Exemption Orders (Discretionary)

PFSL INVESTMENTS CANADA LTD.


COR#98/295

Headnote

National Application System - relief from certain self dealing requirements in connection with a passive fund-on-fund arrangement.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, sections 111, 114(2)(c, )121(2)(b), 123(a), 126(a) and 130(b)

IN THE MATTER OF
THE CANADIAN SECURITIES LEGISLATION OF
BRITISH COLUMBIA
ALBERTA
SASKATCHEWAN
ONTARIO
QUEBEC
NOVA SCOTIA
NEWFOUNDLAND

AND

IN THE MATTER OF
THE NATIONAL APPLICATION SYSTEM

AND

IN THE MATTER OF
PFSL INVESTMENTS CANADA LTD.

AND

PRIMERICA CANADIAN AGGRESSIVE GROWTH PORTFOLIO FUND
PRIMERICA INTERNATIONAL AGGRESSIVE GROWTH PORTFOLIO FUND
PRIMERICA CANADIAN HIGH GROWTH PORTFOLIO FUND
PRIMERICA INTERNATIONAL HIGH GROWTH PORTFOLIO FUND
PRIMERICA CANADIAN GROWTH PORTFOLIO FUND
PRIMERICA INTERNATIONAL GROWTH PORTFOLIO FUND
PRIMERICA CANADIAN BALANCED PORTFOLIO FUND
PRIMERICA CANADIAN CONSERVATIVE PORTFOLIO FUND
PRIMERICA CANADIAN INCOME PORTFOLIO FUND



DECISION DOCUMENT

WHEREAS an application (the “Application”) has been received by the British Columbia Securities Commission, the Alberta Securities Commission, the Saskatchewan Securities Commission, the Ontario Securities Commission, the Commission des valeurs mobilieres du Quebec, the Nova Scotia Securities Commission, and the Department of Provincial Affairs and Attorney General for Newfoundland and Labrador (the “Commissions”) from PFSL Investments Canada Ltd. (“PFSL”), the manager and trustee of Primerica Canadian Aggressive Growth Portfolio Fund, Primerica International Aggressive Growth Portfolio Fund, Primerica Canadian High Growth Portfolio Fund, Primerica International High Growth Portfolio Fund, Primerica Canadian Growth Portfolio Fund, Primerica International Growth Portfolio Fund, Primerica Canadian Balanced Portfolio Fund, Primerica Canadian Conservative Portfolio Fund, Primerica Canadian Income Portfolio Fund (collectively, the “Primerica Funds”) for a decision pursuant to the Canadian securities legislation of British Columbia, Alberta, Saskatchewan, Ontario, Quebec, Nova Scotia and Newfoundland (the “Legislation”) that certain investment restrictions, trade reporting requirements and early warning reporting requirements shall not apply to the purchase and sale by a Primerica Fund of units of a mutual fund (an “Underlying Fund”) managed by AGF Funds Inc. (“AGF”);

AND WHEREAS pursuant to the National Application System (the “NAS”), Ontario is the principal jurisdiction for this Application;

AND WHEREAS it has been represented by PFSL to the Commissions as follows:

1. PFSL is the manager, trustee, exclusive distributor and registrar and transfer agent of the Primerica Funds. PFSL is a corporation incorporated under and governed by the laws of Ontario and is registered as a mutual fund dealer or equivalent under the securities legislation of each province and territory of Canada (the “Jurisdictions”).

2. Each of the Primerica Funds is an open-ended unincorporated mutual fund trust established by way of a declaration of trust dated August 15, 1997, as amended and restated from time to time, and is governed by the laws of the Province of Ontario.

3. Units of each of the Primerica Funds are offered for sale on a continuous basis in each Jurisdiction pursuant to a combined simplified prospectus (the “Prospectus”) and a combined annual information form, each dated September 4, 1997, as amended on October 9, 1998. Upon application of PFSL dated July 30, 1998, the lapse date for the combined simplified prospectus was extended to November 3, 1998.

