The Alberta Gazette

Part I

Vol. 102 Edmonton, Saturday, October 14, 2006 No. 19

RESIGNATIONS & RETIREMENTS

(Justice of the Peace Act)

Death of Justice of the Peace

August 18, 2006

Angeline Urquhart of Edmonton

______________

Resignation of Justice of the Peace

May 5, 2006

Michelle Ollive of Leduc

May 31, 2006

Cynthia Sawyer of Calgary

June 30, 2006

Beth Greaves of Calgary

July 3, 2006

Caron Terlecki of Calgary

July 12, 2006

Patrick M. McIlhargey of Calgary

July 14, 2006

Darlene Monague of Calgary

August 1, 2006

Ursula Abresch of Calgary

August 30, 2006

Holly Kucinskas of Wetaskiwin

August 31, 2006

P. Joan Leonard of Calgary

Caroline Elizabeth Wilson of Calgary

September 1, 2006

Amanda Laprise of Fort McMurray

ORDERS IN COUNCIL

O.C. 442/2006

(Municipal Government Act)

Approved and ordered:

Norman Kwong

Lieutenant Governor. September 13, 2006

The Lieutenant Governor in Council changes the name of the County of

Vermilion River No. 24 to the County of Vermilion River

Ralph Klein, Chair.

GOVERNMENT NOTICES

Agriculture, Food and Rural Development

Form 15

(Irrigation Districts Act)

(Section 88)

Notice to Irrigation Secretariat:

Change of Area of an Irrigation District

On behalf of the Western Irrigation District, I hereby request that the Irrigation

Secretariat forward a certified copy of this notice to the Registrar for Land Titles for

the purposes of registration under

Section 22 of the Land Titles Act and arrange for

notice to be published in the Alberta Gazette.

The following parcels of land should be removed to the irrigation district and the

notation removed from the certificate of title:

LINC Number

Short Legal Description

as shown on title

Title Number

0013 134 929

4; 25; 24; 15;SW

061 287 034

0010 370 146

8010030;6;49

061 314 809

I certify the procedures required under

part 4 of the Irrigation Districts Act have been

completed and the area of the Western Irrigation District should be changed

according to the above list.

Laurie Hodge, Office Manager,

Irrigation Secretariat.

Energy

Hosting Expenses Exceeding $600.00

For the quarter ending March 31, 2006

Function: Centennial Medal Presentation

Purpose: To present Alberta Centennial Medals to recipients nominated by the

Minister of Energy for their contributions to Alberta in the energy field.

Amount: $1,797.25

Date: January 24, 2006

Location: Calgary, Alberta

Justice

Office of the Public Trustee

Property being held by the Public Trustee for a period of Ten

(10) Years

(Public Trustee Act)

Section 11 (2)(

b) Name of Person Entitled

to Property

Description of

Property held

and its value or

estimated value

Property part of deceased

person's Estate or held

under Court Order:

Deceased's Name

Judicial District Court

File Number

Public Trustee

Office

Additional

Information

Robert Carnegie aka

Robert Trynchy

(File #148218)

Cash on hand

$2,717.75

Estate

Sally Anne Carnegie

JD of Edmonton

SES03 114120

Edmonton

(File #141866)

Dwayne Swenson

(File #151008)

Cash on hand

$2,773.81

Estate

Dorothy Katchur

JD of Edmonton

SES03 108159

Edmonton

(File #151006)

Richard Swenson

(File #151009)

Cash on hand

$2,773.81

Estate

Dorothy Katchur

JD of Edmonton

SES03 108159

Edmonton

(File #151006)

Darold Swenson

(File #151010)

Cash on hand

$2,773.81

Estate

Dorothy Katchur

JD of Edmonton

SES03 108159

Edmonton

(File #151006)

_______________________________

2005 Annual Report

(Electronic Interception)

(Section 195(5) of the Criminal Code)

1. The number of applications made for authorizations (by a provincially designated

agent or police officer):

Section 184.2

Section 185

Section 188

Section 487.01(4)

2. The number of applications made for renewals of provincial authorizations:

Section 186

Section 487.01(4)

3. The number of applications granted under:

original authorizations

emergency authorizations

renewal authorizations

The numbers of applications refused under:

Section 185

Section 188

Section 186

Section 487.01(4)

The number of applications granted subject to conditions under:

Section 185

Section 186

Section 188

Section 487.01(4)

4. The number of persons identified in an authorization against whom proceedings were

commenced at the instance of the Attorney General of Alberta in respect of:

an offence specified in the authorization

an offence other than an offence specified in the

authorization but in respect of which an authorization

may be given

an offence in respect of which an authorization may not

be given

5. The number of persons not identified in an authorization against whom proceedings

were commenced at the instance of the Attorney General of Alberta in respect of:

an offence specified in the authorization

an offence other than an offence specified in the

authorization but in respect of which an authorization

may be given

an offence other than an offence specified in such an

authorization and for which no such authorization may

be given

And whose commission or alleged commission of the offence becomes known to a

peace officer as a result of an interception of a private communication under an

authorization.

6. The average period for which authorizations were given and for which renewals

thereof were granted:

days

7. The number of authorizations that by virtue of one or more renewals thereof were

valid:

for 60 days or less

for more than 60 days

for more than 90 days

for more than 120 days

for more than 180 days

for more than 240 days

8. The number of notifications given pursuant to

Section 196:

9. The offences in respect of which authorizations were given, specifying the number of

authorizations given in respect of each such offence:

STATUTE

SECTION

NUMBER OF

AUTHORIZATIONS

CRIMINAL CODE

87(1)

88(1)

94(1)

99(1)

139(2)

235(1)

239(b)

264.1

267(a)

279(1)

279(2)

334(b)

342(3)

344(a)

344(b)/463

346(1)

348(1)(a)

348(1)(b)

355(a)

368(1)

380(1)

423.1

430(1)

430(3)

455(1)(f)

462.31

465(1)

465(1)(a)

465(1)(c)

467.11/467.12/

467.13

CONTROLLED DRUGS

AND SUBSTANCES ACT

5(2)

10. A description of all classes of places specified in an authorization and the number of

authorizations in which each class of place was specified:

Residence

Permanent Temporary

Permanent

Residence / Authorizations

Temporary

Residence / Authorizations

44 /

13 /

5 /

4 /

Commercial

Premises Vehicles Others

Commercial

Premises / Authorizations

Commercial

Vehicle / Authorizations

Commercial

Other / Authorizations

18 /

9 /

8 /

5 /

57 /

16 /

To further clarify question 10 - state number of classes of places specified

in the authorization and the number of authorizations: for example: 30

permanent residences / 7 authorizations

11. From the following categories, specify the number of times in which a particular

method of interception was authorized:

Telecommunications Microphone Video Other

12. The number of persons arrested whose identity became known to a peace officer as a

result of an interception under an authorization:

13. The number of criminal proceedings commenced at the instance of the Attorney

General in Alberta in which private communications obtained by interception under

an authorization were adduced in evidence and the number of such proceedings that

resulted in a conviction:

Criminal proceedings adduced in evidence

resultant convictions

14. The number of criminal investigations in which information obtained as a result of

the interception of a private communication under an authorization was used although

the private communication was not adduced in evidence in criminal proceedings

commenced at the instance of the Attorney General as a result of the investigation.

15. The number of prosecutions commenced against officers or servants of Her Majesty

in Right of Canada or members of the Canadian Forces for offences under

Section

184 or

Section 193:

The interception of private communications continues to be an important tool for

the investigation, prevention and prosecution of offences in Alberta, especially in

the area of drug offences and criminal organization investigations.

Alberta Securities Commission

Please note that "Commentary" sections are for interpretive purposes only and do not

have the force of law.

NATIONAL INSTRUMENT 81-107

Independent Review Committee for Investment Funds

(Securities Act)

Made as a rule by the Alberta Securities Commission on November 1, 2006 pursuant

to sections 223 and 224 of the Securities Act.

TABLE OF CONTENTS

Part 1

DEFINITIONS AND APPLICATION

1.1 Investment funds subject to Instrument

1.2 Definition of a "conflict of interest matter"

1.3 Definition of "entity related to the manager"

1.4 Definition of "independent"

1.5 Definition of "inter-fund self-dealing investment prohibitions"

1.6 Definition of "manager"

1.7 Definition of "standing instruction"

Part 2 FUNCTIONS OF THE MANAGER

2.1 Manager standard of care

2.2 Manager to have written policies and procedures

2.3 Manager to maintain records

2.4 Manager to provide assistance

Part 3 INDEPENDENT REVIEW COMMITTEE

3.1 Independent review committee for an investment fund

3.2 Initial appointments

3.3 Vacancies and reappointments

3.4 Term of office

3.5 Nominating criteria

3.6 Written charter

3.7 Composition

3.8 Compensation

3.9 Standard of care

3.10 Ceasing to be a member

3.11 Authority

3.12 Decisions

3.13 Fees and expenses to be paid by the investment fund

3.14 Indemnification and insurance

3.15 Orientation and continuing education

Part 4 FUNCTIONS OF INDEPENDENT REVIEW COMMITTEE

4.1 Review matters referred by the manager

4.2 Regular assessments

4.3 Reporting to the manager

4.4 Reporting to securityholders

4.5 Reporting to securities regulatory authorities

4.6 Independent review committee to maintain records

Part 5 CONFLICT OF INTEREST MATTERS

5.1 Manager to refer conflict of interest matters to independent review

committee

5.2 Matters requiring independent review committee approval

5.3 Matters subject to independent review committee recommendation

5.4 Standing instructions by the independent review committee

Part 6 EXEMPTED TRANSACTIONS

6.1 Inter-fund trades

6.2 Transactions in securities of related issuers

Part 7 EXEMPTIONS

7.1 Exemptions

7.2 Existing exemptions, waivers or approvals

Part 8 EFFECTIVE DATE

8.1 Effective date

8.2 Transition

Appendix A - Conflicts of interest or self-dealing provisions for the purpose of

section 1.2 - Definition of a 'conflict of interest matter'

Appendix B - Inter-fund self-dealing conflict of interest provisions for the purpose of

section 1.5 - Definition of 'inter-fund self-dealing investment prohibitions'

Appendix A to Commentary - Decision tree for the purpose of Commentary 1 to

section 5.1 - Manager to refer conflict of interest matters to independent review

committee

Introduction

This National Instrument (the Instrument) contains both rules and accompanying

commentary on those rules. The Canadian Securities Administrators (the CSA or

we), have made these rules under authority granted by the securities legislation of

their jurisdiction.

The commentary may explain the implications of a rule, offer examples or indicate

different ways to comply with a rule. It may expand on a particular subject without

being exhaustive. The commentary is not legally binding, but it does reflect the views

of the CSA . Commentary always appears in italic type and, outside of this

introduction, is titled "Commentary".

PART 1

DEFINITIONS AND APPLICATION

1.1 Investment funds subject to Instrument

(1) This Instrument applies to an investment fund that is a reporting

issuer.

(2) In Qu‚bec, this Instrument does not apply to a reporting issuer

organized under

(

a) an Act to establish the Fonds de solidarit‚ des travailleurs

du Qu‚bec (F.T.Q.) R.S.Q.,

chapter F-3.2.1;

(

b) an Act to establish Fondaction, le Fonds de d‚velopement

de la Conf‚d‚ration des syndicats nationaux pour la

coop‚ration et l'emploi (R.S.Q.,

chapter F-3.1.2); and

(

c) an Act constituting Capital r‚gional et coop‚ratif

Desjardins (R.S.Q.,

chapter C-6.1).

Commentary

1. This Instrument applies to all publicly offered mutual

funds and non-redeemable investment funds. Investment

funds subject to this Instrument include:

* labour sponsored or venture capital funds;

* scholarship plans;

* mutual funds and closed-end funds listed and posted

for trading on a stock exchange or quoted on an

over-the-counter market; and

* investment funds not governed by National

Instrument 81-102 Mutual Funds (NI 81-102).

