Exemption Orders (Discretionary)

PERIGEE INVESTMENT COUNSEL INC.


2001 BCSECCOM 1026


Headnote

Mutual Reliance Review System for Exemption Relief Applications – relief from the requirement that a mutual fund manager file reports on each purchase and sale effected through a related person, subject to conditions

Applicable British Columbia Provisions

Securities Act R.S.B.C. 1996, c. 418, ss. 126(c), 130

IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, NOVA SCOTIA, SASKATCHEWAN AND ONTARIO

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF PERIGEE INVESTMENT COUNSEL INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of Alberta, British Columbia, Newfoundland, Nova Scotia, Ontario and Saskatchewan (the “Jurisdictions”) has received an application (the “Application”) from Perigee Investment Counsel Inc. (“Perigee”) for a decision (the “Decision”) pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the provisions of the Legislation requiring a management company or a mutual fund manager to file a report, within thirty days after each month end and in respect of each mutual fund to which it provides services, relating to every purchase or sale effected by such mutual fund through any related person or company with respect to which the related person or company received a fee either from the mutual fund or from the other party to the transaction or both (the “Monthly Reporting Requirement”) not apply to purchases and sales effected by the Funds (as defined below) through Legg Mason Wood Walker, Inc. (the “Related Person”);

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Ontario Securities Commission is the principal regulator for this Application;

AND WHEREAS Perigee has represented to the Decision Makers that:

1. Perigee is a corporation amalgamated under the laws of Canada and is an indirect wholly-owned subsidiary of Legg Mason, Inc. (“Legg Mason”), a holding company based in Baltimore, Maryland. The head office of Perigee is in Toronto, Ontario.

2. Perigee acts as the manager and distributor for a group of funds that currently consists of 34 public mutual funds (the “Funds”).

3. Perigee is registered as a dealer in the category of mutual fund dealer in the provinces of Ontario, British Columbia and Manitoba and as an advisor in the category of investment counsel and portfolio manager in the provinces of Ontario, British Columbia, Alberta, Manitoba, Quebec, Nova Scotia and New Brunswick.

4. The Funds are currently offered for sale in all provinces of Canada pursuant to an amended and restated simplified prospectus and annual information form dated June 11, 2001. The Royal Trust Company is the trustee for each of the Funds.

5. Each of the Funds is a reporting issuer under applicable Legislation and is not on the list of defaulting reporting issuers maintained under the Legislation.

6. The Related Person is a full service regional broker-dealer and investment banking firm operating primarily in the eastern and mid-south regions of the United States and is a wholly-owned subsidiary of Legg Mason.

7. Perigee has disclosed in the annual information form of the Funds that it selects investment brokers and allots the brokerage business in connection with the portfolio transactions of the Funds on the basis of Perigee’s assessment of the quality and efficiency of the available services and the competitiveness of their commissions, and may use the Related Person to purchase or sell the investment portfolio of the Funds. Perigee has also disclosed in the statement of policies filed in the Jurisdictions that where Perigee uses the Related Person to purchase or sell securities it will seek the most favourable execution of its orders, which will be as good as or better than that offered by an unaffiliated third party broker in an arm’s length transaction.

8. The form of the report required by the Legislation requires Perigee to state the issuer of the securities purchased or sold, the class or designation of the securities, the amount or number of securities, the consideration, the name of the related company receiving the fee, the name of the person that paid the fee to the related company and the amount of the fee received by the related company.

9. It is costly and time consuming for Perigee to provide the information required by the Legislation on a monthly and segregated basis.

AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker;

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Makers with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that the Monthly Reporting Requirement shall not apply so as to require Perigee to file a report on a monthly basis in respect of every purchase or sale of securities effected by any of the Funds through the Related Person and with respect to which the Related Person received a fee either from a Fund or from the other party to the transaction or both,

PROVIDED THAT the Decision shall only apply if the statement of portfolio transactions prepared and filed for each Fund in accordance with the Legislation discloses, in respect of every class or designation of securities of an issuer bought or sold during the period to which the statement of portfolio transactions relates,:

(a) the name of the Related Person;

(b) the amount of fees paid to the Related Person; and

(c) the person or company that paid the fees.

DATED October 25, 2001.

R. Stephen Paddon H. Lorne Morphy
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