Securities Law & Instruments

Headnote

Exemptions from the mutual fund self-dealingprohibitions of clauses 111(2)(a), and 111(3) of the SecuritiesAct (Ontario). Mutual funds allowed to make purchases and salesof securities of Sun Life Financial Services of Canada Inc,a related company to the manager of the mutual funds, and toretain those securities provided that a fund governance mechanismis used to oversee the holdings, purchases or sales of thesesecurities for the mutual funds and to ensure that such holdings,purchases or sales have been made free from any influence bySun Life Financial Services of Canada Inc and without takinginto account any consideration relevant to the Sun Life FinancialServices of Canada Inc.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990 c. S.5,as am., 111(2)(a), and 111(3).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO, BRITISH COLUMBIA,ALBERTA, SASKATCHEWAN,

NOVA SCOTIA AND NEWFOUNDLANDAND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CI MUTUAL FUNDS INC.

AND

BPI AMERICAN EQUITY FUND

BPI AMERICAN EQUITY SECTORFUND

BPI GLOBAL EQUITY FUND

BPI GLOBAL EQUITY SECTOR FUND

BPI INTERNATIONAL EQUITY FUND

BPI INTERNATIONAL EQUITY SECTORFUND

CI AMERICAN GROWTH FUND

CI AMERICAN MANAGERS SECTORFUND

CI AMERICAN SMALL COMPANIESFUND

CI AMERICAN SMALL COMPANIESSECTOR FUND

CI AMERICAN VALUE FUND

CI AMERICAN VALUE SECTOR FUND

CI ASIAN DYNASTY FUND

CI CANADIAN EQUITY FUND

CI CANADIAN INVESTMENT FUND

CI CANADIAN SMALL CAP FUND

CI CANADIAN STOCK FUND

CI EMERGING MARKETS FUND

CI EMERGING MARKETS SECTORFUND

CI EUROPEAN FUND

CI EUROPEAN SECTOR FUND

CI EUROPEAN GROWTH FUND

CI GLOBAL BIOTECHNOLOGY SECTORFUND

CI GLOBAL CONSUMER PRODUCTSSECTOR FUND

CI GLOBAL ENERGY SECTOR FUND

CI GLOBAL FINANCIAL SERVICESSECTOR FUND

CI GLOBAL FUND

CI GLOBAL SECTOR FUND

CI GLOBAL HEALTH SCIENCESSECTOR FUND

CI GLOBAL MANAGERSTMSECTOR FUND

CI GLOBAL SMALL COMPANIESFUND

CI GLOBAL SMALL COMPANIESSECTOR FUND

CI GLOBAL TECHNOLOGY SECTORFUND

CI GLOBAL TELECOMMUNICATIONSSECTOR FUND

CI GLOBAL VALUE FUND

CI GLOBAL VALUE SECTOR FUND

CI INTERNATIONAL FUND

CI INTERNATIONAL SECTOR FUND

CI INTERNATIONAL VALUE FUND

CI INTERNATIONAL VALUE SECTORFUND

CI JAPANESE SECTOR FUND

CI PACIFIC FUND

CI PACIFIC SECTOR FUND

CI TACTONICS FUND

CI VALUE TRUST SECTOR FUND

CI WORLD EQUITY FUND

HARBOUR FUND

HARBOUR SECTOR FUND

HARBOUR FOREIGN EQUITY SECTORFUND

LANDMARK AMERICAN FUND

