CI Investments Inc. et al. - MRRS Decision

Headnote

MRRS exemption granted from unitholder approval requirement in subsection 5.1(f) of National Instrument 81-102 -- Mutual Funds and approval granted under paragraph 5.5(1)(b) of NI 81-102. Exemption and approval granted in connection with proposed mergers of RSP clone funds into their corresponding funds due to change in foreign content restrictions. RSP clone funds are fund of funds that terminate upon the completion of the mergers. Exemption and approval granted on a representative basis so that other fund managers of RSP clone funds, in addition to the applicant, that comply with the conditions of the decision may rely upon it.

Rules Cited

National Instrument 81-102 - Mutual Funds, ss. 5.1(f), 5.5(1)(b).

July 28, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,

QUEBEC, NEW BRUNSWICK, NOVA SCOTIA, PRINCE EDWARD ISLAND,

NEWFOUNDLAND and LABRADOR, NORTHWEST TERRITORIES,

YUKON and NUNAVUT

(the Jurisdictions)

AND

IN THE MATTER OF

NATIONAL INSTRUMENT 81-102 MUTUAL FUNDS (NI 81-102)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CI INVESTMENTS INC. (CI)

AND

CI GLOBAL CONSERVATIVE RSP PORTFOLIO

CI GLOBAL BALANCED RSP PORTFOLIO

CI GLOBAL GROWTH RSP PORTFOLIO

CI GLOBAL MAXIMUM GROWTH RSP PORTFOLIO

(the RSP Portfolio Funds)

AND

CI GLOBAL CONSERVATIVE PORTFOLIO

CI GLOBAL BALANCED PORTFOLIO

CI GLOBAL GROWTH PORTFOLIO

CI GLOBAL MAXIMUM GROWTH PORTFOLIO

(the Corresponding Portfolio Funds)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from CI in respect of the RSP Portfolio Funds and the Corresponding Portfolio Funds (the Portfolio Funds) for a decision under the securities legislation of the Jurisdictions (the Legislation) that:

(a) exempts the Portfolio Funds from the requirements of subsection 5.1(f) of NI 81-102 to obtain the prior approval of the securityholders (the Securityholder Approval Requirement) of the Portfolio Funds to the merger (a CI Merger) of any RSP Portfolio Fund and its Corresponding Portfolio Fund;

(b) exempts the Affected Portfolio Funds (as defined below) from the Securityholder Approval Requirement in connection with the Affected Mergers (as defined below); and

(c) approves each CI Merger and Affected Merger as contemplated by section 5.5(1)(b) of NI 81-102.

(collectively, the Requested Relief)

Under the Mutual Reliance Review System for Exemptive Relief Applications

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

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions or in Québec Commission Notice 14-101 have the same meaning in this decision unless they are defined in this decision.

Representations

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

1. CI is a corporation organized under the laws of the Province of Ontario and is registered under the Securities Act (Ontario) as an adviser in the categories of investment counsel and portfolio manager.

2. Each Portfolio Fund is a trust established under the laws of Ontario. Each Portfolio Fund is a reporting issuer or the equivalent thereof in each Jurisdiction, is subject to the requirements of NI 81-102, and is not in default of any requirements of applicable securities legislation.

3. Each Portfolio Fund invests exclusively in securities of more than one underlying mutual fund (the Underlying Funds) which vary based on the investment objectives of the Portfolio Fund. Each Portfolio Fund would qualify as an RSP clone fund (as defined in NI 81-102) except that the RSP Portfolio Fund invests in more than one Underlying Fund.

4. Each RSP Portfolio Fund is offered as part of a family of mutual funds which includes its Corresponding Portfolio Fund. On the date of a CI Merger, the Corresponding Fund has invested its assets directly in securities of the same Underlying Funds and in approximately the same proportions as the direct and indirect investments of the RSP Portfolio Fund. Consequently, on the date of each CI Merger, each RSP Portfolio Fund and its Corresponding Portfolio Fund provides investors with exposure to the same investment portfolio.

5. As a result of the elimination of the foreign property rules from the Income Tax Act (Canada) (the Tax Act) on June 29, 2005, each RSP Portfolio Fund has become redundant since there no longer are any adverse tax consequences under the Tax Act to registered plans for holding foreign property.

6. CI is of the view that it is appropriate to eliminate this redundancy and any confusion resulting therefrom by merging each RSP Portfolio Fund and its Corresponding Portfolio Fund. Prior to the elimination of the foreign property rules from the Tax Act, each RSP Portfolio Fund incurred embedded transaction costs in the forward contracts used to carry out its strategy. These contracts have been terminated.

