One time trade of securities between mutual funds in the same family of funds that are not reporting issuers to implement two fund mergers is exempted from the conflict of interest restrictions in section 118(2)(b).
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 118(2)(b) and 121(2).
July 22, 2005
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
CI INVESTMENTS INC.
WHEREAS the Ontario Securities Commission has received an application (the "Application") from CI Investments Inc. ("CI") for an order pursuant to clause 121(2)(a)(ii) of the Securities Act (Ontario) (the "Securities Act") for relief from the prohibition in paragraph 118(2)(b) of the Securities Act in connection with the merger (the "Mergers") of Landmark Global Opportunities Fund into Altrinsic Opportunities Fund and BPI Global Opportunities III Fund into Trident Opportunities Fund (each, a "Fund" and collectively, the "Funds");
AND WHEREAS it has been represented by CI that:
1. Each Fund is a "mutual fund in Ontario" as defined in the OSA.
2. Each Fund was established as a trust and CI is the trustee and manager of each Fund.
3. Each Fund offers its units in all of the Provinces and Territories of Canada pursuant to applicable prospectus exemptions.
4. The Funds are not offered by way of prospectus and are neither "reporting issuers" nor subject to National Instrument 81-102.
5. The approval of the unitholders of Landmark Global Opportunities Fund and BPI Global Opportunities III Fund (the "Terminating Funds") and Altrinsic Opportunities Fund and Trident Opportunities Fund (the "Continuing Funds") is not required by the Funds' constating documents or offering documents or under applicable securities laws in order to effect the Mergers.
6. The Mergers will be advantageous for investors because, among other reasons:
(a) investors in each Continuing Fund will enjoy increased economies of scale and potentially lower management expenses borne indirectly by investors as part of a larger Fund; and
(b) investors will benefit from becoming investors in a larger Fund which will be better able to maintain a diversified, well-managed portfolio with a smaller proportion of assets set aside to fund redemptions.
7. Each Terminating Fund and its Continuing Fund have the same fee structures and valuation procedures.
8. The assets of each Terminating Fund will be transferred to its Continuing Fund at a value determined in accordance with the valuation procedures set out constating documents of the Terminating Fund and the Continuing Fund. The Continuing Fund will then issue units of the Continuing Fund to the Terminating Fund having an aggregate net asset value equal to the value of the assets transferred. Because the transfer of assets will take place at a value determined by common valuation procedures and the issue of units will be based upon the net asset value of the assets received by the Continuing Fund, CI submits that there will be no conflict of interest for CI to effect the Mergers.
9. Units of the Funds are redeemable weekly at their respective net asset values. Unitholders of each Terminating Fund will be given sufficient notice of their Merger to allow them to redeem their units prior to the Merger, should they wish to do so. A letter dated June 30, 2005 was sent to all unitholders of the Landmark Global Opportunities Fund notifying the unitholders of the Merger with Altrinsic Opportunities Fund. A similar letter will be sent to the unitholders of BPI Global Opportunities III Fund at least 30 days prior to that Merger once a date is fixed for the Merger.
10. It is expected that the Merger involving Landmark Global Opportunities Fund and Altrinsic Global Opportunities Fund will take place on or about July 26, 2005 and the Merger involving BPI Global Opportunities III Fund and Trident Global Opportunities Fund will take place on a date to be determined by CI, which date shall not be later than November 30, 2005.
11. In the opinion of CI, the Mergers will not adversely effect unitholders of the Terminating Funds or the Continuing Funds.
12. In the absence of this order, CI would be prohibited from purchasing and selling the securities of the Terminating Funds in connection with the Mergers.
AND WHEREAS the Commission is satisfied that the test contained in the legislation that provides the Commission with the jurisdiction to make the Order has been met;
IT IS ORDERED pursuant to clause 121(2)(a)(ii) that paragraph 118(2)(b) of the Securities Act shall not apply so as to prevent the sale of the assets of one Fund to the other Fund in connection with the Mergers provided that the Mergers are completed no later than November 30, 2005.
"Paul M. Moore"
"Harold P. Hands"