(1) A mutual fund must not do any of the following:
(a) purchase real property;
(b) purchase a mortgage, other than a guaranteed mortgage;
(c) purchase a guaranteed mortgage if, immediately after the purchase, more than 10% of its net asset value would be made up of guaranteed mortgages;
(d) purchase a precious metal certificate, other than a permitted precious metal certificate;
(e) purchase a permitted precious metal, a permitted precious metal certificate or a specified derivative of which the underlying interest is a physical commodity if, immediately after the purchase, more than 10% of the mutual fund’s net asset value would be made up of permitted precious metals, permitted precious metal certificates or specified derivatives of which the underlying interests are physical commodities;
(f) purchase a physical commodity, except to the extent permitted by paragraph (d) or (e);
(g) purchase, sell or use a specified derivative other than in compliance with sections 2.7 to 2.11;
(h) [repealed]
(i) purchase an interest in a loan syndication or loan participation if the purchase would require the mutual fund to assume any responsibilities in administering the loan in relation to the borrower.
(1.1) Paragraphs (1) (d), (e) and (f) do not apply to an alternative mutual fund.
(1.2) Paragraph (1) (e) does not apply to a precious metals fund with respect to purchasing a permitted precious metal, a permitted precious metal certificate or a specified derivative of which the underlying interest is one or more permitted precious metals.
(2) A non-redeemable investment fund must not do any of the following:
(a) purchase real property;
(b) purchase a mortgage, other than a guaranteed mortgage;
(c) purchase an interest in a loan syndication, or loan participation, if the purchase would require the non-redeemable investment fund to assume any responsibilities in administering the loan in relation to the borrower.
(3) For the purposes of this section, for each long position in a specified derivative that is held by an investment fund for a purpose other than hedging and for each index participation unit or underlying investment fund held by the investment fund, the investment fund is considered to hold directly the underlying interest of that specified derivative or its proportionate share of the assets held by the issuer of the index participation unit or underlying investment fund.
(4) Despite subsection (3), for the purposes of this section, an investment fund is considered to not hold a security or instrument if that security or instrument is a component of, but represents less than 10% of,
(a) a stock or bond index that is the underlying interest of a specified derivative, or
(b) the securities held by the issuer of an index participation unit or underlying investment fund.