Ontario Securities Commission
Commission des valeurs mobilières de l’Ontario
P.O. Box 55, 19th Floor 20 Queen Street West Toronto ON M5H 3S8
CP 55, 19e étage 20, rue queen ouest Toronto ON M5H 3S8
Web site: www.osc.gov.on.ca TDX 76
CDS-OSC VIA SEDAR March 15, 2005 Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, Canada M5L 1B9 Attention: Jennifer Northcote Re: Change of Auditor of Mutual Funds – MRRS Application under section 19.1 of National Instrument 81-102 – Mutual Funds (“NI 81-102”) for an exemption from subsection 5.1(d) of NI 81-102 Application # 163/05 ______________________________________________________________________________
By letter dated March 4, 2005 (the “Application”), you requested on behalf of Canadian Imperial Bank of Commerce (“CIBC”), CIBC Asset Management Inc. (“CAMI”), and the mutual funds identified in Schedule “A” attached hereto (individually, a “Fund” and collectively, the “Funds”), from the regulator or securities regulatory authority in each of the provinces and territories of Canada (the “Decision Makers”), for discretionary relief from subsection 5.1(d) of NI 81-102 to change the auditors of the Funds to Ernst & Young LLP (“E&Y”)(“Auditor Changes”) without prior approval of securityholders of the Funds. Each of CIBC and CAMI has caused the Application to be made on behalf of the Funds for which it acts as manager, also as identified in Schedule “A”. CIBC and CAMI may be referred to collectively herein as the “Managers”. Subsection 5.1(d) of NI 81-102 requires the prior approval of the securityholders of a mutual fund before the auditor of the mutual fund is changed. The Application also contained a request, pursuant to subsection 5.3(1) of National Policy 12201, that the Application and supporting material to be held in confidence during the application review process, until the requested MRRS decision is issued. The Managers have represented to the Decision Makers that:
The Funds are, or will be, open-ended mutual fund trusts established under the laws of the Province of Ontario pursuant to a declaration of trust or trust agreement, as applicable (the “Trust Documents”); Each Fund is, or will be, a reporting issuer in each Jurisdiction, where such status exists, and, to the knowledge of CIBC or CAMI, as the case may be, is not on the list of defaulting reporting issuers maintained by the securities regulatory authorities in the Jurisdictions; Units of the Funds (other than CIBC Balanced Index Fund, Talvest Renaissance Mutual Funds and Renaissance Talvest Mutual Funds and Axiom Portfolios) are offered for sale on a continuous basis in each Jurisdiction pursuant to (i) (ii) (iii) (iv) (v) (vi) a simplified prospectus dated May 10, 2004 in the case of the Imperial Pools; a simplified prospectus dated August 12, 2004 in the case of the CIBC Mutual Funds; a simplified prospectus dated October 7, 2004 in the case of the CIBC Family of Managed Portfolios; a simplified prospectus dated January 12, 2005 in the case of the Frontiers Pools; a simplified prospectus dated November 24, 2004 in the case of the Renaissance Mutual Funds; and a simplified prospectus dated December 15, 2004 in the case of the Talvest Funds.
A final simplified prospectus is expected to be filed for Talvest Renaissance Mutual Funds and Renaissance Talvest Mutual Funds on or about March 15, 2005, and for the Axiom Portfolios on or about March 11, 2005; 4. Units of CIBC Balanced Index Fund were distributed pursuant to a simplified prospectus dated November 20, 1998, which prospectus was not renewed. CIBC Balanced Index Fund is currently out of distribution; CIBC is the manager of, and CIBC Trust is the trustee of, CIBC Balanced Index Fund, Imperial Pools, CIBC Mutual Funds and CIBC Family of Managed Portfolios; CAMI is, or will be, the manager and trustee of the Frontiers Pools, Renaissance Mutual Funds, the Talvest Funds, Talvest Renaissance Mutual Funds and Renaissance Talvest Mutual Funds and Axiom Portfolios;
The current auditors (PricewaterhouseCoopers LLP and Deloitte & Touche LLP)(the “Current Auditors”) of the Funds have issued, or are expected to issue, “unqualified” year-end audit reports in respect of the Funds; To the best of our knowledge, there are no “reportable events” as defined under National Policy 31 – Change of Auditor of a Reporting Issuer that is an Investment Fund (“NP 31”); Except for the master declaration of trust dated November 6, 2000 for The Talvest Funds (other than Talvest Money Market Fund) (the “Talvest DOT”) and the master declaration of trust dated November 6, 2000 for Talvest Money Market Fund (the “Talvest MM DOT”), the Trust Documents only require unitholder approvals to be obtained for a change of auditors of the Funds if such unitholder approvals are required by applicable securities legislation; The Talvest DOT and Talvest MM DOT currently require that unitholder approvals be obtained for a change of auditors of the Talvest Funds. CAMI has determined to amend the Talvest DOT and the Talvest MM DOT such that unitholder approvals for a change of auditors of the Talvest Funds will only be necessary if required by applicable securities legislation. Notice of this amendment is expected to be sent to unitholders of the Talvest Funds at the same time the notice of the Auditor Changes (the “Notice to Unitholders”) is sent. In accordance with the provisions of the Talvest DOT and the Talvest MM DOT, it is anticipated that the amendments would take effect on or about June 15, 2005; An independent review committee (the “IRC”) has been setup in accordance with the requirements set out in the Proposed National Instrument 81-107 to provide guidance to the Funds. It may provide advice to the Managers on issues of an investment and regulatory nature including investment policies and strategies and potential conflicts of interest. Each member of the IRC is independent from the Managers, CIBC Trust, the Current Auditors, E&Y, and their respective associates and affiliates; Members of the IRC will exercise their powers and discharge their duties honestly, in good faith and in the best interests of the Funds, and, in so doing, exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances; The Funds will not relieve the members of the IRC from liabilities for loss that arises out of a failure to satisfy the standard of care set out in paragraph 12 above; The Funds will not incur the cost of any portion of liability insurance that insures a member of the IRC for a liability for loss that arises out of failure to satisfy the standard of care set out in paragraph 12 above; The cost of any indemnification or insurance coverage paid for by the Managers or any associate or affiliate of the Managers to indemnify or insure the members of the IRC in respect of a loss that arises out of a failure to satisfy the standard of care set out in paragraph 12 above will not be paid either directly or indirectly by the Funds;
The boards of directors of CIBC Trust and CAMI have approved the Auditor Changes at meetings held on March 9, 2005, and members of the IRC will consider the Auditor Changes at a meeting scheduled for March 15, 2005. The Managers will only proceed with the Auditor Changes if the Auditor Changes are approved by the boards of directors of CIBC Trust and CAMI, and the Auditor Changes are determined by the IRC to be in the best interests of the Funds or represent the business judgment of each of the Managers, uninfluenced by considerations other than the best interests of the Funds, and the regulatory relief from the requirement to obtain prior approval of unitholders of the Funds to effect the Auditor Changes is obtained; E&Y is a global accounting firm that acts as auditors of a number of Canadian mutual funds that are reporting issuers. It is submitted that E&Y is fully qualified to act as auditors of the Funds; In Canada, there are four major accounting firms, one of which (E&Y) acts as auditors of CIBC and its subsidiaries, and two of which (PricewaterhouseCoopers LLP and Deloitte & Touche LLP) act as auditors of the Funds. While the Funds are not “subsidiaries” of CIBC that are required to have the same auditors as CIBC under the Bank Act (Canada), the Funds are promoted by CIBC or CAMI, and are an important part of the CIBC business. The provision of non-audit services by PricewaterhouseCoopers LLP and/or Deloitte & Touche LLP to CIBC, or the provision of non-audit services by E&Y to the Funds, could be perceived as a conflict and, therefore, could have an impact on the perceived independence of PricewaterhouseCoopers LLP or Deloitte & Touche LLP as the current auditors of the Funds; Given the size of the bank and the frequency of which it hires major accounting firms to provide non-audit services, it would be impractical to limit the Funds, CIBC and its subsidiaries to using the one remaining major accounting firm in Canada for such services. In addition, that one remaining major accounting firm could, at certain times, be conflicted and be unable to provide the required services. On this basis, it is submitted that it is appropriate and consistent with “best practice” to change the auditors of the Funds so that they have the same auditors as CIBC and its subsidiaries; The Notice to Unitholders will be sent to unitholders of the Funds at least 60 days prior to the effective date of the change. The Managers will also amend the simplified prospectuses and annual information forms of the Funds (other than CIBC Balanced Index Funds which does not have a current simplified prospectus) or include in the final simplified prospectus and annual information form of the Funds to disclose the fact that the auditors of the Funds will change to E&Y; Section 4.2 of NP 31 states that a Reporting Package (as defined in NP 31) should be included in the information circular for the first me eting of unitholders of the Funds held subsequent to the Auditor Changes (the “Reporting Package Delivery Policy”); Instead of implementing the Reporting Package Delivery Policy, the Managers propose to outline in the Notice to Unitholders the various ways that unitholders of the Funds can access the Reporting Package. The Managers propose to make the Reporting Package
available at no cost to the unitholders of the Funds through accessing the Funds’ websites, the SEDAR website, and/or by requesting a copy by calling a toll-free phone number of the Managers or by email to an email address provided by the Managers; 23. Unlike shareholders of public corporations, unitholders of a mutual fund do not have annual meetings. It is not expected that a special meeting will be held in the near future for unitholders of any of the Funds, and there is no certainty as to when such next special meeting would take place. It is submitted that it would be more beneficial for unitholders of the Funds to be given access to the Reporting Package now rather than at an undetermined time in the future. The Reporting Package that describes the Auditor Changes would have little or no benefit to future unitholders of the Funds.
