Securities Law & Instruments


Investment by the RSP Funds in deposits (a specifiedderivative) issued by related counterparties exempted from therequirements of s.113, s. 117 and ss. 121(2)(a)(ii).

Statutes Cited

Securities Act (Ontario), R.S.O. c. S.5., asam., 111(2)(a), 112(c), 117(1)(a), 117(1)(d) and 118(2)(a).


























WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker")in each of British Columbia, Alberta, Saskatchewan, Ontario,Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from CIBC Asset Management Inc.(formerly Talvest Fund Management Inc.) ("Talvest"),as manager of the Talvest Asian RSP Fund, Talvest China PlusRSP Fund, Talvest European RSP Fund, Talvest Global Equity RSPFund, Talvest Global Health Care RSP Fund, Talvest Global Science& Technology RSP Fund, Talvest Global Small Cap RSP Fund,Talvest Global Multi Management RSP Fund, Talvest Global ResourceRSP Fund, Talvest International Equity RSP Fund and TalvestValue Line U.S. Equity RSP Fund and other mutual funds managedby Talvest having an investment objective or strategy that islinked to the returns or portfolio of another specified Talvestmutual fund while remaining 100% eligible for registered plans(collectively, the "RSP Funds"), for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that the following prohibitions or requirements in the Legislation(the "Applicable Requirements") shall not applyto Talvest or the RSP Funds, as the case may be, in respectof certain investments to be made by the RSP Funds in forwardcontracts, Deposits (as hereinafter defined) and other derivativeinstruments (collectively, "Derivatives") ofCanadian Imperial Bank of Commerce ("CIBC")and its affiliates (each, a "Related Counterparty"and collectively, the "Related Counterparties"):

1. the provision requiring the managementcompany of a mutual fund or, in British Columbia, a mutualfund manager, to file a report relating to the purchase orsale of securities between the mutual fund and any relatedperson or company, or any transaction in which, by arrangementother than an arrangement relating to insider trading in portfoliosecurities, the mutual fund is a joint participant with oneor more of its related persons or companies;

2. the provision prohibiting a mutual fundfrom knowingly making and holding an investment in a personor company who is a substantial securityholder of the mutualfund, its management company or distribution company;

3. the provision prohibiting a mutual fundfrom knowingly making and holding an investment in an issuerin which any person or company who is a substantial securityholderof the mutual fund, its management company or distributioncompany has a significant interest; and

4. the provision prohibiting a portfolio manageror, in British Columbia, the mutual fund, from knowingly causingan investment portfolio managed by it to invest in any issuerin which a "responsible person" (as that term isdefined in the Legislation) or an associate of a responsibleperson is an officer or director, unless the specific factis disclosed to the client and, if applicable, the writtenconsent of the client to the investment is obtained beforethe purchase.

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;

AND WHEREAS unless otherwise definedthe terms herein have the meaning set out in National Instrument14-101 Definitions;

AND WHEREAS Talvest has represented tothe Decision Makers that:

1. The RSP Funds and their corresponding underlyingfunds (the "Underlying Funds") (collectively,the "Funds") are or will be open-ended mutualfund trusts established under the laws of the Province ofOntario. Talvest is a corporation established under the lawsof Canada, and is a wholly owned subsidiary of CIBC. Talvestis or will be the manager of each of the Funds. The head officeof Talvest is currently located in the Province of Quebec.

2. The Funds are or will be reporting issuersand the existing Funds are not in default of any requirementsof the Legislation.

3. The units of the Funds are or will be qualifiedfor distribution under a simplified prospectus and annualinformation form in all provinces and territories of Canada(such documents when filed in final form hereinafter referredto together as "Prospectus"), which Prospectuswill contain disclosure with respect to the investment objectives,investment strategies and restrictions of the Funds.

4. Each of the RSP Funds is or will be a registeredinvestment such that its units are "qualified investments"for tax-deferred retirement savings plans ("RegisteredPlans") and do not constitute foreign property fora Registered Plan. The primary investment strategy of eachof the RSP Funds is or will be to obtain exposure to an UnderlyingFund by entering into one or more forward contracts or otherderivative instruments with one or more financial institutions(the "Counterparty" or "Counterparties").

5. In addition to the derivative instruments,each of the RSP Funds invests or may invest a portion of itsassets directly in units of the applicable Underlying Fund,which constitute foreign property under the Income TaxAct (Canada) (the "Tax Act"). In orderto ensure that an RSP Fund does not become subject to taxunder Part XI of the Tax Act, the portion invested in unitsof an Underlying Fund does not or will not exceed the maximumamount of foreign property permitted for Registered Plans.

6. The RSP Funds have applied for and obtainedexemptive relief under National Instrument 81-102 ("NI81-102") and under applicable securities legislationwith respect to their investments in units of Underlying Fundsand in forward contracts. Talvest, in its own capacity andon behalf of the RSP Funds, applied for and obtained reliefunder NI 81-102 and under applicable securities legislationto permit the RSP Funds to enter into forward contracts (and,in the case of Talvest Global Resource RSP Fund, other specifiedderivatives) with Related Counterparties.

7. Some or all of the RSP Funds may adoptan alternative method of implementing their investment strategyby entering into derivatives transactions whereby an RSP Fundenters into a deposit (the "Deposit") withone or more Counterparties and receives a return on the Depositwhich is linked to the performance of the applicable UnderlyingFund.

