Sun Life Global Investments (Canada) Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted to mutual funds subject to NI 81-102 to permit applicant funds to purchase long-term debt securities of a related entity under primary offerings of the related entity and on the secondary market -- future oriented relief -- relief subject to conditions including IRC approval, pricing requirements, and limits on the amount of the primary offering applicant funds can purchase.

Applicable Legislative Provisions

Securities Act (Ontario), ss. 111(2)(a), 111(2)(b), 111(2)(c)(ii), 111(3), 113.

National Instrument 31-103 Registration Requirements and Exemptions, ss. 13.5(2)(a), 15.

National Instrument 81-107 Independent Review Committee for Investment Funds, s. 6.2.

April 8, 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

SUN LIFE GLOBAL INVESTMENTS

(CANADA) INC.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of existing mutual funds and future mutual funds of which the Filer or an affiliate of the Filer is the manager (the Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Funds from the prohibitions in the Legislation against:

(a) a mutual fund making or holding an investment in:

(i) any person or company who is a substantial securityholder of the mutual fund, its management company or distribution company;

(ii) any person or company in which the mutual fund, alone or together with one or more related mutual funds, is a substantial securityholder; or

(iii) an issuer in which any person or company who is a substantial securityholder of the mutual fund, its management company or distribution company has a significant interest,

(the Related Issuer Relief ) and

(b) a registered adviser of a Fund knowingly causing an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to purchase a security of an issuer in which a responsible person or an associate of a responsible person is a partner, officer or director, unless the specific fact is disclosed to the client and the written consent of the client is obtained (the NI 31-103 Relief),

in each case, to permit the Funds to invest in non-exchange traded debt securities of Sun Life Financial Inc. or any other issuer in which investment by a Fund would be prohibited as a result of the above prohibitions (each a Related Issuer), in the secondary market or on a primary distribution or treasury offering. (The Related Issuer Relief and NI 31-103 Relief, collectively, are the Exemption Sought.)

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(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 in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (collectively with the Jurisdiction, the Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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

The Filer and the Funds

1. The Filer is a corporation incorporated under the laws of Canada with its head office in Toronto, Ontario.

2. The Filer is registered as a commodity trading manager, investment fund manager and portfolio manager in Ontario.

3. The Filer, or its affiliate is, or will be, the manager and the portfolio adviser of the Funds.

4. Each Fund is, or will be, an investment fund under the laws of Ontario or Canada and is or will be a reporting issuer in one or more of the Jurisdictions.

5. Each Fund is, or will be, governed by National Instrument 81-102 Mutual Funds (NI 81-102), subject to any relief therefrom granted by the securities regulatory authorities.

6. The securities of each of the existing Funds are, or will be, qualified for distribution pursuant to a simplified prospectus and annual information form that have been prepared and filed in accordance with the securities legislation of each of the Jurisdictions.

Relationships with Related Issuers

7. Sun Life Financial Inc. is the ultimate parent company of the Filer and as a result, Sun Life Financial Inc. is a substantial securityholder of the Filer.

8. A Fund, together with one or more other Funds, may be a substantial securityholder of an issuer of non-exchange traded securities.

9. Sun Life Financial Inc. has a significant interest in each of Sun Life Assurance Company of Canada Inc., Sun Life Capital Trust, Sun Life Capital Trust II, Sun Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York, and may have a significant interest in other issuers in which the Funds may desire to invest.

10. Officers and directors of the Filer, or of an affiliate of the Filer that is a registered adviser, may be officers and directors of an issuer in which a Fund desires to invest.

Independent Review Committee

11. The Filer has established an independent review committee (IRC) in respect of each Fund in accordance with the requirements of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107). The IRC shall comply with the standard of care set out in section 3.9 of NI 81-107.

12. The purchase and holding of securities of a Related Issuer by a Fund will be authorized by the IRC of such Fund pursuant to section 5.2 of NI 81-107 and the Filer and the IRC of the Fund will comply with section 5.4 of NI 81-107 in respect of any standing instructions the IRC provides in connection with the purchase and holding of securities of the Related Issuer.

13. Section 6.2 of NI 81-107 provides the Funds with an exemption from the prohibitions comprising the Exemption Sought in respect of purchasing exchange-traded securities, such as common shares, in the secondary market. It does not permit a Fund, or the Filer on behalf of a Fund, to purchase non-exchange-traded securities issued by a Related Issuer. Some securities of Related Issuers, such as debt securities, are not listed and traded.

Investment in Securities of Related Issuers

14. The Filer is seeking the Exemption Sought to permit the Funds to purchase and hold non-exchange-traded debt securities of Related Issuers.

