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Franklin Templeton Investments Corp. et al.

2023-03-23 | Decision | 41-101 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/franklin-templeton-investments-corp-et-al-21

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 2.1 and 6.1(1). Form 81-101F1 Contents of Simplified Prospectus, Item 8(2) of Part B. National Instrument 41-101 General Prospectus Requirements, ss. 3.1(2), 3B.2 and 19.1(1). Form 41-101F2 Information Required in an Investment Fund Prospectus, Item 17.2. Form 41-101F4 Information Required in an ETF Facts Document, Items 2 and 5 of Part I, and Item 1.3 of Part II. National Instrument 81-102 Investment Funds, ss. 2.3(1)(f), 3.1, 15.1.1, 15.3(2), 15.6(1)(a)(i)(A), 15.6(1)(b), 15.6(1)(d)(i), 15.8(2)(a), 15.8(2)(a.1), 15.8(3)(a), 15.8(3)(a.1), and 19.1(1). National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.1, 2.3, 4.4 and 17.1(1). Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, Items 3.1(1), 3.1(7), 3.1(7.1), 3.1(8), 4.1(1), 4.1(2), 4.2(1), 4.2(2), 4.3(1)(a) and 4.3(1)(b) of Part B, and Items 3(1) and 4 of Part C.


The Securities Commission granted exemptive relief to Franklin Templeton Investments Corp. (the Filer) on behalf of certain mutual funds (the Continuing Funds) from various provisions of National Instruments 81-101, 41-101, 81-102, and 81-106. This relief allows the Continuing Funds to use the historical performance and financial data of corresponding terminating exchange-traded funds (Terminating ETFs) in their sales communications, prospectuses, ETF facts documents, and financial statements.

The key reasons for granting this relief include:

1. The Filer is reorganizing its fund offerings, merging each Terminating ETF into a corresponding Continuing Fund, which will then offer both mutual fund and ETF securities.
2. The ETF Series of the Continuing Funds will be listed on the Toronto Stock Exchange (TSX) under the ticker symbols of the Terminating ETFs, with different CUSIP numbers.
3. The Filer aims to make the mergers seamless for investors, arguing that the historical data of the Terminating ETFs is crucial for investors to make informed decisions.
4. Without the relief, the newly created ETF Series of the Continuing Funds would lack their own historical performance data at the time of the mergers, potentially confusing investors.

The conditions for the relief include:

– Fund Communications must include past performance data of the corresponding Terminating ETFs.
– The simplified prospectus must disclose information based on the corresponding Terminating ETFs until the Continuing Fund has its own data.
– ETF Facts documents must include information based on the corresponding Terminating ETFs, stating the “Date series started” as that of the Terminating ETFs.
– MRFPs and financial statements must include financial data of the Terminating ETFs and disclose the mergers.

The relief is subject to the Continuing Funds preparing their simplified prospectus, ETF Facts, and other communications in accordance with the granted relief. The decision is based on the Filer’s representations and the belief that investors will not be misled by the use of the Terminating ETFs’ data, and instead, will have more complete and accurate information for investment decisions.