Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – relief from the conflict of interest restrictions in the Securities Act (Ontario) and the self-dealing prohibitions in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations to permit fund-on-fund structures and in-specie transactions between pooled funds under common management subject to conditions.

Applicable Legislative Provisions

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 111(2)(b), 111(2)(c), 111(4), 113.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.5(2)(a) and (b), 15.1.

December 19, 2014

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
ALIGNVEST CAPITAL MANAGEMENT INC. (the Filer) and
THE INITIAL TOP FUNDS (as defined below)
and THE INITIAL UNDERLYING FUNDS (as defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of each of the Filer, its affiliates, Alignvest Opportunities Fund Trust and Alignvest Income Fund Trust (together, the Initial Top Trusts), Alignvest Opportunities Fund LP and Alignvest Income Fund LP (together, the Initial Top LPs and, together with the Initial Top Trusts, the Initial Top Funds) and any other investment fund that is not a reporting issuer in any jurisdiction of Canada that may be established, advised or managed by the Filer, or its affiliates, in the future (the Future Top Funds and, together with the Initial Top Funds, the Top Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) as of the date of the Reorganization (described below) revoking and replacing the Previous Decision (defined below) with this Decision granting the following exemptions:

1.             an exemption in respect of the Top Funds’ investment in Alignvest Opportunities Master Fund LP and Alignvest Income Master Fund LP (together, the Initial Underlying Funds) or any other investment fund that is not a reporting issuer in any jurisdiction of Canada that may be established, advised or managed by the Filer, or its affiliates, in the future (the Future Underlying Funds and, together with the Initial Underlying Funds, the Underlying Funds; the Underlying Funds together with the Top Funds, collectively the Funds) from:

(a)           the restriction in securities legislation that prohibits an investment fund from knowingly making an investment in any person or company in which the investment fund, alone or together with one or more related investment funds, is a substantial security holder;

(b)           the restriction in securities legislation that prohibits an investment fund from knowingly making an investment in any issuer in which any of the following has a significant interest:

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

(ii)           any person or company who is a substantial security holder of the investment fund, its management company or its distribution company;

(c)           the restriction in securities legislation that prohibits an investment fund, its management company or its distribution company, from knowingly holding an investment described in paragraph (a) or (b) above (the Related Issuer Relief);

(d)           the restriction in section 13.5(2)(a) of National Instrument 31-103 Registration Requirements (NI 31-103) that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to invest in the securities of any issuer in which a responsible person or an associate of a responsible person is a partner, officer or director, unless the fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase, to permit a Top Fund to invest in an Underlying Fund (the Consent Relief); and

2.             an exemption from the restrictions in section 13.5(2)(b)(ii) and (iii) of NI 31-103 that prohibit a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase or sell a security from or to the investment portfolio of:

(a)           an investment fund for which a responsible person acts as an adviser, to permit (i) the purchase and sale of portfolio securities between an Initial Top LP and its corresponding Initial Underlying Fund and between an Initial Top Trust and its corresponding Initial Top LP in connection with effecting the Reorganization as further described below; and (ii) subsequent redemptions by a Top Fund of securities of an Underlying Fund to be paid with portfolio securities of the Underlying Fund; and

(b)           an associate of a responsible person (as defined in NI 31-103) (Associate), to permit redemptions by such Associates of securities of a Top Fund to be paid with portfolio securities of the Top Fund as further described below (each an In specie Transaction, and the requested exemption, the In specie Relief; the In specie Relief, together with the Related Issuer Relief and the Consent Relief, the Requested Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a)           the Ontario Securities Commission is the principal regulator for this application; and

(b)           the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and Nova Scotia.

Interpretation

Terms defined National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

The Previous Decision and the Reorganization

1.             The Filer obtained a previous decision dated May 9, 2014 granting the Filer, the Initial Top Trusts and similar future top investment funds relief similar to the Related Issuer Relief and the Consent Relief in respect of their investments in the Initial Top LPs (which under that decision are the initial underlying LPs) and similar future underlying investment funds (the Previous Decision).

