CI Investments Inc.

Decision

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions - Relief granted from multi-layering prohibition in paragraph 2.5(2)(b) of NI 81-102 to permit CI managed mutual funds to invest in a new CI managed underlying mutual fund which in turn obtains exposure to a new CI managed reference fund through a forward agreement - Underlying fund and reference fund aim to provide exposure to a diversified portfolio of income-generating securities in a manner that is similar to holding multiple income generating funds - Underlying fund and reference fund not available for purchase by retail investors - Three-tier structure is transparent and intended to provide top mutual funds with exposure to fixed income on tax efficient basis - Underlying fund and reference fund not intending to renew simplified prospectus after first prospectus lapses - Underlying fund and reference fund will remain reporting issuers in the same jurisdictions as the top mutual funds after their respective prospectus lapses and continue to be subject to the requirements of NI 81-102, NI 81-106 and NI 81-107 - Top mutual funds and underlying fund granted relief from requirements of paragraphs 2.5(2)(a) and (c) of NI 81-102 to permit their respective continued investment in the underlying fund and reference fund.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.1(1), 2.2(1)(a), 2.5(2)(a), 2.5(2)(b), 2.5(2)(c), 19.1.

July 19, 2010

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)

AND

THE FUNDS AND THE UNDERLYING FUND

(as each is defined below)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer on behalf of:

(a) each of the mutual funds (other than the Underlying Fund and Reference Fund, as each defined below) of which the Filer, or an affiliate of the Filer, is or in the future becomes, the manager and to which National Instrument 81-102 -- Mutual Funds (NI 81-102) applies (the Funds), and

(b) Select Income Advantage Managed Fund (the Underlying Fund),

for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting

(c) the Funds from the requirement of subsection 2.5(2)(b) of NI 81-102 (the Three-Tier Relief) to permit each Fund to invest in units of the Underlying Fund, and

(d) the Funds and the Underlying Fund from the requirements of subsection 2.1(1) and paragraphs 2.2(1)(a), 2.5(2)(a) and 2.5(2)(c) of NI 81-102 (collectively, the Non-Prospectused Investing Relief and, together with the Three-Tier Relief, the Requested Relief) to permit:

(i) each Fund to invest in units of the Underlying Fund, and

(ii) the Underlying Fund to enter into specified derivatives which provide exposure to the returns of units of Select Income Advantage Managed Trust (the Reference Fund).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for the Application; and

(b) the Filer has provided notice that Section 4.7 of Multilateral Instrument 11-102 - Passport System (MI 11-102) is intended to be relied upon in respect of the Requested Relief in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut (the Passport Jurisdictions).

Interpretation

Defined terms in the securities legislation of the Jurisdiction or the Passport Jurisdictions, National Instrument 14-101 -- Definitions or NI 81-102 have the same meanings in this Decision, unless otherwise defined.

Representations

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

1. Each Fund is a reporting issuer under the securities legislation of each province and territory of Canada and is subject to all of the requirements of National Instrument 81-101 -- Mutual Fund Distributions (NI 81-101), NI 81-102, National Instrument 81-106 -- Investment Fund Continuous Disclosure (NI 81-106) and National Instrument 81-107 -- Independent Review Committee for Investment Funds (NI 81-107 and, together with NI 81-102 and NI 81-106, the Mutual Fund Instruments), except to the extent that it may be granted discretionary relief from any such requirements.

2. The Filer, a corporation incorporated under the laws of the Province of Ontario, or an affiliate of the Filer, acts as the manager of each Fund.

3. The Filer and the Funds are, to the best of their knowledge, not in default of securities legislation of the Jurisdiction or any Passport Jurisdiction.

4. Each Fund's investment objective permits the Fund to invest, directly or indirectly, in securities which are fixed income in nature. Each Fund's investment objective also permits the Fund to make such investments either:

(a) directly, by purchasing and holding such securities; or

(b) indirectly through investments in other mutual funds and/or specified derivatives.

5. The Reference Fund is a newly-created mutual fund to which NI 81-101 and the Mutual Fund Instruments apply, except to the extent that it may be granted discretionary relief from any such requirements. The Reference Fund is a reporting issuer under the securities legislation of the Jurisdiction and each Passport Jurisdiction. The Filer is the trustee and manager of the Reference Fund.

