Aegon Fund Management Inc. and the Terminating Funds Listed in Schedule A

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval for fund mergers under 5.5 of NI 81-102 -- relief needed because mergers will not meet pre-approval criteria -- continuing funds have different investment objectives than terminating funds and mergers will not be tax deferred -- 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), 5.5(2), 5.6 and 5.7(1)(b).

April 25, 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

AEGON FUND MANAGEMENT INC.

(AFM)

AND

IN THE MATTER OF

THE TERMINATING FUNDS LISTED IN SCHEDULE "A"

(individually a Terminating Fund, collectively, the Terminating Funds)

(AFM and the Terminating Funds are collectively, 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 (the Legislation) granting approval under section 5.5(1)(b) of National Instrument 81-102 Mutual Funds (NI 81-102) to merge (the Proposed Mergers) each Terminating Fund into the Continuing Fund (the Continuing Funds and each a Continuing Fund), opposite its name in the chart attached as Schedule A (the Merger Approvals).

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) each Filer has provided notice that subsection 4.7(2) of Multilateral Instrument 11-102 Passport System (MI 11-102) is to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

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

Representations

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

1. AFM is the manager of each of the Terminating Funds and the Continuing Funds (the Funds and each a Fund) and is responsible for the overall business and affairs of the Funds. AFM is registered as an investment fund manager in each of the provinces of Canada.

2. Each of the Funds is an open-ended mutual fund trust and is governed under the laws of Ontario, and operating under a common Trust and Custodial Agreement dated April 15, 2002, as amended.

3. The Funds are reporting issuers in each of the provinces of Canada. Units of the Funds are currently offered for sale under a simplified prospectus and annual information form dated May 27, 2011, as amended, in all of the provinces of Canada. Amendments to the simplified prospectus and annual information form, and fund facts were filed as described in paragraph 10 below to reflect the Proposed Mergers.

4. None of the Filers is in default of applicable securities legislation in any jurisdiction.

5. All of the Funds comply with the Legislation that governs mutual fund investment restrictions and practices, except to the extent they have obtained approval from the securities regulatory authorities for relief from the Legislation in certain respects.

6. Each Fund's net asset value and its class unit price is determined as of the close of regular trading on The Toronto Stock Exchange (the Exchange), normally 4:00 p.m., Eastern Standard Time, on each day the Exchange is open for trading. The Funds are each valued in Canadian dollars.

7. Under the Proposed Mergers, the Terminating Funds will merge into the Continuing Funds as set out in the attached Schedule "A".

8. The Merger Approvals are required because the Proposed Mergers do not satisfy all of the criteria for pre-approved mergers set out in section 5.6 of NI 81-102, specifically:

(a) the Proposed Mergers will be completed on a taxable basis and not as a "qualifying exchange" or as a tax deferred transaction as would be required under subsection 5.6(1)(b); and

(b) as set out in the attached Schedule "B", a reasonable person would not consider that the Continuing Funds and Terminating Funds have substantially similar investment objectives, as applicable.

9. As required by National Instrument 81-107Independent Review Committee for Investment Funds, an Independent Review Committee (the IRC) has been appointed for the Funds. The IRC has reviewed the Proposed Merger of each Terminating Fund with its corresponding Continuing Fund along with the process to implement each Proposed Merger from a "conflict of interest" perspective. AFM was advised, that in the opinion of the IRC that the Proposed Merger of each Fund achieves a fair and reasonable result for the Terminating Fund and the corresponding Continuing Fund.

10. A press release in respect of the Proposed Mergers was filed on SEDAR on March 5, 2012 and material change report in respect of the Proposed Mergers was filed on SEDAR on March 8, 2012. Amendment No. 1 dated March 8, 2012 to the Simplified Prospectus dated May 27, 2011, Amendment No. 1 dated March 8, 2012 to the Annual Information Form dated May 27, 2011, and amended and restated fund facts dated March 8, 2012 for each of the Funds were filed on SEDAR.

11. A management information circular in connection with the Proposed Mergers (the Circular) was mailed to unitholders of the Terminating Funds and unitholders of imaxx Global Equity Growth Fund on March 9, 2012 and subsequently filed on SEDAR.

