Phillips, Hager & North Investment Management Ltd. et al. - s. 19.1 of NI 81-102 Mutual Funds

Headnote

Relief granted to permit applicant funds to purchase securities of related entity on secondary market and to continue principal trading portofolio debt securities with related dealers - Relief also granted to permit funds to purchase securities under private placements of reporting issuer underwritten by related dealers - Relief subject to conditions including IRC approval and pricing requirements.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 4.1(1), 4.1(2), 4.2, 19.1.

National Instrument 81-107 Independent Review Committee for Investment Funds.

April 28, 2008

IN THE MATTER OF

NATIONAL INSTRUMENT 81-102 - MUTUAL FUNDS

(NI 81-102)

AND

IN THE MATTER OF

PHILLIPS, HAGER & NORTH INVESTMENT

MANAGEMENT LTD.

(the Applicant)

AND

IN THE MATTER OF

THE MUTUAL FUNDS LISTED IN SCHEDULE A

(each, an Existing Fund and,

collectively, the Existing Funds)

AND ANY MUTUAL FUNDS SUBJECT TO

NATIONAL INSTRUMENT 81-102 -- MUTUAL FUNDS

(NI 81-102) THAT MAY BE ADVISED BY THE FILER OR

ANY AFFILIATE OR ASSOCIATE OF THE FILER AND

MANAGED BY SHSC FINANCIAL INC. IN THE FUTURE

(each, a Future Fund and, collectively, the Future Funds)

ORDER

(s. 19.1 of NI 81-102)

Background

The Director of the Ontario Securities Commission has received an application (the Application) from the Applicant on behalf of each Existing Fund, and any Future Funds (each, a Fund and, collectively, the Funds) for an order under section 19.1 of NI 81-102 for relief in Ontario (the Requested Relief) from

(a) the prohibition in section 4.1(1) of NI 81-102 (the Section 4.1(1) Prohibition) in order to permit a Fund to purchase equity securities (Securities) of a reporting issuer during the period of distribution (the Distribution) of the issuer's Securities pursuant to a private placement (the Private Placement) and for the 60-day period (the 60-Day Period) following completion of the Distribution (the Distribution and the 60-Day Period, together, the Prohibition Period), notwithstanding that an associate or an affiliate (a Related Person) of the dealer manager (the Dealer Manager) of the Fund acts or has acted as an underwriter in connection with the Distribution (each, a Relevant Offering);

(b) from the prohibition in section 4.1(2) of NI 81-102 (the Section 4.1(2) Prohibition) in order to permit a Fund to invest in a class of securities of an issuer (a Related Issuer) of which a partner, director, officer or employee of the dealer manager of the Fund or a partner, director, officer or employee of an affiliate or associate of the dealer manager of the Fund, is a partner, director or officer, notwithstanding that the partner, director, officer or employee:

(i) may participate in the formulation of investment decisions made on behalf of the dealer manager of the Fund;

(ii) may have access before implementation to information concerning investment decisions made on behalf of the dealer manager of the Fund; and

(iii) may influence, other than through research, statistical and other reports generally available to clients, the investment decisions made on behalf of the dealer manager of the Fund,

where such purchase occurs in the secondary market; and

(c) from the prohibition in section 4.2(1) of NI 81-102 (the Section 4.2(1) Prohibition) in order to permit a Fund to purchase from or sell to a Related Person of the manager, portfolio adviser or trustee of the Fund that is a principal dealer (Principal Dealer) in the Canadian debt securities market debt securities of an issuer other than the federal or a provincial government (Non-Government Debt Securities) or debt securities issued or fully and unconditionally guaranteed by the federal or a provincial government (Government Debt Securities) in the secondary market.

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions, in NI 81-102, and in National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) have the same meaning in this Order, unless they are otherwise defined in this Order;

Representations

This Order is based on the following facts represented by the Applicant:

1. The Applicant is a company organized under the laws of British Columbia.

2. The Applicant is registered under the Securities Act (Ontario) as an adviser in the categories of investment counsel and portfolio manager, and as a dealer in the category of mutual fund dealer.

3. Each of the Funds is, or will be, an open-end mutual fund trust or mutual fund corporation. The manager of the Funds is, or will be, SSHC Financial Inc. (the Manager). The head office of the Manager is located in Ontario.

4. The Applicant, or an affiliate or associate of the Applicant, is, or will be, a portfolio adviser, but not the manager, of each of the Existing Funds listed on Schedule A, and any Future Funds which may be advised (but not managed) by the Applicant or one of its affiliates or associates.

5. The securities of each of the Funds are, or will be, offered for sale pursuant to a prospectus filed in Ontario. Each of the Funds is, or will be, a reporting issuer in Ontario. None of the Existing Funds are reporting issuers in any other jurisdiction.

6. As a result of a share purchase transaction (the Transaction) with the shareholders of the Applicant and Royal Bank of Canada (RBC), each of the Funds may be, effective on and after the closing date (the Closing Date) of the Transaction, a dealer managed mutual fund (a Dealer Managed Fund) because the Applicant, or a Related Person of the Applicant, may be a dealer manager as defined in NI 81-102 (Dealer Manager). A Related Person of the Applicant may be, effective on and after the Closing Date, an underwriter in a Distribution which is a Relevant Offering or a Principal Dealer in the Canadian debt securities market and RBC, which is a significant issuer of both exchange traded and non-exchange traded securities, may be a Related Issuer in which a Fund is prohibited from investing, such that the Requested Relief is necessary.

