Mawer Investment Management Ltd.

Headnote

National Policy 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from paragraph 13.5(2)(b) of NI 31-103 to permit inter-fund trades between public mutual funds, pooled funds and managed accounts -- inter-fund trades will comply with conditions in subsection 6.1(2) of NI 81-107 including IRC approval or client consent -- trades involving exchange-traded securities are permitted to occur at last sale price as defined in the Universal Market Integrity Rules -- relief subject to pricing and transparency conditions -- exemption also granted from conflict of interest trading prohibition in paragraph 13.5(2)(b) of Ni 31-103 to permit in-specie subscriptions and redemptions by separately managed accounts, public mutual fund sand pooled funds.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5(2)(b), 15.1.

National Instrument 81-107 Independent Review Committee for Investment Funds, ss. 6.1(2), 6.1(4).

Citation: Mawer Investment Management Ltd., Re, 2012 ABASC 116

March 21, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

MAWER INVESTMENT MANAGEMENT LTD.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for relief from the prohibition in section 13.5(2)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations against a registered adviser knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of: (i) a responsible person (ii) an associate of a responsible person or (iii) an investment fund for which a responsible person acts as an adviser, to permit:

1. the purchase and sale of securities of any issuer within a portfolio of an NI 81-102 Fund (defined below), a Pooled Fund (defined below) and a Managed Account (defined below):

(a) between an NI 81-102 Fund and (i) another NI 81-102 Fund, or (ii) a Pooled Fund;

(b) between a Pooled Fund and (i) another Pooled Fund, or (ii) an NI 81-102 Fund; or

(c) between a Managed Account and (i) an NI 81-102 Fund, or (ii) a Pooled Fund

(the purchases and sales in 1.(a), (b), and (c) are collectively referred to as the Inter-Fund Trades);

2. the Inter-Fund Trades to occur at the last sale price, as defined in the Market Integrity Rules of the Investment Industry Regulatory Organization of Canada, prior to the execution of the trade (the Last Sale Price) in lieu of the closing sale price contemplated by the definition of "current market price" as defined in subparagraph 6.1(1)(a)(i) of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) on that trading day (the Closing Sale Price); and

(1.(a)(b) and (c), 2. are collectively the Inter-Fund Trade Relief);

3. the purchase by a Managed Account of securities of an NI 81-102 Fund or a Pooled Fund, and the redemption of securities of an NI 81-102 Fund or a Pooled Fund (each a Fund and collectively, the Funds) held by a Managed Account, and as payment:

(a) for such purchase, in whole or in part, by the Managed Account making good delivery of portfolio securities to the Fund; and

(b) for such redemption, in whole or in part, by the Fund making good delivery of portfolio securities to the Managed Account; and

4. the purchase by an NI 81-102 Fund or a Pooled Fund of securities of a Pooled Fund, the purchase by a Pooled Fund of securities of an NI 81-102 Fund, the redemption of securities held by an NI-81-102 Fund or a Pooled Fund in a Pooled Fund, and the redemption of securities held by a Pooled Fund in an NI 81-102 Fund, and as payment for such purchase or redemption, in whole or in part, by making good delivery of portfolio securities that are consistent with the investment objective of that Fund;

(the purchases and redemptions in 3. and 4. are collectively referred to as the In Specie Transactions);

(3. and 4. are collectively the In Specie Relief); and

(the In Specie Relief and the Inter-Fund Trade Relief, collectively the Exemption Sought).

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

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, Nova Scotia and Northwest Territories; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, National Instrument 81-102 Mutual Funds (NI 81-102) and NI 81-107 have the same meanings if used in this decision, unless otherwise defined herein.

The following terms have the following meanings:

Managed Account means an account over which the Filer, or an affiliate of the Filer, has discretionary authority.

NI 81-102 Funds means the existing mutual funds and future mutual funds to which NI 81-102 applies, of which the Filer, or an affiliate of the Filer, is the investment fund manager and/or portfolio adviser.

Pooled Funds means the existing and future investment funds of which the Filer, or an affiliate of the Filer, is the investment fund manager and/or portfolio adviser, the securities of which are distributed pursuant to exemptions from the prospectus requirement.

Certain other defined terms have the meanings given to them below under Representations.

