Securities Law & Instruments


Headnote

RSP funds propose to invest in units of their underlying funds that are under commonmanagement with the RSP funds - certain directors and officers of portfolio manager arealso officers of certain underlying funds - exemption granted from the requirements ofsection 101, clause 111(2)(b), subsection 111(3), clauses 117(1)(a) and (d), and clause118(2)(a) of the Act, subject to specified conditions.

Rules Cited

National Instrument 81-102 - Mutual Funds, s. 2.5.


IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA,ONTARIO, NOVA SCOTIA, QUEBEC AND NEWFOUNDLAND

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
C.I. EMERGING MARKETS RSP FUND, C.I. EMERGING MARKETS FUND, C.I. INTERNATIONAL RSP FUND, C.I. INTERNATIONAL FUND,C.I. PACIFIC RSP FUND, C.I. PACIFIC FUND, C.I. GLOBAL BUSINESS-TO-BUSINESS (b2b) RSP FUND, (formerly C.I. European RSP Fund)C.I. GLOBAL BUSINESS-TO-BUSINESS (b2b) SECTOR SHARES, (formerly C.I. European Sector Shares), C.I. GLOBAL BIOTECHNOLOGY RSP FUND,C.I. GLOBAL BIOTECHNOLOGY SECTOR SHARES, C.I. GLOBAL CONSUMER PRODUCTS RSP FUND, C.I. GLOBAL CONSUMER PRODUCTS SECTOR SHARES, C.I. GLOBAL ENERGY RSP FUND,C.I. GLOBAL ENERGY SECTOR SHARES, C.I. JAPANESE RSP FUND, C.I. JAPANESE SECTOR SHARES, C.I. GLOBAL MANAGERS RSP FUND,(formerly C.I. Multi-Manager RSP Fund), C.I. GLOBAL MANAGERS SECTOR SHARES, (formerly C.I. Multi-Manager Sector Shares)

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Quebec, Nova Scotia and Newfoundland (the "Jurisdictions") has received anapplication from C.I. Mutual Funds Inc.("C.I."), on its own behalf and on behalf of the C.I.Emerging Markets RSP Fund, C.I. International RSP Fund, C.I. Pacific RSP Fund, C.I.Global Business-to Business (b2b) RSP Fund (formerly C.I. European RSP Fund), C.I.Global Biotechnology RSP Fund, C.I. Global Consumer Products RSP Fund, C.I. GlobalEnergy RSP Fund, C.I. Japanese RSP Fund, and C.I. Global Managers RSP Fund(formerly C.I. Multi-Manager RSP Fund) (collectively, the "RSP Funds"), for a decision byeach Decision Maker (collectively, the "Decision") under the securities legislation of theJurisdictions (the "Legislation") that the following provisions of the Legislation (the"Applicable Requirements") do not apply to the RSP Funds, or C.I., as the case may be,in connection with certain investments to be made by the RSP Funds;

i. the provisions requiring a mutual fund security holder to issue a news release andfile a report where its aggregate holdings of securities of a reporting issuer exceed10% of the outstanding voting or equity securities of the reporting issuer, and torefrain from purchasing additional voting or equity securities of the reporting issuerfor a specified period of time once its holdings exceed the 10% level and beforesuch holdings exceed the 20% level;

ii. the provisions prohibiting a mutual fund from knowingly making and holding aninvestment in a person or company in which the mutual fund, alone or together withone or more related mutual funds, is a substantial securityholder;

iii. the provision requiring the management company of a mutual fund to file a reportrelating to the purchase or sale of securities between the mutual fund and anyrelated person or company, or any transaction in which, by arrangement other thanan arrangement relating to insider trading in portfolio securities, the mutual fund isa joint participant with one or more of its related persons or companies; and

iv. the provision prohibiting a portfolio manager from knowingly causing an investmentportfolio managed by it to invest in the securities of an issuer in which a"responsible person" (as that term is defined in the Legislation) is a director orofficer, unless the specific fact is disclosed to the client and, if applicable, thewritten consent of the client to the investment is obtained before the purchase;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS C.I. has made the following representations to the DecisionMakers:

1. The C.I. Emerging Markets Fund, C.I. International Fund, C.I. Pacific Fund(collectively, the "Reference Funds") are the funds underlying the RSP Fundsshown on left-hand side of the title of this decision document opposite the namesof the Reference Funds.

2. The C.I. Global Business-to-Business (b2b) Sector Shares (formerly C.I. EuropeanSector Shares), C.I. Global Biotechnology Sector Shares, C.I. Global ConsumerProducts Sector Shares, C.I. Global Energy Sector Shares, C.I. Japanese SectorShares, and C.I. Global Managers Sector Shares (formerly C.I. Multi-ManagerSector Shares) (collectively, the "Reference Shares") are the classes of shares ofC.I. Sector Fund Limited (the "Sector Fund"), which underlie the RSP Funds shownon the left-hand side of the title of this decision document opposite each ReferenceShares.

