Goodman & Company, Investment Counsel Ltd. (Re), 2008 CanLII 46336

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted from self-dealing provisions in s. 4.2 of National Instrument 81-102 – Mutual Funds to permit interfund trades between mutual funds and pooled funds and between mutual funds and closed-end funds – inter-fund transfers will comply with conditions in s. 6.1(2) of National Instrument 81-107 - Independent Review Committee for Investment Funds (NI 81-107) including the requirement of independent review committee approval.

Applicable Legislative Provisions

National Instrument 81-102 – Mutual Funds – ss. 4.2(1), 4.3(1), 4.3(2), 19.1.

National Instrument 81-107 – Independent Review Committee for Investment Funds – s. 6.1(2)

September 12 , 2008

In the Matter of the Securities Legislation of Ontario

and

In the Matter of the Process for Exemptive Relief Application in Multiple Jurisdictions

and

In the Matter of Goodman & Company, Investment Counsel Ltd. (the Filer)

and the Existing NI 81-102 Funds, Existing Closed-End Funds and Existing Pooled Funds, the Future NI 81-102 Funds, Future Closed-End Funds and Future Pooled Funds, all as defined below.

Decision

Background

The securities regulatory authority or regulator in Ontario has received an application from the Filer for a decision under the securities legislation of the jurisdiction of the principal regulator (the Legislation) for an exemption from the prohibition in section 4.2(1) of National Instrument 81-102 – Mutual Funds (NI 81-102) (together, the Exemption Sought) to permit the NI 81-102 Funds (as defined below) to purchase debt securities from or sell debt securities to a Pooled Fund (as defined below) or a Closed-End Fund (as defined below), (each purchase or sale, an Inter-Fund Trade).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon and Nunavut.

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 81-102 and NI 81-107 have the same meaning if used in this decision, unless otherwise defined.

Existing NI 81-102 Fund means each “NI 81-102 Fund” listed in Appendix A being a mutual fund that is a reporting issuer and subject to NI 81-102;

Existing Pooled Fund means each “Pooled Fund” listed in Appendix A being an investment fund that is not a reporting issuer;

Existing Closed-End Fund means each “Closed-End Fund” listed in Appendix A being a reporting issuer that is not a mutual fund and not subject to NI 81-102;

Filer means the Manager;

Funds means the NI 81-102 Funds, the Closed-End Funds and the Pooled Funds;

Future NI 81-102 Fund means each NI 81-102 Fund that may be established by the Manager in the future being a mutual fund that is a reporting issuer and subject to NI 81-102;

Future Pooled Fund means each Pooled Fund that may be established by the Manager in the future being an investment fund that is not a reporting issuer;

Future Closed-End Fund means each Closed-End Fund that may be established by the Manager in the future being a reporting issuer that is not a mutual fund and not subject to NI 81-102;

Inter-Fund Trading Prohibition means section 4.2(1) of NI 81-102;

Manager means Goodman & Company, Investment Counsel Ltd., the manager of the Funds;

NI 81-102 Funds means collectively, the Existing NI 81-102 Funds and the Future NI 81-102 Funds;

Pooled Funds means collectively, the Existing Pooled Funds and the Future Pooled Funds;

Closed-End Funds means collectively, the Existing Closed-End Funds and the Future Closed-End Funds;

Section 4.2(1) Relief means the exemptive relief from section 4.2(1) of NI 81-102, which prohibits an NI 81-102 Fund from engaging in Inter-Fund Trades with a Closed-End Fund and a Pooled Fund to permit NI 81-102 Funds to engage in Inter-Fund Trades with a Closed-End Fund or a Pooled Fund; and

TSX means the Toronto Stock Exchange.

Representations

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

1. Each of the Closed-End Funds, the NI 81-102 Funds and the Pooled Funds is or will be established under the laws of the Province of Ontario or of Canada as investment funds that are (a) open-ended mutual fund trusts, (b) open-ended mutual fund corporations, or (c) closed-ended limited partnerships and/or closed-ended trusts.

2. Each of the NI 81-102 Funds are or will be subject to the provisions of NI 81-102. The securities of each of the NI 81-102 Funds and the Closed-End Funds (being the closed-ended limited partnership and/or closed ended trusts) are or will be qualified for distribution pursuant to simplified prospectuses and annual information forms or long form prospectuses, as the case may be, that have been prepared or will be prepared and filed in accordance with the securities legislation of each of the applicable provinces and territories of Canada. The securities of the Pooled Funds are or will be qualified for distribution on a private placement basis pursuant to an offering memorandum, and will not be reporting issuers. The Closed-End Funds are not or will not be subject to NI 81-102.

3. Each of the NI 81-102 Funds and the Closed-End Funds is or will be a reporting issuer in each of the provinces and territories of Canada.

