Securities Law & Instruments


Investment by mutual funds in securities of another mutual fund that is under commonmanagement for specified purpose exempted from the requirement of clause 111(2)(b),and subsection 111(3), clauses 117(1)(a) and 117(1)(d) subject to certain specifiedconditions under which an "active" investment structure may be used.

Statutes Cites

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







WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia andNewfoundland (the "Jurisdictions") has received an application from Global StrategyFinancial Inc. ("Global Strategy"), as manager and trustee of the Global StrategyDiversified Europe Fund ("Europe Plus RSP Fund"), Global Strategy Diversified WorldEquity Fund ("World Equity RSP Fund") and other mutual funds managed by GlobalStrategy after the date of this Decision having an investment objective or strategy thatis linked to the returns or portfolio of another specified Global Strategy mutual fund(collectively referred to as the "RSP Funds") for a decision by each Decision Maker(collectively, the "Decision") under the securities legislation of the Jurisdictions (the"Legislation") that the following provisions of the Legislation (the "ApplicableRequirements") shall not apply to the RSP Funds or Global Strategy, as the case maybe, in respect of certain investments to be made by the Europe Plus RSP Fund inGlobal Strategy Europe Plus Fund ("the Europe Plus Fund"), by World Equity RSPFund in Global Strategy World Equity Fund ("World Equity Fund") and by the otherRSP Funds in their applicable corresponding Global Strategy mutual fund from time totime (collectively referred to as the "Underlying Funds"):

i. the provisions requiring the management company of a mutual fund to file areport relating to the purchase or sale of securities between the mutual fund andany related person or company, or any transaction in which, by arrangementother than an arrangement relating to insider trading in portfolio securities, themutual fund is a joint participant with one or more of its related persons orcompanies; and

ii. the provisions prohibiting a mutual fund from knowingly making and holding aninvestment in a person or company in which the mutual fund, alone or togetherwith one or more related mutual funds, is a substantial securityholder.

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS Global Strategy has represented to the Decision Makers asfollows:

1. Global Strategy is a corporation amalgamated under the laws of Ontario and itshead office is located in Ontario. Global Strategy is or will be the manager,trustee, promoter and the portfolio manager of the RSP Funds and theUnderlying Funds (collectively, the "Funds"). The registered office of GlobalStrategy is located in the Province of Ontario.

2. The Funds are or will be open-end mutual fund trusts established under the lawsof Ontario. The securities of the Funds are or will be qualified in all of theprovinces and territories of Canada (the "Prospectus Jurisdictions") pursuant tothe prospectus(es) and annual information form(s) (in each case, together the"Prospectus").

3. Each of the Funds is or will be a reporting issuer under the Legislation of each ofthe Prospectus Jurisdictions (other than those jurisdictions which do notrecognize reporting issuers).

4. The investment objectives of the RSP Funds are or will be to provide long-termgrowth of capital, primarily through investment in derivatives that provide areturn linked to the return of the applicable Underlying Fund. In the case of theWorld Equity RSP Fund, the return will be linked to the return of World EquityFund and, in the case of Europe Plus RSP Fund, to the return of Europe PlusFund. Each RSP Fund may use forwards and other derivatives, the returns onwhich are based on returns of units of the applicable Underlying Fund or onreturns on portfolio securities of the applicable Underlying Fund. Each RSPFund will also invest directly in the applicable Underlying Fund up to the amountprescribed from time to time as the maximum permitted amount which may beinvested in foreign property under the Income Tax Act (Canada) (the "Tax Act")without the imposition of tax under Part XI of the Tax Act (the "Foreign PropertyMaximum").

