Exemption Orders (Discretionary)

THE ROYAL TRUST CANADIAN TREASURY BILL MONEY MARKET FUND


COR#97/219

IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c.418

AND

IN THE MATTER OF THE ROYAL TRUST CANADIAN TREASURY BILL MONEY MARKET FUND
ROYAL TRUST CANADIAN MONEY MARKET FUND
ROYAL TRUST MORTGAGE FUND
ROYAL TRUST GROWTH AND INCOME FUND
ROYAL TRUST CANADIAN STOCK FUND
ROYFUND U.S. DOLLAR MONEY MARKET FUND
ROYFUND BOND FUND
ROYFUND INTERNATIONAL INCOME FUND
ROYFUND U.S. EQUITY FUND
ROYFUND CANADIAN T-BILL FUND
ROYFUND CANADIAN MONEY MARKET FUND
ROYFUND MORTGAGE FUND
ROYFUND DIVIDEND FUND
ROYFUND CANADIAN EQUITY FUND
ROYAL TRUST $U.S. MONEY MARKET FUND
ROYAL TRUST BOND FUND
ROYAL TRUST INTERNATIONAL BOND FUND
ROYAL TRUST AMERICAN STOCK FUND

AND

ROYAL MUTUAL FUNDS INC.


Exemption Order Under Sections 123(a) and 130(b) of the Act



WHEREAS Royal Mutual Funds Inc. (the “Manager”), as manager of the Terminating Funds and Continuing Funds (as defined below), has applied to the British Columbia Securities Commission for an order under:

1. section 123(a) of the Securities Act, R.S.B.C. 1996, c. 418, that section 121(2)(b) of the Act does not apply to proposed mergers under which each Terminating Fund will be consolidated with a corresponding Continuing Fund;

2. section 130(b) of the Act that the Manager and certain other persons are exempt from the requirements of section 127(1)(b) of the Act in respect of the proposed mergers; and

3. section 130(b) of the Act that the Manager is exempt from the requirements of section 126(a) of the Act in connection with the proposed mergers;

AND WHEREAS the Terminating Funds and Continuing Funds (collectively, the “Funds”) and the Manager have represented to the Commission that:

1. the following table sets out the names of the Terminating Funds and the Continuing Funds, their respective net assets as of March 31, 1997, and the new name of the continuing Fund:


FUND MERGERS


Terminating FundNet Assets ($million) March 31, 1997Continuing FundNet Assets ($million) March 31, 1997New Name
Royal Trust Canadian Treasury Bill Money Market Fund567.0RoyFund Canadian T-Bill Fund4,170.9Royal Canadian T-Bill Fund
Royal Trust Canadian Money Market Fund550.8RoyFund Canadian Money Market Fund391.9Royal Canadian Money Market Fund
RoyFund U.S. Dollar Money Market Fund107.4Royal Trust $U.S. Money Market Fund154.3Royal $U.S. Money Market Fund

Terminating FundNet Assets ($million) March 31, 1997Continuing FundNet Assets ($million) March 31, 1997New Name
Royal Trust858.5RoyFund963.6Royal Mortgage
Mortgage FundMortgage FundFund
RoyFund Bond Fund762.9Royal Trust Bond Fund827.2Royal Bond Fund
RoyFund International Income Fund125.2Royal Trust International Bond Fund186.6Royal Global Bond Fund
Royal Trust Growth and Income Fund160.6RoyFund Dividend Fund710.3Royal Dividend Fund
Royal Trust Canadian Stock Fund874.0RoyFund Canadian Equity Fund1,849.6Royal Canadian Equity Fund
RoyFund U.S. Equity Fund110.0Royal Trust American Stock Fund154.1Royal U.S. Equity Fund

1. each of the Funds is an open-ended mutual fund trust governed by the laws of Ontario pursuant to a declaration of trust;

2. each of the Funds is a reporting issuer under the Act and is not in default of any requirement of the Act or the Securities Rules, R.B.C. Reg. 194/97;

