Creststreet Asset Management Limited et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval granted for change of manager of mutual funds for the purpose of 5.5(1)(a) -- change of manager is not detrimental to investors or the public interest -- investors have received timely and adequate disclosure regarding the change of manager.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 5.5(1)(a), 5.7, 19.1.

November 23, 2012

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

CRESTSTREET ASSET MANAGEMENT LIMITED

("Creststreet") AND

CRESTSTREET RESOURCE FUND,

CRESTSTREET ALTERNATIVE ENERGY FUND AND

CRESTSTREET DIVIDEND & INCOME FUND

(collectively, the "Funds")

AND

IN THE MATTER OF

BROMPTON FUNDS LIMITED

("Brompton", together with Creststreet, the "Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") approving, pursuant to section 5.5(1)(a) of National Instrument 81-102 Mutual Funds ("NI 81-102"), the change in the manager of the Funds from Creststreet to Brompton (the "Approval Sought").

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

(a) the Ontario Securities Commission (the "OSC") is the principal regulator for this application; and

(b) the Filers have 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, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

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. Except as otherwise stated, all dollar amounts herein are expressed in Canadian dollars.

Representations

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

Creststreet and the Funds

1. Creststreet is:

(a) a corporation governed by the Canada Business Corporations Act (the "CBCA"). Its head office is located at 70 University Avenue, Suite 1450, Toronto, Ontario M5J 2M4;

(b) registered as an adviser in the category of portfolio manager and as an investment fund manager under the Securities Act (Ontario) (the "OSA");

(c) an investment management firm that has assets under management of approximately $47 million; and

(d) the manager of the Funds.

2. Each of the Funds is a class of shares of Creststreet Mutual Funds Limited ("CMFL"), a mutual fund corporation incorporated under the CBCA. The Funds comprise three mutual funds that are qualified for distribution in all provinces of Canada pursuant to a simplified prospectus and annual information form that have been prepared and filed in accordance with applicable Canadian securities regulatory requirements. The Funds account for approximately $30 million of the assets under management by Creststreet.

3. Neither Creststreet nor any of the Funds is in default of the securities legislation in any jurisdiction of Canada.

Brompton

4. Brompton is:

(a) an Ontario business corporation and is a wholly-owned subsidiary of Brompton Corp., an unlisted reporting issuer in all provinces of Canada. Brompton's and Brompton Corp.'s head office is located at 181 Bay Street, Suite 2930, Toronto, Ontario M5J 2T3;

(b) registered as an adviser in the category of portfolio manager under the Legislation and with the OSC in the categories of commodity trading manager, exempt market dealer and investment fund manager. Brompton is also registered as an exempt market dealer in the provinces of British Columbia, Alberta and Québec; and

(c) not in default of the securities legislation in any jurisdiction of Canada.

5. Brompton has been a leading provider of TSX-listed investment funds for over a decade. Brompton has offered and currently manages 12 public closed-end and flow-through funds that provide income-oriented, sector-specific and tax advantaged investment solutions on a low cost basis. Currently, Brompton has assets under management in the funds it manages of approximately $1.3 billion.

Change of Manager

6. Pursuant to an agreement (the "Agreement") dated August 28, 2012, Creststreet has agreed to transfer the management and administrative agreements (the "Fund Contracts") in respect of the Funds to Brompton which will result in a change of portfolio manager and investment fund manager for the Funds on or about November 30, 2012 (the "Change of Manager Transaction"). In addition, Brompton has also agreed to acquire all of the voting shares of CMFL from Creststreet under the Agreement. At closing of the Change of Manager Transaction, Brompton will agree to be bound by, assume the liabilities of and provide all services under the Fund Contracts. Brompton and Creststreet are not related parties and the Agreement was negotiated at arm's length.

7. For the purposes of section 5.5 of NI 81-102, the Change of Manager Transaction will result in a change in the manager of the Funds.

8. As required by section 11.2 of National Instrument 81-106 Investment Fund Continuous Disclosure, a press release dated August 29, 2012 disclosing the Change of Manager Transaction has been issued and filed on SEDAR, a material change report of all of the Funds describing the Change of Manager Transaction was filed on SEDAR on September 7, 2012, and amendments to the prospectuses of the Funds disclosing the Change of Manager Transaction were filed on SEDAR on September 7, 2012.

9. Following the completion of the Change of Manager Transaction: (i) the management and administration of the Funds will become part of Brompton's asset management business; (ii) the current directors and officers of Brompton are expected to remain the directors and officers of Brompton; and (iii) the current directors and officers of Brompton are expected to become the directors and officers of CMFL. The current directors and officers of Brompton, and the proposed directors and officers of CMFL, have the integrity and experience contemplated by sub-paragraph 5.7(1)(a)(v) of NI 81-102.

