Scotia Securities Inc. Funds - MRRS Decision

WHEREAS the local securities regulatory authorityor regulator (the "Decision Maker") in eachof the provinces and territories of BritishColumbia, Alberta, Saskatchewan, Ontario, Québec,Nova Scotia, and Newfoundland (the "Jurisdictions")has received an application (the "Application")from Scotia Securities Inc. (the "Manager")in its own capacity and on behalf of CapitalU.S. Large Companies RSP Fund, Capital U.S.Small Companies RSP Fund, Capital InternationalLarge Companies RSP Fund, Capital Global DiscoveryRSP Fund and Capital Global Small CompaniesRSP Fund (the "Existing RSP Funds") and othermutual funds managed by the Manager after thedate of this Decision (defined herein) havingan investment objective or strategy that islinked to the returns or portfolio of anotherspecified mutual fund while remaining 100% eligiblefor registered plans (together with the ExistingRSP Funds, the "RSP Funds") for a decision pursuantto the securities legislation of the Jurisdictions(the "Legislation") that the following prohibitionsor requirements under the Legislation (the "ApplicableRequirements") shall not apply to the RSP Fundsor the Manager, as the case may be, in respectof certain investments made by the RSP Fundsin Capital International-U.S. Equity, CapitalInternational-U.S Small Cap, Capital International-InternationalEquity, Capital International-Global Discovery,Capital International-Global Small Cap or anyother specific prospectus-qualified mutual funds(the "Underlying Funds") and in respect of certaininvestments made by the RSP Funds in forwardcontracts ("Forward Contracts") with the Bankof Nova Scotia ("BNS"):

1. the restrictions containedin the Legislation prohibiting a mutual fundfrom knowingly making and holding an investmentin a person or company in which the mutual fund,alone or together with one or more related mutualfunds, is a substantial securityholder;

2. the requirements containedin the Legislation requiring the managementcompany or, in British Columbia, a mutual fundmanager, to file a report relating to a purchaseor sale of securities between the mutual fundand any related person or company, or any transactionin which, by arrangement other than an arrangementrelating to insider trading in portfolio securities,the mutual fund is a joint participant withone or more of its related persons or companies;and

3. the requirements prohibitingthe Manager from knowingly causing an RSP Fundto invest in any person or company in whicha director, officer or employee of the Manageris a director or officer.

AND WHEREAS pursuantto the Mutual Reliance Review System for Exemptive

Relief Applications (the "System"),the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS ithas been represented by the Manager to the DecisionMakers

that:

1. The RSP Funds will be open-endedmutual fund trusts established under the lawsof the Province of Ontario. The Manager is acorporation established under the laws of theProvince of Ontario. The Manager is the manager,trustee and promoter of the RSP Funds.

2. The Underlying Funds will beopen-end mutual funds established under thelaws of the Province of Ontario. The units ofthe Underlying Funds are to be qualified inthe jurisdiction of the Decision Maker for salepursuant to a simplified prospectus and annualinformation form which has been filed with andaccepted by the Decision Maker.

3. The RSP Funds and the UnderlyingFunds (collectively, the "Funds") will be reportingissuers. The units of the RSP Funds are to bequalified under a simplified prospectus andannual information form (collectively, the "Prospectus")or the equivalent under the Legislation, whichProspectus will contain disclosure with respectto the investment objective, investment practicesand restrictions of the Funds, The investmentobjective of each RSP Fund shall include thename of its corresponding Underlying Fund. TheRSP Funds are not in default of the requirementsof the Legislation.

4. Each RSP Fund seeks to achieveits investment objective while ensuring thatits units do not constitute "foreign property"under the Income Tax Act (Canada) (the "TaxAct") for registered retirement savings plans,registered retirement income plans, and deferredprofit sharing plans ("Registered Plans").

