Securities Law & Instruments

Headnote

Item F(1) of Appendix C of OSC Rule 13-502 Fees -- exemption for Funds from paying an activity fee of $5,500 in connection with an application brought under subsection 147 of the Act, provided an activity fee be paid on the basis that the application be treated as an application for other regulatory relief under item F(3) of Appendix C of the Rule.

Rules Cited

Ontario Securities Commission Rule 13-502, Fees, (2003) 26 OSCB 4339 and 27 OSCB 7747.

Securities Act, R.S.O. 1990, c. s.5 as am., ss. 77(2) and ss. 78(1).

National Instrument 13-101 -- System for Electronic Document Analysis and Retrieval (SEDAR), s. 2.1(1)1.

BY FACSIMILE

February 22, 2005

Torys LLP
Suite 3000
79 Wellington Street West
Box 270, TD Centre
Toronto, Ontario
M5K 1N2

Attention: Marlene Davidge

Dear Sirs and Mesdames:

Re:
Legg Mason Canada Inc. and the funds listed in Schedule A
Application under Section 147 of the Securities Act (Ontario) and Section 6.1 of OSC Rule 13-502 - Fees ("Rule 13-502")
Application # 042/05

By letter dated January 20, 2005 (the "Application"), you applied on behalf of Legg Mason Canada Inc. ("Legg Mason"), the manager of the funds listed at Schedule A (the "Existing Pooled Funds") and any similar limited partnerships or pooled funds managed by CI now or in the future (collectively with the Existing Pooled Funds, the "Pooled Funds"), to the Ontario Securities Commission (the "Commission") under section 147 of the Securities Act (Ontario) (the "Act") for relief from subsections 77(2) and 78(1) of the Act, which require every mutual fund in Ontario to file interim and comparative annual financial statements (the "Financial Statements") with the Commission.

By same date and cover, you additionally applied to the securities regulatory authority in Ontario (the "Decision Maker") on behalf of Legg Mason for an exemption, pursuant to subsection 6.1 of Rule 13-502, from the requirement to pay an activity fee of $5,500 in connection with the Application in accordance with item F(1) of Appendix C of the Rule, on the condition that fees be paid on the basis that the Application be treated as an application for other regulatory relief under item F(3) of Appendix C of Rule 13-502, and from the requirement to pay an activity fee of $1,500 in connection with the latter relief (the "Fee Exemption"). Item F of Appendix C of Rule 13-502 specifies the activity fee applicable for applications for discretionary relief. Item F(1) specifies that applications under section 147 of the Act pay an activity fee of $5,500, whereas item F(3) specifies that applications for other regulatory relief pay an activity fee of $1,500.

From our view of the Application and other information communicated to staff, we understand the relevant facts and representations to be as follows:

1. Legg Mason is a corporation existing under the laws of Ontario with its head office in Toronto, Ontario. Legg Mason is, or will be, the manager of the Pooled Funds.

2. Legg Mason is registered under the Act as an advisor in the categories of investment counsel and portfolio manager, as dealer in the category of mutual fund dealer, and has an exemption from membership in the Mutual Fund Dealers Association.

3. The Pooled Funds are, or will be, mutual fund trusts established under the laws of Ontario and as such each Pooled Fund is, or will be, "a mutual fund in Ontario" as defined in section 1(1) of the Act.

4. Sections 77(2) and 78(1) of the Act require every mutual fund in Ontario to file interim and annual financial statements with the Commission.

5. Sections 89 and 92 of the Regulation to the Act (the "Regulation") require that the Financial Statements filed pursuant to subsections 77(2) and 78(1) of the Act include the statement of portfolio transactions (the "Statement"). A mutual fund may omit the Statement required by section 89 and 92 of the Regulation from its Financial Statements, if, among other conditions, a copy of the Statement is filed with the Commission prior to or concurrently with the filing of the Financial Statements. The Existing Pooled Funds and Legg Mason currently rely on section 94 of the Regulation.

6. Legg Mason acts as investment advisor to the Existing Pooled Funds, units of which are offered pursuant to statutory exemptive relief and, as such, are not reporting issuers in any of the provinces or territories in Canada.

7. Unitholders of the Existing Pooled Funds receive interim and annual financial statements for the Existing Pooled Funds they hold. The Existing Pooled Funds annual financial statements are audited by Deloitte LLP.

8. Pursuant to section 2.1(1) of National Instrument 13-101 -- System for Electronic Document Analysis and Retrieval (SEDAR), every issuer required to file Financial Statements with the Commission must make this filing through SEDAR, whereupon the filing will be made available to the general public through the SEDAR internet website.

9. In the Application, Legg Mason and the Existing Pooled Funds have requested under section 147 of the Act relief from filing the Financial Statements with the Commission. The activity fee associated with the Application is $5,500 in accordance with item F(1) of Appendix C of Rule 13-502.

10. If Legg Mason and the Existing Pooled Funds had, as an alternative to the Application, sought an exemption from the requirement to file the Financial Statements via SEDAR, the activity fee for that application would be $1,500 in accordance with item F(3) of Appendix C of Rule 13-502.

11. If the Existing Pooled Funds were reporting issuers seeking the same relief as requested in the Application, such relief could be sought under section 80 of the Act, rather than under section 147 of the Act, and the activity fee for that application would be $1,500 in accordance with item F(3) of Appendix C of Rule 13-502.

Decision

This letter confirms that, based on the information provided in the Application, and the facts and representations above, and for the purposes described in the Application, the Decision Maker hereby exempts Legg Mason and the Pooled Funds from:

i) paying an activity fee of $5,500 in connection with the Application, provided that Legg Mason and the Pooled Funds pay an activity fee on the basis that the Application be treated as an application for other regulatory relief under item F(3) of Appendix C to Rule 13-502; and

ii) paying an activity fee of $1,500 in connection with the Fees Exemption application under item F(3) of Appendix C to Rule 13-502.

Yours truly,

"Leslie Byberg"
Manager, Investment Funds Branch

 

SCHEDULE A

POOLED FUNDS

Legg Mason Canada Liquidity Plus Pool

Legg Mason Brandywine Small/Mid Cap U.S. Value Equity Pool

Legg Mason Brandywine Small/Mid Cap U.S. Value Equity RP Pool

Legg Mason Private Capital Management U.S. Equity Pool

Legg Mason Canada Treasury Plus Pool

Legg Mason Canada Income Plus Pool

Legg Mason Fixed Income Alpha Pool

Legg Mason Canadian Equity Alpha Pool

Legg Mason Balanced Alpha Pool

Legg Mason U.S. Value RP Pool

Legg Mason Absolute Return Master Trust

Legg Mason Absolute Return Fund