Morgan Meighen & Associates Limited et al. - MRRS Decision

Headnote

Approval to change the fund manager, change the custodian and conduct fund mergers.

Rules Cited

National Instrument 81-102 - Mutual Funds, ss. 5.5(1)(a), (b) and (c)

September 15, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO, BRITISH COLUMBIA, ALBERTA, MANITOBA,

SASKATCHEWAN, NOVA SCOTIA, NEW BRUNSWICK,

PRINCE EDWARD ISLAND AND

NEWFOUNDLAND AND LABRADOR

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

MORGAN MEIGHEN & ASSOCIATES LIMITED,

CAPSTONE CANADIAN EQUITY FUND,

CAPSTONE BALANCED FUND,

CAPSTONE GLOBAL EQUITY FUND,

CAPSTONE CASH MANAGEMENT FUND,

JUNIPER FUND MANAGEMENT CORPORATION

AND JUNIPER EQUITY GROWTH FUND

(collectively, the "Filers")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (each, a "Decision Maker", and together, the "Decision Makers") in each of the Jurisdictions has received an application from the Filers dated July 21, 2005 (the "Application") for the following approvals (the "Requested Approvals"):

(a) the change of manager of the Capstone Cash Management Fund (the "Assigned Fund") from Morgan Meighen & Associates Limited ("MMA") to Juniper Fund Management Corporation ("JFM") pursuant to paragraph 5.5(1)(a) of National Instrument 81-102 - Mutual Funds ("NI 81-102");

(b) the change of custodian of the Assigned Fund from The Royal Trust Company ("Royal Trust") to NBCN Clearing Inc. ("NCBN") pursuant to paragraph 5.5.(1)(c) of NI 81-102; and

(c) the merger of the Capstone Canadian Equity Fund, Capstone Balanced Fund and the Capstone Global Equity Fund (collectively, the "Terminating Funds") with the Juniper Equity Growth Fund (the "Continuing Fund") pursuant to paragraph 5.5(1)(b) of NI 81-102.

The Terminating Funds and the Assigned Fund are collectively referred to as the "CFunds".

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) the Ontario Securities Commission is the principal regulator for this Application, and

(b) this MRRS decision document evidences the decision of each Decision Maker, as applicable.

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

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

MMA

1. MMA is a corporation organized under the laws of Ontario. MMA is registered with the Ontario Securities Commission, the British Columbia Securities Commission and the Manitoba Securities Commission as an advisor in the categories of investment counsel and portfolio manager. MMA is the manager, portfolio advisor and promoter of the CFunds.

2. Each of the Terminating Funds are open-ended trusts established under the laws of the Province of Ontario by separate trust indentures.

3. Each of the CFunds offer one class of units.

4. Units of the CFunds are currently qualified for sale by a simplified prospectus and annual information form dated July 15, 2005, which have been filed and accepted in all of the Jurisdictions.

5. Each of the CFunds is a reporting issuer or equivalent under applicable securities legislation of the relevant Jurisdictions and is not on the list of defaulting reporting issuers maintained under the applicable securities legislation in those Jurisdictions.

6. Other than circumstances in which the securities regulatory authority of a Jurisdiction has expressly exempted a CFund therefrom, each of the CFunds follows the standard investment restrictions and practices established by the securities regulatory authority.

7. The net asset value for the CFunds are calculated as at 4:00 p.m. (Eastern time) each day that The Toronto Stock Exchange (the "TSX") is open for trading or, in the case of the Capstone Global Equity Fund, each day that the TSX and the New York Stock Exchange are both open for trading.

8. Units of each of the CFunds may be purchased through Capstone Consultants Limited ("Capstone Consultants") or another dealer, without any sales charges when bought directly through Capstone Consultants.

JFM

9. JFM is a corporation organized under the laws of Ontario. It is the manager, trustee and fund administrator of the Continuing Fund. MMA is the investment adviser of the Continuing Fund.

10. The Continuing Fund is an open-ended trust established under the laws of the Province of Ontario by a trust indenture.

11. The Continuing Fund offers two series of units referred to as the "A" Class series of units and the "F" Class series of units. Effective August 1, 2005, the Continuing Fund will commence offering a Private Class series of units as noted in the Continuing Fund's simplified prospectus dated July 5, 2005.

