Franklin Templeton Investments Corp. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of mutual fund mergers -- approval required because merger does not meet the criteria for pre-approved reorganizations and transfers in National Instrument 81-102 -- continuing funds have different investment objectives than terminating funds -- one of the mergers will not be a "qualifying exchange" or a tax-deferred transaction under the Income Tax Act (Canada) -- securityholders of terminating funds provided with timely and adequate disclosure regarding the mergers.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(b), 5.6(1).

June 2, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

THE PROVINCE OF ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF THE

PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

FRANKLIN TEMPLETON INVESTMENTS CORP.

(the "Manager")

AND

BISSETT MULTINATIONAL GROWTH FUND AND

BISSETT MULTINATIONAL GROWTH CORPORATE CLASS

(the "Terminating Funds")

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the "Application") from the Manager and the Terminating Funds (the "Filer") for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for approval of the mergers (the "Mergers") of the Terminating Funds into the Continuing Funds (as defined below) under section 5.5(1)(b) of National Instrument 81-102 ("NI 81-102") (the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this Application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-202 Passport System ("MI 11-202") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (the "Non-Principal Jurisdictions").

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined. The following additional terms shall have the following meanings:

"BMGCC" means Bissett Multinational Growth Corporate Class;

"BMGF" means Bissett Multinational Growth Fund;

"Class" or "Classes" means, individually or collectively, Bissett Multinational Growth Corporate Class and Franklin World Growth Corporate Class;

"Continuing Funds" means Franklin World Growth Fund and Franklin World Growth Corporate Class;

"Corporate Class Ltd." means Franklin Templeton Corporate Class Ltd.;

"Corporate Class Merger" means the merger of Bissett Multinational Growth Corporate Class into Franklin World Growth Corporate Class;

"Effective Date" means the close of business on June 24, 2011, or as soon as practicable thereafter;

"Fund" or "Funds" means, individually or collectively, the Terminating Funds and the Continuing Funds;

"FWGCC" means Franklin World Growth Corporate Class:

"FWGF" means Franklin World Growth Fund;

"IRC" means Independent Review Committee;

"Tax Act" means the Income Tax Act (Canada);

"Trust Fund Merger" means the merger of Bissett Multinational Growth Fund into Franklin World Growth Fund.

Representations

This decision is based on the following facts represented by the Filer:

1. The Manager is a corporation existing under the laws of Ontario. The Manager is the manager of each of the Funds. The registered head office of the Manager is located in Toronto, Ontario.

2. Corporate Class Ltd. is an open-ended mutual fund corporation incorporated under the laws of Alberta on June 1, 2001. Each of the Classes is a separate class of special shares of Corporate Class Ltd.

3. Securities of FWGF are currently qualified for sale by a simplified prospectus and annual information form dated June 29, 2010, which has been filed and receipted in the Jurisdiction and each of the Non-Principal Jurisdictions. Securities of the remaining Funds are currently qualified for sale by a simplified prospectus and annual information form dated June 14, 2010, as amended, which has been filed and receipted in the Jurisdiction and each of the Non-Principal Jurisdictions.

4. Each of the Funds is a reporting issuer in Ontario and in each of the Non-Principal Jurisdictions. The Manager and each of the Funds is not in default of the securities legislation in force in the Jurisdiction or in any of the Non-Principal Jurisdictions.

5. Other than circumstances in which the Principal Regulator or the securities regulatory authority of a Non-Principal Jurisdiction has expressly exempted a Fund therefrom, each of the Funds follows the standard investment restrictions and practices set out in NI 81-102.

6. The net asset value for each series of the Funds is calculated on a daily basis on each day that the Toronto Stock Exchange is open for trading.

7. The Manager intends to merge the Terminating Funds into the Continuing Funds as follows:

a) BMGF into FWGF; and

b) BMGCC into FWGCC.

8. Pursuant to the Mergers, securityholders will receive securities with the same value and of the same series of a Continuing Fund as they currently own in the corresponding Terminating Fund. As FWGF does not currently offer Series A, F and T units and FWGCC does not currently offer Series T shares, the Manager intends to create and prospectus-qualify Series A, F and T units of FWGF and Series T shares of FWGCC on or around June 23, 2011.

