Sphere Investment Management Inc. (Re), 2017 CanLII 93263

December 21, 2017

(the Jurisdiction)

AND

(Sphere or the Filer)

AND

(the Sphere ETFs)

Background

The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Sphere ETFs, for a decision under the securities legislation of the Jurisdiction (the Legislation) approving:

(a) the mergers of Sphere FTSE US Sustainable Yield Index ETF and Sphere FTSE Asia Sustainable Yield Index ETF (the Merging Funds) into Sphere FTSE Canada Sustainable Yield Index ETF (the Continuing Fund) (each a Merger and collectively, the Mergers) under section 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102); and

(b) the change of the investment fund manager of Sphere FTSE Canada Sustainable Yield Index ETF, Sphere FTSE Europe Sustainable Yield Index ETF and Sphere FTSE Emerging Markets Sustainable Yield Index ETF from Sphere to Evolve (the Change in Manager) under section 5.5(1)(a) and 5.5(1)(c) of NI 81-102.

(collectively, the “Requested Approval”)

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 provinces and territories of Canada other than the Jurisdiction (together with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions (NI 14-101), 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:

Sphere

The Filer is a corporation organized under the laws of the Province of Ontario, with its head office located in Toronto, Ontario. The Filer is a wholly-owned subsidiary of Sphere Exchange Traded Funds Limited.
The Filer is registered as (a) an investment fund manager in Newfoundland and Labrador, Ontario and Québec, (b) a portfolio manager in Ontario and (c) a dealer in the category of exempt market dealer in Alberta, Ontario and Québec.
The Filer is not in default of applicable securities legislation in any of the Jurisdictions.
The Filer is the trustee, manager and portfolio manager of the Sphere ETFs.
The Filer’s primary business is to act as investment fund manager and portfolio manager for the Sphere ETFs.

Sphere ETFs

Each of the Sphere ETFs is an exchange traded mutual fund established under the laws of the Province of Ontario.
Securities of the Sphere ETFs are distributed in each of the Jurisdictions under a long form prospectus and ETF summary documents each dated April 4, 2017, as amended by prospectus amendment no. 1 dated November 10, 2017, prepared in accordance with the requirements of National Instrument 41-101 General Prospectus Requirements (NI 41-101) and NI 81-102, as applicable.
Each Sphere ETF is a reporting issuer under the applicable securities legislation of each of the Jurisdictions.
The Sphere ETFs are subject to, among other laws and regulations, NI 81-102, National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).
The Sphere ETFs are not in default of applicable securities legislation in any of the Jurisdictions.
State Street Trust Company Canada is the custodian for the Sphere ETFs.

Evolve

Evolve is a corporation incorporated under the laws of the Province of Ontario, with its head office located in Toronto, Ontario.
Evolve is registered (a) as an investment fund manager in Newfoundland and Labrador, Ontario and Québec and (b) a portfolio manager and commodity trading manager in Ontario.
Evolve is not in default of applicable securities legislation in any of the Jurisdictions.
Evolve is the trustee and investment fund manager of eight exchange traded funds (ETFs) , all of which are listed on the Toronto Stock Exchange (TSX) on the date hereof. Evolve’s primary business is to act as investment fund manager for such ETFs.
CIBC Mellon Trust Company is the custodian of the Evolve ETFs.

Proposed Transaction

In a press release issued on November 6, 2017 and a material change report filed on November 7, 2017, Sphere announced that special meetings of unitholders of the Sphere ETFs (the Meetings) would be held on Monday, December 11, 2017 to approve the Change in Manager and the Mergers, as applicable.
The Proposed Transaction is expected to be completed before the end of December, 2017 (Closing), subject to receiving all necessary unitholder, regulatory and other approvals.
Pursuant to the Change in Manager and the Mergers, Evolve will become the manager, trustee and portfolio manager of each Sphere ETF and each Merging Fund will be merged into the Continuing Fund. In addition, the custodian of the Sphere ETFs will become CIBC Mellon Trust Company. Following Closing, unitholders of the Sphere ETFs will experience the following changes:

Changes Resulting from the Mergers and Change in Manager

Merging Funds

Continuing Fund

Summary of Changes Relevant to Sphere ETF Unitholders Resulting from the Mergers and Change in Manager

