Ridgewood Canadian Investment Grade Bond Fund

Decision

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption from National Instrument 81-106 Investment Fund Continuous Disclosure to permit an investment fund that uses specified derivatives to calculate its NAV on a weekly basis and not on a daily basis, subject to certain conditions.

Applicable Legislative Provisions

National Instrument 81-106 Investment Fund Continuous Disclosure, s. 14.

November 27, 2009

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

RIDGEWOOD CANADIAN INVESTMENT

GRADE BOND FUND

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that exempts the Filer from the requirement contained in section 14.2(3)(b) of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to calculate the Filer's net asset value (NAV) at least once every business day (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon by the Filer in all the provinces of Canada.

Interpretation

Terms defined in National Instrument 14-101 and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. Ridgewood Capital Asset Management Inc. (the Manager) is a corporation incorporated under the Canada Business Corporations Act. It intends to establish the Filer pursuant to a declaration of trust. The head office of the Manager is located at 55 University Avenue, Suite 1020, Toronto, Ontario M5J 2H7.

2. The Manager will be the trustee and manager of the Filer and will be responsible for providing and arranging for the provision of all administrative services required by the Filer. The Manager is also the portfolio advisor of the Filer and is responsible for executing the Filer's investment strategy.

3. Neither the Filer nor the Manager is in default of securities legislation in any of the provinces or territories of Canada.

4. The Filer filed a preliminary prospectus (the Preliminary Prospectus) dated October 30, 2009 on SEDAR with respect to an initial public offering (the Offering) of units (Units) in each of the provinces of Canada, a receipt for which was issued by the Ontario Securities Commission on October 30, 2009. The Offering of Units is a one-time offering and the Filer will not continuously distribute the Units.

5. The Filers's investment objectives are to provide Unitholders with monthly cash distributions, initially targeted to be 5.25% per annum on the original issue of $12.00 per Unit and to maximize the total returns for Unitholders while preserving capital in the long term by obtaining exposure to an investment portfolio (the "Portfolio") consisting primarily of Canadian investment grade bonds. In addition the Filer may invest up to 10% of the Portfolio in U.S. investment grade bonds.

6. The Filer may use derivative instruments such as forward contracts or swaps consistent with its investment objectives and subject to the investment restrictions of the Filer to reduce the effects on the Portfolio of changes in the value of the U.S. dollar relative to the Canadian dollar.

7. CIBC Mellon Trust Company will act as custodian of the assets of the Filer.

8. The Units will be redeemable at the option of the holder of the Units ( a Unitholder) on the second last business day of each month, other than December (each a Monthly Redemption Date). A Unitholder who properly surrenders a Unit for redemption no later than 5:00 p.m. (Toronto time) on the date which is the last business day of the month preceding the Monthly Redemption Date will receive on or before the 10th business day of the month immediately following such Monthly Redemption Date, payment of the Monthly Redemption Price per Unit (as defined below) for such Unit calculated by reference to the price at which Units are trading on the Toronto Stock Exchange (TSX) (subject to the Filer's right to suspend redemptions in certain circumstances).

9. The Monthly Redemption Price per Unit will be equal to the lesser of:

(a) 96% of the weighted average trading price of the Units on the TSX for the 10 trading days immediately preceding the applicable Monthly Redemption Date, and

(b) 100% of the closing market price of a Unit on the applicable Monthly Redemption Date,

less, in each case, any costs associated with redemption, including brokerage costs (the Redemption Costs).

10. Commencing in 2010, Units also may be surrendered for redemption at the option of the Unitholder on the second last business day of December in each year (an Annual Redemption Date). A Unitholder who properly surrenders a Unit for redemption at least 10 business days prior to an Annual Redemption Date will receive on or before the 15th business day following such Annual Redemption Date, payment of the Redemption Price per Unit (as defined below) for such Unit calculated by reference to the net asset value of the Unit (subject to the Filer's right to suspend redemptions in certain circumstances).

11. The Redemption Price per Unit will be equal to:

(a) the net asset value per Unit as at the Annual Redemption Date, less

(b) any applicable Redemption Costs.

12. The Filer will not be a "mutual fund" because the Unitholders are not entitled to receive on demand an amount computed by reference to the value of a proportionate interest in the whole or in part of the net assets of the Filer as contemplated in the definition of "mutual fund" in the securities legislation of the provinces of Canada. Accordingly, the Filer will be a "non-redeemable investment fund" as defined in NI 81-106.

13. Under section 14.2(3)(b) of NI 81-106, an investment fund that is a reporting issuer that uses or holds specified derivatives, such as the Filer intends to do, must calculate its net asset value on a daily basis.

14. The Filer intends to calculate its net asset value (NAV) and net asset value per Unit on a weekly basis on Thursday of each week or if any Thursday is not a business day, the immediately preceding business day, the Annual Redemption Date and the last business day of each month, and includes any other date on which the Manager elects, in its discretion, to calculate the NAV per Unit (each a Valuation Date). The Filer will make available to the financial press for publication on a weekly basis, the NAV per Unit. Such amount also will be available on the Manager's website at www.ridgewoodcapital.ca.

15. The Preliminary Prospectus discloses, and the final prospectus of the Filer will disclose, that the NAV per Unit will be calculated on a weekly basis and will be posted on the internet at www.ridgewoodcapital.ca .

16. The Units are expected to be listed and posted for trading on the Toronto Stock Exchange (TSX) and an application to the TSX to so list the Units has been made. The Units are unlike securities of a conventional mutual fund in which there is normally no such market and where, as a result, holders of such securities who wish to liquidate their holdings must cause the fund to redeem their securities. Since the Units will be listed for trading on the TSX, Unitholders will not have to rely solely on the redemption feature of the Units in order to provide liquidity for their investment.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) the NAV calculation is available to the public upon request; and

(b) a toll-free telephone number or website is available which the public can access for this purpose;

for so long as:

(c) the Units are listed on the TSX; and

(d) the Filer calculates its NAV at least weekly.

"Darren McKall"
Assistant Manager, Investment Funds
Ontario Securities Commission