5. To achieve its investment objectiveeach RSP Fund invests its assets in securitiessuch that its units will, in the opinion oftax counsel to the RSP Fund, be "qualified investments"for Registered Plans and will not constituteforeign property in a Registered Plan. Thiswill primarily be achieved by the RSP Fundsentering into derivative contracts with oneor more financial institutions that link thereturns to those of the Underlying Funds. However,each RSP Fund also intends to invest a portionof its assets in securities of an UnderlyingFund. This investment by an RSP Fund will atall times be below the maximum foreign propertylimit prescribed under the Tax Act for RegisteredPlans (the "Permitted Limit").

6. "BNS", a financial institutionwhich is an affiliate of the Manager, may bea Counterparty to the derivative contracts enteredinto by the RSP Funds.

7. Except for the transactioncosts payable to BNS in relation to any forwardcontracts with it, none of the RSP Funds, theUnderlying Funds, the Manager or any affiliateor asociate of any of the foregoing will payany fees or charges of any kind to any otherrelated party in respect of a trade in suchforward contracts.

8. The Prospectus will disclosethe involvement of BNS in acting as Counterpartyas well as all applicable charges in connectionwith any forward contracts with BNS.

9. The investment objectives ofthe Underlying Funds are achieved through investmentprimarily in foreign securities.

10. The investment by the RSPFunds in the Underlying Funds will be withinthe Permitted Limit. The Manager and the RSPFunds will comply with the conditions of thisDecision in respect of such investments. Theamount of direct investment by each RSP Fundin its corresponding Underlying Fund will beadjusted from time to time so that, except fortransitional cash, the aggregate of the derivativeexposure to, and direct investment in, the UnderlyingFund will equal 100% of the assets of that RSPFund.

11. Except to the extent evidencedby this Decision and specific approvals grantedor to be granted by the Canadian securitiesadministrators under National Instrument 81-102("NI 81-102"), the investment by each RSP Fundin an Underlying Fund will be structured tocomply with the investment restrictions of theLegislation and NI 81-102.

12. The investments by the RSPFunds in securities of the Underlying Fundsrepresent the business judgement of responsiblepersons uninfluenced by considerations otherthan the best interests of the Funds.

13. In the absence of this Decision,pursuant to the Legislation, each RSP Fund isprohibited from (a) knowingly making an investmentin a person or company in which the mutual fund,alone or together with one or more related mutualfunds, is a substantial securityholder; and(b) knowingly holding an investment referredto in subsection (a) hereof. As a result, inthe absence of this Decision a RSP Fund wouldbe required to divest itself of any investmentsreferred to in subsection (a) herein.

14. In the absence of this Decision,the Legislation requires the Manager to filea report on every purchase or sale of securitiesof the Underlying Funds by the RSP Funds.

AND WHEREASpursuant to the System this MRRS Decision Documentevidences

the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREASeach of the Decision Makers are satisfied thatthe test contained

in the Legislation that providesthe Decision Maker with the jurisdiction tomake the Decision has been met;

THE DECISIONof the Decision Makers under the Legislationis that the Applicable

Requirements do not apply to theRSP Funds or the Manager, as the case may be,in respect of investments to be made by theRSP Funds in securities of the Underlying Fundsand in respect of the Forward Contracts.

PROVIDED IN EACH CASETHAT:

1. The Decision as it relatesto the jurisdiction of a Decision Maker, willterminate one year after the publication infinal form of any legislation or rule of thatDecision Maker dealing with the matters in subsection2.5 of NI 81-102; and

2. the foregoing Decision shallonly apply in respect of investments in, ortransactions with, an Underlying Fund that aremade by a RSP Fund in compliance with the followingconditions:

(a) the investment by an RSPFund in an Underlying Fund is compatible withthe fundamental investment objective of suchRSP Fund;

(b) the securities of the RSPFunds and the Underlying Funds are and willcontinue to be offered for sale in the jurisdictionof the Decision Maker pursuant to a prospectuswhich has been filed with and accepted by theDecision Maker;

(c) each RSP Fund restricts itsaggregate direct investment in its UnderlyingFund to a percentage of its assets that is withinthe Permitted Limit;