12. Purchases of, and transfers to, units of the Terminating Fund will be suspended on or prior to the effective date of the Proposed Merger except for those made under automatic purchase plans which will be suspended at the close of business on April 24, 2012 (3 days prior to the Effective Date).

13. The Circular that was sent to unitholders of a Terminating Fund sets out:

(a) information about the differences between the units of the Terminating Funds and the units of the Continuing Funds including investment objectives; net asset values; and management fees and management expense ratios;

(b) information about the investment objectives of the applicable Continuing Fund sufficient to consider the Proposed Mergers;

(c) information about the tax consequences of the Proposed Mergers.

(d) the various ways in which unitholders of the Terminating Funds can obtain, at no cost, the most recent simplified prospectus, the annual information form, the audited financial statements for the period ended December 31, 2010 and the unaudited semi-annual financial statements for the period ended June 30, 2011 of the Continuing Funds.

(e) the opinion of the IRC of the Funds that the Proposed Merger of each Fund achieves a fair and reasonable result for the Terminating Fund and the corresponding Continuing Fund;

14. The fund facts for the applicable Continuing Fund was sent to unitholders of a Terminating Fund with the meeting materials.

15. Unitholders of each Terminating Fund and unitholders of imaxx Global Equity Growth Fund approved the Proposed Mergers at special meetings held concurrently on April 13, 2012. As the net asset value of imaxx Global Equity Growth Fund, a Continuing Fund, is less than the net asset value of imaxx U.S. Equity Growth Fund, a Terminating Fund, the Proposed Merger involving imaxx Global Equity Growth Fund constituted a material change for such Fund and accordingly, its unitholders were asked to approve the Proposed Merger.

16. As the requisite unitholder approvals have been obtained, each Terminating Fund is expected to merge into the applicable Continuing Fund on or about the close of business on April 27, 2012.

17. As set out in the Circular the procedure for implementing each Potential Merger is as follows:

(a) Unitholders of each Terminating Fund to approve the Potential Merger and other matters set out in the resolution attached as Schedule "A" to the Circular.

(b) Unitholders of the Continuing Fund to approve, as applicable, the Potential Merger and other matters set out in the resolution attached as Schedule "B" to the Circular.

(c) The trust agreement governing the Funds is to be amended, as required, so as to permit such actions as are necessary to complete the Potential Mergers.

(d) The value of each Terminating Fund's investment portfolio and other assets will be determined at the close of business on the effective date of the applicable Potential Merger.

(e) Each Terminating Fund will transfer all of its assets to its respective Continuing Fund for an amount equal to the fair market value of the assets transferred, which amount will be satisfied as described in subsection (f) below.

(f) Each Continuing Fund will satisfy the obligation to pay the purchase price for the assets of the Terminating Fund acquired by the Continuing Fund by assuming the Terminating Fund's liabilities and will issue to the Terminating Fund, units of the Continuing Fund having an aggregate value equal to the value of the assets acquired less the amount of the liabilities assumed.

(g) To the extent necessary to ensure that a Terminating Fund is not subject to tax under Part I of the Income Tax Act (Canada), such Terminating Fund will declare and pay a distribution to its unitholders of net income, including net capital gains (if any) in respect of its taxation year ending on its winding up in connection with the Potential Merger, and will satisfy such distribution by the issuance of additional units of the Terminating Fund.

(h) Immediately thereafter, each Terminating Fund will redeem all of its outstanding units at their net asset value which will be paid and satisfied by delivering to its unitholders units of the Continuing Fund acquired in subsection (f) above.

(i) On redemption, unitholders of each Terminating Fund will receive securities of the applicable Continuing Fund as follows: (a) Class A units for Class A units; (b) Class F units for Class F units; and (c) Class I units for Class I units.

(j) Each Terminating Fund will be wound up as soon as reasonably possible following the Merger.

