Exemption for pooled funds from the requirement under section 79(1) of the Act to deliver interim financial statements and comparative annual financial statements to registered securityholders.
Securities Act, R.S.O. 1990, c. s.5 as am., ss. 77(2), 78(1), 79(1), 147.
IN THE MATTER OF
THE SECURITIES ACT (ONTARIO), R.S.O. 1990, CHAPTER S.5 AS AMENDED
IN THE MATTER OF
ARROW HEDGE PARTNERS INC.
THE FUNDS LISTED IN SCHEDULE "A"
(THE "EXISTING POOLED FUNDS")
(Subsection 147 of the Act)
UPON the application (the "Application") of Arrow Hedge Partners Inc. ("Arrow"), the manager of the Existing Pooled Funds and other pooled funds managed by Arrow from time to time (collectively, the "Pooled Funds"), to the Ontario Securities Commission (the "Commission") for an order pursuant to subsection 147 of the Act exempting Arrow and the Pooled Funds from the requirement to deliver comparative annual financial statements and interim financial statements (collectively, the "Financial Statements") of the Pooled Funds to registered and beneficial owners of who hold units of the Pooled Funds ("Securityholders") prescribed by section 79(1), of the Act unless they have requested to receive them.
AND UPON considering the Application and the recommendation of the staff of the Commission;
AND UPON Arrow having represented to the Commission that:
1. Arrow is a corporation under the laws of Ontario with its head office in the Province of Ontario. Arrow is, or will be, the manager of the Pooled Funds. Arrow is registered with the Commission as an adviser in the categories of investment counsel, portfolio manager and commodity trading manager and as a dealer in the category of limited market dealer.
2. The Pooled Funds are, or will be, open-end mutual fund trusts established under the laws of Ontario. The Pooled Funds will not be reporting issuers in any province or territory of Canada. Units of the Pooled Funds are, or will be, distributed in each of the provinces and territories of Canada without a prospectus pursuant to exemptions from the registration and prospectus delivery requirements of applicable securities legislation.
3. By Order dated August 29, 2003, the Commission exempted the Pooled Funds from the requirement to file with the Commission interim financial statements under section 77(2) of the Act and comparative financial statements under section 78(1) of the Act (the "Decision"). This exemption was granted by the Commission under section 147 of the Act.
4. Each of the Pooled Funds fits within the definition of "mutual fund in Ontario" in section 1(1) of the Act. As a result, each Pooled Fund is, or will be required to deliver annually to each Securityholder annual financial statements within 140 days of its financial year end, and interim financial statements within 60 days of the date which they are made up, pursuant to subsection 79(1) of the Act. The financial year end of each Pooled Fund is December 31.
5. If the requested Order is granted, Arrow would send to Securityholders, a notice advising them that they will not receive the Financial Statements of a Pooled Fund unless they request same, and providing them with a request form to send back, by fax or by requesting a prepaid return envelope, if they wish to receive the annual financial statements and/or the interim financial statements. The notice will advise the Securityholders how Financial Statements can be obtained (including through the Arrow website or by calling a toll-free number).
6. There will be substantial cost savings if the Pooled Funds are not required to print and mail Financial Statements to those Securityholders who do not want them.
7. The Canadian Securities Administrators have published for comment proposed National Instrument 81-106 ("NI 81-106"), which, among other things, in Section 2.11 would permit a Pooled Fund not to deliver Financial Statements to those of its Securityholders who do not request them, if the Pooled Fund initially sent to its registered Securityholders a request form under which the Securityholder may request, at no cost to the Securityholder, to receive the Pooled Fund's Financial Statements for the financial year.
8. Securityholders in the Pooled Funds will be able to access the Financial Statements of the Pooled Funds through easily accessible means, including by email at firstname.lastname@example.org or by calling Arrow toll-free at 1-877-327-6048. The Pooled Funds will send a copy of the Financial Statements to any Securityholder who requests them whether in response to the request form or subsequently, regardless of their response to the request form.
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest,
AND UPON the Commission being satisfied that to do so would not adversely affect the rule-making process with respect to proposed NI 81-106;
IT IS ORDERED by the Commission pursuant to subsection 147 of the Act that the Pooled Funds be exempted from the requirements in subsection 79(1) of the Act to deliver the Financial Statements to Securityholders other than those Securityholders that have requested to receive them provided:
(a) This Decision shall terminate upon NI81-106 coming into force.
March 4, 2005.
"Paul M. Moore"
"Susan Wolburgh Jenah"
The Existing Pooled Funds