Securities Law & Instruments


Exemption for a mutual fund manager from subsections111 and 117 and 118(2)(b) of the Securities Act (Ontario) andthe corresponding provisions of the Legislation in the contextof the dismantling of a fund-on-fund structure.

Regulations Cited

Securities Act, R.S.O. 1990, Reg. 1015, as am.,sections 117(1)(2), 118(2)(b) and 121(2)(a)(ii).
















WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Ontario, Nova Scotiaand Newfoundland (the "Jurisdictions") has receivedan application (the "Application") from CI MutualFunds Inc. ("CI" or the "Manager") for adecision (the "Decision") pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that the following provisions of the Legislation shall not applyto CI:

(a) the requirements in the Legislationthat a management company, or mutual fund manager, filea report of every transaction of purchase or sale of securitiesbetween a mutual fund it manages and any related personor company and any transaction in which, by arrangementother than an arrangement relating to insider trading inportfolio securities, a mutual fund is a joint participantwith one or more of its related persons or companies, inrespect of each mutual fund to which it provides servicesor advice, within 30 days after the end of the month inwhich it occurs; and

(b) the restriction in the Legislation thatprohibits a mutual fund or a portfolio manager from knowinglycausing a mutual fund managed by it to purchase or sellthe securities of any issuer from or to the account of aresponsible person, any associate of a responsible personor the portfolio manager;

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 it has been represented byCI to the Decision Makers that:

1. The Manager is a corporation subsistingunder the laws of the Province of Ontario and is registeredunder the Securities Act (Ontario) as, among otherthings, an adviser in the categories of investment counseland portfolio manager.

2. CI Sector Fund Limited (the "Corporation")is a mutual fund corporation that is comprised presently of40 Sector Funds. Each Sector Fund consists of the assets andliabilities attributable to one or more classes of convertiblespecial shares of the Corporation that share a common investmentobjective. The Manager is the manager of each Sector Fundand therefore is a "management company" and "responsibleperson" of each Sector Top Fund for purposes of the Legislation.The Manager owns more than 10% of the voting securities ofthe Corporation with the result that each Sector Fund maybe considered an "associate" of the Manager withinthe meaning of the Legislation.

3. Certain Sector Funds (being those listedin Schedule A hereto) (the "Sector Top Funds") investexclusively in units of an underlying fund (an "UnderlyingFund") managed by the Manager. Each Sector Top Fund hasan investment objective that is consistent with the investmentobjective of its corresponding Underlying Fund, with the exceptionthat the investment objective of the Sector Top Fund includesa statement that it will invest in units of its UnderlyingFund.

4. Each Underlying Fund is a mutual fund trustestablished under the laws of the Province of Ontario. TheManager is the manager and trustee of each Underlying Fund.Consequently, the Manager is a "management company"and "responsible person" of each Underlying Fundfor purposes of the Legislation, and each Underlying Fundis an associate of the Manager within the meaning of the Legislation.

5. Each Sector Top Fund and each UnderlyingFund currently distributes securities pursuant to a simplifiedprospectus that has been filed with and accepted by the securitiesregulatory authority in each of the provinces and territoriesof Canada and is a reporting issuer in each of the provincesand territories of Canada.

6. The portfolio of each Sector Top Fund consistsonly of units of an Underlying Fund (referred to herein asa "fund-on-fund structure") and a small amount ofcash and cash equivalents. The performance of each SectorTop Fund therefore closely tracks the performance of its UnderlyingFund. The fund-on-fund structure was created as a means fortaxable investors to obtain exposure to Underlying Funds whilebeing invested in a corporation that enables the investorsto switch between Sector Funds on a tax-deferred rolloverbasis.

7. The management expense ratio (the "MER")of a Sector Top Fund is typically between 40 and 60 basispoints higher than the MER of its Underlying Fund. This isdue principally to minimal, fund-specific operating expenses,large corporations tax and Ontario capital tax incurred atthe Sector Top Fund level.

8. The Corporation and the Manager wish todismantle the fund-on-fund structure between the Sector TopFunds and the Underlying Funds at their discretion. This wouldbe achieved as follows (the "Dismantling Transaction"):

(a) each Sector Top Fund will change itsinvestment objectives and strategies to be identical toits Underlying Fund, including removing the statement thatthe Sector Top Fund will invest in units of its UnderlyingFund;

(b) each Sector Top Fund will redeem allthe units it holds of its Underlying Fund at the net assetvalue per unit; and

(c) the redemption proceeds will be paidin specie by the Underlying Fund to the Sector TopFund with a substantially pro rata portion of theportfolio of investments held by the Underlying Fund, thevalue of which will be equal to the amount at which thoseportfolio investments were valued in calculating the netasset value per unit used to establish the redemption price.

9. In the absence of this Decision, the Legislationprohibits the Manager or, in British Columbia, each SectorTop Fund and Underlying Fund, from knowingly causing the transferof portfolio securities of an Underlying Fund to a SectorTop Fund as payment in kind of the redemption price pursuantto the Dismantling Transaction.

10. In the absence of this Decision, the Legislationrequires the Manager to file a report relating to the transferof portfolio securities between each Underlying Fund and SectorTop Fund as part of the Dismantling Transaction.

11. The transfer of portfolio securities betweeneach Underlying Fund and Sector Top Fund as part of the DismantlingTransaction represents the business judgment of responsiblepersons, uninfluenced by considerations other than the bestinterests of the Sector Top Funds.

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

AND WHEREAS each Decision Maker is satisfiedthat the tests contained in the Legislation that provides theDecision Makers with the jurisdiction to make the Decision hasbeen met;

THE DECISION of the Decision Makers isthat pursuant to the Legislation the Manager is exempt fromthe requirements in the Legislation that a management company,or mutual fund manager, file a report of every transaction ofpurchase or sale of securities between a mutual fund it managesand any related person or company and any transaction in which,by arrangement other than an arrangement relating to insidertrading in portfolio securities, a mutual fund is a joint participantwith one or more of its related persons or companies, in respectof each mutual fund to which it provides services or advice,within 30 days after the end of the month in which it occurs,as such requirements relate to the Dismantling Transaction;

AND THE DECISION OF THE DECISION MAKERSis that pursuant to the Legislation the Manager is exempt fromthe restrictions in the Legislation that prohibits a mutualfund or a portfolio manager from knowingly causing a mutualfund managed by it to purchase or sell the securities of anyissuer from or to the account of a responsible person, any associateof a responsible person or the portfolio manager as such restrictionrelates to the Dismantling Transaction.

December 10, 2002.

"Howard I. Wetston"                    "TheresaMcLeod"




BPI American Equity Sector Fund
BPI Global Equity Sector Fund
BPI International Equity Sector Fund
CI American Small Companies Sector Fund
CI Emerging Markets Sector Fund
CI European Sector Fund
CI Global Sector Fund
CI Global Small Companies Sector Fund
CI Global Value Sector Fund
CI International Sector Fund
CI International Value Sector Fund
CI Pacific Sector Fund
CI International Balanced Sector Fund
CI Canadian Bond Sector Fund
CI Global Bond Sector Fund

Harbour Sector Fund

Landmark American Sector Fund
Landmark Canadian Sector Fund
Signature Canadian Resource Sector Fund
Signature Explorer Sector Fund
Signature Select Canadian Sector Fund
Signature Dividend Sector Fund
Signature High Income Sector Fund