Aston Hill Management Inc. et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from section 2.5(2)(b) of NI 81-102 to permit new top corporate fund to invest in existing middle trust fund which obtains exposure to bottom trust fund through a forward agreement -- three-tier structure is transparent and intended to provide new top fund with exposure to existing bottom fund on a tax efficient basis -- middle fund also granted relief from 2.5(2)(a) and (c) of NI 81-102 to continue investing in bottom fund after bottom fund's first simplified prospectus lapses -- bottom fund not intending to renew first simplified prospectus -- bottom fund will remain reporting issuer in same jurisdictions as middle fund after lapse and continue to be subject to NI 81-102, NI 81-106 and NI 81-107 -- middle fund and bottom fund granted relief from new funds requirements in sections 3.1 and 3.3. of NI 81-102 -- middle fund and bottom fund are an existing two-tier structure expected to have assets well in excess of $500,000.

Relief granted from sections 2.6(a) & (c) and 6.1(1) of NI 81-102 to permit funds to short sell up to 20% of net assets subject to certain conditions -- relief varies relief previously granted to existing funds by updating its terms to more recent decisions and consolidating it with relief granted to other funds managed by the same manager.

Relief granted to permit money market corporate class fund to invest in money market trust fund for administrative efficiency on condition that bottom money market fund meets and continues to meet the definition of "money market fund" in NI 81-102 and complies with section 2.5 of NI 81-102.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 1.1, 3.1, 3.3, 2.1(1),

2.2(1)(a), 2.5(2)(a), 2.5(2)(b), 2.5(2)(c) and 19.1.

August 11, 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

ASTON HILL ASSET MANAGEMENT INC.

(the Filer)

AND

ASTON HILL CAPITAL GROWTH FUND

ASTON HILL GLOBAL CONVERTIBLE BOND FUND

ASTON HILL GLOBAL CONVERTIBLE BOND TRUST

ASTON HILL GLOBAL RESOURCE FUND

ASTON HILL GROWTH & INCOME FUND

(the Existing Funds)

AND

ASTON HILL CAPITAL GROWTH CLASS

ASTON HILL GLOBAL CONVERTIBLE BOND CLASS

ASTON HILL GLOBAL RESOURCE CLASS

ASTON HILL GROWTH & INCOME CLASS

ASTON HILL MONEY MARKET CLASS

(collectively, together with ASTON HILL MONEY MARKET FUND,

the New Funds, and the New Funds together with

the Existing Funds, the Current Funds)

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) exempting:

(a) the Current Funds (other than Aston Hill Money Market Fund and Aston Hill Money Market Class) and any future mutual funds managed by the Filer or an affiliate of the Filer that are subject to National Instruments 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and 81-102 Mutual Funds (NI 81-102) (the Future Funds, together with the Current Funds, the Funds) from subsections 2.6(a), 2.6(c) and 6.1(1) of NI 81-102 to permit each Fund to (i) sell securities short; (ii) provide a security interest over the Fund's assets in connection with the short sales; and (iii) deposit Fund assets with a dealer as security in connection with the short sales (the Short Selling Relief);

(b) Aston Hill Global Convertible Bond Fund (Global Convertible Fund) from subsections 2.1(1), 2.2(1)(a), 2.5(2)(a) and 2.5(2)(c) of NI 81-102 to permit Global Convertible Fund to enter into and maintain specified derivatives where the underlying interest is units of Aston Hill Global Convertible Bond Trust (Global Convertible Trust) after Global Convertible Trust's prospectus lapses next year (the Non-Prospectused Investing Relief);

(c) Aston Hill Global Convertible Bond Class (Global Convertible Class) from subsection 2.5(2)(b) of NI 81-102 to permit Global Convertible Class to invest in Global Convertible Fund (the Three-Tier Relief);

(d) Aston Hill Money Market Class from the restrictions in section 1.1 of NI 81-102 on the types of investments a money market fund can make to permit Aston Hill Money Market Class to invest in Aston Hill Money Market Fund (the Money Market Relief);

(e) Global Convertible Fund from the seed capital requirements in section 3.1 of NI 81-102 to permit Global Convertible Fund to rely on its existing net assets (the Seed Capital Relief); and

(f) each of Global Convertible Fund and Global Convertible Trust (the Global Convertible Trust Funds) from section 3.3 of NI 81-102 to permit the Global Convertible Trust Funds to bear the costs of the preparation and filing of their respective preliminary and first simplified prospectuses, annual information forms and fund facts (the First Simplified Prospectus Relief),

(collectively, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for the 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 British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions and NI 81-102 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:

The Filer and the Funds

1. The Filer is a corporation amalgamated under the laws of the Province of Ontario with its head office located in Toronto, Ontario. The Filer is registered under the securities legislation of Ontario as a portfolio manager, investment fund manager and exempt market dealer.

