CI Investments Inc.

Headnote

NP 11-203 -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the dealer registration requirement granted to portfolio manager in respect of trades in securities of prospectus-qualified funds in a model portfolio product sold by affiliated dealers. Relief from the know-your-client and suitability requirements granted to portfolio manager in respect of investors in model portfolio product sold by affiliated dealers.

Applicable Legislative Provisions

Securities Act (Ontario), ss. 25, 74(1).

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.2, 13.3.

March 25, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CI INVESTMENTS INC.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in Ontario (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Filer from:

(a) the requirement in the Legislation that the Filer be registered as a dealer in order to effect Reallocation Trades (as defined below);

(b) with respect to investors in the PSS Managed Accounts (as defined below), the requirement in the Legislation that the Filer must take reasonable steps to:

(i) establish the identity of a client and, if the Filer has cause for concern, make reasonable inquiries as to the reputation of the client;

(ii) establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded;

(iii) ensure that the Filer has sufficient information regarding the client's investment needs, objectives, financial circumstances and risk tolerance to enable the Filer to meet its obligations under the Legislation; and

(iv) keep the information described above current,

(the Know Your Client Requirement); and

(c) with respect to investors in the PSS Managed Accounts (as defined below), the requirement in the Legislation that the Filer must take reasonable steps to ensure that, before it makes a recommendation to or accepts an instruction from a client to buy or sell a security, or makes a purchase or sale of a security for a client's managed account, the purchase or sale is suitable for the client (the Suitability Requirement),

(the Requested 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 Filer has provided notice that section 4.7 (1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Filer in all the provinces and territories of Canada in respect of the Requested Relief; and

(c) this decision is the decision of the principal regulator.

Interpretation

Defined terms in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

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

Facts

1. The Filer is a corporation subsisting under the laws of the Province of Ontario. The Filer is registered as an adviser in the category of portfolio manager and as a dealer in the category of exempt market dealer under the Legislation.

2. Assante Financial Management Ltd. (Assante Financial) is a corporation subsisting under the laws of the Province of Ontario. Assante Financial is registered as a dealer in the category of mutual fund dealer under the Legislation and is a member of the Mutual Fund Dealers Association of Canada (the MFDA).

3. Assante Capital Management Ltd. (Assante Capital and, together with Assante Financial, the Assante Dealers) is a corporation subsisting under the federal laws of Canada. Assante Capital is registered as dealer in the category of investment dealer under the Legislation and is a member of the Investment Industry Regulatory Organization of Canada (IIROC).

4. The head office of the Filer is in Ontario. Each Assante Dealer is an affiliate of the Filer. To the best of its knowledge, the Filer is not in default of the Legislation.

5. The Filer is the manager of mutual funds (the Existing Funds) which are subject to the requirements of National Instrument 81-102 -- Mutual Funds (NI 81-102). The Filer may, in the future, become the manager of additional mutual funds (the Future Funds and, together with the Existing Funds, the Funds) that are subject to the requirements of NI 81-102.

6. The Filer proposes to offer a service called Portfolio Select Series Managed Accounts (PSS Managed Accounts) to certain investors in the Funds. PSS Managed Accounts will be available exclusively through the Assante Dealers.

7. Under the PSS Managed Accounts program, the Filer will construct a number of model portfolios (the Model Portfolios) of Funds. Each Model Portfolio will have its unique target asset allocations between equity investments and income producing investments and occupy successive portions of the investing spectrum from 100% equity exposure to 100% income producing exposure. Each Model Portfolio will be comprised exclusively of securities of the Funds.

8. If an investor is interested in utilizing a PSS Managed Account, the investor will complete an investor profile questionnaire (the Questionnaire) with his or her Assante Dealer. The Assante Dealer will then use the responses to the Questionnaire, together with the Assante Dealer's other knowledge of the investor, to complete a "know your client" review of the investor's circumstances. This will enable the Assante Dealer to consider the investor's financial circumstances, investment knowledge, investment objectives and risk tolerance, and thereby assist the Assante Dealer with recommending a Model Portfolio to the investor that is suitable for the investor. If the investor has not already established an account with the Assante Dealer, the investor will complete an account application and agreement to establish such an account.

9. The investor then will receive from his or her Assante Dealer a description of the Model Portfolio selected by the investor (the Selected Model Portfolio). The description of the Selected Model Portfolio will include a permitted range within which the target asset allocations of the Selected Model Portfolio may vary. The Selected Model Portfolio will be broken down into different asset classes (Asset Classes). Each Asset Class will be allocated a permitted range (the Permitted Ranges), being a minimum and maximum percentage of the Selected Model Portfolio that can be allocated to Funds of that particular class. The Asset Classes and Permitted Ranges will be disclosed to the investor and will not be changed without the investor's consent.

10. The investor will utilize a PSS Managed Account to directly hold securities of the Funds associated with the Selected Model Portfolio. Each investor in a PSS Managed Account also will authorize the Filer to manage the PSS Managed Account on a discretionary basis with a view to ensuring that the PSS Managed Account continues to abide by the stated objectives of the Selected Model Portfolio. In doing so, the Filer will determine a benchmark percentage (the Benchmark Percentages) for each Asset Class, representing the target percentage within the Permitted Range of that Asset Class. The Filer will adjust the Benchmark Percentages in its discretion. The Filer also will use its discretion in selecting which Funds will be used for each Asset Class, provided the investment objective and strategies of the Fund are consistent with the Asset Class.

