Northern Trust Global Advisors, Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Pooled mutual funds advised by a registered adviser prohibited from making and holding investments in related issuers -- Relief granted from the Securities Act and National Instrument 31-103 Registration Requirements and Exemptions to permit the funds to make and hold investments in securities of related issuers, subject to IRC approval.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 111(2)(a), 111(2)(c)(ii), 111(3), 113.

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5(2)(a), 15.1.

June 3, 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

NORTHERN TRUST GLOBAL ADVISORS, INC.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for relief from:

(a) the prohibition in the Legislation of the Jurisdiction (the Related Shareholder Relief) that prohibits a mutual fund from making or holding an investment in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company (each a Related Shareholder);

(b) the prohibition in the Legislation of the Jurisdiction (the Related Party Relief) that prohibits a mutual fund from making or holding an investment in an issuer in which a Related Shareholder has a significant interest (each, a Related Party); and

(c) the prohibition in the Legislation of the Jurisdiction (the Related Issuer Relief) that prohibits a registered adviser from knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, from purchasing a security of any issuer (each a Related Issuer) in which a responsible person or an associate of a responsible person is a partner, officer or director unless this fact is disclosed to the client and the written consent of the client to the purchase is obtained before the purchase

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,

(b) in respect of the Related Shareholder Relief and Related Party Relief, 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, Nova Scotia, New Brunswick and Newfoundland and Labrador (collectively, the Non-principal Jurisdictions); and

(c) in respect of the Related Issuer Relief, the Filer has provided notice that section 4.7(1) of MI 11-102 is intended to be relied upon in the Non-principal Jurisdictions.

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions (NI 14-101), M1 11-102, in NI 81-102 and in National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107) have the same meaning in this decision unless otherwise defined.

In this decision the term Related Person will be used to refer to a Related Shareholder, a Related Party or a Related Issuer depending on the provision that is being considered and the term Requested Related Person Securities Relief will be used to refer to the Related Shareholder Relief, the Related Party Relief and the Related Issuer Relief, together, requested by the Filer on behalf of the Pooled Funds (as defined below).

Representations

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

The Filer

1. The head office of the Filer is in Stamford, Connecticut.

2. The Filer is not in default of securities legislation in any Jurisdiction.

3. The Filer is the administrator of a group of pooled funds known collectively as The Diversified Fund of Canada (the DFC), consisting of a series of separate trusts named as follows: the Canadian Equity Fund, Special Canadian Equity Fund, Core U.S. Equity Fund, International Specialist Fund, Active Fixed Income Fund, Short Term Fund (the Existing Pooled Funds).

The Pooled Funds

4. Each Existing Pooled Fund and each new fund established by the Filer or an affiliate of the Filer to which National Instrument 81-102 Mutual Funds (NI 81-102) does not apply (the Future Pooled Funds together with the Existing Pooled Funds, the Pooled Funds) is constituted as a "mutual fund" within the meaning of securities legislation of the Jurisdictions.

5. Units of the Pooled Funds are sold on a private placement basis to institutional investors, primarily pension plans. The Pooled Funds are "mutual funds in Ontario" within the meaning of section 111 of the Act, but are not reporting issuers.

6. The Pooled Funds are not in default of securities legislation in any Jurisdiction.

Investment manager

7. Manulife Asset Management Limited (MAML) is the investment manager of one of the Existing Pooled Funds and could in the future become an investment manager of other Existing Pooled Funds or future sections of the DFC (any such Fund or section for which MAML acts or will act as investment manager, an Affected Fund).

8. MAML is a subsidiary of Manulife Financial Corporation (Manulife).

9. Manulife currently owns, directly or indirectly, more than 20% of the outstanding voting securities of MAML and therefore is a "substantial security holder" of MAML.

10. Directors or officers of MAML may also, from time to time, be directors or officers of Manulife.

11. MAML is not in default of securities legislation in any Jurisdiction.

Investment by the Affected Funds in Securities of Related Issuers

12. As the result of entering into an investment management contract with MAML to provide investment management services to an Affected Fund, MAML is a "management company" of the Affected Funds. An Affected Fund may not invest in securities of Manulife, as Manulife is a substantial security holder of MAML, the management company of the Funds.

13. In addition, an Affected Fund may not invest in, or hold securities of any issuer of which Manulife has a significant interest (Manulife and any such issuer, collectively the Related Issuers).

14. MAML may from time to time be prohibited from causing an Affected Fund to invest in, or hold, the securities of a Related Issuer.

15. Section 6.2 of NI 81-107 provides an exemption from the prohibitions comprising the Requested Related Person Securities Relief for exchange-traded securities such as common shares. It does not permit an Affected Fund, or the Filer on behalf of the Affected Fund, to purchase non-exchange-traded securities issued by Related Persons. Some securities of Related Persons, such as debt securities, are not listed and traded.

