Securities Law & Instruments


December 7, 2000

Stikeman Elliott
5300 Commerce Court West
199 Bay Street
Toronto, Ontario M5L 1B9

Attention: Simon A. Romano

Dear Sirs/Mesdames:

RE:AIC Limited (the "Manager") and AIC Advantage Fund, AIC Advantage Fund II and AIC Canadian Focused Fund (the "AIC Fund Mackenzie Shareholders")

MRRS Exemptive Relief Application under National Instrument 81-102 -- Mutual Funds ("NI 81-102"), Application No. 1214/00



By letter dated October 31, 2000 (the "Application"), you applied to the regulator or the securities regulatory authority in each of the provinces and territories of Canada (the "Decision Makers") on behalf of the Manager, the AIC Fund Mackenzie Shareholders and 1450473 Ontario Inc. ("Bidco" which will become the direct or indirect parent company of the Manager) (collectively, the "Applicants") for an exemption pursuant to section 19.1 of NI 81-102 from the conflict of interest requirements of sections 4.1(2) and 4.2 of NI 81-102 (the "Conflict of Interest Restrictions").

The Applicants have made the following representations to the Decision Makers:

1.AIC Advantage Fund, AIC Advantage Fund II and AIC Diversified Canadian Fund hold shares of C.I. Fund Management Inc. ("C.I.") to which are attached approximately 18% of the voting rights attached to all the voting securities of C.I. currently outstanding. C.I. has made a cash and securities exchange offer to purchase all of the common shares (the "Mackenzie Shares") of Mackenzie Financial Corporation ("Mackenzie") by way of a formal take-over bid (the "C.I. Offer").

2.As of November 3, 2000, approximately 19.1% of the outstanding Mackenzie Shares (approximately 17.7% on a fully-diluted basis) were held by the AIC Fund Mackenzie Shareholders, with no single fund holding in excess of 10%.

3.Bidco is incorporated under the Business Corporations Act (Ontario) for the purpose of implementing the Bidco Offer (as defined below). The authorized capital of Bidco will include an unlimited number of common shares ("Bidco Shares").

4.Bidco is expecting to propose (but has not yet announced) a cash and securities exchange offerto purchase all of the Mackenzie Shares by way of a formal take-over bid (the "Bidco Offer"). The Bidco Offer, when made, will be financially superior to the C.I. Offer for the holders of Mackenzie Shares. Under the terms of the Bidco Offer, Mackenzie shareholders will receive, for every Mackenzie Share deposited under the Bidco Offer,

(a)an amount in cash subject to pro-ration (the "Cash Option"), or

(b)Bidco Shares, subject to pro-ration (the "Share Option"), or

(c)any combination of the Cash Option and the Share Option, subject to pro-ration.

5.Any decision by the Manager of the AIC Fund Mackenzie Shareholders

(a)whether or not to accept the Bidco Offer, the C.I. Offer or any other offer or alternative transaction,

(b)whether or not to opt for cash consideration, share consideration, or a combination of cash and share consideration,

(c)whether to act in another manner, such as to dissent or sell their Mackenzie Shares in the marketplace or otherwise, or

(d)concerning the timing of the announcement of any decisions referred to above,

will be made in a manner consistent with the Manager’s fiduciary obligations towards the security holders of the AIC Fund Mackenzie Shareholders.

6.In this case, the fiduciary obligation of the Manager is to maximize the returns for the security holders of the AIC Fund Mackenzie Shareholders. Therefore, the Manager will make those decisions which maximize returns in respect of the Mackenzie Shares held by AIC Fund Mackenzie Shareholders.

7.In order to ensure that the decisions referred to in paragraph 5 are made in accordance with the fiduciary obligations referred to in paragraphs 5 and 6, the Manager has or will put in place a mechanism to provide for an independent consideration by a qualified and independent financial advisor of the matters referred to in paragraph 5.

8.In the absence of the exemption, the AIC Fund Mackenzie Shareholders would essentially be precluded from accepting the Bidco Offer in consideration of the Share Option or combination of the Cash Option and Share Option, because the Conflict of Interest Restrictions prohibit them from

(a)effectively investing in Bidco by electing to receive Bidco Shares under the Bidco Offer, given that Bidco and the Manager have common directors and officers which do not satisfy the exceptions in section 4.1(2) of NI 81-102; and
(b)effectively selling their holding of Mackenzie Shares to Bidco and effectively purchasing Bidco Shares from Bidco under the Bidco Offer, given that Bidco will be an associate or affiliate of the Manager.

This letter confirms that, based on the information contained in the Application and the representations made by the Applicants, and for the purposes described in the Application, the Decision Makers hereby grant the exemptions requested, subject to the following conditions:

1.If the AIC Fund Mackenzie Shareholders accept the Bidco Offer, the AIC Fund Mackenzie Shareholders are exempt from the Conflict of Interest Restrictions solely to enable them to tender to the Bidco Offer, provided that,

(i)except as otherwise permitted by this exemption or any relief from securities legislation, the AIC Fund Mackenzie Shareholders will in no case acquire more Bidco Shares than is legally permissible under securities legislation in the jurisdiction of each Decision Maker;

(ii)the Manager will take all necessary steps to ensure that the AIC Fund Mackenzie Shareholders will divest all or a portion of such Bidco Shares as quickly as it is commercially reasonable, so that, no later than 24 months from the date of acquisition of such Bidco Shares, the AIC Fund Mackenzie Shareholders do not hold Bidco Shares; and

(iii)the Manager will ensure that such Bidco Shares are not voted at any meeting of Bidco shareholders.

The relief provided herein is conditional upon compliance with all other applicable provisions of NI 81-102.

We note this Application was initially filed on a confidential basis. If the Applicants wish to have the Application and this MRRS decision document kept confidential after the effective date of this MRRS decision document, the request for confidentiality should be set out in a separate application as required by section 5.3 of National Policy 12-201 -- Mutual Reliance Review System for Exemptive Relief Applications. Absent such relief, the Applicants must file a copy of the Application on SEDAR as soon as possible after the date of this MRRS decision document. The Decision Makers will then post this exemption letter on SEDAR.

Yours very truly,


"Paul A. Dempsey"
Paul A. Dempsey
Assistant Manager/Senior Legal Counsel
Investment Funds, Capital Markets Branch