Sphere FTSE US Sustainable Yield Index ETF (net asset value as at October 27, 2017: $4,724,665.24)

Sphere FTSE Asia Sustainable Yield Index ETF (net asset value as at October 27, 2017: $4,197,742.57)

Sphere FTSE Canada Sustainable Yield Index ETF (net asset value as at October 27, 2017: $13,457,222.61)

Change in manager, trustee and investment advisor to Evolve
Change in custodian to CIBC Mellon Trust Company
Change in registrar and transfer agent to TSX Trust Company
Change in investment objectives and strategies
Change in management fee from 0.54% to 0.45%
Introduction of a fixed administration fee of 0.15% of NAV
Change in name to Evolve Canada Sustainable Yield Index ETF

Changes Resulting from the Change in Manager

Sphere ETF

Following the Change in Manager

Sphere FTSE Canada Sustainable Yield Index ETF

Change in manager, trustee and investment advisor to Evolve
Change in custodian to CIBC Mellon Trust Company
Change in registrar and transfer agent to TSX Trust Company
Change in management fee from 0.54% to 0.45%
Introduction of a fixed administration fee of 0.15% of NAV
Change in name to Evolve Canada Sustainable Yield Index ETF

Sphere FTSE Europe Sustainable Yield Index ETF

Change in manager, trustee and investment advisor to Evolve
Change in custodian to CIBC Mellon Trust Company
Change in registrar and transfer agent to TSX Trust Company
Change in management fee from 0.54% to 0.50%
Introduction of a fixed administration fee of 0.15% of NAV
Change in name to Evolve Europe Sustainable Yield Index ETF

Sphere FTSE Emerging Markets Sustainable Yield Index ETF

Change in manager, trustee and portfolio manager to Evolve
Change in custodian to CIBC Mellon Trust Company
Change in registrar and transfer agent to TSX Trust Company
Introduction of a fixed administration fee of 0.25% of NAV
Change in name to Evolve Emerging Markets Sustainable Yield Index ETF

As a result of the Change in Manager, all material agreements regarding the administration of the Sphere ETFs will either be amended and restated by Evolve or be terminated and Evolve will enter into new agreements or enter into an amendment to an existing agreement with the relevant service provider, as required.
The Sphere ETFs’ Independent Review Committee (the IRC) has reviewed the conflicts of interests matters associated with the proposed Change in Manager and the Mergers, including the process to be followed in connection with such Change in Manager and Mergers, and after reasonable inquiry has advised Sphere that, in its determination, if implemented, the resolutions achieve a fair and reasonable result for each of the Sphere ETFs.
Upon completion of the Change in Manager and the Mergers, the individuals that comprise the IRC of the Sphere ETFs will cease to be members of such IRC by operation of subsections 3.10(1)(a) and (b) of NI 81-107. Immediately following completion of the Change in Manager and the Mergers, Evolve has confirmed that the new members of the IRC for the Sphere ETFs will be the same individuals that currently comprise the IRC for the Evolve ETFs, namely: Kevin Drynan (Chair), Rod McIsaac and Mark Leung.

