Franklin Templeton Investments Corp. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from self-dealing provisions in s. 4.2 of National Instrument 81-102 -- Mutual Funds to permit interfund trades between mutual funds and pooled funds managed by the same manager or an affiliate of the same manager -- inter-fund transfers will comply with conditions in s. 6.1(2) of National Instrument 81-107 - Independent Review Committee for Investment Funds (NI 81-107) including the requirement of independent review committee approval.

Applicable Legislative Provisions

National Instrument 81-102 -- Mutual Funds -- ss. 4.2(1), 4.3(1), 4.3(2), 19.1.

National Instrument 81-107 -- Independent Review Committee for Investment Funds -- s. 6.1(2)

April 16 , 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION 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. (FTIC) and

FIDUCIARY TRUST COMPANY OF CANADA (FTCC)

(the Filers)

AND

THE NI 81-102 FUNDS

(as defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filers on behalf of existing mutual funds and future mutual funds of which a Filer, or an affiliate of a Filer, is the manager and to which National Instrument 81-102 -- Mutual Funds (NI 81-102) applies (each, an NI 81-102 Fund and, collectively, the NI 81-102 Funds) for a decision (the Exemption Sought) under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the NI 81-102 Funds from the prohibition in Section 4.2(1) of NI 81-102 to permit an NI 81-102 Fund to purchase debt securities from or sell debt securities to existing Canadian mutual funds and future Canadian mutual funds managed by a Filer, or an affiliate of a Filer, to which NI 81-102 does not apply (each, a Pooled Fund and, collectively, the Pooled Funds)(each purchase or sale of debt securities, an Inter-Fund Trade).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

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

(b) the Filers have provided notice that Section 4.7 of Multilateral Instrument 11-102 -- Passport System is intended to be relied upon in respect of the Exemption Sought in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in the securities legislation of the Jurisdiction or the Passport Jurisdictions, National Instrument 14-101 -- Definitions, NI 81-102 or National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) have the same meanings in this Decision. Certain other defined terms have the meanings given to them above or below under "Representations".

Representations

1. Each of the NI 81-102 Funds and Pooled Funds (each, a Fund and, collectively, the Funds) is, or will be, an open-ended mutual fund trust or mutual fund corporation that is established under the laws of the Province of Ontario, another jurisdiction of Canada or Canada.

2. A Filer, or an affiliate of a Filer, is, or will be, the manager and/or portfolio adviser of each of the Funds.

3. The securities of each of the NI 81-102 Funds are or will be qualified for distribution pursuant to simplified prospectuses and annual information forms that have been prepared or will be prepared and filed in accordance with the securities legislation of each of Ontario and one or more of the Passport Jurisdictions. Accordingly, each NI 81-102 Funds is, or will be, a reporting issuer in one or more of Ontario and the Passport Jurisdictions.

4. The securities of the Pooled Funds are or will be qualified for distribution on a private placement basis pursuant to the Legislation and will not be reporting issuers.

5. A Fund may be an associate or an affiliate of a Filer, or of an affiliate of a Filer, that is the manager, portfolio adviser or trustee of an NI 81-102 Fund.

6. The Filers and each of the Funds are not in default of securities legislation in any jurisdiction of Canada.

7. A Filer, or an affiliate of a Filer, has established, or will establish, an independent review committee (IRC) in respect of each NI 81-102 Fund in accordance with the requirements of NI 81-107.

8. A Filer, or an affiliate of a Filer, will establish an IRC (which will likely also be the IRC in respect of the NI 81-102 Funds) in respect of each Pooled Fund. The initial mandate of the IRC of a Pooled Fund will be to approve Inter-Fund Trades between a Pooled Fund and another Fund.

