Arrow Hedge Partners Inc. et al.

Headnote

Mutual fund in Ontario (non-reporting issuer) granted an extension of the annual financial statement filing deadline as fund provides exposure to offshore investment fund for which audited financial information not yet available.

Rules Cited

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 2.2, 5.1(2) and 17.1.

February 19, 2008

IN THE MATTER OF

NATIONAL INSTRUMENT 81-106

INVESTMENT FUND CONTINUOUS DISCLOSURE

AND

IN THE MATTER OF

ARROW HEDGE PARTNERS INC.

(ARROW)

AND

IN THE MATTER OF

ARROW MULTI-STRATEGY FUND

ARROW MULTI-STRATEGY HEDGE FUND

ARROW GLOBAL LONG/SHORT FUND

ARROW GLOBAL LONG/SHORT HEDGE FUND

ARROW FOCUS FUND

ARROW ENHANCED INCOME FUND

ARROW ENSO GLOBAL FUND

ARROW A2 FUND

ARROW MMCAP RISK ARBITRAGE FUND

ARROW R FIXED INCOME FUND

ARROW GREATER EUROPEAN FUND

ARROW ASIAN INCOME FUND

ARROW ASIAN OPPORTUNITIES FUND

ARROW EUROPEAN EVENT DRIVEN FUND

ARROW JAPAN LONG/SHORT FUND

ARROW L EUROPEAN EQUITY FUND

ARROW NORTH AMERICAN FUND

ARROW PMC GLOBAL LONG/SHORT FUND

ARROW ROUNDTABLE FUND

ARROW US HIGH YIELD FUND

ARROW P CONVERTIBLE ARBITRAGE FUND

ARROW GLOBAL NET SHORT FUND

ARROW THETA FUND

ARROW V GAMMA FUND

ARROW V RELATIVE VALUE FUND

(the Existing Funds)

DECISION DOCUMENT

BACKGROUND

The Ontario Securities Commission has received an application from Arrow on behalf of the Existing Funds and other funds established and managed by Arrow from time to time (the Future Funds) (Existing Funds and Future Funds are referred to collectively as the Funds, and each individually, a Fund), for a decision pursuant to section 17.1 of National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) exempting each Fund from:

(a) the requirement in section 2.2 of NI 81-106 (the Filing Requirement) that the Fund file audited annual financial statements on or before the 90th day after its most recently completed financial year (the Filing Deadline); and

(b) the requirement in subsection 5.1(2) of NI 81-106 that the Fund deliver its audited annual financial statements to its securityholders by the Filing Deadline (the Delivery Requirement).

REPRESENTATIONS

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

Background

1. Arrow is a corporation incorporated under the Business Corporations Act (Ontario).

2. Arrow is registered as an investment counsel and portfolio manager and as a limited market dealer under the Securities Act (Ontario) (the Act) and a Commodity Trading Manager under the Commodity Futures Act (Ontario).

3. Arrow is the manager of the Existing Funds, and will be the manager of the Future Funds.

4. Each of the Existing Funds is a mutual fund in Ontario but not a reporting issuer under the Act. Each of the Future Funds will be a mutual fund in Ontario but not a reporting issuer under the Act.

5. Units of the Funds, and other funds managed by Arrow, are offered or will be offered on a private placement basis in each of the provinces and territories of Canada pursuant to one or more exemptions from the prospectus requirement.

6. Each of the Funds seeks to achieve its investment objective by investing in one or more other funds. Some of the Funds (each a Single Manager Fund) invest substantially all of their assets in a single offshore investment fund. The other Funds (each a Multi-Manager Fund) invest their assets in a number of other funds managed by Arrow, including Single Manager Funds. The offshore investment funds are each an Offshore Underlying Fund and, collectively, the Offshore Underlying Funds.

7. The percentage of the assets of a Multi-Manager Fund that are invested directly or indirectly, though investment in a Single Manager Fund, in securities of an Offshore Underlying Fund will be determined by Arrow from time to time on a basis that Arrow considers is appropriate for the Multi-Manager Fund and that is consistent with the investment objectives of the Multi-Manager Fund.

