Fiera Sceptre Inc.

Headnote

NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from s. 13.5(2)(b) of NI 31-103 to permit inter-fund trades between public mutual funds, closed-end funds, pooled funds and managed accounts -- inter-fund trades will comply with conditions in s. 6.1(2) of NI 81-107 including IRC approval or client consent -- trades involving exchange-traded securities are permitted to occur at last sale price as defined in the Universal Market Integrity Rules -- relief also subject to pricing and transparency conditions. Exemption also granted from conflict of interest trading prohibition in paragraph 13.5(2)(b) of NI 31-103 to permit in-specie subscriptions and redemptions by separately managed accounts, closed-end funds and pooled funds in pooled funds -- Portfolio manager of managed accounts is also portfolio manager of pooled funds and is therefore a "responsible person" -- Relief subject to certain conditions.

Applicable Legislative Provisions

National Instrument 31-103 -- Registration Requirements and Exemptions -- ss. 13.5, 15.1.

National Instrument 81-107 -- Independent Review Committee for Investment Funds -- ss. 6.1(2), 6.1(4).

February 1, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

FIERA SCEPTRE INC.

(THE FILER)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application (the Application) from the Filer for a decision (the Requested Relief) under the securities legislation of the Jurisdictions (the Legislation) that the Filer, or an affiliate of the Filer, when acting as the manager and/or portfolio adviser to:

1. an existing or future mutual fund to which National Instrument 81-102 Mutual Funds (NI 81-102) applies (each, an NI 81-102 Fund and collectively, the NI 81-102 Funds);

2. an existing or future investment fund to which neither NI 81-102 nor National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) applies (each, a Pooled Fund and collectively, the Pooled Funds);

3. an existing or future investment fund to which NI 81-107, but not NI 81-102, applies (each, a Closed-End Fund and collectively, the Closed-End Funds);

4. a fully managed account advised by the Filer, or one of its affiliates, (all such present and future clients being referred to herein as Managed Accounts);

be exempted pursuant to section 15.1 of National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) from the prohibition contained in section 13.5(2)(b) of NI 31-103 to permit:

(a) the purchase or sale of securities of any issuer:

(i) by an NI 81-102 Fund to or from a Pooled Fund;

(ii) by a Pooled Fund to or from an NI 81-102 Fund, another Pooled Fund or a Closed-End Fund;

(iii) by a Closed-End Fund to or from a Pooled Fund; or

(iv) by a Managed Account to or from a Fund (as defined below).

collectively, Non-Exempt Inter-Fund Trades;

(b) the purchase or sale of securities of any issuer:

(i) by an NI 81-102 Fund to or from another NI 81-102 Fund or a Closed-End Fund; or

(ii) by a Closed-End Fund to or from another Closed-End Fund or NI 81-102 Fund.

collectively, Exempt Inter-Fund Trades, in each case at the last sale price, as defined in the Market Integrity Rules of the Investment Industry Regulatory Organization of Canada, prior to the execution of the trade (the Last Sale Price) in lieu of the closing sale price (the Closing Sale Price) contemplated by the definition of current market price of the security in subparagraph 6.1(1)(a)(i) of NI 81-107 on that trading day where the securities involved are exchange-traded securities (which term shall include Canadian and foreign exchange-traded securities); and

(c) making payment, in whole or in part, for:

(i) the purchase by a Client (as defined below) (other than an NI 81-102 Fund) of securities of a Pooled Fund through good delivery by such Client to the Pooled Fund of securities that meet the investment criteria of the Pooled Fund; or

(ii) the redemption by a Client (other than an NI 81-102 Fund) of securities of a Pooled Fund through good delivery of securities by the Pooled Fund to such Client.

each such purchase or redemption being an In-Specie Transaction.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for the Application on the basis that the head office of the Filer is located in Montreal, Québec;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by all provinces and territories of Canada (except for Québec and Ontario) (the Passport Jurisdictions); and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 31-103, NI 81-102 or NI 81-107 have the same respective meanings in this application unless otherwise defined.

The Non-Exempt Inter-Fund Trades and the Exempt Inter-Fund Trades are referred to herein collectively as Inter-Fund Trades.

