Guardian Group of Funds Ltd. - MRRS Decision

Headnote

MRRS -- Approval of fund mergers -- Financial statements of continuing fund not required to be sent to unitholders of the terminating funds provided information circular sent in connection with mergers clearly discloses the various ways unitholders can access the financial statements -- Future oriented approval.

Applicable Legislative Provisions

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

June 22, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK,

NOVA SCOTIA, PRINCE EDWARD ISLAND,

NEWFOUNDLAND AND LABRADOR AND

NORTHWEST TERRITORIES, NUNAVUT

AND THE YUKON (the "Jurisdictions")

AND

IN THE MATTER OF

NATIONAL INSTRUMENT 81-102

MUTUAL FUNDS (the "Instrument")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

GUARDIAN GROUP OF FUNDS LTD. ("GGOF")

AND

GGOF AMERICAN GROWTH FUND,

GGOF GLOBAL GROWTH FUND,

GGOF GLOBAL HEALTH SCIENCES FUND AND

GGOF RSP INTERNATIONAL BALANCED FUND

(the "Terminating Funds")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from GGOF and the Terminating Funds (the Filers) for a decision under the securities legislation of the Jurisdictions (the Legislation) approving:

• the Mergers (defined below) of the Terminating Funds into the applicable Continuing Funds (as defined below); and

• the Future Mergers (defined below).

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.

Interpretation

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

"American Value Merger" means the merger of GGOF American Growth Fund into GGOF American Value Fund Ltd.;

"Continuing Funds" means GGOF American Value Fund Ltd., GGOF Global Diversified Fund, GGOF Global Value Fund and GGOF Global Technology Fund;

"Corporate Fund" means GGOF American Value Fund Ltd.;

"Fund" and "Funds" means, individually or collectively, the Terminating Funds and the Continuing Funds;

"Future Mergers" means any merger, after the date of this decision, of funds managed by GGOF that meet all of the criteria for pre-approval of mergers under section 5.6 of the Instrument except for the financial statement delivery requirements of sub-paragraph 5.6(1)(f)(ii) of the Instrument;

"Global Diversified Merger" means the merger of GGOF RSP International Balanced Fund into GGOF Global Diversified Fund;

"Global Equity Merger" means the merger of GGOF Global Growth Fund into GGOF Global Value Fund;

"Global Technology Merger" means the merger of GGOF Global Health Sciences Fund into GGOF Global Technology Fund;

"Merger" and "Mergers" means, individually or collectively, the American Value Merger, Global Diversified Merger, Global Equity Merger and Global Technology Merger;

"Tax Act" means the Income Tax Act (Canada); and

"Trust Funds" means the Terminating Funds and GGOF Global Diversified Fund, GGOF Global Technology Fund and GGOF Global Value Fund.

Representations

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

1. GGOF is a corporation existing under the laws of Canada and is registered in Ontario as a mutual fund dealer and limited market dealer and as an adviser in the categories of investment counsel and portfolio manager.

2. GGOF is the manager and trustee of each of the Trust Funds. It is also the manager of the Corporate Fund.

3. Each of the Trust Funds is an open-end mutual fund trust established under the laws of the Province of Ontario by declarations of trust.

4. The Corporate Fund is a mutual fund corporation established under the laws of Ontario.

5. Securities of the Funds are currently qualified for sale by a simplified prospectus and annual information form dated July 5, 2005, as amended, which have been filed and accepted in all of the provinces and territories of Canada.

6. Each of the Funds is a reporting issuer under applicable securities legislation of each province and territory of Canada and is not on the list of defaulting reporting issuers maintained under the applicable securities legislation of the Jurisdictions.

7. Each of the Funds follows the standard investment restrictions and practices established under the securities legislation of the Jurisdictions.

8. The net asset value for each Fund is calculated on each day that the Toronto Stock Exchange is open for business.

9. GGOF proposes that each Terminating Fund be merged into the applicable Continuing Fund.

10. No sales charges will be payable in connection with the acquisition by the Continuing Funds of the investment portfolio of the Terminating Funds.

11. The portfolios and other assets of each Terminating Fund are, or prior to the Mergers will be, acceptable to the portfolio manager of the corresponding Continuing Fund and are consistent with the investment objectives of the corresponding Continuing Fund.

