Securities Law & Instruments


Investment by mutual funds ina portfolio of specified mutual funds under common managementexempted from the self-dealing prohibitions in clause 111(2)(b),111(3) and 118(2)(a) and from the reporting requirements ofclauses 117(1)(a) and 117(1)(d), subject to certain specifiedconditions.

Statutes Cited

Securities Act (Ontario),R.S.O. 1990, c. S.5, as am., 111(2)(b), 111(3), 117(1)(a), 117(1)(d)and 118(2)(a).






(the "New Top Funds")


WHEREAS the Canadiansecurities regulatory authority or regulator (the "DecisionMaker") in each of Ontario, Alberta, British Columbia,Saskatchewan, Quebec, Nova Scotia, and Newfoundland and Labrador(the "Jurisdictions") has received an applicationfrom Franklin Templeton Investments Corp. ("FTIC"),on its own behalf and on behalf of the "New Top Funds"and other portfolios managed by FTIC after the date of thisDecision (the "Future Top Funds") having an investmentobjective that invests substantially all of its assets in othermutual funds managed by FTIC (which together with the New TopFunds are referred to collectively as the "Top Funds"and individually as a "Top Fund") for a decision (the"Decision") pursuant to the securities legislationof the Jurisdictions (the "Legislation") that thefollowing provisions of the Legislation (the "ApplicableRequirements") shall not apply to the Top Funds or FTIC,as the case may be, in respect of certain investments to bemade by the Top Funds in Underlying Funds (as defined herein)from time to time:

(a) the restrictions containedin the Legislation prohibiting a mutual fund from knowinglymaking or holding an investment in a person or company inwhich the mutual fund, alone or together with one or morerelated mutual funds, is a substantial securityholder;

(b) the restrictions containedin the Legislation prohibiting a portfolio manager or, inBritish Columbia, the mutual fund, from knowingly causingan investment portfolio managed by it to invest in any issuerin which a "responsible person" (as that term isdefined in the Legislation) is an officer or director, unlessthe specific fact is disclosed to the client and, if applicable,the written consent of the client to the investment is obtainedbefore the purchase; and

(c) the requirements containedin the Legislation requiring a management company or, in BritishColumbia, a mutual fund manager, to file a report relatingto a purchase or sale of securities between the mutual fundand any related person or company, or any transaction in which,by arrangement other than an arrangement relating to insidertrading in portfolio securities, the mutual fund is a jointparticipant with one or more of its related persons or companies.

AND WHEREAS pursuantto the Mutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application.

AND WHEREAS it has beenrepresented by FTIC to the Decision Makers that:

1. FTIC is a corporation amalgamatedunder the laws of the Province of Ontario and is or will bethe manager of each of the Top Funds and each of the UnderlyingFunds (collectively, the "FTIC Funds"). FTIC's headoffice is located in Toronto, Ontario.

2. The FTIC Funds (other thanTempleton Growth Fund, Ltd.) are or will be open-ended mutualfund trusts established under the laws of the Provinces ofOntario or Alberta by a Declaration of Trust, or will be open-endmutual fund corporations incorporated in Canada under federalor provincial law. Templeton Growth Fund, Ltd. is a mutualfund corporation established under the Canada Business CorporationsAct.

3. A preliminary and pro formasimplified prospectus and annual information form dated April10, 2002 (together the "Prospectus") has been filedunder SEDAR Project No. 435468 in all of the provinces andterritories of Canada for purposes of qualification or continuedqualification for distribution, as the case may be, of theExisting Underlying Funds and the new Top Funds;

4. Each of the FTIC Fundsis or will be a reporting issuer in each of the provincesand territories of Canada.

5. Each Top Fund seeks toachieve its investment objective by investing substantiallyall of its assets in a combination of securities of the UnderlyingFunds. Except for transitional cash, each Top Fund will be100% invested in securities of the Underlying Funds.

6. Franklin Templeton is currentlythe manager of Templeton Growth Fund, Ltd., Templeton InternationalStock Fund, Templeton Global Smaller Companies Fund, BissettBond Fund, Bissett Income Fund, Bissett American Equity Fund,Bissett Canadian Equity Fund, Bissett Small Cap Fund, BissettMicrocap Fund, Franklin U.S. Large Cap Growth Fund, FranklinU.S. Small Cap Growth Fund and Mutual Beacon Fund (the "ExistingUnderlying Funds") and may in the future establish othermutual fund trusts or corporations (the "Future UnderlyingFunds", which together with the Existing Underlying Fundsare referred to herein as "Underlying Funds").

7. Each of the Top Funds willnot invest in any other mutual funds whose investment objectivesinclude investing directly or indirectly in other mutual funds.

8. In order to achieve itsinvestment objective, each Top Fund will invest fixed percentages(the "Fixed Percentages") of its assets, excludingcash and cash equivalents held to meet redemptions and expenses,directly in securities of the Underlying Funds, subject tovariation of 2.5% above or below the Fixed Percentages (the"Permitted Ranges") resulting from market fluctuations.

9. The simplified prospectusfor each Top Fund will disclose the names and investment objectives,investment strategies, risks and restrictions of the UnderlyingFunds along with the Fixed Percentages and the Permitted Ranges.

10. Except to the extent evidencedby this Decision and specific approvals granted by the DecisionMakers pursuant to National Instrument 81-102 ("NI 81-102"),the investments by each Top Fund in the Underlying Funds havebeen structured to comply with the investment restrictionsof the Legislation and NI 81-102.

11. In the absence of thisDecision, pursuant to the Legislation, the Top Funds are prohibitedfrom knowingly making or holding an investment in a personor company in which the mutual fund, alone or together withone or more related mutual funds, is a substantial securityholder.As a result, in the absence of this Decision the Top Fundswould be required to divest themselves of any such investments.

