First Defined Portfolio Management Co.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from sections 2.3(f), 2.3(h), 2.5(2)(a) and 2.5(2)(c) of National Instrument 81-102 -- Mutual Funds to permit mutual fund to invest in silver and to invest up to 10% of net assets in leveraged ETFs, inverse ETFs, gold ETFs, silver ETFs, leveraged gold ETFs and leveraged silver ETFs traded on Canadian or US stock exchanges, subject to 10% exposure to gold and silver, and certain conditions.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.3(f), 2.3(h), 2.5(2)(a), 2.5(2)(c), 19.1.

February 29, 2012

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

FIRST DEFINED PORTFOLIO MANAGEMENT CO.

(THE FILER)

DECISION

BACKGROUND

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for:

(a) an exemption (the Silver Exemption) relieving the existing and future mutual funds managed by the Filer or an affiliate of the Filer that are subject to National Instrument 81-102 Mutual Funds (NI 81-102), other than money market funds as defined in NI 81-102 (the Existing Funds and the Future Funds, respectively, together, the Funds and individually, a Fund), from the prohibitions contained in paragraphs 2.3(f) and 2.3(h) of NI 81-102, to permit each Fund to

(A) purchase and hold silver

(B) purchase and hold a certificate that represents silver that is

(i) available for delivery in Canada, free of charge, to or to the order of the holder of the certificate;

(ii) of a minimum fineness of 999 parts per 1000;

(iii) held in Canada;

(iv) in the form of either bars or wafers; and

(v) if not purchased from a bank listed in Schedule I, II or III of the Bank Act (Canada), fully insured against loss and bankruptcy by an insurance company licensed under the laws of Canada or a province or territory of Canada.

(Permitted Silver Certificates)

(C) purchase, sell or use a specified derivative, the underlying interest of which is silver.

(Silver Derivatives, which together with silver and Permitted Silver Certificates are hereinafter referred to as Silver)

(b) an exemption (the ETF Exemption) relieving the Funds from the prohibitions contained in paragraphs 2.3(h), 2.5(2)(a) and 2.5(2)(c) of NI-81-102, to permit each Fund to purchase and hold securities of

(i) exchange-traded funds (ETFs) that use leverage to obtain exposure to no more than +/- 200% of a specified widely-quoted market index (the ETF's Underlying Index) on a daily basis (Leveraged ETFs);

(ii) ETFs that seek to provide daily results that replicate the daily performance of their Underlying Index by an inverse multiple of 100% (Inverse ETFs);

(iii) ETFs that hold gold, permitted gold certificates or specified derivatives of which the underlying interest is gold or permitted gold certificates (Gold ETFs);

(iv) ETFs that hold silver, permitted silver certificates or specified derivatives of which the underlying interest is silver or permitted silver certificates (Silver ETFs);

(v) ETFs that seek to replicate (i) the performance of gold and/or silver on an unlevered basis; or (ii) the value of a specified derivative the underlying interest of which are gold and/or silver on an unlevered basis (Gold/Silver ETFs);

(vi) Gold ETFs that are also Leveraged ETFs, by a multiple of up to 200% (Leveraged Gold ETFs); and

(vii) Silver ETFs that are also Leveraged ETFs, by a multiple of up to 200%(Leveraged Silver ETFs).

(Leveraged ETFs, Inverse ETFs, Gold ETFs, Silver ETFs, Gold/Silver ETFs, Leveraged Gold ETFs and Leveraged Silver ETFs are referred to collectively in this decision as the Underlying ETFs). The Silver Exemption and the ETF Exemption are collectively the Exemption Sought.

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

1. the Ontario Securities Commission is the Principal Regulator for this application; and

2. 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, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon Territories and Nunavut (collectively with the Jurisdiction, the Jurisdictions).

INTERPRETATION

Defined terms contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning in this decision unless otherwise defined.

REPRESENTATIONS

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

The Filer and the Funds

1. The Filer is a corporation organized under the laws of the province of Nova Scotia and is registered as an investment fund manager and mutual fund dealer in Ontario.

2. The head office of the Filer is located in Ontario.

3. The Filer is the manager of each of the Existing Funds, and the Filer or an affiliate thereof will be the manager of each of the Future Funds.

4. Each Existing Fund is, and each Future Fund will be: (a) an open-ended mutual fund established under the laws of Canada or a Jurisdiction, (b) a reporting issuer under the laws of some or all of the provinces and territories of Canada, and (c) governed by the provisions of NI 81-102.

5. Securities of each Existing Fund are, and securities of each Future Fund will be, qualified for distribution in some or all of the provinces and territories of Canada under a simplified prospectus and annual information form prepared in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and filed with and receipted by the securities regulators in the applicable Jurisdiction(s).

6. Neither the Filer nor any of the Existing Funds is in default of securities legislation in the Jurisdictions.

Investments in Gold and Silver

7. In addition to investing in gold, the Funds propose to have the ability to invest in Silver.

8. Permitting each Fund to invest in Silver will permit the portfolio managers of the Fund additional flexibility to increase gains for the Fund in certain market conditions, which may have otherwise caused the Fund to have significant cash positions and therefore deter from its ability to achieve its investment objective.

9. The Filer believes that the markets in gold and silver are highly liquid, and there are no liquidity concerns with permitting a Fund to invest directly or through permitted derivatives or ETFs which are not mutual funds, up to 10% in total of its net asset value in gold or silver.

10. The Filer believes that the potential volatility or speculative nature of silver (or the equivalent in certificates or specified derivatives of which the underlying interest is silver) is no greater than that of gold, or of equity securities.

