HSBC Global Asset Management (Canada) Limited

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 81-102 Investment Funds.

An issuer wants relief from the investment restrictions in National Instrument 81-102 Investment Funds that operate to restrict a mutual fund from investing in an index participation unit unless that index participation unit is traded on a Canadian or US exchange -- The securities to be acquired by the fund meet the definition of index participation unit in NI 81-102 but for the fact that they trade on an exchange in the United Kingdom; the investment by the fund in securities of a UK IPU is in accordance with the fundamental investment objectives of the fund; the fund is not a money market fund.

An issuer wants relief from the investment restrictions in National Instrument 81-102 Investment Funds that restrict a mutual fund from investing in another mutual fund unless the other mutual fund is subject to National Instruments 81-102 and 81-101 and the securities of the other mutual fund are qualified for distribution in the local jurisdiction -- The Foreign Funds are mutual funds distributed in accordance with UCITS regulations and are, and will continue to be, subject to regulatory requirements and concentration limits in their respective jurisdictions that are substantially similar to NI 81-102.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.1(1), 2.2(1), 2.5(2)(a), (b) and (c), and 19.1.

December 20, 2021

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF HSBC GLOBAL ASSET MANAGEMENT (CANADA) LIMITED (the Filer)

DECISION

Background

¶ 1 The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer on behalf of the mutual funds that are subject to National Instrument 81-102 Investment Funds (NI 81-102) that it currently manages (the Existing Funds) and the mutual funds that are subject to NI 81-102 that the Filer or an affiliate of the Filer may manage in the future (the Future Funds, and together with the Existing Funds, the Funds, and each, a Fund) for a decision under securities legislation of the Jurisdictions (the Legislation) exempting the Funds from the following provisions in NI 81-102:

(a) subsections 2.1(1), 2.2(1), 2.5(2)(a), 2.5(2)(b) and 2.5(2)(c) of NI 81-102 to permit the Funds to invest in securities of any mutual fund that is an exchange-traded fund (an ETF) that, but for the fact that they are listed on a stock exchange in the United Kingdom and not on a stock exchange in Canada or the United States, would otherwise qualify as "index participation units" (IPU) as defined in NI 81-102 (such ETF, a UK IPU);

(b) subsection 2.5(2)(b) of NI 81-102 to allow the Funds to invest in other Funds, which may invest more than 10% of the market value of their net assets in securities of UK IPUs (together with paragraph (a) above, the UK ETF Relief);

(c) subsection 2.5(2)(a) of NI 81-102 to permit the Funds to purchase and/or hold shares of investment funds authorized as Undertaking for Collective Investment in Transferable Securities (UCITS) under the UCITS Regulations (as defined below) by, and subject to the supervision of, a national competent authority in the United Kingdom, the Republic of Ireland or Luxembourg (a Foreign Fund), even though the Foreign Fund is not subject to NI 81-102; and

(d) subsection 2.5(2)(c) of NI 81-102 to permit the Funds to purchase and/or hold shares of a Foreign Fund, even though the Foreign Fund is not a reporting issuer in a Canadian Jurisdiction (as defined below) (together with paragraph (c) above, the Foreign Funds Relief, and collectively with the UK ETF Relief, the Exemptions Sought).

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

(a) the British Columbia Securities Commission is the principal regulator for this application;

(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 in Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, the Yukon and Nunavut; 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

¶ 2 Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meanings if used in this decision, unless otherwise defined.

Representations

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

The Filer and the Funds

1. the Filer is a corporation organized under the laws of Canada. The head office of the Filer is located in Vancouver, British Columbia;

2. the Filer is registered as an investment fund manager in British Columbia, Ontario, Quebec, and Newfoundland and Labrador, as a portfolio manager in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, and Newfoundland and Labrador, and as an exempt market dealer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, and the Northwest Territories;

3. the Filer is or will be the manager and principal portfolio advisor of each of the Funds;

4. each of the Funds is or will be a mutual fund that is formed as a trust or class of shares of a mutual fund corporation established under the laws of the Province of British Columbia or another province or territory of Canada, the securities of which are or will be in continuous distribution;

5. the securities of the Funds are or will be qualified for distribution pursuant to a simplified prospectus and annual information form prepared and filed in accordance with the securities legislation of each jurisdiction of Canada;

