United Financial Corporation et al.

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of mutual fund mergers -- approval required because mergers do not meet the criteria for pre-approved reorganizations and transfers in National Instrument 81-102 -- continuing funds have different investment objectives -- certain mergers not a "qualifying exchange" or a tax-deferred transaction under the Income Tax Act -- securityholders of the terminating funds provided with timely and adequate disclosure regarding the mergers -- securityholders of each terminating merger receiving securities in two corresponding continuing funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(b), 5.6.

May 22, 2009

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

UNITED FINANCIAL CORPORATION

(the Filer)

AND

CANADIAN EQUITY DIVERSIFIED POOL,

US EQUITY DIVERSIFIED POOL,

INTERNATIONAL EQUITY DIVERSIFIED POOL,

CANADIAN EQUITY DIVERSIFIED CORPORATE

CLASS, US EQUITY DIVERSIFIED CORPORATE

CLASS, INTERNATIONAL EQUITY DIVERSIFIED

CORPORATE CLASS (each a Terminating Fund and,

collectively, the Terminating Funds)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdiction (the Legislation) for approval of the merger (each a Merger and, collectively, the Mergers) of a Terminating Fund into its corresponding continuing value fund and continuing growth fund (the Continuing Funds and together with the Terminating Funds, the Funds) under subsection 5.5(1)(b) of National Instrument 81-102 -- Mutual Funds (NI 81-102) (the Exemption Sought).

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

1. the Ontario Securities Commission is the principal regulator for this application; and;

2. 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 British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut.

Interpretation

Terms defined in National Instrument 14-101 Definitions and 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 Filer:

Manager and Fund Information

1. The Filer is a corporation amalgamated under the laws of Canada and is registered under the Securities Act (Ontario) as an adviser in the category of investment counsel and portfolio manager and as a limited market dealer.

2. The Filer is the manager of the Funds.

3. Canadian Equity Diversified Pool, US Equity Diversified Pool, International Equity Diversified Pool (each a Terminating Trust Fund and, collectively, the Terminating Trust Funds), Canadian Equity Value Pool, Canadian Equity Growth Pool, US Equity Value Pool, US Equity Growth Pool, International Equity Value Pool and International Equity Growth Pool (each a Continuing Trust Fund and, collectively, the Continuing Trust Funds) are each open-end mutual fund trusts governed by declarations of trust.

4. Canadian Equity Diversified Corporate Class, US Equity Diversified Corporate Class, International Equity Diversified Corporate Class (each a Terminating Corporate Fund and, collectively, the Terminating Corporate Funds) and Canadian Equity Value Corporate Class, Canadian Equity Growth Corporate Class, US Equity Value Corporate Class, US Equity Growth Corporate Class, International Equity Value Corporate Class and International Equity Growth Corporate Class (each a Continuing Corporate Fund and, collectively, the Continuing Corporate Funds) are each classes of convertible special shares of CI Corporate Class Limited (the Corporation).

5. The Corporation is a corporation incorporated under the laws of the Province of Ontario.

6. Each Fund is a mutual fund that is subject to the requirements of NI 81-102.

7. The Filer intends to merge each Terminating Fund into the Continuing Funds shown opposite its name in the table below:

Terminating Fund	Continuing Value Fund	Continuing Growth Fund
Canadian Equity Diversified Pool	Canadian Equity Value Pool	Canadian Equity Growth Pool
US Equity Diversified Pool	US Equity Value Pool	US Equity Growth Pool
International Equity Diversified Pool	International Equity Value Pool	International Equity Growth Pool
Canadian Equity Diversified	Canadian Equity Value	Canadian Equity Growth
Corporate Class	Corporate Class	Corporate Class
US Equity Diversified Corporate Class	US Equity Value Corporate Class	US Equity Growth Corporate Class
International Equity Diversified	International Equity Value	International Equity Growth
Corporate Class	Corporate Class	Corporate Class

8. Each Fund currently distributes its securities in all the provinces and territories of Canada pursuant to an amended and restated simplified prospectus dated April 1, 2009, as amended (together the Prospectus), and an annual information form dated July 25, 2008, as amended (together the AIF).

