Securities Law & Instruments

Headnote

Subsection 38(1) of the Commodity Futures Act(Ontario) - relief from the requirements of subsection 22(1)(b)of the CFA, for a period of three years, in respect of advisingcertain mutual funds and non-redeemable investment funds inrespect of investments in and investments in investment vehiclesthat may invest in, commodity futures contracts and optionstraded on commodity futures exchanges outside Canada subjectto certain terms and conditions.

Statutes Cited

Commodity Futures Act, R.S.O. 1990, c. C20,as am., ss. 22(1)(b), 38(1).
Securities Act, R.S.O. 1990, c. S.5 as am., ss. 53 and 62.

IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED (the "CFA")

AND

IN THE MATTER OF

MORGAN STANLEY ALTERNATIVE
INVESTMENT PARTNERS LP,
MORGAN STANLEY AIP GP LP,
MSDW AIP (CAYMAN) LTD.

AND

MORGAN STANLEY AIP (CAYMAN)GP LTD.

ORDER
(Subsection 38(1) of the CFA)

UPON the application of Morgan StanleyAlternative Investment Partners LP, Morgan Stanley AIP GP LP,MSDW AIP (Cayman) Ltd. and Morgan Stanley AIP (Cayman) GP Ltd.(the "Applicants") to the Ontario Securities Commission(the "Commission") for an order pursuant to subsection38(1) of the CFA that each of the Applicants and their respectivedirectors, partners, officers, and employees are exempt, fora period of three years, from the requirements of paragraph22(1)(b) of the CFA in respect of advising certain mutual fundsand non-redeemable investment funds (the "Funds"),the securities of which will be offered primarily outside ofCanada but may also be privately placed in Ontario, in respectof investments in investment vehicles that may invest in, commodityfutures contracts and options traded on commodity futures exchangesoutside Canada and cleared through clearing corporations outsideCanada, and, in certain cases, direct investments in such instrumentssubject to certain terms and conditions;

AND UPON considering the applicationand the recommendation of staff of the Commission;

AND UPON the Applicants having representedto the Commission that:

1. The Applicants are Morgan Stanley AlternativeInvestment Partners LP, Morgan Stanley AIP GP LP, MSDW AIP (Cayman)Ltd. and Morgan Stanley AIP (Cayman) GP Ltd. Each of the Applicantsis an indirect affiliate of Morgan Stanley, a global financialservices firm incorporated under the laws of the State of Delaware,the common stock of which is listed on the New York Stock Exchangeand on the Pacific Exchange. Morgan Stanley Alternative InvestmentPartners LP is a limited partnership organized under the lawsof the state of Delaware. Morgan Stanley AIP GP LP is a limitedpartnership organized under the laws of the state of Delaware.MSDW AIP (Cayman) Ltd. is an exempted company organized underthe laws of the Cayman Islands. Morgan Stanley AIP (Cayman)GP Ltd. is an exempted company organized under the laws of theCayman Islands. None of the Applicants is resident in Canada.

2. The Funds include funds that are offshorefeeder funds (the "Feeder Funds") that are establishedoutside of Canada and outside of the United States. Two of theApplicants (MSDW AIP (Cayman) Ltd. and Morgan Stanley AIP (Cayman)GP Ltd.) serve as general partner of the Feeder Funds and causethe assets of the Feeder Funds to be invested primarily in Fundsestablished in the United States ("U.S. Funds").

3. The Funds advised by the Applicants are orwill be established outside of Canada. Securities of the Fundsare or will be primarily offered outside of Canada to institutionalinvestors and high net worth individuals. Securities of theFunds will be offered to a small number of Ontario residentswho will be at the time of their investment institutional investorsor high net worth individuals. Such securities will be offeredand distributed in Ontario through registrants (as defined underthe Securities Act (Ontario) (the "OSA")), which havethe appropriate registration, in reliance upon an exemptionfrom the requirements of sections 53 and 62 of the OSA.

4. All of the Funds are or will be "fundof funds" which will primarily invest in certain investmentvehicles unaffiliated with the Applicants and which are, orwill be, established outside of Canada (the "UnderlyingFunds"). The Feeder Funds invest in the Underlying Fundsindirectly by investing directly in the U.S. Funds that investdirectly in the Underlying Funds.

5. Certain of the Underlying Funds may investin commodity futures contracts and options traded on organizedexchanges outside of Canada and cleared through clearing corporationslocated outside of Canada. Certain of the Funds advised by theApplicants may also invest directly in commodity futures contractsand options traded on organized exchanges outside of Canadaand cleared through clearing corporations located outside ofCanada.

6. The Underlying Funds in which the Funds willfrom time to time invest are, or will be, managed by certainthird party managers outside of Canada (the "Managers")and are investing, or will invest, in investments selected bythe Managers which may include commodity futures contracts andoptions. The Managers are unaffiliated with the Applicants anddo not, and will not in the future, provide advice directlyto the Funds.

7. One or more of the Applicants have selected,or will select, the Underlying Funds in which the Funds haveinvested, or will invest, based on the investment strategiesimplemented by the Manager of the relevant Underlying Fund andthe respective investment objectives and policies of the Fundthat has invested, or will invest, in the Underlying Fund. Theinvestment strategies implemented by the Managers may includeinvesting in commodity futures contracts and options.

