Securities Law & Instruments


Mutual Reliance Review Systemfor Exemptive Relief Applications - investment trust exemptfrom prospectus and registration requirements in connectionwith issuance of units to existing unit holders pursuant todistribution reinvestment plan whereby distributions of incomeare reinvested in additional units of the trust, subject tocertain conditions - first trade in additional units deemeda distribution unless made in compliance with certain conditionswhich do not include a seasoning requirement.

Applicable Ontario StatutoryProvisions

Securities Act, R.S.O. 1990,c. S.5, as am., ss. 25, 53 and 74(1).

Multilateral Instrument Cited

Multilateral Instrument 45-102Resale of Securities.
















WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in each of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Quebec, Nova Scotia, New Brunswick, Prince Edward Island,Newfoundland and Labrador, Yukon, Nunavut and Northwest Territories(the "Jurisdictions") has received an applicationfrom NCE Strategic Energy Fund (the "Fund") for adecision, pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the requirement containedin the Legislation to be registered to trade in a security andto file and obtain a receipt for a preliminary prospectus anda final prospectus (the "Registration and Prospectus Requirements")shall not apply to certain trades in units of the Fund ("TrustUnits") which may be distributed to the holders of TrustUnits ("Unitholders") in connection with the automaticreinvestment of certain distributions.

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications("System"), the Ontario Securities Commission is theprincipal regulator for this application;

AND WHEREAS the Fundhas represented to the Decision Makers that:

1. The Fund is an unincorporatedinvestment trust established under the laws of the Provinceof Ontario by a trust agreement dated as of February 14, 2002.

2. The Fund is not a "mutualfund" as defined in the Legislation because the Unitholdersare not entitled to receive on demand an amount computed byreference to the value of a proportionate interest in thewhole or in part of the net assets of the Fund as contemplatedin the definition of "mutual fund" in the Legislation.

3. On April 11, 2002 the Fundbecame a reporting issuer or the equivalent thereof in eachprovince and territory in Canada upon obtaining a receiptfor its final prospectus dated April 11, 2002 (the "Prospectus").As of the date hereof, the Fund is not in default of any requirementsunder the Legislation.

4. The beneficial interestsin the Fund are divided into Trust Units which are a singleclass of limited voting units. The Fund is authorized to issuean unlimited number of Trust Units. Trust Units representa Unitholder's proportionate undivided beneficial interestin the Fund.

5. The Trust Units are listedon The Toronto Stock Exchange.

6. The manager of the Fundis NCE Strategic Energy Management Corp. (the "Manager")which was incorporated pursuant to the Business CorporationsAct (Ontario) on February 8, 2002 for the purpose of managingand administering the Fund.

7. The investment objectivesof the Fund are to provide investors with superior rates ofreturn, principally in the form of capital appreciation, anda cost-effective method of reducing investment risk througha diversification strategy focused on investment opportunitieswithin the Canadian energy sector which have prospects forhigh growth in the near to medium term.

8. The Fund's fiscal year-endis December 31. Pursuant to the Trust Agreement, at least25% of the net realized taxable capital gains, if any, arisingfrom any sales of the Fund's investments during any calendaryear and at least 50% of the Fund's net income, if any, earnedduring any calendar year will be payable to the Unitholdersof record on December 31 of such calendar year and will bedistributed annually in cash on or prior to January 31 ofthe next year, and the Fund, in its sole discretion, may returncapital and/or make cash distributions of net income and netrealized taxable capital gains to the Unitholders from timeto time (the "Distributions"). In addition, theFund may make additional distributions in each year to Unitholdersof record on December 31 in order to ensure there will beno income tax payable by the Fund under the Income TaxAct (Canada) (the "Additional Distributions")and such Additional Distributions will be made to Unitholderson or prior to January 31 of the next year.

9. The Additional Distributionswill be automatically reinvested, on each Unitholder's behalf,in additional Trust Units, unless a Unitholder requests duringthe month of November, that the Additional Distributions payableto him or her in respect of the current year be paid in cash.Each of such Trust Unit will be issued at the closing priceof the Trust Units on the last trading day of such year (the"Automatic Reinvestment Provision"). To the extentthat a Unitholder would otherwise be entitled to receive afractional Trust Unit, the Fund will distribute cash in lieuthereof.

