Mineralfield/Energyfields Multi Series Fund Inc. - ss. 2.1(1) and 19.1 of NI-81-102 Mutual Funds

Order

Headnote

Exemptive relief granted to a mutual fund involved in a roll-over transaction with a limited partnership to exceed the concentration restriction for a period of time in order to permit the fund to sell off any holdings exceeding the concentration restriction as soon as commercially reasonable, and in any event no later than 180 days.

Rules Cited

National Instrument 81-102 - Mutual Funds, ss. 2.1(1) and 19.1.

November 30, 2005

IN THE MATTER OF

NATIONAL INSTRUMENT 81-102 MUTUAL FUNDS

(NI 81-102)

AND

IN THE MATTER OF

MINERALFIELD/ ENERGYFIELDS MULTI SERIES FUND INC.

(the Fund)

 

ORDER

BACKGROUND

The Ontario Securities Commission (the Commission) has received an application (the Application) from the Fund pursuant to section 19.1 of NI 81-102 for an exemption from the section 2.1(1) (the Concentration Restriction) of NI 81-102.

REPRESENTATIONS

This decision is based on the following facts represented by the Fund:

1. The Fund is a corporation incorporated pursuant to articles of incorporation dated September 24, 2004 under the laws of the Province of Ontario. The Fund is a member of the MineralFields group of entities.

2. The Fund is not currently a reporting issuer in any jurisdiction of Canada; however, it has filed a preliminary simplified prospectus and annual information form with the OSC, in order to become a reporting issuer.

3. The Fund has not offered its securities to the public, except to limited partnerships with which it has participated in rollover transactions, as described below. Such securities have only been offered pursuant to prospectus and registration exemptions.

4. The Fund's simplified prospectus and annual information form does not constitute an offer for the sale of its securities.

The Current Portfolio

5. The Fund accepts on a rollover basis, from limited partnerships in the MineralFields group, assets of such limited partnerships. The Fund enters into an asset transfer agreement with a limited partnership such that the assets of the partnership are transferred to the Fund in exchange for shares of the Fund. The assets of the limited partnerships that are transferred to the Fund consist of cash and an investment portfolio of securities of primarily resource and energy issuers.

6. On January 15, 2005, the Fund received assets from two non-reporting MineralFields group limited partnerships as part of two rollover transactions.

7. The limited partnerships from which the Fund accepts a rollover of assets, are not mutual funds and accordingly are not subject to NI 81-102. Therefore, the composition of these assets, as transferred to the Fund on a rollover basis, may not be in compliance with the concentration restrictions set out in subsection 2.1(1) of NI 81-102.

8. Currently, the Fund is in violation of the concentration restrictions set out in subsection 2.1(1) of NI 81-102 because more than 10% of the net assets of the Fund are invested in the securities of a single issuer. As at November 25, 2005, more than 10% of the net assets of the Fund is invested in three issuers: Alpha Gold Corp. (23.07%), Globex Mining Enterprises Inc (19.90%) and Chapleau Resources Ltd. (12.01%).

9. The Fund expects the next rollover transaction from a limited partnership to occur at the end of November 2005 (the "Rollover"). It is expected that immediately after the Rollover, more than 10% of the net assets of the Fund will be invested in the following issuers in approximately the following percentages: Band-Ore Resources Ltd. (11.76%) and Trade Winds Ventures Inc. (11.67%).

The Proposal

10. The Fund proposes to sell, as soon as is commercially reasonable, and in any event no later than 180 days after the date of the (final) simplified prospectus of the Fund, holdings of securities of those issuers that constitute more than 10% of the net assets of the Fund, such that none of its holdings will at that time constitute more than 10% of the net assets of the Fund.

11. The simplified prospectus of the Fund discloses the Rollover transaction, the Fund's intention to accept future rollover transactions and the relief provided in this order.

ORDER

The regulator of the Ontario Securities Commission orders that the Fund's application for exemption from the concentration restrictions in subsection 2.1(1) of NI 81-102 is granted, provided that the Fund will, as soon as is commercially reasonable, and, in any event, no later than 180 days after the date of the (final) simplified prospectus of the Fund, reduce its current holdings of securities of those issuers that constitute more than 10% of the net assets of the Fund, such that none of its holdings will at that time constitute more than 10% of the net assets of the Fund.

"Leslie Byberg"
Manager, Investment Funds Branch
Ontario Securities Commission