6. each of the Existing Funds is a reporting issuer in each of the provinces and territories of Canada and subject to NI 81-102, and each Future Fund will be a reporting issuer in some or all of the provinces and territories of Canada and subject to NI 81-102;

7. the Filer and the Existing Funds are not in default of securities legislation in any jurisdiction;

UK ETF Relief

8. each UK IPU is or will be an "investment fund" and a "mutual fund" within the meaning of applicable Canadian securities legislation;

9. each UK IPU is or will be an ETF traded on a stock exchange in the United Kingdom that is authorized in accordance with either (a) European Union Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) as regards depositary functions, remuneration policies and sanctions as amended and supplemented with further EU legislation and as implemented in the EU member state where the UCITS is domiciled or Ireland with regards to Irish-domiciled UCITS and Luxembourg with regards to Luxembourg-domiciled UCITS (the EU UCITS Regulations), or (b) the EU UCITS Regulations as retained in UK law in accordance with the EU (Withdrawal) Act 2018 (the UK UCITS Regulations and, together with the EU UCITS Regulations, the UCITS Regulations). Each UK IPU therefore is, or will be, a UCITS and will comply with the UCITS Regulations;

10. the managers of the UK IPUs are subject to substantially equivalent regulatory oversight to the Filer, which is primarily regulated by the British Columbia Securities Commission;

11. the securities of each UK IPU are, or will be, offered in their primary market in a manner similar to the Funds pursuant to a prospectus for each investment company;

12. each UK IPU is listed on the London Stock Exchange (LSE) and, in addition, may be listed on one or more additional stock exchange;

13. securities of each UK IPU would be IPUs but for the fact that they are not traded on a stock exchange in Canada or the United States;

14. it is the Filer's understanding that the regulatory regime, administration, operation, investment objectives and restrictions applicable to UK IPUs are as rigorous as those applicable to similar ETFs listed on an exchange in Canada or the United States, the securities of which are IPUs;

15. the LSE is subject to a regulatory oversight by the Financial Conduct Authority of the United Kingdom. The LSE is subject to materially equivalent regulatory oversight to securities exchanges in Canada and the United States, and the listing requirements to be complied with by the UK IPUs are consistent with the listing requirements of the Toronto Stock Exchange;

16. each UK IPU is or will be managed by an associate or affiliate of the Filer or by an unrelated third party;

17. each UK IPU's only purpose is or will be to (a) hold the securities that are included in a specified index in substantially the same proportion as those securities are reflected in that index, or (b) invest in a manner that causes the UK IPU to replicate the performance of that index;

18. in replicating the performance of an index, a UK IPU may purchase securities of other mutual funds;

19. each UK IPU achieves, or will achieve, its investment objective by holding the component securities of the applicable index or otherwise investing in securities in a manner that will enable the UK IPU to track the performance of the applicable index in accordance with the rules on eligible assets prescribed by the UCITS Regulations;

20. the index tracked by each UK IPU is, or will be, transparent, in that the methodology for the selection and weighting of index components is, or will be, publicly available. Details of the components of the index tracked by a UK IPU, such as issuer name and weighting within the index, are, or will be, publicly available by the applicable index provider and updated from time to time or when requested of the applicable index provider;

21. each index tracked by each UK IPU includes sufficient component securities so as to be broad-based and is, or will be distributed and referenced sufficiently so as to be broadly utilized;

22. each UK IPU makes, or will make, the net asset value (NAV) of its holdings available to the public through at least one price information system associated with the stock exchange on which it is listed;

23. no UK IPU is a "synthetic ETF", meaning that no UK IPU will principally rely on an investment strategy that makes use of swaps or other derivatives to gain an indirect financial exposure to the return of an index;

24. the UK IPUs are, or will be, subject to the following regulatory requirements:

(a) each UK IPU is subject to a robust risk management framework through prescribed rules on governance, risk, regulation of service providers and safekeeping of assets;

(b) each UK IPU is restricted to investments permitted by the UCITS Regulations (including any exemptive relief obtained by the UK IPUs therefrom) and/or authorized by the Financial Conduct Authority, Central Bank of Ireland, or the Commission de Surveillance du Secteur Financier in Luxembourg;

