CI Investments Inc. et al.

Headnote

National Policy 11-203 -- Existing and future mutual funds granted exemptions from National Instrument 81-102 Mutual Funds to engage in short-selling of securities up to 20% of net assets, subject to certain conditions and requirements -- Relief is necessary to implement the mutual funds' investment objectives and strategies -- Conditions imposed on amount and nature of short-selling to be conducted -- NI 81-102.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.6(a) and (c), 6.1(1), 19.1.

December 3, 2008

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. AND

UNITED FINANCIAL CORPORATION

(THE FILERS)

AND

THE MUTUAL FUNDS LISTED

IN APPENDIX "A" HERETO

(THE EXISTING FUNDS)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers on behalf of each of the Existing Funds and such other mutual funds as the Filers or affiliates of the Filers may establish in the future (the Future Funds and, together with the Existing Funds, the Funds), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation):

(a) revoking the decision granted by the Canadian Securities Administrators dated June 20, 2005 (the Prior Decision) under which the Existing Funds were granted relief from sections 2.6(a), 2.6(c) and 6.1(1) of National Instrument 81-102 Mutual Funds (NI 81-102);

(b) exempting the Funds from the requirement contained in section 2.6(a) of NI 81-102 prohibiting a mutual fund from providing a security interest over a mutual fund' s assets;

(c) exempting the Funds from the requirement contained in section 2.6(c) of NI 81-102 prohibiting a mutual fund from selling securities short; and

(d) exempting the Funds from the requirement contained in section 6.1(1) of NI 81-102 prohibiting a mutual fund from depositing any part of a mutual fund's assets with an entity other than the mutual fund's custodian,

(together, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(i) the Ontario Securities Commission is the principal regulator for this application; and

(ii) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada.

Interpretation

Terms defined in 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 Filers:

1. Each Fund is, or will be, an open-end mutual fund trust or classes of shares of a mutual fund corporation established under the laws of Ontario of which a Filer (or an affiliate of a Filer) is the manager and, in the case of the mutual fund trusts, the trustee.

2. Each Fund is currently or will be a reporting issuer in one or more provinces and territories of Canada. Neither the Filers nor the Funds are in default of the securities legislation in any of the provinces or territories of Canada.

3. Each Existing Fund (other than Blackmont Corporate Bond Fund, CI Short-Term Advantage Trust, Select Income Managed Fund, Select Canadian Equity Managed Fund, Select U.S. Equity Managed Fund and Select International Equity Managed Fund) currently distributes its securities pursuant to a simplified prospectus dated July 18, 2008, as required by National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101). Blackmont Corporate Bond Fund currently distributes its securities pursuant to a simplified prospectus dated March 13, 2008, as required by NI 81-101.

4. None of CI Short-Term Advantage Trust, Select Income Managed Fund, Select Canadian Equity Managed Fund, Select U.S. Equity Managed Fund or Select International Equity Managed Fund (the Non-Distributing Funds) currently distributes its securities pursuant to a prospectus. There are no retail securityholders of any of the Non-Distributing Funds.

5. The head office of each Filer and Fund is located in Ontario.

6. The Prior Decision granted to the Funds (other than those Funds classified as a money market fund or a short-term income fund) permission to engage in a limited amount of short selling, subject to the certain conditions.

7. The Filers propose the Future Funds be authorized to engage in a limited, prudent and disciplined amount of short selling. The Filers are of the view that the Future Funds could benefit from the implementation and execution of a controlled and limited short selling strategy. This strategy would operate as a complement to the Future Funds' primary discipline of buying securities with the expectation that they will appreciate in market value.

8. The investment practices of each Fund comply in all respects with the requirements of Part 2 of NI 81-102, except to the extent that the Fund has received exemptive relief.

9. Any short sales made by a Fund will be subject to compliance with the investment objectives of such Fund.

10. In order to effect a short sale, a Fund will borrow securities from either its custodian or a dealer (in either case, the Borrowing Agent), which Borrowing Agent may be acting either as principal for its own account or as agent for other lenders of securities.

11. Each Fund will implement the following controls when conducting a short sale:

(a) securities will be sold short for cash, with the Fund assuming the obligation to return to the Borrowing Agent the securities borrowed to effect the short sale;

(b) the short sale will be effected through market facilities on which the securities sold short are normally bought and sold;

(c) the Fund will receive cash for the securities sold short within normal trading settlement periods for the market in which the short sale is effected;

(d) the securities sold short will be liquid securities that:

(i) are listed and posted for trading on a stock exchange, and

(A) the issuer of the security has a market capitalization of not less than C$100 million, or the equivalent, of such security at the time the short sale is effected; or

(B) the investment advisor has pre-arranged to borrow for the purposes of such short sale;

or

(ii) are bonds, debentures or other evidences of indebtedness of or guaranteed by the Government of Canada or any province or territory of Canada or the Government of the United States of America;

(e) at the time securities of a particular issuer are sold short:

