Exemptions from the mutual fund self-dealingprohibitions of clauses 111(2)(a), 111(3) and 118(2)(a) of theSecurities Act (Ontario). Mutual funds allowed to make purchasesand sales of securities of Toronto Dominion Bank, parent companyto the manager of the mutual funds, and to retain those securitiesprovided that a fund governance mechanism is used to overseethe holdings, purchases or sales of these securities for themutual funds and to ensure that such holdings, purchases orsales have been made free from any influence by the TorontoDominion Bank and without taking into account any considerationrelevant to the Toronto Dominion Bank.
Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., 111(2)(a), 111(3) and 118(2)(a).
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,
ONTARIO, QUEBEC, NOVA SCOTIAAND
NEWFOUNDLAND AND LABRADOR
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
TD ASSET MANAGEMENT INC. ("TDAM")
TD CANADIAN T-BILL FUND
TD CANADIAN MONEY MARKET FUND
TD PREMIUM MONEY MARKET FUND
TD US MONEY MARKET FUND
TD HIGH YIELD INCOME FUND
TD CANADIAN BOND FUND
TD SHORT TERM BOND FUND
TD MORTGAGE FUND
TD GLOBAL RSP FUND
TD REAL RETURN BOND FUND
TD MONTHLY INCOME FUND
TD BALANCED FUND
TD BALANCED GROWTH FUND
TD BALANCED INCOME FUND
TD GLOBAL ASSET ALLOCATIONFUND
TD DIVIDEND GROWTH FUND
TD DIVIDEND INCOME FUND
TD CANADIAN VALUE FUND
TD CANADIAN EQUITY FUND
TD CANADIAN BLUE CHIP EQUITYFUND
TD CANADIAN SMALL CAP EQUITYFUND
TD US EQUITY FUND
TD US MID CAP GROWTH FUND
TD US SMALL CAP EQUITY FUND
TD US LARGE CAP VALUE FUND
TD US BLUE CHIP EQUITY FUND
TD US BLUE CHIP EQUITY RSPFUND
TD AMERIGROWTH RSP FUND
TD INTERNATIONAL EQUITY FUND
TD EUROPEAN GROWTH FUND
TD EUROPEAN GROWTH RSP FUND
TD JAPANESE GROWTH FUND
TD ASIAN GROWTH FUND
TD ASIAGROWTH RSP FUND
TD GLOBAL SELECT FUND
TD GLOBAL SELECT RSP FUND
TD INTERNATIONAL GROWTH FUND
TD EMERGING MARKETS FUND
TD EMERGING MARKETS RSP FUND
TD LATIN AMERICAN GROWTH FUND
TD HEALTH SCIENCES FUND
TD HEALTH SCIENCES RSP FUND
TD ENERGY FUND
TD PRECIOUS METALS FUND
TD SCIENCE AND TECHNOLOGYFUND
TD SCIENCE AND TECHNOLOGYRSP FUND
TD ENTERTAINMENT & COMMUNICATIONSFUND
TD ENTERTAINMENT & COMMUNICATIONSRSP FUND
TD RESOURCE FUND
(collectively, "TD MUTUALFUNDS")
TD MANAGED INCOME PORTFOLIO
TD MANAGED INCOME & MODERATEGROWTH PORTFOLIO
TD MANAGED BALANCED GROWTHPORTFOLIO
TD MANAGED AGGRESSIVE GROWTHPORTFOLIO
TD MANAGED MAXIMUM EQUITYGROWTH PORTFOLIO
TD MANAGED INCOME RSP PORTFOLIO
TD MANAGED INCOME & MODERATEGROWTH RSP PORTFOLIO
TD MANAGED BALANCED GROWTHRSP PORTFOLIO
TD MANAGED AGGRESSIVE GROWTHRSP PORTFOLIO
TD MANAGED MAXIMUM EQUITYGROWTH RSP PORTFOLIO
TD FUNDSMART MANAGED INCOMEPORTFOLIO
TD FUNDSMART MANAGED INCOME& MODERATE GROWTH PORTFOLIO
TD FUNDSMART MANAGED BALANCEDGROWTH PORTFOLIO
TD FUNDSMART MANAGED AGGRESSIVEGROWTH PORTFOLIO
TD FUNDSMART MANAGED MAXIMUMEQUITY GROWTH PORTFOLIO
TD FUNDSMART MANAGED INCOMERSP PORTFOLIO
TD FUNDSMART MANAGED INCOME& MODERATE GROWTH RSP PORTFOLIO
TD FUNDSMART MANAGED BALANCEDGROWTH RSP PORTFOLIO
TD FUNDSMART MANAGED AGGRESSIVEGROWTH RSP PORTFOLIO
