Simplified Prospectus

Transcription

1 Simplified Prospectus MAY 29, 2014 Templeton Templeton Asian Growth Fund (Series O units) Templeton Asian Growth Corporate Class (Series A, F, I and O shares) Templeton BRIC Corporate Class (Series A, F, I and O shares) Templeton Canadian Balanced Fund (Series A, F, O and T units) Templeton Canadian Stock Fund Templeton Canadian Stock Corporate Class Templeton EAFE Developed Markets Fund Templeton Emerging Markets Fund (Series A, F, I and O units) Templeton Emerging Markets Corporate Class Templeton Frontier Markets Fund (Series O units) Templeton Frontier Markets Corporate Class Templeton Global Balanced Fund (Series A, F, O, S, T and T-USD units) Templeton Global Bond Fund (Series A, F, I and O units) Templeton Global Bond Fund (Hedged) (Series A, F, I and O units) Templeton Global Bond Hedged Yield Class (Series A, F, I, O, R, S and T shares) Templeton Global Smaller Companies Fund (Series A, F, I and O units) Templeton Global Smaller Companies Corporate Class (Series A, F, I and O shares) Templeton Growth Fund, Ltd. (Series A, A (Hedged), F, I and O shares) Templeton Growth Corporate Class (Series A, F, I and O shares) Templeton International Stock Fund (Series A, F, I, O and T units) Templeton International Stock Corporate Class (Series A, F, I, O and T shares) Franklin Franklin Flex Cap Growth Fund Franklin Flex Cap Growth Corporate Class Franklin High Income Fund (Series A, F, I and O units) Franklin Income Fund (Series A, F, I, O, R, S, T and T-USD units) Franklin Income Corporate Class (Series A, F, I, O, R, S, T and T-USD shares) Franklin Income Hedged Corporate Class (Series A, F, I, O, R, S and T shares) Franklin Strategic Income Fund (Series A, F, I and O units) Franklin U.S. Core Equity Fund Franklin U.S. Rising Dividends Fund (Series A, F, O and T units) Franklin U.S. Rising Dividends Corporate Class (Series A, F, O and T shares) Franklin U.S. Rising Dividends Hedged Corporate Class (Series A, F, O and T shares) Franklin World Growth Fund (Series A, F, O and T units) Franklin World Growth Corporate Class (Series A, F, O and T shares) Franklin Bissett Franklin Bissett All Canadian Focus Fund (Series A, F, I and O units) Franklin Bissett All Canadian Focus Corporate Class (Series A, F, I and O shares) Franklin Bissett Bond Fund (Series A, F, I and O units) Franklin Bissett Bond Corporate Class (Series A, F, I and O shares) Franklin Bissett Bond Yield Class (Series A, F, I and O shares) Franklin Bissett Canadian All Cap Balanced Fund (Series A, F, I, O and T units) Franklin Bissett Canadian All Cap Balanced Corporate Class (Series A, F, I, O and T shares) Franklin Bissett Canadian Balanced Fund (Series A, F, I, O and T units) Franklin Bissett Canadian Balanced Corporate Class (Series A, F, O and T shares) Franklin Bissett Canadian Dividend Fund Franklin Bissett Canadian Dividend Corporate Class (Series A, F, I, O, R, S and T shares) Franklin Bissett Canadian Equity Fund (Series A, F, I and O units) Franklin Bissett Canadian Equity Corporate Class (Series A, F, I, O, R and T shares) Franklin Bissett Canadian High Dividend Fund (Series A, F, I and O units) Franklin Bissett Canadian High Dividend Corporate Class (Series A, F, I, O and T shares) Franklin Bissett Canadian Short Term Bond Fund Franklin Bissett Canadian Short Term Bond Yield Class (Series A, F, I and O shares) Franklin Bissett Corporate Bond Fund (Series A, F, I and O units) Franklin Bissett Corporate Bond Yield Class (Series A, F, I, O and T shares) Franklin Bissett Dividend Income Fund (Series A, F, I, O and T units) Franklin Bissett Dividend Income Corporate Class (Series A, F, I, O and T shares) Franklin Bissett Energy Corporate Class Franklin Bissett Microcap Fund Franklin Bissett Money Market Fund (Series A, F, I and O units) Franklin Bissett Money Market Corporate Class (Series A, F, I and O shares) Franklin Bissett Money Market Yield Class (Series A, F, I and O shares) Franklin Bissett Small Cap Fund Franklin Bissett Small Cap Corporate Class Franklin Bissett Strategic Income Fund (Series A, F, I and O units) Franklin Bissett Strategic Income Corporate Class (Series A, F, I, O, R, S and T shares) Franklin Bissett Treasury Bill Fund (Series A, F, I and O units) Franklin Bissett U.S. Focus Fund (Series O units) Franklin Bissett U.S. Focus Corporate Class Franklin Mutual Series Franklin Mutual U.S. Shares Fund (formerly Franklin Mutual Beacon Fund) (Series A, F, I, O and T units) Franklin Mutual U.S. Shares Corporate Class (formerly Franklin Mutual Beacon Corporate Class) (Series A, F, I, O and T shares) Franklin Mutual Global Discovery Fund (Series A, F, I, O, T and T-USD units) Franklin Mutual Global Discovery Corporate Class (Series A, F, I, O, T and T-USD shares) Franklin Templeton Solutions Franklin Quotential Balanced Growth Portfolio (Series A, F, I, O, R, S and T units) Franklin Quotential Balanced Growth Corporate Class Portfolio (Series A, F, I, O, R, S and T shares) Franklin Quotential Balanced Income Portfolio (Series A, F, I, O, R, S and T units) Franklin Quotential Balanced Income Corporate Class Portfolio (Series A, F, I, O, R, S and T shares) Franklin Quotential Diversified Equity Portfolio (formerly Franklin Quotential Global Growth Portfolio) (Series A, F, I, O, R, T and T-USD units) Franklin Quotential Diversified Equity Corporate Class Portfolio (formerly Franklin Quotential Global Growth Corporate Class Portfolio) (Series A, F, I, O, R, S, T and T-USD shares) Franklin Quotential Diversified Income Portfolio (Series A, F, I, O, S and T units) Franklin Quotential Diversified Income Corporate Class Portfolio (Series A, F, I, O, R, S, T and T-USD shares) Franklin Quotential Growth Portfolio (Series A, F, I, O, R and T units) Franklin Quotential Growth Corporate Class Portfolio (Series A, F, I, O, S and T shares) Franklin Templeton Canadian Core Equity Fund (Series O units) Franklin Templeton Canadian Large Cap Fund (Series O units) Offering Series A, F and O units or shares, except where indicated. No securities regulatory authority has expressed an opinion about these units and shares. It is an offence to claim otherwise. The Funds and the securities offered under this prospectus are not registered with the United States Securities and Exchange Commission and they are sold in the United States only in reliance on exemptions from registration.

2 Table of contents 1 INTRODUCTION 2 WHAT IS A MUTUAL FUND AND WHAT ARE THE RISKS OF INVESTING IN A MUTUAL FUND? 2 What is a mutual fund? 2 The value of a mutual fund 2 The risks of investing in mutual funds 2 Different kinds of mutual funds have different kinds of risks 3 Equity risk 3 Foreign investment risk 3 Interest rate risk 3 Emerging markets risk 3 Smaller companies risk 3 Liquidity risk 3 Low-rated security risk 4 Regulatory risk 4 Credit risk 4 Reinvestment risk 4 Concentration risk 4 Capital depletion risk 4 Derivative risk 4 Repurchase/reverse repurchase agreements risk 4 Securities lending risk 5 Short selling risk 5 Underlying fund risk 5 Asset allocation risk 5 Portfolio management risk 5 Series risk 5 Corporate class fund risk 5 Large investor risk 5 Specialization risk 5 Tracking risk 6 Asset-backed and mortgage-backed securities risk 6 Tax risk 7 ORGANIZATION AND MANAGEMENT OF THE FRANKLIN TEMPLETON INVESTMENTS FUNDS AND PORTFOLIOS 8 Fund on Fund Structures 9 PURCHASES, SWITCHES AND REDEMPTIONS 9 Classes and Series 11 The price of a Fund or Portfolio 12 Opening a Franklin Templeton Investments Account 12 How to buy, switch or redeem Funds and Portfolios 12 Buying Funds and Portfolios 13 How to Switch to other Funds or Portfolios 13 How to Switch to another Series 14 Switch fees 14 Processing your switch order 14 Redeeming Funds or Portfolios 16 General information on processing purchases, switches and redemptions 17 OPTIONAL SERVICES 17 Systematic investment program 17 Systematic withdrawal program (SWP) 17 Automatic rebalancing service 18 Registered plans 19 FEES AND EXPENSES 19 Fees and expenses payable by the Fund or Portfolio 27 Fees and expenses payable directly by you 28 Impact of sales charges 29 DEALER COMPENSATION 29 Sales commissions 29 Trailing commissions 31 Inter-company service fee 31 Marketing support programs 32 DEALER COMPENSATION FROM MANAGEMENT FEES 32 INCOME TAX CONSIDERATIONS FOR INVESTORS 32 For Funds or Portfolios held in a registered plan 33 For Funds or Portfolios not held in a registered plan 34 Dispositions and Switches of Funds or Portfolios not held in a registered plan 35 ADDITIONAL INFORMATION 35 Notice with respect to the Managed Yield Class Funds 35 WHAT ARE YOUR LEGAL RIGHTS? 36 SPECIFIC INFORMATION ABOUT EACH OF THE MUTUAL FUNDS DESCRIBED IN THIS DOCUMENT 36 Introduction 36 Fund details 36 What does the fund invest in? 36 Investments in Derivatives 37 Securities lending, repurchase and reverse transactions 37 Short selling 37 Portfolio turnover rate greater than 70% 37 What are the risks of investing in the fund? 37 Who should invest in this Fund? 38 Investment risk classification methodology 38 Distribution policy 38 Fund expenses indirectly borne by investors TEMPLETON 40 Templeton Asian Growth Fund 42 Templeton Asian Growth Corporate Class 43 Templeton BRIC Corporate Class 44 Templeton Canadian Balanced Fund 45 Templeton Canadian Stock Fund 46 Templeton Canadian Stock Corporate Class 47 Templeton EAFE Developed Markets Fund 48 Templeton Emerging Markets Fund 49 Templeton Emerging Markets Corporate Class 50 Templeton Frontier Markets Fund 52 Templeton Frontier Markets Corporate Class 53 Templeton Global Balanced Fund 55 Templeton Global Bond Fund 56 Templeton Global Bond Fund (Hedged) 58 Templeton Global Bond Hedged Yield Class 60 Templeton Global Smaller Companies Fund 62 Templeton Global Smaller Companies Corporate Class 63 Templeton Growth Fund, Ltd. 65 Templeton Growth Corporate Class 66 Templeton International Stock Fund 68 Templeton International Stock Corporate Class FRANKLIN 71 Franklin Flex Cap Growth Fund 72 Franklin Flex Cap Growth Corporate Class 73 Franklin High Income Fund 75 Franklin Income Fund 77 Franklin Income Corporate Class 78 Franklin Income Hedged Corporate Class 80 Franklin Strategic Income Fund 82 Franklin U.S. Core Equity Fund 83 Franklin U.S. Rising Dividends Fund 85 Franklin U.S. Rising Dividends Corporate Class 86 Franklin U.S. Rising Dividends Hedged Corporate Class 87 Franklin World Growth Fund 89 Franklin World Growth Corporate Class FRANKLIN BISSETT 91 Franklin Bissett All Canadian Focus Fund 92 Franklin Bissett All Canadian Focus Corporate Class 93 Franklin Bissett Bond Fund 95 Franklin Bissett Bond Corporate Class 96 Franklin Bissett Bond Yield Class 98 Franklin Bissett Canadian All Cap Balanced Fund 100 Franklin Bissett Canadian All Cap Balanced Corporate Class 101 Franklin Bissett Canadian Balanced Fund 102 Franklin Bissett Canadian Balanced Corporate Class 103 Franklin Bissett Canadian Dividend Fund 104 Franklin Bissett Canadian Dividend Corporate Class 105 Franklin Bissett Canadian Equity Fund 106 Franklin Bissett Canadian Equity Corporate Class 107 Franklin Bissett Canadian High Dividend Fund 108 Franklin Bissett Canadian High Dividend Corporate Class 109 Franklin Bissett Canadian Short Term Bond Fund 111 Franklin Bissett Canadian Short Term Bond Yield Class 113 Franklin Bissett Corporate Bond Fund 115 Franklin Bissett Corporate Bond Yield Class 117 Franklin Bissett Dividend Income Fund 118 Franklin Bissett Dividend Income Corporate Class 119 Franklin Bissett Energy Corporate Class 120 Franklin Bissett Microcap Fund 121 Franklin Bissett Money Market Fund 122 Franklin Bissett Money Market Corporate Class 123 Franklin Bissett Money Market Yield Class 125 Frankin Bissett Small Cap Fund 126 Franklin Bissett Small Cap Corporate Class 127 Franklin Bissett Strategic Income Fund 129 Franklin Bissett Strategic Income Corporate Class 131 Franklin Bissett Treasury Bill Fund 132 Franklin Bissett U.S. Focus Fund 133 Franklin Bissett U.S. Focus Corporate Class FRANKLIN MUTUAL SERIES 135 Franklin Mutual U.S. Shares Fund (formerly Franklin Mutual Beacon Fund) 137 Franklin Mutual U.S. Shares Corporate Class (formerly Franklin Mutual Beacon Corporate Class) 138 Franklin Mutual Global Discovery Fund 140 Franklin Mutual Global Discovery Corporate Class FRANKLIN TEMPLETON SOLUTIONS 142 Franklin Quotential Balanced Growth Portfolio 144 Franklin Quotential Balanced Growth Corporate Class Portfolio 146 Franklin Quotential Balanced Income Portfolio 148 Franklin Quotential Balanced Income Corporate Class Portfolio 150 Franklin Quotential Diversified Equity Portfolio (formerly Franklin Quotential Global Growth Portfolio) 152 Franklin Quotential Diversified Equity Corporate Class Portfolio (formerly Franklin Quotential Global Growth Corporate Class Portfolio) 154 Franklin Quotential Diversified Income Portfolio 156 Franklin Quotential Diversified Income Corporate Class Portfolio 158 Franklin Quotential Growth Portfolio 160 Franklin Quotential Growth Corporate Class Portfolio 162 Franklin Templeton Canadian Core Equity Fund 163 Franklin Templeton Canadian Large Cap Fund 164 GLOSSARY 164 Book value 164 Capping a Fund or Portfolio or series of a Fund or Portfolio 164 Class 164 Closing a Fund or Portfolio or series of a Fund or Portfolio 164 Corporate Class Funds 165 Deferred sales charge option 165 Dealers 165 Equities, stocks, or shares 165 Fixed income securities 165 Front-load option 165 Low-load option 165 Managed Yield Class Funds 165 Management expense ratio (MER) 165 Money market securities 165 Portfolio turnover rate 166 Franklin Quotential Portfolios or Portfolios 166 Series 166 Term 166 Underlying Funds to Franklin Quotential Portfolios 166 Underlying Funds to Corporate Class Funds 166 Units

3 Introduction In this document, we, us, Manager and Franklin Templeton Investments each refers to Franklin Templeton Investments Corp., the manager of the Franklin Templeton Investments Funds and Franklin Quotential Portfolios (which we refer to generally as the Funds and Portfolios ), and you refers to anyone who invests or is interested in investing in the Funds and Portfolios. This prospectus contains selected important information to help you make informed decisions about investing in the Funds and Portfolios and to help you understand your rights as a mutual fund investor. LOOK FOR THESE BOXES To make this document and our Funds and Portfolios even easier to understand, we have included educational material about the Funds and Portfolios. When you see a box like this one, look for supplementary details about the information in the main text. This document is divided into two parts. The first part, from page 1 to page 35, contains general information that applies to all Funds and Portfolios. The second part, from page 36 to page 163, provides specific information about each Fund and Portfolio described in this document. Additional information about each Fund and Portfolio is available in the following documents: the annual information form ( AIF ); the most recently filed Fund Facts; the most recently filed annual financial statements; any interim financial statements filed after the annual financial statements; the most recently filed annual management report of fund performance; and any interim management report of fund performance filed after that annual management report of fund performance. These documents are incorporated by reference into this prospectus, which means that they legally form part of this document, just as if they were printed as a part of this document. You can request a free copy of any or all of these documents: from your Dealer by calling toll-free by contacting us at [email protected] These documents and other information about the Funds and Portfolios are also available on our website at or at THE PROSPECTUS AND THE AIF The prospectus provides you with information you will need to make an informed investment decision. The AIF provides additional information for investors, such as details about the manager of the Funds and Portfolios, the operations of the Funds and Portfolios, and the directors, officers and trustee of the Funds and Portfolios. Like our prospectus, the AIF is written in plain language. If you would like a copy, let us know. Franklin Templeton investments 1

4 What is a mutual fund and what are the risks of investing in a mutual fund? The Funds and the Portfolios described in this prospectus are all mutual funds. What is a mutual fund? A mutual fund is a pool of money contributed by people with similar investment objectives. A fund is managed by investment professionals who select the securities that are held by the fund. Investors in a fund share the fund s income, expenses, and any gains and losses the fund makes on its investments in proportion to the units they own. By owning units of a mutual fund, investors can have the kind of diversification and professional investment management that is normally only available to institutional investors and wealthy individuals. The value of a mutual fund The value of a mutual fund is its net asset value (NAV). We calculate the NAV of each series of each Fund and Portfolio. The NAV of each series is determined by taking the series proportionate share of all of the assets of the Fund or the Portfolio (the cash and securities in its portfolio), subtracting the series liabilities and the series proportionate share of common liabilities, and dividing by the total number of units of that series that are outstanding. The risks of investing in mutual funds Mutual funds own different types of investments, depending on their investment objectives. The value of the investments a mutual fund owns will vary from day to day, reflecting changes in interest rates, economic conditions, and market and company news. As a result, the value of a mutual fund s units may go up and down, and the value of your investment in a mutual fund may be more or less when you redeem it than when you purchased it. The full amount of your investment in any Fund or Portfolio is not guaranteed. Unlike bank accounts or GICs, mutual fund units and shares are not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer. In certain exceptional circumstances, a mutual fund may suspend redemptions. We describe these circumstances on page 14 under Redeeming Funds or Portfolios. Different kinds of mutual funds have different kinds of risks A mutual fund may own securities of different types, or from different asset classes equities, bonds, cash depending on the fund s investment objectives. For example, a fund whose objective is long-term capital gain will likely invest mostly in equities. A fund whose main objective is to preserve capital in the short term will likely have most of its holdings in money market securities. Different investments have different types of investment risk. Mutual funds also have different kinds of risk, depending on the securities they own. Below is a summary of the various types of investment risk that may be applicable to the Fund or the Portfolio that you decide to purchase. It is important to realize that the Corporate Class Funds (other than Templeton BRIC Corporate Class, Franklin Bissett Energy Corporate Class and the Managed Yield Class Funds), Franklin Bissett Canadian Balanced Fund, Franklin Bissett Strategic Income Fund and the Portfolios (collectively, the Top Funds ) are subject to all the same risks applicable to any of the Funds held or tracked by the Top Funds. The Fund and Portfolio descriptions will tell you which specific risks apply to each Fund or Portfolio. 2 Franklin Templeton investments

5 What is a mutual fund and what are the risks of investing in a mutual fund? We describe the most common risks associated with all of the Funds and Portfolios first. Risks that are specific to fewer Funds or Portfolios, or that affect only a small portion of investments held within a Fund or Portfolio, are described later. EQUITY RISK The value of Funds that invest in equity securities, also called stocks or shares, will be affected by changes in the market price of those securities. The value of Top Funds, whose underlying funds invest in equity securities, will also be affected. The price of a share is influenced by the outlook for the company that issued it and by general economic, industry and market trends. When the economy is strong, the outlook for many companies will be good, and share prices will generally rise. So will the value of mutual funds that own these shares. On the other hand, share prices usually decline with a general economic or industry downturn. FOREIGN INVESTMENT RISK Includes: Foreign equity risk The value of foreign securities may be influenced by the policies of foreign governments and by political, economic or social instability. There may be less information about foreign companies than Canadian firms and there may be lower standards of government supervision and regulation in foreign financial markets. A Fund or Portfolio that holds these securities may have difficulty enforcing legal rights in jurisdictions outside Canada. Foreign currency risk The value of securities issued in foreign currencies, or of securities that pay income in foreign currencies, is affected by changes in the value of the Canadian dollar relative to those currencies. As a result, currency fluctuations may indirectly affect the value of a Fund s investments and, in turn, may also adversely affect the value of Fund securities held by an investor. For example, if the U.S. dollar rises relative to the Canadian dollar, U.S. shares will be worth more in Canadian dollars. On the other hand, if the U.S. dollar falls, U.S. shares will be worth less in Canadian dollars. Funds or series whose strategy includes currency hedging will seek to minimize this risk. To the extent that a Fund does not hedge its foreign currency risk, the value of that Fund s assets and income could be adversely affected by currency exchange rate movements. Foreign currency hedging risk Certain Funds will invest in derivatives, such as forward contracts, to attempt to eliminate the effect of changes in exchange rates, however there is no guarantee that attempts to hedge currency risk will be successful and no hedging strategy can eliminate currency risk entirely. There may be an imperfect historical correlation between the behavior of the derivative instrument and the currency being hedged. Any historical correlation may not continue for the period during which the hedge is in place. In addition, the inability to close out derivative positions could prevent the Fund from investing in derivatives to effectively hedge its currency exposure. Should a hedging strategy be incomplete or unsuccessful, the value of that Fund s assets and income can remain vulnerable to fluctuations in currency exchange rates. There may be circumstances in which a hedging transaction may reduce currency gains that would otherwise arise in the valuation of the relevant Fund. The gains or losses on and the costs of such hedging transactions will accrue solely to the relevant series of the Funds. INTEREST RATE RISK The interest rate on a bond is set when it is issued. When interest rates fall, the price of existing bonds will rise because existing bonds pay higher rates than new bonds, and are therefore worth more. On the other hand, when interest rates rise, the price of existing bonds will fall. The value of Funds that invest in bonds will be affected by changes in interest rates and so will the value of Top Funds whose underlying funds hold such bonds. The value of debt securities that pay a floating or variable rate of interest are generally less price sensitive to interest rate changes. Funds that invest in convertible securities also carry interest rate risk. These securities provide a fixed income stream, so their value varies inversely with interest rates, just like bond prices. However, because they can be converted into common shares, convertible securities are less affected by interest rate fluctuations than bonds. EMERGING MARKETS RISK In emerging market countries, securities markets may be smaller than in more developed countries, making it more difficult to sell securities in order to take profits or avoid losses. Companies in these markets may have limited product lines, markets or resources, making it difficult to measure the value of the company. Political instability and possible corruption, as well as lower standards of regulation for business practices increase the possibility of fraud and other legal problems. The value of Funds that buy these investments and of Top Funds holding underlying funds that buy such investments may rise and fall substantially. SMALLER COMPANIES RISK The share price of smaller companies is usually more volatile than that of more established larger companies. Smaller companies may be developing new products which have not yet been tested in the marketplace or their products may quickly become obsolete. They may have limited resources, including limited access to funds or unproven management, and may trade less frequently and in smaller volume than shares of large companies. They may have few shares outstanding, so a sale or purchase of shares will have a greater impact on the share price. The value of Top Funds, whose underlying funds buy these investments, may rise and fall substantially. LIQUIDITY RISK Illiquid securities are securities with a limited trading market. They may be difficult to value accurately or to sell, and may trade at a price significantly lower than their value. The value of Top Funds, whose underlying funds buy these investments, may rise and fall substantially. To mitigate this risk, a mutual fund is restricted from purchasing additional illiquid securities if more than 10% of its assets based on market value are already invested in illiquid securities. LOW-RATED SECURITY RISK Some investments offer a better return than others because they carry higher risk. They may have a credit rating below investment grade or be unrated. These investments may be hard to value because market quotations are unavailable, and they may be less Franklin Templeton investments 3

6 What is a mutual fund and what are the risks of investing in a mutual fund? liquid than higher-grade investments. They have the potential for substantial loss as well as gain, as will the Top Funds that hold Funds, which invest in low-rated securities. REGULATORY RISK Some industries, such as health care and telecommunications, are heavily-regulated and may receive government funding. Investments in these sectors may be substantially affected by changes in government policy, such as deregulation or reduced government funding. The value of Top Funds, whose underlying funds buy these investments, may rise and fall substantially. CREDIT RISK This is the risk that an issuer of a bond or other fixed income security will not be able to pay interest or repay the principal when it is due. This risk is generally lower if the issuer has a high credit rating from an independent credit rating agency while it is generally higher if the issuer has a low credit rating or no credit rating. The prices of securities with lower ratings tend to fluctuate more than prices of securities with higher ratings. REINVESTMENT RISK A Fund that invests in bonds and other fixed income securities may carry the risk that interest income or principal repayments from the Fund s investments will be reinvested at lower interest rates in the event of a declining rate environment. CONCENTRATION RISK A Fund that has invested a larger portion of its assets in a single issuer may be less diversified and may experience larger fluctuations in value as a result of the price volatility of that issuer. In addition, the Fund may not be able to sell its full investment in that issuer at current prices if there is a shortage of buyers willing to purchase those securities. Consequently, it could be more difficult for the Fund to obtain a reasonable price for that issuer s securities. To mitigate this risk, subject to certain exceptions, a mutual fund is restricted from purchasing additional securities if more than 10% of its assets based on market value are already invested in an issuer. Certain of the Funds have received an exemption from this restriction. CAPITAL DEPLETION RISK Certain Funds, as well as Series R, S, T and T-USD units of the Funds and Portfolios, may make distributions comprised in whole or in part, of return of capital. A return of capital distribution reduces the amount of your original investment and may result in the return to you of the entire amount of your original investment. This distribution should not be confused with yield or income. Return of capital distributions that are not reinvested will reduce the net asset value of the Fund or Portfolio, which could reduce the Fund s or Portfolio s ability to generate future distributions. DERIVATIVE RISK Although derivatives are often used by mutual funds to avoid risk, they have their own kinds of risk. Any Fund or Portfolio that invests in derivatives, or that holds other Funds, which invest in derivatives would also be subject to these risks: The use of derivatives for hedging may not be effective. Some derivatives may limit a Fund s or Portfolio s potential for gain as well as loss. The cost of entering and maintaining derivative contracts may reduce the Fund s or Portfolio s total return to investors. The price of a derivative may not accurately reflect the value of the underlying currency or security. This could prevent the Fund or Portfolio from making a profit or limiting its losses. When entering into a derivative contract, a Fund or Portfolio may be required to deposit funds or securities with the counterparty. If the counterparty goes bankrupt, the Fund or Portfolio could lose or be delayed in recovering these deposits. If a Fund or Portfolio gives a security interest to the counterparty, it may be enforced against the fund s assets. There is no guarantee a market will exist when a Fund or Portfolio wants to close its derivative contract. This could prevent the Fund or Portfolio from making a profit or limiting its losses. The exchanges on which the derivatives are traded may set daily trading limits, preventing a Fund or Portfolio from closing out a contract. If derivatives are being traded on foreign markets, it may be more difficult and take longer to complete the transaction. Foreign derivatives can also be more risky than derivatives traded on North American markets. If the other party to a derivative contract is unable to meet its obligations, the Fund or Portfolio may experience a loss. To minimize this risk, the Fund or Portfolio will select counterparties with a credit rating at least as high as the minimum credit rating required under securities legislation. Where a market change is expected, a Fund or Portfolio may not be able to find a suitable counterparty against which to hedge the market risk REPURCHASE/REVERSE REPURCHASE AGREEMENTS RISK A repurchase agreement involves selling a security at one price and simultaneously agreeing to buy it back at a fixed price. A reverse repurchase agreement involves buying a security at one price and simultaneously agreeing to sell it back at a higher price. A Fund or Portfolio may suffer a loss if the other party to the agreement becomes insolvent. The value of the purchased securities may drop or the value of the sold securities may rise between the time the other party becomes insolvent and the time the Fund or Portfolio recovers its investment. The Fund or Portfolio reduces this risk by holding enough of the other party s securities or cash as collateral to cover its commitments in the agreements. This means the Fund or Portfolio will never have to borrow to meet its obligations under the agreements. To limit the risks associated with repurchase and reverse repurchase transactions, the Funds or Portfolios require the other party to put up collateral the value of which must be at least 102% of the market value of the security sold (for a repurchase transaction) or cash loaned (for a reverse repurchase transaction). The value of the collateral is confirmed and reset daily. A Fund or Portfolio cannot lend more than 50% of the total value of its assets through securities lending or repurchase transactions. SECURITIES LENDING RISK Securities lending involves lending portfolio securities held by a Fund or Portfolio to qualified borrowers who have posted collateral for a fee and a set period of time. In lending its securities, a Fund or Portfolio is subject to the risk that the borrower may not fulfill its obligations leaving the Fund or Portfolio holding collateral worth less than the securities it has lent, resulting in a loss to the Fund or Portfolio that holds the Fund or Portfolio. To limit this risk a Fund or Portfolio must hold collateral worth no less than 102% of the value of the loaned securities and the amount of collateral is adjusted 4 Franklin Templeton investments

7 What is a mutual fund and what are the risks of investing in a mutual fund? daily to ensure this level is maintained, the collateral may only consist of cash, qualified securities or securities that can be immediately converted into identical securities to those that have been loaned, a Fund or Portfolio cannot lend more than 50% of the total value of its assets through securities lending or repurchase transactions and a Fund s or Portfolio s total exposure to any one borrower in securities, derivative transactions and securities lending must be less than 10% of the total value of the Fund s or Portfolio s assets. SHORT SELLING RISK Certain Funds may engage in a limited amount of short selling. A short sale is where a Fund borrows securities from a lender and sells them in the open market ( short sale ). The Fund must repurchase the securities at a later date in order to return them to the lender. In the interim, the proceeds from the short sale are deposited with the lender and the Fund pays interest to the lender on the borrowed securities. If the value of the securities declines between the time of the initial short sale and the time it repurchases and returns the securities, the Fund makes a profit for the difference (less any interest paid by the Fund to the lender). If the price of the borrowed securities rises, however, a loss to the Fund results. There are risks associated with short selling, namely that the borrowed securities will rise in value or not decline enough to cover the Fund s borrowing costs. The Fund may also experience difficulties in repurchasing the borrowed securities if a liquid market for the securities does not exist. In addition, the lender from whom the Fund has borrowed securities may become bankrupt, causing the borrowing Fund to lose the collateral it deposited with the lender. To limit the risks associated with short sale transactions, a Fund will adhere to controls and limits that are intended to offset these risks by short selling only securities of larger issuers for which a liquid market is expected to be maintained and by limiting the amount of exposure for short sales. A Fund will also deposit collateral only with lenders that meet certain criteria for creditworthiness and only up to certain limits. Although some Top Funds may not engage in short selling directly, they may be exposed to short selling because the Underlying Funds in which they invest, or the Fund s whose returns they track, may be engaged in short selling. UNDERLYING FUND RISK Franklin Templeton Investments Corp. and unaffiliated third parties may offer investment products which use a fund on fund structure whereby a Top Fund invests all or a significant portion of its assets in a bottom or underlying fund. Depending on the size of the investment being made by a Top Fund in an underlying fund and the timing of the redemption of this investment, an underlying fund could be forced to alter its portfolio assets significantly to accommodate a large redemption order. This could negatively impact the performance of an underlying fund as it may have to dispose prematurely of portfolio assets that have not yet reached a desired market value, resulting in a loss to the underlying fund. ASSET ALLOCATION RISK Funds and Portfolios that use a fund on fund structure allocate their assets among underlying funds with the goal of ensuring that the asset class, investment style, geographic and market capitalization allocation for each Fund or Portfolio is optimal. There can be no guarantee that a Fund or Portfolio will allocate its assets successfully. Similarly, there can be no guarantee against losses resulting from the asset allocation. PORTFOLIO MANAGEMENT RISK All actively managed mutual funds are dependent on their portfolio advisor(s) to select individual securities or other investments and, therefore, are subject to the risk that poor security selection or market allocation will cause a mutual fund to underperform relative to its benchmark or other mutual funds with similar investment objectives. SERIES RISK All of the Funds and Portfolios are available in more than one series of units. Each series has its own fees and expenses which each Fund and each Portfolio tracks separately. If a Fund or Portfolio cannot pay the expenses of one series using that series proportionate share of the Fund or Portfolio assets, it may have to pay those expenses out of the other series proportionate share of the assets, which could lower the investment return of those other series. CORPORATE CLASS FUND RISK While the assets and liabilities of each Corporate Class Fund are tracked separately, Franklin Templeton Corporate Class Ltd. as a whole is responsible for all of the financial obligations of the Corporate Class Funds combined. If a Corporate Class Fund cannot pay its expenses using its proportionate share of the assets, Franklin Templeton Corporate Class Ltd. may have to pay those expenses out of the other Corporate Class Funds assets which could lower the investment return of those other Corporate Class Funds. As well, the tax consequences of an investment in a Corporate Class Fund will depend in part on the tax position of Franklin Templeton Corporate Class Ltd. as a whole and will differ from an investment in a mutual fund that is not part of a multi-class structure. Please see the Glossary on page 164 and Corporate Class Funds on page 13 for more information on the Corporate Class Funds. LARGE INVESTOR RISK Securities of the Funds or Portfolios may be purchased and redeemed by large investors, such as financial institutions or other mutual funds. These investors may purchase or redeem large numbers of securities of a Fund or Portfolio at one time. The purchase or redemption of a substantial number of securities of a Fund or Portfolio may require the portfolio advisor to change the composition of a portfolio significantly or may force the portfolio advisor to buy or sell investments at unfavourable prices, which can affect Fund or Portfolio performance and may increase realized capital gains of the Fund or Portfolio. SPECIALIZATION RISK Some funds specialize in investing in a particular industry or region of the world. This allows the portfolio advisor to focus on the potential of that industry or geographic area, but it also means that the fund may be more volatile if there is a downturn in the industry or the geographic area since there are relatively few other investments to offset the downturn. These specialty funds must continue to invest in a particular industry or geographic area even if it is performing poorly. TRACKING RISK Certain mutual funds (the Tracking Funds ) may seek to have all or a substantial portion of their returns linked to the performance of units of one or more mutual fund(s) (the Reference Fund ) by either directly purchasing the appropriate securities or by entering into forward contracts and other derivative instruments. The return (performance) of a Tracking Fund may be lower than that of its respective Reference Fund because the Tracking Fund bears its own Franklin Templeton investments 5

8 What is a mutual fund and what are the risks of investing in a mutual fund? fees and expenses, including the costs of any forward contracts and other derivatives that it may use to achieve its investment objectives. Additionally, there may be a delay between the time an investor buys units of a Tracking Fund and the time the Tracking Fund gets additional exposure to the Reference Fund. During this delay, the Tracking Fund may be unable to track the performance of its corresponding Reference Fund. Such performance lags and tracking errors could result in the unit or share price of the Tracking Fund not precisely tracking the unit or share price of its Reference Fund. ASSET-BACKED AND MORTGAGE-BACKED SECURITIES RISK Asset-backed securities are debt obligations that are backed by pools of consumer or business loans. Some asset-backed securities are short-term debt obligations, called asset-backed commercial paper ( ABCP ). Mortgage-backed securities are debt obligations backed by pools of mortgages on commercial or residential real estate. If there are changes in the market perception of the issuers of these types of securities, or in the creditworthiness of the parties involved, then the value of the securities may be affected. In addition, for ABCP, there is a risk that there may be a mismatch in timing between the cash flow of the underlying assets backing the security and the repayment obligation of the security upon maturity. In the use of mortgage-backed securities, there is also a risk that there may be a drop in the interest rates charged on the mortgages, a mortgagor may default on its obligations under a mortgage or there may be a drop in the value of the property secured by the mortgage. TAX RISK Templeton Growth Fund, Ltd. and Franklin Templeton Corporate Class Ltd. may become subject to tax on certain income earned by the corporation. Where either of these corporations become subject to tax, the board of directors of the corporation will allocate the tax payable by the corporation against the net asset value of such Series of the corporation (in the case of Templeton Growth Fund, Ltd.), or such Series of such Corporate Class Funds that make up the corporation (in the case of Franklin Templeton Corporate Class Ltd.) as it, in its absolute discretion, determines to be fair and equitable. 6 Franklin Templeton investments

9 Organization and management of the Franklin Templeton Investments Funds and Portfolios MANAGER Franklin Templeton Investments Corp Yonge Street Suite 900 Toronto, Ontario M2N 0A7 The manager is responsible for the business and operation of the Funds and Portfolios. We provide all general administrative and management services, such as: calculating net asset values and preparing financial statements calculating and arranging for payment of distributions to investors and commissions to Dealers making regulatory and tax filings providing or coordinating all other services required by the Funds and Portfolios office space, facilities and administrative support. These services are offered to Series O and Series R investors under agreements between the investor and the Manager. PORTFOLIO ADVISORS Except in respect of Franklin Templeton Canadian Core Equity Fund and Franklin Templeton Canadian Large Cap Fund, all of the portfolio advisors or sub-advisors are affiliates or part of the Manager. Acuity Investment Management Inc., Toronto, Ontario, is the sub-advisor to Franklin Templeton Canadian Core Equity Fund and Foyston, Gordon & Payne Inc., Toronto, Ontario, is the sub-advisor to Franklin Templeton Canadian Large Cap Fund. The portfolio advisors manage the investment portfolios of the Funds and Portfolios. Franklin Bissett Investment Management is part of the Manager. Some of the Funds use sub-advisors appointed by us to provide advice for a portion or for the entire portfolio. If a sub-advisor has been appointed, they are named in the Fund Details section for the Fund in the Fund Specific Information section of the prospectus. Under securities law, we are required to advise you that where portfolio management services are provided by an advisor or sub-advisor located outside of Canada, it may be difficult to enforce any legal rights against them because all or substantially all of their assets are located outside of Canada. International sub-advisors are not fully subject to the requirements of Canadian securities legislation and we are responsible for the investment advice provided by the following entities in their capacity as sub-advisors to the Funds: Templeton Global Advisors Limited, Templeton Asset Management Ltd., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC and Franklin Templeton Institutional, LLC. Franklin Advisers, Inc., Franklin Mutual Advisers, LLC and Franklin Templeton Institutional, LLC have received an exemption from the Commodity Futures Act (Ontario) (the CFA ) registration requirements in respect of any trades made by the Funds they advise in commodity futures contracts and commodity futures options traded on commodity futures exchanges outside of Canada and cleared through clearing corporations outside of Canada. Accordingly, they will not be CFA registrants and the protections available to CFA registered clients will not be available to investors in the Funds they advise. Franklin Templeton investments 7

10 Organization and management of the Franklin Templeton Investments Funds and Portfolios PRINCIPAL DISTRIBUTORS Franklin Templeton Investments Corp. Toronto, Ontario FTC Investor Services Inc. ( FTC ISI ) Toronto, Ontario (for Series F, O, R and S units) As the principal distributors, we and FTC ISI market the Funds and Portfolios and arrange for sale of their units through Dealers across Canada. We may retain companies to assist in the sale of the Funds and Portfolios under the deferred sales charge options. CUSTODIAN Templeton Growth Fund, Ltd. Templeton Global Bond Fund JPMorgan Chase Bank New York, New York All Franklin Mutual Series Funds, Franklin Funds (other than Franklin World Growth Fund and Franklin World Growth Corporate Class), Templeton Global Balanced Fund and each of their respective Corporate Class Funds (where applicable) CIBC Mellon Trust Company Toronto, Ontario All other Funds and Portfolios J.P. Morgan Bank Canada Toronto, Ontario The custodian, or any sub-custodian it may appoint, has physical custody of the investments made for the Funds and Portfolios. REGISTRAR AND TRANSFER AGENT Franklin Templeton Investments Corp. Toronto, Ontario The registrar and transfer agent: maintains account records of the owners of Fund and Portfolio units carries out all purchase, redemption, conversion and switch orders provides reporting and statements to investors and Dealers TRUSTEE Franklin Templeton Investments Corp. Toronto, Ontario For Funds and Portfolios that are organized as trusts, the trustee holds title to the securities owned by the Funds and Portfolios on behalf of unitholders. AUDITOR PricewaterhouseCoopers LLP Chartered Professional Accountants Toronto, Ontario The auditor audits the annual financial statements of the Funds and the Portfolios. Unitholder approval will not be required for a change in the auditor of a Fund or Portfolio provided the Independent Review Committee has approved such change and unitholders receive notice 60 days in advance of any such change in auditor. INDEPENDENT REVIEW COMMITTEE In accordance with National Instrument Independent Review Committee for Mutual Funds, the Manager has established an Independent Review Committee ( IRC ) to provide impartial judgment on conflicts of interest matters related to the operations of the Funds and Portfolios. The IRC prepares at least annually, a report of its activities for unitholders which is available on our website at or, at your request and at no cost, by calling toll-free or by at [email protected]. Currently, the members of the IRC are D. George Kelly (Chair), Bruce Galloway and Gary Norton. Additional information about the IRC is available in the Annual Information Form. In certain circumstances, your approval may not be required under securities legislation to effect a fund merger provided that the IRC has approved such change and unitholders receive notice 60 days in advance of any such fund merger. Fund on Fund Structures Each of the Top Funds invests in other mutual funds, including mutual funds managed by the Manager. Shareholders or unitholders of a Top Fund have no rights of ownership in the securities of the underlying fund(s). Where the Manager is the manager of both the Top Fund and the underlying funds in which the Top Fund invests, it will not vote the securities of the underlying funds. The Manager is permitted to arrange for these securities to be voted by the beneficial unitholders of the applicable Top Fund. However, given the complexity and costs associated with implementing a flow-through voting structure, it is unlikely that we will arrange for a flow-through of voting rights. 8 Franklin Templeton investments

