Securities Law & Instruments

Headnote

Exemption from the restrictions in sections111(2)(b), 111(2)(c)(ii), 111(3), 117(i)(a) and 118(2)(b) toinvest in related exchange traded funds subject to certain conditions.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., 111(2)(b), 111(2)(c)(ii), 111(3), 113, 117(i)(a) 117(2),118(2)(b),121(2)(a).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, ONTARIO, QUEBEC

NOVA SCOTIA AND NEWFOUNDLANDAND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

TD BALANCED GROWTH FUND, TDDIVIDEND INCOME FUND, TD DIVIDEND GROWTH FUND, TD CANADIAN EQUITYFUND, TD CANADIAN BLUE CHIP EQUITY FUND, TD CANADIAN VALUE FUND,TD PRIVATE CANADIAN DIVIDEND FUND, TD PRIVATE CANADIAN EQUITYGROWTH FUND, TD PRIVATE CANADIAN EQUITY INCOME FUND, TD PRIVATENORTH AMERICAN EQUITY GROWTH FUND AND TD PRIVATE NORTH AMERICANEQUITY INCOME FUND (COLLECTIVELY, THE "FUNDS")

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof the provinces of British Columbia, Alberta, Saskatchewan,Ontario, Quebec, Nova Scotia and Newfoundland and Labrador,(the "Jurisdictions") has received an application(the "Application") from TD Asset Management Inc.("TDAM"), on behalf of the Funds, for a decision underthe securities legislation of the Jurisdictions (the "Legislation")that, in connections with proposed investments by the Fundsin units (the "Units") of the TD Select Canadian GrowthIndex Fund (the "Select Growth Fund") and the TD SelectCanadian Value Index Fund (the "Select Value Fund")(the Select Growth Fund and the Select Value Fund, collectively,the "TD ETFs" and each as "TD ETF") that:

(a) the Funds are exempt from the provisionsin the Legislation of the Jurisdictions, other than Quebecthat

(i) prohibit a mutual fund from makingor holding an investment in any person or company in whichthe mutual fund, alone or together with one or more relatedmutual funds, is a substantial security holder, and

(ii) prohibit a mutual fund from makingor holding an investment in an issuer in which any personor company who is a substantial securityholder of themutual fund, its management company, or its distributioncompany has a significant interest,

(together, the "Investment Prohibitions");

(b) TDAM is exempt from

(i) the provision in the Legislation ofthe Jurisdictions, other than Quebec, that prohibits amutual fund or a portfolio manager from causing an investmentportfolio managed by it to purchase or sell the securitiesof any issuer from or to the account of a responsibleperson, or

(ii) the provision of the Quebec Legislationthat prohibits a registered person from subscribing orbuying, on behalf of a portfolio managed by the registeredperson, securities that the registered person or an affiliateof the registered person owns or is underwriting,

(together, the "Registrant Prohibitions");and

(c) TDAM is exempt from the provision inthe Legislation of the Jurisdictions, other than Quebec,that requires the management company or in British Columbia,the mutual fund manager of a mutual fund to file a reportof every transaction of purchase or sale of securities betweenthe mutual fund and any related person or company (the "ReportingRequirement");

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor the Application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS TDAM has represented to theDecision Makers as follows:

(1) TDAM is the trustee, manager and portfoliomanager of the Funds. It is registered under the Legislationof each Jurisdiction as an adviser in the categories of investmentcounsel and portfolio manager. TDAM is responsible for theday-to-day administration, and for managing the investmentportfolios, of the Funds.

(2) The Funds are reporting issuers undereach Jurisdiction's Legislation and are subject to NationalInstrument 81-102 - Mutual Funds ("NI 81-102").

(3) The TD ETFs are mutual funds whose Unitsare listed and posted for trading on the Toronto Stock Exchange(the "Exchange"). The TD ETFs are reporting issuersunder each Jurisdiction's Legislation and are subject to theapplicable requirements of NI 81-102. The Units of the TDETFs are in continuous distribution.

(4) TD Securities Inc. ("TDSI")is one of the underwriters in the continuous distributionof Units of the TD ETFs. TDSI is also a "responsibleperson" as such term is defined in the Legislation ofthe Jurisdictions, other than Quebec.

(5) TDAM and TDSI are affiliates because bothare wholly-owned subsidiaries of the Toronto-Dominion Bank.

