Securities Law & Instruments


Relief granted to applicanthedge fund as follows:

  • relief from registrationand prospectus requirements in connection with thewriting of certain over-the-counter covered call optionsand cash-covered put options by fund to certain permittedpurchasers who are not accredited investors;

  • relief from fee requirementsin connection with the writing of such options inreliance on ruling; and

  • relief from fee andfiling requirements in connection with the writingof such options to accredited investors in relianceon the accredited investor exemption in OSC Rule 45-501Exempt Distributions.

Applicable OntarioStatutes

Securities Act, R.S.O.1990, c. S.5, as am., ss. 74(1) and 147.

Applicable OntarioRegulations

Regulation made underthe Securities Act, R.R.O. 1990, Reg. 1015, as am., s.59(1).

Rules Cited

Ontario Securities CommissionRule 45-501 [Revised] - Exempt Distributions, sections7.1, 7.3 and 7.5.


R.R.O. 1990, REGULATION1015, AS AMENDED (the "Regulation")




(Subsection 74(1)and Section 147 of the Act
and Subsection 59(1)of Schedule 1 of the Regulation)

UPON the applicationof iPerformance Fund Corp., as manager (the "Manager")of iPerform Strategic Partners Hedge Fund (the "Fund"),to the Ontario Securities Commission (the "Commission")for a ruling:

(i) pursuant to subsection74(1) of the Act, that the writing of certain over-the-countercovered call options and cash covered put options(collectively, "OTC Options") by the Fundto certain permitted purchasers ("Permitted Purchasers")as defined in Schedule "A" to this Rulingis not subject to sections 25 and 53 of the Act;

(ii) pursuant to subsection59(1) of Schedule 1 to the Regulation, that the Fundis exempt from the fees which would otherwise be payablepursuant to section 28 of Schedule 1 of the Regulationin connection with the writing of OTC Options to PermittedPurchasers; and

(iii) pursuant tosection 147 of the Act, the Fund, when relying onsection 2.3 (the "Accredited Investors Exemption")in Commission Rule 45-501 Exempt Distributions ("Rule45-501") in writing OTC Options, is exempt fromthe requirements in

(A) sections 7.1and 7.5 of Rule 45-501 to file a Form 45-501F1;and

(B) section 7.3of Rule 45-501 to pay the prescribed fee in connectionwith the filing of Form 45-501F1;

AND UPON consideringthe application and recommendation of the staff of theCommission;

AND UPON the Managerhaving represented to the Commission as follows:

1. The Fund is an investmenttrust established under the laws of the Province ofOntario pursuant to a declaration of trust dated April29, 2002.

2. The Fund is authorizedto issue an unlimited number of transferable trust units(the "Units") of one class, each of whichrepresents an equal, undivided interest in the net assetsof the Fund.

3. The Fund is a reportingissuer in every province of Canada and has filed a prospectusdated May 3, 2002 with the Commission and with the securitiesregulatory authority in each of the other provincesof Canada with respect to the initial public offeringof Units.

4. The Fund is not a"mutual fund" as defined in the Act and otherapplicable securities legislation and will thereforenot operate in accordance with the requirements of securitieslegislation in Canada applicable to mutual funds.

5. The Manager is registeredunder the Act as an adviser in the categories of investmentcounsel and portfolio manager, and as a mutual funddealer.

6. The Manager actsas manager of the Fund pursuant to a management agreementdated April 29, 2002 between the Manager and the Fund.The Manager is specifically responsible for the day-to-daybusiness of the Fund including management of the Fund'sinvestment portfolios on the advice of certain investmentadvisers (the "Investment Advisers") selectedby the Manager from time to time.

7. The Fund's primaryinvestment objective is to seek capital appreciationwhile managing risk through the use of a diversifiedhedged equity investment program. This hedged equityprogram involves the investment and holding of longpositions in securities, supplemented by short sellingof securities in an effort to enhance the potentialfor capital appreciation while attempting to preservecapital in, and profit from, adverse or volatile marketconditions. The Fund seeks to maximize the net assetsof the Fund available for distribution to holders ofUnits on the termination of the Fund. A secondary objectiveis to achieve returns with less volatility than returnsof the major market indexes.

8. The Fund's investmentstrategy is to allocate its assets across a diversifiedportfolio using, initially, four distinctive long/shortequity hedge styles. The Manager will initially allocatethe Fund's assets among four separate investment accountsof the Fund, with each account being managed by a differentInvestment Adviser. Each Investment Adviser will eitherbe registered under the Act as an adviser or be exemptfrom the registration requirement under the Act. EachInvestment Adviser will manage its account in the Fund,under the supervision of the Manager, using differentinvestment styles and techniques.