9. The IRC of the Pooled Funds will be composed by a Filer, or an affiliate of a Filer, in accordance with section 3.7 of NI 81-107 and will be expected to comply with the standard of care set out in section 3.9 of NI 81-107. Further, the IRC of the Pooled Funds will not approve Inter-Fund Trades between a Pooled Fund and another Fund unless it has made the determination set out in section 5.2(2) of NI 81-107. Inter-Fund Trades involving NI 81-102 Funds will be referred to the relevant IRC of the NI 81-102 Funds under section 5.2(1) of NI 81-107.

10. At the time of an Inter-Fund Trade, each Filer will have in place policies and procedures to enable the NI 81-102 Funds to engage in Inter-Fund Trades with NI 81-102 Funds and Pooled Funds.

11. Each Inter-Fund Trade will be consistent with the investment objective of the NI 81-102 Fund.

12. A Filer, or an affiliate of a Filer will refer the Inter-Fund Trade to the IRC in the manner contemplated by section 5.1 of NI 81-107 and the Filer, or the affiliate of a Filer and the IRC of the Fund, will comply with section 5.4 of NI 81-107 in respect of any standing instructions an IRC provides in connection with the Inter-Fund Trade.

13. FTCC is a wholly owned subsidiary of FTIC. Both FTIC and FTCC are part of a global investment organization known as Franklin Templeton Investments that operates in 30 countries and as at October 31, 2008 had over C$ 515 billion in assets under management. The various investment objectives and investment strategies utilized by the members of Franklin Templeton Investments mean that it may be appropriate for different investment portfolios to acquire or dispose of the same securities through the same trading system. While NI 81-107 has authorized Inter-Fund Trades between NI 81-102 Funds managed by the same manager, the Filer has determined that there are significant benefits to be achieved by NI 81-102 Funds from expanding the potential counterparties to include Pooled Funds. These benefits include lower trading costs, reduced market disruption and quicker execution as well as simpler and more reliable compliance procedures. In the absence of the Exemption Sought, the NI 81-102 Funds are not able to obtain these trading benefits.

14. When a Filer, or an affiliate of a Filer, engages in an Inter-Fund Trade which involves the purchase and sale of securities between an NI 81-102 Fund and a Pooled Fund it will follow the following procedures:

(a) the portfolio manager will deliver the trade instructions in respect of a purchase or a sale of a security by a Fund (Fund A) to a trader on the trading desk of a Filer, or an affiliate of a Filer;

(b) the portfolio manager will deliver the trade instructions in respect of a sale or purchase of a security by a Fund (Fund B) to a trader on the trading desk of a Filer, or an affiliate of a Filer;

(c) the trader on the trading desk will request the approval of the trading desk compliance officer (the TDCO) to execute the trade as an Inter-Fund Trade between Fund A and Fund B;

(d) once the approval of the TDCO is received, the trader on the trading desk will have the discretion to execute the trade as an Inter-Fund Trade between Fund A and Fund B;

(e) the policies applicable to the trading desk will require that all orders are to be executed on a timely basis and will remain open only for 30 days unless the portfolio manager cancels the order sooner; and

(f) the trader on the trading desk will advise the portfolio managers of Fund A and Fund B of the price at which the Inter-Fund Trade occurs.

15. Each of the Filers has determined that it would be in the interests of the NI 81-102 Funds to receive the Exemption Sought for the following reasons:

(i) it will result in cost and timing efficiencies in respect of the execution of transactions for the NI 81-102 Funds; and

(ii) it will result in less complicated and more reliable compliance procedures, as well as simplified and more efficient monitoring thereof, for a Filer, or an affiliate of a Filer, in connection with the execution of transactions on behalf of NI 81-102 Funds.

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 the following conditions are satisfied for Inter-Fund Trades:

(i) the IRC of the NI 81-102 Fund has approved the Inter-Fund Trade in respect of the NI 81-102 Fund in accordance with the terms of section 5.2(2) of NI 81-107;

(ii) the IRC of the Pooled Fund has approved the Inter-Fund Trade in respect of the Pooled Fund in accordance with the terms of section 5.2(2) of NI 81-107; and

(iii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107.

SEDAR # 1358129 (1358130 and 1358131)