Creststreet Resource Class

Headnote

Passport System for Exemptive Relief Applications -- a mutual fund is granted exemptions from National Instrument 81-102 Mutual Funds to allow additional time to reduce proportion of net assets comprising of illiquid assets to 15% or less, subject to certain conditions and requirements.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, s. 2.4(2).

August 27, 2008

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 RESOURCE CLASS

(the "Filer")

DECISION

Background

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") for an exemption from section 2.4(2) of National Instrument 81-102 -- Mutual Funds (NI 81-102) to permit the Filer an additional 90 days until November 18, 2008 to reduce the percentage of its net assets made up of illiquid assets to 15% or less (the Exemption Sought).

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

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

(b) 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 the provinces of Alberta, British Columbia, Manitoba, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Saskatchewan and Quebec.

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is a class of shares of Creststreet Mutual Filers Limited, a mutual fund corporation established under the Canada Business Corporations Act. Creststreet Asset Management Limited is the manager of the Filer (the Manager).

2. The Filer is a reporting issuer, or the equivalent, in each of the provinces of Canada pursuant to a simplified prospectus and annual information form dated November 19, 2007.

3. As at August 15, 2008, the Filer had 6,898,718.4657 Series A shares and 4,021,691.9203 2008 Series shares issued and outstanding. The outstanding shares of the 2008 Series will be converted on a one-to-one basis into Series A shares as at September 30, 2008.

4. The relief requested herein is necessary primarily as a result of the success of the investment made by the Filer in one issuer, Athabasca Oil Sands Corp. (Athabasca), a privately owned oil and gas company. The Filer holds 1,000,000 warrants and 330,000 common shares of Athabasca.

5. On May 23, 2008, the percentage of net assets of the Filer made up of illiquid assets exceeded 15%. This was as a result of an increase in the mark-to-market valuation of the securities of Athabasca, consistent with Filer's policy on valuing private securities, based on verified arm's length third party transactions. The value of each warrant of Athabasca increased from $7.44 to $9.75 and the value of each common share of Athabasca increased from $8.69 to $11.00 on May 23, 2008. Prior to such increased valuation of the securities of Athabasca, the percentage of net assets of the Filer made up of illiquid assets was 13.3%. Immediately after such increased valuation of the securities of Athabasca, the percentage of net assets of the Filer made up of illiquid assets was 16.0%.

6. Pursuant to section 2.4(2) of NI 81-102, the Filer had until August 20, 2008 to reduce the percentage of net assets of the Filer made up of illiquid assets to 15% or less. The decision of the Manager was to sell one-half of the Filer's position in the common shares of Athabasca. The Manager was aware that Athabasca was in the process of obtaining a reserve report from an independent third party engineering firm and believed that it was in the best interests of the shareholders of the Filer to wait until receipt of the reserve report to execute the sale transaction.

7. The reserve report was issued on July 30, 2008 and indicated a potential net asset value between $55 and $108 per common share of Athabasca. Following receipt of the reserve report, the Manager instructed a broker for the Filer to participate in the next private sale transaction of common shares of Athabasca. Although the Manager was optimistic that a sale transaction could be completed prior to August 20, 2008 and that the relief requested hereby would not be necessary, given the difference between the last trade price of $13.50 per share and the potential net asset value per share indicated in the reserve report, the common shares of Athabasca have not traded since the release of the reserve report.

8. As of August 15, 2008, the percentage of net assets of the Filer made up of illiquid assets was 23.7%, of which the securities of Athabasca constituted 18.9% of the net assets of the Filer.

9. Other than section 2.4(2) of NI 81-102, the Filer is not in default of any of the requirements of the securities legislation in any Jurisdiction.

10. The Filer issued a press release and filed a material change report dated August 20, 2008 disclosing that the Filer had exceeded the 15% restriction and had filed the application for the Exemption Sought.

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 Exemption Sought is granted so long as the Filer reduces the percentage of its net assets made up of illiquid assets to 15% or less by November 18, 2008.