TD FUNDSMART MANAGED MAXIMUMEQUITY GROWTH RSP PORTFOLIO
TD MANAGED INDEX INCOME PORTFOLIO
TD MANAGED INDEX INCOME &MODERATE GROWTH PORTFOLIO
TD MANAGED INDEX BALANCEDGROWTH PORTFOLIO
TD MANAGED INDEX AGGRESSIVEGROWTH PORTFOLIO
TD MANAGED INDEX MAXIMUM EQUITYGROWTH PORTFOLIO
TD MANAGED INDEX INCOME RSPPORTFOLIO
TD MANAGED INDEX INCOME &MODERATE GROWTH RSP PORTFOLIO
TD MANAGED INDEX BALANCEDGROWTH RSP PORTFOLIO
TD MANAGED INDEX AGGRESSIVEGROWTH RSP PORTFOLIO
TD MANAGED INDEX MAXIMUM EQUITYGROWTH RSP PORTFOLIO
(collectively, "TD MAPPortfolios")
TD PRIVATE CANADIAN BOND INCOMEFUND
TD PRIVATE U.S. EQUITY GROWTHFUND
TD PRIVATE CANADIAN BOND RETURNFUND
TD PRIVATE U.S. EQUITY INCOMEFUND
TD PRIVATE CANADIAN CORPORATEBOND FUND
TD PRIVATE RSP U.S. EQUITYFUND
TD PRIVATE NORTH AMERICANEQUITY GROWTH FUND
TD PRIVATE SMALL/MID-CAP EQUITYFUND
TD PRIVATE NORTH AMERICANEQUITY INCOME FUND
TD PRIVATE INTERNATIONAL EQUITYFUND
TD PRIVATE CANADIAN EQUITYGROWTH FUND
TD PRIVATE RSP INTERNATIONALEQUITY FUND
TD PRIVATE CANADIAN STRATEGICOPPORTUNITIES FUND
TD PRIVATE CANADIAN DIVIDENDFUND
TD PRIVATE GLOBAL STRATEGICOPPORTUNITIES FUND
(collectively, "TD PRIVATEFUNDS")
EMERALD CANADIAN SHORT TERMINVESTMENT FUND
EMERALD CANADIAN BALANCEDFUND
(collectively, "EMERALDPOOLED FUNDS")
MRRS DECISION DOCUMENT
WHEREAS TDAM has made an applicationto the local securities regulatory authority or regulator (the"Decision Maker") in each of the provinces of BritishColumbia, Alberta, Saskatchewan, Ontario, Québec, NovaScotia and Newfoundland and Labrador (the "Jurisdictions")for a decision pursuant to the securities legislation of theJurisdictions (the "Legislation") that the followingprovisions do not apply so as to prevent the TD Mutual Funds,the TD MAP Portfolios, the TD Private Funds and the EmeraldPooled Funds (collectively, the "Current Funds") aswell as such other funds within the three groups of CurrentFunds as TDAM may establish and advise from time to time (the"Future Funds") (the Current Funds and Future Fundsbeing hereinafter referred to individually as a "Fund"and collectively as the "Funds") from investing in,or continuing to hold an investment in, securities of The Toronto-DominionBank ("TD Bank"):
(a) the provision prohibiting a mutual fundfrom knowingly making or holding an investment in any personor company who is a substantial security holder of the mutualfund, its management company or distribution company;
(b) the provision prohibiting a mutual fundfrom knowingly making or holding an investment in an issuerin which a substantial security holder of the mutual fund,its management company or its distribution company has asignificant interest; and
(c) the provision prohibiting a portfoliomanager from knowingly causing an investment portfolio managedby it to invest in any issuer in which a responsible personor an associate of a responsible person is an officer ordirector unless the specific fact is disclosed to the clientand the written consent of the client to the investmentis obtained before the purchase.
