CI Investments Inc.

Approval

Headnote

Pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief from the dealer registration requirement, know your client and suitability requirements, and the requirements to deliver account statements and investment performance reports, granted to a portfolio manager in respect of investors in a model portfolio service offered through affiliated mutual fund dealers and investment dealers.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7(1).

Securities Act, Ontario, ss. 25, 74(1).

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 13.2, 13.3, 14.14, 14.14.1, 14.18 and 15.1(2).

March 30, 2021

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)

DECISION

Background

The principal regulator (Principal Regulator) in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (Legislation) exempting the Filer from:

(a) the requirement (the Dealer Registration Requirement) in the Legislation that the Filer be registered as a dealer in order to effect Service Trades (as defined below), including executing trades in clients' accounts (the Dealer Registration Exemption);

(b) with respect to clients in the Model Portfolios (as defined below), the requirement (the Know Your Client Requirement) in the Legislation that the Filer take reasonable steps to:

(i) establish the identity of a client and, if the Filer has cause for concern, make reasonable inquiries as to the reputation of the client;

(ii) establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded;

(iii) ensure that the Filer has sufficient information regarding the client's investment needs, objectives, financial circumstances and risk tolerance, amongst other information, to enable the Filer to meet its obligations under the Legislation to make a determination with respect to the Suitability Requirement (as defined below); and

(iv) keep the information described above current (collectively, the Know Your Client Exemption);

(c) with respect to clients invested in the Model Portfolios, the requirement (the Suitability Requirement) in the Legislation that the Filer take reasonable steps to ensure that, before it makes a recommendation to or accepts an instruction from a client to buy or sell a security, or makes a purchase or sale of a security for a client's account, or upon the occurrence of any other required suitability assessment event, such action is suitable for the client (the Suitability Exemption); and

(d) with respect to clients invested in the Model Portfolios, the requirement (the Statement Delivery Requirement) in the Legislation that the Filer deliver account statements and investment performance reports to clients who have invested in the Model Portfolios (the Statement Delivery Exemption).

The Dealer Registration Exemption together with the Know Your Client Exemption, the Suitability Exemption and the Statement Delivery Exemption are collectively referred to as 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 by the Filer in all of the other provinces and territories of Canada (the Other Jurisdictions, and together with Ontario, the Canadian Jurisdictions) in respect of the Exemption Sought.

Interpretation

Terms defined in MI 11-102 and National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

NI 31-103 means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Representations

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

The Filer

1. The Filer is a corporation subsisting under the laws of Ontario with its head office located in Toronto, Ontario. The Filer is registered:

(a) under the securities legislation of all provinces and territories of Canada as a portfolio manager and an exempt market dealer;

(b) under the securities legislation of Ontario, Québec, and Newfoundland and Labrador as an investment fund manager; and

(c) under the Commodity Futures Act (Ontario) as a commodity trading counsel and a commodity trading manager.

2. The Filer and the Funds are not in default of securities legislation in any of the Canadian Jurisdictions except in respect of the Services (as defined below). Model portfolio programs, such as the Services, are a hybrid type of offering, involving both dealing and advising functions. Due to the hybrid nature of such programs, regulatory guidance and interpretation of applicable securities regulatory requirements have been evolving over the years. As a result of the current regulatory guidance and interpretation, the Filer is seeking the Exemption Sought.

The Model Portfolio Services

3. The Filer offers or offered the Services known as the Evolution Private Managed Portfolios (the Evolution Service) (offered since 2008) and Optima Strategy Service (Optima Service) (was offered since 1993 but is no longer offered), to investors prepared to make investments at or above prescribed minimum amounts in certain Model Portfolios (as defined below) available through the Service (the Evolution Service and the Optima Service, each referred to as a Service and, collectively as the Services).

4. The Filer uses its valuation and selection methodologies to construct and maintain model investment portfolios for various stated investment objectives (each a Model Portfolio and, collectively, theModel Portfolios).