11 Purchases, switches and redemptions Classes and Series In this prospectus, we use the term series of units of mutual fund trusts in a general way which includes series of shares of mutual fund corporations. All of the Funds and Portfolios (other than Templeton Growth Fund, Ltd. and the Corporate Class Funds) are organized as mutual fund trusts. Templeton Growth Fund, Ltd. and Franklin Templeton Corporate Class Ltd. are mutual fund corporations. The Corporate Class Funds are actually different classes of shares of Franklin Templeton Corporate Class Ltd. The Corporate Class Funds are structured to provide some potential tax benefits to investors when switching between Corporate Class Funds. See Corporate Class Funds on page 13 and Income tax considerations for investors on page 32 for more details. The Funds or Portfolios in this prospectus offer up to nine series of units Series A, A (Hedged), F, I, O, R, S, T and T-USD. The table below sets out the availability of Funds and Portfolios in each series: Series Funds or Portfolios Available Series Funds or Portfolios Available A All Funds and Portfolios A (Hedged) Templeton Growth Fund, Ltd. F All Funds and Portfolios I Templeton Asian Growth Corporate Class Templeton BRIC Corporate Class Templeton Emerging Markets Fund Templeton Global Bond Fund Templeton Global Bond Fund (Hedged) Templeton Global Bond Hedged Yield Class Templeton Global Smaller Companies Fund and its respective Corporate Class Fund Templeton Growth Fund, Ltd. and its respective Corporate Class Fund Templeton International Stock Fund and its respective Corporate Class Fund Franklin High Income Fund Franklin Income Fund and its respective Corporate Class Fund Franklin Income Hedged Corporate Class Franklin Strategic Income Fund Franklin Bissett All Canadian Focus Fund and its respective Corporate Class Fund Franklin Bissett Bond Fund and its respective Corporate Class Fund Franklin Bissett Bond Yield Class Franklin Bissett Canadian All Cap Balanced Fund and its respective Corporate Class Fund Franklin Bissett Canadian Balanced Fund Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Canadian Equity Fund and its respective Corporate Class Fund Franklin Bissett Canadian High Dividend Fund and its respective Corporate Class Fund Franklin Bissett Canadian Short Term Bond Yield Class Franklin Bissett Corporate Bond Fund Franklin Bissett Corporate Bond Yield Class Franklin Bissett Dividend Income Fund and its respective Corporate Class Fund O R Franklin Bissett Money Market Fund and its respective Corporate Class Fund Franklin Bissett Money Market Yield Class Franklin Bissett Strategic Income Fund Franklin Bissett Strategic Income Corporate Class Franklin Bissett Treasury Bill Fund Franklin Mutual Global Discovery Fund and its respective Corporate Class Fund Franklin Mutual U.S. Shares Fund and its respective Corporate Class Fund Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Growth Corporate Class Portfolio All Funds and Portfolios Templeton Global Bond Hedged Yield Class Franklin Income Fund and its respective Corporate Class Fund Franklin Income Hedged Corporate Class Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Canadian Equity Corporate Class Franklin Bissett Strategic Income Corporate Class Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Templeton investments 9

12 Purchases, switches and redemptions Series Funds or Portfolios Available Series Funds or Portfolios Available S T Templeton Global Balanced Fund Templeton Global Bond Hedged Yield Class Franklin Income Fund and its respective Corporate Class Fund Franklin Income Hedged Corporate Class Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Strategic Income Corporate Class Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Corporate Class Portfolio Templeton Canadian Balanced Fund Templeton Global Balanced Fund Templeton Global Bond Hedged Yield Class Templeton International Stock Fund and its respective Corporate Class Fund Franklin Bissett Canadian All Cap Balanced Fund and its respective Corporate Class Fund Franklin Bissett Canadian Balanced Fund and its respective Corporate Class Fund Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Canadian Equity Corporate Class Franklin Bissett Canadian High Dividend Corporate Class Franklin Bissett Corporate Bond Yield Class T T-USD Franklin Bissett Dividend Income Fund and its respective Corporate Class Fund Franklin Bissett Strategic Income Corporate Class Franklin Income Fund and its respective Corporate Class Fund Franklin Income Hedged Corporate Class Franklin U.S. Rising Dividends Fund and its respective Corporate Class Fund Franklin U.S. Rising Dividends Hedged Corporate Class Franklin World Growth Fund and its respective Corporate Class Fund Franklin Mutual Global Discovery Fund and its respective Corporate Class Fund Franklin Mutual U.S. Shares Fund and its respective Corporate Class Fund Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Corporate Class Portfolio Templeton Global Balanced Fund Franklin Income Fund and its respective Corporate Class Fund Franklin Mutual Global Discovery Fund and its respective Corporate Class Fund Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio ABOUT SERIES A, A (HEDGED), F, I, O, R, S, T AND T-USD UNITS For minimum investments required to purchase Series A, A (Hedged), F, I, O, R, S, T and T-USD units of the Funds or the Portfolios, please see Buying Funds and Portfolios and Minimum investments on page 12 for details. To determine which particular series of Funds or Portfolios is right for you, please see below. SERIES A UNITS Series A units are available to all investors, subject to certain minimum investment requirements. SERIES A (HEDGED) UNITS Series A (Hedged) units are available to all investors who are interested in investing in Templeton Growth Fund, Ltd., subject to certain minimum investment requirements. Templeton Growth Fund, Ltd. holds a significant portion of securities traded in currencies ( Currencies of Investment ) other than the Canadian dollar. The value of such securities may decrease if the Currencies of Investment fall relative to the Canadian dollar. Therefore, a hedging strategy is employed by the Fund that seeks to reduce, as far as possible, the influence of changes in the exchange rate between the Canadian dollar and the currencies of securities held by Templeton Growth Fund, Ltd. on the portion of the Fund s net assets attributable to the Series A (Hedged) units outstanding. SERIES F UNITS Series F units are available to investors who qualify as Series F investors as determined by the Manager in its discretion, including: investors who participate in dealer-sponsored fee-for-service or wrap programs and who pay their advisor an hourly fee or annual asset-based fee rather than commissions on each transaction investors whose Dealer is FTC Investor Services Inc. investors who purchase, sell or hold their securities through a discount brokerage account any other groups of investors for whom we do not incur distribution costs. Investors wishing to purchase Series F units must also meet the minimum investment requirements. Series F units are designed for investors participating in programs that do not require us to incur distribution costs in the form of trailing commissions to Dealers. We are able to reduce our management fee on the Series F units because our costs to distribute these units are lower. Participation in Series F units is only available with the consent of your Dealer. 10 Franklin Templeton investments

13 Purchases, switches and redemptions SERIES I UNITS Series I units are available to investors who have in total invested a minimum of $100,000 with the Manager. The Series I units are designed for certain investors who have made an arrangement with their Dealer to purchase a series of units with reduced management fees because of the lower trailing commissions paid to Dealers on Series I units. SERIES O UNITS Series O units are available to certain investors at the Manager s discretion, including: certain investors who invest at least $500,000, within a period of six months from initial purchase of Series O units, with the Manager any related Funds and certain other third party mutual funds that use a fund on fund structure and who meet the Series O guidelines established by the Manager the Corporate Class Funds that purchase units in the Underlying Funds to the Corporate Class Funds Franklin Bissett Canadian Balanced Fund and Franklin Bissett Strategic Income Fund that each purchases units in a number of Funds the Franklin Quotential Portfolios that purchase units in a number of Underlying Funds to Franklin Quotential Portfolios the counterparties to derivatives contracts entered into by the Funds directors and employees of the Funds, the Portfolios, the Manager or its affiliates other specific classes of investors who meet the Series O guidelines established by the Manager. To qualify to purchase Series O units, you must also have entered into a Series O unit agreement with the Manager. SERIES R UNITS Series R units are designed for investors seeking regular monthly cash flows from a Portfolio. Monthly distributions for each Portfolio will consist of net income and/or a return of capital, which can either be reinvested in additional units or paid in cash (except for units held in a Franklin Templeton Investments registered plan which must be invested in additional units of the Fund or Portfolio). Any net income not distributed during the year, as well as capital gains, will be distributed annually in December and must be reinvested in additional units of the Portfolio. Series R units are available to certain investors at the Manager s discretion, including: certain investors who invest at least $500,000, within a period of six months from initial purchase of Series R units, with the Manager directors and employees of the Funds, the Portfolios, the Manager or its affiliates other specific classes of investors who meet the Series R guidelines established by the Manager. To qualify to purchase Series R units, you must also have entered into a Series R agreement with the Manager. SERIES S UNITS Series S units are available to all investors subject to certain minimum investment requirements. Series S units are designed for investors seeking regular monthly cash flows from a Fund or Portfolio. Monthly distributions for each Fund or Portfolio will consist of net income and/or a return of capital, which can either be reinvested in additional units or paid in cash (except for units held in a Franklin Templeton Investments registered plan which must be invested in additional units of the Fund or Portfolio). Any net income not distributed during the year, as well as capital gains, will be distributed annually in December and must be reinvested in additional units of the Fund or Portfolio. Series S units are available to investors who qualify as Series S investors as determined by the Manager in its discretion, including: investors who participate in dealer-sponsored fee-for-service or wrap programs and who pay their advisor an hourly fee or annual asset-based fee rather than commissions on each transaction investors whose Dealer is FTC Investor Services Inc. investors who purchase, sell or hold their securities through a discount brokerage account any other groups of investors for whom we do not incur distribution costs. Series S units are designed for investors participating in programs that do not require us to incur distribution costs in the form of trailing commissions to Dealers. We are able to reduce our management fee on the Series S units because our costs to distribute these units are lower. Participation in Series S units is only available with our prior consent and the consent of your Dealer organization. SERIES T UNITS (INCLUDING SERIES T-USD UNITS) Series T units are available to all investors, subject to certain minimum investment requirements. Series T units are designed for investors seeking regular monthly cash flows from a Fund or Portfolio. Monthly distributions for each Fund or Portfolio will consist of net income and/or a return of capital, which can either be reinvested in additional units or paid in cash (except for units held in a Franklin Templeton Investments registered plan which must be invested in additional units of the Fund or Portfolio). With our Flexible Series T solution, you also have the option of choosing to have a portion of your dividends or distributions paid out as cash and the remainder reinvested. Please speak with your investment advisor for more information on Flexible Series T. Any net income not distributed during the year, as well as capital gains, will be distributed annually in December and must be reinvested in additional units of the Fund or Portfolio. Monthly distributions for Series T-USD are an amount fixed in U.S. dollars and will therefore not fluctuate based on the exchange rate of the Canadian dollar. Accordingly, the distributions for Series T-USD units and the net asset value ( NAV ) will differ from that of the Canadian dollar Series T units. The price of a Fund or Portfolio We calculate the net asset value ( NAV ) for each series of units of each Fund or Portfolio at the close of trading on The Toronto Stock Exchange ( TSX ) every business day (usually 4 p.m. ET). For Funds and Portfolios available in U.S. dollars, we calculate the NAV in Canadian dollars and convert it into U.S. dollars using that day s exchange rate. Although Series T-USD units are denominated in Canadian dollars, the monthly distributions for Series T-USD units are an amount fixed in U.S. dollars and will therefore not fluctuate based on the exchange rate of the Canadian dollar. The distributions for Series T-USD units (and the NAV) will therefore differ from that of the Canadian dollar Series T units. If we receive your transaction request in good order by the close of trading on the TSX, we will process your order at the NAV (and the exchange rate, if applicable) on that date. Otherwise, we will process your order on the next business day. Franklin Templeton investments 11

14 Purchases, switches and redemptions THE PRICE OF A MUTUAL FUND The NAV of any mutual fund is calculated by: adding up the fund s assets (its holdings in equity, fixed income and money market securities, cash, and receivables) subtracting the fund s liabilities (any money the fund owes, for example, accrued management fees) The NAV in respect of a series of units is called its series net asset value per unit: assets attributable liabilities attributable to the series to the series = price of a unit = NAV per unit number of units of the series For example: $24,000,000 $4,000,000 = $20 per unit 1,000,000 units The prices change daily with changes in the market value of the securities each Fund or Portfolio holds. Opening a Franklin Templeton Investments Account You can open a new account by contacting your investment advisor and completing an application. If you do not have an investment advisor, you may call our Client Services team at We will be pleased to provide you with options available in your area. THE KNOW YOUR CLIENT RULE Franklin Templeton Investments Funds and Franklin Quotential Portfolios are sold through Dealers. The know your client rule ensures that your investment advisor knows about your investment needs and objectives and about your level of investment knowledge. With this information and his or her own expertise, your advisor can recommend the selection of Funds or Portfolios that is best for you. How to buy, switch or redeem Funds and Portfolios You can buy, switch or redeem Funds and Portfolios through Dealers across Canada. Your Dealer may place an order with us by: electronic transmission written request via mail or courier phone or fax. You buy, switch or redeem Funds or Portfolios at their NAV per unit of that particular series. Buying Funds and Portfolios WHO CAN BUY THE FUNDS AND PORTFOLIOS? The Funds and Portfolios are offered for sale to residents of Canada on a continuous basis, which means, subject to certain restrictions, you can buy, switch or redeem any number of units or shares at any time. We reserve the right, from time to time, to cap or close a Fund or Portfolio or any series of a Fund or Portfolio if it is determined to be in the best interest of the Fund or Portfolio or series of the Fund or Portfolio and the unitholders. If we do cap or close a Fund or Portfolio or a series of a Fund or Portfolio it may be re-opened for investment at our discretion. Any capping or closing of a Fund or Portfolio or any series of a Fund or Portfolio will not impact redemption rights of unitholders. Units of the Funds and Portfolios are not registered for sale in any jurisdiction outside Canada. You may not purchase units of the Funds or Portfolios: outside Canada for yourself if you live outside Canada on behalf of a person living outside Canada if this practice is against the law where you or the other person resides, or such foreign residency has negative legal, regulatory or tax implications for a Fund or Portfolio. In some jurisdictions outside Canada, a purchase of Fund or Portfolio units is not against the law as long as the purchase is unsolicited. In these jurisdictions, you and your Dealer are responsible for submitting only those purchase orders that have been initiated by you. U.S. Persons (as defined by Regulation S of the U.S. Securities Act of 1933, or by the U.S. Commodity Futures Trading Commission) are not eligible to invest in the Funds or Portfolios. In the absence of written notice to the Funds or Portfolios to the contrary, the provision by a potential investor of a non-u.s. address on the application form for investment in a Fund or Portfolio will be deemed to be a representation and warranty from such investor that he/she/it is not a U.S. Person and that such investor will continue to be a non-u.s. Person unless and until the Fund or Portfolio is otherwise notified of a change in the investor s U.S. Person status. MINIMUM INVESTMENTS The table below sets out the minimum investments required to purchase Series A, A (Hedged), F, I, O, R, S, T or T-USD units of the Funds or Portfolios: Minimum investment table Series Initial Investment Additional Investments A $500 $100 $50 A (Hedged)* $500 $100 $50 F** $500 $100 $50 I** $100,000 No minimum N/A O** $500,000 No minimum N/A R** $500,000 No minimum N/A S** $5,000 $100 $50 T $5,000 $100 $50 T-USD $5,000 $100 $50 Pre-authorized Chequing Plans (PACs) * Only available for Templeton Growth Fund, Ltd. ** When purchasing Series F, I, O, R or S units of the Funds or Portfolios, investors must also meet the additional eligibility criteria for the series. For more information see Classes and Series on page 9. We reserve the right to change or waive the minimum investment requirements to purchase any series of the Funds or Portfolios. PURCHASE OPTIONS For Series A (including A (Hedged)) and T (including T-USD) units of the Funds and Portfolios, you can purchase units in one of three ways: On a front-load basis. You may pay a sales commission which you negotiate with your Dealer when you buy the Funds or Portfolios. On a low-load basis. You do not pay a sales commission when you buy the Fund or Portfolio. You may be charged a redemption fee if you redeem your units within three years of buying them. See Calculating the redemption fee on page 15. On a deferred sales charge basis. You do not pay a sales commission when you buy the Fund or Portfolio. You may be charged a redemption fee if you redeem your units within six years of buying them. See Calculating the redemption fee on page Franklin Templeton investments

15 Purchases, switches and redemptions Series I units of all Funds and Portfolios are sold only on a front-load basis. Series F, O, R and S units of all Funds and Portfolios are sold only on a no-load basis, which means that you pay no sales charge when you buy or sell. Your choice will affect the fees you pay and the compensation your Dealer receives. See Fees and expenses on page 19 and Dealer compensation on page 29 for more information. FUNDS AND PORTFOLIOS AVAILABILITY IN CANADIAN AND U.S. DOLLARS All Funds and Portfolios are denominated in Canadian dollars. The following Funds and Portfolios are also available in U.S. dollars: Templeton Funds: Templeton Growth Fund, Ltd. and its respective Corporate Class Fund, Templeton International Stock Fund and its respective Corporate Class Fund, Templeton Emerging Markets Fund and its respective Corporate Class Fund, Templeton Global Smaller Companies Fund and its respective Corporate Class Fund, Templeton Global Bond Fund, Templeton Global Bond Hedged Yield Class (Series A, F, I and O shares), Templeton BRIC Corporate Class, Templeton Global Balanced Fund, Templeton EAFE Developed Markets Fund, Templeton Asian Growth Fund and its respective Corporate Class Fund and Templeton Frontier Markets Fund and its Corporate Class Fund All of the Franklin Funds, except Franklin U.S. Rising Dividends Hedged Corporate Class and Franklin Income Hedged Corporate Class Franklin Bissett Funds: Franklin Bissett U.S. Focus Fund and its Corporate Class Fund All of the Franklin Mutual Series Funds Franklin Quotential Portfolios: Franklin Quotential Growth Portfolio, Franklin Quotential Growth Corporate Class Portfolio, Franklin Quotential Diversified Equity Portfolio, Franklin Quotential Diversified Equity Corporate Class Portfolio, Franklin Quotential Diversified Income Corporate Class Portfolio (Series A, F, I and O shares), Franklin Quotential Balanced Income Portfolio (Series A, F, I and O units) and Franklin Quotential Balanced Income Corporate Class Portfolio (Series A, F, I and O shares) You can use U.S. dollars to purchase U.S. denominated Funds and Portfolios as well as Funds and Portfolios available in U.S. dollars with U.S. dollars. This option is provided as a convenience only. Purchasing Funds and Portfolios with U.S. dollars will have no impact on the overall performance of your investment within the Fund or Portfolio and does not act as a hedge against currency fluctuations between the Canadian and United States dollars. Units purchased in United States dollars may not be held in Franklin Templeton registered plans. PROCESSING YOUR ORDER TO BUY If you would like to buy our Funds or Portfolios, please contact your Dealer. Your Dealer will: deliver your order to us with your payment in full, or place an order with us electronically, or by phone or fax, with payment to follow. You must pay your Dealer when you buy your units. If you are purchasing units of Franklin Bissett Treasury Bill Fund or Franklin Bissett Money Market Fund, your Dealer must pay us within one business day of delivering or placing your order. For purchases of any other Fund or Portfolio, your Dealer must pay us within three business days of delivering or placing your order. If your Dealer places your purchase order electronically and we do not receive payment for your units within the periods listed above, we will redeem your units on the next business day. Pursuant to securities regulations, if the proceeds are: greater than the amount you owe us, the Fund or Portfolio keeps the difference; less than the amount you owe, your Dealer will owe the difference to the Fund or Portfolio. Your Dealer may be entitled to recover any losses from you. If you purchase Series O or Series R units and, within 10 days of your purchase, you have not signed a Series O or Series R agreement with us, you agree that we may, at our discretion, proceed to bill your account in accordance with our standard terms for investment in Series O or Series R units. Alternatively, we may switch you into Series A (including A (Hedged)) or Series T (including T-USD) units of the same Fund or Portfolio. How to Switch to other Funds or Portfolios You can switch from one Fund or Portfolio to another Fund or Portfolio through your Dealer. SWITCHES BETWEEN FUNDS THAT ARE TRUSTS A switch from one Fund or Portfolio to another Fund or Portfolio is a purchase and a redemption resulting in a disposition of the units switched, meaning you will likely incur a capital gain or loss for tax purposes if you hold your units outside a registered plan. CORPORATE CLASS FUNDS The distinction between the Corporate Class Funds and the regular Funds that are structured as trusts is important when considering the tax consequences of switching from one Fund to another Franklin Templeton Investments mutual fund. A conversion from one Corporate Class Fund to another Corporate Class Fund is not a taxable transaction to you because you still own shares of Franklin Templeton Corporate Class Ltd. This means you will not have to pay capital gains tax at the time of the conversion, although in certain circumstances the conversion may accelerate the time at which Franklin Templeton Corporate Class Ltd. realizes gains and pays capital gains dividends. A switch from a Corporate Class Fund to a regular Fund will be a redemption of shares of the Corporate Class Fund and a purchase of units of the other Fund which will be a taxable transaction to you. This will likely result in a capital gain or loss for tax purposes if you hold your units outside a registered plan. How to Switch to another Series In addition to switching from one Fund or Portfolio to another Fund or Portfolio, you can also switch from Series A, A (Hedged), F, I, O, R, S, T or T-USD units to a different series of units through your Dealer. You can only switch from one series to another series if you meet the eligibility requirements associated with the series that you wish to switch into. Due to differences in the NAVs of the various series, if you switch from one series to another series, you may receive a different number of units than you originally held. A switch between series of the same Fund or Portfolio that is a trust is a redesignation of your existing units as units of another series. In the case of Templeton Growth Fund, Ltd. and the Corporate Class Funds, a switch between series of the same Fund is a conversion of your existing shares into shares of another series. Franklin Templeton investments 13

16 Purchases, switches and redemptions A redesignation between series of units of the same Fund or a conversion within series of shares of Templeton Growth Fund, Ltd. or the Corporate Class Funds is not considered a disposition for tax purposes. See Income tax considerations for investors on page 32 for more details. If your switch involves both a change in series and a change in Fund or Portfolio, then the switch will be considered a disposition for tax purposes, unless the switch is between Corporate Class Funds. Switch fees The following switches may result in a switch fee payable to your Dealer: switches from units purchased on a front-load basis to units on a no-load basis; switches from units purchased on a front-load basis to units on a front-load basis; switches from units purchased on a low-load basis to units on a low-load basis. You will not be charged a redemption fee until you later redeem your units. The redemption fee will be based on the date and original cost of the low-load units purchased by you before the switch; and switches from units purchased on a deferred sales charge basis to units on a deferred sales charge basis. You will not be charged a redemption fee until you later redeem your units. The redemption fee will be based on the date and original cost of the deferred sales charge units purchased by you before the switch. A switch from Series F units of one Fund or Portfolio to Series F units of another Fund or Portfolio will not be subject to any switch fees. Any other types of switches may result in additional fees, such as redemption fees or sales charges. When your Dealer charges a switch fee on a switch, it will result in a redemption of a sufficient number of your units being switched to pay the switch fee. Processing your switch order We process your switch order as if it were a redemption of the Fund or Portfolio that you are switching out of and a purchase of the Fund or Portfolio that you are switching into. Accordingly, we follow the procedures listed under Processing your order to buy and Processing your redemption order. We may limit the right to switch, limit the amount or number of switches, reject any switch or restrict or refuse purchases if (i) we believe that the Fund or Portfolio would be harmed or unable to invest effectively, or (ii) the Fund or Portfolio receives or anticipates simultaneous orders that may significantly affect the Fund or Portfolio. We do not limit your right to redeem your investment except under the circumstances described under Suspending your right to redeem units. Redeeming Funds or Portfolios You can redeem your Fund or Portfolio units through your Dealer or directly through us. Your redemption order must be in writing, accompanied by any outstanding unit certificates. For your protection, your redemption order (and certificate, if applicable) must be signature guaranteed by a bank, trust company, Dealer or other institution that is satisfactory to us. In some cases, we may also request additional documentation. Your Dealer may place an electronic order, which must be followed by the appropriate documentation. We need written authorization from you on your initial application in order to accept phone and fax orders from you. If your redemption order is by phone or fax, the proceeds will only be payable to you and will be sent to your address of record or to your account at a Canadian bank or trust company. Redemptions by phone or fax are limited to $10,000 per account per day and are not available for: units held in certificate form units held in a registered plan accounts for which there has been a change in address or bank or trust company account within the previous 30 days. PROCESSING YOUR REDEMPTION ORDER If we do not receive all the documentation we need to complete your redemption order, we will contact you or your Dealer. If your Dealer placed your redemption order electronically and upon contacting your Dealer, we are advised that you or your Dealer are unable to provide us with the required documentation, we will immediately repurchase your units. If you or your Dealer advise us that you are able to provide us with the required documentation but you or your Dealer fail to provide it to us within ten business days of us receiving your order, we will repurchase your units. Pursuant to securities regulations, if we repurchase your units and the sale proceeds are: greater than the repurchase amount, the Fund or Portfolio keeps the difference; less than the repurchase amount, we pay the Fund or Portfolio the difference and collect the difference from your Dealer. Your Dealer may be entitled to recover any losses from you. We will pay you the proceeds within three business days of receiving a complete redemption order. We will mail you a cheque unless you tell us to deposit the proceeds to your bank or trust company account by electronic fund transfer (EFT). If you wish to receive your proceeds by EFT, please send us a preprinted void cheque and complete the banking information section of your application at the time of account setup to avoid potential delays on your redemption request. We will keep your banking information on file for future purchases and redemptions. For your protection, we reserve the right to choose the final method of payment, which may include paying the redemption proceeds to your Dealer, in trust for you. SUSPENDING YOUR RIGHT TO REDEEM UNITS As permitted by Canadian securities regulators, we may suspend your right to redeem units: if normal trading is suspended on a stock exchange within or outside Canada on which securities or specified derivatives are traded which represent more than 50% by value of the total assets of that Fund or a Portfolio that holds that Fund and if those securities are not traded on any other exchange that represents a reasonably practical alternative for the Fund with the consent of securities regulators, if the Fund or Portfolio determines that it is not practical to sell the Fund s or Portfolio s securities or fairly determine the value of its net assets of a Corporate Class Fund that invests in units of an Underlying Fund if the right to redeem securities in the Underlying Fund to the Corporate Class Fund is suspended, as the NAV of the Corporate Class Fund would not be available of Franklin Bissett Canadian Balanced Fund and Franklin Bissett Canadian Balanced Corporate Class which invest in units of Underlying Funds if the right to redeem securities in the 14 Franklin Templeton investments

17 Purchases, switches and redemptions Underlying Funds to Franklin Bissett Canadian Balanced Fund and Franklin Bissett Canadian Balanced Corporate Class are suspended, as the NAV of Franklin Bissett Canadian Balanced Fund and Franklin Bissett Canadian Balanced Corporate Class, as the case may be, would not be available of Franklin Bissett Strategic Income Fund and Franklin Bissett Strategic Income Corporate Class which invest in units of Underlying Funds if the right to redeem securities in the Underlying Funds to Franklin Bissett Strategic Income Fund and Franklin Bissett Strategic Income Corporate Class are suspended, as the NAV of Franklin Bissett Strategic Income Fund and Franklin Bissett Strategic Income Corporate Class, as the case may be, would not be available If your right to redeem units is suspended, and you do not withdraw your redemption order, we will redeem your units at their net asset value determined after the suspension ends. SHORT-TERM TRADING Excessive trading can harm Fund or Portfolio performance, operations and all unitholders by increasing trading and other costs, and interfering with the efficient management of a mutual fund s portfolio. We perform ongoing monitoring of trading in units of the Funds and Portfolios in order to identify investor trading patterns that may suggest short-term trading activity. You will be considered to be engaging in short-term trading if you: request a redemption/purchase of a Fund or Portfolio within two weeks of an earlier purchase/redemption of the Fund or Portfolio; redeem or switch units out of the Fund or Portfolio more than twice within a rolling 90 day period; or engage in trades that appear to follow a market timing pattern that may adversely affect the Fund or Portfolio. In determining whether a trade or trading pattern is inappropriate, we consider all relevant factors including good faith changes in investor circumstances or intentions, the nature of the Funds or Portfolios involved, and the investor s past trading pattern, and we may conduct discussions with the investor or the investor s Dealer. If we identify a pattern of short-term trading, we will seek to reject or restrict further trading as described below in greater detail, if in our judgment such trading may adversely affect a Fund or Portfolio. If we, in our sole discretion, reasonably determine that your pattern of trading may adversely affect a Fund or Portfolio, we reserve the right, without prior notice, to: (1) temporarily or permanently reject further trading in a Fund or Portfolio; (2) restrict the amount, number or frequency of any future trades in a Fund or Portfolio. CALCULATING THE REDEMPTION FEE You pay a redemption fee if you redeem Series A (including A (Hedged)) or T (including T-USD) units bought under: the low-load option within three years from the date of original purchase; or the deferred sales charge option within six years from the date of original purchase. The redemption fee is based on the date and original cost of your units. If you have switched to another Fund or Portfolio while remaining within the same purchase option, then your redemption fee is based on the date and original cost of the units before the initial switch. We will redeem units in the following order: (1) units issued through distribution/dividend reinvestment plans (2) free redemption entitlement units (only applicable to low-load sales charge units and deferred sales charge units that remain subject to a redemption fee) (3) matured units (4) units in the order that they were purchased starting with the earliest purchase. The redemption fee for units purchased on a: low-load basis is based on a declining percentage of the original cost of the units if the units are redeemed within three years from the date of original purchase, as shown in the Fees and expenses table on page 27; or deferred sales charge basis declines over a six year period, as shown in the Fees and expenses table on page 27. We will deduct the redemption fee from the proceeds of the redemption. FREE REDEMPTION ENTITLEMENT (only applicable to low-load sales charge units and deferred sales charge units still subject to a redemption fee) You can redeem some of your Series A (including A (Hedged)) or T (including T-USD) units that would otherwise be subject to a redemption fee without paying a fee, even if you have held them for less than three years, in the case of low-load sales charge units, or less than six years, in the case of deferred sales charge units. You can redeem: Deferred sales charge units 10% of the NAV of your deferred sales charge units as of December 31 of the prior calendar year (for units purchased by you after February 28, 1993 and before the current calendar year) + PLUS 10% of the cost of deferred sales charge units purchased by you in the current calendar year LESS cash distributions paid during the prior calendar year, and the value of reinvested units redeemed during the current calendar year. Low-load sales charge units 10% of the NAV of your low-load sales charge units as of December 31 of the prior calendar year + PLUS 10% of the cost of low-load sales charge units purchased by you in the current calendar year LESS cash distributions paid during the prior calendar year, and the value of reinvested units redeemed during the current calendar year. A distribution paid to you in cash will reduce your free redemption entitlement for the following calendar year by the amount of that distribution. You can transfer any unused portion of the free redemption entitlement if you switch deferred sales charge units from one Fund or Portfolio to another, or if you switch low-load sales charge units from one Fund or Portfolio to another, adjusted, in each case, for the NAV of the new Fund or Portfolio units. You may not carry forward this privilege from one year to the next. We may cancel or change this privilege at any time. Franklin Templeton investments 15

18 Purchases, switches and redemptions MINIMUM BALANCES AND MAINTAINING ELIGIBILITY If, because of redemptions, the market value of your investment in any series falls below the minimum investment balance requirement listed in the table below, we may redeem or redesignate your units to another series, after giving you 30 days notice that your balance has fallen below the minimum. You may invest additional money during this period if you wish to maintain the status of your investment. We will not redeem or redesignate your units if the market value of your investment falls below the minimum investment balance requirements because of a decline in the NAV of the units. If we redesignate your units on this basis, no switch fee will be charged by your Dealer. The table below lists the minimum investment balance requirements for each series and the action we may take if your investment falls below the minimum investment balance requirements: Series *MAINTAINING ELIGIBILITY FOR SERIES F, SERIES R AND SERIES S UNITS In addition to the minimum investment balance requirements for Series F, R and S units, you must also continue to qualify to hold Series F, R and S units after your initial purchase as described under About Series A, A (Hedged), F, I, O, R, S, T and T-USD units. We may redesignate your Series F or Series S units into Series A or I units (if you qualify) or your Series R units into Series A or T units (if you qualify) of the same Fund or Portfolio after giving you 30 days notice that you no longer qualify to hold Series F, R or S units. This switch will not be made if you advise us during the notice period that you are once again eligible to hold Series F, R or S units. If we redesignate your units on this basis, no switch fee will be charged by your Dealer. We reserve the right to change or waive the minimum investment balance requirements for any series of units. ELIGIBILITY TO OWN UNITS We may redeem units in an account if we determine in our discretion that: Minimum investment balance requirement Potential consequences if minimum investment balance requirement not met A $500 per Fund Redeem A (Hedged) $500 per Fund Redeem F* $500 per Fund Redeem I $100,000 per household Redesignate to Series A units of the same Fund or Portfolio O $500,000 per household Redesignate to Series A or to Series I units (if Series I minimum investment requirements are met) of the same Fund or Portfolio R* $500,000 per household Redesignate to Series A or to Series T units (if Series T minimum investment requirements are met) of the same Fund or Portfolio S* $5,000 per Fund Redesignate to Series A units of the same Fund T $5,000 per Fund Redesignate to Series A units of the same Fund T-USD $5,000 per Fund Redesignate to Series A units of the same Fund an investor engages in short-term or excessive trading; an investor becomes a resident for securities laws or tax purposes of a foreign jurisdiction where such foreign residency may have negative legal, regulatory or tax implications on the Fund or Portfolio; or it would be in the best interest of the Fund or Portfolio to do so. Unitholders are responsible for all tax consequences, costs and losses, if any, associated with the redemption of units in a Fund or Portfolio upon the exercise of our right to redeem. ORPHANED ACCOUNTS In order to invest in units of the Funds and Portfolios, an investor s account must have a registered Dealer on file with us. If an active account does not have a registered Dealer on file, we consider the account to be an orphaned account. If we determine in our discretion that an account is orphaned, we may take the following actions: freeze the account and restrict all activities in the account except redemptions (including through systematic withdrawals) and transfers out; notify the orphaned account holder in writing as to the account s status and request that the account(s) be moved to another registered Dealer; and after the notification, redeem the holdings in the orphaned account and mail the proceeds to the orphaned account holder s address of record. Unitholders are responsible for all tax consequences, costs and losses, if any, associated with the redemption of units in a Fund or Portfolio in an orphaned account. General information on processing purchases, switches and redemptions REJECTING ORDERS We have the right to reject any purchase or switch order within one business day of receiving it. If we reject your purchase order, we will return your money without interest. We will not process transactions for: a past date a future date (unless the transaction relates to a PAC or SWP) a specific price any units that have not been paid for in full. CONFIRMATIONS Your Dealer or Franklin Templeton Investments will send you a confirmation once we have processed your purchase, switch or redemption order. For PACs and SWPs, you will only receive a confirmation on your first purchase, switch or redemption. After that, you will either receive a confirmation each time a PAC or SWP runs on your account or you will receive quarterly, semiannual or annual account statements. CERTIFICATES AND ASSIGNMENTS We will not issue certificates for units of Funds or Portfolios unless requested by you or your Dealer. We will also not issue certificates for any units of the Funds or Portfolios held within a registered plan. We will not process your switch or redemption order unless it is accompanied by any outstanding unit certificates representing the units to be switched or redeemed and all assignments on the outstanding units have been cancelled. 16 Franklin Templeton investments

19 Optional services Systematic investment program You can buy units of the Funds and Portfolios regularly through a pre-authorized chequing plan (PAC) from your bank or trust account. The PAC can run weekly, twice monthly, monthly, quarterly, semi-annually or annually and must be at least $50 per Fund or Portfolio. We may, at our discretion, waive the minimum PAC amount. There is no charge for this service other than any applicable sales charges you negotiate with your Dealer (if you purchase units under the low-load or deferred sales charge option, you may pay a redemption fee upon redeeming your units please see Sales Charges on page 27). You may change or cancel the plan at any time by writing to us or your Dealer. Once we receive all required documentation, it may take up to 72 hours for us to process any change or cancellation. If you switch all units from one Fund or Portfolio to another, we will continue your PAC in your new Fund or Portfolio. PACs AND DOLLAR-COST AVERAGING PACs can lower your average cost of investing. It is called dollar-cost averaging and it works like this: You invest the same amount of money in the Fund or Portfolio of your choice at regular intervals. When the NAV of your units is high, your fixed-dollar investment buys fewer units. When the NAV is low, your fixed-dollar investment buys more units. It is an easy way to buy more when prices are down and lower the average cost of your Fund or Portfolio units. And that helps increase your potential gain. The Funds and Portfolios have received relief from the requirement to deliver an annual renewal simplified prospectus and any amendments thereto (the Renewal Prospectus ) to participants in a PAC unless they request it. You can request a copy of a Renewal Prospectus by calling us toll-free at or ing us at [email protected]. You can also find the Renewal Prospectus at or on our website at While you have a statutory right to withdraw from your initial purchase of Funds or Portfolios under a PAC, you will not have a statutory right to withdraw from subsequent purchases of Funds or Portfolios under a PAC. Regardless of whether or not you request the Renewal Prospectus, you will continue to have all other statutory rights under securities law, including a misrepresentation right as described on page 35 under What are your legal rights? You also have the right to terminate your participation in a PAC at any time as described above. Systematic withdrawal program (SWP) Provided you maintain at least $5,000 invested in a Fund or Portfolio, you can set up a systematic withdrawal program to redeem amounts periodically from your investments. You can receive payments weekly, twice monthly, monthly, quarterly, semi-annually or annually. We will automatically redeem enough units to make the payments to you, which may reduce the value of your investment. There is no charge for this service, other than any applicable redemption fees. You may change or cancel the plan at any time by writing to us or your Dealer. It may take up to 72 hours for us to process any change or cancellation. If your regular withdrawals are greater than the net earnings of your Fund or Portfolio, you will eventually use up your original investment. Automatic rebalancing service We offer an automatic rebalancing service to all investors in the Funds and Portfolios. This service monitors when the value of your investments within the Funds or Portfolios deviates from your target asset mix. The automatic rebalancing service is available for all Funds and Portfolios, plans and account types, provided that we receive appropriate authorization. There is no fee for this service. To use the automatic rebalancing service, you and your investment advisor must submit an automatic rebalancing service form and select the following parameters: Target asset mix: You must select the Funds and/or Portfolios and target allocation percentages that will be subject to the automatic rebalancing service. Your selected Funds and/or Portfolios must be within the same currency, the same series or a similar fee structure (Series A/T, Series F/S, Series O/R or Series I) and the same purchase option (front load, low load or deferred sales charge). One automatic rebalancing service may be established per currency per account. Franklin Templeton investments 17

