Synergy Asset Management Inc. and Synergy European Momentum RSP Fund

Headnote

Investment by mutual funds in securities of another mutual fund that is undercommon management for specified purpose exempted from the requirementsof clause 111(2)(b), subsection 111(3), clauses 117(1)(a), 117(1)(d) and118(2)(a), subject to certain specified conditions.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c.S.5, as am. Ss. 111(2)(b), 111(3),117(1)(a), 117(1)(d), 117(2), 118(2)(a) and 121 (2)(a)(ii).

WHEREAS the local securities regulatory authority or regulator (the"Decision Maker") in each of the provinces of British Columbia, Alberta,Saskatchewan, Ontario, Québec, Nova Scotia and Newfoundland (the"Jurisdictions") has received an application (the "Application") from SynergyAsset Management Inc. ("Synergy") in its own capacity and on behalf ofSynergy European Momentum RSP Fund ("European Momentum RSP") andother mutual funds managed by Synergy after the date of this Decision(defined herein) having an investment objective or strategy that is linked tothe returns or portfolio of another specified Synergy mutual fund whileremaining 100% eligible for registered plans (together with EuropeanMomentum RSP, the "RSP Funds") for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation") that the followingprohibitions or requirements under the Legislation (the "ApplicableRequirements") shall not apply to the RSP Funds or Synergy, as the casemay be, in respect of certain investments made by the European MomentumRSP in Synergy European Momentum Class ("European Momentum Class")and by other RSP Funds in their applicable corresponding Synergy mutualfund from time to time (together with European Momentum Class, the"Underlying Funds"):

1. the restrictions contained in the Legislation prohibiting a mutual fundfrom knowingly making and holding an investment in a person orcompany in which the mutual fund, alone or together with one or morerelated mutual funds, is substantial security holder;

2. the requirements contained in the Legislation requiring themanagement company or, in British Columbia, a mutual fundmanager, to file a report relating to a purchase or sale of securitiesbetween the mutual fund and any related person or company, or anytransaction in which, by arrangement other than an arrangementrelating to insider trading in portfolio securities, the mutual fund is ajoint participant with one or more of its related persons or companies;and

3. the requirements contained in the Legislation prohibiting the portfoliomanager or, in British Columbia, the mutual fund, from knowinglycausing an investment portfolio managed by it to invest in thesecurities of an issuer in which a "responsible person" (as that termis defined in the Legislation) is an officer or director unless thespecific fact is disclosed to the client and if applicable the writtenconsent of the client to the investment is obtained before thepurchase.

AND WHEREAS pursuant to the Mutual Reliance Review System forExemptive Relief Applications (the "System"), the Ontario SecuritiesCommission is the principal regulator for this application;

AND WHEREAS it has been represented by Synergy to the DecisionMakers that:

1. Each of the RSP Funds will be an open-ended mutual fund trustestablished under the laws of the Province of Ontario. Each of theUnderlying Funds will be a class of a corporation incorporated underthe laws of the Province of Ontario or an open-ended mutual fundtrust established under the laws of the Province of Ontario.

2. Synergy is a corporation established under the laws of the Provinceof Ontario. Synergy is the manager and promoter of the RSP Fundsand the Underlying Funds and also the trustee of EuropeanMomentum RSP. Directors and officers of Synergy are directors andofficers of the Underlying Corporation.

3. The RSP Funds and the Underlying Funds will be reporting issuersor the equivalent under the Legislation and are not in default of therequirements of the Legislation. The units of the RSP Funds and ofthe Underlying Funds will be qualified under a simplified prospectusand annual information form (collectively, the "Prospectus")

4. Each of the RSP Funds seeks to achieve its investment objectivewhile ensuring that units of the Fund do not constitute "foreignproperty" under the Tax Act (Canada) (the "Tax Act") for registeredretirement savings plans, registered retirement income plans, anddeferred profit sharing plans ("Registered Plans").

5. To achieve its investment objective each RSP Fund invests its assetsin securities such that its units will, in the opinion of tax counsel to theRSP Fund, be "qualified investments" for Registered Plans and willnot constitute foreign property (as defined in the Tax Act) to suchRegistered Plans. This will primarily be achieved through theimplementation of a derivative strategy. However, each RSP Fundalso intends to invest a portion of its assets in securities of itsUnderlying Fund. These investments by the RSP Funds will at alltimes be below the maximum foreign property limit prescribed forRegistered Plans (the "Permitted Limit").

6. The investment objectives of the Underlying Funds are achievedthrough investment primarily in foreign securities.

7. The direct investments by the RSP Funds in their Underlying Fundswill be within the Permitted Limit (the "Permitted RSP FundInvestments"). Synergy and the RSP Funds will comply with theconditions of this Decision in respect of such investments. Theamount of direct investment by each RSP Fund in its Underlying Fundwill be adjusted from time to time so that, except for transitional cash,the aggregate of the derivative exposure to, and direct investment in,the Underlying Fund will equal 100% of the assets of that RSP Fund.

8. Except to the extent evidenced by this Decision and specificapprovals granted or to be granted by the Canadian securitiesadministrators under National Instrument 81-102 ("NI 81-102"), theinvestment by each RSP Fund in its Underlying Fund will bestructured to comply with the investment restrictions of the Legislationand NI 81-102.