5. Each Model Portfolio has or will have investment guidelines governing the acceptable minimum and maximum allocation to various asset classes within the Model Portfolio (the Permitted Ranges, and each, a Permitted Range).

6. Each Model Portfolio is or will be comprised exclusively of open-ended mutual funds, including exchange-traded mutual funds (ETFs), (collectively, Funds and, individually, a Fund) established under the laws of a Canadian Jurisdiction and available on the platform of the Dealers, and cash and cash equivalents.

7. The Model Portfolios currently do not comprise of ETFs, but the Filer may offer ETFs within the Model Portfolios in the future.

8. Each of the Funds is, or will be, a reporting issuer in one or more of the Canadian Jurisdictions, and subject to the requirements of National Instrument 81-102 Investment Funds.

9. The securities of each of the Funds are, or will be, qualified for distribution in one or more of the Canadian Jurisdictions pursuant to a: (a) simplified prospectus, annual information form and Fund Facts, prepared and filed in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure, or (b) long form prospectus and ETF Facts, prepared and filed in accordance with National Instrument 41-101 General Prospectus Requirements.

10. The securities of each Fund that is an ETF are, or will be, listed and traded on a recognized exchange.

11. Each Model Portfolio in the applicable Service is comprised entirely of Funds for which the Filer acts as investment fund manager and certain Funds are offered exclusively through the Services.

12. Each Service is or was available exclusively to clients of the Filers' affiliates, Assante Capital Management Ltd., an investment dealer registered in each Canadian Jurisdiction and a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Assante Financial Management Ltd., a mutual fund dealer registered in each Canadian Jurisdiction and a member of the Mutual Fund Dealers Association of Canada (MFDA) (collectively the Dealers and individually a Dealer).

13. The applicable Dealer will collect all of the required know your client (KYC) and suitability information for each client considering the Service. Based on an assessment of the client's KYC and suitability information, the Dealer's dealing representative will recommend a Model Portfolio for the client.

14. The client will discuss the recommended Model Portfolio and the Funds within the Model Portfolio with their Dealer's dealing representative, and the client ultimately chooses the Model Portfolio. The Model Portfolio may be further tailored for the individual client in that allocations between asset classes or Funds may be varied or Funds may be replaced by other Funds managed by the Filer.

15. If the client decides to invest in a Model Portfolio, a tripartite agreement (the Agreement) is entered into between the client, the Dealer and the Filer in respect of the Service as described below.

16. Securities of the Funds that comprise each Model Portfolio will be initially distributed through the Dealers to clients and will be held either directly by each client in his/her own account(s) established with the Dealer, or in the case of nominee accounts, in the Dealer's name, in trust for the client.

17. Clients will have no direct contact with the Filer in connection with the Filer's management of the Model Portfolios and will interact solely with their Dealer and approved persons of their Dealer in connection with the Filer's management of the Model Portfolios and the Dealer's administration of its accounts.

18. The Dealer will be responsible for gathering and periodically updating KYC information concerning the client and reviewing, on at least an annual basis, the suitability of the Model Portfolio for the client.

19. Where a Dealer's dealing representative determines that a Model Portfolio is no longer appropriate for the client or that a different Model Portfolio would be more appropriate for the client, the Dealer's dealing representative will communicate with the client, and take appropriate action. A change to a different Model Portfolio will not be made without the client entering into a new Agreement or providing instructions to the Dealer in respect of the new Model Portfolio.

20. A client may terminate the Service at any time by instructing the Dealer to redeem or switch the client's investment out of the Funds.

Monitoring, Service Trades and Additional Investment Trades

21. The Filer will oversee and monitor each Model Portfolio to ensure it remains in compliance with its stated investment objective and investment guidelines at all times and to determine whether any changes to the composition of the Model Portfolio or Permitted Ranges would be appropriate.

22. As part of the Service, when, due to changes in the relative market value of each Fund, one or more Funds in a client's Model Portfolio exceed an applicable Permitted Range, the Filer will execute appropriate trades so that each Fund is returned to a relative weight that is within the Permitted Range (the Rebalancing Trades).