(d) the investment objectivesin the Prospectus of the RSP Funds describethe intent of RSP Funds to invest in the specifiedUnderlying Funds and shall name the UnderlyingFunds;

(e) the RSP Funds may changethe Permitted Limit only if they change theirfundamental investment objectives in accordancewith the Legislation;

(f) if at any time, the assetsof the RSP Funds that are invested in the UnderlyingFunds exceed the percentage limit permittedunder the Decision the necessary changes aremade in the RSP Funds' investment portfolioas at the next valuation date of the RSP Fundsin order to bring the RSP Funds' investmentportfolio into conformity with the aforesaidamount;

(g) there are compatible datesfor the calculation of the net asset value ofthe RSP Fund and its Underlying Fund for thepurpose of the issue and redemption of the securitiesof such mutual funds;

(h) in the event of the provisionof any notice to securityholders of an UnderlyingFund as required by the constating documentsof that Underlying Fund or by the laws applicableto that Underlying Fund, such notice will alsobe delivered to the securityholders of the applicableRSP Fund; all voting rights attached to thesecurities of the Underlying Fund which areowned by an applicable RSP Fund will be passedthrough to the securityholders of the applicableRSP Fund.

(i) if a securityholders' meetingis called by the Underlying Fund in respectof a matter requiring securityholder approvalunder NI 81-102, all of the disclosure and noticematerial prepared in connection with such meetingwill be provided to the securityholders of theRSP Fund and such securityholders will be entitledto direct a representative of the RSP Fund tovote the RSP Fund's holding in the UnderlyingFund in accordance with their direction; andthe representative of an RSP Fund will not bepermitted to vote the RSP Fund's holdings inthe Underlying Fund except to the extent thesecurityholders of the RSP Fund so direct;

(j) no sales charges are payableby an RSP Fund in relation to its purchasesof securities of an Underlying Fund;

(k) no redemption fees or othercharges are charged by an Underlying Fund inrespect of the redemption by an RSP Fund ofsecurities of that Underlying Fund owned bythat RSP Fund;

(l) the arrangements betweenor in respect of an RSP Fund and its UnderlyingFund are such as to avoid the duplication ofmanagement fees;

(m) as part of receiving theannual and, upon request, the semi-annual financialstatements of an RSP Fund, securityholders ofthat RSP Fund will receive appropriate summarydisclosure in respect of the RSP Fund's holdingsof securities of the corresponding UnderlyingFund;

(n) copies of the simplifiedprospectus, annual information form and annualand semi-annual financial statements relatingto the applicable Underlying Fund may be obtainedupon request by a securityholder of the RSPFund without charge and this fact will be disclosedin the Prospectus of the RSP Funds; and

(o) the RSP Funds will not investin an Underlying Fund whose investment objectiveincludes investing directly or indirectly inother mutual funds.

AND PROVIDED THAT INRESPECT OF investments by an RSP Fundin Forward

Contracts, the Decision appliesto investments in Forward Contracts of BNS asCounterparty, that are made in compliance withthe following conditions:

(a) the pricing terms offeredby BNS to the RSP Funds under the forward contractsare at least as favourable as the terms committedby BNS to other third parties, which are ofsimilar size as the RSP Funds;

(b) prior to the RSP Funds enteringinto a forward contract transaction with BNS,the independent auditors of the RSP Funds willreview the pricing offered by BNS to the RSPFunds against the pricing offered by BNS toother fund groups offering RSP Funds of similarsize, to ensure that the pricing is at leastas favourable;

(c) the review by the independentauditors will be undertaken whenever the Prospectusis renewed and whenever it is proposed to amendthe pricing and terms of such contract;

(d) the RSP Funds' Prospectusdiscloses the independent auditors' role andtheir review of the forward contracts, as wellas the involvement of BNS; and

(e) the RSP Funds will enterinto forward contracts with BNS only once confirmationof favourable pricing is received from the independentauditors or board of Trustees, as the case maybe.

December 13, 2000.

"Howard I. Wetston"      "J.A. Geller"