April 28, 2017

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 Excel Funds Management Inc. (the Filer)

IN THE MATTER OF

THE EXISTING MUTUAL FUNDS MANAGED BY THE FILER

(the Existing Top Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Existing Top Funds and any additional mutual funds, including exchange-traded funds (the Future Top Funds and together with the Existing Top Funds, the Top Funds) that may be managed in the future by the Filer, or by an affiliate of the Filer, for a decision under the securities legislation of the principal regulator (the Legislation) granting an exemption to the Top Funds from the following prohibitions in National Instrument 81-102 Investment Funds (NI 81-102) (the Exemption Sought):

(i) subsection 2.1(1) of NI 81-102 to permit each Top Fund to purchase a security of an exchange-traded mutual fund that is managed by the Filer (the Initial Underlying ETFs) or an exchange-traded mutual fund that will be managed by the Filer of an affiliate of the Filer in the future (the Future Underlying ETFs and together with the Initial Underlying ETFs, the Underlying ETFs) or enter into a specified derivatives transaction with respect to an Underlying ETF even though, immediately after the transaction, more than 10% of the net asset value of the Top Fund would be invested, directly or indirectly, in securities of the Underlying ETF (the Concentration Restriction);

(ii) paragraph 2.2(1)(a) of NI 81-102 to permit each Top Fund to purchase a security of an Underlying ETF such that, after the purchase, the Top Fund would hold securities representing more than 10% of:

(A) the votes attaching to the outstanding voting securities of the Underlying ETF; or

(B) the outstanding equity securities of the Underlying ETF (the Control Restriction);

(iii) paragraph 2.5(2)(a) of NI 81-102 to permit each Top Fund to purchase and hold a security of an Underlying ETF that is not offered under a simplified prospectus prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) (the Fund of Fund Restriction); and

(iv) paragraph 2.5(2)(e) of NI 81-102 to permit each Top Fund to pay brokerage commissions in relation to its purchase and sale on a recognized exchange (as defined in the Securities Act (Ontario)) in Canada of securities of the Underlying ETFs (the Sales and Redemption Fee Restriction).

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) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

The Filer and the Top Funds

1. The Filer is a corporation organized under the laws of the Province of Ontario with its head office located in Mississauga, Ontario.

2. The Filer is not in default of securities legislation in any of the Jurisdictions.

3. The Filer or an affiliate acts, or will act, as manager of each of the Top Funds.

4. The Filer is registered as an investment fund manager in the Provinces of Newfoundland and Labrador, Ontario and Quebec.

5. The Top Funds are, or will be, open-ended mutual funds, including exchange-traded funds, organized and governed by the laws of a jurisdiction of Canada.

6. The Top Funds are, or will be, governed by the provisions of NI 81-102, subject to any exemption therefrom that has been, or may be, granted by the securities regulatory authorities.

7. Each Top Fund distributes, or will distribute, some or all of its securities pursuant to a simplified prospectus prepared pursuant to NI 81-101 and Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1) or a long form prospectus prepared pursuant to National Instrument 41-101 General Prospectus Requirements (NI 41-101) and Form 41-101F2 Information Required in an Investment Fund Prospectus (Form 41-101F2).

8. The Top Funds are, or will be, reporting issuers in the provinces and territories of Canada in which their securities are distributed.

9. Each Top Fund wishes to have the ability to invest up to 100% of its net asset value in any one or more Underlying ETFs.

10. Each investment by a Top Fund in securities of an Underlying ETF will be made in accordance with the investment objectives of the Top Fund and will represent the business judgement of responsible persons uninfluenced by considerations other than the best interest of the Top Fund.

11. The Top Funds do not, and will not, sell short securities of any Underlying ETF.

The Underlying ETFs

12. The Filer, or an affiliate of the Filer, acts, or will act, as the investment fund manager of each Underlying ETF.

13. Each Underlying ETF may issue more than one series of securities. Each Initial Underlying ETF will initially offer Class E securities. The Top Funds may invest in Class E securities, or other designated securities, of the Underlying ETFs (collectively, the Securities).

