1832 Asset Management L.P.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief granted from paragraphs 2.5(2)(a) and 2.5(2)(c) of National Instrument 81-102 Investment Funds to permit existing and future mutual funds to invest up to 10% of their net assets in closed-end funds traded on a stock exchange in Canada and the United States -- one mutual fund permitted to invest up to 25% of its net assets in closed-end funds in Canada and the United States provided the closed-end funds comply with the investment restrictions in NI 81-102 applicable to mutual funds -- relief granted to one mutual fund to facilitate "cloning" structure in which corporate class fund replicates performance of mutual fund trust that invests in underlying closed-end funds -- name of corporate class corresponds to name of intermediate fund, and top fund investment objectives includes name of intermediate fund and make reference to cloning strategy -- fund of fund investing by top funds to otherwise comply with fund of fund restrictions in section 2.5 of NI 81-102.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, paragraphs 2.5(2)(a), (b) and (c) and section 19.1.

March 16, 2016

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 1832 ASSET MANAGEMENT L.P. (the Filer or Manager)

DECISION

BACKGROUND

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of (i) the Top Funds (as defined below) for an exemption effective as of March 21, 2016 (the Effective Date) under the securities legislation of the jurisdiction of the principal regulator (the Legislation) from paragraphs 2.5(2)(a) and (c) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the Top Funds to purchase and hold securities of Underlying Closed-End Funds (as defined below) (the Underlying CEF Relief) and (ii) Dynamic Alternative Yield Class (DAYC) for an exemption under the Legislation from paragraph 2.5(2)(b) of NI 81-102 to permit DAYC to invest in the Specified Top Fund (as defined below), notwithstanding that at the time of investment the Specified Top Fund holds more than 10% of its net asset value in Underlying Closed-End Funds (the Triple Fund Relief and, together with the Underlying CEF Relief, the Requested Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(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 each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).

INTERPRETATION

Unless otherwise defined herein, terms defined in National Instrument 14-101 Definitions, MI 11-102 and National Instrument 81-107 Independent Review Committee for Investment Funds have the same meaning in this decision. In addition, the following terms have the following meanings:

Act means the Securities Act (Ontario) as may be amended from time to time.

Amendments means certain amendments to section 2.5 of NI 81-102, which prohibit a mutual fund from purchasing or holding a security of another investment fund unless, among other things:

(a) under subsection 2.5(2)(a), the other investment fund is a mutual fund that is subject to NI 81-102 and offers or has offered securities under a simplified prospectus in accordance with NI 81-101 (the s.2.5(a) Investment Restriction); and

(b) under subsection 2.5(2)(c), the mutual fund and the other investment fund are reporting issuers in the local jurisdiction (together with the s.2.5(a) Investment Restriction, the Investment Restrictions).

Investment Company Act means the Investment Company Act of 1940 and the rules and regulations thereunder, as the same may be amended from time to time.

NI 81-101 means National Instrument 81-101 Mutual Fund Prospectus Disclosure.

Non-redeemable investment fund has the meaning as ascribed to it in subsection 1(1) of the Act.

Specified Top Fund means Dynamic Alternative Yield Fund, which is subject to NI 81-102 and managed and advised by the Manager.

Top Funds means the existing mutual funds and future mutual funds, which are or will be subject to NI 81-102 and are or will be managed and/or advised by the Manager or an affiliate or associate of the Manager and which, for greater certainty, includes the Specified Top Fund.

Underlying Canadian Closed-End Fund means a non-redeemable investment fund that is subject to NI 81-102, that is not managed and/or advised by the Manager or an affiliate or associate of the Manager, and whose securities are listed on a stock exchange in Canada.

Underlying Closed-End Fund means an Underlying Canadian Closed-End Fund or an Underlying U.S. Closed-End Fund.

Underlying U.S. Closed-End Fund means a non-redeemable investment fund that is not subject to NI 81-102 but is subject to the Investment Company Act, that is not managed and/or advised by the Manager or an affiliate or associate of the Manager, and whose securities are listed on a stock exchange in the United States.

