Securities Law & Instruments

Headnote

Mutual Reliance Review Systemfor Exemptive Relief Applications - trades in units of pooledfund not subject to requirement to file reports of trade within10 days of trade provided prescribed reports filed and feespaid within 30 days of financial year end of pooled fund.

Statutes Cited

Securities Act, R.S.O. 1990,c. S.5, as am., s. 147.

Rules Cited

Ontario Securities CommissionRule 45-501 - Exempt Distributions (2001) 24 OSCB 7011.

Ontario Securities CommissionRule 81-501 - Mutual Fund Reinvestment Plans (1998) 21 OSCB2713.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN, MANITOBA, ONTARIO,

QUÉBEC, NEW BRUNSWICK,NOVA SCOTIA, PRINCE EDWARD ISLAND,

NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

THE CHAMPLAIN FUND

MRRS DECISION DOCUMENT

WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in each of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Québec, New Brunswick, Nova Scotia, Prince EdwardIsland, Newfoundland and Labrador (the "Jurisdictions")has received an application from Jones Heward Investment CounselInc. (the "Filer") for a decision under the securitieslegislation (the "Legislation") of the Jurisdictionsthat:

(a) trades in units of TheChamplain Fund (the "Fund") to an investor upon:

(i) the subscription ofan investor for units subsequent to the initial investmentby the investor ("Additional Units") shall notbe subject to the requirements to file a preliminary prospectusand a final prospectus in respect of a distribution or primarydistribution to the public of a security (the "ProspectusRequirements") of the Legislation of Manitoba, Québec,New Brunswick, Prince Edward Island, and Newfoundland andLabrador, and to the requirements to be registered to tradein a security (the "Registration Requirements")of the Legislation of Manitoba, New Brunswick, Prince EdwardIsland, and Newfoundland and Labrador (together, the "ProspectusRequirements" and the "Registration Requirements"are the "Prospectus and Registration Requirements");and

(ii) the reinvestment ofdistributions by the Fund in units ("Reinvested Units")shall not be subject to the Registration and ProspectusRequirements of the Legislation of Manitoba, Québec,New Brunswick, Prince Edward Island and Newfoundland andLabrador; and

(b) initial trades in unitsof the Fund to investors (the "Initial Units") andtrades in Additional Units are not subject to the requirementsof the Legislation of the Jurisdictions other than Manitoba,New Brunswick and Prince Edward Island relating to the filingof forms and the payment of fees within certain prescribedtime periods (the "Reporting Requirement"), subjectto certain conditions;

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications(the "System"), the Commission des valeurs mobilièresdu Québec is the principal regulator for this application;

AND WHEREAS the Filerhas represented to the Decision Makers that:

1. The Filer is registeredunder the Securities Act (Ontario) and the Securities Act(Alberta) as an adviser in the categories of investment counseland portfolio manager, and acts as the investment adviserto the Fund;

2. The Fund is a unit trustwhich was established under the laws of the Cayman Islandson October 25, 2001 pursuant to a declaration of trust datedOctober 25, 2001, as amended and restated on March 1, 2002(the "Declaration of Trust");

3. The trustee of the Fundis Queensgate Bank & Trust Company Ltd.;

4. Bank of Montreal Irelandplc, Dublin, Ireland, an affiliate of the Filer, has beenretained to provide certain management and administrativeservices to the Fund;

5. The Filer intends to offervarious classes of units of the Fund to investors residentin the Jurisdictions;

6. The Fund is a "mutualfund" as defined in the Legislation of the Jurisdictions;

7. The Fund currently doesnot intend to become a reporting issuer, as such term is definedin the Legislation of the Jurisdictions, and the units ofthe Fund will not be listed on any stock exchange;

8. The Fund is divided intounits which will evidence each investor's undivided interestin the assets of the Fund;

9. Units of the Fund are notqualified for investment by a trust governed by a registeredretirement savings plan, registered retirement income fund,deferred profit sharing plan or registered education savingsplan;

10. Investors may purchaseInitial Units and Additional Units through registered dealersin the Jurisdictions. In certain limited circumstances, InitialUnits and Additional Units may also be purchased directlyfrom the Fund pursuant to exemptions from the RegistrationRequirements of the applicable securities laws;

11. The initial distributionof units of the Fund (the "Initial Investment")to an investor in the Jurisdictions other than Ontario, Albertaand British Columbia will have an aggregate acquisition costto the investor of at least the amount prescribed by the Legislationof the Jurisdictions (the "Prescribed Amount") inconnection with exemptions from the Registration and ProspectusRequirements which require the investor to purchase securitiesof an issuer having a minimum acquisition cost. The InitialInvestment and subsequent subscriptions for Additional Unitsby an investor in Ontario will be made pursuant to the exemptionfrom the Registration and Prospectus Requirements accordedto accredited investors as defined in the securities legislationof Ontario (the "Legislation of Ontario"); the InitialInvestment and subsequent subscriptions for Additional Unitsby an investor in Alberta or British Columbia may be madepursuant to the exemption from the Registration and ProspectusRequirements accorded to accredited investors as defined inMultilateral Instrument 45-103 Capital Raising Exemptions("MI 45-103"), or pursuant to exemptions which requirethe investor to purchase securities of an issuer having aminimum acquisition cost, so long as such exemptions remainin effect;