14. Each Underlying ETF is, or will be, an open-ended mutual fund subject to NI 81-102, subject to any exemption therefrom that has been, or may be, granted by the securities regulatory authorities.

15. Securities of each Underlying ETF are, or will be:

(a) distributed pursuant to a long form prospectus prepared pursuant to NI 41-101 and Form 41-101F2; and

(b) listed on the Toronto Stock Exchange or another "recognized exchange" in Canada, as that term is defined in securities legislation.

16. Because Securities of the Underlying ETFs are, or will be, distributed pursuant to a long form prospectus prepared pursuant to NI 41-101 and Form 41-101F2, each Underlying ETF is, or will be, a reporting issuer in the provinces and territories of Canada in which its securities are distributed.

17. The Underlying ETFs are, or will be, actively managed exchange-traded mutual funds. Accordingly, Securities of the Underlying ETFs are not, or will not be, index participation units, as such term is defined in NI 81-102 (IPUs).

18. No Underlying ETF holds, or will hold, more than 10% of its net asset value in securities of another investment fund, unless: (i) the securities of the other investment fund are securities of a money market fund, as defined in NI 81-102; (ii) the securities of the other investment fund are IPUs issued by an investment fund; or (iii) such investment is permitted pursuant to exemptive relief that has been granted by the securities regulatory authorities.

19. No Top Fund pays, or will pay, a management or an incentive fee which to a reasonable person would duplicate a fee payable by the applicable Underlying ETF for the same service.

20. A holder of Securities may:

(a) sell such securities on the TSX or another "recognized exchange";

(b) redeem such securities in any number at a redemption price equal to 95% of the closing price for the security on the TSX or another "recognized exchange" on the effective day of redemption; or

(c) if such holder is a designated broker or dealer or has the consent of the Filer, exchange a prescribed number of securities (a PNU) (and any additional multiple thereof) of the Underlying ETF for cash or securities and cash, the exchange price being equal to the net asset value of the securities of the Underlying ETF tendered for exchange on the effective day of the exchange request.

21. The Securities of each Underlying ETF are, or will be, highly liquid, as the designated broker acts, or will act, as an intermediary between investors and each Underlying ETF, standing in the market with bid and ask prices for such securities to maintain a liquid market for them.

22. All brokerage costs related to trades in Securities of the Underlying ETFs will be borne by the Top Funds in the same manner as any other portfolio transactions made on the exchange.

23. No Underlying ETF is, or will be, a commodity pool governed by National Instrument 81-104 Commodity Pools (NI 81-104).

24. No Underlying ETF has, or will have, a net market exposure greater than 100% of its net asset value.

25. The Underlying ETFs primarily achieve, or will primarily achieve, their investment objectives through direct holdings of cash and securities, or other investment funds, in accordance with their investment objectives and strategies and the requirements of NI 81-102.

26. Each Top Fund and each Underlying ETF is, or will be, subject to National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) generally and in respect of conflicts of interest matters arising from trades of securities of an Underlying ETF.

27. If a Top Fund makes a trade in securities of an Underlying ETF with or through the Filer acting as dealer, the Filer will comply with its obligations under NI 81-107 in respect of any proposed related party transactions. All such related party transactions will be disclosed to securityholders of the relevant Top Fund in its management report of fund performance.

Reasons for Exemption Sought

28. Due to the potential size disparity between the Top Funds and the Underlying ETFs, it is possible that a relatively small investment, on a percentage of net asset value basis, by a relatively larger Top Fund in Securities of an Underlying ETF could result in such Top Fund holding securities representing more than 10% of: (i) the votes attaching to the outstanding voting securities of the applicable Underlying ETF; or (ii) the outstanding equity securities of that Underlying ETF, contrary to the Control Restriction.