(i) the aggregate market value of all securities of that issuer sold short by the Fund will not exceed 5% of the net assets of the Fund; and

(ii) the Fund will place a stop-loss order with a dealer to immediately purchase for the Fund an equal number of the same securities if the trading price of the securities exceeds 120% (or such lesser percentage as the manager of the Fund may determine) of the price at which the securities were sold short;

(f) the Fund will deposit Fund assets with the Borrowing Agent as security for the short sale transaction;

(g) the Fund will keep proper books and records of all short sales and Fund assets deposited with Borrowing Agents as security;

(h) the Fund will develop written policies and procedures for the conduct of short sales prior to conducting any short sales; and

(i) the Fund will provide disclosure in its prospectus or annual information form of the short selling strategies and the details of this exemptive relief prior to implementing the short selling strategy.

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 aggregate market value of all securities sold short by each Fund does not exceed 20% of the net assets of the Fund on a daily marked-to-market basis;

2. each Fund holds cash cover (as defined in NI 81-102) in an amount, including the Fund assets deposited with Borrowing Agents as security in connection with short sale transactions, that is at least 150% of the aggregate market value of all securities sold short by the Fund on a daily marked-to-market basis;

3. no proceeds from short sales by a Fund are used by the Fund to purchase long positions in securities other than cash cover;

4. each Fund maintains appropriate internal controls regarding its short sales including written policies and procedures, risk management controls and proper books and records;

5. any short sale made by a Fund is subject to compliance with the investment objective of the Fund;

6. the short selling relief does not apply to a Fund that is classified as a money market fund or a short-term income fund;

7. for short sale transactions in Canada, every dealer that holds Fund assets as security in connection with short sale transactions by the Fund shall be a registered dealer in Canada and a member of a self-regulatory organization that is a participating member of the Canadian Investor Protection Fund;

8. for short sale transactions outside of Canada, every dealer that holds Fund assets as security in connection with short sale transactions by the Fund shall:

(a) be a member of a stock exchange and, as a result, be subject to a regulatory audit; and

(b) have a net worth in excess of the equivalent of C$100 million determined from its most recent audited financial statements that have been made public;

9. except where the Borrowing Agent is the Fund's custodian, when the Fund deposits Fund assets with a Borrowing Agent as security in connection with a short sale transaction, the amount of Fund assets deposited with the Borrowing Agent does not, when aggregated with the amount of Fund assets already held by the Borrowing Agent as security for outstanding short sale transactions of the Fund, exceed 10% of the total net assets of the Fund, taken at market value as at the time of the deposit;

10. the security interest provided by each Fund over any of its assets that is required to enable the Fund to effect short sale transactions is made in accordance with industry practice for that type of transaction and relates only to obligations arising under such short sale transactions;

11. prior to conducting any short sales, each Fund discloses in its simplified prospectus a description of: (a) short selling; (b) how the Fund intends to engage in short selling; (c) the risks associated with short selling; (c) in the Investment Strategy section of the prospectus, the Fund's strategy and this exemptive relief; provided that: (i) the Existing Funds are not required to amend their current simplified prospectuses in order to disclose this exemptive relief if their current simplified prospectuses disclose the terms of the Prior Decision until the next amendment to or renewal of the simplified prospectuses; and (ii) the Non-Distributing Funds disclose this exemptive relief in their next filing of their annual information form and thereafter;

12. prior to conducting any short sales, each Fund discloses in its annual information form the following information:

(a) whether there are written policies and procedures in place that set out the objectives and goals for short selling and the risk management procedures applicable to short selling;

(b) who is responsible for setting and reviewing the policies and procedures referred to in the preceding paragraph, how often the policies and procedures are reviewed, and the extent and nature of the involvement of the board of directors or trustee in the risk management process;

(c) whether there are trading limits or other controls on short selling in place and who is responsible for authorizing the trading and placing limits or other controls on the trading;

(d) whether there are individuals or groups that monitor the risks independent of those who trade; and

(e) whether risk measurement procedures or simulations are used to test the portfolio under stress conditions;

13. prior to a Non-Distributing Fund relying upon this exemptive relief, the Non-Distributing Fund gives notice to its current securityholders of the terms of this exemptive relief;

14. if a Non-Distributing Fund commences distributing securities, the simplified prospectus and annual information form contains the disclosure required in paragraphs 11 and 12;

15. prior to conducting any short sales, each Future Fund has provided to its securityholders not less than 60 days' written notice that discloses the Future Fund's intent to begin short selling transactions and the disclosure required in the Future Fund's simplified prospectus and annual information form as outlined in paragraph 11 and 12 above or the Future Fund's initial simplified prospectus and annual information form and each renewal thereof has included such disclosure.

This decision shall terminate upon the coming into force of any legislation or rule of the principal regulator dealing with the matter referred to in sections 2.6(a), 2.6(c), and 6.1(1) of NI 81-102.

APPENDIX "A"

EXISTING FUNDS