McLean Budden Limited et al.

Headnote

Investment by mutual funds in securities of another mutual fund that is under commonmanagement for specified purpose exempted from the requirements of section 101,clause 111(2)(b), subsection 111(3), clauses 117(1)(a) and 117(1)(d), subject to certainconditions imposing a "passive" investment structure.

Statute Cited

Securities Act, R.S.O. 1990 c. S.5, as am. ss. 101, 111(2)(b), 111(3), 113, 117(1)(a),117(1)(d), 117(2), 118(2)(a)

Rules Cited

National Policy Statement No. 39, Mutual Funds, ss. 2.04(1)(a), 2.04(1)(b), 2.04(4)(b),9.02

National Policy 12-201, Mutual Reliance Review System for Exemptive ReliefApplications

WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Ontario, Quebec, NovaScotia and Newfoundland (the "Jurisdictions") has received an application from McLeanBudden Limited ("MB") on behalf of McLean Budden Balanced Growth Fund (the"Balanced Growth Fund"), McLean Budden Canadian Equity Growth Fund (the"Canadian Equity Growth Fund") and McLean Budden Canadian Equity Value Fund(the "Canadian Equity Value Fund") (individually, a "Top Fund" and, collectively, the"Top Funds") for a decision pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the requirements of the Legislation that:

(a) a mutual fund which is a security holder of a reporting issuer issue a newsrelease and file a report where its aggregate holdings of securities of thereporting issuer exceed 10% of the outstanding securities of the reporting issuer;

(b) a mutual fund shall not knowingly make or hold an investment in a person orcompany in which the mutual fund, alone or together with one or more relatedmutual funds, is a substantial securityholder; and

(c) a management company file a report relating to a purchase and sale ofsecurities between the mutual fund and any related person or company, or anytransaction in which, by arrangement, other than an arrangement relating toinsider trading in portfolio securities, the mutual fund is a joint participant withone or more of its related persons or companies;

shall not apply in respect of investments by a Top Fund in the McLean BuddenInternational Equity Growth Fund (the "International Equity Growth Fund") and McLeanBudden American Equity Growth Fund (the "American Equity Growth Fund")(individually, an "Underlying Fund" and, collectively, the "Underlying Funds").

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

AND WHEREAS it has been represented by MB to the Decision Makers that:

1. MB is a registrant, registered as a mutual fund dealer and as an investmentcounsel and portfolio manager under the Securities Act (the "Act").

2. MB is the manager, principal distributor and a promoter of the Top Funds andthe Underlying Funds (collectively, the "MB Funds").

3. The head office of MB is located in Ontario.

4. Each of the MB Funds is an open-ended mutual fund established under the lawsof Ontario by a Declaration of Trust.

5. Each of the MB Funds is a reporting issuer and no MB Fund is in default of anyrequirements of the legislation applicable in any of the provinces of Canada.

6. Units of the MB Funds are qualified for distribution by means of a simplifiedprospectus and an annual information form filed in each of the provinces ofCanada in June, 1999. The simplified prospectus and annual information formwill be refiled as contemplated by the legislation applicable in each of theprovinces of Canada.

7. The investment objectives and portfolios of the MB Funds are as follows:

Balanced Growth Fund: The principal objective is to achieve as high a rate ofreturn as is consistent with a conservative investment policy through adiversified portfolio consisting of a balance of equity and fixed income securitiesissued principally by Canadian issuers.

Canadian Equity Growth Fund: The principal objective is to achieve a highrate of return through investment primarily in Canadian equity growth securities.

Canadian Equity Value Fund: The principal objective is to achieve a high rateof return through investment primarily in Canadian equity value securities.

American Equity Growth Fund: The principal objective is to achieve a highrate of return through investment primarily in U.S. equity securities.

International Equity Growth Fund: The principal objective is to achieve a highrate of return through investment primarily in non-North American equitysecurities.

8. The simplified prospectus of the MB Funds discloses that the foreign securitiesheld by the Balanced Growth Fund, the Canadian Equity Growth Fund and theCanadian Equity Value Fund may consist, in whole or in part, of units of theAmerican Equity Growth Fund or the International Equity Growth Fund, subjectto certain limitations in applicable securities regulatory policies and legislation.

9. Each of the Top Funds wishes to invest an amount of its assets in each of theUnderlying Funds such that the aggregate investment will be below themaximum permitted amount (the "Foreign Property Limit") capable of being madeas foreign property investments under the Income Tax Act (Canada) (the "TaxAct") by mutual fund trusts the units of which are not themselves foreign propertyunder the Tax Act. Each of the Top Funds will invest the following specifiedpercentages (the "Permitted Percentages") of its assets, in each of theUnderlying Funds, subject to a variation above or below the specifiedpercentages of not more than 2.5%:

provided that the total aggregate investments by a Top Fund in the UnderlyingFunds at any one time will not exceed the Foreign Property Limit.

10. Investments by a Top Fund in the Underlying Funds as contemplated hereinwould be in the best interests of each of the Funds. Except to the extentevidenced by this decision and specific approvals granted by the CanadianSecurities Administrators pursuant to National Policy Statement No. 39, theinvestments by a Top Fund in the Underlying Funds have been structured tocomply with the investment restrictions in the Legislation and in National PolicyStatement No. 39;

11. The Permitted Percentages and the names of the applicable Underlying Fundsin which each Top Fund will invest will be disclosed in the simplified prospectusand annual information form of the MB Funds.

