Davis + Henderson Income Fund - MRRS Decision

Headnote

ApplicableOntario Statutory Provisions

INTHE MATTER OF

THESECURITIES LEGISLATION OF

ALBERTA, BRITISH COLUMBIA, MANITOBA, NEW BRUNSWICK,

NEWFOUNDLANDAND LABRADOR, NOVA SCOTIA, ONTARIO,

PRINCEEDWARD ISLAND, QUÉBEC AND SASKATCHEWAN

AND

INTHE MATTER OF

THEMUTUAL RELIANCE REVIEW SYSTEM

FOREXEMPTIVE RELIEF APPLICATIONS

AND

INTHE MATTER OF

DAVIS+ HENDERSON INCOME FUND

MRRSDECISION DOCUMENT

WHEREASthe local securities regulatory authority or regulator(the "Decision Maker") in each of Alberta, British Columbia,Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia,Ontario, Prince Edward Island, Québec and Saskatchewan(the "Jurisdictions") has received an application from Davis+ Henderson Income Fund (the "Fund") for a decision under thesecurities legislation (the "Legislation") of the Jurisdictionsto exempt the Fund from filing and distributing annual financialstatements, an annual report and an annual filing, where applicable,for its fiscal year ended December 31, 2001, as would otherwisebe required pursuant to applicable Legislation;

ANDWHEREAS under the Mutual Reliance Review System forExemptive Relief Applications (the "System"), the Ontario SecuritiesCommission is the principal regulator for this application; ANDWHEREAS the Fund has represented to the Decision Makersthat: 1.The Fund is a limited purpose trust established under the lawsof Ontario pursuant to an amended and restated declaration oftrust dated November 6, 2001. The Fund is authorized to issuean unlimited number of units. As of January 15, 2002, 18,955,000units were issued and outstanding. 2.The Fund holds common shares and notes issued by D+H HoldingsCorp., an Ontario corporation, which holds units of Davis +Henderson, Limited Partnership ("Davis + Henderson L.P."), aBritish Columbia limited partnership. The Fund also holds sharesin Davis + Henderson G.P. Inc., the general partner of Davis+ Henderson L.P. 3.The Fund offered 17,235,000 units of the Fund pursuant to aninitial public offering by way of a final prospectus dated December11, 2001 (the "Prospectus") and an additional 1,720,000 by wayof over-allotment option as described in the Prospectus. Theclosing of the offering occurred on December 20, 2001 and theclosing of the over-allotment option occurred on January 10,2002. 4.The Fund used the total proceeds of the offering and the over-allotmentoption to indirectly acquire a 49.98% interest in Davis + HendersonL.P., which in turn acquired the cheque supply outsourcing businessformerly carried on as a division of MDC Corporation Inc. ("MDC") 5.The fiscal year end of the Fund occurred on December 31, 2001. 6.The Prospectus contains (i)audited balance sheets of Davis + Henderson L.P. as at December31, 2000 and 1999 and audited statements of operations and divisionalequity and cash flows for each of the years in the three yearperiod ended December 31, 2000, (ii)an unaudited balance sheet of Davis + Henderson L.P. as at September30, 2001 and unaudited statements of operations and divisionalequity and cash flows for the nine month periods ended September30, 2001 and 2000, together with notes to those financial statements, (iii)an unaudited pro forma consolidated balance sheet of the Fundas at September 30, 2001 and unaudited pro forma consolidatedstatements of operations and distributable cash for the ninemonth period ended September 30, 2001 and the year ended December31, 2000, together with notes to those financial statements,and (iv)an audited balance sheet of the Fund as at December 11, 2001. 7.The Fund's financial position as at December 31, 2001 is substantiallyreflected in the pro forma financial statements included inthe Prospectus. Other than the offering described in the Prospectus,there were no material acquisitions or dispositions of unitsof the Fund during the period from December 11, 2001 to December31, 2001 (the "Stub Period"). 8.Meetings of unitholders will be held to elect trustees of theFund, commencing in 2003, such that no proxy circular is expectedto be distributed to unitholders in respect of the year endingDecember 31, 2001. 9.The only operations of the Fund prior to the end of its fiscalyear ended December 31, 2001 involved the issuance of 17,235,000units, the purchase of the common shares and notes of D+H HoldingsCorp., the purchase of common shares of Davis + Henderson G.P.as described in the Prospectus. 10.The benefit to be derived from unitholders of the Fund fromreceiving financial statements, an annual report and an annualfiling in respect of the fiscal year ended December 31, 2001would be minimal in view of the short period from the date ofthe Prospectus to the Fund's fiscal year end (20 days) and thenature of the business carried on by the Fund and by its trustees. 11.The expense to the Fund of preparing, filing and sending toits unitholders financial statements, an annual report and anannual filing in respect of the fiscal year ended December 31,2001 would not be justified in view of the benefit to be derivedby the unitholders from receiving such statements and information. 12.The Fund will prepare, file and deliver to all its unitholdersunaudited financial statements for the period ended March 31,2002 within the applicable time period and will prepare, fileand deliver to all its unitholders a proxy circular in respectof the year ended December 31, 2002 within the applicable timeperiod. ANDWHEREAS under the System, this MRRS Decision Documentevidences the decision of each Decision Maker (collectively,the "Decision"); ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met; THEDECISION of the Decision Makers under the Legislationis that the Fund is exempted from the requirement to file anddistribute annual financial statements, an annual report andan annual filing, where applicable, for its fiscal year endedDecember 31, 2001, provided that a)the Fund's interim financial statements for the period endedMarch 31, 2002 will include the Stub Period, and b)the Fund's audited annual financial statement and the annualreport, where applicable, for the period ended December 31,2002 will include the Stub Period.

February4, 2002. "R.Stephen Paddon"       "H. Lorne Morphy"