2. Each of the Existing Funds and Aston Hill Money Market Fund is a mutual fund trust governed by a declaration of trust under the laws of the Province of Ontario of which the Filer is the trustee and manager.

3. The Filer currently is the portfolio advisor to each Current Fund except Aston Hill Global Resource Fund. Aston Hill Investments Inc., an affiliate of the Filer, currently is the portfolio advisor to Aston Hill Global Resource Fund.

4. Each of the Existing Funds, except Global Convertible Trust, is a reporting issuer under the securities legislation of each province of Canada. Global Convertible Trust is a reporting issuer under the securities legislation of Ontario and Québec.

5. Each of the Existing Funds, except the Global Convertible Trust Funds, currently offers it units for sale to the public in all of the provinces of Canada, other than Québec, under a simplified prospectus and annual information form prepared and filed in accordance with NI 81-101 and may, in the future, offer its units for sale to the public in the province of Québec as well as in Yukon, Northwest Territories and Nunavut. Each of the Global Convertible Trust Funds has filed a preliminary simplified prospectus and annual information form dated June 2, 2011 (collectively, the 2011 Prospectus) to qualify its units for sale to the public in all the provinces of Canada, other than Québec, and each may, in the future, offer its units for sale to the public in the province of Québec as well as in Yukon, Northwest Territories and Nunavut.

6. Each of the New Funds except Aston Hill Money Market Fund (each, a Corporate Fund) will be a mutual fund that is constituted as a class of shares of Aston Hill Corporate Funds Inc. (the Corporation). The Corporation is a corporation incorporated under the federal laws of Canada. The Filer will be the manager of each Corporate Fund.

7. The New Funds have filed the 2011 Prospectus in order to qualify their securities for sale to the public in all the provinces of Canada, other than Québec. Each New Fund may, in the future, offer its securities for sale to the public in the province of Québec as well as in Yukon, Northwest Territories and Nunavut.

8. Each Current Fund is, and each Future Fund will be, a mutual fund that is subject to all of the requirements of NI 81-101, NI 81-102, National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107, together with NI 81-102 and NI 81-106, the Mutual Fund Instruments), except to the extent that it may be granted discretionary relief from any such requirements.

9. The Filer and the Current Funds are not in default of applicable securities legislation.

The Previous Short Selling Relief

10. In decision documents dated: November 7, 2007 for Aston Hill Growth & Income Fund; March 5, 2010 for each Global Convertible Trust Fund; June 15, 2010 for Aston Hill Global Resource Fund; and May 25, 2011 for Aston Hill Capital Growth Fund, each of the Existing Funds was granted relief from subsections 2.6(a), 2.6(c) and 6.1(1) of NI 81-102, allowing each Existing Fund to (i) sell securities short; (ii) provide a security interest over the Existing Fund's assets in connection with the short sales; and (iii) deposit Existing Fund assets with a dealer as security in connection with the short sales (the Previous Short Selling Relief).

11. The Filer is seeking the Short Selling Relief to vary the Previous Short Selling Relief by updating and consolidating it. The Short Selling Relief updates the Previous Short Selling Relief granted to the Existing Funds except Aston Hill Capital Growth Fund by conforming the representations and conditions to that of more recent decisions which have granted exemptive relief similar to the Short Selling Relief. The Short Selling Relief consolidates Aston Hill Capital Growth Fund's Previous Short Selling Relief with the Short Selling Relief for consistency across the Funds.

12. The representations of the Previous Short Selling Relief do not apply to the Funds and the Funds will not rely on the Previous Short Selling Relief which, as of the date of this decision, will be considered succeeded by this decision.

Proposed Short Selling

13. The Filer proposes that each Fund be authorized to engage in a limited, prudent and disciplined amount of short selling. The Filer is of the view that the Funds could benefit from the implementation and execution of a controlled and limited short selling strategy. This strategy would complement the Funds' primary discipline of buying securities with the expectation that they will appreciate in market value.

