CI Investments Inc. et al

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), and 15.8(3)(a.1) of National Instrument 81-102 Investment Funds to permit an alternative mutual fund, that has not distributed securities under a simplified prospectus in a jurisdiction for 12 consecutive months, to include in their sales communications performance data for the period when the fund was not a reporting issuer -- relief granted from section 15.1.1 of NI 81-102 to permit a mutual fund to use performance data from periods prior the fund being a reporting issuer in calculating fund's investment risk level in accordance with Appendix F Investment Risk Classification Methodology to NI 81-102 and to disclose the risk level in the fund facts and ETF Facts -- relief granted from section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure for the purposes of relief requested from (i) Item 4 and Item 5 of Part I of Form 81-101F3 Contents of Fund Facts Document, to permit the mutual fund disclose in its fund facts the risk level calculated in accordance with the relief granted from NI 81-102 and to include in its fund facts the past performance data for the periods when the fund was not a reporting issuer and (ii) Item 9.1 of Part B of Form 81-101 Contents of Simplified Prospectus to permit the mutual fund to disclose the risk level methodology used in accordance with relief from NI 81-102 -- Relief granted from sections 3B.2 and 3B.3 of National Instrument 41-101 General Prospectus Requirements for the purposes of relief from Item 4 of Form 41-101F4 Information Required in an ETF Facts Document to disclose the fund's risk level calculated in accordance with relief from NI 81-102 in the ETF Facts.

Relief granted from section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure for the purposes of the relief requested from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance, items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1, and Items 3(1) and 4 of Part C of Form 81-106F1, to permit mutual fund to include in annual and interim management reports of fund performance the financial highlights and past performance of the fund that are derived from the fund's annual financial statements that pertain to time periods when the fund was not a reporting issuer -- subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 15.3(2), 15.3(4)(c), 15.6(1)(a)(i), 15.6(1)(d), 15.8(2)(a.1), 15.8(3)(a.1), 15.1.1 and 19.1.

National Instrument 81-101 Investment Fund Prospectus Disclosure, ss. 2.1 and 6.1.

Item 9.1(b) of Part B of Form 81-101F1 Contents of Simplified Prospectus.

Item 4 and Item 5 of Part I of Form 81-101F3 Contents of Fund Facts Document.

National Instrument 41-101 General Prospectus Requirements, ss. 3B.2, 3B.3 and 19.1.

Item 4 of Part 1 of Form 41-101F4 Information Required in an ETF Facts Document.

National Instrument 81-106 Investment Fund Continuous Disclosure, ss. 4.4 and 17.1.

Items 3.1(7), 4.1(1), 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B and Items 3(1) and 4 of Part C of Form 81-0106F1 Contents of Annual and Interim Management Report of Fund Performance.

July 26, 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) AND MARRET DIVERSIFIED OPPORTUNITIES FUND (TO BE RENAMED CI ALTERNATIVE DIVERSIFIED OPPORTUNITIES FUND) (the Fund)

DECISION

Background

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

(a) Subsection 15.3(2), paragraph 15.3(4)(c), subparagraph 15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of National Instrument 81-102 Investment Funds (NI 81-102) to permit the Fund to include performance data in sales communications notwithstanding that the performance data will relate to a period prior to the Fund offering its existing series of units, being series F and USD-F (to be redesignated as series Y and YH) units (collectively, the Units) under a simplified prospectus;

(b) Subsection 15.1.1(a) of NI 81-102 and Items 2 and 4 of Appendix F Investment Risk Classification Methodology to NI 81-102 (Appendix F) to permit the Fund to include its past performance data in determining its investment risk level in accordance with Appendix F;

(c) Subsection 15.1.1(b) of NI 81-102 and Item 4(2)(a) and Instruction (1) of Item 4 of Part I of Form 81-101F3 Contents of Fund Facts Document (Form 81-101F3) to permit the Fund to disclose its investment risk level in its fund facts documents as determined by including its past performance data in accordance with Appendix F, as amended by the requested exemptive relief;