7. The Existing Funds are, and the Future Funds will be, subject to the oversight of an independent review committee (IRC) in respect of the Funds in accordance with the requirements of NI 81-107.

8. A Fund would not be subject to the Section 4.1(1) Prohibition in connection with a Relevant Offering if, in accordance with section 4.1(4) of NI 81-102, certain conditions are met, including that a prospectus is filed in Ontario and the IRC of the Fund has approved the investment in accordance with NI 81-107.

9. The investment strategies of a Fund that relies on the Requested Relief from the Section 4.1(2) Prohibition permit or will permit it to invest in the securities purchased, either as a principal strategy in achieving its investment objective or as a temporary strategy, pending the purchase of other securities.

10. The role played by a Principal Dealer which, as the result of the Transaction, will be a Related Person of the portfolio advisor or trustee of a Fund is such that the Fund needs the Requested Relief from the Section 4.2 Prohibition because:

(a) there is a limited supply of Non-Government Debt Securities and Government Debt Securities available; and

(b) frequently the only source of Non-Government Debt Securities and Government Debt Securities will be a Related Person.

12. The Applicant has the authority to bring the application on behalf of the Funds.

ORDER

The Director is satisfied that it would not be prejudicial to the public interest to grant the Requested Relief in respect of each Fund so long as the following conditions are satisfied:

A. Requested Relief from the Section 4.1(1) Prohibition

The Investment Decision

1. At the time of each purchase by a Dealer Managed Fund during a Prohibition Period for a Relevant Offering, the Dealer Managed Fund has an IRC that complies with NI 81-107 and the IRC of the Dealer Managed Fund will have approved the investment in accordance with each of subsection 4.1(4)(a) of NI 81-102 and NI 81-107. The Dealer Managed Fund will also comply with paragraphs (c)(ii) and (d) of subsection 4.1(4) of NI 81-102.

2. Each issuer of a Relevant Offering is a reporting issuer or equivalent under applicable securities legislation in a Canadian jurisdiction at the time of each purchase by a Dealer Managed Fund during the Prohibition Period for the Relevant Offering.

Transparency

3.

(a) Prior to the first reliance on the decision, the internet website of the Dealer Managed Fund or Dealer Manager, as applicable, discloses, and

(b) on the date which is the earlier of (i) the date when an amendment to the simplified prospectus of the Dealer Managed Fund is filed for reasons other than this decision and (ii) the date on which the initial or renewal simplified prospectus is receipted, Part A of the simplified prospectus of the Dealer Managed Fund discloses,

that the Dealer Managed Fund may invest in Securities during the Prohibition Period pursuant to this decision, notwithstanding that a Related Person has acted as underwriter in the Relevant Offering of the same class of such Securities.

4. On the date which is the earlier of: (i) the date when an amendment to the annual information form of the Dealer Managed Fund is filed for reasons other than the decision; and (ii) the date on which the initial or renewal annual information form is receipted, the annual information form of the Dealer Managed Fund discloses the information referred to in paragraph 3 above and describes the policies or procedures and standing approvals, if any, that have been approved by the IRC as related to investments that can only be made pursuant to the decision.

B. Requested Relief from the Section 4.1(2) Prohibition:

At the time of each investment:

1. The purchase is consistent with, or is necessary to meet, the investment objective of the Fund.

2. The IRC has approved the transaction in accordance with Section 5.2(2) of NI 81-107.

3. The manager of the Fund complies with section 5.1 of NI 81-107 and the manager and the IRC of the Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions.

4. If the security is an exchanged traded security, the purchase is made on an exchange on which the securities of the issuer are listed and traded.

5. If the security is not an exchange traded security,

(a) the price payable for the security is not more than the ask price of the security;

(b) the ask price of the security is determined as follows:

(i) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(ii) if the purchase does not occur on a marketplace,

(A) the Fund may pay the price for the security at which an independent, arm's length seller is willing to sell the security, or

(B) if the Fund does not purchase the security from an independent, arm's length seller, the Fund must obtain, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and not pay more then that quote.

6. The transaction complies with any applicable "market integrity requirements" as defined in section 6.1(1)(b) of NI 81-107.

7. No later than the time the Fund files its annual financial statements, the manager of the Fund files with the securities regulatory authority or regulator the particulars of any investments made in reliance on this relief.

C. Requested Relief from the Section 4.2(1) Prohibition

1. The purchase or sale is consistent with, or is necessary to meet, the investment objective of the Fund.

2. The IRC of the Fund has approved the transaction in accordance with Section 5.2(2) of NI 81-107.

3. The manager of the Fund complies with section 5.1 of NI 81-107 and the manager and the IRC of the Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions.

4. The bid and ask price of the security is readily available as provided in Commentary 7 to section 6.1 of NI 81-107.

5. A purchase is not executed at a price which is higher than the available ask price of the security and a sale is not executed at a price which is lower than the available bid price.

6. The purchase or sale is subject to market integrity requirements as defined in NI 81-107.

7. The Fund keeps the written records required by section 6.1(2)(g) of NI 81-107.

SCHEDULE A

1. Social Housing Canadian Money Market Fund

2. Social Housing Canadian Short-Term Bond Fund

3. Social Housing Canadian Bond Fund

4. Social Housing Canadian Equity Fund