Securities Law & Instruments

Headnote

MRRS exemption granted from the requirement in section 5.8(2) of National Instrument 81-102 -- Mutual Funds to provide securityholders with at least 60 days' notice before the proposed termination. Exemption granted in connection with proposed terminations of RSP clone funds due to change in foreign content restrictions. Exemption granted on a representative basis so that the applicant and other fund managers of RSP clone funds that comply with the conditions of the decision may rely upon it.

Rules Cited

National Instrument 81-102 - Mutual Funds, s. 5.8(2).

June 23, 2005

Borden Ladner Gervais LLP
Scotia Plaza
40 King Street West
Toronto, ON
M5H 3Y4

Attention: Rebecca A. Cowdery

Dear Sirs/Mesdames:

RE:
Mackenzie Financial Corporation and Other Managers of RSP Clone Funds
Application pursuant to Section 19.1 of National Instrument 81-102 Mutual Funds ("NI 81-102") for Exemption from Section 5.8(2) of NI 81-102
SEDAR Project No. 773504
Application No. 307/05

By letter dated April 29, 2005 (the "Application"), Mackenzie Financial Corporation ("Mackenzie" or the "Manager") applied to the regulator or the securities regulatory authority in each province and territory of Canada (collectively, the "Decision Makers") on behalf of Mackenzie Cundill RSP Value Fund, Mackenzie Ivy RSP Foreign Equity Fund, Mackenzie Select Managers RSP Fund and Mackenzie Ivy RSP Global Balanced Fund (the "Mackenzie RSP Funds" and, individually, a "Mackenzie RSP Fund"), for a decision of the Decision Makers exempting:

(a) the Mackenzie RSP Funds;

(b) each RSP Clone Fund (as defined by NI 81-102) in existence on the date of this Decision Document; and

(c) each mutual fund in existence on the date of this Decision Document and which qualifies as an RSP Clone Fund (as defined by NI 81-102) except that it links its performance to the performance of more than one underlying mutual fund (collectively, the mutual funds referred to in paragraphs (b) and (c), the "Affected Funds")

from the requirement in Section 5.8(2) of NI 81-102 to provide the securityholders of a Mackenzie RSP Fund or an Affected Fund with at least 60 days' notice in connection with the proposed termination of the Mackenzie RSP Fund or Affected Fund.

The Manager has represented to the Decision Makers that:

1. Mackenzie is a corporation organized under the laws of the Province of Ontario and is registered under the Securities Act (Ontario) (the "Act") as an adviser in the categories of investment counsel and portfolio manager and as a limited market dealer. Mackenzie is also registered under the Commodity Futures Act (Ontario) as a commodity trading manager. Mackenzie is also registered in the Province of Alberta as an adviser in the category of portfolio manager and investment counsel and in the Province of Manitoba as an adviser in the category of portfolio manager.

2. Each Mackenzie RSP Fund is a trust established under the laws of Ontario. Each Mackenzie RSP Fund is a reporting issuer or the equivalent thereof in each Jurisdiction, is subject to the requirements of NI 81-102, and is not in default of any requirements of applicable securities legislation.

3. Each Mackenzie RSP Fund qualifies as an "RSP clone fund" as defined in NI 81-102. As such, each Mackenzie RSP Fund is intended for investors who wish to invest through a registered plan without the investment constituting "foreign property" for purposes of the Income Tax Act (Canada) (the "Tax Act"). Substantially all of the investors in each Mackenzie RSP Fund are investors investing through a registered plan. Each Mackenzie RSP Fund has a fundamental investment objective that requires it to link its performance with another Mackenzie fund whose securities constitute foreign property under the Act (the underlying fund).

4. The February 23, 2005 federal budget proposes that the foreign property rules contained in the Tax Act be repealed effective for months ending in 2005 and subsequent years (the "Budget Proposals"). The Budget Proposals were passed by parliament on March 9, 2005 and Bill C-43, a bill containing the legislation to enact the Budget Proposals was tabled on March 24, 2005 and received third reading on June 16, 2005. It is expected that the Budget Proposals will be legislated into law shortly. If enacted as proposed, investors will no longer need to invest in the Mackenzie RSP Funds or the Affected Funds since there will no longer be any adverse tax consequences under the Tax Act for holding foreign property in a registered plan.

5. Mackenzie is of the view that it would be in the best interests of investors in the Mackenzie RSP Funds to hold units of their respective underlying funds, if the Budget Proposals are enacted. Each Mackenzie RSP Fund incurs embedded transaction costs in the forward contracts used to carry out the Mackenzie RSP Fund's investment strategy. These embedded transaction costs typically range between 0.20-0.50 percent of the value of the forward contracts each year. These embedded transaction costs, as well as the additional operating costs incurred due to the "fund on fund" structure, are not paid by the underlying funds.

6. Once the Budget Proposals are legislated, Mackenzie intends to terminate the Mackenzie RSP Funds and, as part of the wind-up termination procedures, unitholders will instead become direct securityholders of the Mackenzie RSP Fund's underlying fund. This process can be completed without securityholder approval and, if the relief requested herein is granted, without notice, making it a cost-effective, efficient and expedient way to provide investors with an investment in a less expensive fund on a timely basis.

7. Substantially all of the investors in the Mackenzie RSP Funds invest through registered tax plans, therefore the proposed terminations of the Mackenzie RSP Funds will be tax neutral to them. Those investors investing in the Mackenzie RSP Funds directly and not through a registered tax plan will incur taxable capital gains or losses as a result of the proposed terminations, but this result would occur regardless of whether or not those investors received advance notice of the termination.