REPRESENTATIONS

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

The Manager

1. The Manager is an Ontario limited partnership, which is wholly-owned indirectly by The Bank of Nova Scotia. The general partner of the Manager is 1832 Asset Management G.P. Inc., an Ontario corporation wholly-owned directly by The Bank of Nova Scotia, with its head office in Ontario.

2. The Manager is registered as: (i) a portfolio manager in all of the provinces of Canada and in Northwest Territories and Yukon; (ii) an exempt market dealer in all of the provinces of Canada (except Prince Edward Island and Saskatchewan); (iii) an investment fund manager in Ontario, Quebec, Newfoundland and Labrador and Northwest Territories; and (iv) a commodity trading manager in Ontario.

3. The Manager is not in default of securities legislation in any of the Jurisdictions.

The Top Funds

4. Each of the Top Funds is or will be established as an open-ended mutual fund trust, limited partnership or class of shares of a mutual fund corporation, in each case established or governed under the laws of the Province of Ontario or the laws of Canada.

5. Each of the Top Funds is or will be a "reporting issuer" (as defined in the Act) in one or more of the Jurisdictions. The securities of each Top Fund are or will be qualified for distribution in one or more of the Jurisdictions pursuant to a simplified prospectus and annual information form that has been or will be filed in accordance with the securities legislation of each of the relevant Jurisdictions.

6. The investment objectives and investment strategies of each of the Top Funds generally permit or will permit the Top Funds to invest in Underlying Closed-End Funds.

7. The investment strategies of the Specified Top Fund expressly state that the Specified Top Fund may invest in Underlying Closed-End Funds.

8. No Top Fund is in default of securities legislation in any of the Jurisdictions.

Underlying Closed-End Funds

9. Each Underlying Canadian Closed-End Fund is or will be a non-redeemable investment fund that is subject to NI 81-102, that is not managed and/or advised by the Manager or an affiliate or associate of the Manager and whose securities are listed on a stock exchange in Canada.

10. Each Underlying U.S. Closed-End Fund is or will be a non-redeemable investment fund that is not subject to NI 81-102 but is subject to the Investment Company Act, that is not managed and/or advised by the Manager or an affiliate or associate of the Manager and whose securities are listed on a stock exchange in the United States.

Investment by the Top Funds in Underlying Closed-End Funds

11. Each of the existing Top Funds that currently invest in Underlying Closed-End Funds filed a prospectus on or before September 22, 2014, and therefore pursuant to the Amendments the Top Funds are not required to comply with the Investment Restrictions until the Effective Date.

12. But for the Requested Relief, as of the Effective Date

(a) the s.2.5(a) Investment Restriction would prohibit a Top Fund from purchasing or holding securities of an Underlying Canadian Closed-End Fund because the Underlying Canadian Closed-End Funds (i) are not mutual funds, and (ii) do not offer, and have not offered, securities under a simplified prospectus in accordance with NI 81-101; and

(b) the Investment Restrictions would prohibit a Top Fund from purchasing or holding securities of a U.S. Closed-End Fund because the Underlying U.S. Closed-End Funds (i) are not mutual funds, (ii) are not subject to NI 81-102, (ii) do not offer, and have not offered, securities under a simplified prospectus in accordance with NI 81-101, and (iii) are not "reporting issuers" within the meaning of the Act in the applicable Jurisdiction(s).

Three-Tier Fund Structure

13. DAYC seeks to provide a return that is similar to the Specified Top Fund. DAYC has, from its inception, achieved its investment objectives by investing in the Specified Top Fund. Aside from a reference in the investment objectives of DAYC to the possibility of entering into income conversion transactions, the investment objectives of DAYC and the Specified Top Fund are identical.

14. DAYC could achieve its investment objectives by investing directly in securities, including in Underlying Closed-End Funds. However, the Filer has determined that it is better for DAYC to achieve its investment objectives by continuing to invest substantially all of its assets in the Specified Top Fund for the following reasons:

(a) This arrangement will be somewhat more tax efficient for DAYC. This is important because DAYC is designed to be held in taxable accounts, whereas the Specified Top Fund is designed to be held in registered accounts, and

(b) This arrangement will reduce tracking errors between DAYC and the Specified Top Fund, since any adjustments made by the Specified Top Fund to its portfolio will automatically adjust the exposure of DAYC to that portfolio.

