INTHE MATTER OF
THESECURITIES LEGISLATION OF
BRITISHCOLUMBIA, ALBERTA, SASKATCHEWAN
ONTARIO,NOVA SCOTIA, NEWFOUNDLAND AND LABRADOR
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM
FOREXEMPTIVE RELIEF APPLICATIONS
INTHE MATTER OF
NORTHWESTMUTUAL FUNDS INC.
NORTHWESTRSP INTERNATIONAL FUND
MRRSDECISION DOCUMENTWHEREASthe Canadian securities regulatory authority or regulator(the "Decision Maker") in each of British Columbia,Alberta, Saskatchewan, Ontario, Nova Scotia and Newfoundland andLabrador (collectively, the "Jurisdictions")has received an application (the "Application")from Northwest Mutual Funds Inc. ("Northwest")in its own capacity and on behalf of Northwest RSP InternationalFund (the "Top Fund"), for adecision pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the following restrictionsand requirements contained in the Legislation (the "ApplicableRequirements") shall not apply to Northwest orthe Top Fund, as the case may be, in respect of certain investmentsto be made by the Top Fund in Northwest International Fund (the"Underlying Fund"):
A.the restrictions prohibiting a mutual fund from knowingly makingor holding an investment in a person or company in which the mutualfund, alone or together with one or more related mutual funds,is a substantial security holder; and
B.the requirements for a management company, or in British Columbia,a mutual fund manager, to file a report relating to a purchaseor sale of securities between the mutual fund and any relatedperson or company, or any transaction in which, by arrangementother than an arrangement relating to insider trading in portfoliosecurities, the mutual fund is a joint participant with one ormore of its related persons or companies.
ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulator forthis Application;
ANDWHEREAS Northwest has represented to the Decision Makersthat:
1.Northwest is a corporation established under the laws of Ontarioand its head office is located in Toronto, Ontario. Northwestis the administrative manager, trustee and promoter of the TopFund and the Underlying Fund.
2.The Top Fund and the Underlying Fund are open-end mutual fundtrusts established under the laws of Ontario. Units of the TopFund and Underlying Fund are qualified for distribution in allJurisdictions under a simplified prospectus and annual informationform each dated April 6, 2001 (together, the "Prospectus").
3.The Top Fund and the Underlying Fund are reporting issuers ineach of the Jurisdictions and are not in default of any requirementsof the Legislation.
4.The investment objective of the Top Fund, as set out in the Prospectus,is to provide long-term capital growth that is 100% linked tothe returns of the Underlying Fund by using forward contractsor other derivatives based on the units of the Underlying Fundor all or substantially all of the securities forming part ofthe portfolio of the Underlying Fund. The Fund may also investdirectly in units of the Underlying Fund, as well as in moneymarket instruments and/or bank deposits and similar investments.
5.The investment objective of the Underlying Fund is achieved throughinvestment primarily in foreign securities. The Underlying Fund'sinvestment objective does not include investing directly or indirectlyin other mutual funds.
6.To achieve its investment objective, the Top Fund invests itsassets such that the units of the Top Fund will be "qualifiedinvestments" for registered retirement savings plans, registeredretirement income funds, deferred profit sharing plans, registeredretirement income funds, and deferred profit sharing plans (collectively,"Registered Plans") and will not constitute "foreignproperty" under the Income Tax Act (Canada). This isprimarily achieved through the implementation of a derivativestrategy that provides a return linked to the returns of the UnderlyingFund. The Top Fund also invests a portion of its assets directlyin securities of the Underlying Fund. This investment is at alltimes below the maximum foreign property limit prescribed forRegistered Plans (the "Permitted Limit").
7.The amount of direct investment by the Top Fund in the UnderlyingFund is adjusted from time to time so that, except for the transitionalcash (i.e. cash from purchases not yet invested or cash held tosatisfy redemptions), the aggregate of the derivative exposureto, and direct investment in, the Underlying Fund equals 100%of the assets of the Top Fund.
8.Except to the extent evidenced by this Decision and specific approvalsgranted by the Decision Makers pursuant to National Policy No.39 (the predecessor to National Instrument 81-102 Mutual Funds("NI 81-102")), the investments by the Top Fundin the Underlying Fund have been structured to comply with theinvestment restrictions of the Legislation and NI 81-102.
