Securities Law & Instruments


Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted from s. 13.5(2)(b) of NI 31-103 to permit inter-fund trades between public mutual funds, pooled funds and managed accounts and to permit inter-fund trades at last sale price – Relief subject to conditions including IRC approval or client consent – relief also subject to pricing and transparency conditions – inter-fund trades will comply with conditions in s. 6.1(2) of NI 81-107 – Relief granted from s. 13.5(2)(a) of NI 31-103 to allow pooled funds to invest in underlying funds that are corporations or limited partnerships under common management – relief granted subject to certain conditions including no duplication of management fees – Relief granted from s. 13.5(2)(b) of NI 31-103 to permit in specie transfers between public mutual funds, pooled funds and managed accounts – Relief subject to conditions including IRC approval or client consent – relief also subject to pricing and transparency conditions.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5, 15.1.
National Instrument 81-102 Investment Funds, ss. 2.5(2), 2.5(7).
National Instrument 81-107 Independent Review Committee for Investment Funds, ss. 6.1, 6.2.

July 24, 2017

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
SPR & CO LP
(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the following:

Fund on Funds Transactions

(a)           the prohibition contained in section 13.5(2)(a) of NI 31­103 to permit a Pooled Fund to invest in related Pooled Funds or NI 81­102 Funds

(the Fund on Fund Relief);

Transactions with Related Parties

(b)           the prohibition in section 13.5(2)(b) of NI 31­103 against a registered adviser knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing or selling a security from or to the investment portfolio of an associate of a responsible person or any investment fund for which a responsible person acts as an adviser, such that the following purchases and sales (each purchase or sale, an Inter­fund Trade) are permitted and, for Inter­fund Trades of exchange­traded securities, are permitted to be executed at the Last Sale Price:

(i)            an Inter­fund Trade between an NI 81­102 Fund and another NI 81­102 Fund or a Pooled Fund?

(ii)           an Inter­fund Trade between a Pooled Fund and another Pooled Fund or an NI 81­102 Fund? and

(iii)          an Inter­fund Trade between a Managed Account and an NI 81­102 Fund or a Pooled Fund

(the Inter­fund Trade Relief);

In specie Transfer Relief

(c)           the prohibition in section 13.5(2)(b) of NI 31-103 to permit in specie subscriptions and redemptions by

(i)            a Pooled Fund in another Pooled Fund or an NI 81­102 Fund; and

(ii)           a Managed Account in an NI 81-102 Fund or a Pooled Fund

(the In specie Transfer Relief)

(the Fund on Fund Relief, Inter-fund Trade Relief and In specie Transfer Relief are collectively the Requested Relief).

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

1.             The Ontario Securities Commission (OSC) is the principal regulator for this application; and

2.             the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in respect of the Requested Relief in each province and territory of Canada.

Interpretation

Terms defined in National Instrument 14­101 Definitions, MI 11­102, NI 31-103, NI 81-102, NI 81-106, NI 81-107 or in the Securities Act (Ontario) have the same meaning if used in this decision, unless otherwise defined. The following additional terms shall have the following meanings:

APA means the Asset Purchase Agreement among, inter alia, Sprott Asset Management LP, Sprott Private Wealth LP and 2568004 Ontario Inc. dated April 10, 2017, as filed on SEDAR under the profile of Sprott Inc., as the same may be amended, supplemented or modified from time to time in accordance with its terms.

Clients means clients of the Managed Accounts who are not responsible persons.

Closed-end Fund means each non-redeemable investment fund that is or will be a reporting issuer and subject to NI 81-102 of which the Filer or an affiliate of the Filer is or will act as manager or portfolio adviser.

Closing means the completion of the “Initial Closing” as defined in the APA.

Existing Funds means, collectively, the Existing NI 81-102 Funds and Existing Pooled Funds.

Existing Managed Account means each fully managed account managed, upon Closing, by the Filer or an affiliate of the Filer for a client that is not a responsible person.

Existing NI 81-102 Fund means each existing NI 81-102 Fund (including existing Closed-end Funds), being an investment fund that is a reporting issuer and subject to NI 81-102 of which the Filer or an affiliate of the Filer, upon Closing, acts as manager and/or portfolio adviser.

Existing Pooled Fund means each existing Pooled Fund, being an investment fund that is not a reporting issuer of which the Filer or an affiliate of the Filer, upon Closing, acts as manager and/or portfolio adviser.

Funds means, collectively, the NI 81-102 Funds and the Pooled Funds.