18. The imaxx U.S. Equity Growth Fund expects to realize capital gains and possibly net income on its transfer of assets to the imaxx Global Equity Growth Fund and it is expected to make a distribution of such capital gains and/or net income to the extent such amounts cannot be applied against losses or losses carried forward. In respect of all of the Terminating Funds, except for the imaxx U.S. Equity Growth Fund, AFM anticipates that each Terminating Fund will realize insufficient capital gains on the transfer of assets to the relevant Continuing Fund to apply against capital losses that would be realized on such transfer and net capital losses carried forward. In particular, based on asset values as of December 15, 2011, imaxx U.S. Equity Value Fund and imaxx Global Equity Value Fund would have capital losses in the amount of approximately $2.4 million and $1.5 million, respectively. Such unutilized net capital losses would not be able to be accessed by the Continuing Funds and would disappear when the Terminating Funds are wound up. Such unutilized net capital losses of a Terminating Fund would have expired in any event on the Mergers, had the Mergers taken place by way of tax-deferred "qualifying exchanges". The amounts of gains or losses of the Terminating Funds will be dependent on their asset values as at the time of the Mergers, which values may change from the values described above. It was determined to have the Mergers occur on a taxable basis as the capital gains tax implications to substantially all of the unitholders will be negligible, and will allow any significant tax losses of the Continuing Funds to be preserved, resulting in a lower likelihood that the Continuing Funds will make a capital gains or income distribution in the future.

19. No sales charge will be payable in connection with the purchase by the Terminating Funds of securities of the Continuing Funds.

20. Following the Proposed Mergers, the Continuing Funds will continue as publicly offered open-end mutual funds and the Terminating Funds will be wound up as soon as practicable.

21. Any unitholder of a Fund who does not wish to participate in the Proposed Mergers can at any time up to the close of business on the effective date of the Proposed Merger redeem his or her units of the Fund and receive the net asset value in accordance with the redemption procedures for such Fund.

22. The cost of effecting the Proposed Mergers will be borne by AFM and not by the Funds.

23. As discussed in the Circular, AFM believes that the Proposed Mergers are in the best interest of the unitholders of each of the Funds for the following reasons:

(a) Creating Economies of Scale: Most of the Terminating Funds are small in size and lack the economies of scale necessary to ensure cost efficiencies. The completion of the Proposed Mergers will result in a substantially smaller number of mutual funds being managed by AFM, thereby reducing the administrative and legal costs associated with the operation of the AEGON imaxx Funds. The Proposed Mergers are expected to reduce such expenses as audit, legal and compliance, custody and bank charges, increasing efficiency and value to unitholders. In addition, the management of the Continuing Funds will be spread over a greater pool of assets, thereby potentially lowering the management expense ratio for these funds.

(b) Larger Asset Base for Continuing Funds: Each Continuing Fund will have a larger asset base which will allow for greater portfolio diversification and a smaller proportion of assets set aside to fund redemptions. This may lead to some reduction of risk and increased returns.

(c) Greater Marketing Focus: By reducing the number of funds in the AEGON imaxx Group, the Proposed Mergers will allow AFM to focus on and develop the Continuing Funds. The greater focus on these funds will potentially increase the opportunity for growth in size of these funds, ensuring that they remain viable investment options for their unitholders.

(d) Reducing Costs to Unitholders: The Continuing Funds generally charge management fees that are substantially the same or lower than the comparable fees charged to the equivalent class of units of the Terminating Funds. AFM believes that the combination of changes in fees and reduced costs and increased efficiencies described above will ultimately result in overall reduced costs for investors.

24. Except as noted above, the Proposed Mergers will comply with all of the other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102.

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 Approvals is granted.

SCHEDULE "A"

TERMINATING FUNDS AND CONTINUING FUNDS

SCHEDULE "B"

INVESTMENT OBJECTIVES OF THE

THE TERMINATING FUNDS AND THE CONTINUING FUND

The investment objectives of the Terminating Funds and their respective Continuing Funds are not substantially the same, except to the extent described below. The differences between such funds are discussed below.

Merger of imaxx Canadian Balanced Fund and imaxx TOP Income Portfolio into imaxx Canadian Fixed Pay Fund.

Merger of imaxx Canadian Equity Value Fund and imaxx Canadian Small Cap Fund into imaxx Canadian Equity Growth Fund

Merger of imaxx U.S. Equity Growth Fund, imaxx U.S. Equity Value Fund and imaxx Global Equity Value Fund into imaxx Global Equity Growth Fund