CI Investments Inc. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- exemption granted to a precious metals fund to permit the fund to invest up to 100% its net assets in gold -- to permit the fund to invest up to 20% of its net assets in any combination of silver, platinum, gold or palladium, provided that at no time greater than 10% of the fund's net assets be invested in any one of silver, platinum or palladium -- to permit the fund to invest in gold ETFs, silver ETFs, platinum ETFs and palladium ETFs, provided the fund does not invest in leveraged ETFs and inverse ETFs, and subject to certain conditions -- to permit the Fund to acquire, store and hold portfolio assets in and outside Canada through Brinks or Via Mat, for purposes other than facilitating portfolio transactions of the Fund.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.3(e), 2.3(f), 2.3(h), 2.5(2)(a), 2.5(2)(c), 6.1(2), 6.1(3)(b), 6.2, 6.3 and 19.1.

December 9, 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 Manager)

AND

IN THE MATTER OF

SIGNATURE GOLD CORPORATE CLASS

(the Fund)

AND

IN THE MATTER OF

RBC DEXIA INVESTOR SERVICES TRUST

(the Custodian)

AND

IN THE MATTER OF

THE BANK OF NOVA SCOTIA

(the Bullion Custodian)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption, pursuant to section 19.1 of National Instrument 81-102 Mutual Funds (NI 81-102) from the following provisions of NI 81-102:

(a) clause 2.3(e) of NI 81-102 to permit the Fund to invest more than 10% of its net assets, taken at the market value at the time of the purchase, directly or indirectly in gold and/or permitted gold certificates (as such term is defined in NI 81-102) including through investments in derivatives which have an underlying interest in gold;

(b) clauses 2.3(f) and (h) of NI 81-102 to permit the Fund to invest, directly or indirectly, in silver, silver certificates, platinum, platinum certificates, palladium, palladium certificates, including through derivatives which have an underlying interest in silver, platinum or palladium;

(c) clause 2.5(2)(a) and (c) of NI 81-102 to permit the Fund to invest in exchange-traded funds traded on a stock exchange in Canada or the United States, the underlying interest of which is gold (Gold ETFs);

(d) clause 2.5(2)(a) and (c) of NI 81-102 to permit the Fund to invest in exchange-traded funds traded on a stock exchange in Canada or the United States, the underlying interest of which is silver, platinum or palladium (Precious Metals ETFs and, together with Gold ETFs, Underlying ETFs);

(e) clause 6.1(2)(b) of NI 81-102, to permit the physical bullion of the Fund to be held outside of Canada by the Fund's custodian, RBC Dexia Investor Services Trust (the Custodian) or The Bank of Nova Scotia (the Bullion Custodian), for purposes other than facilitating portfolio transactions of the Fund;

(f) clause 6.1(3)(b) of NI 81-102, to permit Custodian or Bullion Custodian to appoint the Brinks Company, or its subsidiaries or affiliates (Brinks) or Via Mat International Ltd., or its subsidiaries or affiliates (Via Mat), which are persons or companies that are not described in section 6.2 or 6.3 of NI 81-102, to act as sub-custodians to hold the Fund's physical bullion;

(g) section 6.2 of NI 81-102 to permit Brinks or Via Mat to be appointed as sub-custodians of the Fund to hold the Fund's physical bullion in Canada; and

(h) section 6.3 of NI 81-102 to permit Brinks and Via Mat to be appointed as sub-custodians of the Fund to hold the Fund's physical bullion outside Canada

(collectively, 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 Manager 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 all of the provinces and territories of Canada (other than the Jurisdiction).

Interpretation

Terms defined in NI 81-102, 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 Manager:

The Fund

1. The Manager is a corporation established under the laws of the Province of Ontario with its head office in Toronto, Ontario. The Manager is registered with the Ontario Securities Commission as an investment fund manager, adviser (portfolio manager), exempt market dealer, commodity trading counsel and commodity trading manager. The Manager is also registered as an adviser (portfolio manager) in each of the other provinces of Canada. The Manager may in the future become registered in the territories of Canada.

2. The Manager will act as the manager and portfolio adviser for the Fund.

3. The Fund is an open-end mutual fund. The Fund is a class of CI Corporate Class Limited, a mutual fund corporation existing under the laws of the Province of Ontario.

4. Neither the Manager nor the Fund is in default of securities legislation in any Jurisdiction.

5. A preliminary simplified prospectus in respect of the Fund was filed via SEDAR under project No. 1638580 on September 24, 2010. Once a final prospectus for the Fund is filed and a receipt is obtained for it, the Fund will be a "reporting issuer" or equivalent in each Jurisdiction.