11. Each investor also will authorize the Filer in writing to reallocate securities of the Funds held in the PSS Managed Account to:

(a) reflect changes made by the Filer to the Selected Model Portfolio from time to time; and

(b) rebalance the holdings in the PSS Managed Account from time to time in the Filer's discretion to more closely match the Benchmark Percentages of the Selected Model Portfolio,

collectively, Reallocation Trades.

12. Pursuant to the written authorization from the investor to the Filer, the Filer will be responsible to the investor for ensuring that the investor's monies in the PSS Managed Account are invested in accordance with the terms of the Selected Model Portfolio. However, the Know Your Client Requirement and Suitability Requirement will not apply to the Filer's relationship with the investor in a PSS Managed Account.

13. The investor's Assante Dealer will be responsible for gathering and periodically updating "know your client" information concerning the investor and confirming the suitability of the Selected Model Portfolio for the investor. However, the Assante Dealer will not be responsible for the Filer's obligations to the investor to manage the PSS Managed Account in accordance with the Selected Model Portfolio, nor will any Assante Dealer participate in facilitating any Reallocation Trades. Neither Assante Dealer will acquire discretionary authority from its clients in connection with PSS Managed Accounts. Accordingly, neither Assante Dealer will be required to seek registration as an adviser under the Legislation in order to offer PSS Managed Accounts to their clients.

14. Sales communications and account opening documents will explain the different responsibilities of the Assante Dealer and the Filer with respect to the investor and the investor's PSS Managed Account. This will include disclosure that the Filer is responsible for managing the investor's PSS Managed Account without reference to the investor's circumstances and only in accordance with the model portfolio selected by the investor, and the Assante Dealer alone will have the responsibility to determine that the selected model portfolio is and remains suitable for the investor.

15. The investor will be provided with the simplified prospectus or other offering document required by the Legislation for the Funds included in the investor's PSS Managed Account on an annual basis. In addition, the investor will be provided with the simplified prospectus or other offering document required by the Legislation for each Fund not included in the investor's PSS Managed Account prior to investing any of the PSS Managed Account in such Fund.

16. The investor's Assante Dealer will not act on behalf of the investor when the Filer effects a Reallocation Trade for the investor. Accordingly, neither Assante Dealer will be required by the Legislation to deliver trade confirmations to the investor for Reallocation Trades. The documentation executed by the investor in connection with establishing a PSS Managed Account will disclose that the investor will not receive trade confirmations for Reallocation Trades.

17. All Reallocation Trades will be reflected in the investor's account on the day following the Reallocation Trade, and also will be reflected in the trade blotter to be shared by the Filer and the investor's Assante Dealer in connection with the PSS Managed Account. The investor's Assante Dealer will reflect all Reallocation Trades in the investor's account in accordance with the Legislation.

18. The investor's Assante Dealer will send the investor a statement of account in accordance with the requirements of the MFDA or IIROC, as applicable. Such statements of account will be sent monthly if any transactions have occurred in the PSS Managed Account during the month, otherwise the statement of account will be sent monthly or quarterly. Such statements of account will identify the assets being managed on behalf of the investor through the PSS Managed Account and will include, for each Reallocation Trade made during the period, the information that the investor's Assante Dealer would otherwise have been required to include in a trade confirmation in accordance with the Legislation. Such statements of account also will reconfirm that the investor will not receive trade confirmations for Reallocation Trades.

19. In addition, the Filer will send periodic reports to the investor summarizing the Filer's activities in the PSS Managed Account.

20. The fees and expenses charged in respect of the classes of securities of the Funds that are available in a PSS Managed Account will be disclosed in the simplified prospectuses of the Funds. Neither the Funds nor their investors will pay any additional fees or expenses for utilizing a PSS Managed Account. The sales charges, redemption fees and other fees charged to investors for investing in securities of a Fund using a PSS Managed Account will be the same as those charged to investors that purchase or hold the same classes of securities of other Funds outside a PSS Managed Account. The Filer, as manager of the Funds included in the PSS Managed Account, will receive management, administration and other fees from the Funds and/or the investor in the usual manner for securities of the classes of the Funds included in the PSS Managed Account. No sales charges, redemption fees, switch fees or early trading fees will be charged in connection with Reallocation Trades. Accordingly, there will be no duplication of any fees or charges as a result of an investor's decision to utilize a PSS Managed Account.

21. In the absence of the Requested Relief, the Filer will be required to register as a dealer in the category of mutual fund dealer under the Legislation and become a member of the MFDA in order to effect the Reallocation Trades.

22. In the absence of the Requested Relief, the Filer will be required to gather and update the information contemplated by the Know Your Client Requirement for each investor with a PSS Managed Account.

23. In the absence of the Requested Relief, the Filer will be required by the Suitability Requirement to ensure that each Reallocation Trade in an investor's PSS Managed Account is suitable for the investor rather than invested in accordance with the terms of the investor's Selected Model Portfolio.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Requested Relief is granted provided that:

(a) the Filer is, at the time of the Reallocation Trade, registered under the Legislation as an adviser in the category of portfolio manager;

(b) the Reallocation Trade is made in accordance with the terms of the Selected Model Portfolio of the PSS Managed Account in which the Reallocation Trade occurs; and

(c) the Filer has taken reasonable steps to assure itself that the investor's Assante Dealer has complied with the Know Your Client Requirement and Suitability Requirement with respect to the investor.