10. No commissions, servicecharges or brokerage fees will be payable by Unitholders inconnection with the acquisition of Trust Units pursuant tothe Automatic Reinvestment Provision.

11. All Additional Distributionsmade to Unitholders who are not residents of Canada will bepaid in cash and will not be reinvested.

12. The Unitholders do nothave the option of making cash payments to purchase TrustUnits under the Automatic Reinvestment Provision.

13. The distribution of theTrust Units by the Fund pursuant to the Automatic ReinvestmentProvision cannot be made in reliance on certain registrationand prospectus exemptions contained in the Legislation asthe Automatic Reinvestment Provision involves the reinvestmentof income distributed by the Fund and not the reinvestmentof dividends or interest by the Fund.

14. The distribution of theTrust Units by the Fund pursuant to the Automatic ReinvestmentProvision cannot be made in reliance on registration and prospectusexemptions contained in the Legislation for distribution reinvestmentplans of mutual funds, as the Fund is not a "mutual fund"as defined in the Legislation.

15. The Fund is not a qualifyingissuer as defined in Multilateral Instrument 45-102 Resaleof Securities (MI 45-102).

AND WHEREAS under theSystem, this MRRS Decision Document evidences the decision ofeach of the Decision Makers (collectively, the "Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Makers with the jurisdictionto make the Decision has been met;

THE DECISION of the DecisionMakers pursuant to the Legislation is that the trades of TrustUnits by the Fund to the Unitholders pursuant to the AutomaticReinvestment Provision shall not be subject to the Registrationand Prospectus Requirements of the Legislation provided that:

(a) at the time of the tradethe Fund is a reporting issuer or the equivalent under theLegislation and is not in default of any requirements ofthe Legislation;

(b) no sales charge is payablein respect of the distributions;

(c) the Fund has sent, orhas caused to be sent to each Unitholder prior to November1st in each calendar year, a statement describing:

(i) the right to electnot to participate in the Automatic Reinvestment Provisionand to instead receive the Additional Distribution payableto the Unitholder in respect of such calendar year incash; and

(ii) instructions on howto exercise the right referred to in paragraph (i);

(d) except in Quebec, thefirst trade in Trust Units acquired pursuant to this Decisionin a Jurisdiction will be deemed a distribution or primarydistribution to the public under the Legislation unlessthe conditions in paragraphs 2 through 5 of subsection 2.6(4)of MI 45-102 are satisfied;

(e) in Quebec, the firsttrade (alienation) in Trust Units acquired pursuant to thisDecision will be deemed to be a distribution or a primarydistribution to the public unless:

(i) at the time of thefirst trade, the Fund is a reporting issuer in Quebec;

(ii) no unusual effortis made to prepare the market or to create a demand forthe securities that are the subject of the alienation;

(iii) no extraordinarycommission or other consideration is paid in respect ofthe alienation;

(iv) the vendor of thesecurities, if in a special relationship with the Fund,has no reasonable grounds to believe that the Fund isin default of any requirement of securities legislationin Quebec; and

(f) disclosure of the distributionof the Trust Units to Unitholders is made to the relevantJurisdictions by providing the particulars of the date ofthe distribution of such Trust Units, the number of suchTrust Units and the purchase price paid or to be paid forsuch Trust Units in:

(i) an information circularor take-over bid circular filed in accordance with theLegislation; or

(ii) a letter filed withthe Decision Maker in the relevant Jurisdiction by a personor company certifying that the person or company has knowledgeof the facts contained in the letter,

when the Fund distributessuch Trust Units for the first time and, thereafter, notless frequently than annually, unless the aggregate numberof Trust Units so traded in any month exceeds 1% of theTrust Units outstanding at the beginning of the month inwhich the Trust Units were traded, in which case a separatereport shall be filed in each relevant Jurisdiction in respectof that month within ten days of the end of such month.

July 10, 2002.

"Robert Korthals"                    "HaroldP. Hands"