Securities Law & Instruments

Headnote

Approval of fund mergers pursuant to paragraph 5.5(1)(b) of National Instrument 81-102 Mutual Funds.

Rule Cited

National Instrument 81-102 Mutual Funds, ss. 5.6, 5.5(1)(b).

November 22, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,

MANITOBA, ONTARIO, QUÉBEC,

NEW BRUNSWICK, NOVA SCOTIA, NEWFOUNDLAND

AND LABRADOR, PRINCE EDWARD ISLAND,

NORTHWEST TERRITORIES, NUNAVUT and YUKON

(the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BPI GLOBAL EQUITY FUND

SIGNATURE CANADIAN INCOME FUND

SYNERGY CANADIAN SHORT-TERM INCOME CLASS

SYNERGY CANADIAN CORPORATE CLASS

(the Terminating Funds)

AND

CI INVESTMENTS INC.

(the Filer)

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer, on behalf of the Terminating Funds for a decision under the securities legislation of the Jurisdictions (the Legislation) granting approval for each Terminating Fund to merge into its respective Continuing Fund (identified in paragraph 2 below), as contemplated by section 5.5(1)(b) of National Instrument 81-102 Mutual Funds (NI 81-102) (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 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 the Filer:

1. The Filer is the manager of each of the Terminating Funds and Continuing Funds (collectively, the Funds) set out in paragraph 2 hereof.

2. CI intends to merge each Terminating Fund into the Continuing Fund opposite its name below:

Terminating Fund
Continuing Fund
 
BPI Global Equity Fund
CI Global Fund
 
Signature Canadian Income Fund
Signature Dividend Fund
 
Synergy Canadian Short-Term Income Class
CI Short-Term Corporate Class
 
Synergy Canadian Corporate Class
Synergy Canadian Equity Corporate Class

(individually a Merger and, collectively, the Mergers).

3. Synergy Canadian Equity Corporate Class, CI Short-Term Corporate Class and Synergy Canadian Corporate Class (individually, a CI Corporate Fund) are classes of shares of CI Corporate Class Limited (CI Corporate), a mutual fund corporation subsisting under the laws of the Province of Ontario. CI Corporate offers multiple mutual funds to the public using a multiple class structure. Each CI Corporate Fund offers class A, F and I shares. Synergy Canadian Equity Corporate Class also offers Insight class shares.

4. BPI Global Equity Fund, CI Global Fund, Signature Canadian Income Fund and Signature Dividend Fund are mutual fund trusts created pursuant to a declaration of trust under the laws of the Province of Ontario (individually, a Trust Fund). Each Trust Fund offers class A, F and I units. CI Global Fund also offers Insight class units and Signature Dividend Fund also offers class Y and Z units.

5. Synergy Canadian Short-Term Income Class is a class of shares of Synergy Canadian Fund Inc. (Synergy Canadian), a mutual fund corporation subsisting under the laws of the Province of Ontario. Synergy Canadian offers multiple mutual funds to the public using a multiple class structure. Synergy Canadian Short-Term Income Class offers two series of shares designated as Series A and Series F.

6. BPI Global Equity Fund, CI Global Fund, Signature Canadian Income Fund, Signature Dividend Fund, Synergy Canadian Short-Term Income Class, CI Short-Term Corporate Class and Synergy Canadian Corporate Class are mutual funds subject to the requirements of NI 81-102 pursuant to a simplified prospectus and annual information form dated June 20, 2005, as amended by Amendment No. 1 dated June 23, 2005, by Amendment No. 2 dated August 4, 2005, by Amendment No. 3 dated August 18, 2005 and by Amendment No. 4 dated September 26, 2005, previously filed with the CSA as SEDAR project no. 784613 (the CI Prospectus).

7. Synergy Canadian Equity Corporate Class is a mutual fund subject to the requirements of NI 81-102 pursuant to a simplified prospectus and annual information form dated September 29, 2005 previously filed with the CSA as SEDAR project no. 814338.

8. The Filer filed a press release and material change report on September 26, 2005, followed by an amendment to the CI Prospectus on September 29, 2005, to announce the Mergers.

9. The Mergers (except the merger involving Synergy Canadian Corporate Class) will be beneficial to securityholders of each Terminating Fund and Continuing Fund for the following reasons:

(a) each Terminating Fund and its Continuing Fund are largely duplicative of one another;

(b) following the Merger, each Continuing Fund will have more assets allowing for increased portfolio diversification opportunities and a smaller proportion of assets set aside to fund redemptions;

(c) in the case of most Terminating Funds, there will be a savings in brokerage charges through a merger rather than liquidating the portfolio of securities of that mutual fund; and

(d) each Continuing Fund will benefit from its larger profile in the marketplace.

