ROI Public Funds terminated forward/mirror fund structure and merged on a taxable basis to create Dream Hard Asset Alternative Trust

DREAM (formerly Dundee) acquired the rights to manage various ROI mutual funds.  These Funds held much of their Canadian real estate and fixed income portfolios indirectly through the terms of forward agreements with a Canadian bank, which in turn held those assets in "Reference Funds."  They would have ceased to be grandfathered from the character conversion rules at the end of 2014. Their forwards were cash settled and they merged into a new mutual fund trust, Dream Hard Asset Alternative Trust. ("Hard" is an adjective, not an adverb.)

The form of the merger was quite similar to a s. 132.2 merger: after some preliminary transactions to address the mirror "Reference Fund" structure, the Funds sold their assets to the new Trust for units, and then terminated by distributing those Trust units to their unitholders. However, the merger occurred on a taxable basis, which was not a significant issue due to the tax efficiency of the current grandfathered forward sale structure.

The new TSX-listed Trust is subject to potential SIFT tax on most of its assets. However, an estimated 90% of its distributions for 2015 will be capital distributions due to high depreciation.

Neal Armstrong.   Summary of Prospectus of Dream Hard Asset Alternative Trust and of Circulars of ROI Public Funds under Mergers & Acquisitions – REIT/Income Fund/LP Acqisitions – Taxable Trust Mergers.