Claymore Investments, Inc. and MFC Global Investment Management (Canada), a Division of Elliot & Page Limited - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Portfolio manager exempted from self-dealing provision prohibiting it from knowingly causing any investment portfolio managed by it to invest in any issuer in which a "responsible person" (as defined in the Securities Act (Ontario)) is an officer and/or director unless the specific fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase. - Investment advisory board will review all investments caught by the self-dealing provision to ensure such investments are in the best interests of the investment fund. - Paragraph 118(2)(a) of the Securities Act (Ontario).

Applicable Legislative Provisions

Securities Act, R.S.O. 1990 c. S.5, as am., ss. 118(2)(a), 21(2).

February 2, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO, ALBERTA, SASKATCHEWAN,

NEWFOUNDLAND AND LABRADOR,

NOVA SCOTIA AND NEW BRUNSWICK

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

CLAYMORE INVESTMENTS, INC. AND

MFC GLOBAL INVESTMENT MANAGEMENT (CANADA),

A DIVISION OF ELLIOTT & PAGE LIMITED

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from Claymore Investments, Inc. (the "Manager") and MFC Global Investment Management (Canada), a division of Elliott & Page Limited ("MFC Global", and together with the Manager, the "Filers") for a decision (the "Decision") under the securities legislation of the Jurisdictions (the "Legislation") that:

• the provision prohibiting a portfolio manager from causing any investment portfolio managed by it to invest in any issuer in which a "responsible person" as defined in the Legislation, or an associate of a responsible person, is an officer or director unless the specific fact is disclosed to the client and the written consent of the client to the investment is obtained before the purchase (the "Investment Restrictions")

shall not apply to investments made by MFC Global in securities of Manulife Financial Corporation ("Manulife") and other affiliates of Manulife (collectively, the "Manulife Securities") for the portfolios of investment funds managed by the Manager for which MFC Global acts as investment advisor and/or provides portfolio management services (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 Decisions 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 Filers:

The Manager

1. The Manager is a corporation established under the federal laws of Canada and is registered as an adviser in Ontario in the categories of investment counsel and portfolio manager.

2. The Manager is the manager of various investment trusts established under the laws of the Province of Ontario, including Canadian Financial Income Fund. The Manager, Canadian Financial Income Fund and MFC Global obtained relief from the Investment Restrictions to permit MFC Global to invest in Manulife Securities on behalf of Canadian Financial Income Fund by MRRS Decision Document dated September 2, 2005. Canadian Financial Income Fund is not in default under the Legislation.

3. The Manager has filed a preliminary prospectus dated December 28, 2005 in all of the provinces and territories of Canada (the "Preliminary Prospectus") under SEDAR Project No. 874488 to qualify the distribution of units of Canadian Financial Dividend & Income Fund (the "Current Fund"), a new investment trust that the Manager expects to create in January 2006 and for which MFC Global will be engaged as investment advisor.

4. As disclosed in the Preliminary Prospectus, the investment objectives of the Current Fund will be: (i) to maximize total return for holders of Units, consisting of distributions and capital appreciation; and (ii) to provide holders of Units with a stable stream of monthly cash distributions. The investment strategy of the Current Fund will be to invest in a diversified and actively managed portfolio comprised primarily of common shares, preferred shares, corporate bonds and income trust units of issuers in the Canadian financial sector. Therefore, the investment by MFC Global in Manulife Securities on behalf of the Current Fund would be consistent with the investment objectives and strategies of the Current Fund.

5. The Manager expects to create other investment funds from time to time for which MFC Global will be engaged to act as investment advisor and/or to provide portfolio management services (the "Future Funds") (the Future Funds and the Current Fund being hereinafter referred to individually as a "Fund" and collectively as the "Funds"). The investment by MFC Global in Manulife Securities on behalf of one or more Future Funds may be consistent with the investment objectives and/or strategies of such Future Funds.

6. The Manager has disclosed in the Preliminary Prospectus of the Current Fund that, subject to the receipt of any required regulatory approval, the Current Fund may, from time to time, invest in or continue to hold securities of related parties of MFC Global, provided that the decision to buy, sell or hold such securities is in the best interests of the Fund, and is made in accordance with: (i) the investment objectives and restrictions of the Current Fund; and (ii) applicable regulatory rules and the terms of any regulatory approval, if necessary.

7. The Manager will disclose in the prospectus or offering document of any Future Fund that MFC Global obtained regulatory approval to invest in Manulife Securities and that the Future Fund may, from time to time, invest in or continue to hold securities of related parties of MFC Global, provided that the decision to buy, sell or hold such securities is in the best interests of the Future Fund, and is made in accordance with: (i) the investment objectives and restrictions of the Future Fund; and (ii) the terms of this decision and any additional regulatory rules, if applicable.