12. In the absence of thisDecision, the Legislation requires FTIC to file a report onevery purchase or sale of securities of the Underlying Fundsby the Top Funds.

13. In the absence of thisDecision, pursuant to the Legislation, FTIC is prohibitedfrom causing the Top Funds to invest in the Underlying Fundsunless the specific fact is disclosed to securityholders ofthe Top Funds and the written consent of securityholders ofthe Top Funds is obtained before the purchase.

14. The investments by theTop Funds in securities of the Underlying Funds representthe business judgment of "responsible persons" (asdefined in the Legislation) uninfluenced by considerationsother than the best interests of the Top Funds.

AND WHEREAS pursuantto the System this MRRS Decision Document evidences the Decisionof each Decision Maker;

AND WHEREAS each of theDecision Makers is satisfied that the tests contained in theLegislation that provide the Decision Maker with the jurisdictionto make the Decision have been met;

THE DECISION of the DecisionMakers pursuant to the Legislation is that the Applicable Requirementsshall not apply so as to prevent the Top Funds from making andholding investments in securities of the Underlying Funds orso as to require FTIC to file a report relating to each purchaseor sale of such securities and disclose such purchase to securityholdersof the Top Funds and obtain their written consent to the investmentprior to the purchase.


1. the Decision, as it relatesto the jurisdiction of a Decision Maker, will terminate oneyear after the publication in final form of any legislationor rule of that Decision Maker dealing with matters in subsection2.5 of NI 81-102.

2. the Decision shall onlyapply if, at the time the Top Funds make or hold investmentsin the Underlying Funds, the following conditions are satisfied:

(a) the securities of boththe Top Fund and the Underlying Funds are being offeredfor sale in the jurisdiction of the Decision Maker pursuantto a simplified prospectus and annual information form whichhas been filed with and accepted by the Decision Maker;

(b) the investment by theTop Fund in the Underlying Funds is compatible with thefundamental investment objective of the Top Fund;

(c) the Prospectus discloses:

(i) the intent of theTop Fund to invest substantially all of its assets insecurities comprised of a combination of the UnderlyingFunds;

(ii) the managers of theUnderlying Funds;

(iii) the names of theUnderlying Funds;

(iv) the Fixed Percentagesand the Permitted Ranges within which such Fixed Percentagesmay vary; and

(v) the investment objectives,investment strategies, risks and restrictions of the UnderlyingFunds;

(d) the investment objectiveand strategies of each Top Fund discloses that the Top Fundinvests substantially all of its assets in securities ofthe Underlying Funds;

(e) the Underlying Fundsare not mutual funds whose investment objectives includeinvesting directly or indirectly in other mutual funds;

(f) each Top Fund investsits assets (exclusive of cash and cash equivalents) in specifiedUnderlying Funds in accordance with the Fixed Percentagesdisclosed in the simplified prospectus of the Top Fund ;

(g) the Top Fund's holdingof securities in the Underlying Funds does not deviate fromthe Permitted Ranges;

(h) any deviation from theFixed Percentages is caused by market fluctuations only;

(i) if an investment ofany Top Fund in the Underlying Funds has deviated from thePermitted Ranges as a result of market fluctuations, theTop Fund's investment portfolio is re-balanced to complywith the Fixed Percentages on the next day on which thenet asset value was calculated following the deviation;

(j) if the Fixed Percentagesand the Underlying Funds have changed, either the Prospectushas been amended in accordance with securities legislationto reflect this significant change, or a new simplifiedprospectus has been filed to reflect the proposed changeand existing securityholders of the Top Funds have beengiven at least 60 days prior written notice of the proposedchange;

(k) there are compatibledates for the calculation of the net asset value of theTop Fund and the Underlying Funds for the purpose of theissue and redemption of the securities of such mutual funds;

(l) no sales charges arepayable by a Top Fund in relation to its purchases of securitiesof the Underlying Funds;

(m) no redemption fees orother charges are charged by the Underlying Funds in respectof the redemption by a Top Fund of securities of the UnderlyingFunds owned by the Top Fund;

(n) no fees or charges ofany sort are paid by the Top Fund and the Underlying Funds,by their respective managers or principal distributors,or by any affiliate or associate of any of the foregoingentities, to anyone in respect of the Top Fund's purchase,holding or redemption of the securities of the UnderlyingFunds;

(o) the arrangements betweenor in respect of the Top Fund and the Underlying Funds aresuch as to avoid the duplication of management fees;

(p) any notice providedto security holders of an Underlying fund as required byapplicable laws or the constating documents of that UnderlyingFund, has been delivered by the Top Fund to its securityholders;

(q) all of the disclosureand notice material prepared in connection with a meetingof security holders of the Underlying Funds and receivedby the Top Fund has been provided to its security holders,the security holders have been permitted to direct a representativeof the Top Fund to vote its holdings in the Underlying Fundin accordance with their direction, and the representativeof the Top Fund has not voted its holdings in the UnderlyingFund except to the extent the security holders of the TopFund have directed;

(r) in addition to receivingthe annual and, upon request, the semi-annual financialstatements of the Top Fund, securityholders of the Top Fundhave received appropriate summary disclosure in respectof the Top Funds' holdings of securities of the UnderlyingFunds in the financial statements of the Top Fund; and

(s) to the extent that theTop Fund and the Underlying Funds do not use a combinedsimplified prospectus and annual information form containingdisclosure about the Top Fund and the Underlying Funds,copies of the simplified prospectus and annual informationform of the Underlying Funds have been provided upon requestto securityholders of the Top Fund and the right to receivethese documents is disclosed in the simplified prospectusof the Top Fund.

June 7, 2002.

"Paul M. Moore"                    "RobertL. Shirriff"