National Policy 11-203 -- Process for Exemptive Relief Decisions in Multiple Jurisdictions -- Relief from certain new mutual fund start-up requirements and restrictions on performance data disclosure in NI 81-102 granted to closed-end fund converting to open-ended mutual fund -- relief from seed capital requirements and from prohibition against fund bearing costs of preparation and filing of first simplified prospectus, annual information form and fund -- fund is an existing fund which will have in excess of $500000 in assets following conversion to mutual fund.
Applicable Legislative Provisions
National Instrument 81-102 Mutual Funds, ss. 3.1, 3.3, 19.1.
June 21, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
MANULIFE ASSET MANAGEMENT LIMITED
MANULIFE STRATEGIC INCOME OPPORTUNITIES FUND
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption relieving the Fund from:
(a) the prohibitions in section 3.1 of National Instrument 81-102 -- Mutual Funds (NI 81-102) to permit the Fund to rely on its existing net assets as its seed capital (theSeed Capital Relief); and
(b) the prohibitions in section 3.3 of NI 81-102 to permit the Fund to bear the costs of preparation and filing of its first simplified prospectus, annual information form and fund facts document (the First Simplified Prospectus Relief)
(collectively, the Exemption Sought).
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) 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, Newfoundland and Labrador, Prince Edward Island, Yukon, Nunavut and Northwest Territories (collectively, the Other Jurisdictions).
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.
Conversion means the conversion of the Fund from a closed-end investment fund to a mutual fund on or about June 28, 2013.
Conversion Date means the date upon which the Conversion is effected, being the close of business on or about June 28, 2013.
This decision is based on the following facts represented by the Filer:
1. The Filer acts as the manager, trustee and investment manager of the Fund.
2. The Filer is a corporation governed by the laws of Ontario and is registered in the categories of portfolio manager and exempt market dealer in Alberta, British Columbia, Saskatchewan, Manitoba, Nova Scotia, New Brunswick and Prince Edward Island, portfolio manager, exempt market dealer and investment fund manager in Newfoundland and Labrador and Quebec and mutual fund dealer, portfolio manager, commodity trading manager, exempt market dealer and investment fund manager in Ontario. The Filer's head office is located in Toronto, Ontario.
3. The Fund was established as a closed-end investment fund under the laws of Ontario pursuant to a declaration of trust dated May 27, 2011 as amended and restated by a declaration of trust dated June 16, 2011 (the Declaration of Trust).
4. Neither the Filer nor the Fund is in default of securities legislation in any province or territory of Canada.
5. Units of the Fund were distributed pursuant to an initial public offering under a long form prospectus dated May 27, 2011 (theLong Form Prospectus) and were listed for trading on the Toronto Stock Exchange (TSX) on June 17, 2011.
6. As of June 7, 2013, there were 7,994,443 units of the Fund outstanding with a net asset value (NAV) per unit of $9.1491, for an aggregate NAV of the Fund of approximately $73,142,316.76.
7. Since its inception, the Fund has complied with the investment restrictions contained in NI 81-102, except, as described in the Long Form Prospectus, the Fund was permitted to use leverage (up to 25% of the net asset value of the Fund) and obtain exposure to a portfolio of securities through a forward agreement.
8. The Fund will automatically convert from a closed-end investment fund to a mutual fund on or about June 28, 2013 (the Conversion), as disclosed in the Long Form Prospectus.
9. The Declaration of Trust and Long Form Prospectus provide that the units of the Fund will be delisted from any stock exchange on which they were listed prior to the Conversion Date and the Fund will convert to an open-ended mutual fund and units of the Fund will become redeemable at their NAV per unit on a daily basis on the Conversion Date.
10. A written notice regarding the Conversion was mailed to unitholders of the Fund on April 10, 2013.
11. The Manager filed a preliminary simplified prospectus, preliminary annual information form and preliminary fund facts on May 10, 2013 on SEDAR to qualify the Advisor Series securities of the Fund (previously the units of the closed-end fund) and Series F securities, Series FT6 securities, Series I securities, Series IT securities and Series T6 securities of the Fund (new classes of units of the Fund) under National Instrument 81-101 -- Mutual Fund Prospectus Disclosure in Ontario and each of the Other Jurisdictions.
12. The Fund's units were delisted from the TSX at the close of business on June 14, 2013 in order to permit the completion of the Conversion.
13. In connection with the Conversion, the Fund will be renamed Manulife Global Tactical Credit Fund and the investment practices of the Fund will continue to comply in all respects with the requirements of Part 2 of NI 81-102 subject to any regulatory exemptions granted to the Fund.
Seed Capital Relief and First Simplified Prospectus Relief
14. The Fund was a non-redeemable investment fund prior to the Conversion Date and has an operating history and public continuous disclosure record dating back to May 27, 2011.
15. The net asset value of the Fund as at June 7, 2013 was approximately $73,142,316.76. The Filer expects the net asset value of the Fund to be above $500,000 when units of the Fund become available for sale under the final version of the First Simplified Prospectus.
16. On the Conversion Date, the Fund will become a mutual fund subject to the requirements of NI 81-102. The Filer believes that the Conversion will provide unitholders of the Fund with enhanced liquidity and the opportunity for the Fund to raise additional capital.
17. Granting the Seed Capital Relief and First Simplified Prospectus Relief will not cause prejudice to investors because the Fund has been in existence since 2011 and has sufficient assets to continue its operations. The Fund also has sufficient assets to pay the costs of the First Simplified Prospectus.
The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted.