BMO Harris Investment Management Inc. - MRRS Decision

Headnote

MRRS exemption granted from paragraph 2.5(2)(a) of National Instrument 81-102 -- Mutual Funds to permit a top fund to invest in an exchange traded mutual fund that is not subject to National Instrument 81-101 -- Mutual Fund Prospectus Disclosure. Exchange traded mutual fund is a standard split share issuer that invests in a fixed portfolio of 8 companies and is qualified under a longform prospectus.

Applicable Legislative Provisions

National Instrument 81-102 -- Mutual Funds ss. 2.1, 2.5(2)(a) and 19.1.

April 24, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA,

SASKATCHEWAN, MANITOBA, ONTARIO, QUEBEC,

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

BMO HARRIS INVESTMENT MANAGEMENT INC.

(THE "FILER")

AND

IN THE MATTER OF

THE FUNDS SET OUT AT SCHEDULE "A"

(THE "PORTFOLIOS")

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 Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") for an exemption from the restriction contained in subsection 2.5(2)(a) of National Instrument 81-102 Mutual Funds ("NI 81-102") against a mutual fund purchasing or holding a security of a mutual fund unless the other mutual fund is subject to National Instrument 81-101 Mutual Fund Distributions ("NI 81-101") (the "Requested Relief")

Under the Mutual Reliance Review System 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 meanings in this decision unless they are defined in this decision.

Representations

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

1. The Filer is a corporation incorporated under the laws of the Province of Ontario, and will be the manager and investment manager of the Portfolios and any future mutual funds managed by the Applicant (collectively, the "Future Portfolios").

2. Each of the Portfolios is and any Future Portfolios will be an open-ended mutual fund with a head office located in the Province of Ontario. The securities of the Portfolios are qualified for distribution in each of the Provinces of Canada under a simplified prospectus and annual information form filed with securities regulators in each province of Canada.

3. To achieve the investment objectives of each Portfolio, the Filer invests the assets of the Portfolio in, among other things, equity securities of Canadian issuers. The Filer would like the Portfolios to be permitted to invest in Big 8 Split Inc. ("Big 8"), which is an issuer that is a mutual fund that is not subject to NI 81-101.

4. The Filer actively manages the investments of the Portfolios in accordance with the investment objectives and investment strategies of such Portfolios.

5. The Filer is not related to Big 8.

6. Big 8 is, as indicated in its initial public offering (IPO), long form prospectus dated August 28, 2003 (the "Prospectus") and in its application for NI 81-102 relief dated June 27, 2003:

a. organized under the laws of Canada or a Canadian province or territory;

b. a mutual fund within the meaning of the securities legislation because Big 8 is an issuer of securities that entitle the holder to receive an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of Big 8, within a specified period after demand. The Capital Shares and the Preferred Shares (as defined below) may be surrendered for retraction at any time.

7. Big 8 received an exemption from various provisions of NI 81-102 in a decision dated July 30,2003.

8. As indicated in the Prospectus, Big 8 is a passive investment company whose primary undertaking is to invest in a fixed portfolio of common shares (the "Big 8 Portfolio Shares") of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, The Toronto-Dominion Bank, Great West Lifeco Inc., Manulife Financial Corporation and Sun Life Financial Services of Canada Inc. in order to generate fixed cumulative preferential dividends for the holders of Big 8's class A preferred shares (the "Preferred Shares") and to enable the holders of its class A capital shares (the "Capital Shares") to participate in any capital appreciation in the Big 8 Portfolio Shares and to benefit from any increase in the dividends on the Big 8 Portfolio Shares. The Big 8 Portfolio Shares are the only material assets of Big 8.

9. As indicated in the Prospectus, an investment in Preferred Shares or Capital Shares does not constitute an investment in the Big 8 Portfolio Shares. Holders of Preferred Shares and Capital Shares will not own the Big 8 Portfolio Shares held by Big 8 or have any voting rights in respect of the Big 8 Portfolio Shares.

10. As indicated in its Prospectus, it is the policy of Big 8 to hold the Big 8 Portfolio Shares and to not engage in any trading of the Big 8 Portfolio Shares except:

a. to fund the payment of the fixed dividends on the Preferred Shares,

b. to fund retractions or redemptions of Capital Shares and Preferred Shares,

c. following the receipt of any stock dividends on the Big 8 Portfolio Shares, or

d. to meet its obligations in respect of liabilities including extraordinary liabilities.

11. As indicated in Big 8's Statement of Investments as at December 15, 2005, the percentage of portfolio market value of each issuer of Big 8 Portfolio Shares varies between 11.6 % and 13.8%.

12. The Preferred Shares and the Capital Shares of Big 8 are listed on the TSX. Consequently, Big 8 is not subject to NI 81-101. NI 81-102 prohibits a mutual fund from purchasing or holding a security of another mutual fund unless the other mutual fund is subject to NI 81-101. The Portfolios' and Future Portfolios' purchase and holding of Big 8 will comply with NI 81-102 on all other respects.

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 in connection with the Porfolios' and Future Portfolios' purchase and holding of securities of Big 8.

Schedule A