14. Short sales will be made consistent with each Fund's investment objectives and strategies.

15. In order to effect a short sale, a Fund will borrow securities from either its custodian or a dealer (in either case, the Borrowing Agent), which Borrowing Agent may be acting either as principal for its own account or as agent for other lenders of securities.

16. The Fund will be required to deposit Fund assets with the Borrowing Agent as security in connection with the short sale transaction in accordance with usual industry practice.

17. All short sales will be effected through market facilities through which the securities sold short are normally bought and sold and will be sold short within normal trade settlement periods for the market in which the short sale is effected. Securities will be sold short for cash only with the Fund assuming the obligation to return to the Borrowing Agent the securities borrowed to effect the short sale transaction.

18. The securities sold short will not be "illiquid assets" as such term is defined in NI 81-102, and will be securities that are either:

(a) listed and posted for trading on a stock exchange and

(i) the issuer of which has a market capitalization of not less than CDN $100 million, or the equivalent thereof, at the time the short sale is effected, or

(ii) that the Fund's portfolio advisor has pre-arranged to borrow for the purpose of such sale; or

(b) bonds, debentures or other evidences of indebtedness of, or guaranteed by, any issuer.

19. Each Fund will hold "cash cover" (as defined in NI 81-102) to cover its obligations in relation to the short sale.

20. The Fund will maintain appropriate internal controls regarding its short sales prior to conducting any short sales, including written policies and procedures and risk management controls.

21. The Fund will keep proper books and records of all short sales and Fund assets deposited with Borrowing Agents as security.

Non-Prospectused Investing

22. The investment objective of Global Convertible Trust is to provide unitholders with the opportunity for capital appreciation by investing in a portfolio comprised primarily of U.S. dollar denominated global convertible bonds.

23. The investment objective Global Convertible Fund is to provide unitholders with monthly tax-efficient distributions and the opportunity for capital appreciation. Global Convertible Fund invests, directly or indirectly, in a portfolio comprised primarily of U.S. dollar denominated global convertible bonds. In order to pursue its investment objective, Global Convertible Fund obtains exposure to Global Convertible Trust by entering into one or more specified derivatives (collectively the Forward Agreement) with one or more counterparties. All aspects of the Forward Agreement comply with the requirements of NI 81-102 relating to the use of specified derivatives by mutual funds.

24. Global Convertible Trust will issue units under the 2011 Prospectus. Only investors who qualify as accredited investors will be permitted to purchase units of Global Convertible Trust under the 2011 Prospectus.

25. Global Convertible Trust does not intend to renew its prospectus after the 2011 Prospectus lapses. This will result in cost-savings as Global Convertible Trust will not need to prepare and renew its prospectus annually. After the 2011 Prospectus of Global Convertible Trust lapses in 2012, Global Convertible Trust intends to continue distributing its units only on a basis which is exempt from the prospectus requirements in Canadian securities legislation (principally by distributing its units only to accredited investors).

26. After the 2011 Prospectus lapses in 2012, Global Convertible Trust will remain a reporting issuer in each jurisdiction in which Global Convertible Fund is a reporting issuer and, accordingly, will remain subject to all of the requirements of the Mutual Fund Instruments, except to the extent that Global Convertible Trust may be granted discretionary relief from any such requirements. Global Convertible Fund will not invest, directly or indirectly, in units of Global Convertible Trust if Global Convertible Trust ceases to be a reporting issuer in the same jurisdictions in which Global Convertible Fund is a reporting issuer.

Three-Tier Investing

27. The investment objective of Global Convertible Class is to provide shareholders with monthly tax-efficient distributions and the opportunity for capital appreciation by investing, directly or indirectly, in a portfolio comprised primarily of U.S. dollar denominated global convertible bonds.

28. The Filer believes it would be advantageous for Global Convertible Class and its securityholders to be able to obtain exposure to the investment portfolio of Global Convertible Trust by investing in Global Convertible Fund. It would be inefficient from a tax perspective for Global Convertible Class to invest directly in Global Convertible Trust. It would be administratively inefficient for Global Convertible Class to enter into its own specified derivatives to obtain exposure to Global Convertible Trust.