9. The investments by the RSP Funds in securities of the UnderlyingFunds represent the business judgement of responsible personsunfluenced by considerations other than the best interests of thefunds.

10. In the absence of this Decision, pursuant to the Legislation, eachRSP Fund is prohibited from (a) knowingly making an investment ina person or company in which the mutual fund, alone or together withone or more related mutual funds, is a substantial securityholder; and(b) knowingly holding an investment referred to in subsection (a)hereof. As a result, in the absence of this Decision a RSP Fundwould be required to divest itself of any investments referred to insubsection (a) herein.

11. In the absence of this Decision, the Legislation requires Synergy tofile a report on every purchase or sale of securities of the UnderlyingFunds by their RSP Funds.

12. By virtue of certain directors and officers of Synergy beingresponsible persons in respect of European Momentum Class andperhaps of other Underlying Funds, in the absence of this Decision,Synergy would be prohibited from causing the RSP Funds to investin their Underlying Funds unless these facts are disclosed toinvestors and, if applicable, the written consent of investors isobtained before the purchase.

AND WHEREAS pursuant to the System this MRRS DecisionDocument evidences the decision of each Decision Maker (collectively, the"Decision");

AND WHEREAS each of the Decision Makers are satisfied that thetest contained in the Legislation that provides the Decision Maker with thejurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is thatthe Applicable Requirements do not apply to the RSP Funds or Synergy, asthe case may be, in respect of investments to be made by the RSP Funds insecurities of the Underlying Funds.

PROVIDED IN EACH CASE THAT:

1. the Decision, as it relates to the jurisdiction of a Decision Maker, willterminate one year after the publication in final form of any legislationor rule of that Decision Maker dealing with the matters in subsection2.5 of NI 81-102; and

2. the Decision shall only apply in respect of investments in, ortransactions with, an Underlying Fund that are made by an RSP Fundin compliance with the following conditions:

(a) the investment by the RSP Fund in its Underlying Fund iscompatible with the fundamental investment objective of theRSP Fund;

(b) the RSP Fund and the Underlying Fund are under commonmanagement and the securities of both are offered for sale inthe jurisdiction of the Decision Maker pursuant to a prospectuswhich has been filed with and accepted by the Decision Maker;

(c) the RSP Fund restricts its aggregate direct investment insecurities of the applicable Underlying Fund to a percentageof its assets that is within the Permitted Limit;

(d) the Prospectus of the RSP Fund describes the intent of theRSP Fund to invest in it's Underlying Fund;

(e) the RSP Fund may change the Permitted RSP FundInvestments if it changes its fundamental investment objectivein accordance with the Legislation;

(f) there are compatible dates for the calculation of the net assetvalue of the RSP Fund and its Underlying Fund for thepurpose of the issue and redemption of the securities of suchmutual funds;

(g) in the event of the provision of any notice to securityholders ofan Underlying Fund, as required by applicable laws or theconstating documents of that Underlying Fund, such notice willalso be delivered to the securityholders of the its RSP Fund;all voting rights attached to the securities of the UnderlyingFund which are owned by its RSP Fund will be passed throughto the securityholders of the applicable RSP Fund.

(h) in the event that a securityholders' meeting is called by anUnderlying Fund, all of the disclosure and notice materialprepared in connection with such meeting will be provided tothe securityholders of its RSP Fund; such securityholders willbe entitled to direct a representative of the RSP Fund to votethe RSP Fund's holding in the Underlying Fund in accordancewith their direction; and the representative of the RSP Fundwill not be permitted to vote the RSP Fund's holdings in theUnderlying Fund except to the extent the securityholders of theRSP Fund so direct;

(i) no sales charges are payable by the RSP Fund in relation toits purchases of securities of its Underlying Fund;

(j) no redemption fees or other charges are charged by theUnderlying Fund in respect of the redemption by the RSPFund of securities of the Underlying Fund owned by the RSPFund;

(k) no fees and charges of any sort are paid by the RSP Fund, itsUnderlying Fund, the manager or principal distributor of theRSP Fund or the Underlying Fund, or by any affiliate orassociate of any of the foregoing entities, to anyone in respectof the RSP Fund's purchase, holding or redemption of thesecurities of its Underlying Fund;

(l) the arrangements between or in respect of the RSP Funds andit's Underlying Fund are such as to avoid the duplication ofmanagement fees;

(m) in addition to receiving the annual and, upon request, thesemi-annual financial statements of the RSP Fund,securityholders of the RSP Fund will receive the annual and,upon request, the semi-annual financial statements of it'sUnderlying Fund in either a combined report containing boththe RSP Fund and Underlying Fund's financial statements, orin a separate report containing the Underlying Fund's financialstatements; and

(n) to the extent that the RSP Fund and it's Underlying Fund donot use a combined simplified prospectus and annualinformation form and financial statements containingdisclosure about the RSP Fund and the Underlying Fund,copies of the simplified prospectus, annual information formand annual and financial statements relating to the UnderlyingFund may be obtained upon request by a securityholder of theRSP Fund;

October 3^rd, 2000.

"J. A. Geller"       "Robert W. Davis"