LANDMARK AMERICAN SECTOR FUND

LANDMARK CANADIAN FUND

LANDMARK CANADIAN SECTOR FUND

LANDMARK GLOBAL SECTOR FUND

SIGNATURE CANADIAN RESOURCEFUND

SIGNATURE CANADIAN RESOURCESECTOR FUND

SIGNATURE EXPLORER FUND

SIGNATURE EXPLORER SECTORFUND

SIGNATURE SELECT CANADIANFUND

SIGNATURE SELECT CANADIANSECTOR FUND

CI CANADIAN ASSET ALLOCATIONFUND

CI DIVERSIFIED FUND

CI GLOBAL BOOMERNOMICS®SECTOR FUND

CI INTERNATIONAL BALANCEDFUND

CI INTERNATIONAL BALANCEDSECTORFUND

HARBOUR GROWTH & INCOMEFUND

SIGNATURE CANADIAN BALANCEDFUND

SIGNATURE CANADIAN INCOMEFUND

CI CANADIAN BOND FUND

CI CANADIAN BOND SECTOR FUND

CI DIVIDEND FUND

CI GLOBAL BOND FUND

CI GLOBAL BOND SECTOR FUND

CI INTERNATIONAL BOND RSPFUND

CI SHORT-TERM BOND FUND

CI MID-TERM BOND FUND

CI LONG-TERM BOND FUND

SIGNATURE DIVIDEND FUND

SIGNATURE DIVIDEND SECTORFUND

SIGNATURE DIVIDEND INCOMEFUND

SIGNATURE HIGH INCOME FUND

SIGNATURE HIGH INCOME SECTORFUND

INSIGHT CANADIAN VALUE POOL

INSIGHT CANADIAN GROWTH POOL

INSIGHT CANADIAN DIVIDENDGROWTH POOL

INSIGHT CANADIAN SMALL CAPPOOL

INSIGHT U.S. VALUE POOL

INSIGHT U.S. GROWTH POOL

INSIGHT INTERNATIONAL VALUEPOOL

INSIGHT INTERNATIONAL GROWTHPOOL

INSIGHT GLOBAL EQUITY POOL

INSIGHT GLOBAL SMALL CAP POOL

INSIGHT CANADIAN HIGH YIELDINCOME POOL

INSIGHT CANADIAN FIXED INCOMEPOOL

INSIGHT GLOBAL FIXED INCOMEPOOL

CLARICA CONSERVATIVE BALANCEDFUND

CLARICA HIGH YIELD BOND FUND

CLARICA BALANCED FUND

CLARICA CANADIAN LARGE CAPVALUE FUND

CLARICA GLOBAL LARGE CAP VALUEFUND

CLARICA GLOBAL SCIENCE &TECHNOLOGY FUND

CLARICA SHORT TERM BOND FUND

CLARICA PREMIER MORTGAGE FUND

CLARICA INCOME FUND

CLARICA PREMIER BOND FUND

CLARICA SUMMIT GROWTH ANDINCOME FUND

CLARICA GLOBAL BOND FUND

CLARICA CANADIAN GROWTH EQUITYFUND

CLARICA GROWTH FUND

CLARICA CANADIAN BLUE CHIPFUND

CLARICA CANADIAN DIVERSIFIEDFUND

CLARICA SUMMIT CANADIAN EQUITYFUND

CLARICA SUMMIT DIVIDEND GROWTHFUND

CLARICA PREMIER AMERICAN FUND

CLARICA SUMMIT FOREIGN EQUITYFUND

CLARICA US GROWTH EQUITY FUND

CLARICA PREMIER INTERNATIONALFUND

CLARICA ALPINE GROWTH EQUITYFUND

CLARICA CANADIAN SMALL/MIDCAP FUND

CLARICA US SMALL CAP FUND

CLARICA EUROPEAN EQUITY FUND

CLARICA ALPINE ASIAN FUND

CLARICA ASIA AND PACIFIC RIMEQUITY FUND

CLARICA PREMIER EMERGING MARKETSFUND

CLARICA ALPINE CANADIAN RESOURCESFUND

CLARICA BOND FUND

CLARICA DIVERSIFUND 40

CLARICA EQUIFUND

CLARICA AMERIFUND

(the "Current Funds")

