Securities Law & Instruments


Investment by mutual funds in securities ofother mutual funds under common management for a specified purposeexempted from the reporting requirements and self-dealing prohibitionsof clause 111(2)(b), subsection 111(3) and clauses 117(1)(a)and (d), subject to certain conditions imposing a "passive"fund-on-fund structure.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., 111(2)(b), 111(3), 117(1)(a) and 117(1)(d).
















WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotiaand Newfoundland and Labrador (the "Jurisdictions")has received an application from McLean Budden Limited ("MB")on behalf of the McLean Budden Balanced Value Fund (the "BalancedValue Fund"), and other mutual funds managed by MB afterthe date of this Decision (as defined herein) that have as theirinvestment objective the investment in another mutual fund ormutual funds managed by MB (individually, a "Top Fund"and together, the "Top Funds") for a decision pursuantto the securities legislation of the Jurisdictions (the "Legislation")that the following provisions of the Legislation (the "ApplicableRequirements") shall not apply to the Top Funds or MB,as the case may be, in respect of certain investments to bemade by a Top Fund in an Underlying Fund (as defined herein)from time to time:

(a) the restrictions contained in the Legislation,prohibiting a mutual fund from knowingly making or holdingan investment in a person or company in which the mutualfund, alone or together with one or more related mutualfunds, is a substantial security holder; and

(b) the requirements contained in the Legislation,requiring a management company, or in British Columbia,a mutual fund manager, to file a report relating to a purchaseor sale of securities between the mutual fund and any relatedperson or company, or any transaction in which, by arrangement,other than an arrangement relating to insider trading inportfolio securities, the mutual fund is a joint participantwith one or more of its related persons or companies.

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 - Definitions;

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

1. MB is a corporation established under thelaws of Canada and is or will be the manager, and promoterof each of the Top Funds and each of the Underlying Funds(collectively, the "MB Funds"). The head officeof MB is located in Ontario.

2. Each of the MB Funds is or will be an open-endedmutual fund established under the laws of Ontario by a Declarationof Trust.

3. Each of the MB Funds is or will be a reportingissuer in each of the provinces of Canada and is not or willnot be in default of any of the requirements of the Legislation.

4. Units of each of the MB Funds will be qualifiedfor distribution by means of a simplified prospectus and anannual information form filed in accordance with the Legislationapplicable in each of the provinces of Canada.

5. In order to achieve its investment objective,each Top Fund will invest fixed percentages (the "FixedPercentages") of its assets (other than cash and cashequivalents) in securities of specified Underlying Funds,subject to a variation of 2.5% above or below the Fixed Percentages(the "Permitted Ranges") to account for market fluctuations.Investments of each Top Fund will be made in accordance withits fundamental investment objectives. The remaining assetsof the Top Funds will be invested in securities of non-mutualfund issuers.

6. Initially, the Balanced Value Fund willinvest in the McLean Budden Fixed Income Fund and the McLeanBudden Global Equity Fund and may, in future, invest in othermutual funds established by MB (collectively, the "UnderlyingFunds"). The total direct investment of the BalancedValue Fund in the Underlying Funds (the "Permitted TotalInvestment") will equal 62% of the assets of the BalancedValue Fund, subject to the variation to account for marketfluctuations described in paragraph 5.

7. Each Top Fund will invest its assets inaccordance with the Permitted Total Investment and Fixed Percentagesdisclosed in the simplified prospectus of the Top Fund.

8. A Top Fund will not invest in an UnderlyingFund with an investment objective which includes investingdirectly or indirectly in other mutual funds.

9. The simplified prospectus for the Top Fundswill disclose the investment objectives, investment strategies,risks and restrictions of the Top Fund and the applicableUnderlying Funds, the Permitted Total Investment, the FixedPercentages and the Permitted Ranges.

10. The Fixed Percentages or Underlying Fundsdisclosed in the simplified prospectus will not be changedunless the simplified prospectus of the Top Fund is amendedor a new prospectus is filed and the security holders of theTop Fund have been given at least 60 days' notice of the change.

11. Except to the extent evidenced by thisDecision and specific approvals granted by the Decision Makerspursuant to National Instrument 81-102 Mutual Funds ("NI81-102"), the investments by each of the Top Funds inthe Underlying Funds have been structured to comply with theinvestment restrictions of the Legislation and NI 81-102.

12. In the absence of this Decision, pursuantto the Legislation, each Top Fund is prohibited from knowinglymaking or holding an investment in a person or company inwhich the mutual fund, alone or together with one or morerelated mutual funds, is a substantial security holder. Asa result, in the absence of this Decision each Top Fund wouldbe required to divest itself of any such investments.

13. In the absence of this Decision, Legislationrequires MB to file a report on every purchase or sale ofsecurities of the Underlying Funds by a Top Fund.