3. Each of the RSP Funds will be, and each of the Reference Funds, is an open-ended mutual fund trust established or will be established under the laws of theProvince of Ontario. Each of the Reference Shares is or will be a class of sharesof the Sector Fund, a mutual fund corporation incorporated under the laws of theProvince of Ontario.

4. C.I. is a corporation amalgamated under the laws of the Province of Ontario. Thehead office of C.I. is located in Ontario.

5. C.I. is or will be the manager, promoter, trustee and portfolio manager of each ofthe RSP Funds and the Reference Funds. It is also the manager, promoter andportfolio manager of the Reference Shares. C.I., as portfolio manager of the RSPFunds, and the directors and officers of C.I. are responsible persons in respect ofthe RSP Funds. Certain directors and officers of C.I. are also directors of the SectorFund.

6. The RSP Funds will be, and the Reference Funds are, reporting issuers. None ofthe Reference Funds is in default of any requirements of the Legislation of theJurisdictions. The securities of each of the Reference Funds are currently qualifiedfor distribution in all the Jurisdictions pursuant to a simplified prospectus andannual information form dated August 5, 1999 (the "August/99 Prospectus) of theReference Funds. The Reference Shares, other than the C.I. Global Business-toBusiness (b2b) Sector Shares (the "Global b2b Shares") and the C.I. GlobalManagers Sector Shares (the "Managers Shares"), are also currently qualified fordistribution in all the Jurisdictions pursuant to the August/99 Prospectus of theSector Fund. The securities of the RSP Funds and the Global b2b Shares and theManagers Shares will be qualified under a simplified prospectus and annualinformation form (collectively, the "Prospectus") to be filed shortly in all theJurisdictions.

7. Each of the RSP Funds seeks to achieve its investment objective while ensuringthat securities of the RSP Funds do not constitute "foreign property" for registeredplans (the "Registered Plans") under the Income Tax Act (Canada) (the "Tax Act").

8. To achieve its investment objective, each of the RSP Funds will invest its assets insecurities such that its units will, in the opinion of tax counsel to the RSP Funds,be "qualified investments" for Registered Plans and will not constitute "foreignproperty" (as defined in the Tax Act) to such Registered Plans. This will primarilybe achieved through the implementation of a derivative strategy. However, the RSPFunds also intend to invest a portion of their assets in securities of theircorresponding Reference Funds or Reference Shares . This investment of the RSPFunds will at all times be below the maximum foreign property limit prescribed forRegistered Plans (the "Permitted Limit").

9. The investment objectives of the Reference Funds, and of each Reference Sharesof the Sector Fund, are or will be achieved through investments primarily in foreignsecurities.

10. The direct investments by the RSP Funds in their corresponding Reference Fundsor Reference Shares will be within the Permitted Limit (the "Permitted RSP FundInvestments"). The amount of direct investment by each RSP Fund in itscorresponding Reference Fund or Reference Shares will be adjusted from time totime so that, except for transitional cash, the aggregate of derivative exposure to,and direct investment in, the Reference Fund or Reference Shares will equal 100%of the assets of the RSP Fund.

11. Except as provided by this Decision and except for the specific exemptions orapprovals granted or to be granted by the Canadian securities administrators underNational Instrument 81-102 ("NI 81-102"), the investments of the RSP Funds in theReference Funds or the Reference Shares have been or will be structured tocomply with the investment restrictions of the Legislation and NI 81-102.

12. In the absence of the Decision, as soon as each RSP Fund's aggregate holdingsof securities of its corresponding Reference Fund or Reference Shares exceed 10%of the outstanding securities of such Reference Fund or class of Reference Shares,the RSP Fund would be required to comply with the reporting and otherrequirements of the Legislation.

13. In the absence of the Decision, each of the RSP Funds is prohibited from

a. knowingly making an investment in its corresponding Reference Fund orReference Shares in which the RSP Fund, alone or together with one ormore related mutual funds, is or will be a substantial securityholder; and

b. knowingly holding an investment referred to in subparagraph (a) above andwould thus be required to divest itself of such investment.

14. In the absence of the Decision, C.I. would be required to file a report on everypurchase or sale by the RSP Funds of securities of their corresponding ReferenceFunds or Reference Shares.

15. In the absence of the Decision, C.I. is prohibited from causing certain RSP Fundsto invest in their corresponding Reference Shares, unless the fact that certaindirectors of C.I. are also officers of the Sector Fund is disclosed to the RSP Fundsand, if applicable, the written consent of the RSP Funds is obtained before thepurchase.

16. The investment in or redemption of securities of the corresponding ReferenceFunds or Reference Shares, by the RSP Funds, represents the business judgmentof responsible persons, uninfluenced by considerations other than the best interestof the RSP Funds.