29. The simplified prospectus and fund facts of Global Convertible Class will disclose that it invests directly in units of Global Convertible Fund which, in turn, obtains exposure to Global Convertible Trust using the Forward Agreement. It will therefore be clear to investors that accountability for portfolio management is at the level of Global Convertible Trust. In addition, Global Convertible Class will comply with the requirements under NI 81-106 relating to top 25 positions disclosure in its management reports of fund performance and the requirements in Form 81-101F3 relating to portfolio holdings disclosure in its fund facts as if Global Convertible Class were investing directly in Global Convertible Trust. This will provide transparency to investors relating to the investment portfolio.

30. Investments by Global Convertible Class in Global Convertible Fund will be permitted by, and consistent with, the investment objective of Global Convertible Class.

31. The investments by Global Convertible Class in Global Convertible Fund, and the exposure of Global Convertible Fund (and, indirectly, Global Convertible Class) to the changes in value of units of Global Convertible Trust:

(a) will be made in accordance with the requirements of section 2.5 of NI 81-102 except as otherwise permitted by the Exemption Sought; and

(b) will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of Global Convertible Class and Global Convertible Fund.

Money Market Fund

32. The investment objective of Aston Hill Money Market Class will be to provide the maximum current income that is consistent with preservation of capital and liquidity by investing primarily in Canadian money market securities. Aston Hill Money Market Class seeks to qualify as a "money market fund" as defined in NI 81-102.

33. Aston Hill Money Market Class intends to pursue its investment objective as a money market fund by investing in Aston Hill Money Market Fund. Aston Hill Money Market Fund is a "money market fund" as defined in NI 81-102 and will only invest in securities that are permitted to be held by money market funds under NI 81-102. By investing in Aston Hill Money Market Fund, Aston Hill Money Market Class will be accomplishing indirectly what it would otherwise be able to accomplish directly as a "money market fund" as defined in NI 81-102. Absent the Money Market Relief, Aston Hill Money Market Class will not qualify as a "money market fund" as defined in NI 81-102.

34. Pooling the assets of Aston Hill Money Market Class with those of Aston Hill Money Market Fund will increase the size of Aston Hill Money Market Fund and may lead to better yields for both Aston Hill Money Market Class and Hill Money Market Fund as well as administrative efficiencies.

Seed Capital and First Simplified Prospectus

35. Prior to June 30, 2011, Global Convertible Fund was a non-redeemable investment fund. On June 30, 2011, Global Convertible Fund became a mutual fund (the Mutual Fund Conversion) subject to the requirements of NI 81-102. The Filer believes the Mutual Fund Conversion will provide unitholders of Global Convertible Fund with enhanced liquidity and an opportunity for Global Convertible Fund to raise additional capital.

36. Global Convertible Trust has been subject to the requirements of the Mutual Fund Instruments in the provinces of Ontario and Québec since its first distribution of units in December 2009. Upon filing the final version of the 2011 Prospectus, Global Convertible Trust will become a reporting issuer in, and subject to the Mutual Fund Instruments in, all the other provinces of Canada. Global Convertible Trust will continue to be subject to the Mutual Fund Instruments in all provinces of Canada for as long as it remains a reporting issuer.

37. Each Global Convertible Trust Fund has filed the preliminary version of the 2011 Prospectus and expects to shortly file the final version of the 2011 Prospectus, which will constitute the first simplified prospectus filed under NI 81-101 for each Global Convertible Trust Fund.

38. The net asset value of Global Convertible Fund as at July 18, 2011 was approximately $39 million. The Filer expects the net asset value of Global Convertible Fund to be above $500,000 when units of the Fund become available for sale under the final version of the 2011 Prospectus.

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 Seed Capital Relief and the First Simplified Prospectus Relief are granted.

The decision of the principal regulator under the Legislation is that the Three-Tier Relief is granted provided that the Three-Tier Relief shall terminate upon the coming into force of any legislation or rule dealing with the matters referred to in subsection 2.5(2)(b) of NI 81-102.