2. This Instrument does not regulate mutual funds that are

not reporting issuers (commonly referred to as pooled

funds), for example, mutual funds that sell securities to

the public only under capital raising exemptions in

securities legislation.

1.2 Definition of "conflict of interest matter"

In this Instrument, "a conflict of interest matter" means

(

a) a situation where a reasonable person would consider a

manager, or an entity related to the manager, to have an

interest that may conflict with the manager's ability to act

in good faith and in the best interests of the investment

fund; or

(

b) a conflict of interest or self-dealing provision listed in

Appendix A that restricts or prohibits an investment fund,

a manager or an entity related to the manager from

proceeding with a proposed action.

Commentary

Section 5.1 of this Instrument requires that a manager

refer all conflict of interest matters to the independent

review committee (IRC).

2. The CSA do not consider the 'reasonable person' test

described in paragraph (

a) to capture inconsequential

matters. It is expected that, among the factors the

manager will look to for guidance to identify conflict of

interest matters caught by this Instrument, will be

industry best practices. The CSA expect, however, each

manager to consider the nature of its investment fund

operations when making its decisions about which

conflict of interest matters it faces for the funds it

manages.

3. The types of conflicts of interest faced by the portfolio

manager or portfolio adviser (or sub-adviser) or any

other entity related to the manager this Instrument

captures relate to the decisions made on behalf of the

investment fund that may affect or influence the

manager's ability to make decisions in good faith and in

the best interests of the investment fund. This Instrument

is not intended to capture the conflicts of interest at the

service provider level generally.

The CSA expect the manager to consider whether a

particular portfolio manager or portfolio adviser or any

other 'entity related to the manager' would have any

conflicts of interest falling within the definition.

For example, paragraph (

a) might, depending on the

circumstances, capture these conflicts of the portfolio

manager or portfolio adviser:

* portfolio management processes for the investment

fund, including allocation of investments among a

family of investment funds; and

* trading practices for the investment fund, including

negotiating soft dollar arrangements with dealers

with whom the adviser places portfolio transactions

for the investment fund.

4. The CSA contemplate that an 'entity related to the

manager' will have its own policies and procedures to

address any conflicts of interest in its operations. It is

expected the manager will make reasonable inquiries of

these policies and procedures. The conflicts of interest

facing these entities, including any third party portfolio

manager or portfolio adviser, may affect, or be perceived

to affect, the manager's ability to make decisions in the

best interests of the investment fund. The manager is

expected to refer such conflicts to the IRC under this

Instrument.

5. For greater certainty, paragraph (

b) requires that a

'conflict of interest matter' includes any course of action

that the investment fund, the manager or an entity related

to the manager would otherwise be restricted or

prohibited from proceeding with because of a conflict of

interest or self-dealing prohibition in securities

legislation. These include the types of transactions

described under subsection 5.2(1) of this Instrument.

1.3 Definition of "entity related to the manager"

In this Instrument, "entity related to the manager" means

(

a) a person or company that can direct or materially affect

the direction of the management and policies of the

manager or the investment fund, other than as a member

of the independent review committee; or

(

b) an associate, affiliate, partner, director, officer or

subsidiary of the manager or of a person or company

referred to in paragraph (a).

Commentary

1. The CSA consider an 'entity related to the manager' in

paragraph (

a) to include:

* the portfolio manager or portfolio adviser (or sub-

adviser) of the investment fund, including any third

party portfolio manager or portfolio adviser;

* the administrator of a scholarship plan; and

* any person or company that can materially direct or

affect the manager's management or policies,

including through contractual agreements or

ownership of voting securities.

1.4 Definition of "independent"

(1) In this Instrument, a member of the independent review committee

is "independent" if the member has no material relationship with

the manager, the investment fund, or an entity related to the

manager.

(2) For the purposes of subsection (1), a material relationship means a

relationship which could reasonably be perceived to interfere with

the member's judgment regarding a conflict of interest matter.

Commentary

1. Under subsection 3.7(3), all members of the IRC must be

independent of the manager, the investment fund and

entities related to the manager. The CSA believe that all

members must be independent because the principal

function of the IRC is to review activities and

transactions that involve inherent conflicts of interest

between an investment fund and its manager. Given this

role, it is important that the members of the IRC are free

from conflicting loyalties.

2. While the members of the IRC should not themselves be

subject to inherent conflicts or divided loyalties, the CSA

recognize that there may be inherent conflicts relating to

inter-fund issues where a single IRC acts for a family of

investment funds. In those cases, this Instrument requires

members to conduct themselves in accordance with their

written charter and in accordance with the standard of

care set out in this Instrument.

The CSA do not consider the IRC's ability to set its own

reasonable compensation to be a material relationship

with the manager or investment fund under subsection

1.4(1).

3. A material relationship referred to in subsection 1.4(1)

may include an ownership, commercial, charitable,

industrial, banking, consulting, legal, accounting or

familial relationship. The CSA expect managers and IRC

members to consider both past and current relationships

when determining whether a material relationship exists.

For example, depending on the circumstances, the

following individuals may be independent under

section

1.4:

* an independent member of an existing advisory

board or IRC of an investment fund;

* an independent member or former independent

member of the board of directors, or of a special

committee of the board of directors, of an

investment fund;

* a former independent member of the board of

directors, or special committee of the board of

directors, of the manager;

* an individual appointed as a trustee for an

investment fund; and

* an independent member of the board of directors, or

of a special committee of the board of directors, of a

registered trust company that acts as trustee for an

investment fund.

By way of further example, the CSA consider it unlikely

that the following individuals would be independent

under

section 1.4:

* a person who is or has recently been an employee or

executive officer of the manager or investment fund;

and

* a person whose immediate family member is or has

recently been an executive officer of the manager or

investment fund.

The CSA also consider that it would be rare that a

member of the board of directors, or special committee of

the board of directors, of a manager could be

'independent' within the meaning of this Instrument. One

such example of when a member of the board of directors

of a manager could be 'independent' may be "owner-

operated" investment funds, sold exclusively to defined

groups of investors, such as members of a trade or

professional association or co-operative organization,

who directly or indirectly, own the manager. In the case

of these investment funds, the CSA view the interests of

the independent members of the board of directors of the

manager and investors as aligned.

1.5 Definition of "inter-fund self-dealing investment prohibitions"

In this Instrument, "inter-fund self-dealing investment prohibitions" means

the provisions listed in Appendix B that prohibit

(

a) a portfolio manager from knowingly causing any investment

portfolio managed by it to purchase or sell, or

(

b) an investment fund from purchasing or selling,

the securities of an issuer from or to the account of a responsible person, an

associate of a responsible person or the portfolio manager.

1.6 Definition of "manager"

In this Instrument, "manager" means a person or company that directs the

business, operations and affairs of an investment fund.

Commentary

1. The CSA are of the view that the term 'manager' should

be interpreted broadly.

The term "manager" is intended to include a group of

members on the board of an investment fund or the

general partner of an investment fund organized as a

limited partnership, where it acts in the capacity of

'manager'/decision-maker.

2. The CSA have, in connection with prospectus reviews, on

occasion encountered investment funds structured in

unusual ways. The CSA may examine an investment fund

if it seems that it was structured to avoid the operation of

this Instrument.

1.7 Definition of "standing instruction"

In this Instrument, "standing instruction" means a written approval or

recommendation from the independent review committee that permits the

manager to proceed with a proposed action under

section 5.2 or 5.3 on an

ongoing basis.

PART 2 FUNCTIONS OF THE MANAGER

2.1 Manager standard of care

A manager in exercising its powers and discharging its duties related to the

management of the investment fund must

(

a) act honestly and in good faith, and in the best interests of

the investment fund; and

(

b) exercise the degree of care, diligence and skill that a

reasonably prudent person would exercise in comparable

circumstances.

Commentary

1. This

section introduces a required standard of care for

managers in certain jurisdictions and is intended to

create a uniform standard of care provision for managers

of investment funds subject to this Instrument.

2.2 Manager to have written policies and procedures

(1) Before proceeding with a conflict of interest matter or any other

matter that securities legislation requires the manager to refer to

the independent review committee, the manager must

(

a) establish written policies and procedures that it must

follow on that matter or on that type of matter, having

regard to its duties under securities legislation; and

(

b) refer the policies and procedures to the independent

review committee for its review and input.

(2) In establishing the written policies and procedures described in

subsection (1), the manager must consider the input of the

independent review committee, if any.

(3) The manager may revise its policies and procedures if it provides

the independent review committee with a written description of

any significant changes for the independent review committee's

review and input before implementing the revisions.

Commentary

Section 2.2 contemplates that a manager should identify

for each investment fund the conflict of interest matters it

expects will arise and that will be required to be referred

to the IRC under

section 5.1, and review its policies and

procedures for those matters with the IRC.

Section 2.2 further requires the manager to establish

policies and procedures for other matters it expects will

arise and that will be required by securities legislation to

be referred to the IRC, for example, certain

reorganizations and transfers of assets between related

mutual funds under

Part 5 of NI 81-102.

2. A manager is expected to establish policies and

procedures that are consistent with its obligations to the

investment fund under securities legislation to make

decisions in the best interests of the fund. Paragraph

(1)(

a) is intended to reinforce this obligation.

A manager that manages more than one investment fund

may establish policies and procedures for an action or

category of actions for all of the investment funds it

manages. Alternatively, the manager may establish

separate policies and procedures for the action or

category of actions for each of its investment funds, or

groups of its investment funds.

However structured, the CSA expect the written policies

and procedures the manager establishes to be designed

to prevent any violations by the manager and the

investment fund of securities legislation in the areas that

this Instrument addresses, and to detect and promptly

correct any violations that occur.

3. A manager is expected to follow the policies and

procedures established under this section. In referring a

matter to the IRC under

section 5.1, the CSA expect the

manager to inform the IRC whether its proposed action

follows its written policies and procedures on the matter.

If an unanticipated conflict of interest matter arises for

which the manager does not have a policy and

procedure, the CSA expect the manager to bring the

matter and its proposed action to the IRC for its review

and input at the time the matter is referred to the IRC.

4. Small investment fund families may require fewer written

policies and procedures than large fund complexes that,

for example, have conflicts of interest as a result of

affiliations with other financial service firms.

2.3 Manager to maintain records

A manager must maintain a record of any activity that is subject to the

review of the independent review committee, including

(

a) a copy of the policies and procedures that address the

matter;

(

b) minutes of its meetings, if any; and

(

c) copies of materials, including any written reports,

provided to the independent review committee.

Commentary

1. This

section is intended to assist the CSA in determining

whether the manager is adhering to this Instrument, and

in identifying weaknesses in the manager's policies and

procedures if violations do occur. The CSA expect

managers to keep records in accordance with existing

best practices.

2. A manager is expected under this

section to keep minutes

only of any material discussions it has at meetings with

the IRC or internally on matters subject to the review of

the IRC.

The CSA do not view this

section or this Instrument as

preventing the IRC and manager from sharing record

keeping and maintaining joint records of IRC and

manager meetings.

3. The CSA expect a manager to keep records of the actions

it takes in respect of a matter referred to the IRC. This

includes any otherwise restricted or prohibited

transactions described in subsection 5.2(1) for which the

manager requires the IRC's approval under

Part 6 of this

Instrument or under

Part 4 of NI 81-102.

2.4 Manager to provide assistance

(1) When a manager refers to the independent review committee a

conflict of interest matter or any other matter that securities

legislation requires it to refer, or refers its policies and procedures

related to such matters, the manager must

(

a) provide the independent review committee with

information sufficient for the independent review

committee to properly carry out its responsibilities,

including

(

i) a description of the facts and circumstances

giving rise to the matter;

(ii) the manager's policies and procedures;

(iii) the manager's proposed course of action, if

applicable; and

(iv) all further information the independent review

committee reasonably requests;

(

b) make its officers who are knowledgeable about the matter

available to attend meetings of the independent review

committee or respond to inquiries of the independent

review committee about the matter; and

(

c) provide the independent review committee with any other

assistance it reasonably requests in its review of the

matter.

