AGF Investments Inc. and Acuity Funds Ltd.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of fund merger of corporate funds pursuant to an amalgamation under paragraph 5.5(1)(b) of NI 81-102 -- Approval required because mergers do not meet all criteria for pre-approval outlined in section 5.6 of NI 81-102 -- Current simplified prospectus and financial statements of continuing funds not delivered to shareholders of corresponding existing funds because continuing funds will be new funds and will not have their own performance data -- Continuing funds will have the same investment objectives, investment strategies, management fees, portfolio investment manager, and, at the effective date of the amalgamation, the same portfolio assets as the existing funds -- Portfolio assets of existing funds to continue as portfolio assets referable to continuing funds upon amalgamation -- Amalgamation may not technically constitute a wind-up of the existing funds -- Proxy circular includes disclosure about the amalgamation and prospectus-like disclosure concerning the continuing funds. Approval of mutual fund trust mergers -- approval required because mergers do not meet the criteria for pre-approved reorganizations and transfers in National Instrument 81-102 -- continuing funds have different investment objectives than terminating funds -- certain mergers not a "qualifying exchange" or a tax-deferred transaction under Income Tax Act -- securityholders of terminating funds provided with timely and adequate disclosure regarding the mergers.

Applicable Legislative Provisions

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

June 20, 2011

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

AGF INVESTMENTS INC. (AGF)

ACUITY FUNDS LTD. (Acuity),

AND

IN THE MATTER OF

THE MERGING FUNDS

(as hereinafter defined)

AND

IN THE MATTER OF

THE CONTINUING FUNDS

(as hereinafter defined)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from AGF and Acuity, the respective managers of each of the funds discussed below (AGF and Acuity together with the funds discussed below are hereinafter referred to as the Filers) for a decision under the securities legislation of the Jurisdiction (the Legislation) for merger approvals (Merger Approval) pursuant to clause 5.5(1)(b) of National Instrument 81-102 -- Mutual Funds (NI 81-102).

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

(a) the Ontario Securities Commission is the principal regulator for the 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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, The Northwest Territories, Yukon and Nunavut.

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.

The following terms shall have the following meanings:

ACC	refers to Acuity Corporate Class Ltd.
Acuity Corporate Funds	refers, collectively, to the existing 4 classes of mutual fund shares of ACC available for purchase: Acuity All Cap 30 Canadian Equity Class. Acuity Natural Resources Class, Acuity High Income Class and Acuity Diversified Income Class
Acuity Trust Funds	refers, collectively, to the Merging Acuity Trust Funds and the Continuing Acuity Trust Funds
AGF Corporate Funds	refers to the designated existing 22 classes of mutual fund shares of AWTAG available for purchase
AGF Trust Funds	refers, collectively, to the Merging AGF Trust Funds and the Continuing AGF Trust Funds
Amalco	refers to the continued corporation (to be known as AGF All World Tax Advantage Group Limited) as a result of the Amalgamation of ACC and AWTAG
Amalco Corporate Funds	refers, collectively, to the continuing classes of Amalco as a result of the Amalgamation
Amalgamation	refers to the proposed amalgamation of ACC and AWTAG
AWTAG	refers to AGF All World Tax Advantage Group Limited, one of the corporations amalgamating
Circulars	refers to the management information circulars described in the Application
Continuing Acuity Trust Funds	refers, collectively, to Acuity Conservative Asset Allocation Fund (name to be changed to Acuity Pure Canadian Balanced Fund), Acuity All Cap 30 Canadian Equity Fund, and Acuity Growth & Income Fund
Continuing AGF Trust Funds	refers, collectively, to AGF Canadian Stock Fund, AGF Global Dividend Fund, AGF Canadian Money Market Fund, AGF Elements Global Portfolio, AGF Elements Growth Portfolio, AGF Elements Balanced Portfolio, and AGF Elements Yield Portfolio
Continuing Trust Funds	refers, collectively, to the Continuing Acuity Trust Funds and the Continuing AGF Trust Funds
IRC	refers to the independent review committee of a fund or funds
Merging Acuity Corporate Funds	refers to the 2 Acuity Corporate Funds (namely, Acuity All Cap 30 Canadian Equity Class and Acuity Natural Resource Class) that will be merging with the applicable Merging AGF Corporate Funds
Merging Acuity Trust Funds	refers, collectively, to Acuity Dividend Fund, Acuity Money Market Fund, Acuity Canadian Equity Fund, Acuity Global High Income Fund, Acuity Global Dividend Fund, Alpha Balanced Portfolio, Alpha Income Portfolio, Alpha Global Portfolio, and Alpha Growth Portfolio
Merging AGF Corporate Funds	refers to the 2 AGF Corporate Funds (namely, AGF Canadian Growth Equity Class and AGF Global Resources Class) that will be merging with the applicable Merging Acuity Corporate Funds
Merging AGF Trust Funds	refers, together, to AGF Pure Canadian Balanced Fund and AGF Canadian All Cap Equity Fund
Merging Trust Funds	refers, collectively, to the Merging Acuity Trust Funds and the Merging AGF Trust Funds
Merging Funds	refers, collectively, to the Merging AGF Corporate Funds, the Merging Acuity Corporate Funds, the Merging Acuity Trust Funds and the Merging AGF Trust Funds
OBCA	refers to the Business Corporations Act (Ontario)
Tax Act	refers to the Income Tax Act (Canada)

