Opus 2 Ambassador Growth Portfolio et al. - s. 117

Order

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

OPUS 2 AMBASSADOR GROWTH PORTFOLIO

OPUS 2 AMBASSADOR BALANCED PORTFOLIO

OPUS 2 AMBASSADOR CONSERVATIVE PORTFOLIO

OPUS 2 AMBASSADOR GROWTH RSP PORTFOLIO

OPUS 2 AMBASSADOR BALANCED RSP PORTFOLIO

OPUS 2 AMBASSADOR CONSERVATIVE RSP PORTFOLIO

AND

OPUS 2 DIRECT.COM INC.

ORDER

UPON the application of Opus 2 Direct.com Inc. ("Opus 2"), the future manager of the Opus 2 Ambassador Growth Portfolio, Opus 2 Ambassador Balanced Portfolio, Opus 2 Ambassador Conservative Portfolio, Opus 2 Ambassador Growth RSP Portfolio, Opus 2 Ambassador Balanced RSP Portfolio and Opus 2 Ambassador Conservative RSP Portfolio (the "Current Top Funds") and other mutual funds managed by Opus 2 after the date of this ruling having an investment strategy that invests in other mutual funds managed by Opus 2 (together with the Current Top Funds, the "Top Funds"), to the Ontario Securities Commission (the "Commission") for an order that the following requirements and restrictions contained in the Act (the "Applicable Requirements") shall not apply to the Top Funds or Opus 2, as the case may be, in respect of certain investments to be made by a Top Fund in an Underlying Fund (as defined herein) from time to time:

1. the restrictions contained in the Act prohibiting a mutual fund from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder; and

2. the requirements contained in the Act requiring a management company to file a report relating to a purchase or sale of securities between the mutual fund and any related person or company, or any transaction in which, by arrangement other than an arrangement relating to insider trading in portfolio securities, the mutual fund is a joint participant with one or more of is related persons or companies;

AND UPON considering the application and the recommendation of staff of the Commission;

AND UPON Opus 2 having represented to the Commission as follows:

1. Opus 2 is a corporation organized under the laws of Ontario and will be the manager of each of the Top Funds. Opus 2 is or will be the manager of each of the Underlying Funds (as defined herein). The head office of Opus 2 is located in Ontario.

2. Each of the Top Funds and Underlying Funds is or will be an open-end mutual fund trust established under the laws of Ontario by a declaration of trust.

3. Each of the Top Funds and Underlying Funds is or will be qualified for sale in the Provinces of Ontario and New Brunswick by means of a simplified prospectus and annual information form filed in accordance with the legislation applicable in each of these Provinces.

4. Each of the Top Funds and Underlying Funds is or will be a reporting issuer in the Provinces of Ontario and New Brunswick.

5. To achieve its investment objective, each of the Top Funds will invest fixed percentages (the "Fixed Percentages") of its assets (other than cash and cash equivalents) in securities of specified Underlying Funds, subject to a variation of 2.5% above or below the Fixed Percentages (the "Permitted Ranges") to account for market fluctuations. The Underlying Funds will have investment objectives that Opus 2 considers to align with the investment objectives of the Top Funds.

6. Opus 2 is currently the manager of Opus 2 Direct Canadian Growth Equity Pool, Opus 2 Direct Canadian Value Equity Pool, Opus 2 Direct Canadian Fixed Income Pool, Opus 2 Direct U.S. Growth Equity Pool, Opus 2 Direct U.S. Value Equity Pool, Opus 2 Direct Foreign Equity (E.A.F.E.) Pool and Opus 2 Direct Foreign Equity (RSP) Pool (the "Current Underlying Funds") and may in the future establish other mutual funds (together with the Current Underlying Funds, the "Underlying Funds").

7. The Current Top Funds invest in other mutual funds managed by McDonald Investment Management Inc. ("MIM"), the present manager of the Top Funds, subject to the terms of an order dated November 10, 1997 (the "Existing Order") and exemptive relief from National Policy No. 39 dated November 27, 1997 (the "Existing Waiver"). MIM and Opus 2 have entered into a transaction agreement (the "Merger") which provides, inter alia, that following the date upon which the required regulatory and unitholder approvals are obtained (the "Effective Date"), management of the Top Funds will change from MIM to Opus 2, the existing underlying funds will be merged into certain of the Underlying Funds, the Top Funds will be renamed, and the investments of the Top Funds in the Underlying Funds will be adjusted. The Effective Date is expected to be Friday, May 4, 2001.