2.             The Filer is seeking the Requested Relief in connection with the reorganization of the fund-on-fund structure contemplated by the Previous Decision (the Reorganization). That fund-on-fund structure involved top funds organized under the laws of a Canadian jurisdiction investing in underlying funds organized under the laws of a Canadian jurisdiction. Pursuant to the proposed Reorganization, subject to obtaining any necessary investor approvals and the Requested Relief, the portfolio assets of each Initial Top LP will be transferred to its corresponding Initial Underlying Fund organized as a Cayman exempted limited partnership in exchange for units of the Initial Underlying Fund and the Initial Top Trusts will redeem their holdings of the Initial Top LPs in exchange for units of the Initial Underlying Funds. After the Reorganization, the two Initial Top Trusts and their corresponding two Initial Top LPs will each be invested in the corresponding Initial Underlying Fund. Although the Related Issuer Relief will apply only to Future Top Funds that are organized as investment funds in Ontario, it contemplates that certain Future Underlying Funds may also be organized outside of Canada. The Consent Relief contemplates that certain Future Top Funds and Future Underlying Funds may also be organized outside of Canada. In this way, the fund-on-fund structures contemplated by the Requested Relief include foreign as well as domestic structures. In each case, the Future Top Funds and Future Underlying Funds will be organized substantially similarly to, and have management fees, performance fees and/or profit allocations which are substantially similar to, the Initial Top Funds and the Initial Underlying Funds.

3.             The primary reason for the proposed Reorganization is to facilitate investments in the Underlying Funds by non-residents of Canada thereby increasing the size of the pool of assets under management, enabling the Filer to realize greater economies of scale in carrying out the investment strategies of the Underlying Fund and enhancing the ability of the Top Funds and the Underlying Funds to realize their investment objectives.

4.             It is anticipated that the proposed Reorganization will be completed as soon as possible following receipt of all necessary investor approvals and granting of the Requested Relief.

The Filer

5.             The Filer is a corporation existing under the laws of the Province of Ontario with its head office in Toronto, Ontario. The Related Issuer Relief is required in Ontario and Alberta. The Consent Relief and the In specie Relief are required in Ontario and Nova Scotia.

6.             The Filer is registered as an investment fund manager in Ontario. The Filer is also registered as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer in the Provinces of Ontario and Nova Scotia.

7.             The Filer is not a reporting issuer in any jurisdiction in Canada and is not in default of securities legislation of any jurisdiction in Canada. The Filer is the investment fund manager of the Initial Top Funds and will be the investment fund manager of the Initial Underlying Funds. The investment fund manager of the Future Top Funds and Future Underlying Funds will be the Filer, an affiliate of the Filer, or in the case of a Future Top Fund or Future Underlying Fund structured as a corporation, the corporation (as directed by the board of directors of the corporation).

8.             The Filer is, or will be, the portfolio adviser of the Funds and is, or will be, responsible for managing the assets of the Funds, has, or will have, complete discretion to invest and reinvest the Funds’ assets, and is, or will be, responsible for executing all portfolio transactions. Furthermore, the Filer may assist in the marketing of the Funds and, subject to compliance with applicable securities laws, may act as a distributor of securities of the Funds not otherwise sold through another registered dealer.

The Top Funds

9.             Each of the Top Funds is, or will be, an investment fund for the purposes of the Legislation.

10.          The Initial Top Trusts are trusts established under the laws of the Province of Ontario. The Initial Top LPs are limited partnerships established under the laws of the Province of Ontario. The Future Top Funds will be structured as trusts, partnerships (such as limited partnerships) or corporations under the laws of Ontario, another jurisdiction of Canada or a foreign jurisdiction.

