Burgundy Asset Management Limited et al.

Headnote

Investment by mutual funds in securities of mutual funds managed by the same manageras well as in private mutual funds managed by the same manager to implement a "passive"fund-of-fund structure exempted from the requirement of clause 111(2)(b) and subsection111(3), clauses 117(1)(a) and 117(1)(d), subject to certain specified conditions underwhich a "passive" investment structure may be used.

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)

WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of the Provinces of Ontario, British Columbia and Alberta (the"Jurisdictions") has received an application filed by Burgundy Asset Management Limited("Burgundy"), on its own behalf and on behalf of the Burgundy Balanced Income Fund,Burgundy American Equity Fund, Burgundy Partners Equity RSP Fund, BurgundyFoundation Trust Fund, Burgundy Partners' RSP Fund, Burgundy Partners' Fund andBurgundy Pension Trust Fund (collectively, the "Top Funds"), for a decision (the"Decision") pursuant to the securities legislation of the Jurisdictions (the "Legislation") thatthe following provisions in the Legislation (the "Applicable Requirements") shall not applyin connection with the investment by the Top Funds in one or more Other Burgundy Fundsor Private Funds (as defined in paragraphs 1 and 2 below):

(a) the provision prohibiting a mutual fund from knowingly making or holding aninvestment in a person or company in which the mutual fund, alone or together withone or more related mutual funds, is a substantial securityholder (the "Self-DealingProhibitions"), and

(b) the provision requiring the management company of a mutual fund to file a report(the "Reporting Requirement"), within 30 days after the end of the month in whicheach transaction occurs, of

(i) every purchase or sale of securities between the mutual fund and anyrelated person or company, or

(ii) any transaction in which, by arrangement other than an arrangement relatingto insider trading in portfolio securities, the mutual fund is a joint participantwith one or more of its related persons or companies;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS Burgundy has represented to the Decision Makers as follows:

1. Burgundy is the manager of the Top Funds and also of the Burgundy CanadianEquity Fund, Burgundy Premium Yield Fund, Burgundy Bond Fund, BurgundyMoney Market Fund, Burgundy U.S. Money Market Fund and Burgundy EuropeanEquity Fund (collectively, the "Other Burgundy Funds).

2. Burgundy is also the manager of the Burgundy Japan Fund and the BurgundySmaller Companies Fund (the "Private Funds").

3. Burgundy is registered with each of the Decision Makers as an adviser in thecategories of investment counsel and portfolio manager (or their equivalent) and asa dealer in the category of mutual fund dealer (or its equivalent).

4. The head office of Burgundy is located in Ontario.

5. Each of the Top Funds and the Other Burgundy Funds is an open-ended mutualfund trust established under the laws of the Province of Ontario by Declaration ofTrust. Except for Burgundy Pension Trust Fund, Burgundy U.S. Money MarketFund and Burgundy European Equity Fund (the "New Funds"), each of the TopFunds and the Other Burgundy Funds is a reporting issuer (or its equivalent) underthe Legislation and is not in default of any requirement of the Legislation or therules and regulations made thereunder.

6. Units of the Top Funds and the Other Burgundy Funds (other than the New Funds)are offered for sale pursuant to a simplified prospectus and annual information formdated April 5, 1999 (the "1999 Prospectus"). The lapse date of the 1999Prospectus has been extended to June 8, 2000. For the purpose of renewing the1999 Prospectus, a pro forma prospectus has been filed on May 9, 2000 and iscurrently under review by staff of all the Jurisdictions.

7. A preliminary prospectus dated May 9, 2000, which has been combined with the proforma prospectus referred to in paragraph 6 above, has also been filed on May 9,2000 to qualify the distribution to the public of units of the New Funds.

8. Burgundy had previously applied for and obtained, by order of the OntarioSecurities Commission dated February 13, 1998 (the "Previous Order"), certainapprovals and exemptions from the provisions set out in National Policy StatementNo. 39 and the Securities Act (Ontario) to permit the Burgundy Balanced IncomeFund and the Burgundy Partners' RSP Fund (the "Applicant Funds") to investspecified amounts in the Burgundy Bond Fund (the "Bond Fund") and to permit aone time interfund trade between each of the Applicant Funds and the Bond Fundin order to implement the initial investment by the Applicant Funds in the BondFund.

