printmgr file - Templeton

Franklin Templeton Investments Funds
NOTES TO FINANCIAL STATEMENTS For the periods ended December 31, 2012 and 2011 (Continued)
5. Sales Charges
The sales charge incurred by unitholders of Series A and I units and T and T USD (collectively “Series T”) units is dependent on the purchase
option selected at the time of purchase.
Under the front-load sales option, a negotiable fee of up to 6% of the purchase price is payable by the Series A and Series T investors to
their dealers. Series I unitholders negotiate a fee of up to 2% with their dealers. Under the low-load option, the Series A and Series T
investors will pay a redemption fee to the Manager if they redeem their units within three years of purchasing them. This redemption fee is
based on a declining percentage of the original cost of the investor’s units and how long the investor has held them, ranging from 3% to
0%. Up to 10% of an investor’s investment in Series A and T units may be redeemed in each calendar year without a redemption charge.
Under the deferred sales charge option, the Series A and Series T investors will pay a redemption fee to the Manager if they redeem their
units within six years of purchasing them. This redemption fee is based on a declining percentage, ranging from 6% to 0%, of the original
cost of the investor’s units and how long the investor has held them. Up to 10% of an investor’s investment in Series A and Series T units
may be redeemed in each calendar year without a redemption charge.
No sales charges are paid in respect of the sale of Series F, O, R and S units of a Fund.
6. Operating Expenses
The operating expenses of the Funds, which include, but are not limited to, legal, audit, custodial, registrar, fund administration and the cost of
financial statements and other reports, are the direct responsibility of the Funds. Brokerage commissions and taxes paid by the Funds are not
included in operating expenses, but are borne by the Funds, as applicable, and are reflected separately in the Statements of Operations. The
Manager pays the operating expenses on behalf of the Funds and is then reimbursed by the Funds. The Manager may waive or absorb operating
expenses of the Funds. The decision to do so is reviewed regularly and determined at the sole discretion of the Manager.
The portion of the operating expenses allocated to Series O and R investors may be absorbed by the Manager as part of its agreement with
the investors in those series.
Operating expenses for Series F units of Templeton EAFE Developed Markets Fund are capped at 1.00% of the average net asset value of
the Fund on an annual basis. For Series F units of all Bissett Funds in existence prior to October 2, 2000, operating expenses are capped
at 0.50% of the average net asset value of such Fund on an annual basis. In addition, the Manager pays all operating expenses for all series
of Bissett Canadian Short Term Bond Fund, Bissett Corporate Bond Fund, Franklin Templeton Money Market Fund, Franklin Templeton
Treasury Bill Fund and Franklin Templeton U.S. Money Market Fund.
7. Other Expenses
The principal items in other expenses are fund administration expenses (including pricing fees, technology and overhead costs) charged by
the Manager.
8. Other Assets
The principal items in other assets are recoverable expenses from the Manager and prepaid registration fees.
9. Other Liabilities
The principal items in other liabilities are amounts owing to the Manager relating to expenses paid for or incurred on behalf of the Funds.
10. Financial Risk Management
Risks arising from holding financial instruments are inherent in the Funds’ activities and are managed through a process of ongoing measurement
and monitoring. These financial risks may include, among others, market risk (including currency risk, interest rate risk and other price
risk), liquidity risk and credit risk. These risks are moderated through careful selection of securities and other financial instruments within the
Funds’ investment guidelines by the respective portfolio advisors. The risks are measured using a method that reflects the expected impact on
the results and net assets attributable to unitholders of the Funds from reasonably possible changes in the relevant risk variables. Information
about these risk exposures at the reporting date and risk management policies employed are disclosed in Notes 10 (a) to (e).
Franklin Templeton Investments Funds 227