(the provisions of (a), (b) and (c) beingcollectively, the "Investment Restrictions")
AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;
AND WHEREAS the Canadian securities administrators("CSA") recently released for comment its conceptproposal 81-402 titled "Striking a New Balance: A Frameworkfor Regulating Mutual Funds and their Managers" whichcontains, among other things, alternatives for mutual fund governance.The comment period ended June 7, 2002. The CSA has not yet developeda definitive model for mutual fund governance.
AND WHEREAS the CSA has a strategy fordealing with important matters on a timely basis even thoughthey may be part of a larger comprehensive policy study by theCSA.
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;
AND WHEREAS it has been represented byTDAM to the Decision Makers that:
1. The Funds are, or will be, open-ended mutualfund trusts established, or mutual fund corporations incorporated,under the laws of the Province of Ontario.
2. TDAM is, or will be, the trustee and managerof, and the portfolio adviser to, each of the Funds.
3. The securities of the Funds are, or willbe, offered for sale in all of the provinces and territoriesof Canada and each of the Funds is, or will be, either (i)a reporting issuer under the Legislation that is not on alist of defaulting issuers maintained under the Legislation;or (ii) a mutual fund in Ontario.
4. TD Bank owns 100% of the outstanding commonshares of TDAM.
5. The Current Funds have not yet made anyinvestment in securities of TD Bank.
6. TDAM believes that it would be in the bestinterests of investors in the Funds to be permitted to investin securities of TD Bank, in keeping with the investment objectivesof the Funds, though only up to the limit allowed by applicableLegislation.
7. Although each of the directors, officersand employees of TDAM (the "TDAM Employees"), includingthose who participate in the formulation of, or have accessprior to implementation to, investment decisions made by TDAMon behalf of the Funds, is also a director, officer and/oremployee of TD Bank,
(a) each TDAM Employee works full time forTDAM;
(b) each TDAM Employee is dually employedby both TDAM and TD Bank for the sole purpose of subjectingemployment and pension benefit arrangements for the TDAMEmployees to a single federal regulatory scheme rather thana multiplicity of provincial and territorial regulatoryschemes; and
(c) each TDAM Employee who has access tomaterial information in relation to TD Bank that has notbeen generally disclosed (an "Access Person")is subject to TD Bank's "Trading Windows Policy"which prohibits Access Persons from engaging in any tradingin securities of TD Bank while the trading window is closedand while the Access Person is in possession of undisclosedmaterial information in relation to TD Bank.
8. TDAM will create an Independent ReviewCommittee (the "Independent Committee"), comprisedentirely of individuals who are wholly independent of TDAM,to oversee the holdings, purchases and sales of securitiesof TD Bank by the Funds.
9. The Independent Committee shall reviewthe holdings, purchases and sales of securities of TD Bankto ensure that they have been made free from any influenceby TD Bank and without taking into account any considerationrelevant to TD Bank.
10. The Independent Committee will take intoconsideration the best interests of unitholders of the Fundsand no other factors.
11. The compensation that is payable to membersof the Independent Committee will be allocated among the Fundsin a manner that is considered by the Independent Committeeto be fair and reasonable.
12. Within thirty days of the end of eachmonth in which TDAM purchases or sells securities of TD Bankon behalf of one or more Funds, TDAM shall file the reporton SEDAR contemplated by paragraph (n) below disclosing thename of each Fund that purchased or sold securities of TDBank during the month, the number or amount of TD Bank securitiespurchased or sold by each Fund and the volume weighted averageprice paid or received for the TD Bank securities by eachFund.