12. Absent the relief sought in this application the Legislation has the followingimplications:

(a) the Legislation requires a Top Fund to issue a news release, file a reportand restrict further investments where its aggregate holdings of anUnderlying Fund exceed 10% of the outstanding securities of theUnderlying Fund;

(b) the Legislation prevents the acquisition or holding of units of anUnderlying Fund by a Top Fund if the Top Fund together with other TopFunds would hold more than 20% of the units of the Underlying Funds;

(c) the Legislation requires the filing of a report in respect of the purchase bya Top Fund of units of an Underlying Fund.

13. The investment in, or redemption of, securities of the Underlying Funds by a TopFund represents the business judgment of responsible persons uninfluenced byconsiderations other than the best interests of the Top Fund.

AND WHEREAS pursuant to the Mutual Reliance Review System this MRRS DecisionDocument evidences the decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers pursuant to the Legislation is that therequirements of the Legislation, from which relief has been requested, shall not applyto a Top Fund in respect of its investments in the Underlying Funds;

PROVIDED THAT the following conditions are satisfied in respect of each purchaseand sale of units of an Underlying Fund by a Top Fund:

(a) the investment by a Top Fund in an Underlying Fund is compatible withthe investment objective of the Top Fund;

(b) the Top Fund and the Underlying Fund in which it invests are undercommon management and the securities of the Top Fund and theUnderlying Fund are offered for sale in the Jurisdictions pursuant to aprospectus which has been filed with and accepted by the DecisionMakers;

(c) the Top Fund will invest an amount of its assets equivalent to thePermitted Percentages in the specified Underlying Funds, provided thatsuch investments may vary above and below the Permitted Percentagesby no more than 2.5% and provided that the total aggregate investmentsby a Top Fund in the Underlying Funds at any one time will not exceedthe Foreign Property Limit;

(d) the prospectus of the Top Fund and the Underlying Funds in which itinvests must disclose the Permitted Percentages in which the Top Fundmay invest in the Underlying Funds;

(e) the Permitted Percentages which are disclosed in the prospectus may notbe changed unless the prospectus is amended or a new prospectus isfiled and the security holders of the Top Fund have either been given atleast 60 days notice of the change in the Permitted Percentages or theprior approval of the security holders has been given to the change in thePermitted Percentages at a meeting of security holders of the Top Fundcalled for that purpose;

(f) if at any time, the assets of a Top Fund that are invested in theUnderlying Funds deviate from the Permitted Percentages by more than2.5%, the necessary changes are made in the Top Fund's investments asat the next valuation date of the Top Fund in order to bring the TopFund's investments within the Permitted Percentages;

(g) there are compatible dates for the calculation of the net asset value of theTop Fund and of the Underlying Funds for the purpose of the issue andredemption of the securities of such mutual funds;

(h) in the event of the provision of any notice to security holders of anUnderlying Fund in respect of a matter for which notice is required by theDeclaration of Trust of the Underlying Fund or by the laws applicable tothe Underlying Fund, such notice will also be delivered to the securityholders of the Top Fund; all voting rights attached to the units of theUnderlying Fund which are owned by the Top Fund will be passedthrough to the security holders of the Top Fund; in the event that asecurity holders' meeting is called for an Underlying Fund, all of thedisclosure and notice material prepared in connection with such meetingwill be provided to the security holders of the Top Fund and such securityholders will be entitled to direct the trustee of the Top Fund to vote theirpro rata share of the Top Fund's holdings of units in the Underlying Fundin accordance with their direction; and the trustee of the Top Fund will notbe permitted to vote the Top Fund's holdings in the Underlying Fundexcept to the extent the security holders of the Top Fund so direct;

(i) the arrangements between or in respect of a Top Fund and theUnderlying Funds are such as to avoid the duplication of managementfees;

(j) no sales charges are payable by the Top Fund in respect of a purchase ofunits of any of the Underlying Funds;

(k) no trailing fees are payable in respect of the Top Fund's investments inUnderlying Funds and no management fee rebates are received by MB inrespect of the investment by a Top Fund in any of the Underlying Funds;

(l) no redemption fees or other charges are charged by an Underlying Fundin respect of the redemption by the Top Fund of securities of theUnderlying Fund owned by the Top Fund;

(m) no fees or charges of any sort are paid by the Top Fund or by anUnderlying Fund or by the manager or principal distributor of the TopFund or of an Underlying Fund or by an affiliate or associate of any of theforegoing entities to anyone in respect of the investment by the Top Fundin an Underlying Fund;

(n) in addition to receiving the annual financial statements (and, if requested,the semi-annual financial statements) of a Top Fund, security holders of aTop Fund will receive either (i) appropriate summary disclosure regardingeach Underlying Fund in which the Top Fund invests in the financialstatements of the Top Fund or (ii) the annual and, upon request, thesemi-annual financial statements of each applicable Underlying Fund ineither a combined report, containing both Top Fund and Underlying Fundfinancial statements, or in a separate report containing Underlying Fundfinancial statements;

(o) copies of the prospectus and annual and semi-annual financialstatements relating to each Underlying Fund, if not included with those ofthe Top Fund, may be obtained upon request by a security holder of theTop Fund and this fact is disclosed in the prospectus; and

(p) this Decision Document will terminate on the first anniversary datefollowing the publication in final form of any legislation or rule of theDecision Makers which deals with the matters addressed by clause2.04(4)(b) of National Policy Statement No. 39.

January 19^th, 2000.

"J. A. Geller"      "Robert W. Korthals"