State Street Global Advisors, Ltd. et al. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications -- Relief from certain mutual fund conflict of interest investment restrictions to permit a mutual fund to invest in securities of a related party. -- Proportion of assets to be invested in shares of the related party to be determined based on the proportion that such shares are weighted in the specified target index that the mutual fund seeks to track.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 111(2)(a), 111(3), 113.
March 31, 2006
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
STATE STREET GLOBAL ADVISORS, LTD.
(the Filer)
AND
IN THE MATTER OF
STATE STREET GLOBAL ADVISORS WORLD FUNDS
AND
STATE STREET GLOBAL ADVISORS
MULTI-ACCESS FUNDS
(each an Existing Fund)
MRRS DECISION DOCUMENT
Background
The securities regulatory authority or regulator (the Decision Maker) in each of the provinces of Alberta and Ontario (each a Jurisdiction) has received an application from the Filer, in respect of the Existing Funds, together with such other mutual funds that may be created by the Filer in the future, which will be managed by the Filer, (collectively, with the Existing Funds, the Funds, and individually, a Fund) under the securities legislation of the Jurisdictions (the Legislation) that the provisions prohibiting a mutual fund from knowingly making or holding an investment in any person or company which is a substantial security holder of the mutual fund, its management company or distribution company (the Investment Restrictions) shall not apply to investments made by the Funds in shares of State Street Corporation (State Street).
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 (the Decision) 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 otherwise defined in this Decision.
Representations
This Decision is based on the following facts represented by the Filer:
1. The Filer is a corporation established under the laws of Canada and is registered as an adviser or in an equivalent capacity in each Jurisdiction. The Filer is or will be the manager, adviser and distribution company for each Fund.
2. Each Fund is or will be a mutual fund in Ontario.
3. No Fund is or expects to become a reporting issuer.
4. Each Fund is an index mutual fund (i.e., a fund that has adopted fundamental investment objectives that require it to hold the securities that are included in the index the fund is tracking in substantially the same proportion as those securities are reflected in that index) and is offered on an exempt basis to qualified investors in each province and territory of Canada. State Street may be one of the stocks included in an index certain Funds are trying to track.
5. The Filer is indirectly, a wholly-owned subsidiary of State Street. Accordingly, State Street is a substantial holder of the Filer.
6. The Filer is prohibited by the Investment Restrictions from causing the investment portfolios of certain Funds from investing in shares of State Street because State Street is a substantial security holder of the Filer, the manager and the distribution company of the Funds.
7. State Street is a large international corporation and the ability to invest in shares of State Street is important to certain Funds.
8. The Filer considers that it would be in the best interest of investors in the Funds if the Filer was permitted to invest the investment portfolio of a Fund(s) in shares of State Street, provided such investment is substantially in the same proportion as the shares of State Street are of the index the Fund(s) is tracking.
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 this Decision has been met.
The decision of the Decision Makers under the Legislation is that the Filer and the Funds are exempt from the Investment Restrictions so as to enable a Fund(s) to invest in, or to continue to hold an investment in, shares of State Street, provided such investment is substantially in the same proportion as the shares of State Street are of the index the Fund(s) is tracking.