12. It is proposed that unitholdersof the Fund in the Jurisdictions other than Ontario, Albertaand British Columbia may subscribe for Additional Units inincrements of less than the Prescribed Amount, provided that,at the time of such additional acquisition, such unitholdershold units of the Fund with an aggregate acquisition costor aggregate net asset value of at least the Prescribed Amountand that unitholders of the Fund in Alberta or British Columbiamay subscribe for Additional Units of the Fund without anyminimum acquisition cost for such Additional Units, providedthat, at the time of such additional acquisition, such unitholdershold units of the Fund with an aggregate acquisition costor aggregate net asset value of at least $97,000, in the caseof unitholders in Alberta, and $100,000, in the case of unitholdersin British Columbia, or that such unitholders are accreditedinvestors as defined in MI 45-103; the issuance of AdditionalUnits to an investor in such circumstances is exempt fromthe Registration and Prospectus Requirements of the Legislationof the Jurisdictions other than Manitoba, Québec, NewBrunswick, Prince Edward Island and Newfoundland and Labrador;

13. The Fund proposes to distributeReinvested Units by way of automatic reinvestment of distributionsto unitholders of the Fund; the issuance of Reinvested Unitsupon the reinvestment of distributions is exempt from theRegistration and Prospectus Requirements of the Legislationof the Jurisdictions other than Manitoba, Québec, NewBrunswick, Prince Edward Island and Newfoundland and Labrador;

14. The Legislation of Jurisdictionsother than Manitoba, New Brunswick and Prince Edward Islandhas a Reporting Requirement in respect of Initial Investmentsmade pursuant to the exemptions described above (the "PrivatePlacement Exemptions") and the Legislation of BritishColumbia has a Reporting Requirement in respect of distributionsof Additional Units;

15. The Legislation of Ontarioand Alberta has a Reporting Requirement in respect of InitialInvestments and distributions of Additional Units made pursuantto the exemption from the Registration and Prospectus Requirementsaccorded to accredited investors as defined in the Legislationof Ontario or MI 45-103; and

16. Units are non-transferableexcept in limited circumstances as set out in the Declarationof Trust of the Fund.

AND WHEREAS under theSystem, this MRRS Decision Document evidences the decision ofeach Decision Maker (collectively, the "Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdictionto make the Decision has been met;

THE DECISIONS of theDecision Makers pursuant to the Legislation are that:

(A) the Registration Requirementscontained in the Legislation of Manitoba, New Brunswick,Prince Edward Island and Newfoundland and Labrador and theProspectus Requirements contained in the Legislation ofManitoba, Québec, New Brunswick, Prince Edward Islandand Newfoundland and Labrador shall not apply to:

(i) trades in AdditionalUnits pursuant to a subsequent subscription by a unitholderof the Fund provided that:

(a) at the time of thetrade, the Filer is registered under the Legislationof Ontario and Alberta as an adviser in the categoriesof investment counsel and portfolio manager;

(b) at the time of thetrade, the unitholder then owns units of the Fund havingan aggregate acquisition cost or an aggregate net assetvalue of not less than the applicable Prescribed Amount;and

(c) this clause (A)(i)will cease to be in effect in a Jurisdiction 90 daysafter the coming into force, subsequent to the dateof this Decision, of any legislation, regulation orrule in the Jurisdiction exempting from the registrationand prospectus requirements of the Legislation distributionsby a pooled fund of additional securities which appliesto trades of Additional Units as described in this Decision;

(B) trades in ReinvestedUnits pursuant to the reinvestment of distributions of theFund shall not be subject to the Registration and ProspectusRequirements of the Legislation of Manitoba, Québec,New Brunswick, Prince Edward Island and Newfoundland andLabrador provided that no sales commissions or other chargein respect of such issuance of Reinvested Units is payable;

(C) the first trade of unitsof the Fund by unitholders of the Fund acquired under anexemption from the Registration and Prospectus Requirementsprovided in this Decision is deemed to be a distributionor primary distribution to the public in a Jurisdictionunless, except in Québec, the conditions in subsections(2) or (3) of section 2.5 of MI 45-102 Resale of Securitiesare satisfied;

(D) the Reporting Requirementsof the Legislation of the Jurisdictions other than Manitoba,New Brunswick and Prince Edward Island do not apply to atrade in Initial Units, Additional Units or Reinvested Unitsof the Fund made in reliance on the exemptions from theRegistration and Prospectus Requirements contained in thisDecision or in reliance on the Private Placement Exemptions,provided that within 30 days of the end of each financialyear of the Fund, the Fund:

(i) files with the applicableDecision Maker a report in respect of all trades in InitialUnits and Additional Units during such financial year,in the form prescribed by the applicable Legislation;

(ii) files with the DecisionMaker in Québec a report in respect of all tradesin Reinvested Units during such financial year, in theform prescribed by the applicable Legislation; and

(iii) remits to the applicableDecision Maker the fee prescribed by the applicable Legislation.

THE DECISION of the DecisionMaker in Québec is subject to the further condition thatthe Fund file with the Decision Maker in Québec, within140 days of the end of each financial year, annual audited financialstatements with the applicable fee.

May 31, 2002.

"Viateur Gagnon"                    "GuyLemoine"