Representations

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

The Filers

1. The head office of each of the Filers is located in Toronto, Ontario. The Filers are not in default of securities legislation in any jurisdiction of Canada.

2. Each of ACC and AWTAG is a multi-class mutual fund corporation incorporated under the laws of Ontario. ACC offers the Acuity Corporate Funds, and AWTAG offers the AGF Corporate Funds.

3. Each of the Acuity Trust Funds is an open-end mutual fund trust established under the laws of Ontario by a declaration of trust pursuant to which Acuity is the trustee.

4. Each of the AGF Trust Funds is an open-end mutual fund trust established under the laws of Ontario by a declaration of trust pursuant to which AGF is the trustee.

5. Each of Acuity and AGF is a corporation incorporated under the laws of Ontario. AGF Management Limited recently acquired control of Acuity such that both of AGF and Acuity are direct or indirect wholly owned subsidiaries of AGF Management Limited. AGF Management Limited received regulatory approval of the change of control in a decision dated January 31, 2011.

6. Acuity and AGF are the manager and trustee of each of the Acuity Trust Funds and AGF Trust Funds, respectively, and the manager of each of the Acuity Corporate Funds and AGF Corporate Funds, respectively.

7. Each of the Acuity Trust Funds, AGF Trust Funds, Acuity Corporate Funds and AGF Corporate Funds is a reporting issuer under the applicable securities legislation of each jurisdiction in Canada.

8. ACC issued Class A and Class B shares to persons affiliated with Acuity, which have now been purchased by AGF Management Limited. Such shares will be redeemed or purchased immediately prior to the Amalgamation.

9. The funds (the Funds) proposed to be merged (the Proposed Mergers) are set forth below:

MERGING FUND	CONTINUING FUND
<<Proposed Corporate Fund Mergers and Continuations through Amalgamation>>
Acuity All Cap 30 Canadian Equity Class and AGF Canadian Growth Equity Class	Amalco Canadian Growth Equity Class (to be named "AGF Canadian Growth Equity Class")
Acuity Natural Resource Class and AGF Global Resources Class	Amalco Global Resources Class (to be named "AGF Global Resources Class")
Acuity High Income Class	Amalco High Income Class (to be named "AGF High Income Class")
Acuity Diversified Income Class	Amalco Diversified Income Class (to be named "AGF Diversified Income Class")
<<Proposed Acuity Trust Fund Mergers>>
Acuity Dividend Fund	Acuity Growth & Income Fund
Acuity Money Market Fund	AGF Canadian Money Market Fund
Acuity Canadian Equity Fund	AGF Canadian Stock Fund
Acuity Global High Income Fund	AGF Global Dividend Fund
Acuity Global Dividend Fund	AGF Global Dividend Fund
Alpha Balanced Portfolio	AGF Elements Balanced Portfolio
Alpha Income Portfolio	AGF Elements Yield Portfolio
Alpha Global Portfolio	AGF Elements Global Portfolio
Alpha Growth Portfolio	AGF Elements Growth Portfolio
<<Proposed AGF Trust Fund Mergers>>
AGF Pure Canadian Balanced Fund	Acuity Conservative Asset Allocation Fund (name to be changed to Acuity Pure Canadian Balanced Fund)
AGF Canadian All Cap Equity Fund	Acuity All Cap 30 Canadian Equity Fund

10. Meetings of securityholders of all of the Merging Funds were held in May 2011 at which the Proposed Mergers were approved. All other approvals required by the OBCA in connection with the Proposed Corporate Fund Mergers were received.