The decision of the principal regulator under the Legislation is that the Short Selling Relief is granted provided that, in respect of each Fund:

1. any short sales made by the Fund will be subject to compliance with the investment objectives of the Fund;

2. any short sales will be effected through market facilities through which the securities sold short are normally bought and sold;

3. securities will be sold short for cash only;

4. no proceeds from short sales by the Fund will be used by the Fund to purchase long positions in securities other than cash cover;

5. the Short Selling Relief does not apply to any Fund that is classified as a money market fund;

6. the aggregate market value of all securities sold short by the Fund will not exceed 20% of the total net assets of the Fund on a daily marked-to-market basis;

7. the aggregate market value of all securities of an issuer that are sold short by the Fund will not exceed 5% of the total net assets of the Fund on a daily marked-to-market basis;

8. the Fund will hold "cash cover" (as defined in NI 81-102) in an amount, including the Fund assets deposited with Borrowing Agents as security in connection with short sale transactions, that is at least 150% of the aggregate market value of all securities sold short by the Fund on a daily marked-to-market basis;

9. except where the Borrowing Agent is the Fund's custodian, when the Fund deposits Fund assets with a Borrowing Agent as security in connection with a short sale transaction, the amount of Fund assets deposited with the Borrowing Agent does not, when aggregated with the amount of Fund assets already held by the Borrowing Agent as security for outstanding short sale transactions of the Fund, exceed 10% of the total net assets of the Fund, taken at market value as at the time of the deposit;

10. for short sale transactions in Canada, every dealer that holds Fund assets as security in connection with short sale transactions by the Fund shall be a registered dealer in Canada and a member of a self-regulatory organization that is a participating member of the Canadian Investor Protection Fund;

11. for short sale transactions outside of Canada, every dealer that holds Fund assets as security in connection with short sale transactions by the Fund shall:

(a) be a member of a stock exchange and, as a result, be subject to a regulatory audit; and

(b) have a net worth in excess of the equivalent of $50 million determined from its most recent audited financial statements that have been made public;

12. the security interest provided by the Fund over any of its assets that is required to enable the Fund to effect short sale transactions is made in accordance with industry practice for that type of transaction and relates only to obligations arising under such short sale transactions;

13. the Fund will maintain appropriate internal controls regarding its short sales including written policies and procedures, risk management controls and proper books and records;

14. prior to conducting any short sales, the Fund discloses in its simplified prospectus a description of: (i) short selling, (ii) how the Fund intends to engage in short selling, (iii) the risks associated with short selling, and (iv) in the Investment Strategy section of the simplified prospectus, the Fund's strategy and the Short Selling Relief;

15. prior to conducting any short sales, the Fund discloses in its annual information form the following information:

(a) that there are written policies and procedures in place that set out the objectives and goals for short selling and the risk management procedures applicable to short selling;

(b) who is responsible for setting and reviewing the policies and procedures referred to in the preceding paragraph, how often the policies and procedures are reviewed, and the extent and nature of the involvement of the board of directors of the manager in the risk management process;

(c) the trading limits or other controls on short selling in place and who is responsible for authorizing the trading and placing limits or other controls on the trading;

(d) whether there are individuals or groups that monitor the risks independent of those who trade; and

(e) whether risk measurement procedures or simulations are used to test the portfolio under stress conditions;

16. each Existing Fund will provide a written summary of the material differences between the Short Selling Relief and its Previous Short Selling Relief in its next regular mailing to unitholders; and

17. the Short Selling Relief shall terminate upon the coming into force of any legislation or rule dealing with the matters referred to in subsections 2.6(a), 2.6(c) and 6.1(1) of NI 81-102.

The decision of the principal regulator under the Legislation is that the Money Market Relief is granted provided that:

1. Aston Hill Money Market Fund meets and continues to meet the definition of "money market fund" in NI 81-102;

2. all investments by Aston Hill Money Market Class in Aston Hill Money Market Fund comply with the requirements of section 2.5 of NI 81-102; and

3. the Money Market Relief shall terminate upon the coming into force of any legislation or rule dealing with the restriction in section 1.1 of NI 81-102 which prohibits a money market fund from investing in another money market fund.

The decision of the principal regulator under the Legislation is that the Non-Prospectused Investing Relief is granted provided that:

1. Global Convertible Trust remains a reporting issuer that is subject to the Mutual Fund Instruments in all jurisdictions in which Global Convertible Fund is a reporting issuer; and

2. the Non-Prospectused Investing Relief shall terminate upon the coming into force of any legislation or rule dealing with the matters referred to in subsections 2.1(1), 2.2(1)(a), 2.5(2)(a) and 2.5(2)(c) of NI 81-102.