Scotia Securities 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,
ONTARIO, NOVA SCOTIA,
NEWFOUNDLAND AND LABRADOR
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SCOTIA T-BILL FUND, SCOTIAPREMIUM T-BILL FUND, SCOTIA MONEY MARKET FUND, SCOTIA CANAMU.S. $ MONEY MARKET FUND, SCOTIA CANADIAN BOND INDEX FUND, SCOTIAMORTGAGE INCOME FUND, SCOTIA CANADIAN INCOME FUND, SCOTIA CANAMU.S. $ INCOME FUND, SCOTIA CANGLOBAL INCOME FUND, SCOTIA CANADIANBALANCED FUND, SCOTIA TOTAL RETURN FUND, SCOTIA CANADIAN STOCKINDEX FUND, SCOTIA CANADIAN DIVIDEND FUND, SCOTIA CANADIAN BLUECHIP FUND, SCOTIA CANADIAN GROWTH FUND, SCOTIA CANADIAN SMALLCAP FUND, SCOTIA RESOURCE FUND, SCOTIA AMERICAN STOCK INDEXFUND, SCOTIA AMERICAN GROWTH FUND, SCOTIA CANAM STOCK INDEXFUND, SCOTIA NASDAQ INDEX FUND, SCOTIA YOUNG INVESTORS FUND,SCOTIA INTERNATIONAL STOCK INDEX FUND, SCOTIA GLOBAL GROWTHFUND, SCOTIA EUROPEAN GROWTH FUND, SCOTIA PACIFIC RIM GROWTHFUND, SCOTIA LATIN AMERICAN GROWTH FUND, CAPITAL U.S. LARGECOMPANIES FUND, CAPITAL U.S. LARGE COMPANIES RSP FUND, CAPITALU.S. SMALL COMPANIES FUND, CAPITAL U.S. SMALL COMPANIES RSPFUND, CAPITAL INTERNATIONAL LARGE COMPANIES FUND, CAPITAL INTERNATIONALLARGE COMPANIES RSP FUND, CAPITAL GLOBAL DISCOVERY FUND, CAPITALGLOBAL DISCOVERY RSP FUND, CAPITAL GLOBAL SMALL COMPANIES FUND,CAPITAL GLOBAL SMALL COMPANIES RSP FUND
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof the Provinces of British Columbia, Alberta, Saskatchewan,Ontario, Nova Scotia, Newfoundland and Labrador, (the "Jurisdictions")has received an application (the "Application") fromScotia Securities Inc. (the "Manager"), Scotia T-BillFund, Scotia Premium T-Bill Fund, Scotia Money Market Fund,Scotia CanAm U.S. $ Money Market Fund, Scotia Canadian BondIndex Fund, Scotia Mortgage Income Fund, Scotia Canadian IncomeFund, Scotia CanAm U.S. $ Income Fund, Scotia CanGlobal IncomeFund, Scotia Canadian Balanced Fund, Scotia Total Return Fund,Scotia Canadian Stock Index Fund, Scotia Canadian Dividend Fund,Scotia Canadian Blue Chip Fund, Scotia Canadian Growth Fund,Scotia Canadian Small Cap Fund, Scotia Resource Fund, ScotiaAmerican Stock Index Fund, Scotia American Growth Fund, ScotiaCanAm Stock Index Fund, Scotia Nasdaq Index Fund, Scotia YoungInvestors Fund, Scotia International Stock Index Fund, ScotiaGlobal Growth Fund, Scotia European Growth Fund, Scotia PacificRim Growth Fund, Scotia Latin American Growth Fund, CapitalU.S. Large Companies Fund, Capital U.S. Large Companies RSPFund, Capital U.S. Small Companies Fund, Capital U.S. SmallCompanies RSP Fund, Capital International Large Companies Fund,Capital International Large Companies RSP Fund, Capital GlobalDiscovery Fund, Capital Global Discovery RSP Fund, Capital GlobalSmall Companies Fund and Capital Global Small Companies RSPFund (collectively, the "Funds") for a decision pursuantto the securities legislation of certain of the Jurisdictions(the "Legislation") for relief from the requirementto deliver comparative annual financial statements of the Fundsto certain securityholders of the Funds unless they have requestedto receive them;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (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 Manager is a corporation incorporatedunder the laws of Ontario. The Manager is the trustee andmanager of the Funds. The Manager is registered as a mutualfund dealer in all jurisdictions of Canada.