20 Optional services Variance trigger: You must determine the maximum percentage by which any Fund and/or Portfolio in your automatic rebalancing service can deviate from your target asset mix before causing a rebalancing. Rebalancing frequency: You must decide whether you want your account rebalanced on a quarterly, semi-annual or annual basis. Your account will be reviewed and, if necessary, rebalanced on the second last business day of the month ending the quarter, semi-annual period or year. When the current value of your investment in any Fund or Portfolio varies on the rebalancing frequency date by more than the variance trigger you have chosen, we will automatically switch your investments to return to your target asset mix. Once a Fund or Portfolio in your target asset mix has a fund balance of less than one unit and/or 100% of one or more of the Funds or Portfolios in your target asset mix are redeemed, switched or transferred from the account, the service will be discontinued. You and your investment advisor may make changes to your automatic rebalancing service by submitting a new automatic rebalancing service form. As described under How to Switch to other Funds or Portfolios on page 13, in some circumstances a switch between Funds or Portfolios made by the automatic rebalancing service may cause you to realize a taxable capital gain. Registered plans We can set up a: registered retirement savings plan (RRSP) locked-in retirement savings plan (LRSP) spousal registered retirement savings plan (SP RRSP) locked-in retirement account (LIRA) registered education savings plan (RESP) tax-free savings account (TFSA) registered retirement income fund (RRIF) spousal registered retirement income fund (SP RRIF) life income fund (LIF) locked-in retirement income fund (LRIF) restricted life income fund (RLIF), or restricted locked-in savings plan (RLSP) for you, or you can purchase the Funds or Portfolios for your self-directed registered plan. We encourage you to consult your investment or tax advisor about the tax implications of registered plans. 18 Franklin Templeton investments

21 Fees and expenses The following table lists the fees and expenses you may pay if you invest in the Funds and Portfolios. Some of these fees and expenses you pay directly. Others are payable by the Funds or Portfolios, which will indirectly reduce the value of your investment in the Fund or the Portfolio. The Funds and Portfolios are required to pay harmonized sales tax ( HST ) on management fees and expenses at a rate determined separately for each series for each year. The rate that applies to the fees and expenses paid during a year for a series is determined based on the net asset value of the series attributable to investors resident in each province or territory at a certain point in time and the HST rate applicable to each of those provinces or territories. As a result, HST will be paid based on a blended rate of the 5% rate in the non-harmonized jurisdictions, 15% in Nova Scotia, 14% in Prince Edward Island, and 13% in the other harmonized provinces of Ontario, New Brunswick and Newfoundland and Labrador. Quebec has also harmonized the QST at a rate of %, which will be factored into the blended rate referred to above. The blended rate will be different from year to year. This happens because different unitholders invest in the different series and the unitholders who invest in each series change from year to year because of purchases, switches and redemptions. Unitholder approval is required to change the basis of the calculation of a fee or expense that is charged to a Fund or Portfolio in a way that could result in an increase in charges to the Fund or Portfolio. However, if the proposed change only affects charges to one series of units of the Fund or Portfolio, only unitholders of such series shall be entitled to vote in respect of the proposed change. No unitholder approval will be required if the Fund or Portfolio is at arm s length to the person or company charging the fee or expense and if a written notice is sent to unitholders at least 60 days before the effective date of the change. Fees and expenses payable by the Fund or Portfolio MANAGEMENT FEES Unique to each series of units of each Fund or Portfolio. See Fund details for the Fund or Portfolio you are interested in. We may reduce or rebate the management fee for certain investors in a Fund or Portfolio. Our decision to do this depends on a number of factors, including the size of the investment or the nature of the investment, such as investments by pension funds, insurers or other institutional investors. If we reduce or rebate the management fee, an amount equal to the reduction is paid as a distribution ( management fee distribution ) or is paid as a rebate ( management fee rebate ). In connection with the implementation of the Administration Fee (as defined below in the Operating Expenses section), we have agreed to waive a portion of the management fees on certain series of units (the Management Fee Waiver ). These Management Fee Waivers shall be applied at least until such time as we decide to lower the management fees, the Administration Fee, or a combination of the two on these series by an amount that is equal to or greater than the amount of the series Management Fee Waiver. If we reduce the management fee, the Administration Fee, or both for a series, we may also reduce the Management Fee Waiver by the corresponding amount. Please refer to the Fund details section of the fund-specific pages for further information regarding the Management Fee Waivers. Where a Fund or a Portfolio invests in underlying funds, there are fees and expenses payable by the underlying funds in addition to those payable by the Fund or Portfolio. However, we will ensure that there is no duplication of management fees for the same services in respect of those Funds or Portfolios that use fund on fund structures as described in the investment strategies of the specific Fund or Portfolio description. In addition, a Fund or Portfolio that invests in another fund does not pay duplicate sales fees or redemption fees with respect to the purchase or redemption by it of securities of the underlying fund. Franklin Templeton investments 19

22 Fees and expenses MANAGEMENT FEES OPERATING EXPENSES Series O and Series R investors do not bear any of the management fees within the Funds or Portfolios, but instead pay a separate management and administration fee that they negotiate directly with the Manager. The management and administration fee may range from 0.25% to 1.50% based on the Fund or Portfolio and the average daily net asset value of the units held in the investor s accounts on a quarterly basis. Effective January 1, 2014, the Manager began paying the operating expenses of each Fund, other than Fund Costs (as defined below) and Taxes (as defined below) (the Operating Expenses ) in exchange for the payment by the Fund of a fixed rate administration fee (the Administration Fee ) to the Manager with respect to each series of the Fund, except for Series O, R and Franklin Bissett Money Market Fund, Franklin Bissett Money Market Corporate Class, Franklin Bissett Money Market Yield Class and Franklin Bissett Treasury Bill Fund (the Money Market Funds ). All series to which the Administration Fee applies are referred to as Participating Series. The Operating Expenses payable by the Manager include, but are not limited to, audit fees, fund accounting costs, transfer agency and recordkeeping costs, custodian costs, administration costs and trustee services relating to registered tax plans, costs of printing and disseminating prospectuses, annual information forms, fund facts and continuous disclosure materials, legal fees, investor communication costs and regulatory filing fees. The Fund Costs, which are payable by all Funds, are borrowing and interest costs, investor meeting costs (as permitted by Canadian securities regulation), the fees and expenses of the IRC, directors fees and expenses for Franklin Templeton Corporate Class Ltd. ( FTCCL ) and Templeton Growth Fund, Ltd. ( TGF ), any costs and expenses associated with litigation for the benefit of the Funds or brought to pursue rights on behalf of the Funds, the cost of compliance with any new governmental and regulatory requirements imposed on or after December 10, 2013 (including those relating to Operating Expenses) or with any material change to existing governmental and regulatory requirements imposed on or after December 10, 2013 (including extraordinary increases to regulatory filing fees), any new types of costs, expenses or fees not incurred prior to December 10, 2013, including those arising from new government or regulatory requirements relating to the Operating Expenses or related to those external services that were not commonly charged in the Canadian mutual fund industry as of December 10, 2013 and operating expenses that would have been outside the normal course of business of the Funds prior to December 10, Each Fund will also pay all applicable taxes, including without limitation, income taxes, withholding taxes, HST and related taxes (collectively, the Taxes ). Except as described below, each series of a Fund is responsible for its appropriate share of common Fund Costs in addition to the Fund Costs that it alone incurs. The Manager may, in some years and in certain cases, absorb a portion of a series Administration Fee or Fund Costs. The decision to absorb the Administration Fee or Fund Costs, or a portion thereof, is reviewed annually and determined at the discretion of the Manager, without notice to investors. The Manager pays all Operating Expenses of the Money Market Funds. In addition, the Manager pays all Operating Expenses of Series O and R as part of its agreement with each investor. The Administration Fee is equal to a specified percentage of the net asset value of a Participating Series, calculated and paid in the same manner as the management fee for the Fund (calculated as an annual percentage of the NAV and paid monthly). The rate of the annual Administration Fee for each Participating Series is set out below: Fund Name Series Administration Fee Canadian Equity Canadian Dividend & Income Equity Franklin Bissett Canadian Dividend Fund A 0.22% Franklin Bissett Canadian Dividend Fund F 0.22% Franklin Bissett Canadian Dividend Corporate Class A 0.22% Franklin Bissett Canadian Dividend Corporate Class F 0.22% Franklin Bissett Canadian Dividend Corporate Class I 0.22% Franklin Bissett Canadian Dividend Corporate Class S 0.22% Franklin Bissett Canadian Dividend Corporate Class T 0.22% 20 Franklin Templeton investments

23 Fees and expenses Fund Name Series Administration Fee Canadian Equity Templeton Canadian Stock Fund A 0.23% Templeton Canadian Stock Fund F 0.23% Templeton Canadian Stock Corporate Class A 0.23% Templeton Canadian Stock Corporate Class F 0.23% Franklin Bissett Canadian Equity Fund A 0.23% Franklin Bissett Canadian Equity Fund F 0.23% Franklin Bissett Canadian Equity Fund I 0.23% Franklin Bissett Canadian Equity Corporate Class A 0.23% Franklin Bissett Canadian Equity Corporate Class F 0.23% Franklin Bissett Canadian Equity Corporate Class I 0.23% Franklin Bissett Canadian Equity Corporate Class T 0.23% Franklin Bissett All Canadian Focus Fund A 0.23% Franklin Bissett All Canadian Focus Fund F 0.23% Franklin Bissett All Canadian Focus Fund I 0.23% Franklin Bissett All Canadian Focus Corporate Class A 0.23% Franklin Bissett All Canadian Focus Corporate Class F 0.23% Franklin Bissett All Canadian Focus Corporate Class I 0.23% Canadian Small/Mid Cap Equity Franklin Bissett Small Cap Fund A 0.25% Franklin Bissett Small Cap Fund F 0.25% Franklin Bissett Small Cap Corporate Class A 0.25% Franklin Bissett Small Cap Corporate Class F 0.25% Franklin Bissett Canadian High Dividend Fund A 0.25% Franklin Bissett Canadian High Dividend Fund F 0.25% Franklin Bissett Canadian High Dividend Fund I 0.25% Franklin Bissett Canadian High Dividend Corporate Class A 0.25% Franklin Bissett Canadian High Dividend Corporate Class F 0.25% Franklin Bissett Canadian High Dividend Corporate Class I 0.25% Franklin Bissett Canadian High Dividend Corporate Class T 0.25% Canadian Balanced/Asset Allocation Canadian Equity Balanced Franklin Bissett Dividend Income Fund A 0.16% Franklin Bissett Dividend Income Fund F 0.16% Franklin Bissett Dividend Income Fund I 0.16% Franklin Bissett Dividend Income Fund T 0.16% Franklin Bissett Dividend Income Corporate Class A 0.16% Franklin Bissett Dividend Income Corporate Class F 0.16% Franklin Bissett Dividend Income Corporate Class I 0.16% Franklin Bissett Dividend Income Corporate Class T 0.16% Franklin Bissett Canadian All Cap Balanced Fund A 0.16% Franklin Bissett Canadian All Cap Balanced Fund F 0.16% Franklin Bissett Canadian All Cap Balanced Fund I 0.16% Franklin Bissett Canadian All Cap Balanced Fund T 0.16% Franklin Bissett Canadian All Cap Balanced Corporate Class A 0.16% Franklin Bissett Canadian All Cap Balanced Corporate Class F 0.16% Franklin Bissett Canadian All Cap Balanced Corporate Class I 0.16% Franklin Bissett Canadian All Cap Balanced Corporate Class T 0.16% Franklin Templeton investments 21

24 Fees and expenses Fund Name Series Administration Fee Canadian Neutral Balanced Franklin Bissett Canadian Balanced Fund A 0.19% Franklin Bissett Canadian Balanced Fund F 0.19% Franklin Bissett Canadian Balanced Fund I 0.19% Franklin Bissett Canadian Balanced Fund T 0.19% Franklin Bissett Canadian Balanced Corporate Class A 0.19% Franklin Bissett Canadian Balanced Corporate Class F 0.19% Franklin Bissett Canadian Balanced Corporate Class T 0.19% Franklin Bissett Strategic Income Fund A 0.19% Franklin Bissett Strategic Income Fund F 0.19% Franklin Bissett Strategic Income Fund I 0.19% Franklin Bissett Strategic Income Corporate Class A 0.19% Franklin Bissett Strategic Income Corporate Class F 0.19% Franklin Bissett Strategic Income Corporate Class I 0.19% Franklin Bissett Strategic Income Corporate Class S 0.19% Franklin Bissett Strategic Income Corporate Class T 0.19% Tactical Balanced Templeton Canadian Balanced Fund A 0.23% Templeton Canadian Balanced Fund F 0.23% Templeton Canadian Balanced Fund T 0.23% Templeton Global Balanced Fund A 0.23% Templeton Global Balanced Fund F 0.23% Templeton Global Balanced Fund S 0.23% Templeton Global Balanced Fund T 0.23% Templeton Global Balanced Fund T-USD 0.23% Domestic Fixed Income Canadian Fixed Income Franklin Bissett Bond Fund A 0.15% Franklin Bissett Bond Fund F 0.15% Franklin Bissett Bond Fund I 0.15% Franklin Bissett Bond Corporate Class A 0.15% Franklin Bissett Bond Corporate Class F 0.15% Franklin Bissett Bond Corporate Class I 0.15% Franklin Bissett Bond Yield Class A 0.15% Franklin Bissett Bond Yield Class F 0.15% Franklin Bissett Bond Yield Class I 0.15% Franklin Bissett Corporate Bond Fund A 0.15% Franklin Bissett Corporate Bond Fund F 0.15% Franklin Bissett Corporate Bond Fund I 0.15% Franklin Bissett Corporate Bond Yield Class A 0.15% Franklin Bissett Corporate Bond Yield Class F 0.15% Franklin Bissett Corporate Bond Yield Class I 0.15% Franklin Bissett Corporate Bond Yield Class T 0.15% Canadian Short Term Fixed Income Franklin Bissett Canadian Short Term Bond Fund A 0.15% Franklin Bissett Canadian Short Term Bond Fund F 0.15% Franklin Bissett Canadian Short Term Bond Yield Class A 0.15% Franklin Bissett Canadian Short Term Bond Yield Class F 0.15% Franklin Bissett Canadian Short Term Bond Yield Class I 0.15% 22 Franklin Templeton investments

25 Fees and expenses Fund Name Series Administration Fee Global & International Equity Asia Pacific ex-japan Equity Templeton Asian Growth Corporate Class A 0.27% Templeton Asian Growth Corporate Class F 0.27% Templeton Asian Growth Corporate Class I 0.27% Emerging Markets Equity Templeton Emerging Markets Fund A 0.35% Templeton Emerging Markets Fund F 0.35% Templeton Emerging Markets Fund I 0.35% Templeton Emerging Markets Corporate Class A 0.35% Templeton Emerging Markets Corporate Class F 0.35% Templeton BRIC Corporate Class A 0.35% Templeton BRIC Corporate Class F 0.35% Templeton BRIC Corporate Class I 0.35% Templeton Frontier Markets Corporate Class A 0.35% Templeton Frontier Markets Corporate Class F 0.35% Global Equity Templeton Growth Fund, Ltd. A 0.35% Templeton Growth Fund, Ltd. F 0.35% Templeton Growth Fund, Ltd. I 0.35% Templeton Growth Fund, Ltd. A (Hedged) 0.35% Templeton Growth Corporate Class A 0.35% Templeton Growth Corporate Class F 0.35% Templeton Growth Corporate Class I 0.35% Franklin Mutual U.S. Shares Fund A 0.33% Franklin Mutual U.S. Shares Fund F 0.33% Franklin Mutual U.S. Shares Fund I 0.33% Franklin Mutual U.S. Shares Fund T 0.33% Franklin Mutual U.S. Shares Corporate Class A 0.33% Franklin Mutual U.S. Shares Corporate Class F 0.33% Franklin Mutual U.S. Shares Corporate Class I 0.33% Franklin Mutual U.S. Shares Corporate Class T 0.33% Franklin Mutual Global Discovery Fund A 0.33% Franklin Mutual Global Discovery Fund F 0.33% Franklin Mutual Global Discovery Fund I 0.33% Franklin Mutual Global Discovery Fund T 0.33% Franklin Mutual Global Discovery Fund T-USD 0.33% Franklin Mutual Global Discovery Corporate Class A 0.33% Franklin Mutual Global Discovery Corporate Class F 0.33% Franklin Mutual Global Discovery Corporate Class I 0.33% Franklin Mutual Global Discovery Corporate Class T 0.33% Franklin Mutual Global Discovery Corporate Class T-USD 0.33% Franklin World Growth Fund A 0.33% Franklin World Growth Fund F 0.33% Franklin World Growth Fund T 0.33% Franklin World Growth Corporate Class A 0.33% Franklin World Growth Corporate Class F 0.33% Franklin World Growth Corporate Class T 0.33% Global Small/Mid Cap Equity Templeton Global Smaller Companies Fund A 0.38% Templeton Global Smaller Companies Fund F 0.38% Templeton Global Smaller Companies Fund I 0.38% Templeton Global Smaller Companies Corporate Class A 0.38% Templeton Global Smaller Companies Corporate Class F 0.38% Templeton Global Smaller Companies Corporate Class I 0.38% Franklin Templeton investments 23

26 Fees and expenses Fund Name Series Administration Fee International Equity Templeton International Stock Fund A 0.35% Templeton International Stock Fund F 0.35% Templeton International Stock Fund I 0.35% Templeton International Stock Fund T 0.35% Templeton International Stock Corporate Class A 0.35% Templeton International Stock Corporate Class F 0.35% Templeton International Stock Corporate Class I 0.35% Templeton International Stock Corporate Class T 0.35% Templeton EAFE Developed Markets Fund A 0.35% Templeton EAFE Developed Markets Fund F 0.35% Managed Solutions Global Equity Franklin Quotential Diversified Equity Portfolio A 0.35% Franklin Quotential Diversified Equity Portfolio F 0.35% Franklin Quotential Diversified Equity Portfolio I 0.35% Franklin Quotential Diversified Equity Portfolio T 0.35% Franklin Quotential Diversified Equity Portfolio T-USD 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio A 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio F 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio I 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio S 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio T 0.35% Franklin Quotential Diversified Equity Corporate Class Portfolio T-USD 0.35% Global Balanced/Asset Allocation Global Neutral Balanced Franklin Income Fund A 0.19% Franklin Income Fund F 0.19% Franklin Income Fund I 0.19% Franklin Income Fund S 0.19% Franklin Income Fund T 0.19% Franklin Income Fund T-USD 0.19% Franklin Income Corporate Class A 0.19% Franklin Income Corporate Class F 0.19% Franklin Income Corporate Class I 0.19% Franklin Income Corporate Class S 0.19% Franklin Income Corporate Class T 0.19% Franklin Income Corporate Class T-USD 0.19% Franklin Income Hedged Corporate Class A 0.19% Franklin Income Hedged Corporate Class F 0.19% Franklin Income Hedged Corporate Class I 0.19% Franklin Income Hedged Corporate Class S 0.19% Franklin Income Hedged Corporate Class T 0.19% Managed Solutions Global Balanced Income Franklin Quotential Balanced Income Portfolio A 0.20% Franklin Quotential Balanced Income Portfolio F 0.20% Franklin Quotential Balanced Income Portfolio I 0.20% Franklin Quotential Balanced Income Portfolio S 0.20% Franklin Quotential Balanced Income Portfolio T 0.20% Franklin Quotential Balanced Income Corporate Class Portfolio A 0.20% Franklin Quotential Balanced Income Corporate Class Portfolio F 0.20% Franklin Quotential Balanced Income Corporate Class Portfolio I 0.20% Franklin Quotential Balanced Income Corporate Class Portfolio S 0.20% Franklin Quotential Balanced Income Corporate Class Portfolio T 0.20% 24 Franklin Templeton investments

27 Fees and expenses Fund Name Series Administration Fee Managed Solutions Global Equity Balanced Franklin Quotential Growth Portfolio A 0.25% Franklin Quotential Growth Portfolio F 0.25% Franklin Quotential Growth Portfolio I 0.25% Franklin Quotential Growth Portfolio T 0.25% Franklin Quotential Growth Corporate Class Portfolio A 0.25% Franklin Quotential Growth Corporate Class Portfolio F 0.25% Franklin Quotential Growth Corporate Class Portfolio I 0.25% Franklin Quotential Growth Corporate Class Portfolio S 0.25% Franklin Quotential Growth Corporate Class Portfolio T 0.25% Managed Solutions Global Fixed Income Balanced Franklin Quotential Diversified Income Portfolio A 0.17% Franklin Quotential Diversified Income Portfolio F 0.17% Franklin Quotential Diversified Income Portfolio I 0.17% Franklin Quotential Diversified Income Portfolio S 0.17% Franklin Quotential Diversified Income Portfolio T 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio A 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio F 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio I 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio S 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio T 0.17% Franklin Quotential Diversified Income Corporate Class Portfolio T-USD 0.17% Managed Solutions Global Neutral Balanced Franklin Quotential Balanced Growth Portfolio A 0.24% Franklin Quotential Balanced Growth Portfolio F 0.24% Franklin Quotential Balanced Growth Portfolio I 0.24% Franklin Quotential Balanced Growth Portfolio S 0.24% Franklin Quotential Balanced Growth Portfolio T 0.24% Franklin Quotential Balanced Growth Corporate Class Portfolio A 0.24% Franklin Quotential Balanced Growth Corporate Class Portfolio F 0.24% Franklin Quotential Balanced Growth Corporate Class Portfolio I 0.24% Franklin Quotential Balanced Growth Corporate Class Portfolio S 0.24% Franklin Quotential Balanced Growth Corporate Class Portfolio T 0.24% Global Fixed Income Global Fixed Income Templeton Global Bond Fund A 0.22% Templeton Global Bond Fund F 0.22% Templeton Global Bond Fund I 0.22% Templeton Global Bond Fund (Hedged) A 0.22% Templeton Global Bond Fund (Hedged) F 0.22% Templeton Global Bond Fund (Hedged) I 0.22% Templeton Global Bond Hedged Yield Class A 0.22% Templeton Global Bond Hedged Yield Class F 0.22% Templeton Global Bond Hedged Yield Class I 0.22% Templeton Global Bond Hedged Yield Class S 0.22% Templeton Global Bond Hedged Yield Class T 0.22% High Yield Income Franklin Strategic Income Fund A 0.21% Franklin Strategic Income Fund F 0.21% Franklin Strategic Income Fund I 0.21% Franklin High Income Fund A 0.21% Franklin High Income Fund F 0.21% Franklin High Income Fund I 0.21% Franklin Templeton investments 25

28 Fees and expenses Fund Name Series Administration Fee Specialty Equity Specialty Equity Franklin Bissett Energy Corporate Class A 0.35% Franklin Bissett Energy Corporate Class F 0.35% Franklin Bissett Microcap Fund A 0.35% Franklin Bissett Microcap Fund F 0.35% U.S. Equity U.S. Equity Franklin Bissett U.S. Focus Corporate Class A 0.28% Franklin Bissett U.S. Focus Corporate Class F 0.28% Franklin Flex Cap Growth Fund A 0.28% Franklin Flex Cap Growth Fund F 0.28% Franklin Flex Cap Growth Corporate Class A 0.28% Franklin Flex Cap Growth Corporate Class F 0.28% Franklin U.S. Rising Dividends Fund A 0.28% Franklin U.S. Rising Dividends Fund F 0.28% Franklin U.S. Rising Dividends Fund T 0.28% Franklin U.S. Rising Dividends Corporate Class A 0.28% Franklin U.S. Rising Dividends Corporate Class F 0.28% Franklin U.S. Rising Dividends Corporate Class T 0.28% Franklin U.S. Rising Dividends Hedged Corporate Class A 0.28% Franklin U.S. Rising Dividends Hedged Corporate Class F 0.28% Franklin U.S. Rising Dividends Hedged Corporate Class T 0.28% Franklin U.S. Core Equity Fund A 0.28% Franklin U.S. Core Equity Fund F 0.28% Each member of the IRC receives an annual retainer of $25,000 (with an additional retainer of $5,000 for the Chair) and a per meeting fee of $1,500 for each meeting of the IRC that the member attends, plus expenses for each meeting. These fees and expenses, in addition to other expenses associated with the IRC, such as insurance and applicable legal costs, are allocated by us amongst all Franklin Templeton Investments mutual funds, including the Funds in this simplified prospectus, in a manner that is considered to be fair and reasonable to the mutual funds. During the year ended December 31, 2013, IRC members received from the Franklin Templeton Investments mutual funds compensation in the amount of $111, for annual retainers and meeting fees as well as $10, as reimbursement for expenses in connection with performing their duties for the Franklin Templeton Investments mutual funds. Each Fund s share of the IRC s compensation is disclosed in the Fund s financial statements. TRANSACTION COSTS The Managed Yield Class Funds each pay transaction costs to the counterparties under their respective forward contracts. Based on the current arrangements which the Managed Yield Class Funds have with the counterparties, these costs are expected to range between 0.40% to 0.50% per year of the value of the forward contracts each year, but could change. 26 Franklin Templeton investments

29 Fees and expenses Fees and expenses payable directly by you SALES CHARGES: No sales charges are payable on Series F, O, R and S units. No sales charges are payable by any of the Funds or Portfolios when purchasing units of underlying funds as described in the investment strategies of the specific Fund or Portfolio descriptions. FRONT-LOAD OPTION For Series A (including A (Hedged)) and T (including T-USD) units purchased with a front-load option: Up to 6% of the purchase price as negotiated between you and your Dealer. For Series I units: Up to 2% of the purchase price as negotiated between you and your Dealer. LOW-LOAD OPTION You will pay a redemption fee if you choose to buy Series A (including A (Hedged)) or T (including T-USD) units under this option and you redeem your units within three years of buying them. The redemption fee is based on the original cost of your units and how long you hold them. We deduct the redemption fee from the value of the units you redeem. The redemption fee is paid to us. The table below shows the redemption fee schedule: 3.0% in the first year after purchase 2.5% in the second year 2.0% in the third year Nil after three years Up to 10% of your investment in Series A (including A (Hedged)) or T (including T-USD) units may be redeemed in each calendar year without a redemption charge. This right is not cumulative if you do not use it in any calendar year. Please see Free redemption entitlement on page 15. DEFERRED SALES CHARGE OPTION You will pay a redemption fee if you choose to buy Series A (including A (Hedged)) or T (including T-USD) units under this option and you redeem your units within six years of buying them. The redemption fee is based on the original cost of your units and how long you hold them. We deduct the redemption fee from the value of the units you redeem. The redemption fee is paid to us. The table below shows the redemption fee schedule: 6.0% in the first year after purchase 5.5% in the second year 5.0% in the third year 4.5% in the fourth year 4.0% in the fifth year 3.0% in the sixth year Nil after six years Up to 10% of your investment in Series A (including A (Hedged)) or T (including T-USD) units may be redeemed in each calendar year without a redemption charge. This right is not cumulative if you do not use it in any calendar year. Please see Free redemption entitlement on page 15. PROGRAM FEES FOR SERIES O AND R UNITS In consideration of the administration and management services we provide in respect of Series O and R units of the Funds and Portfolios, Series O and R investors pay us a fee (the Management and Administration Fee ), plus applicable taxes. In consideration of the investment advisory services provided by your Dealer, you pay your Dealer a fee (the Investment Advisory Services Fee ), plus applicable taxes. The Management and Administration Fee together with the Investment Advisory Services Fee are collectively referred to as the Program Fees. The Program Fees paid by a Series O or R investor are calculated at the close of trading on the TSX every business day and are paid quarterly in arrears. The Program Fees are negotiable. SWITCH FEES Up to 2% of the NAV of the switched units as negotiated between you and your Dealer. No switch fees are payable to your Dealer on switches of Series F units for Series F units of another Fund or Portfolio. Franklin Templeton investments 27

30 Fees and expenses BANK FEES You will be charged the amount of any charges levied by a bank or other financial institution for any of your cheques that are dishonoured and returned to the Funds or Portfolios for any charge related to electronic fund transfers. Impact of sales charges This table shows the fees that you would pay under the different purchase options available if you invested $1,000 in Series A (including A (Hedged)) or T (including T-USD) units of a Fund or Portfolio, you held that investment for one, three, five or ten years, and you redeemed the entire investment immediately before the end of each period. It assumes: the sales commission under the front-load option is 6%, although you may negotiate a lower sales commission with your Dealer; you haven t used your 10% free redemption entitlement under the low-load or deferred sales charge purchase options. Fee at time of purchase Fee if redeem before end of: 1 year 3 years 5 years 10 years Front-load option (1) $60 (6%) Nil Nil Nil Nil (2) (3) Low-load option Nil $30 (3%) $20 (2%) Nil Nil Deferred sales charge option (2) (4) Nil $60 (6%) $50 (5%) $40 (4%) Nil No load option Series F, O, R and S units only Nil Nil Nil Nil Nil (1) Series F, O, R and S units cannot be purchased under the front-load option and the maximum sales commission to purchase Series I units is 2%. (2) Series F, I, O, R and S units cannot be purchased under the low-load or deferred sales charge options. (3) Redemption fees apply to the low-load option only if you redeem your units within three years of purchasing them, see the Fees and expenses table for more details. (4) Redemption fees apply to the deferred sales charge option only if you redeem your units within six years of purchasing them, see the Fees and expenses table for more details. 28 Franklin Templeton investments

31 Dealer compensation Sales commissions Your Dealer usually receives a sales commission when you invest in Series A (including A (Hedged)), I or T (including T-USD) units of the Funds or Portfolios. The purchase option that you select determines the sales commission that is payable to your Dealer. FRONT-LOAD OPTION You negotiate a sales commission with your Dealer of up to 6% of the amount you invest in Series A (including A (Hedged)) or T (including T-USD) units, which is deducted from your purchase amount. To buy Series I units you negotiate a sales commission with your Dealer of up to 2% of the amount you invest, which is deducted from your purchase amount. Series F, O, R and S units are not available under this purchase option. LOW-LOAD OPTION At the time of purchase, your full purchase amount is invested in low-load Series A (including A (Hedged)) or T (including T-USD) units of the Fund or Portfolio and we pay your Dealer a sales commission of 2.5% of the amount you invest. We compensate your Dealer for the services provided to you in connection with your purchase. You will not pay a redemption fee to us unless you redeem your units within three years of buying them. Series F, I, O, R and S units are not available under this purchase option. DEFERRED SALES CHARGE OPTION At the time of purchase, your full purchase amount is invested in deferred sales charge Series A (including A (Hedged)) or T (including T-USD) units of the Fund or Portfolio and we pay your Dealer a sales commission of 5% of the amount you invest. We compensate your Dealer for the services provided to you in connection with your purchase. You will not pay a redemption fee to us unless you redeem your units within six years of buying them. Series F, I, O, R and S units are not available under this purchase option. Trailing commissions We pay your Dealer trailing commissions on a monthly or quarterly basis. We also pay trailing commissions to discount brokers for securities you purchase through your discount brokerage account. This commission is determined by us and may be changed at any time. The trailing commission is paid based on the average daily net asset value of Series A (including A (Hedged)), I or T (including T- USD) units of the Funds or the Portfolios held by a Dealer s clients during each month. No trailing commission is paid in respect of Series O and Series R units. Instead, the Investment Advisory Services Fee is negotiated by, and is payable by the investor to his or her Dealer under the Series O or Series R agreement. See Program Fees for Series O and R Units on page 27 for more details. As the following table shows, trailing commissions also depend on which purchase option you choose. Franklin Templeton investments 29

32 Dealer compensation NAME OF FUND OR PORTFOLIO TRAILING COMMISSIONS PER ANNUM (%) Series A (including A (Hedged)) or Series T (including T-USD) Series F Series I Series S Front-load Low-load Low-load Matured Units 2 Deferred Sales Charge Deferred Sales Charge Matured Units 1 Franklin Bissett Treasury Bill Fund N/A 0.30 N/A Franklin Bissett Money Market Yield Class Franklin Bissett Money Market Fund Franklin Bissett Money Market Corporate Class N/A 0.40 N/A Franklin Bissett Canadian Short Term Bond Fund N/A N/A N/A Franklin Bissett Canadian Short Term Bond Yield Class N/A 0.40 N/A Franklin Bissett Bond Fund Franklin Bissett Bond Corporate Class Franklin Bissett Bond Yield Class Franklin Bissett Corporate Bond Fund Franklin Bissett Corporate Bond Yield Class Templeton Global Bond Fund Templeton Global Bond Fund (Hedged) Franklin High Income Fund Franklin Strategic Income Fund N/A 0.50 N/A Templeton Global Bond Hedged Yield Class N/A 0.75 N/A Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio N/A 0.75 N/A Templeton Asian Growth Corporate Class Templeton BRIC Corporate Class Templeton Emerging Markets Fund Templeton Global Smaller Companies Fund Templeton Global Smaller Companies Corporate Class Templeton International Stock Fund Templeton International Stock Corporate Class Franklin Income Fund Franklin Income Corporate Class Franklin Income Hedged Corporate Class Franklin Bissett All Canadian Focus Fund Franklin Bissett All Canadian Focus Corporate Class Franklin Bissett Canadian All Cap Balanced Fund Franklin Bissett Canadian All Cap Balanced Corporate Class Franklin Bissett Canadian Balanced Fund Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Canadian Equity Fund Franklin Bissett Canadian Equity Corporate Class Franklin Bissett Canadian High Dividend Fund Franklin Bissett Canadian High Dividend Corporate Class Franklin Bissett Dividend Income Fund Franklin Bissett Dividend Income Corporate Class Franklin Bissett Strategic Income Fund Franklin Bissett Strategic Income Corporate Class Franklin Mutual U.S. Shares Fund Franklin Mutual U.S. Shares Corporate Class Franklin Mutual Global Discovery Fund Franklin Mutual Global Discovery Corporate Class Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio N/A 0.75 N/A 30 Franklin Templeton investments

33 Dealer compensation NAME OF FUND OR PORTFOLIO TRAILING COMMISSIONS PER ANNUM (%) Note: Series A (including A (Hedged)) or Series T (including T-USD) Series F Series I Series S Front-load Low-load Low-load Matured Units 2 Deferred Sales Charge Deferred Sales Charge Matured Units 1 Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Growth Corporate Class Portfolio N/A 0.75 N/A Templeton Growth Fund, Ltd. Templeton Growth Corporate Class N/A 0.50 N/A All other Funds and Portfolios N/A N/A N/A If you purchased units of a Fund or Portfolio under a previous Franklin Templeton Investments prospectus, the trailing commissions may be different to those listed above. 1 Only applicable to matured Series A (including A (Hedged)) and T (including T-USD) units. Deferred sales charge matured units refers to units that have been issued and outstanding for more than six years. 2 Only applicable to matured Series A (including A (Hedged)) and T (including T-USD) units purchased on or after June 12, Low load matured units refers to units that have been issued and outstanding for more than three years. Inter-company service fee For acting as principal distributor for Series F, O, R and S units, we pay an inter-company service fee of 0.20% in respect of those units to our affiliate, FTC ISI. In addition, FTC ISI may charge you an Investment Advisory Services Fee in respect of Series O and R units. Please see Program Fees for Series O and R Units on page 27. Marketing support programs We pay for marketing materials we provide to Dealers to help support the sale of our Funds and Portfolios. These materials may include reports and commentaries on the financial markets, securities in general or on the Funds and Portfolios themselves. In addition, we may organize and present educational conferences for Dealers to attend or pay the registration costs for Dealers to attend conferences hosted by third parties. We may share with Dealers some of the costs they incur in publishing and distributing sales communications for investors, organizing and presenting seminars to educate investors about mutual funds or organizing and presenting conferences or seminars that Dealers may attend. We may execute brokerage transactions through Dealers who have provided other services to the Funds, such as investment research, order execution, or distribution of Fund units. However, we will only execute through such a Dealer if the relevant Dealer can best execute the transactions, in accordance with our policy. See the AIF for more information. Franklin Templeton investments 31

34 Dealer compensation from management fees We paid Dealers approximately 39.72% of the total management fees we earned on all of the Funds and Portfolios in our last completed financial year. This amount included sales and trailing commissions, as well as our support of their promotional activities. Income tax considerations for investors This information is a general summary of Canadian federal income tax rules. It assumes you are a Canadian resident individual (other than a trust) that you deal at arm s length with the Funds and Portfolios and that you hold your units or shares as capital property. More detailed information is available in the Annual Information Form. This summary is not exhaustive of all tax considerations, therefore you should consult your tax advisor about your own tax situation. For Funds or Portfolios held in a registered plan The units of the Funds and Portfolios are qualified investments under the Income Tax Act (Canada) (the Tax Act ) for registered plans. If you hold units of a Fund or Portfolio in a registered plan such as a RRSP, RRIF, RESP, deferred profit sharing plan ( DPSP ) or registered disability savings plan ( RDSP ), distributions or dividends paid by the Fund or Portfolio and capital gains from a disposition of the units are generally sheltered from tax until you decide to make withdrawals from the plan. If you hold units of a Fund in a TFSA, distributions or dividends paid by the Fund and capital gains from a disposition of the units are sheltered from tax. Templeton Asian Growth Fund, Templeton Frontier Markets Fund, Franklin Bissett U.S. Focus Fund and Franklin Templeton Canadian Core Equity Fund are qualified investments for registered tax plans but each of them cannot qualify as a mutual fund trust for tax purposes because they currently do not have enough investors. If, in the future, the Funds do not qualify as mutual fund trusts, the Funds may become subject to alternative minimum tax, Part X.2 tax and Part XII.2 tax, and will not be entitled to capital gains refunds. The portfolio advisors will use their best efforts to manage the investments of the Funds so that they will not be liable for any of these taxes. An annuitant of a trust governed by a RRSP or RRIF, or the holder of a TFSA may be subject to a penalty tax in respect of Funds or Portfolios held by the RRSP, RRIF or TFSA if the Funds or Portfolios are prohibited investments as determined under the Tax Act. As long as the RRSP or RRIF annuitant, or TFSA holder, deals at arm s length with the Fund or Portfolio or does not have a significant interest in the Fund or Portfolio, the Fund or Portfolio will not be a prohibited investment under the Tax Act for the RRSP, RRIF or TFSA. For more information, contact your tax advisor. 32 Franklin Templeton investments

