Fixed Fee May Reduce MERs

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    Franklin Templeton Investments Corp. has proposed a fixed rate administration fee for some series of its mutual funds and Tapestry Private Portfolios (Participating Series). In conjunction with the administration fee proposal, it 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 to vote on these proposed changes. 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, the firm will pay the operating expenses of each Participating Series other than 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.