TD Asset Management Inc. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- relief granted from the investment prohibition in subsection 4.1(1) of NI 81-102 to permit purchases of equity securities under private placements where the issuer is a reporting issuer in one or more jurisdictions -- relief conditional on funds complying with conditions under s. 4.1(4)(a), (c)(ii), and (d) which include approval by the funds' independent review committee.

Applicable Legislative Provisions

National Instrument 81-102 -- Mutual Funds, ss. 4.1(1), 19.1.

National Instrument 81-107 -- Independent Review Committees for Investment Funds, s. 5.2.

March 5, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARD ISLAND,

NEWFOUNDLAND AND LABRADOR, AND THE

NORTHWEST TERRITORIES, NUNAVUT

AND THE YUKON

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

(the "MRRS")

AND

IN THE MATTER OF

TD ASSET MANAGEMENT INC.

(the "Applicant")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application (the "Application") from the Applicant (or "Dealer Manager") on behalf of the mutual funds listed in Appendix "A" hereto for which the Applicant currently acts as manager or portfolio adviser or both (the "Existing Funds") and any other mutual fund subject to National Instrument 81-102 - Mutual Funds ("NI 81-102") which may be created in the future for which the Applicant or an affiliate thereof will act as manager or portfolio adviser or both (the "Future Funds", and together with the Existing Funds, the "Funds" or "Dealer Managed Funds"), for a decision under section 19.1 of NI 81-102 (the "Legislation") for:

• an exemption from subsection 4.1(1) of NI 81-102 to enable the Dealer Managed Funds to purchase equity securities (the "Securities") of a reporting issuer during the period of distribution (the "Distribution") of the issuer's Securities pursuant to a private placement offering (a "Private Placement") and for the 60-day period (the "60-Day Period") following completion of the Distribution (the Distribution and the 60-Day Period together, the "Prohibition Period"), notwithstanding that the Dealer Manager or the associates or affiliates thereof act or have acted as underwriter in connection with the Distribution (each a "Relevant Offering"), such relief referred to as the "Requested Relief".

Under the Mutual Reliance Review System (MRRS) for Exemptive Relief Applications:

(a) the Ontario Securities Commission is the principal regulator for this Application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in the Securities Act (Ontario) or National Instrument 14-101 - Definitions have the same meanings in this decision (the "Decision") unless they are defined in this Decision.

Representations

This Decision is based on the following facts represented by the Applicant:

1. Each of the Dealer Managed Funds is or will be an open-ended mutual fund trust or corporation established under the laws of the Province of Ontario. The securities of each of the Dealer Managed Funds are or will be qualified for distribution in the Jurisdictions pursuant to simplified prospectuses and annual information forms that have been prepared and filed in accordance with the securities legislation of the Jurisdictions.

2. The Applicant is or will be the manager or the portfolio adviser or both of the Dealer Managed Funds. The Applicant and/or certain of its affiliates currently are, and will be in the future, "dealer managers" with respect to the Funds, and each Fund is or will be a "dealer managed fund", as such terms are defined in section 1.1 of NI 81-102.

3. The Applicant is a corporation incorporated under the laws of Ontario and holds a registration in the categories of "investment counsel" and "portfolio manager" in Ontario. It also holds a registration in the categories of "investment counsel" and "portfolio manager" or the equivalent in each of the other Jurisdictions. The head office of the Applicant is located in Toronto, Ontario.

4. In addition, affiliates of the Applicant, who are registered as advisers in the categories of "investment counsel" and "portfolio manager" or the equivalent in each of the Jurisdictions, may from time to time act as portfolio advisers of the Funds through advisory or sub-advisory agreements. Each such affiliate will be a "dealer manager" with respect to the Funds.

5. The Applicant has appointed an independent review committee (the "IRC") under National Instrument 81-107 - Independent Review Committee for Investment Funds ("NI 81-107") for the Existing Funds and will appoint an IRC for the Future Funds. In compliance with NI 81-107, the IRC has actively assumed, its roles and responsibilities. The investment objective of each Dealer Managed Fund permits it or will permit it to invest in the relevant Securities.

6. TD Securities Inc. (the "Related Underwriter") may be a party to the underwriting agreement with a reporting issuer of Securities in a Relevant Offering. In respect of each Relevant Offering in which the Related Underwriter participates as an underwriter, the Dealer Manager may wish to cause a Dealer Managed Fund to invest in Securities during the Prohibition Period.