35 Income tax considerations for investors For Funds or Portfolios not held in a registered plan If you hold shares of Templeton Growth Fund, Ltd. or the Corporate Class Funds outside of a registered plan, you must include in computing your income for tax purposes any dividends paid to you by Templeton Growth Fund, Ltd. or the Corporate Class Funds, whether you receive these dividends in cash or they are reinvested in additional shares. Templeton Growth Fund, Ltd. or the Corporate Class Funds may distribute both ordinary dividends and capital gains dividends. Ordinary dividends will be subject to the applicable grossup and dividend tax credit rules for dividends received from taxable Canadian corporations. An enhanced gross up and dividend tax credit is available in respect of eligible dividends paid by a corporation resident in Canada which are so designated by the corporation. Capital gains dividends, whether paid in cash or reinvested, will be taxed as realized capital gains in your hands. Capital gains dividends are distributions of realized capital gains. Capital gains may be realized in various circumstances, including when Templeton Growth Fund, Ltd. or a Corporate Class Fund disposes of capital property held in its portfolio at a profit as a result of an investor switching out of that Fund. Capital gains dividends may be paid to investors in any of the Corporate Class Funds, whether or not the realized capital gains arise directly from the investment portfolio attributable to such Corporate Class Funds. In certain circumstances, capital losses realized by Templeton Growth Fund, Ltd. and Franklin Templeton Corporate Class Ltd. may be suspended and therefore will be unavailable to shelter capital gains. Generally, if you receive management fee or expense rebates from the Manager in respect of management fees or other expenses paid by Templeton Growth Fund, Ltd. or the Corporate Class Funds, you must include those payments in computing your income for tax purposes whether you received the amount in cash or additional shares. The dividends paid to an investor in the Corporate Class Funds will differ from the dividends or distributions the investor would have received if the investor had invested in a mutual fund that was not part of a multi-class structure. Because Franklin Templeton Corporate Class Ltd. is a single mutual fund corporation, its tax position will include, among other things, the revenues, deductible expenses, capital gains and capital losses of the investment portfolios attributable to all the Corporate Class Funds and the various series of shares of the Corporate Class Funds. For example, the net losses or net capital losses in respect of the investment portfolio of a particular Corporate Class Fund may be applied to reduce the net income or net realized capital gains of Franklin Templeton Corporate Class Ltd. as a whole. Generally, this will benefit the investors in the Corporate Class Funds other than the particular Corporate Class Fund. Franklin Templeton Corporate Class Ltd. will, on a discretionary basis, allocate its income or loss and the applicable taxes payable to each Corporate Class Fund. Franklin Templeton Corporate Class Ltd. may pay, on a discretionary basis, capital gains dividends to shareholders of any Corporate Class Fund so that it can receive a refund of capital gains taxes it has paid. Capital gains taxes may arise when a Corporate Class Fund disposes of capital property held in its portfolio at a profit as a result of an investor switching out of that Corporate Class Fund. The amount of capital gains dividends to be paid by a Corporate Class Fund will be affected by the number of redemptions from all Corporate Class Funds, including Corporate Class Funds not offered under this prospectus, as well as accrued gains or losses of Franklin Templeton Corporate Class Ltd. as a whole. A Corporate Class Fund may have to modify its investments as a consequence of investors switching between Corporate Class Funds. As a result, more accrued gains and losses may be recognized at an earlier time compared with mutual funds that do not allow for tax-deferred switching among funds. In certain circumstances, this may accelerate the recognition of gains by investors as a consequence of the earlier payment of capital gains dividends. Distributions made by any of the Corporate Class Funds which are a return of capital will not be taxable to you but will reduce the adjusted cost base of your shares. Where the amount deducted causes the adjusted cost base of your shares of that Class to become a negative amount, such amount will be treated as a realized capital gain. The adjusted cost base of your shares of that Class will then be increased to nil. Any future deductions which cause the adjusted cost base to become a negative amount will similarly be treated as a capital gain realized and will result in a subsequent adjustment to the adjusted cost base of your shares. The monthly distributions made by the Funds on any of the Series R, S, T and T-USD units are expected to be made as returns of capital, and will have the tax consequences as described above. We will provide you with information regarding any distributions that are a return of capital. For more information, contact your tax advisor. If you hold units of one of the other Funds or Portfolios outside of a registered plan, you must include in computing your income for tax purposes the amount of the net income and the taxable portion of net capital gains paid or payable to you by the Fund or Portfolio in the year, whether you receive these distributions in cash or they are reinvested in additional units. To the extent that these Funds or Portfolios so designate under the Tax Act, distributions of net capital gains, taxable dividends on shares of taxable Canadian corporations and foreign source income of a Fund or Portfolio paid or payable to you by the Fund or Portfolio will effectively retain their character in your hands and be subject to the special tax treatment applicable to income of that character. To the extent that the distributions to you by one of these Funds in any year exceed your share of the net income and net realized capital gains of the Fund for the year, those distributions (except to the extent that they are proceeds of disposition) will be a return of capital. Distributions which are return of capital will not be taxable to you but will reduce the adjusted cost base of your units. If the adjusted cost base of your units is reduced to less than zero you will realize a capital gain to the extent that your adjusted cost base is below zero and the adjusted cost base of the units will be increased by the amount of such gain. The monthly distributions by Franklin Bissett Dividend Income Fund, Franklin Bissett Canadian High Dividend Fund, Franklin Bissett Canadian Dividend Fund and Franklin Bissett Strategic Income Fund may include a return of capital and monthly distributions made by the Funds on any of the Series R, S, T and T-USD units are expected to be made as returns of capital, and will have the tax consequences as described above. We will provide you with information regarding any distributions that are a return of capital. For more information, contact your tax advisor. Some Funds may have investors who own a significant amount of the Fund as described under Large Investor Risk on page 5. Large redemptions by these investors may result in more accrued gains to be recognized that could increase the distribution of a Fund. When you invest in a Fund or Portfolio, the unit price may include accrued but unrealized capital gains and realized income and capital gains that have not been distributed or paid out as a dividend, as the case may be. You may be taxed on such amounts when they are distributed or paid out as a dividend, as the case may be. If you invest Franklin Templeton investments 33

36 Income tax considerations for investors in a Fund or Portfolio before a distribution or dividend date, you will have to pay tax on any distribution of income or capital gains or any dividend paid to you, even if the distribution or dividend relates to income or capital gains that were earned before you bought your units. As prescribed by the Canada Revenue Agency, we will send you a tax form each year indicating the amount of income, capital gains or return of capital distributed to you in the previous year and the amount of taxable dividends and capital gains dividends that were paid to you in the previous year, if applicable. Dispositions and Switches of Funds or Portfolios not held in a registered plan If you sell units, or if you switch units of a Fund or Portfolio for units of another Fund or Portfolio, other than a switch between Corporate Class Funds, you may realize a capital gain or loss. The capital gain (loss) will be equal to the difference between the amount you receive for the sale or switch net of any costs (such as a redemption fee) and the adjusted cost base of the units sold. If you switch shares of a Corporate Class Fund or Portfolio for shares of another Corporate Class Fund or Portfolio, the switch occurs on a tax deferred rollover basis so that you will not realize a capital gain or loss on the switch. The cost of the shares of the new Corporate Class Fund or Portfolio acquired on the switch will be equal to the adjusted cost base of the shares switched from the old Corporate Class Fund or Portfolio. A switch of units of one series of a Fund or Portfolio into units of another series of the same Fund or Portfolio will not, in itself, result in a capital gain or loss. In the case of a disposition of units, one-half of a capital gain generally is included in determining your income. In certain situations, where a shareholder or unitholder disposes of shares or units of a Fund or Portfolio and would otherwise realize a capital loss, the loss will be denied. In certain other situations, where a shareholder or unitholder receives dividends from a Fund or Portfolio and would otherwise realize a capital loss, the shareholder may be required to reduce the capital loss realized by the amount of the dividends received. For more information, contact your tax advisor. We will provide you with details on the proceeds from the sale or switch. However, in order to calculate your gain or loss, you need to know the adjusted cost base of your units before disposition. HOW TO CALCULATE THE AGGREGATE ADJUSTED COST BASE (ACB) OF YOUR INVESTMENT IN UNITS OR SHARES OF A SERIES OF A FUND OR PORTFOLIO ACB = the cost of your initial investment, including sales charges the cost of any additional purchases, including sales charges + reinvested distributions or dividends (including management fee distributions or rebates) + for a Corporate Class Fund, the adjusted cost base of any shares of another Corporate Class Fund that were switched into the Corporate Class Fund the capital returned in any distributions the ACB of any previous redemptions for a Corporate Class Fund, the adjusted cost base of any shares of the Corporate Class Fund that were switched into another Corporate Class Fund Note: The monthly distributions on Franklin Bissett Dividend Income Fund, Franklin Bissett Canadian High Dividend Fund, Franklin Bissett Canadian Dividend Fund and Franklin Bissett Strategic Income Fund and Series R, S and T (including T-USD) units of the Funds and Portfolios may include returns of capital. The adjusted cost base (ACB) of your units or shares of a Fund or Portfolio is determined by dividing the book value of your total investment in Fund or Portfolio by the number of units or shares of that series of the Fund or Portfolio that you own. Investors holding Series O or Series R units should consult with their own tax advisors with respect to the deductibility of their management and administration fees paid outside the Fund to the Manager. 34 Franklin Templeton investments

37 Additional information Under the United States Foreign Account Tax Compliance Act ( FATCA ), foreign financial institutions, the broad definition of which would include investment funds established outside of the U.S., may be subject to a 30% withholding tax on U.S. source income and gross proceeds received by a Fund or Portfolio after June 30, 2014 (the FATCA Withholding Tax ). In addition, certain Unitholders of the Fund may be subject to the FATCA withholding tax on the Fund s distributions and proceeds arising from the sale of Fund shares after December 31, Pursuant to the Intergovernmental Agreement for the Enhanced Exchange of Tax Information under the Canada-U.S. Tax Convention entered into between Canada and the U.S. on February 5, 2014 (the IGA ), and related Canadian legislation that has been proposed, in order to avoid the imposition of the FATCA Withholding Tax, the Fund and the Manager are required to report certain information with respect to Unitholders who are U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada), and certain other U.S. Persons as defined under the IGA (excluding registered plans such as RRSPs), to the CRA. The CRA will then exchange the information with the U.S. Internal Revenue Service pursuant to the provisions of the Canada-U.S. Income Tax Treaty. Accordingly, under the IGA and proposed tax amendments, you may be required to provide us with certain identifying information, including a U.S. federal tax identification number, or face penalties. This new regime is expected to become effective on July 1, While we may do so, we are not obligated, and currently do not propose, to provide tax reporting information for all Funds and Portfolios for jurisdictions other than Canada. Notice with respect to the Managed Yield Class Funds Templeton Global Bond Hedged Yield Class, Franklin Bissett Bond Yield Class, Franklin Bissett Corporate Bond Yield Class, Franklin Bissett Canadian Short Term Bond Yield Class and Franklin Bissett Money Market Yield Class Templeton Global Bond Hedged Yield Class, Franklin Bissett Bond Yield Class, Franklin Bissett Corporate Bond Yield Class, Franklin Bissett Canadian Short Term Bond Yield Class and Franklin Bissett Money Market Yield Class (the Yield Classes ) enter into forward contracts under which the Yield Classes forward sell Canadian equity securities in exchange for the approximate returns of Templeton Global Bond Fund, Franklin Bissett Bond Fund, Franklin Bissett Corporate Bond Fund, Franklin Bissett Canadian Short Term Bond Fund and Franklin Bissett Money Market Fund (the Reference Funds ), respectively, less the cost of the forward contracts. Under proposed changes to the Tax Act, the return the Yield Classes earn from the Reference Funds via the forward contracts will be treated as ordinary income rather than capital gains. Beginning in 2015, the Manager expects that the tax efficient returns earned by the Yield Classes will no longer be available. The Manager is currently assessing the implications of the current proposal and alternatives for the Yield Classes. While it awaits definitive legislation, the Manager has closed the Yield Classes to new investment. What are your legal rights? You may have the right to withdraw from your agreement to buy mutual funds within two business days of receiving the prospectus or fund facts, or to cancel your purchase within 48 hours of receiving confirmation of your order. Securities legislation in some provinces and territories also allows you to cancel an agreement to buy mutual fund units and get your money back, or to make a claim for damages, if the prospectus, annual information form, fund facts or financial statements misrepresent any facts about the Fund or Portfolio. These rights must usually be exercised within certain time limits. For more information, refer to the securities legislation of your province or territory or consult your lawyer. Franklin Templeton investments 35

38 Specific information about each of the mutual funds described in this document Introduction In this part of the prospectus, you will find everything you need to help you evaluate and compare the Funds and Portfolios in light of your investment needs. The Fund descriptions, which begin on page 39, and the Portfolio descriptions which begin on page 141, give you specific information about each Fund and Portfolio. Information that is common to most of the Funds and Portfolios is described here. You should refer back to this section when reading the Fund or Portfolio description to make sure you have complete information about a particular Fund or Portfolio. Certain terms are defined in the glossary. Fund details This section gives you information such as type of mutual fund, the Fund or Portfolio s start-up date, the nature of the securities offered by the Fund or Portfolio (series of units or shares), the Fund or Portfolio s eligibility for registered plans, the name of the portfolio advisor and/or sub-advisor for the Fund or Portfolio. Templeton Growth Fund, Ltd. and Franklin Templeton Corporate Class Ltd. are mutual fund corporations. All other Funds and Portfolios are mutual fund trusts. We state whether the securities you are buying are units of a mutual fund trust or shares of a mutual fund corporation. All of the Funds and Portfolios are eligible for registered plans such as RRSPs, RRIFs, DPSPs, RESPs, RDSPs and TFSAs. WHAT IS THE DIFFERENCE BETWEEN A GLOBAL EQUITY FUND AND AN INTERNATIONAL EQUITY FUND? A global equity fund may invest in any country in the world, including Canada and the United States. An international equity fund may invest anywhere outside Canada and the United States. What does the fund invest in? This section includes the Fund or Portfolio s fundamental investment objective and the investment strategies it uses in trying to achieve its objective. Investments in Derivatives WHAT IS A DERIVATIVE? A derivative is a contract between two parties that derives its value from another security such as common shares, bonds, currencies or a market index. Some examples of the most common derivatives are: A forward contract is an agreement to buy or sell currency, commodities or securities at an agreed price for future delivery. Forward contracts are often used to reduce risk. For example, if you knew you would be buying goods priced in U.S. dollars in six months time, you might buy U.S. dollars now for delivery in six months to avoid the risk of the U.S. dollar rising in value. This is called hedging. An option gives the buyer the right, but not the obligation, to buy or sell currency, commodities or securities at an agreed price within a certain period of time. For example, you might hedge the share price of a stock you own by buying an option to sell it at its current price for the next six months. If the share price falls, all you will lose is the price of the option. Of course, if it goes up, you will not make as much, because you have paid for the option. 36 Franklin Templeton investments

39 Specific information about each of the mutual funds described in this document The Funds may invest in derivatives to the full extent permitted by Canadian securities legislation. The Funds may invest in derivatives as follows: to hedge against losses from movements in stock markets, currency exchange rates or interest rates; to gain indirect exposure to individual securities, markets or other investments, instead of buying the underlying securities or other investments directly; or to seek to generate additional income. The Funds and Portfolios, other than the money market funds, have received an exemption from the Canadian securities regulatory authorities from certain of the derivative rules set out in applicable Canadian securities legislation. This exemption allows each of these Funds and Portfolios to: enter into interest rate swaps, credit default swaps or, if the transaction is for hedging purposes, currency swaps or forwards that, in each case, have a remaining term to maturity of greater than three years; use as cover bonds, debentures, notes or other evidences of indebtedness that are liquid, floating rate evidences of indebtedness or securities of our money market funds; and use as cover, when a Fund or Portfolio holds a long position in a debt-like security that has a component that is a long position in a forward contract or in a standardized future or forward contract or when a Fund or Portfolio is entitled to receive payments under a swap, a right or obligation to sell an equivalent quantity of the underlying interest of the standardized future, forward or swap. For more details on this exemption, please refer to the AIF. We note which Funds and Portfolios may invest in derivatives in the fund descriptions. Except as noted below, the portfolio advisors of the Funds are not currently registered to advise with respect to futures contracts and until such time as they obtain the necessary registration, futures contracts will not be entered into. Three portfolio advisors have been granted an exemption from the requirement to register in respect of futures contracts. However, currently, Franklin Income Fund is the only fund that invests in futures contracts. Securities lending, repurchase and reverse transactions The Funds may enter into securities lending transactions, repurchase transactions and reverse repurchase transactions in order to earn additional income. Securities lending involves lending securities held by a Fund to qualified borrowers who have posted collateral. The Fund retains its exposure to changes in the value of the borrowed securities while earning additional fees. A repurchase transaction involves a Fund selling a security at one price and agreeing to buy it back from the same party at a fixed price. While the Fund retains its exposure to changes in the value of the portfolio securities, it also earns fees for participating in the repurchase transaction. A reverse repurchase transaction involves a Fund buying a security at one price and agreeing to sell it back to the same party at a higher price. The difference between the Fund s purchase price for the security and the resale price provides the Fund with additional income. Short selling The Funds may, in the future, engage in a limited amount of short selling. Currently, the Manager is amending its policies and procedures to reflect the Canadian legal requirements regarding short selling. A short sale is where a Fund borrows securities from a lender and sells them in the open market ( short sale ). The Fund must repurchase the securities at a later date in order to return them to the lender. In the interim, the proceeds from the short sale are deposited with the lender and the Fund pays interest to the lender on the borrowed securities. If the value of the securities declines between the time of the initial short sale and the time it repurchases and returns the securities, the Fund makes a profit for the difference (less any interest paid by the Fund to the lender). Short selling provides the Funds with more opportunities for profits when markets are generally volatile or declining. The Funds will engage in short selling only within certain controls and limitations. Securities will be sold short only for cash. At the time securities of a particular issuer are sold short by a Fund: (i) the Fund has either borrowed or arranged to borrow from a qualified lender the issuer s securities; (ii) the aggregate market value of all securities of that issuer sold short will not exceed 5% of the total net assets of the Fund; and (iii) the aggregate market value of all securities sold short by the Fund does not exceed 20% of the total net assets of the Fund. A Fund also will hold cash cover (as defined in NI ) in an amount, including the Fund s assets deposited with lenders as security in connection with the short sale transactions, that is at least 150% of the aggregate market value of all securities it sold short on a daily marked-to-market basis. No proceeds from short sales will be used by a Fund to purchase long positions other than cash cover. Portfolio turnover rate greater than 70% The higher a Fund s or Portfolio s portfolio turnover rate in a year, the greater the trading costs payable by the Fund or Portfolio, and the greater the chance that you may receive a distribution or dividend from the Fund or Portfolio that must be included in computing your income for tax purposes for that year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund or Portfolio. Funds and Portfolios, other than money market funds, with a portfolio turnover rate greater than 70%, are identified in the investment strategies section of their Fund or Portfolio descriptions. What are the risks of investing in the fund? The main risks of a Fund s or Portfolio s investment strategy are listed under this heading in point form, and in order of importance. Funds or Portfolios that invest in other Funds are subject to the same risks as the Funds that they invest in. You can read a complete description of each kind of risk in the first part of this prospectus under Different kinds of mutual funds have different kinds of risks on page 2. Who should invest in this Fund? The Who should invest in this fund? section on each Fund-specific page tells you the type of investor the Fund or Portfolio may be suitable for. This information is intended as a general guide only. When you are choosing investments, you should, together with your financial advisor, consider your whole portfolio, your investment objectives and your risk tolerance level. Franklin Templeton investments 37

40 Specific information about each of the mutual funds described in this document Investment risk classification methodology In the Who Should Invest in this Fund? section and in the How Risky Is It? section of the most recently filed Fund Facts, we assign each Fund with an investment risk rating to assist you and your financial advisor in determining whether the Fund is appropriate for you. Each Fund is assigned an investment risk rating in one of the following categories: low, low to medium, medium, medium to high or high risk. The risk ratings were determined using a methodology based on recommendations of the Fund Risk Classification Task Force of the Investment Funds Institute of Canada (the Task Force ). The Task Force concluded that the most comprehensive, easily understood form of risk is historical volatility risk as measured by the standard deviation of fund performance. However, the Task Force recognized that other types of risk, both measurable and non-measurable, may exist and reminds investors that a Fund s historical volatility may not be indicative of its future volatility, just as a Fund s historical performance may not be indicative of future returns. As such, the Task Force recommends that, in addition to considering the standard deviation of fund performance, fund managers should also consider qualitative factors such as investment style and security selection process. Consequently, we determine the risk rating of each Fund using the following process: 1. Determining each Fund s five year annualized standard deviation for the series of the Fund with the longest performance history using standard deviation numbers from an independent investment research organization; 2. Determining each Fund s preliminary risk classification using the standard deviation bands set out in the Task Force s guidelines; 3. Reviewing the preliminary risk classification for each Fund compared to its three and ten year annualized standard deviations (using standard deviation numbers from an independent investment research organization). During the course of this review, we may, but are not required to, also look from time to time at certain qualitative factors such as a Fund s style or security selection process; and 4. Determining whether the risk classification assigned to each Fund in step 2 above is appropriate for the Fund and whether any adjustment is required in light of the analysis performed in step 3 above. For Funds with less than three years of performance history or Funds that have undergone an investment objective change ( New Fund ), we assign the New Fund a risk classification based either on: (i) the five year annualized standard deviation of a Franklin Templeton fund offered in a foreign jurisdiction that has the same portfolio manager, investment objective and strategies ( Foreign Fund ) as the New Fund; or (ii) the five year annualized standard deviation of the New Fund s benchmark, where the New Fund does not have an equivalent Foreign Fund. Because the risk rating assigned to each Fund is based on its annualized standard deviation over a limited period(s) of time and may/may not include time periods when the capital markets have experienced volatility, the inclusion/elimination of periods of market volatility from the standard deviation calculation will impact a Fund s risk rating. The risk rating assigned to each Fund is reviewed by a committee of our senior management. We review the risk ratings of the Funds on an annual basis, as well as when there is a material change to a Fund. A full description of the methodology we use to determine the risk ratings of the Funds is available on request, at no cost, by calling toll-free , by contacting us at [email protected] or by writing us at Franklin Templeton Investments Corp., 5000 Yonge Street, Suite 900, Toronto, Ontario, M2N 0A7. Distribution policy This section tells you when you can expect to receive dividends (from a mutual fund corporation) or distributions (from a mutual fund trust). We may choose to pay distributions at other times, including when you redeem units. Dividends or distributions on shares or units held in Franklin Templeton Investments registered plans are always reinvested in additional shares or units of the Funds or Portfolios. Dividends or distributions on shares or units held in other registered plans or in non-registered accounts are automatically reinvested in additional shares or units of the Fund or Portfolio unless you tell us in writing that you prefer to receive cash dividends or distributions. Dividends or distributions on Series R, S and T (including T-USD) units held in non-registered accounts are automatically reinvested unless you tell us in writing that you prefer to have these dividends or distributions paid out as cash. With our Flexible Series T solution, you also have the option of choosing to have a portion of your dividends or distributions paid out as cash and the remainder reinvested. Please speak with your investment advisor for more information on Flexible Series T. Although Series T-USD units are denominated in Canadian dollars, the monthly distributions for Series T-USD units are an amount fixed in U.S. dollars and will therefore not fluctuate based on the exchange rate of the Canadian dollar. The distributions for Series T-USD units (and the NAV) will therefore differ from that of the Canadian dollar Series T units. You will be taxed on your dividends or distributions (other than a return of capital) even if the dividends or distributions are reinvested to purchase additional units or shares, unless your investment is held in a registered plan. Fund expenses indirectly borne by investors Mutual funds pay their expenses out of fund assets. This means investors in a fund indirectly pay for these expenses through lower returns. For those Funds and Portfolios having more than one series of units, the expenses of each series are tracked separately. For Series O and R, there are no expenses indirectly borne by investors. The chart allows you to compare the cost of investing in the Fund or Portfolio with the cost of other mutual funds. It shows the cumulative expenses you would have paid over various time periods if you: invested $1,000 in Series A, A (Hedged), F, I, S, T or T-USD units of any of the Funds or Portfolios earned a total annual return of 5%, which may be different from the series actual return in any given year and is only used for illustrative purposes as required by the securities regulators paid the same management expense ratio each year as you did in the Fund s or Portfolio s last completed financial year. See Fees and expenses on page 20 of this prospectus for more information about the cost of investing in Series O and R units of the Funds and Portfolios. 38 Franklin Templeton investments

41 Templeton TEMPLETON GLOBAL EQUITY GROUP For more than 70 years, the Templeton organization has been synonymous with global investment management governing a suite of equity, balanced and income funds. Armed with a team of experienced analysts around the globe, we are able to scour the world for undervalued companies and maintain a local presence by conducting thorough in-person visits with thousands of companies each year. TEMPLETON S INVESTMENT STRATEGY Search Globally Templeton has always believed that when searching for the best investment opportunities, bargains are borderless. To find the most promising companies for our portfolios, we leverage the experience and resource infrastructure developed over the last 70 years, including analysts and offices that span the globe, from Asia to Europe to the Americas. Seek Value As value-oriented investors, we search worldwide for stocks selling at prices we believe are low relative to their true value. Stocks are typically mispriced for a reason, and our analysts must distinguish a cheap stock from a true bargain. Perform Fundamental, Bottom-Up Research Our research begins with the company. We conduct in-person visits and perform extensive fundamental research to model a company s potential future earnings, cash flow and asset value relative to its stock price. Then we compare the results to other companies in its industry and versus companies regionally and globally to determine if a stock is undervalued. Practice Patient, Long-Term Investing We have always believed it s better to adhere to a sound investment plan than to jump in and out of the market. As disciplined investors, we evaluate a company s potential for earnings and growth over a five-year horizon. We believe this discipline is what drives more consistent long-term results, in terms of both lower volatility and strong returns. In the words of Sir John, we prefer to buy when others are despondently selling and sell when others are avidly buying. TEMPLETON EMERGING MARKETS GROUP Templeton Emerging Markets Group generally follows the same overall Templeton approach, but focuses on investment opportunities in emerging and frontier markets, where it can capitalize on its experience, its on-the-ground presence and the dynamic economic growth potential of these countries. Franklin Templeton investments 39

42 Templeton Asian Growth Fund FUND DETAILS Series O is presently capped (closed to new investors). May become available at the discretion of the Manager. Type of fund: Asia Pacific ex-japan equity Start date: Series O units: December 31, 2010 Nature of securities: Series O units of a mutual fund trust Eligible for registered plans: No Management fee: Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Templeton Asset Management Ltd., Singapore What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of companies located in the Asia region including, but not limited to Hong Kong, India, Indonesia, Korea, Malaysia, People s Republic of China, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam and in companies expected to benefit from developments in the economies of the Asia region. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. Asian companies ( Asian Companies ) are those: whose principal securities trading markets are in Asia region countries; or that derive at least 50% of their total revenues or profits from either goods or services produced or sales made in Asia region countries; or that have at least 50% of their assets in Asia region countries; or that are linked to currencies of Asia region countries; or that are organized under the laws of, or with principal offices in, Asia region countries. The Fund: will, under normal market conditions, invest at least 80% of its assets in equity securities of Asian Companies may invest in American, Global and European Depositary Receipts, which are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic corporation may invest in securities of issuers in non-asia region countries, including but not limited to Australia, New Zealand or Japan may invest in debt obligations of Asian Companies or countries in the Asia region selects investments from different industries and companies of any size may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest up to 7.5% of its net assets, taken at market value at the time of investment, in securities of Templeton China Opportunities Fund ( TCOF ), a sub-fund forming part of Franklin Templeton Selected Markets Funds. TCOF seeks capital appreciation by investing all or almost all of its assets in China A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Due to restrictions imposed on foreign investors in the China A-share market, for a one year period following its initial investment, TCOF is subject to a lock-up period in which its investment principal may not be repatriated (the Lock-Up Period ). TCOF is managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. Under the laws of Luxembourg, TCOF is considered as an undertaking for collective investment in transferable securities ( UCITS ) equivalent investment fund and manages its portfolio in accordance with the investment restrictions applicable to UCITS. The investment restrictions applicable to UCITS are substantially similar to those that govern the Fund in Canada. As part of its investment strategy, investing in TCOF provides the Fund access to Chinese stocks listed in the People s Republic of China ( PRC ) and thereby obtain clear exposure to the local opportunities presented by the Chinese economy. What are the risks of investing in the fund? emerging markets risk equity risk foreign investment risk smaller companies risk specialization risk large investor risk portfolio management risk liquidity risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk short selling risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 43.80% of the Fund, Franklin Quotential Balanced Income Portfolio held 14.02% of the Fund and Franklin Quotential Growth Portfolio held 11.05% of the Fund. See page 2 for a full discussion of these risks. In addition to the risks listed above, because of certain restrictions imposed by PRC investment regulations regarding the repatriation of assets invested in China A-shares, after the Lock-Up Period, TCOF may, from time to time, be delayed in meeting redemption requests. These potential delays could adversely impact the Fund s ability to redeem assets out of TCOF. Who should invest in this fund? Investors: seeking above average capital gain potential of a fund concentrated on the Asia region, on its own or as a small portion of a well diversified portfolio planning to hold their investment for the long term 40 Franklin Templeton investments

43 TEMPLETON ASIAN GROWTH FUND This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment Risk Classification Methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) Please see Fund expenses indirectly borne by investors on page 38. Franklin Templeton investments 41

44 Templeton Asian Growth Corporate Class FUND DETAILS Type of fund: Asia Pacific ex-japan equity Start date: Series A, F, I and O shares: December 31, 2010 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.30% Series F shares: 1.30% Series I shares: 1.80% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Templeton Asset Management Ltd., Singapore is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton Asian Growth Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Asian Growth Fund, whose investment objective is long-term capital appreciation by investing primarily in equity securities of companies located in the Asia region including, but not limited to Hong Kong, India, Indonesia, Korea, Malaysia, People s Republic of China, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam and in companies expected to benefit from developments in the economies of the Asia region. invests up to 100% of its assets in units of Templeton Asian Growth Fund and therefore the share price of Templeton Asian Growth Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Asian Growth Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 40 for a full description of the Investment strategies of Templeton Asian Growth Fund. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? See page 40 for a list of the risks associated with the Fund s investment in Templeton Asian Growth Fund. The Fund has these additional risks: tracking risk series risk corporate class fund risk tax risk As of May 2, 2014, one securityholder held 17.07% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking above average capital gain potential of a fund concentrated on the Asia region, on its own or as a small portion of a well diversified portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. This Fund allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. 42 Franklin Templeton investments

45 Templeton BRIC Corporate Class FUND DETAILS Type of fund: Emerging markets equity Start date: Series A, F and O shares: June 28, 2004 Nature of securities: Eligible for registered plans: Yes Series I shares: March 30, 2009 Series A, F, I and O shares of a mutual fund corporation Management fee: Series A shares: 2.30% Series F shares: 1.30% Series I shares: 1.80% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Templeton Asset Management Ltd., Singapore What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of companies based in the BRIC countries - Brazil, Russia, India and China (including Hong Kong and Taiwan) and in companies expected to benefit from developments in the economies of the BRIC countries. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. Companies based in BRIC countries are those companies ( BRIC Companies ): that are organized under the laws of, or with a principal office in, or for which the principal trading market is in Brazil, Russia, India or the People s Republic of China (China) (including Hong Kong and Taiwan); or that derive a significant portion of their profits or sales from goods or services sold or produced in BRIC countries; or that have a significant portion of their assets in BRIC countries. The Fund may also invest in companies located anywhere in the world ( Global BRIC Companies ), provided that the advisor expects those issuers to benefit from developments in the economy of a BRIC country. The Fund: will, under normal market conditions, invest at least 65% of its assets in equity securities in BRIC Companies or Global BRIC Companies may invest solely in BRIC Companies, or solely in Global BRIC Companies, or in a combination of BRIC Companies and Global BRIC Companies may invest in debt obligations of BRIC Companies and Global BRIC Companies selects investments from different industries and companies of any size may invest in American, Global and European Depositary Receipts, which are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic corporation may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? emerging markets risk equity risk foreign investment risk smaller companies risk liquidity risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk series risk underlying fund risk corporate class fund risk tax risk short selling risk securities lending risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a diversified portfolio of equities in BRIC Companies and Global BRIC Companies fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium to high investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 43

46 Templeton Canadian Balanced Fund FUND DETAILS Type of fund: Canadian asset allocation Start date: Series A units: October 17, 1994 Series F and O units: November 24, 2000 Series T units: June 17, 2002 Nature of securities: Series A, F, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% Portfolio advisor: Fixed income portion: Franklin Bissett Investment Management, Calgary, Alberta Equity portion: Franklin Templeton Investments Corp., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE High long-term total return from interest, dividends and capital gains by investing primarily in a mix of Canadian equities and fixed-income securities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophies on pages 39 (equity) and 90 (fixed income). We will review and adjust the proportion of assets invested in the three main asset classes equities, fixed-income and money market securities from time to time according to various factors including the relative values of equity and fixed-income securities interest rates current and anticipated economic conditions. The Fund: actively manages a mix of equity, fixed income and money market securities based on the portfolio advisor s views of changing economic conditions may invest up to 30% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk large investor risk capital depletion risk (Series T units only) portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk See page 2 for a full discussion of these risks. 44 Franklin Templeton investments Who should invest in this fund? Investors: seeking a mix of Canadian assets actively managed to take advantage of changing economic conditions planning to hold their investment for the medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund.

47 Templeton Canadian Stock Fund FUND DETAILS Type of fund: Canadian equity Start date: Series A units: January 3, 1989 Nature of securities: Eligible for registered plans: Yes Series F and O units: November 24, 2000 Series A, F and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in Canadian equities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. The Fund: may invest up to 30% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. Who should invest in this fund? Investors: seeking a core Canadian equity fund planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk foreign investment risk derivative risk large investor risk portfolio management risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk See page 2 for a full discussion of these risks. Franklin Templeton investments 45

48 Templeton Canadian Stock Corporate Class FUND DETAILS Type of fund: Canadian equity Start date: Series A, F and O shares: June 18, 2001 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton Canadian Stock Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Canadian Stock Fund, whose investment objective is long-term capital appreciation by investing primarily in Canadian equities invests in units of Templeton Canadian Stock Fund and therefore the share price of Templeton Canadian Stock Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Canadian Stock Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 45 for a full description of the Investment strategies of Templeton Canadian Stock Fund. What are the risks of investing in the fund? See page 45 for a list of the risks associated with the Fund s investment in Templeton Canadian Stock Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk As of May 2, 2014, one securityholder held 11.61% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core Canadian equity fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 46 Franklin Templeton investments

49 Templeton EAFE Developed Markets Fund FUND DETAILS Type of fund: International equity Start date: Series F units: January 2, 1994 Nature of securities: Eligible for registered plans: Yes Series A and O units: November 24, 2000 Series A, F and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of non-north American international equities. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. The Fund: selects investments from many different industries and countries to enhance returns and reduce risks may invest in any number of companies from one country or industry may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. Who should invest in this fund? Investors: seeking a well-diversified core international fund with minimal to no emerging markets or smaller companies exposure planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk foreign investment risk large investor risk derivative risk portfolio management risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Templeton Institutional Balanced Trust held 31.91% of the Fund, one securityholder held 29.95% of the Fund and Franklin Bissett Canadian Balanced Fund held 14.19% of the Fund. See page 2 for a full discussion of these risks. Franklin Templeton investments 47

50 Templeton Emerging Markets Fund FUND DETAILS Type of fund: Emerging markets equity Start date: Series A units: September 20, 1991 Nature of securities: Eligible for registered plans: Yes Series F, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 2.25% Series F units: 1.25% Series I units: 1.75% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Templeton Asset Management Ltd., Singapore What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equities of companies in emerging markets. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. The Fund may invest in equities of companies that trade in emerging markets, or that trade anywhere in the world and earn 50% of their revenue from production or sales in emerging markets. An emerging market is any country with: a stock market capitalization of less than 3% of the Morgan Stanley Capital International ( MSCI ) World Index, at the time of purchase. a low or middle income economy, as determined by the International Bank for Reconstruction and Development. Examples of low or middle income economies include Indonesia, Colombia, Peru, Philippines, South Africa and Thailand. The Fund: selects investments from many different industries and emerging market countries to provide a diversified portfolio of emerging market securities may invest in American, Global and European Depositary Receipts, which are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic corporation may, to the extent permitted under securities legislation, invest in equity linked notes ( Notes ) for the purpose of gaining exposure to a specific security basket of securities or an equity index, provided that an investment in the securities to which these relate would be eligible for direct investment and consistent with the Fund s investment objective. A Note s return on investment is typically tied to the performance of an equity security or securities, whereby the value of the Note at maturity and/or its coupon is determined by movements in the value of the underlying equity security. Generally, the market value of a Note should follow that of the underlying equity security but there is no guarantee that it will fluctuate in the same manner. Notes may or may not be listed on a recognized stock exchange or dealt in a regulated market. These Notes will largely carry the same risks as traditional equity securities but will be subject to the credit risk of the issuer of the Notes and not that of the issuer of the underlying equity may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? emerging markets risk equity risk foreign investment risk smaller companies risk large investor risk liquidity risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking above average capital gain potential of an emerging markets fund, on its own or as a small portion of a well diversified portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 48 Franklin Templeton investments

51 Templeton Emerging Markets Corporate Class FUND DETAILS Type of fund: Emerging markets equity Start date: Series A, F and O shares: June 18, 2001 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.25% Series F shares: 1.25% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Templeton Asset Management Ltd., Singapore is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton Emerging Markets Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Emerging Markets Fund, whose investment objective is long-term capital appreciation by investing primarily in equities of companies in emerging markets invests in units of Templeton Emerging Markets Fund and therefore the share price of Templeton Emerging Markets Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Emerging Markets Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 48 for a full description of the Investment strategies of Templeton Emerging Markets Fund. What are the risks of investing in the fund? See page 48 for a list of the risks associated with the Fund s investment in Templeton Emerging Markets Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking above average capital gain potential of an emerging markets fund, on its own or as a small portion of a well diversified portfolio to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 49

52 Templeton Frontier Markets Fund FUND DETAILS Series O is presently capped (closed to new investors). May become available at the discretion of the Manager. Type of fund: Emerging markets equity Start date: Series O units: July 18, 2011 Nature of securities: Series O units of a mutual fund trust Eligible for registered plans: No Management fee: Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Templeton Asset Management Ltd., Singapore What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of companies located in frontier market countries and in companies expected to benefit from developments in the economies of frontier market countries. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. Frontier market countries are: countries with a stock market capitalization of less than 3% of the Morgan Stanley Capital International World Index. a sub-set of those currently considered to be developing by the World Bank, the International Finance Corporation, the United Nations, or the countries authorities, which are typically located in the Asia-Pacific region, Central and Eastern Europe, the Middle East, Central and South America, and Africa. Examples of developing countries may include Bangladesh, Sri Lanka, Azerbaijan, Romania, Jordan, Tunisia, Columbia, Paraguay, Kenya and Zambia. Frontier markets companies ( Frontier Markets Companies ) are those: whose principal securities trading markets are in frontier market countries; or that derive 50% or more of their total revenue or profit from either goods or services produced or sales made in frontier market countries; or that have 50% or more of their assets in frontier market countries; or that are linked to currencies of frontier market countries; or that are organized under the laws of, or with principal offices in, frontier market countries. As the economies and capital markets of frontier market countries evolve, the above definitions of frontier market countries and Frontier Markets Companies may change slightly from time to time. The Fund: will, under normal market conditions, invest at least 80% of its assets in equity securities of Frontier Market Companies may invest in American, Global and European Depositary Receipts, which are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic corporation selects investments from different industries and companies of any size, including small and micro-cap companies may invest in securities of issuers that are not Frontier Markets Companies may invest in debt obligations of issuers located in frontier market countries, which may be lower-rated or unrated may invest in illiquid securities may, to the extent permitted under securities legislation, invest in equity linked notes ( Notes ) for the purpose of gaining exposure to a specific security basket of securities or equity index, provided that an investment in the securities to which these relate would be eligible for direct investment and consistent with the Fund s investment objective. A Note s return on investment is typically tied to the performance of an equity security or securities, whereby the value of the Note at maturity and/or its coupon is determined by movements in the value of the underlying equity security. Generally, the market value of a Note should follow that of the underlying equity security but there is no guarantee that it will fluctuate in the same manner. Notes may or may not be listed on a recognized stock exchange or dealt in a regulated market. These Notes will largely carry the same risks as traditional equity securities but will be subject to the credit risk of the issuer of the Notes and not that of the issuer of the underlying equity may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. 50 Franklin Templeton investments

53 TEMPLETON FRONTIER MARKETS FUND What are the risks of investing in the fund? emerging markets risk equity risk foreign investment risk smaller companies risk specialization risk large investor risk liquidity risk portfolio management risk interest rate risk low-rated security risk credit risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk short selling risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 35.84% of the Fund, Templeton Frontier Markets Corporate Class held 19.40% of the Fund and Franklin Quotential Balanced Income Portfolio held 11.37% of the Fund. See page 2 for a full discussion of these risks. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) Please see Fund expenses indirectly borne by investors on page 38. Who should invest in this fund? Investors: seeking the above average capital gain potential of a fund focused on investing in frontier market countries, on its own or as a small portion of a well diversified portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 51

54 Templeton Frontier Markets Corporate Class FUND DETAILS All series are presently capped (closed to new investors). May become available at the discretion of the Manager. Type of fund: Emerging markets equity Start date: Series A, F and O shares: July 18, 2011 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.25% Series F shares: 1.25% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Templeton Asset Management Ltd., Singapore is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton Frontier Markets Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Frontier Markets Fund, whose investment objective is long-term capital appreciation by investing primarily in equity securities of companies located in frontier market countries and in companies expected to benefit from developments in the economies of frontier market countries. invests up to 100% of its assets in units of Templeton Frontier Markets Fund and therefore the share price of Templeton Frontier Markets Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Frontier Markets Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 50 for a full description of the Investment strategies of Templeton Frontier Markets Fund. What are the risks of investing in the fund? See page 51 for a list of the risks associated with the Fund s investment in Templeton Frontier Markets Fund. The Fund has these additional risks: tracking risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking the above average capital gain potential of a fund focused on investing in frontier market countries, on its own or as a small portion of a well diversified portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. This Fund allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 52 Franklin Templeton investments