6. The Fund is a precious metals fund. The Fund's investment objective is to provide a secure, convenient alternative for investors seeking to hold gold for long-term capital growth by investing primarily, directly or indirectly, in gold and equity securities that provide exposure to gold. The Fund may also invest, directly or indirectly, in silver, platinum and palladium.

7. The Fund will seek to achieve its investment objectives by investing:

(i) primarily in gold bullion and or permitted gold certificates, and other instruments including Gold ETFs, derivatives designed to provide exposure to gold and equity securities of companies engaged in the production and supply of gold. The Fund may also invest a portion of its assets in cash, money market instruments and/or treasury bills; and

(ii) up to 20% of its net asset value at the time of investment, in silver, platinum, palladium, certificates representing those metals, equity securities of companies which produce or supply silver, platinum or palladium and/or other instruments, including permitted derivatives including Precious Metals ETFs, that are designed to achieve exposure to any of the foregoing metals provided that no more than 10% of the Fund's net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

Investment in Gold

8. The Fund's investment objectives and investment strategies are designed to offer investors an opportunity to obtain exposure primarily to gold. To fulfill its investment objectives, the Fund requires the ability to invest, directly and indirectly, primarily in gold and/or gold certificates or instruments which provide an exposure to gold, beyond the limits set out in clause 2.3(e) of NI 81-102.

9. The Manager submits that there are no liquidity concerns with permitting the Fund to invest in gold bullion or permitted gold certificates beyond the limits of NI 81-102, since the market for gold bullion and permitted gold certificates is highly liquid.

Investment in Silver, Platinum and Palladium

10. The Manager requests exemptive relief that would permit the Fund, being a precious metals fund, to invest an aggregate of up to 20% of its net asset value, taken at the market value at the time of investment, in silver bullion, platinum bullion, palladium bullion, derivatives of which the underlying interest is silver, platinum or palladium, silver certificates, platinum certificates palladium certificates and/or equity securities of companies which produce or supply silver, platinum and palladium, provided that no more than 10% of the Fund's net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

11. Similar to the market for gold bullion and gold certificates, the Manager submits that the markets for silver, platinum and palladium are also highly liquid, and there are no liquidity concerns with permitting the Fund to invest in these precious metals provided that the maximum investment in theses metals is limited to an aggregate amount of 20% of the net assets of the mutual fund, taken at market value at the time of purchase.

12. The Manager submits that permitting the investments in silver, platinum and palladium along with gold, will give the portfolio manager additional flexibility in certain market conditions, which may have otherwise caused the Fund to have significant cash positions and therefore deter from its ability to achieve its investment objective of providing long-term growth of capital.

13. As the aggregate investments in silver, platinum and palladium (or the equivalent in certificates or specified derivatives and Precious Metals ETFs, of which the underlying interest is silver, platinum or palladium) would be 20% or less of the net assets of the Fund, taken at the market value thereof at the time of the investment, the Manager submits that there would be no significant change in the risk profile of the Fund. The final prospectus will state that the Fund will invest in precious metals and the risks associated with such investments and will identify the Fund as a precious metals fund as its fund type.

Investment in Underlying ETFs

14. To obtain exposure to gold, silver, platinum and palladium indirectly, the Fund intends to invest in Underlying ETFs.

15. Each Underlying ETF is a "mutual fund" (as such term is defined under the Securities Act (Ontario)) and is listed and traded on a stock exchange;

16. The assets of each Underlying ETF consist primarily of gold, silver, platinum or palladium, as applicable. The objective of each Gold ETF is to reflect the price of gold (less the Gold ETF's expenses and liabilities) on an unlevered basis and the objective of each Precious Metals ETF is to replicate the performance of the underlying metal on an unlevered basis.

17. Gold ETFs include, but are not limited to, iShares COMEX Gold Trust and SPDR Gold Trust.

18. In accordance with the concentration restrictions in NI 81-102, no investment in an Underlying ETF will exceed 10% of the Fund's net asset value, taken at market value at the time of purchase. For that reason, the Manager submits that there are should be no liquidity concerns with permitting the Fund to invest in Underlying ETFs.

19. The Fund will not invest in leveraged Underlying ETFs or inverse Underlying ETFs.

20. An investment by the Fund in securities of an Underlying ETF will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Fund.

21. The Fund will not invest in Underlying ETFs that do not hold physical gold, silver, platinum or palladium bullion, as applicable.

