Securities Law & Instruments


Investmentby mutual funds directly and indirectly (through derivative exposure)in securities of other mutual funds exempted from the reportingrequirements and self-dealing prohibitions of s.113 and s.117


SecuritiesAct (Ontario), R.S.O. 1990 c.S.5., as am., 111(2)(b), 111(3),117(1)(a) and 117(1)(d).

















WHEREASthe local securities regulatory authority or regulator (the"Decision Maker") in each of the provinces of British Columbia,Alberta, Saskatchewan, Ontario, Nova Scotia, and Newfoundlandand Labrador (the "Jurisdictions") has received an applicationfrom Counsel Group of Funds Inc. ("Counsel"), as manager ofthe Top Funds (as defined below) for a decision by each DecisionMaker (collectively, the "Decision") under the securities legislationof the Jurisdictions (the "Legislation") that:

(a)the restrictions contained in the Legislation prohibiting amutual fund from knowingly making or holding an investment ina person or company in which the mutual fund, alone or togetherwith one or more related mutual funds, is a substantial securityholdershall not apply in respect of investments by the Top Funds inthe Underlying Funds (as defined below); and

(b)the requirements contained in the Legislation requiring themanagement company, or in British Columbia, a mutual fund manager,to file a report relating to a purchase or sale of securitiesbetween the mutual fund and any related person or company, orany transaction in which, by arrangement other than an arrangementrelating to insider trading in portfolio securities, the mutualfund is a joint participant with one or more of its relatedpersons or companies, shall not apply in respect of investmentsby the Top Funds in the Underlying Funds.

The above requirements and restrictions contained in the Legislationare herein collectively referred to as the "Applicable Requirements".

AND WHEREAS under the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application;

AND WHEREAS Counsel has represented to the DecisionMakers as follows:

1.Counsel is a corporation established under the laws of the Ontarioand its head office is located in the Province of Ontario. Counselis or will be the manager of the Top Funds and the Counsel UnderlyingFunds (collectively, the "Counsel Funds" and "Counsel UnderlyingFunds" being Underlying Funds that are managed by Counsel).

2.The Counsel Funds are or will be open-end mutual fund trustsor classes of shares of a mutual fund corporation, each establishedunder the laws of Ontario. Securities of the Counsel Funds areor will be qualified for distribution under a simplified prospectusand annual information form filed in all provinces (except Quebec)and territories of Canada (collectively, the "Prospectus") tobe filed with and accepted by the Decision Makers.

3.Each of the Counsel Funds is or will be a reporting issuer andnot in default of any of the requirements of the Legislation.

4.The Top Funds will invest their assets in mutual funds, includingCounsel Underlying Funds, and future mutual funds managed byCounsel or a person or company unrelated to Counsel (the "UnderlyingFunds").

5.Counsel proposes to establish a new group of mutual funds. Threeof these new funds include the Counsel Balanced RSP Portfolio,Counsel Growth RSP Portfolio and Counsel All Equity RSP Portfolio(the "Existing Top Funds"). Counsel may in the future establishother mutual funds with investment objectives similar to theExisting Top Funds (the "Future Top Funds" and collectivelywith the Existing Top Funds, the "Top Funds").

6.As part of its investment objective, each Top Fund will investa certain fixed percentage (the "Fixed Percentages") of itsassets (excluding cash and cash equivalents) directly and indirectly(through derivative exposure) in specified Underlying Funds,subject to a variation of 2.5% above or below the Fixed Percentages(the "Permitted Ranges") to account for market fluctuations.Investments by each of the Top Funds will be made in accordancewith the fundamental investment objectives of the Top Funds.

7.The Top Funds seek to achieve their investment objectives whileensuring that their securities do not constitute "foreign property"for registered retirement savings plans, registered retirementincome funds, deferred profit sharing plans and similar plans("Registered Plans").

8.To achieve their investment objective, the Top Funds investtheir assets in securities such that their units will be "qualifiedinvestments" for Registered Plans and will not constitute foreignproperty in a Registered Plan.

9.The Top Funds' total direct investments in the Underlying Fundswhich constitute foreign property in a Registered Plan willat no time exceed the maximum foreign property limit under theIncome Tax Act (Canada) for Registered Plans (the "PermittedLimit").

10.The Top Funds will not invest in an Underlying Fund with aninvestment objective which includes investing directly or indirectlyin other mutual funds.

11.The Top Funds will enter into forward contracts or other specifiedderivative instruments ("Forward Contracts") based on the returnsof specified Underlying Funds with one or more financial institutions(each a "Counterparty").

12.Except to the extent evidenced by this Decision and specificapprovals granted by the Decision Makers pursuant to NationalInstrument 81-102 ("NI 81-102"), the investments by the TopFunds in the Underlying Funds have been structured to complywith the investment restrictions of the Legislation and NI 81-102.

13.In the absence of this Decision, each of the Top Funds is prohibitedfrom knowingly making or holding an investment in the UnderlyingFunds in which the Top Fund alone or together with one or morerelated mutual funds is a substantial securityholder.

14.In the absence of this Decision, Counsel is required to filea report on every purchase or sale of securities of the UnderlyingFunds by each of the Top Funds.

