Fédération des Caisses Desjardins du Québec et al. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Exemption from self- dealing requirements in Ontario Securities Act - fund manager granted relief to have related parties acquire asset-backed commercial paper from related mutual funds - asset-backed commercial paper market experiencing unforeseen liquidity problems - purchase of fund's asset-backed commercial paper to be made with cash - transactions with fund subject to recommendation of fund's independent review committee - relief in the best interest of the funds.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 118(2), 121(2)(a).

September 18, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA AND NEWFOUNDLAND

AND LABRADOR

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

("MRRS")

AND

IN THE MATTER OF

THE FÉDÉRATION DES CAISSES DESJARDINS DU QUÉBEC

(the "Filer")

AND

IN THE MATTER OF

DESJARDINS MONEY MARKET FUND,

DESJARDINS DIVIDEND FUND AND

DESJARDINS CANADIAN BOND FUND

(each a "Fund" and together the "Funds")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator ("Decision Maker") in each of the Jurisdictions has received an application (the "Application") from the Filer on behalf of the Funds for relief in each Jurisdiction from the following prohibitions In the securities legislation of the Jurisdictions (the "Requested Relief) in order to permit the sale of all of the asset backed commercial paper ("ABCP") Issued by an issuer listed in Schedule "A" and owned by the Funds on the date of the Application to 9186-3027 Québec inc,, an indirect wholly-owned subsidiary of the Filer (the "Acquirer")

(i) the provision that prohibits a portfolio manager or a responsible person (depending on the jurisdiction) from causing a portfolio managed by it or a mutual fund (depending on the jurisdiction) to sell the securities of an issuer to the account of a responsible person or an associate of a responsible person or the portfolio manager.

Under the MRRS :

(i) the principal regulator for the Application is the Autorité des marchés financiers; and

(ii) this MRRS decision document represents the decision of each of the Decision Makers.

Interpretation

Defined terms contained in National instrument 14-101 - Definitions and in National Instrument 81-102 - Mutual Funds have the same meaning in this MRRS decision document unless they are otherwise defined in this decision.

Representations

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

1. The Fédération des caisses Desjardins du Québec is the manager of the Funds.

2. Desjardins Global Asset Management Inc. ("DGAM") is the portfolio advisor of the Funds.

3. The Acquirer is an indirect wholly-owned subsidiary of the Filer.

4. The Funds are reporting issuers in the Jurisdictions. The Funds own ABCP issued by the issuers listed in Schedule

6. The ABCP consists of (i) short-term commercial paper with fixed interest rates and having terms to maturity of less than 365 days and (ii) floating rate evidences of indebtedness which may have terms to maturity in excess of 365 days.

7. The ABCP owned by the Funds have terms to maturity ranging from August 22, 2007 to April 20, 2009. ABCP coming to maturity beyond one year are floating rate notes. For the purpose of determining the average duration of the security portfolio of a Fund, floating rate notes are considered to come to maturity at every date a change of their interest rate is scheduled.

8. The ABCP owned by the Funds had, when acquired, and continued to have, as of the date of the Application, an approved credit rating.

9. The Filer has determined that the appropriate method to value the ABCP owned by the Funds is cost plus accrued interest which is the valuation methodology used in respect of other commercial paper investments held by the Funds.

10. DGAM has determined that the appropriate method to value the ABCP owned by the Funds is cost plus accrued interest.

11. The Filer has determined that current liquidity problems affecting the ABCP market may have an impact on the confidence of investors in the Funds and may result in unusual levels of redemption requests.

12. The Filer wants to ensure that the Funds are able to meet any redemption requests received by the Funds.

13. The Filer and DGAM have agreed that if DGAM determines that the sale of ABCP to the Acquirer is in the best interests of the Funds, the Acquirer will acquire all of the ABCP held by the Funds as of the date of the Application and issued by the issuers listed on Schedule "A", at a price per security equal to cost plus accrued interest. Such transactions may occur during the period between the date the Requested Relief is granted and October 31, 2007. The purchase price to be paid for the ABCP shall be paid exclusively in cash and no in specie transactions will occur.

14. The Funds will invest the proceeds of any sale of ABCP to the Acquirer in certificates of deposit issued by the Caisse centrale Desjardins du Québec (the "Certificates of Deposit"). The Certificates of Deposit shall have a term to maturity of 365 days or less and shall be redeemable on demand without penalty.

15. Following the investment in the Certificates of Deposit, DGAM will reconsider investment alternatives in light of the evolution of the Canadian money market with the objective of returning the Desjardins Money Market Fund to a more diversified portfolio of investments within a reasonable time frame.

16. The Filer has appointed the initial members of the Funds' independent review committee ("IRC") but as of the date of this application National Instrument 81-107 does not apply to the Funds as the IRC is not yet fully operational.

17. The members of the IRC, meeting as an ad hoc committee, have agreed with the making of this application on behalf of the Funds and the completion of the transactions contemplated therein, being the sale of the ABCP by the Funds and the purchase of the Certificates of Deposit, as being in the best interests of the Funds.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted in respect of the Funds on the condition that:

a) DGAM determines that the sale of the ABCP and the purchase of the Certificates of Deposit are in the best interests of the Funds;

b) the sale occurs during the period between the date hereof and October 31, 2007; and;

c) the price per security is equal to cost plus accrued Interest.

SCHEDULE "A"

ASSET BACKED COMMERCIAL PAPER ISSUERS

Apollo Trust

Apsley Trust

Aria Trust

Aurora Trust

Gemini Trust

Lafayettes Structured

Newshore Canadian Trust

Rocket Trust

Silverstone Trust

Structured Investment

Whitehall Trust