CI Investments Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - BNS acquiring 37.5% interest in CI LP - Pooled and public mutual funds managed by fund managers owned by CI LP becoming prohibited from making and holding investments in securities of BNS and in securities in which BNS has significant interest - Affiliates of BNS, who are participating dealers of the public mutual funds, deemed under the Act to have equity interest in CI LP and fund managers.

Relief granted from mutual fund conflict of interest investment restrictions in the Act to permit pooled and public mutual funds managed by the fund managers to make and hold investments in securities of related issuers, subject to IRC approval - Relief granted from restriction in the Act preventing public mutual funds from making portfolio trades through related dealers provided disclosure of contracts with related dealers is made in the next amendment or next renewal prospectus of the public mutual funds - Relief granted from paragraph 8.2(1)(b) of NI 81-105 requiring that the public mutual funds disclose in their prospectus the equity interest that BNS participating dealers have in the fund managers, provided this disclosure is made in the next amendment or next renewal prospectus of the public mutual funds - BNS participating dealers exempted from compliance with the point of sale equity interest disclosure and consent requirements of subsections 8.2(3) and 8.2(4) of NI 81-105 in respect of trades made by existing clients in securities of the public mutual funds after the acquisition, provided existing clients notified of equity interest in next quarterly account statement.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 111(2)(a), 111(2)(c)(ii), 111(3), 113, 115(1), 115(2).

National Instrument 81-105 Mutual Fund Sales Practices, ss. 8.2(1)(b), 8.2(3), 8.2(4), 9.1.

December 11, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO AND NEWFOUNDLAND

AND LABRADOR

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CI INVESTMENTS INC.

(THE FILER)

DECISION

Background

The securities regulatory authority or regulator in Ontario (the Passport Review Decision Maker) and in each of Ontario and Newfoundland and Labrador (together, the Coordinated Review Decision Makers) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting:

1. each Public Fund (as defined below) from:

(a) the investment restriction in the Legislation which prohibits a mutual fund from knowingly making an investment in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company;

(b) the investment restriction in the Legislation which prohibits a mutual fund from knowingly making an investment in any issuer in which any person or company who is a substantial security holder of the mutual fund, its management company or its distribution company has a significant interest; and

(c) the investment restriction in the Legislation which prohibits a mutual fund from knowingly holding an investment described in paragraphs (a) or (b) above (this paragraph, together with paragraphs (a) and (b) above, are together referred to in this decision as the Public Funds Relief);

2. each Pooled Fund (as defined below) from:

(a) the investment restriction in the Legislation which prohibits a mutual fund from knowingly making an investment in any person or company who is a substantial security holder of the mutual fund, its management company or distribution company;

(b) the investment restriction in the Legislation which prohibits a mutual fund from knowingly making an investment in any issuer in which any person or company who is a substantial security holder of the mutual fund, its management company or its distribution company has a significant interest; and

(c) from the investment restriction in the Legislation which prohibits a mutual fund from knowingly holding an investment described in paragraphs (a) or (b) above (this paragraph, together with paragraphs (a) and (b) above, are together referred to in this decision as the Pooled Funds Relief);

3. each Public Fund from the prohibitions in the Legislation which prohibit a mutual fund from making any investment in consequence of which a related person or company of the mutual fund will receive any fee or other compensation except fees paid pursuant to a contract which is disclosed in any preliminary prospectus or prospectus, or any amendment to either of them, that is filed by the mutual fund and is accepted by the applicable securities regulatory authority or regulator (the Trade Execution Relief);

4. each Public Fund from the requirement in section 8.2(1)(b) of National Instrument 81-105 Mutual Fund Sales Practices (NI 81-105) that a mutual fund disclose in its prospectus or simplified prospectus a complete description of any equity interest that a participating dealer and associates of the participating dealer, in aggregate, have in any member of the organization of the mutual fund (the Prospectus Equity Interest Disclosure Relief); and

5. each BNS Participating Dealer (as defined below) from:

(a) the requirement in section 8.2(3) of NI 81-105 (the POS Equity Interest Disclosure Requirement) that a participating dealer deliver to the purchaser of securities of a mutual fund a document that discloses the amount of any equity interest that the participating dealer and associates of the participating dealer, in aggregate, have in any member of the organization of the mutual fund (the POS Equity Interest Disclosure Relief); and

(b) the requirement in section 8.2(4) of NI 81-105 (the POS Equity Interest Consent Requirement) to obtain the prior written consent of the purchaser before completing a trade to which the POS Equity Interest Disclosure Requirement applies (the POS Equity Interest Consent Relief);

(together, the Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario 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:

(i) each Public Fund in British Columbia, Alberta, Saskatchewan, Québec, New Brunswick and Nova Scotia in respect of the Public Funds Relief;

(ii) each Pooled Fund in British Columbia, Alberta, Saskatchewan, Québec, New Brunswick and Nova Scotia in respect of the Pooled Funds Relief;

(iii) each Public Fund in British Columbia, Alberta, Saskatchewan, Québec, New Brunswick and Nova Scotia in respect of the Trade Execution Relief;

(iv) each Public Fund in all the provinces and territories of Canada in respect of the Prospectus Equity Interest Disclosure Relief;

(v) each BNS Participating Dealer in all the provinces and territories of Canada in respect of the POS Equity Interest Disclosure Relief; and

(vi) each BNS Participating Dealer in all the provinces and territories of Canada in respect of the POS Equity Interest Consent Relief;

(c) this decision is the decision of the principal regulator; and

(d) this decision evidences the decision of each of the Coordinated Review Decision Makers.

Interpretation

Defined terms in MI 11-102, NI 81-105, National Instrument 81-102 Mutual Funds, and National Instrument 14-101 Definitions 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:

Facts

1. The head office of the Filer and each Fund (defined below) is located in Ontario. Neither the Filer nor any Fund is in default of the securities legislation of any jurisdiction of Canada.

2. The Filer and affiliates of the Filer (together, the Managers) are managers of one or more mutual funds and may, in the future, become managers of additional mutual funds (all such present and future mutual funds being hereinafter referred to as the Funds). Some Funds are or will be reporting issuers under the securities legislation of some or all of the jurisdictions of Canada (the Public Funds) while other Funds do not or will not have such status (the Pooled Funds).

3. Each Manager currently is directly or indirectly wholly-owned by Canadian International LP (CI LP), the general partner of which is wholly-owned by CI Financial Income Fund (CI Financial). CI Financial also owns all of the Class A voting, participating limited partner units of CI LP, representing 100% of the outstanding voting securities and approximately 47.7% of the total outstanding equity securities of CI LP.

4. Sun Life Financial Inc. (Sun Life) currently owns, directly or indirectly, approximately 37.5% of CI LP's total outstanding voting and equity securities (the CI Securities). This represents an indirect ownership of more than 20% of the outstanding voting securities of each Manager with the result that Sun Life is a substantial security holder of each Manager.

5. Sun Life has publicly announced its agreement to sell the CI Securities to The Bank of Nova Scotia (BNS) (the Transaction), as a result of which BNS will become a substantial security holder of each Manager.

6. BNS currently holds, directly or indirectly, more than 10% of the outstanding shares or units of, and therefore has a significant interest in, the following persons or companies: Dundee Corporation, DundeeWealth Inc., Automodular Corporation, Scotiabank Subordinated Notes Trust, Avotus Corporation and High Liner Foods Inc. These persons and companies, together with BNS and any other person or company in which BNS may presently or in the future hold a significant interest, are referred to in this decision as the Related Issuers.