55 Templeton Global Balanced Fund FUND DETAILS Type of fund: Global neutral balanced Start date: Series F, O and T units: December 12, 2005 Series A and T-USD units: June 26, 2008 Series S units: June 21, 2010 Nature of securities: Series A, F, O, S, T and T-USD units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.85% Series F units: 0.85% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series S units: 0.85% Series T units: 1.85% Series T-USD units: 1.85% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Fixed income portion: Franklin Advisers, Inc., San Mateo, California Equity portion: Templeton Global Advisors Limited, Nassau, Bahamas What does the fund invest in? INVESTMENT OBJECTIVE Current income while maintaining prospects for capital appreciation by investing primarily in debt and equity securities issued around the world. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: seeks income by investing in a combination of corporate, agency and government debt securities issued in numerous countries, including developed and developing countries and emerging markets, as well as stocks that offer or could offer attractive dividend yields seeks capital appreciation by investing in equity securities of companies from a variety of industries such as utilities, oil, gas and consumer goods located anywhere in the world, including emerging markets may invest in debt securities that are rated below investment grade, sometimes called junk bonds or high yield securities may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include cross hedging where the Fund attempts to hold a net long position of a particular currency versus a second currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency may hold all of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to: invest more than 10% of the Fund s assets invested in fixed income securities issued or guaranteed by various governments or permitted international agencies that are traded on mature and liquid markets and provided that the acquisition of these securities is consistent with the Fund s investment objective. As part of our investment strategy, this option gives us more flexibility to choose the most appropriate investments for the Fund. invest up to 7.5% of its net assets, taken at market value at the time of investment, in securities of Templeton China Opportunities Fund ( TCOF ), a sub-fund forming part of Franklin Templeton Selected Markets Funds. TCOF seeks capital appreciation by investing all or almost all of its assets in China A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Due to restrictions imposed on foreign investors in the China A-share market, for a one year period following its initial investment, TCOF is subject to a lock-up period in which its investment principal may not be repatriated (the Lock-Up Period ). TCOF is managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. Under the laws of Luxembourg, TCOF is considered as an undertaking for collective investment in transferable securities ( UCITS ) equivalent investment fund and manages its portfolio in accordance with the investment restrictions applicable to UCITS. The investment restrictions applicable to UCITS are substantially similar to those that govern the Fund in Canada. As part of its investment strategy, investing in TCOF provides the Fund access to Chinese stocks listed in the People s Republic of China ( PRC ) and thereby obtain clear exposure to the local opportunities presented by the Chinese economy. What are the risks of investing in the fund? equity risk foreign investment risk credit risk low-rated security risk smaller companies risk large investor risk capital depletion risk (Series S, T and T-USD units only) portfolio management risk derivative risk liquidity risk interest rate risk repurchase/reverse repurchase agreements risk series risk short selling risk securities lending risk See page 2 for a full discussion of these risks. In addition to the risks listed above, because of certain restrictions imposed by PRC investment regulations regarding the repatriation of assets invested in China A-shares, after the Lock-Up Period, TCOF may, from time to time, be delayed in meeting redemption requests. These potential delays could adversely impact the Fund s ability to redeem assets out of TCOF. Franklin Templeton investments 53

56 TEMPLETON GLOBAL BALANCED FUND Who should invest in this fund? Investors: who are seeking current income from global issuers with prospects for capital gains planning to hold their investment for a medium term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series S, T and T-USD units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series S, T and T-USD units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series S Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. 54 Franklin Templeton investments

57 Templeton Global Bond Fund FUND DETAILS Type of fund: Global fixed income Start date: Series A units: July 15, 1988 Series F, I and O units: June 18, 2001 Nature of securities: Series A, F, I and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.75% Series F units: 0.75% Series I units: 1.15% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE High current income with capital appreciation by investing primarily in fixed-income securities and preferred shares issued around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may not invest more than 25% of the total value of the invested assets (excluding cash) in a particular industry engages, at the discretion of the portfolio advisor, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and the use of proxy hedges where the Fund attempts to hold a net long position of a particular currency versus a second currency that is expected to perform similarly to the first currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency may invest in debt securities that are rated below investment grade, sometimes called junk bonds or high yield securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest more than 10% of the Fund s assets in securities issued or guaranteed by various governments or permitted international agencies that are traded on mature and liquid markets and provided that the acquisition of these securities is consistent with the Fund s investment objective. As part of our investment strategy, this option gives us more flexibility to choose the most appropriate investments for the Fund. What are the risks of investing in the fund? foreign investment risk interest rate risk credit risk concentration risk low-rated security risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: mainly interested in current income from global issuers planning to invest for the medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 55

58 Templeton Global Bond Fund (Hedged) FUND DETAILS Type of fund: Global fixed income Start date: Series A, F, I and O units: August 19, 2013 Nature of securities: Series A, F, I and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.75% Series F units: 0.75% Series I units: 1.15% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and the Underlying Fund Sub-advisor: Franklin Advisers, Inc., San Mateo, California is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE High current income with capital appreciation by investing substantially all of its assets in units of Templeton Global Bond Fund (the Underlying Fund ). The Fund invests in derivatives to attempt to eliminate the impact of currency fluctuations between the U.S. and Canadian dollars. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Global Bond Fund, whose investment objective is high current income with capital appreciation by investing primarily in fixed-income securities and preferred shares issued around the world invests in forward contracts to hedge as completely as possible against fluctuations caused by changes in exchange rates between the U.S. and Canadian dollars. As a result, the Fund will not generally suffer/benefit from any fluctuation in the value of the U.S. dollar against the Canadian dollar. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. Investment Strategies of the Underlying Fund The Underlying Fund: may not invest more than 25% of the total value of the invested assets (excluding cash) in a particular industry engages, at the discretion of the portfolio advisor, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and the use of proxy hedges where the Underlying Fund attempts to hold a net long position of a particular currency versus a second currency that is expected to perform similarly to the first currency (by selling forward contracts) even if the Underlying Fund does not hold securities denominated in the second currency may invest in debt securities that are rated below investment grade, sometimes called junk bonds or high yield securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Underlying Fund s other investment strategies in a manner considered most appropriate to achieving the Underlying Fund s overall investment objectives and enhancing the Underlying Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Underlying Fund and described under Investments in Derivatives on page 37. The Underlying Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Underlying Fund s overall investment objective and enhancing the Underlying Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Underlying Fund has obtained approval of the Canadian securities regulators to invest more than 10% of the Underlying Fund s assets in securities issued or guaranteed by various governments or permitted international agencies that are traded on mature and liquid markets and provided that the acquisition of these securities is consistent with the Underlying Fund s investment objective. As part of our investment strategy, this option gives us more flexibility to choose the most appropriate investments for the Underlying Fund. What are the risks of investing in the fund? Since the Fund invests in units of the Underlying Fund, the unit price of the Fund rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the unit price of the Fund not precisely tracking the unit price of the Underlying Fund. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. Hedging will limit the opportunity for gains that would be realized in the event of an increase in the value of the U.S. dollar relative to the Canadian dollar. During times of extreme market stress or volatility the Fund may not be able to prevent losses from exposure to U.S. currency. The Fund has these additional risks: foreign investment risk interest rate risk credit risk concentration risk low-rated security risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk As of May 2, 2014, two securityholders held 66.70% and 17.27%, respectively, of the Fund. See page 2 for a full discussion of these risks. 56 Franklin Templeton investments

59 TEMPLETON GLOBAL BOND FUND (HEDGED) Who should invest in this fund? Investors: mainly interested in current income from global issuers planning to hold their investment for the medium to long term seeking to lower their risk of currency fluctuations between the U.S. and Canadian dollars This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes income on the last business day of each quarter (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 57

60 Templeton Global Bond Hedged Yield Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Global fixed income Start date: Series A, F, I, O, R, S, and T shares: September 27, 2010 Nature of securities: Series A, F, I, O, R, S, and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.75% Series F shares: 1.25% Series I shares: 1.15% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 1.25% Series T shares: 1.75% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE Provide a return similar to that of Templeton Global Bond Fund, primarily by entering into forward contracts or other permitted derivatives in order to provide the Fund with a tax-efficient return determined with reference to the performance of Templeton Global Bond Fund. If, in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities and preferred shares issued around the world. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may invest in a portfolio of Canadian equity securities and enter into forward contracts (as further described below) under which it will forward sell the equity securities in order to provide a return in a tax efficient manner similar to the return, in U.S. dollars, of an investment in Templeton Global Bond Fund (the Reference Fund ), less certain expenses including the transaction costs of using the derivative strategy. Under proposed changes to the Tax Act, the return the Fund earns from the Reference Fund via the forward contracts will be treated as ordinary income rather than capital gains. The Manager expects that, until 2015, the earnings derived from its derivative transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Beginning in 2015, or at such earlier time when in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Manager expects that the earnings generated will be interest income within the Corporate Class structure. There will be performance lags or tracking errors with respect to the Fund s derivative strategy which will result in the return of the Fund not precisely tracking the returns of Templeton Global Bond Fund may, in certain circumstances, where in the opinion of the portfolio advisor the derivative strategy is not beneficial to shareholders, cease to use the derivative strategy and instead invest primarily in fixed income securities and preferred shares issued around the world similar to the investments made by Templeton Global Bond Fund in order to obtain a return similar to Templeton Global Bond Fund. In the event that the Fund invests directly in fixed income securities and preferred shares issued around the world, the Fund expects that the earnings generated will be interest income within the Corporate Class structure. Although the Fund will invest in securities similar to investments made by Templeton Global Bond Fund, the Fund s portfolio may differ from that of Templeton Global Bond Fund which may result in the return of the Fund not precisely tracking the returns of Templeton Global Bond Fund may use the derivative strategy in combination with direct investments in fixed income securities and may increase or decrease its investments in equity securities and forward contracts and correspondingly decrease or increase its position in fixed income securities and preferred shares issued around the world at any time where the portfolio advisor believes it is advantageous to do so may, as part of the derivative strategy, utilize forward foreign currency contracts in order to seek to provide a return, in Canadian dollars, that is similar to the return, in U.S. dollars, of an investment in the Reference Fund may, from time to time, invest up to 10% of the net assets of the Fund in other mutual funds, including those managed by the Manager may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. Under the terms of the equity forward contracts, under which the Fund seeks to provide a return similar to the Reference Fund, the Fund will agree to deliver at maturity of the forward contracts, equity securities owned by the Fund in return for a cash payment based on the total return of an investment in Templeton Global Bond Fund over the term of the forward contract (less costs of the derivative transaction). Physical settlement of the forward contracts is expected to generate capital gains, which generally are subject to favourable tax treatment compared with ordinary income. The Fund may enter into a variety of forward contracts as permitted by the securities regulatory authorities with one or more counterparties. The settlement obligations of the Fund will be by physical delivery of the equity securities in return for the cash payment of the forward price by the counterparty. The equity securities subject to the forward contract will be pledged to the counterparty as security for the Fund s obligations under the forward contract. Under the terms of the currency forward contracts, under which the Fund seeks to reduce the impact of fluctuations in the currency exchange rate between the Canadian and U.S. dollars on the Fund s returns, the Fund will agree to make or receive a payment at maturity of the forward contracts based on the difference in the relative values of the Canadian and U.S. dollars over the term of the forward contract (less the costs of the derivative transaction). The share price of the Fund rises and falls with the changes in the net asset value of the units of Templeton Global Bond Fund in combination with fluctuations in the currency exchange rate between the Canadian and U.S. dollars. 58 Franklin Templeton investments

61 TEMPLETON GLOBAL BOND HEDGED YIELD CLASS The Fund may terminate the forward contracts prior to maturity at any time or the counterparty may terminate the forward contract upon the occurrence of certain events. Early termination may require delivery of securities and/or a payment by one or both parties. The portfolio turnover rate of the Fund is high because of the frequent settlements of the forward contracts. The earnings generated upon settlement of the contracts are expected to generate capital gains for the Fund and result in capital gains dividends to shareholders that, when shares are held outside of a registered plan, must be included in income for tax purposes. The Fund is not expected to incur trading costs as a result of its high portfolio turnover rate. Investment Objective and Strategies of the Reference Fund Please refer to page 55 for the Investment objective and Investment strategies of Templeton Global Bond Fund. What are the risks of investing in the fund? If Templeton Global Bond Fund suspends redemptions, the Fund may be unable to value part of its portfolio or redeem shares. If the Fund cannot find suitable counterparties with whom to enter into derivative arrangements, the Fund may be unable to track the performance of Templeton Global Bond Fund. The Fund s utilization of forward foreign currency contracts may limit investors from benefiting from any potential decrease in the value of the Canadian dollar. In addition, the Fund is subject to the following risks: foreign investment risk interest rate risk concentration risk large investor risk portfolio management risk derivative risk capital depletion risk (Series R, S and T shares only) tracking risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class risk tax risk short selling risk See page 2 for a full discussion of these risks. Generally, the Fund is not an appropriate investment for registered plans as they are indifferent to the tax treatment of distributions provided by the Fund and the Fund will have lower returns than a direct investment in Templeton Global Bond Fund due to the costs of derivative transactions. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S, and T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S, and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years indirectly Expenses payable borne over: by investors based on $1,000 initial investment (in $) Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Who should invest in this fund? Investors: seeking long term positive total returns (in Canadian dollars) from a global bond fund investment that are realized in a tax efficient manner who wish to protect against a rise in the value of the Canadian dollar against the U.S. dollar planning to invest for the medium to long term who, in the case of Series R, S, and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 59

62 Templeton Global Smaller Companies Fund FUND DETAILS Type of fund: Global equity Start date: Series A units: January 3, 1989 Nature of securities: Eligible for registered plans: Yes Series F, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00%* Series I units: 1.25% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series F units: -0.02% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of smaller companies around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. Smaller companies are those with a market capitalization of less than US$2.5 billion, at the time of initial purchase. The Fund: will primarily hold, excluding cash, equity securities of smaller companies in developed countries, as well as in emerging markets may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may invest in any country or industry in any proportion selects investments from many different industries and countries to enhance returns and reduce risk may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest up to 7.5% of its net assets, taken at market value at the time of investment, in securities of Templeton China Opportunities Fund ( TCOF ), a sub-fund forming part of Franklin Templeton Selected Markets Funds. TCOF seeks capital appreciation by investing all or almost all of its assets in China A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Due to restrictions imposed on foreign investors in the China A-share market, for a one year period following its initial investment, TCOF is subject to a lock-up period in which its investment principal may not be repatriated (the Lock-Up Period ). TCOF is managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. Under the laws of Luxembourg, TCOF is considered as an undertaking for collective investment in transferable securities ( UCITS ) equivalent investment fund and manages its portfolio in accordance with the investment restrictions applicable to UCITS. The investment restrictions applicable to UCITS are substantially similar to those that govern the Fund in Canada. As part of its investment strategy, investing in TCOF provides the Fund access to Chinese stocks listed in the People s Republic of China ( PRC ) and thereby obtain clear exposure to the local opportunities presented by the Chinese economy. What are the risks of investing in the fund? equity risk foreign investment risk emerging markets risk smaller companies risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk liquidity risk As of May 2, 2014, one securityholder held 11.02% of the Fund. See page 2 for a full discussion of these risks. In addition to the risks listed above, because of certain restrictions imposed by PRC investment regulations regarding the repatriation of assets invested in China A-shares, after the Lock-Up Period, TCOF may, from time to time, be delayed in meeting redemption requests. These potential delays could adversely impact the Fund s ability to redeem assets out of TCOF. Who should invest in this fund? Investors: seeking above average capital gain potential of a smaller companies fund, on its own or as a small portion of a more conservative portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 60 Franklin Templeton investments

63 TEMPLETON GLOBAL SMALLER COMPANIES FUND Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 61

64 Templeton Global Smaller Companies Corporate Class FUND DETAILS Type of fund: Global equity Start date: Series A, F, I and O shares: June 18, 2001 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00%* Series I shares: 1.25% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager *Management Fee Waiver: Series F shares: -0.02% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton Global Smaller Companies Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton Global Smaller Companies Fund, whose investment objective is long-term capital appreciation by investing primarily in equity securities of smaller companies around the world invests in units of Templeton Global Smaller Companies Fund and therefore the share price of Templeton Global Smaller Companies Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Global Smaller Companies Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 60 for a full description of the Investment strategies of Templeton Global Smaller Companies Fund. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? See page 60 for a list of the risks associated with the Fund s investment in Templeton Global Smaller Companies Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking above average capital gain potential of a smaller companies fund, on its own or as a small portion of a more conservative portfolio to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 62 Franklin Templeton investments

65 Templeton Growth Fund, Ltd. FUND DETAILS Type of fund: Global equity Start date: Series A shares: November 29, 1954 Nature of securities: Eligible for registered plans: Yes Series F, I and O shares: November 24, 2000 Series A (Hedged) shares: March 28, 2013 Series A, A (Hedged), F, I and O shares of a mutual fund corporation Management fee: Series A shares: 1.85% Series A (Hedged) shares: 1.85% Series F shares: 0.85% Series I shares: 1.10%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager *Management Fee Waiver: Series I shares: -0.23% Portfolio advisor: Templeton Global Advisors Limited, Nassau, Bahamas What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of companies around the world, and fixed-income securities issued by governments or companies of any country. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. The portfolio advisor selects investments from many different industries and countries to enhance returns and reduce risk. The Fund: may invest in any country or industry in any proportion primarily invests in equity securities of mid to large cap companies in developed countries, but may also invest in small cap companies and companies of any size in emerging markets may hold equities and fixed income securities in any proportion, provided that in normal market conditions not less than 75% of its invested assets (excluding cash and money market securities) are invested in equity securities in the case of Series A (Hedged), invests in forward contracts to hedge as completely as possible against currency fluctuations between the Canadian dollar and the currencies of securities held by the Fund ( Currencies of Investment ) on the portion of the Fund s net assets attributable to Series A (Hedged) shares outstanding. As a result, Series A (Hedged) shares will not generally suffer/benefit from any fluctuation in the value of the Currencies of Investment against the Canadian dollar. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the Currencies of Investment and the Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest up to 7.5% of its net assets, taken at market value at the time of investment, in securities of Templeton China Opportunities Fund ( TCOF ), a sub-fund forming part of Franklin Templeton Selected Markets Funds. TCOF seeks capital appreciation by investing all or almost all of its assets in China A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Due to restrictions imposed on foreign investors in the China A-share market, for a one year period following its initial investment, TCOF is subject to a lock-up period in which its investment principal may not be repatriated (the Lock-Up Period ). TCOF is managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. Under the laws of Luxembourg, TCOF is considered as an undertaking for collective investment in transferable securities ( UCITS ) equivalent investment fund and manages its portfolio in accordance with the investment restrictions applicable to UCITS. The investment restrictions applicable to UCITS are substantially similar to those that govern the Fund in Canada. As part of its investment strategy, investing in TCOF provides the Fund access to Chinese stocks listed in the People s Republic of China ( PRC ) and thereby obtain clear exposure to the local opportunities presented by the Chinese economy. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk emerging markets risk smaller companies risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk tax risk short selling risk liquidity risk See page 2 for a full discussion of these risks. In addition to the risks listed above, because of certain restrictions imposed by PRC investment regulations regarding the repatriation of assets invested in China A-shares, after the Lock-Up Period, TCOF may, from time to time, be delayed in meeting redemption requests. These potential delays could adversely impact the Fund s ability to redeem assets out of TCOF. In the case of Series A (Hedged), the investment by Templeton Growth Fund, Ltd. in forward contracts to hedge as completely as possible against currency fluctuations between the Canadian dollar and the Currencies of Investment on the portion of the Fund s net assets attributable to Series A (Hedged) shares Franklin Templeton investments 63

66 TEMPLETON GROWTH FUND, LTD. outstanding is unlikely to result in the impact of currency fluctuations being eliminated altogether. The returns of Series A (Hedged) will differ from the returns of Series A. Hedging will limit the opportunity for gains that would be realized in the event of an increase in the value of the Currencies of Investment relative to the Canadian dollar. During times of extreme market stress or volatility, the Fund may not be able to prevent losses in Series A (Hedged) from exposure to the Currencies of Investment. Who should invest in this fund? Investors: seeking a well-diversified core global equity fund planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gain dividends in June of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series A (Hedged) Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 64 Franklin Templeton investments

67 Templeton Growth Corporate Class FUND DETAILS Type of fund: Global equity Start date: Series A, F, I and O shares: June 18, 2001 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.85%* Series F shares: 0.85% Series I shares: 1.10%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager *Management Fee Waiver: Series A shares: -0.15% Series I shares: -0.09% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Templeton Global Advisors Limited, Nassau, Bahamas is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in shares of Templeton Growth Fund, Ltd. (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in shares of Templeton Growth Fund, Ltd., whose investment objective is long-term capital appreciation by investing primarily in equity securities of companies around the world, and fixed-income securities issued by governments or companies of any country invests in shares of Templeton Growth Fund, Ltd. and therefore the share price of Templeton Growth Corporate Class rises and falls with the share price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton Growth Corporate Class not precisely tracking the share price of the Underlying Fund. See page 63 for a full description of the Investment strategies of Templeton Growth Fund, Ltd. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? See page 63 for a list of the risks associated with the Fund s investment in Templeton Growth Fund, Ltd. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a well-diversified core global equity fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 65

68 Templeton International Stock Fund FUND DETAILS Type of fund: International equity Start date: Series A units: January 3, 1989 Series F, I and O units: November 24, 2000 Series T units: June 17, 2002 Nature of securities: Series A, F, I, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series I units: 1.30%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% *Management Fee Waiver: Series I units: -0.03% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of companies outside Canada and the United States. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 39. The Fund: selects investments from many different industries and countries to enhance returns and reduce risk may invest in any number of companies from one country or industry may, although its mandate is to invest primarily outside Canada and the United States, invest in Canadian or U.S. money market or fixed-income securities primarily holds equity securities of mid to large cap companies in developed countries, but may also invest in small cap companies and companies of any size in emerging markets may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest up to 7.5% of its net assets, taken at market value at the time of investment, in securities of Templeton China Opportunities Fund ( TCOF ), a sub-fund forming part of Franklin Templeton Selected Markets Funds. TCOF seeks capital appreciation by investing all or almost all of its assets in China A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Due to restrictions imposed on foreign investors in the China A-share market, for a one year period following its initial investment, TCOF is subject to a lock-up period in which its investment principal may not be repatriated (the Lock-Up Period ). TCOF is managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. Under the laws of Luxembourg, TCOF is considered as an undertaking for collective investment in transferable securities ( UCITS ) equivalent investment fund and manages its portfolio in accordance with the investment restrictions applicable to UCITS. The investment restrictions applicable to UCITS are substantially similar to those that govern the Fund in Canada. As part of its investment strategy, investing in TCOF provides the Fund access to Chinese stocks listed in the People s Republic of China ( PRC ) and thereby obtain clear exposure to the local opportunities presented by the Chinese economy. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk emerging markets risk smaller companies risk large investor risk capital depletion risk (Series T units only) portfolio management risk derivative risk repurchase/reverse repurchase agreements risk securities lending risk underlying fund risk series risk short selling risk liquidity risk See page 2 for a full discussion of these risks. In addition to the risks listed above, because of certain restrictions imposed by PRC investment regulations regarding the repatriation of assets invested in China A-shares, after the Lock-Up Period, TCOF may, from time to time, be delayed in meeting redemption requests. These potential delays could adversely impact the Fund s ability to redeem assets out of TCOF. Who should invest in this fund? Investors: seeking a well-diversified core international equity fund seeking geographic diversification outside North America planning to hold their investment for the medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 66 Franklin Templeton investments

69 TEMPLETON INTERNATIONAL STOCK FUND Distribution policy For Series A, F, I and O units, the Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. For Series T units, the Fund may distribute any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and may distribute any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may also make distributions on Series T units at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 67

70 Templeton International Stock Corporate Class FUND DETAILS Type of fund: International equity Start date: Series A, F, I and O shares: June 18, 2001 Nature of securities: Eligible for registered plans: Yes Series T shares: September 27, 2007 Series A, F, I, O and T shares of a mutual fund corporation Management fee: Series A shares: 2.00% Series F shares: 1.00% Series I shares: 1.30% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Templeton International Stock Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Templeton International Stock Fund, whose investment objective is long-term capital appreciation by investing primarily in equity securities of companies outside Canada and the United States invests in units of Templeton International Stock Fund and therefore the share price of Templeton International Stock Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Templeton International Stock Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 66 for a full description of the Investment strategies of Templeton International Stock Fund. What are the risks of investing in the fund? See page 66 for a list of the risks associated with the Fund s investment in Templeton International Stock Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a well-diversified core international equity fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch seeking geographic diversification outside North America planning to hold their investment for the medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 68 Franklin Templeton investments

71 Franklin FRANKLIN TEMPLETON FIXED INCOME GROUP This integrated global fixed income platform comprises over 100 investment professionals located in offices around the world. The group launched its first fixed income portfolio more than 40 years ago, and has been managing money for the institutional market for more than 30 years. A global fixed income leader, the group has depth and breadth of experience in all major sectors of the fixed income market, including investment-grade and high-yield corporate bonds, global sovereign and emerging market debt, mortgage and asset-backed securities, bank loans and municipal securities. The Franklin Templeton Fixed Income Group is a seamlessly integrated, global fixed income platform that manages a diversified range of standard and customized investment strategies. Composed of 148 investment professionals based in London, New York, San Mateo, and Singapore combined with local asset management teams in South Korea, India, China, Brazil, Japan, Vietnam, Malaysia, and the U.A.E. the Fixed Income Group has more than 40 years of investment experience. Based on size, global presence and depth of expertise, and leveraging our comprehensive understanding of the interaction of the global economic environment and the world s bond markets, the Fixed Income Group is strategically positioned to identify alpha opportunities across all major market sectors. Fixed Income Policy Committee The Fixed Income Policy Committee establishes the long-term macroeconomic investment themes that guide the portfolio construction process across all fixed income strategies. Composed of the Fixed Income Group Chief Investment Officer and other senior fixed income investment professionals from the teams described below, the policy committee meets weekly in sessions alternating between macroeconomic and sector discussions. The committee s views and recommendations form the basis for strategy implementation decisions. Sector Teams The Fixed Income Group devotes extensive resources to research, with teams of analysts focusing on the following major fixed income sectors: Corporate Credit (Investment Grade and High Yield) Bank Loans Global Sovereign and Emerging Markets Mortgages and Structured Finance U.S. Treasuries Municipals Research analysts conduct in-depth fundamental analysis of U.S. and non-u.s. government and credit issues, recommending specific investments and industry weights to the strategy teams in the portfolio construction process. Strategy Teams Implementing the investment themes and recommendations developed by the Fixed Income Policy Committee, lead portfolio managers for each strategy optimize the portfolio construction process, making top-down implementation decisions regarding duration, yield curve, as well as country, currency, and sector allocations. Factored into these decisions are the in-depth sector insight offered by analysts and the risk management measures recommended by quantitative analysts. Quantitative Research Group Dedicated to the Fixed Income Group, the quantitative research team works closely with portfolio managers in the portfolio construction process. Strategically located on the trading desks, quantitative analysts provide the strategy teams with portfolio risk management and analytical tools, portfolio optimizations, and performance attribution. They also make alpha-generating recommendations and contribute their risk management perspective at regular portfolio review meetings. FRANKLIN EQUITY GROUP Franklin Equity Group has been working with investors globally for more than 65 years to pursue their long-term goals. The group offers investors a range of investment options, managed by experienced teams and based on bottom-up security selection, integrated and disciplined risk management and an unwavering commitment to solid long-term returns to our shareholders. While each of the investment teams has a unique investment philosophy and process, they share core tenets which underpin their collective research efforts: We are Research Focused Extensive research is at the core of all Franklin equity portfolios. Employing proprietary research models, Franklin portfolio managers and analysts conduct rigorous quantitative and qualitative analysis in order to examine fundamentals and estimate growth potential. Field visits are an integral and regular part of our process before, and after, a stock is purchased. Industry and consumer trends that impact the Franklin Templeton investments 69

72 long-term prospects of companies are also evaluated. In addition, the portfolio teams leverage in-house credit research, which provides additional insight into a company s financial health. Our Experience Runs Deep Founded in 1947, Franklin Equity Group has a team of 70 investment professionals spread around the globe with an average tenure of over 11 years. Over 30 dedicated industry specialists, organized into sector teams, provide a robust research platform leveraged by the Franklin Equity Group portfolio teams. We Evaluate and Manage Risk We strive to provide investors with strong risk-adjusted returns over the long term by employing an integrated and disciplined risk management process to help monitor, evaluate and manage portfolio risk across the teams. We Offer Comprehensive Equity Solutions Franklin Equity Group s investment expertise is offered to investors through products that span market cap, sector and risk profile to meet a multitude of investments needs. Franklin Core/Hybrid Strategies Our Franklin Core/Hybrid strategies, which include Franklin Income Fund and Franklin U.S. Core Equity Fund, implement an investment philosophy based on identifying investments which offer a compelling trade-off between risk and reward potential. Using our bottom-up research, we seek to exploit fundamental views that differ from the market consensus regarding growth potential or valuation. Some of these opportunities may be undervalued or out-of-favor securities that offer high current income and/or strong long-term appreciation potential. Within our hybrid funds, we consider a wide range of investments including equities, fixed income, and convertible securities to meet our investment objectives. Franklin Growth Strategies Our Franklin Growth strategies, which include Franklin Flex Cap Growth Fund, are built around solid growth companies with sustainable competitive advantages demonstrating strong revenue and projections and/or leading edge products or processes. Additional growth indicators include proprietary technology or intellectual property, a unique marketing niche, distinct positioning as industry leaders and visionary management. Investments may be in companies across the market cap spectrum and diversified across sectors. Franklin Value Strategies Our Franklin Value strategies utilize an investment framework which emphasizes high quality companies with attractive valuations, low debt levels, solid management teams, and, in the case of Franklin U.S. Rising Dividends Fund, excellent track records of consistent dividend growth and the potential for future dividend growth. We employ investing patience, adhering to a buy-and-hold strategy that generally results in low portfolio turnover. 70 Franklin Templeton investments

73 Franklin Flex Cap Growth Fund FUND DETAILS Type of fund: U.S. equity Start date: Series A units: April 14, 1997 Series F and O units: November 24, 2000 Nature of securities: Series A, F and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE Capital appreciation by investing primarily in U.S. equities demonstrating accelerating growth, increasing profitability, or above-average growth or growth potential compared to the overall economy. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. The portfolio advisor will focus on high quality companies, with strong management teams and financial strength, which have potential for sustainable growth over a full market cycle. While the Fund will likely hold securities from many different industries, it may hold substantial positions in the following: technology, including electronic technology and technology services companies health care and biotechnology industrials consumer discretionary. The Fund: primarily invests in the U.S. but may also invest up to 25% of its assets in non-u.s. securities may invest in initial public offerings and private or illiquid securities such as late stage venture capital financings, as permitted under securities regulations may invest in companies of any size, including smaller and mid-size companies for capital growth opportunities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk foreign investment risk smaller companies risk liquidity risk regulatory risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 39.33% of the Fund and Franklin Quotential Balanced Income Portfolio held 12.75% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a portfolio of U.S. companies with sustainable, high-growth potential seeking a U.S. equity fund that combines investment in small, medium and large companies, with a focus on companies within the $5 billion to $20 billion capitalization range planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 71

74 Franklin Flex Cap Growth Corporate Class FUND DETAILS Type of fund: U.S. equity Start date: Series A, F and O shares: June 18, 2001 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Advisers, Inc., San Mateo, California is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Flex Cap Growth Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Flex Cap Growth Fund, whose investment objective is capital appreciation by investing primarily in U.S. equities demonstrating accelerating growth, increasing profitability, or aboveaverage growth or growth potential compared to the overall economy invests in units of Franklin Flex Cap Growth Fund and therefore the share price of Franklin Flex Cap Growth Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Flex Cap Growth Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 71 for a full description of the Investment strategies of Franklin Flex Cap Growth Fund. What are the risks of investing in the fund? See page 71 for a list of the risks associated with the Fund s investment in Franklin Flex Cap Growth Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a portfolio of U.S. companies with sustainable, high-growth potential to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch seeking a U.S. equity fund that combines investment in small, medium and large companies, with focus on companies within the $5 billion to $20 billion capitalization range planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 72 Franklin Templeton investments

75 Franklin High Income Fund FUND DETAILS Type of fund: Global high yield fixed income Start date: Series A, F and O units: February 17, 2003 Series I units: July 3, 2009 Nature of securities: Series A, F, I and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units:1.65% Series F units: 0.75% Series I units: 1.15% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in high-yield, lower-rated debt securities issued in the U.S. and throughout the world. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. Under normal market conditions, the Fund invests mainly in high yield, lowerrated debt securities and preferred stocks issued by companies and governments in any country, developed or developing. The Fund: may invest in bonds, notes, debentures, convertible securities and preferred stocks issued by companies and governments from around the world may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and cross hedging, where the Fund attempts to hold a net long position of a particular currency versus a second currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. Such loans may include term loans, and to the extent permitted by securities regulations, revolving credit facilities, synthetic term loans, delayed draw term loans and receivables purchase facilities. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are re-determined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium. may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may invest in debt securities that have floating or variable payment schedules including floating rate notes issued by governments and corporate issuers, secured floating rate bank loans, Treasury Inflation Indexed bonds (TIPs) and adjustable-rate asset-backed securities under normal market conditions, utilizes forward foreign currency contracts to hedge at least 85% of the Fund portfolio so as to reduce the impact of fluctuations in the currency exchange rates between the Canadian and U.S. dollars may invest in senior and subordinated debt securities and zero coupon bonds may invest all of its assets in debt securities that are rated below investment grade sometimes called junk bonds or high yield securities, some of which may be debt securities that are in default may, from time to time, hold: (i) equity securities issued in exchange for debt instruments by companies recently emerging from or facing financial restructuring, that resulted from the conversion of convertible securities or that were received as part of a bond offering; and (ii) warrants/rights issued by companies recently emerging from or facing financial restructuring may hold all or a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? interest rate risk credit risk low-rated security risk liquidity risk foreign investment risk emerging markets risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Diversified Income Portfolio held 34.49% of the Fund and Franklin Quotential Diversified Income Corporate Class Portfolio held 23.84% of the Fund. See page 2 for a full discussion of these risks. Franklin Templeton investments 73

76 FRANKLIN HIGH INCOME FUND Who should invest in this fund? Investors: who are seeking a high level of current income and some capital gains planning to hold their investment for the medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 74 Franklin Templeton investments

77 Franklin Income Fund FUND DETAILS Type of fund: Global neutral balanced Start date: Series A, F, I, O, R, S, T and T-USD units: June 28, 2013 Nature of securities: Series A, F, I, O, R, S, T and T-USD units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.85% Series F units: 0.85% Series I units: 1.40% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series R units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series S units: 0.85% Series T units: 1.85% Series T-USD units: 1.85% Portfolio advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE Maximize income while maintaining prospects for long-term capital appreciation by investing primarily in a diversified portfolio of debt and equity securities issued in the U.S. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. Under normal market conditions, the Fund invests in a diversified portfolio of debt and equity securities. The Fund may shift its investments from one asset class to another based on the investment manager s analysis of the best opportunities for the Fund s portfolio in a given market. The equity securities in which the Fund invests consist primarily of common and preferred stocks, as well as convertible securities, while its debt security investments include all varieties of fixed, floating and variable rate instruments including secured and unsecured bonds, senior floating rate and term loans, mortgage-backed securities and other asset-backed securities, debentures, zero coupon bonds, notes, and short-term debt instruments. In analyzing both debt and equity securities, the portfolio advisor considers a variety of factors, including: a company s relative value based on such factors as dividend yield, anticipated cash flow, interest or dividend coverage, asset coverage, and earnings prospects; the experience and strength of the company s management; the company s changing financial condition and market recognition of the change; the company s sensitivity to changes in interest rates and business conditions; and the company s debt maturity schedules and borrowing requirements. The Fund: seeks income by investing in corporate, foreign and U.S. treasury bonds, as well as stocks with dividend yields the portfolio advisor believes are attractive seeks capital appreciation by investing in common stocks of companies from a variety of industries but may, from time to time, depending on economic conditions, have significant investments in particular sectors primarily invests in the U.S. but may also invest up to 25% of its assets in non-u.s. securities either directly or through depositary receipts, which are certificates typically issued by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic corporation may invest all of its assets in debt securities that are rated below investment grade sometimes called junk bonds or high yield securities, some of which may be debt securities that are in default may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. Such loans may include term loans, and to the extent permitted by securities regulations, revolving credit facilities, synthetic term loans, delayed draw term loans and receivables purchase facilities. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are re-determined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium may invest in senior and subordinated debt securities and zero coupon bonds may invest in debt securities that have floating or variable payment schedules including floating rate notes issued by governments and corporate issuers, secured floating rate bank loans, Treasury Inflation Indexed bonds (TIPs) and adjustable-rate asset-backed securities may, from time to time, seek to hedge against market risk using a variety of derivative instruments. The portfolio advisor considers various factors, such as availability and costs, in deciding whether, when and to what extent to enter into derivative transactions may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may, to the extent permitted under securities legislation, invest in equity linked notes ( Notes ) for the purpose of gaining exposure to a specific security, basket of securities or an equity index provided that an investment in the securities to which these relate would be eligible for direct investment and consistent with the Fund s investment objective. A Note s return on investment is typically tied to the performance of an equity security or securities, whereby the value of the Note at maturity and/or its coupon is determined by movements in the value of the underlying equity security. Generally, the market value of a Note should follow that of the underlying equity security but there is no guarantee that it will fluctuate in the same manner. Notes may or may not be listed on a recognized stock exchange or dealt in a regulated market. These Notes will largely carry the same risks as traditional equity securities but will be subject to the credit risk of the issuer of the Notes and not that of the issuer of the underlying equity may invest in illiquid securities, as permitted by Canadian securities regulation may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, futures contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. Franklin Templeton investments 75

78 FRANKLIN INCOME FUND The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? interest rate risk credit risk low-rated security risk equity risk reinvestment risk foreign investment risk concentration risk regulatory risk derivative risk portfolio management risk liquidity risk large investor risk capital depletion risk (Series T units only) repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Income Corporate Class held 40.83% of the Fund and the Manager held 15.29% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking exposure to income generating U.S. securities with prospects for capital appreciation seeking to access a portfolio of both equity and fixed income securities via a single fund planning to hold their investment for a medium term to long term who, in the case of Series R, S, T and T-USD units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F, I and O units, the Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. For Series R, S, T and T-USD units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S, T and T-USD units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 76 Franklin Templeton investments

79 Franklin Income Corporate Class FUND DETAILS Type of fund: Global neutral balanced Start date: Series A, F, I, O, R, S, T and T-USD shares: June 28, 2013 Nature of securities: Series A, F, I, O, R, S, T and T-USD shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.85% Series F shares: 0.85% Series I shares: 1.40% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.85% Series T shares: 1.85% Series T-USD shares: 1.85% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Advisers, Inc., San Mateo, California is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Income Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Income Fund, whose investment objective is to maximize income while maintaining prospects for long-term capital appreciation by investing primarily in a diversified portfolio of debt and equity securities issued in the U.S invests in units of Franklin Income Fund and therefore the share price of Franklin Income Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Income Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 75 for a full description of the Investment Strategies of Franklin Income Fund. What are the risks of investing in the fund? See page 76 for a list of the risks associated with the Fund s investment in Franklin Income Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking exposure to income generating U.S. securities with prospects for capital appreciation in a fund to be held primarily outside of a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring tax liability on the switch seeking to access a portfolio of both equity and fixed income securities via a single fund planning to hold their investment for a medium term to long term who, in the case of Series R, S, T and T-USD shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S, T and T-USD shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S, T and T-USD shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S, T and T-USD shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 77

80 Franklin Income Hedged Corporate Class FUND DETAILS Type of fund: Global neutral balanced Start date: Series A, F, I, O, R, S and T shares: June 28, 2013 Nature of securities: Series A, F, I, O, R, S and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.85% Series F shares: 0.85% Series I shares: 1.40% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.85% Series T shares: 1.85% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Advisers, Inc., San Mateo, California is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Income Fund (the Underlying Fund ). The Fund invests in derivatives to attempt to eliminate the impact of currency fluctuations between the U.S. and Canadian dollars. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Income Fund, whose investment objective is to maximize income while maintaining prospects for long-term capital appreciation by investing primarily in a diversified portfolio of debt and equity securities issued in the U.S. invests in forward contracts to hedge as completely as possible against fluctuations caused by changes in exchange rates between the U.S. and Canadian dollars. As a result, the Fund will not generally suffer/benefit from any fluctuation in the value of the U.S. dollar against the Canadian dollar. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. See page 75 for a full description of the Investment Strategies of Franklin Income Fund. What are the risks of investing in the fund? Since the Fund invests in units of the Underlying Fund, the share price of the Fund rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of the Fund not precisely tracking the unit price of the Underlying Fund. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. Hedging will limit the opportunity for gains that would be realized in the event of an increase in the value of the U.S. dollar relative to the Canadian dollar. During times of extreme market stress or volatility the Fund may not be able to prevent losses from exposure to U.S. currency. See page 76 for a list of the risks associated with the Fund s investment in Franklin Income Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk As of May 2, 2014, the Manager held 21.48% of the Fund and one securityholder held 19.33% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking exposure to income generating U.S. securities with prospects for capital appreciation in a fund to be held primarily outside of a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring tax liability on the switch seeking to access a portfolio of both equity and fixed income securities via a single fund planning to hold their investment for a medium term to long term seeking to lower their risk of currency fluctuations between the U.S. and Canadian dollars who, in the case of Series R, S and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. This Fund allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S and T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. 78 Franklin Templeton investments