7. To the extent the Related Underwriter participates as an underwriter in a Relevant Offering, the investment prohibition contained in subsection 4.1(1) of NI 81-102 (the "Investment Prohibition") restricts the Dealer Managed Funds from making certain investments in the issuer's Securities during the relevant Prohibition Period, which can result in opportunity costs to a Dealer Managed Fund due to not being able to obtain desired investment exposure to Securities that would be beneficial to, and in the best interests of, such Dealer Managed Fund.

8. Subsection 4.1(1) provides an exemption if the Dealer Manager or any of the associates or affiliates thereof act as a member of a selling group distributing five percent or less of the underwritten securities. However, this de minimis exemption is not available to entities that are underwriting a Distribution (as opposed to being in the selling group), and therefore the Dealer Managed Funds cannot avail themselves of this exemption.

9. The Funds would not be restricted by the Investment Prohibition if, in accordance with subsection 4.1(4) of NI 81-102, certain conditions are met, including that a prospectus is filed in one or more of the Jurisdictions in connection with a Relevant Offering and an IRC established for the Funds under NI 81-107 has approved the investment under NI 81-107.

10. The Applicant will not be able to rely on subsection 4.1(4) of NI 81-102 in connection with a Relevant Offering as a prospectus would not be filed in connection with a Private Placement. However the Applicant will comply with each of the other conditions in subsection 4.1(4) including that the Funds' IRC will approve any purchases under the Relevant Offerings under subsection 5.2(2) of NI 81-107.

Decision

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

The Decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that the following conditions are satisfied:

The Investment Decision

I. At the time of each purchase by a Dealer Managed Fund during a Prohibition Period for a Relevant Offering, the Dealer Managed Fund has an IRC that complies with NI 81-107 and the IRC of the Dealer Managed Fund will have approved the investment in accordance with each of subsection 4.1(4)(a) of NI 81-102 and NI 81-107. The Dealer Managed Funds will also comply with paragraphs (c)(ii) and (d) of subsection 4.1(4) of NI 81-102.

II. Each issuer of a Relevant Offering is a reporting issuer or equivalent under the Legislation in a Jurisdiction at the time of each purchase by a Dealer Managed Fund during the Prohibition Period for the Relevant Offering.

Transparency

III.

(a) Prior to the first reliance on the Decision by a Dealer Managed Fund, the internet website of the Dealer Managed Fund or Dealer Manager, as applicable, discloses,

and

(b) on the date which is the earlier of (i) the date when an amendment to the simplified prospectus of the Dealer Managed Fund is filed for reasons other than the Decision and (ii) the date on which the initial or renewal simplified prospectus of the Dealer Managed Fund is receipted, Part A of the simplified prospectus of the Dealer Managed Fund discloses,

that the Dealer Managed Fund may invest in Securities during the Prohibition Period pursuant to the Decision, notwithstanding that the Related Underwriter has acted as underwriter in the Relevant Offering of the same class of such Securities.

IV. On the date which is the earlier of:

(i) the date when an amendment to the annual information form of the Dealer Managed Fund is filed for reasons other than the Decision; and

(ii) the date on which the initial or renewal annual information form of the Dealer Managed Fund is receipted,

the annual information form of the Dealer Managed Fund discloses the information referred to in paragraph III above and describes the policies or procedures and, standing approvals if any, that have been approved by the IRC as related to investments that can only be made pursuant to the Decision.

Sunset

V. The Decision, as it relates to the jurisdiction of a Decision Maker, will terminate on the coming into force of any legislation or rule of the Decision Makers dealing with Private Placements in the context of section 4.1 of NI 81-102.