(6) TDAM is the trustee and portfolio managerof the TD ETFs and, as such, is responsible for the day-to-dayadministration, and for managing the investment portfolios,of the TD ETFs.

(7) The fundamental investment objective ofeach TD ETF is to provide long-term growth of capital by replicating,to the extent possible, the performance of the Dow Jones CanadaTopCap Growth Index and the Dow Jones Canada TopCap ValueIndex (each, a "Target Index"), respectively. Toachieve its investment objective, each TD ETF acquires andholds a portfolio of shares (the "Index Shares")of companies (each a "Constituent Company") thatcomprise the relevant Target Index.

(8) As one of the underwriters in the continuousdistribution of Units of the TD ETFs, TDSI may subscribe forUnits of the TD ETFs at any time. As payment therefor, TDSIis required to deliver Index Shares and cash in an amountsufficient so that the aggregate value of the Index Sharesand cash is equal to the net asset value, next determinedfollowing receipt of the subscription order, of the Unitssubscribed for.

(9) TDSI also acts as a designated brokersof the TD ETFs. As such, TDSI may be required to purchaseIndex Shares from, or sell certain securities to the TD ETFsas a result of

(a) an adjustment to the relevant TargetIndex,

(b) a take-over bid for a Constituent Companyof the relevant Target Index, or

(c) the receipt by the TD ETFs of dividendsor other distributions from a Constituent Company that resultsin an adjustment to the relevant Target Index.

(10) In acting as an underwriter and designatedbroker of the TD ETFs, TDSI receives no compensation fromthe TD ETFs or TDAM. However, as a dealer, TDSI may engagein secondary market trading activity in Units of the TD ETFs

(a) on an agency basis, and receive compensationfor its services as agent, or

(b) on a principal basis, and benefit fromthe spread between the price at which it purchases Unitsand the price at which it sells them.

(11) The TD ETFs have not issued any Unitsto the underwriters, acting as such, since the original closingof their initial distribution of Units on December 6, 2001.At that time, TDSI subscribed for 1,000,000 Units of the SelectGrowth Fund and 700,000 Units of the Select Value Fund asan underwriter. Additional units have been subsequently issuedto TDSI as designated broker when the Target Indices wereadjusted.

(12) As at October 31, 2002, TDSI continuedto hold 49.5% and 38.2%, respectively, of the outstandingUnits of the Select Growth Fund and Select Value Fund.

(13) The net asset value ("NAV")per Unit of the TD ETFs is published daily on TDAM's website.The closing price of the TD ETFs on the Exchange is publisheddaily in newspapers of general circulation in Canada.

(14) As at January 3, 2003, the aggregateNAV of the Funds was approximately $5.1 billion. The aggregateNAV of the TD ETFs as at the same date was approximately $35.2million.

(15) The proposed investment in Units of theTD ETFs would be consistent with the investment objectiveof the Funds. For this purpose, each Fund proposes to investonly the cash balances that it holds either to fund redemptionsor pending direct investment in securities other than Unitsof the TD ETFs.

(16) It is anticipated that each Fund willinvest between 0.50% and 3.00% of its NAV in a TD ETF. However,the aggregate investment of each Fund in the TD ETFs and inany other mutual fund similar to the TD ETFs that are managedby TDAM will not exceed 5% of its NAV.

(17) If each Fund were to invest .05% of itsNAV in Units of each TD ETF, the aggregate investment of theFunds in Units of the TD ETFs could result in the Funds acquiringand holding, collectively, an aggregate of 20% or more ofthe outstanding Units of each TD ETF (the "20% Threshold")from time to time. TDAM will ensure that the Funds' collectiveand aggregate holding in each TD ETF does not at any timeexceed 40% of the outstanding Units of each ETF.

(18) It is contemplated that, from time totime TDAM may cause the Funds to purchase Units of the TDETFs from the account of TDSI.

(19) Pursuant to a prior MRRS decision Documentdated January 8, 2002 (the "Previous Exemption"),each Fund was permitted to invest in Units of TD ETFs, subjectto certain conditions including the condition that the aggregateinvestment would not exceed 5% of its NAV. In obtaining thePrevious Exemption, it was represented to the Decision Makersthat a Fund will not knowingly make or hold an investmentin a TD ETF if, at the time of such investment, the Fund,either alone or together with other funds, is a substantialsecurity holder of the TD ETF. The Previous Exemption expiredon January 8, 2003.

