Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief -- Portfolio manager granted relief from self-dealingprohibition in securities legislation for the purpose of allowingmutual funds managed by it to purchase or sell debt securitiesof any issuer from or to the account of a related principaldealer -- Related dealer "responsible person" undersecurities legislation.

Applicable Ontario Statute

Securities Act (Ontario), R.S.O. 1990, c. S.5,as am., clause 118(2)(b) and subclause 121(2)(a)(ii).

Instruments Cited

National Instrument 33-105 -- Underwriting Conflicts;National Instrument 44-101 -- Short Form Prospectus Distributions;National Instrument 81-102 -- Mutual Funds.













(the "Applicant")



WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Ontario, Quebec,Nova Scotia, and Newfoundland & Labrador (the "Jurisdictions")has received an application from the Applicant for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that the provision (the "Self-Dealing Prohibition")contained in the Legislation, which prohibits a portfolio managerfrom knowingly causing any investment portfolio managed by itto purchase or sell securities of any issuer from or to theaccount of a responsible person, any associate of a responsibleperson or the portfolio manager, does not apply to the Applicantin connection with the purchase from or sale to (a "Trade")the account of National Bank Financial Inc. ("NB Financial")by the existing or future mutual funds whose investment portfoliosare, or will be, managed by the Applicant (collectively, the"Altamira Funds") of

(i) debt securities issued or fully and unconditionallyguaranteed by the federal or provincial governments ("GovernmentDebt Securities"), or

(ii) debt securities of an issuer other thanthe federal and provincial governments ("Non-GovernmentDebt Securities");

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

AND WHEREAS the Applicant has representedto the Decision Makers that:

1. Altamira Investment Services Inc. currentlyacts, and may in the future act, as manager (the "Manager")of the Altamira Funds. The Manager's head office is in Toronto,Ontario.

2. The Applicant, a wholly owned subsidiaryof the Manager, currently acts, and may in the future act,as portfolio adviser of the Altamira Funds.

3. Natcan Investment Management Inc. is currentlya sub-advisor to each of the following Altamira Funds: AltamiraPrecision Canadian Index Fund, Altamira Precision Dow 30 IndexFund, Altamira Precision European Index Fund, Altamira PrecisionEuropean RSP Index Fund, Altamira Precision InternationalRSP Index Fund, Altamira Precision U.S. RSP Index Fund, AltamiraPrecision U.S. Midcap Index Fund, Altamira High Yield BondFund, Altamira Dividend Fund and Altamira Canadian Value Fund.

4. On August 12, 2002, National Bank of Canadaacquired all of the issued and outstanding shares of the Manager(the "Acquisition"). As a result of the Acquisition,the Applicant is now an affiliate of NB Financial, as NationalBank of Canada now owns all of the issued and outstandingshares of both the Applicant and NB Financial.

5. The securities of each of the AltamiraFunds are qualified for distribution in each of the provincesand territories of Canada pursuant to a simplified prospectusand annual information form that has been prepared and filedin accordance with applicable securities legislation. Accordingly,each of the Altamira Funds is a reporting issuer in each ofthe provinces and territories of Canada, where such conceptexists.

6. Each of the Altamira Fund's investmentobjectives permits investment in debt securities.

7. In recent years, the amount of GovernmentDebt Securities available for investment in Canada has declinedsignificantly due to government deficit reduction programs.As a result, investors in debt securities have had to relyincreasingly on Non-Government Debt Securities. However, becauseof the limited supply of Non-Government Debt Securities inthe primary market, holders of outstanding Non-GovernmentDebt Securities have tended not to sell their holdings priorto the maturity date of their Non-Government Debt holdings.This has, in turn, led to the limited availability of Non-GovernmentDebt Securities in the secondary market. Moreover, becauseof their limited availability, the Non-Government Debt Securitiesthat are available in the secondary market are usually soldat prices that are higher than if they were purchased in theprimary market, assuming no change in the markets and in thestatus of the issuer.

8. The debt securities market is primarilya dealers' market where a dealer provides buy or sell pricequotes (as the case may be) and, if the price quotes are accepted,the resulting Trade is effected with the dealer acting asprincipal.

9. National Bank Financial is a principaldealer in the primary and secondary Canadian debt securitiesmarket.

10. The Self-Dealing Prohibition, combinedwith the circumstances described in paragraphs 7 to 9 above,has made it even more difficult for the Applicant to acquiredebt securities for the Altamira Funds in the secondary market.

11. On July 10, 2002, the Ontario SecuritiesCommission, as principal regulator under the System, issueda decision (the "July 10 Decision") exempting ScotiaCassels Investment Counsel Inc., RBC Global Investment ManagementInc. and certain other portfolio managers affiliated withregistered dealers from the Self-Dealing Prohibition containedin the Legislation, subject to certain terms and conditions.