14. The investments by the Top Funds in securitiesof the Underlying Funds will represent the business judgmentof "responsible persons" (as defined in the Legislation)uninfluenced by considerations other than the best interestsof the Top Funds.

AND WHEREAS pursuant to the System thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that the Applicable Requirements shallnot apply so as to prevent a Top Fund from making and holdingan investment in securities of the Underlying Funds or requireMB to file a report relating to the purchase or sale of suchsecurities.


1. the Decision, as it relates to the jurisdictionof a Decision Maker, will terminate one year after the publicationin final form of any legislation or rule of that DecisionMaker dealing with matters in section 2.5 of NI 81-102.

2. the Decision shall only apply if, at thetime a Top Fund makes or holds an investment in its UnderlyingFunds, the following conditions are satisfied:

(a) the securities of both the Top Fundand the Underlying Fund are being offered for sale in thejurisdiction of the Decision Maker pursuant to a simplifiedprospectus and annual information form which has been filedwith and accepted by the Decision Maker;

(b) the investment by the Top Fund in theUnderlying Funds is compatible with the fundamental investmentobjectives of the Top Fund;

(c) the simplified prospectus of the TopFund discloses the intent of the Top Fund to invest in securitiesof the Underlying Funds, the names of the Underlying Funds,the Fixed Percentages and the Permitted Ranges within whichsuch Fixed Percentages may vary;

(d) the investment objective of the TopFund discloses that the Top Fund invests in securities ofother mutual funds and the Permitted Total Investment;

(e) the Underlying Funds are not mutualfunds whose investment objective includes investing directlyor indirectly in other mutual funds;

(f) the Top Fund invests its assets (exclusiveof cash and cash equivalents) in the Underlying Funds inaccordance with the Permitted Total Investment and the FixedPercentages disclosed in the simplified prospectus of theTop Fund;

(g) the Top Fund's holding of securitiesin the Underlying Funds does not deviate from the PermittedRanges;

(h) any deviation from the Fixed Percentagesis caused by market fluctuations only;

(i) if an investment by the Top Fund inany of the Underlying Funds has deviated from the PermittedRanges as a result of market fluctuations, the Top Fund'sinvestment portfolio was re-balanced to comply with theFixed Percentages on the next day on which the net assetvalue was calculated following the deviation;

(j) if the Fixed Percentages and the UnderlyingFunds disclosed in the simplified prospectus change, eitherthe simplified prospectus of the Top Fund has been amendedor a new simplified prospectus has been filed to reflectthe change, and the security holders of the Top Fund havebeen given at least 60 days' notice of the change;

(k) there are compatible dates for the calculationof the net asset value of the Top Fund and the UnderlyingFunds for the purpose of the issue and redemption of thesecurities of such mutual funds;

(l) no sales charges are payable by theTop Fund in relation to its purchases of securities in theUnderlying Funds;

(m) no redemption fees or other chargesare charged by an Underlying Fund in respect of the redemptionby the Top Fund of securities of the Underlying Fund ownedby the Top Fund;

(n) no fees or charges of any sort are paidby the Top Fund and the Underlying Funds, by their respectivemanagers or principal distributors, or by any affiliateor associate of any of the foregoing entities, to anyonein respect of the Top Fund's purchase, holding or redemptionof the securities of the Underlying Funds;

(o) the arrangements between or in respectof the Top Fund and the Underlying Funds are such as toavoid the duplication of management fees;

(p) any notice provided to security holdersof an Underlying Fund as required by applicable laws orthe constating documents of that Underlying Fund has beendelivered by the Top Fund to its security holders;

(q) all of the disclosure and notice materialprepared in connection with a meeting of security holdersof the Underlying Funds and received by the Top Fund hasbeen provided to its security holders, the security holdershave been permitted to direct a representative of the TopFund to vote its holdings in the Underlying Fund in accordancewith their direction, and the representative of the TopFund has not voted its holdings in the Underlying Fundsexcept to the extent the security holders of the Top Fundhave directed;

(r) in addition to receiving the annualand, upon request, the semi-annual financial statementsof the Top Fund, security holders of the Top Fund have receivedappropriate summary disclosure in respect of the Top Fund'sholdings of units of the Underlying Funds in the financialstatements of the Top Fund; and

(s) to the extent that the Top Fund andthe Underlying Funds do not use a combined simplified prospectusand annual information form containing disclosure aboutthe Top Fund and the Underlying Funds, copies of the simplifiedprospectus and annual information form of the UnderlyingFunds have been provided upon request to security holdersof the Top Fund and the right to receive these documentsis disclosed in the simplified prospectus of the Top Fund.

March 25, 2003.

"Paul M. Moore"                    "RobertW. Korthals"