Additional Information Regarding the Proposed Transaction

In addition to the press release mentioned above and the corresponding material change report, which were issued and filed on SEDAR, investors in the Sphere ETFs have been further notified of the Proposed Transaction with Evolve through amendment no. 1 to the final prospectus of the Sphere ETFs, which was filed on SEDAR on November 10, 2017.
Pursuant to NI 81-102, the Meetings were held on December 11, 2017. At the Meetings, unitholders of the Sphere ETFs voted and approved the Change in Manager and the Mergers
The Notice-and-Access Document and voting instruction forms or forms of proxy, as applicable, in respect of the Meetings (the Meeting Materials) describing the Change in Manager and the Mergers were sent to unitholders of the Sphere ETFs on or about November 10, 2017 and copies thereof were filed on SEDAR following the mailing in accordance with applicable securities legislation, and exemptive relief obtained by Sphere on November 4, 2016 permitting the Sphere ETFs to use Notice-and-Access to send proxy-related materials to beneficial unitholders.
The Meeting Materials contain a detailed description of the proposed Change in Manager and Mergers, the ETF summary documents for the Continuing Fund, information about the Merging Funds and the Continuing Fund and income tax considerations for unitholders of the Sphere ETFs. The Meeting Materials also describe the various ways in which investors can obtain a copy of the prospectus of the Continuing Fund, as well as the most recent interim and annual financial statements and management reports of fund performance for the Continuing Fund.
The Meeting Materials contain sufficient information regarding the business, management and operations of Evolve (including details of its officers and directors) and all information necessary to allow unitholders to make an informed decision about the Change in Manager and the Mergers. All other required information and documents necessary to comply with applicable proxy solicitation requirements of securities legislation, including the ETF summary documents for the Continuing Fund, for the Meetings have also been mailed to applicable unitholders of the Sphere ETFs.
The Filer, Evolve and their respective affiliates are not related parties and there are no pre-existing commercial relationships between Evolve and Sphere. Sphere and Evolve will not have any commercial relationship following Closing.

Business Reasons for Proposed Transaction

Sphere believes that the proposed Change in Manager and the Mergers are in the best interests of the unitholders of the applicable Sphere ETFs. The Change in Manager and the Mergers are being proposed, in part, due to the aggregate management expense ratio of the Sphere ETFs’ platform currently being absorbed by Sphere, which is well above what is ordinarily charged by ETFs with similar investment objectives and strategies and taking into consideration Sphere’s subsidization of operating expenses, Sphere has determined that it is no longer able to continue offering the Sphere ETFs in the long term. Accordingly, and after considering several alternatives, Sphere believes unitholders are better served by the proposed Change in Manager and Mergers.
Sphere, and not the Sphere ETFs, will bear all costs and expenses associated with calling and holding the Meetings and implementing the Change in Manager, including legal fees, filing fees and other expenses associated with preparing, printing and mailing applicable Meeting Materials, obtaining necessary securities regulatory approvals, filing prospectus amendments, press releases and material change reports and other costs associated with calling the Meetings and effecting the Change in Manager.
The Mergers will eliminate the operating and regulatory costs of operating the Merging Funds as separate ETFs, and any operating costs payable by the Merging Funds are expected to be spread over a larger asset base. Sphere also believes that unitholders of Sphere FTSE Canada Sustainable Yield Index ETF and Sphere FTSE Europe Sustainable Yield Index ETF will benefit from the proposed reduction in management fees, as described in paragraph 19 above.
As of November 8, 2017 Evolve had approximately $21.5 million in assets under management.

Impact of the Proposed Transaction

In connection with the Change in Manager, Evolve intends to change the name of certain Sphere ETFs as follows:

Sphere ETF

Proposed Name

Sphere FTSE Canada Sustainable Yield Index ETF

Evolve Canada Sustainable Yield Index ETF

Sphere FTSE Europe Sustainable Yield Index ETF

Evolve Europe Sustainable Yield Index ETF

Sphere FTSE Emerging Markets Sustainable Yield Index ETF

Evolve Emerging Markets Sustainable Yield Index ETF

Sphere FTSE US Sustainable Yield Index ETF

To be merged into Evolve Canada Sustainable Yield Index ETF

Sphere FTSE Asia Sustainable Yield Index ETF

To be merged into Evolve Canada Sustainable Yield Index ETF

In connection with the Mergers, the Merging Funds will merge into the Continuing Fund, and as a result unitholders of the Merging Funds will become unitholders of the Continuing Fund and will experience the following changes (including as a result of the Change in Manager described below): (i) the manager, trustee and portfolio manager of the Merging Funds will change from Sphere to Evolve, (ii) the custodian of the Merging Funds will change from State Street Trust Company Canada to CIBC Mellon Trust Company Canada and (iii) the transfer agent of the Merging Funds will change from State Street Trust Company Canada to TSX Trust Company. Accordingly, applicable notices of termination have been, or will be, provided to terminating service providers of the Merging Funds.
In connection with the Change in Manager, (i) the manager, trustee and portfolio manager of the applicable Sphere ETFs will change from Sphere to Evolve, (ii) the custodian of the applicable Sphere ETFs will change from State Street Trust Company Canada to CIBC Mellon Trust Company Canada and (iii) the transfer agent of the applicable Sphere ETFs will change from State Street Trust Company Canada to TSX Trust Company. Accordingly, applicable notices of termination have been, or will be, provided to terminating service providers of the applicable Sphere ETFs.
The material implications of the proposed changes to the unitholders of the Sphere ETFs are all described in the Meeting Materials.
There is no intention to change the officers, directors or registered individuals of Evolve.
The closing of the Proposed Transaction will not adversely affect Evolve’s financial position or its ability to fulfill its regulatory obligations.