MFC Global

8. MFC Global will act as the investment advisor of the Current Fund and may be engaged by the Manager to act as investment advisor and/or to provide portfolio management services to one or more Future Funds.

9. MFC Global is a division of Elliott & Page Limited ("EPL"). EPL is a corporation incorporated under the laws of Ontario. The principal office of EPL is located in Toronto, Ontario. EPL is registered as an adviser in Ontario in the categories of investment counsel and portfolio manager and is registered under the equivalent categories in the other Jurisdictions except Newfoundland and Labrador.

10. In 1982, EPL was acquired by North American Life Assurance Company, which is now The Manufacturers Life Insurance Company ("MLIC"). Manulife holds all of the outstanding shares of MLIC and therefore, EPL is an indirect wholly-owned subsidiary of Manulife.

11. Certain directors and/or officers of EPL who are, or may be, "responsible persons" in respect of the Fund, are or may be officers and/or directors of Manulife or its affiliates (the "Related Officers and Directors"). The Related Officers and Directors will not participate in the formulation of, or generally have access prior to implementation to, the day to day investment decisions made by MFC Global on behalf of the Funds.

12. All Related Officers and Directors will not provide investment advice to the Funds. Furthermore, no trading officer of EPL who will provide portfolio management services to the Funds is under the direct supervision of a Related Officer or Director in respect of the provision of such portfolio management services.

13. All Related Officers and Directors who have access to material information in relation to Manulife that has not been generally disclosed (an "Access Person") are subject to Manulife's written policies including Manulife's Code of Business Conduct and Ethics and/or MFC Global's Code of Ethics, which, among other things, prohibit Access Persons from engaging in any trading of Manulife Securities while the trading window is closed or while the Access Person is in possession of undisclosed material information in relation to Manulife.

Proposed Investments by the Funds in Manulife Securities

14. Manulife, the indirect parent company of EPL, is one of the leading life insurance based financial services organizations in Canada.

15. MFC Global believes that it would be in the best interests of holders of Units of the Funds for the Funds to be permitted to invest in Manulife Securities, provided such investment is in keeping with the investment objectives, strategies and restrictions of each Fund.

16. Because the Units of the Current Fund are being offered to the public through a syndicate of investment dealers and will be listed for trading on The Toronto Stock Exchange, it is impractical to obtain the written consent of each holder of Units to the investment by MFC Global in Manulife Securities on behalf of the Current Fund. Likewise, securities of the Future Funds may be offered to the public pursuant to a prospectus or otherwise distributed broadly, so that it may be impractical to obtain the written consent of each investor in the Future Funds to the investment by MFC Global in Manulife Securities on behalf of such Future Funds.

17. The Manager has appointed an advisory board (the "Independent Advisory Board"), which will review the Funds' purchases, sales and continued holdings of Manulife Securities to ensure that these investment decisions: have been made free from any influence by Manulife, have not taken into account any consideration relevant to Manulife or any associate or affiliate of Manulife, and do not cause the portfolios of the Funds to exceed any investment concentration limits for the Funds for any one issuer.

18. In reviewing each Fund's purchases, sales and continued holdings of Manulife Securities, the Independent Advisory Board will take into account the best interests of the Fund and no other factors.

19. All fees and expenses of the Independent Advisory Board incurred in connection with its duties with respect to a Fund will be paid by that Fund.

20. In the absence of the Requested Relief, because it is impractical to obtain the consent of investors in the Funds, MFC Global would be prohibited from investing in Manulife Securities on behalf of the Funds because certain directors and/or officers of EPL who are or may be "responsible persons" in respect of the Funds, are or may be officers and/or directors of Manulife or its affiliates.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the authority to make the decision has been met.

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

1. The Manager has appointed an Independent Advisory Board to review each Fund's purchases, sales and continued holdings of Manulife Securities;

2. The Independent Advisory Board has at least three members, and every member of the Independent Advisory Board will be independent of Manulife, the Manager, MFC Global, EPL, and any associate or affiliate of Manulife, the Manager, MFC Global and EPL.

