Securities Law & Instruments

Headnote

Exemption from the fees otherwise due under subsection 14(1) of Schedule 1 of theRegulation to the Securities Act on a distribution of units made by an "underlying" funddirectly (i ) to a "clone" fund, (ii) to the "clone" fund's counterparties for hedgingpurposes and (iii) on the reinvestment of redistributions on such units.

Regulations Cited

Regulation made under the Securities Act, R.R.O 1990, Reg, 1015, as am., Schedule 1,ss. 14(1), 14(4) and 59(1).


IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, CHAPTER S. 5, AS AMENDED

AND

IN THE MATTER OF
MD INTERNATIONAL GROWTH FUND, MD US LARGE CAP VALUE FUNDMD GROWTH INVESTMENTS LIMITED, MD US LARGE CAP GROWTH FUND (formerly MD US Equity Fund)

ORDER
(Subsection 59(1) of Schedule 1 of the Regulation made under the above statute (the "Regulation"))

UPON the application of MD Funds Management Inc. ("MD Management"), themanager of MD International Growth RSP Fund, MD US Large Cap Value RSP Fund, MDGrowth RSP Fund and MD US Large Cap Growth RSP Fund (formerly MD US Equity RSPFund) and other similar funds established by MD Management from time to time(collectively, the "RSP Funds") and MD International Growth Fund, MD US Large CapValue Fund, MD Growth Investments Limited and MD US Large Cap Growth Fund(formerly MD US Equity Fund) and other similar funds established by MD Managementfrom time to time (collectively, the "Underlying Funds") to the Ontario SecuritiesCommission (the "Commission") for an order pursuant to subsection 59(1) of Schedule 1of the Regulation exempting the Underlying Funds from paying duplicate filing fees on anannual basis in respect of the distribution of units of the Underlying Funds to the RSPFunds, the distribution of units of the Underlying Funds to counterparties with whom theRSP Funds have entered into forward contracts and on the reinvestment of distributionson such units;

AND UPON considering the application and the recommendation of the staff of theCommission;

AND UPON MD Management having represented to the Commission that:

1. MD Management is the manager and trustee of the RSP Funds and of MDInternational Growth Fund, MD US Large Cap Value Fund and MD US Large CapGrowth Fund (formerly MD US Equity Fund). MD Management is also the managerof MD Growth Investments Limited ("MD Growth"). MD Management is acorporation established under the laws of Canada.

2. Each of the RSP Funds and MD International Growth Fund, MD US Large CapValue Fund and MD US Large Cap Growth Fund (formerly MD US Equity Fund) is,or will be, an open-ended unincorporated mutual fund trust established under thelaws of Ontario. MD Growth is a mutual fund corporation established under the lawsof Ontario.

3. The units of the RSP Funds and the Underlying Funds are, or will be, qualified fordistribution pursuant to simplified prospectuses and annual information forms filedacross Canada.

4. Each of the RSP Funds and the Underlying Funds is, or will be a reporting issuerunder the securities laws of each of the provinces and territories of Canada. Noneof the RSP Funds or the Underlying Funds is in default of any requirements of thesecurities legislation, regulations or rules applicable in each of the provinces andterritories of Canada.

5. As part of their investment strategy, the RSP Funds enter into forward contractswith one or more financial institutions (the "Counterparties") that link the returns toan Underlying Fund.

6. A Counterparty may hedge its obligations under a forward contract by investing inunits (the "Hedge Units") of the applicable Underlying Fund.

7. As part of their investment strategy, the RSP Funds may purchase units of theUnderlying Funds (the "Fund on Fund Investments").

8. Applicable securities regulatory approvals for the Fund on Fund Investments andthe RSP Funds' investment strategies have been obtained.

9. Annually, each of the RSP Funds will be required to pay filing fees to theCommission in respect of the distribution of its units in Ontario pursuant to section14 of Schedule 1 of the Regulation and will similarly be required to pay fees basedon the distribution of its units in other relevant Canadian jurisdictions pursuant tothe applicable securities legislation in each of those jurisdictions.

10. Annually, each of the Underlying Funds will be required to pay filing fees in respectof the distribution of its units in Ontario, including units issued to the RSP Fundsand the Hedge Units, pursuant to section 14 of Schedule 1 of the Regulation andwill similarly be required to pay fees based on the distribution of its units in otherrelevant Canadian jurisdictions pursuant to the applicable securities legislation ineach of those jurisdictions.

11. A duplication of filing fees pursuant to Section 14 of Schedule 1 of the Regulationmay result when (a) assets of an RSP Fund are invested in the applicableUnderlying Fund, (b) Hedge Units are distributed, and (c) a distribution is paid byan Underlying Fund on units of the Underlying Fund held by the applicable RSPFund or Hedge Units which are reinvested in additional units of the UnderlyingFund (the "Reinvested Units").

AND UPON the Commission being satisfied to do so would not be prejudicial to thepublic interest.

IT IS ORDERED by the Commission pursuant to subsection 59(1) of Schedule 1 ofthe Regulation that the Underlying Funds are exempt from the payment of duplicate filingfees on an annual basis pursuant to section 14 of Schedule 1 of the Regulation in respectof the distribution of units of the Underlying Funds to the RSP Funds, the distribution ofHedge Units to Counterparties and the distribution of Reinvested Units, provided that eachUnderlying Fund shall include in its notice filed under subsection 14(4) of Schedule 1 ofthe Regulation a statement of the aggregate gross proceeds realized in Ontario as a resultof the issuance by the Underlying Funds of (1) units distributed to the RSP Fund, (2)Hedge Units and (3) Reinvested Units; together with a calculation of the fees that wouldhave been payable in the absence of this order.

July 12th, 2000.

"Howard I. Wetston"      "Robert W. Davis"