Custody of Bullion Held by the Fund

22. Pursuant to a Second Amended and Restated Custodian Agreement dated July 2, 2006, as amended, the Custodian acts as the custodian for all mutual funds managed by the Manager. The Custodian will hold the property of the Fund other than the Fund's physical gold, silver, platinum and palladium bullion. The terms of the Master Custodian Agreement comply with all requirements in Part 6 of NI 81-102.

23. The Custodian has appointed the Bullion Custodian to be a sub-custodian of the Fund and to hold the Fund's physical gold, silver, platinum and palladium bullion. The custody arrangements with respect to the Fund's physical gold, silver, platinum and palladium bullion are governed by the terms of agreements between the Custodian and the Bullion Custodian (the Bullion Custodian Agreement). Except as represented below, the terms of the Bullion Custodian Agreement will comply with all requirements in Part 6 of NI 81-102.

24. The Fund's physical gold, silver, platinum and palladium bullion will be stored and held either on an allocated and segregated basis in the vault facilities of the Bullion Custodian, in Canada, London, England or New York, U.S.A, or will be stored in the vault of a sub-custodian on an allocated and segregated basis in Canada, London, England or New York, U.S.A, where in the latter case it shall be identified as the property of the Bullion Custodian. The Bullion Custodian shall at all times record and identify in the books and records maintained by the Bullion Custodian that such bullion is being held on behalf of the Custodian. The Bullion Custodian is one of the largest providers of physical precious metals trading and custodial services in the world. The Manager has determined that the Bullion Custodian will be the appropriate choice to provide custodial services to the Fund because the Bullion Custodian is experienced in providing gold, silver, platinum and palladium storage and custodial services, and is familiar with the requirements relating to the physical handling and storage of gold, silver, platinum and palladium bullion.

25. The Fund will not insure its physical gold, silver, platinum or palladium bullion. The Bullion Custodian Agreement requires that the Bullion Custodian or any sub-custodian maintain insurance on such terms and conditions as it considers appropriate against all risk of physical loss of, or damage to, bullion stored in the Bullion Custodian's or such sub-custodian's vaults except the risk of war, nuclear incident, terrorism events or government confiscation. Neither the Manager, the Fund nor the Custodian are beneficiaries of any such insurance and none of them have the ability to dictate the existence, nature or amount of coverage.

26. The Manager has discussed such insurance coverage with the Bullion Custodian, and believes that the insurance that the Bullion Custodian or any sub-custodian has obtained will be appropriate for the Fund. The Bullion Custodian Agreement provides that the Bullion Custodian shall not cancel its insurance or permit its sub-custodian to cancel such insurance except upon 30 days prior written notice to the Manager. The Fund will disclose the material details of that insurance arrangement in its final annual information form.

27. The Bullion Custodian has advised the Manager and the Custodian that due to physical storage capacity constraints, having regard to the amount of gold, silver, platinum and palladium bullion which the Fund may acquire, there may not be sufficient space in the vault facilities of the Bullion Custodian to store all of the Fund's physical gold, silver, platinum and palladium bullion.

28. As a result, the Bullion Custodian may be required to use the services of sub-custodians to store some of the Fund's physical gold, silver, platinum and palladium bullion.

29. The Bullion Custodian has advised the Custodian and the Manager that it proposes to use Brinks and Via Mat, as sub-custodians, if necessary, to hold the physical gold, silver, platinum and palladium bullion of the Fund. Brinks and Via Mat are not entities that are currently approved to act as a custodian or sub-custodian for assets held in Canada, or to act as a sub-custodian for assets held outside of Canada as Brinks and Via Mat are not, among other things, a bank listed in Schedule I, II or III of the Bank Act (Canada) or a trust company incorporated under the laws of Canada.

30. Brinks and Via Mat are leading providers of secure logistics for valuables, including diamonds, jewellery, precious metals, securities, currency and secure data, serving banks, retailers, governments, mines, refiners and metal traders. Brinks and Via Mat are both authorized depositories for the London Bullion Market Association and have vault facilities that are accepted as warehouses for the London Bullion Market Association. Brinks is also an authorized depository for NYMEX/COMEX.

31. The number of entities in Canada which are eligible to act as sub-custodians for the physical storage of silver bullion is limited. Of these eligible entities, some already have exclusive relationships with other investment funds for storage purposes whereas others simply may not have the excess capacity that the Fund may need to store physical silver bullion. These capacity constraints have been intensified due to the increased demand for physical commodities and the corresponding need to arrange for safe-keeping.

