Securities Law & Instruments


Investment by a mutual fund in securities of two mutual funds to implement a "passive"fund-of-fund structure exempted from the requirement of section 101, clause 111(2)(b),111(2)(c) and subsection 111(3), clauses 117(1)(a) and 117(1)(d), subject to certainspecified conditions under which a "passive" investment structure may be used.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c.S.5, as am. ss. 101, 104(2)(c), 111(2)(b), 111(2)(c),111(3), 113, 117(1)(a), 117(1)(d), 117(2)







WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Nova Scotia and Newfoundland (the "Jurisdictions") has received an application(the "Application") from Counsel Group of Funds Inc. (the "Manager") in its own capacityand on behalf of Counsel World Equity Portfolio (the "Top Fund"), and Counsel FocusPortfolio and Mawer World Investment Fund (collectively, the "Underlying Funds") for adecision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that,if applicable in a particular Jurisdiction, the following requirements and restrictionscontained in the Legislation (the "Requirement(s)") shall not apply in respect of certaininvestments to be made by the Top Fund in the Underlying Funds:

1. the Requirements that the Top Fund and the Manager issue a news release andfile a report where its aggregate holdings of securities of a reporting issuer exceed10% of the outstanding securities of the reporting issuer and refrain frompurchasing additional securities of the Underlying Funds pending the expiration ofone business date from the date the report is filed;

2. the Requirement prohibiting a mutual fund from knowingly making and holding aninvestment in a person or company in which the mutual fund, alone or together withone or more related mutual funds, is a substantial securityholder; and

3. the Requirement that the Manager file a report relating to a purchase or sale ofsecurities between the Top Fund and any related person or company, or anytransaction in which, by arrangement other than an arrangement relating to insidertrading in portfolio securities, the Top Fund is a joint participant with one or moreof its related persons or companies;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS it has been represented by the Manager to the Decision Makersthat:

1. The Top Fund and Counsel Focus Portfolio will be open-ended mutual fund trustsestablished under the laws of the Province of Ontario. The Manager is a corporationestablished under the laws of Ontario and will be the manager, promoter, registrarand transfer agent for the Top Fund and Counsel Focus Portfolio. The Manager'shead office is located in Ontario.

2. Mawer World Investment Fund is a member of a group of ten open-ended mutualfunds established by way of Declaration of Trust dated July 16, 1987 under the lawsof Alberta. Mawer Investment Management ("Mawer Investment") is the managerof the Mawer World Investment Fund. Mawer Investment has been retained by theManager to act as adviser to the Top Fund.


3. The Top Fund and Counsel Focus Portfolio will be, and Mawer World InvestmentFund is, a reporting issuer in each Jurisdiction. Mawer World Investment Fund isnot in default of any requirements of the Legislation. The securities of the MawerWorld Investment Fund are currently qualified for distribution pursuant to asimplified prospectus dated June 3, 1999. The securities of the Top Fund andCounsel Focus Portfolio will be qualified once their preliminary simplifiedprospectus and preliminary annual information form receive a final receipt from theCanadian securities authorities.

4. Mawer World Investment Fund's objective is achieved by investing primarily instocks and currencies traded outside of Canada. Counsel Focus Portfolio'sinvestment objective will be achieved by investing in 20 to 30 large capitalizationinternational corporations.

5. The Top Fund will invest all of its assets (exclusive of cash and cash equivalents)in the Underlying Funds' units.

6. The Top Fund's prospectus will disclose the Top Fund's and the Underlying Funds'investment objectives, the fixed percentages of the net assets of the Top Fundinvested in units of each of the Underlying Funds (the "Fixed Percentages") and thepermitted ranges within which such Fixed Percentages may vary (the "PermittedRange"). The Top Fund will invest its assets in each of the Underlying Funds inthe following Fixed Percentages: 50% in the Mawer World Investment Fund and50% in the Counsel Focus Portfolio. The Fixed Percentages are subject to thePermitted Range of not more than 2.50 percentage points above or below the FixedPercentages, all of which will be disclosed in the Top Fund's prospectus.

7. The Underlying Funds in which the Top Fund will invest and Fixed Percentages willnot be changed except upon the filing of an amendment of the Top Fund'sprospectus and the provision of sixty days' notice (which notice shall include a copyof the amendment) of the change to the Top Fund's securityholders.

8. Except to the extent evidenced by this Decision and specific approvals granted bythe Canadian securities administrators pursuant to National Instrument 81-102Mutual Funds ("NI 81-102"), the investments by the Top Fund in the UnderlyingFunds have been structured to comply with the investment restrictions of theLegislation and NI 81-102.

9. In order to avoid the duplication of management fees with respect to the Top Fund'sinvestments in Mawer World Investment Fund, Mawer Investment has agreed toarrange for Mawer World Investment Fund to pay the Top Fund a management feerebate distribution (calculated and accrued daily and paid monthly) in accordancewith an investment management agreement (the "Management Fee RebateDistribution"). The Management Fee Rebate Distribution is paid so that whenadded to the management fee charged directly to the Top Fund, the total effectivemanagement fee charged to an investor in the Top Fund will not exceed the annualmanagement fee of 2.50% as stated in the Top Fund's prospectus. The investmentmanagement agreement may be terminated upon 60 days prior written notice.