11.          To the extent sold in Canada, securities of each of the Top Funds are, or will be, offered and issued pursuant to available prospectus exemptions in accordance with National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

12.          The investment objective of each of the Initial Underlying Funds will be the same as the current investment objective of its corresponding Initial Top LP. Concurrent with the Reorganization, the investment objective of each of the Initial Top Trusts will be changed to be the same as that of its corresponding Initial Underlying Fund and the investment strategies of the Initial Top Funds will be changed to reflect that each Initial Top Fund will pursue its investment objective by gaining exposure to the returns of its corresponding Initial Underlying Fund. For example, the investment objective of Alignvest Opportunities Fund Master Limited Partnership will be the same as the current investment objective of Alignvest Opportunities Fund Limited Partnership and, concurrent with the Reorganization, the investment objective of Alignvest Opportunities Fund Trust will be changed to be the same as that of Alignvest Opportunities Fund Master Limited Partnership and the investment strategies of each of Alignvest Opportunities Fund Trust and Alignvest Opportunities Fund Limited Partnership will be changed to reflect that the Fund will pursue its investment objective by gaining exposure to the returns of Alignvest Opportunities Fund Master Limited Partnership.

13.          The investment objectives of a Future Top Fund will be the same as the investment objectives of its corresponding Future Underlying Fund and each Future Top Fund will invest substantially all of its assets in its corresponding Future Underlying Fund.

14.          The Initial Top Funds are not reporting issuers under the Legislation nor are they in default of securities legislation of any jurisdiction of Canada. No Future Top Fund will be a reporting issuer under the Legislation.

The Underlying Funds

15.          Each of the Underlying Funds is, or will be, an investment fund for the purposes of the Legislation.

16.          Each of the Initial Underlying Funds will be exempted limited partnerships formed and organized under the laws of the Cayman Islands. The Future Underlying Funds will be structured as trusts, partnerships (such as limited partnerships) or corporations under the laws of Ontario, another jurisdiction of Canada or a foreign jurisdiction.

17.          To the extent sold in Canada, securities of the Underlying Funds are, or will be, offered and issued pursuant to available prospectus exemptions in accordance with NI 45-106.

18.          Each of the Underlying Funds will have separate investment objectives, strategies and/or restrictions.

19.          An investment in an Underlying Fund by a Top Fund will be effected at an objective price. The portfolio of each Underlying Fund will consist primarily of publicly traded securities. Each Underlying Fund will not hold more than 10% of its net asset value (NAV) in illiquid assets (as defined in National Instrument 81-102 Investment Funds (NI 81-102)).

20.          The Initial Underlying Funds will not be reporting issuers under the Legislation nor are they in default of securities legislation of any jurisdiction of Canada. No Future Underlying Fund will be a reporting issuer under the Legislation.

Fund-on-Fund Structure

21.          A Top Fund allows investors to obtain exposure to the investment portfolio of the Underlying Fund and its strategies through direct investment by the Top Fund in securities of the Underlying Fund (the fund-on-fund structure). The primary purpose of the fund-on-fund structure is to permit the Filer to manage a portfolio of assets in a single investment vehicle (commonly referred to as a master fund) on a more efficient basis while accepting investments from both Canadian investors and investors from several foreign jurisdictions, through one or more investment vehicles (commonly referred to as feeder funds) that are designed to address the specific tax, securities and other laws of each separate jurisdiction or type of investor.

22.          Investing in the Underlying Funds will allow the Top Funds to achieve their investment objectives in a cost efficient manner and will not be detrimental to the interests of other security holders of the Underlying Funds.

23.          Non-Canadian investors may invest directly or indirectly in an Initial Underlying Fund and Canadian investors may invest indirectly in the Initial Underlying Fund through the applicable Initial Top Fund.

24.          Top Funds and their corresponding Underlying Funds have, or will have, matching valuation dates.

25.          Securities of the Top Funds and their corresponding Underlying Funds have, or will have, co-ordinated redemption dates.

26.          Each of the Top Funds and the Underlying Funds that is subject to National Instrument 81-106 Investment Funds Continuous Disclosure (NI 81-106), prepares, or will prepare, annual audited financial statements and interim unaudited financial statements in accordance with NI 81-106 and will otherwise comply with the requirements of NI 81-106, as applicable. The holdings of securities of an Underlying Fund are, or will be, disclosed in the financial statements of the Top Fund.

27.          No Underlying Fund will be a Top Fund.

28.          The assets of the Initial Top Trusts and the Initial Top LPs are currently held by TD Securities Inc. and Scotia Capital Inc.