8. The structure of the Deposit transactionsis as follows:

(a) The Deposit will mature monthly (subjectto the RSP Fund's ability to elect early maturity) for amaturity amount equal to the principal amount of the Depositplus or minus the investment return on an equivalent dollaramount of Class O units of the corresponding UnderlyingFund

(b) Simultaneously with the Counterpartyissuing the Deposit, the Counterparty will enter into anote (the "Note") and a total return swap (the"Swap") transaction with a special purpose trust(the "SPT"). The activities of the SPT will belimited solely to those necessary under the Note, the Swapand related transactions and the SPT will not be permittedto incur any other liabilities. The combination of the Noteand the Swap will provide the Counterparty with a returnbased on the net asset value of Class O units of the correspondingUnderlying Fund. The Note and the Swap will mature on thematurity of the corresponding Deposit.

(c) In order to hedge its obligations underthe Swap, the SPT may, but is not obligated to, purchaseClass O units of the corresponding Underlying Fund in anamount equal to the Deposit under a standing purchase order.

(d) The Counterparty will have the rightto put the corresponding Note and Swap to the RSP Fund ifunits of the Underlying Fund cannot be redeemed for nextday settlement for a continuing period of ten business daysor under certain other limited circumstances.

(e) The SPT will unconditionally guaranteethe payment by the Counterparty under the Deposit.

(f) No duplicate fees or expenses will bepaid with respect to the Class O units bought by the RSPFunds, the Counterparties and the SPT.

9. Talvest and the RSP Funds have appliedfor exemptive relief under NI 81-102 to enter into Deposits.As the return under the Deposit is linked to the appreciationor depreciation in the net asset value of the units of thecorresponding Underlying Fund, the Deposit is a "specifiedderivative", as such term is defined under NI 81-102.Alternatively, the RSP Funds may obtain exposure to UnderlyingFunds through other Derivatives.

10. There may be directors or officers ofCIBC and its affiliates that are also directors or officersof Talvest.

11. An independent governance committee (the"Independent Committee") for Talvest funds,comprised of individuals who are not directors, officers oremployees of Talvest or any of its affiliates may be constitutedin the future.

12. The RSP Funds intend to enter into Derivativeswith Related Counterparties so long as the pricing terms ofthe Derivatives are at least as favourable as those offeredby the Related Counterparty to other third parties of similarsize to the RSP Fund.

13. The Prospectus, and any renewal thereof,will disclose the involvement of the Related Counterpartyin the Derivatives, the review of the contracts by the independentauditors of the RSP Funds or the Independent Committee aswell as all applicable charges in connection therewith.

14. Except to the extent evidenced by thisDecision and specific approvals granted or to be granted bythe Canadian Securities Administrators under NI 81-102 orthe Legislation, the investments by the RSP Funds in the Derivativeswill be structured to comply with the investment restrictionsof the Legislation and NI 81-102.

15. The investments by the RSP Funds in Derivativeswith a Related Counterparty represents the business judgmentof "responsible persons" (as defined in the Legislation),uninfluenced by considerations other than the best interestsof the RSP Funds.

16. In the absence of this Decision, eachRSP Fund is prohibited from knowingly making or holding aninvestment in securities of the Related Counterparties.

17. In the absence of this Decision, Talvestis required to file a report on every purchase or sale ofsecurities of the Related Counterparties.

18. In the absence of this Decision, the portfoliomanager, or mutual fund, is prohibited from causing each RSPFund to invest its assets in securities of the Related Counterpartiesunless the specific fact is disclosed to investors and, ifapplicable, the written consent of investors is obtained beforethe purchase

AND WHEREAS under the System this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the Applicable Requirements shall notapply to the RSP Funds or Talvest, as the case may be, in respectof investments by the RSP Funds in Derivatives with a RelatedCounterparty, PROVIDED that at the time a RSP Fund makes aninvestment in Derivatives of the Related Counterparty, the followingconditions are satisfied:

(a) the pricing terms and conditions offeredby the Related Counterparty to the RSP Fund for a Derivativeare at least as favourable as the pricing terms and conditionscommitted by the Related Counterparty for the Derivativeto one or more non-affiliated third party fund groups ofsimilar size;

(b) prior to the RSP Fund entering intoa Derivative with a Related Counterparty, the independentauditors of the RSP Fund or the Independent Committee willreview the pricing terms and conditions offered by the RelatedCounterparty to the RSP Fund against the pricing terms andconditions offered by the Related Counterparty to othernon-affiliated third party fund groups of similar size,to ensure that the pricing is at least as favourable;

(c) the review by the independent auditorsor the Independent Committee will be undertaken not lessfrequently than on an annual basis and, in addition, onevery pricing amendment to the Derivative during the termof the Derivative;

(d) the RSP Fund's prospectus (and eachrenewal thereof) discloses the role of the independent auditorsor the Independent Committee and their review of the Derivative,as well as the involvement of the Related Counterparty;and

(e) the RSP Fund will enter into a Derivativewith a Related Counterparty only once the independent auditorsof the RSP Fund or the Independent Committee have confirmedto the RSP Fund that the pricing terms and conditions offeredby the Related Counterparty to the RSP Fund for the Derivativesare at least as favourable as those committed by the RelatedCounterparty for the Derivative to one or more non-affiliatedthird party fund groups of similar size.

February 5, 2003.

"Robert W. Korthals"                    "KerryD. Adams"