5. The current investment objective of each of World Equity RSP Fund and EuropePlus RSP Fund (the "Existing RSP Funds") is to provide long-term growth ofcapital, primarily through effective exposure, including through derivatives, toequity financial markets anywhere in the world (in the case of World Equity RSPFund) and to European financial markets, especially equity markets (in the caseof Europe RSP Fund). The investment objective of each of World Equity Fundand Europe Plus Fund is to provide long-term growth of capital, primarily throughinvestment in a portfolio of equity securities of issuers, in the case of WorldEquity Fund, located in equity financial markets located anywhere in the worldand, in the case of Europe Plus Fund, located in (or which conduct a significantamount of their business in) the European region. The Existing RSP Fundscurrently follow an investment strategy involving the use of exchange-tradedfutures whose values are based, in each case, on a basket of foreign equitysecurities. The Existing RSP Funds propose to change their investmentstrategies with the result that each of the Existing RSP Funds will invest in amanner so that its return is linked to the return of the applicable UnderlyingFund.

6. Global Strategy believes that there will be material positive consequences toeach Existing RSP Fund, as a result of the changes in its investment strategy.

7. Global Strategy believes that the change in each Existing RSP Fund'sinvestment strategy will result in it having more assets than would otherwise bethe case, which should allow the Existing RSP Fund to be operated moreefficiently.

8. The Prospectus contains or will contain disclosure with respect to the investmentobjective, investment practices and restrictions of the Funds. The change ininvestment strategy of each Existing RSP Fund is not a change in thefundamental investment objective of the Existing RSP Fund requiring unitholderapproval. The investments of each Existing RSP Fund and the applicableUnderlying Fund are substantially connected. Each Existing RSP Fund hasgiven notice to its unitholders of the proposed change in investment strategy tolink the return of the Existing RSP Fund to the return of the applicableUnderlying Fund.

9. As part of its investment practice, each RSP Fund intends to invest in securitiesof the applicable Underlying Fund. All purchases of the Underlying Funds maybe made through Global Strategy as principal distributor of the UnderlyingFunds.

10. Each of the RSP Funds will make investments such that its securities will be"qualified investments" for registered retirement savings plans, registeredretirement income funds and deferred profit sharing plans (collectively, the"Registered Plans") under the Tax Act and, based on an opinion of counsel toGlobal Strategy, will not constitute foreign property to a Registered Plan.

11. The direct investment by an RSP Fund in securities of the applicable UnderlyingFund (the "Permitted RSP Fund Investment") will be in an amount not to exceedthe Foreign Property Maximum.

12. The Permitted Fund Investments will be within the Foreign Property Maximum.Global Strategy and the RSP Funds will comply with the conditions of thisDecision in respect of such investments. The amount of the direct investment byeach RSP Fund in the applicable Underlying Fund will be adjusted from time totime so that, except for transitional cash, the aggregate of derivative exposureto, and direct investment in, the Underlying Fund will equal 100% of the assetsof the RSP Fund.

13. The investment objective of each Underlying Fund is or will be achieved throughinvestment primarily in foreign securities.

14. Except to the extent evidenced by this Decision Document and specificapprovals granted by the securities regulatory authorities or regulators underNational Instrument 81-102 ("NI 81-102"), the investments by the RSP Funds inthe Underlying Funds have been or will be structured to comply with theinvestment restrictions of the Legislation and NI 81-102.

15. In the absence of this Decision, an RSP Fund is prohibited from knowinglymaking and holding an investment in the applicable Underlying Fund in whichthe RSP Fund alone or together with one or more related mutual funds, is asubstantial securityholder.

16. In the absence of this Decision, Global Strategy is required to file a report onevery purchase or sale of securities of the applicable Underlying Fund by anRSP Fund.

17. An RSP Fund's investment in or redemption of securities of the applicableUnderlying Fund represents the business judgement of responsible persons,uninfluenced by considerations other than the best interests of the RSP Fund.