8. Opus 2 wishes to revoke and replace the terms of the Existing Waiver and Existing Order so that the Top Funds may invest in the Underlying Funds in substantially the same manner as the Top Funds currently invest as described in paragraph 7.

9. The Current Top Funds will invest in the Current Underlying Funds as follows:

Opus 2 Ambassador Growth Portfolio

  • 22.5% Opus 2 Direct Canadian Value Equity Pool
  • 22.5% Opus 2 Direct Canadian Growth Equity Pool
  • 25% Opus 2 Direct Foreign Equity (E.A.F.E.) Pool
  • 15% Opus 2 Direct U.S. Value Equity Pool
  • 15% Opus 2 Direct U.S. Growth Equity Pool
Opus 2 Ambassador Balanced Portfolio
  • 20% Opus 2 Direct Canadian Fixed Income Pool
  • 17.5% Opus 2 Direct Canadian Value Equity Pool
  • 17.5% Opus 2 Direct Canadian Growth Equity Pool
  • 20% Opus 2 Direct Foreign Equity (E.A.F.E.) Pool
  • 12.5% Opus 2 Direct U.S. Value Equity Pool
  • 12.5% Opus 2 Direct U.S. Growth Equity Pool
Opus 2 Ambassador Conservative Portfolio
  • 40% Opus 2 Direct Canadian Fixed Income Pool
  • 12.5% Opus 2 Direct Canadian Value Equity Pool
  • 12.5% Opus 2 Direct Canadian Growth Equity Pool
  • 15% Opus 2 Direct Foreign Equity (E.A.F.E.) Pool
  • 10% Opus 2 Direct U.S. Value Equity Pool
  • 10% Opus 2 Direct U.S. Growth Equity Pool
Opus 2 Ambassador Growth RSP Portfolio
  • 22.5% Opus 2 Direct Canadian Value Equity Pool
  • 22.5% Opus 2 Direct Canadian Growth Equity Pool
  • 25 % Opus 2 Direct Foreign Equity (RSP) Pool
  • 15% Opus 2 Direct U.S. Value Equity Pool
  • 15% Opus 2 Direct U.S. Growth Equity Pool

Opus 2 Ambassador Balanced RSP Portfolio

  • 20% Opus 2 Direct Canadian Fixed Income Pool
  • 17.5% Opus 2 Direct Canadian Value Equity Pool
  • 17.5% Opus 2 Direct Canadian Growth Equity Pool
  • 15% Opus 2 Direct Foreign Equity (RSP) Pool
  • 12.5% Opus 2 Direct U.S. Value Equity Pool
  • 12.5% Opus 2 Direct U.S. Growth Equity Pool
  • 5% Opus 2 Direct Foreign Equity (E.A.F.E.) Pool
Opus 2 Ambassador Conservative RSP Portfolio
  • 40% Opus 2 Direct Canadian Fixed Income Pool
  • 12.5% Opus 2 Direct Canadian Value Equity Pool
  • 12.5% Opus 2 Direct Canadian Growth Equity Pool
  • 10% Opus 2 Direct Foreign Equity (E.A.F.E.) Pool
  • 10% Opus 2 Direct U.S. Value Equity Pool
  • 10% Opus 2 Direct U.S. Growth Equity Pool
  • 5% Opus 2 Direct Foreign Equity (RSP) Pool

10. The simplified prospectus for each of the Top Funds will disclose the investment objectives, portfolio advisor, risks and restrictions of the Top Fund and the Underlying Funds, the Fixed Percentages and the Permitted Ranges.

11. The appropriateness of each Top Fund's selection of Underlying Funds and of the Fixed Percentages will be reviewed on an ongoing basis to ensure that a particular Underlying Fund or Fixed Percentage continues to be appropriate for a Top Fund's investment objectives.

12. Except to the extent set forth herein and specific approvals granted by applicable Canadian securities regulators pursuant to National Instrument 81-102 Mutual Funds ("NI 81-102"), the investments by the Top Funds in the Underlying Funds will be structured to comply with the investment restrictions of the Act and NI 81-102.

13. In the absence of this order, pursuant to the Act, each of the Top Funds is prohibited from knowingly making or holding an investment in a person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder. As a result, in the absence of this order each of the Top Funds is required to divest itself of any such investments.

14. In the absence of this order, the Act requires Opus 2 to file a report on every purchase or sale of securities of the Underlying Funds by a Top Fund.

15. The investments by each of the Top Funds in the securities of the Underlying Funds will represent the business judgment of "responsible persons" (as defined in the Act), uninfluenced by considerations other than the best interests of each of the Top Funds.

