RBC Funds Inc. - MRRS Decision
Headnote
Exemption from the requirement to deliver comparativeannual financial statements for the year ending December 31,2002 to registered securityholders of certain mutual funds.
Statutes Cited
Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., ss. 79 and 80(b)(iii).
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,
MANITOBA, ONTARIO, QUEBEC,NOVA SCOTIA
AND NEWFOUNDLAND AND LABRADOR
AND
IN THE MATTER OF
THE MUTUAL RELIANCE SYSTEMFOR
EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
ROYAL CANADIAN T-BILL FUND,ROYAL CANADIAN MONEY MARKET FUND, ROYAL PREMIUM MONEY MARKETFUND, ROYAL $U.S. MONEY MARKET FUND, ROYAL CANADIAN SHORT-TERMINCOME FUND, ROYAL BOND FUND, ROYAL CANADIAN BOND INDEX FUND,ROYAL MONTHLY INCOME FUND, ROYAL GLOBAL BOND FUND, ROYAL BALANCEDFUND, ROYAL TAX MANAGED RETURN FUND, ROYAL BALANCED GROWTH FUND,ROYAL GLOBAL BALANCED FUND, ROYAL SELECT CONSERVATIVE PORTFOLIO,ROYAL SELECT BALANCED PORTFOLIO, ROYAL SELECT GROWTH PORTFOLIO,ROYAL SELECT CHOICES CONSERVATIVE PORTFOLIO, ROYAL SELECT CHOICESBALANCED PORTFOLIO, ROYAL SELECT CHOICES GROWTH PORTFOLIO, ROYALSELECT CHOICES AGGRESSIVE GROWTH PORTFOLIO, ROYAL DIVIDEND FUND,ROYAL CANADIAN VALUE FUND, ROYAL CANADIAN EQUITY FUND, ROYALCANADIAN INDEX FUND, O'SHAUGHNESSY CANADIAN EQUITY FUND, ROYALCANADIAN GROWTH FUND, ROYAL ENERGY FUND, ROYAL PRECIOUS METALSFUND, ROYAL U.S. EQUITY FUND, ROYAL U.S. INDEX FUND, ROYAL U.S.RSP INDEX FUND, O'SHAUGHNESSY U.S. VALUE FUND, ROYAL U.S. MID-CAPEQUITY FUND, O'SHAUGHNESSY U.S. GROWTH FUND, ROYAL LIFE SCIENCEAND TECHNOLOGY FUND, ROYAL INTERNATIONAL EQUITY FUND, ROYALINTERNATIONAL RSP INDEX FUND, ROYAL EUROPEAN EQUITY FUND, ROYALASIAN EQUITY FUND, ROYAL GLOBAL EDUCATION FUND, ROYAL GLOBALTITANS FUND, ROYAL GLOBAL COMMUNICATIONS AND MEDIA SECTOR FUND,ROYAL GLOBAL CONSUMER TRENDS SECTOR FUND, ROYAL GLOBAL FINANCIALSERVICES SECTOR FUND, ROYAL GLOBAL HEALTH SCIENCES SECTOR FUND,ROYAL GLOBAL INDUSTRIALS SECTOR FUND, ROYAL GLOBAL RESOURCESSECTOR FUND AND ROYAL GLOBAL TECHNOLOGY SECTOR FUND
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof the provinces of British Columbia, Alberta, Saskatchewan,Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland andLabrador (the "Jurisdictions") has received an application(the "Application") from RBC Funds Inc. (the "Manager"),Royal Canadian T-Bill Fund, Royal Canadian Money Market Fund,Royal Premium Money Market Fund, Royal $U.S. Money Market Fund,Royal Canadian Short-Term Income Fund, Royal Bond Fund, RoyalCanadian Bond Index Fund, Royal Monthly Income Fund, Royal GlobalBond Fund, Royal Balanced Fund, Royal Tax Managed Return Fund,Royal Balanced Growth Fund, Royal Global Balanced Fund, RoyalSelect Conservative Portfolio, Royal Select Balanced Portfolio,Royal Select Growth Portfolio, Royal Select Choices ConservativePortfolio, Royal Select Choices Balanced Portfolio, Royal SelectChoices Growth Portfolio, Royal Select Choices Aggressive GrowthPortfolio, Royal Dividend Fund, Royal Canadian Value Fund, RoyalCanadian Equity Fund, Royal Canadian Index Fund, O'ShaughnessyCanadian Equity Fund, Royal Canadian Growth Fund, Royal EnergyFund, Royal Precious Metals Fund, Royal U.S. Equity Fund, RoyalU.S. Index Fund, Royal U.S. RSP Index Fund, O'Shaughnessy U.S.Value Fund, Royal U.S. Mid-Cap Equity Fund, O'Shaughnessy U.S.Growth Fund, Royal Life Science and Technology Fund, Royal InternationalEquity Fund, Royal International RSP Index Fund, Royal EuropeanEquity Fund, Royal Asian Equity Fund, Royal Global EducationFund, Royal Global Titans Fund, Royal Global Communicationsand Media Sector Fund, Royal Global Consumer Trends Sector Fund,Royal Global Financial Services Sector Fund, Royal Global HealthSciences Sector Fund, Royal Global Industrials Sector Fund,Royal Global Resources Sector Fund and Royal Global TechnologySector Fund (collectively, the "Funds") for a decisionpursuant to the securities legislation of the Jurisdictions(the "Legislation) for relief from the requirement to deliveran annual report, where applicable, and comparative annual financialstatements of the Funds to certain securityholders of the Fundsunless they have requested to receive them;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Application (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;
AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;
AND WHEREAS it has been represented bythe Manager to the Decision Makers that:
(a) The Funds are open-ended mutual fundtrusts established under the laws of Ontario.
