Headnote
National Policy 11-203 – Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief granted from paragraph 13.5(2)(b) of NI 31-103 to permit inter-fund trades between public mutual funds, pooled funds and managed accounts – inter-fund trades will comply with conditions in subsection 6.1(2) of NI 81-107 including IRC approval or client consent – trades involving exchange-traded securities are permitted to occur at last sale price as defined in the Universal Market Integrity Rules – interfund trades in mortgages must comply with certain provisions of NP 29 and NI 81-102 – mortgages traded must be valued by an independent provider of mortgage valuation services - relief also subject to pricing and transparency conditions - exemption also granted from conflict of interest trading prohibition in paragraph 13.5(2)(b) of NI 31-103 to permit in-specie subscriptions and redemptions by separately managed accounts, public mutual funds and pooled funds.
Applicable Legislative Provisions
National Instrument 31-103 – Registration Requirements and Exemptions – ss. 13.5(2)(b), 15.1 National Instrument 81-107 – Independent Review Committee for Investment Funds – ss. 6.1(2) and 6.1(4).
September 7, 2011
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 RBC Global Asset Management Inc. (the Filer)
and the Funds (as defined below)
Decision
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from the prohibition in section 13.5(2)(b) of National Instrument 31-103 Registration Requirements and Exemptions (the 31-103 Self-Dealing Restrictions) against an a registered adviser knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as adviser, to purchase or sell securities of any issuer from or to the investment portfolio of an associate of a responsible person or an investment fund for which a responsible person acts as an adviser,
(a) to permit the following purchases and sales (each purchase or sale, an Inter-Fund Trade):
(i) an existing mutual fund or future mutual fund to which National Instrument 81-102 Mutual Funds (NI 81-102) applies of which the Filer, or an affiliate of the Filer, is the registered adviser (each, an NI 81-102 Fund and collectively, the NI 81-102 Funds), to enter into Inter-Fund Trades of securities with another NI 81-102 Fund, an existing mutual fund or future mutual fund to which NI 81-102 does not apply of which the Filer, or an affiliate of the Filer, is the registered adviser (each, a Pooled Fund and, collectively, the Pooled Funds) or a fully managed account managed by the Filer or an affiliate of the Filer for a client that is not a responsible person (each, a Managed Account and, collectively, the Managed Accounts);
(ii) a Pooled Fund to enter into Inter-Fund Trades of securities with another Pooled Fund, an NI 81-102 Fund or a Managed Account;
(iii) a Managed Account to enter into Inter-Fund Trades of securities with an NI 81-102 Fund or a Pooled Fund; and
(iv) where the transactions listed in (i) to (iii) involve exchange-traded securities (which term shall include Canadian and foreign exchange-traded securities), the transactions are permitted to be executed at the last sale price, as defined in the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada, prior to the execution of the trade (the Last Sale Price) in lieu of the closing sale price contemplated by the definition of "current market price of the security" in subparagraph 6.1(1)(a)(i) of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) on that trading day (the Closing Sale Price); and
(b) to permit the following purchases and redemptions (each purchase and redemption, an In-Specie Transaction):
(i) the purchase by a Managed Account of securities of an NI 81-102 Fund or Pooled Fund, and the redemption of securities held by a Managed Account in an NI 81-102 Fund or Pooled Fund, and as payment:
(A) for such purchase, in whole or in part, by the Managed Account making good delivery of portfolio securities to the NI 81-102 Fund or Pooled Fund; and
(B) for such redemption, in whole or in part, by the NI 81-102 Fund or Pooled Fund making good delivery of portfolio securities to the Managed Account; and
(ii) the purchase by an NI 81-102 Fund or Pooled Fund of securities of another NI 81-102 Fund or Pooled Fund and the redemption of securities held by an NI 81-102 Fund or Pooled Fund in another NI 81-102 Fund or Pooled Fund, and as payment for such purchase or redemption, in whole or in part, by making good delivery of portfolio securities that meet the investment criteria of that NI 81-102 Fund or Pooled Fund,
(collectively, the Exemption Sought).