7. The Managers and the Funds currently deal at arm's length with the Related Issuers and their subsidiaries. Completion of the Transaction will result in BNS holding indirectly only a minority interest in the Managers. The Filer expects that, following completion of the Transaction, BNS will be a non-controlling investor in CI Financial, the Managers and the Funds will continue to deal at arm's length with the Related Issuers and their subsidiaries, and the Managers will continue to operate independently from BNS and its subsidiaries. The Filer is not aware of any present intention of BNS to consolidate the operations of the Managers with the operations of any subsidiaries of BNS.

8. Each Fund currently invests, or may invest, in listed and unlisted securities issued by the Related Issuers.

9. Each Public Fund has an independent review committee (an IRC) established in accordance with National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).

10. BNS also currently has significant interests in two full-service investment dealers, namely Scotia Capital Inc. (Scotia Capital), which BNS wholly-owns, and Dundee Securities Corporation (Dundee Securities), in which BNS indirectly holds a 19.4% equity interest.

11. Each Fund currently executes trades in portfolio securities through Scotia Capital and Dundee Securities (together, the Related Executing Dealers). After completion of the Transaction, each Related Executing Dealer will become a related person or company to the Public Funds.

12. Scotia Capital and its affiliates who are registered under Canadian securities legislation as brokers or dealers for trading in securities (together with Scotia Capital, the BNS Participating Dealers) may distribute securities of the Public Funds and therefore each is a participating dealer of each Public Fund.

13. Following the completion of the Transaction, the BNS Participating Dealers will, by virtue of being affiliates of BNS, be deemed under the Legislation to beneficially own the CI Securities and therefore hold an equity interest of approximately 37.5% in each Manager.

14. CI Financial has publicly announced its intention to implement a reorganization by which CI Financial will convert from an income trust to a corporate form (the Reorganization) on or about December 31, 2008. Following the completion of the Transaction and the Reorganization:

(a) each Manager will be wholly-owned, directly or indirectly, by the corporate successor to CI Financial;

(b) BNS will continue to be a substantial security holder of each Manager; and

(c) each BNS Participating Dealer will continue to be deemed to hold an equity interest in each Manager.

15. Following the completion of the Transaction, clients of each BNS Participating Dealer may wish to purchase securities of the Public Funds. In some cases, the purchases will be made based on new instructions received from such clients (New Trades). In other cases, the purchases will be made based on standing instructions received from the client (Pre-Authorized Trades). Pre-Authorized Trades will arise in the following circumstances:

(a) Pre-authorized purchase programs: The Public Funds offer investors the opportunity to enrol in programs pursuant to which investors provide their instructions to purchase a specified dollar amount of securities of one or more Public Funds on a regular basis selected by the investor. Cash to pay for the purchases is debited electronically from the investor's account at a financial institution until the investor changes his or her instructions.

(b) Systematic transfer program: The Public Funds offer investors the opportunity to enrol in programs pursuant to which investors provide their instructions to transfer a predetermined dollar amount of investment from one Public Fund to another Public Fund with a frequency selected by the investor. These transfers are effected by redeeming securities from one Public Fund and immediately investing the redemption proceeds in securities of the next Public Fund until the investor changes his or her instructions.

(c) Account rebalancing programs: The Public Funds offer investors the opportunity to enrol in programs pursuant to which investors provide their target allocations among Public Funds in their account, together with the frequency with which they would like the current values of their holdings to be compared to their target allocations, and their range of permitted deviation from the target allocations. If, on the scheduled date selected by the investor, the current value of any individual holding deviates from its target allocation by more than the permitted deviation, redemption and purchase trades are effected to rebalance the investor's holdings to their target allocations. These rebalancing trades continue until the investor changes his or her instructions.

(d) Distribution/dividend reinvestment programs: Unless investors instruct the Public Fund otherwise, all distributions and dividends paid by the Public Funds are immediately reinvested in additional securities of the Public Fund that paid the distribution or dividend.