(c) each UK IPU is subject to investment restrictions limiting its holdings of illiquid securities that are not listed on a stock exchange or regulated market to no more than 10% of the UK IPU's NAV;

(d) each UK IPU is subject to investment restrictions limiting its holdings of other collective investment undertakings, including mutual funds, to no more than 10% of the UK IPU's NAV;

(e) each UK IPU is subject to restrictions regarding the use of derivatives, including the types of derivatives in which it may transact, limits on counterparty risk, and limits on increases to overall market risk resulting from the use of derivatives;

(f) each UK IPU is required to prepare a prospectus that discloses material facts, similar to the disclosure requirements under Form 41-101F2 Information Required in an Investment Fund Prospectus and Form 81-101F1 Contents of a Simplified Prospectus;

(g) each UK IPU is required to prepare key investor information documents that provide disclosure that is substantially similar to the disclosure required to be included in the ETF facts document required by Form 41-101F4 Information Required in an ETF Facts Document;

(h) each UK IPU is subject to continuous disclosure obligations that are similar to the disclosure obligations under National Instrument 81-106 Investment Fund Continuous Disclosure;

(i) each UK IPU is required to update information of material significance in the prospectus, to prepare management reports and an audited set of financial statements annually; and

(j) each UK IPU has a board of directors and a manager that are subject to a governance framework that sets out the duty of care and standard of care, which require the board of directors of both the manager and the UK IPU to act in the best interest of securityholders of the UK IPU;

25. the investment objectives and investment strategies of each Fund are, or will be, disclosed in each Fund's simplified prospectus and any Fund that invests in a UK IPU will be permitted to do so in accordance with its investment objectives and investment strategies;

26. the simplified prospectus of each Fund provides, or will provide, all disclosure mandated for investment funds investing in other investment funds;

27. there will be no duplication of management fees or incentive fees as a result of an investment by a Fund in a UK IPU;

28. the amount of loss that could result from an investment by a Fund in an UK IPU will be limited to the amount invested by the Fund in such UK IPU;

29. the Funds will purchase and sell securities of UK IPUs in the secondary market through the facilities of the LSE or by subscribing or redeeming such securities directly from the UK IPUs;

30. where a Fund purchases or sells securities of an UK IPU in the secondary market, it will pay commissions to brokers in connection with the purchase or sale of such securities;

31. the Filer will ensure that there are appropriate restrictions on sales fees and redemption charges for any purchase or sale of shares of a UK IPU;

Reasons for the UK ETF Relief

32. the Filer considers that investments by the Funds in UK IPUs provide an efficient and cost-effective means for the Funds to achieve diversification, obtain exposure to the markets and asset classes in which the UK IPUs invest and, in the case of certain UK IPUs, unique investment exposures. In particular, UK IPUs can provide a cost-effective way to achieve the Funds' desired allocations to various sectors, as well as desired exposure to certain countries, which in some cases may not be possible through reliance on ETFs listed on stock exchanges in Canada or the United States alone due to the relative size of the ETFs and/or the makeup of the available ETFs;

33. an investment by a Fund in an UK IPU will be made in accordance with the investment objectives and investment strategies of the Fund;

34. in the absence of the UK ETF Relief:

(a) the concentration restriction in subsection 2.1(1) of NI 81-102 would prohibit a Fund from purchasing or holding more than 10% of its net assets in securities of UK IPUs and, because IPUs are currently defined to be securities that are traded on a stock exchange in Canada or the United States only, the Fund would not be able to rely upon the IPU exemption set forth in subsection 2.1(2)(d) of NI 81-102;

(b) the control restriction in subsection 2.2(1) of NI 81-102 would prohibit a Fund from purchasing or holding securities representing more than 10% of the votes attaching to the outstanding voting securities of a UK IPU or from purchasing securities of a UK IPU for the purpose of exercising control over or management of the UK IPU and, because IPUs are currently defined to be securities that are traded on a stock exchange in Canada or the United States only, the Fund would not be able to rely upon the IPU exemption set forth in subsection 2.2(1.1)(b) of NI 81-102;