29.          The Filer is entitled to receive management fees with respect to certain classes of securities of the Initial Underlying Funds. Affiliates of the Filer (for example, the general partners of the Initial Top LPs) may also be entitled to receive profit allocations (that will be calculated based on increases in the NAV of the Initial Underlying Funds or of certain classes of securities of the Initial Underlying Funds) with respect to a class of securities of the Initial Underlying Fund held by such affiliates of the Filer. The general partner of each Initial Top LP is entitled to receive a nominal allocation in respect of the respective Initial Top LP and the general partner of each Initial Underlying Fund is entitled to receive a nominal allocation in respect of the respective Initial Underlying Fund.

30.          Persons or companies who are officers or directors of the Filer or substantial security holders of the Filer or the Top Funds may acquire and hold a significant interest in one or more Underlying Funds from time to time. The significant interest in the Underlying Funds may arise as a result of the direct or indirect investment in securities of the Underlying Fund by such persons or companies.

31.          There will be no increase in the fees to which the Initial Top Funds are directly or indirectly subject as a result of the Reorganization.

32.          The amounts invested from time to time in an Underlying Fund by a Top Fund may exceed 20% of the outstanding voting securities of the Underlying Fund. As a result, each Top Fund could, either alone or together with other Top Funds, become a substantial security holder of an Underlying Fund. The Top Funds are, or will be, related investment funds by virtue of the common management by the Filer or its affiliates.

33.          In the absence of the Requested Relief, the Top Funds may be precluded from investing in their corresponding Underlying Funds since an officer and/or director of the Filer, who may be considered a “responsible person” (as defined by section 13.5 of NI 31-103) may also be an officer and/or director of the applicable Underlying Fund, including an officer and/or director of the general partner of an Underlying Fund where the Underlying Fund is a limited partnership.

34.          Since the Top Funds and the Underlying Funds are not subject to NI 81-102, the Top Funds and the Underlying Funds are unable to rely upon the exception in subsection 2.5(7) of NI 81-102.

35.          In the absence of the Related Issuer Relief and Consent Relief, a Top Fund would be precluded from purchasing and holding securities of an Underlying Fund due to the investment restrictions contained in securities legislation.

36.          Each investment by a Top Fund in an Underlying Fund represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Top Fund.

In specie Transactions

37.          To effect the Reorganization, the Filer wishes to engage in in specie transactions pursuant to which: (i) the securities comprising the investment portfolio of each Initial Top LP will be exchanged for limited partnership units of its corresponding Initial Underlying Fund, and (ii) immediately following completion of the exchange described in (i), each Initial Top Trust will redeem the limited partnership units it holds in its corresponding Initial Top LP and receive limited partnership units of its corresponding Initial Underlying Fund as the redemption proceeds. Following completion of these steps, each of the Initial Top Funds will be a direct investor in its corresponding Initial Underlying Fund.

38.          In such circumstances, instead of the Initial Top LP disposing of the portfolio securities and the Initial Underlying Fund purchasing the same portfolio securities and incurring unnecessary brokerage costs, the portfolio securities would, pursuant to each In specie Transaction, be acquired by the applicable Initial Underlying Fund.

39.          As the Filer is a registered adviser which is, or will be, the portfolio manager of each Top Fund and Underlying Fund, absent the grant of the In specie Relief, the Filer would be precluded by the provisions of section 13.5(2)(b)(ii) and (iii) of NI 31-103 from effecting certain In specie transactions.

40.          The Filer considers an investment by an Initial Top LP in securities of an Initial Underlying Fund by way of an In specie Transaction to be a more cost effective and efficient way for the Initial Underlying Funds to acquire the portfolio securities and for the Initial Top LPs to dispose of such portfolio securities. The Filer also considers the acquisition of limited partnership units of the Initial Underlying Fund by the applicable Initial Top Trust through an In specie Transaction to be the most efficient and cost effective way for the Initial Top Trusts to acquire their investment in the Initial Underlying Funds.