9. Securityholders of the Terminating Funds and FWGCC will be asked to approve the Mergers at meetings to be held on June 10, 2011. The Manager, as the sole Class A Common Shareholder of Corporate Class Ltd. will vote its Class A Common Shares in favour of the Corporate Class Merger, as required under the Business Corporations Act (Alberta).

10. The Funds' IRC has reviewed the potential conflict of interest matters related to the Mergers and has provided the Manager with a positive recommendation having determined that the proposed Mergers, if implemented, achieve a fair and reasonable result for each of the Funds. A summary of the IRC's recommendation has been included in the notice of special meetings sent to investors of the Terminating Funds and FWGCC.

11. The Mergers are contingent upon each other. If applicable securityholder approval is not received at the special meeting in respect of a Merger, then neither Merger will proceed.

12. The Manager will pay for all costs attributable to the Mergers. These costs include legal, proxy solicitation, printing, mailing and regulatory fees.

13. Securityholders of the Terminating Funds will continue to have the right to redeem securities of the Terminating Funds for cash at any time up to the close of business on the business day immediately before the Effective Date. The management information circular mailed to securityholders of the Terminating Funds discloses that a securityholder's deferred sales charge schedule is not changed or eliminated as a result of the Mergers, and that investors who redeem their shares of the Terminating Fund may be subject to redemption charges as outlined in the simplified prospectus.

14. Effective as of the close of business on June 10, 2011, the Terminating Funds will cease any distribution of securities (except purchases under existing pre-authorized chequing plans). Following the Mergers, all systematic investment programs and systematic withdrawal programs, such as pre-authorized chequing plans and systematic withdrawal programs, that had been established with respect to the Terminating Funds, will be re-established on a series-for-series basis in the Continuing Funds unless a securityholder advises the Manager otherwise. Securityholders may change or cancel any systematic program at any time and securityholders of the Terminating Funds who wish to establish one or more systematic programs in respect of their investment in the Continuing Funds may do so following the Mergers.

15. Material change reports, press releases and amendments to the simplified prospectus and annual information form, which gave notice of the proposed Mergers, were filed via SEDAR on March 28 and April 6, 2011.

16. A notice of meeting, management information circular and proxy in connection with the special meetings of securityholders were mailed to securityholders of the Terminating Funds and of FWGCC on or about May 18, 2011 and were filed via SEDAR on May 19, 2011. The information circular contained prospectus-level disclosure regarding the Continuing Funds and the securities to be issued to securityholders of the Terminating Funds upon the completion of the Mergers.

17. The material sent to securityholders of the Terminating Funds and FWGCC included a tailored simplified prospectus consisting of:

a) the current Part A of the simplified prospectus of FWGCC, and

b) the current Part B of the simplified prospectus of FWGCC.

18. In addition:

a) the information circular sent to securityholders in connection with the Mergers provided prospectus-level disclosure with respect to FWGF and the features of the new series;

b) the information circular sent to securityholders in connection with the Mergers provided sufficient information about the Mergers to permit securityholders to make an informed decision about the Mergers;

c) each Fund has an unqualified audit report in respect of its last completed financial period;

d) the information circular sent to securityholders in connection with a Merger prominently disclosed that securityholders can obtain the most recent interim and annual financial statements of the applicable continuing fund by accessing the SEDAR website at www.sedar.com, by accessing the Manager's website at www.franklintempleton.ca, by calling a toll-free number or by contacting the Manager at [email protected]; and

e) upon request by a securityholder for financial statements, the Manager will make best efforts to provide the securityholder with financial statements of the Continuing Funds in a timely manner so that the securityholder can make an informed decision regarding a Merger.

19. Subject to the required approvals of the Principal Regulator and applicable securityholders, the Terminating Funds will merge into the Continuing Funds on the Effective Date.

