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I.G. Investment Management Ltd. and iProfile Global Equity RSP Pool - MRRS Decision
Headnote
Investment by RSP fund in securities of two other mutual funds for specified purpose exempted from the reportingrequirements and self-dealing prohibitions of clauses 111(2)(a) and (b) and clauses 117(1)(a) and (d) subject to certainspecified conditions.
Statutes Cited
Securities Act (Ontario), R.S.O. 1990 c.S.5, as am., ss. 111(2)(a), 111(2)(b), 111(2)(c), 117(1)(a) and 117(1)(d).
IN THE MATTER OF THE SECURITIES LEGISLATION
OF BRITISH COLUMBIA, ALBERTA,
SASKATCHEWAN, ONTARIO, NOVA SCOTIA AND
NEWFOUNDLAND
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
I.G. INVESTMENT MANAGEMENT, LTD.
AND
iPROFILE GLOBAL EQUITY RSP POOL
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision
Maker") in each of the provinces of British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland(the "Jurisdictions") has received an application (the "Application") from I.G. Investment Management, Ltd. ("IGIM) andthe iProfile Global Equity RSP Pool (the "Top Fund") for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that the following provisions in the Legislation (the "Applicable Requirements") shall notapply in connection with certain investments to be made by the Top Fund in the iProfile U.S. Equity Pool (the "U.S.Equity Fund") and the iProfile International Equity Pool (the "International Equity Fund", and collectively referred to asthe "Underlying Funds"):
1. the restrictions contained in the Legislation prohibiting a mutual fund from knowingly making or holding aninvestment in a person or company in which the mutual fund, alone or together with one or more related mutualfunds, is a substantial securityholder; and
2. the requirements contained in the Legislation requiring a management company, or in British Columbia, amutual fund manager, to file a report relating to a purchase or sale of securities between the mutual fund andany related person or company, or any transaction in which, by arrangement other than an arrangement relatingto insider trading in portfolio securities, the mutual fund is a joint participant with one or more of its relatedpersons or companies;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive
Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS it has been represented by IGIM to the Decision Makers that:
1. The Top Fund and the Underlying Funds will be open-ended mutual fund trusts established under the laws ofthe Province of Manitoba. IGIM is a corporation established under the laws of the Province of Manitoba andwill be the manager for the Top Fund and the Underlying Funds. The head office of IGIM is in Winnipeg,Manitoba.
2. The Top Fund and the Underlying Funds will be reporting issuers. The securities of the Top Fund and theUnderlying Funds will be qualified under a simplified prospectus and annual information form and filed in allprovinces and territories.
3. The simplified prospectus will disclose the investment objectives, investment strategies, risks and restrictionsof the Top Fund and the Underlying Funds. The investment objective of the Top Fund will include the disclosureof the names of the Underlying Funds and the Top Fund's total aggregate derivative exposure to, and directinvestment in, the Underlying Funds.
4. The investment objectives of the Underlying Funds will be achieved through investment primarily in foreignsecurities.
5. The Top Fund seeks to achieve its investment objective while ensuring that its securities do not constituteforeign property" for registered retirement savings plans, registered retirement income funds, deferred profitsharing plans and similar plans ("Registered Plans").
6. To achieve its investment objective, the Top Fund will invest its assets in securities such that its units will, inthe opinion of tax counsel to the Top Fund, be "qualified investments" for Registered Plans and will notconstitute foreign property in a Registered Plan. This will primarily be achieved through the implementationof a derivative strategy. However, the Top Fund also intends to invest a portion of its assets directly insecurities of the Underlying Funds. This investment by the Top Fund will at all times be below the maximumforeign property limit prescribed for Registered Plans (the "Permitted Limit").
7. The aggregate of derivative exposure to, and direct investment in, the Underlying Funds, will equal 80% (the"Permitted Aggregate Investment") of the assets of the Top Fund, subject to a variation to account for marketfluctuations as described in paragraph 9.
8. The amount of direct investment by the Top Fund in the Underlying Funds will be adjusted from time to timeso that, except for transitional cash (ie. cash from purchases not yet invested or cash held to satisfyredemptions), the Top Fund will invest its assets in accordance with the Permitted Aggregate Investment andthe Fixed Percentages disclosed in the simplified prospectus.
9. To achieve its investment objective, the Top Fund invests an aggregate specified percentage (the "FixedPercentages") of its assets directly and indirectly (through derivative exposure) in each of the Underlying Funds,subject to a variation of 2.5% above or below the Fixed Percentages (the "Permitted Ranges") to account formarket fluctuations. The Fixed Percentages disclosed in the simplified prospectus of the Top Fund are 60%in the U.S. Equity Fund and 20% in the International Equity Fund. The balance of the assets of the Top Fundnot invested in the Underlying Funds will be invested directly or indirectly (through derivative exposure) in othersecurities or cash.
10. Except to the extent evidenced by this Decision and specific approvals granted by the Canadian securitiesadministrators pursuant to National Instrument 81-102 Mutual Funds ("NI 81-102"), the investments by the TopFund in the Underlying Funds will be structured to comply with the investment restrictions of the Legislation andNI 81-102.