Future Funds means, collectively, the Future NI 81-102 Funds and the Future Pooled Funds;

Future Managed Account means each fully managed account that is not an Existing Managed Account and that will be managed by the Filer or an affiliate of the Filer for a client that is not a responsible person in the future.

Future NI 81-102 Fund means each future NI 81-102 Fund (including future Closed-end Funds) that is not an Existing NI 81-102 Fund, being an investment fund that is or will be a reporting issuer and subject to NI 81-102 of which the Filer or an affiliate of the Filer will act as manager or portfolio adviser in the future.

Future Pooled Fund means each future Pooled Fund that is not an Existing Pooled Fund, being an investment fund that is not or will not be a reporting issuer of which the Filer or an affiliate of the Filer will act as manager and/or portfolio adviser in the future.

In specie Transfer means causing a Managed Account or a Pooled Fund to deliver securities to a Pooled Fund or NI 81-102 Fund in respect of the purchase of securities of the Pooled Fund or NI 81-102 Fund by the Managed Account or Pooled Fund, or to receive securities from the investment portfolio of a Pooled Fund or NI 81-102 Fund in respect of a redemption of securities of the Pooled Fund or NI 81-102 Fund by the Managed Account or Pooled fund.

Last Sale Price means 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 on that trading day where the securities involved in the Inter­fund Trade are exchange­traded securities (which term shall include Canadian and foreign exchange­traded securities).

Managed Accounts means the Existing Managed Accounts and the Future Managed Accounts.

NI 31­103 means National Instrument 31­103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

NI 81­102 means National Instrument 81­102 Investment Funds.

NI 81­102 Funds means, collectively, the Existing NI 81-102 Funds and the Future NI 81-102 Funds.

NI 81­107 means National Instrument 81­107 Independent Review Committee for Investment Funds.

Pooled Funds means, collectively, the Existing Pooled Funds and the Future Pooled Funds.

Representations

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

The Filer

1.             The Filer is a limited partnership formed and organized under the laws of the Province of Ontario. The general partner of the Filer is 2573322 Ontario Inc., a corporation incorporated under the laws of the Province of Ontario. The head office of the Filer is located in Ontario.

2.             Upon Closing, the management agreements relating to the Existing Funds and the managed account agreements relating to the Existing Managed Accounts will be assigned to the Filer by Sprott Asset Management LP and the Filer will become the manager and portfolio adviser of such Existing Funds and Existing Managed Accounts.

3.             The Filer is or upon Closing will be registered as an adviser in the category of (i) an investment fund manager in Ontario, Quebec and Newfoundland and Labrador, (ii) a portfolio manager in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Newfoundland and Labrador, and (iii) exempt market dealer in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Quebec. Neither the Filer nor any of the Funds that will upon Closing be managed by the Filer is on the date hereof in default of securities legislation in any province or territory of Canada.

4.             The Filer or an affiliate thereof upon Closing or thereafter will be the manager and/or portfolio adviser for the Funds. The Filer or an affiliate thereof upon Closing or thereafter also carries on, or will carry on, certain investment management activities on a discretionary basis and upon Closing or thereafter is, or will be, the portfolio adviser for the Managed Accounts.

5.             Sprott Asset Management LP previously received the Fund on Fund Relief and Inter-fund Trade Relief in a decision dated September 30, 2010. The Filer requires this relief to be re-issued to it upon Closing to facilitate a seamless transition in connection with the management of the Funds and the Managed Accounts.

The NI 81-102 Funds and Pooled Funds

6.             Each of the NI 81­102 Funds is, or will be, an open­ended mutual fund trust or other trust established under the laws of the Province of Ontario, a class of a mutual fund corporation or other corporation established under the laws of the Province of Ontario or of Canada or a limited partnership established under the laws of the Province of Ontario. Each of the NI 81­102 Funds is, or will be, a reporting issuer in Ontario and/or at least one of the other provinces and territories of Canada.

7.             Each of the Pooled Funds is, or will be, a limited partnership or a trust and will not be a reporting issuer.

8.             Certain underlying NI 81-102 Funds and Pooled Funds (the Bottom Funds) may be related to the top Pooled Funds (the Top Funds) including as a result of: (1) overlapping directors, officers or employees between the Filer and the Bottom Funds; or (2) the general partner of a Bottom Fund being an associate of the Filer.