23. As part of the Service, provided that the Model Portfolio remains consistent with its stated investment objective at all times, the Filer may, from time to time, use its discretion to make decisions regarding certain changes to the holdings of a Model Portfolio within the Permitted Ranges (the Optimization Changes).

24. As part of the Service, provided that the client's dealing representative of the Dealer is given at least 45 days' advance written notice (the Written Notice) and the Model Portfolio remains consistent with its stated investment objective at all times, the Filer may also, from time to time, use its discretion to make decisions regarding certain changes to the Permitted Ranges (the Weighting Changes).

25. The Written Notice will describe the proposed Weighting Change and/or Optimization Change and will provide sufficient detail for the Dealers' dealing representatives to determine whether the Model Portfolios, after the implementation of the proposed change, would continue to be appropriate for their clients. The Written Notice will specify that if the Dealer's dealing representative does not provide an objection on behalf of his / her client to the proposed Weighting Change and/or Optimization Change by a specified date, such non-objection will be deemed to be consent for the changes on the effective date.

26. The Optimization Changes and Weighting Changes to Model Portfolios that are determined from time to time by the Filer will be executed in a client's account by the Filer through the following types of trades:

(a) purchase of securities to increase holdings of an existing Fund in a Model Portfolio (the Increase Trades);

(b) sale of securities to decrease holdings of an existing Fund in a Model Portfolio (the Decrease Trades);

(c) purchase of securities to add a new Fund to a Model Portfolio (the New Fund Trades); and

(d) sale of securities to remove an existing Fund from a Model Portfolio (the Fund Removal Trades).

The Rebalancing Trades, together with the Fund Removal Trades, Increase Trades, Decrease Trades and New Fund Trades are collectively referred to as the Service Trades.

31. A client may, from time to time, contribute additional funds to the client's account with a Dealer for investment in the selected Model Portfolio through the Service. Such additional funds will be applied towards the purchase of additional securities of the Funds in accordance with the Permitted Ranges (the Additional Investment Trades). All Additional Investment Trades will be effected by the relevant Dealer.

32. Dealers will not have discretionary authority to participate in the management of the Model Portfolios or to recommend Rebalancing Trades, Optimization Changes or Weighting Changes.

33. The records of the Filer and the Dealer will be reconciled daily to reflect any Rebalancing Trades, Optimization Changes or Weighting Changes.

Fees and Expenses

34. In respect of Model Portfolios held in fee-based accounts, the client pays the Dealer a negotiated fee for investment advisory services, including for the Service, that is calculated as a percentage of the net asset value of the client's investment within the Service. In respect of Model Portfolios held outside fee-based accounts, the Model Portfolios comprise of series of Funds for which the Filer pays the Dealer trailing commissions for its provision of investment advisory services.

35. Depending on the Service the Filer may charge a separate fee for managing the Model Portfolios, which is calculated as a percentage of the net asset value of the client's investment within the Service and may be dependent on whether the client's investment meets the minimum investment amount for the Service.

36. Depending on whether the Model Portfolios are held within or outside of fee-based accounts, the Model Portfolios will comprise of series of Funds that have embedded management fees (i.e. held outside of fee-based accounts) or series of Funds that do not have embedded management fees (i.e. held within fee-based accounts). The Agreement details the applicable management and/or administration fees payable by the Funds, as applicable, and by the client, as applicable, in respect of institutional series of Funds held within fee-based accounts, for which management fees are negotiated between the client and the Dealer, and payable to the Filer.

37. In respect of Model Portfolios that comprise of ETFs, such ETFs will be subject to management fees and operating expenses (or administration fees), as applicable.

38. There will be no duplication of any fees or charges as a result of a client's decision to use the Service.

39. For Model Portfolios comprised of Funds that are not ETFs, there will be no separate fees, such as sales charges, redemption fees, switch fees or early trading fees, charged in connection with the Service Trades.