(2) A manager must not prevent or attempt to prevent the independent

review committee, or a member of the independent review

committee, from communicating with the securities regulatory

authority or regulator.

PART 3 INDEPENDENT REVIEW COMMITTEE

3.1 Independent review committee for an investment fund

An investment fund must have an independent review committee.

Commentary

1. A manager is expected to establish an IRC using a

structure that is appropriate for the investment funds it

manages, having regard to the expected workload of that

committee. For example, a manager may establish one

IRC for each of the investment funds it manages, for

several of its investment funds, or for all of its investment

funds.

2. This Instrument does not prevent investment funds from

sharing an IRC with investment funds managed by

another manager. This Instrument also does not prevent

a third party from offering IRCs for investment funds.

Managers of smaller families of investment funds may

find these to be cost-effective ways to establish IRCs for

their investment funds.

3.2 Initial appointments

The manager must appoint each member of an investment fund's first

independent review committee.

3.3 Vacancies and reappointments

(1) An independent review committee must fill a vacancy on the

independent review committee as soon as practicable.

(2) A member whose term has expired, or will soon expire, may be

reappointed by the other members of the independent review

committee.

(3) In filling a vacancy on the independent review committee or

reappointing a member of the independent review committee, the

independent review committee must consider the manager's

recommendations, if any.

(4) A member may not be reappointed for a term or terms of office

that, if served, would result in the member serving on the

independent review committee for longer than 6 years, unless the

manager agrees to the reappointment.

(5) If, for any reason, an independent review committee has no

members, the manager must appoint a member to fill each vacancy

as soon as practicable.

Commentary

1. Consistent with the manager's role to appoint the first

members of an IRC, if at any time the IRC has no

members, the manager will also appoint the replacement

members. The CSA anticipate that the circumstances

contemplated in subsection (5) will occur rarely, such as

in the event of a change of manager or change in control

of the manager. In these circumstances, managers

should consider their timely disclosure obligations under

securities legislation.

2. The manager may suggest candidates and may provide

assistance to the IRC in the selection and recruitment

process when a vacancy arises. Subsection (3) requires

the IRC to consider the manager's recommendation, if

any, when filling a vacancy or reappointing a member of

the IRC.

The CSA believe that allowing the IRC to select its own

members and decide the term a member can serve will

foster independent-minded committees that will be

focussed on the best interests of the investment fund. The

CSA also consider the members of the IRC to be best-

positioned to judge the manner in which a prospective

member can contribute to the effectiveness of the IRC.

3. The maximum term limit of 6 years specified in

subsection (4) for a member to serve on an investment

fund's IRC is intended to enhance the independence and

effectiveness of the IRC. An IRC may reappoint a member

beyond the maximum term, but only with the agreement

of the manager.

3.4 Term of office

The term of office of a member of an independent review committee must

be not less than 1 year and not more than 3 years, and must be set by the

manager or the independent review committee, as the case may be, at the

time the member is appointed.

Commentary

1. To ensure continuity and continued independence from

the manager, the CSA recommend that the terms of all

IRC members be staggered.

3.5 Nominating criteria

Before a member of the independent review committee is appointed, the

manager or the independent review committee, as the case may be, must

consider

(

a) the competencies and skills the independent review

committee, as a whole, should possess;

(

b) the competencies and skills of each other member of the

independent review committee; and

(

c) the competencies and skills the prospective member

would bring to the independent review committee.

Commentary

Section 3.5 sets out the criteria the manager and the IRC

must consider before appointing a member of the IRC.

Subject to these requirements, the manager and the IRC

may establish nominating criteria in addition to those set

out in this section.

3.6 Written charter

(1) The independent review committee must adopt a written charter

that includes its mandate, responsibilities and functions, and the

policies and procedures it will follow when performing its

functions.

(2) If the independent review committee and the manager agree in

writing that the independent review committee will perform

functions other than those prescribed by securities legislation, the

charter must include a description of the functions that are the

subject of the agreement.

(3) In adopting the charter, the independent review committee must

consider the manager's recommendations, if any.

Commentary

1. The CSA expect the written charter to set out the

necessary policies and procedures to ensure the IRC

performs its role adequately and effectively and in

compliance with this Instrument. An IRC acting for more

than one investment fund may choose to establish a

separate charter for each fund. Alternatively, an IRC may

choose to establish one charter for all of the investment

funds it oversees or groups of investment funds.

2. The IRC should consider the specific matters subject to

its review when developing the policies and procedures

to be set out in its charter.

3. Without discussing all of the policies and procedures that

may be set out in the written charter, the CSA expect that

the written charter will include the following:

* policies and procedures the IRC must follow when

reviewing conflict of interest matters,

* criteria for the IRC to consider in setting its

compensation and expenses and the compensation

and expenses of any advisors employed by the IRC,

* a policy relating to IRC member ownership of

securities of the investment fund, manager or in any

person or company that provides services to the

investment fund or the manager,

* policies and procedures that describe how a member

of the IRC is to conduct himself or herself when he

or she faces a conflict of interest, or could be

perceived to face a conflict of interest, with respect

to a matter being considered or to be considered by

the IRC,

* policies and procedures that describe how the IRC is

to interact with any existing advisory board or

board of directors of the investment fund and the

manager, and

* policies and procedures that describe how any

subcommittee of the IRC to which has been

delegated any of the functions of the IRC, is to

report to the IRC.

4. The manager and the IRC may agree that the IRC will

perform functions in addition to those prescribed by this

Instrument and elsewhere in securities legislation. This

Instrument does not preclude those arrangements, nor

does this Instrument regulate those arrangements.

3.7 Composition

(1) An independent review committee must have at least three

members.

(2) The size of the independent review committee is to be determined

by the manager, with a view to facilitating effective decision-

making, and may only be changed by the manager.

(3) Every independent review committee member must be

independent.

(4) An independent review committee must appoint a member as

Chair.

(5) The Chair of an independent review committee is responsible for

managing the mandate, and responsibilities and functions, of the

independent review committee.

Commentary

1. To ensure its effectiveness, a manager should consider

the workload of the IRC when determining its size. The

CSA expect that the manager will seek the input of the

IRC prior to changing the size of the IRC.

2. The CSA anticipate that the Chair of the IRC will lead

IRC meetings, foster communication among IRC

members, and ensure the IRC carries out its

responsibilities in a timely and effective manner.

The CSA expect the IRC Chair will be the primary person

to interact with the manager on issues relating to the

investment fund. An IRC Chair and the manager may

agree to have regular communication as a way for the

IRC Chair to keep informed of the operations of the

investment fund between meetings, and of any significant

events relating to the investment fund.

3. The requirement that all members of the IRC be

independent does not preclude the IRC from consulting

with others who can help the members understand

matters that are beyond their specific expertise, or help

them understand industry practices or trends, for

example.

3.8 Compensation

(1) The manager may set the initial compensation and expenses of an

independent review committee that is appointed under

section 3.2

or subsection 3.3(5).

(2) Subject to subsection (1), the independent review committee must

set reasonable compensation and proper expenses for its members.

(3) When setting its compensation and expenses under subsection (2),

the independent review committee must consider

(

a) the independent review committee's most recent

assessment of its compensation under paragraph

4.2(2)(b); and

(

b) the manager's recommendations, if any.

Commentary

1. This

section permits the manager to determine the

amount and type of compensation and expenses the IRC

members will initially receive. To avoid undue influence

from the manager, subsection (2) requires that,

subsequent to the initial setting of compensation and

other than in the unusual circumstance described in

subsection 3.3(5), members of the IRC have the sole

authority for determining their compensation. The

Instrument permits the manager to recommend to the

members of the IRC the amount and type of

compensation to be paid, and requires the IRC to

consider that recommendation.

2. The CSA expect the IRC and the manager to decide the

IRC's compensation in a manner consistent with good

governance practices. Among the factors the IRC and

manager should consider when determining the

appropriate level of compensation are the following:

* the number, nature and complexity of the investment

funds and the fund families for which the IRC acts;

* the nature and extent of the workload of each

member of the IRC, including the commitment of

time and energy that is expected from each member;

* industry best practices, including industry averages

and surveys on IRC compensation; and

* the best interests of the investment fund.

3. The CSA expect that the IRC and the manager will

discuss any instance where the IRC disagrees with the

manager's recommendations under paragraph (3)(b), in

an attempt to reach an agreement that is satisfactory to

both the IRC and the manager.

3.9 Standard of care

(1) Every member of an independent review committee, in exercising

his or her powers and discharging his or her duties related to the

investment fund, and, for greater certainty, not to any other person,

as a member of the independent review committee must,

(

a) act honestly and in good faith, with a view to the best

interests of the investment fund; and

(

b) exercise the degree of care, diligence and skill that a

reasonably prudent person would exercise in comparable

circumstances.

(2) Every member of an independent review committee must comply

with this Instrument and the written charter of the independent

review committee required under

section 3.6.

(3) A member of the independent review committee does not breach

paragraph (1)(b), if the member exercised the care, diligence and

skill that a reasonably prudent person would exercise in

comparable circumstances, including reliance in good faith on

(

a) a report or certification represented as full and true to the

independent review committee by the manager or an

entity related to the manager; or

(

b) a report of a person whose profession lends credibility to

a statement made by the person.

(4) A member of the independent review committee has complied with

his or her duties under paragraph (1)(

a) if the member has relied in

good faith on

(

a) a report or certification represented as full and true to the

independent review committee by the manager or an

entity related to the manager; or

(

b) a report of a person whose profession lends credibility to

a statement made by the person.

Commentary

1. The standard of care for IRC members under this

section

is consistent with the special relationship between the

IRC and the investment fund.

The CSA consider the role of the members of the IRC to

be similar to corporate directors, though with a much

more limited mandate, and therefore we would expect

any defences available to corporate directors to also be

available to IRC members.

2. The CSA consider the best interests of the investment

fund referred to in paragraph (1)(

a) to generally be

consistent with the interests of the securityholders in the

investment fund as a whole.

3. It is not the intention of the CSA to create a duty of care

on the part of the IRC to any other person under

paragraph (1)(b).

3.10 Ceasing to be a member

(1) An individual ceases to be a member of an independent review

committee when

(

a) the investment fund terminates;

(

b) the manager of the investment fund changes, unless the

new manager is an affiliate of the former manager; or

(

c) there is a change of control of the manager of the

investment fund.

(2) An individual ceases to be a member of an independent review

committee if

(

a) the individual resigns;

(

b) the individual's term of office expires and the member is

not reappointed;

(

c) a majority of the other members of the independent

review committee vote to remove the individual; or

(

d) a majority of the securityholders of the investment fund

vote to remove the individual at a special meeting called

for that purpose by the manager.

(3) An individual ceases to be a member of the independent review

committee if the individual is

(

a) no longer independent within the meaning of

section 1.4

and the cause of the member's non-independence is not

temporary for which the member can recuse himself or

herself;

(

b) of unsound mind and has been so found by a court in

Canada or elsewhere;

(

c) bankrupt;

(

d) prohibited from acting as a director or officer of any

issuer in Canada;

(

e) subject to any penalties or sanctions made by a court

relating to provincial and territorial securities legislation;

(

f) a party to a settlement agreement with a provincial or

territorial securities regulatory authority.

(4) If an individual ceases to be a member of the independent review

committee due to a circumstance described in subsection (2), the

manager must, as soon as practicable, notify the securities

regulatory authority or regulator of the date and the reason the

individual ceased to be a member.

