Goodman & Company, Investment Counsel Ltd. et al.

Decision

Headnote

National Policy 11-203 Process for Exemption Relief Applications in Multiple Jurisdictions -- relief from section 4.1 of NI 81-102 for dealer-managed mutual funds to invest in an offering of debt securities of Viterra Inc. for which dealer-manager acts as underwriter during distribution period or 60 day period following distribution -- debt securities will not have "approved rating" as required by subsection 4.1(4) -- securities are consistent with fund investment objectives and funds' participation subject to approval of independent review committee -- offerings will have at least one underwriter in addition to related dealer, at least one arm's length purchaser purchasing at least 5% of the securities -- related funds are purchasing approximately 10% of offering and will pay no more than lowest price paid by arm's length purchaser(s) -- National Instrument 81-102 -- Mutual Funds section 4.1.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 4.1, 19.1.

February 15, 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

GOODMAN & COMPANY,

INVESTMENT COUNSEL LTD.

(the "Filer")

AND

DYNAMIC CANADIAN BOND FUND

MARQUIS INSTITUTIONAL BOND PORTFOLIO

DYNAMIC FOCUS + BALANCED FUND

DYNAMIC POWER BALANCED FUND

DYNAMIC POWER BALANCED CLASS

DYNAMIC ADVANTAGE BOND FUND

DYNAMIC ADVANTAGE BOND CLASS

DYNAMIC STRATEGIC YIELD FUND

DYNAMIC STRATEGIC YIELD CLASS

DYNAMIC DIVIDEND INCOME FUND

DYNAMIC DIVIDEND INCOME CLASS

(collectively, the "Funds")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer, in respect of the Funds, for a decision under the securities legislation of the Jurisdiction (the "Legislation") for relief (the "Requested Relief") from the prohibition in section 4.1(1) of NI 81-102 (the "Investment Prohibition") to permit the investment by the Funds in debt securities of Viterra Inc. ("Viterra") during the period of their distribution (the "Distribution") or during the period of 60 days after the Distribution (the "60-Day Period"), notwithstanding the involvement of the Filer's affiliate as an underwriter in the Distribution and notwithstanding that the debt securities do not have an approved rating by an approved credit rating organization as contemplated by section 4.1(4)(b) of National Instrument 81-102 ("NI 81-102").

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

(a) the Ontario Securities Commission is the principal regulator for this application; 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 on in Alberta, British Columbia, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Yukon Territory, Northwest Territories and Nunavut Territory (collectively, the "Non-Principal Jurisdictions").

Interpretation

Terms defined in MI 11-102, National Instrument 14-101 Definitions, NI 81-102 and National Instrument 81-107 Independent Review Committee for Investment Funds ("NI 81-107") have the same meaning if used in this decision, unless otherwise defined. For greater certainty, the term "approved rating", as used in section 4.1(4)(b) of NI 81-102, has the meaning given to such term in National Instrument 44-101 Short Form Prospectus Distributions.

Representations

This decision is based on the following facts represented by the Filer in respect of the Filer and the Funds:

1. The Filer is a corporation existing under the laws of the Province of Ontario, is registered with the OSC as a portfolio manager in the category of adviser, and is further registered in that category in each of British Columbia, Alberta, Manitoba, Saskatchewan, Quebec, New Brunswick and Nova Scotia and is registered as a commodity trading manager with the OSC.

2. Each of the Funds is a mutual fund established under the laws of the Jurisdiction, and none of the Funds is a "money market fund" as defined in NI 81-102.

3. The securities of the Funds are offered for sale pursuant to a prospectus filed in one or more of the Jurisdiction and the Non-Principal Jurisdictions. Each of the Funds is a dealer managed mutual fund that is a reporting issuer in one or more of the Jurisdiction and the Non-Principal Jurisdictions.

4. Each of the Funds has an independent review committee ("IRC") appointed under NI 81-107.

5. Neither the Filer nor the Funds are in default of securities legislation in any Jurisdiction.

6. The Filer is the manager and portfolio adviser of the Funds.

7. The Filer is a wholly-owned subsidiary of DundeeWealth Inc. As of February 1, 2011, DundeeWealth Inc. is a wholly-owned subsidiary of The Bank of Nova Scotia.

8. Pursuant to a final base shelf prospectus dated August 6, 2010 and a prospectus supplement dated February 10, 2011, Viterra is offering $200 million of 10 year Senior Unsecured Notes (the "Debt Securities"). The Debt Securities are rated BBB (low) by Dominion Bond Rating Service Limited and BBB- by Standard & Poor's, neither of which is an "approved rating" as contemplated in NI 81-102.

9. The Distribution has been marketed to potential lenders by a group of 13 investment dealers (the "Underwriters") pursuant to available exemptions from applicable securities laws.

10. The Filer is an affiliate of Scotia Capital Inc. (the "Related Underwriter"), an investment dealer who is an Underwriter in the Distribution.

11. The Filer proposes to purchase (the "Proposed Purchase") for the Funds in the aggregate up to $20 million of the Debt Securities offered through the Distribution. The Funds' participation in the Distribution would be subject to the approval of the IRC for the Funds.

12. The Funds require the Requested Relief from the Investment Prohibition because the Debt Securities do not have an "approved rating" by an "approved credit rating organization" as contemplated by section 4.1(4)(b) of NI 81-102.

13. The Proposed Purchase is consistent with the investment objectives of the Funds and represents the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Funds.

14. The Filer considers that a Fund may be prejudiced if it cannot make the Proposed Purchase, which is consistent with each Fund's investment objectives, during the Distribution, or in the 60-Day Period. Foregoing participation in this investment opportunity is a significant opportunity cost for the Funds as they would be denied timely access to these securities purely as a result of the coincidental participation of the Related Underwriter in the transaction and the credit rating of securities distributed in the Distribution.

15. The investment decision for the Proposed Purchase was made by the Filer independently from its Related Underwriter, as is reflected in and required by policies and procedures approved by the IRC.

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 from the Investment Prohibition is granted in respect of the Proposed Purchase by the Funds, provided that:

(a) at the time of the investment, the Proposed Purchase is consistent with the investment objectives of the Funds and represents the business judgment of the portfolio adviser of the Funds uninfluenced by considerations other than the best interests of the Funds;

(b) the Filer complies with section 5.1 of NI 81-107;

(c) at the time of the investment, the IRC has approved the transaction in accordance with section 5.2(2) of NI 81-107;

(d) if the securities are acquired during the Distribution

(i) at least one Underwriter is not related to the Filer,

(ii) at least one purchaser who is independent and arm's length to the Funds and the Related Underwriter must purchase at least 5% of the securities distributed under the Distribution, and

(iii) the price paid for the securities by a Fund shall be no higher than the lowest price paid by any of the arm's length lenders who participate in the Distribution, and

(iv) the Funds collectively acquire no more than 20% of the securities distributed under the Distribution;

(e) if the securities are acquired in the 60-Day Period,

(i) the ask price of the securities is readily available as provided in Commentary 7 to section 6.1 of NI 81-107,

(ii) the price paid for the securities by a Fund is not higher than the available ask price of the security, and

(iii) the purchase is subject to market integrity requirements as defined in NI 81-107; and

(f) no later than the time a Fund files its next annual financial statements, the manager of the Funds will file the particulars of the investment made by the Funds pursuant to the Requested Relief.

"Darren McKall"
Assistant Manager, Investment Funds
Ontario Securities Commission