81 FRANKLIN INCOME HEDGED CORPORATE CLASS Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 79

82 Franklin Strategic Income Fund FUND DETAILS Type of fund: Global fixed income Start date: Series A, F and O units: February 17, 2003 Series I units: July 3, 2009 Nature of securities: Series A, F, I and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.65%* Series F units: 0.75% Series I units: 1.15%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series A units: -0.07% Series I units: -0.08% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in fixed income securities issued in the U.S. and throughout the world. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. Under normal market conditions, the Fund invests at least 65% of its assets in U.S. and global debt securities. Debt securities include all varieties of fixed and floating rate income securities, including bonds, mortgage securities, corporate loans and loan participations, and other asset-backed securities and convertible securities. The Fund: may invest in high yield and investment grade corporate bonds and preferred stocks of issuers located in the U.S. and foreign countries, including emerging markets countries; developed country government and agency bonds; emerging market government and agency bonds; mortgage securities and other asset-backed securities; convertible securities, including bonds and preferred stocks may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and cross hedging, where the Fund attempts to hold a net long position of a particular currency versus a second currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. Such loans may include term loans, and to the extent permitted by securities regulations, revolving credit facilities, synthetic term loans, delayed draw term loans and receivables purchase facilities. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are re-determined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may invest in debt securities that have floating or variable payment schedules including floating rate notes issued by governments and corporate issuers, secured floating rate bank loans, Treasury Inflation Indexed bonds (TIPs) and adjustable-rate asset-backed securities may invest all of its assets in debt securities that are rated below investment grade sometimes called junk bonds or high yield securities, some of which may be debt securities that are in default may have significant investments in mortgage securities issued by pools sponsored by agencies such as the Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and Government National Mortgage Association (GNMA) under normal market conditions, utilizes forward foreign currency contracts to hedge at least 85% of the Fund portfolio so as to reduce the impact of fluctuations in the currency exchange rates between the Canadian and U.S. dollars may, from time to time, hold: (i) equity securities issued in exchange for debt instruments by companies recently emerging from or facing financial restructuring, that resulted from the conversion of convertible securities or that were received as part of a bond offering; and (ii) warrants/rights issued by companies recently emerging from or facing financial restructuring may hold all or a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As an exception to standard investment restrictions for mutual funds, the Fund has obtained approval of the Canadian securities regulators to invest more than 10% of the Fund s assets in securities issued or guaranteed by various governments or permitted international agencies that are traded on mature and liquid markets and provided that the acquisition of these securities is consistent with the Fund s investment objective. As part of our investment strategy, this option gives us more flexibility to choose the most appropriate investments for the Fund. 80 Franklin Templeton investments

83 FRANKLIN STRATEGIC INCOME FUND What are the risks of investing in the fund? interest rate risk credit risk low-rated securities risk foreign investment risk emerging markets risk liquidity risk portfolio management risk large investor risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 18.08% of the Fund, Franklin Quotential Diversified Income Portfolio held 15.37% of the Fund, Franklin Quotential Balanced Income Portfolio held 13.23% of the Fund and Franklin Quotential Diversified Income Corporate Class Portfolio held 10.62% of the Fund. Distribution policy The Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a high level of current income and some capital gains planning to hold their investment for the medium to long term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 81

84 Franklin U.S. Core Equity Fund FUND DETAILS Type of fund: U.S. equity Start date: Series A, F and O units: August 1, 2007 Nature of securities: Series A, F and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equities of U.S. companies. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. The Fund: will, under normal market conditions, invest in equity securities of large capitalization companies, which are companies similar in size to those in the S&P 500 Index seeks to maintain a portfolio consisting of securities of approximately companies may invest in any industry or sector utilize an opportunistic and contrarian investment approach, seeking to identify mis-priced companies using fundamental analysis, focusing on companies that, in the investment team s opinion, offer the best trade-off between growth opportunity, business and financial risk, and valuation may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 45.53% of the Fund and Franklin Quotential Balanced Income Portfolio held 14.40% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core (or focused) fund concentrated in U.S. stocks planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk regulatory risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk series risk short selling risk securities lending risk 82 Franklin Templeton investments

85 Franklin U.S. Rising Dividends Fund FUND DETAILS Type of fund: U.S. equity Start date: Series F units: December 1, 1984 Series A and O units: November 24, 2000 Series T units: June 14, 2007 Nature of securities: Series A, F, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Advisory Services, LLC, Fort Lee, New Jersey What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of American equities, with a focus on investing in companies that have paid consistently rising dividends The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. Under normal market conditions, the Fund invests at least 80% of its net assets in companies that have paid consistently rising dividends. Companies that have paid consistently rising dividends include those companies that pay dividends on their common stocks and have maintained or increased their most recent dividend payment at some point during the last four consecutive years. The Fund invests at least 65% of its net assets in securities of companies that have: consistently increased dividends in at least 8 of the last 10 years, and have not decreased dividends during that time increased dividends substantially (at least 100%) over the past 10 years long-term debt that is no more than 50% of total capitalization (except for utility companies) or senior debt that has been rated investment grade by at least one of the major bond-rating agencies reinvested earnings, and paid out less than 65% of current earnings in dividends (except for utility companies) attractive prices, with prices at the time of purchase either in the lower half of the stock s price/earnings ratio range for the past 10 years or less than the current market price/earnings ratio of stocks composing the Standard & Poor s 500 Stock Index The Fund: may have significant positions in particular sectors may invest in equity securities of any size company, including companies falling within the small-cap (generally companies with a market capitalization of less than US$2.5 billion) and mid-cap (generally companies with a market capitalization range of US$2.5 billion to US$8 billion) ranges may hold all or a substantial portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk foreign investment risk smaller companies risk regulatory risk large investor risk capital depletion risk (Series T units only) portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin U.S. Rising Dividends Corporate Class held 11.33% of the Fund and Franklin Quotential Balanced Growth Portfolio held 10.63% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core U.S. equity fund planning to hold their investment for the medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Franklin Templeton investments 83

86 FRANKLIN U.S. RISING DIVIDENDS FUND Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 84 Franklin Templeton investments

87 Franklin U.S. Rising Dividends Corporate Class FUND DETAILS Type of fund: U.S. equity Start date: Series A, F and O shares: January 16, 2006 Series T shares: September 27, 2007 Nature of securities: Series A, F, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Advisory Services, LLC, Fort Lee, New Jersey is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin U.S. Rising Dividends Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin U.S. Rising Dividends Fund, whose investment objective is long-term capital appreciation by investing primarily in a diversified portfolio of American equities, with a focus on investing in companies that have paid consistently rising dividends invests in units of Franklin U.S. Rising Dividends Fund and therefore the share price of Franklin U.S. Rising Dividends Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin U.S. Rising Dividends Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 83 for a full description of the Investment Strategies of Franklin U.S. Rising Dividends Fund. What are the risks of investing in the fund? See page 83 for a list of the risks associated with the Fund s investment in Franklin U.S. Rising Dividends Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core U.S. equity fund to be held primarily outside of a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 85

88 Franklin U.S. Rising Dividends Hedged Corporate Class FUND DETAILS Type of fund: U.S. equity Start date: Series A, F, O and T shares: October 29, 2012 Nature of securities: Series A, F, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Advisory Services, LLC, Fort Lee, New Jersey is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin U.S. Rising Dividends Fund (the Underlying Fund ). The Fund invests in derivatives to attempt to eliminate the impact of currency fluctuations between the U.S. and Canadian dollars. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin U.S. Rising Dividends Fund, whose investment objective is long-term capital appreciation by investing primarily in a diversified portfolio of American equities, with a focus on investing in companies that have paid consistently rising dividends invests in forward contracts to hedge as completely as possible against fluctuations caused by changes in exchange rates between the U.S. and Canadian dollars. As a result, the Fund will not generally suffer/benefit from any fluctuation in the value of the U.S. dollar against the Canadian dollar. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. See page 83 for a full description of the Investment strategies of the Underlying Fund. What are the risks of investing in the fund? Since the Fund invests in units of the Underlying Fund, the share price of the Fund rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of the Fund not precisely tracking the unit price of the Underlying Fund. Investments in forward contracts to hedge as completely as possible against currency fluctuations between the U.S. and Canadian dollar will not result in the impact of currency fluctuations being eliminated altogether. The Fund s returns will differ from the U.S. dollar returns of the Underlying Fund. Hedging will limit the opportunity for gains that would be realized in the event of an increase in the value of the U.S. dollar relative to the Canadian dollar. During times of extreme market stress or volatility the Fund may not be able to prevent losses from exposure to U.S. currency. See page 83 for a list of the risks associated with the Fund s investment in the Underlying Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk As of May 2, 2014, one securityholder held 11.97% of the Fund. See page 2 for a full discussion of these risks. 86 Franklin Templeton investments Who should invest in this fund? Investors: who are seeking a core U.S. equity fund planning to hold their investment for the medium to long term seeking to lower their risk of currency fluctuations between the U.S. and Canadian dollars who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. This Fund allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund.

89 Franklin World Growth Fund FUND DETAILS Type of fund: Global equity Start date: Series O units: March 10, 2008 Series A, F and T units: June 24, 2011 Nature of securities: Series A, F, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Templeton Institutional, LLC, New York, New York What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity securities of growth companies with any market size capitalization, which are located throughout the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 69. The portfolio advisor employs a disciplined, bottom-up investment approach to identify attractive investment opportunities that have higher expected revenue and earnings growth than their peers. The portfolio advisor uses a growth investment style and in-depth, fundamental research to identify high-quality companies, across all industry groups, with sustainable business models that offer the most attractive combination of growth and quality. In addition to selecting securities from Canada, the U.S. and other industrialized countries that comprise the Morgan Stanley Capital International EAFE Index (Europe, Australia and the Far East), the Fund may invest up to 20% of its total assets in common stocks of issuers located in emerging market nations and up to 35% of its total assets in debt securities. The Fund: may also, when suitable opportunities are available, invest in initial public offerings of securities may invest a small portion of its assets in private companies or illiquid securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk emerging markets risk smaller companies risk capital depletion risk (Series T units only) liquidity risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk large investor risk series risk underlying fund risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 24.01% of the Fund, Franklin World Growth Corporate Class held 20.65% of the Fund, Franklin Quotential Diversified Equity Portfolio held 12.70% of the Fund and Franklin Quotential Growth Portfolio held 11.16% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a growth fund investing in high-growth potential companies around the world planning to hold their investment for the medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Franklin Templeton investments 87

90 FRANKLIN WORLD GROWTH FUND Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 88 Franklin Templeton investments

91 Franklin World Growth Corporate Class FUND DETAILS Type of fund: Global equity Start date: Series A, F and O shares: June 18, 2001 Series T shares: June 24, 2011 Nature of securities: Series A, F, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Templeton Institutional, LLC, New York, New York is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin World Growth Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin World Growth Fund, whose investment objective is long-term capital appreciation by investing primarily in equity securities of growth companies with any market size capitalization, which are located throughout the world invests in units of Franklin World Growth Fund and therefore the share price of Franklin World Growth Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin World Growth Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 87 for a full description of the Investment strategies of Franklin World Growth Fund. What are the risks of investing in the fund? See page 87 for a list of the risks associated with the Fund s investment in Franklin World Growth Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk As of May 2, 2014, four securityholders held 28.49%, 23.22%, 20.70% and 10.22%, respectively, of the Fund. See page 2 for a full discussion of these risks. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Who should invest in this fund? Investors: seeking a growth fund investing in high-growth potential companies around the world to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 89

92 Franklin Bissett A DISCIPLINED APPROACH For over 30 years, Franklin Bissett Investment Management has been applying a disciplined approach in constructing equity, fixed income and balanced funds. Our overriding objectives are: (i) superior riskadjusted returns over a complete market cycle; and (ii) that our fundamental research, which adheres to time tested investment styles and solid portfolio execution, will result in funds that outperform over the medium to longer term. EQUITY PORTFOLIOS In keeping with our proven Growth at a Reasonable Price philosophy, the Franklin Bissett equity team seeks to identify high quality, wellmanaged businesses that have a track record of success and exhibit a sustainable business model. We believe that those businesses are capable of providing steady earnings and dividend growth and, in turn, equity price appreciation. We are fundamentally research driven. In addition, we focus on a superior return on equity, financial strength and attractive valuations, as well as on consistent, above-average revenue and full-cycle earnings and cash-flow growth. Our focus on risk management gives the added benefit of lower volatility versus the respective indices. FIXED INCOME PORTFOLIOS Franklin Bissett s fixed income team also employs fundamental analysis at the core of its process. The goal of Franklin Bissett s fixed income funds is to generate stable and predictable income while protecting capital. We believe a diversified portfolio that identifies relative value opportunities in federal, provincial and investment-grade corporate bonds will add value over the long term. Interest rate and yield curve risks are mitigated by prudently managing the fund s duration and term-to-maturity characteristics. BALANCED PORTFOLIOS Franklin Bissett s Asset Mix Committee carefully develops strategic asset allocations for our balanced funds. At each portfolio s core we utilize Franklin Bissett s equity and fixed income expertise, which may be complemented by foreign mandates from within the Franklin Templeton Investments family, depending on the balanced fund s investment strategy. We then employ an ongoing and dynamic asset allocation process that focuses on the relative value of each asset class and refine intermediate-term allocations. This discipline is reflected in our balanced funds, which are suited for investors looking for a combination of growth and income. 90 Franklin Templeton investments

93 Franklin Bissett All Canadian Focus Fund FUND DETAILS Type of fund: Nature of securities: Eligible for registered plans: Yes Canadian equity Start date: Series A, F and O units: September 20, 2004 Series I units: March 30, 2009 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00% Series I units: 1.40% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of Canadian securities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests in Canadian equities and income trusts that are carefully selected based on a quantitative approach uses a pre-determined quantitative screening model that identifies securities based on different selection criteria chosen by the portfolio advisor. The model incorporates a mix of various historical and projected financial and stock market data may invest up to 10% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 36.35% of the Fund, Franklin Quotential Balanced Income Portfolio held 11.71% of the Fund and Franklin Bissett Canadian Balanced Fund held 10.31% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core Canadian equity fund that employs a quantitative investment strategy planning to hold their investment for a medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 91

94 Franklin Bissett All Canadian Focus Corporate Class FUND DETAILS Type of fund: Canadian equity Start date: Series A, F and O shares: September 20, 2004 Series I shares: March 30, 2009 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series I shares: 1.40% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta, is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett All Canadian Focus Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett All Canadian Focus Fund, whose investment objective is long-term capital appreciation by investing primarily in a diversified portfolio of Canadian securities invests in units of Franklin Bissett All Canadian Focus Fund and therefore the share price of Franklin Bissett All Canadian Focus Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett All Canadian Focus Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 91 for a full description of the Investment strategies of Franklin Bissett All Canadian Focus Fund. What are the risks of investing in the fund? See page 91 for a list of the risks associated with the Fund s investment in Franklin Bissett All Canadian Focus Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core Canadian equity fund that employs a quantitative investment strategy to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 92 Franklin Templeton investments

95 Franklin Bissett Bond Fund FUND DETAILS Type of fund: Canadian fixed income Start date: Series F units: August 1, 1986 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 1.30%* Series F units: 0.70%* Series I units: 0.95% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series A units: -0.01% Series F units: -0.12% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in Canadian federal and provincial government, and corporate bonds, debentures and short-term notes. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund invests primarily in investment grade debt securities. Debt securities include all varieties of fixed income and floating rate securities, including government and corporate bonds, bonds backed by mortgages and other financial assets, and corporate loans. The Fund also: may invest up to 25% of its assets in debt securities that are rated below investment grade, sometimes called high yield securities may invest up to 30% of its assets in foreign securities including those of both developed and emerging markets may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are redetermined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium. may invest a portion of its assets in preferred shares as well as dividend paying shares of Canadian companies may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. may hold a portion of its assets in cash, money market securities (including bank-sponsored asset-backed commercial paper) or money market mutual funds as a strategic asset class or for tactical or liquidity purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? liquidity risk interest rate risk credit risk foreign investment risk reinvestment risk regulatory risk large investor risk portfolio management risk derivative risk asset-backed and mortgage-backed securities risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 19.81% of the Fund, Franklin Quotential Diversified Income Portfolio held 16.59% of the Fund, Franklin Quotential Balanced Income Portfolio held 14.66% of the Fund and Franklin Quotential Diversified Income Corporate Class Portfolio held 11.50% of the Fund. See page 2 for a full discussion of these risks. Franklin Templeton investments 93

96 FRANKLIN BISSETT BOND FUND Who should invest in this fund? Investors: who are conservative and seeking interest income and some capital gains planning to hold their investments for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 94 Franklin Templeton investments

97 Franklin Bissett Bond Corporate Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Canadian fixed income Start date: Series A, F, I and O shares: June 18, 2001 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.30% Series F shares: 0.70%* Series I shares: 0.95% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager *Management Fee Waiver: Series F shares: -0.12% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett Bond Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Bond Fund, whose investment objective is high current income and some long-term capital appreciation by investing primarily in Canadian federal and provincial government, and corporate bonds, debentures and short-term notes invests in units of Franklin Bissett Bond Fund and therefore the share price of Franklin Bissett Bond Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Bond Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 93 for a full description of the Investment strategies of Franklin Bissett Bond Fund. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? See page 93 for a list of the risks associated with the Fund s investment in Franklin Bissett Bond Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are most conservative and seeking interest income and some capital gains in a fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 95

98 Franklin Bissett Bond Yield Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Canadian fixed income Start date: Series A, F and O shares: September 11, 2006 Series I shares: March 30, 2009 Series A, F, I and O shares of a mutual fund corporation Nature of securities: Eligible for registered plans: Yes Management fee: Series A shares: 1.30% Series F shares: 0.70%* Series I shares: 0.95% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager *Management Fee Waiver: Series F shares: -0.12% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Provide a return similar to that of a Canadian bond fund. The Fund intends to achieve its objective primarily by investing in Canadian equity securities and entering into forward contracts or other permitted derivatives in order to provide the Fund with a return determined with reference to the performance of a Canadian bond fund managed by the Manager. The Fund expects that the earnings derived from these transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Alternatively, where, in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Fund expects that the earnings generated will be interest income within the Corporate Class structure. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may invest in a portfolio of Canadian equity securities and enter into forward contracts (as further described below) under which it will forward sell the equity securities in order to provide a return in a tax efficient manner similar to the Franklin Bissett Bond Fund (the Reference Fund ), less certain expenses including the transaction costs of using the derivative strategy. Under proposed changes to the Tax Act, the return the Fund earns from the Reference Fund via the forward contracts will be treated as ordinary income rather than capital gains. The Manager expects that, until 2015, the earnings derived from its derivative transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Beginning in 2015, or at such earlier time when in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Manager expects that the earnings generated will be interest income within the Corporate Class structure. There will be performance lags or tracking errors with respect to the Fund s derivative strategy which will result in the return of the Fund not precisely tracking the returns of Franklin Bissett Bond Fund may, in certain circumstances, where in the opinion of the portfolio advisor the derivative strategy is not beneficial to shareholders, cease to use the derivative strategy and instead invest primarily in fixed income securities similar to the investments made by Franklin Bissett Bond Fund (including bank-sponsored asset backed commercial paper) in order to obtain a return similar to Franklin Bissett Bond Fund. Although the Fund will invest in securities similar to investments made by Franklin Bissett Bond Fund, the Fund s portfolio may differ from that of Franklin Bissett Bond Fund which may result in the return of the Fund not precisely tracking the returns of Franklin Bissett Bond Fund may use the derivative strategy in combination with direct investments in fixed income securities and may increase or decrease its investments in equity securities and forward contracts and correspondingly decrease or increase its position in fixed income securities at any time where the portfolio advisor believes it is advantageous to do so may, from time to time, invest up to 10% of the net assets of the Fund in other mutual funds, including those managed by the Manager may invest up to 30% of the Fund s net assets in foreign securities may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. Under the terms of the forward contracts the Fund will agree to deliver, at maturity of the forward contracts, equity securities owned by the Fund in return for a cash payment based on the total return of an investment in the Franklin Bissett Bond Fund over the term of the forward contract (less costs of the derivative transaction). The value of the forward contracts, and therefore the share price of the Fund, rises and falls with the changes in the net asset value of the units of Franklin Bissett Bond Fund. Physical settlement of the forward contracts is expected to generate capital gains, which generally are subject to favourable tax treatment compared with ordinary income. The Fund may enter into a variety of forward contracts as permitted by the securities regulatory authorities with one or more counterparties. The settlement obligations of the Fund will be by physical delivery of the equity securities in return for the cash payment of the forward price by the counterparty. The equity securities subject to the forward contract will be pledged to the counterparty as security for the Fund s obligations under the forward contract. The Fund may terminate the forward contracts prior to maturity at any time or the counterparty may terminate the forward contract upon the occurrence of certain events. Early termination may require delivery of securities and/or a payment by one or both parties. The portfolio turnover rate of the Fund is high because of the frequent settlements of the forward contracts. The earnings generated upon settlement of the contracts are expected to generate capital gains for the Fund and result in capital gains dividends to shareholders. The Fund is not expected to incur trading costs as a result of its high portfolio turnover rate. INVESTMENT OBJECTIVE AND STRATEGIES OF THE REFERENCE FUND Please refer to page 93 for the Investment objective and Investment strategies of Franklin Bissett Bond Fund. 96 Franklin Templeton investments

99 FRANKLIN BISSETT BOND YIELD CLASS What are the risks of investing in the fund? If Franklin Bissett Bond Fund suspends redemptions, the Fund may be unable to value part of its portfolio or redeem shares. If the Fund cannot find suitable counterparties with whom to enter into derivative arrangements, the Fund may be unable to track the performance of Franklin Bissett Bond Fund. In addition, the Fund is subject to the following risks: liquidity risk equity risk derivative risk interest rate risk credit risk concentration risk foreign investment risk asset-backed and mortgage-backed securities risk regulatory risk tracking risk repurchase/reverse repurchase agreements risk securities lending risk large investor risk portfolio management risk series risk corporate class fund risk tax risk Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking returns similar to a Canadian bond fund that are realized in a tax efficient manner seeking tax efficiency through the ability to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investments for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Generally, the Fund is not an appropriate investment for registered plans as they are indifferent to the tax treatment of distributions provided by the Fund and the Fund will have lower returns than a direct investment in Franklin Bissett Bond Fund due to the costs of the derivative transactions. Franklin Templeton investments 97

100 Franklin Bissett Canadian All Cap Balanced Fund FUND DETAILS Type of fund: Canadian balanced Start date: Series A, F, I, O and T units: January 12, 2009 Nature of securities: Series A, F, I, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.90% Series F units: 0.90% Series I units: 1.35% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 1.90% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Balance of current income and long-term capital appreciation by investing primarily in a diversified portfolio of Canadian equity and fixed income securities, and to a lesser degree, in fixed income securities issued around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: normally invests around 65% of its assets in Canadian equity securities across all market capitalizations and the balance in fixed income securities equity to fixed income allocation may change based on changes in market valuation or the portfolio manager s view on market conditions may invest up to 30% of its assets in foreign securities including those in both developed and emerging markets fixed income component invests primarily in Canadian investment grade debt securities. Debt securities include all varieties of fixed income and floating rate securities, including government and corporate bonds, bonds backed by mortgages and other assets and corporate loans may invest up to 25% of its assets in debt securities that are rated below investment grade, sometimes called junk bonds or high yield securities may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate entities by banks and other financial institutions may hold a portion of its assets in cash, money market securities (including bank-sponsored asset-backed commercial paper) or money market mutual funds as a strategic asset class or for tactical or liquidity purposes may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may engage in currency management strategies using currency forward contracts to hedge the risk of, or gain exposure to, changes in currency exchange rates 98 Franklin Templeton investments may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Trust Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk interest rate risk credit risk smaller companies risk liquidity risk foreign investment risk reinvestment risk capital depletion risk (Series T units only) asset-backed and mortgage-backed securities risk regulatory risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Bissett Canadian All Cap Balanced Corporate Class held 32.16% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a Canadian balanced fund with some exposure to global fixed income securities planning to hold their investment for a medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk.

101 FRANKLIN BISSETT CANADIAN ALL CAP BALANCED FUND Distribution policy For Series A, F, I and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 99

102 Franklin Bissett Canadian All Cap Balanced Corporate Class FUND DETAILS Type of fund: Canadian balanced Start date: Series A, F, I, O and T shares: January 12, 2009 Nature of securities: Series A, F, I, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.90% Series F shares: 0.90% Series I shares: 1.35% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 1.90% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Balance of current income and long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett Canadian All Cap Balanced Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Canadian All Cap Balanced Fund, whose investment objective is to seek a balance of current income and long-term capital appreciation by investing primarily in a diversified portfolio of Canadian equity and fixed income securities, and to a lesser degree, in fixed income securities issued around the world invests in units of Franklin Bissett Canadian All Cap Balanced Fund and therefore the share price of Franklin Bissett Canadian All Cap Balanced Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Canadian All Cap Balanced Corporate Class not precisely tracking the unit price of the Underlying Fund See page 98 for a full description of the Investment strategies of Franklin Bissett Canadian All Cap Balanced Fund. What are the risks of investing in the fund? See page 98 for a list of the risks associated with the Fund s investment in Franklin Bissett Canadian All Cap Balanced Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a Canadian balanced fund with some exposure to global fixed income securities to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 100 Franklin Templeton investments

103 Franklin Bissett Canadian Balanced Fund FUND DETAILS Type of fund: Canadian balanced Start date: Series F units: September 6, 1991 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series T units: June 17, 2002 Series A, F, I, O and T units of a mutual fund trust Management fee: Series A units: 1.85% Series F units: 0.85%* Series I units: 1.35%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 1.85% *Management Fee Waiver: Series F units: -0.06% Series I units: -0.02% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Balance of current income and long-term capital appreciation by investing primarily in a portfolio of Franklin Bissett Funds to achieve a balance of fixed income and equity investments. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: has, under normal market conditions, an optimal asset mix of Canadian equities 30-50%, Canadian fixed income 30-50% and Global/U.S. securities 15-40%. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of fixed income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 40% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes. What are the risks of investing in the fund? equity risk interest rate risk foreign investment risk smaller companies risk liquidity risk capital depletion risk (Series T units only) derivative risk asset allocation risk portfolio management risk large investor risk repurchase/reverse repurchase agreements risk securities lending risk series risk As of May, 2, 2014, two securityholders held 21.70% and 17.85%, respectively, of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core balanced fund that is well diversified by asset class, geography and market capitalization planning to hold their investments for a medium term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F, I and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 101

104 Franklin Bissett Canadian Balanced Corporate Class FUND DETAILS Type of fund: Nature of securities: Eligible for registered plans: Yes Canadian balanced Start date: Series A, F and O shares: December 18, 2006 Series T shares: September 27, 2007 Series A, F, O and T shares of a mutual fund corporation Management fee: Series A shares: 1.85% Series F shares: 0.85% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 1.85% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Balance of current income and long-term capital appreciation by investing primarily in a portfolio of Franklin Bissett Funds to achieve a balance of fixed income and equity investments. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: has, under normal market conditions, an optimal asset mix of Canadian equities 30-50%, Canadian fixed income 30-50% and Global/U.S. securities 15-40%. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of fixed income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 40% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes. What are the risks of investing in the fund? equity risk interest rate risk foreign investment risk smaller companies risk liquidity risk capital depletion risk (Series T shares only) derivative risk asset allocation risk portfolio management risk repurchase/reverse repurchase agreements risk securities lending risk large investor risk series risk corporate class risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core balanced fund that is well diversified by asset class, geography and market capitalization to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investments for a medium term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 102 Franklin Templeton investments

105 Franklin Bissett Canadian Dividend Fund FUND DETAILS Type of fund: Canadian dividend and income equity Start date: Series A, F and O units: December 22, 2003 Nature of securities: Series A, F and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.90% Series F units: 0.90% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in dividend paying or income producing Canadian securities, including common shares, income trust units and preferred shares. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests in equity securities of quality companies at reasonable prices that have a proven ability to deliver a consistent and growing level of dividends over time invests in income trusts that are expected to have stable or growing distributions over time may invest in other income paying securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk interest rate risk smaller companies risk low-rated security risk liquidity risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking income and some capital gains planning to hold their investment for the medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes income and cash received from underlying securities, less any expenses on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 103

106 Franklin Bissett Canadian Dividend Corporate Class FUND DETAILS Type of fund: Canadian dividend and income equity Start date: Series A, F, I, O, R, S and T shares: September 27, 2010 Nature of securities: Series A, F, I, O, R, S and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.90% Series F shares: 0.90% Series I shares: 1.40% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.90% Series T shares: 1.90% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett Canadian Dividend Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Canadian Dividend Fund, whose investment objective is long-term capital appreciation by investing primarily in dividend paying or income producing Canadian securities, including common shares, income trust units and preferred shares invests in units of Franklin Bissett Canadian Dividend Fund and therefore the share price of Franklin Bissett Canadian Dividend Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Canadian Dividend Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 103 for a full description of the Investment strategies of Franklin Bissett Canadian Dividend Fund. What are the risks of investing in the fund? See page 103 for a list of the risks associated with the Fund s investment in Franklin Bissett Canadian Dividend Fund. The Fund has these additional risks: tracking risk capital depletion risk (Series R, S and T shares only) corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking income and some capital gains in a fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium to long term who, in the case of Series R, S and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S and T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S and T shares, any annual payments consisting of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 104 Franklin Templeton investments

107 Franklin Bissett Canadian Equity Fund FUND DETAILS Type of fund: Canadian equity Start date: Series F units: March 1, 1983 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00%* Series I units: 1.40%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series F units: -0.18% Series I units: -0.20% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of mid to large capitalization Canadian equities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests primarily in equity securities of growth-oriented entities with a market capitalization of $1 billion and greater (at the time of purchase) at reasonable prices may invest up to 30% of the Fund s assets in foreign securities may invest up to 10% of the market value of the Fund in mutual funds managed by the Manager or third parties may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. Who should invest in this fund? Investors: seeking a core Canadian equity fund planning to hold their investment for the medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk foreign investment risk large investor risk derivative risk portfolio management risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk See page 2 for a full discussion of these risks. Franklin Templeton investments 105

108 Franklin Bissett Canadian Equity Corporate Class FUND DETAILS Type of fund: Canadian equity Start date: Series A, F and O shares: June 18, 2001 Series I, R and T shares: October 14, 2013 Nature of securities: Series A, F, I, O, R and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00%* Series I shares: 1.40%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% *Management Fee Waiver: Series F shares: -0.17% Series I shares: -0.12% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett Canadian Equity Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Canadian Equity Fund, whose investment objective is long-term capital appreciation by investing primarily in a diversified portfolio of mid to large capitalization Canadian equities invests in units of Franklin Bissett Canadian Equity Fund and therefore the share price of Franklin Bissett Canadian Equity Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Canadian Equity Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 105 for a full description of the Investment strategies of Franklin Bissett Canadian Equity Fund. What are the risks of investing in the fund? See page 105 for a list of the risks associated with the Fund s investment in Franklin Bissett Canadian Equity Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core Canadian equity fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term who, in the case of Series R and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R and T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 106 Franklin Templeton investments

109 Franklin Bissett Canadian High Dividend Fund FUND DETAILS Type of fund: Canadian dividend and income equity Start date: Series F units: June 30, 1996 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00%* Series I units: 1.50% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series F units: -0.01% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High level of after tax cash flow by investing primarily in income producing Canadian securities including income trusts, common shares, preferred shares and fixed income instruments. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: may invest up to 30% of the Fund s assets in foreign equity or fixed income securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk interest rate risk foreign investment risk large investor risk portfolio management risk capital depletion risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are conservative to moderate and seeking cash flow from investment planning to hold their investment for a medium term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and cash received from underlying securities, less any expenses on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 107

110 Franklin Bissett Canadian High Dividend Corporate Class FUND DETAILS Type of fund: Canadian dividend and income equity Start date: Series A, F, I, O and T shares: June 25, 2012 Nature of securities: Series A, F, I, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series I shares: 1.50% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE High level of after tax cash flow by investing substantially all of its assets in units of Franklin Bissett Canadian High Dividend Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Canadian High Dividend Fund, whose investment objective is high level of after tax cash flow by investing primarily in income producing Canadian securities including income trusts, common shares, preferred shares and fixed income instruments invests in units of Franklin Bissett Canadian High Dividend Fund and therefore the share price of Franklin Bissett Canadian High Dividend Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Canadian High Dividend Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 107 for a full description of the Investment strategies of Franklin Bissett Canadian High Dividend Fund. What are the risks of investing in the fund? See page 107 for a list of the risks associated with the Fund s investment of Franklin Bissett Canadian High Dividend Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Who should invest in this fund? Investors: who are conservative to moderate and seeking cash flow from investment to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 108 Franklin Templeton investments

111 Franklin Bissett Canadian Short Term Bond Fund FUND DETAILS Type of fund: Canadian short term fixed income Start date: Series A, F and O units: December 22, 2003 Nature of securities: Series A, F and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.05% Series F units: 0.55% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income and preservation of capital by investing primarily in Canadian fixed-income securities including federal and provincial government bonds and corporate bonds, debentures and short-term notes. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund invests primarily in investment grade debt securities. Debt securities include all varieties of fixed income and floating rate securities, including government and corporate bonds, bonds backed by mortgages and other financial assets, and corporate loans. The Fund also: will generally have a duration of 3.5 years or lower may invest up to 25% of its assets in debt securities that are rated below investment grade, sometimes called high yield securities may invest up to 30% of its assets in foreign securities including those of both developed and emerging markets may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are redetermined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium. may invest a portion of its assets in preferred shares as well as dividend paying shares of Canadian companies may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. may hold a portion of its assets in cash, money market securities (including bank-sponsored asset-backed commercial paper) or money market mutual funds as a strategic asset class or for tactical or liquidity purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? liquidity risk interest rate risk credit risk foreign investment risk reinvestment risk regulatory risk large investor risk portfolio management risk derivative risk asset-backed and mortgage-backed securities risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Diversified Income Portfolio held 21.29% of the Fund and Franklin Quotential Diversified Income Corporate Class Portfolio held 14.77% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are conservative and seeking regular income planning to hold their investment for a short to medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 109

112 FRANKLIN BISSETT CANADIAN SHORT TERM BOND FUND Distribution policy The Fund distributes income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 110 Franklin Templeton investments

113 Franklin Bissett Canadian Short Term Bond Yield Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Canadian short term fixed income Start date: Series A, F, I, and O shares: September 27, 2010 Nature of securities: Series A, F, I, and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.05% Series F shares: 0.55% Series I shares: 0.80% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Provide a return similar to that of Franklin Bissett Canadian Short Term Bond Fund, primarily by entering into forward contracts or other permitted derivatives in order to provide the Fund with a taxefficient return determined with reference to the performance of Franklin Bissett Canadian Short Term Bond Fund. If, in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may invest in a portfolio of Canadian equity securities and enter into forward contracts (as further described below) under which it will forward sell the equity securities in order to provide a return in a tax efficient manner similar to Franklin Bissett Canadian Short Term Bond Fund (the Reference Fund ), less certain expenses including the transaction costs of using the derivative strategy. Under proposed changes to the Tax Act, the return the Fund earns from the Reference Fund via the forward contracts will be treated as ordinary income rather than capital gains. The Manager expects that, until 2015, the earnings derived from its derivative transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Beginning in 2015, or at such earlier time when in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Manager expects that the earnings generated will be interest income within the Corporate Class structure. There will be performance lags or tracking errors with respect to the Fund s derivative strategy which will result in the return of the Fund not precisely tracking the returns of Franklin Bissett Canadian Short Term Bond Fund may, in certain circumstances, where in the opinion of the portfolio advisor the derivative strategy is not beneficial to shareholders, cease to use the derivative strategy and instead invest primarily in fixed income securities similar to the investments made by Franklin Bissett Canadian Short Term Bond Fund (including bank-sponsored asset backed commercial paper) in order to obtain a return similar to Franklin Bissett Canadian Short Term Bond Fund. In the event that the Fund invests directly in fixed income securities, the Fund expects that the earnings generated will be interest income within the Corporate Class structure. Although the Fund will invest in securities similar to investments made by Franklin Bissett Canadian Short Term Bond Fund, the Fund s portfolio may differ from that of Franklin Bissett Canadian Short Term Bond Fund which may result in the return of the Fund not precisely tracking the returns of Franklin Bissett Canadian Short Term Bond Fund may use the derivative strategy in combination with direct investments in fixed income securities and may increase or decrease its investments in equity securities and forward contracts and correspondingly decrease or increase its position in fixed income securities at any time where the portfolio advisor believes it is advantageous to do so may, from time to time, invest up to 10% of the net assets of the Fund in other mutual funds, including those managed by the Manager may invest up to 30% of the Fund s net assets in foreign securities may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. Under the terms of the forward contracts the Fund will agree to deliver, at maturity of the forward contracts, equity securities owned by the Fund in return for a cash payment based on the total return of an investment in the Franklin Bissett Canadian Short Term Bond Fund over the term of the forward contract (less costs of the derivative transaction). The value of the forward contracts, and therefore the share price of the Fund, rises and falls with the changes in the net asset value of the units of Franklin Bissett Canadian Short Term Bond Fund. Physical settlement of the forward contracts is expected to generate capital gains, which generally are subject to favourable tax treatment compared with ordinary income. The Fund may enter into a variety of forward contracts as permitted by the securities regulatory authorities with one or more counterparties. The settlement obligations of the Fund will be by physical delivery of the equity securities in return for the cash payment of the forward price by the counterparty. The equity securities subject to the forward contract will be pledged to the counterparty as security for the Fund s obligations under the forward contract. The Fund may terminate the forward contracts prior to maturity at any time or the counterparty may terminate the forward contract upon the occurrence of certain events. Early termination may require delivery of securities and/or a payment by one or both parties. The portfolio turnover rate of the Fund is high because of the frequent settlements of the forward contracts. The earnings generated upon settlement of the contracts are expected to generate capital gains for the Fund and result in capital gains dividends to shareholders that, when shares are held outside of a registered plan, must be included in income for tax purposes. The Fund is not expected to incur trading costs as a result of its high portfolio turnover rate. INVESTMENT OBJECTIVE AND STRATEGIES OF THE REFERENCE FUND Please refer to page 109 for the Investment objective and Investment strategies of Franklin Bissett Canadian Short Term Bond Fund. Franklin Templeton investments 111

114 FRANKLIN BISSETT CANADIAN SHORT TERM BOND YIELD CLASS What are the risks of investing in the fund? If Franklin Bissett Canadian Short Term Bond Fund suspends redemptions, the Fund may be unable to value part of its portfolio or redeem shares. If the Fund cannot find suitable counterparties with whom to enter into derivative arrangements, the Fund may be unable to track the performance of Franklin Bissett Canadian Short Term Bond Fund. In addition, the Fund is subject to the following risks: liquidity risk equity risk derivative risk interest rate risk credit risk reinvestment risk concentration risk foreign investment risk asset-backed and mortgage-backed securities risk regulatory risk tracking risk repurchase/reverse repurchase agreements risk securities lending risk large investor risk portfolio management risk series risk corporate class fund risk tax risk Generally, the Fund is not an appropriate investment for registered plans as they are indifferent to the tax treatment of distributions provided by the Fund and the Fund will have lower returns than a direct investment in Bissett Canadian Short Term Bond Fund due to the costs of the derivative transactions. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. As of May 2, 2014, one securityholder held 15.11% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking returns similar to a Canadian short term bond fund that are realized in a tax efficient manner to be held primarily outside a registered plan planning to hold their investments for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 112 Franklin Templeton investments

