Trimark Balanced Pool and Trimark Global Equity Pool - ss. 113, 117(2)

Headnote

Exemption granted from mutual fund conflict of interest investment restrictions in paragraphs 111(2)(b), 111(2)(c) and 111(3) and the management company reporting requirements in section 117(1)(a) of the Act to permit a pooled fund to purchase and hold securities of another pooled fund managed by the same manager.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 111(2)(b), 111(2)(c), 111(3), 113, 117(1)(a), 117(2).

November 17, 2006

IN THE MATTER OF

THE SECURITIES ACT, R.S.O. 1990,

CHAPTER S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

THE TRIMARK BALANCED POOL AND

TRIMARK GLOBAL EQUITY POOL

(collectively, the "AIM Funds")

ORDER

(Section 113 and Subsection 117(2) of the Act)

Background

The Ontario Securities Commission (the "Commission") has received an application (the "Application") from AIM Funds Management Inc. (the "Applicant") on behalf of the AIM Funds for an order under section 113 and subsection 117(2) of the Act, exempting the AIM Funds from the following investment prohibitions in paragraph 111(2)(b), paragraph 111(2)(c) and subsection 111(3), and the reporting requirements in paragraph 117(1)(a) of the Act (the "Requested Relief") in respect of investments by the Trimark Balanced Pool (the "Balanced Fund"), a pooled fund managed by the Applicant, in the Trimark Global Equity Pool (the "Global Fund"), a pooled fund managed by the Applicant:

(i) the restriction prohibiting a mutual fund from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder; or

(ii) in an issuer in which

(a) any officer or director of the mutual fund, its management company or distribution company or an associate of any of them, or

(b) any person or company who is a substantial securityholder of the mutual fund, its management company or its distribution company,

has a significant interest; and

(iii) the requirement of a management company to file a report of every transaction of purchase or sale of securities between a mutual fund if that mutual fund is a reporting issuer it manages and any related person or company.

Representations

1. The Applicant is the trustee, manager and portfolio adviser of the AIM Trimark Pooled Funds (the "Funds"), each established by a declaration of trust made by the Applicant on September 7, 2004, as amended. The Funds include the Balanced Fund and the Global Fund (the "AIM Funds").

2. Each of the AIM Funds is a "mutual fund" and a "mutual fund in Ontario" as defined in the Act but is not a reporting issuer in Ontario or any other jurisdiction of Canada.

3. Units of the AIM Funds are offered on a prospectus exempt basis under National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106") primarily to Canadian pension funds pursuant to section 2.3 of NI 45-106.

4. The investment objective of the Balanced Fund is to achieve strong capital growth and interest income over the long term by investing in a diversified portfolio of equity and fixed income securities. The investment objective of the Global Fund is to achieve long-term capital growth by investing primarily in equity securities anywhere in the developed world.

5. In furtherance of its investment objective, the Balanced Fund has invested a portion of its assets in the Global Fund, this being a more cost effective and efficient way for the Balanced Fund to achieve exposure to global securities than a direct investment in such securities. Accordingly, the Balanced Fund's investment in the Global Fund thus represents the business judgement of the Applicant uninfluenced by considerations other than the best interests of the Balanced Fund and its unitholders.

6. As a mutual fund in Ontario, the Balanced Fund is subject to the restriction in the Act that prohibits a mutual fund in Ontario from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related funds, is a substantial security holder, and the Applicant is subject to the requirement in the Act that reports be filed with respect to purchases or sales of units by one mutual fund in a related mutual fund.

7. The Balanced Fund would be a substantial securityholder in the Global Fund pursuant to section 110(2)(b) of the Act if at any time the Balanced Fund, alone or together with one or more related funds including other Funds, held more than 20% of the outstanding units of the Global Fund.

8. The Balanced Fund and the Global Funds are related issuers by virtue of the common management of such Funds by the Applicant.

9. When causing the Balanced Fund to make investments in the Global Fund, the Applicant will ensure that:

(a) the arrangements between or in respect of the Balanced Fund and the Global Fund are such as to avoid the duplication of management fees or incentive fees (if any);

(b) no sales or redemption fees are payable by the Balanced Fund in relation to its purchases or redemptions of units of an Underlying Fund;

(c) the Applicant will not vote the units of the Global Fund held by the Balanced Fund at any meeting of the holders of such units;

(d) investors will receive details of the investment objective and strategies of the Global Fund prior to entering into agreements for the provision of investment management services pursuant to which the investors may invest in units of the Balanced Fund; and

(e) where the Balanced Fund is substantially invested in the Global Fund, the annual and interim financial statements of the Balanced Fund will list the 25 largest holdings of the Global Fund by percentage of assets of that fund.

10. In the absence of the Requested Relief, the Balanced Fund would be precluded from investing in the Global Fund due to the investment prohibitions in paragraph 111(2)(b) and subsection 111(3) of the Act. In the absence of the Requested Relief, the Applicant would also be required to file a report for every transaction between the Balanced Fund and the Global Fund involving units of the Global Fund under section 117(1)(a) of the Act.

11. Industrial Alliance Insurance and Financial Services Inc. ("Industrial Alliance") is an insurance company, unrelated to the Applicant. Industrial Alliance may from time to time be a substantial securityholder of the Balanced Fund as a result of holding more than 20% of the outstanding units of the Balanced Fund. Industrial Alliance may also invest in the Global Fund such that it may from time to time have a significant interest in the Global Fund as a result of holding more than 10% of the outstanding units of the Global Fund. Accordingly, at any given time, Industrial Alliance may be a both a substantial securityholder of the Balanced Fund and have a significant interest in the Global Fund.

12. In the absence of the Requested Relief, the Balanced Fund would be precluded from investing in the Global Fund due to the investment prohibitions in paragraph 111(2)(c) and subsection 111(3) of the Act if Industrial Alliance is a substantial securityholder the Balanced Fund and has a significant interest in the Global Fund at the same time,

Order

The Commission is satisfied that the tests contained in section 113 and 117(2) of the Act have been met.

The Commission orders that the Requested Relief be granted, provided that:

1. units of the Balanced Fund are sold in Canada solely in accordance with NI 45-106;

2. the arrangements between or in respect of the Balanced Fund and the Global Fund are such as to avoid any duplication of management fees or incentive fees (if any);

3. no sales or redemption charges are payable by the Balanced fund in relation to its purchases or redemptions of units of the Global Fund;

4. the Applicant will not vote units of the Global Fund held by the Balanced Fund at any meeting of holders of such units;

5. investors will receive details of the investment objective and strategies of the Global Fund prior to entering into agreements for the provision of investment management services pursuant to which such investors acquire units of the Balanced Fund; and

6. where the Balanced Fund is substantially invested in the Global Fund, the annual and interim financial statements of the Balanced Fund will list the 25 largest holdings of the Global Fund by percentage of the net assets of that fund.