Stanton Asset Management Inc. et al.

Headnote

One time trade securities between a non-redeemable investment fund and an affiliated fund, both advised by the same portfolio manager, to implement a merger -- costs of the merger borne by the manager -- sale of securities exempt from the self-dealing prohibitions in s. 13.5(2)(b)(ii)(iii), National Instrument 31-103 -- Registration Requirements and Exemptions.

Applicable Legislative Provisions

National Instrument 31-103 Registration Requirements and Exemptions, ss.13.5(2)(b)(ii) and (iii), 15.1.

November 12, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

STANTON ASSET MANAGEMENT INC.

(the Filer)

AND

O'LEARY HARD ASSET INCOME FUND

(the Terminating Fund) AND

O'LEARY GLOBAL INFRASTRUCTURE YIELD FUND

(the Continuing Fund, and together with

the Terminating Fund, the Funds)

DECISION

Background

The securities regulatory authority or regulators in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for exemptive relief from Section 13.5(2)(b)(ii) and (iii) of National Instrument 31-103 -- Registration Requirements and Exemptions (NI 31-103) in connection with the transfer of the investment portfolio of the Terminating Fund to the Continuing Fund in order to implement the merger (the Merger) of the Terminating Fund into the Continuing Fund (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) L'Autorité des marchés financiers is the principal regulator (the Principal Regulator) for this application;

(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 each of the provinces of Canada, other than the province of Ontario; and

(c) the decision is the decision of the Principal Regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in MI 11-102 and National Instrument 14-101 -- Definitions 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:

1. The Filer is a corporation existing under the Canada Business Corporations Act with its head office in Montreal, Quebec.

2. The Filer is registered as a portfolio manager under the securities legislation of each of Québec and Ontario (the "Legislation").

3. The Filer is the portfolio manager of each Fund and O'Leary Funds Management LP (the "Manager") is the manager of each Fund.

4. The Manager proposes to effect the Merger of the Terminating Fund into the Continuing Fund, subject to regulatory approval, on or about November 1, 2012 (the "Merger Date").

5. Each Fund was established pursuant to a declaration of trust under the laws of the Province of Ontario.

6. The Funds are reporting issuers under the securities legislation of each province of Canada.

7. Neither the Filer nor either of the Funds is in default of securities legislation in any Canadian jurisdiction.

8. The Terminating Fund is a "non-redeemable investment fund" as defined in the Legislation and units of the Terminating Fund (the "Units") are listed on the Toronto Stock Exchange ("TSX").

9. The Terminating Fund was established under the laws of the Province of Ontario pursuant to a declaration of trust dated September 28, 2010 (the "Terminating Fund Declaration") and completed its initial public offering on October 20, 2010.

10. The original long form prospectus of the Terminating Fund and the Terminating Fund Declaration provided for the conversion of the Terminating Fund into an open end mutual fund on or about October 31, 2012. In line with the Manager's overall business plan to merge mutual funds with similar investment objectives (usually as a result of conversion or merger of closed-end funds) in order to streamline and consolidate its product line and to achieve the most cost-effective management of all its funds, the Manager proposes to merge the Terminating Fund into the Continuing Fund rather than proceed with the conversion of the Terminating Fund into an open end mutual fund and its subsequent merger into the Continuing Fund.

11. The Continuing Fund is a "mutual fund" as defined in the Legislation and is governed by National Instrument 81-102 -- Mutual Funds ("NI 81-102"). The Continuing Fund was originally qualified for distribution by a simplified prospectus dated December 22, 2009 and merged with the closed end fund known as O'Leary Global Infrastructure Fund on June 1, 2010, with series X units of the Continuing Fund being issued to unitholders of the former closed end fund.

12. The Continuing Fund currently offers series A, series F, series H, series I, series M and series X units pursuant to a simplified prospectus dated June 18, 2012 (the "Simplified Prospectus").

13. The Continuing Fund proposes to file amendments to its Simplified Prospectus and annual information form (and to file an additional fund facts document) to qualify the Series Y Units to be used in the Merger on or about the Merger Date.