APPENDIX "A" -- Existing Mutual Funds

TD Emerald Pooled Funds

TD Emerald Balanced Fund

TD Emerald Canadian Bond Index Fund

TD Emerald Canadian Equity Index Fund

TD Emerald Canadian Short Term Investment Fund

TD Emerald International Equity Index Fund

TD Emerald Global Government Bond Index Fund

TD Emerald U.S.Market Index Fund

TD Emerald Treasury Management Pooled Funds

TD Emerald Canadian Treasury Management Fund

TD Emerald Canadian Treasury Management - Financial Institution Fund

TD Emerald Canadian Treasury Management - Government of Canada Fund

TD Emerald U.S. Dollar Treasury Management Fund

TD Emerald U.S. Dollar Treasury Management - Government Fund

TD Managed Assets Program

TD Managed Index Aggressive Growth Portfolio

TD Managed Index Balanced Growth Portfolio

TD Managed Index Income & Moderate Growth Portfolio

TD Managed Index Income Portfolio

TD Managed Index Maximum Equity Growth Portfolio

TD Managed Maximum Equity Growth Portfolio

TD FundSmart Managed Maximum Equity Growth Portfolio

TD Managed Income Portfolio

TD Managed Aggressive Growth Portfolio

TD FundSmart Managed Income Portfolio

TD FundSmart Managed Aggressive Growth Portfolio

TD Managed Balanced Growth Portfolio

TD Managed Income & Moderate Growth Portfolio

TD FundSmart Managed Income & Moderate Growth Portfolio

TD FundSmart Managed Balanced Growth Portfolio

TD Mutual Funds

TD Canadian T-Bill Fund

TD Canadian Money Market Fund

TD Premium Money Market Fund

TD U.S. Money Market Fund

TD Short Term Bond Fund

TD Mortgage Fund

TD Canadian Bond Fund

TD Canadian Core Plus Bond Fund

TD Corporate Bond Capital Yield Fund

TD Real Return Bond Fund

TD Global Bond Fund

TD High Yield Income Fund

TD Monthly Income Fund

TD Balanced Income Fund

TD Diversified Monthly Income Fund

(formerly TD Monthly High Income Fund)

TD Balanced Growth Fund

TD Global Monthly Income Fund

TD Dividend Income Fund

TD Dividend Growth Fund

TD Income Trust Capital Yield Fund

TD Canadian Blue Chip Equity Fund

TD Canadian Equity Fund

TD Canadian Value Fund

TD Canadian Small-Cap Equity Fund

TD North American Dividend Fund

TD U.S. Blue Chip Equity Fund

TD U.S. Blue Chip Equity Currency Neutral Fund

TD U.S. Quantitative Equity Fund

TD U.S. Large-Cap Value Fund

TD U.S. Large-Cap Value Currency Neutral Fund

TD U.S. Mid-Cap Growth Fund

TD U.S. Mid-Cap Growth Currency Neutral Fund

TD U.S. Small-Cap Equity Fund

TD U.S. Small-Cap Equity Currency Neutral Fund

TD Global Dividend Fund

TD Global Value Fund

TD Global Select Fund

TD Global Multi-Cap Fund

TD Global Sustainability Fund

TD International Equity Fund

TD International Equity Growth Fund

TD European Growth Fund

TD Japanese Growth Fund

TD Asian Growth Fund

TD Pacific Rim Fund

TD Emerging Markets Fund

TD Latin American Growth Fund

TD Resource Fund

TD Energy Fund

TD Precious Metals Fund

TD Entertainment & Communications Fund

TD Science & Technology Fund

TD Health Sciences Fund

TD Canadian Bond Index Fund

TD Balanced Index Fund

TD Canadian Index Fund

TD Dow Jones Industrial AverageSM Index Fund

TD U.S. Index Fund

TD U.S. Index Currency Neutral Fund

TD Nasdaq® Index Fund

TD International Index Fund

TD International Index Currency Neutral Fund

TD European Index Fund

TD Japanese Index Fund

TD Income Advantage Portfolio

TD U.S. Equity Advantage Portfolio

TD U.S. Equity Advantage Currency Neutral Portfolio

TD Global Equity Advantage Portfolio

TD Pools

TD Income Trust Pool

TD Corporate Bond Pool

TD World Bond Pool

TD Private Funds

TD Private Canadian Bond Income Fund

TD Private Canadian Corporate Bond Fund

TD Private North American Equity Fund

TD Private Canadian Equity Fund

TD Private Canadian Dividend Fund

TD Private Income Trust Fund

TD Private U.S. Equity Fund

TD Private U.S. Large-Cap Currency Neutral Fund

TD Private Small/Mid-Cap Equity Fund

TD Private International Equity Fund

TD Private Canadian Strategic Opportunities Fund