Additional Information with respect to the Change in Manager

Following the Change in Manager, the fundamental investment objectives and index constituents of Sphere FTSE Canada Sustainable Yield Index ETF, Sphere FTSE Europe Sustainable Yield Index ETF and Sphere FTSE Emerging Markets Sustainable Yield Index ETF will remain substantially the same.
As a result of the Change in Manager, the unitholders of the Sphere FTSE Europe Sustainable Yield Index ETF will benefit from a reduced management fee of 0.50% (from 0.54%) of the net asset value of the Sphere ETF, and unitholders of Sphere FTSE Canada Sustainable Yield Index ETF (including unitholders of the Merging Funds) will benefit from a reduced management fee of 0.45% (from 0.54%) of the net asset value of the Sphere ETF. The management fee of Sphere FTSE Emerging Markets Sustainable Yield Index ETF will remain the same.
Following the Change in Manager, Evolve will also introduce a fixed administration fee that will result in a cap on certain operating expenses of 0.15% of net asset value in respect of Sphere FTSE Canada Sustainable Yield Index ETF and Sphere FTSE Europe Sustainable Yield Index ETF, and a fixed administration fee of 0.25% of net asset value of Sphere FTSE Emerging Markets Sustainable Yield Index ETF.

Additional Information with respect to the Mergers

The net asset value of each of the Merging Funds and the Continuing Fund is set out in paragraph 19 above.
Pursuant to the Mergers, unitholders of a Merging Fund will receive units of the Continuing Fund.
The total value of the units of the Continuing Fund offered to unitholders of the Merging Fund will have a value that is equivalent to the net asset value of the Merging Fund calculated on the effective date of the Merger (or as at the close of business on the business day that is prior to the effective date of the Merger).
The fundamental investment objective of each Merging Fund is not substantially similar to the investment objective of the Continuing Fund. The Meeting Materials clearly delineate the differences in investment objectives, investment strategies and other material differences between each Merging Fund and the Continuing Fund.
The management fee of the Continuing Fund will be less than the management fee of the Merging Funds. The Meeting Materials clearly delineate the differences in management fees and expense structures between the Merging Funds and the Continuing Fund.
The net asset value for each Merging Fund and the Continuing Fund is calculated on a daily basis on each day that the TSX is open for trading.
No redemption fee will be payable by unitholders of the Merging Funds in connection with the Mergers.
Prior to the effective date of the Mergers, each Merging Fund will liquidate its entire portfolio into cash such that the Continuing Fund may acquire portfolio assets that are consistent and acceptable to the portfolio manager of the Continuing Fund and consistent with the investment objectives of the Continuing Fund.
The Merger of Sphere FTSE US Sustainable Yield Index ETF (the Taxable Merger Terminating Fund) into the Continuing Fund (such Merger being a Taxable Merger) will be effected on a taxable basis.
The Merger of Sphere FTSE Asia Sustainable Yield Index ETF (the Tax-Deferred Merger Terminating Fund) into the Continuing Fund (such Merger being a Tax-Deferred Merger) will be effected as a “qualifying exchange” within the meaning of section 132.2 of the Income Tax Act (Canada) (the Tax Act).
The redemption provisions of the Sphere ETFs and the Continuing Fund, and the Sphere ETFs following the Change in Manager, are substantially the same, including the right to redeem units for cash at a redemption price per unit equal to the lesser of: (i) 95% of the closing price for the units on the TSX on the effective day of the redemption; and (ii) the net asset value per unit on the effective day of the redemption.
In the opinion of Sphere, the Mergers do not constitute a material change for the Continuing Fund.
The Sphere ETFs have complied with Part 11 of NI 81-106 in connection with the making of the decision by the board of directors of Sphere to proceed with the Change in Manager and the Mergers.
Sphere is not entitled to rely upon the approval of the IRC in lieu of unitholder approval for the Mergers due to the fact that one or more conditions of section 5.6 of NI 81-102 will not be met.
At each Meeting, the affirmative vote of not less than a majority of the votes cast by unitholders of the applicable Sphere ETF present in person or represented by proxy at that Meeting is required for approval of the Change in Manager and/or Merger, as applicable. It is expected that the Change in Manager and the Mergers will be implemented if approved by the unitholders of the applicable Sphere ETF, regardless of whether the Change in Manager or the Mergers are approved by unitholders of the other applicable Sphere ETFs.
Subject to receipt of unitholder and regulatory approvals, the Change in Manager and the Mergers will occur as soon as reasonably practicable following receipt of all required unitholder and regulatory approvals, subject to the discretion of Sphere to not proceed with any one or more of the Change in Manager and the Mergers. It is currently anticipated that the Change in Manager and Mergers will occur on or before January 31, 2018.
Each Merging Fund will be terminated concurrently or as soon as reasonably possible following, or upon implementation of, the Merger.

