First Asset Management Inc. et al. - MRRS Decision

Headnote

Approval granted for change of control of ten managers of mutual funds pursuant to sale of parent company of the managers and related transactions.

Rules Cited

National Instrument 81-102 Mutual Funds, s. 5.5(2).

July 13, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF ONTARIO, ALBERTA, BRITISH COLUMBIA, MANITOBA,

SASKATCHEWAN, QUÉBEC, NEW BRUNSWICK, NEWFOUNDLAND AND LABRADOR, NOVA

SCOTIA AND PRINCE EDWARD ISLAND (the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM FOR

EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

FIRST ASSET MANAGEMENT INC., COVINGTON CAPITAL CORPORATION, TRIAX YIELD

TRUST MANAGEMENT INC., FIRST ASSET INVESTMENT MANAGEMENT INC., FIRST ASSET

FUNDS INC., TRF GENERAL PARTNER INC., TRIAX RESOURCE (II) GENERAL PARTNER INC.,

TDK FUND MANAGEMENT INC., NEW MILLENNIUM VENTURE PARTNERS INC., COVINGTON

GROUP OF FUNDS INC. AND NGB MANAGEMENT INC. (collectively, the "Filers")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (each, a "Decision Maker", and together, the "Decision Makers") in each of the Jurisdictions has received an application from the Filers dated April 29, 2004 and amended by letter dated May 10, 2005 (together, the "Application") for approval pursuant to Section 5.5(2) of National Instrument 81-102 -- Mutual Funds ("NI 81-102") for a change of control of Covington Capital Corporation ("Covington"), Triax Yield Trust Management Inc., First Asset Investment Management Inc., First Asset Funds Inc., TRF General Partner Inc., Triax Resource (II) General Partner Inc., TDK Fund Management Inc., New Millennium Venture Partners Inc., Covington Group of Funds Inc. (collectively, the "Triax Managers") and NGB Management Inc. ("NGB") (NGB, Covington and the Triax Managers are, collectively, the "Managers" and each, a "Manager"), each of which is the manager of the funds set forth in Schedule A to this decision. The change of control will occur as a result of the Acquisitions (as defined below) described below.

Under the Mutual Reliance Review System 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, as applicable.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

This decision is based on the following facts represented by the Filers:

Covington

1. Covington is a company based in Toronto, Ontario and was formed by amalgamation pursuant to the Business Corporations Act (Ontario). Covington is registered with the Ontario Securities Commission as investment counsel and portfolio manager and a limited market dealer. Covington's head office is located in Ontario.

2. As of the date hereof, First Asset Management Inc. ("FAMI") has a 60% ownership interest in Covington.

3. Covington manages and advises on a number of investment products and those mutual funds set forth in Schedule A (the "Covington Funds"). Each of the Covington Funds is a reporting issuer in Ontario and not in default of any requirements of the securities legislation of Ontario.

4. Each of the Covington Funds is a labour sponsored investment fund which is offered on a continuous basis.

5. Covington typically handles and oversees all day-to-day operations of the Covington Funds and in some circumstances also provides investment management and trustee services.

Triax and the Triax Managers

6. Except for New Millennium Venture Partners Inc., each of the Triax Managers is a wholly owned subsidiary of Triax Capital Corporation ("Triax"). New Millennium Venture Partners Inc. is owned by FAMI and Covington, with their ownership interests being 66.67% and 33.33%, respectively.

7. Triax is a company based in Toronto, Ontario and was formed by amalgamation pursuant to the Business Corporations Act (Ontario). Triax is a wholly owned subsidiary of FAMI.

8. The head office of each of the Triax Managers is located in Ontario.

9. The Triax Managers each manage and advise on a number of investment products and the mutual funds set forth in Schedule A (the "Triax Funds"). Each of the Triax Funds is a reporting issuer or the equivalent thereof in the jurisdictions noted in Schedule A and not in default of any requirements of the securities legislation of the Jurisdictions.

10. The Triax Managers typically handle and oversee all day-to-day operations of the Triax Funds and in some circumstances also provide investment management and trustee services.

11. The Triax Funds primarily consist of labour sponsored investment funds, all of which are offered on a continuous basis with the exception of those funds identified in Schedule A as not being offered on a continuous basis, and closed-end specialty trusts, which are listed on the Toronto Stock Exchange.

NGB

12. NGB is a company based in Toronto, Ontario and incorporated pursuant to the Business Corporations Act (Ontario). NGB's head office is located in Ontario.

13. The funds managed by NGB consist of 2 labour sponsored investment funds (the "NGB Funds"), one of which is offered on a continuous basis in the Province of Ontario as identified on Schedule A. Each NGB Fund is a reporting issuer in Ontario and not in default of any requirements of the securities legislation of Ontario.

14. NGB handles or oversees all day-to-day operations of the NGB Funds.

FAMI

15. FAMI is a company based in Toronto, Ontario and incorporated pursuant to the Business Corporations Act (Ontario). FAMI's head office is located in Ontario.

16. FAMI's business consists of acquiring interests in other entities which engage in the asset management business and related businesses.

17. FAMI has a controlling or significant interest in several entities registered with the various provincial and territorial securities regulators (collectively, the "FAMI Registered Companies"). In addition to Covington, the FAMI Registered Companies include Montrusco Bolton Investments Inc., Beutel Goodman & Company Ltd. (and its affiliated companies), Deans Knight Capital Management Ltd., First Asset Advisory Services Inc., First Asset Brokerage Corporation, First Asset Investment Management Inc., Foyston, Gordon & Payne Inc., Gestion Aequilibrium Inc. and Louisbourg Investments Inc.

The Acquisitions

The shareholders of FAMI and FAMI entered into a securities purchase agreement dated April 19, 2005 with Affiliated Managers Group, Inc. ("AMG") pursuant to which AMG will acquire all of the issued and outstanding shares in the capital of FAMI (the "FAMI Acquisition").

In connection with the FAMI Acquisition, FAMI will acquire the remaining 40% of Covington and will also acquire 100% of the ownership of NGB (the "NGB Acquisition", and together with the FAMI Acquisition, the "Acquisitions").

AMG is a public U.S. asset management holding company based in Boston, Massachusetts and incorporated pursuant to the laws of Delaware. AMG's securities are listed and posted for trading on the New York Stock Exchange under the symbol "AMG".

The FAMI Acquisition will result in a direct change of control of FAMI, and accordingly, an indirect change of control of each of the Managers. The NGB Acquisition will result in a direct change of control of NGB.

Decision

Each of the Decision Makers is satisfied that, based on the information and representations contained in the Application and this decision, and for the purposes described in the Application, the Decision Makers, as applicable, hereby grant approval pursuant to Section 5.5(2) of NI 81-102 in respect of the change of control of each of the applicable Managers.

The approval provided herein is subject to compliance with all applicable provisions of NI 81-102.

Schedule A

I. Covington Funds

II. Triax Funds

{•} Not offered on a continuous basis.

III. NGB Funds

{•} Not offered on a continuous basis.