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 on in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon (the Non-Principal Jurisdictions).
Interpretation
Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless they are defined in this decision.
Representations
This decision is based on the following facts represented by the Filer:
The Filer is registered under securities legislation in each of the Jurisdiction and the Non-Principal Jurisdictions in the categories of portfolio manager and exempt market dealer and under the Securities Act (Ontario) as an investment fund manager. The Filer is duly organized under the Canada Business Corporations Act and has its head office in Ontario.
The Filer or an affiliate of the Filer is the manager and promoter of mutual funds that are either offered for sale pursuant to a simplified prospectus and annual information form filed in certain provinces and territories of Canada (defined above as NI 81-102 Funds) or offered for sale on a private placement basis pursuant to prospectus exemptions under applicable securities legislation (defined above as Pooled Funds and together with the NI 81-102 Funds, the Funds), and the Filer or an affiliate of the Filer will be the manager and promoter of future Funds.
None of the Pooled Funds will be a reporting issuer. Securities of each of the Pooled Funds are or will be qualified for distribution pursuant to exemptions from the prospectus requirement.
The Filer or an affiliate of the Filer is the portfolio manager of the existing Funds, and the Filer expects that the Filer or an affiliate of the Filer will be the portfolio manager of future Funds.
RBC Dexia Investor Services Trust is the trustee of certain of the existing Funds. The Filer is the trustee for all other existing Funds, and the Filer expects that either the Filer or RBC Dexia Investor Services Trust will be the trustee for all future Funds. RBC Dexia Investor Services Trust is a joint venture equally owned by Royal Bank of Canada, the parent entity of the Filer, and Dexia Banque Internationale a Luxembourg. Accordingly, a Fund may be an associate of the Filer or RBC Dexia Investor Services as appropriate, in their capacity as trustee of the Funds.
The Filer or an affiliate of the Filer may be the portfolio manager for Managed Accounts of the Filer or an affiliate of the Filer.
The Filer or an affiliate of a Filer that is registered as a portfolio manager offers discretionary portfolio management services to clients (Clients) seeking wealth management or related services under a written agreement (Discretionary Management Agreement) in connection with the Managed Account of the Client with the Filer or an affiliate of the Filer.
Inter-Fund Trades
- The Filer wishes to be able to enter into Inter-Fund Trades of portfolio securities, including mortgages (Mortgages), between:
a. an NI 81-102 Fund and another NI 81 102 Fund, a Pooled Fund or a Managed Account;
b. a Pooled Fund and another Pooled Fund, an NI 81-102 Fund or a Managed Account; and
c. a Managed Account and a Pooled Fund or an NI 81-102 Fund.
The Filer or an affiliate of the Filer, as manager of an NI 81-102 Fund, has established or will establish an independent review committee (IRC) for each of the NI 81-102 Funds in accordance with the requirements of NI 81-107. The mandate of each IRC includes or will include the review and approval of the transactions covered by the Exemption Sought.
An Inter-Fund Trade involving an NI 81-102 will be referred to the IRC of the NI 81-102 Fund as contemplated by section 5.2(1) of NI 81-107. The IRC of the NI 81-102 Fund will not approve such purchase or sale transaction unless it has made the determination set out in section 5.2(2) of NI 81-107.
The Filer or an affiliate of the Filer, as manager of a Pooled Fund, does not intend to establish a new IRC for the Pooled Funds. Instead, the mandate of the IRC of the NI 81-102 Funds will be expanded to include the review and approval of Inter-Fund Trades on behalf of each Pooled Fund. In its review of Inter-Fund Trades on behalf of a Pooled Fund, the IRC will comply with the standard of care set out in section 3.9 of NI 81-107. The IRC will not approve an Inter-Fund Trade on behalf of a Pooled Fund unless the IRC has made the determination set out in section 5.2(2) of NI 81-107.