11. To obtain exposure to gold or silver indirectly, the Filer intends to use specified derivatives the underlying interest of which is gold or silver and invest in Gold ETFs, Silver ETFs, Leveraged Gold ETFs, Leveraged Silver ETFs and Gold/Silver ETFs (which together with gold, silver, permitted gold certificates and Permitted Silver Certificates are referred to collectively in this decision as Gold and Silver Products).

12. If the investment in Gold and Silver Products represents a material change for any Existing Fund, the Filer will comply with the material change reporting obligations for that Fund.

13. Any investment by a Fund in Silver will be made in compliance with the custodian requirements in Part 6 of NI 81-102.

The Underlying ETFs

14. In addition to investing in securities of ETFs that qualify as index participation units as defined in NI 81-102 (IPUs), the Funds may invest in the Underlying ETFs, whose securities are not IPUs.

15. The amount of loss that can result from an investment by a Fund in an Underlying ETF will be limited to the amount invested by the Fund in securities of the Underlying ETF.

16. Each Leveraged ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed +/-200% of the corresponding daily performance of its Underlying Index.

17. Each Inverse ETF will be rebalanced daily to ensure that its performance and exposure to its Underlying Index will not exceed -100% of the corresponding daily performance of its Underlying Index.

18. Each Leveraged Gold ETF and Leveraged Silver ETF will be rebalanced daily to ensure that its performance and exposure to its underlying gold or silver interest will not exceed +200% of the corresponding daily performance of the underlying gold or silver interest.

Investment in the Underlying ETFs and Silver

19. To the extent a Fund intends to rely on the Exemption Sought, the Fund will be permitted in accordance with its investment objectives and investment strategies to invest in Underlying ETFs and Silver.

20. The Underlying ETFs and Silver are attractive investments for the Funds, as they provide an efficient and cost effective means of achieving diversification and exposure.

21. But for the ETF Exemption, paragraph 2.5(2)(a) of NI 81-102 would prohibit a Fund from purchasing or holding a security of an Underlying ETF, because the Underlying ETFs are not subject to both NI 81-102 and NI 81-101.

22. But for the ETF Exemption, paragraph 2.5(2)(c) of NI 81-102 would prohibit a Fund from purchasing or holding securities of some Underlying ETFs, because some Underlying ETFs will not be qualified for distribution in the local jurisdiction.

23. But for the Silver Exemption, paragraph 2.3(f) of NI 81-102 would prohibit an investment by a Fund in Silver, because a Fund is prohibited from purchasing a physical commodity other than gold or permitted gold certificates.

24. But for the Silver Exemption, paragraph 2.3(h) of NI 81-102 would prohibit an investment by a Fund in Silver because a Fund is prohibited from purchasing, selling or using a specified derivative the underlying interest of which is a physical commodity other than gold or a specified derivative of which the underlying interest is a physical commodity other than gold.

25. To the extent a Fund has an active investment strategy, an investment by a Fund in securities of an Underlying ETF and/or Silver will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Fund.

26. The Filer is not currently related to any Underlying ETF, is not the manager of an Underlying ETF and does not currently expect to be so related in the near future.

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 Exemption Sought is granted provided that:

(a) a Fund may not purchase securities of an Underlying ETF if, immediately after the purchase, more than 10% of the net assets of the Fund Fund in aggregate, taken at market value at the time of the purchase, would consist of securities of the Underlying ETFs;

(b) in addition to (a), if short selling relief has been obtained in respect of a Fund, the Fund may not purchase securities of a Leveraged ETF that tracks the inverse of its Underlying Index by no more than 200% (Bear ETF) or sell any securities short if, immediately after the transaction, the aggregate market value of (i) all securities sold short by the Fund, and (ii) all securities of Bear ETFs held by the Fund, would exceed 20% of the Fund's net assets, taken at market value at the time of the transaction;

(c) each Fund that intends to rely on the Exemption Sought will limit its exposure to gold or silver (including direct purchases of gold or silver, permitted gold certificates or Permitted Silver Certificates, investments in Gold ETFs, Silver ETFs, Gold/Silver ETFs in Leveraged Gold ETFs and Leveraged Silver ETFs, investments in specified derivatives the underlying interest of which is gold or silver and investments in IPUs that track a gold index or a silver index), to no more than 10% of the net assets of the Fund, taken at market value at the time of purchase as applicable;

(d) the investment by a Fund in securities of an Underlying ETF and/or Silver is in accordance with the fundamental investment objective of the Fund;

(e) the prospectus of each Fund that intends to rely on the Exemption Sought discloses, or will disclose the next time it is renewed after the date hereof, (i) in the Investment Strategy section of the prospectus, the fact that the Fund has obtained relief to invest in the Underlying ETFs and, as appropriate, (ii) to the extent applicable, the risks associated with such an investment;

(f) the prospectus of each Fund that intends to rely on the Exemption Sought discloses, or will disclose the next time it is renewed after the date hereof, (i) in the Investment Strategy section of the prospectus, the fact that the Fund has obtained relief to invest in Silver; and (ii) to the extent applicable, the risks associated with such an investment;

(g) each Fund will not invest in an Underlying ETF with an Underlying Index based, directly or indirectly through a specified derivative or otherwise, on a physical commodity other than gold or silver;

(h) a Fund does not short sell securities of an Underlying ETF;

(i) the securities of the Underlying ETFs are traded on a stock exchange in Canada or the United States;

(j) no more than 10% of the Fund's net assets, taken at market value at the time of investment, is invested directly and indirectly in Gold or Silver Products (including through Underlying ETFs and underlying market exposure of specified derivatives); and

(k) the securities of the Underlying ETFs are treated as specified derivatives for the purposes of Part 2 of NI 81-102.