8. Subsection 5.8(2) of NI 81-102 provides that no mutual fund shall terminate unless notice of the termination is given to all securityholders of the mutual fund at least 60 days before the termination.

9. Mackenzie is satisfied that as trustee and manager of each Mackenzie RSP Fund it has sufficient authority and flexibility under the constating documents of the Mackenzie RSP Funds to terminate the Mackenzie RSP Funds without notifying their securityholders once the Budget Proposals are legislated, provided the relief requested herein is granted by the Decision Makers. Mackenzie is satisfied that no advance notice of the nature contemplated by subsection 5.8(2) of NI 81-102 is necessary due to, among other things, the substantial coverage of the Budget Proposals in the media.

10. Each investor in a Mackenzie RSP Fund after the Mackenzie RSP Funds' termination will receive a communication (that may be part of or accompany a trade confirmation sent by dealers, the next account statement sent to securityholders or the first management reports for the underlying funds) that will describe the termination of the Mackenzie RSP Fund and indicate the number and series of the securities of the underlying fund that that investor holds after the termination.

11. A manager of an Affected Fund may be in an identical position to Mackenzie, in that it may wish to terminate the Affected Fund so that investors in that fund become direct investors in the underlying fund(s) associated with the Affected Fund and the manager may be in a position to make substantially the same representations as Mackenzie that:

(a) it would be in the best interests of investors in the Affected Fund to hold securities directly in its underlying fund(s) if the Budget Proposals become law;

(b) the manager has sufficient authority and flexibility under the constating documents of the Affected Fund to terminate that fund without notifying securityholders or seeking securityholder approval, once the Budget Proposals become law; and

(c) the number of investors investing in the Affected Fund directly and not through a registered tax plan is not material. The termination of the Affected Fund will be tax neutral to investors investing through a registered tax plan and the tax result from the termination on investors investing directly and not through a registered tax plan would occur regardless of whether or not those investors received advance notice of the termination.

12. Mackenzie and the other managers referred to in paragraph 11 will comply with subsection 5.8(3) of NI 81-102 providing the securities regulatory authorities with information about the termination of any of those funds in the manner therein provided.

This letter confirms that, based on the information and representations contained in the Application and in this letter, and for the purposes described in the Application, the Decision Makers hereby exempt each Mackenzie RSP Fund and each Affected Fund, whose manager wishes to rely on this Decision Document to terminate the Affected Funds in the manner, and on the conditions set out in this Decision Document, from the requirement in subsection 5.8(2) of NI 81-102 to provide the securityholders of the Mackenzie RSP Fund or the Affected Fund with at least 60 days' notice in connection with the termination of the Mackenzie RSP Fund or the Affected Fund on or after the date that the Budget Proposals are enacted.

The Decision Makers' decision is made on the conditions that:

1. Mackenzie, as manager of the Mackenzie RSP Funds, or any other manager of an Affected Fund, who wishes to rely on this Decision Document:

(a) Issues a press release announcing its intention to terminate the Mackenzie RSP Funds or the Affected Fund, as the case may be, in the manner described in this Decision Document, including a reference to the benefits of the termination due to the reduced costs of investing directly in the underlying fund(s)

(b) Sends a communication to dealers who have clients invested in the Mackenzie RSP Funds or the Affected Fund, describing the termination plan for the Mackenzie RSP Funds or the Affected Fund upon the Budget Proposals becoming law so the dealers and their sales representatives will be in position to discuss the terminations with their clients;

(c) Posts the press release and the dealer communication to the applicable manager's Web site, if any; and

(d) Files the press release with the securities regulatory authorities in those Jurisdictions where the Mackenzie RSP Funds or the Affected Fund are distributed

as soon as practicable after Mackenzie or the other manager decides to terminate the Mackenzie RSP Funds or the Affected Fund and in any event, at least two business days before the date that the Mackenzie RSP Funds or the Affected Fund will be terminated in the manner contemplated by this Decision Document

2. Mackenzie and any other manager of an Affected Fund, who wishes to rely on this Decision Document, will send or cause to be sent to each person who was a securityholder in a Mackenzie RSP Fund or an Affected Fund on the date of the termination, as soon as practicable following the termination of that Affected Fund and in any event by March 1, 2006, a communication that may be part of or accompany:

(a) a trade confirmation, if a trade confirmation is sent following the termination;

(b) an account statement next sent to securityholders after the termination;

(c) the financial statements and/or management reports of fund performance for the underlying funds; or

(d) any other communication sent to securityholders

that describes the purpose of the termination of the Mackenzie RSP Fund or the Affected Fund and that securities in the applicable series of the Mackenzie RSP Fund or the Affected Fund have been changed into the applicable number of securities of the applicable series of the underlying fund.

3. This Decision Document shall be revoked and be of no further force and effect on the date that is three months after the date that the Budget Proposals become law (the "Expiry Date"), except to the extent that Mackenzie or a manager of an Affected Fund has

(a) relied on this Decision Document and complied with Condition 1 before the Expiry Date; and

(b) has not yet complied with Condition 2,

in which event, Mackenzie or the manager of the Affected Fund shall be required to comply with Condition 2 as required by March 1, 2006.

Yours truly,

"Leslie Byberg"
Manager, Investment Funds Branch