Steps for the Taxable Merger

Prior to the effective date of the Taxable Merger, the Taxable Merger Terminating Fund will liquidate its entire portfolio into cash.
Prior to the Taxable Merger, the Taxable Merger Terminating Fund will distribute any net income and net realized capital gains for its current taxation year to the extent necessary to eliminate its liability for non-refundable income tax.
The “Exchange Ratio” in respect of the units of the Taxable Merger Terminating Fund will be calculated by dividing the net asset value of the units of the Taxable Merger Terminating Fund by the net asset value of the units of the Continuing Fund, in each case, as at the close of business on the business day prior to the effective date of the Taxable Merger.
On the effective date of the Taxable Merger, the Taxable Merger Terminating Fund will, after satisfying any outstanding liabilities, transfer all of its assets to the Continuing Fund (which will consist entirely of cash prior to the Taxable Merger) in consideration for an amount (the “Purchase Price”) equal to the fair market value of the assets transferred to the Continuing Fund at the effective time of the Taxable Merger.
The Continuing Fund will satisfy the Purchase Price by issuing to the Taxable Merger Terminating Fund that number of units of the Continuing Fund (rounded down to the nearest whole unit) equal to the number of units of the Taxable Merger Terminating Fund then outstanding multiplied by the Exchange Ratio (calculated in the same manner as described in paragraph 61 above). Such issued units of the Continuing Fund will be listed on the TSX at all times while they are held by the Taxable Merger Terminating Fund.
Immediately thereafter, all of the units of the Taxable Merger Terminating Fund will be redeemed and the redemption price therefor will be paid by delivering the applicable number of units of the Continuing Fund to unitholders of the Taxable Merger Terminating Fund based on the number of such units of the Taxable Merger Terminating Fund then held with each unitholder of the Taxable Merger Terminating Fund receiving that number of units of the Continuing Fund (rounded down to the nearest whole unit) as is equal to the Exchange Ratio (calculated in the same manner as described in paragraph 61 above) multiplied by the number of units of the Taxable Merger Terminating Fund held by such unitholder immediately prior to the completion of the Taxable Merger. No cash in lieu of fractional units will be paid under the Taxable Merger.
The Taxable Merger Terminating Fund will be wound up in connection with the Taxable Merger.
Sphere and Evolve have analyzed the tax implications of the Mergers from the perspective of unitholders of the Merging Funds and the Continuing Fund and have concluded that it is necessary to effect the Taxable Merger on a taxable basis.
No commission or other fee will be charged to unitholders of the Taxable Merger Terminating Fund on the issue or exchange of securities of the Continuing Fund.