The NI 81-102 Funds, Pooled Funds and Closed-End Funds are referred to as the Funds. The Funds and the Managed Account Clients (as defined below) are referred to as the Clients.

Representations

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

The Filer

1. The Filer is a corporation governed by the Business Corporations Act (Ontario). Although the registered office of the Filer is located in Toronto, Ontario, its head office is located in Montréal, Québec.

2. The Filer is registered in:

(a) Québec as an investment fund manager, an exempt market dealer, a portfolio manager and a derivatives portfolio manager;

(b) Ontario as an investment fund manager, an exempt market dealer, a portfolio manager and a commodity trading manager; and

(c) each of the other provinces and territories of Canada as an exempt market dealer and a portfolio manager.

3. The Filer, or an affiliate of the Filer, is, or will be, the manager and/or portfolio adviser of each of the NI 81-102 Funds, Pooled Funds and Closed-End Funds.

4. Each NI 81-102 Fund and Closed-End Fund is, or will be, a reporting issuer under the securities legislation of one or more Jurisdictions.

5. Each Pooled Fund is not, and will not be, a reporting issuer under the securities legislation of any Jurisdiction.

6. Securities of the Pooled Funds are, or will be, distributed to investors in one or more of the Jurisdictions pursuant to exemptions from the prospectus requirements in accordance with National Instrument 45-106 Prospectus and Registration Exemptions.

7. Neither the Filer, the existing NI 81-102 Funds, the existing Pooled Funds nor the existing Closed-End Fund are in default of securities legislation in any of the Jurisdictions.

8. Each Fund may be an associate of a responsible person of a Client, or an investment fund for which a responsible person of a Client acts as an adviser.

Managed Accounts

9. The Filer or an affiliate of the Filer, offers discretionary portfolio management services to clients seeking wealth management or related services and may provide such services to future clients (all such present and future clients being referred to herein as Managed Account Clients). Discretionary portfolio management services are provided to each Managed Account Client under a written agreement (a Managed Account Agreement) in connection with the Managed Account of the Managed Account Client with the Filer.

10. Pursuant to the Managed Account Agreements, the Filer, acting as portfolio manager, makes investment decisions for each Managed Account and has full discretionary authority to trade in securities for each Managed Account without obtaining the specific consent or instructions of the Managed Account Client to the trade.

11. The portfolio management services provided by the Filer to each Managed Account Client include the following:

(a) each Managed Account Client executes a Managed Account Agreement whereby the Managed Account Client authorizes the Filer to supervise, manage and direct purchases and sales in the Managed Account, at the Filer's full discretion on a continuing basis;

(b) the Filer's qualified employees perform investment research, securities selection and portfolio management functions with respect to all securities, investments, cash and cash equivalents, derivatives and other assets in the Managed Account;

(c) each Managed Account holds securities, derivatives and other investments as selected by the Filer in its sole discretion; and

(d) the Filer retains overall responsibility for the advice provided to its Managed Account Clients and has designated a senior officer to oversee and supervise the Managed Accounts.

Inter-Fund Trades

12. Because of the various investment objectives, strategies and parameters of the Clients, it may be appropriate for one or more Clients to acquire securities of an issuer while one or more other Clients are simultaneously disposing of the same securities. In these circumstances, the Filer may wish to cause a Client to engage in an Inter-Fund Trade of the securities with another Client.

13. At the time of each Inter-Fund Trade, the Filer will have in place policies and procedures governing such transactions.

14. An Inter-Fund Trade will be implemented by the Filer, or an affiliate of the Filer, on behalf of the applicable Funds and Managed Accounts as follows:

(a) the Filer, or an affiliate of the Filer, as portfolio manager, will deliver the trade instructions in respect of a purchase or sale of a portfolio security by the applicable Fund or Managed Account to a trader on a trading desk with a registered dealer;

(b) the Filer, or an affiliate of the Filer, as portfolio manager, will deliver the trade instructions in respect of a sale or purchase of a portfolio security by another Fund or Managed Account to a trader on a trading desk with a registered dealer;

(c) the trader will be required to execute the trade on a timely basis as an Inter-Fund Trade between the applicable Funds or between a Fund and a Managed Account in accordance with the requirements of paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107 provided that for exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price of the security prior to the execution of the trade (or, as may be instructed by the Filer, or an affiliate of the Filer, at the Closing Sale Price); and

(d) the trader will advise the Filer, or an affiliate of the Filer, of the price at which the Inter-Fund Trade occurred.