9.             Certain of the NI 81-102 Funds and Pooled Funds are or will be “associates” of the Filer.

The Managed Accounts

10.          The Filer or an affiliate thereof will upon Closing or thereafter offer discretionary portfolio management services to high net worth individuals and institutional investors and upon Closing will have entered or thereafter will enter into an investment management agreement (the Investment Management Agreement) with each such Client.

Fund on Funds Transactions

11.          In connection with the investments of a Pooled Fund in another Fund, there will be no duplication of management or incentive fees.

12.          When a Pooled Fund invests in another Fund, the Filer will not charge or receive any sales fees or redemption fees in relation to the purchase of securities of the underlying funds by the top fund. As a result, no duplication of any sales fees or redemption fees can occur where a Pooled Fund invests in another Fund.

13.          A Pooled Fund that invests in another Fund will not vote any of the securities it holds in the underlying funds, but the Filer may, if it chooses, arrange for all of the securities of the underlying funds held by the Pooled Fund be voted by the beneficial owners of securities of the Pooled Fund.

14.          The Filer cannot rely upon the exemption codified under section 2.5(7) of NI 81­102 because the Pooled Funds are not subject to NI 81­102.

Transactions with Related Parties

15.          In respect of Inter­fund Trades that involve a Pooled Fund or a Managed Account, the Filer cannot rely on the exemption under section 6.1(4) of NI 81­107, because neither a Pooled Fund nor a Managed Account is subject to NI 81­107.

16.          The Investment Management Agreement with each Client for each Managed Account will contain the authorization of the Client for the Filer to purchase securities from or sell securities to a Fund.

17.          The Filer will provide to each Client specific disclosure on the relationships between the Filer and the Funds.

18.          It would be in the best interests of the Funds and the Managed Accounts if an Inter­fund Trade of exchange­ traded securities could be made at Last Sale Price instead of at the current market price, as required under paragraph 6.1(2)(e) of NI 81­107. This will result in the Inter­fund Trade being done at the price which is closest to the market price at the time the decision to make the Inter­fund Trade is made.

19.          An Inter­fund Trade to be effected at the Last Sale Price will be implemented by the Filer as follows:

(a)           the Filer, as the portfolio manager, will deliver the trade instruction in respect of a purchase or sale of a security by a Fund or a Managed Account, as applicable (Fund A), to a trader on the Filer’s trading desk?

(b)           the Filer, as the portfolio manager, will deliver the trade instruction in respect of a purchase or sale of a security by another Fund or Managed Account, as applicable (Fund B), to a trader on the Filer’s trading desk?

(c)           the trader on the Filer’s trading desk will have the discretion to execute the trade as an Inter­fund Trade between Fund A and Fund B at the Last Sale Price of the security, prior to the execution of the trade?

(d)           the policies applicable to the Filer’s 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 Filer, as portfolio manager, cancels the order sooner? and

(e)           the trader on the Filer’s trading desk will advise of the Last Sale Price.

Fund Governance for the NI 81­102 Funds and Pooled Funds

20.          The Filer has or by Closing will have established an independent review committee (IRC) in respect of the Existing NI 81­102 Funds in accordance with the requirements of NI 81­107, and will establish an IRC for each Future NI 81­102 Fund in accordance with the requirements of NI 81­107.

21.          Inter­fund Trades involving the NI 81­102 Funds will be referred to the IRC of such Funds for approval and the IRC will not approve the Inter­fund Trades unless it has made the determinations set out in section 5.2(2) of NI 81­107.

22.          The Filer has or by Closing will have established an IRC in respect of the Existing Pooled Funds and will establish an IRC in respect of the Future Pooled Funds. The IRC of the Pooled Funds will be composed in accordance with section 3.7 of NI 81­107 and will be expected to comply with the standard of care set out in section 3.9 of NI 81­107.

23.          The mandate of the IRC of the Pooled Funds will also include approving Inter­fund Trades. The IRC of the Pooled Funds will not approve Inter­fund Trades unless the IRC has made the determination set out in section 5.2(2) of NI 81­107.

24.          Section 6.1(4) of NI 81­107 provides an exemption from section 13.5(2)(b) of NI 31­103 in respect of Inter­fund Trades, so long as such trades comply with the conditions in section 6.1(2) of NI 81­107. The Inter­fund Trades will comply with all of the conditions in section 6.1(2) except paragraph 6.1(2)(a) and, for Inter­fund Trades of exchange­traded securities, paragraphs 6.1(2)(a) and 6.1(2)(e).

