First Asset Investment Management Inc.

Headnote

NP 11-203 -- Exemptive relief granted to ETFs offered in continuous distribution from certain mutual fund requirements and restrictions on: transmission of purchase or redemption orders, issuing units for cash or securities, calculation and payment of redemptions, and date of record for payment of distributions -- National Instrument 81-102 -- Mutual Funds.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 9.1, 9.4(2), 10.2, 10.3, 14.1, 19.1.

April 28, 2011

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 ASSET INVESTMENT MANAGEMENT INC.

(the Filer or the Manager)

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 (the Legislation) for exemptive relief from the following provisions of National Instrument 81-102 Mutual Funds (NI 81-102) (the Exemption Sought):

1. Sections 9.1 and 10.2 to permit purchases and sales of units (the Units) of Can-60 Income ETF, Can-Financials Income ETF, Can-Energy Income ETF and Can-Materials Income ETF (the Existing ETFs) and such other exchange traded funds as the Filer, or an affiliate of the Filer, may establish in the future (each a Future ETF and together with the Existing ETFs, the ETFs or individually, an ETF) on the Toronto Stock Exchange (the TSX), instead of through order receipt offices;

2. Section 9.4(2) to permit an ETF to accept a combination of cash and securities as subscription proceeds for Units;

3. Section 10.3 to permit an ETF to redeem less than the Prescribed Number of Units (as defined below) of the ETF at a discount to their market price, instead of at their net asset value; and

4. Section 14.1 to permit an ETF to establish a record date for distributions in accordance with the rules of the TSX.

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, Yukon, Northwest Territories and Nunavut (including 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.

• Basket of Securities means a group of securities determined by Manager from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.

• Designated Broker means a registered broker or dealer that enters into an agreement with an ETF to perform certain duties in relation to the ETF.

• ETF Index means, the S&P/TSX 60 Index in respect of the Can-60 Income ETF; the S&P/TSX Capped Financials Sector Index^™ in respect of Can-Financials Income ETF; the S&P TSX Capped Energy Index in respect of the Can-Energy Income ETF; and the S&P TSX Capped Materials Index in respect of the Can-Materials Income ETF.

• Prescribed Number of Units means, in relation to an ETF, the number of Units of the ETF determined by the Filer from time to time for the purpose of subscription orders, exchanges, redemptions or for other purposes.

• Underwriter means a registered broker or dealer that has entered into an underwriting agreement with an ETF and that subscribes for and purchases Units of the ETF from the ETF.

• Unitholder means a beneficial and registered holder of Units of an ETF.

Section references set out in this decision are references to NI 81-102, unless otherwise indicated.

Representations

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

1. The Existing ETFs are, and each of the Future ETFs will be, a mutual fund trust governed by the laws of Ontario and a reporting issuer under the laws of all of the Jurisdictions.

2. On March 21, 2011, the Manager filed a preliminary long form prospectus in respect of the Existing ETFs for the purpose of qualifying Units for distribution in all of the Jurisdictions.

3. The Filer will also apply to list the Units of the ETFs on the TSX. The Filer will not file a final prospectus for any ETF until the TSX has conditionally approved the listing of Units of such ETF.

4. Each Existing ETF's investment objectives are to provide Unitholders with (i) quarterly cash distributions, (ii) the opportunity for capital appreciation by investing on an equal weight basis in a portfolio of securities of issuers comprising the applicable ETF Index, and (iii) lower overall volatility of returns on the portfolio than would be experienced by owning a portfolio of securities of the issuers that comprise such ETF Index directly.

5. The Filer is a corporation incorporated under the laws of Ontario and it, or an affiliate, will act as the trustee and manager of each ETF. The Manager is the investment manager of the Existing ETFs and is registered in the categories of "commodity trading manager" under the Commodity Futures Act (Ontario) and as "exempt market dealer", "investment fund manager" and "portfolio manager" under the Securities Act (Ontario).

