Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to a commodity pool from paragraph 2.5(2)(a) and (c) of National Instrument 81-102 Mutual Funds to permit a commodity pool to gain exposure to another commodity pool implementing a two tiered structure, subject to certain conditions. The underlying commodity pool has not filed a prospectus under National Instrument 81-101 Mutual Fund Prospectus Disclosure, but has filed a non-offering long form prospectus and will be a reporting issuer subject to National Instrument 81-106 -- Investment Fund Continuous Disclosure and National Instrument 81-102 -- Mutual Funds, as modified by National Instrument 81-104 -- Commodity Pools.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.5(2)(a), (c), 19.1.

November 9, 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

MAN CANADA AHL DP INVESTMENT FUND

(the "Filer")

AND

IN THE MATTER OF

MAN INVESTMENTS CANADA CORP.

(the "Manager")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager, on behalf of the Filer, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for exemptive relief (the "Requested Relief") from subparagraphs 2.5(2)(a) and (c) of National Instrument 81-102 Mutual Funds ("NI 81-102") to permit the Filer to invest indirectly in securities of the AHL Investment Strategies SPC -- Class D Man AHL Diversified 2 CAD Notes (the "AHL SPC Class D") provided that:

(a) the Filer and AHL SPC Class D are commodity pools subject to NI 81-102 and National Instrument 81-104 Commodity Pools ("NI 81-104");

(b) the exposure of the Filer to securities of the AHL SPC Class D is in accordance with the fundamental investment objectives of the Filer;

(c) the preliminary prospectus (the "Preliminary Prospectus") of the Filer dated July 3, 2009 discloses and the final prospectus of the Filer will disclose that the Filer will obtain exposure to securities of the AHL SPC Class D and, to the extent applicable, the risks associated with such an investment;

(d) no securities of the AHL SPC Class D are distributed in Canada other than to the Counterparty (as hereinafter defined) under the Forward Agreement (as hereinafter defined); and

(e) the indirect investment by the Filer in securities of the AHL SPC Class D is made in compliance with each provision of paragraph 2.5 of NI 81-102, except paragraph 2.5(a) and (c) of NI 81-102.

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

(a) the Ontario Securities Commission (the "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, Northwest Territories, Nunavut and Yukon (the "Passport Jurisdictions").

Interpretation

Terms defined in National Instrument 14-101 Definitions and Ml 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is an investment trust established under the laws of the Province of Ontario pursuant to a declaration of trust.

2. The Manager is the manager, trustee and promoter of the Filer. The Manager will be responsible for providing or arranging for the provision of administrative services required by the Filer. The principal office of the Manager is located at Suite 1202, 70 York Street, Toronto, Ontario M5J 1S9.

3. The Filer filed the Preliminary Prospectus on SEDAR (the System for Electronic Document Analysis and Retrieval, found at www.sedar.com) with respect to the proposed offering (the "Offering") of Class A Units, Class B Units, Class C Units, Class F Units, Class I Units, Class O Units, Class P Units, Class Q Units and Class R Units (together, the "Units") of the Filer, a receipt for which was issued by the Commission on July 3, 2009.

4. The Filer is a commodity pool as such term is defined in section 1.1 of NI 81-104, in that the Filer has adopted fundamental investment objectives that permit the Filer to gain exposure to or use or invest in specified derivatives in a manner that is not permitted under NI 81-102.

5. The Filer is subject to NI 81-102, NI 81-104 and the Securities Act (Ontario), subject to any exemptions therefrom that may be granted by securities regulatory authorities. NI 81-104 also grants exemptions from certain investment restrictions of NI 81-102 to commodity pools.

6. The Filer's investment objectives are: (i) to provide holders of Units (the "Unitholders") with the opportunity to realize capital appreciation through investment returns that have a low correlation to traditional forms of stock and bond securities; and (ii) starting in 2010, to pay to holders of Class O Units, Class P Units, Class Q Units and Class R Units quarterly cash distributions in each calendar year equal to 6% of the NAV of such Units calculated as at the last valuation date of the preceding year. The investment objectives of the Filer, as well as its investment strategy, are disclosed in the Preliminary Prospectus.