15. Accordingly, the Filer wishes to provide DAYC with the ability to invest in the Specified Top Fund, notwithstanding that the Specified Top Fund has invested 10% or more of its net asset value in Underlying Closed-End Funds.

16. DAYC's investment in securities of the Specified Top Fund will otherwise be made in accordance with the requirements of section 2.5 of NI 81-102.

17. When the simplified prospectus of DAYC is next renewed, the Filer will (A) clarify the investment objectives and the investment strategies of DAYC in order to disclose (i) in the investment objectives, the name of the Specified Top Fund and (ii) in the investment strategies, the investment strategies of the Specified Top Fund; and (B) add similar disclosure to the Fund Facts of DAYC.

18. The simplified prospectus of DAYC discloses that there will be no duplication of fees and expenses as a result of its investment in other investment funds.

19. DAYC will comply with the requirement under National Instrument 81-106 Investment Fund Continuous Disclosure relating to the top 25 positions portfolio holdings disclosure in its management reports of fund performance and the requirements of Form 81-101F3 Contents of Fund Facts Document relating to top 10 position portfolio holdings disclosure in its Fund Facts as if DAYC were investing directly in the securities held by the Specified Top Fund.

20. The Triple Fund Relief will result in a fund of fund structure that is akin to, and no more complex than, the three-tier structure currently permitted under subsection 2.5(4)(a) of NI 81-102.

21. An investment by DAYC in the Specified Top Fund and by the Specified Top Fund in Underlying Closed-End Funds represents the business judgement of responsible persons of DAYC and the Specified Top Fund, uninfluenced by considerations other than the best interests of DAYC and the Specified Top Fund, respectively.

22. The Filer has determined that it would be in the best interest of DAYC to receive the Triple Fund Relief.

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 Underlying CEF Relief is granted provided that:

(a) the securities of each Underlying Closed-End Fund trade on a stock exchange in Canada or the United States;

(b) a Top Fund (other than the Specified Top Fund) does not purchase securities of an Underlying Closed-End Fund if, immediately after the purchase, more than 10% of the Top Fund's net asset value would consist of securities of Underlying Closed-End Funds;

(c) the Specified Top Fund does not purchase securities of an Underlying Closed-End Fund if, immediately after the purchase, more than 25% of the Specified Top Fund's net asset value would consist of securities of Underlying Closed-End Funds;

(d) subject to (e) and (f) below, other than with respect to paragraphs 2.12(1)10, 2.13(1)9 and 2.14(1)8 of NI 81-102, each Underlying Closed-End Fund complies with the investment restrictions in NI 81-102 applicable to mutual funds;

(e) the weighted average leverage exposure of the Specified Top Fund does not exceed 10% of the net asset value of the Specified Top Fund. The Specified Top Fund's weighted average leverage exposure is determined by multiplying (i) the leverage employed by each Underlying Closed-End Fund, by (ii) the percentage of the Specified Top Fund's net asset value to be invested in such Underlying Closed-End Fund;

(f) the Specified Top Fund may invest an amount equal to 10% of its net asset value in Underlying Closed-End Funds that do not comply with the investment restrictions in NI 81-102; and

(g) the Manager uses pre-trade compliance controls to monitor the restrictions in paragraphs (d), (e) and (f) above.

The decision of the principal regulator under the Legislation is that the Triple Fund Relief is granted provided that:

(a) the proposed investment of DAYC in the Specified Top Fund is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102; and

(b) when the simplified prospectus of DAYC is next renewed, (A) the investment objectives and the investment strategies of DAYC as set out in the simplified prospectus are clarified in order to disclose (i) in the investment objectives, the name of the Specified Top Fund and (ii) in the investment strategies, the investment strategies of the Specified Top Fund; and (B) similar disclosure is added the Fund Facts of DAYC.

"Darren McKall"

Manager, Investment Funds and Structured Products Branch

Ontario Securities Commission