(5) The notification referred to in subsection (4) is satisfied if it is

made to the investment fund's principal regulator.

(6) The notice of a meeting of securityholders of an investment fund

called to consider the removal of a member under paragraph (2)(

d) must comply with the notice requirements set out in

section 5.4 of

National Instrument 81-102 Mutual Funds.

(7) For any member of the independent review committee who

receives notice or otherwise learns of a meeting of securityholders

called to consider the removal of the member under paragraph

(2)(d),

(

a) the member may submit to the manager a written

statement giving reasons for opposing the removal; and

(

b) the manager must, as soon as practicable, send a copy of

the statement referred to in paragraph (

a) to every

securityholder entitled to receive notice of the meeting

and to the member unless the statement is included in or

attached to the notice documents required by subsection

(6).

Commentary

1. The CSA do not anticipate that the securityholder vote

contemplated in paragraph 3.10(2)(

d) will be routine.

When a manager calls a meeting of securityholders to

consider the removal of a member, subsection

(7) requires that the member will have an opportunity to

respond to the manager's notice.

2. In the circumstances described in paragraphs 3.10(1)(

b) and (c), all members of the IRC will cease to be members.

This does not preclude the new manager from

reappointing the former members of the IRC under

subsection 3.3(5).

3. Paragraph 3. 10(3)(

a) is meant to exclude a situation

where a member may face, or be perceived to face, a

conflict of interest with respect to a specific conflict of

interest matter the IRC is considering.

3.11 Authority

(1) An independent review committee has authority to

(

a) request information it determines useful or necessary

from the manager and its officers to carry out its duties;

(

b) engage independent counsel and other advisors it

determines useful or necessary to carry out its duties;

(

c) set reasonable compensation and proper expenses for any

independent counsel and other advisors engaged by the

independent review committee; and

(

d) delegate to a subcommittee of at least three members of

the independent review committee any of its functions,

except the removal of a member under paragraph

3.10(2)(c).

(2) If the independent review committee delegates to a subcommittee

under paragraph (1)(

d) any of its functions, the subcommittee must

report on its activities to the independent review committee at least

annually.

(3) Despite any other provision in this Instrument, an independent

review committee may communicate directly with the securities

regulatory authority or regulator with respect to any matter.

Commentary

1. The CSA recognize that utilizing the manager's staff and

industry experts may be important to help the members of

the IRC deal with matters that are beyond the level of

their expertise, or help them understand different

practices among investment funds.

While this Instrument does not require legal counsel or

other advisers for the IRC to be independent of the

manager or the investment fund, there may be instances

when the members of the IRC believe they need access to

counsel or advisers who are free from conflicting

loyalties. Paragraph (1)(

b) gives the IRC the discretion

and authority to hire independent legal counsel and other

advisers. The CSA expect that the IRC will use

independent advisors selectively and only to assist, not

replace, IRC decision-making. The CSA do not anticipate

that IRCs will routinely use external counsel and other

advisers.

2. Paragraph (1)(

d) is intended to allow an IRC of more

than three members to delegate any of its functions,

except the removal of an IRC member, to a subcommittee

of at least three members. The CSA expect in such

instances that the written charter of the IRC will include

a defined mandate and reporting requirements for any

subcommittee.

The CSA do not consider delegation by the IRC of a

function to a subcommittee to absolve the IRC from its

responsibility for the function.

3. Subsection (3) specifies that the IRC may inform the

securities regulatory authority or regulator of any

concerns or issues that it may not otherwise be required

to report. For example, the IRC may be concerned if very

few matters have been referred by the manager for

review, or it may have found, or have reasonable

grounds to suspect, a breach of securities legislation has

occurred. However, the IRC has no obligation to report

matters other than those prescribed by this Instrument or

elsewhere in securities legislation.

4. The CSA do not consider that this

section or this

Instrument prevents the manager from communicating

with the securities regulatory authorities with respect to

any matter.

3.12 Decisions

(1) A decision by the independent review committee on a conflict of

interest matter or any other matter that securities legislation

requires the independent review committee to review requires the

agreement of a majority of the independent review committee's

members.

(2) If, for any reason, an independent review committee has two

members, a decision by the independent review committee must be

unanimous.

(3) An independent review committee with one member may not make

a decision.

Commentary

1. This

section requires a decision of the members of the

IRC to represent the majority. Should the IRC find itself

with two members, subsection (2) permits the IRC to

continue to make decisions on conflict of interest matters

provided the remaining two members agree.

3.13 Fees and expenses to be paid by the investment fund

The investment fund must pay from the assets of its fund all reasonable

costs and expenses reasonably incurred in the compliance of this Instrument.

Commentary

1. A manager is expected to allocate the costs associated

with the IRC on an equitable and reasonable basis

amongst the investment funds for which the IRC acts.

This Instrument does not prohibit a manager from

reimbursing the investment fund for any of the costs

associated with compliance with this Instrument. It is

expected that the prospectus will disclose whether or not

the manager will reimburse the investment fund.

2. The CSA do not expect costs that the manager or

investment fund would ordinarily incur in the operation

of the investment fund without the presence of the IRC

(for example, rent) to be charged to the investment fund

under this section. Among the costs the CSA expect will

be charged to the investment fund under this

section are

the following:

* the compensation and expenses payable to the

members of the IRC and to any independent counsel

and other advisers employed by the IRC;

* the costs of the orientation and continuing education

of the members of the IRC; and

* the costs and expenses associated with a special

meeting of securityholders called by the manager to

remove a member or members of the IRC.

3.14 Indemnification and insurance

(1) In this section, "member" means:

(

a) a member of the independent review committee;

(

b) a former member of the independent review committee;

and

(

c) the heirs, executors, administrators or other legal

representatives of the estate of an individual in (

a) or (b).

(2) An investment fund and manager may indemnify a member against

all costs, charges and expenses, including an amount paid to settle

an action or satisfy a judgment, reasonably incurred by the person

in respect of any civil, criminal, administrative, investigative or

other proceeding in which the member is involved because of

being or having been a member.

(3) An investment fund and manager may advance moneys to a

member for the costs, charges and expenses of a proceeding

referred to in subsection (2). The member must repay the moneys

if the member does not fulfill the conditions of subsection (4).

(4) An investment fund and manager may not indemnify a member

under subsection (2) unless

(

a) the member acted honestly and in good faith, with a view

to the best interests of the investment fund; and

(

b) in the case of a criminal or administrative action or

proceeding that is enforced by a monetary penalty, the

member had reasonable grounds for believing that the

individual's conduct was lawful.

(5) Despite subsection (2), a member referred to in that subsection is

entitled to an indemnity from the investment fund in respect of all

costs, charges and expenses reasonably incurred by the member in

connection with the defence of any civil, criminal, administrative,

investigative or other proceeding to which the member is subject

because of the member's association with the investment fund as

described in subsection (2), if the member seeking indemnity

(

a) was not judged by the court or other competent authority

to have committed any fault or omitted to do anything

that ought to have been done; and

(

b) fulfills the conditions set out in subsection (4).

(6) An investment fund and manager may purchase and maintain

insurance for the benefit of any member referred to in subsection

(2) against any liability incurred by the member in his or her

capacity as a member.

Commentary

1. This Instrument requires that members of an IRC be

accountable for their actions. At the same time, this

section does not prevent an investment fund or a

manager from limiting a member's financial exposure

through insurance and indemnification.

2. This

section permits an investment fund and the manager

to indemnify and purchase insurance coverage for the

members of the IRC on terms comparable to those

applicable to directors of corporations. The broad goals

underlying the indemnity provisions are to allow for

reimbursement for reasonable good faith behaviour,

thereby discouraging the hindsight application of

perfection to the IRC's actions.

Under this section, the investment fund is required to

indemnify an IRC member who has been sued and has

successfully defended the action, subject to certain

conditions. If the IRC member does not defend the action

successfully, the investment fund and manager may

indemnify the member in certain circumstances. The

intention of indemnity is to encourage responsible

behaviour yet still permit enough leeway to attract strong

candidates.

The two conditions which must be satisfied in either

instance under this

section for an IRC member to be

indemnified are:

* the IRC member must have acted in a manner

consistent with his or her fiduciary duty with respect

to the action or matter for which the IRC member is

seeking the indemnification; and

* the IRC member must have had reasonable grounds

for believing that his or her conduct was lawful.

The CSA expect any such coverage to be on reasonable

commercial terms.

3. It is open to members of the IRC to negotiate contractual

indemnities with the manager and the investment fund

provided the protection is permissible under this section.

3.15 Orientation and continuing education

(1) The manager and independent review committee must provide

orientation consisting of educational or informational programs

that enable a new independent review committee member to

understand

(

a) the role of the independent review committee and its

members collectively; and

(

b) the role of the individual member.

(2) The manager may provide a member of the independent review

committee with educational or informational programs, as the

manager considers useful or necessary, that enable the member to

understand the nature and operation of the manager's and

investment fund's businesses.

(3) The independent review committee may reasonably supplement

the educational and informational programs provided to its

members under this section.

Commentary

1. The CSA expect members of the IRC to regularly

participate in educational or informational programs

that may be useful to the members in understanding and

fulfilling their duties.

Section 3.15 sets out only the minimum educational

programs that a manager and IRC are expected to

provide for members of the IRC. Educational activities

could include presentations, seminars or discussion

groups conducted by:

* personnel of the investment fund or manager,

* outside experts,

* industry groups,

* representatives of the investment fund's various

service providers, and

* educational organizations and institutions.

2. The CSA expect a discussion of a member's role referred

to in paragraph (1)(

b) to include a reference to the

commitment of time and energy that is expected from the

member.

PART 4 FUNCTIONS OF INDEPENDENT REVIEW COMMITTEE

4.1 Review of matters referred by manager

(1) The independent review committee must review and provide its

decision under

section 5.2 or under

section 5.3 to the manager on a

conflict of interest matter that the manager refers to the

independent review committee for review.

(2) The independent review committee must perform any other

function required by securities legislation.

(3) The independent review committee has the authority to choose

whether to deliberate and decide on a matter referred to in

subsection (1) and (2) in the absence of the manager, any

representative of the manager and any entity related to the

manager.

(4) Despite subsection (3), an independent review committee must

hold at least one meeting annually at which the manager, any

representative of the manager or any entity related to the manager

are not in attendance.

(5) The independent review committee has no power, authority or

responsibility for the operation of the investment fund or the

manager except as provided in this section.

Commentary

1. The Instrument requires the IRC only to consider matters

referred to it by the manager that involve or may be

perceived to involve a conflict of interest for the manager

between its own interests and its duty to manage an

investment fund.

Securities legislation also requires the IRC to consider

other matters. For example, a change in a mutual fund's

auditor and certain reorganizations and transfers of

assets between related mutual funds under

Part 5 of NI

81-102 require the review and prior approval of the IRC

for the manager to proceed.

2. The manager and the IRC may agree that the IRC will

perform functions in addition to those prescribed by this

Instrument and elsewhere in securities legislation. This

Instrument does not preclude those arrangements, nor

does this Instrument regulate those arrangements.

3. Subsection (3) permits the IRC to decide who, other than

IRC members, may attend any IRC meeting other than

the meeting referred to in subsection (4). Subsection

(3) also does not preclude the IRC from receiving oral or

written submissions from the manager or from holding

meetings with representatives of the manager or an entity

related to the manager or any other person not

independent under this Instrument. The CSA believe

utilizing the manager's staff and industry experts may be

important to help the members of the IRC understand

matters that are beyond their specific expertise, or help

them understand different practices among investment

funds.

4. The requirement that the IRC hold at least one meeting

without anyone else present (including management of

the investment fund) is intended to give the members of

the IRC an opportunity to speak freely about any

sensitive issues, including any concerns about the

manager.

The CSA are of the view that subsection (4) is satisfied if

the IRC holds a portion of any meeting annually without

the presence of the manager, any representative of the

manager or any entity related to the manager.