11. In the absence of this Decision, pursuant to the Legislation, the Top Fund is prohibited from (a) knowinglymaking an investment in a person or company in which the mutual fund, alone or together with one or morerelated mutual funds, is a substantial securityholder; and (b) knowingly holding an investment referred to inclause (a) hereof. As a result, in the absence of this Decision the Top Fund would be required to divest itselfof any investments referred to in clause (a) hereof.
12. In the absence of the Decision, the Legislation requires IGIM to file a report on every purchase or sale ofsecurities of the Underlying Funds by the Top Fund.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences
the decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in
the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers pursuant to the Legislation is that
the Applicable Legislation shall not apply so as to prevent the Top Fund from making or holding an investment insecurities of the Underlying Funds.
PROVIDED IN EACH CASE THAT:
1. the Decision, as it relates to the jurisdiction of a Decision Maker, will terminate one year after the publicationin final form of any legislation or rule of that Decision Maker dealing with the matters in section 2.5 of NI 81-102;and
2. the Decision shall only apply if, at the time the Top Fund makes or holds an investment in the UnderlyingFunds, the following conditions are satisfied:
(a) the securities of both the Top Fund and the Underlying Funds are being offered for sale in thejurisdiction of the Decision Maker pursuant to a simplified prospectus and annual information formwhich has been filed with and accepted by the Decision Maker;
(b) the investment by the Top Fund in the Underlying Funds is compatible with the fundamentalinvestment objectives of the Top Fund;
(c) the simplified prospectus discloses the intent of the Top Fund to invest directly and indirectly (throughderivative exposure) in the Underlying Funds, the names of the Underlying Funds, the FixedPercentages and the Permitted Ranges within which such Fixed Percentages may vary;
(d) the investment objective of the Top Fund discloses names of the Underlying Funds and the PermittedAggregate Investment;
(e) the Underlying Funds are not mutual funds whose investment objective includes investing directly orindirectly in other mutual funds;
(f) except as permitted by this Decision, the Top Fund will not invest in any other mutual funds;
(g) the Top Fund restricts its aggregate direct investment in the Underlying Funds to a percentage of itsassets that is within the Permitted Limit;
(h) the Top Fund invests its assets directly and indirectly (through derivative exposure) in the UnderlyingFunds in accordance with the Permitted Aggregate Investment and the Fixed Percentages disclosedin the simplified prospectus;
(i) the Top Fund's derivative exposure to, and direct investment in, the Underlying Funds does notdeviate from the Permitted Ranges;
(j) any deviation from the Fixed Percentages is caused by market fluctuations only;
(k) if a direct or indirect investment by the Top Fund in any of the Underlying Funds has deviated fromthe Permitted Ranges as a result of market fluctuations, the Top Fund's investment portfolio was re-balanced to comply with the Fixed Percentages on the next day on which the net asset value wascalculated following the deviation.
(l) if the Fixed Percentages which are disclosed in the simplified prospectus have been changed, eitherthe simplified prospectus has been amended or a new simplified prospectus filed to reflect thechange, and the securityholders of the Top Fund have been given at least 60 days' notice of thechange;
(m) there are compatible dates for the calculation of the net asset value of the Top Fund and theUnderlying Funds for the purpose of the issue and redemption of securities of such mutual funds;
(n) no sales charges are payable by the Top Fund in relation to its purchases of securities of theUnderlying Funds;
(o) no redemption fees or other charges are charged by an Underlying Fund in respect of the redemptionby the Top Fund of securities of the Underlying Funds owned by the Top Fund;
(p) no fees or charges of any sort are paid by the Top Fund and the Underlying Funds, by their respectivemanagers or principal distributors, or by any affiliate or associate of any of the foregoing entities, toanyone in respect of the Top Fund's purchase, holding or redemption of the securities of theUnderlying Funds;
(q) the arrangements between or in respect of the Top Fund and the Underlying Funds are such as toavoid the duplication of management fees;
(r) any notice provided to securityholders of an Underlying Fund as required by applicable laws or theconstating documents of that Underlying Fund, has been delivered by the Top Fund to itssecurityholders along with all voting rights attached to the securities of the Underlying Fund which aredirectly owned by the Top Fund;
(s) all of the disclosure and notice material prepared in connection with a meeting of securityholders ofthe Underlying Funds and received by the Top Fund has been provided to its securityholders, thesecurityholders have been permitted to direct a representative of the Top Fund to vote its holdings inthe Underlying Fund in accordance with their direction, and the representative of the Top Fund hasnot voted its holdings in the Underlying Funds except to the extent the securityholders of the Top Fundhave directed;
(t) in addition to receiving the annual and, upon request, the semi-annual financial statements, of the TopFund, securityholders of the Top Fund have received the annual and, upon request, the semi-annualfinancial statements of the Underlying Funds in either a combined report, containing financialstatements of the Top Fund and the Underlying Funds, or in a separate report containing the financialstatements of the Underlying Funds; and
(u) to the extent that the Top Fund and the Underlying Funds do not use a combined simplifiedprospectus and annual information form containing disclosure about the Top Fund and the UnderlyingFunds, copies of the simplified prospectus and annual information form of the Underlying Funds havebeen provided upon request to securityholders of the Top Fund and this right is disclosed in theprospectus of the Top Fund;
January 2, 2001.
"J.A. Geller" "Howard I. Weston"