9. The Funds are reporting issuers under the Legislation and are not on the list of defaulting reporting issuers maintained under the Legislation.

10. Each of the Funds follows the standard investment restrictions and practices established under the Legislation except to the extent that the Funds have received permission from the CSA to deviate therefrom.

11. Each Terminating Corporate Fund and each Continuing Corporate Fund achieves its investment objective, in part, by investing in units of an underlying mutual fund trust (an Underlying Fund).

Details of the Proposed Mergers

12. The proposed Mergers were described in (i) a press release issued and filed on SEDAR on April 15, 2009, (ii) a material change report filed on SEDAR on April 20, 2009, and (iii) amendments to the Prospectus and AIF each dated and filed on SEDAR on April 22, 2009.

13. The current investment mandate of each Terminating Fund is comprised of a combination of a value mandate and a growth mandate. Each merger therefore involves a Terminating Fund merging the portion of its assets relating to its value mandate into its corresponding Continuing Value Fund and the portion of its assets relating to its growth mandate into its corresponding Continuing Growth Fund, in each case in return for units or shares (as applicable) of its Continuing Value Fund and Continuing Growth Fund.

14. Due to the different structures of the Funds, the procedures for implementing the Mergers will vary. The steps of each Merger take into account the particular features of each Fund and are as follows:

(a) With respect to the Merger of a Terminating Corporate Fund into Continuing Corporate Funds:

(i) Each Terminating Corporate Fund currently invests substantially all of its assets in units of an Underlying Fund. Each Terminating Corporate Fund will redeem all the units it holds of its Underlying Fund at its net asset value. Payment of the redemption price will be satisfied by an in-kind delivery of a pro rata number of securities from the portfolio of the Underlying Fund.

(ii) Each outstanding share of the Terminating Corporate Fund will be exchanged into a combination of shares of an equivalent class of its corresponding Continuing Value Fund and shares of an equivalent class of its Continuing Growth Fund on the basis that: (a) the net asset value of the share(s) of the Continuing Value Fund so issued will be equal to 50% (60% in the case of Canadian Equity Diversified Corporate Class) of the net asset value of the share(s) of the Terminating Corporate Fund, and (b) the net asset value of the share(s) of the Continuing Growth Fund so issued will be equal to 50% (40% in the case of Canadian Equity Diversified Corporate Class) of the net asset value of the share(s) of the Terminating Corporate Fund.

(iii) 50% (60% in the case of Canadian Equity Diversified Corporate Class) of the assets and liabilities attributed to the Terminating Corporate Fund will be reallocated to its corresponding Continuing Value Fund and 50% (40% in the case of Canadian Equity Diversified Corporate Class) of the assets and liabilities attributed to the Terminating Corporate Fund will be reallocated to its corresponding Continuing Growth Fund.

(iv) As soon as reasonably possible following the Merger, the articles of incorporation of the Corporation will be amended to delete each Terminating Corporate Fund.

(b) With respect to the Merger of a Terminating Trust Fund into Continuing Trust Funds:

(i) The value of each Terminating Trust Fund's investment portfolio and other assets will be determined at the close of business on the effective date of the Merger in accordance with the constating documents of the Terminating Trust Fund.

(ii) Each Terminating Trust Fund will transfer approximately 50% (60% in the case of Canadian Equity Diversified Pool) of its assets to its corresponding Continuing Value Fund and approximately 50% (40% in the case of Canadian Equity Diversified Pool) of its assets to its corresponding Continuing Growth Fund. In return, each Terminating Trust Fund will be issued units from its corresponding Continuing Value Fund having an aggregate net asset value equal to the value of the assets transferred to the Continuing Value Fund and units from its corresponding Continuing Growth Fund having an aggregate net asset value equal to the value of the assets transferred to the Continuing Growth Fund.

