Mavrix Fund Management Inc. announced that it received a general inquiry letter from the OSC on August 20, 2007, as part of a fact-finding exercise by the Ontario Securities Commission (OSC) into non-bank sponsored asset-backed commercial paper (ABCP).

Following discussions on the matter and additional correspondence with the OSC, Mavrix determined that such securities were no longer eligible to be held within a money market fund and transferred at par, an aggregate of approximately $3.4 million of ABCP from two money market funds managed by Mavrix to one open-end mutual fund and two flow-through limited partnerships also managed by Mavrix. The ABCP is comprised of extendible Series E Notes of Rocket Trust and Gemini Trust.

On November 7, 2007, Mavrix received a letter from the OSC advising that it believed that relief was required to have been obtained in connection with the inter-fund trades and that the OSC has concerns related to the appropriateness of the trades and, in particular, the price at which the trades were effected. The OSC subsequently advised Mavrix that these matters have been referred to the enforcement branch of the OSC for further inquiry.

Mavrix says it has cooperated fully with the OSC in connection with the inquiry and that it will continue to do so. Mavrix has acknowledged to the OSC that the inter-fund trades were prohibited under self-dealing restrictions in securities legislation and that Mavrix did not make an application for exemptive relief to make the inter-fund trades.

Additionally, pending resolution of the inquiry, Mavrix has undertaken to the OSC that it will not execute inter-fund trades without the prior consent of the OSC. And further, if the value of “illiquid assets” in any fund exceeds 10%, it will consult with the fund’s independent review committee concerning the appropriateness of a third party valuation of such securities.

On December 12, 2007, Mavrix announced it would backstop the ABCP held in its funds by reimbursing the funds for any shortfall should the ABCP held in such funds realize less than par value on maturity or on a prior sale.

By providing the backstop, Mavrix says it will ensure that none of its funds will suffer a loss as a consequence of holding ABCP (or any securities issued in exchange therefore as a consequence of the Montreal Accord). Mavrix has agreed with the OSC that, prior to releasing its audited financial statements for the year ended December 31, 2007, it will obtain a valuation of the ABCP then held in funds managed by it and to set up a reserve in respect of its obligations under the backstop commitment.