15. The Filer, or an affiliate of a Filer, cannot rely on the exemption from the Legislation under Section 6.1(4) of NI 81-107 to engage in an Inter-Fund Trade unless both parties are investment funds to which NI 81-107 applies, and the Inter-Fund Trade occurs at the current market price which, in the case of exchange-traded securities, includes the Closing Sale Price but not the Last Sale Price.

16. Each Inter-Fund Trade to which an NI 81-102 Fund or a Closed-End Fund is a party will be referred to the independent review committee (the IRC) of such Fund in accordance with section 5.2(1) of NI 81-107.

17. Though the Pooled Funds are not subject to the requirements of NI 81-107, each Pooled Fund will have an IRC at the time of each Inter-Fund Trade to which the Pooled Fund is a party. The IRC of the Pooled Fund will be composed in accordance with section 3.7 of NI 81-107 and will comply with the standard of care set out in section 3.9 of NI 81-107. The mandate of the IRC of a Pooled Fund will include approving Inter-Fund Trades to which the Pooled Fund is a party. The IRC of a Pooled Fund will not approve an Inter-Fund Trade to which the Pooled Fund is a party unless the IRC of the Pooled Fund has made the determination in the same manner as set out in section 5.2(2) of NI 81-107.

18. At the time of each Inter-Fund Trade to which a Managed Account is a party, the Managed Account Agreement or other documentation relating to such Managed Account will contain the authorization from the Managed Account Client for the portfolio manager of the Managed Account to engage in Inter-Fund Trades with Funds.

19. Each Inter-Fund Trade will comply with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, other than the Inter-Fund Trade may be executed at the Last Sale Price in respect of exchange-traded securities.

In-Specie Transactions

20. Investments in individual securities may, at certain times, not be appropriate in certain circumstances for the Filer's Managed Account Clients. Consequently, from time to time the Filer may wish to invest assets of Managed Account Clients in securities of one or more of the Pooled Funds in order to provide Managed Account Clients with the benefits of asset diversification, access to investment products with very high minimum investment levels and economies of scale regarding minimum commission charges on portfolio trades, as well as to generally facilitate portfolio management.

21. The Filer wishes to be able to pay for securities of Pooled Funds purchased by Managed Account Clients, in whole or in part, by making good delivery to the Pooled Fund of securities held by such Managed Account, provided those securities meet the investment criteria of the Pooled Fund. The Filer anticipates that the In-Specie Transactions described in this paragraph will occur most commonly when the Managed Account is newly established and the Filer believes that the Managed Account Client will be better served by holdings securities of one or more Pooled Funds rather than continuing to directly hold individual securities.

22. Similarly, following a redemption of securities of a Pooled Fund by a Managed Account Client, the Filer wishes to be able to pay the redemption price of such securities, in whole or in part, by making good delivery to the Managed Account of securities held in the investment portfolio of the Pooled Fund. The Filer anticipates that the In-Specie Transactions described in this paragraph will occur most commonly after the Managed Account Client has experienced a change in circumstances which results in the Managed Account being a candidate for direct holdings of individual securities rather than securities of the Pooled Fund or at the request of a Managed Account Client when such client wishes to have its account managed by another portfolio manager.

23. In addition to In-Specie Transactions involving Managed Account Clients, the Filer wishes to be able to enter into In-Specie Transactions for the purchase or redemption of securities of a Pooled Fund by another Pooled Fund or Closed-End Fund. This will occur most commonly when, as part of its portfolio management, the Filer wishes to obtain exposure for another Pooled Fund or Closed-End Fund to certain investments, asset classes or investment strategies of the Pooled Fund by investing in securities of that Pooled Fund. These In-Specie Transactions will facilitate the creation or reduction of such exposure.

24. At the time of each In-Specie Transaction, the Filer will have in place policies and procedures governing such transactions.