(c) the investment restriction in subsection 2.5(2)(a) of NI 81-102 would prohibit a Fund from purchasing or holding securities of an UK IPU because UK IPUs are not subject to NI 81-102 and NI 81-101 and, because IPUs are currently defined to be securities that are traded on a stock exchange in Canada or the United States only, the Fund would not be able to rely upon the IPU exemption set forth in subsection 2.5(3)(a) of NI 81-102;

(d) the investment restriction in subsection 2.5(2)(b) of NI 81-102 would prohibit a Fund from purchasing or holding securities of a Fund that invests its assets in a UK IPU unless at the time of the purchase of that security, the Fund holds no more than 10% of the market value of its net assets in securities of other mutual funds and, because IPUs are currently defined to be securities that are traded on a stock exchange in Canada or the United States only, the Fund would not be able to rely upon the IPU exemption in subsection 2.5(4)(b)(ii) of NI 81-102; and

(e) the investment restriction in subsection 2.5(2)(c) of NI 81-102 would prohibit a Fund from purchasing or holding securities of an UK IPU because UK IPUs are not reporting issuers in the local jurisdiction and, because IPUs are currently defined to be securities that are traded on a stock exchange in Canada or the United States only, the Fund would not be able to rely upon the IPU exemption in subsection 2.5(3)(a) of NI 81-102;

35. each investment by a Fund in securities of an UK IPU will represent the business judgement of responsible persons uninfluenced by considerations other than the best interests of the Fund;

Foreign Funds Relief

36. each of the Foreign Funds are, or will be, managed by the Filer or an affiliate or associate of the Filer;

37. each Foreign Fund (a) has, or will have, a primary purpose to invest money provided by its securityholders and (b) has, or will have, securities that entitle its securityholders to receive on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the net assets of such Foreign Fund;

38. each of the Foreign Funds is considered to be an "investment fund" and a "mutual fund", each within the meaning of applicable Canadian securities legislation;

39. no Foreign Fund is, or will be, subject to NI 81-102 and no Foreign Fund distributes, or will distribute, its securities in Canada under a simplified prospectus in accordance with NI 81-101;

40. the Foreign Funds are subject to investment restrictions and practices that are generally similar to those applicable to the Funds. The Foreign Funds are available for purchase by the public and are not considered to be hedge funds;

41. the Foreign Funds are distributed in certain European countries pursuant to MiFID II (the second Markets in Financial Instruments Directive together with Regulation (EU) No. 600/2014) and globally where permissible, pursuant to applicable local law (including private placement regimes);

42. the Foreign Funds are distributed in certain European countries pursuant to the UCITS Regulations;

43. each Foreign Fund is, or will be, subject to investment restrictions and practices under the laws of the United Kingdom, the Republic of Ireland or Luxembourg (the Foreign States) that are applicable to mutual funds that are sold to the general public. The Foreign Funds are, or will be, authorized as a UCITS by the applicable national competent authority of the relevant Foreign State;

44. the Foreign Funds qualify, or will qualify, as UCITS and the shares of the Foreign Funds are managed in accordance with the UCITS Regulations, as applicable;

45. each of the Foreign Funds is, or will be, governed by the laws of the United Kingdom, the Republic of Ireland or Luxembourg, and is subject to the following regulatory requirements and restrictions, which are generally similar to the requirements and restrictions set forth in NI 81-102:

(a) each Foreign Fund is subject to a risk management framework through prescribed rules on governance, risk, regulation of service providers and safekeeping of assets;

(b) each Foreign Fund is restricted to investing a maximum of 10% of its net assets in a single issuer;

(c) each Foreign Fund is subject to investment restrictions designed to limit its holdings of illiquid securities to 10% or less of its NAV;

(d) each Foreign Fund holds no more than 10% of its NAV in securities of other investment funds, including other collective investment undertakings;

(e) each Foreign Fund is subject to investment restrictions designed to limit holdings of transferrable securities that are not listed on a stock exchange or regulated market to 10% or less of the Foreign Fund's NAV;

(f) the rules governing the use of derivatives by the Foreign Funds are comparable to the rules regarding the use of derivatives under NI 81-102 with respect to the types of derivatives allowed to be used, issuer concentration, risk exposure in connection with mark to market value, the disclosure required in offering documents and the monitoring requirements, and with only a slight difference between the two regimes in connection with counterparty credit ratings (A-1 under NI 81-102 versus an effective rating requirement of A-2 for counterparties that are not regulated as credit institutions under the UCITS Regulations);