8. By selecting an Underlying Fund based uponthe Underlying Fund's investment strategy, where such strategymay specifically involve investing in commodity futures contractsand options, and by advising the Funds directly on investingin commodity futures and options contracts, the Applicants currentlyprovide, or will in the future provide, advice with respectto commodity futures contracts and options or securities tothe Funds.

9. Certain affiliates of the Applicants areregistered with the Ontario Securities Commission. Morgan Stanley& Co. Incorporated is registered under the OSA in the categoriesof international dealer and international adviser (investmentcounsel and portfolio manager). An affiliate of the Applicants,Morgan Stanley Investment Management Inc., is registered underthe OSA in the category of international adviser (investmentcounsel and portfolio manager). Another affiliate of the Applicants,Morgan Stanley Canada Limited, is registered under the OSA asa broker and investment dealer (equities and options). MorganStanley & Co. Limited and Morgan Stanley & Co. InternationalLimited, two other affiliates of the Applicants, are registeredunder the OSA as international dealers. The Applicants are not,and have no current intention of becoming registered, in anycapacity under the OSA or the CFA.

10. Each of the Applicants, where required,is registered or licensed under the applicable legislation ofits principal jurisdiction to provide advice to the Funds, oris entitled to rely on appropriate exemptions from such registrationsor licences pursuant to the applicable legislation of its principaljurisdiction. In particular:

(a) Morgan Stanley Alternative Investment PartnersLP is a registered investment adviser with the U.S. Securitiesand Exchange Commission (the "SEC"), and a registeredcommodity pool operator with the U.S. Commodity Futures TradingCommission (the "CFTC");

(b) Morgan Stanley AIP GP LP is a registeredinvestment adviser with the SEC, a registered commodity tradingadvisor with the U.S. National Futures Association and a registeredcommodity pool operator with the CFTC;

(c) MSDW AIP (Cayman) Ltd. is not required tobe, and accordingly is not, currently registered as an investmentadviser with the SEC but is a registered commodity pool operatorwith the CFTC; and

(d) Morgan Stanley AIP (Cayman) GP Ltd. is notrequired to be, and accordingly is not, currently registeredas an investment adviser with the SEC but is a registered commoditypool operator with the CFTC.

11. None of the Funds is, and none has any currentintention of becoming, a reporting issuer in Ontario or in anyother Canadian jurisdiction.

12. Prospective investors in the Funds who areOntario residents will receive disclosure that includes (i)a statement that there may be difficulty in enforcing any legalrights against any of the applicable Fund (or any of the UnderlyingFunds), the Applicant advising the relevant Fund, the trusteeor manager of the applicable Fund (or of any of the UnderlyingFunds) because they are resident outside of Canada and all orsubstantially all of their assets are situated outside of Canada;and (ii) a statement that the Applicant advising the relevantFund and, where applicable, the Managers advising the relevantUnderlying Fund are not, or will not be, registered with orlicensed by any securities regulatory authority in Canada and,accordingly, the protections available to clients of a registeredadviser will not be available to purchasers of securities ofsuch Fund.

AND UPON being satisfied that it wouldnot be prejudicial to public interest for the Commission togrant the exemption requested on the basis of the terms andconditions proposed,

IT IS ORDERED pursuant to subsection38(1) of the CFA that each of the Applicants and their respectivedirectors, partners, officers, and employees responsible foradvising the Funds are not subject to the requirements of paragraph22(1)(b) of the CFA in respect of their advisory activitiesin connection with the Funds, for a period of three years, providedthat at the time such activities are engaged in:

(a) any such Applicant, where required, is orwill be, registered or licensed under the applicable legislationof its principal jurisdiction to provide advice to the Funds,or is, or will be entitled to rely on appropriate exemptionsfrom such registrations or licences pursuant to the applicablelegislation of its principal jurisdiction;

(b) the Funds and the Underlying Funds investin commodity futures contracts and options traded on organizedexchanges outside of Canada and cleared through clearing corporationslocated outside of Canada and other derivative instruments tradedover the counter;

(c) securities of the Funds will be offeredprimarily outside of Canada and will only be distributed inOntario through a registrant (as defined under the OSA), andin reliance upon an exemption from the requirements of sections53 and 62 of the OSA and upon an exemption from the adviserregistration requirement provided under section 7.10 of CommissionRule 35-502 Non-Resident Advisers; and

(d) prospective investors in the Funds who areOntario residents will receive disclosure that includes (i)a statement that there may be difficulty in enforcing any legalrights against any of the applicable Fund (or any of the UnderlyingFunds), the Applicant advising the relevant Fund, the trusteeor manager of the applicable Fund (or of any of the UnderlyingFunds) because they are resident outside of Canada and all orsubstantially all of their assets are situated outside of Canada;and (ii) a statement that the Applicant advising the relevantFund and, where applicable, the Managers advising the relevantUnderlying Fund are not, or will not be, registered with orlicensed by any securities regulatory authority in Canada and,accordingly, the protections available to clients of a registeredadviser will not be available to purchasers of securities ofsuch Fund.

September 20, 2002.

"Howard I. Wetston"      "Robert L. Sheriff"