115 Franklin Bissett Corporate Bond Fund FUND DETAILS Type of fund: Nature of securities: Eligible for registered plans: Yes Canadian fixed income Start date: Series A, F and O units: December 18, 2006 Series I units: July 3, 2009 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 1.30% Series F units: 0.80% Series I units: 0.95% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in bonds, debentures, notes, revenue bonds and asset-backed and mortgage-backed securities of Canadian corporate entities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund invests primarily in investment grade debt securities. Debt securities include all varieties of fixed income and floating rate securities, including government and corporate bonds, bonds backed by mortgages and other financial assets, and corporate loans. The Fund also: may invest in government bonds and bonds backed by mortgages and other assets may invest up to 25% of its assets in debt securities that are rated below investment grade, sometimes called high yield securities may invest up to 30% of its assets in foreign securities including those of both developed and emerging markets may invest in loans and loan participations, sometimes called corporate or syndicated loans, made to corporate and other business entities by banks and other financial institutions. In a loan participation, the Fund buys from the lender a portion of a larger loan the lender has made to the borrower. Corporate or syndicated loans typically pay interest rates that are redetermined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium. may invest a portion of its assets in preferred shares as well as dividend paying shares of Canadian companies may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and creditlinked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or credit-linked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities (including bank-sponsored asset-backed commercial paper) or money market mutual funds as a strategic asset class or for tactical or liquidity purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? liquidity risk interest rate risk credit risk foreign investment risk reinvestment risk regulatory risk large investor risk portfolio management risk derivative risk asset-backed and mortgage-backed securities risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Bissett Canadian Balanced Fund held 52.65% of the Fund and one securityholder held 13.30% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are conservative and seeking interest income and some capital gains planning to hold their investments for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 113

116 FRANKLIN BISSETT CORPORATE BOND FUND Distribution policy The Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 114 Franklin Templeton investments

117 Franklin Bissett Corporate Bond Yield Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Canadian fixed income Start date: Series A, F and O shares: December 18, 2006 Nature of securities: Eligible for registered plans: Yes Series I shares: March 30, 2009 Series T shares: June 25, 2012 Series A, F, I, O and T shares of a mutual fund corporation Management fee: Series A shares: 1.30% Series F shares: 0.80% Series I shares: 0.95% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 1.30% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Provide a return similar to that of a corporate bond fund. The Fund intends to achieve its objective primarily by investing in Canadian equity securities and entering into forward contracts or other permitted derivatives in order to provide the Fund with a return determined with reference to the performance of a corporate bond fund managed by the Manager. The Fund expects that the earnings derived from these transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Alternatively, where, in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Fund expects that the earnings generated will be interest income within the Corporate Class structure. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may invest in a portfolio of Canadian equity securities and enter into forward contracts (as further described below) under which it will forward sell the equity securities in order to provide a return in a tax efficient manner similar to the Franklin Bissett Corporate Bond Fund (the Reference Fund ), less certain expenses including the transaction costs of using the derivative strategy. Under proposed changes to the Tax Act, the return the Fund earns from the Reference Fund via the forward contracts will be treated as ordinary income rather than capital gains. The Manager expects that, until 2015, the earnings derived from its derivative transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Beginning in 2015, or at such earlier time when in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Manager expects that the earnings generated will be interest income within the Corporate Class structure. There will be performance lags or tracking errors with respect to the Fund s derivative strategy which will result in the return of the Fund not precisely tracking the returns of Franklin Bissett Corporate Bond Fund may, in certain circumstances, where in the opinion of the portfolio advisor the derivative strategy is not beneficial to shareholders, cease to use the derivative strategy and instead invest primarily in fixed income securities similar to the investments made by Franklin Bissett Corporate Bond Fund (including bank-sponsored asset-backed commercial paper) in order to obtain a return similar to Franklin Bissett Corporate Bond Fund. Although the Fund will invest in securities similar to investments made by Franklin Bissett Corporate Bond Fund, the Fund s portfolio may differ from that of Franklin Bissett Corporate Bond Fund which may result in the return of the Fund not precisely tracking the returns of Franklin Bissett Corporate Bond Fund may use the derivative strategy in combination with direct investments in fixed income securities and may increase or decrease its investments in equity securities and forward contracts and correspondingly decrease or increase its position in fixed income securities at any time where the portfolio advisor believes it is advantageous to do so may, from time to time, invest up to 10% of the net assets of the Fund in other mutual funds, including those managed by the Manager may invest up to 30% of the Fund s net assets in foreign securities may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. Under the terms of the forward contracts the Fund will agree to deliver, at maturity of the forward contracts, equity securities owned by the Fund in return for a cash payment based on the total return of an investment in the Franklin Bissett Corporate Bond Fund over the term of the forward contract (less costs of the derivative transaction). The value of the forward contracts, and therefore the share price of the Fund, rises and falls with the changes in the net asset value of the units of Franklin Bissett Corporate Bond Fund. Physical settlement of the forward contracts is expected to generate capital gains, which generally are subject to favourable tax treatment compared with ordinary income. The Fund may enter into a variety of forward contracts as permitted by the securities regulatory authorities with one or more counterparties. The settlement obligations of the Fund will be by physical delivery of the equity securities in return for the cash payment of the forward price by the counterparty. The equity securities subject to the forward contract will be pledged to the counterparty as security for the Fund s obligations under the forward contract. The Fund may terminate the forward contracts prior to maturity at any time or the counterparty may terminate the forward contract upon the occurrence of certain events. Early termination may require delivery of securities and/or a payment by one or both parties. The portfolio turnover rate of the Fund is high because of the frequent settlements of the forward contracts. The earnings generated upon settlement of the contracts are expected to generate capital gains for the Fund and result in capital gains dividends to shareholders. The Fund is not expected to incur trading costs as a result of its high portfolio turnover rate. INVESTMENT OBJECTIVE AND STRATEGIES OF THE REFERENCE FUND Please refer to page 113 for the Investment objective and Investment strategies of Franklin Bissett Corporate Bond Fund. Franklin Templeton investments 115

118 FRANKLIN BISSETT CORPORATE BOND YIELD CLASS What are the risks of investing in the fund? If Franklin Bissett Corporate Bond Fund suspends redemptions, the Fund may be unable to value part of its portfolio or redeem shares. If the Fund cannot find suitable counterparties with whom to enter into derivative arrangements, the Fund may be unable to track the performance of Franklin Bissett Corporate Bond Fund. In addition, the Fund is subject to the following risks: liquidity risk interest rate risk credit risk reinvestment risk foreign investment risk large investor risk portfolio management risk derivative risk concentration risk regulatory risk tracking risk asset-backed and mortgage-backed security risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking returns similar to a corporate bond fund that are realized in a tax efficient manner planning to hold their investments for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Generally, the Fund is not an appropriate investment for registered plans as they are indifferent to the tax treatment of distributions provided by the Fund and the Fund will have lower returns than a direct investment in Franklin Bissett Corporate Bond Fund due to the costs of the derivative transactions. 116 Franklin Templeton investments

119 Franklin Bissett Dividend Income Fund FUND DETAILS Type of fund: Canadian equity balanced Start date: Series F units: May 31, 1988 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series T units: June 17, 2002 Series A, F, I, O and T units of a mutual fund trust Management fee: Series A units: 1.95% Series F units: 0.95%* Series I units: 1.45% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 1.95% *Management Fee Waiver: Series F units: -0.06% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income by investing primarily in Canadian and American dividend paying preferred and common stocks and, from time to time, bonds up to a maximum of 25% of the Fund s total assets. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests in equity securities of quality companies at reasonable prices that have a proven ability to deliver a consistent and growing level of dividends over time may invest up to 30% of the Fund s assets in foreign equity may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk interest rate risk low-rated securities risk smaller companies risk foreign investment risk liquidity risk capital depletion risk (Series T units only) portfolio management risk credit risk reinvestment risk large investor risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, two securityholders held 13.81% and 13.67%, respectively, of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are conservative and seeking dividend income, some capital gains and possibly some interest income planning to hold their investment for a medium term to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy For Series A, F, I and O units, the Fund distributes any income on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 117

120 Franklin Bissett Dividend Income Corporate Class FUND DETAILS Type of fund: Canadian equity balanced Start date: Series A, F, I, O and T shares: June 25, 2012 Nature of securities: Series A, F, I, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.95% Series F shares: 0.95%* Series I shares: 1.45% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 1.95% *Management Fee Waiver: Series F shares: -0.05% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE High current income by investing substantially all of its assets in units of Franklin Bissett Dividend Income Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Dividend Income Fund, whose investment objective is high current income by investing primarily in Canadian and American dividend paying preferred and common stocks and, from time to time, bonds up to a maximum of 25% of the Fund s total assets invests in units of Franklin Bissett Dividend Income Fund and therefore the share price of Franklin Bissett Dividend Income Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Dividend Income Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 117 for a full description of the Investment strategies of Franklin Bissett Dividend Income Fund. What are the risks of investing in the fund? See page 117 for a list of the risks associated with the Fund s investment of Franklin Bissett Dividend Income Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are conservative and seeking dividend income, some capital gains and possibly some interest income to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for a medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 118 Franklin Templeton investments

121 Franklin Bissett Energy Corporate Class FUND DETAILS Type of fund: Natural resources equity Start date: Series A, F and O shares: June 14, 2007 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equities and other securities of Canadian entities involved directly or indirectly in the energy sector. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests primarily in equity securities of growth-oriented entities invests primarily in the energy sector, which includes entities engaged in the exploration, production, refining, marketing, transportation and distribution of all types of energy, as well as entities engaged in energy related activities, such as pipelines, utilities, manufacturing and the construction or provision of oil rigs, drilling equipment and other energy related services may hold all of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may invest up to 30% of the Fund s assets in foreign securities may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. securities lending risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking to invest in the Canadian energy sector who are not concerned with short-term price fluctuations planning to hold their investment for a long term This Fund is for investors willing to accept high investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk specialization risk concentration risk regulatory risk smaller companies risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk series risk short selling risk Franklin Templeton investments 119

122 Franklin Bissett Microcap Fund FUND DETAILS Type of fund: Canadian small/mid cap equity Start date: Series F units: November 3, 1997 Nature of securities: Eligible for registered plans: Yes Series A and O units: November 24, 2000 Series A, F and O units of a mutual fund trust Management fee: Series A units: 3.00% Series F units: 2.00%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager *Management Fee Waiver: Series F units: -0.17% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in Canadian equities of smaller capitalization companies. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests primarily in companies at the very low end of the equity market capitalization range invests in companies with proven management and a long-term growth plan may invest up to 30% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. Who should invest in this fund? Investors: seeking above average capital gain potential of a smaller companies fund as part of a more conservative portfolio planning to hold their investment for the long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Bissett Canadian Balanced Fund held 12.72% of the Fund. See page 2 for a full discussion of these risks. 120 Franklin Templeton investments

123 Franklin Bissett Money Market Fund FUND DETAILS Type of fund: Canadian money market Start date: Series F units: September 6, 1991 Nature of securities: Eligible for registered plans: Yes Series A, I and O units: November 24, 2000 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 1.00% Series F units: 0.50% Series I units: 0.875% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income, liquidity and preservation of capital by investing primarily in high quality money market securities issued by Canadian federal or provincial governments and government agencies, and high quality short-term money market instruments and bankers acceptances. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests primarily in fixed and floating rate securities maturing in one year or less may also invest in floating rate notes with interest rate reset dates of less than one year may also invest in commercial paper and other forms of corporate indebtedness (including bank-sponsored asset-backed commercial paper) may invest up to 30% of the Fund s assets in foreign securities. The Fund maintains: a dollar-weighted average term of 90 days or less. Average term is calculated based on the next reset date of the floating rate notes of the Fund a dollar-weighted average maturity of 180 days or less. Average maturity is calculated based on the final maturity date of the floating rate notes in the Fund a unit price of $10 by distributing income monthly. What are the risks of investing in the fund? The unit price of the Fund may fluctuate, although we try to keep it fixed at $ In addition, the Fund is subject to the following risks: interest rate risk concentration risk reinvestment risk credit risk regulatory risk asset-backed and mortgage-backed securities risk large investor risk portfolio management risk underlying fund risk series risk foreign investment risk As of May 2, 2014, Franklin Bissett Money Market Corporate Class held 15.18% of the Fund and two securityholders held 12.35% and 10.49%, respectively, of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a Canadian money market fund planning to hold their investments for a short term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund credits any income daily to unitholders and may make distributions on the last business day of each month. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 121

124 Franklin Bissett Money Market Corporate Class FUND DETAILS Type of fund: Canadian money market Start date: Series A, F, I and O shares: June 18, 2001 Nature of securities: Series A, F, I and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.00% Series F shares: 0.50% Series I shares: 0.875% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE High current income, liquidity and preservation of capital by investing substantially all of its assets in units of Franklin Bissett Money Market Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Money Market Fund, whose investment objective is high current income, liquidity and preservation of capital by investing primarily in high quality money market securities issued by Canadian federal or provincial governments and government agencies, and high quality short-term money market instruments and bankers acceptances the Fund reinvests distributions paid by the Underlying Fund in additional units of the Underlying Fund. The Fund does not make corresponding dividends. The retention of the additional units increases the value of the Fund s investments resulting in a rising share price. Any dividend paid by the Fund will decrease the share price will not maintain its share price at a constant amount. See page 121 for a full description of the Investment strategies of Franklin Bissett Money Market Fund. What are the risks of investing in the fund? See page 121 for a list of the risks associated with the Fund s investment in Franklin Bissett Money Market Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk As of May 2, 2014, one securityholder held 35.69% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a Canadian money market fund to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investments for a short term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 122 Franklin Templeton investments

125 Franklin Bissett Money Market Yield Class FUND DETAILS All Series are presently closed to new investment. May become available at the discretion of the Manager. Type of fund: Synthetic Canadian money market Start date: Series A, F and O shares: September 11, 2006 Series I shares: March 30, 2009 Series A, F, I and O shares of a mutual fund corporation Nature of securities: Eligible for registered plans: Yes Management fee: Series A shares: 1.00% Series F shares: 0.50% Series I shares: 0.875% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the reference fund What does the fund invest in? INVESTMENT OBJECTIVE Provide a return similar to that of a money market fund. The Fund intends to achieve its objective primarily by investing in Canadian equity securities and entering into forward contracts or other permitted derivatives in order to provide the Fund with a return determined with reference to the performance of a money market fund managed by the Manager. The Fund expects that the earnings derived from these transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Alternatively, where, in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in money market securities. In these circumstances, the Fund expects that the earnings generated will be interest income within the Corporate Class structure. The fundamental investment objective may only be changed with the approval of a majority of the shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: may invest in a portfolio of Canadian equity securities and enter into forward contracts (as further described below) under which it will forward sell the equity securities in order to provide a return in a tax efficient manner similar to Franklin Bissett Money Market Fund (the Reference Fund ), less certain expenses including the transaction costs of using the derivative strategy. Under proposed changes to the Tax Act, the return the Fund earns from the Reference Fund via the forward contracts will be treated as ordinary income rather than capital gains. The Manager expects that, until 2015, the earnings derived from its derivative transactions will be treated as capital gains, and if distributed to shareholders, will be capital gains dividends for tax purposes. Beginning in 2015, or at such earlier time when in the opinion of the portfolio advisor, the after tax returns do not outweigh the costs of using the derivative strategy, the Fund may primarily invest directly in fixed income securities. In these circumstances, the Manager expects that the earnings generated will be interest income within the Corporate Class structure. There will be performance lags or tracking errors with respect to the Fund s derivative strategy which will result in the return of the Fund not precisely tracking the returns of Franklin Bissett Money Market Fund may, in certain circumstances, where in the opinion of the portfolio advisor the derivative strategy is not beneficial to shareholders, cease to use the derivative strategy and instead invest primarily in money market securities similar to the investments made by Franklin Bissett Money Market Fund (including bank-sponsored asset backed commercial paper) in order to obtain a return similar to Franklin Bissett Money Market Fund. Although the Fund will invest in securities similar to investments made by Franklin Bissett Money Market Fund, the Fund s portfolio may differ from that of Franklin Bissett Money Market Fund which may result in the return of the Fund not precisely tracking the returns of Franklin Bissett Money Market Fund may use the derivative strategy in combination with direct investments in money market securities and may increase or decrease its investments in equity securities and forward contracts and correspondingly decrease or increase its position in money market securities at any time where the portfolio advisor believes it is advantageous to do so may, from time to time, invest up to 10% of the net assets of the Fund in other mutual funds, including those managed by the Manager may invest up to 30% of the Fund s net assets in foreign securities may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations. Under the terms of the forward contracts the Fund will agree to deliver, at maturity of the forward contracts, equity securities owned by the Fund in return for a cash payment based on the total return of an investment in the Franklin Bissett Money Market Fund over the term of the forward contract (less costs of the derivative transaction). The value of the forward contracts, and therefore the share price of the Fund, rises and falls with the changes in the net asset value of the units of Franklin Bissett Money Market Fund. Physical settlement of the forward contracts is expected to generate capital gains, which generally are subject to favourable tax treatment compared with ordinary income. The Fund may enter into a variety of forward contracts as permitted by the securities regulatory authorities with one or more counterparties. The settlement obligations of the Fund will be by physical delivery of the equity securities in return for the cash payment of the forward price by the counterparty. The equity securities subject to the forward contract will be pledged to the counterparty as security for the Fund s obligations under the forward contract. The Fund may terminate the forward contracts prior to maturity at any time or the counterparty may terminate the forward contract upon the occurrence of certain events. Early termination may require delivery of securities and/or a payment by one or both parties. The portfolio turnover rate of the Fund is high because of the frequent settlements of the forward contracts. The earnings generated upon settlement of the contracts are expected to generate capital gains for the Fund and result in capital gains dividends to shareholders. The Fund is not expected to incur trading costs as a result of its high portfolio turnover rate. INVESTMENT OBJECTIVE AND STRATEGIES OF THE REFERENCE FUND Please refer to page 121 for the Investment objective and Investment strategies of Franklin Bissett Money Market Fund. Franklin Templeton investments 123

126 FRANKLIN BISSETT MONEY MARKET YIELD CLASS What are the risks of investing in the fund? If Franklin Bissett Money Market Fund suspends redemptions, the Fund may be unable to value part of its portfolio or redeem shares. If the Fund cannot find suitable counterparties with whom to enter into derivative arrangements, the Fund may be unable to track the performance of Franklin Bissett Money Market Fund. In addition, the Fund is subject to the following risks: equity risk derivative risk interest rate risk concentration risk reinvestment risk regulatory risk tracking risk large investor risk portfolio management risk repurchase/reverse repurchase agreements risk securities lending risk asset-backed and mortgage-backed securities risk series risk corporate class fund risk tax risk foreign investment risk Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking returns similar to a money market fund that are realized in a tax efficient manner seeking tax efficiency through the ability to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investments for a short term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Generally, the Fund is not an appropriate investment for registered plans as they are indifferent to the tax treatment of distributions provided by the Fund and the Fund will have lower returns than a direct investment in Franklin Templeton Money Market Fund due to the costs of the derivative transactions. 124 Franklin Templeton investments

127 Frankin Bissett Small Cap Fund FUND DETAILS Type of fund: Canadian small/mid cap equity Start date: Series F units: August 30, 1993 Nature of securities: Eligible for registered plans: Yes Series A and O units: November 24, 2000 Series A, F and O units of a mutual fund trust Management fee: Series A units: 2.35% Series F units: 1.35% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of Canadian small capitalization equities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: invests primarily in companies at the low end of the equity market capitalization range invests in companies with proven management and a long-term growth plan may invest up to 30% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. Who should invest in this fund? Investors: seeking above average capital gain potential of a smaller companies fund, on its own or as part of a more conservative portfolio planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, two securityholders held 18.32% and 15.13%, respectively, of the Fund. See page 2 for a full discussion of these risks. Franklin Templeton investments 125

128 Franklin Bissett Small Cap Corporate Class FUND DETAILS Type of fund: Canadian small/mid cap equity Start date: Series A, F and O shares: June 18, 2001 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.35% Series F shares: 1.35% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett Small Cap Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett Small Cap Fund, whose investment objective is long-term capital appreciation by investing primarily in a diversified portfolio of Canadian small capitalization equities invests in units of Franklin Bissett Small Cap Fund and therefore the share price of Franklin Bissett Small Cap Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett Small Cap Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 125 for a full description of the Investment strategies of Franklin Bissett Small Cap Fund. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? See page 125 for a list of the risks associated with the Fund s investment of Franklin Bissett Small Cap Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking above average capital gain potential of a smaller companies fund, on its own or as part of a more conservative portfolio to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 126 Franklin Templeton investments

129 Franklin Bissett Strategic Income Fund FUND DETAILS Type of fund: Canadian balanced Start date: Series A, F, I and O units: December 29, 2011 Nature of securities: Series A, F, I and O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.85% Series F units: 0.85% Series I units: 1.35% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta Sub-advisor: Global fixed income portion: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE High current income and long-term capital appreciation by investing primarily, directly or indirectly through investing in mutual funds managed by the Manager, in a diversified mix of income-generating equity and fixed income securities from Canada and around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: has, under normal market conditions, a neutral asset mix exposure of 50% equity and 50% fixed income. The Fund may invest up to 50% of its assets, directly or indirectly, in foreign securities. The portfolio advisor may review and adjust the optimal asset mix, +/- 10%, in its sole discretion, depending on the outlook and relative attractiveness of expected risk-adjusted returns from each asset class over time may obtain its Canadian equity exposure by investing directly in Canadian equity securities. Accordingly, the Fund: may invest in income-generating equity securities including Canadian common and preferred shares, REITs, income trusts, and global dividend-paying equities will initially obtain its Canadian and foreign fixed income exposure indirectly, by investing in units of Franklin Bissett Bond Fund and Franklin Strategic Income Fund. However, once the Fund attains sufficient net assets, the Fund may obtain its Canadian and foreign fixed income exposure directly by investing in Canadian and foreign fixed income securities. To obtain this fixed income exposure, the Fund: may invest in Canadian federal and provincial government bonds, debentures and short-term notes may invest a portion of its assets in securities backed by mortgages or other financial assets may invest in investment grade and high yield corporate bonds and preferred stocks of issuers located in Canada, the U.S. and foreign countries, including emerging market countries; developed country government and agency bonds; emerging market government and agency bonds; mortgage securities and other asset-backed securities; convertible securities, including bonds and preferred stocks may invest in loans made to corporate and other business entities by banks and other financial institutions ( corporate loans ). Such corporate loans typically pay interest rates, which are re-determined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium may invest in loan participations and other direct or indirect corporate debt obligations, including assignments of corporate loans, in which the Fund will buy from the lender a portion of a larger loan the lender has made to a borrower. Such loans may include term loans, and to the extent permitted by securities regulations, revolving credit facilities, synthetic term loans, delayed draw term loans and receivables purchase facilities may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and credit-linked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or creditlinked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may invest in debt securities that have floating or variable payment schedules including floating rate notes issued by governments and corporate issuers, secured floating rate bank loans, Treasury Inflation Indexed bonds (TIPs), Canadian Government Real Return Bonds (RRBs) and adjustable-rate asset-backed securities may invest a portion of its assets in debt securities that are rated below investment grade sometimes called junk bonds or high yield securities, some of which may be debt securities that are in default may have investments in mortgage securities issued by pools sponsored by agencies such as the Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and Government National Mortgage Association (GNMA) under normal market conditions, utilizes forward foreign currency contracts to hedge a portion of the Fund s foreign fixed income portfolio so as to reduce the impact of fluctuations in the currency exchange rates between the Canadian and U.S. dollars may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and cross hedging, where the Fund attempts to hold a net long position of a particular currency versus a second currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency may hold up to 50% of its net assets in other mutual funds may hold up to 20% of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes Franklin Templeton investments 127

130 FRANKLIN BISSETT STRATEGIC INCOME FUND may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk interest rate risk credit risk foreign investment risk reinvestment risk regulatory risk emerging markets risk low-rated security risk large investor risk portfolio management risk derivative risk asset-backed and mortgage-backed securities risk repurchase/reverse repurchase agreements risk series risk short selling risk securities lending risk Who should invest in this fund? Investors: who are conservative and seeking cash flow from investment planning to hold their investment for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes cash, less any expenses on the last business day of each month (except in December, when it may be distributed earlier) and distributes any realized net capital gains annually in December and may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. See page 2 for a full discussion of these risks. 128 Franklin Templeton investments

131 Franklin Bissett Strategic Income Corporate Class FUND DETAILS Type of fund: Canadian balanced Start date: Series A, F, I, O, R, S and T shares: December 29, 2011 Nature of securities: Series A, F, I, O, R, S and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.85% Series F shares: 0.85% Series I shares: 1.35% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.85% Series T shares: 1.85% Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta Sub-advisor: Global fixed income portion: Franklin Advisers, Inc., San Mateo, California What does the fund invest in? INVESTMENT OBJECTIVE High current income and long-term capital appreciation by investing primarily, directly or indirectly through investing in mutual funds managed by the Manager, in a diversified mix of income-generating equity and fixed income securities from Canada and around the world. The Fund may also indirectly obtain exposure to fixed income securities by investing a portion of its portfolio in Canadian equity securities and hedge its equity risks by entering into forward contracts or other permitted derivatives in order to provide the Fund with a return determined with reference to a portfolio of fixed income securities. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund: has, under normal market conditions, a neutral asset mix exposure of 50% equity and 50% fixed income. The Fund may invest up to 50% of its assets, directly or indirectly, in foreign securities. The portfolio advisor may review and adjust the optimal asset mix, +/- 10%, in its sole discretion, depending on the outlook and relative attractiveness of expected risk-adjusted returns from each asset class over time may obtain its Canadian equity exposure by investing directly in Canadian equity securities. Accordingly, the Fund: may invest in income-generating equity securities including Canadian common and preferred shares, REITs, income trusts, and global dividend-paying equities will initially obtain its Canadian and foreign fixed income exposure indirectly, by investing in units of Franklin Bissett Bond Fund and Franklin Strategic Income Fund. However, once the Fund attains sufficient net assets, the Fund may obtain its Canadian and foreign fixed income exposure directly by investing in Canadian and foreign fixed income securities. To obtain this fixed income exposure, the Fund: may invest in Canadian federal and provincial government bonds, debentures and short-term notes may invest a portion of its assets in securities backed by mortgages or other financial assets may invest in investment grade and high yield corporate bonds and preferred stocks of issuers located in Canada, the U.S. and foreign countries, including emerging market countries; developed country government and agency bonds; emerging market government and agency bonds; mortgage securities and other asset-backed securities; convertible securities, including bonds and preferred stocks may invest in loans made to corporate and other business entities by banks and other financial institutions ( corporate loans ). Such corporate loans typically pay interest rates, which are re-determined periodically on the basis of a floating base lending rate such as the London Interbank Offered Rate (LIBOR) plus a premium may invest in loan participations and other direct or indirect corporate debt obligations, including assignments of corporate loans, in which the Fund will buy from the lender a portion of a larger loan the lender has made to a borrower. Such loans may include term loans, and to the extent permitted by securities regulations, revolving credit facilities, synthetic term loans, delayed draw term loans and receivables purchase facilities may, to the extent permitted by securities regulations, invest in credit derivatives, such as credit default swaps, credit-linked securities and credit-linked notes, for non-hedging purposes, in order to obtain exposure to companies or financial markets and for hedging purposes, in order to reduce the risk position of the Fund. Swap agreements, such as credit default swaps, are contracts between the Fund and, typically, a brokerage firm, bank, or other financial institution (the swap counterparty) for periods ranging from a few days to multiple years. In a basic swap transaction, the Fund agrees with its counterparty to exchange the returns (or differentials in rates of return) earned or realized on a particular notional amount of underlying instruments. The notional amount is the set amount selected by the parties as the basis on which to calculate the obligations that they have agreed to exchange. The return on investment of credit-linked securities or creditlinked notes is typically tied to the performance of a reference asset, whereby the value of these securities at maturity and/or their coupon is determined by movements in the value of the reference asset may invest in debt securities that have floating or variable payment schedules including floating rate notes issued by governments and corporate issuers, secured floating rate bank loans, Treasury Inflation Indexed bonds (TIPs), Canadian Government Real Return Bonds (RRBs) and adjustable-rate asset-backed securities may invest a portion of its assets in debt securities that are rated below investment grade sometimes called junk bonds or high yield securities, some of which may be debt securities that are in default may have investments in mortgage securities issued by pools sponsored by agencies such as the Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA) and Government National Mortgage Association (GNMA) under normal market conditions, utilizes forward foreign currency contracts to hedge a portion of the Fund s foreign fixed income portfolio so as to reduce the impact of fluctuations in the currency exchange rates between the Canadian and U.S. dollars may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates. These currency management strategies may include investing in currency forward contracts and cross hedging, where the Fund attempts to hold a net long position of a particular currency versus a second currency (by selling forward contracts) even if the Fund does not hold securities denominated in the second currency Franklin Templeton investments 129

132 FRANKLIN BISSETT STRATEGIC INCOME CORPORATE CLASS may hold up to 50% of its net assets in other mutual funds may hold up to 20% of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? The Fund may be unable to value part of its portfolio or redeem shares if it invests in units of Franklin Bissett Bond Fund and/or Franklin Strategic Income Fund and those underlying funds suspend redemptions. In addition, the Fund is subject to the following risks: equity risk smaller companies risk liquidity risk interest rate risk credit risk foreign investment risk reinvestment risk capital depletion risk (Series R, S and T shares only) regulatory risk emerging markets risk portfolio management risk low-rated security risk large investor risk derivative risk asset-backed and mortgage-backed securities risk repurchase/reverse repurchase agreements risk concentration risk tracking risk corporate class fund risk tax risk series risk short selling risk securities lending risk Who should invest in this fund? Investors: who are conservative and seeking cash flow from investment planning to hold their investment for a medium term This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S and T shares, the Fund may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. See page 2 for a full discussion of these risks. 130 Franklin Templeton investments

133 Franklin Bissett Treasury Bill Fund FUND DETAILS Type of fund: Canadian money market Start date: Series A units: March 2, 1988 Nature of securities: Eligible for registered plans: Yes Series F, I and O units: September 14, 2001 Series A, F, I and O units of a mutual fund trust Management fee: Series A units: 0.75% Series F units: 0.50% Series I units: 0.625% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE High current income and liquidity Capital preservation The Fund invests primarily in high quality money market securities issued by Canadian federal or provincial governments and government agencies, and high quality short-term money market instruments and bankers acceptances. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 90. The Fund invests primarily in fixed and floating rate securities maturing in one year or less issued or guaranteed by the Canadian federal government provincial governments government agencies. The Fund: may also invest in floating rate notes with interest rate reset dates of less than one year may invest up to 30% of the Fund s assets in foreign securities. The Fund maintains: a dollar-weighted average term of 90 days or less. Average term is calculated based on the next reset date of the floating rate notes in the Fund a dollar-weighted average maturity of 180 days or less. Average maturity is calculated based on the final maturity date of the floating rate notes in the Fund a unit price of $10 by distributing income monthly. Who should invest in this fund? Investors: investing for the short term seeking a money market fund with minimal corporate credit risk This Fund is for investors willing to accept low investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund credits any income daily to unitholders and may make distributions on the last business day of each month. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. What are the risks of investing in the fund? The unit price of the Fund may fluctuate, although we try to keep it fixed at $ In addition, the Fund is subject to the following risks: interest rate risk credit risk reinvestment risk regulatory risk large investor risk portfolio management risk underlying fund risk series risk foreign investment risk asset-backed and mortgage-backed securities risk See page 2 for a full discussion of these risks. Franklin Templeton investments 131

134 Franklin Bissett U.S. Focus Fund FUND DETAILS Type of fund: U.S. equity Start date: Series O units: March 3, 2008 Nature of securities: Series O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Bissett Investment Management, Calgary, Alberta What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of U.S. securities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in U.S. securities that are carefully selected based on a quantitative approach uses a pre-determined quantitative screening model that identifies securities based on different selection criteria chosen by the portfolio advisor. The model incorporates a mix of various historical and projected financial and stock market data may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemptions from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. As of May 2, 2014, Franklin Bissett Canadian Balanced Fund held 52.65% of the Fund, Franklin Templeton Institutional Balanced Trust held 26.85% of the Fund and Franklin Bissett U.S. Focus Corporate Class held 13.27% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core U.S. equity fund that employs a quantitative investment strategy planning to hold their investment for a medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors Please see Fund expenses indirectly borne by investors on page 38. What are the risks of investing in the fund? equity risk foreign investment risk smaller companies risk liquidity risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk series risk underlying fund risk short selling risk securities lending risk 132 Franklin Templeton investments

135 Franklin Bissett U.S. Focus Corporate Class FUND DETAILS Type of fund: U.S. equity Start date: Series A, F and O shares: March 3, 2008 Nature of securities: Series A, F and O shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of the Fund Franklin Bissett Investment Management, Calgary, Alberta, is the portfolio advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Bissett U.S. Focus Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Bissett U.S. Focus Fund, whose investment is longterm capital appreciation by investing primarily in a diversified portfolio of U.S. securities invests in units of Franklin Bissett U.S. Focus Fund and therefore the share price of Franklin Bissett U.S. Focus Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Bissett U.S. Focus Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 132 for a full description of the Investment strategies of Franklin Bissett U.S. Focus Fund. What are the risks of investing in the fund? See page 132 for a list of the risks associated with the Fund s investment of Franklin Bissett U.S. Focus Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core U.S. equity fund that employs a quantitative investment strategy planning to hold their investment for a medium to long term This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. This Fund allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 133

136 Franklin Mutual Series At Franklin Mutual Series, we focus on recognizing value that other investors might miss. We believe that despite short-term market fluctuation, cash flow, revenue and the intrinsic value of companies ultimately drive stock prices in the long run. Our goal is to deliver solid, risk-adjusted returns, year in and year out. Over the last 60 years Franklin Mutual Series consistent, deep value approach has benefited shareholders with long-term investment horizons. Since 1949, Franklin Mutual Series pursuit of value has been the underlying force driving our strategy. WE ARE OPPORTUNISTIC VALUE INVESTORS Our core investments are in undervalued stocks with viable catalysts that we believe will change the way the market views their true worth, thus unlocking value for our shareholders. Through bottom-up research, we seek to find value wherever it hides. This approach allows us to find opportunities throughout all parts of the business cycle. WE THINK AND ACT LIKE COMPANY OWNERS Our portfolio managers roll up their sleeves to do their own proprietary research, determined to find the best opportunities the market has overlooked. We aim to be diligent in our analysis and disciplined in our purchases so that we only buy securities trading at a significant discount to what we think they are intrinsically worth. WE STRIVE TO REDUCE RISK Undervalued stocks are by definition discounted, which we believe reduces risk. In addition, our select investments in distressed securities and merger arbitrage, both natural extensions of our value strategy, tend to be affected less by broad market movements than by the specifics surrounding each particular situation. The Franklin Mutual Series strategy has historically provided our funds with lower volatility than the overall market and has enabled us to deliver strong and more consistent results over the long term. WE UNCOVER HIDDEN INVESTMENT OPPORTUNITIES We want to identify companies Wall Street may have dismissed due to business uncertainty or complexity that many analysts might find overwhelming to decipher. Our fund managers and analysts use their own proprietary, fundamental research to thoroughly examine each potential investment by combing industry publications, scrutinizing annual reports, and probing company management teams, customers and suppliers. 134 Franklin Templeton investments

137 Franklin Mutual U.S. Shares Fund (formerly Franklin Mutual Beacon Fund) FUND DETAILS Type of fund: U.S. equity Start date: Series A units: February 3, 1997 Series F, I and O units: November 24, 2000 Series T units: June 14, 2007 Nature of securities: Series A, F, I, O and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00% Series I units: 1.35% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Mutual Advisers, LLC, Short Hills, New Jersey What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity and debt securities of U.S. issuers but may also invest in issuers around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 134. While following this basic philosophy, the portfolio advisor selects investments that may be trading below their intrinsic value, which may be reflected in cash flow, book value relative to market value, earnings multiples of comparable securities or other factors. The Fund: may hold equities, debt or money market securities in any proportion, provided that in normal market conditions not less than 75% of its assets (excluding cash and money market securities) are invested in common stock, preferred stock, and debt securities convertible into common stock or preferred stock. Debt securities may be rated or unrated and if rated, such rating may range from the very highest to the very lowest may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may also purchase senior or subordinated debt obligations from banks where the indebtedness purchased represents indebtedness of a company to a bank and not the securities of the bank. Debt instruments issued by companies recently emerging from or facing financial restructuring may also be purchased may invest in securities traded on U.S. or foreign exchanges, the NASDAQ national market or subject to certain restrictions, in the over-the-counter market may invest in equity or debt securities of companies involved in mergers, consolidations, liquidations and reorganizations may invest in illiquid securities, or in closed-end fund securities, as permitted by Canadian securities regulations may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? The investment strategy of this Fund involves the possibility that some investments - specifically, investments in troubled companies - may face substantial loss as a result of the creditworthiness of the troubled company. The portfolio advisor attempts to select only those securities that, based on proper analysis of actual risk compared to the risk perceived by the market, appear to have strong potential for gain. This Fund also faces the following risks, described on page 2: equity risk foreign investment risk interest rate risk liquidity risk low-rated security risk large investor risk portfolio management risk capital depletion risk (Series T units only) derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 24.32% of the Fund. Who should invest in this fund? Investors: seeking a fund investing in undervalued securities primarily in the U.S. planning to hold their investment for the medium to long term who, in the case of Series T units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Franklin Templeton investments 135

138 FRANKLIN MUTUAL U.S. SHARES FUND Distribution policy For Series A, F, I and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 136 Franklin Templeton investments

139 Franklin Mutual U.S. Shares Corporate Class (formerly Franklin Mutual Beacon Corporate Class) FUND DETAILS Type of fund: U.S. equity Start date: Series A, F, I and O shares: June 18, 2001 Series T shares: September 27, 2007 Nature of securities: Series A, F, I, O and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00% Series I shares: 1.35% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Mutual Advisers, LLC, Short Hills, New Jersey is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Mutual U.S. Shares Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Mutual U.S. Shares Fund, whose investment objective is long-term capital appreciation by investing primarily in equity and debt securities of U.S. issuers but may also invest in issuers around the world invests in units of Franklin Mutual U.S. Shares Fund and therefore the share price of Franklin Mutual U.S. Shares Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Mutual U.S. Shares Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 135 for a full description of the Investment strategies of Franklin Mutual U.S. Shares Fund. What are the risks of investing in the fund? See page 135 for a list of the risks associated with the Fund s investment in Franklin Mutual U.S. Shares Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a fund investing in undervalued securities primarily in the U.S. to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term who, in the case of Series T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T shares, the Fund may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T shares, any annual payments consisting of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 137

140 Franklin Mutual Global Discovery Fund FUND DETAILS Type of fund: Global equity Start date: Series A, F and O units: February 17, 2003 Series I units: April 7, 2008 Series T units: June 14, 2007 Series T-USD units: June 26, 2008 Nature of securities: Series A, F, I, O, T and T-USD units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 2.00% Series F units: 1.00%* Series I units: 1.35%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% Series T-USD units: 2.00%* *Management Fee Waiver: Series F units: -0.03% Series I units: -0.05% Series T-USD units: -0.18% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Franklin Mutual Advisers, LLC, Short Hills, New Jersey What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in equity and debt securities of issuers around the world. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 134. While following this basic philosophy, the portfolio advisor selects investments that may be trading below their intrinsic value, which may be reflected in cash flow, book value relative to market value, earnings multiples of comparable securities or other factors. The Fund: may hold equities, debt or money market securities in any proportion, provided that in normal market conditions not less than 65% of its assets (excluding cash and cash equivalents, such as money market securities and direct or indirect U.S. government obligations) are invested in common stock, preferred stock, and debt securities convertible or expected to be convertible into common stock or preferred stock. Debt securities may be rated or unrated and if rated, such rating may range from the very highest to the very lowest may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may invest up to 100% of its assets in non-u.s. equity and debt securities, which may include sovereign debt and participation in foreign government debt may invest in securities of any size issuer, including small-capitalization companies may also purchase debt securities, including senior or subordinated bank debt obligations where the indebtedness purchased represents indebtedness of a company to a bank and not the securities of the bank. Such debt instruments purchased by the Fund will usually be in default or which are at substantial risk of default may invest in securities traded on U.S. or foreign exchanges, the NASDAQ national market or subject to certain restrictions, in the over-the-counter market may invest in equity or debt securities of companies involved in mergers, consolidations, liquidations and reorganizations may invest in illiquid securities, or in closed-end fund securities, as permitted by Canadian securities regulations may hold a portion of its assets in cash, money market securities, direct or indirect U.S. government obligations or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investments in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? The investment strategy of this Fund involves the possibility that some investments - specifically, investments in troubled companies - may face substantial loss as a result of the creditworthiness of the troubled company. The portfolio advisor attempts to select only those securities that, based on detailed analysis of actual risk compared to the risk perceived by the market, appear to have strong potential for gain. This Fund also faces the following risks, described on page 2: equity risk foreign investment risk interest rate risk liquidity risk smaller companies risk low-rated security risk large investor risk portfolio management risk capital depletion risk (Series T and T-USD only) derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Mutual Global Discovery Corporate Class held 20.44% of the Fund. Who should invest in this fund? Investors: seeking a fund investing in undervalued securities from around the world planning to hold their investment for the medium to long term who, in the case of Series T and T-USD units, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. 138 Franklin Templeton investments