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker")in each of Ontario, British Columbia, Alberta, Saskatchewan,Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from CI Mutual Funds Inc. (the "Filer"),in respect of the Current Funds together with such other mutualfunds for which the Filer hereafter becomes the manager (individuallya "Fund" and collectively the "Funds"),for a decision under the securities legislation of the Jurisdictions(the "Legislation") that the provisions containedin the Legislation prohibiting a mutual fund from knowinglymaking or holding an investment in any person or company whois a substantial security holder of the mutual fund, its managementcompany or distribution company shall not apply to investmentsmade by the Funds in the securities of Sun Life Financial Servicesof Canada Inc. ("SLFS");

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice 14-101;

AND WHEREAS the Filer has representedto the Decision Makers that:

1. The Filer is a corporation amalgamatedunder the laws of Ontario and is or will be the manager ofeach Fund. The Filer's registered office is located in Ontario.

2. Each Fund is or will be either an open-endmutual fund trust established under the laws of Ontario ora class of shares of a mutual fund corporation incorporatedunder the laws of Ontario.

3. At the time a Fund invests in securitiesof SLFS, that Fund is or will be a reporting issuer underthe securities legislation in all the Jurisdictions.

4. The Filer is a wholly-owned subsidiaryof CI Fund Management Inc. ("CIX"). CIX isa corporation incorporated under the laws of Ontario. CIXis a reporting issuer under the securities legislation inall the provinces of Canada and the common shares of CIX arelisted and posted for trading on The Toronto Stock Exchange.

5. Sun Life Assurance Company of Canada ("SunLife") and Clarica Life Insurance Company ("Clarica")are wholly-owned subsidiaries of SLFS.

6. On July 25, 2002, CIX completed a transactionwith Sun Life, Clarica and others pursuant to which CIX acquired,among other assets, all of the issued and outstanding sharesof Clarica Diversico Ltd. (a wholly-owned subsidiary of Clarica)and Spectrum Investment Management Limited (a wholly-ownedsubsidiary of Sun Life) (the "Transaction").In return, CIX issued, in aggregate, approximately 71 millioncommon shares to Clarica and Sun Life. Pursuant to the Legislation,all such shares are deemed to be owned by SLFS with the resultthat, as of the date hereof, SLFS (through Sun Life and Clarica)indirectly owns approximately 31.6% of the issued and outstandingcommon shares of CIX.

7. SLFS is a "substantial security holder"of the Filer because it is deemed to own more than 20% ofthe voting securities of the Filer. The Legislation prohibitseach Fund from knowingly making or holding an investment inSLFS because it is a substantial security holder of the Filer.

8. The Filer believes that it would be inthe best interests of investors of the Funds to be permittedto invest in securities of SLFS, in keeping with the investmentobjectives of the Funds, up to the limit allowed by applicableLegislation.

9. The Filer will establish an independentreview committee (the "IRC"), comprised entirelyof individuals who are wholly independent of the Filer andSLFS, to oversee the holdings, purchases or sales of securitiesof SLFS for the Funds.

10. The IRC shall review the holdings, purchasesor sales of securities of SLFS to ensure that they have beenmade free from any influence by SLFS and without taking intoaccount any consideration relevant to SLFS.

11. The IRC will take into consideration thebest interests of securityholders of the Funds and no otherfactors.

12. It is currently anticipated that the membersof the IRC will be comprised exclusively of members of theBoard of Governors of the CI Mutual Funds that: (a) fulfillthe conditions for independence stipulated in paragraph 2(b)below, and (b) are not directors, officers, employees or associatesof the Filer, SLFS, any portfolio manager of the Funds, orany associate or affiliate of the Filer, SLFS or any suchportfolio manager (other than acting as directors of a mutualfund corporation).

13. The independent members of the Board ofGovernors currently are paid a fixed annual fee which is allocatedto all mutual funds under the Filer's management, generallypro rata based upon their relative net asset values. Thereis no intention to pay the members of the IRC any compensationin addition to their usual compensation as members of theBoard of Governors.

AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that:

1. the provisions contained in the Legislationprohibiting a mutual fund from knowingly making or holdingan investment in any person or company who is a substantialsecurity holder of the mutual fund, its management companyor distribution company shall not apply to investments madeby the Funds in securities of SLFS; and

2. this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate one year after the publicationin final form of any legislation or rule of that DecisionMaker dealing with mutual fund governance in a manner thatconflicts with or makes inapplicable any provision of thisDecision;

PROVIDED THAT:

(a) The Filer has appointed the IRC to reviewthe Funds' purchases, sales and continued holdings of securitiesof SLFS;

(b) the IRC has at least three members,none of whom is an associate or employee of (i) the Fileror SLFS, (ii) any portfolio manager of the Funds; or (iii)any associate or affiliate of the Filer or SLFS or the portfoliomanagers of the Funds;

(c) the IRC has a written mandate describingits duties and standard of care which, as a minimum, setsout the conditions of this Decision;

(d) the members of the IRC exercise theirpowers and discharge their duties honestly, in good faithand in the best interests of investors in the Funds and,in doing so, exercise the degree of care, diligence andskill that a reasonably prudent person would exercise inthe circumstances;

(e) none of the Funds relieves the membersof the IRC from liability for loss that arises out of afailure to satisfy the standard of care set out in paragraph(d) above;

(f) none of the Funds indemnifies the membersof the IRC against legal fees, judgments and amounts paidin settlement as a result of a breach of the standard ofcare set out in paragraph (d) above;

(g) none of the Funds incurs the cost ofany portion of liability insurance that insures a memberof the IRC for a liability for loss that arises out of afailure to satisfy the standard of care set out in paragraph(d) above;

(h) the cost of any indemnification or insurancecoverage paid for by the Filer, any portfolio manager ofthe Funds, or any associate or affiliate of the Filer orthe portfolio managers of the Funds to indemnify or insurethe members of the IRC in respect of a loss that arisesout of a failure to satisfy the standard of care set outin paragraph (d) above is not paid either directly or indirectlyby the Funds;

(i) the IRC reviews the Funds' purchases,sales and continued holdings of securities of SLFS on aregular basis, but not less frequently than every threemonths;

(j) the IRC forms the opinion at any time,after reasonable inquiry, that the decisions made on behalfof each Fund by the Filer or the Fund's portfolio managerto purchase, sell or continue to hold securities of SLFSwere and continue to be in the best interests of the Fund,and:

(i) represent the business judgement ofthe Filer or the Fund's portfolio manager, uninfluencedby considerations other than the best interests of theFund;

(ii) have been made free from any influenceby SLFS and without taking into account any considerationrelevant to SLFS; and

(iii) do not exceed the limitations ofthe applicable legislation;

(k) the determination made by the IRC pursuantto paragraph (j) above is included in detailed written minutesprovided to the Filer not less frequently than every threemonths;

(l) the reports required to be filed pursuantto the Legislation with respect to every purchase and saleof securities of SLFS are filed on SEDAR in respect of therelevant Fund;

(m) the IRC advises the Decision Makersin writing of:

(i) any determination by it that the conditionset out in paragraph (j) has not been satisfied with respectto any purchase, sale or holding of securities of SLFS;

(ii) any determination by it that anyother condition of this Decision has not been satisfied;

(iii) any action it has taken or proposesto take following the determinations referred to above;and

(iv) any action taken, or proposed tobe taken, by the Filer or a portfolio manager of the Fundsin response to the determinations referred to above; and

(n) the existence, purpose, duties and obligationsof the IRC, the names of its members, whether and how theyare compensated by the Funds, and the fact that they meetthe requirements of the condition set out in paragraph (b)are disclosed:

(i) in a press release issued, and a materialchange report filed, prior to reliance on the Decision;

(ii) in item 12 of Part A of the simplifiedprospectus of the Funds; and

(iii) on the Filer's internet website.

December 24, 2002.

"Robert W. Korthals"                    "TheresaMcLeod"