Steps for the Tax-Deferred Merger

Prior to the effective date of the Tax-Deferred Merger, the Tax-Deferred Merger Terminating Fund will liquidate its entire portfolio into cash.
Prior to the Tax-Deferred Merger, each of the Tax-Deferred Merger Terminating Fund and the Continuing Fund will distribute any net income and net realized capital gains for its current taxation year to the extent necessary to eliminate its liability for non-refundable income tax.
The “Exchange Ratio” in respect of the units of the Tax-Deferred Merger Terminating Fund will be calculated by dividing the net asset value of the units of the Tax-Deferred Merger Terminating Fund by the net asset value of the units of the Continuing Fund, in each case, as at the close of business on the business day prior to the effective date of the Tax-Deferred Merger.
On the effective date of the Tax-Deferred Merger, the Tax-Deferred Merger Terminating Fund will, after satisfying any outstanding liabilities, transfer all of its assets to the Continuing Fund (which will consist entirely of cash prior to the Tax-Deferred Merger) in consideration for an amount (“Purchase Price”) equal to the fair market value of its assets transferred to Continuing Fund at the effective time of the Tax-Deferred Merger.
The Continuing Fund will satisfy the Purchase Price by issuing to the Tax-Deferred Merger Terminating Fund that number of units of the Continuing Fund (rounded down to the nearest whole unit) equal to the number of units of the Tax-Deferred Merger Terminating Fund then outstanding multiplied by the applicable Exchange Ratio (calculated in the same manner as described in paragraph 70 above). Such issued units of the Continuing Fund will be listed on the TSX at all times while they are held by the Tax-Deferred Merger Terminating Fund.
Immediately thereafter, all of the units of the Tax-Deferred Merger Terminating Fund that are listed on the TSX will be redeemed and the redemption price therefor will be paid by delivering the applicable number of units of the Continuing Fund to unitholders of the Tax-Deferred Merger Terminating Fund based on the number of such units of the Tax-Deferred Merger Terminating Fund then held with each unitholder of the Tax-Deferred Merger Terminating Fund receiving that number of units of the Continuing Fund (rounded down to the nearest whole unit) as is equal to the Exchange Ratio (calculated in the same manner as described in paragraph 70 above) multiplied by the number of units of the Tax-Deferred Merger Terminating Fund held by such unitholder immediately prior to the completion of the Tax-Deferred Merger. No cash in lieu of fractional units will be paid under the Tax-Deferred Merger.
The Tax-Deferred Merger Terminating Fund and the Continuing Fund will file a joint tax election in respect of the transfer to the Continuing Fund of all of the assets of the Tax-Deferred Merger Terminating Fund.
The Tax-Deferred Merger Terminating Fund will be wound-up in connection with the Tax-Deferred Mergers.
No commission or other fee will be charged to unitholders of the Tax-Deferred Merger Terminating Fund on the issue or exchange of securities of the Continuing Fund.

General

In the event that any Change in Manager or Merger was not approved by unitholders of the applicable Sphere ETF, the Manager intended to terminate such remaining Sphere ETF in accordance with its respective Declaration of Trust.
It is expected that all of the current officers and directors of Evolve will continue on in their current capacities and that they will continue to have the requisite integrity and experience as contemplated under section 5.7(1)(a)(v) of NI 81-102. The experience and integrity of each of the members of the Evolve management team is apparent by their education and years of experience in the investment industry. Such experience and integrity has been established and accepted by the Principal Regulator through the granting of registration to such individuals and/or through the granting of receipts for the prospectuses of the Evolve ETFs.
The Mergers will not adversely affect Evolve’s financial position or its ability to fulfill its regulatory obligations.
The Requested Approval will not be detrimental to the protection of investors in the Sphere ETFs or prejudice the public interest.

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 under the Legislation is that the Requested Approval is granted.

“Darren McKall”

Darren McKall, Manager

Investment Funds and Structured Products Branch

Ontario Securities Commission

SEDAR Project #: 2694356

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Approval of change of manager of a mutual fund, and a mutual fund merger – merger approval required because merger does not meet the criteria for per-approval – continuing fund has different investment objectives than terminating fund – merger not a “qualifying exchange” or a tax-deferred transaction under the Income Tax Act – manager of continuing fund is not an affiliate of the manager of the terminating funds - securityholders provided with timely and adequate disclosure regarding the merger - change of manager is not contrary to the public interest.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds sections 5.5(1)(a), 5.5(1)(b), 5.5(3), 5.6, 5.7 and 19.1