12. Each of the Continuing Funds and the applicable Terminating Funds, other than the Global Technology Merger, has substantially similar fundamental investment objectives.

13. Each of the Continuing Funds and the applicable Terminating Funds has substantially similar valuation procedures.

14. The fee structure of each Terminating Fund is or will be substantially similar to the structure of the applicable Continuing Fund.

15. Unitholders of the Terminating Funds will continue to have the right to redeem units of the Terminating Funds for cash at any time up to the close of business on the day before the effective date of the Mergers.

16. A material change report and amendments to the simplified prospectus and annual information form of the Funds were filed via SEDAR under Project No. 934899 and Project No. 795433 on May 8, 2006 with respect to the proposed Mergers.

17. A notice of meeting, a management information circular and a proxy form in connection with a meeting of unitholders of the Terminating Funds were mailed to unitholders of these Funds on May 31, 2006 and were filed via SEDAR as Project No. 950613.

18. Unitholders of the Terminating Funds will be asked to approve the Mergers at special meetings to be held on June 21, 2006 or any adjournment thereof. Implicit in the approval by unitholders of the Mergers is the acceptance by each Terminating Fund of the proposed tax treatment and the adoption by each Terminating Fund of the investment objectives of the corresponding Continuing Fund.

19. The Terminating Funds will merge into the applicable Continuing Funds on or about the close of business on June 23, 2006 and the Continuing Funds will continue as publicly offered open-end mutual funds.

20. The Terminating Funds will be wound up as soon as reasonably possible following the Mergers.

21. GGOF will pay for the costs of the Mergers. These costs consist mainly of legal, proxy solicitation, printing, mailing, brokerage costs and regulatory fees.

22. Approval of the Mergers is required because the Mergers do not satisfy all of the criteria for pre-approval of the Mergers under section 5.6 of the Instrument in the following ways:

(a) each Merger (other than the Global Diversified Merger) will not be completed as a "qualifying exchange" or a tax-deferred transaction under the Tax Act;

(b) the Continuing Fund and the Terminating Fund in the Global Technology Merger do not have substantially similar fundamental investment objectives; and

(c) the most recent financial statements of the Guardian Group of Funds will not be sent to the unitholders of the Terminating Funds but, instead GGOF has prominently disclosed in the information circular sent to unitholders of the Terminating Funds that the most recent audited financial statements of the Continuing Funds can be obtained by accessing the SEDAR website at www.sedar.com, by accessing GGOF's website at www.ggof.com, by calling GGOF toll-free at 1-800-668-7327 or by submitting a request to GGOF by email at [email protected] or by writing to them at Guardian Group of Funds Ltd., 100 King Street West, 31st Floor, P.O. Box 150, Toronto, Ontario, M5X 1H3.

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 this decision has been met.

The decision of the Decision Makers under the Legislation is that the Mergers and Future Mergers (collectively, the "GGOF Fund Mergers", individually, a "GGOF Fund Merger") are approved provided that:

(a) the information circular sent to unitholders with respect to a GGOF Fund Merger provides sufficient information about the applicable GGOF Fund Merger to permit unitholders to make an informed decision about that GGOF Fund Merger;

(b) the information circular sent to unitholders with respect to a GGOF Fund Merger prominently discloses that unitholders can obtain the financial statements of the applicable continuing fund by accessing the SEDAR website at www.sedar.com, by accessing GGOF's website at www.ggof.com, by calling GGOF's toll-free telephone number, or by submitting (by fax, email or mail) a request to GGOF;

(c) upon a request by a unitholder for financial statements, GGOF will make a best effort to provide the unitholder with financial statements of the applicable continuing fund in a timely manner so that the unitholder can make an informed decision regarding the GGOF Fund Merger; and

(d) each applicable terminating fund and the applicable continuing fund with respect to a GGOF Fund Merger have an unqualified audit report in respect of their last completed financial period.

The Decision approving the Future Mergers, as it relates to the Jurisdiction of a Decision Maker, will terminate one year after the publication in final form of any legislation or rule of that Decision Maker dealing with matters in subparagraph 5.5(1)(b) of the Instrument.