10. The Mergers involving Synergy Canadian Short-Term Income Class and Synergy Canadian Corporate Class (each, a Converting Fund) will provide investors with a broader choice of mutual funds into which they may switch their assets on a tax-deferred basis. CI Corporate currently offers to its shareholders the ability to switch between any of 42 mutual funds on a tax-deferred basis, whereas Synergy Canadian provides its shareholders with the ability to switch between 5 mutual funds on a tax-deferred basis.

11. The Filer intends to convert each Converting Fund into its corresponding Continuing Fund on a tax-deferred basis (collectively, the Conversions). The Conversions are expected to be effected through an amalgamation involving Synergy Canadian and CI Corporate. Pursuant to the amalgamation, investors in each Converting Fund will receive shares of the corresponding replacement class in its Continuing Fund on a dollar-for-dollar basis. Shares of these Continuing Funds will not be available to new investors until after the Conversions have been completed. The Conversions are subject to any necessary securityholder and regulatory approvals.

12. Due to the different structures utilized by the Funds and their current tax circumstances, the procedures for implementing the Mergers will vary. However, the result of each Merger will be that investors in the Terminating Fund will cease to be securityholders in that Terminating Fund and will become securityholders in its Continuing Fund.

13. Each Terminating Fund will be wound-up as soon as reasonably possible following its Merger. In the opinion of the Filer, each Terminating Fund and its Continuing Fund have substantially similar valuation procedures and, except as noted below, substantially similar fundamental investment objectives and fee structures.

14. The Filer believes that each Merger may not satisfy all the criteria for pre-approved reorganizations and transfers set forth in section 5.6 of NI 81-102. As described in the application:

(a) in respect of the Mergers involving Signature Canadian Income Fund and Synergy Canadian Corporate Class and their respective Continuing Funds, a reasonable person may not consider that the fundamental investment objectives of these Terminating Funds and their respective Continuing Funds are substantially similar;

(b) in respect of the Merger involving Synergy Canadian Short-Term Income Class as the Terminating Fund, a reasonable person might not consider that the fee structures of this Terminating Fund and its Continuing Fund are substantially similar; and

(c) in respect of the Merger involving BPI Global Equity Fund as the Terminating Fund, the Merger will not be implemented as either a "qualifying exchange" within the meaning of section 132.2 of the Income Tax Act (Canada) or a tax-deferred transaction under subsection 85(1), 85.1(1), 86(1) or 87(1) of that Act.

The foregoing differences between the Terminating Funds and the Continuing Funds, as well as the tax implications of each Merger, are disclosed in the Meetings Documents (as defined below).

15. Investors in the Terminating Funds will be asked to approve the Mergers at special meetings of securityholders to be held on November 24, 2005 (the Meetings). In connection with the Meetings, the Filer is sending to the securityholders of each Terminating Fund a management information circular dated October 13, 2005, a related form of proxy and the simplified prospectus of its Continuing Fund (collectively, the Meeting Documents). If securityholders approve the Mergers, it is proposed that each Merger will occur after the close of business on November 25, 2005 (the Effective Date), subject to regulatory approvals, where necessary. The cost of effecting the Mergers (consisting primarily of proxy solicitation, printing, mailing, legal and regulatory fees) will be borne by the Filer. The Filer may, in its discretion, postpone implementing any Merger until a later date (which shall be not later than January 1, 2006) and may elect to not proceed with any Merger.

16. Purchases of and transfers to securities of each Terminating Fund will be suspended on or prior to the Effective Date. Following each Merger, automatic purchase plans and systematic redemption plans which were established with respect to the Terminating Fund will be re-established with respect to its Continuing Fund unless securityholders who are affected by the Merger advise the Filer otherwise. Securityholders may change any automatic purchase plan or systematic redemption plan at any time and investors in a Terminating Fund who wish to establish an automatic purchase plan or systematic redemption plan in respect of their holdings of the Continuing Fund may do so following its Merger.

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 the decision has been met. The decision of the Decision Makers under the Legislation is that the Requested Relief is granted.

"Leslie Byberg"
Manager, Investment Funds Branch
Ontario Securities Commission