AND WHEREAS pursuant to the System thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers pursuantto the Legislation is that:
1. the Funds are exempt from the InvestmentRestrictions so as to enable the Funds to invest in securitiesof TD Bank; and
2. this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate one year after the publicationin final form of any legislation or rule of that DecisionMaker dealing with mutual fund governance in a manner thatconflicts with or makes inapplicable any provision of thisDecision;
(a) TDAM has appointed the Independent Committeeto review the Funds' purchases, sales and continued holdingsof securities of TD Bank;
(b) the Independent Committee has at leastthree members, none of whom is an associate or employeeof (i) TDAM, (ii) any portfolio adviser to the Funds; or(iii) any associate or affiliate of TDAM or a portfolioadviser to the Funds;
(c) the Independent Committee has a writtenmandate describing its duties and standard of care which,as a minimum, sets out the conditions of this Decision;
(d) the members of the Independent Committeeexercise their powers and discharge their duties honestly,in good faith and in the best interests of investors inthe Funds and, in doing so, exercise the degree of care,diligence and skill that a reasonably prudent person wouldexercise in the circumstances;
(e) none of the Funds relieves the membersof the Independent Committee from liability for loss thatarises out of a failure to satisfy the standard of careset out in paragraph (d);
(f) none of the Funds indemnifies the membersof the Independent Committee against legal fees, judgmentsand amounts paid in settlement as a result of a breach ofthe standard of care set out in paragraph (d);
(g) none of the Funds incurs the cost ofany portion of liability insurance that insures a memberof the Independent Committee for a liability for loss thatarises out of a failure to satisfy the standard of careset out in paragraph (d);
(h) the cost of any indemnification or insurancecoverage paid for by TDAM, any portfolio adviser to theFunds, or any associate or affiliate of TDAM or a portfolioadviser to the Funds to indemnify or insure the membersof the Independent Committee in respect of a loss that arisesout of a failure to satisfy the standard of care set outin paragraph (d) is not paid either directly or indirectlyby the Funds;
(i) the Independent Committee reviews theFunds' purchases, sales and continued holdings of securitiesof TD Bank on a regular basis, but not less frequently thanevery three months;
(j) the Independent Committee forms theopinion at any time, after reasonable inquiry, that thedecisions made on behalf of each Fund by TDAM or the Fund'sportfolio adviser to purchase, sell or continue to holdsecurities of TD Bank were and continue to be in the bestinterests of the Fund, and to:
(i) represent the business judgement ofTDAM or the Fund's portfolio adviser, uninfluenced byconsiderations other than the best interests of the Fund;
(ii) have been made free from any influenceby TD Bank and without taking into account any considerationrelevant to TD Bank; and
(iii) not exceed the limitations of theapplicable legislation.
(k) the determination made by the IndependentCommittee pursuant to paragraph (j) is included in detailedwritten minutes provided to TDAM not less frequently thanevery three months;
(l) the Independent Committee advises theDecision Makers in writing of:
(i) any determination by it that the conditionset out in paragraph (j) has not been satisfied with respectto any purchase, sale or holding of securities of TD Bank;
(ii) any determination by it that anyother condition of this Decision has not been satisfied;
(iii) any action it has taken or proposesto take following the determinations referred to above;and
(iv) any action taken, or proposed tobe taken, by TDAM or a portfolio adviser to the Fundsin response to the determinations referred to above;
(m) the existence, purpose, duties and obligationsof the Independent Committee, the names of its members,whether and how they are compensated by the Funds, and thefact that they meet the requirements of the condition setout in paragraph (b) are disclosed:
(i) in a press release issued, and a materialchange report filed, prior to reliance on the Decision;
(ii) in item 12 of Part A of the simplifiedprospectus of the Funds; and
(iii) on TDAM's internet website; and
(n) the reports required to be filed pursuantto the Legislation with respect to every purchase and saleof securities of TD Bank are filed on SEDAR in respect ofthe relevant Fund.
January 10, 2002.
"Howard I. Wetston" "TheresaMcLeod"