Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Exemptive relief
granted to mutual funds allowing extension of prospectus lapse date. - New lapse date to
coincide with filing of initial management reports of fund performance. - Securities Act
(Ontario)
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 62(5).
February 23, 2006
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, ONTARIO, NEW BRUNSWICK,
NOVA SCOTIA, PRINCE EDWARD ISLAND AND
NEWFOUNDLAND AND LABRADOR
(THE "JURISDICTIONS")
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
ACCUMULUS MANAGEMENT LTD.
(THE "MANAGER")
AND
ACCUMULUS TALISMAN FUND,
ACCUMULUS DIVERSIFIED MONTHLY INCOME FUND,
ACCUMULUS SHORT TERM INCOME FUND AND
ACCUMULUS BALANCED FUND
(THE "FUNDS")
MRRS DECISION DOCUMENT
Background
The local securities regulatory authority or regulator (the "Decision Maker") in each of
the Jurisdictions has received an application from the Manager and the Funds for a
decision under the securities legislation of the Jurisdictions (the "Legislation") that the
time limits for the renewal of the simplified prospectuses of the Funds dated February 23,
2005 (the "Prospectus") be extended to those time limits that would be applicable if the
lapse date of the Prospectus was March 31, 2006 (the "Requested Relief").
Under the Mutual Reliance Review System ("MRRS") for Exemptive Relief
Applications:
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
Defined terms contained in National Instrument 14-101 Definitions 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 Applicant:
(a) The Manager is the manager of the Funds.
(b) The Funds are open-end investment funds created under the laws of Ontario.
(c) The Funds are currently qualified for distribution in all of the provinces and territories
of Canada (other than Quebec) under the Prospectus.
(d) The Funds are reporting issuers under the Legislation. None of the Funds is in default
of any of the requirements of the Legislation.
(e) A pro forma prospectus for the Funds was filed on January 24, 2006 (SEDAR Project
# 881876), which was a date not less than thirty days prior to the lapse date of the
Prospectus.
(f) A substantial amount of work must be done by the Manager in connection with the
preparation of the Management Reports of Fund Performance ("MRFP Reports") for the
Funds as required by National Instrument 81-106 - Investment Fund Continuous
Disclosure ("NI 81-106") in time for their due date for filing of April 28, 2006. This is
the first occasion that MRFP Reports are being prepared for the Funds pursuant to NI 81106 and staff of the Manager are being trained and becoming acquainted for the first time
with the requirements in this regard. These members of the Manager's staff are also the
individuals with the requisite knowledge for the simplified prospectus and annual
information form of the Funds and, therefore, would be intimately involved with their
preparation. The Manager has and continues to utilize substantial business and financial
resources to ensure it can complete the MRFP Reports within the regulatory timeframes.
Such costs are charged to the Funds as fund operating expenses.
(g) Section 7.4 of National Instrument 81-101 - Mutual Fund Prospectus Disclosure ("NI
81-101") provides that Items 8, 11 and 13.1 of Part B of Form 81-101F1 do not apply to a
mutual fund that has filed a MRFP Report pursuant to NI 81-106.
(h) Based on the current requirement to file a final prospectus for the Funds by March 3,
2006, and the MRFP Reports by April 28, 2006, the Funds must provide each Fund's
principal holdings, past performance and financial highlights in both the Prospectus as
well as in the MRFP Reports. Doing so would in many respects be duplicative and there
are also differences in the content and manner of presentation of the information in the
Prospectus and MRFP Reports.
(i) If the Funds are required to provide disclosure in both the Prospectus and MRFP
Reports, it will require that the resources the Manager has available will be spending
unnecessary time and incurring additional costs in preparing information for disclosure in
the Prospectus which, pursuant to section 7.4 of NI 81-101, will no longer be required
once the MRFP Reports have been filed. As one example, the disclosure in the
Prospectus will all be based on the year ended December 31, 2004, while the financial
information in the MRFP Reports (being a full year more current) will render the
information in the Prospectus (which, even in the first instance, will be more than 14
months old and therefore of little, if any, practical value) of no value whatsoever.
(j) Since February 23, 2005, the date of the Prospectus, no undisclosed material change
has occurred. Accordingly, the Prospectus provides accurate information regarding the
Funds. The extension requested will not affect the currency or accuracy of the
information contained in the Prospectus and accordingly, will not be prejudicial to the
public interest.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that
provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Requested Relief is
granted provided a simplified prospectus is filed no later than 10 days after March 31,
2006 and that the MRFP Reports for the Funds are filed no later than April 10, 2006.
"Rhonda Goldberg"
Assistant Manager, Investment Funds Branch
Ontario Securities Commission