Ark Fund Management Ltd. and the Mutual Funds Listed in Appendix "A

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to allow mutual fund to short sell up to 20% of net assets, subject to certain conditions -- National Instrument 81-102 Mutual Funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.6(a) and (c), 6.1(1), 19.1.

December 4, 2009

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

ARK FUND MANAGEMENT LTD.

(the "Manager")

AND

IN THE MATTER OF

THE MUTUAL FUNDS LISTED

IN APPENDIX "A" HERETO

(the "Existing Funds")

(collectively, the Existing Funds and

the Manager, the "Filers")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers, on behalf of each of the Existing Funds and any other mutual fund as the Manager or any affiliate of the Manager may manage in the future (together with the Existing Funds, the "Funds"), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") exempting the Funds from the following requirements of the Legislation:

(a) the requirement contained in subsection 2.6(a) of National Instrument 81-102 Mutual Funds ("NI 81-102") prohibiting a mutual fund from providing a security interest over its assets;

(b) the requirement contained in subsection 2.6(c) of NI 81-102 prohibiting a mutual fund from selling securities short; and

(c) the requirement contained in subsection 6.1(1) of NI 81-102 prohibiting a mutual fund from depositing any part of its assets with an entity other than that mutual fund's custodian

(paragraphs (a), (b) and (c) together are referred to as the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filers have 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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territories and Nunavut.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless otherwise defined.

Representations

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

1. The Manager is a corporation incorporated under the laws of the Province of Ontario. The head office of the Manager is located in Toronto, Ontario.

2. Each Fund is, or will be, an open-end mutual fund trust or a class of shares of a mutual fund corporation, established under the laws of the Province of Ontario, of which the Manager, or an affiliate of the Manager, is or will be the manager.

3. Each Fund is, or will be, a reporting issuer in the provinces and territories of Canada, as set out in Appendix "A", and distributes or will distribute securities under a simplified prospectus and annual information form and be otherwise subject to NI 81-102.

4. Each of the Funds is not, nor will be, in default of securities legislation in Ontario or any of the other provinces and territories of Canada.

5. The investment practices of each Fund will comply in all respects with the requirements of Part 2 of NI 81-102, except to the extent that the Fund has received permission from the applicable securities regulatory authorities or regulators to deviate therefrom.

6. The Manager proposes that each Fund be authorized to engage in a limited, prudent and disciplined amount of short selling. The Manager 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.

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

8. 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.

9. Each Fund will implement the following requirements and controls when conducting a short sale:

(a) securities will be sold short for cash, with the Fund assuming the obligation to return to the Borrowing Agent the securities borrowed to effect the short sale;

(b) the short sale will be effected through market facilities through which the securities sold short are normally bought and sold;

(c) the Fund will receive cash for the securities sold short within normal trading settlement periods for the market in which the short sale is effected;

(d) the securities sold short will be liquid securities, and "liquid securities" are securities that satisfy either (i) or (ii) below:

(i) the securities are listed and posted for trading on a stock exchange; and

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

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

(ii) the securities are fixed-income securities, bonds, debentures or other evidences of indebtedness of, or guaranteed by, the Government of Canada or any province or territory of Canada or the Government of the United States of America;

(e) at the time securities of a particular issuer are sold short:

(i) the aggregate market value of all securities of that issuer sold short by the Fund will not exceed 5% of the total net assets of the Fund; and

(ii) the Fund will place a "stop-loss" order with a dealer to immediately purchase for the Fund an equal number of the same securities if the trading price of the securities exceeds 120% (or such lesser percentage as the Manager may determine) of the price at which the securities were sold short;

(f) the Fund will deposit Fund assets with the Borrowing Agent as security in connection with the short sale transaction;

(g) the Fund will maintain appropriate internal controls regarding short sales prior to conducting any short sales, including written policies and procedures and risk management controls;

(h) the Fund will keep proper books and records of all short sales and Fund assets deposited with Borrowing Agents as security; and

(i) the Fund will provide disclosure in its simplified prospectus and annual information form of the proposed use of short selling by the Fund, the specific risks related to short selling, and details of this exemptive relief prior to implementing the short selling strategy.

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 Exemption Sought is granted provided that in respect of each Fund:

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

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

3. the Exemption Sought does not apply to a Fund that is classified as a money market fund or a short-term income fund;

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

5. the Fund holds "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;

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

7. 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;

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

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

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

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 assets of the Fund, taken at market value as at the time of the deposit;

10. 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;

11. prior to conducting any short sales, the Fund discloses in its simplified prospectus, or an amendment thereto, 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 this exemptive relief;

12. prior to conducting any short sales, the Fund discloses in its annual information form, or an amendment thereto, the following information:

(i) 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;

(ii) 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;

(iii) 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;

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

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

13. prior to conducting any short sales, the Fund has provided to its securityholders not less than 60 days' written notice that discloses the Fund's intent to begin short selling transactions and the disclosure required in the Fund's simplified prospectus and annual information form as outlined in paragraphs 11 and 12 above, or the Fund's initial simplified prospectus and annual information form and each renewal thereof has included such disclosure.

The Exemption Sought shall terminate upon the coming into force of any legislation or rule of the principal regulator dealing with matters referred to in subsections 2.6(a), 2.6(c) and 6.1(1) of NI 81-102.

Appendix "A"

EXISTING FUNDS

Mutual fund corporations

Mutual fund trust

Ark NorthRoad Global Fund{3}

{1} offered in all of the provinces and territories of Canada

{2} offered in the provinces of Alberta and British Columbia

{3} offered in all of the provinces of Canada