TD Asset Management Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption from unitholder approval requirement in clause 5.1(c) of NI 81-102 -- mutual fund permitted to change its investment objective without seeking unitholder approval -- all unitholders of the fund have entered into discretionary investment management agreements giving full discretionary authority to portfolio manager -- relief from securityholder approval not to be considered a precedent -- relief granted based on specific facts in application for one-time non-recurring change to investment objective of fund.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.1(c), 19.1.

February 20, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF THE PROCESS

FOR EXEMPTIVE RELIEF APPLICATIONS

IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

TD ASSET MANAGEMENT INC.

TD WATERHOUSE PRIVATE INVESTMENT COUNSEL INC.

(the Filers)

AND

TD PRIVATE CANADIAN DIVERSIFIED YIELD FUND

TD PRIVATE CANADIAN BOND INCOME FUND

(the Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filers, on behalf of the Funds, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Funds from subsection 5.1(c) of National Instrument 81-102 Mutual Funds (NI 81-102) requiring a mutual fund to obtain the prior approval of its securityholders before the fundamental investment objective of the mutual fund is changed (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for this Application; and

(b) the Filers have provided notice that section 4.7 of Multilateral Instrument 11-102 Passport System is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 or NI 81-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. TD Asset Management Inc. (TDAM) is a corporation amalgamated under the Business Corporations Act (Ontario). It is a wholly-owned subsidiary of The Toronto-Dominion Bank, a bank listed in Schedule I to the Bank Act (Canada). Its head office is located in Toronto, Ontario.

2. TDAM is registered as:

(a) a portfolio manager and exempt market dealer under the securities legislation of all provinces and territories of Canada;

(b) an investment fund manager under theSecurities Act (Ontario); and

(c) a commodity trading manager under the Commodity Futures Act (Ontario).

3. TDAM conducts an investment management business offering passive, quantitative, enhanced and active portfolio management services to a large and diversified client base. As at December 31, 2011, TDAM and its affiliates had assets under management in excess of $190 billion. As part of its portfolio management business, TDAM is the trustee, manager and promoter of the Funds which are part of the TD Private Funds. The TD Private Funds are qualified for sale by means of a simplified prospectus and an annual information form that have been prepared and filed in accordance with the securities legislation of all provinces and territories of Canada. The Funds are no-load mutual funds within the meaning of subsection 15.5(1) of NI 81-102.

4. TD Waterhouse Private Investment Counsel Inc. (TDW PIC) is a corporation incorporated under the Canada Business Corporations Act. It is a wholly-owned subsidiary of TDAM. Its head office is located in Toronto, Ontario.

5. TDW PIC is registered as a portfolio manager and exempt market dealer under the securities legislation of all provinces and territories of Canada.

6. TDW PIC utilizes model portfolios, which include mutual funds managed by TDAM, to provide customized investment strategies to clients (PIC Clients) who have $1,000,000 or more of investable assets and have entered into an investment management agreement with TDW PIC (the PIC Agreement) to manage their assets on a discretionary basis. PIC Client accounts are charged an annual fee that is based upon a percentage of the assets under management pursuant to the PIC Agreement.

7. TDW PIC uses, among other things, the TD Private Funds, as an investment vehicle for the assets of many PIC Client accounts in order to reduce the cost of administering such accounts so that TDAM's individually managed account services can be offered to individuals who could not otherwise gain access to such services. In addition to granting TDW PIC discretionary investment authority, each PIC Agreement expressly authorizes TDW PIC to exercise such discretion to, among other things, purchase and redeem units of the TD Private Funds.

8. With the exception of one individual investor holding less than 0.005% of the issued and outstanding units of each Fund, all of the unitholders of the Funds are PIC Clients that have entered into a PIC Agreement.

9. TDAM and TDW PIC have determined that it is appropriate to change the fundamental investment objective of TD Private Canadian Bond Income Fund (the Income Fund) from:

The fundamental investment objective is to achieve rates of total return that, over the medium term, exceed those of a short -- to mid-term index of Canadian bonds. An important secondary objective is to generate a stable level of cash income while maintaining lower return volatility than the broad market index.