41.          Similarly, following a redemption of securities of an Underlying Fund by a Top Fund, the Filer may wish to engage in In specie Transactions pursuant to which payment, in whole or in part, of the redemption proceeds will be satisfied by the Underlying Fund making good delivery of portfolio securities held in its investment portfolio to the Top Fund provided that those portfolio securities meet the investment criteria of the Top Fund. In addition, following a redemption of securities of a Top Fund, the Top Fund may wish to effect payment, in whole or in part, of the redemption proceeds to its security holders (who may include associates of responsible persons of the Filer) through the delivery of portfolio securities, including portfolio securities that were portfolio securities of the corresponding Underlying Fund received by the Top Fund as redemption proceeds, when those portfolio securities meet the investment criteria of the security holders.

42.          Effecting In specie Transactions of securities as described above will allow the Filer to manage each of the Funds more effectively and reduce transaction costs for the Funds. For example, In specie Transactions reduce market impact costs, which can be detrimental to the Funds. In addition, In specie Transactions allow the Filer to maintain within its control larger blocks of securities that would otherwise have to be broken up and then re-assembled. Finally, In specie Transactions are an effective way to deliver portfolio securities to security holders in circumstances where, in the judgement of the Filer, such transactions are in the best interests of security holders. 

43.          The portfolio securities to be acquired pursuant to each In specie Transaction will be consistent with the investment objective of the Top Fund or the Underlying Fund acquiring the portfolio securities, as applicable.

44.          Each Underlying Fund will not hold more than 10% of its NAV in illiquid assets (as defined in NI 81-102). The valuation of any illiquid securities which would by the subject of an In specie Transaction will be carried out according to the Filer’s policies and procedures for the fair valuation of portfolio securities, including illiquid securities (FV Procedures). The Filer’s internal valuation team monitors and determines fair value according to applicable FV Procedures. The Filer’s Chief Compliance Officer will review and approve the valuation of any illiquid securities. If any illiquid securities are the subject of an In specie Transaction, the illiquid securities will be transferred on a pro rata basis.

45.          In specie Transactions will be subject to: (i) compliance with written policies and procedures of the Filer representing In specie Transactions that are consistent with applicable securities legislation and (ii) the oversight of the Filer’s Compliance department to ensure that the transaction represents the business judgment of the Filer acting in its discretionary capacity with respect to the applicable Fund or Funds, uninfluenced by considerations other than the best interests of the applicable Fund or Funds.

46.          The Filer will not receive any compensation in respect of any sale or redemption of units of a Fund and, in respect of any delivery of securities further to an In specie Transaction, the only charge paid by the Fund may be a commission charged by the dealer executing the trade and/or any administrative charges levied by a prime broker.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision. The decision of the principal regulator under the Legislation is that the Requested Relief is granted effective as of the date of the Reorganization, provided that:

1.             the Previous Decision will no longer be relied on once this Decision is relied on;

2.             in respect of the Related Issuer Relief and the Consent Relief:

(a)           to the extent sold in Canada, securities of the Top Funds are distributed solely pursuant to exemptions from the prospectus requirements in NI 45-106;

(b)           the investment by a Top Fund in an Underlying Fund is compatible with the investment objectives of the Top Fund;

(c)           at the time of the purchase of securities of an Underlying Fund, the Underlying Fund holds no more than 10% of its NAV in securities of other investment funds unless the Underlying Fund:

(i)            is a “clone fund” (as defined by NI 81-102),

(ii)           purchases or holds securities of a “money market fund” (as defined by NI 81-102), or

(iii)          purchases or holds securities that are “index participation units” (as defined by NI 81-102) issued by an investment fund;

(d)           no management fees or incentive fees are payable by a Top Fund that, to a reasonable person, would duplicate a fee payable by the Underlying Fund for the same service;

(e)           no sales fees or redemption fees are payable by a Top Fund in relation to its purchases or redemptions of securities of the Underlying Fund;

(f)            the Filer, or its affiliate, does not cause the securities of the Underlying Fund held by a Top Fund to be voted at any meeting of holders of such securities, except that the Filer, or its affiliates, may arrange for the securities the Top Fund holds of the Underlying Fund to be voted by the beneficial holders of securities of the Top Fund;

(g)           the offering memorandum or other similar disclosure document of a Top Fund will be provided to investors in a Top Fund prior to the time of investment and will disclose:

(i)            that the Top Fund may purchase securities of an Underlying Fund;