9. Each Private Fund is an open-ended mutual fund trust established under the lawsof the Province of Ontario by a Declaration of Trust. The Private Funds are notreporting issuers under the Legislation. However, each Private Fund complies withNational Instrument 81-102 Mutual Funds ("NI 81-102"), other than in respect ofincentive fees charged directly to investors, which do not comply with section 7.1thereof. The incentive fee currently charged by the Private Funds has previouslybeen negotiated with the direct investors in the Private Funds.

10. Units of the Private Funds are sold on an exempt basis through an offeringmemorandum.

11. As manager of the Top Funds, Burgundy determines the different asset classes thatthe Top Funds should either be invested in or have exposure to, in order to achievetheir investment objectives. Given the relative size of the Top Funds, Burgundybelieves that investing in units of Other Burgundy Funds and/or the Private Funds,which have acquired or will acquire such asset classes for their portfolios, would bea more efficient way of investing the assets of the Top Funds. The Other BurgundyFunds and/or the Private Funds become the vehicle through which the funds ofinvestors in the Top Funds are gathered and invested in different but appropriateasset classes, which would provide the Top Funds the diversification they need atlower transaction costs.

12. Accordingly, Burgundy intends to cause each Top Fund to invest the followingpercentages of its net assets (the "Fixed Percentages") in units of one or more ofthe Other Burgundy Funds and/or Private Funds listed in the 3^rd column of the tablebelow (the "Underlying Funds") as follows:

13. Burgundy sells units of the Top Funds and the Other Burgundy Funds only toclients, including Burgundy employees and their spouses (the "BurgundyEmployees"), who have entered into investment management agreements that giveBurgundy discretionary authority to invest the clients' money. The minimum accountsize of any client (together with accounts of immediate family members), other thanthe Burgundy Employees, is $1,000,000 for taxable accounts and $500,000 forregistered accounts. There is no minimum account size for clients who areBurgundy Employees. The Top Funds and the Other Burgundy Funds are not soldby any other dealer.

14. Except to the extent evidenced by this Decision and except for the specificexemptions granted by the Decision Makers pursuant to NI 81-102, the proposedinvestments by the Top Funds in the Underlying Funds have been or will bestructured to comply with the investment restrictions of the Legislation and NI 81-102.

15. In the absence of this Decision, each of the Top Funds will be subject to the Self-Dealing Prohibitions, and Burgundy will be subject to the Reporting Requirement,of the Legislation.

16. The investment of the Top Funds in the Underlying Funds represents the businessjudgment of "responsible persons" (as defined in the Legislation), uninfluenced byconsiderations other than the best interests of the Top Funds.

AND WHEREAS under the System, this MRRS Decision Document evidences theDecision of each Decision Maker;

AND WHEREAS each Decision Maker is satisfied that the tests contained in theLegislation that provides the Decision Maker with the jurisdiction to make the Decision hasbeen met;

THE DECISION of the Decision Makers under the Legislation is that the ApplicableRequirements shall not apply to the acquisition or redemption of the units of an UnderlyingFund by a Top Fund, provided that

(a) this Decision, as it relates to the jurisdiction of a Decision Maker, will terminate oneyear after the publication in final form of any legislation or rule of that DecisionMaker dealing with the matters in subsection 2.5(1) of NI 81-102; and

(b) this Decision shall only apply to investments by the Top Fund in units of anUnderlying Fund, which are made in compliance with the following conditions:

i. the Top Fund and the Underlying Fund are under common management;

ii. the investment by the Top Fund in units of the Underlying Fund is compatiblewith the Top Fund's investment objectives;

iii. units of the Top Fund are sold to the public in the Jurisdiction of the DecisionMakers pursuant to a simplified prospectus and annual information form (the"Prospectus") that have been filed with and accepted by the Decision Makers;

iv. the Prospectus of the Top Fund discloses the intent to invest in theUnderlying Fund, specifying the Fixed Percentages and identifying theUnderlying Fund, and discloses the facts set out in subclauses vii and viiibelow, the voting rights of the Top Fund's unitholders in respect of the TopFund's holdings in the Underlying Fund as set out in subclauses xvii and xviiibelow, and the availability (upon request) to the Top Fund's unitholders of thedisclosure documents and financial statements of the Underlying Fund as setout in subclause xx below;

v. if the Underlying Fund is one of the Other Burgundy Funds, the units of suchUnderlying Fund are sold to the public in the Jurisdiction of the DecisionMakers pursuant to a simplified prospectus and annual information form thathave been filed with and accepted by the Decision Makers;

vi. if the Underlying Fund is a Private Fund,

A. the Prospectus of the Top Fund discloses, in addition to thedisclosure required by subclause iv above, the investment objectivesand investment strategies of the Private Fund and the risksassociated with investment in the Private Fund, and also incorporatesby reference into the Prospectus the financial statements of thePrivate Fund;