(c) The Funds are reporting issuers in eachof the Participating Jurisdictions and are not in defaultof any requirements of the Legislation.
(d) Class A and F units of the Funds arepresently offered for sale on a continuous basis in eachprovince and territory of Canada pursuant to a simplifiedprospectus dated December 3, 2001, as amended. Private ClientUnits of certain of the Funds are presently offered forsale on a continuous basis in each province and territoryof Canada pursuant to a separate simplified prospectus datedDecember 3, 2001.
(e) Each of the Funds is required to deliverannually, within 140 days of its financial year-end, toeach holder of its securities ("Securityholders"),comparative financial statements in the prescribed formpursuant to the Legislation. Pursuant to the Legislationthe financial statements of the Top Funds are to includefinancial statements of the Underlying Funds. The Top Fundssatisfy this requirement by the sending of the financialstatements of the Underlying Funds with the financial statementsof the Top Funds.
(f) The Manager proposes to send to Securityholderswho hold securities of the Funds in client name where theManager is the dealer (the "Direct Securityholders"),together with their year end account statement, a noticeadvising them that they will not receive the annual financialstatements of the Funds for the year then ended unless theyrequest same, and providing them with a request form tosend back, by fax or prepaid mail, if they wish to receivethe annual financial statements. The notice will advisethe Direct Securityholders that the annual financial statementsof the Funds may be found on the websites referred to inclause (h) and downloaded. The Manager would send such financialstatements to any Direct Securityholder who requests themin response to such notice or who subsequently requeststhem by request on a toll-free number or at a branch ofThe Bank of Nova Scotia.
(g) 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 the Manageris not the dealer will be sent the annual financial statementsof the Funds in accordance with the Legislation.
(h) Securityholders will be able to accessannual financial statements of the Funds either on the SEDARwebsite or on the Scotiabank website: www.scotiabank.com.As disclosed in the simplified prospectuses of the funds,the top ten holdings will also be accessible via a toll-freephone line and the Scotiabank website, which are updatedmonthly.
(i) There would be substantial cost savingsif the Funds are not required to print and mail annual financialstatements to those Direct Securityholders who do not wantthem.
(j) 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.
(k) 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 Makersare 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:
1.
(i) the Funds; and
(ii) mutual funds created subsequent tothe date hereof that are offered by way of simplified prospectusand managed by the Manager,
shall not be required to deliver their comparativeannual financial statements for the year ending 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 clause (f) of therepresentations within 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 annual financialstatements made by the return of the request forms, on aprovince-by-province basis within 30 days after the endof each quarterly period beginning from the time of mailingthe request forms and ending 12 months from the time ofmailing;
(c) the Manager shall record the numberand a summary of complaints received from Direct Securityholdersabout not receiving the annual financial statements andshall file on Sedar, under the annual financial statementscategory, this information within 30 days after the endof each quarterly period beginning from the time of mailingthe request forms and ending 12 months from the time ofmailing;
(d) the Manager shall, if possible, measurethe number of "hits" on the annual financial statementsof the Funds on the www.scotiabank.com website andshall file on Sedar, under the annual financial statementscategory, this information within 30 days after the endof each quarterly period beginning from the time of mailingthe request forms and ending 12 months from the time ofmailing; 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.
December 5, 2002.
"Howard I. Wetston" "HaroldP. Hands"