(g) a Foreign Fund may engage in securities lending activities if provided for in its prospectus or prospectus supplement, as applicable of the Foreign Fund;

(h) each Foreign Fund makes, or will make, the NAV of its holdings available to the public through at least one price information system (e.g. Bloomberg or Reuters) and all prices are published daily on the website of the Filer or an affiliate of the Filer, as applicable;

(i) the Filer and each affiliate of the Filer, as applicable, is required to prepare a prospectus (and in the Filer's case, a prospectus supplement in respect of each sub-fund of the Filer) that discloses material facts pertaining to each Foreign Fund. The prospectus (together with, in the case of the Filer, the corresponding prospectus supplement) provides disclosure that is similar to the disclosure required to be included in a simplified prospectus under NI 81-101 and a prospectus under NI 41-101, although some information, such as annual returns, management expense ratios, trading expense ratios, and trading price and volume, is not included in the prospectus and/or prospectus supplement of a Foreign Fund, as applicable;

(j) each Foreign Fund publishes a Key Investor Information Document (KIID) that contains disclosure similar to that required to be included in a fund facts document prepared under NI 81-101;

(k) each Foreign Fund is subject to continuous disclosure obligations that are similar to the disclosure obligations of the Funds under National Instrument 81-106 Investment Fund Continuous Disclosure;

(l) any material change in the investment objective or material change to the investment policy of a Foreign Fund will only be effected either following the written approval of all shareholders of the Foreign Fund or a resolution of a majority of the voting shareholders of that Foreign Fund at a general meeting, or after shareholders are given 30 days' notice of the change;

(m) all investment management activities of the investment fund manager for each of the Foreign Funds must be conducted at all times in accordance with the UCITS Regulations, the UCITS Notices and the investment policy of the Foreign Fund; and

(n) the auditor of each of the Foreign Funds is required to prepare an audited set of accounts for each Foreign Fund at least annually;

46. the investment objectives and investment strategies of each Fund are, or will be, disclosed in each Fund's simplified prospectus and any Fund that invests in a Foreign Fund will be permitted to do so in accordance with its investment objectives and investment strategies;

47. the simplified prospectus of each Fund provides, or will provide, all disclosure mandated for investment funds investing in other investment funds;

48. there will be no duplication of management fees or incentive fees as a result of an investment by a Fund in a Foreign Fund;

49. the amount of loss that could result from an investment by a Fund in a Foreign Fund will be limited to the amount invested by the Fund in such Foreign Fund;

50. the securities of the Foreign Funds are sold to the public by dealers registered pursuant to MiFID II and globally pursuant to applicable local law (including private placement regimes);

51. as is the case with the purchase or sale of conventional mutual funds in Canada, dealers may be paid a commission in connection with the purchase and sale of shares of the Foreign Funds;

52. the Filer will ensure that there are appropriate restrictions on sales fees and redemption charges for any purchase or sale of shares of a Foreign Fund;

Reasons for the Foreign Funds Relief

53. a Fund is not permitted to invest in shares of a Foreign Fund unless the requirements of section 2.5(2) of NI 81-102 are satisfied;

54. section 2.5 of NI 81-102 would permit the Funds to invest in the Foreign Funds but for the fact that each Foreign Fund is not subject to NI 81-102 and is not a reporting issuer in any of the Jurisdictions;

55. other than the paragraphs of section 2.5 of NI 81-102 from which the Funds seek relief, the Funds will otherwise comply fully with section 2.5 of NI 81-102 when investing in the Foreign Funds, and each Fund's simplified prospectus will provide all applicable disclosure mandated for investment funds investing in other investment funds;

56. an investment by a Fund in a Foreign Fund will be made in accordance with the investment objectives and investment strategies of the Fund;

57. a Fund will not invest in a Foreign Fund if the Foreign Fund holds more than 10% of its total assets in securities of other investment funds at the time of purchase;