32. The Manager and the Bullion Custodian believe that both Brinks and Via Mat are appropriate sub-custodians for the Fund's physical gold, silver, platinum and palladium bullion. The Bullion Custodian has engaged in a review of the facilities, procedures, records and the level of insurance coverage of Brinks and Via Mat, and will engage in a similar review annually, to satisfy itself as to the continuing appropriateness of using Brinks and Via Mat as sub-custodians of the Fund's physical bullion.

33. The custody arrangements with respect to the holding of the Fund's physical gold, silver, platinum and palladium bullion by Brinks or Via Mat will be governed by the terms of an agreement between the Bullion Custodian and Brinks or Via Mat, as the case may be, (the Bullion Sub-Custodian Agreements), the terms of which will comply with Part 6 of NI 81-102, except as represented herein.

34. To the best of the Manager's, the Fund's, the Custodian's and the Bullion Custodian's knowledge, the Custodian Agreement, the Bullion Custodian Agreement and the Bullion Sub-Custodian Agreements are consistent with industry practice.

35. In relation to the Fund, the sub-custodial activities of Brinks and Via Mat will be limited to holding the Fund's physical gold, silver, platinum and palladium bullion. All physical gold, silver, platinum and palladium bullion of the Fund held by Brinks and Via Mat will be held in vault facilities in Canada, London, England or New York, U.S.A, on an allocated and segregated basis. The Bullion Custodian will exercise its audit rights under each Bullion Sub-Custodian Agreement on an on-going basis in order to satisfy itself that Brinks and Via Mat are in substantial compliance with the terms of the relevant Bullion Sub-Custodian Agreement and, in particular, that the bullion of the Fund which the Bullion Custodian has transferred to Brinks and Via Mat on behalf of the Fund (i) is held by Brinks and Via Mat at vault facilities that are accepted as warehouses for the London Bullion Market Association, (ii) is physically segregated and specifically identified, both in the vault facilities in which such bullion is held by Brinks and Via Mat and on the books and records of Brinks and Via Mat, as constituting the property of the Bullion Custodian or the Fund, (iii) has not sustained loss, damage or destruction (but with no obligation on the part of the Bullion Custodian to verify the weight, quality, fineness, assay characteristics, authenticity or composition of such bullion or that such bullion conforms to any good delivery standards for the London Bullion Market Association, NYMEX/COMEX, the London Platinum and Palladium Market Association or any other bullion trading body or that such bullion is otherwise fit for any purpose), and (iv) remains the subject of a subsisting policy of insurance that covers Brinks' and Via Mats' liability for the loss, damage or destruction of such bullion.

36. The Bullion Custodian has advised the Fund and the Manager that each of Brinks and Via Mat have arranged for sufficient insurance coverage in respect of any of the Fund's physical gold, silver, platinum and palladium bullion held by the Bullion Custodian through the vault facilities of Brinks or Via Mat. The Manager has discussed the insurance coverage obtained by Brinks and Via Mat with the Bullion Custodian and believes that the insurance coverage obtained by Brinks and Via Mat is appropriate for the Fund.

37. Pursuant to the Custodian Agreement, in safekeeping the property of the Fund, the Custodian is required to exercise (i) the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances; or (ii) at least the same degree of care as it exercises with respect to its own property of a similar kind, if this is a higher degree of care than the degree of care referred to in (i). In addition, pursuant to the Custodian Agreement, the Custodian is not entitled to an indemnity from the Fund in the event the Custodian breaches its standard of care. The Bullion Custodian Agreement includes a similar standard of care in respect of the obligations of the Bullion Custodian and a similar provision in respect of the Bullion Custodian's indemnity. The Bullion Custodian has satisfied itself that the degree of care to which Brinks and Via Mat are subject in respect of the Bullion Sub-Custodian Agreement is no less than the degree of care referred to in (i).

38. The Bullion Custodian Agreement provides that the Bullion Custodian shall, at all times, indemnify and save harmless the Custodian from and against any and all losses, charges, damages, actions, demands, costs, expenses, claims and liabilities (except for indirect, incidental, exemplary, punitive, consequential or special damages) arising from the Bullion Custodian's own negligence or willful misconduct in the performance or non-performance of its duties under the Bullion Custodian Agreement.

39. The Custodian Agreement provides that if the Fund suffers a loss as a result of any act or omission of the Custodian or of any other agent appointed by the Custodian (rather than appointed by the Manager), including the Bullion Custodian, and if such loss is directly attributable to the failure of such agent to comply with its standard of care in the provision of any service to be provided by it under the Custodian Agreement, then the Custodian shall assume liability for such loss directly, and shall reimburse the Fund accordingly. The Bullion Custodian Agreement provides that if the Custodian suffers a loss as a result of any act or omission of a sub-custodian (including Brinks or Via Mat) or of any other agent appointed by the Bullion Custodian (rather than appointed by the Custodian) and if such loss is directly attributable to the failure of such agent to comply with its standard of care in the provision of any service to be provided by it under the Bullion Custodian Agreement or the applicable Bullion Sub-Custodian Agreement, then the Bullion Custodian shall assume liability for such loss directly (except for indirect, incidental, exemplary, punitive, consequential or special damages) and shall reimburse the Custodian accordingly.