4.2 Regular assessments

(1) At least annually, the independent review committee must review

and assess the adequacy and effectiveness of

(

a) the manager's written policies and procedures required

under

section 2.2;

(

b) any standing instruction it has provided to the manager

under

section 5.4;

(

c) the manager's and the investment fund's compliance with

any conditions imposed by the independent review

committee in a recommendation or approval it has

provided to the manager; and

(

d) any subcommittee to which the independent review

committee has delegated, under paragraph 3.11(1)(d), any

of its functions.

(2) At least annually, the independent review committee must review

and assess

(

a) the independence of its members; and

(

b) the compensation of its members.

(3) At least annually, the independent review committee must review

and assess its effectiveness as a committee, as well as the

effectiveness and contribution of each of its members.

(4) The review by the independent review committee required under

subsection (3) must include a consideration of

(

a) the independent review committee's written charter

referred to in

section 3.6;

(

b) the competencies and knowledge each member is

expected to bring to the independent review committee;

(

c) the level of complexity of the issues reasonably expected

to be raised by members in connection with the matters

under review by the independent review committee; and

(

d) the ability of each member to contribute the necessary

time required to serve effectively on the independent

review committee.

Commentary

Section 4.2 sets out the minimum assessments the

independent review committee must perform. Subject to

these requirements, the IRC may establish a process for

(and determine the frequency of) additional assessments

as it sees fit.

2. The annual self-assessment by the IRC should improve

performance by strengthening each member's

understanding of his or her role and fostering better

communication and greater cohesiveness among

members.

3. When evaluating individual performance, it is expected

that the IRC consider factors such as the member's

attendance and participation in meetings, continuing

education activities and industry knowledge. The

manager may also provide IRC members with feedback

which the IRC may consider.

It is expected the self-assessment should focus on both

substantive and procedural aspects of the IRC's

operations. When evaluating the IRC's structure and

effectiveness, the IRC should consider factors such as the

following:

* the frequency of meetings;

* the substance of meeting agendas;

* the policies and procedures that the manager has

established to refer matters to the IRC;

* the usefulness of the materials provided to the

members of the IRC;

* the collective experience and background of the

members of the IRC;

* the number of funds the IRC oversees; and

* the amount and form of compensation the members

receive from an individual investment fund and in

aggregate from the fund family.

4. The CSA expect the members of an IRC to respond

appropriately to address any weaknesses found in a self-

assessment. For example, it may be necessary to improve

the IRC members' continuing education, recommend

ways to improve the quality and sufficiency of the

information provided to them, or recommend to the

manager decreasing the number of investment funds

under the IRC's oversight.

In rare circumstances, the IRC may consider removing a

member of the IRC as contemplated under paragraph

3.10(2)(

c) as a result of the self-assessment.

4.3 Reporting to the manager

The independent review committee must as soon as practicable deliver to

the manager a written report of the results of an assessment under subsection

4.2(1) and (2) that includes

(

a) a description of each instance of a breach of any of the

manager's policies or procedures of which the

independent review committee is aware, or that it has

reason to believe has occurred;

(

b) a description of each instance of a breach of a condition

imposed by the independent review committee in a

recommendation or approval it has provided to the

manager, of which the independent review committee is

aware, or that it has reason to believe has occurred; and

(

c) recommendations for any changes the independent

review committee considers should be made to the

manager's policies and procedures.

4.4 Reporting to securityholders

(1) An independent review committee must prepare, for each financial

year of the investment fund and no later than the date the

investment fund files its annual financial statements, a report to

securityholders of the investment fund that describes the

independent review committee and its activities for the financial

year and includes

(

a) the name of each member of the independent review

committee at the date of the report, with

(

i) the member's length of service on the

independent review committee;

(ii) the name of any other fund family on whose

independent review committee the member

serves; and

(iii) if applicable, a description of any relationship

that may cause a reasonable person to question

the member's independence and the basis upon

which the independent review committee

determined that the member is independent;

(

b) the percentage of securities of each class or series of

voting or equity securities beneficially owned, directly or

indirectly, in aggregate, by all the members of the

independent review committee of the investment fund

(

i) in the investment fund if the aggregate level of

ownership exceeds 10 percent;

(ii) in the manager; or

(iii) in any person or company that provides services

to the investment fund or the manager;

(

c) the identity of the Chair of the independent review

committee;

(

d) any changes in the composition or membership of the

independent review committee during the period;

(

e) the aggregate compensation paid to the independent

review committee and any indemnities paid to members

of the independent review committee by the investment

fund during the period;

(

f) a description of the process and criteria used by the

independent review committee to determine the

appropriate level of compensation of its members and

any instance when, in setting the compensation and

expenses of its members, the independent review

committee did not follow the recommendation of the

manager, including

(

i) a

summary of the manager's recommendation;

and

(ii) the independent review committee's reasons for

not following the recommendation;

(

g) if known, a description of each instance when the

manager acted in a conflict of interest matter referred to

the independent review committee for which the

independent review committee did not give a positive

recommendation, including

(

i) a

summary of the recommendation; and

(ii) if known, the manager's reasons for proceeding

without following the recommendation of the

independent review committee and the result of

proceeding;

(

h) if known, a description of each instance when the

manager acted in a conflict of interest matter but did not

meet a condition imposed by the independent review

committee in its recommendation or approval, including

(

i) the nature of the condition;

(ii) if known, the manager's reasons for not meeting

the condition; and

(iii) whether the independent review committee is of

the view that the manager has taken, or

proposes to take, appropriate action to deal with

the matter; and

(

i) a brief

summary of any recommendations and approvals

the manager relied upon during the period.

(2) The report required under subsection (1) must as soon as

practicable

(

a) be sent by the investment fund, without charge, to a

securityholder of the investment fund, upon the

securityholder's request;

(

b) be made available and prominently displayed by the

manager on the investment fund's, investment fund

family's or manager's website, if it has a website;

(

c) be filed by the investment fund with the securities

regulatory authority or regulator; and

(

d) be delivered by the independent review committee to the

manager.

Commentary

1. The report to be filed with the securities regulatory

authorities should be filed on the SEDAR group profile

number of the investment fund as a continuous disclosure

document. The CSA expect that the investment fund will

pay any reasonable costs associated with the filing of the

report.

2. It is expected the report will be displayed in an easily

visible location on the home page of the website of the

investment fund, the investment fund family or the

manager, as applicable. The CSA expect the report to

remain on the website at least until the posting of the next

report.

3. The disclosure required in subparagraph (1)(a)(iii) is

expected to be provided only in instances where a

member could reasonably be perceived to not be

'independent' under this Instrument.

4.5 Reporting to securities regulatory authorities

(1) If the independent review committee is aware of an instance where

the manager acted in a conflict of interest matter under subsection

5.2(1) but did not comply with a condition or conditions imposed

by securities legislation or the independent review committee in its

approval, the independent review committee must, as soon as

practicable, notify in writing the securities regulatory authority or

regulator.

(2) The notification referred to in subsection (1) is satisfied if it is

made to the investment fund's principal regulator.

Commentary

1. Subsection (1) captures a breach of a condition imposed

for an otherwise prohibited or restricted transaction

described in subsection 5.2(1), for which the manager

has acted under

Part 6 of this Instrument or under

Part 4

of NI 81-102. This includes a breach of a condition

imposed by the IRC as part of its approval (including a

standing instruction), or, for example, any conditions

imposed for inter-fund trading under

section 6.1 of this

Instrument or

section 4.3 of NI 81-102, for transactions

in securities of related issuers under

section 6.2 of this

Instrument, and for purchases of securities underwritten

by related underwriters under

section 4.1 of NI 81-102.

The CSA consider that a breach of a condition imposed

by securities legislation (including this Instrument) or by

the IRC in a transaction described in subsection 5.2(1)

will result in the transaction having been made in

contravention of securities legislation. In such instances,

the securities regulatory authorities may consider taking

various action, including requiring the manager to

unwind the transaction and pay any costs associated with

doing so.

2. The CSA expect that the IRC will include in its

notification the steps the manager proposes to take, or

has taken, to remedy the breach, if known.

3. Notification under this

section is not intended to be a

mechanism to resolve disputes between an IRC and a

manager, or to raise inconsequential matters with the

securities regulatory authorities.

4. The CSA do not view this

section or this Instrument as

preventing the manager from communicating with the

securities regulatory authorities with respect to any

matter.

4.6 Independent review committee to maintain records

An independent review committee must maintain records, including

(

a) a copy of its current written charter;

(

b) minutes of its meetings;

(

c) copies of any materials and written reports provided to it;

(

d) copies of materials and written reports prepared by it; and

(

e) the decisions it makes.

Commentary

Section 4.6 sets out the minimum requirements regarding

the record keeping by an IRC. The CSA expect IRCs to

keep records in accordance with existing best practices.

2. The IRC is expected under paragraph (

b) to keep minutes

only of any material discussions it has at meetings with

the manager or internally on matters subject to its

review.

The CSA do not view this

section or this Instrument as

preventing the IRC and manager from sharing record

keeping and maintaining joint records of IRC and

manager meetings.

3. The CSA expect the IRC to keep records of any actions it

takes in respect of a matter referred to it, in particular

any transaction otherwise prohibited or restricted by

securities legislation, as described in subsection 5.2(1),

for which the manager has sought the approval of the

IRC.

PART 5 CONFLICT OF INTEREST MATTERS

5.1 Manager to refer conflict of interest matters to independent

review committee

(1) Subject to

section 5.4, when a conflict of interest matter arises, and

before taking any action in the matter, the manager must

(

a) determine what action it proposes to take in respect of the

matter, having regard to

(

i) its duties under securities legislation; and

(ii) its written policies and procedures on the

matter; and

(

b) refer the matter, along with its proposed action, to the

independent review committee for its review and

decision.

(2) If a manager must hold a meeting of securityholders to obtain

securityholder approval before taking an action in a conflict of

interest matter, the manager must include a

summary of the

independent review committee's decision under subsection (1) in

the notice of the meeting.

Commentary

Section 5.1 recognizes that a manager may not be able to

objectively determine whether it is acting in the best

interests of the investment fund when it has a conflict of

interest. This

section requires managers to refer all

conflict of interest matters - not just those subject to

prohibitions or restrictions under securities legislation -

to the IRC so that an independent perspective can be

brought to bear on the manager's proposed action.

A decision tree for different types of conflict of interest

matters is set out in Appendix A to the Commentary.

While the CSA expect the IRC to bring a high degree of

rigour and skeptical objectivity to its review of conflict of

interest matters, the CSA do not consider it the role of the

IRC to second-guess the investment or business decisions

of a manager or an entity related to the manager.

Section 5.1 sets out how the manager must proceed when

faced with a conflict of interest matter.

Referring proposed actions involving conflict of interest

matters to the IRC for its review is not considered by the

CSA to detract from the manager's obligations to the

investment fund under securities legislation to make

decisions in the best interests of the fund. Subparagraph

(a)(

i) is intended to reinforce this obligation.

3. In referring a matter to the IRC, a manager is expected to

inform the IRC whether its proposed action follows its

written policies and procedures on the matter under

section 2.2.

If an unanticipated conflict of interest matter arises for

which the manager does not have an existing written

policy and procedure, the CSA expect the manager to

bring the matter and its proposed action to the IRC for its

review and input at the time the matter is referred to the

IRC.

4. There may be matters that are subject to a securityholder

vote that also involve a "conflict of interest matter"

under this Instrument. For example, increases in the

charges of the manager to the mutual fund will be a

conflict of interest matter as well as a matter subject to a

securityholder vote under

Part 5 of National Instrument

81-102 Mutual Funds. For these matters, subsection

(2) requires a manager to refer the matter first to the IRC

before seeking the approval of securityholders, and to

include a

summary of the IRC's decision in the written

notice to securityholders.