58. the Filer considers that investments by the Funds in Foreign Funds provide an efficient and cost-effective means for the Funds to achieve diversification, obtain exposure to the markets and asset classes in which the Foreign Funds invest and, in the case of certain Foreign Funds, unique investment exposures. In particular, Foreign Funds can provide a cost-effective way to achieve the Funds' desired allocations to various sectors, as well as desired exposure to certain countries, which in some cases may not be possible through reliance on investments in mutual funds that would meet the requirements set out in section 2.5(2) of NI 81-102 due to the relative size of such funds and/or the makeup of the available funds;

59. a Fund's investment in shares of a Foreign Fund is not for the purpose of distributing the Foreign Fund to the Canadian public. The investments by a Fund in a Foreign Fund are proposed not to allow the Foreign Fund to be indirectly distributed in Canada, but to allow a Fund to achieve its investment objectives and investment strategies by investing, to a very limited extent, in professionally managed lower-cost Foreign Funds, where the investment style and approach of the Foreign Fund is known to the manager of the Fund;

60. in the absence of the Foreign Funds Relief the investment restriction in:

(a) paragraph 2.5(2)(a) of NI 81-102 would prohibit a Fund from purchasing and/or holding shares of a Foreign Fund because the Foreign Fund is not subject to NI 81-102; and

(b) paragraph 2.5(2)(c) of NI 81-102 would prohibit a Fund from purchasing and/or holding shares of a Foreign Fund because the Foreign Fund is not a reporting issuer in a Canadian Jurisdiction;

61. each investment by a Fund in shares of a Foreign Fund will represent the business judgement of responsible persons uninfluenced by considerations other than the best interests of the Fund;

Decision

¶ 4 Each of the Decision Makers is satisfied that the decision meets the 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 Exemptions Sought are granted provided that:

(a) in the case of the UK ETF Relief:

(i) the investment by a Fund in securities of a UK IPU is made in accordance with the fundamental investment objectives of the Fund;

(ii) securities of the UK IPUs qualify as IPUs within the meaning of NI 81-102 but for the fact that they are trade on a stock exchange in the United Kingdom and not a stock exchange in Canada or the United States;

(iii) none of the UK IPUs are "synthetic ETFs", meaning that they will not principally rely on an investment strategy that makes use of swaps or other derivatives to gain an indirect financial exposure to the return of an index;

(iv) investments by a Fund in securities of one or more UK IPUs comply with NI 81-102 as if securities of the UK IPUs were IPUs within the meaning of NI 81-102;

(v) the relevant offering documents of each Fund discloses, or will disclose the next time it is renewed after the date of this decision, the fact that the Fund has obtained relief to invest in UK IPUs;

(vi) in the event there is a significant change to the regulatory regime applicable to the UK IPUs that results in a less restrictive regulatory regime compared to the current regime and that has a material impact on the management or operation of the UK IPUs in which the Funds are invested, the Funds do not acquire any additional securities of such UK IPUs, and dispose of any securities of such UK IPUs in an orderly and prudent manner; and

(vii) the UK ETF Relief will terminate six months after the coming into force of any amendments to NI 81-102 that restrict or regulate a Fund's ability to invest in UK IPUs;

(b) in the case of the Foreign Funds Relief:

(i) the Foreign Funds qualify as UCITS and are subject to investment restrictions and practices under the laws of the relevant Foreign State that are applicable to mutual funds that are sold to the general public and are regulated investment funds authorized as a UCITS by the applicable national competent authority of a Foreign State;

(ii) the investment by a Fund in a Foreign Fund otherwise complies with section 2.5 of NI 81-102, and the prospectus or a simplified prospectus, as applicable, of the Fund provides, or will provide, all applicable disclosure mandated for investment funds investing in other investment funds;

(iii) a Fund does not invest in a Foreign Fund if, immediately after the investment, more than 10% of its net assets, taken at market value at the time of the investment, would consist of investments in Foreign Funds;

(iv) in the event that there is a change to the regulatory regime applicable to the Foreign Funds that results in a less restrictive regulatory regime compared to the current regime and that has a material impact on the management or operation of the Foreign Funds in which the Funds are invested, the Funds do not acquire additional shares of such Foreign Funds, and dispose of any shares of such Foreign Funds in an orderly and prudent manner; and

(v) the Foreign Funds Relief will terminate six months after the coming into force of any amendments that would permit a fund to invest in the Foreign Funds subject to the provisions of such amendments.

"John Hinze"

Director, Corporate Finance

British Columbia Securities Commission