This letter confirms that based on the information and representations contained in the Application and for the purposes described in the Application, the Decision Makers hereby exempt the Funds from subsection 5.1(d) of NI 81-102 with respect to obtaining the prior approval of the unitholders to change the auditors of the Funds to E&Y, and for the Application to be kept confidential until the issuance of this letter, provided that a) the IRC has reviewed the Auditor Changes and each member has, after reasonable inquiry, formed the opinion that the Auditor Changes are in the best interest of the Funds, or represent the business judgement of the Manager, uninfluenced by considerations other than the best interest of the Funds, b) the Managers will outline in the Notice to Unitholders the various ways that unitholders of the Funds can access the Reporting Package. The Managers will make the Reporting Package available at no cost to the unitholders of the Funds through accessing the Funds’ websites, the SEDAR website, and/or by requesting a copy by calling a toll-free phone number of the Managers or by email to an email address provided by the Managers, and c) there are no “reportable events” as defined under NP 31.
Susan Silma Susan Silma Director, Investment Funds Branch Email: firstname.lastname@example.org
SCHEDULE “A” - FUNDS Fund Family CIBC 5-Year Protected Mutual Funds Imperial Pools Funds CIBC Balanced Index Fund Manager Canadian Imperial Bank of Commerce Canadian Imperial Bank of Commerce
Imperial Money Market Pool Imperial Canadian Equity Pool Imperial Short-Term Bond Pool Imperial Registered U.S. Equity Index Pool Imperial Canadian Bond Pool Imperial U.S. Equity Pool Imperial Canadian Income Trust Pool Imperial Registered International Equity Index Pool Imperial International Bond Pool Imperial International Equity Pool Imperial Canadian Dividend Income Pool Imperial Overseas Equity Pool Imperial Canadian Dividend Pool Imperial Emerging Economies Pool CIBC Canadian T -Bill Fund CIBC International Small Companies Fund CIBC Premium Canadian T-Bill Fund CIBC Financial Companies Fund CIBC Money Market Fund CIBC Canadian Resources Fund CIBC U.S. Dollar Money Market Fund CIBC Energy Fund CIBC High Yield Cash Fund CIBC Canadian Real Estate Fund CIBC Mortgage and Short-Term Income Fund CIBC Precious Metals Fund CIBC Canadian Bond Fund CIBC North American Demographics Fund CIBC Monthly Income Fund CIBC Global Technology Fund CIBC Global Bond Fund CIBC Canadian Short-Term Bond Index Fund CIBC Balanced Fund CIBC Canadian Bond Index Fund 6
CIBC Mutual Funds
Canadian Imperial Bank of Commerce
CIBC Family of Managed Portfolios
Funds CIBC Dividend Fund CIBC Global Bond Index Fund CIBC Core Canadian Equity Fund CIBC Canadian Index Fund Canadian Imperial Equity Fund CIBC U.S. Equity Index Fund CIBC Capital Appreciation Fund CIBC U.S. Index RRSP Fund CIBC Canadian Small Companies Fund CIBC International Index Fund CIBC Canadian Emerging Companies Fund CIBC International Index RRSP Fund CIBC U.S. Small Companies Fund CIBC European Index Fund CIBC Global Equity Fund CIBC European Index RRSP Fund CIBC European Equity Fund CIBC Japanese Index RRSP Fund CIBC Japanese Equity Fund CIBC Emerging Markets Index Fund CIBC Emerging Economies Fund CIBC Asia Pacific Index Fund CIBC Far East Prosperity Fund CIBC Nasdaq Index Fund CIBC Latin American Fund CIBC Nasdaq Index RRSP Fund CIBC Managed Income Portfolio CIBC Managed Income Plus Portfolio CIBC Managed Balanced Portfolio CIBC Managed Balanced Growth Portfolio CIBC Managed Balanced Growth RRSP Portfolio CIBC Managed Growth Portfolio CIBC Managed Growth RRSP Portfolio CIBC Managed Aggressive Growth Portfolio CIBC Managed Aggressive Growth RRSP Portfolio CIBC U.S. Dollar Managed Income Portfolio CIBC U.S. Dollar Managed Balanced Portfolio CIBC U.S. Dollar Managed Growth Portfolio 7