(d) Subsection 15.1.1(b) of NI 81-102 and Item 4(2)(a) and the Instruction of Item 4 of Part I of Form 41-101F4 Information Required in an ETF Facts Document (Form 41-101F4) to permit the Fund to disclose its investment risk level in its ETF facts documents as determined by including its past performance data in accordance with Appendix F, as amended by the requested exemptive relief;

(e) Item 9.1(b) of Part B of Form 81-101F1 Contents of Simplified Prospectus (Form 81-101F1) to permit the Fund to disclose in its simplified prospectus the reference index it uses to determine its investment risk level in accordance with Appendix F, as amended by the requested relief;

(f) Items 5(2), 5(3) and 5(4) and Instructions (1) and (5) of Part I of Form 81-101F3 in respect of the requirement to comply with subsection 15.3(2), paragraph 15.3(4)(c), subparagraph 15.6(1)(a)(i), and paragraphs 15.6(1)(d), 15.8(2)(a.1) and 15.8(3)(a.1) of NI 81-102 to permit the Fund to include in its fund facts documents the past performance data of the Units notwithstanding that (i) such performance data relates to a period prior to the Fund offering the Units under a simplified prospectus, and (ii) the Fund has not distributed the Units under a simplified prospectus for 12 consecutive months;

(g) Instruction (3) of Item 2 of Part I, Items 1.3(2), 1.3(3) and 1.3(4) of Part II, and Instructions (3), (5) and (7.1) of Item 1.3 of Part II of Form 81-101F3 to permit the Fund to include in its fund facts documents certain financial data, including the management expense ratio and trading expense ratio, for the Units notwithstanding that the Fund has not yet filed a management report of fund performance (MRFP);

(h) Section 2.1 of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) for the purposes of the relief requested herein from Form 81-101F1 and Form 81-101F3; and

(i) Sections 3B.2 and 3B.3 of National Instrument 41-101 General Prospectus Requirements (NI 41-101) for the purposes of the relief requested herein from Form 41-101F4

(paragraphs (a), (b), (c), (d), (e), (f), (g), (h) and (i) above, theNI 41-101, NI 81-101 and NI 81-102 Relief);

(j) Section 4.4 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) for the purposes of relief requested herein from Form 81-106F1 Contents of Annual and Interim Management Report of Fund Performance (Form 81-106F1); and

(k) Items 3.1(7), 4.1(1) in respect of the requirement to comply with subsection 15.3(2) and paragraph 15.3(4)(c) of NI 81-102, Items 4.1(2), 4.2(1), 4.3(1) and 4.3(2) of Part B of Form 81-106F1 and Items 3(1) and 4 of Part C of Form 81-106F1 to permit the Fund to include in its annual and interim MRFPs the past performance and financial data of the Fund notwithstanding that such data relates to a period prior to the Fund offering its securities under a simplified prospectus

(paragraphs (j) and (k) above, the NI 81-106 Relief and, together with the NI 41-101, NI 81-101 and NI 81-102 Relief, 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 each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, NI 41-101, NI 81-101, NI 81-102 and NI 81-106 have the same meanings if used in this decision, unless otherwise defined.

Representations

The Filer

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

2. The Filer is registered as follows:

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

(b) as a portfolio manager and exempt market dealer under the securities legislation of each of the Canadian Jurisdictions; and

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

3. The Filer will be the trustee and manager of the Fund once the Fund becomes a reporting issuer. Currently, Marret Asset Management Inc., an affiliate of the Filer, is the trustee and manager of the Fund. Concurrently with the Fund becoming a reporting issuer, the Filer will become the trustee and manager of the Fund. Marret Asset Management Inc. will remain as the portfolio adviser of the Fund under a sub-advisory agreement with the Filer.

4. The Filer is not in default of securities legislation in any of the Canadian Jurisdictions.

The Fund

5. The Fund is an open-end mutual fund trust created on May 9, 2018 under the laws of the Province of Ontario and governed by an amended and restated declaration of trust dated October 31, 2014, as amended.