16. The BNS Participating Dealers carry on business through more than 1,000 branches across Canada and utilize more than 6,000 registered personnel to sell mutual fund securities. There are currently more than 400,000 accounts of BNS Participating Dealers who may wish to purchase securities of the Public Funds in the future and more than 35,000 accounts of BNS Participating Dealers who are enrolled in a program involving Pre-Authorized Trades in securities of the Public Funds. The compliance regime used by the BNS Participating Dealers to deal with the large number of branches, registered personnel and accounts described above relies upon delivering key information to clients, and obtaining key written consents from clients, using standardized account opening documentation. Changes to this standardized account opening documentation require approximately three months to implement due to, among other factors, printing and coordinating the distribution of materials to a large number of branches and registered personnel and related changes to recordkeeping systems and training.

17. Each Pre-Authorized Trade and New Trade constitutes a distribution of securities of a Public Fund to which NI 81-105 applies. Following the completion of the Transaction, Pre-Authorized Trades by clients of the BNS Participating Dealers for additional securities of the Public Funds will continue unless the Public Funds disregard the standing instructions from such investors for such Pre-Authorized Trades.

18. The Filer expects that each BNS Participating Dealer will update its account opening documentation by March 31, 2009 in order to comply with the POS Equity Interest Disclosure Requirement and the POS Equity Interest Consent Requirement for every person who becomes a client of a BNS Participating Dealer after such date (New BNS Clients).

19. The Filer expects that, following the completion of the Transaction:

(a) each BNS Participating Dealer will have no material relationship with any Manager other than the equity interest that it will be deemed to hold in such Manager;

(b) each BNS Participating Dealer will be free to choose which mutual funds to recommend to its clients and will consider recommending the Public Funds to its clients in the same manner as it considers recommending mutual funds that are not managed by a Manager;

(c) each BNS Participating Dealer will comply with its obligations at law to recommend to its clients only those mutual funds that the BNS Participating Dealer believes would be suitable for such clients and in accordance with the investment objectives of such clients; and

(d) neither the BNS Participating Dealers nor any of their sales representatives will be subject to quotas (whether express or implied) in respect of selling securities of the Public Funds.

20. Following the completion of the Transaction:

(a) each Manager will provide the BNS Participating Dealers with the compensation described in the prospectuses of the Public Funds in the same manner as the Manager provides compensation for any other participating dealer selling securities of the Public Funds of which it is the manager; and

(b) neither the Manager nor any other member of the organization of a Public Fund will provide any incentive (whether express or implied) to any sales representative of the BNS Participating Dealers or to the BNS Participating Dealers to encourage those sales representatives or the BNS Participating Dealers to recommend to clients of the BNS Participating Dealers the Public Funds rather than mutual funds managed by persons other than the Managers except as permitted by NI 81-105.

21. In the absence of the Public Funds Relief, the Public Funds will, after completion of the Transaction, be prohibited by the Legislation from making and holding investments in unlisted debt securities issued by the Related Issuers. The continued making and holding of investments by the Public Funds in unlisted debt securities of the Related Issuers after the Transaction is completed has been referred to, and approved by, the IRC of the Public Funds.

22. In the absence of the Pooled Funds Relief, the Pooled Funds will, after completion of the Transaction, be prohibited by the Legislation from making and holding investments in any securities (including listed securities and unlisted debt securities) of the Related Issuers. The Pooled Funds are unable to rely on the related issuer investment exemption codified in section 6.2(2) of NI 81-107 to invest in listed securities of the Related Issuers since NI 81-107 does not apply to the Pooled Funds. Each Pooled Fund will establish an IRC that will be composed in accordance with the requirements of section 3.7 of NI 81-107. The IRC of each Pooled Fund will be expected to comply with the standard of care set out in section 3.9 of NI 81-107 as if each Pooled Fund were subject to that rule. The only conflict of interest matter that will be referred by each Pooled Fund to its IRC will be investments made by the Pooled Fund in securities of Related Issuers.

23. The Filer considers that the Funds should be permitted to invest in unlisted debt securities of the Related Issuers because they provide the Funds with increased opportunities to invest in highly rated corporate debt instruments, achieve greater investment diversification and, in some circumstances, better track certain benchmark indices.