15.The investments by the Top Funds in securities of the UnderlyingFunds represents the business judgement of "responsible persons"(as defined in the Legislation) uninfluenced by considerationsother than the best interests of the Top Funds.

ANDWHEREAS under the System, this MRRS Decision Documentevidences the Decision of each Decision Maker;

ANDWHEREAS each Decision Maker is satisfied that the testcontained in the Legislation that provides the Decision Makerwith the jurisdiction to make the Decision has been met;

THEDECISION of the Decision Makers pursuant to the Legislationis that the

ApplicableRequirements shall not apply so as to prevent the Top Fundsfrom making or holding an investment in securities of the UnderlyingFunds, or to require Counsel to file a report relating to thepurchase or sale of such securities;

PROVIDED THAT IN RESPECT OF the investments by theTop Funds in securities of the Underlying Funds:

1.the Decision, as it relates to the jurisdiction of the DecisionMaker, will terminate one year after the publication in finalform of any legislation or rule of that Decision Maker dealingwith the matters in section 2.5 of NI 81-102.

2.the Decision shall only apply if, at the time a Top Fund makesor holds an investment in its Underlying Funds, the followingconditions are satisfied:

(a) the securities of both the Top Fund and the Underlying Fundsare being offered for sale in the jurisdiction of each DecisionMaker pursuant to a simplified prospectus and annual informationform which have been filed with and accepted by the DecisionMaker;

(b) the investment by the Top Fund in the Underlying Funds iscompatible with the fundamental investment objective of theTop Fund;

(c) the simplified prospectus of the Top Fund discloses theintent of the Top Fund to invest directly and indirectly (throughderivative exposure) in the Underlying Funds, the names of theUnderlying Funds, the Fixed Percentages and the Permitted Rangeswithin which such Fixed Percentages may vary;

(d) the investment objective of the Top Fund discloses thatthe Top Fund invests directly and indirectly (through derivativeexposure) in other mutual funds and that the Top Fund will maintain100% eligibility for Registered Plans.

(e) the Underlying Funds are not mutual funds whose investmentobjective includes investing directly or indirectly in othermutual funds;

(f) the Top Fund restricts its direct investment in the UnderlyingFunds which constitute foreign property in Registered Plansto a percentage of its assets that is within the Permitted Limit;

(g) the Top Fund's derivative exposure to, and direct investmentin, the Underlying Funds does not deviate from the PermittedRanges;

(h) any deviation from the Fixed Percentages is caused by marketfluctuations only;

(i) if a direct or indirect investment by the Top Fund in anyof the Underlying Funds has deviated from the Permitted Rangesas a result of market fluctuations, the Top Fund's investmentportfolio was re-balanced to comply with the Fixed Percentageson the next day on which the net asset value was calculatedfollowing the deviation;

(j) if the Fixed Percentages and the Underlying Funds whichare disclosed in the simplified prospectus of the Top Fund havebeen changed, either the simplified prospectus has been amendedor a new simplified prospectus filed to reflect the change,and the securityholders of the Top Fund have been given at least60 days' notice of the change;

(k) there are compatible dates for the calculation of the netasset value of the Top Fund and the Underlying Funds for thepurpose of the issue and redemption of the securities of suchmutual funds;

(l) no sales charges are payable by the Top Fund in relationto its purchases of securities of the Underlying Funds;

(m) no redemption fees or other charges are charged by an UnderlyingFund in respect of the redemption by the Top Fund of securitiesof the Underlying Fund owned by the Top Fund;

(n) no fees or charges of any sort are paid by the Top Fundand the Underlying Funds, by their respective managers or principaldistributors, or by any affiliate or associate of any of theforegoing entities, to anyone in respect of the Top Fund's purchase,holding or redemption of the securities of the Underlying Funds;

(o) the arrangements between or in respect of the Top Fund andthe Underlying Funds are such as to avoid the duplication ofmanagement fees;

(p) any notice provided to securityholders of an UnderlyingFund as required by applicable laws or the constating documentsof that Underlying Fund has been delivered by the Top Fund toits securityholders;

(q) all of the disclosure and notice material prepared in connectionwith a meeting of securityholders of the Underlying Funds andreceived by the Top Fund has been provided to its securityholders,the securityholders have been permitted to direct a representativeof the Top Fund to vote its holdings in the Underlying Fundin accordance with their direction, and the representative ofthe Top Fund has not voted its holdings in the Underlying Fundsexcept to the extent the securityholders of the Top Fund havedirected;

(r) in addition to receiving the annual and, upon request, thesemi-annual financial statements, of the Top Fund, securityholdersof the Top Fund have received appropriate summary disclosurein respect of the Top Fund's holdings of securities of the UnderlyingFunds in the financial statements of the Top Fund; and

(s) to the extent that the Top Fund and the Underlying Fundsdo not use a combined simplified prospectus and annual informationform containing disclosure about the Top Fund and the UnderlyingFunds, copies of the simplified prospectus

and annual information form of the Underlying Funds have beenprovided upon request to securityholders of the Top Fund andthe right to receive these documents is disclosed in the prospectusof the Top Fund.

January15, 2002.

"HowardI. Wetston"       "R. Stephen Paddon"