Sun Life Financial Services of Canada Inc. and C.I. Fund Management Inc. have completed their asset swaps today.

Sun Life picked up its 30% interest in C.I. through 71.2 million newly issued shares of C.I. Sun Life exchanged its subsidiary companies, Spectrum Investment Management Ltd. and Clarica Diversico Ltd., for this equity interest in C.I. The total value of the transaction is $652 million based on Wednesday’s weighted average price of $9.15 per C.I. share.

The transaction also includes a strategic distribution agreement giving C.I. access for its products to more than 4,000 Clarica agents and managers. After giving effect to the transaction, Sun Life Financial holds approximately a 31% interest in C.I. The transaction also includes a standstill agreement under which Sun Life Financial has agreed not to increase its stake in C.I. beyond 34% for three years, subject to certain exceptions.

Sun Life Financial has entered into an agreement with certain C.I. management shareholders, which among other things, will provide Sun Life Financial with representation on C.I.’s board of directors. Subject to the standstill agreement, Sun Life Financial’s current intention is to increase its interest in C.I., the company said.

With the acquisition of Spectrum and Clarica Diversico, C.I. has gained $11.7 billion in mutual and segregated fund assets. C.I. now has $34.7 billion in fee-earning assets, including $29.7 billion in mutual and segregated funds. C.I. becomes the sixth-largest fund company in Canada as measured by mutual fund assets under management and the fourth-largest excluding money market funds.

C.I. says that it has already made a great deal of progress in its plans to integrate the operations of Spectrum and Clarica Diversico. C.I.’s target is to complete the integration of Spectrum by September 3, and the integration of the Clarica funds by the end of November 2002.

“As the integration proceeds, we expect to substantially reduce the operating costs of the Spectrum and Clarica funds, leading to significant savings for the unitholders,” said Bill Holland, C.I.’s president and CEO. C.I. is currently reviewing the combined fund lineup of the three companies and expects to begin consolidating funds in October. “We see a great deal of potential to streamline our fund families while continuing to offer an industry-leading selection of funds and top-quality portfolio managers,” Holland said.

As a result of the acquisition, C.I. expects its staff numbers to rise to about 525.