(iii) Each Continuing Trust Fund will not assume any of its Terminating Trust Fund's liabilities. Instead, each Terminating Trust Fund will retain sufficient assets to satisfy its estimated liabilities, if any, as of the date of the Merger.

(iv) Each Terminating Trust Fund and each of its corresponding Continuing Trust Funds will declare, pay and automatically reinvest a distribution of net capital gains and income (if any).

(v) Immediately thereafter, each Terminating Trust Fund will redeem all of its outstanding units at their net asset value and pay for them by delivering to its unitholders units of an equivalent class of its corresponding Continuing Value Fund having an aggregate net asset value equal to approximately 50% (60% in the case of Canadian Equity Diversified Pool) of the Terminating Trust Fund and units of an equivalent class of its corresponding Continuing Growth Fund having an aggregate net asset value equal to approximately 50% (40% in the case of Canadian Equity Diversified Pool) of the Terminating Trust Fund.

(vi) Each Terminating Trust Fund will be wound-up within 30 days following its Merger.

15. The result of each Merger will be that investors in a Terminating Fund will cease to be securityholders in that Terminating Fund and will become securityholders in its corresponding Continuing Value Fund and Continuing Growth Fund.

16. In the opinion of the Filer, the Mergers will be beneficial to securityholders of each Fund for the following reasons:

(a) as each Terminating Fund represents a blended investment mandate of its corresponding Continuing Value Fund and Continuing Growth Fund, each Merger will result in investors becoming securityholders of two Continuing Funds having more precise investment mandates without changing the investor's overall market exposure;

(b) following the Mergers, each Continuing Fund will have more assets, thereby allowing for increased portfolio diversification opportunities and a smaller proportion of assets set aside to fund redemptions; and

(c) each Continuing Fund will benefit from its larger profile in the marketplace.

17. As required by National Instrument 81-107 -- Independent Review Committee for Investment Funds, the Filer presented the terms of the Mergers to the independent review committee of the Funds (the IRC) for its review. The IRC determined that the decision of the Filer to complete the Mergers: (a) has been proposed by the Filer free from any influence by an entity related to the Filer and without taking into account any consideration relevant to an entity related to the Filer; (b) represents the business judgement of the Filer uninfluenced by considerations other than the best interest of the Funds; (c) is in compliance with the Filer's written policies and procedures relating to the Mergers; and (d) achieves a fair and reasonable result for the Funds.

18. Investors in the Terminating Funds and the Continuing Corporate Funds will be asked to approve the Mergers at special meetings of securityholders of such Funds to be held on May 22, 2009 (the Meetings). In connection with the Meetings, the Filer has sent to such securityholders a management information circular dated April 22, 2009, a related form of proxy, and the Prospectus of its Continuing Funds (collectively, the Meeting Materials).

19. If all required approvals for each Merger are obtained, it is proposed that each Merger will occur after the close of business on or about May 22, 2009 (the Effective Date). The Filer therefore anticipates that a securityholder of a Terminating Fund will become a securityholder of each of the corresponding Continuing Funds after the close of business on the Effective Date.

20. Each Terminating Fund will be wound-up as soon as reasonably possible following its Merger.

21. The Filer may, in its discretion, postpone implementing any Merger until a later date (which shall be not later than December 31, 2009) and may elect to not proceed with any Merger.

22. The cost of effecting the Mergers (consisting primarily of proxy solicitation, printing, mailing, legal and regulatory fees) will be borne by the Filer.

23. Securityholders of a Terminating Fund will continue to have the right to redeem units of the Terminating Fund at any time up to the close of business on the Effective Date. Purchases of, and transfers to, securities of the Terminating Funds will be suspended on or prior to the effective date of the Mergers, except for those made under automatic purchase plans which will be suspended at the close of business on the effective date of the Mergers. Following each Merger, all optional plans, including automatic withdrawal plans, which were established with respect to a Terminating Fund will be re-established in comparable plans with respect to the corresponding Continuing Funds unless investors advise otherwise.