7. Though the net asset value of the Terminating Fund (as defined below) may be larger than the net asset value of its Continuing Fund (as defined below) at the time of the CI Merger, that fact, by itself, will not constitute a significant change for the Continuing Fund under NI 81-102.

8. The CI Mergers will not change the constitution or proportions of the investment portfolio in which the Portfolio Funds invest their respective assets, nor will the CI Mergers result in an increase in the management fees or operating expenses for unitholders of the Portfolio Funds.

9. Substantially all of the investors in each RSP Portfolio Fund invest through registered plans. Consequently, if the RSP Portfolio Fund is the Terminating Fund following the CI Merger, the CI Merger will be tax neutral to such investors, regardless of whether the CI Merger is implemented on a tax-deferred basis.

10. Subsection 5.1(f) of NI 81-102 provides that the prior approval of the securityholders of a mutual fund (the Terminating Fund) is required before the Terminating Fund undertakes a reorganization with or transfers its assets to another mutual fund (the Continuing Fund) if (a) the Terminating Fund ceases to continue after the reorganization or transfer of assets, and (b) the transaction results in the securityholders of the Terminating Fund becoming securityholders in the Continuing Fund.

11. CI is satisfied that, as trustee and manager of each Portfolio Fund, it has sufficient authority and flexibility under the constating documents of the Portfolio Funds to implement the CI Mergers without unitholder approval, provided the relief requested herein is granted by the Decision Makers.

12. Prior to or after each CI Merger, registered holders of units in the Terminating Fund will receive a communication (that may be part of or accompany a trade confirmation sent by dealers, the next account statement sent to unitholders, or the first management reports of fund performance for its Continuing Fund) that will describe the CI Merger and the basis on which units of the Terminating Fund have been or will be exchanged for units of its Continuing Fund. If the notice is part of or accompanies the first management report of fund performance for the Continuing Fund, CI will follow the process prescribed for the delivery of such reports in subsection 5.1(3) of National Instrument 81-106 -- Investment Fund Continuous Disclosure if that section applies.

13. A manager of mutual funds (the Affected Portfolio Funds) which, on the date of an Affected Merger (as defined below), are structured in the same manner as the Portfolio Funds as described in paragraphs 3 and 4 above may be in an identical position to CI in that it may wish to merge such Affected Portfolio Funds and the manager may be in a position to make substantially the same representations as CI that

(a) it is appropriate to merge the Affected Portfolio Funds to eliminate redundancy and any confusion resulting therefrom,

(b) the manager otherwise has sufficient authority and flexibility under the constating documents of the Affected Portfolio Funds to merge the Affected Portfolio Funds without seeking securityholder approval, and

(c) each merger of Affected Portfolio Funds (the Affected Mergers) will be tax neutral to investors in the Terminating Fund.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make this decision has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that:

1. CI, as manager of the Portfolio Funds, or any other manager of an Affected Portfolio Fund who wishes to rely on this Decision

(a) issues a press release announcing its intention to effect the CI Mergers or the Affected Mergers (collectively, the Mergers) in the manner described in this decision,

(b) sends a communication to dealers who have clients invested in the Terminating Fund or the Affected Portfolio Funds describing the Mergers so that dealers and their sales representatives will be in position to discuss the respective Mergers with their clients,

(c) posts the press release and the dealer communication to the applicable manager's web site, if any, and

(d) files the press release with the securities regulatory authorities in those Jurisdictions where the Terminating Funds are reporting issuers

as soon as practicable after CI or the manager of an Affected Portfolio Fund decides to proceed with a Merger and, in any event, at least two business days before the date of such Merger.

2. CI and any other manager of an Affected Portfolio Fund who wishes to rely on this Decision sends or causes to be sent to each registered holder of securities of a Terminating Fund, prior to or as soon as practicable following such Merger and, in any event, by March 1, 2006 a communication that may be part of or accompany:

(a) a trade confirmation, if a trade confirmation is sent following the Merger;

(b) an account statement next sent to securityholders after the Merger;

(c) the financial statements and/or management reports of fund performance for the Continuing Fund; or

(d) any other communication sent to securityholders

that describes the purpose of the Merger and the manner in which securities in the Terminating Fund have been or will be exchanged for securities of its Continuing Fund.

3. Each Merger complies with all of the requirements of subsection 5.6(1) of NI 81-102 other than paragraph 5.6(1)(e)(i) of NI 81-102.

4. This Decision shall be revoked and be of no further force and effect on the date (the Expiry Date) that is three months after the date hereof, except to the extent that CI or the manager of the Affected Portfolio Fund has relied on this Decision and complied with Condition 1 above before the Expiry Date but has not yet complied with Condition 2 above, in which event CI or the manager of the Affected Portfolio Fund shall be required to comply with Condition 2 above as required by March 1, 2006.