15. The Filer has determined that it would be in the best interests of the Funds to receive the Exemption Sought.

16. The investment strategies of each of the Funds that relies on the Exemption Sought will permit it to invest in securities of a Related Issuer.

17. Related Issuers of the Filer are significant issuers of securities and are issuers of highly rated commercial paper and other debt instruments. The Filer considers that the Funds should have access to such securities for the following reasons:

(a) there is a limited supply of highly rated corporate debt;

(b) diversification is reduced to the extent that a Fund is limited with respect to investment opportunities; and

(c) to the extent that a Fund is trying to track or outperform a benchmark, it is important for the Fund to be able to purchase any securities included in the benchmark. Debt securities of Related Issuers to the Filer are included in most of the Canadian debt indices.

18. Where the non-exchange-traded debt security is purchased by a Fund in a primary distribution or treasury offering (Primary Offering) pursuant to the Exemption Sought:

(a) the debt security, other than an asset backed commercial paper security, will have a term to maturity of 365 days or more and will be issued by a Related Issuer that has been given and continues to have, at the time of purchase, an "approved credit rating" by an approved credit rating organization; and

(b) the terms of the Primary Offering, such as the size and the pricing, will be a matter of public record as evidenced in a prospectus, offering memorandum, press release or other public document.

19. Where the non-exchange-traded debt security is purchased by a Fund in the secondary market pursuant to the Exemption Sought and not in a Primary Offering, the debt security has been given and continues to have, at the time of purchase, an "approved credit rating" by an "approved credit rating organization".

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 the Exemption Sought is granted provided that:

1. the purchase or holding is consistent with, or is necessary to meet, the investment objective of the Fund;

2. at the time of purchase, the IRC of the Fund has approved the transaction in accordance with section 5.2(2) of NI 81-107;

3. the manager of the Fund complies with section 5.1 of NI 81-107 and the manager and IRC of the Fund comply with section 5.4 of NI 81-107 for any standing instructions the IRC provides in connection with the investment;

4. for a Fund to make or hold an investment in non-exchange traded debt securities of a Related Issuer in the secondary market:

(a) the security has been given, and continues, at the time of purchase, to have an "approved credit rating" by an "approved credit rating organization", within the meaning of those terms in NI 81-102;

(b) the price payable for the security is not more than the ask price of the security;

(c) the ask price of the security is determined as follows:

(i) if the purchase occurs on a marketplace, the price payable is determined in accordance with the requirements of the marketplace; or

(ii) if the purchase does not occur on a marketplace,

(1) the Fund may pay the price for the security at which an independent, arm's length seller is willing to sell the security, or

(2) if the Fund does not purchase the security from an independent arm's length seller, the Fund pays the price quoted publicly by an independent marketplace or obtains, immediately before the purchase, at least one quote from an independent, arm's length purchaser or seller and does not pay more than that quote; and

(d) the transaction complies with any applicable "market integrity requirements" as defined in NI 81-107;

5. for a Fund to make or hold an investment in long-term non-exchange traded debt securities of a Related Issuer in a Primary Offering:

(a) the size of the Primary Offering is at least $100 million;

(b) at least two purchasers who are independent, arm's length purchasers (which may include "independent underwriters" within the meaning of NI 33-105 Underwriting Conflicts), collectively purchase at least 20% of the Primary Offering;

(c) no Fund shall participate in the Primary Offering if, following its purchase, the Fund would have more than 5% of its net assets invested in non-exchange-traded debt securities of a Related Issuer;

(d) no Fund shall participate in the Primary Offering if, following its purchase, the Fund, together with related Funds, will hold more than 20% of the securities issued in the Primary Offering; and

(e) the price paid for the securities by a Fund in the Primary Offering shall be no higher than the lowest price paid by any of the arm's length purchasers who participate in the Primary Offering;

6. no later than the time the Fund files its annual financial statements, the Filer, as manager of the Fund, files with the securities regulatory authority or regulator the particulars of any investments made in reliance on this relief;

7. the IRC of the Fund complies with section 4.5 of NI 81-107 in connection with any instance that it becomes aware that the Filer did not comply with any of the conditions of this Decision; and

8. the Decision with respect to non-exchange traded debt securities purchased pursuant to a Primary Offering or in the secondary market will expire on the coming into force of any securities legislation relating to fund purchases of non-exchange traded debt securities purchased pursuant to a Primary Offering or in the secondary market.

Related Issuer Relief

NI 31-103 Relief