canadian Core Bond Trust
National Policy 11-203 – relief granted from section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure for the purposes of the relief requested from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1, and Items 3(1) and 4 of Part C of Form 81-106F1, to permit a mutual fund to include in annual and interim management reports of fund performance the financial highlights and past performance of the fund that are derived from the fund’s annual financial statements that pertain to time periods when the fund was not a reporting issuer.
Applicable Legislative Provisions
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 4.4, 17.1.
Form 81-0106F1 Contents of Annual and Interim Management Report of Fund Performance, Part B, Items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2); Part C, Items 3(1) and 4.
December 18, 2017
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
FRANKLIN TEMPLETON INVESTMENTS CORP.
IN THE MATTER OF
BISSETT CANADIAN CORE BOND TRUST
The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of the Fund for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting series O units the Fund (Series O Units) from:
(a) Section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) for the purposes of relief requested herein from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance (Form 81-106F1); and
(b) Items 3.1(7) and 4.1(1) in respect of the requirement to comply with section 15.3(2) of National Instrument 81-102 Investment Funds (NI 81-102), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1 and Items 3(1) and 4 of Part C of Form 81-106F1 to permit the Fund to include, in its annual and interim management reports of fund performance (MRFPs), past performance data notwithstanding that such performance data relates to a period prior to the Fund offering its securities under a simplified prospectus.
(collectively, the Relief Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this Application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer in each of the provinces of Canada and in the Yukon (together with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Fund is an open-ended mutual fund trust created under the laws of the Province of Ontario on October 5, 2009 (the Inception Date) and governed pursuant to a trust indenture dated July 31, 1996, as amended.
2. The Filer is a corporation amalgamated under the laws of the Province of Ontario having its head office in Toronto, Ontario.
3. The Filer is registered under securities legislation in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland & Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec, Saskatchewan and Yukon as a portfolio manager and as a dealer in the categories of mutual fund dealer and exempt market dealer. The Filer is also registered under securities legislation in Alberta, British Columbia, Manitoba, Newfoundland & Labrador, Nova Scotia, Ontario and Quebec as an investment fund manager. The Filer is the investment fund manager, promoter and portfolio manager of the Fund.
4. Since the Inception Date, Series O Units of the Fund were distributed to investors on a prospectus-exempt basis in accordance with National Instrument 45-106 Prospectus Exemptions (NI 45-106) in the Jurisdictions.
5. The Fund intends to commence distributing its units pursuant to a simplified prospectus and, to that end, filed a preliminary simplified prospectus and annual information form dated September 22, 2017. Upon the issuance of a receipt for the final simplified prospectus and fund facts (the Prospectus) and annual information form of the Fund, the Fund will become a reporting issuer in each of the Jurisdictions, will become subject to the requirements of NI 81-102 and will be renamed Franklin Bissett Canadian Bond Fund. The Fund will also become subject to the requirements of NI 81-106 that apply only to investment funds that are reporting issuers.
6. The Filer and the Fund are not in default of securities legislation in any of the Jurisdictions.
7. Since the Inception Date, as a "mutual fund in Ontario", the Fund has prepared and sent annual and interim financial statements to all holders of its securities in accordance with NI 81-106.
8. Since the Inception Date, the Fund has complied with the investment restrictions and practices contained in NI 81-102, including not using leverage in the management of its portfolio.
9. The Fund will be managed substantially similarly after it becomes a reporting issuer as it was prior to becoming a reporting issuer. As a result of the Fund becoming a reporting issuer:
(a) the Fund's investment objectives will not change, other than to provide additional detail as required by National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101);
(b) Series O unitholders of the Fund will pay a negotiated management and administration fee that is less than the negotiated management fee and fund expenses they were paying previously; and
(c) the day-to-day administration of the Fund in respect of Series O Units will not change other than to comply with the additional regulatory requirements associated with being a reporting issuer (none of which impact portfolio management of the Fund) and to provide additional features that are available to investors of mutual funds managed by the Filer, as described in the Prospectus.
10. As a reporting issuer, the Fund will be required under NI 81-106 to prepare and send MRFPs.
11. Without the Relief Sought, the MRFP of Series O Units of the Fund cannot include financial highlights and performance data that relates to a period prior to its becoming a reporting issuer.
12. The Filer also proposes to present the performance data of Series O Units of the Fund for the time period since the Inception Date in sales communications and fund facts. The Filer has filed a separate application for exemptive relief from certain provisions of NI 81-102 and Form 81-101F3 Contents of Fund Facts Document to enable the Fund to include, in sales communications and fund facts, performance data of the Series O Units of the Fund since the Inception Date (the NI 81-102 and NI 81-101 Relief).
13. The performance data and other financial data of the Fund for the time period before it became a reporting issuer is significant and meaningful information for existing and prospective investors of Series O Units of the Fund.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Relief Sought is granted provided that:
(a) any MRFP that includes performance data of Series O Units of the Fund relating to a period prior to when the Fund was a reporting issuer discloses:
(i) that the Fund was not a reporting issuer during such period;
(ii) that the financial statements of the Fund for such period are posted on the Fund’s website and are available to investors upon request; and
(iii) performance data of Series O Units of the Fund as applicable for the 10, 5, 3 and one year periods as well as since its inception until the since inception data includes a 10 year period;
(b) the Filer posts the financial statements of the Fund for the past 10 years, or since the Inception Date, whichever period is lesser, on the Fund’s website and makes those financial statements available to investors upon request; and
(c) the Fund prepares sales communications and fund facts in accordance with the NI 81-102 and NI 81-101 Relief.
Investment Funds and Structured Products Branch
Ontario Securities Commission