6. The Fund intends to become a reporting issuer in the Canadian Jurisdictions.

7. The investment objective of the Fund is to is to achieve capital appreciation and provide unitholders with attractive risk adjusted returns over an investment cycle.

8. To achieve its investment objective, the Fund invests across a variety of asset classes including, but not limited to, government bonds (nominal and inflation-linked), corporate bonds (investment grade and non-investment grade), equities, commodities and currencies, in both domestic and foreign markets.

9. Since the inception of the Fund, the Units have only been distributed to investors on a prospectus-exempt basis in accordance with National Instrument 45-106 Prospectus Exemptions (NI 45-106) in the Canadian Jurisdictions.

10. The Filer filed a preliminary simplified prospectus, annual information form, fund facts documents and ETF facts documents prepared and filed in accordance with NI 81-101 and Form 41-101F4. Once the final simplified prospectus, annual information form, fund facts documents and ETF documents are filed, the Fund will become a reporting issuer and will distribute its units to the public. Accordingly, the Fund will be a reporting issuer under securities legislation and will be subject to the requirements of NI 81-102 that apply to alternative mutual funds and to the requirements of NI 81-106 that apply to investment funds that are reporting issuers.

11. Since its inception, the Fund, as a "mutual fund in Ontario", has prepared and sent audited annual and interim financial statements to all holders of its securities in accordance with NI 81-106.

12. Since its inception, the Fund has complied with the investment restrictions and practices contained in NI 81-102 that apply to alternative mutual funds in all material respects.

13. Marret Asset Management Inc., as the current trustee and manager has sent a notice to all current unitholders of the Fund explaining the changes in the Fund described herein, including the change in manager and trustee of the Fund from Marret Asset Management to the Filer.

14. The Fund is not in default of securities legislation in any Canadian Jurisdiction.

Use of Past Performance Data

15. The Filer proposes to present the performance data of each existing series of Units for the time period since the Fund's inception, as applicable, in sales communications pertaining to the Fund. Without the Exemption Sought, the sales communications pertaining to the Fund cannot include performance data of the Fund that relates to a period prior to its becoming a reporting issuer, and the Fund cannot provide performance data in its sales communications until it has distributed securities under a simplified prospectus for at least 12 consecutive months.

16. Upon becoming a reporting issuer, the Fund will be required under NI 81-101 to prepare and file a simplified prospectus, annual information form and fund facts documents. Since the Fund proposes to offer new exchange-traded series of units, the Fund will also be required to file ETF facts documents upon becoming a reporting issuer.

17. The Filer proposes to use the Fund's past performance data to determine its investment risk level and to disclose that investment risk level in the simplified prospectus, fund facts document and ETF facts document, as applicable, for each series of units of the Fund. Without the Exemption Sought, the Filer, in determining and disclosing the Fund's investment risk level in the simplified prospectus, fund facts document and ETF facts document, as applicable, for each series of units, cannot use performance data of the Fund that relates to a period prior to the Fund becoming a reporting issuer.

18. The Filer proposes to include in the fund facts document for each existing series of Units past performance data in the chart required by Items 5(2), 5(3) and 5(4) under the sub-headings "Year-by-year returns", "Best and worst 3-month returns" and "Average return", respectively, related to periods prior to the Fund becoming a reporting issuer in the Canadian Jurisdictions. Without the Exemption Sought, the fund facts documents of the Fund cannot include performance data of the Fund that relates to a period prior to its becoming a reporting issuer.

19. Upon becoming a reporting issuer, the Fund will be required under NI 81-106 to prepare and send MRFPs to all holders of its securities on an annual and interim basis. Without the Exemption Sought, the MRFPs of the Fund cannot include financial highlights and performance data of the Fund that relates to a period prior to the Fund becoming a reporting issuer.

20. The performance data and other financial data of the Fund for the time period before it becomes a reporting issuer is significant and meaningful information for existing and prospective investors in the Fund.