24. The Filer considers that the Pooled Funds should be permitted to invest in listed securities of the Related Issuers because they provide the Pooled Funds with opportunities to broaden their diversification within the financial services sector.

25. In the absence of the Trade Execution Relief, each Public Fund will, after completion of the Transaction, become required by the Legislation to cease executing trades in portfolio securities through the Related Executing Dealers and to cease paying brokerage fees to Related Executing Dealers for such trades until such time as contracts between the Public Fund and the Related Executing Dealers, as contemplated by the Legislation, have been executed and disclosed in the Public Fund's prospectus. An amendment to the prospectus of each Public Fund would have to be filed immediately after the Transaction for purposes of making such disclosure. The continued execution of trades in portfolio securities by the Public Funds through the Related Executing Dealers after the Transaction is completed has been referred to, and approved by, the IRC of the Public Funds.

26. In the absence of the Prospectus Equity Interest Disclosure Relief, each Public Fund will, after completion of the Transaction, be required by paragraph 8.2(1)(b) of NI 81-105 to immediately file an amendment to its prospectus to disclose the equity interest of the BNS Participating Dealers in the Manager of the Public Fund.

27. The aggregate cost of amending the current prospectuses of all the Public Funds to include the disclosure described in paragraphs 25 and 26 above is estimated to be approximately $300,000, the vast majority of which would be comprised of filing fees payable to the Canadian securities administrators.

28. In the absence of the POS Equity Interest Disclosure Relief, each BNS Participating Dealer would be required to disclose to its clients who are not New BNS Clients (Existing BNS Clients) the equity interest of such BNS Participating Dealer in each Manager prior to such Existing BNS Clients' next trade (whether a New Trade or a Pre-Authorized Trade) in securities of the Public Funds managed by such Manager.

29. In the absence of the POS Equity Interest Consent Relief, each BNS Participating Dealer would be required after the Transaction is completed to obtain the prior written consent of each Existing BNS Client, as contemplated by subsection 8.2(4) of NI 81-105, prior to such Existing BNS Client completing the next trade (whether a New Trade or Pre-Authorized Trade) in securities of the Public Funds.

30. The Filer believes that it would require considerable printing and mailing costs, staff resources and time for the BNS Participating Dealers to attempt to comply with the POS Equity Interest Disclosure Requirement and the POS Equity Interest Consent Requirement for Existing BNS Clients due to the mailing and follow up that this initiative would require.

31. Existing BNS Clients who are currently enrolled in Pre-Authorized Trade programs made their decision to invest in the Public Funds prior to the BNS Participating Dealers acquiring an equity interest in the Managers. Accordingly, there was no actual or perceived conflict of interest at the time that the BNS Participating Dealer advised its clients with respect to their investments in the Public Funds, including their enrolment in Pre-Authorized Trade programs. Pre-Authorized Trades do not require any further investment advice from the BNS Participating Dealers prior to execution where a conflict of interest may be perceived to exist.

32. The Filer believes that if the BNS Participating Dealers are required to comply with the POS Equity Interest Consent Requirement in respect of trades by Existing BNS Clients in securities of the Public Funds, the procedures associated with such compliance will create a disincentive for many of the Existing BNS Clients and sales representatives of the BNS Participating Dealers from trading in securities of the Public Funds.

33. It is not feasible for each BNS Participating Dealer to obtain the prior written consent of each Existing BNS Client prior to such Existing BNS Client completing his or her next Pre-Authorized Trade. Consequently, if the POS Equity Interest Consent Relief is not granted, each BNS Participating Dealer will be required to seek cancellation of all Pre-Authorized Trade instructions from its clients until it is able to comply with section 8.2(4) of NI 81-105.

34. Each BNS Participating Dealer will provide its Existing BNS Clients with disclosure of its equity interest in the Managers no later than with the account statements mailed to Existing BNS Clients for the quarter ending March 31, 2009.