4. Each Underlying Fund is a mutual fund qualified under a consolidated amended and restated simplified prospectus and a consolidated amended and restated annual information form of the AGF Group of Funds, each dated September 28, 1998.

5. Each Primerica Fund invests a specified percentage (the “Permitted Percentage”) of its assets in specified Underlying Funds, subject to a variation above or below such Permitted Percentage of not more than 2.5 percentage points, all of which is disclosed in the Prospectus. The particular Underlying Funds in which each Primerica Fund may invest and the equity/income targets of each Primerica Fund applicable to each Underlying Fund may not be changed without the approval of the unitholders of the Primerica Fund.

6. Approval to deviate from sections 2.04(1)(a), (b), (k) and 2.04(4) of National Policy Statement No. 39 (“NP 39”) was granted at the time that a receipt was obtained for the Prospectus in respect of each Primerica Fund.

7. Except to the extent evidenced by the decision sought through this Application and the specific approval previously granted by the Canadian securities regulatory authorities pursuant to NP 39, the investments by the Primerica Funds in units of Underlying Funds comply with the investment restrictions in the Legislation.

8. The Prospectus discloses the identity and investment objectives of each Underlying Fund and discloses that there is no duplication of sales charges, redemption charges or management fees. The Primerica Funds receive management fee distributions from the Underlying Funds and management fee rebates from AGF such that the incremental management fee borne by unitholders of the Primerica Funds is limited to 0.10%. The incremental management fee is warranted given the portfolio allocation and consolidated reporting services provided to investors in the Primerica Funds.

9. Where a matter relating to an Underlying Fund (other than an annual meeting of an Underlying Fund which is a corporation) requires a vote of securityholders of the Underlying Fund, PFSL will either hold a meeting of unitholders of each
      Primerica Fund which holds securities of the Underlying Fund or will give unitholders of each such Primerica Fund the opportunity to vote by proxy without holding a meeting. If PFSL decides to hold a meeting, PFSL will cause all mutual fund securities of the Underlying Fund held by a Primerica Fund to be voted in the manner decided by a majority of unitholders of such Primerica Fund at the meeting (including those unitholders voting at the meeting by proxy). If PFSL decides not to hold a meeting but rather to give unitholders of a Primerica Fund the opportunity to vote by proxy only, PFSL will cause the mutual fund securities of the Underlying Fund held by such Primerica Fund to be voted in the same proportions as unitholders of the Primerica Fund have voted by proxy.

10. Unitholders of the Primerica Funds receive the audited annual financial statements of the Primerica Funds together with the report of the Primerica Funds’ auditors. Statements of the Underlying Funds are available upon request. Unitholders also receive such additional reports as may be required by law or regulatory policy.

11. In the absence of this decision, a Primerica Fund would be prohibited from investing in an Underlying Fund once the Primerica Fund, either alone or together with one or more of the other Primerica Funds, became a substantial securityholder of the Underlying Fund within the meaning of the Legislation, and the Primerica Fund would be required to divest itself of any units or shares of the Underlying Fund acquired in contravention of such prohibition.

12. In the absence of this decision, the Primerica Funds would be required to file reports with the Commissions respecting certain transactions involving the purchase or sale of units or shares of an Underlying Fund.

13. In the absence of this decision, as soon as the aggregate holdings by the Primerica Funds of units of an Underlying Fund exceed 10% of the outstanding units of the Underlying Fund, PFSL, and possibly the Primerica Funds, would be required to comply with so-called early warning reporting requirements.

AND WHEREAS,pursuant to the NAS, this Decision Document evidences the decision of the Commissions;

AND WHEREAS the Commissions are of the opinion that it would not be prejudicial to the public interest to grant this decision;

IT IS HEREBY DECIDED by the Commissions pursuant to the Legislation that the mutual fund investment restrictions, mutual fund portfolio transaction reporting requirements and early warning reporting requirements contained in the Legislation shall not apply to the acquisition or redemption of the units of an Underlying Fund by a Primerica Fund, provided, in each case, that:
      (i) units of the Primerica Funds are qualified for sale in each relevant Jurisdiction;