14. The Terminating Fund Declaration stipulates that "The investment activities of the Fund are to be conducted in accordance with, among other things, the investment guidelines and restrictions that are applicable to mutual funds pursuant to NI 81-102."

15. Unless an exemption has been obtained, each of the Funds follows the standard investment restrictions and practices established under the applicable securities legislation of each province of Canada.

16. Although not substantially similar in all respects, the Manager is of the view that the investment objectives and strategies of the two Funds are similar in many respects and that it would be in the best interests of each Fund for the Funds to be merged.

17. The investment objectives of the Terminating Fund, as stated in its most recent annual information form, are as follows: "(a) to maximize total return for holders of Units ("Unitholders"), consisting of interest and dividend income and capital appreciation, and (b) to provide Unitholders with monthly distributions currently targeted to be $0.065 per Unit ($0.78 per annum representing an annual yield of 6.5% based on the $12.00 per Unit issue price)."

18. The investment strategies of the Terminating Fund, as stated in its most recent annual information form, include the following: "The Fund invests in an actively-managed portfolio (the "Portfolio") that invests in Canada and globally primarily in publicly-traded dividend-paying equity securities of issuers owning or controlling significant tangible assets in industry sectors including real estate, pipelines, power utilities, transportation and telecommunications (the "Hard Asset Issuers") and having market capitalizations of at least $1 billion at the time of investment, as well as corporate bonds, including non-investment grade bonds, convertible debt securities and preferred shares. The Fund provides investors diversification across equities and fixed income securities of issuers in such industry sectors, with access to both Canadian and global markets, allowing investors to access what Stanton Asset Management Inc. ("Stanton" or the "Portfolio Advisor") believes to be the most attractive investments in each sector regardless of geography and to seek to benefit from the performance of each sector."

19. The investment objectives of the Continuing Fund, as stated in its Simplified Prospectus, are as follows: "to generate income and long-term capital growth by investing primarily in common equity and fixed income securities by global infrastructure issuers. The Fund will not be limited to how much it can invest or keep invested in a country or sector. This will vary according to market conditions."

20. The investment strategies of the Continuing Fund, as stated in its Simplified Prospectus, include the following:

"In seeking to achieve its investment objectives, the Fund's investment strategies emphasize investments in publicly traded equity and debt securities issued by global infrastructure issuers as well as Canadian mid-cap and large cap infrastructure issuers with market capitalizations of at least $1 billion which will be diversified globally by region and by sector.

The Fund may also invest up to 10% of its net assets in equity and debt securities of private issuers having infrastructure assets or operations.

The Fund invests in publicly?traded equities of global issuers focused on infrastructure, which the portfolio advisor believes provide access to high quality long?term assets, predictable cash flow, high dividend yields, reduced volatility and positive correlation to inflation, and capital appreciation.

The Fund invests in publicly?traded debt of global issuers focused on infrastructure, which the portfolio advisor believes provide a steady income stream."

21. Upon completion of the Merger, Unitholders of the Terminating Fund will receive Series Y Units of the Continuing Fund which will have a distribution policy which seeks to provide unitholders with monthly distributions. It is proposed that this policy will be stated in substantially the following manner in the amended Simplified Prospectus:

"The Fund will seek to provide unitholders of series Y units with monthly distributions in cash. Initially, the Fund will endeavour to distribute $0.63 per annum representing an annual distribution of approximately 6.0%, based on a the NAV as of August 31, 2012 of O'Leary Hard Asset Income Fund (the closed-end fund which merged into the mutual fund, O'Leary Global Infrastructure Yield Fund, on [November 1, 2012]). This amount of annual distribution corresponds to a regular monthly distribution of $0.0525 per series Y unit. The monthly distribution amount will be determined by the Manager on an annual basis, taking into account the market conditions, the fees and expenses of the Fund and the portfolio performance. The Manager intends to make the determination in January of each year. The Manager will determine this amount by looking at the NAV of the series on December 31 of the previous year and determine the amount assuming that market conditions remain relatively constant over the coming year. There can be no assurance that the Fund will be able to achieve its monthly distribution objectives."