5.2 Matters requiring independent review committee approval

(1) A manager may not proceed with a proposed action under

section

5.1 without the approval of the independent review committee if

the action is

(

a) an inter-fund trade as described in subsection 6.1(2) of this

Instrument or a transaction as described in subsection

4.2(1) of National Instrument 81-102 Mutual Funds;

(

b) a transaction in securities of an issuer as described in

subsection 6.2(1) of this Instrument; or

(

c) an investment in a class of securities of an issuer

underwritten by an entity related to the manager as

described in subsection 4.1(1) of National Instrument 81-

102 Mutual Funds.

(2) An independent review committee must not approve an action

unless it has determined, after reasonable inquiry, that the action

(

a) is proposed by the manager free from any influence by an

entity related to the manager and without taking into

account any consideration relevant to an entity related to

the manager;

(

b) represents the business judgment of the manager

uninfluenced by considerations other than the best

interests of the investment fund;

(

c) is in compliance with the manager's written policies and

procedures relating to the action; and

(

d) achieves a fair and reasonable result for the investment

fund.

Commentary

1. For the transactions described in subsection (1),

provided the manager receives the IRC's approval under

this section, and satisfies the additional conditions

imposed under the applicable sections of

Part 6 of this

Instrument or

Part 4 of NI 81-102, the manager will be

permitted to proceed with the action without obtaining

regulatory exemptive relief.

The IRC may give its approval for certain actions or

categories of actions in the form of a standing instruction

as described in

section 5.4. If no standing instruction is

in effect, the manager is required to seek the IRC's

approval prior to proceeding with any action set out in

subsection (1). An IRC may consider as guidance any

conditions in prior exemptive relief orders, waivers or

approvals obtained from the securities regulatory

authorities when contemplating the appropriate terms

and conditions in its approval.

2. If the IRC does not approve a proposed action described

in subsection (1), the manager is not permitted to

proceed without obtaining exemptive relief from the

securities regulatory authorities. The CSA consider it in

the best interests of the investment fund, and ultimately

investors, for the IRC to be able to stop any proposed

action which does not meet the test in subsection (2).

3. The CSA would usually expect that, before the IRC

approves a proposed action described in subsection (1),

it will have requested from the manager or others a

report or certification to assist in its determination that

the test in subsection (2) has been met.

4. The CSA expect that the manager will discuss with the

IRC any instance where the IRC does not approve a

proposed action, so that an alternative action satisfactory

to both the manager and the IRC can be found, if

possible.

5. The CSA consider that the ability of the manager to seek

the removal of a member or members of the IRC under

paragraph 3.10(2)(

d) sufficiently addresses any concern

that a manager may have about an IRC's ongoing refusal

to approve matters.

5.3 Matters subject to independent review committee

recommendation

(1) Before a manager may proceed with a proposed action under

section 5.1 other than those set out in subsection 5.2(1),

(

a) the independent review committee must provide a

recommendation to the manager as to whether, in the

committee's opinion after reasonable inquiry, the

proposed action achieves a fair and reasonable result for

the investment fund; and

(

b) the manager must consider the recommendation of the

independent review committee.

(2) If the manager decides to proceed with an action in a conflict of

interest matter that, in the opinion of the independent review

committee after reasonable inquiry, does not achieve a fair and

reasonable result for the investment fund under paragraph (1)(a),

the manager must notify in writing the independent review

committee before proceeding with the proposed action.

(3) Upon receiving the notification described in subsection (2), the

independent review committee may require the manager to notify

securityholders of the investment fund of the manager's decision.

(4) A notification to securityholders under subsection (3) must

(

a) sufficiently describe the proposed action of the manager,

the recommendation of the independent review

committee and the manager's reasons for proceeding;

(

b) state the date of the proposed implementation of the

action; and

(

c) be sent by the manager to each securityholder of the

investment fund at least thirty days before the effective

date of the proposed action.

(5) The investment fund must, as soon as practicable, file the

notification referred to in subsection (4) with the securities

regulatory authority or regulator upon the notice being sent to

securityholders.

Commentary

1. This

section captures all conflict of interest matters a

manager encounters other than those listed in subsection

5.2(1). This includes conflict of interest matters

prohibited or restricted by securities legislation not

specified in subsection 5.2(1), and a manager's business

and commercial decisions made on behalf of the

investment fund that may be motivated, or be perceived to

be motivated, by the manager's own interests rather than

the best interests of the investment fund. Examples

include:

* increasing charges to the investment fund for costs

incurred by the manager in operating the fund;

* correcting material errors made by the manager in

administering the investment fund;

* negotiating soft dollar arrangements with dealers

with whom the manager places portfolio

transactions for the investment fund; and

* choosing to bring services in-house over using third-

party service providers.

The CSA expect that, in seeking guidance in identifying

conflict of interest matters caught by this Instrument,

among the factors the manager will look to for guidance

to identify conflict of interest matters will be industry best

practices. However, the CSA also acknowledge that each

manager will need to consider the nature of its

investment fund operations in determining a conflict of

interest matter.

2. The CSA expect the IRC's recommendation to state a

positive or negative response as to whether they view the

proposed action as achieving a fair and reasonable result

for the investment fund.

3. For a proposed action in a conflict of interest matter

under this

section that is prohibited or restricted by

securities legislation (but not specified in subsection

5.2(1)), a manager will still need to seek exemptive relief

from the securities regulatory authorities.

4. Subsection (2) recognizes that, in exceptional

circumstances, the manager may decide to proceed with

a proposed course of action despite a negative

recommendation from the IRC. In such instances,

subsection (2) requires the manager to notify the IRC

before proceeding with the action. If the IRC determines

that the proposed action is sufficiently important to

warrant notice to securityholders in the investment fund,

the IRC has the authority to require the manager to give

such notification before proceeding with the action.

The CSA anticipate that the situation of a manager

proceeding with a conflict of interest matter, despite a

negative recommendation by the IRC, will occur

infrequently.

5. The notification referred to in subsection (5) should be

filed on the SEDAR group profile number of the

investment fund as a continuous disclosure document.

5.4 Standing instructions by the independent review committee

(1) Despite

section 5.1, the manager is not required to refer a conflict

of interest matter nor its proposed action to the independent review

committee if the manager complies with the terms of a standing

instruction that is in effect.

(2) For any action for which the independent review committee has

provided a standing instruction, at the time of the independent

review committee's regular assessment described in subsection

4.2(1),

(

a) the manager must provide a written report to the

independent review committee describing each instance

that it acted in reliance on a standing instruction; and

(

b) the independent review committee must

(

i) review and assess the adequacy and

effectiveness of the manager's written policies

and procedures on the matter or on that type of

matter with respect to all actions permitted by

each standing instruction;

(ii) review and assess the manager's and investment

fund's compliance with any conditions imposed

by it in each standing instruction;

(iii) reaffirm or amend each standing instruction;

(iv) establish new standing instructions, if

necessary; and

(

v) advise the manager in writing of all changes to

the standing instructions.

(3) A manager may continue to rely on a standing instruction under

subsection (1) until such time as the independent review committee

notifies the manager that the standing instruction has been

amended or is no longer in effect.

Commentary

Section 5.4 recognizes that there are certain actions or

categories of actions of the manager for which it may be

appropriate for the IRC to choose to provide a standing

instruction. For example, this may include a manager's

ongoing voting of proxies on securities held by the

investment fund when the manager has a business

relationship with the issuer of the securities, or, a

manager's decision to engage in inter-fund trading.

2. The CSA expect that, before providing or continuing a

standing instruction to the manager for an action or

category of actions, the IRC will have:

* reviewed the manager's written policies and

procedures with respect to the action or category of

actions;

* requested from the manager or other persons a

report or certification to assist in deciding whether

to give its approval or recommendation for the

action or category of actions under subsection 5.2(1)

or 5.3(1), as the case may be;

* considered whether a standing instruction for the

particular action or category of actions is

appropriate for the investment fund; and

surrounding the standing instruction for the action

or category of actions.

An IRC may consider including in any standing

instruction any terms or conditions in prior exemptive

relief orders, waivers or approvals obtained from the

securities regulatory authorities.

3. As part of the IRC's review under subparagraph

(2)(b)(ii), the IRC is expected to be mindful of its

reporting obligation under

section 4.5 of this Instrument,

which includes notifying the securities regulatory

authorities of any instance where the manager, in

proceeding with an action, did not meet a condition

imposed by the IRC in its approval (this includes a

standing instruction).

4. This

section is intended to improve the flexibility and

timeliness of the manager's decisions concerning a

proposed course of action in a conflict of interest matter.

PART 6 EXEMPTED TRANSACTIONS

6.1 Inter-fund trades

(1) In this

section

(a) "current market price of the security" means,

(

i) if the security is an exchange-traded security or

a foreign exchange-traded security,

(

A) the closing sale price on the day of the

transaction as reported on the

exchange upon which the security is

listed or the quotation trade reporting

system upon which the security is

quoted, or

(

B) if there are no reported transactions for

the day of the transaction, the average

of the highest current bid and lowest

current ask for the security as

displayed on the exchange upon which

the security is listed or the quotation

trade reporting system upon which the

security is quoted, or

(

C) if the closing sale price on the day of

the transaction is outside of the closing

bid and closing ask, the average of the

highest current bid and lowest current

ask for the security as displayed on the

exchange upon which the security is

listed or the quotation trade reporting

system upon which the security is

quoted; or

(ii) for all other securities, the average of the

highest current bid and lowest current ask

determined on the basis of reasonable inquiry;

and

(b) "market integrity requirements" means

(

i) if the security is an exchange-traded security,

the purchase or sale

(

A) is printed on a marketplace that

executes trades of the security; and

(

B) complies with the market conduct and

display requirements of the

marketplace, its regulation services

provider and securities regulatory

authorities; or

(ii) if the security is a foreign exchange-traded

security, the purchase or sale complies with the

requirements that govern transparency and

trading of foreign exchange-traded securities on

the foreign exchange or foreign quotation and

trade reporting system; or

(iii) for all other securities, the purchase or sale is

through a dealer, if the purchase or sale is

required to be reported by a registered dealer

under applicable securities legislation.

(2) The portfolio manager of an investment fund may purchase a

security of any issuer from, or sell a security of any issuer to,

another investment fund managed by the same manager or an

affiliate of the manager, if, at the time of the transaction

(

a) the investment fund is purchasing from, or selling to,

another investment fund to which this Instrument applies;

(

b) the independent review committee has approved the

transaction under subsection 5.2(2);

(

c) the bid and ask price of the security is readily available;

(

d) the investment fund receives no consideration and the

only cost for the trade is the nominal cost incurred by the

investment fund to print or otherwise display the trade;

(

e) the transaction is executed at the current market price of

the security;

(

f) the transaction is subject to market integrity

requirements; and

(

g) the investment fund keeps written records, including

(

i) a record of each purchase and sale of securities;

(ii) the parties to the trade; and

(iii) the terms of the purchase or sale

for five years after the end of the fiscal year in which the

trade occurred, the most recent two years in a reasonably

accessible place.

(3) The provisions of National Instrument 21-101 Marketplace

Operation, and

Part 6 and

Part 8 of National Instrument 23-101

Trading Rules, do not apply to a portfolio manager or portfolio

adviser of an investment fund, or an investment fund, with respect

to a purchase or sale of a security referred to in subsection (2) if

the purchase or sale is made in accordance with that subsection.

(4) The inter-fund self-dealing investment prohibitions do not apply to

a portfolio manager or portfolio adviser of an investment fund, or

an investment fund, with respect to a purchase or sale of a security

referred to in subsection (2) if the purchase or sale is made in

accordance with that subsection.

(5) The dealer registration requirement does not apply to a portfolio

manager of an investment fund, with respect to a purchase or sale

of a security referred to in subsection (2) if the purchase or sale is

made in accordance with that subsection.