16. The Filer is restricted from purchasing and holding non-exchange-traded securities of the Related Persons on behalf of an Affected Fund. The Filer considers that the Affected Funds should have access to such securities for the following reasons:

(a) There is currently and has been for several years a very limited supply of highly rated corporate debt.

(b) Diversification is reduced to the extent that an Affected Fund is limited with respect to investment opportunities and places the Affected Fund at a competitive disadvantage.

17. Each purchase of non-exchange-traded debt securities of a Related Issuer will occur in the secondary market and not under primary distributions or treasury offerings of a Related Issuer.

18. Each non-exchange-traded debt security of a Related Issuer purchased by an Affected Fund will have, at the time of the purchase, an "approved credit rating" by an "approved credit rating organization" within the meaning of those terms in NI 81-102.

19. The Filer will use an independent review committee (IRC) with a mandate that will include the approval of purchases by an Affected Fund of securities of Related Issuers.

20. The IRC will be composed in accordance with section 3.7 of NI 81-107 and will comply with the standard of care set out in section 3.9 of NI 81-107 as if the Affected Funds were subject to that rule. The only conflict of interest matters that will be referred by each Affected Fund to its IRC will be the proposed investment to be made by the Affected Fund in securities of Related Issuers.

21. The IRC will not approve purchases unless it has made the determination set out in section 5.2(2) of NI 81-107.

22. The Affected Funds are only permitted to make investments that are consistent with, or are necessary to meet, their investment objectives.

Decision

Related Shareholder Relief and Related Party Relief

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 is that the Related Shareholder Relief and Related Party Relief is granted to permit the Filer to purchase Related Person debt securities in the secondary market on behalf of the Affected Funds on the condition that:

(a) the purchase or holding is consistent with, or is necessary to meet, the investment objective of the Affected Fund;

(b) each Affected Fund maintains an IRC that is composed in accordance with the requirements of section 3.7 of NI 81-107 and that complies with the standard of care set out in section 3.9 of NI 81-107;

(c) the IRC of the Affected Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(d) MAML complies with section 5.1 of NI 81-107 and MAML and the IRC of the Affected Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;

(e) the price payable for the security is not more than the ask price of the security;

(f) the ask price of the security is determined as follows:

(i) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(ii) if the purchase does not occur on a marketplace,

(A) the Affected Fund may pay the price for the security at which an independent, arm's length seller is willing to sell the security, or

(B) if the Affected Fund does not purchase the security from an independent, arm's length seller, the Affected Fund must pay the price quoted publicly by an independent marketplace or obtain, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and not pay more than that quote;

(g) the transaction complies with any applicable "market integrity requirements";

(h) no later than the time that an Affected Fund is required to file its annual financial statements, the Affected Fund files with the applicable securities regulatory authorities or regulator the particulars of any such investments; and

(i) the reporting obligation in section 4.5 of NI 81-107 applies to the Related Shareholder Relief and the Related Party Relief and the IRC of each Affected Fund relying on the Related Shareholder Relief and the Related Party Relief complies with section 4.5 of NI 81-107 as if the Affected Fund were subject to that rule, in connection with any instance that it becomes aware that such Affected Fund does not comply with any of the conditions of this decision.

This decision is effective June 3, 2011.

Related Issuer Relief

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 is that the Related Issuer Relief is granted to permit the Filer to purchase Related Person debt securities in the secondary market on behalf of the Affected Funds on the condition that:

(a) the purchase or holding is consistent with, or is necessary to meet, the investment objective of the Affected Fund;

(b) each Affected Fund maintains an IRC that is composed in accordance with the requirements of section 3.7 of NI 81-107 and that complies with the standard of care set out in section 3.9 of NI 81-107;

(c) the IRC of the Affected Fund has approved the transaction in accordance with Section 5.2(2) of NI 81-107;

(d) the manager of the Affected Fund complies with section 5.1 of NI 81-107 and the manager and the IRC of the Affected Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;

(e) the price payable for the security is not more than the ask price of the security;

(f) the ask price of the security is determined as follows:

(i) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(ii) if the purchase does not occur on a marketplace,

(A) the Affected Fund may pay the price for the security at which an independent, arm's length seller is willing to sell the security, or

(B) if the Affected Fund does not purchase the security from an independent, arm's length seller, the Affected Fund must pay the price quoted publicly by an independent marketplace or obtain, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and not pay more than that quote.

(g) the transaction complies with any applicable "market integrity requirements"; and

(h) no later than the time the Affected Fund files its annual financial statements, the Affected Fund files with the securities regulatory authority or regulator the particulars of any such investments.

This decision is effective June 3, 2011.