1832 Asset Management L.P. and Dynamic Global Growth Opportunities Fund

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from sections 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) and 15.1.1 of National Instrument 81-102 Investment Funds to permit a new prospectus qualified alternative mutual fund that has not distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months to include in its sales communications past performance data relating to a period when the fund's securities were previously distributed to investors on a prospectus-exempt basis and to use this past performance data to calculate its investment risk level in accordance with Appendix F Investment Risk Classification Methodology -- New alternative mutual fund is managed substantially similarly after it became a reporting issuer as it was during the period prior to becoming a reporting issuer and has substantially similar investment objectives and fee structure.

Relief granted from section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure for the purposes of the relief requested from (i) Item 10(b) of Part B of Form 81-101 Contents of Simplified Prospectus to permit the new alternative mutual fund to use the past performance data for a period when its securities were offered on a prospectus-exempt basis to calculate its investment risk rating in its simplified prospectus, (ii) Item 5 of Part I of Form 81-101F3 Contents of Fund Facts Document to permit the alternative mutual fund to include in its fund facts document past performance data for a period when the fund was offered on a prospectus-exempt basis, (iii) Item 2 of Part I and Item 1.3 of Part II of Form 81-101F3 to permit the alternative mutual fund to include in its fund facts document certain financial data, including the management expense ratio and trading expense ratio, for its units notwithstanding that it has not yet filed a management report of fund performance, and (iv) Item 4 of Form 81-101F3 to permit the alternative mutual fund to disclose its investment risk level as determined by including its past performance data in accordance with Appendix F Investment Risk Classification Methodology.

Relief granted from section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure for the purposes of the relief requested from Items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1, and Items 3(1) and 4 of Part C of Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, to permit the new alternative mutual to include in its annual and interim management reports of fund performance the past performance and financial data relating to a period when the fund was previously offered on a prospectus-exempt basis.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), 15.8(3)(a.1), 15.1.1 and 19.1.

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 2.1 and 6.1.

Form 81-101F1 Contents of Simplified Prospectus, Item 10(b) of Part B.

Form 81-101F3 Contents of Fund Facts Document, Items 2, 4 and 5 of Part I and Item 1.3 of Part II.

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 4.4 and 17.1.

I Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, tems 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B and Items 3(1) and 4 of Part C.

May 22, 2024

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
1832 ASSET MANAGEMENT L.P.
(the Filer)

AND

IN THE MATTER OF
DYNAMIC GLOBAL GROWTH OPPORTUNITIES FUND
 (the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of the Fund for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting Series A and F units of the Fund from:

(a) Subsection 15.3(2), paragraph 15.3(4)(c), subparagraph15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the Fund to include performance data in sales communications relating to Series A and F units of the Fund notwithstanding that:

(i) the past performance data will relate to a period prior to the Fund offering its securities under a simplified prospectus; and

(ii) the Fund has not distributed its securities under a prospectus for 12 consecutive months;

(b) Paragraph 15.1.1(a) of NI 81-102 and Items 2 and 4 of Appendix F Investment Risk Classification Methodology to NI 81-102 (the Risk Classification Methodology) to permit the Fund to include its past performance data in determining its investment risk level in accordance with the Risk Classification Methodology;

(c) Paragraph 15.1.1(b) of NI 81-102, Item 4(2)(a) and Instruction (1) of Item 4 of Form 81-101F3 Contents of Fund Facts Document (Form 81-101F3) to permit the Fund to disclose its investment risk level as determined by including its past performance data in accordance with the Risk Classification Methodology;

(d) Item 10(b) of Part B of Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1) to permit the Fund to use its past performance data to calculate its investment risk rating in its simplified prospectus;

(e) Section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) for the purposes of the relief requested herein from Form 81-101F1 and Form 81-101F3;

(f) Items 5(2), 5(3) and 5(4), and Instruction (1) of Part I of Form 81-101F3 in respect of the requirement to comply with subsection 15.3(2), paragraph 15.3(4)(c), subparagraph 15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of NI 81-102 to permit the Fund to include in its fund facts past performance data relating to Series A and Series F units of the Fund notwithstanding that such:

(i) performance data relates to a period prior to the Fund offering its securities under a simplified prospectus; and

(ii) the Fund has not distributed its securities under a simplified prospectus for 12 consecutive months

(g) Instruction (3) of Item 2 of Part I, Items 1.3(2), 1.3(3) and 1.3(4) of Part II, and Instructions (3), (5) and (7.1) of Item 1.3 of Part II of Form 81-101F3 to permit the Fund to include in its fund facts certain financial data, including the management expense ratio and trading expense ratio, for the Units notwithstanding that the Fund has not yet filed a management report of fund performance (MRFP);