(6) In subsection (5). "dealer registration requirement" has the

meaning ascribed to that term in National Instrument 14-101

Definitions.

Commentary

1. The term "inter-fund self-dealing investment

prohibitions" is defined in

section 1.5 of this Instrument.

It is intended to capture the prohibitions in the securities

legislation and certain regulations of each securities

regulatory authority regarding inter-fund trades.

2. This

section is intended to exempt investment funds from

the prohibitions in the securities legislation and certain

regulations that preclude inter-fund trades. It is not

intended to apply to securities issued by an investment

fund that are purchased by another fund within the same

fund family.

The CSA are of the view that this

section applies to inter-

fund trades between fund families of the same manager

provided the purchase or sale is made in accordance

with subsection (2).

3. This

section is also intended to provide a portfolio

manager with a dealer registration exemption, where

necessary, for inter-fund trades made in accordance with

this section, but will not apply to any other activities of

the portfolio manager. The exemption is based on

compliance with this Instrument and the limitation of its

application to prospectus-qualified investment funds.

The CSA note that the Registration Reform project may

re-examine this exemption.

4. This

section sets out the minimum conditions for inter-

fund trades to proceed without regulatory exemptive

relief. An IRC may consider including in any approval

any terms or conditions in prior exemptive relief orders,

waivers or approvals obtained from the securities

regulatory authorities.

5. This

section does not specify the policies and procedures

that a manager must have to effect inter-fund trades.

However, the CSA expect the manager's policies to

include factors or criteria for

* allocating securities purchased for or sold by two or

more investment funds managed by the manager;

and

* ensuring that the terms of purchase or sale will be

no less beneficial to the investment fund than those

generally available to other market participants in

arm's-length transactions.

6. The CSA expect that the IRC may give its approval in the

form of a standing instruction under

section 5.4, to give

the manager greater flexibility to take advantage of

perceived market opportunity.

7. Paragraph (2)(

c) requires that the market quotations for

the transactions be transparent. The CSA expect that if

the price information is publicly available from a

marketplace, newspaper or through a data vendor, for

example, this will be the price. If the price is not publicly

available, the CSA expect the investment fund to obtain at

least one quote from an independent, arm's-length

purchaser or seller, immediately before the purchase or

sale.

8. The CSA consider the requirement in paragraph (2)(

f) to

be a way to facilitate price discovery and integrity. The

CSA believe this is essential to well-functioning and

efficient capital markets. Subparagraph (1)(b)(iii) is

intended to capture, for corporate debt securities, the

requirement, if applicable, to report the trade to CanPx,

and for illiquid securities, the requirement, if applicable,

to report the trade to the Canadian Unlisted Board

(CUB).

9. Paragraph (2)(

g) sets out the minimum expectations

regarding the records an investment fund must keep of its

inter-fund trades made in reliance on this section. The

records should be detailed, and sufficient to establish a

proper audit trail of the transactions.

6.2 Transactions in securities of related issuers

(1) An investment fund may make or hold an investment in the

security of an issuer related to it, its manager, or an entity related

to the manager, if

(

a) at the time that the investment is made,

(

i) the independent review committee has approved

the investment under subsection 5.2(2); and

(ii) the purchase is made on an exchange on which

the securities of the issuer are listed and traded;

and

(

b) no later than the time the investment fund files its annual

financial statements, the manager of the investment fund

files with the securities regulatory authority or regulator

the particulars of the investment.

(2) The mutual fund conflict of interest investment restrictions do not

apply to a mutual fund with respect to an investment referred to in

subsection (1) if the investment is made in accordance with that

subsection.

(3) In subsection (2), "mutual fund conflict of interest investment

restrictions" has the meaning ascribed to that term in National

Instrument 81-102 Mutual Funds.

(4) In Quebec,

Section 236 of the Securities Regulation does not apply

to a portfolio adviser or registered person acting under a

management contract with respect to an investment referred to in

subsection (1) on behalf of an investment fund, if the investment is

made in accordance with that subsection.

Commentary

1. This

section is intended to relieve investment funds in

Quebec, and mutual funds elsewhere in Canada, from the

prohibitions in the securities legislation of each

securities regulatory authority that preclude investments

in securities of related issuers.

2. This

section sets out the minimum conditions for

purchases to proceed without regulatory exemptive relief.

An IRC may consider including in any approval any

terms or conditions in prior exemptive relief orders,

waivers or approvals obtained from the securities

regulatory authorities.

The CSA expect that the IRC may give its approval in the

form of a standing instruction as described in

section 5.4

to allow the manager greater flexibility in its decisions.

3. This

section contemplates that the manager will comply

with the applicable reporting requirements under

securities legislation for each purchase. The filing

referred to in paragraph (1)(

b) should be filed on the

SEDAR group profile number of the investment fund, as a

continuous disclosure document.

4. If an IRC gives its approval for the investment fund to

purchase securities of an issuer described in this section,

and then subsequently withdraws its approval for

additional purchases, the CSA will not consider the

continued holding of the securities to be subject to

subsection 1.2(

b) of the Instrument. However, we will

expect the manager to consider whether continuing to

hold those securities is a conflict of interest matter that

subsection 1.2(

a) of the Instrument would require the

manager to refer to the IRC.

PART 7 EXEMPTIONS

7.1 Exemptions

(1) The securities regulatory authority or regulator may grant an

exemption from this Instrument, in whole or in part, subject to

such conditions or restrictions as may be imposed in the

exemption.

(2) Despite subsection (1), in Ontario only the regulator may grant

such an exemption.

7.2 Existing exemptions, waivers or approvals

Any exemption, waiver or approval under a provision of securities

legislation that was effective before this Instrument came into force and that

deals with the matters that this Instrument regulates, will expire one year

after this Instrument comes into force.

Commentary

1. The CSA have, in a number of jurisdictions, granted

exemptions and waivers from the conflict of interest and

self-dealing provisions in securities legislation to permit

the manager and/or the investment fund to make

investments not otherwise permitted by securities

legislation. Some of those exemptions and waivers

contained "sunset" provisions that provided for the

expiry of the exemption or waiver upon the coming into

force of legislation or a CSA policy or rule that

effectively provides for fund governance.

For greater certainty, the CSA note that the coming into

force of

section 7.2 of this Instrument will effectively

cause all exemptions and waivers that deal with the

matters regulated by this Instrument - not just those

exemptions and waivers that deal with the matters under

subsection 5.2(1) - to expire one year after its coming

into force whether or not they contained a "sunset"

provision.

PART 8 EFFECTIVE DATE

8.1 Effective date

This Instrument comes into force on November 1, 2006.

8.2 Transition

(1) Despite

section 8.1, this Instrument does not apply to an

investment fund until the earlier of

(

a) the date on which the manager provides to the securities

regulatory authority or regulator the notification referred

to in subsection (4); and

(

b) the date one year after this Instrument comes into force.

(2) Despite subsection (1), six months from the date this Instrument

comes into force the manager must appoint the first members of

the independent review committee under

section 3.2 in compliance

with this Instrument.

(3) Despite

section 4.4, the independent review committee's first

report to securityholders must be completed by the 120th day after

the end of the first financial year of the investment fund to which

this Instrument applies.

(4) A manager of an investment fund must notify the securities

regulatory authority or regulator in writing if it intends to comply

with this Instrument prior to the expiration of the transition period

under subsection (1).

(5) The notification referred to in subsection (4) is satisfied if the

notification is made to the investment fund's principal regulator.

Commentary

Section 8.2 is intended to address transitional concerns.

The CSA expect that all investment funds will be

compliant with this Instrument following the expiry of the

transition period under subsection 8.2(1), twelve months

after the Instrument is in force. For an investment fund

established after the expiry of the transition period, it is

expected that the investment fund will be compliant with

this Instrument before any purchase order for securities

of the investment fund is accepted.

2. Subsection 8.2(2) allows a manager an extra six months

from the date this Instrument is in force to appoint the

initial members of the IRC.

While a six month transition period exists for the

appointment of IRC members, the CSA strongly

encourage a timely appointment of the IRC by the

manager so that within the twelve month transitional

period there is sufficient time for the IRC to adopt its

charter, to review the manager's policies and

procedures, and to review (subject to manager referral)

any existing conflict of interest matters.

The transition period is also intended to give the

manager sufficient time to refer existing and new conflict

of interest matters to the IRC for its review and

determination.

3. The CSA anticipate a manager or investment fund may

wish to rely on the Instrument before the expiry of the

transition period so that it may proceed with IRC

approval for an otherwise prohibited or restricted

transaction in securities legislation described in

subsection 5.2(1). This may not occur unless there is

complete compliance with the Instrument. Subsection

(4) is intended to assist the CSA in knowing which managers

of investment funds are proceeding in this manner before

the expiry of the transition period.

4. For investment funds established before the expiry of the

transition period, the CSA expect the manager to

establish policies and procedures on any conflict of

interest matters (if they do not already have them), and to

refer to the IRC these policies and procedures and any

decisions related to such matters prior to the end of the

transition period.

5. The CSA do not consider a manager's organization of an

investment fund (such as the initial setting of fees or the

initial choice of service providers) to be subject to IRC

review, unless the manager's decisions give rise to a

conflict of interest concerning the manager's obligations

to existing investment funds within the manager's fund

family. However, the CSA expect the manager will

establish policies and procedures for any conflict of

interest matters arising from the investment fund's

organization or otherwise, and refer to the IRC these

policies and procedures and any decisions related to

such matters.

It is anticipated that the manager will wish to engage the

IRC early in the establishment of the investment fund to

ensure the IRC is adequately informed of potential new

conflicts of interest.

6. An investment fund, whether established before or after

the date this Instrument comes into force, has a total

transition period of up to twelve months from the date the

Instrument comes into force to comply with the

Instrument. Only if the manager of an investment fund

intends to comply with the Instrument in its entirety

before the expiry of the transition period is the notice in

subsection (4) required.

7. It is expected that investment funds will incorporate any

new disclosure obligations arising out of this Instrument

as part of their annual prospectus renewal or continuous

disclosure filing following the expiry of the transition

period.

8. The CSA do not consider the expenses incurred by

existing investment funds in establishing an IRC under

this Instrument to be caught by

section 5.1 of NI 81-102.

We do not view

section 5.1 as intending to capture the

costs associated with compliance by an investment fund

with new regulatory requirements.

APPENDIX A - CONFLICT OF INTEREST OR SELF-DEALING

PROVISIONS

JURISDICTION SECURITIES LEGISLATION REFERENCE

Alberta

Part 15 - Insider Trading and Self-Dealing of the

Securities Act (Alberta)

British Columbia

Part 15 - Self-Dealing of the Securities Act

(British Columbia)

Manitoba

Part XI - Insider Trading of the Securities Act

(Manitoba)

Newfoundland

Part XX - Insider Trading and Self-Dealing of the

and Labrador Securities Act (Newfoundland and Labrador)

New Brunswick

Part 10 - Insider Trading and Self-Dealing of the

Securities Act (New Brunswick)

Nova Scotia Sections 112 - 128 of the Securities Act (Nova

Scotia)

Ontario

Part XXI - Insider Trading and Self-Dealing of

the Securities Act (Ontario)

Quebec

Section 236 of the Securities Regulation (Quebec)

Saskatchewan

Part XVII - Insider Trading and Self-Dealing -

Mutual Funds of the Securities Act (Saskatchewan)

British Columbia, Alberta,

Part 4 of National Instrument 81-102 Mutual Funds

Manitoba, Newfoundland and

Labrador, New Brunswick,

Northwest Territories, Nova

Scotia, Nunavut, Ontario,

Prince Edward Island,

Quebec, Saskatchewan and

Yukon

APPENDIX B - INTER-FUND SELF-DEALING CONFLICT OF INTEREST

PROVISIONS

JURISDICTION SECURITIES LEGISLATION REFERENCE

Alberta

Section 192(2)(

b) of the Securities Act (Alberta)

Section 31(6) of ASC Rules

British Columbia

Section 127(1)(

b) of the Securities Act (British

Columbia)

Newfoundland

Section 119(2)(

b) of the Securities Act

and Labrador (Newfoundland and Labrador)

Section 103(6) of Reg. 805/96

New Brunswick

Section 144(1)(

b) of the Securities Act (New

Brunswick)

Section 11.7(6) of Local Rule 31-501 Registration

Requirements

Nova Scotia

Section 126(2)(

b) of the Securities Act (Nova

Scotia)

Section 32(6) of the General Securities Rules

Ontario

Section 118(2)(

b) of the Securities Act (Ontario)

Section 115(6) of Reg. 1015

Prince Edward Island

Section 38.1(6) of Securities Act Regulations

Quebec

Section 236 of the Securities Regulation (Quebec)

Saskatchewan

Section 127(2)(

b) of the Securities Act

(Saskatchewan)

Section 27(6) of Securities Regulations

______________

AMENDMENTS TO NATIONAL INSTRUMENT 81-101

Mutual Fund Prospectus Disclosure,

Form 81-101F1 Contents of Simplified Prospectus and

Form 81-101F2 Contents of Annual Information Form

(Securities Act)

Made as an amendment rule by the Alberta Securities Commission on November 1,

2006 pursuant to sections 223 and 224 of the Securities Act.