      (ii) each Primerica Fund invests its assets in Underlying Funds in accordance with the Permitted Percentages subject to a permitted deviation above or below the Permitted Percentages of not more than 2.5 percentage points, provided that any deviations above or below the Permitted Percentages of greater than 2.5 percentage points will be adjusted on the next valuation date;

      (iii) there are compatible dates for the calculation of the net asset value of each Primerica Fund and its Underlying Funds for the purpose of the issue and redemption of the units thereof;

      (iv) when units of the Primerica Funds are purchased on a sales charge basis, no sales charges are payable by the Primerica Funds in respect of the corresponding purchases of securities of the Underlying Funds, such that there will be no duplication of sales charges;

      (v) when units of the Primerica Funds which were purchased on a deferred sales charge as is are redeemed, any deferred sales charge payable will be borne solely by the redeeming unitholder such that there will be no duplication of deferred sales charges;
      (vi) the particular Underlying Funds in which each Primerica Fund may invest and the equity/income targets of each Primerica Fund applicable to each Underlying Fund that are disclosed in the simplified prospectus for a Primerica Fund may not be changed unless and until the unitholders of the Primerica Fund have approved the change, an amendment to the simplified prospectus to reflect the change is filed with the Commissions and each prospective purchaser of the units of the Primerica Fund who proposes to acquire the units following the issuance of receipts for the amendment receives a copy of the amended simplified prospectus for the Primerica Fund;

      (vii) the Permitted Percentages that are disclosed in the simplified prospectus for a Primerica Fund may not be changed unless and until the simplified prospectus is amended to reflect the proposed change, the amendment is filed with the Commissions, existing unitholders of the Primerica Fund are

      given at least 60 days’ prior written notice of the proposed change, which includes a copy of the amendment, and each prospective purchaser of the units of the Primerica Fund who proposes to acquire the units following the issuance of receipts for the amendment receives a copy of the amended simplified prospectus for the Primerica Fund;
      (viii) the arrangements between or in respect of each Primerica Fund and the Underlying Funds are such as to avoid the duplication of management fees;
      (ix) in the event of the provision of any notice to the unitholders of an Underlying Fund that is material to unitholders of one or more Primerica Funds (other than a notice in respect of an annual meeting of an Underlying Fund which is a corporation or in respect of which PFSL will be calling a meeting of unitholders of one or more Primerica Funds), as
          required by the constating documents of the Underlying Fund or by the laws applicable to the Underlying Fund, such notice will also be delivered to the unitholders of each Primerica Fund that then holds units of the Underlying Fund. Where a matter relating to an Underlying Fund (other than an annual meeting of an Underlying Fund which is a corporation) requires a vote of securityholders of the Underlying Fund, PFSL will either hold a meeting of unitholders of each Primerica Fund which holds securities of the Underlying Fund or will give unitholders of each such Primerica Fund the opportunity to vote by proxy without holding a meeting. If PFSL decides to hold a meeting, PFSL will cause all mutual fund securities of the Underlying Fund held by a Primerica Fund to be voted in the manner decided by a majority of unitholders of such Primerica Fund at the meeting (including those unitholders voting at the meeting by proxy). If PFSL decides not to hold a meeting but rather to give unitholders of a Primerica Fund the opportunity to vote by proxy only, PFSL will cause the mutual fund securities of the Underlying Fund held by such Primerica Fund to be voted in the same proportions as unitholders of the Primerica Fund have voted by proxy;

      (x) this Decision Document will terminate on the first anniversary date following the publication in final form of any legislation or rule of the Commissions which deals with the matters addressed by clause 2.04(4)(b) of National Policy Statement No. 39;

      (xi) the annual and semi-annual financial statements of a Primerica Fund include appropriate summary disclosure regarding each Underlying Fund in which it invests; and

      (xii) copies of the simplified prospectus and annual and semi-annual financial statements relating to each Underlying Fund may be obtained upon request by a unitholder of a Primerica Fund.

DATED at Toronto, Ontario on the 10th day of December, 1998.


“J.A. Geller"_____“R. Stephen Paddon”__

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