40. For Model Portfolios comprised of Funds that are ETFs, there will be no separate fees, such as sales charges, redemption fees, switch fees or early trading fees, charged in connection with the Service Trades except for brokerage fees (also known as trading or transaction fees) charged by the Dealer for each Service Trade, if any, which will be charged to each client.

Agreement among the Filer, the Dealer and the Client, Investment Policy Statement and Client Reporting

41. A detailed investment policy statement (the Investment Policy Statement) is created for the client by the Dealer prior to or concurrently with the execution of the Agreement. The Investment Policy Statement will set out the composition of the Model Portfolio selected by the client, including the investment objective and Permitted Ranges of the Model Portfolio, and the names of the underlying Funds that form part of the Model Portfolio and incorporating any modifications tailoring the Model Portfolio for the client.

42. The Agreement entered into among the Filer, the Dealer and each client in respect of the Service will set out, among other matters, the following:

(a) the role, duties and responsibilities of the Filer, including:

(i) that the client authorizes the Filer to manage the client's investments on a discretionary basis in accordance with the terms of the Model Portfolio selected by the client and without reference to the client's circumstances;

(ii) that the Filer has the discretion to make Rebalancing Trades whenever appropriate, consistent with the Permitted Ranges for the Model Portfolio;

(iii) that the Filer has the discretion to make Optimization Changes, provided the Model Portfolio remains consistent with its stated investment objective and the Permitted Ranges;

(iv) that the Filer has the discretion to recommend Weighting Changes and/or Optimization Changes, provided the Dealer's dealing representative of the client is given at least 45 days' advance written notice and does not object on behalf of his / her client and the Model Portfolio remains consistent with its stated investment objective;

(v) that the Filer is responsible for effecting the Service Trades;

(b) the role, duties and responsibilities of the Dealer, including:

(i) that the Dealer will be solely responsible for gathering and periodically updating KYC information concerning the client and reviewing, on at least an annual basis, the suitability of the selected Model Portfolio for the client;

(ii) that the Dealer is responsible for effecting the initial distribution of Funds to the client's account and any Additional Investment Trades;

(iii) that the Dealer will not have discretionary authority to participate in the management of the Model Portfolio or to recommend Optimization Changes or Weighting Changes;

(iv) that the Dealer is responsible for providing the client with all required reporting under the Legislation in connection with the Service, including trade confirmations, account statements and investment performance reports;

(c) a description of all fees and expenses payable by a client to the Filer in respect of an investment in a Model Portfolio, including those charged directly to a client in respect of the Service and those charged in respect of an investment in the Funds through the Service, as well as confirmation that there will be no duplication of any fees or charges as a result of the client's decision to use the Service, as described in paragraphs 34 to 40 above;

(d) a description of the investment advisory fee payable by a client to the Dealer in respect of a Model Portfolio held within a fee-based account, which is calculated based on the net asset value of the client's investment within the Model Portfolio;

(e) how a client may terminate the Service.

43. The Dealer will provide a copy of the Agreement and the Investment Policy Statement to the client and be responsible for ensuring that the client understands the Service and the topics covered in the Agreement.

44. The Dealer will reflect the Service Trades and Additional Investment Trades in each client's account(s) on the next business day following such trades, subject to technological limitations.

45. Clients will be able to access their accounts via Dealer online access on a daily basis.

46. Fund Facts and ETF Facts will be delivered to each client by the Dealer as required by the Legislation, subject to any applicable exemption.

47. Trade confirmations for every transaction in a client's account, including Service Trades, will be provided to the client by the Dealer in accordance with the requirements under the Legislation.

48. The Dealer will send account statements and investment performance reports to each client in the Service in accordance with the requirements under the Legislation.