Canadian Imperia l Bank of Commerce
Fund Family Frontiers Pools
Renaissance Mutual Funds
Funds Frontiers Canadian Short Term Income Pool Frontiers Canadian Fixed Income Pool Frontiers Canadian Monthly Income Pool Frontiers Canadian Equity Pool Frontiers U.S. Equity Pool Frontiers U.S. Equity RSP Pool Frontiers International Equity Pool Frontiers International Equity RSP Pool Frontiers Emerging Markets Equity Pool Frontiers Global Bond Pool Renaissance Canadian Money Market Fund Renaissance Canadian T-Bill Fund Renaissance U.S. Money Market Fund Renaissance Canadian Bond Fund Renaissance Canadian Real Return Bond Fund Renaissance Canadian Dividend Income Fund Renaissance Canadian High Yield Bond Fund Renaissance Canadian Income Trust Fund Renaissance Canadian Income Trust Fund II Renaissance Canadian Balanced Fund Renaissance Canadian Balanced Value Fund Renaissance Canadian Core Value Fund Renaissance Canadian Growth Fund Renaissance Canadian Small Cap Fund Renaissance U.S. Basic Value Fund Renaissance U.S. Fundamental Growth Fund Renaissance U.S. RSP Index Fund Renaissance Developing Capital Markets Fund Renaissance Euro Fund Renaissance International Growth Fund Renaissance International Growth 8
Manager CIBC Asset Management Inc.
CIBC Asset Management Inc.
The Talvest Funds
Funds RSP Fund Renaissance International RSP Index Fund Renaissance Tactical Allocation Fund Renaissance Tactical Allocation RSP Fund Renaissance Global Growth Fund Renaissance Global Growth RSP Fund Renaissance Global Opportunities Fund Renaissance Global Opportunities RSP Fund Renaissance Global Sectors Fund Renaissance Global Sectors RSP Fund Renaissance Global Technology Fund Renaissance Global Technology RSP Fund Talvest Cdn. Asset Allocation Fund Talvest Millennium High Income Fund Talvest Bond Fund Talvest Income Fund Talvest High Yield Bond Fund Talvest Money Market Fund Talvest Asian Fund Talvest Global Equity Fund Talvest Cdn. Equity Growth Fund Talvest Global Multi Management Fund Talvest Cdn. Equity Value Fund Talvest Global Small Cap Fund Talvest Cdn. Multi Management Fund Talvest International Equity Fund Talvest China Plus Fund Talvest Millennium Next Generation Fund Talvest Dividend Fund Talvest Small Cap Cdn. Equity Fund Talvest European Fund Talvest U.S. Equity Fund Talvest China Plus RSP Fund Talvest Global RSP Fund Talvest Global Asset Allocation RSP Fund Talvest Global Science & 9
CIBC Asset Management Inc.
Talvest Renaissance Mutual Funds and Renaissance Talvest Mutual Funds
Funds Technology RSP Fund Talvest Global Bond RSP Fund Talvest Global Small Cap RSP Fund Talvest Global Equity RSP Fund Talvest International Equity RSP Fund Talvest Global Health Care RSP Fund Talvest U.S. Equity RSP Fund Talvest Global Multi Management RSP Fund Talvest Global Science & Technology Fund Talvest Global Health Care Fund Talvest Global Resource Fund Renaissance Talvest Millennium High Income Fund Renaissance Talvest China Plus Fund Renaissance Talvest Global Health Care Fund Talvest Renaissance Canadian Real Return Bond Fund Talvest Renaissance Canadian Balanced Fund Talvest Renaissance Canadian Balanced Value Fund Talvest Renaissance Canadian Core Value Fund Talvest Renaissance U.S. Basic Value Fund Axiom Balanced Income Portfolio Axiom Diversified Monthly Income Portfolio Axiom Balanced Growth Portfolio Axiom Long-Term Growth Portfolio Axiom Canadian Growth Portfolio Axiom Global Growth Portfolio Axiom Foreign Growth Portfolio Axiom All Equity Portfolio
CIBC Asset Management Inc.
CIBC Asset Management Inc.