24. The securities of each Fund are qualified investments for registered retirement savings plans, registered retirement income funds, registered education savings plans, tax-free savings accounts, registered disability savings plans and deferred profit sharing plans.

25. Each Terminating Fund has the same distribution policy as each of its Continuing Funds.

26. Each class of securities of a Continuing Fund is charged management fees at a rate that is the same as the rate of management fees charged to the equivalent class of securities of its corresponding Terminating Fund.

27. The Filer bears all of the operating expenses of the Funds (other than certain taxes, borrowing costs and certain new governmental fees) in return for fixed annual administration fees. Each class of securities of a Continuing Fund is charged an administration fee that is the same rate of the administration fee charged to the equivalent class of securities of its corresponding Terminating Fund.

28. Investors pay a commission to their dealers when purchasing securities of any Fund on a front-end sales charge basis. The amount of the commission is negotiable between the investor and his or her dealer, but is not to exceed certain percentages. In all cases, the maximum front-end sales charge applicable to securities of a Continuing Fund is the same or lower than for the equivalent class of securities of its corresponding Terminating Fund.

29. Where securities of a Fund are available for purchase on a redemption charge basis, in all cases the redemption fee is calculated against the original cost of the securities redeemed and is the same percentage for redeeming securities of a Continuing Fund as for redeeming securities of its corresponding Terminating Fund in the same time periods.

30. All Funds have substantially similar arrangements with respect to switch fees.

31. All Funds calculate their net asset values daily at 4:00 p.m. (Toronto time). Net asset values per unit or share are calculated for each class of securities using similar methodologies and currencies. Assets and liabilities generally are valued in the same manner.

32. In the opinion of the Filer, a reasonable person may not consider that the investment objectives of a Terminating Fund to be substantially similar to the investment objectives of its respective Continuing Funds and, accordingly, the Mergers involving the Terminating Funds may not meet the criteria for pre-approved reorganizations under subsection 5.6(1)(a)(ii) of NI 81-102.

33. The investment objectives of each Terminating Fund and its Continuing Funds are described in the Meeting Materials so that securityholders of a Terminating Fund may compare the investment objectives of each before voting on the Mergers.

34. The Mergers involving the Terminating Trust Funds will not be implemented as either a "qualifying exchange" within the meaning of section 132.2 of the Income Tax Act (Canada) (the "Tax Act") or a tax-deferred transaction under section 85(1), 85.1(1), 86(1) or 87(1) of the Tax Act (in each case, a Prescribed Rollover).

35. The Filer has determined that implementing the Mergers in a manner that is not a Prescribed Rollover will not have a material adverse tax consequence for investors.

36. As the Mergers involving the Terminating Trust Funds will not be implemented in a manner that are Prescribed Rollovers, such Mergers do not meet the criteria for pre-approved reorganizations under subsection 5.6(b) of NI 81-102.

37. The tax implications of the Mergers to a Terminating Trust Fund and its securityholders are disclosed in the Meeting Materials. A securityholder of a Terminating Trust Fund may therefore consider the tax implications of its Merger before voting on the Merger.

38. The Filer may rely on an exemption dated November 25, 2004 (the Prior Exemption) from the financial statement delivery provision set out in subsection 5.6(1)(f)(ii) of NI 81-102 in respect of mergers of mutual funds managed by the Filer. The Filer has complied with the conditions of the Prior Exemption in respect of the Mergers.

39. In the opinion of the Filer, each Merger satisfies all of the criteria for pre-approved reorganizations and transfers set forth in section 5.6 of NI 81-102, except the criteria contained in subsection 5.6(1)(a)(ii) of NI 81-102, subsection 5.6(1)(f)(ii) of NI 81-102 and, for certain Mergers, subsection 5.6(1)(b) of NI 81-102.

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 Exemption Sought is granted.