MI 11-102-Passport System -- Lapse date of mutual fund prospectus extended until merger and amalgamation of funds -- Extension of lapse date will not affect the currency or accuracy of the information contained in the prospectus -- Securities Act (Ontario).
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 147.
June 28, 2011
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
ACUITY FUNDS LTD.
IN THE MATTER OF
ACUITY CANADIAN EQUITY FUND
ACUITY DIVIDEND FUND
ACUITY GLOBAL DIVIDEND FUND
ACUITY GLOBAL HIGH INCOME FUND
ACUITY MONEY MARKET FUND
ALPHA BALANCED PORTFOLIO
ALPHA GLOBAL PORTFOLIO
ALPHA GROWTH PORTFOLIO
ALPHA INCOME PORTFOLIO
(Collectively, The "Merging Trust Funds")
ACUITY ALL CAP 30 CANADIAN EQUITY CLASS
ACUITY NATURAL RESOURCE CLASS
ACUITY HIGH INCOME CLASS
ACUITY DIVERSIFIED INCOME CLASS
(Collectively, "The Merging Corporate Funds" And
Together With The Merging Trust Funds,
The "Merging Funds")
ACUITY ALL CAP 30 CANADIAN EQUITY FUND
ACUITY CANADIAN BALANCED FUND
ACUITY CANADIAN SMALL CAP FUND
ACUITY CLEAN ENVIRONMENT EQUITY FUND
ACUITY CONSERVATIVE ASSET ALLOCATION FUND
ACUITY DIVERSIFIED INCOME FUND
ACUITY EAFE EQUITY FUND
ACUITY FIXED INCOME FUND
ACUITY GROWTH & INCOME FUND
ACUITY HIGH INCOME FUND
ACUITY NATURAL RESOURCE FUND
ACUITY SOCIAL VALUES BALANCED FUND
ACUITY SOCIAL VALUES CANADIAN EQUITY FUND
ACUITY SOCIAL VALUES GLOBAL EQUITY FUND
ALPHA SOCIAL VALUES PORTFOLIO
(Collectively The "Continuing Funds")
(The Merging Funds And The Continuing Funds
Are Collectively, "The Funds")
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the time limit pertaining to the distribution of securities of the Funds under their multi-fund simplified prospectus dated August 18, 2010 be extended to September 30, 2011 (the Extended Lapse Date) to permit the continued distribution of securities of the Funds (the Requested Exemption).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) 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 other provinces and territories of Canada (collectively, with Ontario, the Jurisdictions).
Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer and the Funds:
1. The Filer is the manager of the Funds. The Filer and the Funds are not in default of any of the requirements of the Legislation.
2. The Funds are reporting issuers under the Legislation. Securities of the Funds are currently qualified for distribution in all Jurisdictions under a simplified prospectus and annual information form dated August 18, 2010, as amended (the Prospectus).
3. Pursuant to the Legislation, the lapse date for the distribution of securities of the Funds under the Prospectus is August 18, 2011 (the Lapse Date).
4. On April 12, 2011, the Filer announced, in a press release, mergers of the Merging Funds, and material change reports and an amendment to the Prospectus (the April Amendment) were filed on SEDAR on April 13, 2011.
5. At special meetings of the securityholders of the Funds, the mergers of the Merging Funds into the relevant Continuing Funds, or other funds managed by the Filer or an affiliate of the Filer, were approved on either May 18, 2011 or May 31, 2011.
6. The merger of the Merging Trust Funds are expected to take place as of the close of business on or about August 26, 2011, after which the Merging Trust Funds will be wound up.
7. The four Merging Corporate Funds of Acuity Corporate Class Ltd. are merging since Acuity Corporate Class Ltd. will amalgamate and continue with AGF All World Tax Advantage Group Limited as one corporation to be called AGF All World Tax Advantage Group Limited. The amalgamation will take effect on Saturday, October 1, 2011. Two of the Merging Corporate Funds, specifically, Acuity High Income Class and Acuity Diversified Income Class of Acuity Corporate Class Ltd., are not merging in the usual sense but are continuing as classes of the amalgamated corporation. After the amalgamation on October 1, 2011, Acuity High Income Class and Acuity Diversified Income Class will continue under the names, AGF High Income Class and AGF Diversified Income Class, and will be part of the amalgamated corporation, AGF All World Tax Advantage Group Limited. The assets of the remaining two of the Merging Corporate Funds will be contributed through merger to two other classes, such that the two Merging Corporate Funds will not exist as separate classes.
8. The financial year end of the Funds will be changed to September 30, commencing with September 30, 2011.
9. The April Amendment disclosed the timing and details of all of the foregoing changes. There have been no other material changes in the affairs of the Funds other than those for which amendments to the Prospectus have been filed.
10. The Filer proposes to continue the distribution of the Merging Funds until their respective effective dates of the mergers and to continue the distribution of all of the Continuing Funds.
11. Absent exemptive relief, the Filer would not be permitted to continue the distribution of the Funds unless the Filer had filed the pro forma prospectus for the Funds 30 days prior to the Lapse Date, filed the final prospectus no later than 10 days after the Lapse Date and obtained a decision for such final prospectus dated no later than 20 days after the Lapse Date. Pursuant to the Legislation, provided a pro forma simplified prospectus is filed 30 days prior to August 18, 2011, a final version is filed by August 28, 2011, and a receipt for the simplified prospectus is issued by the securities regulatory authorities by September 7, 2011, the securities of the Funds may be distributed after the Lapse Date during the prospectus renewal period.
12. The Filer will file the pro forma prospectus in mid to late August 2011 in respect of the Continuing Funds, will file the final prospectus on October 3, 2011 and request a decision document as of October 3, 2011 in order to allow for the completion of the final mergers on Saturday October 1, 2011. In the case of AGF High Income Class and AGF Diversified Income Class, a preliminary prospectus (rather than a pro forma prospectus due to the fact that they are continuing as part of the amalgamated corporation, with a different manager) will be filed in mid to late August 2011 and the final prospectus will be filed on October 3, 2011. The Filer will offer securities of all Funds under the Prospectus until the date of merger of the Merging Trust Funds and until September 30, 2011 for the Merging Corporate Funds and the Continuing Funds (other than AGF High Income Class and AGF Diversified Income Class).
13. There is approximately a month or potentially less than a month between the Extended Lapse Date and the date on which a decision document could be issued in respect of the existing Lapse Date.
14. The Extended Lapse Date will permit the Filer to be able to complete the proposed mergers and changes to fund groups in an orderly manner and to have offering documents that are not confusing to investors, in a situation where the extension of the Lapse Date is less than a month.
15. There have been no material changes in the affairs of the Funds other than those for which amendments to the Prospectus have been or will be filed.
16. The extension requested will not affect the currency or accuracy of the information contained in the Prospectus, as it may be further amended for material changes in accordance with NI 81-106, and accordingly will not be prejudicial to the public interest.
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 Requested Exemption is granted.