49. The Dealer will provide each client in the Service with an annual tax reporting package.

Exemption Sought

48. In the absence of the Exemption Sought, the Filer would be required:

(a) to register as a mutual fund dealer under the Legislation and become a member of the MFDA in order to effect the Service Trades;

(b) to gather and update the information contemplated by the Know Your Client Requirement in section 13.2 of NI 31-103 for each client in the Service;

(c) to ensure that each Service Trade is suitable for each client in the Service in accordance with the Suitability Requirement in section 13.3 of NI 31-103, rather than invested in accordance with the terms of the client's Model Portfolio; and

(d) to deliver account statements and investment performance reports to clients who have invested in the Model Portfolios in accordance with the Statement Delivery Requirement in sections 14.14, 14.14.1 and 14.18 of NI 31-103.

49. The Dealers do not require an exemption from the adviser registration requirement under the Legislation as a result of their involvement with the Service, as they will not be engaged in providing discretionary management advice to clients in connection with the management of the Model Portfolios and will not be effecting the Service Trades.

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 Filer is, at the time of each Service Trade, registered under the Legislation as an adviser in the category of portfolio manager;

(b) each Service Trade is made in accordance with the terms of the selected Model Portfolio;

(c) each client in the Service is informed in writing in the Agreement or otherwise:

(i) of the roles, duties and responsibilities of the Filer and the Dealer, including that:

a. the Filer will manage the Model Portfolios without reference to the client's circumstances and only in accordance with the terms of the Model Portfolio selected by the client;

b. the Dealer will be solely responsible for gathering and periodically updating KYC information concerning the client and reviewing, on at least an annual basis, the suitability of the selected Model Portfolio for the client;

(ii) that the client will receive account statements and performance reports from the Dealer, and will not receive account statements and performance reports from the Filer;

(d) the Filer will adopt and maintain oversight policies and procedures designed to provide reasonable assurance that each Dealer complies with its KYC and suitability obligations with respect to each client in the Service, including requiring that:

(i) the Dealer not market and sell the Model Portfolios through an order-execution-only, suitability-exempt channel;

(ii) the Dealer notify the Filer of each instance where a Model Portfolio is sold to a client on the basis of a client-directed trade as contemplated in section 13.3 of NI 31-103 and similar provisions under IIROC or MFDA rules;

(iii) the Dealer be responsible for gathering and periodically updating KYC information concerning the client and confirming, on at least an annual basis, the suitability of the selected Model Portfolio for each client, and

(iv) the Dealer, on an annual basis, no later than 30 days after the end of the calendar year, provide a certificate to the Filer that the Dealer has complied with its KYC and suitability obligations with respect to each client in the Service.

(e) the Filer will adopt and maintain oversight policies and procedures designed to provide reasonable assurance that each Dealer complies with the client reporting obligations under the rules of NI 31-103, the MFDA or IIROC, as applicable, in respect of clients in the Service, including requiring that the Dealer, on an annual basis, no later than 30 days after the end of the calendar year, provide a certificate to the Filer that:

(i) the Dealer has complied with its client reporting obligations under the rules of NI 31-103, the MFDA or IIROC, as applicable, and

(ii) the Dealer has undertaken steps in accordance with its policies and procedures to provide reasonable assurance that account statements and investment performance reports delivered to clients are complete, accurate and delivered on a timely basis in a format that is compliant with the rules of NI 31-103, the MFDA or IIROC, as applicable.

(f) the Filer will adopt and maintain oversight policies and procedures designed to provide reasonable assurance that each Dealer complies with its obligations in respect of all trading for clients in connection with the Service, including requiring that the Dealer, on an annual basis, no later than 30 days after the end of the calendar year, provide a certificate to the Filer that the Dealer has effected all trades for clients in connection with the Service, including all Additional Investment Trades but not including Service Trades, in accordance with the selected Model Portfolios.

(g) the Filer has a written agreement in place with each Dealer concerning their respective roles, duties and responsibilities to clients in respect of the Service.

In respect of the Dealer Registration Exemption

"Craig Hayman"
"Cathy Singer"
Commissioner
Commissioner
Ontario Securities Commission
Ontario Securities Commission

In respect of the Know Your Client Exemption, Suitability Exemption and Statement Delivery Exemption

"Felicia Tedesco"
Deputy Director
Ontario Securities Commission