22. The Manager has reviewed the portfolio of the Terminating Fund and has determined that all of the assets of the Terminating Fund's portfolio are suitable investments for the Continuing Fund and fall within the investment objectives of the Continuing Fund.

23. The Merger could be considered a material change for the Continuing Fund, as the net asset value ("NAV") of the Continuing Fund is smaller than the NAV of the Terminating Fund. As a consequence of this, a unitholder meeting of the Continuing Fund has been called for October 31, 2012 at which meeting unitholder approval will be sought in accordance with the requirements of Section 5.1(g) of NI 81-102.

24. The Merger will be effected with respect to the Terminating Fund, in accordance with the Terminating Fund Declaration. The relevant provisions provide that the Manager may, upon obtaining approval of Unitholders by resolution passed by at least 66 2/3% of the votes cast at a meeting called and held for such purpose, merge the Terminating Fund with a mutual fund trust, provided that,

(a) the Fund ceases to continue after the reorganization or transfer of assets; and

(b) the transaction results in Unitholders becoming unitholders in the mutual fund trust.

As a consequence of this, a unitholder meeting of the Terminating Fund has been called for October 31, 2012 at which meeting unitholder approval will be sought in accordance with the Terminating Fund Declaration.

25. As required by National Instrument 81-107 -- Independent Review Committee for Investment Funds ("NI 81-107"), an Independent Review Committee ("IRC") has been appointed for each of the Funds, and the Manager presented the terms of the Merger to the IRC at a special meeting called for this purpose on September 6, 2012, and requested the IRC's recommendation of the Merger. The IRC provided a positive recommendation that the Merger would achieve a fair and reasonable result for both Funds.

26. The board of directors of O'Leary Funds Management Inc., the general partner of the Manager, also approved the Merger and determined that it is in the best interests of each of the Funds. A press release was issued on September 7, 2012 announcing both the Board approval and the IRC recommendation. The press release and material change report in respect of the Merger were filed on SEDAR on September 12, 2012 under project numbers 01959995 and 01959996.

27. The press release announces the Merger more than 50 days prior to the Merger Date. The Unitholders of the Terminating Fund have ample opportunity to redeem their Units prior to the Merger in compliance with the redemption provisions set out in the Terminating Fund Declaration, should they wish to do so.

28. Notice of the special meeting, a form of proxy and a management information circular will be prepared and sent to unitholders of the Terminating Fund and the Continuing Fund in accordance with Part 12 of National Instrument 81-106 -- Investment Funds Continuous Disclosure ("NI 81-106"). The Manager has sent written notice of the Merger to CDS on September 6, 2012 with respect each of the Funds announcing a record date of October 1, 2012 and the meeting date of October 31, 2012 for both Funds.

29. No TSX approval is required for the Merger. However, the Terminating Fund will need to comply with the requirements of the TSX to delist.

30. The NAV for units of each Fund is calculated on a daily basis on each day that the TSX is open for trading. The Funds have substantially similar valuation rules and procedures.

31. A second press release and material change report in respect of the Merger will be filed on SEDAR under the profile of each of the Funds upon receipt of approval for the Merger from the respective unitholders of each Fund and from the Principal Regulator as requested herein.

32. All costs and expenses associated with the Merger will be borne by the Manager. No sales charges, redemption fees or other fees or commissions will be payable by unitholders of the Funds in connection with the Merger.

33. The Merger will be implemented on a tax-deferred basis after the expiry of the annual redemption notice period of the Terminating Fund and as soon as practicable after October 31, 2012, the date originally scheduled for the conversion of the Terminating Fund into an open end mutual fund.

34. The Terminating Fund and the Continuing Fund are each a mutual fund trust under the Income Tax Act (Canada) ("Tax Act") and accordingly, units of the Funds are "qualified investments" under the Tax Act for registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered disability savings plans, registered education savings plans and tax-free savings accounts.

35. The Filer is a "responsible person" as defined in the Legislation as a result of being the portfolio manager of the Funds.