40. The Fund's auditors will be present during, and will verify, a physical count of all of the Fund's physical gold, silver, platinum and palladium bullion, whether held by the Bullion Custodian, Brinks, or Via Mat, at least once every year. The Fund and its auditors will have the ability, with sufficient advance notice to the Bullion Custodian, who shall make arrangements with Brinks or Via Mat, where required, to attend at the vaults of the Bullion Custodian, Brinks and/or Via Mat as required to verify the gold, silver, platinum and palladium bullion held by the Bullion Custodian, Brinks or Via Mat on behalf of the Fund.

41. The Bullion Custodian shall, to the best of its ability, monitor the most recent audited financial statements of Brinks and Via Mat or their respective affiliates or subsidiaries, in order to ensure that the shareholders' equity of such entities is sufficient with what the Bullion Custodian believes to be appropriate for an entity acting as custodian of physical bullion and, in any event at sufficient levels in order to meet the Bullion Custodian's own internal requirements as though the Bullion Custodian were seeking to deposit its own physical bullion with such sub-custodians.

42. All bullion purchased by the Fund will be certified by the relevant vendor as bullion conforming to the good delivery standards of the London Bullion Market Association, the London Platinum and Palladium Market or another internationally recognized bullion trading body.

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:

(a) the investment by the Fund in gold, silver, platinum or palladium (including specified derivatives, certificates and Underlying ETFs) is in accordance with the fundamental investment objectives of the Fund;

(b) no more than 20% of the Fund's net assets, taken at the market value thereof at the time of investment, is invested in silver, platinum or palladium in the aggregate (including certificates, Precious Metals ETFs and underlying market exposure of specified derivatives);

(c) no more than 10% of the Fund's net assets, taken at the market value thereof at the time of investment, is invested in any one of silver, platinum or palladium (including certificates, Precious Metals ETFs and underlying market exposure of specified derivatives);

(d) the Fund does not short sell securities of an Underlying ETF;

(e) the securities of the Underlying ETFs are traded on a stock exchange in Canada or the United States;

(f) the securities of the Underlying ETFs are treated as specified derivatives for the purposes of Part 2 or NI 81-102;

(g) the Manager, on behalf of the Fund, ensures that any silver, platinum or palladium certificates purchased by the Fund, represent the underlying precious metal which is:

(i) available for delivery in Canada, free of charge, to or to the order of the holder of the certificate;

(ii) of minimum fineness of 999 parts per 1,000;

(iii) held in Canada;

(iv) in the form of either bars or wafers; and

(v) if not purchased from a bank listed in Schedule I, II or III of the Bank Act (Canada), fully insured against loss and bankruptcy by an insurance company licensed under the laws of Canada or a jurisdiction;

(h) in respect of the relief granted from the requirements of sections 6.1(2)(b), 6.1(3)(b), 6.2 and 6.3, the Fund, the Manager, the Custodian and the Bullion Custodian are limited to using Brinks and Via Mat as sub-custodians for the gold, silver, platinum and palladium bullion of the Fund which will be held only in Canada, London or New York;

(i) in respect of the compliance reports to be prepared by the Custodian pursuant to section 6.7 of NI 81-102, in lieu of including the information required by paragraphs 6.7(1)(a), 6.7(1)(b), 6.7(1)(c) and 6.7(2)(b) and (c) in respect of the Custodian's review of the sub-custodian arrangements involving Brinks and Via Mat, the Custodian shall instead be entitled to rely on a certificate of the Bullion Custodian prepared in respect of the Bullion Custodian's annual review process for Brinks and Via Mat referred to in paragraph 34 above, and whether the Bullion Custodian remains of the view that Brinks and Via Mat continue to be appropriate sub-sub-custodians to hold the Fund's physical gold, silver, platinum and palladium bullion; and

(j) the simplified prospectus of the Fund contains disclosure regarding the unique risks associated with an investment in the Fund including the risk that direct purchases of gold, silver, platinum and palladium by the Fund may generate higher transaction and custody costs than other types of investments, which may impact the performance of the Fund.

"Darren McKall"
Assistant Manager, Investment Funds Branch
Ontario Securities Commission