July 20, 2016

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 ARROW CAPITAL MANAGEMENT INC. (Arrow), GEMINI ALTERNATVE FUNDS, LLC (Gemini, and together with Arrow, the Filers) AND Exemplar DIVERSIFIED PORTFOLIO (the Fund)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers, on behalf of the Fund, for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) to grant exemptive relief pursuant to paragraph 19.1 of National Instrument 81-102 Investment Funds (NI 81-102), from subsections 2.1(1), 2.2(1), 2.5(2)(a) and 2.5(2)(c) of NI 81-102 to permit the Fund to purchase and hold securities of an investment fund to be established and managed by Gemini (the "Sub-Fund") and to permit the Sub-Fund, and the Fund indirectly through the Sub-Fund, to invest in a further investment fund to be established and managed by Gemini (the "Bottom Fund") which shall adopt the investment restrictions contained in NI 81-102 and will be managed in accordance with these restrictions, except as otherwise permitted by National Instrument 81-104 Commodity Pools (NI 81-104), and in accordance with any exemptions therefrom obtained by the Fund (collectively, the "Requested Relief").

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

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filers have provided notice that subsection 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, other than Nunavut (collectively, with Ontario, the Jurisdictions).

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions and NI 81-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers in respect of the Filers and the Fund, the Sub-Fund and the Bottom Fund:

The Filers

1. Arrow is a corporation incorporated under the Business Corporations Act (Ontario) with its head office located in Toronto, Ontario.

2. Arrow is registered in the following categories in certain of the Jurisdictions indicated below:

(a) Ontario: Portfolio Manager (PM), Investment Fund Manager (IFM); Exempt Market Dealer (EMD) and Commodity Trading Manager under the Commodity Futures Act (Ontario);

(b) Alberta: EMD;

(c) British Columbia: EMD;

(d) Quebec: EMD and IFM; and

(e) Newfoundland and Labrador: IFM.

3. Gemini is a limited liability corporation incorporated under the laws of Nebraska with its head office located in Chicago, Illinois.

4. Gemini holds registration with the National Futures Association (U.S.) as a Commodity Trading Advisor and Commodity Pool Operator.

5. Gemini is relying on the exemption in section 3 of Multilateral Instrument 32-102 Registration Exemptions for Non-Resident Investment Fund Managers in respect of the investment fund manager registration requirement of the Jurisdictions.

6. None of Arrow, Gemini, the Fund, the Sub-Fund or the Bottom Fund is in default of any securities legislation in any of the Jurisdictions.

The Fund, the Sub-Fund and the Bottom Fund

7. The Fund is a mutual fund to which NI 81-102 applies. The Fund is also a commodity pool as such term is defined in NI 81-104, in that the Fund has adopted fundamental investment objectives that permit the Fund to gain exposure to or use or invest in specified derivatives in a manner that is not permitted under NI 81-102.

8. The Fund is a reporting issuer in each of the Jurisdictions and shares of the Fund are currently qualified for distribution in each of the Jurisdictions under the long-form prospectus of the Fund dated May 30, 2016 (the Fund's Prospectus).

9. The Fund's investment objective is to seek superior long term absolute and risk-adjusted returns with the potential for low correlation to global equity and fixed-income market returns through the selection and management of long and short positions in a globally diversified portfolio of futures, options, forward contracts and other financial derivative instruments on agricultural and soft commodities, metals, energies, currencies, interest rates and equity indices (the Underlying Assets).

10. Subject to obtaining and maintaining the Requested Relief, the Fund's investment sub-adviser, Integrated Managed Futures Corp. (IMFC), will pursue the Fund's investment objectives by indirectly obtaining exposure to the Underlying Assets. The Fund will obtain exposure to the Underlying Assets in a three-tier structure whereby: (1) the Fund may invest all, other than cash and cash equivalents, or a portion of its assets in non-voting securities of the Sub-Fund, which will be a segregated portfolio company incorporated in the Cayman Islands; (2) the Sub-Fund invests all of its assets in the Bottom Fund, which is a limited liability company formed under the laws of Delaware; and (3) the Bottom Fund acquires and maintains the Underlying Assets. The return to the Fund, and consequently to the shareholders of the Fund, and the return of the Sub-Fund will be based on the performance of the Bottom Fund, which, in turn, will be based on the performance of the Underlying Assets.

11. Gemini is the manager of the Sub-Fund and the Bottom Fund. IMFC, who has been the investment sub-adviser to the Fund since the Fund's inception in 2009, will be the investment adviser to the Sub-Fund and the Bottom Fund and will actively manage the Underlying Assets. IMFC is registered as a commodity trading manager in the province of Ontario and as an exempt market dealer in the provinces of Ontario, Quebec, British Columbia and Alberta and also registered in the United States as a commodity trading advisor and commodity pool operator with the Commodity Futures Trading Commission and as an investment advisor with the Securities and Exchange Commission. The head office of IMFC is located in Toronto, Ontario.

12. The Sub-Fund will file a non-offering prospectus in the provinces of Ontario and Quebec pursuant to which it will become a reporting issuer under the Securities Act (Ontario) and the Securities Act (Québec) and subject to the continuous disclosure requirements of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106). Accordingly, the financial statements and other reports required to be filed by the Sub-Fund will be available through SEDAR.