AND WHEREAS under the System this MRRSDecision Document evidences the decision of each Decision Maker(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 underthe Legislation is that:

I the Investment Prohibitions do not applyso as to enable each Fund to make or hold an investmentin Units of the TD ETFs;

II the Registrant Prohibitions do not applyso as to enable TDAM to cause each Fund to

(A) purchase Units of the TD ETFs notwithstandingthat TDSI is one of the underwriters in the continuousdistribution of Units of the TD ETFs,

(B) purchase Units of each TD ETF fromthe account of TDSI or its affiliates or associates followingthe 60-day period after

(i) any subscription by TDSI as an underwriterfor Units of the TD ETFs, or

(ii) any issuance of Units of the TDETFs to TDSI as a designated broker, or

(C) sell Units of each TD ETF to the accountof TDSI or its affiliates or associates at any time; and

III the Reporting Requirement does not applyto TDAM in connection with the purchase or sale of Unitsof the TD ETFs between the Funds and any related personor company (the "Related Person");

PROVIDED THAT:

(1) at the time of each investment in or purchaseof Units of the TD ETFs by a Fund pursuant to paragraph Iand subparagraph II(A) of this Decision, the following conditionsare satisfied:

(a) the investment

(i) represents the business judgment ofTDAM uninfluenced by considerations other than the bestinterests of the Fund, or

(ii) is, in fact, in the best interestsof the Fund;

(b) the investment is consistent with, oris necessary to meet, the investment objective of the Fundthat is disclosed in the Fund's simplified prospectus;

(c) if the investment is made during the60-day period after

(i) any subscription by TDSI as an underwriterfor Units of the TD ETFs, or

(ii) any issuance of Units of the TD ETFsto TDSI as a designated broker,

the purchase order is not placed, on anagency or principal basis, with TDSI or its affiliates orassociates;

(d) each purchase is made on the Exchangeor any other exchange on which the Units of the TD ETFsare listed and traded;

(e) TDSI does not receive, directly or indirectly,any form of compensation in acting as an underwriter ordesignated broker in connection with the distribution ofUnits of the TD ETFs;

(2) in the case of an investment in or purchaseof Units of the TD ETFs by a Fund pursuant to paragraph Iand subparagraph II(A) of this Decision,

(a) the aggregate investment of each Fundin Units of the TD ETFs, and in securities of any othermutual fund similar to the TD ETFs that are managed by TDAMor its affiliates or associates, does not exceed 5% of itsNAV;

(b) the Funds' aggregate holding in eachTD ETF does not exceed 40% of the outstanding Units of eachTD ETF;

(c) whenever the aggregate holding of Unitsof each TD ETF by one or more of the Funds trips the 20%Threshold, TDAM files on SEDAR under the continuous disclosurecategory of filing, and within 10 days following the endof each month in which the aggregate holding tripped the20% Threshold, a report certified by TDAM and stating thepercentage of the outstanding Units of each TD ETF collectivelyheld by the Funds;

(3) in the case of the purchase or sale ofUnits of the TD ETFs by each Fund pursuant to subparagraphsII(B) and (C) of this Decision, the purchase or sale is madein compliance with the requirements of section 4.3 of NI 81-102;

(4) in the case of the exemption from theReporting Requirement pursuant to paragraph III of this Decision,the statement of portfolio transactions prepared and filedfor each Fund in accordance with the Legislation discloses,in respect of Units of each TD ETF bought or sold during theperiod covered by the statement of portfolio transactions,

(a) the name of each Related Person,

(b) the amount of fees paid to each RelatedPerson, and

(c) the person or company that paid thefees;

(5) paragraphs I and III of this Decision,as they relate to the jurisdiction of a Decision Maker, willterminate in respect of the Funds after the coming into forceof any legislation or rule of that Decision Maker dealingwith the matters regulated by section 2.5 of NI 81-102; and

(6) subparagraph II(A) of this Decision, asit relates to the jurisdiction of a Decision Maker, will terminatein respect of the Funds after the coming into force of anylegislation or rule of that Decision Maker dealing with thematters regulated by section 4.1 of NI 81-102.

January 31, 2003.

"Howard I. Wetston"                    "LorneMorphy"