Representations

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

The Filer

1. The Filer is a corporation organized under the laws of Alberta, with its head office in Calgary, Alberta.

2. The Filer is registered in:

(a) Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia and Northwest Territories as an adviser in the category of portfolio manager;

(b) Alberta as an investment fund manager; and

(c) Alberta, British Columbia, Saskatchewan, Manitoba and Ontario as a mutual fund dealer.

The Filer is not a member of the Mutual Fund Dealers Association of Canada.

3. The Filer, or an affiliate of the Filer, is, or will be, the investment fund manager and/or the portfolio adviser of each of the NI 81-102 Funds and the Pooled Funds (defined above as the Funds).

4. The Filer is not a reporting issuer in any jurisdiction of Canada.

5. The NI 81-102 Funds are reporting issuers and as a result the Filer has established an independent review committee (IRC) under NI 81-107 with respect to each of the NI 81-102 Funds.

6. The Filer, or an affiliate of the Filer, as investment fund manager of a Pooled Fund, will either expand the mandate of the IRC of the NI 81-102 Funds to include the review and approval of the Inter-Fund Trades on behalf of each Pooled Fund, or establish a new IRC for some or all of the Pooled Funds.

7. None of the Filer, an affiliate of the Filer, the NI 81-102 Funds or the Pooled Funds are in default of securities legislation in any jurisdiction of Canada.

The Pooled Funds

8. Each Pooled Fund is, or will be, an investment fund established under the laws of Alberta or another jurisdiction of Canada.

9. The Filer, or an affiliate of the Filer, is, or will be, the investment fund manager and/or portfolio adviser of each of the Pooled Funds.

10. The Pooled Funds are not, and will not be, reporting issuers in any jurisdiction of Canada.

11. Securities of the Pooled Funds are, or will be, distributed in some or all of the jurisdictions of Canada pursuant to exemptions from the prospectus requirement in those jurisdictions.

The NI 81-102 Funds

12. Each NI 81-102 Fund is, or will be, an investment fund established under the laws of Alberta or another jurisdiction of Canada.

13. The Filer, or an affiliate of the Filer, is, or will be, the investment fund manager and/or portfolio adviser of each of the NI 81-102 Funds.

14. The NI 81-102 Funds are, and will be, reporting issuers in some or all of the jurisdictions of Canada.

15. Securities of the NI 81-102 Funds are, or will be, distributed pursuant to a simplified prospectus and annual information form in some or all of the jurisdictions of Canada.

The Managed Accounts

16. The Filer, or an affiliate of the Filer, is, or will be, the portfolio adviser of each of the Managed Accounts.

17. Each client of the Filer, or its affiliate, wishing to receive the investment management services of the Filer, or its affiliate, has entered into, or will enter into, a written investment management agreement (or other similar agreement) whereby the client appoints the Filer, or its affiliate, to act as portfolio adviser in connection with an investment portfolio of the client with full discretionary authority to trade in securities for the Managed Account without obtaining the specific consent of the client to execute the trade.

18. Investments in individual securities may not be appropriate in certain circumstances for a client; consequently, the Filer, or its affiliate, may, where authorized under the investment management agreement or other documentation in respect of a Managed Account, from time to time, invest the client's assets in securities of any one or more of the Funds in order to give the client the benefit of asset diversification and economies of scale regarding minimum commission charges on portfolio trades, and generally to facilitate portfolio management.

19. Each investment management agreement or other documentation in respect of a Managed Account contains, or will contain, the authorization of the client to engage in the Inter-Fund Trades and In Specie Transactions.

Inter-Fund Trades

20. As the portfolio adviser, the Filer may desire to cause:

(a) an NI 81-102 Fund to engage in an Inter-Fund Trade with (i) another NI 81-102 Fund, or (ii) a Pooled Fund;

(b) a Pooled Fund to engage in an Inter-Fund Trade with (i) another Pooled Fund, or (ii) an NI 81-102 Fund; or

(c) a Managed Account to engage in an Inter-Fund Trade with (i) an NI 81-102 Fund, or (ii) a Pooled Fund.