Inter-Fund Trades involving a Fund will be referred to the IRC under subsection 5.2(1) of NI 81-107 and the manager of such Fund will comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade.
The Discretionary Management Agreement or other documentation in respect of a Managed Account will contain the authorization of the Client for the Filer (or its affiliate) on behalf of the Managed Account to engage in Inter-Fund Trades with the Funds.
At the time of an Inter-Fund Trade, the Filer (or its affiliate) will have in place policies and procedures applicable to Inter-Fund Trades between Funds or between Funds and Managed Accounts.
When a Filer, or an affiliate of a Filer, engages in an Inter-Fund Trade which involves the purchase and sale of securities between Funds or between a Fund and a Managed Account, it will generally follow the following procedures or other procedures approved by the applicable IRC:
a. the portfolio manager of the Filer or affiliate of the Filer will request the approval of the chief compliance officer of the Filer or affiliate of the Filer or his or her designated alternate, or of another designated individual, to execute a purchase or a sale of a security by a Fund or Managed Account as an Inter-Fund Trade;
b. upon receipt of the required approval, the portfolio manager of the Filer or affiliate of the Filer will either place the trade directly or deliver the trade instructions to a trader on a trading desk of the Filer or affiliate of the Filer;
c. upon receipt of the trade instructions and the required approval, the trader on the trading desk will have the discretion to execute the trade as an Inter-Fund Trade in accordance with the requirements of paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 provided that, for exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price of the security, determined at the time of the receipt of the required approval prior to the execution of the trade; and
d. the policies applicable to the trading desk of the Filer or affiliate of the Filer will require that all orders are to be executed on a timely basis.
The Filer cannot rely on the exemption from the Trading Prohibition in subsection 6.1(4) of NI 81-107 unless the parties to the Inter-Fund Trade are both reporting issuers and the Inter-Fund Trade occurs at the current market price which, in the case of exchange-traded securities, includes the Closing Sale Price but not the Last Sale Price.
The Filer has determined that it would be in the interests of the Funds and the Managed Accounts to receive the Exemption Sought.
Inter-Fund Trades in securities other than Mortgages, will be executed through a registered dealer or otherwise be subject to market integrity requirements.
National Policy Statement No. 29 (NP 29) sets out guidelines relating to investments in mortgages by a mutual fund that is subject to NP 29, including with respect to the determination of the net asset value of mortgages, and provides certain protections to investors in such funds.
Each mortgage held by Funds managed or advised by Phillips, Hager & North Investment Management, an operating division of the Filer, (the PH&N Funds) is valued and serviced by CMLS Financial Ltd. (CMLS). CMLS is an affiliate of Penmor Mortgage Capital Corporation (Penmor). Penmor is the originator for each of the mortgages held by the PH&N Funds. CMLS and Penmor are not related to the Filer; however, two officers of the Filer serve on Board of Directors of Penmor and CMLS on a voluntary basis. Other than the PH&N Funds, the Funds currently do not hold any mortgages valued by CMLS.
CMLS is a mortgage valuator which uses a risk-based system to independently value mortgages for its clients. CMLS’s valuations of the mortgages held by the PH&N Funds have been used by Phillips, Hager & North Investment Management without alteration or adjustment. Accordingly, pursuant to the Exemption Sought, each Mortgage traded between the Funds or between a Fund and a managed account will be valued by CMLS or another independent provider of mortgage valuation services at the price determined in accordance with the provisions of Section III(2)(2.3) of NP 29 and such valuation will be used to interfund trade any such Mortgage without alteration by the Filer.
