Mutual fund in Ontario (non-reporting issuer) granted extension of the annual financial statement filing and delivery deadlines as primarily invested in an offshore investment fund for which audited financial information is not yet available.
Applicable Legislative Provisions
National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 5.1(2), 17.1.
June 25, 2009
IN THE MATTER OF
THE SECURITIES LEGISLATION
IN THE MATTER OF
MACKENZIE FINANCIAL CORPORATION
IN THE MATTER OF
MACKENZIE ALTERNATIVE STRATEGIES FUND
The Ontario Securities Commission (OSC) has received an application from the Filer, on behalf of the Fund, for a decision pursuant to section 17.1 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) for an exemption from:
(a) the requirements contained in sections 2.1 and 2.2 of NI 81-106 (the Filing Requirement), which require the Fund to file its audited annual financial statements on or before the 90th day after its most recently completed financial year (the Filing Deadline); and
(b) the requirement contained in subsection 5.1(2) of NI 81-106, which requires the Fund to deliver its audited annual financial statements to investors of the Fund on or before the Filing Deadline (the Delivery Requirement, and collectively with the Filing Requirement, the Requested Relief).
Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are otherwise defined.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation amalgamated under the laws of Ontario and is registered as an advisor in the category of Investment Counsel and Portfolio Manager in Ontario and Alberta and in the category of Portfolio Manager in Manitoba. The Filer is also registered in Ontario as a dealer in the category of Limited Market Dealer, and is registered under the Commodity Futures Act (Ontario) in the category of Commodity Trading Manager. The Filer's head office is in Toronto, Ontario.
2. The Filer is the trustee and manager of the Fund. Tremont Partners, Inc. (Tremont), a corporation incorporated under the laws of Connecticut, is the investment advisor to the Fund.
3. The Fund is an open-ended mutual fund trust, established under the laws of Ontario on January 2, 2001 pursuant to a declaration of trust, and was offered to qualified investors in all Provinces and Territories of Canada (the Offering Jurisdictions) pursuant to available exemptions from the prospectus requirements of applicable securities legislation. The Fund is in the process of a wind-up. The Fund has suspended redemptions and is not accepting any new investors. The Fund is not and will not be a reporting issuer in any of the Offering Jurisdictions and units of the Fund do not trade on any exchange or market. The Fund has a financial year-end of March 31.
4. The Filer and the Fund are not in default of securities legislation in any province or territory of Canada.
5. Since March 20, 2008, the Fund's investment objective has been to achieve an attractive risk-adjusted return through the use of a "multi-manager" investment approach by investing in securities of Tremont Opportunity Fund Limited (TOFL). TOFL is an open-ended investment company incorporated as an exempted company under the laws of the Cayman Islands that invests its assets with a diverse group of non-US hedge funds or similar vehicles (Hedge Funds) whose managers employ a variety of investment strategies. The Fund's investment objectives also allowed for the holding of a small portion of its assets in certain directly held Hedge Funds that it invested in prior to March 20, 2008. The Fund may from time to time also hold cash and money market instruments and may also enter into forward contracts and other derivatives. The Fund's objectives emphasize total return, not current income.
6. TOFL is managed by Tremont (Bermuda) Limited (Tremont (Bermuda)), a corporation incorporated under the laws of Bermuda, and an affiliate of Tremont. TOFL and many of its underlying Hedge Funds are in the process of a wind-up, have suspended redemptions and are not accepting any new investors. TOFL's financial year-end is December 31. The filing deadline for its financial statements under the laws of the Cayman Islands is June 30. Tremont has advised the Filer that TOFL's financial statements will not be available before September 2009. The audits of TOFL are not complete, and the Fund's auditors have advised that receipt of TOFL's unqualified financial statements is one of the requirements in order to complete their audit of the Fund's financial statements.
7. Sections 2.1, 2.2 and subsection 5.1(2) of NI 81-106 require the Fund to file and deliver its annual financial statements by the Filing Deadline.
8. Section 2.11 of NI 81-106 provides an exemption (the Filing Exemption) from the Filing Requirement if, among other things, the Fund prepares and delivers its annual financial statements to investors in accordance with Part 5 of NI 81-106 by the Filing Deadline.
9. In order to formulate an opinion on the financial statements of the Fund, the Fund's auditors require the audited financial statements of its primary underlying investment, TOFL, an offshore hedge fund. The Fund's auditors have indicated that they do not expect to receive sufficient, relevant, and reliable information about TOFL in time for them to complete the audit of the Fund.
10. As the Fund's financial year-end is March 31, it has a preparation and delivery deadline of June 29. The Fund will not be able to meet the Filing Deadline and therefore will not be able to comply with the Delivery Requirement.
11. As the Fund will not be able to deliver its financial statements to investors in accordance with Part 5 of NI 81-106 by the Filing Deadline, it cannot rely on the Filing Exemption.
12. The Fund therefore requires an extension of the Filing Deadline and Delivery Requirement to September 27, 2009 to enable the Fund's auditors to first receive TOFL's audited financial statements.
13. If the Requested Relief is granted, the Filer will notify its investors that they have received and intend to rely on relief from the Filing Requirement and the Delivery Requirement.
The Director is satisfied that the test contained in NI 81-106 that provides the Director with the jurisdiction to make the decision has been met.
The decision of the Director under NI 81-106 is that:
(a) the Fund is exempted from the Filing Requirement provided that:
(i) the audited annual financial statements of the Fund are filed on or before September 27, 2009; or
(ii) the conditions in section 2.11 of NI 81-106 are met, except for subsection 2.11(b), and the audited annual financial statements of the Fund are delivered to the Fund's investors in accordance with Part 5 of NI 81-106 on or before September 27, 2009;
(b) the Fund is exempted from the Delivery Requirement provided that the audited annual financial statements of the Fund are delivered to the Fund's investors in accordance with Part 5 of NI 81-106 on or before September 27, 2009.