9.In the absence of this Decision, the Top Fund is prohibited fromknowingly making or holding an investment in the Underlying Fundin which the Top Fund alone or together with one or more relatedmutual funds is a substantial security holder.
10.In the absence of this Decision, Northwest is required to filea report on every purchase or sale of units of the UnderlyingFund by the Top Fund.
11.The investments by the Top Fund in units of the Underlying Fundrepresent the business judgment of "responsible persons" (as definedin the Legislation) uninfluenced by considerations other thanthe best interests of the Top Fund.
ANDWHEREAS pursuant to the System this MRRS Decision Documentevidences the decision of each Decision Maker (collectively, the"Decision");
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 each Decision Maker pursuant to the Legislationis that the Applicable Requirements shall not apply so as to preventthe Top Fund from making or holding an investment in units ofthe Underlying Fund, or so as to require Northwest to file a reportrelating to the purchase or sale of such units;
PROVIDEDTHAT in respect of the investments by the Top Fund inunits of the Underlying Fund:
1.the Decision, as it relates to the jurisdiction of a 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 the Top Fund makesor holds an investment in the Underlying Fund, the following conditionsare satisfied:
(a)the units of both the Top Fund and the Underlying Fund are beingoffered for sale in the jurisdiction of the Decision Maker pursuantto a simplified prospectus and annual information form which hasbeen filed with and accepted by the Decision Maker;
(b)the investment by the Top Fund in the Underlying Fund is compatiblewith the fundamental investment objective of the Top Fund;
(c)the investment objective of the Top Fund discloses that the TopFund invests directly and, if applicable, indirectly (throughderivative exposure), in the Underlying Fund, the name of theUnderlying Fund and that the Top Fund is fully eligible for RegisteredPlans;
(d)the Underlying Fund is not a mutual fund whose investment objectiveincludes investing directly or indirectly in other mutual funds;
(e)the Top Fund restricts its direct investment in the UnderlyingFund to a percentage of its assets that is within the PermittedLimit;
(f)there are compatible dates for the calculation of the net assetvalue of the Top Fund and the Underlying Fund for the purposeof the issue and redemption of units of such mutual funds;
(g)no sales charges are payable by the Top Fund in relation to itspurchases of units of the Underlying Fund;
(h)no redemption fees or other charges are charged by an UnderlyingFund in respect of the redemption by the Top Fund of units ofthe Underlying Fund owned by the Top Fund;
(i)no fees or charges of any sort are paid by the Top Fund and theUnderlying Fund, by their respective managers or principal distributors,or by any affiliate or associate of any of the foregoing entities,to anyone in respect of the Top Fund's purchase, holding or redemptionof the units of the Underlying Fund;
(j)the arrangements between or in respect of the Top Fund and theUnderlying Fund are such as to avoid the duplication of managementfees;
(k)any notice provided to unitholders of the Underlying Fund as requiredby applicable laws or the constating documents of the UnderlyingFund, has been delivered by the Top Fund to its unitholders;
(l)all of the disclosure and notice material prepared in connectionwith a meeting of unitholders of the Underlying Fund and receivedby the Top Fund has been provided to its unitholders, the unitholdershave been permitted to direct a representative of the Top Fundto vote its holdings in the Underlying Fund in accordance withtheir direction, and the representative of the Top Fund has notvoted its holdings in the Underlying Fund except to the extentthe unitholders of the Top Fund have directed;
(m)in addition to receiving the annual and, upon request, the semi-annualfinancial statements of the Top Fund, unitholders of the Top Fundhave received the annual and, upon request, the semi-annual financialstatements of the Underlying Fund in either a combined report,containing financial statements of the Top Fund and the UnderlyingFund, or in a separate report containing the financial statementsof the Underlying Fund; and
(n)to the extent that the Top Fund and the Underlying Fund do notuse a combined simplified prospectus and annual information formcontaining disclosure about the Top Fund and the Underlying Fund,copies of the simplified prospectus and annual information formof the Underlying Fund have been provided upon request to unitholdersof the Top Fund and the right to receive these documents is disclosedin the simplified prospectus of the Top Fund.
"TheresaMcLeod" "H. Lorne Morphy"