(collectively, the relief under paragraphs (a), (b), (c), (d), (e), (f), and (g), the NI 81-101 and 81-102 Relief);

(h) Section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) for the purposes of the relief requested herein from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance (Form 81-106F1); and

(i) Items 3.1(7) and 4.1(1) in respect of the requirement to comply with subsection 15.3(2) and paragraph 15.3(4)(c) of NI 81-102, Items 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1 and Items 3(1) and 4 of Part C of Form 81-106F1, to permit the Fund to include in its annual and interim MRFPs past performance data and financial highlights of the Fund notwithstanding that such performance data and financial highlights relate to a period prior to the Fund offering its securities under a simplified prospectus

(together, the relief under paragraphs (h) and (i), the NI 81-106 Relief),

(collectively, the Exemption Sought).

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator; 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 each of the other provinces and territories of Canada (together with Ontario, the Jurisdictions)

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 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:

The Filer

1. The Filer is an Ontario limited partnership, which is wholly-owned by the Bank of Nova Scotia (BNS). The general partner of the Filer is 1832 Asset Management G.P. Inc., an Ontario corporation wholly-owned by BNS with its head office located in Toronto, Ontario.

2. The Filer is registered as: (i) a portfolio manager in all of the provinces of Canada and in the Northwest Territories and the Yukon; (ii) an exempt market dealer in all of the provinces of Canada (except Prince Edward Island and Saskatchewan); (iii) an investment fund manager in Ontario, Québec, Newfoundland and Labrador and the Northwest Territories; and (iv) a commodity trading manager in Ontario.

3. The Filer is the investment fund manager and portfolio manager of the Fund.

4. The Filer is not a reporting issuer in any of the Jurisdictions and is not in default of securities legislation in any of the Jurisdictions.

The Fund

5. The Fund is an open-end trust established under the laws of the Jurisdiction on June 7, 2002 and governed by an amended and restated trust agreement made as of May 31, 2002, as amended.

6. The Fund currently consists of nine series of units, each of which have been offered to investors on a private placement basis in accordance with National Instrument 45-106 Prospectus Exemptions (NI 45-106):

(a) Series A and Series F units, which have been offered to investors since March 9, 2015 (Series Launch Date);

(b) Series A1, A2, F1 and F2 units of the Fund, which were issued to unitholders pursuant to a merger between Dynamic Power Emerging Markets Fund and the Fund on June 14, 2013. Such series of units are no longer available to investors for purchase;

(c) Series C and FC units of the Fund, which were issued to unitholders pursuant to a name change of the Fund from "Dynamic Power Hedge Fund" to "Dynamic Global Growth Opportunities Fund on March 9, 2015. Such series of units are no longer available to investors for purchase; and

(d) Series A3 and F3 units of the Fund, which were issued to unitholders pursuant to a merger between Dynamic Contrarian Fund and the Fund on June 19, 2015. Such series of units are no longer available to investors for purchase.

7. The Fund is not in default of securities legislation in any of the Jurisdictions.

8. The Filer intends to offer the Fund as an alternative mutual fund to the public in the Jurisdictions pursuant to a simplified prospectus and fund facts. The Fund filed a preliminary simplified prospectus and fund facts for Series A and F units with the securities regulator in each of the Jurisdictions on April 16, 2024, and expects to file a final simplified prospectus and fund facts in May 2024. Upon issuance of a receipt for the final simplified prospectus, the Fund will become a reporting issuer in each of the Jurisdictions and will become subject to the requirements of NI 81-102 and NI 81-106.

9. The investment objective of the Fund is to provide attractive long-term equity or equity related returns. The Fund will use alternative investment strategies primarily including engaging in physical short sales and may also include purchasing securities on margin or with borrowed funds.

10. Since the Series Launch Date, the Fund has prepared audited annual and unaudited interim financial statements in accordance with NI 81-106.

11. Since the Series Launch Date, the Fund has not deviated from the investment restrictions contained in NI 81-102 applicable to an alternative mutual fund, except as permitted by any exemptive relief decisions obtained in respect of the Fund, and except with respect to one investment that, for a short period of time, deviated from the investment in other funds restrictions under section 2.5 of NI 81-102.

12. Specifically, the Fund deviated from the investment restrictions in NI 81-102 for the period between September 18, 2019 to November 14, 2019, when the Fund held units of JPMorgan Liquidity Funds -- USD Liquidity LVNAV Fund, which is an investment fund similar to a money market fund for the purposes of NI 81-102, resulting in the Fund holding an investment in another fund. This other fund invests in short-term US dollar denominated debt securities, deposits with credit institutions and reverse repurchase agreements. The investment in this other fund only exceeded 10% but less than 15% of the net asset value of the Fund for a short period of time between September 18, 2019 and September 24, 2019. For the remainder of the period, the investment in the other fund represented less than 2% of the net asset value of the Fund.