21. When the Filer, or an affiliate of the Filer, engages in an Inter-Fund Trade, it will generally follow the following procedures or other procedures approved by the applicable IRC:

(a) the portfolio adviser of the Filer, or an affiliate of the Filer, will request the approval of the chief compliance officer of the Filer, or an affiliate of the Filer, or his or her designated alternate, or of another designated individual, to execute a purchase or a sale of a security by a Fund or Managed Account as an Inter-Fund Trade;

(b) upon receipt of the required approval, the portfolio adviser of the Filer, or an affiliate of the Filer, will either place the trade directly or deliver the trade instructions to a trader on a trading desk of the Filer, or an affiliate of the Filer;

(c) upon receipt of the approved trade instructions, the trader on the trading desk will have the discretion to execute the trade as an Inter-Fund Trade in accordance with the requirements of paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, provided that, for exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price or the Current Market Price of the security;

(d) the policies applicable to the trading desk of the Filer, or an affiliate of the Filer, will require that all orders are to be executed on a timely basis; and

(e) the trader will advise the Filer of the price at which the Inter-Fund Trade occurred.

22. The Inter-Fund Trades will be effected through a registered dealer or otherwise be subject to market integrity requirements.

23. At the time of an Inter-Fund Trade, the Filer will have in place policies and procedures to enable the Funds and Managed Accounts to engage in the Inter-Fund Trades.

24. As noted above, the Filer, or an affiliate of the Filer, as investment fund manager of a Pooled Fund, will either expand the mandate of the IRC of the NI 81-102 Funds to include the review and approval of the Inter-Fund Trades on behalf of each Pooled Fund, or establish a new IRC for some or all of the Pooled Funds. In any event, in its review of the Inter-Fund Trades on behalf of a Pooled Fund, the applicable IRC will comply with the standard of care set out in section 3.9 of NI 81-107. The IRC will not approve an Inter-Fund Trade on behalf of a Pooled Fund unless the IRC has made the determination set out in subsection 5.2(2) of NI 81-107.

25. The Inter-Fund Trades involving a Fund will be referred to the IRC under subsection 5.2(1) of NI 81-107 and the Filer, as investment fund manager and/or portfolio adviser of such Fund, will comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade.

26. As the Filer, or its affiliate, is, or will be, the portfolio adviser of a Fund and of the Managed Accounts, the Filer, or its affiliate, would be considered a "responsible person" within the meaning of the applicable provisions of the Legislation; accordingly, absent the granting of the Exemption Sought, the Filer, or its affiliate, would be restricted from engaging in the Inter-Fund Trades.

27. The Filer cannot rely on the exemption from the trading prohibition in subsection 6.1(4) of NI 81-107 unless the parties to the Inter-Fund Trade are both reporting issuers and the Inter-Fund Trade occurs at the current market price, which in the case of exchange-traded securities, includes the Closing Sale Price but not the Last Sale Price.

28. The Filer has determined that it would be in the interests of the Funds and the Managed Accounts to receive the Inter-Fund Trade Relief.

29. Due to the various investment objectives and investment strategies utilized by the Funds and the Managed Accounts, it may be appropriate for different investment portfolios to acquire or dispose of the same securities through the same trading system; the Filer has determined that there are benefits to be achieved from expanding the potential counterparties to include other Funds and Managed Accounts; these benefits include lower trading costs, reduced market disruption and quicker execution, as well as simpler and more reliable compliance procedures.

In Specie Transactions

30. The Filer desires to be able to enter into an In Specie Transaction between a Fund and a Managed Account or between an NI 81-102 Fund or a Pooled Fund and a Pooled Fund, that permits payment, in whole or in part, for securities of a Fund purchased by a Managed Account, for securities of a Pooled Fund purchased by an NI 81-102 Fund or another Pooled Fund, or for securities of an NI 81-102 Fund purchased by a Pooled Fund, to be made by making good delivery of portfolio securities held by such Managed Account to a Fund, of portfolio securities held by such NI 81-102 Fund or Pooled Fund to a Pooled Fund, or of portfolio securities held by such Pooled Fund to an NI 81-102 Fund, in any case provided these portfolio securities meet the investment criteria of the Fund.

