Franklin Templeton Investments Corp. and Bissett Canadian Core Bond Trust

Headnote

National Policy 11-203 – Relief granted from 15.3(2), 15.6(1)(a)(i) and 15.6(1)(d) of National Instrument 81-102 Investment Funds to permit a mutual fund, that has not distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months, to include in their sales communications performance data for the period when the fund was not a reporting issuer – relief also granted from section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure for the purposes of the relief requested from Item 5 of Part I of Form 81-101F3 Contents of Fund Facts Document, to permit the mutual fund to include in its fund facts for series O, the past performance data for the period when the fund was not a reporting issuer.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 15.3(2), 15.6(1)(a)(i), 15.6(1)(d), 19.1.

National Instrument 81-101 Investment Fund Prospectus Disclosure, s. 2.1.

Form 81-101F3 Contents of Fund Facts Document, Part I, Item 5.

December 18, 2017

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

FRANKLIN TEMPLETON INVESTMENTS CORP.

(the Filer)

AND

IN THE MATTER OF

BISSETT CANADIAN CORE BOND TRUST

(the Fund)

DECISION

Background

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 of the Fund (Series O Units) from:

(a)           Sections 15.3(2), 15.6(1)(a)(i) and 15.6(1)(d) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the Fund to include, with respect to its Series O Units, performance data in sales communications notwithstanding that

(i)            the performance data will relate to a period prior to the Fund offering its securities under a simplified prospectus; and

(ii)           the Fund has not distributed its securities under a simplified prospectus for 12 consecutive months,

(b)           Section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) for the purposes of the relief requested herein from Form 81-101F3 Contents of Fund Facts Document (Form 81-101F3), and

(c)           Items 5(2), 5(3) and 5(4), and Instructions (1) and (5) of Part I of Form 81-101F3 in respect of the requirement to comply with sections 15.3(2), 15.6(1)(a)(i) and 15.6(1)(d) of NI 81-102 to permit the Fund to include in its fund facts the past performance data of Series O Units of the Fund notwithstanding that:

(i)            such performance data relates to a period prior to the Fund offering its securities under a simplified prospectus; and

(ii)           the Fund has not distributed its securities under a simplified prospectus for 12 consecutive months,

(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).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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 and fund facts dated September 22, 2017. Upon the issuance of a receipt for the final simplified prospectus (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 National Instrument 81-106 Investment Fund Continuous Disclosure (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 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.          The Filer proposes to present the performance data of Series O Units of the Fund for the time period since its Inception Date in sales communications and fund facts.

11.          Without the Relief Sought, the sales communications pertaining to the Fund cannot include performance data that relates to a period prior to its becoming a reporting issuer.

12.          Without the Relief Sought, sales communications pertaining to the Fund would not be permitted to include performance data until the Fund has distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months.

13.          As a reporting issuer the Fund will be required under NI 81-101 to prepare and file fund facts.

14.          The Filer proposes to include in the fund facts for Series O Units, past performance data in the chart required by items 5(2), 5(3) and 5(4) under the sub-headings "Year-by-year returns", "Best and worst 3-month returns" and "Average return", respectively, related to periods prior to the Fund becoming a reporting issuer in a Jurisdiction. Without the Relief Sought, the fund facts of the Fund cannot include performance data of the Fund that relate to a period prior to its becoming a reporting issuer.

15.          As a reporting issuer, the Fund will be required under NI 81-106 to prepare and send annual and interim management reports of fund performance (individually, an MRFP and collectively, the MRFPs).

16.          The Filer has filed a separate application for exemptive relief from certain provisions of NI 81-106 (the NI 81-106 Relief) to enable the Fund to include in its MRFPs the performance data of the Series O Units of the Fund since the Inception Date.

17.          The performance 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.

Decision

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 sales communication and any fund facts that contains 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; and

(ii)           performance data of Series O Units of the Fund as applicable for 10, 5, 3 and one year periods as well as since its inception, until the since inception data includes a 10-year period; and

(b)           the Fund prepares its MRFPs in accordance with the NI 81-106 Relief.

“Vera Nunes”

Manager

Investment Funds and Structured Products Branch

Ontario Securities Commission