Decision

Each of the Decision Makers is satisfied that the decision meets the relevant test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that:

(i) with respect to Inter-Fund Trades:

(a) the Inter-Fund Trade is consistent with the investment objective of the Fund or the Managed Account;

(b) the manager of a Fund refers the Inter-Fund Trade to the IRC of the Fund in the manner contemplated by section 5.1 of NI 81-107 and the manager of the Fund complies with section 5.4 of NI 81-107 in respect of any standing instructions an IRC provides in connection with the Inter-Fund Trade;

(c) in the case of an Inter-Fund Trade between Funds:

(i) the IRC of each Fund that is a party to an Inter-Fund Trade has approved the Inter-Fund Trade in accordance with the terms of section 5.2(2) of NI 81-107;

(ii) the Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for purposes of paragraph (e) of Subsection 6.1(2) in respect of exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price.

(d) in the case of an Inter-Fund Trade between a Managed Account and a Fund:

(i) the IRC of each Fund that is a party to an Inter-Fund Trade has approved the Inter-Fund Trade in accordance with the terms of section 5.2(2) of NI 81-107;

(ii) the Managed Account Agreement or other documentation relating to such Managed Account authorizes the transaction and such authorization has not been revoked; and

(iii) each Inter-Fund Trade complies with paragraphs (c) to (g) of subsection 6.1(2) of NI 81-107, except that for purposes of paragraph (e) of Subsection 6.1(2) in respect of exchange-traded securities, the Inter-Fund Trade may be executed at the Last Sale Price.

(ii) with respect to In-Specie Transactions:

(a) where a Fund (other than an NI 81-102 Fund) acquires securities of a Pooled Fund:

(i) the Fund acquiring the securities would, at the time of payment, be permitted to purchase the securities;

(ii) the securities are acceptable to the Filer as the portfolio manager of the Fund and are consistent with the investment objective of the Fund acquiring the securities;

(iii) the value of the securities is equal to the issue price of the securities of the Fund valued as if the securities were portfolio assets of that Fund; and

(iv) each Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered to the Fund and the value assigned to such securities for five years after the end of the financial year, the most recent two years in a reasonably accessible place.

(b) where a Fund (other than an NI 81-102 Fund) redeems securities of a Pooled Fund:

(i) the securities are acceptable to the Filer as the portfolio manager of the Fund and consistent with the investment objective of the Fund;

(ii) the value of the securities is equal to the amount at which those securities were valued by the Fund in calculating the net asset value per security used to establish the redemption price; and

(iii) each Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place.

(c) where a Managed Account acquires securities of a Pooled Fund:

(i) the Managed Account Agreement or other documentation relating to such Managed Account authorizes the In-Specie Transaction and such authorization has not been revoked;

(ii) the Fund would, at the time of payment, be permitted to purchase the securities to be delivered;

(iii) the securities are acceptable to the Filer as portfolio manager and are consistent with the investment objective of the Fund;

(iv) the value of the portfolio securities is at least equal to the issue price of the securities of the Fund for which they are used as payment, valued as if the securities were portfolio assets of that Fund;

(v) the account statement next prepared for the Managed Account will describe the securities delivered to the Fund and the value assigned to such securities; and

(vi) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered to the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place.

(d) where a Managed Account redeems securities of a Pooled Fund:

(i) the Managed Account Agreement or other documentation relating to such Managed Account authorizes the In-Specie Transaction and such authorization has not been revoked;

(ii) the securities meet the investment criteria of the Managed Account acquiring the securities and are acceptable to the Filer;

(iii) the value of the securities is equal to the amount at which those securities were valued by the Fund in calculating the net asset value per security used to establish the redemption price;

(iv) the account statement next prepared for the Managed Account will describe the securities delivered to the Managed Account and the value assigned to such securities; and

(v) the Fund will keep written records of each In-Specie Transaction in a financial year of the Fund, reflecting details of the securities delivered by the Fund and the value assigned to such securities, for five years after the end of the financial year, the most recent two years in a reasonably accessible place.

(e) the Filer does not receive any compensation in respect of any In-Specie Transaction and, in respect of any delivery of securities further to an In-Specie Transaction, the only charges paid by the Managed Account or Fund, as applicable, is the commission charged by the dealer executing the trade and/or any administrative charges levied by the custodian.