Prior Relief to permit Inter-Fund Trades
A predecessor entity of the Filer, Phillips, Hager & North Investment Management Ltd., was granted an exemption from the self-dealing restrictions contained in the legislation of the Jurisdiction and the Non-Principal Jurisdictions (the Securities Act Self-Dealing Restrictions), which restrictions are substantially equivalent to the 31-103 Self-Dealing Restrictions, pursuant to a decision dated November 23, 2007 (the Existing Relief), to permit the Filer to cause the Funds and Managed Accounts to engage in Inter-Fund Trades.
The Filer has been relying on the Existing Relief following the repeal of section 127(1)(b) of the Securities Act (British Columbia) and the implementation of NI 31-103 on the basis of section 16.12 of NI 31-103, which provides that a person or company that was entitled to rely on an exemption, waiver or approval granted to it by a regulator or securities regulatory authority relating to a requirement under securities legislation or securities directions existing immediately before NI 31-103 came into force is exempt from any substantially similar provision of NI 31-103 to the same extent and on the same conditions, if any, as contained in the exemption, waiver or approval.
A predecessor entity of the Filer, RBC Asset Management Inc., was granted an exemption from the application of section 6.1(4) of NI 81-107 to the extent that it requires a purchase or sale of an exchange traded security between one NI 81-102 Fund and another NI 81-102 Fund to comply with section 6.1(2)(e) of NI 81-107 to permit Inter-Fund Trades between one NI 81-102 Fund and another NI 81-102 Fund at the Last Sale Price pursuant to a decision of the Ontario Securities Commission and the securities regulators of Canada on January 18, 2008 (the Last Sale Price Relief).
The Filer now requests the Exemption Sought to specifically contemplate In-Specie Transactions and Inter-Fund Trades between a Fund and a discretionary account of the Filer or of an affiliate of the Filer, that is managed by the Filer or an affiliate of the Filer, for a client that is not a responsible person.
The Existing Relief was granted only in British Columbia and Alberta given the applicable facts and legislation at the time which made the relief not required in other provinces and territories of Canada.
The Filer was formed through the amalgamation of Phillips, Hager & North Investment Management Ltd., with its affiliate, RBC Asset Management Inc., effective November 1, 2010 (the Amalgamation). Following the Amalgamation, the head office of the Filer is located in Ontario. As a result of the change in office from British Columbia, the location of the head office of the predecessor entity, Phillips, Hager & North Investment Management Ltd., to Ontario, certain Inter-Fund Trades may be considered to occur in the Jurisdiction. In addition, the investment decision making structure for the Filer may involve certain Inter-Fund Trades occurring in each of the Non-Principal Jurisdictions.
Should the Exemption Sought be granted, neither the Filer, nor any affiliate of the Filer, will rely on the Existing Relief.
None of the Filer, or any affiliate of the Filer or the Funds, is in default of any requirements of securities legislation in the Jurisdiction or any Non-Principal Jurisdiction.
In-Specie Transactions
Investments in individual securities may at certain times not be appropriate in certain circumstances for Clients of the Filer or an affiliate of the Filer. Consequently, the Filer may, where authorized under the Discretionary Management Agreement, from time to time invest Client assets in securities of any one or more of the Funds in order to give its Clients the benefit of asset diversification and economies of scale regarding minimum commission charges on portfolio trades, and generally to facilitate portfolio management.
The Filer also wishes to be able to enter into transactions that permit payment, in whole or in part, for units or shares of a Fund (Fund Securities) purchased by a Managed Account to be made by making good delivery of portfolio securities held by such Managed Account to a Fund, provided those portfolio securities meet the investment criteria of the Fund.
Similarly, following a redemption of Fund Securities by a Managed Account, the Filer wishes to be able to enter into transactions that permit payment, in whole or in part, of redemption proceeds to be satisfied by making good delivery of portfolio securities held in the investment portfolio of a Fund to such Managed Account, provided those portfolio securities meet the investment criteria of the Managed Account.
