Franklin Templeton Investments Corp. is introducing a new series of tax-efficient funds. The funds are designed to be held outside of registered accounts.

Tax Class Funds allow investors to switch between different Franklin Templeton funds without triggering a tax event such as a capital gain.

“With Tax Class Funds, clients can switch between funds to re-allocate returns, diversify portfolios, or rebalance asset mixes without immediate tax consequences,” said Don Reed, president and CEO of Franklin Templeton Investments Corp. “The ability to defer the tax impact of a change to a mutual fund portfolio provides investors with a new level of investment flexibility.”

The funds work by being held within a corporate structure. As long as the investor remains invested in at least one of the Tax Class Funds under the structure, any capital gains (or losses) resulting from switching funds can be deferred until the investment is redeemed out of the corporate structure.

Most of the new funds are “fund-on-fund” structures, investing in units of existing, well-established Templeton, Franklin, Bissett and Mutual Series funds.

“We offer 19 of our core funds in tax class versions, reflecting our four distinct management styles — value, growth, growth at a reasonable price, and deep value — covering global, Canadian and speciality sectors,” Reed noted.

The new funds will be available on June 18, 2001.