In specie Relief

25.          The Filer may wish to or otherwise be required to deliver securities held in a Managed Account or a Pooled Fund to a Pooled Fund or NI 81-102 Fund in respect of a purchase of units or shares of the Pooled Fund or NI 81-102 Fund (Fund Securities), and may wish to or otherwise be required to receive securities from a Pooled Fund or NI 81-102 Fund in respect of a redemption of Pooled Fund or NI 81-102 Fund Securities by a Managed Account or a Pooled Fund.

26.          As the Filer will upon Closing or thereafter be an “associate” of certain Pooled Funds or NI 81-102 Funds, absent the grant of the In specie Transfer Relief, the Filer would be precluded by the provisions of section 13.5(2)(b)(ii) of NI 31-103 from effecting the In specie Transfers for each such Pooled Fund or NI 81-102 Fund. As the Filer is or will be a registered adviser which is or will be the manager and portfolio manager of the Pooled Funds or NI 81-102 Funds and is or will be the portfolio manager of the Managed Accounts, absent the grant of the In specie Transfer Relief, the Filer would be precluded by the provisions of section 13.5(2)(b)(iii) of NI 31-103 from effecting the In specie Transfers.

27.          Effecting In specie Transfers of securities between the Managed Accounts and Pooled Funds, and the Pooled Funds or NI 81-102 Funds will allow the Filer to manage each asset class more effectively and reduce transaction costs for the Managed Account or Pooled Fund client and the Pooled Fund or NI 81-102 Fund. For example, In specie Transfers reduce market impact costs, which can be detrimental to the Managed Accounts or Pooled Fund clients and/or Pooled Funds or NI 81-102 Funds. In specie Transfers also allow a portfolio manager to retain within its control institutional-size blocks of securities that otherwise would need to be broken and re-assembled.

28.          The only cost which will be incurred by a Pooled Fund or NI 81-102 Fund or Managed Account for an In specie Transfer will be a nominal administrative charge levied by the custodian of the Pooled Fund or NI 81-102 Fund in recording the trades and any commission charged by the dealer executing the trade.

29.          The Filer will obtain the prior specific written consent of the relevant Managed Account client before it engages in any In specie Transfers in connection with the purchase or redemption of securities of the Pooled Funds or NI 81-102 Funds for the Managed Account.

30.          The Filer, as manager of the Pooled Funds or NI 81-102 Funds, will value the securities transferred under an In specie Transfer on the same valuation day on which the purchase price or redemption price of the Fund Securities of a Pooled Fund or NI 81-102 Fund is determined. With respect to the purchase of Fund Securities of a Pooled Fund or NI 81-102 Fund, the securities transferred to a Pooled Fund or NI 81-102 Fund under an In specie Transfer in satisfaction of the purchase price of those Fund Securities will be valued as if the securities were portfolio assets of the Pooled Fund or NI 81-102 Fund, as contemplated by section 9.4(2)(b)(iii) of NI 81-102. With respect to the redemption of Fund Securities of a Pooled Fund or NI 81-102 Fund, the securities transferred to a Managed Account in satisfaction of the redemption price of those Fund Securities will have a value equal to the amount at which those securities were valued in calculating the net asset value per security used to establish the redemption price of the Fund Securities of the Pooled Fund or NI 81-102 Fund, as contemplated by section 10.4(3)(b) of NI 81-102.

31.          In specie Transfers will be subject to (i) compliance with the written policies and procedures of the Filer respecting In specie Transfers that are consistent with applicable securities legislation, and (ii) the oversight of the Filer's Compliance Department, to ensure that the transaction represents the business judgment of the Filer acting in its discretionary capacity with respect to the Pooled Fund or NI 81-102 Fund and the Managed Account, uninfluenced by considerations other than the best interests of the Pooled Fund or NI 81-102 Fund and Managed Account. The results of the oversight and review by the Filer's Compliance Department will be submitted in the form of a report to the Filer's board of directors on a quarterly basis.

32.          The valuation of any illiquid securities which would be the subject of an In specie Transfer will be carried out according to the Filer's policies and procedures for the fair valuation of portfolio securities, including illiquid securities (FV Procedures). The Filer's internal valuation team (Valuation Team) will monitor and determine fair value according to the applicable FV Procedures and a valuation committee, consisting of senior employees, must review and approve or reject any valuation recommendations provided by the Valuation Team. The FV Procedures will have received the positive recommendation of each Fund’s IRC. Any valuation of private securities, including illiquid securities are subject to review by the Funds’ auditors. If any illiquid securities are the subject of In specie Transfer, the illiquid securities would be transferred on a pro rata basis. The Funds generally invest or will invest in liquid securities. The Filer will not cause any Fund to engage in an In specie Transfer if illiquid securities represent more than an immaterial portion of the portfolio of the applicable Fund or Managed Account.

