MRRS -- Exemption to allow a non-redeemable investment fund converting into a mutual fund continue to show past performance; the relief also provided exemption for the fund from certain new mutual fund requirements -- The non-redeemable investment fund has always been complying with investment restrictions of NI 81-102 and the fund has already met the minimum subscription for new mutual fund -- Section 3.1, 3.3, 15.6(a), 15.6(d) and Part 19 of National Instrument 81-102.
Applicable Legislative Provisions
Sections 3.1, 3.3, 15.6(a), 15.6(d) and 19.1 of National Instrument 81-102.
October 2, 2007
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, QUÉBEC, NEW BRUNSWICK,
NOVA SCOTIA, PRINCE EDWARD ISLAND AND
NEWFOUNDLAND AND LABRADOR
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
ROI SCEPTRE RETIREMENT GROWTH FUND
(FORMERLY, SCEPTRE INCOME & HIGH GROWTH TRUST)
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the Decision Makers) in each of the Jurisdictions has received an application from Return on Innovation Management Ltd. (the Manager) for decisions under section 19.1 of National Instrument 81-102 Mutual Funds (the Legislation or NI 81-102) granting exemptions from:
i) section 3.1 of NI 81-102 so that the Fund is not considered to be a newly established mutual fund within the meaning of such term in Section 3.1 of NI 81-102;
ii) the prohibitions contained in Section 3.3 of NI 81-102 to permit the costs of the preparation and filing of a preliminary simplified prospectus and annual information form to be borne by the Fund; and
iii) the prohibitions in Subsections 15.6(a) and (d) to permit the Fund to use its historic performance data in sales communications notwithstanding that it has not distributed its securities under a simplified prospectus for 12 consecutive months and to permit sales communications relating to the Fund to contain performance data for the period prior to the Fund offering its securities under a simplified prospectus ((i), (ii), and (iii) together, the Requested Relief).
Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by the Fund:
(a) The Fund is a closed-end mutual fund trust governed by the laws of the Province of Ontario.
(b) The Fund distributed its units pursuant to a long form prospectus dated December 16, 2004. The units of the Fund were listed and traded on the Toronto Stock Exchange under the symbol "SZH.UN". Units of the Fund were initially listed for trading on December 29, 2004.
(c) The Fund is a reporting issuer under the securities legislation of each of the provinces of Canada. The Fund is not in default of any of the requirements of the securities legislation in any of the provinces of Canada.
(d) As at September 7, 2007 there were 5,848,154.824 units of the Fund outstanding representing aggregate net assets of $58,481,548.24.
(e) The Fund's manager and trustee were changed to the Manager from Sceptre Fund Management Inc.
(f) In connection with the change of manager and trustee, unitholders of the Fund voted on June 8, 2007 to approve a series of changes:
(i) The merger of the Fund with Sceptre Income and Growth Trust (SIGT), a closed-end investment fund, where the Fund was the continuing fund. In reporting its performance information, the Fund will comply with Section 15.9 of NI 81-102 presenting past performance of SIGT when applicable.
(ii) Delisting the Fund from the Toronto Stock Exchange and making the changes necessary for the Fund to qualify its units for continuous distribution pursuant to a simplified prospectus in accordance with NI 81-101 (the Conversion).
(g) On September 17, 2007, the Fund filed a preliminary simplified prospectus dated September 14, 2007, SEDAR Project # 1158893.
(h) Sceptre Investment Counsel Limited is the portfolio manager of the Fund. Following the change of manager and trustee, Sceptre Investment Counsel Limited will remain the portfolio manager of the Fund.
(i) Since its inception in December 2004, the Fund has complied with the investment restrictions contained in NI 81-102 and has not used leverage in the management of its portfolio.
(j) Without the Requested Relief:
(i) The fund could not file a simplified prospectus unless the Manager or other persons specified in Section 3.1 of NI 81-102 invest not less than $150,000 in securities of the Fund; or
(ii) the simplified prospectus of the Fund would be required to state that the Fund will not issue securities other than those referred to in (i) unless subscriptions aggregating not less than $500,000 have been received by the Fund from investors other than the persons referred to in (i) and accepted by the Fund, in which circumstances the Fund would be prohibited from distributing any securities unless such subscriptions together with payment therefor have been received; and
(iii) none of the costs of the preparation and filing of the preliminary simplified prospectus may be borne by the Fund.
(k) Without the Requested Relief sales communications pertaining to the Fund would not be permitted to include performance data until the Fund has distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months and sales communications pertaining to the Fund would only be permitted to include performance information for the period commencing after the date on which the Fund commences distributing securities under a simplified prospectus.
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.