CI Investments Inc. and United Financial Corporation

Headnote

National Policy 11-203 Process for Exemptive Relief in Multiple Jurisdictions -- Relief granted from conflict of interest reporting requirements in subsection 117(1)(c) of the Securities Act (Ontario) for transactions involving related parties of a mutual fund -- monthly reporting not required provided that similar disclosure is made in the management reports on fund performance for each mutual fund and that certain records of related party portfolio transactions are kept by the mutual funds.

Applicable Legislative Provisions

Securities Act (Ontario), subsections 117(1)(c) and 117(2).

October 14, 2009

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. AND

UNITED FINANCIAL CORPORATION

(the Filers)

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 Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting each Filer from the requirement in the Legislation (the Monthly Reporting Requirement) that, for each purchase and sale effected by a Fund (as defined below) through a related person or company with respect to which the related person or company received a fee either from the Fund or from the other party to the transaction or from both, the Filer which is the manager of such Fund must file a report within thirty days after the end of the month in which the purchase or sale occurred (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 Filers have provided notice that section 4.7 (1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon by each Filer in British Columbia, Alberta, Saskatchewan, New Brunswick and Nova Scotia in respect of the 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 contained in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. CI Investments Inc. is incorporated under the laws of the Province of Ontario and is registered as an adviser in the categories of investment counsel and portfolio manager (or the equivalent) under the securities legislation of all the provinces of Canada. United Financial Corporation is incorporated under the federal laws of Canada and is registered as an adviser in the categories of investment counsel and portfolio manager (or the equivalent) under the securities legislation of all the provinces and territories of Canada. The head office of each Filer is in Ontario.

2. Each Filer currently manages the mutual funds listed in Schedule A hereto, each of which is regulated by National Instrument 81-102 -- Mutual Funds (NI 81-102). Each Filer may, in the future, become the manager of additional mutual funds (the Future Funds) that are regulated by NI 81-102 (all such present mutual funds and Future Funds being hereinafter referred to as the Funds and, individually, as a Fund).

3. Each Fund is a reporting issuer under the securities legislation of one or more jurisdictions of Canada.

4. Each Fund has entered into a management contract with a Filer pursuant to which the Filer provides investment advice to the Fund for valuable consideration and pursuant to which the Filer directs the business, operations and affairs of the Fund. Accordingly, the Filer is the "management company" (or equivalent) under the Legislation and "manager" of such Fund and a "portfolio adviser" to such Fund.

5. From time to time, each Filer may hire one or more portfolio managers or sub-advisors to the Funds (together with the Filers, the Portfolio Advisors).

6. Each Fund has an independent review committee (the IRC) as required by National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107).

7. Each of Blackmont Capital Inc. (Blackmont), Scotia Capital Inc., Scotia Capital (USA) Inc. and Dundee Securities Corporation (together, the Present Related Dealers) is a broker or dealer engaged in trading in securities.

8. Each Present Related Dealer is a "related person or company" of each Filer within the meaning of the Legislation because:

(a) CI Financial Corp. is both a substantial security holder of each Filer and holds a significant interest in Blackmont; and

(b) The Bank of Nova Scotia is both a substantial security holder of each Filer and holds a significant interest in each Present Related Dealer.

9. In the future, additional brokers or dealers engaged in trading in securities may become a related person or company of the Filers (the Future Related Dealers and, together with the Present Related Dealers, the Related Dealers).

10. As disclosed in the annual information forms or prospectuses of the Funds, each Portfolio Advisor may arrange for a purchase or sale of securities by a Fund (a Portfolio Trade) to be executed through a Related Dealer (a Related Dealer Executed Trade), provided that the Related Dealer Executed Trade is made on a "best execution" basis, which includes that the trade is made on terms and conditions comparable to those offered by unrelated brokers and dealers.

11. The IRC of each Fund has given its positive recommendation for the Funds to effect Related Dealer Executed Trades, subject to the conditions and parameters set in such recommendation.

12. The Portfolio Advisors have discretion to allocate Portfolio Trades in any manner that they believe to be in the Funds' best interests. The Related Dealer Executed Trades reflect the business judgment of the Portfolio Advisors uninfluenced by considerations other than the best interests of the Funds. In allocating Related Dealer Executed Trades, consideration is given to commission rates and to research, execution and other services offered.

13. Each Fund prepares and files interim and annual management reports of fund performance (MRFPs) under National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106). The MRFPs disclose the following information with respect to Related Dealer Executed Trades that occurred during the period to which the MRFP relates: the identity of the Related Dealer; the relationship of the Related Dealer to the Fund; the purpose of the transaction; the measurement basis used to determine the recorded amount and any ongoing commitments to the Related Dealer; the dollar amount of commission, spread or any other fees that the Fund paid to the Related Dealer in connection with Related Dealer Executed Trades; and whether the Fund has relied upon the positive recommendation of its IRC to proceed with Related Dealer Executed Trades and details of any conditions or parameters of such recommendation.

14. Each Fund also maintains records of all portfolio transactions undertaken by the Fund as required by NI 81-106.

15. The Monthly Reporting Requirement obligates each Filer to prepare a report of any Related Dealer Executed Trades by each Fund for which the Filer is the manager and file such reports within 30 days of the end of the month in which the Related Dealer Executed Trade occurs. This report discloses, with respect to each Related Dealer Executed Trade: the issuer of the securities purchased or sold; the class or designation of the securities; the amount or number of securities; the consideration; the name of the Related Dealer receiving a fee; the name of the person or company that paid the fee to the Related Dealer; and the amount of the fee received by the Related Dealer.

16. Each Fund's MRFPs disclose the amount of brokerage commission paid by each Fund on trades with Related Dealers. This information is presented on a Fund-by-Fund basis.

17. It is costly and time consuming to prepare and file the reports contemplated by the Monthly Reporting Requirement, which contain information similar to that required by NI 81-106 to be disclosed in the MRFPs, on a monthly and segregated basis for each Fund.

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:

(a) the MRFPs for each Fund disclose:

(i) the name of the Related Dealer;

(ii) the amount of fees paid to each Related Dealer, and

(iii) the person or company who paid the fees, if they were not paid by the Fund; and

(b) the records of portfolio transactions maintained by each Fund include, separately for every portfolio transaction effected by the Fund through a Related Dealer:

(i) the name of the Related Dealer;

(ii) the amount of fees paid to the Related Dealer; and

(iii) the person or company who paid the fees.

SCHEDULE A