31. Similarly, following a redemption of securities of a Fund by a Managed Account, the redemption of securities held by an NI 81-102 Fund or a Pooled Fund in a Pooled Fund, or the redemption of securities held by a Pooled Fund in an NI 81-102 Fund, the Filer desires to be able to enter into an In Specie Transaction that permits payment, in whole or in part, of redemption proceeds to be satisfied by making good delivery of portfolio securities held in the investment portfolio of a Fund to such Managed Account, of portfolio securities held in the investment portfolio of a Pooled Fund to an NI 81-102 Fund or another Pooled Fund, or of portfolio securities held in the investment portfolio of an NI 81-102 Fund to a Pooled Fund.

32. Each In Specie Transaction involving an NI 81-102 Fund will be referred to the IRC for approval in accordance with the requirements of NI 81-107. The IRC will not approve such transaction unless it has made the determination set out in subsection 5.2(2) of NI 81-107.

33. The Filer, or its affiliate, will value the portfolio securities under an In Specie Transaction using the same values that are used to calculate the net asset value for the purpose of the issue price or redemption price of securities of the Fund.

34. The portfolio securities transferred in an In Specie Transaction will be consistent with the investment criteria of the Fund or Managed Account, as the case may be, acquiring the portfolio securities.

35. None of the portfolio securities which are the subject of an In Specie Transaction will be securities of related issuers of the Filer.

36. The Funds will keep written records of each In Specie Transaction, including records of each purchase and redemption of portfolio securities and the terms thereof for a period of five years commencing after the end of the financial year in which the trade occurred, the most recent two years in a reasonably accessible place.

37. The only cost which will be incurred by a Fund or a Managed Account for an In Specie Transaction is a nominal administrative charge levied by the custodian of the Fund in recording the trades and/or any commission charged by the dealer executing the trade.

38. The Filer has obtained or will obtain the prior written consent of the relevant client before it engages in any In Specie Transactions in connection with the purchase or redemption of securities of the Funds for a Managed Account.

39. At the time of an In Specie Transaction, the Filer, or its affiliate, will have in place policies and procedures to enable the Funds and Managed Accounts to engage in the In Specie Transactions with Funds and Managed Accounts.

40. As the Filer, or its affiliate, is, or will be, the portfolio adviser of the Funds and the portfolio adviser of the Managed Accounts, the Filer, or its affiliate, would be considered a "responsible person" within the meaning of the applicable provisions of the Legislation; accordingly, absent the granting of the Exemption Sought, the Filer, or its affiliate, would be prohibited from engaging in the In Specie Transactions.

41. The Filer has determined that it would be in the interests of the Funds and the Managed Accounts to receive the In Specie Relief.

42. The Filer has determined that effecting the In Specie Transactions of securities between a Fund and a Managed Account or between a Fund and another Fund will allow the Filer to manage each asset class more effectively and reduce transaction costs for the client, as applicable, and the Funds; for example, the In Specie Transactions reduce market impact costs, which can be detrimental to clients and/or the Funds; the In Specie Transactions also allow a portfolio adviser to retain within its control institutional-size blocks of securities that otherwise would need to be broken and re-assembled.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers is that the Exemption Sought is granted provided that:

Inter-Fund Trades

1. in connection with Inter-Fund Trades:

(a) the Inter-Fund Trade is consistent with the investment objective of the Fund or the Managed Account, as applicable;

(b) the Filer refers the Inter-Fund Trade to the IRC in the manner contemplated by section 5.1 of NI 81-107 and the Filer and the applicable IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade;

(c) the IRC of each Fund has approved the Inter-Fund Trade in respect of that Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(d) if the transaction is with a Managed Account, the investment management agreement or other documentation in respect of the Managed Account contains the authorization of the client for the Filer to engage in the Inter-Fund Trades; and

(e) for exchange-traded securities, the Inter-Fund Trade is executed at the Last Sale Price or the Current Market Price of the security and the Inter-Fund Trade complies with paragraphs (c), (d), (f) and (g) of subsection 6.1(2) of NI 81-107;

In Specie Transactions

2. in connection with an In Specie Transaction where a Managed Account acquires securities in a Fund:

(a) if the transaction involves the purchase of securities in an NI 81-102 Fund the IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(b) the Filer and the applicable IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the applicable IRC provides in connection with the In Specie Transaction;

(c) the Filer obtains the prior written consent of the client of the Managed Account before it engages in any In Specie Transaction;