4. The Filer is, or will be, the manager, trustee (where applicable), principal distributor and registrar of the Funds. The Filer and/or sub-advisors, including a related sub-advisor, may be the portfolio manager(s) of the Funds.

5. The Filer is a corporation incorporated under the laws of the Province of Ontario, and holds a registration in the categories of "investment counsel" and "portfolio manager" in Ontario. The Filer also holds a registration in the categories of "investment counsel" and "portfolio manager" or the equivalent in each of Québec, British Columbia, Alberta, Manitoba, Saskatchewan, Nova Scotia and New Brunswick. The head office of the Filer is in Toronto, Ontario.

6. Certain of the Closed-End Funds, the NI 81-102 Funds and the Pooled Funds are “associates” of the Filer.

7. The Filer and each of the Funds are not in default of securities legislation in any jurisdiction of Canada.

8. The Filer is currently compliant with and acting in reliance on NI 81-107 and has established an independent review committee (IRC) for the Existing NI 81-102 Funds and the Existing Closed-End Funds. The Filer will establish an IRC for the Future NI 81-102 Funds and the Future Closed-End Funds and an IRC for the Pooled Funds with respect to Inter-Fund Trades, all in accordance with the requirements of NI 81-107.

9. The mandate of the IRC of a Pooled Fund, among other things, will include approving Inter-Fund Trades between the Pooled Fund and an NI 81-102 Fund or between the Pooled Fund and a Closed-End Fund. The IRC of the Pooled Funds will be composed by the Manager in accordance with the requirements of section 3.7 of NI 81-107 and will be expected to comply with the standard of care set out in section 3.9 of NI 81-107. Further, the IRC of the Pooled Funds will not approve Inter-Fund Trades between a Pooled Fund and a NI 81-102 Fund or between a Pooled Fund and a Closed-End Fund unless it has made the determination set out in section 5.2(2) of NI 81-107.

10. Purchases and sales of securities involving NI 81-102 Funds will be referred to the IRC of the NI 81-102 Funds under section 5.2(1) of NI 81-107 and will be subject to the requirements of section 5.2(2) of NI 81-107.

11. The Filer has established policies and procedures to enable the NI 81-102 Funds or the Closed-End Funds to engage in Inter-Fund Trades, and such policies and procedures will be revised and extended to the Pooled Funds for Inter-Fund Trades.

12. The Filer has determined that it would be in the interests of the NI 81-102 Funds to be able to purchase securities from or sell securities to a Closed-End Fund or to a Pooled Fund. An exemption currently exists in section 4.3(1) of NI 81-102 to permit the NI 81-102 Funds to interfund trade listed equity securities with the Closed-End Funds and/or the Pooled Funds. The NI 81-102 Funds, however, are unable to rely upon the exemption from section 4.2(1) of NI 81-102 for inter-fund trades in debt securities codified in subsection 4.3(2) of NI 81-102 because it would only apply where funds on both sides of the interfund trade are mutual funds governed by NI 81-107. The Pooled Funds are not subject to NI 81-107 and the Closed-End Funds, although subject to NI 81-107, are not mutual funds. The NI 81-102 Funds are also unable to rely on the exemption in section 4.3(1) of NI 81-102 because debt securities are typically not subject to public quotations as required by section 4.3(1) of NI 81-102.

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 Exemption Sought is granted provided that the following conditions are satisfied for Inter-Fund Trades:

(a) the IRC of the NI 81-102 Fund has approved the transaction in respect of the NI 81-102 Fund under section 5.2 of NI 81-107;

(b) the IRC of the Closed-End Fund or the Pooled Fund has approved the transaction in respect of the Closed-End Fund or Pooled Fund under section 5.2 of NI 81-107; and

(c) the transaction complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107.

“Darren McKall”

