Securities Law & Instruments

Headnote

Item E(1) of Appendix C of OSC Rule 13-502 Fees-- exemption for pooled funds from paying an activity fee of$5,500 in connection with an application brought under subsection147 of the Act, provided an activity fee be paid on the basisthat the application be treated as an application for otherregulatory relief under item E(3) of Appendix C of the Rule.

Rules Cited

Ontario Securities Commission Rule 13-502, Fees,(2003) 26 OSCB 891.

Securities Act, R.S.O. 1990, c. S.5 as am.,ss. 77(2) and ss. 78(1).

National Instrument 13-101 -- System for ElectronicDocument Analysis and Retrieval (SEDAR), s. 2.1(1)1.

BY FAX

August 28, 2003

Torys LLP
Suite 3000
Maritime Life Tower
Box 270, TD Centre
Toronto, Ontario
M5K 1N2

Attention: Karen A. Malatest

Dear Sirs/Mesdames:

Re:
Arrow Hedge Partners Inc. ("Arrow")
Application for Exemptive Reliefunder OSC Rule 13-502 Fees ) the "Rule" or "Rule13-502")
Application #519/03

By letter dated August 5, 2003 (the "Application"),you applied on behalf of Arrow, the manager of certain pooledfunds listed in schedule A of the Application (the "ExistingPooled Funds") and other pooled funds created and managedby Arrow from time to time (collectively with the Existing PooledFunds, the "Pooled Funds"), to the Ontario SecuritiesCommission (the "Commission") under subsection 147of the Securities Act (Ontario( (the "Act")for relief from interim and comparative annual financial statements(the "Financial Statements") with the Commission (the"Financial Statements Exemption").

By the same date and cover, you additionallyapplied to the securities regulatory authority in Ontario (the"Decision Maker") on behalf of Arrow for an exemption,pursuant to subsection 6.1 of Rule 13-502, from the requirementto pay an activity fee of $5,500 in connection with the Applicationwith respect to the Financial Statement Exemption in accordancewith item E(1) of Appendix C of the Rules, on the conditionthat fees be paid on the basis that the Application be treatedas an application for other regulatory relief under item E(3)of Appendix C of Rule 13-502 (the "Fee Exemption").

Further, you requested that the activity feeof $1,500 for the application of the Fee Exemption be waived.

Item E of Appendix C to Rule 13-502 specifiesthe activity fee applicable for application for discretionaryrelief. Item E(1) specifies that applications under subsection147 of the Act pay an activity fee of $5,500 whereas item E(3)specifies that applications for other regulatory relief payan activity fee of $1,500.

From our review of the Application and otherinformation communicated to staff, we understand the relevantfacts and representations to be as follows:

1. Arrow is a corporation existing under thelaws of Ontario with its head office in Ontario. Arrow isor will be, the manager of the Pooled Funds. Arrow is registeredwith the Commission as an adviser in the categories of investmentcounsel, portfolio manager and commodity trading manager andas a dealer in the category of limited market dealer.

2. The Pooled Funds are, or will be, open-endedmutual fund trusts established under the laws of Ontario.The Pooled Funds are not, or will be, reporting issuers inany province or territory of Canada. Units of the Pooled Fundsare, or will be distributed in each of the provinces and territoriesof Canada without a prospectus pursuant to exemptions fromthe prospectus delivery requirements of applicable securitieslegislation.

3. The Pooled Funds fit within the definitionof "mutual fund in Ontario" in section 1(1) of theAct and are thus required to file Financial Statements withthe Commission under subsection of 77(2) and 78(1) of theAct.

4. Section 2.1(1) of National Instrument 13-101-- System for Electronic Document Analysis and Retrieval (SEDAR)("Rule 13-101") requires that every issuer requiredto file a document under securities legislation make its filingthrough SEDAR. The Financial Statements filed with the Commissionthus become publicly available.

5. In the Application, Arrow and the PooledFunds have requested under subsection 147 of the Act relieffrom filing the Financial Statement with the Commission. Theactivity fee associated with the application is $5,500 inaccordance with item E(1) of Appendix C to Rule 13-502.

6. If Arrow and the Pooled Funds had, as analternative to the Application, sought exemption from therequirement to file the Financial Statements via SEDAR, theactivity fee for that application would be $1,500 in accordancewith item E(3) to Appendix C of Rule 13-502.

7. If the Pooled Funds were reporting issuersseeking the same relief as requested in the Application, suchrelief could be sought under section 80 of the Act, ratherthan under subsection 147 of the Act, and the activity feefor that Application would be $1,500 in accordance with itemE(3) of Appendix C to Rule 13-502.

Decision

This letter confirms that, based on the informationprovided in the Application, other communications to staff,and the facts and representations above, and for the purposesdescribed in the application, the Decision Maker hereby exemptsArrow and the Pooled Funds from

i) paying an activity fee of $5,500 in connectionwith the Financial Statements Exemption application, providedthat Arrow and the Pooled Funds pay an activity fee on thebasis that the Financial Statements Exemption applicationbe treated as an application for other regulatory relief underitem E(3) of Appendix C to Rule 13-502, and

ii) paying an activity fee of $1,500 in connectionwith the Fees Exemption application under item E(3) of AppendixC to Rule 13-502.

Yours truly,

"Susan Silma"