7. To pursue its investment objectives, the Filer will obtain exposure to the returns of an investment portfolio that ultimately invests in financial instruments across a range of global markets including, without limitation, stocks, bonds, currencies, short-term interest rates, energies, metals and agricultural commodities using a predominantly trend-following trading program (the "AHL Diversified Programme") that employs futures, options, forward contracts, swaps and other financial derivative instruments.

8. The Filer will obtain exposure to the AHL SPC Class D through one or more forward purchase and sale agreements (collectively, the "Forward Agreement") to be entered into with one or more Canadian chartered banks and/or their affiliates.

9. The AHL SPC Class D is a segregated portfolio established by AHL Investment Strategies SPC, a segregated portfolio company incorporated with limited liability in the Cayman Islands and registered as a segregated portfolio company under the Companies Law (2007 Revision). The assets of the AHL SPC Class D will be managed by Man Investments Limited (the "Investment Manager").

10. The Investment Manager is a company incorporated in England and Wales with limited liability (No. 2093429) whose registered address is Sugar Quay, Lower Thames Street, London EC3R 6DU, and is regulated in the conduct of regulated activities in the United Kingdom by the Financial Services Authority of the United Kingdom.

11. The AHL SPC Class D has filed a preliminary non-offering prospectus dated July 16, 2009 with securities regulatory authorities in the provinces of Ontario and Québec, a receipt for which was issued by the Commission on July 17, 2009, and intends to file and obtain a receipt for a final non-offering prospectus from the Commission and the Autorité des marchés financiers, pursuant to which it will become a reporting issuer under the Securities Act (Ontario) and the Securities Act (Québec). Accordingly, the financial statements and other reports required to be filed by the AHL SPC Class D will be available through SEDAR.

12. The AHL SPC Class D is a commodity pool as such term is defined in section 1.1 of NI 81-104. The AHL SPC Class D has adopted and is subject to the investment restrictions and practices contained in NI 81-102, and will be managed in accordance with these restrictions and practices, except as otherwise permitted by NI 81-104; however, the AHL SPC Class D is a mutual fund that is not subject to National Instrument 81-101 Mutual Fund Distributions ("NI 81-101") and whose securities are not qualified for distribution in the local jurisdiction, as required by the provisions of paragraph 2.5(a) and (c) of NI 81-102.

13. An investment by the Filer in securities of the AHL SPC Class D will be made in accordance with the provisions of paragraph 2.5 of NI 81-102, except for the Requested Relief.

14. None of the Manager, the Filer or the AHL SPC Class D is in default of any securities legislation in any of the Jurisdictions.

15. As part of the AHL SPC Class D structure, the AHL SPC Class D employs a trading subsidiary, Class D Man AHL Diversified 2 CAD Notes Trading Limited, a wholly-owned subsidiary of the AHL SPC Class D incorporated with limited liability on September 10, 2009 in the Cayman Islands (the "Trading Subsidiary"), through which dealings in investments for the account of the AHL SPC Class D are conducted. The proceeds from the issuance of securities of the AHL SPC Class D are contributed to the Trading Subsidiary, which, in turn, invests such proceeds in accordance with the AHL Diversified Programme. The directors of the AHL Investment Strategies SPC also serve as directors of the Trading Subsidiary.

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 Requested Relief is granted provided that:

(a) the Filer and the AHL SPC Class D are commodity pools subject to NI 81-102 and NI 81-104;

(b) the exposure of the Filer to securities of the AHL SPC Class D is in accordance with the fundamental investment objectives of the Filer;

(c) the Preliminary Prospectus discloses and the final prospectus of the Filer will disclose that the Filer will obtain exposure to securities of the AHL SPC Class D and, to the extent applicable, the risks associated with such an investment;

(d) AHL SPC Class D is a reporting issuer subject to National Instrument 81-106 -- Investment Fund Continuous Disclosure;

(e) no securities of the AHL SPC Class D are distributed in Canada other than to the Counterparty under the Forward Agreement; and

(f) the indirect investment by the Filer in securities of the AHL SPC Class D is made in compliance with each provision of paragraph 2.5 of NI 81-102, except paragraph 2.5(a) and (c) of NI 81-102.

"Darren McKall"
Assistant Manager, Investment Funds
Ontario Securities Commision