(d) the Fund would, at the time of payment, be permitted to purchase the portfolio securities;

(e) the portfolio securities are acceptable to the portfolio adviser of the Fund and are consistent with the investment criteria of the Fund;

(f) the value of the portfolio securities is equal to the issue price of the securities in the Fund for which they are used as payment, valued as if the securities were portfolio assets of that Fund;

(g) none of the portfolio securities which are the subject of the In Specie Transaction will be securities of related issuers of the Filer;

(h) the account statement next prepared for the Managed Account will describe the portfolio securities delivered to the Fund and the value assigned to such securities; and

(i) he Fund will keep written records of each In Specie Transaction in a financial year of the Fund, reflecting details of the portfolio securities delivered to the Fund and the value assigned to such portfolio securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

3. in connection with an In Specie Transaction where a Managed Account redeems securities in a Fund:

(a) if the transaction involves the redemption of securities in an NI 81-102 Fund, the IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(b) the Filer and the applicable IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the applicable IRC provides in connection with the In Specie Transaction;

(c) the Filer obtains the prior written consent of the client of the Managed Account before it engages in an In Specie Transaction and such consent has not been revoked;

(d) the portfolio securities are consistent with the investment criteria of the Managed Account acquiring the portfolio securities and are acceptable to the Filer;

(e) the value of the portfolio securities is equal to the amount at which those securities were valued by the Fund in calculating the net asset value per security used to establish the redemption price;

(f) none of the portfolio securities which are the subject of the In Specie Transaction will be securities of related issuers of the Filer;

(g) the account statement next prepared for the Managed Account will describe the portfolio securities received from the Fund and the value assigned to such securities in the Fund; and

(h) the Fund will keep written records of each In Specie Transaction in a financial year of the Fund, reflecting details of the portfolio securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

4. in connection with an In Specie Transaction where an NI 81-102 Fund or a Pooled Fund acquires portfolio securities of a Pooled Fund, or a Pooled Fund acquires portfolio securities of an NI 81-102 Fund:

(a) if the transaction involves the purchase of securities in an NI 81-102 Fund, the IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(b) the Filer and the applicable IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the applicable IRC provides in connection with the In Specie Transaction;

(c) the Fund acquiring the securities would, at the time of payment, be permitted to purchase the portfolio securities;

(d) the portfolio securities are acceptable to the portfolio adviser of the Fund and are consistent with the investment criteria of the Fund acquiring the security;

(e) the value of the portfolio securities is equal to the issue price of the securities in the Fund for which they are used as payment, valued as if the portfolio securities were portfolio assets of that Fund;

(f) none of the portfolio securities which are the subject of the In Specie Transaction will be securities of related issuers of the Filer; and

(g) the Fund will keep written records of each In Specie Transaction in a financial year of the Fund, reflecting details of the portfolio securities delivered to the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;

5. in connection with an In Specie Transaction where an NI 81-102 Fund or a Pooled Fund redeems securities of a Pooled Fund, or a Pooled Fund redeems securities in an NI 81-102 Fund:

(a) if the transaction involves the redemption of securities in an NI 81-102 Fund, the IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of subsection 5.2(2) of NI 81-107;

(b) the Filer and the applicable IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the applicable IRC provides in connection with the In Specie Transaction;

(c) the portfolio securities are acceptable to the portfolio advisor of the Fund and are consistent with the investment criteria of the Fund acquiring the security;

(d) the value of the portfolio securities is equal to the amount at which those securities were valued by the Fund in calculating the net asset value per security used to establish the redemption price;

(e) none of the portfolio securities which are the subject of the In Specie Transaction will be securities of related issuers of the Filer; and

(f) the Fund will keep written records of each In Specie Transaction in a financial year of the Fund, reflecting details of the portfolio securities delivered by the Fund and the value assigned to such securities, for five years after the end of the Financial year, the most recent two years in a reasonably accessible place; and

6. the Filer does not receive any compensation in respect of any In Specie Transaction and, in respect of any delivery of portfolio securities further to an In Specie Transaction, the only charges paid by the Managed Account or the applicable Fund is the commission charged by the dealer executing the trade (if any) and/or any administrative charges levied by the custodian.