3. units of the Funds are distributed continuously in each province of Canada pursuant to combined simplified prospectuses and annual information forms dated July 12, 1996;

4. the Manager is a corporation incorporated under the laws of Canada, is registered under the Act as a mutual fund dealer and is not in default of any requirement of the Act or the Rules;

5. The Royal Trust Company (“Royal Trust”) is the trustee of the Funds and Royal Bank Investment Management Inc. (the "Portfolio Manager”) is the investment adviser of the Funds;

6. the Manager, Royal Trust and the Portfolio Manager are all wholly-owned subsidiaries of The Royal Bank of Canada (“Royal Bank”);

7. since the acquisition of Royal Trust in September 1993 by Royal Bank, Royal Bank, Royal Trust and the Manager have been assessing the manner in which the Royal Trust mutual funds (the “Royal Trust Funds”), which include five of the Terminating Funds and four of the Continuing Funds, and the RoyFund mutual funds (the “RoyFunds”), which include four of the Terminating Funds and five of the Continuing Funds, are structured, managed, operated and distributed, with a view to rationalizing and harmonizing the operations of the two mutual fund groups;

8. the final step in this three-year process will be the mergers, on a tax-deferred, rollover basis, of the Terminating Funds with the Continuing Funds having the same investment objectives as the Terminating Funds;

9. unitholder notices have been given where required to effect the mergers;

10. the Terminating Funds intend to merge with the Continuing Funds on July 1, 1997 (the "Effective Date"), following which the merged mutual funds will be known collectively as the "Royal Mutual Funds", will be distributed pursuant to a single combined simplified prospectus and annual information form, and will be sold in both the Royal Bank and Royal Trust branch networks;

11. on the Effective Date, each Terminating Fund proposes to:

(a) sell all of its assets to its corresponding Continuing Fund in exchange for units of that Continuing Fund;
    (b) distribute the units of the Continuing Fund to its unitholders so that each unitholder becomes a unitholder of the Continuing Fund and receives units of the Continuing Fund (including fractional units, if necessary) that are equal in value to the net asset value of the units of the Terminating Fund previously held by that unitholder; and
      (c) wind up;
        12. the investment objectives of each Terminating Fund are the same as those of the Continuing Fund with which the Terminating Fund is to merge and, as a result, the assets, being securities, to be purchased by each Continuing Fund from the corresponding Terminating Fund will be proper investments for the Continuing Fund having regard to its investment objectives;

        13. no brokerage fees, commissions or other charges or expenses will be incurred by a Terminating Fund or its unitholders in connection with the mergers;

        14. all costs of the mergers, including the costs of the steps taken to facilitate the mergers that would not otherwise be ordinary course costs charged to the Funds, will be or have been borne by the Manager, and will not be or have not been charged to any of the Funds or the unitholders ;

        15. the mergers will not result in the duplication of management fees or other charges payable by unitholders or the Funds;

        16. the Funds are "no-load" funds and unitholders of each Fund will continue to have the right to redeem their units for cash without charge at any time up to the close of business on the business day before the Effective Date;

        17. each Fund will make an additional distribution to unitholders so that the fund is not subject to tax in the taxation year that includes the merger, if required;

        18. there are no material differences in the valuation methods of the Terminating Funds and the Continuing Funds;

        19. full disclosure of the mergers has been provided to unitholders of the Funds on a continuous and repeated basis since May 1994 and the simplified prospectuses contain all material disclosure concerning the mergers;

        20. a notice respecting the mergers and their effect on the Funds has been delivered to unitholders of each Fund along with a copy of the simplified prospectus and financial statements of the relevant Continuing Fund;

        21. from the date of the mailing of the notice, a copy of the notice has been given to all prospective and new unitholders of each Fund, together with the simplified prospectus of the Fund, so that all prospective and new unitholders will receive full disclosure and notice of the mergers;

