Mutual Reliance Review System for Exemptive Relief Applications - application for mutual fund lapse date extension.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c.418, s. 70
Securities Rules, B.C. Reg. 194/97, s. 121, 122, 123 and 124.


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

AND

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

AND

IN THE MATTER OF HSBC CANADIAN MONEY MARKET FUND, HSBC U.S. DOLLAR MONEY MARKET FUND, HSBC MORTGAGE FUND, HSBC CANADIAN BOND FUND, HSBC WORLD BOND RSP FUND, HSBC CANADIAN BALANCED FUND, HSBC DIVIDEND INCOME FUND, HSBC EQUITY FUND, HSBC SMALL CAP GROWTH FUND, HSBC GLOBAL EQUITY FUND, HSBC GLOBAL EQUITY RSP FUND, HSBC U.S. EQUITY FUND, HSBC U.S. EQUITY RSP FUND, HSBC EUROPEAN FUND, HSBC ASIAPACIFIC FUND, HSBC EMERGING MARKETS FUND, HSBC GLOBAL TECHNOLOGY FUND (INDIVIDUALLY A “FUND” AND COLLECTIVELY, THE “FUNDS”)


MRRS DECISION DOCUMENT


[para 1]
WHEREAS the Canadian securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia and Newfoundland and Labrador (the “Jurisdictions”) has received an application from HSBC Investment Funds (Canada) Inc. (“HIFC”), in its capacity as manager of each Fund, for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the time limits pertaining to the distribution of units (“Units”) under the simplified prospectus and annual information form of the Funds dated December 1, 2000 (collectively, the “2000 Prospectus”) be extended;

[para 2]
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the British Columbia Securities Commission is the Principal Jurisdiction for this application;

[para 3]
AND WHEREAS HIFC and the Funds have represented to the Decision Makers that:

1. HIFC is the manager-trustee, principal distributor and promoter of the Funds and is an indirect wholly-owned subsidiary of HSBC Bank Canada, a Schedule II chartered bank under the Bank Act (Canada).

2. HIFC is registered under the Legislation as a mutual fund dealer (or its equivalent).
3. Each Fund is a reporting issuer under the Legislation and is not in default of any of the requirements of the Legislation made thereunder.
4. The Funds are open-end mutual fund trusts, each of which was established under the laws of British Columbia or Ontario pursuant to a separate declaration of trust and each of which is qualified for distribution in the Jurisdictions by means of a simplified prospectus and annual information form.
5. The lapse date for the distribution of securities of the Funds in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia and Newfoundland and Labrador is December 1, 2001, and in Ontario and Quebec it is December 4, 2001.
6. The Applicant proposes to establish four new mutual funds, the HSBC Japan Fund, HSBC Global Healthcare Fund, HSBC Global Financial Services Fund and HSBC Global Resources Fund (together, the “New Funds”), each of which will be an open-end mutual fund trust established under the laws of British Columbia and each of which will be qualified for distribution in the Jurisdictions by means of the consolidated simplified prospectus and annual information form for the Funds.
7. A preliminary and pro forma simplified prospectus (the “2001 Prospectus”) and annual information form (the “2001 AIF”) for the Funds and the New Funds were filed with the securities regulatory authorities in each of the Jurisdictions on August 2, 2001. The 2001 Prospectus and 2001 AIF were “preliminary” with respect to the New Funds and “pro forma” with respect to the Funds.
8. The Applicant has in the 2001 Prospectus and 2001 AIF combined disclosure regarding the New Funds with disclosure regarding the Funds (the New Funds and the Funds being collectively referred to herein as the “HSBC Mutual Fund Group”). In this way, a single simplified prospectus and annual information form will be used in respect of all of the mutual funds in the HSBC Mutual Fund Group.

9. In order for the New Funds to qualify as a “mutual fund trust” under the Income Tax Act (Canada) (the “Tax Act”) effective from the date of their formation, each New Fund must, among other things, have 150 unitholders within 90 days of the end of its first financial year. The financial year for the Funds ends, and the financial year for the New Funds will end, on December 15 of each year. As a result, if the New Funds were established and a (final) simplified prospectus and annual information form for the HSBC Mutual Fund Group was filed within the prescribed time frames under the current lapse date of December 1, 2001, the New Funds would be required to have 150 unitholders by March 14, 2002. Recent events affecting capital markets occurring subsequent to the date of filing of the 2001 Prospectus and 2001 AIF have created doubt as to whether the New Funds will be able to obtain 150 unitholders by March 14, 2002.

10. The Applicant wishes to extend the time limits for filing the final simplified prospectus and annual information form and for obtaining a receipt for a renewal prospectus of the Funds.

11. The request to extend these time limits for the Funds is sought to permit HIFC to form the New Funds after December 15, 2001 and thereby provide the New Funds with additional time to obtain 150 unitholders.