A member of the Independent Advisory Board is not independent if the member has a direct or indirect material relationship with the Funds, the Filers, or an entity related to the Filers. A material relationship is any relationship that a reasonable person would consider might interfere with the exercise of the member's independent judgement of regarding conflicts of interest facing the Filers;

3. The trust agreement or other constating document of each Fund prescribes the duties and standard of care of the Independent Advisory Board and the Independent Advisory Board has been provided with a copy of this Decision;

4. The members of the Independent Advisory Board exercise their powers and discharge their duties honestly, in good faith and in the best interests of the Funds and, in doing so, exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances;

5. The Funds do not relieve the members of the Independent Advisory Board from liability for losses that arise out of a failure to satisfy the standard of care set out in paragraph 4 above;

6. The Funds do not indemnify the members of the Independent Advisory Board against legal fees, judgments and amounts paid in settlement as a result of a breach of the standard of care set out in paragraph 4 above;

7. The Funds do not incur the cost of any portion of liability insurance that insures a member of the Independent Advisory Board for a liability for loss that arises out of a failure to satisfy the standard of care set out in paragraph 4 above;

8. The cost of any indemnification or insurance coverage paid for by the Manager, MFC Global, EPL or any other investment advisor of any Fund, or any associate or affiliate of the Manager, MFC Global, EPL or any other investment adviser of that Fund, to indemnify or insure the members of the Independent Advisory Board of that Fund in respect of a loss that arises out of a failure to satisfy the standard of care set out in paragraph 4 above is not paid either directly or indirectly by that Fund;

9. Prior to effecting a purchase pursuant to this Decision, the Manager has in place written policies and procedures to ensure that there is compliance with the conditions of this Decision;

10. The Manager will ensure that there is compliance with the conditions of this Decision;

11. The Independent Advisory Board reviews each Fund's purchases, sales and continued holdings of Manulife Securities on a regular basis, but not less frequently than once every calendar quarter;

12. The Independent Advisory Board forms the opinion, after reasonable inquiry, that any decision made on behalf of each Fund by MFC Global to purchase, sell or continue to hold Manulife Securities was, and continues to be, in the best interests of that Fund and:

(a) represents the business judgement of MFC Global, uninfluenced by considerations other than the best interests of that Fund,

(b) was made free from any influence by Manulife and without taking into account any consideration relevant to Manulife or any associate or affiliate of Manulife, and

(c) does not exceed the limitations of the applicable legislation;

13. The determination made by the Independent Advisory Board pursuant to paragraph 12 above is included in detailed written minutes provided to MFC Global not less frequently than quarterly;

14. Within 30 days after the end of each quarter in which MFC Global purchases or sells Manulife Securities on behalf of any Fund that is a reporting issuer, a Filer will file on SEDAR:

(a) a report disclosing:

(i) the date of each purchase and sale,

(ii) the volume weighted average price paid or received for the Manulife Securities by that Fund on a given date, and

(iii) whether a purchase, sale or equity position was determined by the Independent Advisory Board to not comply with paragraph 12 above and, if so, why the purchase, sale or equity position was either completed, continued or not liquidated notwithstanding the Independent Advisory Board's determination;

(b) a certificate of MFC Global certifying that:

(i) at the time of each trade the trade represented the business judgement of MFC Global uninfluenced by considerations other than the best interest of that Fund and was, in fact, in the best interests of that Fund,

(ii) the trades were made free from any influence by Manulife or any affiliate or associate thereof and without taking any consideration relevant to Manulife or any associate or affiliate thereof, and

(iii) the trades were not part of a series of transactions aiming to support or otherwise influence the price of the Manulife Securities; and

(c) a certificate by each member of the Independent Advisory Board certifying that after reasonable inquiry the member formed the opinion that the policies and procedures referred to in paragraph 9 above are adequate and effective to ensure compliance with this Decision and that the decision made on behalf of that Fund by MFC Global to purchase Manulife Securities for that Fund and the purchase by that Fund:

(i) was made in compliance with the conditions of this Decision;

(ii) represented the business judgment of MFC Global uninfluenced by considerations other than the best interests of that Fund; and

(iii) was, in fact, in the best interests of that Fund;

15. The Independent Advisory Board advises the Decision Makers in writing of:

(a) any determination by it that paragraph 12 has not been satisfied with respect to any purchase, sale or holding of Manulife Securities,

(b) any determination by it that any other condition of this Decision has not been satisfied,

(c) any action it has taken or proposes to take following the determinations referred to above, and

(d) any action taken, or proposed to be taken, by the Manager or MFC Global in response to the determinations referred to above;

16. The existence, purpose, duties and obligations of the Independent Advisory Board, the names of its members, whether and how they are compensated by each Fund, and the fact that they are independent are disclosed:

(a) in the prospectus or other offering document of the Fund, and

(b) on the Manager's internet website; and

17. The Decision, as it relates to the Jurisdiction of a Decision Maker, will terminate one year after the publication in final form of any legislation or rule of that Decision Maker dealing with investment fund governance in a manner that conflicts with or makes inapplicable any provision of this Decision.