Section 1.1 of National Instrument 81-101 Mutual Fund Prospectus

Disclosure is amended by:

(

a) adding the following after the definition of "financial year":

"independent review committee" means the independent review

committee of the investment fund established under National

Instrument 81-107 Independent Review Committee for Investment

Funds;"; and

(

b) adding the following after the definition of "multiple SP":

"NI 81-107" means National Instrument 81-107 Independent

Review Committee for Investment Funds;".

2. Form 81-101F1 Contents of Simplified Prospectus is amended

(

a) in Item 5 of Part A by:

(

i) adding the following after subsection (3):

"

(3.1) Under a separate sub-heading "Independent

Review Committee" in the diagram or table, briefly

describe the independent review committee of the mutual

funds, including

* an appropriate

summary of its mandate,

* its composition,

* that it prepares at least annually a report of its

activities for securityholders which is available

on the [mutual fund's/mutual fund family's]

Internet site at [insert mutual fund's Internet site

address], or at the securityholders request at no

cost, by contacting the [mutual fund/mutual

fund family] at [insert mutual fund's /mutual

fund family's e-mail address], and

* that additional information about the

independent review committee, including the

names of the members, is available in the

mutual fund's Annual Information Form.";

(ii) adding the following after subsection (5):

"

(6) Despite subsection (3.1), if the information required

by subsection (3.1) is not the same for substantially all of

the mutual funds described in the document, provide only

that information that is the same for substantially all of

the mutual funds and provide the remaining disclosure

required by that subsection under Item 4(3.1) of Part B of

this Form."; and

(iii) adding the following Instruction after Instruction (2):

"

(3) The information about the independent review

committee should be brief. For instance, its mandate may

in part be described as "reviewing, and providing input

on, the manager's written policies and procedures which

deal with conflict of interest matters for the manager and

reviewing such conflict of interest matters." A cross-

reference to the annual information form for additional

information on the independent review committee and

fund governance should be included.".

(

b) in Item 8 of Part A by

(

i) adding the following after subsection 8.1(3) :

"

(3.1) Under "Operating Expenses" in the table, include a

description of the fees and expenses payable in

connection with the independent review committee."; and

(ii) adding the following after subsection 8.1(5):

"

(6) Despite subsection (3.1), if the information required

by subsection (3.1) is not the same for each mutual fund

described in the document, make this disclosure in the

description of fees and expenses required for each fund

by Item 5 of Part B of this Form and include a cross-

reference to that information in the table required by this

Item.".

(

c) in Item 4 of Part B by adding the following after subsection (3):

"

(3.1) Under a separate sub-heading "Independent Review

Committee" in the diagram or table, briefly describe the

independent review committee of the mutual funds, including

* an appropriate

summary of its mandate,

* its composition,

* that it prepares at least annually a report of its

activities for securityholders

which is available on the [mutual fund's/mutual fund

family's] Internet site at [insert mutual fund's Internet

site address], or at securityholders request at no cost, by

contacting the [mutual fund/mutual fund family] at [insert

mutual fund's /mutual fund family's e-mail address], and

* that additional information about the

independent review committee,

including the names of the members, is available in the

mutual fund's Annual Information Form.".

(

d) in Item 5 of Part B by adding the following after subparagraph

(f)(ii):

"(iii) the amount of the fees and expenses payable in connection

with the independent review committee, charged to the mutual

fund; and".

3. Form 81-101F2 Contents of Annual Information Form is amended

(

a) in Item 4 by adding the following after subsection (2):

"

(2.1) If the mutual fund has relied on the approval of the

independent review committee and the relevant

requirements of NI 81-107 to vary any of the investment

restrictions and practices contained in securities

legislation, including NI 81-102, provide details of the

permitted variations.

(2.2) If the mutual fund has relied on the approval of the

independent review committee to implement a

reorganization with, or transfer of assets to, another

mutual fund or to proceed with a change of auditor of the

mutual fund as permitted by NI 81-102, provide details.".

(

b) in Item 10 by:

(

i) striking out "and" at the end of paragraph 10.1(f);

(ii) adding ";and" at the end of paragraph 10.1(g); and

(iii) adding the following after paragraph 10.1(g):

"(

h) the oversight of the manager of the mutual fund by

the independent review committee.".

(

c) in Item 11 by adding the following after subsection 11.1(5):

"

(6) Disclose the percentage of securities of each class or series of

voting or equity securities beneficially owned, directly or

indirectly, in aggregate, by all the independent review committee

members of the mutual fund

(

a) in the mutual fund if the aggregate level of ownership

exceeds 10 percent,

(

b) in the manager, or

(

c) in any person or company that provides services to the

mutual fund or the manager.".

(

d) in Item 12

(

i) by repealing paragraph (1)(

a) and substituting the

following:

"(

a) the mandate and responsibilities of the independent review

committee and the reasons for any change in the composition of

the independent review committee since the date of the most

recently filed annual information form;

(a.1) any other body or group that has responsibility for fund

governance and the extent to which its members are independent

of the manager of the mutual fund; and"; and

(ii) by renumbering the Instruction as Instruction (1) and

adding the following Instruction after Instruction (1):

"

(2) If the mutual fund has an independent review committee, state

in the disclosure provided under paragraph (1)(

b) that NI 81-107

requires the manager to have policies and procedures relating to

conflicts of interest.".

(

e) in Item 15 by repealing subsection (2) and substituting the following:

"

(2) Describe any arrangements under which compensation was

paid or payable by the mutual fund during the most recently

completed financial year of the mutual fund, for the services of

directors of the mutual fund, members of an independent board of

governors or advisory board of the mutual fund and members of

the independent review committee of the mutual fund, including

the amounts paid, the name of the individual and any expenses

reimbursed by the mutual fund to the individual

(

a) in that capacity, including any additional amounts payable

for committee participation or special assignments; and

(

b) as consultant or expert."

4. This Instrument comes into force on November 1, 2006.

______________

AMENDMENTS TO NATIONAL INSTRUMENT 81-102

Mutual Funds

(Securities Act)

Made as an amendment rule by the Alberta Securities Commission on November 1,

2006 pursuant to sections 223 and 224 of the Securities Act.

1. The Table of Contents of National Instrument 81-102 Mutual Funds is

amended by adding the following after Appendix B-1, Appendix B-2 and

Appendix B-3 - Compliance Reports:

"APPENDIX C -Provisions contained in Securities Legislation for

the Purpose of Subsection 4.1(5) - Prohibited Investments".

Section 1.1 of National Instrument 81-102 Mutual Funds is amended by:

(

a) adding the following after the definition of "illiquid asset":

""independent review committee" means the independent review

committee of the investment fund established under National

Instrument 81-107 Independent Review Committee for Investment

Funds";

(

b) repealing the definition of "mutual fund conflict of interest

investment restrictions" and substituting the following:

""mutual fund conflict of interest investment restrictions" means

the provisions of securities legislation that

(

a) prohibit a mutual fund from knowingly making or

holding an investment in any person or company who is a

substantial security holder, as defined in securities

legislation, of the mutual fund, its management company,

manager or distribution company;

(

b) prohibit a mutual fund from knowingly making or

holding an investment in any person or company in

which the mutual fund, alone or together with one or

more related mutual funds, is a substantial security

holder, as defined in securities legislation;

(

c) prohibit a mutual fund from knowingly making or

holding an investment in an issuer in which any person or

company who is a substantial security holder of the

mutual fund, its management company, manager or

distribution company, has a significant interest, as

defined in securities legislation;

(

d) prohibit a mutual fund, a responsible person as

defined in securities legislation, a portfolio adviser or a

registered person acting under a management contract

from knowingly causing any investment portfolio

managed by it, or a mutual fund, to invest in, or prohibit

a mutual fund from investing in, any issuer in which a

responsible person, as defined in securities legislation, is

an officer or director unless the specific fact is disclosed

to the mutual fund, securityholder or client, and where

securities legislation requires it, the written consent of the

client to the investment is obtained before the purchase;

(

e) prohibit a mutual fund, a responsible person as

defined in securities legislation, or a portfolio adviser

knowingly causing any investment portfolio managed by

it to purchase or sell, or prohibit a mutual fund from

purchasing or selling, the securities of any issuer from or

to the account of a responsible person, as defined in

securities legislation, an associate of a responsible person

or the portfolio adviser; and

(

f) prohibit a portfolio adviser or a registered person

acting under a management contract from subscribing to

or buying securities on behalf of a mutual fund, where his

or her own interest might distort his or her judgment,

unless the specific fact is disclosed to the client and the

written consent of the client to the investment is obtained

before the subscription or purchase."; and

(

c) adding the following after the definition of "mutual fund conflict

of interest reporting requirements":

""NI 81-107" means National Instrument 81-107 Independent

Review Committee for Investment Funds."

Section 4.1 of National Instrument 81-102 Mutual Funds is amended by

adding the following after subsection (3):

"(4) Subsection (1) does not apply to an investment in a class of securities of

an issuer if, at the time of each investment

(

a) the independent review committee of the dealer managed

mutual fund has approved the transaction under subsection 5.2(2)

of NI 81-107;

(

b) in a class of debt securities of an issuer other than a class of

securities referred to in subsection (3), the security has been given,

and continues to have, an approved rating by an approved credit

rating organization;

(

c) in any other class of securities of an issuer,

(

i) the distribution of the class of equity securities is

made by prospectus filed with one or more securities

regulatory authorities or regulators in Canada, and

(ii) during the 60 day period referred to in subsection

(1) the investment is made on an exchange on which the

class of equity securities of the issuer is listed and traded;

and

(

d) no later than the time the dealer managed mutual fund files its

annual financial statements, the manager of the dealer managed

mutual fund files the particulars of each investment made by the

dealer managed mutual fund during its most recently completed

financial year.

(5) The corresponding provisions contained in securities legislation referred

to in Appendix C do not apply with respect to an investment in a class of

securities of an issuer referred to in subsection (4) if the investment is made

in accordance with that subsection.".

Section 4.3 of National Instrument 81-102 Mutual Funds is amended by

(

a) renumbering 4.3 Exception as subsection (1); and

(

b) adding the following after subsection (1):

"

(2) Section 4.2 does not apply to a purchase or sale of a class of debt

securities by a mutual fund from, or to, another mutual fund managed by the

same manager or an affiliate of the manager, if, at the time of the transaction

(

a) the mutual fund is purchasing from, or selling to, another

mutual fund to which N