13. The Bottom Fund will file a non-offering prospectus in the provinces of Ontario and Quebec pursuant to which it will become a reporting issuer under the Securities Act (Ontario) and the Securities Act (Québec) and subject to the continuous disclosure requirements of NI 81-106. Accordingly, the financial statements and other reports required to be filed by the Bottom Fund will be available through SEDAR.

14. Both the Sub-Fund and the Bottom Fund will be mutual funds because holders of their securities will be entitled to receive on demand, an amount computed by reference to the NAV of the net asset value of the Sub-Fund and the Bottom Fund, respectively. However, the Sub-Fund and the Bottom Fund will not distribute any securities under their respective non-offering prospectus and accordingly the Sub-Fund and the Bottom Fund will be a mutual fund to which NI 81-106 applies, but will not be subject to the requirements of either NI 81-102 or NI 81-104.

15. Though not subject to NI 81-102, the Sub-Fund will be a "clone fund" as such term is defined in NI 81-102 as its fundamental investment objective will be to track the performance of the Bottom Fund. The Fund will be the sole securityholder of the participating, non-voting securities of the Sub-Fund. Notwithstanding that the Sub-Fund will be a clone fund, the Sub-Fund has adopted the investment restrictions contained in NI 81-102 except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Fund, including the exemption obtained to permit the Fund to invest in the Sub-Fund and indirectly in the Bottom Fund.

16. Though not subject to NI 81-102 or NI 81-104, the Bottom Fund will be a commodity pool as such term is defined in NI 81-104, as it has adopted fundamental investment objectives that permit it to use specified derivatives in a manner that is not permitted under NI 81-102. Notwithstanding that the Bottom Fund will not be subject to NI 81-102 or NI 81-104, the Bottom Fund adopted the investment restrictions contained in NI 81-102 except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Sub-Fund, including the exemption obtained to permit the Sub-Fund to invest in the Bottom Fund.

17. The Fund will only invest in securities of the Sub-Fund, to gain exposure to the Bottom Fund and the Underlying Assets, in accordance with its investment strategies and investment restrictions.

18. In accordance with the agreement between Arrow, the Fund, the Sub-Fund, Bottom Fund and Gemini, Arrow will have access as is necessary to monitor the Sub-Fund's and the Bottom Fund's compliance with in respect of investment restrictions applicable in managing the Underlying Assets and Arrow will be provided with all information necessary to ensure that Arrow and the Fund is able to fully comply with all applicable continuous disclosure obligations.

19. The Fund will not gain exposure to securities of the Sub-Fund, or indirectly to the Bottom Fund, if the Fund would be exposed to any management fees or incentive fees in respect of the investment that duplicate a fee payable by shareholders of the Fund for the same service. Furthermore, management fees payable by the Sub-Fund and the Bottom Fund will be disclosed in the Fund's Prospectus, when amended or next renewed. In addition, the Fund will not gain exposure to securities of the Sub-Fund, or indirectly to the Bottom Fund, if any sales fees or redemption fees are payable in respect of the investment that duplicate a fee that the Fund would be exposed to.

20. The Fund will comply with the requirements under NI 81-106 relating to the top 25 positions portfolio holdings disclosure in its management reports of fund performance as if the Fund were investing directly in the Underlying Assets.

21. Except for subsection 2.1(1), 2.2(1), 2.5(2)(a) and 2.5(2)(c) of NI 81-102, the investment of the Fund in securities of the Sub-Fund will comply with provisions of NI 81-102. In addition, except as described in this application, the Fund will comply with the applicable investment restrictions contained in NI 81-102 regarding investments in other mutual funds.

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 Fund is a commodity pool subject to NI 81-102 and NI 81-104;

(b) the Sub-Fund is an investment fund that complies with the investment restrictions contained in NI 81-102 and the Underlying Assets are managed in accordance with these restrictions, except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Fund;

(c) the Bottom Fund is an investment fund that complies with the investment restrictions contained in NI 81-102 and the Underlying Assets are managed in accordance with these restrictions, except as otherwise permitted by NI 81-104 and in accordance with any exemptions therefrom obtained by the Fund;

(d) the investment by the Fund in securities of the Sub-Fund to gain indirect exposure to the Bottom Fund and the Underlying Assets is in accordance with the fundamental investment objectives of the Fund;

(e) the prospectus of the Fund discloses, and any annual information form filed will disclose, that the Fund will invest in securities of the Sub-Fund, which will in turn invests in the Bottom Fund to gain indirect exposure to the Underlying Assets, and discloses the risks associated with such investment structure;

(f) the Sub-Fund is a reporting issuer subject to NI 81-106;

(g) the Bottom Fund is a reporting issuer subject to NI 81-106;

(h) no securities of the Sub-Fund or the Bottom Fund are distributed in Canada other than the distribution of the securities of the Sub-Fund to the Fund;

(i) the investment by the Fund in securities of the Sub-Fund to gain indirect exposure to the Bottom Fund and the Underlying Assets is made in compliance with each provision of paragraph 2.5 of NI 81-102, except paragraph 2.5(a) and 2.5(c) of NI 81-102; and

(j) the Sub-Fund's and Bottom Fund's custodian meets the requirements of a sub-custodian for assets held outside Canada under section 6.3 of NI 81-102.

"Raymond Chan"

Raymond Chan

Investment Funds and Structured Products Branch Ontario Securities Commission

SEDAR Project Number: 2454443