11. Acuity and AGF will be responsible for the costs associated with the Proposed Mergers.

12. Pursuant to NI 81-107 -- Independent Review Committee for Investment Funds, the IRCs reviewed the Proposed Mergers on behalf of the Merging Funds and the Continuing Funds and the process to be followed in connection with the Proposed Mergers, and advised Acuity and AGF that in the IRCs' opinion, having reviewed the Proposed Mergers as a potential conflict of interest, following the process proposed, each of the Proposed Mergers achieves a fair and reasonable result for each of the Merging Funds and the Continuing Funds.

13. Press releases were issued, material change reports were filed and amendments to the relevant prospectuses and annual information forms were filed when a final decision to proceed with securityholder meetings was made.

14. The relevant notices of the meetings and Circulars were mailed to securityholders of the relevant Funds and filed on SEDAR in accordance with applicable securities legislation.

The Amalgamation and Proposed Corporate Fund Mergers

15. Subject to regulatory approval, ACC will amalgamate with AWTAG and continue as one corporation known as AGF All World Tax Advantage Group Limited.

16. The Amalgamation will be effected pursuant to an amalgamation agreement entered into between ACC and AWTAG as contemplated by section 174 of the OBCA.

17. Acuity and AGF have determined that the Proposed Corporate Fund Mergers will not be a material change to each of the Merging AGF Corporate Funds due to the small size of the applicable Merging Acuity Corporate Fund relative to the applicable Merging AGF Corporate Fund.

18. The Filers currently propose to effect the Amalgamation and Proposed Corporate Fund Mergers on or about October 1, 2011 (the Amalgamation Effective Date).

19. Pursuant to the Amalgamation, Acuity All Cap 30 Canadian Equity Class and Acuity Natural Resource Class are merging with AGF Canadian Growth Equity Class and AGF Global Resources Class, respectively, to form two Amalco Corporate Funds -- which will also be known as AGF Canadian Growth Equity Class and AGF Global Resources Class. The other two Acuity Corporate Funds (Acuity High Income Class and Acuity Diversified Income Class) will essentially continue as Amalco Corporate Funds -- to be known as AGF High Income Class and AGF Diversified Income Class. Similarly, all of the other 20 AGF Corporate Funds are simply continuing as Amalco Corporate Funds as part of the Amalgamation, and will retain their current fund names.

20. The portfolio assets of each Amalco Corporate Fund will be maintained as a separate portfolio by Amalco for the exclusive benefit of the shareholders of such Amalco Corporate Fund. AGF will be the manager of Amalco as most of the Amalco Corporate Funds will be existing AGF Corporate Funds (classes of AWTAG).

21. The Amalgamation will be a tax-deferred transaction pursuant to section 87 of the Tax Act.

22. Shareholders of ACC and AWTAG will be permitted to dissent from the Amalgamation pursuant to the provisions of the OBCA.

23. Shares of the Acuity Corporate Funds and AGF Corporate Funds will continue to be redeemable prior to the Amalgamation Effective Date.

Proposed Trust Fund Mergers

24. Acuity and AGF are proposing that there be mergers of the Merging Acuity Trust Funds and the Merging AGF Trust Funds with the relevant Continuing Trust Funds.

25. The Filers currently propose to effect the Proposed Trust Fund Mergers of the Merging Trust Funds and Continuing Trust Funds on or about August 26, 2011 (the Trust Fund Mergers Effective Date).

26. Acuity and AGF have determined that the Proposed Trust Fund Mergers will not be a material change to each of the Continuing Trust Funds due to the small size of the applicable Merging Trust Fund relative to the applicable Continuing Trust Fund.

27. Securityholders of each Merging Trust Fund will continue to have the right to redeem securities of the Merging Trust Funds at any time up to the close of business immediately before the Trust Fund Mergers Effective Date.