AND WHEREAS under the System this Decision Document evidences thedecision of each Decision Maker;

AND WHEREAS each Decision Maker is satisfied that the test contained in theLegislation 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 theApplicable Requirements shall not apply to the RSP Funds or Global Strategy, as thecase may be, in respect of the investments to be made by the RSP Funds in securitiesof the Underlying Funds;

PROVIDED THAT IN RESPECT OF the investment by the RSP Funds insecurities of the Underlying Funds:

1. the Decision, as it relates to the jurisdiction of a Decision Maker, will terminateone year after the publication in final form of any legislation or rule of thatDecision Maker dealing with the matters in section 2.5 of National Instrument 81-102; and

2. the Decision shall apply only to investments in, or transactions with, theapplicable Underlying Fund that are made by an RSP Fund in compliance withthe following conditions:

(a) the RSP Fund and the Underlying Fund are under common managementand the securities of both are offered for sale in the jurisdiction of eachDecision Maker, pursuant to a prospectus which has been filed with andaccepted by the Decision Maker;

(b) the RSP Fund restricts its aggregate direct investment in securities of theapplicable Underlying Fund to a percentage of its assets that is within theForeign Property Maximum;

(c) the investment by the RSP Fund in its Underlying Fund is compatible withthe fundamental investment objectives of the RSP Fund;

(d) the prospectus discloses the intent of the RSP Fund to invest in securitiesof the Underlying Fund;

(e) the RSP Fund may change the Permitted RSP Fund Investments if itchanges its fundamental investment objective in accordance with theLegislation;

(f) no sales charges are payable by the RSP Fund in relation to itspurchases of securities of the Underlying Fund;

(g) there are compatible dates for the calculation of the net asset value of theRSP Fund and the Underlying Fund for the purpose of issuing andredeeming securities of both mutual funds;

(h) no redemption fees or other charges are charged by the Underlying Fundin respect of the redemption by the RSP Fund of securities of theUnderlying Fund owned by the RSP Fund;

(i) the arrangements between or in respect of the RSP Fund and theUnderlying Fund are such as to avoid the duplication of management feesor incentive fees;

(j) no fees and charges of any sort are paid by the RSP Fund, theUnderlying Fund, the manager or principal distributor of the RSP Fund orthe Underlying Fund or by any affiliate or associate of any of theforegoing entities to anyone in respect of the RSP Fund's purchase,holding or redemption of, the securities of the Underlying Fund;

(k) in the event of the provision of any notice to securityholders of theUnderlying Fund as required by the applicable laws or the constatingdocuments of the Underlying Fund, the notice will also be delivered to thesecurityholders of the RSP Fund; all voting rights attached to thesecurities of the Underlying Fund that are owned by the RSP Fund will bepassed through to the securityholders of the RSP Fund;

(l) in the event that a meeting of the securityholders of the Underlying Fundis called, all of the disclosure and notice material prepared in connectionwith such meeting and received by the RSP Fund will be provided to thesecurityholders of the RSP Fund; and each securityholder will be entitledto direct a representative of the RSP Fund to vote that securityholder'sproportion of the RSP Fund's holding in the Underlying Fund inaccordance with his or her direction; and the representative of the RSPFund will not be permitted to vote the RSP Fund's holdings in theUnderlying Fund except to the extent the securityholders of the RSP Fundso direct;

(m) in addition to receiving the annual and, upon request, the semi-annualfinancial statements, of the RSP Fund, securityholders of the RSP Fundwill receive the annual and, upon request, the semi-annual financialstatements, of the Underlying Fund in either a combined report,containing both the RSP Fund's and Underlying Fund's financialstatements, or in a separate report containing the Underlying Fund'sfinancial statements; and

(n) to the extent that the RSP Fund and the Underlying Fund do not use acombined prospectus and financial statements containing disclosureabout the RSP Fund and the Underlying Fund, copies of the simplifiedprospectus, and annual information form and financial statementsrelating to the Underlying Fund may be obtained upon request by asecurityholder of the RSP Fund.

July 12th, 2000.

"Howard I. Weston"      "Robert W. Davis"