B. the Private Fund will at all times be in compliance with NI 81-102,except section 7.1 thereof in respect of incentive fees chargeddirectly to investors other than the Top Fund;

C. the only investors in the Top Fund are or will be clients of Burgundyreferred to in paragraph 13 above;

D. the Private Fund will not charge an incentive fee to the Top Fund;

vii. the Top Fund's investments in the Underlying Fund may deviate by no morethan 2.5% (the "Permitted Percentage Deviation") above or below the FixedPercentages, but only as a result of market fluctuations and without anyaction being taken by Burgundy to increase or decrease the Top Funds'investment within the Permitted Percentage Deviation.

viii. if at any time the investment of the Top Fund in the Underlying Fund exceeds(or declines below) the Permitted Percentage Deviation, Burgundy will makethe necessary changes in the Top Fund's investment portfolio at its nextvaluation date in order to bring its investment in the Underlying Fund up ordown to the Fixed Percentages;

ix. the Fixed Percentages and the Underlying Funds in which the Top Fund mayinvest in, as disclosed in the Prospectus, will not be changed unless the TopFund amends its Prospectus to reflect the proposed change or files a newprospectus reflecting such change, and the unitholders of the Top Fund aregiven at least 60 days' prior written notice of the proposed change.

x. except as permitted by this Decision, the Top Fund will not invest in any othermutual fund;

xi. the Underlying Fund will not invest in another mutual fund;

xii. there are compatible dates for the calculation of the net asset value of theTop Fund and the Underlying Fund for the purpose of the issue andredemption of their respective units;

xiii. there will be no duplication of management fee resulting from the Top Fund'sinvestment in the Underlying Fund;

xiv. no sales charges will be paid by the Top Fund in respect of the purchase ofunits of the Underlying Fund;

xv. no redemption fees or other charges will be charged by anyone in respect ofany redemption by the Top Fund of units of the Underlying Fund;

xvi. no fees or charges of any sort are charged by the Underlying Fund, or by anaffiliate or associate of any of the foregoing entities, to anyone in respect ofthe investment by the Top Fund in the Underlying Fund;

xvii. if a notice is provided to the unitholders of the Underlying Fund, as requiredby applicable laws or by the constating documents of the Underlying Fund,such notice will also be delivered to the unitholders of the Top Fund if it hasinvested more than 10 percent of its net assets in the Underlying Fund, andall voting rights attached to the units of the Underlying Fund held by the TopFund will be passed through to the Top Fund's unitholders;

xviii. if a unitholders' meeting is called for an Underlying Fund in which the TopFund has invested more than 10% of its net assets, all of the disclosure andnotice material prepared in connection with such meeting and received by theTop Fund will be provided to the unitholders of the Top Fund; suchunitholders will be entitled to direct the trustee of the Top Fund to vote theirpro rata share of the Top Fund's holdings in the Underlying Fund inaccordance with their direction; the trustee of the Top Fund shall not vote theTop Fund's holdings in the Underlying Fund except to the extent that theunitholders of the Top Fund so direct;

xix. the annual and semi-annual financial statements of the Top Fund will includeappropriate summary disclosure concerning the Top Fund's investment in theUnderlying Fund; and

xx. unitholders of the Top Fund may obtain, upon request, a copy of the simplifiedprospectus and annual information form of the Underlying Fund (if it is one ofthe Other Burgundy Funds), or the offering memorandum of the UnderlyingFund (if it is a Private Fund), and the annual and semi-annual financialstatements of the Underlying Fund.

This MRRS Decision Document revokes the Previous Order issued by the OntarioSecurities Commission to the Burgundy Balanced Income Fund, the Burgundy Partners'RSP Fund, the Burgundy Bond Fund and Burgundy Asset Management Limited.

June 28^th, 2000.

"J. A. Geller"       "Stephen N. Adams"