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 Requested Relief is granted as follows.

Fund on Funds Relief

1.             The Fund on Fund Relief is granted so long as:

(a)           the transaction is consistent with, or is necessary to meet, the investment objective of the Pooled Fund;

(b)           in respect of the purchase of securities of another Fund:

(i)            no management or incentive fees are payable by the Pooled Fund that, to a reasonable person, would duplicate a fee payable by the underlying fund for the same service;

(ii)           no sales or redemption fees are payable by the Pooled Fund in relation to its purchases or redemptions of the securities of the underlying funds;

(iii)          the Pooled Fund does not vote on any of the securities it holds in the underlying funds, but the Filer may, if it chooses, arrange for all of the securities of the underlying funds held by the Pooled Fund to be voted by the beneficial owners of units of the Pooled Fund;

(iv)          investors in the Pooled Funds receive disclosure:

(A)           that the Pooled Fund may purchase securities of other Funds;

(B)           that the Pooled Fund and the underlying funds in which it invests are managed by the Filer; and

(C)          of the approximate or maximum percentage of net assets of the Pooled Fund that is dedicated to investing in securities of other Funds; and

(c)           no Pooled Fund will purchase or hold a security of an underlying fund unless at the time of purchase, the underlying fund holds no more than 10% of its net asset value (NAV) in securities of other investment funds unless the underlying fund:

(i)            is a clone fund (as defined in NI 81-102);

(ii)           purchases or holds securities of a “money market fund” (as defined in NI 81-102); or

(iii)          purchases or holds securities that are “index participation units” (as defined in NI 81-102) issued by an investment fund.

Inter­fund Trade Relief

2.             The Inter­fund Trade Relief is granted so long as:

(a)           the Inter­fund Trade is consistent with the investment objectives of the Fund or the Managed Account;

(b)           the Filer refers the Inter­fund Trade to the IRC in the manner contemplated by section 5.1 of NI 81­107 and the Filer complies with any standing instructions an IRC provides in connection with the Inter­fund Trade?

(c)           in the case of an Inter­fund Trade between Funds:

(i)            the IRC of each Fund has approved the Inter­fund Trade in respect of the Fund in accordance with the terms of section 5.2(2) of NI 81­107?

(ii)           the Inter­fund Trade complies with subsection 6.1(2) of NI 81­107 except for paragraph 6.1(2)(a) and, for Inter­fund Trades of exchange­traded securities, paragraphs 6.1(2)(a) and 6.1(2)(e)? and

(iii)          for Inter­fund Trades of exchange­traded securities, the Inter­fund Trade is executed at Last Sale Price?

(d)           in the case of an Inter­fund Trade between a Managed Account and a Fund:

(i)            the IRC of the Fund has approved the Inter­fund Trade in respect of such Fund in accordance with the terms of section 5.2(2) of NI 81­107?

(ii)           the Investment Management Agreement or other documentation in respect of the Managed Account authorizes the transaction?

(iii)          the Inter­fund Trade complies with subsection 6.1(2) of NI 81­107 except for paragraph 6.1(2)(a) and, for Inter­fund Trades of exchange­traded securities, paragraphs 6.1(2)(a) and 6.1(2)(e)? and

(iv)          for Inter­fund Trades of exchange­traded securities, the Inter­fund Trade is executed at Last Sale Price.

In specie Relief

3.             The In specie Relief is granted so long as:

(i)            if the transaction is the purchase of Fund Securities by a Managed Account:

(A)           from an NI 81-102 Fund; (I) the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of an In specie Transfer in accordance with the terms of s. 5.2 of NI 81-107; and (II) the Filer, as manager of the NI 81-102 Fund, and the IRC of the NI 81-102 Fund, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In specie Transfer;

(B)           the Filer obtains the prior written consent of the client of the relevant Managed Account before it engages in any In specie Transfers in connection with the purchase of Fund Securities;

(C)          the Funds would at the time of payment be permitted to purchase the securities of the Managed Account;

(D)          the securities are acceptable to the Filer as portfolio manager of the Funds and consistent with the Funds’ investment objectives;

(E)           the value of the securities sold to the Funds is at least equal to the issue price of the Fund Securities for which they are payment, valued as if the securities were portfolio assets of the Funds;