6. Units of an ETF may only be subscribed for or purchased directly from the ETF by Underwriters or Designated Brokers and orders may only be placed for a Prescribed Number of Units (or a multiple thereof) of the ETF on any day when there is a trading session on the TSX.

7. Each Underwriter or Designated Broker that subscribes for Units must deliver, in respect of each Prescribed Number of Units to be issued, a Basket of Securities and cash in an amount sufficient so that the value of the Basket of Securities and cash delivered is equal to the net asset value of the Units subscribed for next determined following the receipt of the subscription order. The ETFs may also accept subscriptions for Units in cash only in an amount equal to the net asset value of the Units next determined following the receipt of the subscription order.

8. All subscriptions and redemptions for Units of an ETF may be submitted on any day on which there is a trading session on the TSX and will settle by the third day after that date.

9. Each ETF will appoint a Designated Broker(s) to perform certain functions which include standing in the market with a bid and ask price for Units of that ETF for the purpose of maintaining liquidity for Units of that ETF.

10. The net asset value per Unit of each ETF will be calculated and published on each day on which there is a trading session on the TSX and will be made available on the website of the Filer or the ETF.

11. Neither the Underwriters nor the Designated Brokers will receive any fees or commissions in connection with the issuance of Units of an ETF to them. The Filer may, at its discretion, charge an administration fee on the issuance of Units of an ETF to Underwriters or Designated Brokers.

12. Except as described above, Units of an ETF may not be purchased directly from the ETF. Investors are generally expected to purchase Units of an ETF through the facilities of the TSX. However, Units of an ETF may be issued directly to Unitholders of the ETF upon the reinvestment of distributions of income or capital gains.

13. Unitholders of an ETF that wish to dispose of their Units of the ETF may generally do so by selling their Units of the ETF on the TSX, through a registered broker or dealer, subject only to customary brokerage commissions. A Unitholder that holds a Prescribed Number of Units or an integral multiple thereof may exchange such Units for Baskets of Securities and cash. Unitholders of an ETF may also redeem their Units of the ETF for cash at a redemption price equal to 95% of the closing price of the Units of the ETF on the TSX on the effective date of redemption.

14. As trustee and manager, the Filer will be entitled to receive a fixed annual fee from each ETF. Such annual fee will be calculated as a fixed percentage of the net asset value of the ETF. The Filer will be responsible for the payment of all expenses of the ETFs, except for the management fee, any expenses related to the implementation and on-going operation of an independent review committee under National Instrument 81-107 Independent Review Committee for Investment Funds, brokerage expenses and commissions, income taxes and withholding taxes and extraordinary expenses.

15. Unitholders of an ETF will have the right to vote at a meeting of Unitholders of the ETF prior to: any change in the fundamental investment objective of the ETF; any change to their voting rights; the introduction of a fee or expenses to be charged to the ETF or to Unitholders; or a change in the basis of the calculation of a fee or expenses charged to the ETF or Unitholders where such change could result in an increase in the amount of fees or expenses payable by the ETF or Unitholders.

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 as follows:

1. Sections 9.1 and 10.2 -- to enable the purchase and sale of Units of an ETF on the TSX, which precludes the transmission of purchase or redemption orders to the order receipt offices of the ETF.

2. Section 9.4(2) -- to permit payment for the issuance of Units of the ETFs to be made partially in cash and partially in securities, provided that the acceptance of securities as payment is made in accordance with Section 9.4(2)(b) of NI 81-102.

3. Section 10.3 -- to permit the redemption of less than the Prescribed Number of Units of an ETF at a price equal to 95% of the closing price of the Units of the ETF on the TSX.

4. Section 14.1 -- to relieve an ETF from the requirement relating to the record date for the payment of distributions, provided that the ETF complies with applicable TSX requirements.

The Exemption Sought shall terminate upon the coming into force of any legislation or rule of the principal regulator dealing with the matters referred to in subsections 9.1, 9.4(2), 10.2, 10.3, and 14.1 of NI 81-102.