AND UPON the Commission being satisfied that do so would not be prejudicial to the public interest.

IT IS ORDERED by the Commission pursuant to the Act that the Existing Order is hereby revoked;

AND IT IS ORDERED by the Commission pursuant to the Act that the Applicable Requirements shall not apply to the Top Funds from making and holding an investment in securities of the Underlying Funds or require Opus 2 to file a report relating to the purchase or sale of such securities.

PROVIDED THAT the order does not take effect until the Effective Date of the Merger;

AND PROVIDED IN EACH CASE THAT:

1. the order will terminate one year after the publication in final form of any legislation or rule of the Commission dealing with matters in section 2.5 of NI 81-102.

2. the order shall only apply if, at the time a Top Fund makes or holds an investment in its Underlying Funds, the following conditions are satisfied:

(a) the securities of both the Top Fund and the Underlying Fund are being offered for sale in the Province of Ontario pursuant to a simplified prospectus and annual information form which have been filed with and accepted by the Commission;

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

(c) the simplified prospectus discloses the intent of the Top Fund to invest in securities of the Underlying Funds, the names of the Underlying Funds, the Fixed Percentages and the Permitted Ranges within which such Fixed Percentages may vary;

(d) the investment objective of the Top Fund discloses that the Top Fund invests in securities of other mutual funds;

(e) the Underlying Funds are not mutual funds whose investment objective includes investing directly or indirectly in other mutual funds;

(f) the Top Fund invests its assets (exclusive of cash and cash equivalents) in the Underlying Funds in accordance with the Fixed Percentages disclosed in the simplified prospectus;

(g) the Top Fund's holding of securities in the Underlying Funds does not deviate from the Permitted Ranges;

(h) any deviation from the Fixed Percentages is caused by market fluctuations only;

(I) if an investment by the Top Fund in any of the Underlying Funds has deviated from the Permitted Ranges as a result of market fluctuations, the Top Fund's investment portfolio was re-balanced to comply with the Fixed Percentages on the next day on which the net asset value was calculated following the deviation;

(j) if the Fixed Percentages and the Underlying Funds which are disclosed in the simplified prospectus have been changed, either the simplified prospectus has been amended in accordance with securities legislation to reflect this significant change, or a new simplified prospectus reflecting the significant change has been filed within ten days thereof, and the securityholders of the Top Fund have been given at least 60 days' notice of the change;

(k) there are compatible dates for the calculation of the net asset value of the Top Fund and the Underlying Funds for the purpose of the issue and redemption of the securities of such mutual funds;

(l) no sales charges are payable by the Top Fund in relation to its purchases of securities of the Underlying Funds;

(m) no redemption fees or other charges are charged by an Underlying Fund in respect of the redemption by the Top Fund of securities of the Underlying Fund owned by the Top Fund;

(n) no fees or charges of any sort are paid by the Top Fund and the Underlying Funds, by their respective managers or principal distributors, or by any affiliate or associate of any of the foregoing entities, to anyone in respect of the Top Fund's purchase, holding or redemption of the securities of the Underlying Funds;

(o) the arrangements between or in respect of the Top Fund and the Underlying Funds are such as to avoid the duplication of management fees;

(p) any notice provided to securityholders of an Underlying Fund as required by applicable laws or the constating documents of that Underlying Fund has been delivered by the Top Fund to its securityholders;

(q) all of the disclosure and notice material prepared in connection with a meeting of securityholders of the Underlying Funds and received by the Top Fund has been provided to its securityholders, the securityholders have been permitted to direct a representative of the Top Fund to vote its holdings in the Underlying Fund in accordance with their direction, and the representative of the Top Fund has not voted its holdings in the Underlying Funds except to the extent the securityholders of the Top Fund have directed;

(r) in addition to receiving the annual and, upon request, the semi-annual financial statements, of the Top Fund, securityholders of the Top Fund have received appropriate summary disclosure in respect of the Top Fund's holdings of securities of the Underlying Funds in the financial statements of the Top Fund; and

(s) to the extent that the Top Fund and the Underlying Funds do not use a combined simplified prospectus and annual information form containing disclosure about the Top Fund and the Underlying Funds, copies of the simplified prospectus and annual information form of the Underlying Funds have been provided upon request to securityholders of the Top Fund and the right to receive these documents is disclosed in the simplified prospectus of the Top Fund.

April 24 , 2001.

Howard I. Wetston, Paul M. Moore