The Fund invests primarily in high-quality debt issues of Canadian governments, agencies, and corporations, including mortgage-backed or asset-backed securities, to create a steady stream of annual income and produce a lower volatility than the broad market index.

to:

The fundamental investment objective is to seek to generate income, with a view to preserving capital as a secondary objective. The Fund may invest directly in, or provide exposure to, primarily debt obligations issued or guaranteed by the Canadian federal or provincial governments or any agencies of such government and debt obligations of corporations, including debt obligations of Schedule I Canadian chartered banks or loan or trust companies.

10. These changes in the Income Fund's fundamental investment objective are being proposed to clarify that the Income Fund's primary objective is to generate income rather than total returns having a capital gains component and that its secondary objective is capital preservation.

11. TDAM and TDW PIC have also determined that it is appropriate to change the fundamental investment objective of TD Private Canadian Diversified Yield Fund (the Yield Fund) from:

The fundamental investment objective is to achieve rates of total return that, over the longer term, on an after-tax basis, exceed those of a mid-term index of Canadian government bonds.

The Fund invests primarily in dividend and income paying securities, including but not limited to high-yield common shares of Canadian corporations, high-quality and marketable preferred share issues of Canadian financial institutions, utilities, and other corporations, income trusts and Canadian dollar denominated bonds. The Fund focuses on generating a stable level of distributions from the securities, while employing a limited degree of trading activity and/or interest rate anticipation to preserve capital value.

to:

The fundamental investment objective is to seek to provide a high level of after-tax income, with a view to achieving capital appreciation as a secondary objective. The Fund may invest directly in, or provide exposure to, investments including, but not limited to, dividend-paying common shares of Canadian corporations, high-quality preferred share issues of Canadian financial institutions, utilities, and other corporations and Canadian dollar denominated bonds.

12. These changes in the Yield Fund's investment objectives are being proposed to clarify that its primary objective is to generate after-tax income, its secondary objective is capital appreciation and it will no longer seek to achieve such objectives through investments in the securities of income trusts.

13. Section 5.1(c) of NI 81-102 requires that prior approval of each Fund's unitholders be obtained for any change to the fundamental investment objective of the Fund. TDAM and TDW PIC believe that, in the circumstances, a unitholder meeting convened for the purpose of obtaining unitholder approval to change the fundamental investment objective of each Fund is not desirable and represents an unnecessary expense and inconvenience to TDAM, TDW PIC, each Fund and its unitholders.

14. Unlike an investor that holds units outside of a discretionary managed account, the unitholders of each Fund have not participated in the investment decision to acquire units of the Fund. Instead, other than as set out in paragraph 15 below, all unitholders of the Funds are relying entirely on TDW PIC to make investment decisions for them and as a result, the proposed change to the fundamental investment objective of each Fund is analogous to the unitholder changing from one TD Private Fund to another, which would not require prior unitholder approval but would, for tax purposes, be a disposition.

15. There is one individual investor that is no longer a discretionary client of TDW PIC who holds less than 0.005% of the issued and outstanding units of each of the Funds. As such, this investor would be unable to preclude approval of a change of each Fund's fundamental investment objective.

16. Provided the Exemption Sought is granted, the Funds' Trust Indenture does not require unitholder approval for a change to the fundamental investment objective of each Fund, provided TDAM believes that the change is not materially adverse to unitholders. TDAM believes the proposed change to the fundamental investment objective of each Fund is in the best interests of the Fund's unitholders.

17. If the Exemption Sought is granted, TDAM proposes to amend the investment objective in each Fund's simplified prospectus and annual information form as part of the annual renewal of the simplified prospectus and annual information form to be completed on or about March 31, 2012 and to then issue a press release and file a material change report announcing the change to the investment objective immediately following completion of the annual renewal process.

18. The proposed change to the fundamental investment objective of each Fund is neutral to the unitholders of the Fund from a fee and expense perspective.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator is that the Exemption Sought is granted.