Darren McKall

Assistant Manager

Investment Funds Branch

ONTARIO SECURITIES COMMISSION

SEDAR # 1280316, 1280317, 1280320, 1280318,

1280323, 1280324

Appendix A

NI 81-102 FUNDS

DYNAMIC FUNDS

Dynamic Focus+ Balanced Fund

Dynamic Focus+ Diversified Income Trust Fund

Dynamic Focus+ Energy Income Trust Fund

Dynamic Focus+ Equity Fund

Dynamic Focus+ Real Estate Fund

Dynamic Focus+ Resource Fund

Dynamic Focus+ Small Business Fund

Dynamic Focus+ Wealth Management Fund

Dynamic Advantage Bond Fund

Dynamic Canadian Bond Fund

Dynamic Dividend Fund

Dynamic Dividend Income Fund

Dynamic Dollar-Cost Averaging Fund

Dynamic High Yield Bond Fund

Dynamic Money Market Fund

Dynamic Real Return Bond Fund

Dynamic Power American Currency Neutral Fund

Dynamic Power American Growth Fund

Dynamic Power Balanced Fund

Dynamic Power Canadian Growth Fund

Dynamic Power Small Cap Fund

Dynamic Diversified Real Asset Fund

Dynamic Precious Metals Fund

Dynamic Strategic All Income Portfolio

Dynamic Strategic Growth Portfolio

Dynamic Global Infrastructure Fund

Dynamic American Value Fund

Dynamic Canadian Dividend Fund

Dynamic Dividend Value Fund

Dynamic European Value Fund

Dynamic Far East Value Fund

Dynamic Global Discovery Fund

Dynamic Global Dividend Value Fund

Dynamic Global Value Fund

Dynamic Global Value Balanced Fund

Dynamic Value Balanced Fund

Dynamic Value Fund of Canada

DynamicEdge Balanced Portfolio

DynamicEdge Balanced Growth Portfolio

DynamicEdge Equity Portfolio

DynamicEdge Growth Portfolio

Dynamic Dividend Income Class

Dynamic Money Market Class

Dynamic Power American Growth Class

Dynamic Power Canadian Growth Class

Dynamic Power Global Balanced Class

Dynamic Power Global Growth Class

Dynamic Power Global Navigator Class

Dynamic Canadian Dividend Class

Dynamic Canadian Value Class

Dynamic EAFE Value Class

Dynamic Global Dividend Value Class

Dynamic Global Discovery Class

Dynamic Global Value Class

Dynamic Energy Class

Dynamic Value Balanced Class

DynamicEdge Balanced Class Portfolio

DynamicEdge Balanced Growth Class Portfolio

DynamicEdge Equity Class Portfolio

DynamicEdge Growth Class Portfolio

DMP Canadian Dividend Class

DMP Canadian Value Class

DMP Global Value Class

DMP Power Canadian Growth Class

DMP Power Global Growth Class

DMP Resource Class

DMP Value Balanced Class

MARQUIS INVESTMENT PROGRAM

Marquis Canadian Bond Pool

Marquis High Yield U.S. Bond Pool

Marquis Canadian Equity Pool

Marquis Enhanced Canadian Equity Pool

Marquis U.S. Equity Pool

Marquis International Equity Pool

Marquis Global Equity Pool

Marquis Diversified Defensive Portfolio

Marquis Diversified Conservative Portfolio

Marquis Diversified Balanced Portfolio

Marquis Diversified Growth Portfolio

Marquis Diversified High Growth Portfolio

Marquis Diversified All Equity Portfolio

Marquis Diversified All Income Portfolio

Marquis MultiPartners Growth Portfolio

Marquis MultiPartners High Growth Portfolio

Marquis MultiPartners Equity Portfolio

RADIANT STRATEGIC PORTFOLIOS

Radiant All Equity Portfolio

Radiant All Income Portfolio

Radiant Balanced Portfolio

Radiant Bond Portfolio

Radiant Conservative Portfolio

Radiant Defensive Portfolio

Radiant Growth Portfolio

Radiant High Growth Portfolio

CLOSED-END FUNDS

DIVERSIFUNDS

diversiTrust Income Fund

diversiTrust Stable Income Fund

diversiTrust Income+ Fund

diversiTrust Energy Income Fund

diversiYield Income Fund

diversiGlobal Dividend Value Fund

CDR FUNDS

Canada Dominion Resources 2007 Limited Partnership

CMP FUNDS

CMP Gold Trust

CMP 2007 Resource Limited Partnership

DPF INDIA OPPORTUNITIES FUND

POOLED FUNDS

Dynamic Alpha Performance Fund

Dynamic Contrarian Fund

Dynamic Focus+ Alternative Fund

Dynamic Income Opportunities Fund

Dynamic Power Emerging Markets Fund

Dynamic Power Hedge Fund

Dynamic Quantitative Hedge Fund

Goodman Private Wealth Management Balanced Pool

CDR 2007 Private Flow-Through Limited Partnership

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted from self-dealing provisions in s. 4.2 of National Instrument 81-102 – Mutual Funds to permit interfund trades between mutual funds and pooled funds and between mutual funds and closed-end funds – inter-fund transfers will comply with conditions in s. 6.1(2) of National Instrument 81-107 - Independent Review Committee for Investment Funds (NI 81-107) including the requirement of independent review committee approval.

Applicable Legislative Provisions

National Instrument 81-102 – Mutual Funds – ss. 4.2(1), 4.3(1), 4.3(2), 19.1.

National Instrument 81-107 – Independent Review Committee for Investment Funds – s. 6.1(2)