The Filer anticipates that such In-Specie Transactions will typically occur following a redemption of Fund Securities where a Managed Account invested in such Fund has experienced a change in circumstances which results in the Managed Account being an ideal candidate for direct holdings of individual portfolio securities rather than Fund Securities, or vice versa.
In addition, the Filer wishes to be able to enter into In-Specie Transactions for purchases and redemptions of Fund Securities between two Funds. This will occur where, as part of its portfolio management, a Fund wishes to obtain exposure to certain investments or category of asset classes invested in by a second Fund by investing in Fund Securities of that second Fund. The Filer wishes to be able to enter into transactions that permit payment, in whole or in part, for the Fund Securities to be made by making good delivery of portfolio securities held by the Fund to the second Fund in which it seeks to invest. Similarly, following a redemption of Fund Securities, the Filer wishes to be able to enter into transactions that permit payment, in whole or in part, of the redemption proceeds to be satisfied by making good delivery of portfolio securities held in the investment portfolio of the Fund being redeemed, provided those portfolio securities meet the investment criteria of the Fund accepting those portfolio securities.
Each Discretionary Management Agreement or other documentation will contain the authorization of the Client for the Filer (or its affiliate) to engage in In-Specie Transactions on behalf of the Managed Account.
The Filer (or its affiliate) will value portfolio securities under an In-Specie Transaction using the same values to be used on that day to calculate the net asset value for the purpose of the issue price or redemption price of Fund Securities.
Since the Filer or its affiliate, is or will be the portfolio manager of the Managed Accounts and/or the Funds, the Filer or its affiliate would be considered a “responsible person” within the meaning of NI 31-103.
Prior to entering into an In-Specie Transaction involving a Fund and/or Managed Account, the proposed transaction will be reviewed to determine that the transaction represents the business judgment of the Filer (or its affiliate), uninfluenced by considerations other than the best interests of the Fund and/or Managed Account.
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:
Inter-Fund Trades:
the Inter-Fund Trade is consistent with the investment objective of the Fund or Managed Account;
the Filer, or an affiliate of the Filer, as manager of a Fund, refers the Inter-Fund Trade involving a Fund to the IRC in the manner contemplated by section 5.1 of NI 81-107 and the manager and the IRC comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the Inter-Fund Trade;
the IRC of each Fund has approved the Inter-Fund Trade in accordance with the terms of subsection 5.2(2) of NI 81-107;
in the case of an Inter-Fund Trade between Funds in securities other than Mortgages, the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for purposes of paragraph (e) of subsection 6.1(2) in respect of exchange-traded securities, the current market price of the security may be the Last Sale Price;
in the case of an Inter-Fund Trade between a Fund and a Managed Account:
(a) the Discretionary Management Agreement or other documentation in respect of the Managed Account authorizes the Inter-Fund Trade; and
(b) where the Inter-Fund Trade involves securities other than Mortgages, the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for purposes of paragraph (e) of subsection 6.1(2) in respect of exchange-traded securities, the current market price of the security may be the Last Sale Price;
- with respect to each Inter-Fund Trade of Mortgages:
(a) each Mortgage traded in reliance on the Exemption Sought will comply with Section III (2)(2.1) (b), (c), (e), (f) and (i) of NP 29;
(b) each Mortgage traded between a Pooled Fund or a Managed Account and a NI 81-102 Fund in reliance on the Exemption Sought will be a guaranteed mortgage as defined in NI 81-102;
(c) each Mortgage traded between a Pooled Fund or a Managed Account and a NI 81-102 Fund subject to NP 29 under s. 20.4 of NI 81-102, will comply with Section III(2)(2.1)(g) of NP 29; and
(d) each Mortgage traded between the Funds or between Fund and a Managed Account will be valued by CMLS or another independent provider of mortgage valuation services, at the price determined in accordance with the provisions of Section III (2)(2.3) Arm’s Length Transactions Investor’s Yield of NP 29;
the applicable Fund(s) keeps the written records required by section 6.1(2)(g) of NI 81-107; and
the applicable Fund(s) receives no consideration and the only cost for the trade is the nominal cost incurred by the Fund(s) to print or otherwise display the trade;