13. The above exception to compliance with NI 81-102 did not have a material impact on the Fund's performance.

14. Except as described above, there have been no other instances of the Fund's non-compliance with NI 81-102 applicable to an alternative mutual fund since the Series Launch Date, except as permitted to any exemptive relief decisions obtained in respect of the Fund.

15. The Fund will be managed substantially similarly after it becomes a reporting issuer as it was prior to becoming a reporting issuer. As a result of the Fund becoming a reporting issuer:

(a) the Fund's investment objectives will not materially change;

(b) the management fee charged to the Fund in respect of the Series A units and the Series F units will not change;

(c) the day-to-day administration of the Fund will not change, other than to comply with the additional regulatory requirements associated with being a reporting issuer (none of which will impact the portfolio management of the Fund);

(d) the management expense ratio of the Series A and F units of the Fund is not expected to increase by more than 0.10%, which the Filer considers to be an immaterial amount; and

(e) the trading expense ratio of the Series A and F units of the Fund is not expected to change.

16. The Filer proposes to present the performance data of the Fund for the time period since the Series Launch Date as the performance data of the Series A and Series F units of the Fund in the sales communications pertaining to such series of units of the Fund;

17. Without the Exemption Sought, the sales communications pertaining to the Fund cannot include performance data of the Fund that relates to a period prior to it becoming a reporting issuer, and the Fund cannot provide past performance data in its sales communications until it has distributed securities under a simplified prospectus for at least 12 consecutive months.

18. The Filer proposes to use the Fund's past performance data for the time period commencing as of the Series Launch Date to determine the investment risk level of the Series A and F units of the Fund, and to disclose that investment risk level in its simplified prospectus and fund facts for each such series of units of the Fund. Without the Exemption Sought, the Filer, in determining and disclosing the Fund's investment risk level in its simplified prospectus and fund facts for each such series of units of the Fund, cannot use the past performance data of the Fund that relates to a period prior to the Fund becoming a reporting issuer.

19. The Filer proposes to include in the fund facts for Series A and F units of the Fund the past performance data for the time period commencing as of the Series Launch Date in the disclosure required by Items 5(2), 5(3) and 5(4) of Form 81-101F3 under the sub-headings "Year-by-year returns", "Best and worst 3-month returns" and "Average return", respectively, related to periods prior to the Fund becoming a reporting issuer. Without the Exemption Sought, the fund facts for the Fund cannot include performance data of Series A and F units of the Fund that relate to a period prior to it becoming a reporting issuer.

20. The Filer proposes to use the management expense ratio, trading expense ratio and fund expenses of Series A and F units of the Fund that relate to a period prior to it becoming a reporting issuer in the "Fund expenses" sections of the fund facts. Without the Exemption Sought, the fund facts for the Fund cannot include the management expense ratio, trading expense ratio and fund expenses of Series A and F units of the Fund that relate to a period prior to it becoming a reporting issuer.

21. As a reporting issuer, the Fund will be required under NI 81-106 to prepare and send MRFPs to all holders of its securities on an annual and interim basis.

22. Without the Exemption Sought, the MRFPs of the Fund cannot include financial highlights and performance data of Series A and F units of the Fund that relate to a period prior to it becoming a reporting issuer.

23. The performance data and other financial data of the Fund for the time period before it became a reporting issuer is significant and meaningful information for existing and prospective investors in the Fund.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) any sales communication, fund facts documents and MRFP that contains past performance data of the units of the Fund relating to a period of time prior to when the Fund was a reporting issuer discloses that:

(i) the Fund was not a reporting issuer during such period;

(ii) the expenses of the Fund would have been higher during such period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer;

(iii) the Filer obtained exemptive relief on behalf of the Fund to permit the disclosure of past performance data of the units of the Fund relating to a period prior to when the Fund was a reporting issuer; and

(iv) with respect to any MRFP, the financial statements of the Fund for such period are posted on the Filer's website and are available to investors upon request;

(b) the management expense ratio and the trading expense ratio disclosed in any fund facts document are calculated as if the Fund had filed an annual MRFP for its most recently completed financial year and as if, in doing so, it had relied on the NI 81-106 Relief; and

(c) the Filer posts the financial statements of the Fund since the Series Launch Date on the Fund's designated website and delivers those financial statements to investors upon request.

"Darren McKall"
Manager, Investment Management Division
Ontario Securities Commission

Application File #: 2024/0260
SEDAR Project #: 6119420