AND WHEREAS under the System, this MRRS Decision Document evidences theDecision of each Decision Maker;

AND WHEREAS each of the Decision Makers is satisfied that the tests containedin the Legislation that provides the Decision Maker with the jurisdiction to make theDecision have been met;

THE DECISION of the Decision Makers under the Legislation is that the ApplicableRequirements do not apply to the RSP Funds, or C.I., as the case may be, in respect ofinvestments to be made by the RSP Funds in their corresponding Reference Funds orReference Shares,

PROVIDED IN EACH CASE THAT:

i. the Decision, as it relates to the jurisdiction of a Decision Maker, will terminate oneyear after the publication in final form of any legislation or rule of that DecisionMaker dealing with the matters in section 2.5 of NI 81-102; and

ii. the Decision shall only apply in respect of investments in, or transactions with, thecorresponding Reference Funds or Reference Shares that are made by the RSPFunds in compliance with the following conditions:

a. the RSP Funds, the Reference Funds and the Reference Shares are undercommon management, and both the Reference Funds' securities and theReference Shares are offered, and will continue to be offered, for sale in theJurisdiction of the Decision Maker pursuant to a prospectus that has beenfiled with and accepted by the Decision Maker;

b. each RSP Fund restricts its aggregate direct investment in its correspondingReference Fund or Reference Shares to a percentage of its assets that iswithin the Permitted Limit;

c. the investment by the RSP Funds in their corresponding Reference Fundsor Reference Shares is compatible with the fundamental investmentobjective of the RSP Funds;

d. the Prospectus of the RSP Funds describes the intent of the RSP Funds toinvest in their corresponding Reference Funds or Reference Shares;

e. the RSP Funds may change the Permitted RSP Fund Investments if theychange their fundamental investment objectives in accordance with NI 81-102;

f. there are compatible dates for the calculation of the net asset value of theRSP Funds and their corresponding Reference Funds or Reference Sharesfor the purpose of the issue and redemption of the securities of the RSPFunds, Reference Funds and the Reference Shares;

g. no sales charges are payable by the RSP Funds in relation to theirpurchases of securities of the corresponding Reference Funds or ReferenceShares;

h. no redemption fees or other charges are charged by the Reference Fundsor by the Sector Fund as issuer of the Reference Shares, in respect of theredemption by the RSP Funds of securities of their corresponding ReferenceFunds or Reference Shares that are owned by the RSP Funds;

i. the arrangements between or in respect of the RSP Funds, the ReferenceFunds and the Reference Shares are such as to avoid the duplication ofmanagement fees;

j. no fees and charges of any sort are paid by each RSP Fund, itscorresponding Reference Fund, or the Sector Fund as issuer of thecorresponding Reference Shares, or by the manager or principal distributorof the RSP Funds, Reference Funds or Reference Shares, or by any affiliateor associate of any of the foregoing entities, to anyone in respect of eachRSP Fund's purchase, holding or redemption of the securities of itscorresponding Reference Fund or Reference Shares;

k. in the event of the provision of any notice to the securityholders of aReference Fund or any Reference Shares, as required by applicable lawsor the constating documents of the Reference Fund or the Sector Fund asissuer of the Reference Shares, the notice will also be delivered to thesecurityholders of the corresponding RSP Fund; all voting rights attached tothe securities of the Reference Fund or the Reference Shares that areowned by the corresponding RSP Fund will be passed through to thesecurityholders of such RSP Fund;

l. in the event that a meeting of the securityholders of a Reference Fund or anyReference Shares is called, all of the disclosure and notice materialprepared in connection with such meeting and received by thecorresponding RSP Fund will be provided to the securityholders of such RSPFund; such securityholders will be entitled to direct a representative of theRSP Fund to vote the RSP Fund's holding in the Reference Fund or theReference Shares in accordance with their direction; and the representativeof the RSP Fund will not be permitted to vote the RSP Fund's holdings in theReference Fund or the Reference Shares except to the extent thesecurityholders of the RSP Fund so direct;

m. in addition to receiving the annual and (upon request) the semi-annualfinancial statements of the RSP Funds, securityholders of the RSP Fundswill receive the annual and (upon request) semi-annual financial statementsof the Reference Funds or the Sector Fund as issuer of the ReferenceShares, either in a combined report containing the financial statements ofboth the RSP Funds and the Reference Funds or the Sector Fund, or in aseparate report containing the financial statements of the Reference Fundsor the Sector Fund; and

n. to the extent that the RSP Funds, the Reference Funds and the Sector Fundas issuer of the Reference Shares do not use a combined simplifiedprospectus, annual information form and financial statements containingdisclosure about the RSP Funds, Reference Funds and Reference Shares,copies of the simplified prospectus and annual and semi-annual financialstatements relating to the Reference Funds and the Sector Fund may beobtained upon request by a securityholder of the RSP Funds.

February 24th, 2000.

"J. A. Geller" "Stephen N. Adams"