29. It is anticipated that many of the trades in Securities of an Underlying ETF conducted by a Top Fund will not be of the size necessary for the Top Fund to be eligible to purchase or redeem a PNU of Securities of an Underlying ETF directly from or to, as the case may be, the Underlying ETF. As such, it is anticipated that many of the trades in Securities of an Underlying ETF by a Top Fund will be conducted in the secondary market through the TSX or another recognized exchange in Canada. Absent the Exemption Sought, the Top Funds would not be permitted to pay brokerage commission fees for such trades in Securities of an Underlying ETF.

30. An investment by a Top Fund in Securities of an Underlying ETF does not qualify for the exemptions set out in:

(a) paragraph 2.1(2)(d) of NI 81-102 from the Concentration Restriction;

(b) paragraph 2.2(1.1)(b) of NI 81-102 from the Control Restriction;

(c) subsection 2.5(3) of NI 81-102 from the Fund of Fund Restriction; and

(d) subsection 2.5(5) of NI 81-102 from the Sales and Redemption Fee Restriction

because Securities of the Underlying ETFs are not, or will not be, IPUs.

31. An investment in an Underlying ETF by a Top Fund is an efficient and cost effective alternative to administering one or more investment strategies similar to that of the Underlying ETF.

32. An investment in an Underlying ETF by a Top Fund should pose no additional investment risk to the Top Fund because each Underlying ETF is, or will be, subject to NI 81-102, subject to any exemption therefrom that has been, or may in the future be, granted by the securities regulatory authorities.

33. The only material difference between an Underlying ETF and other types of mutual funds governed by NI 81-102 is the method of distribution and disposition of its Securities. Granting the Exemption Sought will permit the Top Funds to invest in actively-managed mutual funds that are listed on the TSX (or another recognized exchange in Canada) in the same manner as they are permitted to invest in mutual funds that file a simplified prospectus under NI 81-101.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator is that the Exemption Sought is granted, provided that:

(i) the investment by a Top Fund in securities of an Underlying ETF is in accordance with the investment objectives of the Top Fund;

(ii) a Top Fund does not sell securities of an Underlying ETF short;

(iii) the Underlying ETF is not a commodity pool governed by NI 81-104;

(iv) the Underlying ETF does not rely on exemptive relief from:

(A) section 2.3 of NI 81-102 regarding the purchase of physical commodities;

(B) sections 2.7 and 2.8 of NI 81-102 regarding the purchase, sale or use of specified derivatives; and

(C) subsections 2.6(a) and 2.6(b) of NI 81-102 with respect to the use of leverage;

(v) in connection with the Exemption Sought from the Concentration Restriction, the Top Fund shall, for each investment it makes in the securities of an Underlying ETF, apply, to the extent applicable, subsections 2.1(3), 2.1(4) and 2.1(5) of NI 81-102 as if those provisions applied to a Top Fund's investments in securities of the Underlying ETF, and, accordingly, limit a Top Fund's indirect holdings in securities of an issuer held by one or more Underlying ETFs as required by, and in accordance with, subsections 2.1(3), 2.1(4) and 2.1(5) of NI 81-102;

(vi) the investment by a Top Fund in securities of an Underlying ETF is made in compliance with section 2.5 of NI 81-102, with the exception of paragraph 2.5(2)(a) and, in respect only of brokerage fees incurred for the purchase and sale of Underlying ETFs by a Top Fund, paragraph 2.5(2)(e) of NI 81-102; and

(vii) the prospectus of each Top Fund discloses, or will disclose at the time of its next renewal, the fact that the Top Fund has obtained the Exemption Sought to permit the relevant transactions on the terms described herein.

"Darren McKall"

Darren McKall

Manager, Investment Funds and Structured Products Branch

ONTARIO SECURITIES COMMISSION

SEDAR PROJECT # 259197