In-Specie Transactions:
- in connection with an In-Specie Transaction where a Managed Account acquires Fund Securities:
(a) if the transaction involves the purchase of Fund Securities of an NI 81-102 Fund by the Managed Account, the IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of section 5.2(2) of NI 81-107;
(b) the Filer (or affiliate of the Filer) and the applicable IRC comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;
(c) the Filer (or its affiliate) obtains the prior written consent of the Client of the Managed Account before it engages in any In-Specie Transaction;
(d) the Fund would, at the time of payment, be permitted to purchase the securities;
(e) the securities are acceptable to the Filer (or its affiliate) as portfolio manager of the Fund and consistent with the Fund’s investment objective;
(f) the value of the securities is at least equal to the issue price of the Fund Securities of the Fund for which they are used as payment, valued as if the securities were portfolio assets of that Fund;
(g) the account statement next prepared for the Managed Account describes the securities delivered to the Fund and the value assigned to such securities; and
(h) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered to the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
- in connection with an In-Specie Transaction where a Managed Account redeems Fund Securities:
(a) if the transaction involves the redemption of Fund Securities of an NI 81-102 Fund by a Managed Account, the applicable IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of section 5.2(2) of NI 81-107;
(b) the Filer (or affiliate of the Filer) and the applicable IRC comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;
(c) the Filer (or its affiliate) obtains the prior written consent of the Client of the Managed Account before it engages in an In-Specie Transaction and such consent has not been revoked;
(d) the securities are acceptable to the Filer (or its affiliate) as portfolio manager of the Managed Account and consistent with the Managed Account’s investment objective;
(e) the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per Fund Security used to establish the redemption price;
(f) the account statement next prepared for the Managed Account describes the securities delivered to the Managed Account and the value assigned to such securities; and
(g) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
- in connection with an In-Specie Transaction where a Fund purchases Fund Securities:
(a) if the transaction involves the redemption of Fund Securities of an NI 81-102 Fund, the applicable IRC of the NI 81-102 Fund has approved the In Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of section 5.2(2) of NI 81-107;
(b) the Filer (or affiliate of the Filer) and the applicable IRC comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;
(c) the Fund would, at the time of payment, be permitted to purchase the securities;
(d) the securities are acceptable to the Filer (or its affiliate) as portfolio manager of the Fund and consistent with such Fund’s investment objective;
(e) the value of the securities is equal to the issue price of the Fund Securities of the Fund, valued as if the securities were portfolio assets of that Fund; and
(f) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered to the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place;
- in connection with an In-Specie Transaction where a Fund redeems Fund Securities:
(a) if the transaction involves the redemption of Fund Securities of an NI 81-102 Fund, the applicable IRC of the NI 81-102 Fund has approved the In-Specie Transaction on behalf of the NI 81-102 Fund in accordance with the terms of section 5.2(2) of NI 81-107;
(b) the Filer (or affiliate of the Filer) and the applicable IRC comply with section 5.4 of NI 81-107 for any standing instructions the applicable IRC provides in connection with the transaction;
(c) the securities are acceptable to the Filer (or its affiliate) as portfolio manager of the Fund and consistent with the Fund’s investment objective;
(d) the value of the securities is equal to the amount at which those securities were valued in calculating the net asset value per security used to establish the redemption price; and
(e) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place; and
- the Filer does not receive any compensation in respect of any In-Specie Transaction and, in respect of any delivery of securities further to an In-Specie Transaction, the only charges paid by the Managed Account or the applicable Fund is the commission charged by the dealer executing the trade (if any) and/or any administrative charges levied by the custodian.
"Darren McKall"
Darren McKall
Manager, Investment Funds
Ontario Securities Commission