10. In the absence of this Decision, as soon as the aggregate holdings by the Top Fundof each Underlying Fund's units exceed 10% of the outstanding securities of anUnderlying Fund, the Manager, and possibly the Top Fund, would be required tocomply with the reporting and other requirements of the Legislation.

11. In the absence of this Decision, pursuant to the Legislation, the Top Fund isprohibited from (a) knowingly making an investment in a person or company inwhich the mutual fund, alone or together with one or more related mutual funds, isa substantial securityholder; and (b) knowingly holding an investment referred toin subsection (a). As a result, in the absence of this Decision, the Top Fund wouldbe required to divest itself of any investments referred to in subsections (a) and (b).

12. In the absence of this Decision, the Legislation requires the Manager to file a reporton every purchase or sale by the Top Fund of the Underlying Funds' units.

13. The Top Fund's purchase and sale of the Underlying Funds' units will represent thebusiness judgment of responsible persons uninfluenced by considerations otherthan the best interests of the Top Fund.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that theRequirements do not apply to the Top Fund's purchase and sale of the Underlying Funds'units;


1. this Decision, as it relates to the jurisdiction of a Decision Maker, will terminate oneyear after the publication in final form of any legislation or rule of that DecisionMaker dealing with the matters in section 2.5 of NI 81-102; and

2. the foregoing Decision shall only apply to the Top Fund's purchases and sales ofan Underlying Fund's units made in compliance with the following conditions:

(a) the Top Fund and Counsel Focus Portfolio are under common managementand the Underlying Fund's units are offered for sale in the jurisdiction of theDecision Maker pursuant to a prospectus which has been filed with andaccepted by the Decision Maker;

(b) the Top Fund will make investments in the Underlying Fund in accordancewith the Fixed Percentages;

(c) the investment by the Top Fund in the Underlying Fund is compatible withthe fundamental investment objective of the Top Fund;

(d) the Top Fund's simplified prospectus will disclose its intent to invest in theUnderlying Funds, the name of the Underlying Funds, the FixedPercentages and the Permitted Range;

(e) the Fixed Percentages and the Underlying Funds may not be changed untilthe Top Fund's prospectus is amended and filed or a new prospectus is filedwith the Decision Maker, existing unitholders of the Top Fund have beengiven at least 60 days' prior written notice of the change, or the priorapproval of the unitholders has been given to change the Fixed Percentagesand the Underlying Funds, at a meeting of unitholders of the Top Fundcalled for that purpose and each prospective purchaser of the Top Fund'sunits who proposed to acquire units following the issuance of the receipt forthe amendment receives a copy of the Top Fund's amended prospectus;

(f) the Top Fund will not pay sales charges for its purchases of the UnderlyingFund's units;

(g) there are compatible dates for the calculation of the Top Fund's and theUnderlying Funds' net asset value for the purpose of issuing and redeemingunits of such mutual funds;

(h) the Underlying Fund does not charge the Top Fund redemption fees or othercharges for redeeming the Underlying Fund's units;

(i) the arrangements between the Top Fund and the Underlying Funds avoidthe duplication of management fees;

(j) no fees and charges of any sort are paid by the Top Fund, an UnderlyingFund (except the Management Fee Rebate Distribution paid by MawerWorld Investment Fund to the Top Fund referred to above) by the TopFund's or the Underlying Funds' manager or principal distributor or by theforegoing entities' affiliates or associates to anyone in respect of the TopFund's purchase, holding or redemption of the Underlying Fund's units;

(k) if the Underlying Fund's constating documents or the laws applicable to theUnderlying Funds, require it to give notice to its unitholders, it will alsodeliver such notice to the Top Fund's unitholders; all voting rights attachedto the Underlying Fund's units owned by the Top Fund will be passedthrough to the the Top Fund's unitholders; if an Underlying Fund calls aunitholders' meeting, all of the disclosure and notice material prepared forthe meeting will be provided to the Top Fund's unitholders who will beentitled to direct a representative of the Top Fund to vote that Top Fund'sholding in the Underlying Fund in accordance with their direction; the TopFund's representative will not be permitted to vote the Top Fund's holdingsin the Underlying Fund other than as the RSP Fund's unitholders direct;

(l) in addition to receiving the Top Fund's annual and, upon request, the semi-annual financial statements, the Top Fund's unitholders will receive theUnderlying Fund's annual and, upon request, semi-annual financialstatements in either a combined report, containing both the Top Fund's andUnderlying Funds' financial statements, or in a separate report containingthe Underlying Funds' financial statements; and

(m) if the Top Fund and the Underlying Funds do not use a combined simplifiedprospectus and annual information form and financial statements containingdisclosure about the Top Fund and the Underlying Funds, copies of theUnderlying Fund's simplified prospectus and annual and semi-annualfinancial statements may be obtained upon request by a Top Fund'sunitholder.

February 11th, 2000.

"Howard I. Wetston" "R. Stephen Paddon"