20. Following the Mergers, the Continuing Funds will continue as publicly offered open-end mutual funds.

21. No sales charges will be payable in connection with the Mergers.

22. The Trust Fund Merger will be implemented pursuant to the following steps:

a) Prior to the Effective Date, all securities in the portfolio of BMGF will be liquidated, as they do not meet the investment objective or strategies of FWGF. As a result, BMGF will temporarily hold cash and/or cash equivalents and will not be fully invested in accordance with its investment objectives for a brief period of time prior to the Trust Fund Merger.

b) On the Effective Date, BMGF will transfer all of its assets, which will consist of cash and/or cash equivalents (less an amount required to satisfy the liabilities of BMGF), to FWGF, in exchange for units of FWGF. The units of FWGF received by BMGF will have an aggregate net asset value equal to the value of BMGF's net assets, which units will be issued by FWGF at the relevant series net asset value per unit as of the close of business on the Effective Date.

c) BMGF will distribute to its securityholders sufficient net income and net realized capital gains so that it will not be subject to tax under Part 1 of the Tax Act for its current taxation year.

d) Immediately following the above-noted transfer and distribution, BMGF will distribute units of FWGF held in its portfolio to its securityholders in exchange for their units of BMGF, so that following the distribution, the securityholders of BMGF will become direct securityholders of FWGF. Series A, F, O and T securitytholders of BMGF will receive corresponding Series A, F, O and T units of FWGF on a dollar-for-dollar basis.

e) As soon as reasonably possible following the Trust Fund Merger, BMGF will be wound up.

23. The Corporate Class Merger will be implemented pursuant to the following steps:

a) The articles of incorporation of Corporate Class Ltd. will be amended to authorize the exchange of all outstanding shares of each series of BMGCC for shares of the same series of FWGCC.

b) On the Effective Date, the net assets of BMGCC (after retention of sufficient assets to satisfy BMGCC's liabilities), which will be comprised of units of FWGF distributed as a result of the Trust Fund Merger, will be included in the portfolio of assets attributed to FWGCC at cost.

c) On the Effective Date, each outstanding share of BMGCC will be exchanged, on a dollar-for-dollar basis, for a share of an equivalent series of FWGCC, so that securityholders of BMGCC become securityholders of FWGCC.

d) The shares of BMGCC will cancelled by Corporate Class Ltd., and BMGCC will be terminated.

24. Approval of the Mergers is required because the Mergers do not satisfy all of the criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102 in the following ways:

a) the fundamental investment objectives of the Terminating Funds and Continuing Funds are not, or may not be considered by a reasonable person to be, "substantially similar"; and

b) the Trust Fund Merger does not qualify as a "qualifying exchange" or a tax-deferred transaction under the Tax Act because FWGF is not a "Mutual Fund Trust" under the Tax Act. A "qualifying exchange" can only take place between two Mutual Fund Trusts.

25. The Filer submits that it is in the overall best interests of investors to effect the Trust Fund Merger on a taxable basis in order to preserve FWGF's unused capital losses, which would otherwise expire upon implementation of the Trust Fund Merger as a tax-deferred transaction. By effecting the Trust Fund Merger on a taxable basis, the Filer expects the capital losses of FWGF to be available to shelter income and capital gains realized by FWGF in future years and thereby reduce the amount of taxable distributions made to unitholders of FWGF in the future.

26. Except as noted herein, the Mergers will otherwise comply with all of the other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102.

27. The Filer submits that the Mergers will result in the following benefits:

a) securityholders of the Funds will gain access to greater portfolio diversification due to the Continuing Funds' broader investment mandate;

b) the Mergers will eliminate the administrative and regulatory costs of operating each Terminating Fund as a separate mutual fund;

c) each Continuing Fund will have a portfolio of greater value, allowing for increased portfolio diversification opportunities; and

d) each Continuing Fund, as a result of its greater size, will benefit from its larger profile in the marketplace.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that prior to the Effective Date, a final simplified prospectus qualifying the Series A, F, and T units of FWGF and Series T shares of FWGCC is filed by the Manager in the Jurisdiction and each of the Non-Principal Jurisdictions, and a receipt therefor is issued.

"Vera Nunes"
Manager, Investment Funds Branch
Ontario Securities Commission