9. The Fund is authorizedto use derivative instruments to seek to hedge portfoliorisk, for cash management purposes and for non-hedgingpurposes in pursuit of its investment objectives. TheFund will, from time to time, write covered call optionsin respect of all or part of the securities held bythe Fund. In addition, the Fund may write cash coveredput options on securities in which the Fund is permittedto invest.

10. The Fund may, fromtime to time, hold a portion of its assets in cash andcash equivalents. The Fund may, from time to time, utilizesuch cash and cash equivalents to provide cover in respectof the writing of cash covered put options, which isintended to generate additional returns and to reducethe net cost of acquiring the securities subject tothe put options.

11. The writing of OTCOptions by the Fund will not be used as a means forthe Fund to raise new capital.

12. The purchasers ofOTC Options written by the Fund will generally be majorCanadian financial institutions and the purchasers ofOTC Options will either be Permitted Purchasers or bepurchasing in reliance of the Accredited Investor Exemption.

AND UPON the Commissionbeing satisfied that to do so would not be prejudicialto the public interest;


(i) pursuant to subsection74(1) of the Act that the writing of OTC Options bythe Fund to Permitted Purchasers as defined in Schedule"A" to this Ruling is not subject to sections25 and 53 of the Act, provided that the portfolioadvisers advising the Fund with respect to such activitiesare registered with the Commission as advisers underthe Act and have either satisfied, or have been exemptedfrom satisfying, any applicable proficiency requirementsin Ontario for advising with respect to options;

(ii) pursuant to subsection59(1) of Schedule 1 to the Regulation, the Fund isexempt from the fees which would otherwise be payablepursuant to section 28 of Schedule 1 of the Regulationin connection with the writing of OTC Options to PermittedPurchasers; and

(iii) pursuant tosection 147 of the Act, the Fund, when relying onthe Accredited Investors Exemption in Rule 45-501in writing OTC Options, is exempt from the requirementsin sections 7.1, 7.3 and 7.5 of Rule 45-501.

June 10, 2002.

"Paul M. Moore"                    "H.Lorne Morphy"





1. The terms "subsidiary"and "holding body corporate" used in paragraphs(d), (e) and (f) of section 3 of this Appendix havethe same meaning as they have in the Business CorporationsAct (Ontario).

2. All requirementscontained in this Appendix that are based on the amountsshown on the balance sheet of an entity apply to theconsolidated balance sheet of the entity.

Permitted PurchaserActing As Principal

3. The following arepermitted purchasers for all OTC derivative transactions,if acting as principal:

(a) A person or companythat a person or company that, together with its affiliates,

(i) has enteredinto one or more transactions involving OTC derivativeswith counterparties that are not its affiliates,if

(A) the transactionshad a total gross dollar value of or equivalentto at least $1 billion in notional principal amount;and

(B) any of thecontracts relating to one of these transactionswas outstanding on any day during the previous15-month period, or

(ii) had total grossmarked-to-market positions of or equivalent to atleast $100 million aggregated across counterparties,with counterparties that are not its affiliatesin one or more transactions involving OTC derivativeson any day during the previous 15-month period.

(b) A person or companyregistered under the Securities Act (Ontario)as an international dealer if the person or companyhas total assets, as shown on its last audited balancesheet, in excess of $25 million or its equivalentin another currency.

(c) A person or companyregistered under the Commodity Futures Act(Ontario) as a dealer in the category of futures commissionmerchant, or in an equivalent capacity elsewhere inCanada.

(d) A wholly-ownedsubsidiary of any of the organizations described inparagraph (g), (k), (m) or (t) of the definition of"accredited investor" in Rule 45-501 ordescribed in paragraph (b) or (c) above.

(e) A holding bodycorporate of which any of the organizations describedin paragraph (d) is a wholly-owned subsidiary.

(f) A wholly-ownedsubsidiary of a holding body corporate described inparagraph (e).

(g) A firm, partnership,joint venture or other form of unincorporated associationin which one or more of the organizations describedin paragraph (d), (e) or (f) have a direct or indirectcontrolling interest.

(h) A party whoseobligations in respect of the OTC derivatives transactionfor which the determination is made is fully guaranteedby another permitted purchaser.

Permitted PurchaserNot Acting as Principal

4. The following arepermitted purchasers, in respect of all OTC derivativetransactions:

(a) Accounts of aperson, company, pension fund or pooled fund trustthat are fully managed by a portfolio manager or financialintermediary referred to in paragraph (a), (c), (d),(e) or (g) of the definition of accredited investorin Rule 45-501 or in paragraph (b), (c) or (d) aboveor a broker or investment dealer acting as a trusteeor agent for the person, company, pension fund orpooled fund trust under section 148 of the Regulationmade under the Securities Act (Ontario).

Subsequent Failureto Qualify

5. A party is a permittedpurchaser for the purpose of any OTC derivatives transactionif it, he or she is a qualified party at the time it,he or she enters into the transaction.