21. The Fund will be managed substantially similarly after it becomes a reporting issuer as it was prior to becoming a reporting issuer. The Filer expects the Fund and its existing unitholders will incur no increase or additional fees as a result of the Fund becoming a reporting issuer, and such existing unitholders may purchase additional Units of the existing series (which will be redesignated as Series Y and YH Units) after the Fund becomes a reporting issuer. The Fund's investment objectives, portfolio sub-adviser and other key terms of its management and operations will remain the same in all respects, other than as described below. Concurrently with the Fund becoming a reporting issuer:

(a) Marret Asset Management Inc. will resign as the trustee and manager of the Fund and CI Investments Inc. will become the trustee and manager of the Fund;

(b) the Fund's name will change from Marret Diversified Opportunities Fund to CI Alternative Diversified Opportunities Fund;

(c) in addition to the Units, the Fund will offer several new series of units, which will include both mutual fund series units and exchange-traded series units;

(d) the Fund will calculate its net asset value (NAV) daily at 4:00 pm (Eastern Time) on each day that the Filer is open for a full day of business;

(e) mutual fund units of the Fund will be available for purchase and redemption on each day that the Filer is open for a full day of business. If the Filer receives a purchase or redemption order in respect of mutual fund units before 4:00pm (Eastern Time), it will be processed using that day's NAV; and

(f) in order to align the investment strategies of the Fund with the requirements of NI 81-102, certain changes will be made to the investment strategies of the Fund. The Filer does not consider the changes to the investment strategies material as the changes will not impact how the Fund is currently managed. Since the inception of the Fund, in practice the Fund's investments have at all times conformed with the requirements of NI 81-102 applicable to alternative mutual funds, even though the Fund's investment strategies technically allowed the Fund to invest in ways that would not have been permitted had NI 81-102 applied to the Fund.

22. Any sales communication, fund facts documents or MRFP that will contain performance or other financial data for the Units of the Fund relating to a period of time prior to the Fund becoming a reporting issuer will disclose that:

(i) the Fund was not a reporting issuer during such period;

(ii) if applicable, the expenses of the Fund would have been higher during such period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer; and

(iii) the Filer obtained an exemption on behalf of the Fund to permit the disclosure of the performance or other financial data, as applicable, of the Units relating to a period prior to when the Fund was a reporting issuer.

23. Any MRFP that contains financial or performance data of Units relating to a period prior to the Fund becoming a reporting issuer will disclose that the financial statements of the Fund for such period are posted on the Fund's website and are available to investors upon request.

24. The management expense ratio and the trading expense ratio disclosed in any fund facts document will be calculated as if the Fund had filed an annual MRFP for its most recently completed financial year and as if, in doing so, it had relied on the NI 81-106 Relief.

25. The Filer will post the financial statements of the Fund since its inception on the Fund's website and will make those financial statements available to investors upon request.

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) Any sales communication, fund facts document or MRFP that contains performance or other financial data for the Units of the Fund relating to a period of time prior to the Fund becoming a reporting issuer discloses that:

(i) the Fund was not a reporting issuer during such period;

(ii) if applicable, the expenses of the Fund would have been higher during such period had the Fund been subject to the additional regulatory requirements applicable to a reporting issuer; and

(iii) the Filer obtained an exemption on behalf of the Fund to permit the disclosure of the performance or other financial data, as applicable, of the Units relating to a period prior to when the Fund was a reporting issuer;

(b) Any MRFP that contains financial or performance data of Units relating to a period prior to the Fund becoming a reporting issuer discloses that the financial statements of the Fund for such period are posted on the Fund's website and are available to investors upon request;

(c) The management expense ratio and the trading expense ratio disclosed in any fund facts document are calculated as if the Fund had filed an annual MRFP for its most recently completed financial year and as if, in doing so, it had relied on the NI 81-106 Relief; and

(d) The Filer posts the financial statements of the Fund since its inception on the Fund's website and makes those financial statements available to investors upon request.