36. The transfer of the investment portfolio of the Terminating Fund to the Continuing Fund (and the corresponding purchase of such investment portfolio by the Continuing Fund) as a step in the Merger may be considered a purchase or sale of securities, knowingly caused by a registered adviser that manages the investment portfolio of the Funds, from or to the investment portfolio of (i) an associate of a responsible person (since each Fund is a trust which is an "associate" of the trustee of the Fund, which is also an affiliate of the adviser and thus a "responsible person"), and (ii) an investment fund for which a "responsible person" acts as an adviser, in each case, contrary to NI 31-103.

37. The Merger is expected to take place using the following steps:

(a) Prior to the Merger Date, the Terminating Fund will sell any securities in its portfolio necessary to meet redemption requests.

(b) Effective as of close of business on the Merger Date, the Units of the Terminating Fund will be de-listed from the TSX.

(c) The value of the Terminating Fund's portfolio and other assets will be determined at the close of business on the Merger Date in accordance with the Terminating Fund Declaration.

(d) The Continuing Fund will acquire the investment portfolio and other assets of the Terminating Fund in exchange for Series Y Units of the Continuing Fund.

(e) The Continuing Fund will not assume liabilities of the Terminating Fund and the Terminating Fund will retain sufficient assets to satisfy its estimated liabilities, if any, as of the Merger Date.

(f) The Series Y Units of the Continuing Fund received by the Terminating Fund will have an aggregate NAV equal to the value of the Terminating Fund's portfolio assets and other assets that the Continuing Fund is acquiring, and the Series Y Units will be issued at their applicable series NAV per unit as of the close of business on the Merger Date.

(g) The Terminating Fund will distribute to its Unitholders a sufficient amount of its net income and net realized capital gains so that it will not be subject to tax under Part I of the Tax Act for its taxation year ending on the Merger Date.

(h) Immediately thereafter, the Terminating Fund will be terminated and the Series Y Units of the Continuing Fund received by the Terminating Fund will be distributed to Unitholders of the Terminating Fund on a dollar for dollar basis in exchange for their Units in the Terminating Fund.

(i) As soon as reasonably possible following the Merger, the Terminating Fund will be wound up.

(j) The Manager will issue a press release forthwith after the Merger is completed announcing the completion of the Merger and the ratio by which Units of the Terminating Fund were exchanged for Series Y Units..

38. In the absence of this order, the Filer would be prohibited from purchasing and selling the securities of the Terminating Fund (and thereby transferring the investment portfolio of the Terminating Fund to the Continuing Fund) in connection with the Merger.

39. In the opinion of the Filer, the Merger will not adversely affect unitholders of the Terminating Fund or the Continuing Fund and will in fact be in the best interests of unitholders of both Funds. The Filer believes that the Merger will be beneficial to unitholders for the following reasons:

(a) the Merger will eliminate the administrative and regulatory costs of operating the Terminating Fund as a separate mutual fund;

(b) the Continuing Fund, after the merger of the two Funds' portfolios, will have a portfolio of considerable size and will have the potential to have an even larger portfolio, as the Continuing Fund will be in continuous distribution, and so should offer improved portfolio diversification to unitholders;

(c) Series Y Units of the Continuing Fund will have greater liquidity through daily purchases and redemptions than Units of the Terminating Fund and the Merger will eliminate the discount to NAV for the Terminating Fund;

(d) management fees for the Terminating Fund are the same as the management fees for the Series Y Units of the Continuing Fund;

(e) the Continuing Fund, as a result of its greater size, should benefit from a reduction of its management expense ratio as the fixed portion of its administrative and regulatory costs will be paid by a larger number of unitholders; and

(f) the Continuing Fund allows greater unitholder flexibility with respect to switches, reclassifications and conversions into other mutual funds managed by the Manager.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers is that the Exemption Sought is granted provided that:

(a) upon a request by a Unitholder for financial statements, the Filer will make best efforts to provide the unitholder with financial statements of the Continuing Fund; and

(b) the Terminating Fund and the Continuing Fund with respect to the Merger have an unqualified audit report in respect of their last completed financial period.