Decision

Each of the Passport Review Decision Maker and the Coordinated Review Decision Makers is satisfied that the decision meets the test set out in the Legislation for the relevant regulator or securities regulatory authority to make the decision.

The decision of the Passport Review Decision Maker and the Coordinated Review Decision Makers under the Legislation is that the Relief is granted provided that:

1. in respect of the Public Funds Relief and the Pooled Funds Relief:

(a) each purchase and holding by a Fund of securities of the Related Issuers after completion of the Transaction is consistent with, or is necessary to meet, the investment objective of the Fund;

(b) each debt security of a Related Issuer purchased by a Fund after completion of the Transaction will be a debt security issued by a Related Issuer that has, at the time of the purchase, an approved credit rating by an approved credit rating organization;

(c) if the security of the Related Issuer is listed and traded, the purchase is made on an exchange on which the securities are listed and traded;

(d) each Pooled Fund establishes an IRC that is composed in accordance with the requirements of section 3.7 of NI 81-107 and that is expected to comply with the standard of care set out in section 3.9 of NI 81-107;

(e) the IRC of the Fund has approved the transaction in the manner contemplated by section 5.2(2) of NI 81-107;

(f) the Manager of the Fund complies with section 5.1 of NI 81-107 and the Manager and the IRC of the Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the transactions;

(g) the price payable for the security purchased after the completion of the Transaction is not more than the ask price of the security;

(h) the ask price of the security is determined as follows:

(i) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of that marketplace; or

(ii) if the purchase does not occur on a marketplace:

(A) the Fund pays the price for the security at which an independent arm's length seller is willing to sell the security; or

(B) if the Fund does not purchase the security from an independent arm's length seller, the Fund pays the price quoted publicly by an independent marketplace or obtains, immediately before the purchase, at least one quote from an independent arm's length purchaser or seller and pays not more than that quote;

(i) securities of the Related Issuers are purchased in the secondary market;

(j) the transaction complies with any applicable "market integrity requirements" as defined in NI 81-107;

(k) no later than the time the Fund files its annual financial statements, the Fund files with the securities regulatory authorities or regulator the particulars of any such investments; and

(l) the reporting obligation in section 4.5 of NI 81-107 applies to the Pooled Funds Relief granted in this decision and the IRC of the Pooled Funds relying on the Pooled Funds Relief complies with section 4.5 of NI 81-107, as if the Pooled Funds were subject to that rule, in connection with any instance that it becomes aware that the Pooled Funds did not comply with any of the conditions of this decision;

2. in respect of the Trade Execution Relief:

(a) each Manager uses its reasonable best efforts to enter into a contract with each Related Executing Dealer as contemplated by the Legislation as quickly as possible and, in any event, not later than the lapse date of the current prospectus of the Public Fund or the date it files its next annual information form; and

(b) after entering into the contract referred to above, the Public Fund discloses such contract in its next prospectus, amendment to its current prospectus, or next annual information form that it files with any Canadian securities administrator, whichever occurs first;

3. in respect of the Prospectus Equity Interest Disclosure Relief:

(a) the information prescribed by 8.2(1)(b) of NI 81-105 is included in the next amendment to the current prospectus of each Public Fund or in its next renewal prospectus or annual information form, whichever is filed first;

4. in respect of the POS Equity Interest Disclosure Relief:

(a) the Relief is granted only in respect of trades in securities of the Public Funds made by Existing BNS Clients after the Transaction is completed;

(b) each BNS Participating Dealer advises its Existing BNS Clients of the BNS Participating Dealer's equity interest in the Managers no later than with the account statements mailed to Existing BNS Clients for the quarter ending March 31, 2009; and

(c) each BNS Participating Dealer discloses on its website the BNS Participating Dealer's equity interest in the Managers; and

5. in respect of the POS Equity Interest Consent Relief:

(a) the Relief is granted only in respect of trades in securities of the Public Funds made by Existing BNS Clients after the Transaction is completed.