        22. following the completion of the mergers and the renewal of the simplified prospectuses in the form of a single combined simplified prospectus and annual information form reflecting the mergers, the Manager will send a copy of the combined simplified prospectus to the unitholders of the Funds;

        23. in 1994, Royal Trust established a Board of Governors of the Royal Trust Funds and the RoyFunds, a majority of the members of which are independent of Royal Bank, Royal Trust and the Manager, to consider and advise on the overall strategy and policy of each of the Funds and on potential conflicts of interest involving the Funds;

        24. the Board of Governors has been informed and updated on the proposed mergers since its inception;

        25. Royal Trust will have the Board of Governors review the proposed mergers and the mergers will not be effected unless the Board of Governors gives its approval to the Manager;

        26. in the event that the report of the auditors on the financial statements of a Continuing Fund for the year ending December 31, 1997, contains a reservation in respect of the value of the assets of the corresponding Terminating Fund, the Manager will provide to each person who is a unitholder of the Terminating Fund on July 1, 1997, but is no longer a unitholder of the Continuing Fund at the time that the audited financial statements are sent to the unitholders of the Continuing Fund, a copy of that auditors’ report together with a notice advising the person that, although the person is no longer a unitholder of the Continuing Fund, they are entitled to receive the enclosed report and providing a summary of the reasons for the reservation;

        27. in the moment of time after a Terminating Fund acquires the units from its corresponding Continuing Fund but before these units are distributed to the unitholders of the Terminating Fund, the Terminating Fund will be a “substantial security holder", as defined in section 120(2)(c) of the Act, of the Continuing Fund and, in the absence of this order, would be prohibited by section 121(2)(b) of the Act from holding units of the Continuing Fund;

        28. in the opinion of each Terminating Fund and the Manager, the proposed investment by that Terminating Fund in units of its corresponding Continuing Fund is in the best interests of the Terminating Fund and represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Terminating Fund;
        29. the Manager, Royal Trust and the Portfolio Manager are "responsible persons", as defined in section 120(1) of the Act, in respect of the Funds and by knowingly causing the transactions involving the purchase and sale of securities required to effect the mergers, in the absence of this order, would be in contravention of section 127(1)(b) of the Act; and

        30. under the definition of related person in section 120(l) of the Act and the deeming provision in section 120(2)(a) of the Act, each Terminating Fund is a “related person” of its corresponding Continuing Fund and, in the absence of this order, section 126(a) of the Act would require the Manager to file reports respecting the transactions involving the purchase and sale of securities required to effect the mergers;

        AND WHEREAS for the purpose of the order requested under section 123(a) of the Act, the Commission is satisfied that the proposed investment by each Terminating Fund in units of its corresponding Continuing Fund represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Terminating Fund;

        AND WHEREAS for the purpose of the orders requested under section 130(b) of the Act, the Commission considers that to do so would not be prejudicial to the public interest;

        IT IS ORDERED, effective March 12, 1997:

        1. under section 123(a) of the Act, that section 121(2)(b) of the Act does not apply to the investment by a Terminating Fund in units of its corresponding Continuing Fund provided that, immediately following the investment, all of the assets of the Terminating Fund are distributed to its unitholders and, as soon as reasonably possible thereafter, the Terminating Fund is wound up;

        2. under section 130(b) of the Act, that the Funds, the Manager, Royal Trust and the Portfolio Manager are exempt from the requirements of section 127(1)(b) of the Act in respect of the transactions involving the purchase and sale of securities required to effect the mergers provided that, immediately following the transactions, all of the assets of the Terminating Fund are distributed to its unitholders and, as soon as reasonably possible thereafter, the Terminating Fund is wound up; and

        3. under section 130(b) of the Act, that the Manager is exempt from the requirements of section 126(a) of the Act in connection with the merger.

        DATED at Vancouver, British Columbia, on November 10, 1997.





        Adrienne R. Wanstall
        Member
        ©2025 British Columbia Securities Commission