Reasons for Merger Approval

28. The Filers require Merger Approval and cannot rely on section 5.6(1) of NI 81-102 for the following reasons:

(a) a statutory amalgamation may not technically constitute a wind-up of the Merging Acuity Corporate Funds and the Merging AGF Corporate Funds;

(b) the investment objectives of the Merging Acuity Corporate Funds and the Merging AGF Corporate Funds are not substantially similar;

(c) certain of the Proposed Trust Fund Mergers are not tax deferred mergers;

(d) certain of the Merging Acuity Trust Funds and the Merging AGF Trust Funds do not have the same fees as the relevant Continuing Trust Funds;

(e) the investment objectives of certain Merging Acuity Trust Funds and Merging AGF Trust Funds are not substantially similar with those of the relevant Continuing Trust Funds; and

(f) the materials sent to securityholders of the Merging Funds did not include a copy of the current simplified prospectus of the Continuing Funds.

29. Although the investment objectives of some Merging Funds or method of implementation may not be substantially similar to the relevant Continuing Funds, they are nevertheless complementary.

30. Current Canadian tax laws do not permit the merger of a unit trust with a mutual fund trust and certain Proposed Mergers would cause a Continuing Fund to lose its material loss carry forwards if done on a tax deferred basis.

31. To the extent that the fees of certain Merging Funds are lower than those of the Continuing Funds, the fees will be grandfathered for all outstanding securities of such Merging Funds.

32. In the case of Acuity High Income Class and Acuity Diversified Income Class, only the Part A of the Continuing Fund prospectus was sent as these Acuity Corporate Funds are not really merging but becoming new classes of Amalco. In all other cases, a tailored prospectus of the Continuing Fund was sent in lieu of the current simplified prospectus.

33. Acuity and AGF believe that the Mergers will be beneficial to securityholders of each Fund for the following reasons:

(a) it is expected that each Proposed Merger will reduce duplication and create operational efficiencies;

(b) in the case of the Proposed Mergers involving Acuity High Income Class and Acuity Diversified Income Class, investors in the Merging Acuity Corporate Fund will become investors in Amalco which will provide investors with the opportunity to change mutual fund investments while deferring the realization of any capital gains on their investments;

(c) following the Proposed Mergers, each Continuing Fund except for AGF High Income Class and AGF Diversified Income Class will have more assets, thereby allowing for increased portfolio diversification opportunities; and

(d) each Continuing Fund will benefit from its larger profile in the marketplace.

34. The Filers submit that investors will not be prejudiced in connection with the Proposed Mergers as:

(a) the information circular sent to securityholders in connection with a Proposed Merger provided sufficient information about the Proposed Merger to permit securityholders to make an informed decision about the Proposed Merger including the tax implications of the Proposed Merger, the differences between the Terminating Fund and the Continuing Fund and the Funds' IRC's recommendation that the Mergers achieve a fair and reasonable result for the Funds ;

(b) the information circular sent to securityholders in connection with a Proposed Merger prominently disclosed that securityholders can obtain the most recent interim and annual financial statements of the applicable Continuing Fund by accessing the SEDAR website at www.sedar.com, by accessing, as the case may be, AGF or Acuity's website, by calling AGF's or Acuity's toll-free telephone number, by faxing a request to AGF or Acuity or by contacting a dealer;

(c) upon request by a securityholder for financial statements of an applicable Continuing Fund, AGF or Acuity, as the case may be, made best efforts to provide the securityholder with the financial statements of the applicable Continuing Fund in a timely manner so that the securityholder can make an informed decision regarding a Proposed Merger;

(d) each applicable Continuing Fund and Merging Fund with respect to a Proposed Merger have an unqualified audit report in respect of their last completed financial period; and

(e) the meeting materials sent to securityholders in respect of a Proposed Merger, other than Acuity High Income Class and Acuity Diversified Income Class, included a tailored simplified prospectus consisting of:

(i) the current Part A of the simplified prospectus of the applicable Continuing Fund; and

(ii) the current Part B of the simplified prospectus of the applicable Continuing Fund;

(f) the meeting materials sent to securityholders in respect of the Acuity High Income Class and Acuity Diversified Income Class, included the current Part A of the simplified prospectus of the applicable Continuing Fund, but not the Part B as each Continuing Fund is in substance a continuation of Acuity High Income Class and Acuity Diversified Income Class respectively; and

(g) securityholders of the Merging Funds approved the Proposed Mergers at meetings held either on May 18 or May 31, 2011.

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 Merger Approval is granted.