Securities Law & Instruments

Headnote

MRRS Exemptive Relief Applications - Extension of lapse date.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 62(5).

Rules Cited

National Policy 43-201 entitled: Mutual Reliance Review System for Prospectus andAIF's.

National Instrument 81-101 entitled: Mutual Fund Prospectus Disclosure.

National Instrument 81-102 entitled: Mutual Funds.


IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA,ALBERTA, SASKATCHEWAN, MANITOBA, NEW BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND, AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
QSAT CANADIAN EQUITY FUND AND QSA e-BUSINESS FUND

MRRS DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMakers") in each of the provinces of Ontario, British Columbia, Alberta, Saskatchewan,Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, (the"Jurisdictions") has received an application (the "Application") from Acker Finley AssetManagement Inc. ("AFAM"), QSAT Canadian Equity Fund ( the "Equity Fund") and QSAe-business Fund ( the "e-business Fund" and collectively with Equity Fund, the "Funds")for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation")that the time limits pertaining to the distribution of units under the prospectus of the Fundsbe extended to those time limits that would be applicable if the lapse date of theprospectus was May 19, 2000.

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

AND WHEREAS it has been represented by AFAM to the Decision Makers that:

1. AFAM, the Manager of the Funds, is a corporation incorporated under the laws ofOntario.

2. The Funds, are open-ended mutual fund trusts formed under the laws of Ontario,are reporting issuers (or of equivalent status) under the Legislation and, except asdescribed below, are not in default of any requirements of the Legislation.

3. Securities of the Funds are offered for sale on a continuous basis in each of theJurisdictions pursuant to a simplified prospectus and annual information form datedMarch 12, 1999 in the case of Equity Fund (the "Canadian Equity Prospectus")and dated April 5, 1999 in the case of e-business Fund (the "e-businessProspectus").

4. Final receipts for the Canadian Equity Prospectus were issued by the DecisionMakers on March 24, 1999, save and except for the Saskatchewan SecuritiesCommission which issued its final receipt on March 25, 1999.

5. Pursuant to the Legislation, the lapse date for the distribution of units of the EquityFund (the "Earlier Lapse Date") is March 12, 2000, in British Columbia, Alberta,Saskatchewan, Manitoba, Nova Scotia, Prince Edward Island and Newfoundlandand is March 24, 2000 in Ontario and New Brunswick (the "Later Lapse Date").

6. As a result of an honest and inadvertent error, the Equity Fund believed that theLater Lapse Date was the lapse date for all the Jurisdictions, not just Ontario andNew Brunswick.

7. As a result of this error, a multiple preliminary and pro forma simplified prospectusand annual information form (collectively, the "Renewal Documents") for the Funds(and certain other related mutual funds) was filed on February 22, 2000, in all of theJurisdictions which was 30 days prior to the Later Lapse Date but not 30 days priorto the Earlier Lapse Date. The Renewal Documents also qualify two (2) new mutualfunds, the QSAT Biotechnology Fund and the QSAT Global High Yield Fund, tobe established by AFAM (the "New Funds"), as well as qualifying for continuousoffering the securities of the e-business Fund, which has a lapse date of April 5,2000 in all Jurisdictions except for Ontario and New Brunswick in which the lapsedate is April 6, 2000.

8. Unaware of the error, the Equity Fund has continued after the Earlier Lapse Dateto distribute its units in all the Jurisdictions under the Canadian Equity Prospectuswhich is contrary to the Legislation of all such Jurisdictions except Ontario and NewBrunswick.

9. There has been no material changes to the Equity Fund since the Earlier LapseDate and neither the Equity Fund nor its Manager have received any materialbenefit outside of the normal course from such continued distribution in the relevantJurisdictions.

10. All unitholders of record of Equity Fund in British Columbia and Alberta (the"Affected Unitholders") who purchased units of Equity Fund following the earlierlapse date up to and including the date of the order are to be provided with theright (the "Cancellation Right") to cancel such trades within twenty business daysof receipt of a statement (the "Statement") describing their Cancellation Rights andto receive, upon exercising such Cancellation Rights the purchase price paid on theacquisition of such units and all fees and expenses incurred in effecting suchpurchase ( the net asset value per unit on the date of such a purchase by anAffected Unitholder is hereinafter defined as the "Purchase Price per Unit"). EquityFund has undertaken to mail the Statement to Affected Unitholders no later thanMarch 31, 2000 and if the net asset value per unit of the Equity Fund on the datethat an Affected Unitholder exercises the Cancellation Right is less than thePurchase Price per Unit, AFAM shall reimburse the Fund the difference betweenthe Purchase Price per Unit and the net asset value per unit on the date on whichsuch Affected Unitholder exercises the Cancellation Right.

11. AFAM wishes to combine the disclosure regarding the Equity Fund, the e-businessFund and the New Funds in one document and wishes to synchronise the lapsedates.

12. The Renewal Documents were filed under National Instruments 81-101 and 81-102,which have created new standards and requirements relating to the content, formand level of disclosure in such documents.

13. The OSC, on behalf of the Decision Makers, provided extensive commentsregarding the Renewal Documents to AFAM which will require AFAM to makesubstantial changes to the Renewal Documents.

14. Without an extension of the lapse date of the Funds, the Funds may not distributeits units in any Jurisdiction other than Ontario and New Brunswick and there maynot be sufficient time to properly address and resolve the comments raised by theOSC in respect of the Renewal Documents.

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 are satisfied that the test containedin the Legislation that provides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers, pursuant to the Legislation, is that the timelimits provided by the Legislation as they apply to a distribution of securities under theCanadian Equity Prospectus and the e-business Prospectus are hereby extended to thetime limits that would be applicable if the lapse date of the Funds was May 19, 2000.

March 24th, 2000.

"Bill Gazzard"