<!--mc:cls:cover-masthead-->
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – approval for fund mergers under 5.5 of NI 81-102 – relief needed because mergers will not meet pre-approval criteria – continuing funds have different investment objectives than terminating funds and mergers will not be tax deferred – securityholders of terminating funds provided with timely and adequate disclosure regarding the mergers.
**Applicable Legislative Provisions**
National Instrument 81-102 Mutual Funds – sections 5.5(1)(b), 5.5(2), 5.6 and 5.7(1)(b).
April 25, 2012
**IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction)**
**AND**
**IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS**
**AND**
**IN THE MATTER OF AEGON FUND MANAGEMENT INC. (AFM)**
**AND**
**IN THE MATTER OF THE TERMINATING FUNDS LISTED IN SCHEDULE “A” (individually a Terminating Fund, collectively, the Terminating Funds)**
**(AFM and the Terminating Funds are collectively, the Filers)**
<!--mc:cls:cover-masthead-->
DECISION
<!--mc:close:case-cover-->
## Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) granting approval under section 5.5(1)(b) of National Instrument 81-102 Mutual Funds (NI 81-102) to merge (the Proposed Mergers) each Terminating Fund into the Continuing Fund (the Continuing Funds and each a Continuing Fund), opposite its name in the chart attached as Schedule A (the Merger Approvals).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) each Filer has provided notice that subsection 4.7(2) of Multilateral Instrument 11-102 Passport System (MI 11-102) is to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
## Interpretation
Defined terms contained in National Instrument 14-101 Definitions and in MI 11-102 have the same meaning if used in this decision unless otherwise defined.
## Representations
This decision is based on the following facts represented by the Filers:
1. AFM is the manager of each of the Terminating Funds and the Continuing Funds (the Funds and each a Fund) and is responsible for the overall business and affairs of the Funds. AFM is registered as an investment fund manager in each of the provinces of Canada.
2. Each of the Funds is an open-ended mutual fund trust and is governed under the laws of Ontario, and operating under a common Trust and Custodial Agreement dated April 15, 2002, as amended.
3. The Funds are reporting issuers in each of the provinces of Canada. Units of the Funds are currently offered for sale under a simplified prospectus and annual information form dated May 27, 2011, as amended, in all of the provinces of Canada. Amendments to the simplified prospectus and annual information form, and fund facts were filed as described in paragraph 10 below to reflect the Proposed Mergers.
4. None of the Filers is in default of applicable securities legislation in any jurisdiction.
5. All of the Funds comply with the Legislation that governs mutual fund investment restrictions and practices, except to the extent they have obtained approval from the securities regulatory authorities for relief from the Legislation in certain respects.
6. Each Fund’s net asset value and its class unit price is determined as of the close of regular trading on The Toronto Stock Exchange (the Exchange), normally 4:00 p.m., Eastern Standard Time, on each day the Exchange is open for trading. The Funds are each valued in Canadian dollars.
7. Under the Proposed Mergers, the Terminating Funds will merge into the Continuing Funds as set out in the attached Schedule “A”.
8. The Merger Approvals are required because the Proposed Mergers do not satisfy all of the criteria for pre-approved mergers set out in section 5.6 of NI 81-102, specifically:
(a) the Proposed Mergers will be completed on a taxable basis and not as a “qualifying exchange” or as a tax deferred transaction as would be required under subsection 5.6(1)(b); and
(b) as set out in the attached Schedule “B”, a reasonable person would not consider that the Continuing Funds and Terminating Funds have substantially similar investment objectives, as applicable.
9. As required by National Instrument 81-107 Independent Review Committee for Investment Funds, an Independent Review Committee (the IRC) has been appointed for the Funds. The IRC has reviewed the Proposed Merger of each Terminating Fund with its corresponding Continuing Fund along with the process to implement each Proposed Merger from a “conflict of interest” perspective. AFM was advised, that in the opinion of the IRC that the Proposed Merger of each Fund achieves a fair and reasonable result for the Terminating Fund and the corresponding Continuing Fund.
10. A press release in respect of the Proposed Mergers was filed on SEDAR on March 5, 2012 and material change report in respect of the Proposed Mergers was filed on SEDAR on March 8, 2012. Amendment No. 1 dated March 8, 2012 to the Simplified Prospectus dated May 27, 2011, Amendment No. 1 dated March 8, 2012 to the Annual Information Form dated May 27, 2011, and amended and restated fund facts dated March 8, 2012 for each of the Funds were filed on SEDAR.
11. A management information circular in connection with the Proposed Mergers (the Circular) was mailed to unitholders of the Terminating Funds and unitholders of imaxx Global Equity Growth Fund on March 9, 2012 and subsequently filed on SEDAR.
12. Purchases of, and transfers to, units of the Terminating Fund will be suspended on or prior to the effective date of the Proposed Merger except for those made under automatic purchase plans which will be suspended at the close of business on April 24, 2012 (3 days prior to the Effective Date).
13. The Circular that was sent to unitholders of a Terminating Fund sets out:
(a) information about the differences between the units of the Terminating Funds and the units of the Continuing Funds including investment objectives; net asset values; and management fees and management expense ratios;
(b) information about the investment objectives of the applicable Continuing Fund sufficient to consider the Proposed Mergers;
(c) information about the tax consequences of the Proposed Mergers.
(d) the various ways in which unitholders of the Terminating Funds can obtain, at no cost, the most recent simplified prospectus, the annual information form, the audited financial statements for the period ended December 31, 2010 and the unaudited semi-annual financial statements for the period ended June 30, 2011 of the Continuing Funds.
(e) the opinion of the IRC of the Funds that the Proposed Merger of each Fund achieves a fair and reasonable result for the Terminating Fund and the corresponding Continuing Fund;
14. The fund facts for the applicable Continuing Fund was sent to unitholders of a Terminating Fund with the meeting materials.
15. Unitholders of each Terminating Fund and unitholders of imaxx Global Equity Growth Fund approved the Proposed Mergers at special meetings held concurrently on April 13, 2012. As the net asset value of imaxx Global Equity Growth Fund, a Continuing Fund,
minicounsel