141 FRANKLIN MUTUAL GLOBAL DISCOVERY FUND Distribution policy For Series A, F, I and O units, the Fund distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series T and T-USD units, the Fund distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Fund and may not be paid in cash. The Fund may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T and T-USD units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. Franklin Templeton investments 139

142 Franklin Mutual Global Discovery Corporate Class FUND DETAILS Type of fund: Global equity Start date: Series A, F and O shares: February 17, 2003 Series I shares: April 7, 2008 Series T shares: September 27, 2007 Series T-USD shares: June 26, 2008 Nature of securities: Series A, F, I, O, T and T-USD shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 2.00% Series F shares: 1.00%* Series I shares: 1.35%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series T shares: 2.00%* Series T-USD shares: 2.00%* *Management Fee Waiver: Series F shares: -0.03% I shares: -0.04% Series T shares: -0.02% T-USD shares: -0.12% Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario is the portfolio advisor of both the Fund and Underlying Fund Sub-advisor: Franklin Mutual Advisers, LLC, Short Hills, New Jersey is the sub-advisor of the Underlying Fund What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing substantially all of its assets in units of Franklin Mutual Global Discovery Fund (the Underlying Fund ). The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests in units of Franklin Mutual Global Discovery Fund, whose investment objective is long-term capital appreciation by investing primarily in equity and debt securities of issuers around the world invests in units of Franklin Mutual Global Discovery Fund and therefore the share price of Franklin Mutual Global Discovery Corporate Class rises and falls with the unit price of the Underlying Fund. There may be performance lags or tracking errors with respect to the Fund s investment in the Underlying Fund which could result in the share price of Franklin Mutual Global Discovery Corporate Class not precisely tracking the unit price of the Underlying Fund. See page 138 for a full description of the Investment strategies of Franklin Mutual Global Discovery Fund. What are the risks of investing in the fund? See page 138 for a list of the risks associated with the Fund s investment in Franklin Mutual Global Discovery Fund. The Fund has these additional risks: tracking risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a fund investing in undervalued securities from around the world to be held primarily outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch planning to hold their investment for the medium to long term who, in the case of Series T and T-USD shares, are seeking regular monthly cash flows from investments held outside a registered plan This Fund is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series T and T-USD shares, the Fund may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series T and T-USD shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Fund and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Fund s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Fund s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series T and T-USD shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Fund. 140 Franklin Templeton investments

143 Franklin Templeton Solutions Franklin Templeton Solutions (FT Solutions) is a global group of multi-asset experts focused on creating total portfolio solutions integrated with risk management, designed to help investors achieve their financial goals in a variety of market conditions. The team has been dedicated to managing multi-asset portfolios for over 20 years with specialists in long-only strategies, alternative strategies and tactical allocation strategies. A Disciplined Investment Process By combining capital market expertise and a disciplined investment process, we believe a multi-asset portfolio can help investors address complex risk management and investment challenges by focusing on adding value from three sources: Long-term strategic asset allocation: To meet long-term objectives, top-down analysts develop strategic asset allocation recommendations by creating capital market expectations over a market cycle using quantitative and fundamental analysis infused with the insights gained from Franklin Templeton s specialized investment professionals around the world. Short-term tactical asset allocation: Franklin Quotential s portfolio managers have the flexibility to shift asset allocations and investment strategies away from the strategic allocations over the short-term to take advantage of opportunities and minimize risks that are identified in the current market environments. Manager Research and Selection: Rigorous and disciplined manager and strategy research aim to create an optimal mix of investment strategies for each asset class by identifying complementary strategies across market cycles. FT Solutions manages total portfolio solutions around the world, diversified across traditional and alternative asset classes. With over 70 specialists, FT Solutions is embedded within Franklin Templeton Investments global integrated platform combining access to the local insights and global perspective of over 600 investment professionals. Franklin Templeton investments 141

144 Franklin Quotential Balanced Growth Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F, I, O and T units: August 19, 2002 Series S units: February 1, 2006 Series R units: June 14, 2007 Nature of securities: Series A, F, I, O, R, S and T units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series A units: 1.90% Series F units: 0.90% Series I units: 1.20% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series R units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series S units: 0.90% Series T units: 1.90% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE A balance of current income and long-term capital appreciation by investing in a diversified mix of equity and income mutual funds, with a bias towards capital appreciation. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 20-50% fixed income and 50-80% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S and T units only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core balanced holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, S and T units, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. Distribution policy For Series A, F, I and O units, the Portfolio distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series R, S and T units, the Portfolio distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Portfolio and may not be paid in cash. The Portfolio may make distributions at other times during the year. 142 Franklin Templeton investments

145 FRANKLIN QUOTENTIAL BALANCED GROWTH PORTFOLIO Distributions are automatically reinvested in additional units of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 143

146 Franklin Quotential Balanced Growth Corporate Class Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F and O shares: June 28, 2004 Series R, S and T shares: September 27, 2007 Series I shares: March 30, 2009 Nature of securities: Series A, F, I, O, R, S and T shares of a mutual fund corporation Eligible for registered plans: Yes Management fee: Series A shares: 1.90% Series F shares: 0.90% Series I shares: 1.20% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.90% Series T shares: 1.90% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE A balance of current income and long-term capital appreciation by investing in a diversified mix of equity and income mutual funds, with a bias towards capital appreciation. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 20-50% fixed income and 50-80% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S and T shares only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core balanced holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, S and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. The Portfolio has been primarily designed to be held outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Portfolio may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S and T shares, the Portfolio may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Portfolio and may not be paid in cash. 144 Franklin Templeton investments

147 FRANKLIN QUOTENTIAL BALANCED GROWTH CORPORATE CLASS PORTFOLIO Distributions/dividends are automatically reinvested in additional shares of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 145

148 Franklin Quotential Balanced Income Portfolio FUND DETAILS Type of fund: Nature of securities: Eligible for registered plans: Yes Strategic Asset Allocation Portfolio Start date: Series A, F, I, O and T units: August 19, 2002 Series S units: February 1, 2006 Series R units: June 14, 2007 Series A, F, I, O, R, S and T units of a mutual fund trust Management fee: Series A units: 1.75% Series F units: 0.75% Series I units: 1.20% Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series R units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series S units: 0.75% Series T units: 1.75% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE A balance of current income and long-term capital appreciation by investing in a diversified mix of equity and income mutual funds, with a bias towards income. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 40-70% fixed income and 30-60% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? interest rate risk equity risk foreign investment risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S and T units only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core balanced holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, S and T units, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. Distribution policy For Series A, F, I and O units, the Portfolio distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series R, S and T units, the Portfolio distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Portfolio and may not be paid in cash. The Portfolio may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. 146 Franklin Templeton investments

149 FRANKLIN QUOTENTIAL BALANCED INCOME PORTFOLIO Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 147

150 Franklin Quotential Balanced Income Corporate Class Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F and O shares: June 28, 2004 Nature of securities: Eligible for registered plans: Yes Series R, S and T shares: September 27, 2007 Series I shares: March 30, 2009 Series A, F, I, O, R, S and T shares of a mutual fund corporation Management fee: Series A shares: 1.75% Series F shares: 0.75% Series I shares: 1.20% Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.75% Series T shares: 1.75% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE A balance of current income and long-term capital appreciation by investing in a diversified mix of equity and income mutual funds, with a bias towards income. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 40-70% fixed income and 30-60% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? interest rate risk equity risk foreign investment risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S and T shares only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core balanced holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, S and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. The Portfolio has been primarily designed to be held outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. Distribution policy The Portfolio may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S and T shares, the Portfolio may also distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Portfolio and may not be paid in cash. 148 Franklin Templeton investments

151 FRANKLIN QUOTENTIAL BALANCED INCOME CORPORATE CLASS PORTFOLIO Distributions/dividends are automatically reinvested in additional shares of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 149

152 Franklin Quotential Diversified Equity Portfolio (formerly Franklin Quotential Global Growth Portfolio) FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F, I and O units: June 9, 2003 Nature of securities: Eligible for registered plans: Yes Series R and T units: June 14, 2007 Series T-USD units: June 26, 2008 Series A, F, I, O, R, T and T-USD units of a mutual fund trust Management fee: Series A units: 2.05% Series F units: 1.05% Series I units: 1.25%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series R units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.05% Series T-USD units: 2.05%* *Management Fee Waiver: Series I units: -0.02% T-USD units : -0.03% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified mix of equity mutual funds. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of % equities and 0-10% fixed income. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. Franklin Quotential Diversified Equity Portfolio's portfolio turnover rate may be greater than 70%. The higher a Portfolio's portfolio turnover rate: the greater the chance that you may receive a distribution from the Portfolio that must be included in determining a taxable investor's income for tax purposes the higher the trading costs of the Portfolio. These costs are an expense of the Portfolio and are paid out of Portfolio assets, which may reduce your returns. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk emerging markets risk smaller companies risk liquidity risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, T and T-USD units only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core equity holding well-diversified by investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, T and T-USD units, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. 150 Franklin Templeton investments

153 FRANKLIN QUOTENTIAL DIVERSIFIED EQUITY PORTFOLIO Distribution policy For Series A, F, I and O units, the Portfolio distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series R, T and T-USD units, the Portfolio distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Portfolio and may not be paid in cash. The Portfolio may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, T and T-USD units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 151

154 Franklin Quotential Diversified Equity Corporate Class Portfolio (formerly Franklin Quotential Global Growth Corporate Class Portfolio) FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F, I and O shares: June 28, 2004 Nature of securities: Eligible for registered plans: Yes Series R, S and T shares: September 27, 2007 Series T-USD shares: June 26, 2008 Series A, F, I, O, R, S, T and T-USD shares of a mutual fund corporation Management fee: Series A shares: 2.05% Series F shares: 1.05% Series I shares: 1.25%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 1.05% Series T shares: 2.05% Series T-USD shares: 2.05% *Management Fee Waiver: Series I shares: -0.03% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified mix of equity mutual funds. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of % equities and 0-10% fixed income. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. Franklin Quotential Diversified Equity Corporate Class Portfolio s portfolio turnover rate may be greater than 70%. The higher a Portfolio s portfolio turnover rate: the greater the chance that you may receive a distribution from the Portfolio that must be included in determining a taxable investor s income for tax purposes the higher the trading costs of the Portfolio. These costs are an expense of the Portfolio and are paid out of Portfolio assets, which may reduce your returns. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk emerging markets risk smaller companies risk liquidity risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S, T and T-USD shares only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core equity holding well-diversified by investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R, S, T and T-USD shares, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. The Portfolio has been primarily designed to be held outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. 152 Franklin Templeton investments

155 FRANKLIN QUOTENTIAL DIVERSIFIED EQUITY CORPORATE CLASS PORTFOLIO Distribution policy The Portfolio may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S, T and T-USD shares, the Portfolio may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S, T and T-USD shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Portfolio and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S, T and T-USD shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 153

156 Franklin Quotential Diversified Income Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A and F units: June 26, 2008 Nature of securities: Eligible for registered plans: Yes Series I, O, S and T units: February 17, 2003 Series A, F, I, O, S and T units of a mutual fund trust Management fee: Series A units: 1.65% Series F units: 0.90%* Series I units: 1.375%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series S units: 0.90%* Series T units: 1.65% *Management Fee Waiver: Series F units: -0.11% Series I units: -0.06% Series S units: -0.11% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in a diversified mix of income and bond mutual funds. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of % fixed income and 0-40% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? interest rate risk equity risk foreign investment risk low-rated securities risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series S and T units only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core high income holding well diversified by asset class, investment style, and geography planning to hold their investment for a medium term This Portfolio is for investors willing to accept low investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. Distribution policy For Series A, F, I and O units, the Portfolio distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series S, and T units, the Portfolio distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Portfolio and may not be paid in cash. The Portfolio may make distributions at other times during the year. 154 Franklin Templeton investments

157 FRANKLIN QUOTENTIAL DIVERSIFIED INCOME PORTFOLIO Distributions are automatically reinvested in additional units of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series S and T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 155

158 Franklin Quotential Diversified Income Corporate Class Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F, I and O shares: June 28, 2004 Nature of securities: Eligible for registered plans: Yes Series R, S and T shares: September 27, 2007 Series T-USD shares: June 25, 2012 Series A, F, I, O, R, S, T and T-USD shares of a mutual fund corporation Management fee: Series A shares: 1.65% Series F shares: 0.90%* Series I shares: 1.375%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series R shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 0.90%* Series T shares: 1.65% Series T-USD shares: 1.65% *Management Fee Waiver: Series F shares: -0.11% Series I shares: -0.04% Series S -0.11% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE High current income and some long-term capital appreciation by investing primarily in a diversified mix of income and bond mutual funds. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of % fixed income and 0-40% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes. may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? interest rate risk equity risk foreign investment risk low-rated securities risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R, S, T and T-USD shares only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core high income holding well diversified by asset class, investment style, and geography planning to hold their investment for a medium term who, in the case of Series R, S, T and T-USD shares, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. The Portfolio has been primarily designed to be held outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. 156 Franklin Templeton investments

159 FRANKLIN QUOTENTIAL DIVERSIFIED INCOME CORPORATE CLASS PORTFOLIO Distribution policy The Portfolio may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series R, S, T and T-USD shares, the Portfolio may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series R, S, T and T-USD shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Portfolio and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R, S, T and T-USD shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Series T-USD Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 157

160 Franklin Quotential Growth Portfolio FUND DETAILS Type of fund: Nature of securities: Eligible for registered plans: Yes Strategic Asset Allocation Portfolio Start date: Series A, F, I and O units: August 19, 2002 Series R and T units: June 14, 2007 Series A, F, I, O, R and T units of a mutual fund trust Management fee: Series A units: 2.00% Series F units: 1.00% Series I units: 1.25%* Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series R units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Series T units: 2.00% *Management Fee Waiver: Series I units: -0.07% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified mix of equity mutual funds, with additional stability derived from investing in income mutual funds. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 10-40% fixed income and 60-90% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series R and T units only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core equity holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series R and T units, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. Distribution policy For Series A, F, I and O units, the Portfolio distributes any income and realized net capital gains annually in December and may make distributions at other times during the year. For Series R and T units, the Portfolio distributes any income and/or return of capital on the last business day of each month (except in December, when it may be distributed earlier) and distributes any income and/or realized capital gains annually in December. Annual distributions consisting of income and capital gains may only be reinvested in additional units of the Portfolio and may not be paid in cash. The Portfolio may make distributions at other times during the year. Distributions are automatically reinvested in additional units of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. 158 Franklin Templeton investments

161 FRANKLIN QUOTENTIAL GROWTH PORTFOLIO Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series R and T units. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 159

162 Franklin Quotential Growth Corporate Class Portfolio FUND DETAILS Type of fund: Strategic Asset Allocation Portfolio Start date: Series A, F and O shares: June 28, 2004 Nature of securities: Eligible for registered plans: Yes Series S and T shares: September 27, 2007 Series I shares: March 30, 2009 Series A, F, I, O, S and T shares of a mutual fund corporation Management fee: Series A shares: 2.00% Series F shares: 1.00% Series I shares: 1.25%* Series O shares: Management and administration fee is negotiated with and paid by the shareholder directly to the Manager Series S shares: 1.00% Series T shares: 2.00% *Management Fee Waiver: Series I shares: -0.06% Portfolio advisor: Fiduciary Trust Company of Canada, Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified mix of equity mutual funds, with additional stability derived from investing in income mutual funds. The fundamental investment objective may only be changed with the approval of a majority of shareholders at a meeting called for that purpose. INVESTMENT STRATEGIES We describe our fundamental investment philosophy on page 141. The Portfolio: has, under normal market conditions, an optimal asset mix of 10-40% fixed income and 60-90% equities. The portfolio advisor may review and adjust the optimal asset mix, in its sole discretion, depending on economic conditions and relative value of income and equity securities invests in mutual funds managed by the Manager. The portfolio advisor may, in its sole discretion, modify the optimal asset mix, change the percentage holdings of any fund, remove any fund or add other funds may invest up to 20% of the Portfolio s net assets in exchange-traded funds may engage, from time to time, in currency management strategies to hedge the risk of changes in currency exchange rates may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as investing in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Portfolio s other investment strategies in a manner considered most appropriate to achieving the Portfolio s overall investment objectives and enhancing the Portfolio s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Portfolio and described under Investments in Derivatives on page 37. As an exception to standard investment restrictions for mutual funds, the Portfolio has received permission from the Canadian securities regulators to invest up to 10% of its net assets, taken at market value at the time of investment, in aggregate, in securities of Franklin Templeton Investment Funds sub-funds (each a FTIF Sub-Fund ). The FTIF Sub-Funds are managed by an affiliate of the Manager and organized under the laws of Luxembourg as a Société d Investissement à Capital Variable, an open-end investment company. The FTIF Sub-Funds each qualify as a UCITS, an undertaking for collective investment in transferable securities, and are distributed under a prospectus in several European and other countries. As part of our investment strategy, investing in the FTIF Sub-Funds gives the Portfolio greater opportunities for diversification according to asset class, investment style, geography, sector weighting and market capitalization. The FTIF Sub-Funds are not subject to Canadian securities regulation. However, the FTIF Sub-Funds are subject to investment restrictions and practices that are substantially similar to those that govern the Portfolio in Canada. Franklin Quotential Growth Corporate Class Portfolio s portfolio turnover rate may be greater than 70%. The higher a Portfolio s portfolio turnover rate: the greater the chance that you may receive a distribution from the Portfolio that must be included in determining a taxable investor s income for tax purposes the higher the trading costs of the Portfolio. These costs are an expense of the Portfolio and are paid out of Portfolio assets, which may reduce your returns. What are the risks of investing in the fund? equity risk foreign investment risk interest rate risk smaller companies risk liquidity risk emerging markets risk asset allocation risk portfolio management risk large investor risk capital depletion risk (Series S and T shares only) derivative risk repurchase/reverse repurchase agreements risk securities lending risk series risk corporate class fund risk tax risk See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core equity holding well-diversified by asset class, investment style, geography and market capitalization planning to hold their investment for the medium to long-term who, in the case of Series S and T shares, are seeking regular monthly cash flows from investments held outside a registered plan This Portfolio is for investors willing to accept low to medium investment risk for that part of their portfolio. However, this Portfolio could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Portfolio s investment risk. The Portfolio has been primarily designed to be held outside a registered plan as it allows taxable investors to switch between Corporate Class Funds without incurring a tax liability on the switch. 160 Franklin Templeton investments

163 FRANKLIN QUOTENTIAL GROWTH CORPORATE CLASS PORTFOLIO Distribution policy The Portfolio may pay ordinary taxable dividends within the year and capital gains dividends in January or February of each year. For Series S and T shares, the Portfolio may distribute any return of capital on the last business day of each month (except in December, when it may be distributed earlier). For Series S and T shares, any annual payments of ordinary taxable dividends and/or capital gains dividends may only be reinvested in additional shares of the Portfolio and may not be paid in cash. Distributions/dividends are automatically reinvested in additional shares of the Portfolio, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Returns of capital do not necessarily reflect the Portfolio s investment performance and should not be confused with yield or income. You should not draw any conclusions about the Portfolio s investment performance from the amount of the distribution. Returns of capital will reduce the amount of your original investment and may result in the return to you of your original investment. A return of capital made to you is not immediately taxable in your hands but will reduce the adjusted cost base of the related securities. You should consult your tax advisor regarding the tax implications of receiving return of capital on Series S and T shares. Fund expenses indirectly borne by investors based on $1,000 initial investment (in $) One year Three years Five years Ten years Expenses payable over: Series A Series F Series I Series S Series T Please see Fund expenses indirectly borne by investors on page 38 for the required assumptions used in this table, which do not reflect the actual performance of the Portfolio. Franklin Templeton investments 161

164 Franklin Templeton Canadian Core Equity Fund FUND DETAILS Series O is presently capped (closed to new investors). May become available at the discretion of the Manager. Type of fund: Canadian equity Start date: Series O units: June 27, 2008 Nature of securities: Series O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Acuity Investment Management Inc., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of Canadian equity securities. The fundamental investment objective may only be changed with the approval of a majority of the unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund: invests primarily in a broad selection of equity securities including income trusts, preferred shares, warrants and securities convertible into equity securities of Canadian issuers seeks out companies which, typically, would possess proven management and proprietary or strategic advantages and financial strength invests in companies that, in the Sub-advisor s opinion, have above-average sales or earnings growth potential and favourable valuation levels with respect to growth expectations may, under unusual market conditions, hold a significant portion of assets in cash, cash equivalents or fixed income securities may invest up to 30% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investment in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. The Fund s portfolio turnover rate may be greater than 70%. The higher a Fund s portfolio turnover rate: the greater the chance that you may receive a distribution from the Fund that must be included in determining a taxable investor s income for tax purposes the higher the trading costs of the Fund. These costs are an expense of the Fund and are paid out of Fund assets, which may reduce your returns. What are the risks of investing in the fund? equity risk credit risk concentration risk large investor risk foreign investment risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk series risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 50.54% of the Fund, Franklin Quotential Balanced Income Portfolio held 16.30% of the Fund, Franklin Quotential Balanced Growth Corporate Class Portfolio held 10.84% of the Fund and Franklin Quotential Growth Portfolio held 10.08% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: who are seeking a core Canadian equity fund planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium to high investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment Risk Classification Methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors Please see Fund expenses indirectly borne by investors on page Franklin Templeton investments

165 Franklin Templeton Canadian Large Cap Fund FUND DETAILS Series O is presently capped (closed to new investors). May become available at the discretion of the Manager. Type of fund: Canadian large cap equity Start date: Series O units: June 27, 2008 Nature of securities: Series O units of a mutual fund trust Eligible for registered plans: Yes Management fee: Series O units: Management and administration fee is negotiated with and paid by the unitholder directly to the Manager Portfolio advisor: Franklin Templeton Investments Corp., Toronto, Ontario Sub-advisor: Foyston, Gordon & Payne Inc., Toronto, Ontario What does the fund invest in? INVESTMENT OBJECTIVE Long-term capital appreciation by investing primarily in a diversified portfolio of large capitalization Canadian equity securities. The fundamental investment objective may only be changed with the approval of a majority of unitholders at a meeting called for that purpose. INVESTMENT STRATEGIES The Fund s sub-advisor employs a bottom-up value-oriented approach to investments based upon detailed internal, fundamental research. When considering investments, the primary concern is to select quality companies acquired at reasonable valuations. The Fund: seeks investments in companies that have solid business prospects, financial strength, quality management, and conservatively priced equity securities under normal market conditions the Fund will primarily invest in large cap companies (generally those with a market capitalization of more than $4 billion at the time of purchase) but may also invest in mid-cap companies (generally those with a market capitalization between $0.8 billion and $4 billion at the time of purchase) and small-cap equities (generally those with a market capitalization of less than $0.8 billion at the time of purchase) may invest up to 15% of the Fund s assets in foreign securities may hold a portion of its assets in cash, money market securities or money market mutual funds while seeking investment opportunities or for defensive purposes may engage in securities lending, repurchase and reverse repurchase transactions as well as invest in derivatives including forward contracts, calls, puts and swaps (as described on pages 36 to 37). These transactions and investments in derivatives will be used in conjunction with the Fund s other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objectives and enhancing the Fund s returns. Such investments are permitted by securities regulations and the exemption from certain derivative rules received by the Fund and described under Investment in Derivatives on page 37. The Fund may engage in a limited amount of short selling. These transactions will be used with the other investment strategies in a manner considered most appropriate to achieving the Fund s overall investment objective and enhancing the Fund s returns. See Short selling on page 37 for more information. What are the risks of investing in the fund? equity risk smaller companies risk liquidity risk concentration risk foreign investment risk large investor risk portfolio management risk derivative risk repurchase/reverse repurchase agreements risk underlying fund risk short selling risk securities lending risk As of May 2, 2014, Franklin Quotential Balanced Growth Portfolio held 46.97% of the Fund, Franklin Quotential Balanced Income Portfolio held 15.07% of the Fund and Franklin Quotential Balanced Growth Corporate Class Portfolio held 10.07% of the Fund. See page 2 for a full discussion of these risks. Who should invest in this fund? Investors: seeking a core Canadian large cap fund planning to hold their investment for the medium to long term This Fund is for investors willing to accept medium investment risk for that part of their portfolio. However, this Fund could be used in a portfolio whose overall investment risk may be lower or higher than this individual part. Please see Investment risk classification methodology on page 38 for a description of how we classify this Fund s investment risk. Distribution policy The Fund distributes any income and realized net capital gains annually in December and may pay distributions at other times during the year. Distributions are automatically reinvested in additional units of the Fund, unless you tell us in writing that you prefer to receive cash distributions. Please see page 38 for more information. Fund expenses indirectly borne by investors Please see Fund expenses indirectly borne by investors on page 38. Franklin Templeton investments 163

166 Glossary BOOK VALUE The cost of your units or shares at the time you purchased them or received them as a distribution or dividend. The book value of your total investment in units or shares of a series of a Fund or Portfolio is calculated as follows: THE COST OF YOUR INITIAL INVESTMENT + Plus the cost of any additional purchases Plus reinvested distributions or dividends Plus, for a Corporate Class Fund, the adjusted cost base of any shares of another Corporate Class Fund that were switched into the Corporate Class Fund Minus the capital returned in any distributions Minus the ACB of any previous redemptions Minus, for a Corporate Class Fund, the adjusted cost base of any shares of the Corporate Class Fund that were switched into another Corporate Class Fund The adjusted cost base (ACB) of your units or shares of a Fund or Portfolio is determined by dividing the book value of your total investment in Fund or Portfolio by the number of units or shares of that series of that Fund or Portfolio that you own. CAPPING A FUND OR PORTFOLIO OR SERIES OF A FUND OR PORTFOLIO When we cap a Fund or Portfolio or series of a Fund or Portfolio, we do not allow new investors to purchase units of the Fund or Portfolio or units of the series of the Fund or Portfolio which is being capped. We do, however, permit existing investors to purchase additional units of the Fund or Portfolio or series of the Fund or Portfolio. A new investor is an investor who, at the time of capping, is not an investor in the Fund or Portfolio or series of Fund or Portfolio that is being capped. We reserve the right to re-open a Fund or Portfolio, or series of a Fund or Portfolio at any time. CLASS Franklin Templeton Corporate Class Ltd. currently offers 39 classes of convertible, special shares, each such class referred to within this prospectus as a Corporate Class Fund. Franklin Templeton Corporate Class Ltd. may issue additional classes of shares. Each Corporate Class Fund tracks a separate portfolio of assets owned by Franklin Templeton Corporate Class Ltd. Currently, each Corporate Class Fund is divided into three separate series of shares (designated as Series A, F and O). Some of the Corporate Class Funds are also available in I, R, S, T and T-USD. Each Corporate Class Fund may be divided into additional series of shares. CLOSING A FUND OR PORTFOLIO OR SERIES OF A FUND OR PORTFOLIO When we close a Fund or Portfolio or series of a Fund or Portfolio, we do not allow any new purchases of units of the Fund or Portfolio or units of the series of the Fund or Portfolio which is being closed. We reserve the right to re-open a Fund or Portfolio, or series of a Fund or Portfolio at any time. CORPORATE CLASS FUNDS Refers to one or more of the following Funds or Portfolios that are all classes of shares issued by Franklin Templeton Corporate Class Ltd. The Corporate Class Funds are: Templeton Asian Growth Corporate Class Templeton BRIC Corporate Class Templeton Canadian Stock Corporate Class Templeton Emerging Markets Corporate Class Templeton Frontier Markets Corporate Class Templeton Global Bond Hedged Yield Class Templeton Global Smaller Companies Corporate Class Templeton Growth Corporate Class Templeton International Stock Corporate Class Franklin Flex Cap Growth Corporate Class Franklin Income Corporate Class Franklin Income Hedged Corporate Class Franklin U.S. Rising Dividends Corporate Class Franklin U.S. Rising Dividends Hedged Corporate Class Franklin World Growth Corporate Class Franklin Bissett All Canadian Focus Corporate Class Franklin Bissett Bond Corporate Class Franklin Bissett Bond Yield Class Franklin Bissett Canadian All Cap Balanced Corporate Class Franklin Bissett Canadian Balanced Corporate Class Franklin Bissett Canadian Dividend Corporate Class 164 Franklin Templeton investments

167 Glossary Franklin Bissett Canadian Equity Corporate Class Franklin Bissett Canadian High Dividend Corporate Class Franklin Bissett Canadian Short Term Bond Yield Class Franklin Bissett Corporate Bond Yield Class Franklin Bissett Dividend Income Corporate Class Franklin Bissett Energy Corporate Class Franklin Bissett Money Market Corporate Class Franklin Bissett Money Market Yield Class Franklin Bissett Small Cap Corporate Class Franklin Bissett Strategic Income Corporate Class Franklin Bissett U.S. Focus Corporate Class Franklin Mutual Global Discovery Corporate Class Franklin Mutual U.S. Shares Corporate Class Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Corporate Class Portfolio DEFERRED SALES CHARGE OPTION Deferred sales charge is a type of purchase option for Series A (including A (Hedged)) and T (including T-USD) units. Under this purchase option, at the time of sale, your full purchase amount is invested in the Fund or Portfolio and we pay your Dealer a sales commission of 5% of the amount you invest. You will not pay a redemption fee to us unless you redeem your units within six years of buying them. The redemption fee reduces over time. You receive a free entitlement amount annually. DEALERS Dealers, including registered investment dealers, mutual fund dealers and exempt market dealers, and other intermediaries acting as dealer that distribute securities of the mutual fund. EQUITIES, STOCKS, OR SHARES Represent proportionate interest in a company. Some equities pay regular dividends; others do not. Many investors purchase equities because they expect the company s profits to rise, increasing the market value of the shares. Includes common shares, preferred shares and securities convertible into common shares. FIXED INCOME SECURITIES Pay regular income. Bonds and guaranteed investments certificates (GICs) are examples of fixed income securities that pay regular interest. Although they may not pay a fixed return, floating rate bonds and securities are generally also referred to as fixed-income securities. FRONT-LOAD OPTION Front-load is a type of purchase option for Series A (including A (Hedged)), I and T (including T-USD) units. Under this purchase option, at the time of sale, you negotiate a sales commission with your Dealer of up to 6% of the amount you invest in Series A (including A (Hedged)) and T (including T-USD) units (up to 2% for Series I units). This sales commission is deducted from your purchase amount. LOW-LOAD OPTION Low-load is a type of purchase option for Series A (including A (Hedged)) and T (including T-USD) units. Under this purchase option, at the time of sale, your full purchase amount is invested in the Fund or Portfolio and we pay your Dealer a sales commission of 2.5% of the amount you invest. You will not pay a redemption fee to us unless you redeem your units within three years of buying them. The redemption fee reduces over time. You receive a free entitlement amount annually. MANAGED YIELD CLASS FUNDS Refers to one or more of the following Funds that are all classes of shares issued by Franklin Templeton Corporate Class Ltd. The Managed Yield Class Funds each invest in Canadian equity securities and enter into forward contracts or other permitted derivatives in order to provide the respective Managed Yield Class Fund with a return determined with reference to the performance of another Franklin Templeton Investments mutual fund (the reference fund ). The Managed Yield Class Funds and their respective reference funds are: MANAGED YIELD CLASS FUND: Templeton Global Bond Hedged Yield Class Franklin Bissett Bond Yield Class Franklin Bissett Corporate Bond Yield Class Franklin Bissett Canadian Short Term Bond Yield Class Franklin Templeton Money Market Yield Class MANAGEMENT EXPENSE RATIO (MER) The MER shows how much a Fund or Portfolio paid in management fees and operating expenses (including harmonized sales tax) during each year shown. It is expressed as an annualized percentage of daily average net assets during the year. MER per series = REFERENCE FUND: Templeton Global Bond Fund Franklin Bissett Bond Fund Franklin Bissett Corporate Bond Fund Franklin Bissett Canadian Short Term Bond Fund Franklin Templeton Money Market Fund Fees and Expenses of the Fund or Portfolio allocated to the series Daily average net asset value of the series MONEY MARKET SECURITIES Short-term securities with maturities of less than one year such as treasury bills, commercial paper, bankers acceptances and certificates of deposit. PORTFOLIO TURNOVER RATE Indicates the rate at which the Fund s or the Portfolio s portfolio advisor changes its portfolio of investments in a year. A portfolio turnover rate of 100% is equivalent to the Fund or the Portfolio buying and selling each security in its portfolio once in the course of its financial year. The higher the portfolio turnover rate in a year, the greater the trading costs payable by the Fund or the Portfolio in a year and the greater the chance of you receiving a distribution or a dividend from the Fund or the Portfolio that must be included in computing your income for tax purposes for that year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund or Portfolio. See page 32, Income tax considerations for investors, for more details on the tax consequences of a high portfolio turnover rate. Franklin Templeton investments 165

168 Glossary FRANKLIN QUOTENTIAL PORTFOLIOS OR PORTFOLIOS Refers to those Portfolios that invest in a diversified mix of Templeton, Franklin, Franklin Bissett and Franklin Mutual Series equity and fixed income mutual funds. The Franklin Quotential Portfolios are: Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio Franklin Quotential Diversified Equity Corporate Class Portfolio Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Growth Corporate Class Portfolio SERIES Each Fund and Portfolio that is a trust may have an unlimited number of series of units. Templeton Growth Fund, Ltd. and the Corporate Class Funds may each have an unlimited number of series of shares. In this prospectus, we sometimes use series of units as a general term which also includes series of shares in Templeton Growth Fund, Ltd. and the Corporate Class Funds. TERM The length of time you hold an investment. SHORT TERM: MEDIUM TERM: LONG TERM: up to one year. between one and five years. more than five years. UNDERLYING FUNDS TO FRANKLIN QUOTENTIAL PORTFOLIOS Refers to the Funds in which the Franklin Quotential Portfolios invest from time to time. UNDERLYING FUNDS TO CORPORATE CLASS FUNDS Refers to the Funds in which the corresponding Corporate Class Funds invest. The Underlying Funds to Corporate Class Funds are: Templeton Asian Growth Fund Templeton Canadian Stock Fund Templeton Emerging Markets Fund Templeton Frontier Markets Fund Templeton Global Smaller Companies Fund Templeton Growth Fund, Ltd. Templeton International Stock Fund Franklin Flex Cap Growth Fund Franklin Income Fund Franklin U.S. Rising Dividends Fund Franklin World Growth Fund Franklin Bissett All Canadian Focus Fund Franklin Bissett Bond Fund Franklin Bissett Canadian All Cap Balanced Fund Franklin Bissett Canadian Dividend Fund Franklin Bissett Canadian Equity Fund Franklin Bissett Canadian High Dividend Fund Franklin Bissett Dividend Income Fund Franklin Bissett Money Market Fund Franklin Bissett Small Cap Fund Franklin Bissett U.S. Focus Fund Franklin Mutual Global Discovery Fund Franklin Mutual U.S. Shares Fund UNITS Your proportionate interest in a Fund or Portfolio. In this prospectus, we sometimes use units as a general term, referring to your units in a Fund or Portfolio or your shares in Templeton Growth Fund, Ltd. or the Corporate Class Funds. 166 Franklin Templeton investments

169 Franklin Templeton Investments Corp Yonge Street, Suite 900 Toronto, ON, M2N 0A7 Client Services: Fax: Client Services Toll-free: Toll-free Fax: Templeton Templeton Asian Growth Fund Templeton Asian Growth Corporate Class Templeton BRIC Corporate Class Templeton Canadian Balanced Fund Templeton Canadian Stock Fund Templeton Canadian Stock Corporate Class Templeton EAFE Developed Markets Fund Templeton Emerging Markets Fund Templeton Emerging Markets Corporate Class Templeton Frontier Markets Fund Templeton Frontier Markets Corporate Class Templeton Global Balanced Fund Templeton Global Bond Fund Templeton Global Bond Fund (Hedged) Templeton Global Bond Hedged Yield Class Templeton Global Smaller Companies Fund Templeton Global Smaller Companies Corporate Class Templeton Growth Fund, Ltd. Templeton Growth Corporate Class Templeton International Stock Fund Templeton International Stock Corporate Class Franklin Franklin Flex Cap Growth Fund Franklin Flex Cap Growth Corporate Class Franklin High Income Fund Franklin Income Fund Franklin Income Corporate Class Franklin Income Hedged Corporate Class Franklin Strategic Income Fund Franklin U.S. Core Equity Fund Franklin U.S. Rising Dividends Fund Franklin U.S. Rising Dividends Corporate Class Franklin U.S. Rising Dividends Hedged Corporate Class Franklin World Growth Fund Franklin World Growth Corporate Class Franklin Bissett Franklin Bissett All Canadian Focus Fund Franklin Bissett All Canadian Focus Corporate Class Franklin Bissett Bond Fund Franklin Bissett Bond Corporate Class Franklin Bissett Bond Yield Class Franklin Bissett Canadian All Cap Balanced Fund Franklin Bissett Canadian All Cap Balanced Corporate Class Franklin Bissett Canadian Balanced Fund Franklin Bissett Canadian Balanced Corporate Class Franklin Bissett Canadian Dividend Fund Franklin Bissett Canadian Dividend Corporate Class Franklin Bissett Canadian Equity Fund Franklin Bissett Canadian Equity Corporate Class Franklin Bissett Canadian High Dividend Fund Franklin Bissett Canadian High Dividend Corporate Class Franklin Bissett Canadian Short Term Bond Fund Franklin Bissett Canadian Short Term Bond Yield Class Franklin Bissett Corporate Bond Fund Franklin Bissett Corporate Bond Yield Class Franklin Bissett Dividend Income Fund Franklin Bissett Dividend Income Corporate Class Franklin Bissett Energy Corporate Class Franklin Bissett Microcap Fund Franklin Bissett Money Market Fund Franklin Bissett Money Market Corporate Class Franklin Bissett Money Market Yield Class Franklin Bissett Small Cap Fund Franklin Bissett Small Cap Corporate Class Franklin Bissett Strategic Income Fund Franklin Bissett Strategic Income Corporate Class Franklin Bissett Treasury Bill Fund Franklin Bissett U.S. Focus Fund Franklin Bissett U.S. Focus Corporate Class Franklin Mutual Series Franklin Mutual U.S. Shares Fund (formerly Franklin Mutual Beacon Fund) Franklin Mutual U.S. Shares Corporate Class (formerly Franklin Mutual Beacon Corporate Class) Franklin Mutual Global Discovery Fund Franklin Mutual Global Discovery Corporate Class Franklin Templeton Solutions Franklin Quotential Balanced Growth Portfolio Franklin Quotential Balanced Growth Corporate Class Portfolio Franklin Quotential Balanced Income Portfolio Franklin Quotential Balanced Income Corporate Class Portfolio Franklin Quotential Diversified Equity Portfolio (formerly Franklin Quotential Global Growth Portfolio) Franklin Quotential Diversified Equity Corporate Class Portfolio (formerly Franklin Quotential Global Growth Corporate Class Portfolio) Franklin Quotential Diversified Income Portfolio Franklin Quotential Diversified Income Corporate Class Portfolio Franklin Quotential Growth Portfolio Franklin Quotential Growth Corporate Class Portfolio Franklin Templeton Canadian Core Equity Fund Franklin Templeton Canadian Large Cap Fund Additional information about the Funds and Portfolios is available in the Funds and Portfolios annual information form, fund facts, management reports of fund performance and financial statements. These documents are incorporated by reference into this simplified prospectus, which means that they legally form part of this document just as if they were printed as sections of it. You can get a free copy of any or all of these documents, from your dealer, by calling toll-free or by contacting us at [email protected]. These documents and other information about the Funds and Portfolios, such as information circulars and material contracts, are also available at or at GEN PE 05/14