(F)           the account statement next prepared for the Managed Account will include a note describing the securities delivered to the Funds and the value assigned to such securities; and

(G)          the Funds keep written records of all In specie Transfers during the financial year, reflecting details of the securities delivered to the Funds 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;

(ii)           if the transaction is the redemption of Fund Securities by a Managed Account:

(A)           to an NI 81-102 Fund; (I) the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC in respect of an In specie Transfer in accordance with the terms of section 5.2 of NI 81-107; and (II) the Filer, as manager of the NI 81-102 Fund, and the IRC, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In specie Transfer;

(B)           the Filer obtains the prior written consent of the client of the relevant Managed Account to the payment of redemption proceeds in the form of an In specie Transfer;

(C)          the securities are acceptable to the Filer as portfolio manager of the Managed Account and consistent with the Managed Account's investment objectives;

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

(E)           the holder of the Managed Account has not provided notice to terminate its Investment Management Agreement with the Filer;

(F)           the account statement next prepared for the Managed Account will include a note describing the securities delivered to the Managed Account and the value assigned to such securities; and

(G)          the Funds keep written records of all In specie Transfers during the financial year, reflecting details of the securities delivered by the Funds 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;

(iii)          the Filer does not receive any compensation in respect of any sale or redemption of Fund Securities and, in respect of any delivery of securities further to an In specie Transfer, the only charge paid by the Managed Account, if any, is the commission charged by the dealer executing the trade;

(iv)          if the transaction is the purchase of Fund Securities of a NI 81-102 Fund by a Pooled Fund:

(A)           the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of an In specie Transfer in accordance with the terms of section 5.2 of NI 81-107;

(B)           the Filer, as manager of the NI 81-102 Fund, and the IRC, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In specie Transfer;

(C)          the NI 81-102 Fund would at the time of payment be permitted to purchase those securities;

(D)          the securities are acceptable to the Filer as portfolio manager of the NI 81-102 Fund, and consistent with the NI 81-102 Fund's investment objectives;

(E)           the value of the securities is at least equal to the issue price of the Fund Securities of the NI 81-102 Fund for which they are payment, valued as if the securities were portfolio assets of that NI 81-102 Fund; and

(F)           the Funds will keep written records of all In specie Transfers during the financial year, reflecting details of the securities delivered, 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;

(v)           if the transaction is the redemption of Fund Securities of a NI 81-102 Fund by a Pooled Fund:

(A)           the Filer, as manager of the NI 81-102 Fund, obtains the approval of the IRC of the NI 81-102 Fund in respect of the In specie Transfer in accordance with the terms of section 5.2 of NI 81-107;

(B)           the Filer, as manager of the NI 81-102 Fund, and the IRC, comply with the requirements of section 5.4 of NI 81-107 for any standing instructions the IRC provides in respect of an In specie Transfer;

(C)          the securities are acceptable to the portfolio adviser of the Pooled Fund, and consistent with the investment objective of the Pooled Fund;

(D)          the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Security used to establish the redemption price of the NI 81-102 Fund; and

(E)           the Funds will keep written records of all In specie Transfers during a financial year, reflecting details of the securities delivered 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;

(vi)          if the transaction is the purchase of Fund Securities of a Pooled Fund by a Pooled Fund:

(A)           the Pooled Fund would at the time of payment be permitted to purchase those securities;

(B)           the securities are acceptable to the Filer as portfolio manager of the Pooled Fund, and consistent with the Pooled Fund's investment objectives;

(C)          the value of the securities is at least equal to the issue price of the Fund Securities for which they are payment, valued as if the securities were portfolio assets of that Pooled Fund; and

(D)          each Pooled Fund will keep written records of all In specie Transfers during the financial year, reflecting details of the securities delivered to the Pooled 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;

(vii)         if the transaction is the redemption of Fund Securities of a Pooled Fund by a Pooled Fund:

(A)           the securities are acceptable to the portfolio adviser of the Pooled Fund, and consistent with the investment objective of the Pooled Fund;

(B)           the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Security used to establish the redemption price of the Pooled Fund; and

(C)          each Pooled Fund will keep written records of all In specie Transfers during the financial year, reflecting details of the securities delivered by the Pooled 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

(viii)        the Filer does not receive any compensation in respect of any sale or redemption of Fund Securities and, in respect of any delivery of securities further to an In specie Transfer, the only charge paid by the Funds is the commission charged by the dealer executing the trade.

“Vera Nunes”
Manager
Investment Funds & Structured Products Branch
Ontario Securities Commission