[Federal Register Volume 73, Number 66 (Friday, April 4, 2008)]
[Notices]
[Pages 18585-18586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6966]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28229; 812-13500]


Franklin California Tax-Free Income Fund, et al.; Notice of 
Application

March 31, 2008.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from rule 12d1-2(a) 
under the Act.

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Summary of Application: Applicants request an order to permit funds of 
funds relying on rule 12d1-2 under the Act to invest in certain 
financial instruments.

Applicants: Franklin California Tax-Free Income Fund, Franklin 
California Tax-Free Trust, Franklin Capital Growth Fund, Franklin 
Custodian Funds, Franklin Federal Tax-Free Income Fund, Franklin 
Floating Rate Master Trust, Franklin Global Trust, Franklin Gold And 
Precious Metals Fund, Franklin High Income Trust, Franklin Investors 
Securities Trust, Franklin Managed Trust, Franklin Municipal Securities 
Trust, Franklin Mutual Recovery Fund, Franklin Mutual Series Fund Inc., 
(``FMSF''), Franklin New York Tax-Free Income Fund, Franklin New York 
Tax-Free Trust, Franklin Real Estate Securities Trust, Franklin 
Strategic Mortgage Portfolio, Franklin Strategic Series, Franklin Tax-
Free Trust, Franklin Templeton Global Trust, Franklin Templeton 
International Trust, Franklin Templeton Variable Insurance Products 
Trust, Franklin Value Investors Trust, Institutional Fiduciary Trust, 
Templeton China World Fund, Templeton Developing Markets Trust, 
Templeton Funds, Templeton Global Investment Trust, Templeton Global 
Opportunities Trust, Templeton Global Smaller Companies Fund, Templeton 
Growth Fund, Inc. (``TGF''), Templeton Income Trust, Templeton 
Institutional Funds, Inc. (''TIFI'')(collectively, ``Funds''), Franklin 
Advisers, Inc., Franklin Investment Advisory Services, LLC, Franklin 
Advisory Services, LLC, Fiduciary International, Inc., Franklin 
Templeton Investments Corp., Franklin Templeton Institutional, LLC, 
Franklin Templeton Investment Management Limited, Franklin Mutual 
Advisers, LLC, Templeton Investment Counsel, LLC, Templeton Global 
Advisors Limited, Templeton Asset Management Ltd. (collectively, 
``Managers'') and Franklin/Templeton Distributors, Inc. (``FTDI'').

Filing Date: The application was filed on February 22, 2008.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on April 25, 2008 and should be accompanied by proof of service on 
applicants, in the form of an affidavit or, for lawyers, a certificate 
of service. Hearing requests should state the nature of the writer's 
interest, the reason for the request, and the issues contested. Persons 
who wish to be notified of a hearing may request notification by 
writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 100 F Street, NE., Washington, DC 
20549-1090; Applicants, One Franklin Parkway, San Mateo, California 
94403-1906.

FOR FURTHER INFORMATION CONTACT:  Lewis Reich, Senior Counsel, at (202) 
551-6919, or Nadya B. Roytblat, Assistant Director, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 
20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. Each Fund is organized as a Delaware statutory trust or a 
Massachusetts business trust (except FMSF, TGF and TIFI, which are 
Maryland corporations) and is registered under the Act as an open-end

[[Page 18586]]

management investment company. Each Manager is registered as an 
investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''), is a direct or indirect wholly owned subsidiary of 
Franklin Resources, Inc., and serves as the investment manager for one 
or more Funds and directly manages their assets. FTDI, a wholly owned 
subsidiary of Franklin Resources, Inc, serves as principal underwriter 
of the Funds' shares, and is registered as a broker-dealer under the 
Securities Exchange Act of 1934 (``Exchange Act''). Applicants request 
an exemption to the extent necessary to permit the Funds and their 
existing and future series and any other existing or future registered 
open-end management investment companies and their series that are in 
the same group of investment companies, as defined in section 
12(d)(1)(G) of the Act, as the Funds (included in the term ``Funds'') 
that may invest in other Funds (``Underlying Funds'') in reliance on 
rule 12d1-2 under the Act to also invest in other financial instruments 
that may not be securities within the meaning of section 2(a)(36) of 
the Act (``Other Investments'') consistent with their investment 
objectives, policies, strategies and limitations.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more than 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered 
open-end investment company may sell its securities to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's voting stock, or cause more than 
10% of the acquired company's voting stock to be owned by investment 
companies.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (i) The acquiring company and acquired company 
are part of the same group of investment companies; (ii) the acquiring 
company holds only securities of acquired companies that are part of 
the same group of investment companies, government securities, and 
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Exchange Act or by the Commission; and (iv) the acquired 
company has a policy that prohibits it from acquiring securities of 
registered open-end management investment companies or registered unit 
investment trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
    3. Rule 12d1-2 under the Act permits a registered open-end 
investment company or a registered unit investment trust that relies on 
section 12(d)(1)(G) of the Act to acquire, in addition to securities 
issued by another registered investment company in the same group of 
investment companies, government securities, and short-term paper: (1) 
Securities issued by an investment company that is not in the same 
group of investment companies, when the acquisition is in reliance on 
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other 
than securities issued by an investment company); and (3) securities 
issued by a money market fund, when the investment is in reliance on 
rule 12d1-1 under the Act. For the purposes of rule 12d1-2, 
``securities'' means any security as defined in section 2(a)(36) of the 
Act.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction from any provision of the Act, or 
from any rule under the Act, if such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policies and 
provisions of the Act.
    5. Applicants state that the proposed arrangement would comply with 
the provisions of rule 12d1-2 under the Act, but for the fact that the 
Funds may invest a portion of their assets in Other Investments. 
Applicants request an order under section 6(c) of the Act for an 
exemption from rule 12d1-2(a) to allow the Funds to invest in Other 
Investments. Applicants assert that permitting the Funds to invest in 
Other Investments as described in the application would not raise any 
of the concerns that the requirements of section 12(d)(1) were designed 
to address.

Applicants' Conditions

    Applicants agree that the order granting the requested relief will 
be subject to the following conditions:
    1. Prior to approving any investment advisory agreement under 
section 15 of the Act, the board of trustees of the appropriate Fund, 
including a majority of the trustees who are not ``interested persons'' 
as defined in section 2(a)(19) of the Act, will find that the advisory 
fees, if any, charged under the agreement are based on services 
provided that are in addition to, rather than duplicative of, services 
provided pursuant to the advisory agreement of any Underlying Fund or 
any other registered investment company that is not in the same group 
of investment companies as the Fund, in which the Fund may invest. Such 
findings, and the basis upon which the findings are made, will be 
recorded fully in the minute books of the appropriate Fund.
    2. Applicants will comply with all provisions of rule 12d1-2 under 
the Act, except for paragraph (a)(2), to the extent that it restricts 
any Fund from investing in Other Investments as described in the 
application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-6966 Filed 4-3-08; 8:45 am]
BILLING CODE 8011-01-P