12. As the Acquisition was completed afterthe July 10 Decision was issued, the Applicant was not a partyto the application in respect thereof. Accordingly, the Applicantand the Altamira Funds cannot rely on the July 10 Decisionfor relief from the Self-Dealing Prohibition.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

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

THE DECISION of the Decision Makers underthe Legislation is that the Self-Dealing Prohibition does notapply so as to enable the Applicant to cause the Altamira Fundsto purchase Government Debt Securities or Non-Government Securitiesfrom, or sell such debt securities to, the account of NB Financialin the secondary market,


A. at the time of causing an Altamira Fundto Trade in Government Debt Securities or Non-Government DebtSecurities pursuant to this Decision, the following conditionsare satisfied:

(1) the Trade

(a) represents the business judgment ofthe Applicant uninfluenced by considerations other thanthe best interests of the Altamira Fund, or

(b) is, in fact, in the best interestsof the Altamira Fund;

(2) the Trade is consistent with, or isnecessary to meet, the investment objective of the AltamiraFund as disclosed in its simplified prospectus;

(3) the terms of the Trade are better thanthe terms quoted by one or more dealers who are neitheraffiliates nor associates of NB Financial (the "IndependentDealers"); and

(4) if the Trade is a purchase of Non-GovernmentDebt Securities,

(a) the purchase is not made from NB Financialduring the 60-day period after the distribution of suchNon-Government Debt Securities, if NB Financial acted

(i) as underwriter in the distributionof the Non-Government Debt Securities, or

(ii) as a selling group member sellingmore than 5% of the underwritten securities;

(b) the issuer of the Non-Government DebtSecurities is not a "related issuer" or "connectedissuer", as defined in National Instrument 33-105Underwriting Conflicts, of NB Financial;

(c) NB Financial is not

(i) the issuer of the Non-GovernmentDebt Securities, or

(ii) a promoter of the issuer of theNon-Government Debt Securities; and

(d) the Non-Government Debt Securitieshave been given, and continue to have, an "approvedrating" by an "approved rating organization"as such terms are defined in section 1.1 of National Instrument44-101 - Short Form Prospectus Distributions;

B. prior to effecting any Trade pursuant tothis Decision,

(1) the simplified prospectus of the AltamiraFund discloses that it may purchase or sell Government DebtSecurities or Non-Government Debt Securities from or tothe account of NB Financial pursuant to this Decision, and

(2) the annual information form of the AltamiraFund describes the policies or procedures referred to inparagraph (C) below;

C. prior to effecting any Trade pursuant tothis Decision, the Altamira Fund has in place written policiesor procedures to ensure that,

(1) there is compliance with the conditionsof this Decision,

(2) in connection with any Trade in GovernmentDebt Securities or Non-Government Debt Securities with NBFinancial,

(a) each Altamira Fund maintains an itemizeddaily record of all such Trades showing, for each Trade,

(i) the name and principal amount ofthe debt securities,

(ii) if the Trade is in Government DebtSecurities, the relevant benchmark Canada bond (the"Benchmark Bond"), the bid-ask price of theBenchmark Bond, and the price that was paid or receivedby the Altamira Fund on the Trade,

(iii) if the Trade is in Non-GovernmentDebt Securities, the relevant Benchmark Bond (or, inthe case of US$-Pay Non-Government Debt Securties, therelevant US Treasury Bond), the bid-ask price of theBenchmark Bond or US Treasury Bond, and the spread overthe Benchmark Bond US Treasury Bond that was paid orreceived by the Managed Fund on the Trade,

(iv) the time and date of the Trade,and

(v) the name of the dealer on the Trade,

(b) the Applicant maintains written recordsof the quotations received from Independent Dealers, andeach Altamira Fund maintains a daily consolidated recordof the quotations (including the price, quantity, timesand date) received from one or more Independent Dealers,in respect of each Trade made with NB Financial, and

(c) the Manager conducts a timely reviewof each Altamira Fund's Trades with NB Financial to confirmthat each Trade

(i) represented the business judgmentof the Applicant uninfluenced by considerations otherthan the best interests of the Altamira Fund, or

(ii) was, in fact, in the best interestsof the Altamira Fund;

D. the following particulars of each Tradepursuant to this Decision are set out in a report certifiedby the Applicant and filed on SEDAR, in respect of each AltamiraFund and no later than 30 days after the end of the monthin which one or more such Trades were made:

(1) the issuer of the debt securities;

(2) the principal amount of debt securitiespurchased or sold by the Altamira Fund;

(3) the price at which the purchase or salewas made;

(4) the fact that the trade was made withNB Financial, and

(a) in the case of a Trade in GovernmentDebt Securities, the price paid or received by the AltamiraFund, or

(b) in the case of a Trade in Non-GovernmentDebt Securities, the spread over the relevant BenchmarkBond or US Treasury Bond that was paid or received bythe Altamira Fund; and

(5) a certification by the Applicant thatthe Trade

(a) represented the business judgmentof the Applicant uninfluenced by considerations otherthan the best interest of the Altamira Fund, or

(b) was, in fact, in the best interestsof the Altamira Fund; and

E. this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate after the coming intoforce of any legislation or rule of that Decision Maker dealingwith the matters regulated by section 4.2 of National Instrument81-102 Mutual Funds.

May 30, 2003.

"H. Lorne Morphy"
"Theresa McLeod"