Excel Funds Management Inc.

Decision

National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions – Variation of prior relief – mutual funds previously granted exemption from National Instrument 81-102 Investment Funds to permit investment in securities of underlying mutual funds which have adopted same investment objectives and investment strategies – mutual funds are clone funds – relief varied to remove restriction on other mutual funds investing in the mutual funds.

Rules Cited

National Instrument 81-102 Mutual Funds, s. 2.5(2)(a).

June 27, 2017

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
EXCEL FUNDS MANAGEMENT INC.
(the Filer)

AND

IN THE MATTER OF
EXCEL INDIA BALANCED FUND AND
EXCEL NEW INDIA LEADERS FUND
(the Funds)

AND

IN THE MATTER OF
NEW LEADERS CLASS AND
GROWTH & INCOME CLASS
(the Underlying Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) varying the decision issued to the Filer on April 21, 2016 (the Prior Decision). The variation requested is to eliminate condition (a) of the Prior Decision (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

i)              the Ontario Securities Commission (OSC) is the principal regulator for this application; and

ii)             the Filer has provided the notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Jurisdic-tions).

Interpretation

Unless expressly defined herein, terms in this decision have the respective meanings given to them in MI 11-102, National Instrument 14-101 Definitions and National Instrument 81-102 Investment Funds (NI 81-102).

Representation

The decision is based on the facts set out under “Representations” in the Prior Decision and the following facts represented by the Filer:

1.             The Prior Decision provides exemptive relief for the Funds from paragraph 2.5(2)(a) of NI 81-102 to permit each of the Funds to invest in securities of the New Leaders Class and the Growth & Income Class of shares of Excel Funds Mauritius Company Ltd. (the Company), a multi-class investment fund corporation.

2.             Excel New India Leaders Fund is a “clone fund” (as defined in NI 81-102) as it has adopted a fundamental investment objective of tracking the performance of the Underlying Fund it invests in, namely, the New Leaders Class of shares of the Company.

3.             Excel India Balanced Fund is a “clone fund” (as defined in NI 81-102) as it has adopted a fundamental objective of tracking the performance of the Underlying Fund it invests in, namely, the Growth & Income Class of shares of the Company.

4.             Condition (a) of the Prior Decision provides that units of the Funds may not be sold to any mutual fund that is subject to NI 81-102. The Filer wishes to eliminate condition (a) of the Prior Decision to permit mutual funds subject to NI 81-102 to invest in the Funds.

5.             All other conditions under the Prior Decision continue to apply to the Exemption Sought.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

“Vera Nunes”
Manager,
Investment Funds and Structured Products Branch
Ontario Securities Commission