Acorn Global Investments Inc. et al. -- s. 213(3)(b) of the LTCA

Headnote

Clause 213(3)(b) of the Loan and Trust Corporations Act -- Application by manager, with no prior track record acting as trustee, for approval to act as trustee of existing pooled funds and future pooled funds to be managed by the applicant and offered pursuant to a prospectus exemption -- The pooled funds contemplated are specifically 'hedge funds' and have unique custodial arrangements -- Fund investment objectives include focus on extensive use of exchange-traded futures -- Use of futures requires deposit of fund assets with futures commission merchants which are IIROC members -- Deposit of assets with futures commissions merchants will comply with s. 6.8 of National Instrument 81-102 Mutual Fundsexcept for the 10% requirement in s. 6.8(1) or s. 6.8(2)(c).

Statutes Cited

Loan and Trust Corporations Act, R.S.O. 1990, c. L.25, as am., s. 213(3)(b).

June 19, 2012

IN THE MATTER OF

THE LOAN AND TRUST CORPORATIONS ACT

R.S.O. 1990, CHAPTER L.25, AS AMENDED

(the Act)

AND

IN THE MATTER OF

ACORN GLOBAL INVESTMENTS INC.

(the Applicant)

AND

IN THE MATTER OF

ACORN DIVERSIFIED TRUST AND

ACORN DIVERSIFIED PORTFOLIO

(each an Existing Fund)

ORDER

(Section 213(3)(b) of the Act)

UPON the application by the Applicant to the Ontario Securities Commission (the Commission) for an order pursuant to section 213(3)(b) of the Act granting relief to the Applicant, which is the manager of the Existing Funds and will be the manager of such other pooled funds that the Applicant may manage and establish in the future under the laws of Ontario (each a Future Fund, and together with the Existing Funds, the Funds and individually a Fund), to allow it to act as the trustee of the Funds;

AND WHEREAS the Applicant has represented to the Commission that:

1. The Applicant is a corporation incorporated under the Business Corporations Act (Ontario) and is and will be the manager and adviser of each Fund;

2. The Applicant, which has its head office in Oakville, Ontario, is registered as a portfolio manager, a commodity trading manager, an investment fund manager and as an exempt market dealer with the Commission;

3. The investment objective of each Existing Fund is to deliver annualized double digit returns over a three to five year period and a diversification benefit by providing low correlation to traditional equity, bond, and real estate investments;

4. The Applicant uses a disciplined approach to achieve the investment objective of a Fund by applying an investment strategy which contemplates investment in a wide variety of highly liquid global markets, including exchange traded futures, equities and options as well as currencies. It is expected that each Fund will, directly or indirectly, make extensive use of exchange traded futures to achieve its investment objective;

5. The Applicant in its capacity as trustee of a Fund will be responsible for the business, operations and affairs of the Fund, other than acting as administrator or custodian of the assets of the Fund;

6. CIBC Mellon Trust Company (the Custodian) acts and may act as the custodian and administrator of the Funds;

7. The assets of a Fund will be held by the Custodian and/or a Canadian financial institution that complies with Part 6 of National Instrument 81-102 Mutual Funds (NI 81-102) (a Financial Institution) and/or a futures commission merchant, each of which will be independent of the Applicant and each Fund;

8. Cash of the Funds is and may be held by the Custodian and/or one or more Financial Institutions;

9. A futures commission merchant which holds assets of a Fund will be registered with the Commission in the category of futures commission merchant and a member of the Investment Industry Regulatory Organization of Canada;

10. All futures transactions carried out by a futures commission merchant on behalf of a Fund will:

(a) only involve a deposit of portfolio assets of the Fund in Canada;

(b) occur within Canada or outside of Canada; and

(c) not involve a deposit by the Fund with any counterparty of any portfolio assets of the Fund over which the Fund has granted a security interest in connection with a particular specified derivatives transaction;

11. When a Fund invests in exchange-traded futures, each Fund will comply with:

(i) section 6.8(1) of NI 81-102, except for the reference to "10% of the net assets of the mutual fund" included therein;

(ii) section 6.8(2)(a) and (b) of NI 81-102; and

(iii) section 6.8(4) of NI 81-102;

12. A Fund may deliver portfolio assets to a person or company in satisfaction of its obligations under a securities lending, repurchase or reverse repurchase agreement that complies with NI 81-102 if the collateral, cash proceeds or purchased securities that are delivered to the Fund in connection with the transaction are held by the Custodian or a Financial Institution;

13. Units of the Funds are and will only be offered on an exempt basis to investors in each of the provinces and territories of Canada pursuant to the prospectus exemptions in National Instrument 45-106 Prospectus and Registration Exemptions; and

14. Prospective investors will be provided with an offering memorandum prior to their investment in a Fund(s) which, among other things, will describe the investment objectives and investment strategies of the Fund(s);

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

THE ORDER of the Commission is that the Applicant may act as the trustee of each Fund, provided that units of that Fund are only offered to potential investors in Canada pursuant to a prospectus exemption.