Creststreet Resource Class - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- exemption from s. 10.3 of NI 81-102 to permit a mutual fund, in substance, to suspend redemptions for approximately 140 days on shares issued to limited partners of a flow-through limited partnership in connection with the partnership's dissolution and rollover for income tax purposes -- full true and plain disclosure regarding the purpose of the partnership and its dissolution given to investors in the partnership's prospectus -- exemption granted in connection with future partnerships in addition to current partnership.

Rules Cited:

National Instrument 81-102 Mutual Funds, s. 10.3.

January 20, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, 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

CRESTSTREET RESOURCE CLASS

(the Filer)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from Creststreet Asset Management Limited (the Manager), on behalf of the Filer, for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from the requirement contained in section 10.3 of National Instrument 81-102 to use the net asset value of certain series of shares of the Filer next determined after receipt by the Filer of a redemption order to calculate the redemption price of such series of shares (the Requested Relief).

Interpretation

Defined terms contained in National Instrument 14-101, Definitions, have the same meaning in this decision unless they are defined in this decision. In addition, the following terms have the following meanings:

"Issued Shares" means the 2006 Series shares of the Filer to be issued to Creststreet 2004 Limited Partnership on or about January 20, 2006, and each series of shares of the Filer as may be issued to Partnerships in the future on or about January 20 in each subsequent year in exchange for the acquisition by the Filer of the assets of such Partnerships;

"Partnerships" means one or more limited partnerships, including Creststreet 2004 Limited Partnership, as may be established by the Manager from time to time;

"Redemption Date" means, for each series of Issued Shares, a date which is not more than 140 days following the date of issuance of such Issued Shares and not more than three business days following the applicable Redemption Cut-off Date (as defined below); and

"Valuation Date" means, each Friday or in the event the Toronto Stock Exchange is not open for business on any such day, the first day thereafter that the Toronto Stock Exchange is open.

Representations

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

1) The Filer is a class of shares of Creststreet Mutual Funds Limited (formerly, Creststreet Resource Fund Limited), a mutual fund corporation established under the Canada Business Corporations Act. The Filer is a reporting issuer in each of the provinces of Canada pursuant to a simplified prospectus and annual information form dated December 30, 2004.

2) The Filer's head office is located at 70 University Avenue, Suite 1450, Toronto, Ontario, M5J 2M4.

3) All of the assets of the Partnerships, including certain common shares of resource issuers that are "flow-through shares" (Flow-Through Shares) as defined in the Income Tax Act (Canada) (the ITA), will, pursuant to transfer agreements entered into with the Filer from time to time, be transferred to the Filer on a tax-deferred "rollover" basis in exchange for Issued Shares on or about January 20 in each year.

4) The Issued Shares received by each Partnership will have the same aggregate net asset value as the aggregate net asset value of such Partnership, determined on the same basis as the net asset value of the Filer.

5) Following the transfer of assets to the Filer, each Partnership will be dissolved and upon dissolution, the limited partners and the general partner (collectively, the Partners) of each Partnership will receive their pro rata interest in the Issued Shares on a tax-deferred basis.

6) Details describing the transfer of assets from Creststreet 2004 Limited Partnership to the Filer is described in the prospectus of Creststreet 2004 Limited Partnership dated April 23, 2004 (the 2004 LP Prospectus). The 2004 LP Prospectus disclosed that payment for 2006 Series shares, subject to written notices of redemption received by the Filer on or before May 26, 2006 would be made on May 31, 2006 based on the May 26, 2006 net asset value of the Filer. Thereafter, payment for 2006 Series shares subject to notices of redemption would be made weekly, on the third business day following the next Valuation Date.

7) Details describing the transfer of assets from each other Partnership to the Filer will be disclosed in the prospectus of the applicable Partnership (each, an LP Prospectus) to be filed with the Decision Makers upon the initial public offering of units of such Partnership. Each LP Prospectus will disclose that payment for the Issued Shares, subject to written notices of redemption received by the Filer on or before a specified date (the Redemption Cut-off Date), will be made on the Redemption Date specified in the LP Prospectus based on the net asset value of the Filer determined as of the Redemption Cut-off Date. Thereafter, payment for Issued Shares subject to notices of redemption will be made weekly, on the third business day following the next Valuation Date.

8) All Issued Shares transferred to Partners in a given calendar year upon the dissolution of the Partnerships that remain outstanding will be converted on a one-to-one basis into series A shares of the Filer as at September 30 in such year.

9) The Filer will hold and dispose of Flow-Through Shares and other securities acquired by the Filer from the Partnerships and invest the net proceeds of such dispositions and any cash on hand in a manner consistent with the investment portfolio of the Filer, being a diversified portfolio consisting principally of equity securities of Canadian issuers.

10) Except to the extent referenced in this application, and except as permitted by the MRRS Decision Document issued by the Decision Makers on November 3, 2004, the Filer will adopt the standard investment restrictions and practices set forth in NI 81-102.

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 Relief is granted so long as the prospectus of each Partnership contains the disclosure described in paragraph 7 above.