(b) The Royal Trust Company ("RoyalTrust") is the trustee of the Funds.
(c) RBC Global Investment Management Inc.("RBC GIM") is the portfolio adviser of the Fundsand is registered as an adviser, or in an equivalent category,in each of the Jurisdictions.
(d) Royal Mutual Funds Inc. ("RMFI")is the principal distributor of the Funds and is registeredas a mutual fund dealer, or in an equivalent category, ineach of the Jurisdictions.
(e) Royal Trust, RBC GIM and RMFI are affiliatesof the Manager.
(f) The Funds are reporting issuers in eachof the Jurisdictions and are not in default of any requirementof the Legislation.
(g) Series A Units of the Funds and SeriesF Units of certain of the Funds are presently offered forsale on a continuous basis in each of the provinces andterritories of Canada pursuant to a simplified prospectusdated July 16, 2002, as amended.
(h) Each of the Funds is required to deliverannually, within 140 days of its financial year-end, toeach holder of its securities ("Securityholders"),an annual report, where applicable and comparative annualfinancial statements in the prescribed form pursuant toLegislation. .
(i) The Manager proposes to send to Securityholderswho hold securities of the Funds in client name where RMFIis the dealer (the "Direct Securityholders"),a notice, on or about January 15, 2003, advising them thatthey will not receive the annual report, where applicableand annual financial statements of the Funds for the yearended December 31, 2002, unless they request same, and providingthem with a request form to send back, by fax or prepaidmail, if they wish to receive the annual report, where applicableand annual financial statements. The notice will advisethe Direct Security holders that the annual report and annualfinancial statements of the Funds may be found on the websitereferred to in clause (k) and downloaded. The Manager wouldsend such annual report and annual financial statementsto any Direct Securityholders who requests them in responseto such notice or who subsequently requests them by requeston a toll-free number or at a branch of the Royal Bank ofCanada.
(j) Securityholders who hold their securitiesin the Funds through a nominee will be dealt with pursuantto National Instrument 54-101. Securityholders who holdtheir securities in the Funds in client name where RMFIis not the dealer will be sent the annual report and annualfinancial statements of the Funds for the year ended December31, 2002, in accordance with the Legislation.
(k) Securityholders will be able to accessthe annual report and annual financial statements of theFunds either on the SEDAR website or on the Funds' website:www.royalbank.com. As disclosed in the simplifiedprospectuses of the Funds, the top ten holdings will alsobe accessible via a toll-free phone line and the Royal Bankwebsite, which are updated monthly.
(l) There would be substantial cost savingsif the Funds are not required to print and mail the annualreport, where applicable and annual financial statementsto those Direct Securityholders who do not want them.
(m) The Canadian Securities Administratorshave published for comment proposed National Instrument81-106 which, among other things, would permit mutual fundsnot to deliver annual financial statements to those of itssecurityholders who do not request them, if the funds provideeach securityholder with a request form under which thesecurityholder may request, at no cost to the securityholder,to receive the mutual fund's annual financial statementsfor that financial year.
(n) Proposed National Instrument 81-106would also require a mutual fund to have a toll-free telephonenumber for, or accept collect calls from, persons or companiesthat want to receive a copy of, among other things, theannual financial statements of the mutual fund.
AND WHEREAS pursuant to the System thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the Jurisdiction to make theDecision has been met;
AND WHEREAS the Decision Makers are satisfiedthat making the Decision will not adversely affect the rule-makingprocess with respect to proposed National Instrument 81-106and is consistent with National Instrument 54-101;
THE DECISION of the Decision Makers pursuantto the Legislation is that the Funds shall not be required todeliver their annual report, where applicable and comparativeannual financial statements for the year ended December 31,2002 to their Direct Securityholders other than those DirectSecurityholders who have requested to receive them providedthat:
(a) The Manager shall file on SEDAR, underthe annual financial statements category, confirmation ofmailing of the request forms that have been sent to theDirect Securityholders as described in paragraphs (i) abovewithin 90 days of mailing the request forms;
(b) The Manager shall file on SEDAR, underthe annual financial statements category, information regardingthe number and percentage of requests for the annual reportand annual financial statements made by the return of therequest forms on a province-by-province basis within 30days after the end of each quarterly period beginning fromthe time of mailing the request forms and ending 12 monthsfrom the time of mailing;
(c) The Manager shall record the numberand a summary of complaints received from Direct Securityholdersabout not receiving the annual report and annual financialstatements and shall file on SEDAR, under the annual financialstatements category, this information within 30 days afterthe end of each quarterly period beginning from the timeof mailing the request forms and ending 12 months from thetime of mailing;
(d) The Manager shall, if possible, measurethe number of "hits" on the annual report andannual financial statements of the Funds on the Funds' website:www.royalbank.com and shall file on SEDAR, underthe annual financial statements category, this informationwithin 30 days after the end of each quarterly period beginningfrom the time of mailing the request forms and ending 12months from the time of mailing; and
(e) The Manager shall file on SEDAR, underthe annual financial statements category, estimates of thecost savings resulting from the granting of this Decisionwithin 90 days of mailing the request forms.
January 22, 2003.
"Howard I. Wetston" "RobertL. Shirriff"