Canoe Financial LP

Headnote

NP 11-203 Process for Exemptive relief Applications in Multiple Jurisdictions -- Relief granted to mutual fund from prohibition against purchasing a specified derivative the underlying interest of which is a physical commodity other than gold -- Mutual fund wanting to invest in standardized futures with underlying interests in oil or natural gas as a hedge against the prices of related securities held by them -- relief granted provided purchase of standardized future is effected through the NYMEX, the standardized future is traded only for cash or an offsetting standardized future contract, and the standardized future is sold at least one day prior to the date on which delivery of the underlying commodity is due under the standardized future.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.3(h), 19.1.

February 22, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CANOE FINANCIAL LP

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision on behalf of Canoe 'GO CANADA!' Canadian Energy Class (the Fund) under the securities legislation of the Jurisdictions (the Legislation) for a decision exempting the Fund from the restriction imposed by section 2.3(h) of National Instrument 81-101 Mutual Funds (NI 81-102), which prohibits mutual funds from purchasing, selling or using a specified derivative for which the underlying interest is a physical commodity other than gold so that the Fund is permitted to invest in standardized futures (as such term is defined in section 1.1 of NI 81-102) with underlying interests in sweet crude oil or natural gas in order to hedge the risks associated with the Fund's portfolio investments in such oil and natural gas securities (Exemption Sought). References to "oil" and "gas" in this decision in connection with the Fund's investment strategies are to sweet crude oil and natural gas respectively.

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

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

(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 by the Filer in each of the provinces and territories of Canada other than Ontario; and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in the Province of Ontario.

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.

1. The Filer is a limited partnership established under the laws of the Province of Alberta having its registered head office in Calgary, Alberta. The general partner of the Filer is Canoe Financial Corp., a corporation incorporated under the laws of the Province of Alberta. The Filer is registered as an investment fund manager and portfolio manager with the Alberta Securities Commission.

2. The Fund is a class of special shares of Canoe 'GO CANADA!' Fund Corp., a mutual fund corporation incorporated under the laws of the Province of Alberta.

3. The Filer is the manager and portfolio manager for the Fund.

4. A simplified prospectus in respect of the Fund was filed and a receipt obtained February 14, 2011. As a result, the Fund is a "reporting issuer" or equivalent in each province and territory of Canada.

5. Neither the Filer nor the Fund is in default of any requirements of securities legislation in any jurisdiction.

6. The investment objectives and investment strategies of the Fund permit portfolio investments in oil and gas securities. In addition, the Filer, as the Fund's portfolio manager, may choose to use derivatives to hedge against losses from changes in the prices of the Fund's respective investments.

7. Of late, the price of oil has continued to trend higher, whereas the price of natural gas has continued to trend lower. Canadian prices for natural gas have dropped approximately 43% since January 2010 alone, falling due to decrease demand and increasing supply levels in North America. In light of both these trends, the Filer has determined that it would be in the best interests of the Fund and the securityholders of the Fund if the Filer has the ability to implement an appropriate risk management strategy to protect the Fund from fluctuations in the prices of oil and gas.

8. The Filer has determined that trading in standardized futures contracts on the New York Mercantile Exchange (the NYMEX), where the underlying interests are physical commodities such as oil and gas, as a hedge against the prices of related securities held by the Fund, would be an optimal risk management strategy to protect the Fund from fluctuations in the prices of oil and gas from a number of perspectives, including liquidity, cost and complexity.

9. At least one of the officers of the Manager, who will oversee commodity trading for the Fund or a portfolio manager of the Fund, will have:

(a) a minimum of three years of experience in trading of physical and/or financial crude oil and natural gas; and

(b) a Chartered Financial Analyst designation or have completed the courses required to meet the registration requirements as a Commodity Trading Manager, as required under the Commodities Futures Act (Ontario).

10. The Manager is adequately registered in Alberta in categories of registration that would permit it to trade, and to advise on the trading of, standardized futures with underlying interest in crude oil and natural gas in Alberta.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) the purchases, uses and sales of standardized futures which have underlying interests in oil or gas are made in accordance with the provisions otherwise relating to the use of specified derivatives for hedging purposes in NI 81-102 and the related disclosure otherwise required in National Instrument 81-101 Mutual Fund Prospectus Disclosure and National Instrument 81-106 Investment Fund Continuous Disclosure;

(b) a standardized future contract will be traded only for cash or an offsetting standardized future contract to satisfy the obligations under the standardized future and will be sold at least one day prior to the date on which delivery of the underlying commodity is due under the standardized future;

(c) the purchase of a standardized future will be effected through the NYMEX;

(d) the Fund will not purchase a standardized future if, immediately following the purchase, all the standardized futures contracts purchased and then held by the Fund relate to barrels of oil and/or British Thermal Units of gas representing an aggregate value that would exceed 75% of the total net assets of the Fund at that time;

(e) the Fund will keep proper books and records of all such purchases and sales; and

(f) the Fund will provide disclosure in its simplified prospectus that: (i) the Fund may invest in standardized futures with underlying interests in oil and natural gas as a hedge against related oil and gas investments; (ii) the risks associated with this investment strategy; and (iii) this exemptive relief prior to implementing the strategy.