12. Units of the Continuing Fund are currently qualified for sale by a simplified prospectus and annual information form dated July 5, 2005, which have been filed and accepted in the Province of Ontario. Shortly after completion of the mergers, the Continuing Fund expects to file a simplified prospectus and annual information form in the other Jurisdictions.

13. The Continuing Fund is a reporting issuer in Ontario and is not in default of the relevant securities legislation.

14. Other than circumstances in which the securities regulatory authority of the Province of Ontario has expressly exempted the Continuing Fund therefrom, the Continuing Fund follows the standard investment restrictions and practices established by such securities regulatory authority.

15. The net asset value for the Continuing Fund is calculated on a daily basis, at the close of business of the TSX on each and every business day on which the TSX is open for trading.

16. Units of the Continuing Fund may be purchased through registered securities dealers, investment dealers, brokers and mutual fund dealers, as well as directly from the Continuing Fund in the Province of Ontario.

The Transaction

17. On June 27, 2005, MMA and JFM signed an agreement to transfer the management of the CFunds from MMA to JFM (the "Transaction Agreement").

18. A press release dated June 27, 2005 and a material change report dated July 7, 2005, were issued and filed by the CFunds in connection with the transaction.

19. A Notice of Meeting, Management Information Circular and Proxy (collectively, the "Initial Materials") in connection with special meetings of unitholders of the CFunds were mailed to unitholders of the CFunds on July 28, 2005. A Notice of Adjournment of Meeting and Supplemental Information was mailed to unitholders of the CFunds on August 19, 2005 (the "Supplemental Material", collectively with the Initial Materials, the "CFunds Proxy Materials").

20. The Supplemental Material provided that the special meetings of unitholders of the CFunds was postponed by way of adjournment to September 16, 2005 and closing of the transactions to be on or about September 23, 2005. The Supplemental Materials further provided that any proxies received in respect of the Terminating Funds prior to the date of the Supplemental Material were to be resubmitted in order to be acted upon.

The Merger

21. Pursuant to the Transaction Agreement, each Terminating Fund will merge into the Continuing Fund on or about September 23, 2005 and the Continuing Fund will continue as a publicly offered open-end mutual fund trust governed by the laws of the Province of Ontario, subject to all required regulatory and unitholder approvals.

22. The structure of the mergers of the Capstone Balanced Fund, followed by the Capstone Canadian Equity Fund and the Capstone Global Equity Fund with the Continuing Fund will be as follows:

(a) the Continuing Fund will acquire all or substantially all of the property of such Terminating Fund in exchange for A class series units of the Continuing Fund that have a fair market value equal to the fair market value of the property transferred to the Continuing Fund by such Terminating Fund;

(b) within sixty (60) days of the transfers of property described in step (a) above, all of the units issued by such Terminating Fund and outstanding immediately before the transfers will be disposed of by the unitholders to such Terminating Fund. In consideration for the disposal of their units, the unitholders of such Terminating Fund will receive A class series units of the Continuing Fund;

(c) the Capstone Balanced Fund and the Continuing Fund shall jointly make and file an election described under the definition of "qualifying exchange" in subsection 132.2(1) of the Income Tax Act (Canada) (the "Tax Act"), as proposed to be amended prior to the date hereof, and under any applicable analogous provision of provincial legislation, specifying such agreed amounts in respect of the property transferred by the Capstone Balanced Fund to the Continuing Fund as are determined by the Capstone Balanced Fund in its sole discretion; and

(d) as soon as reasonably possible following the Mergers, the Terminating Funds will be wound up.

23. As the Capstone Balanced Fund will hold momentarily more than 20% of the outstanding units of the Continuing Fund, the distribution of A class series units of the Continuing Fund to unitholders by the Capstone Balanced Fund may be a "distribution" under securities legislation, and will be exempt from the prospectus requirements pursuant to section 2.11 of National Instrument 45-106.

Change in Manager and Custodian

24. Pursuant to the Transaction Agreement, MMA will transfer management of the Assigned Fund to JFM, subject to all required regulatory and unitholder approvals.

25. Pursuant to the Transaction Agreement, MMA has agreed to transfer the Assigned Fund's custodian responsibilities from Royal Trust to NCBN, subject to all required regulatory approvals.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Approvals are granted.