8. The financial year end of each of the Existing Funds is December 31. The financial year end of each of the Future Funds will be December 31.

9. The Offshore Underlying Funds have varying financial year-ends and are subject to a variety of financial reporting deadlines. The audit of the financial statements of a Single Manager Fund cannot be completed until the financial statements of the applicable Offshore Underlying Fund are available. In the case of a Multi-Manager Fund, the audits of the financial statements of the Multi-Manager Fund cannot be completed until the audits of funds, including the applicable Single Manager Funds (each invested in an Offshore Underlying Fund), representing a material percentage of the net assets of the Multi-Manager Fund, are complete.

10. Section 2.2 and subsection 5.1(2) of NI 81-106 require the Funds to file and deliver their audited annual financial statements by the Filing Deadline.

11. Section 2.11 of NI 81-106 provides an exemption (the Filing Exemption) from the Filing Requirement if, among other things, the Funds deliver their annual financial statements in accordance with Part 5 of NI 81-106 by the Filing Deadline.

12. The annual audited financial statements of the Offshore Underlying Funds are prepared in accordance with the accounting principles applicable to them, such as International Financial Reporting Standards, Canadian GAAP or U.S. GAAP, and delivered in accordance with the delivery requirements applicable to them, which is generally within 180 days of the year end.

13. Arrow has been advised by the auditors of each of the Existing Funds that compliance with Canadian GAAP requires a Single Manager Fund to include certain information about its holdings in the applicable Offshore Underlying Fund, and such information must be provided by the applicable Offshore Underlying Fund.

14. Arrow has also been advised by the auditors of each of the Single Manager Funds that compliance with Canadian GAAP requires the auditors of a Single Manager Fund, in auditing the information contained in the financial statements of the Single Manager Fund that was provided by the applicable Offshore Underlying Fund, to review the audited annual financial statements of the applicable Offshore Underlying Fund.

15. Arrow has also been advised by the auditors of the Multi-Manager Funds that the audit of a Multi-Manager Fund cannot be completed until the audited financial statements of funds, including the applicable Single Manager Funds, representing a material percentage of the net assets of the Multi-Manager Fund, have been received.

16. Given the above, it is expected that either on a regular basis in the case of the Single Manager Funds, or from time to time in the case of the Multi-Manager Funds, Arrow will not be able to file the financial statements of the Funds by the Filing Deadline. As a result, in those circumstances, the Funds will not be able to meet the Filing Deadline and will not be able to comply with the Delivery Requirement.

17. The Funds want to rely on the Filing Exemption. Subsection 2.11(b) of the Filing Exemption requires that the Funds deliver financial statements to securityholders in accordance with Part 5 of NI 81-106 by the Filing Deadline. As noted in paragraph 0 above, it is expected that the Funds will not be able to meet the Filing Deadline and will not be able to comply with the Delivery Requirement. As a result, the Funds will not be able to satisfy the condition in subsection 2.11(b) and therefore will not be able to rely on the Filing Exemption.

18. The Funds will notify Unitholders that they have received and intend to rely on relief from the Filing Requirement and the Delivery Requirement.

DECISION

The Director is satisfied that the test contained in NI 81-106 that provides the Director with the jurisdiction to make the decision has been met.

The Director orders that where a Fund's auditor cannot complete the audit of the Fund's annual financial statements by the Filing Deadline because audited financial statements of Offshore Underlying Funds representing a material percentage of the Fund's net assets as at the end of the Fund's financial year, as determined by the Fund's auditors, have not been received in time, then:

(a) the Fund is exempted from the Filing Requirement provided that:

(i) the audited annual financial statements of the Fund are filed on or before the 180th day after the Fund's most recently completed financial year, or

(ii) the conditions in section 2.11 of NI 81-106 are met, except for subsection 2.11(b), and the audited annual financial statements of the Fund are delivered to its securityholders in accordance with Part 5 of NI 81-106, on or before the 180th day after the Fund's most recently completed financial year; and

(b) the Fund is exempted from the Delivery Requirement provided that the audited annual financial statements of the Fund are delivered to its securityholders in accordance with Part 5 of NI 81-106, on or before the 180th day after the Fund's most recently completed financial year.