(ii)           that the Filer, or its affiliate, is the investment fund manager and/or portfolio adviser of both the Top Fund and the Underlying Fund;

(iii)          that the Top Fund will invest substantially all of its assets in the Underlying Fund;

(iv)          each officer, director or substantial security holder of the Filer, or its affiliate, or of a Top Fund that also has a significant interest in the Underlying Fund, the approximate amount of the significant interest they hold, on an aggregate basis, expressed as a percentage of the NAV of the Underlying Fund, and the potential conflicts of interest which may arise from such relationships;

(v)           the fees and expenses payable by the Underlying Fund that the Top Fund invests in, including any incentive fees or profit allocations or other allocations;

(vi)          that the investor may receive from the Filer or its affiliate, on request and free of charge, a copy of the offering memorandum or other similar disclosure document of the Underlying Fund; and

(vii)         that the investor may receive from the Filer or its affiliate, on request and free of charge, the annual or semi-annual financial statements relating to the Underlying Fund in which the Top Fund invests.

3.             in respect of the In specie Relief:

(a)           where an Initial Top LP purchases securities of its corresponding Initial Underlying Fund and the Initial Underlying Fund receives portfolio securities from the Initial Top LP as payment:

(i)            the Initial Underlying Fund would, at the time of payment, be permitted to purchase the portfolio securities;

(ii)           the portfolio securities are acceptable to the Filer, as portfolio adviser to the Initial Underlying Fund, and are consistent with the investment objective of the Initial Underlying Fund;

(iii)          the value of the portfolio securities is at least equal to the issue price of the securities of the Initial Underlying Fund for which they are payment, valued as if the securities were portfolio assets of the Initial Underlying Fund; and

(iv)          each Initial Underlying Fund will keep written records of each In specie Transaction in a financial year of such Initial Underlying Fund, reflecting the details of portfolio securities delivered to such Fund and the value assigned to such portfolio securities, for a period of five years after the end of the fiscal year, the most recent two years in a reasonably accessible place;

(b)           where a Top Fund redeems securities of an Underlying Fund and the Top Fund receives portfolio securities from the Underlying Fund as payment:

(i)            the Top Fund would, at the time of payment, be permitted to purchase the portfolio securities;

(ii)           the portfolio securities are acceptable to the Filer, as portfolio adviser to the Top Fund, and are consistent with the investment objective of the Top Fund;

(iii)          the value of the portfolio securities is equal to the amount at which those portfolio securities were valued by the Underlying Fund in calculating the NAV per security of the Underlying Fund used to establish the redemption price of the securities of the Underlying Fund redeemed by the Top Fund; and

(iv)          each Underlying Fund will keep written records of each In specie Transaction in a financial year of such Underlying Fund, reflecting the details of portfolio securities delivered by such Fund and the value assigned to such portfolio securities, for a period of five years after the end of the fiscal year, the most recent two years in a reasonably accessible place;

(c)           where an Associate redeems securities of a Top Fund and receives portfolio securities of the Top Fund, including portfolio securities that were portfolio securities of the corresponding Underlying Fund received by the Top Fund as redemption proceeds:

(i)            the value of the portfolio securities is equal to the amount at which those portfolio securities were valued by the Top Fund in calculating the NAV per security of the Top Fund used to establish the redemption price of the securities of the Top Fund redeemed by the Associate;

(ii)           each Top Fund will keep written records of each In specie Transaction in a financial year of such Top Fund, reflecting the details of portfolio securities delivered by such Fund and the value assigned to such portfolio securities, for a period of five years after the end of the fiscal year, the most recent two years in a reasonably accessible place; and

(d)           the Filer does not receive any compensation in respect of the In specie Transaction and, in respect of the delivery of securities under the In specie Transaction, the only charge paid by the Fund may be a commission charged by the dealer executing the trade and/or any administrative charges levied by a prime broker.

The Consent Relief and In specie Relief

“Raymond Chan”
Manager, Investment Funds
Ontario Securities Commission

The Related Issuer Relief

“AnneMarie Ryan”
Commissioner
Ontario Securities Commission

“Judith N. Robertson”
Commissioner
Ontario Securities Commission