10. After the completion of the Change of Manager Transaction, the portfolios of each of the Funds will be managed by a portfolio manager of Brompton who has experience in managing flow-through funds and resource assets. In addition, a current portfolio manager of Creststreet (the "Continuing PM") is expected to join Brompton following completion of the Change of Manager Transaction. The Continuing PM will continue to be a portfolio manager for the Funds, thereby providing continuity and experience to the management of the portfolios of each of the Funds.

11. Brompton has an experienced and well respected independent review committee ("IRC") in place for all of its funds and upon closing of the Change of Manager Transaction, the members of the IRC for Brompton's current funds will become the IRC members of the Funds in accordance with applicable law.

12. Brompton possesses all registrations under the OSA and National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") to allow it to manage the Funds after closing of the Change of Manager Transaction.

13. Brompton will have the appropriate personnel, policies and procedures and systems in place to assume the management of the Funds on closing of the Change of Manager Transaction.

14. Brompton proposes to continue the service provider contracts currently in place for the Funds following the closing of the Change of Manager Transaction, although Brompton proposes to change the auditor of the Funds and CMFL to its funds' auditor, PricewaterhouseCoopers LLP. The change of auditor will be effected as contemplated by section 5.3.1 of NI 81-102.

15. In addition to continued experienced investment fund management and portfolio management, other benefits of the Change of Manager Transaction to shareholders of the Funds are expected to include:

(a) lower management expense ratios ("MERs"), as following the completion of the Change of Manager Transaction, Brompton expects to utilize economies of scale to provide operating cost efficiencies for the Funds, thereby resulting in lower MERs; and

(b) improved liquidity, as following the completion of the Change of Manager Transaction, Brompton intends to allow investors to purchase, redeem and switch shares of the Funds on a daily basis starting in 2013. Currently, purchases, redemptions and switches of shares of the Funds are only permitted on a weekly basis.

16. Brompton does not expect its acquisition of the Fund Contracts pursuant to the Change of Manager Transaction to adversely affect the operation and administration of the Funds.

17. Brompton has no current intention to change the fundamental investment objectives of the Funds following closing of the Change of Manager Transaction. Notwithstanding the foregoing, Brompton may implement changes to certain of the Funds following the completion of the Change of Manager Transaction. Any such changes will be implemented in accordance with the prospectus disclosure of the Funds and applicable securities laws. For example, to the extent that any changes made to the Funds following the Change of Manager Transaction would constitute "material changes" within the meaning of NI 81-106, press releases will be issued, material change reports filed and amendments made to the prospectuses of the applicable Funds.

18. The Change of Manager Transaction was disclosed and communicated to shareholders of the Funds as required and, as reflected in the management information circular dated September 26, 2012 relating to the special meeting (the "Meeting") of shareholders of the Funds held on November 8, 2012 (the "Circular"), the shareholders of each Fund were provided with the opportunity to consider and approve the Change of Manager Transaction.

19. As indicated in the Circular, the IRC for the Funds has reviewed the terms of the Change of Manager Transaction on behalf of each of the Funds and the process to be followed in connection with the transaction, and has advised Creststreet that, in the IRC's opinion having reviewed the transaction as a potential "conflict of interest", following the process proposed, the transaction, and the resulting change of manager of the Funds, achieves a fair and reasonable result for each of the Funds.

20. The shareholders of each of the Funds approved the Change of Manager Transaction at the Meeting. In addition to the Change of Manager Transaction, at the Meeting shareholders of:

(a) each of the Funds passed a special resolution to approve moving the Funds from weekly to daily valuation; and

(b) each of Creststreet Alternative Energy Fund ("CAEF") and Creststreet Resource Fund ("CRF") passed a special resolution to approve the merger of CAEF into CRF (the "Fund Merger").

21. The Fund Merger is anticipated to become effective on or about November 23, 2012 and has been approved by the IRC of CAEF and CRF. The approval of the securities administrators in respect of the Fund Merger is not being sought on the basis that the Fund Merger meets the criteria of the exception contained in section 5.6 of NI 81-102.

22. Brompton has provided a notice to the securities administrators pursuant to section 11.9 of NI 31-103 requesting a non-objection in respect of the Change of Manager Transaction.

23. In conjunction with the closing of the Change of Manager Transaction and to reflect the change in management, CRF, Creststreet Dividend & Income Fund and CMFL will change their names to Brompton Resource Fund, Brompton Dividend & Income Fund and Brompton Mutual Funds Limited, respectively, on or about November 30, 2012.

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 Approval Sought is granted.