6. The investment objective of the Reference Fund is to provide exposure to a diversified portfolio of income-generating securities in a manner that is similar to holding multiple income-generating funds. The Reference Fund invests primarily in investment grade fixed income securities issued by governments and corporations in Canada and globally. The Reference Fund also may invest up to 50% of its assets in other income generating securities such as preferred shares, common shares and real estate investment trusts.

7. The Underlying Fund is a newly-created mutual fund to which NI 81-101 and the Mutual Fund Instruments apply, except to the extent that it may be granted discretionary relief from any such requirements. The Underlying Fund is a reporting issuer under the securities legislation of the Jurisdiction and each Passport Jurisdiction. The Filer is the trustee and manager of the Underlying Fund.

8. The investment objective of the Underlying Fund is to provide exposure to a diversified portfolio of income-generating securities in a manner that is similar to holding multiple income-generating funds. In order to pursue its investment objective, the Underlying Fund will obtain exposure to the Reference Fund by entering into one or more specified derivatives (collectively, the Forward Agreement) with one or more counterparties. All aspects of the Forward Agreement will comply with the requirements of NI 81-102 relating to the use of specified derivatives by mutual funds.

9. Units of the Underlying Fund and the Reference Fund are not available for purchase by retail investors in Canada. Instead, units of the Underlying Fund and the Reference Fund are available for purchase only by "accredited investors" (as defined in National Instrument 45-106 -- Prospectus Exempt Distributions).

10. The Underlying Fund and the Reference Fund do not intend to renew their respective prospectuses after the first such prospectuses lapse. After such first prospectuses lapse in 2011, the Underlying Fund and the Reference Fund intend to continue distributing their units only on a basis which is exempt from the prospectus requirements in Canadian securities legislation (principally by distributing their units only to accredited investors). The Underlying Fund and Reference Fund will at that time cease to be subject to the requirements of NI 81-101.

11. After the first prospectuses of the Underlying Fund and Reference Fund lapse in 2011, the Underlying Fund and the Reference Fund will remain reporting issuers in each jurisdiction in which the Funds also are reporting issuers, and will accordingly remain subject to all of the requirements of the Mutual Fund Instruments, except to the extent that they may be granted discretionary relief from any such requirements. A Fund will not purchase or hold units of the Underlying Fund if the Underlying Fund or Reference Fund cease to be reporting issuers in the same jurisdictions in which the Fund is a reporting issuer.

12. The Filer believes that it would be advantageous to each Fund and its securityholders to be able to obtain exposure to the portfolio of fixed income securities owned by the Reference Fund by investing in units of the Underlying Fund. It would be inefficient from a tax perspective for each Fund to directly acquire and hold units of the Reference Fund. It would be administratively inefficient for each Fund to enter into its own specified derivatives to obtain exposure to the Reference Fund.

13. A Fund will invest in units of the Underlying Fund only if such investment is permitted by, and consistent with, the investment objective of the Fund.

14. The investments by the Funds in units of the Underlying Fund, and the exposure of the Underlying Fund (and, indirectly, the Funds) to the changes in value of units of the Reference Fund:

(a) will be made in accordance with the requirements of section 2.5 of NI 81-102 except as otherwise permitted by the Requested Relief; and

(b) will represent the business judgment of "responsible persons" (as defined in section 13.5(1) of National Instrument 31-103 -- Registration Requirements and Exemptions) uninfluenced by considerations other than the best interests of the Funds (including the Underlying Fund).

Decision

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

The Decision of the principal regulator under the Legislation is that

1. the Three-Tier Investing Relief is granted to the Funds, and

2. the Non-Prospectused Investing Relief is granted

(a) to a Fund provided that the Underlying Fund remains a reporting issuer that is subject to the Mutual Fund Instruments in all jurisdictions in which the Fund is a reporting issuer, and

(b) to the Underlying Fund provided that the Reference Fund remains a reporting issuer that is subject to the Mutual Fund Instruments in all jurisdictions in which the Underlying Fund is a reporting issuer.

"Vera Nunes"
Assistant Manager, Investment Funds Branch