Mackenzie Financial Corporation et al.

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of mutual fund mergers -- relief granted from multi-layering prohibition to facilitate the mergers -- approval required because mergers do not meet the criteria for pre-approved reorganizations and transfers in NI 81-102 -- terminating funds bifurcated and assets transferred to more than one mutual fund -- certain mergers not a "qualifying exchange" or a tax-deferred transaction under the Income Tax Act -- securityholders of terminating funds provided with timely and adequate disclosure regarding the mergers -- temporary multi-layering of funds required to make transfers pursuant to the mergers.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, ss. 2.5(2)(b), 5.5(1)(b), 5.6.

April 14, 2011

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

MACKENZIE FINANCIAL CORPORATION

(the Filer)

AND

KEYSTONE CONSERVATIVE PORTFOLIO FUND

KEYSTONE BALANCED PORTFOLIO FUND

KEYSTONE BALANCED GROWTH PORTFOLIO FUND

KEYSTONE GROWTH PORTFOLIO FUND

(each a Terminating Fund and, collectively,

the Terminating Funds)

DECISION

Background

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

(a) approving the Bifurcations (defined below) of each Terminating Fund into its Continuing Funds (as defined below) pursuant to subsection 5.5(1)(b) of National Instrument 81-102 Mutual Funds (NI 81-102); and

(b) exempting the Filer from subsection 2.5(2)(b) of NI 81-102 so that the Terminating Funds may purchase and hold, on a transitional basis pending completion of the Bifurcations, securities of the Continuing Funds and certain other mutual funds which hold more than 10% of the market value of their net assets in securities of other mutual funds,

(together, the Approval Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

1. the Ontario Securities Commission is the principal regulator for this application; and

2. 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 British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (the Non-Principal Jurisdictions).

Interpretation

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

Representations

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

1. The Filer is a corporation amalgamated under the laws of Ontario and the head office of the Filer is located in Ontario. The Filer is registered under the Securities Act (Ontario) as an adviser in the category of portfolio manager and as an exempt market dealer and has applied for registration in the category of investment fund manager.

2. The Filer is the manager and portfolio adviser of each Terminating Fund as well as:

a. the Symmetry One Registered Conservative Portfolio Fund, Symmetry One Registered Balanced Portfolio Fund, Symmetry One Registered Moderate Growth Portfolio Fund and Symmetry One Registered Growth Portfolio Fund (collectively referred to as the Symmetry One Registered Funds); and

b. Symmetry One Conservative Portfolio Class, Symmetry One Balanced Portfolio Class, Symmetry One Moderate Growth Portfolio Class and Symmetry One Growth Portfolio Class (collectively referred to as the Symmetry One Classes and, together with the Symmetry One Registered Funds, the Symmetry One Funds or the Continuing Funds).

3. Each Terminating Fund and each Continuing Fund (collectively referred to as the Funds) is a reporting issuer under the Legislation. Securities of the Terminating Funds are offered for continuous sale under a simplified prospectus and annual information dated June 29, 2010, as amended, and securities of the Continuing Funds are offered for continuous sale under a simplified prospectus and annual information form dated November 3, 2010, as amended, in each of the provinces and territories of Canada.

4. Neither the Filer nor any of the Terminating Funds or Continuing Funds are in default of securities legislation in the Jurisdiction or in any of the Non-Principal Jurisdictions. Each Terminating Fund and Continuing Fund is a mutual fund that is subject to the requirements of NI 81-102 and National Instrument 81-101 Mutual Fund Prospectus Disclosure.

5. The Symmetry One Registered Funds were created specifically for investors (Registered Investors) who hold their investments through a registered retirement savings plan (RRSP), registered retirement income fund (RRIF) or other registered savings plan (together with RRSPs and RRIFs, Registered Plans). The Symmetry One Classes were created to provide investors (Non-Registered Investors) who do not hold their investments through a Registered Plan with a tax-efficient alternative to the Symmetry One Registered Funds.

6. Mackenzie does not permit Non-Registered Investors to invest in the Symmetry One Registered Funds. Although Registered Investors are permitted to invest in the Symmetry One Classes, Mackenzie does not recommend this, because the incremental costs associated with the Symmetry One Classes do not afford Registered Investors the benefits of tax efficiency that are enjoyed by Non-Registered Investors.

7. By way of a series of portfolio holding changes, mandatory redemptions and mergers (for each such Terminating Fund a Bifurcation and collectively the Bifurcations), the Filer proposes to move:

a. Registered Investors in each of the remaining Terminating Funds into the corresponding Symmetry One Registered Funds; and

b. Non-Registered Investors in each of the remaining Terminating Funds into the corresponding Symmetry One Classes.

8. The result of the Bifurcations will be that investors in each Terminating Fund will cease to be securityholders in the Terminating Fund and will become securityholders in their appropriate Continuing Fund, as shown in the table below:

investors in	who are	will become investors in
Keystone Conservative Portfolio Fund	Registered Investors	Symmetry One Registered Conservative Portfolio Fund
	Non-Registered Investors	Symmetry One Conservative Portfolio Class
Keystone Balanced Portfolio Fund	Registered Investors	Symmetry One Registered Balanced Portfolio Fund
	Non-Registered Investors	Symmetry One Balanced Portfolio Class
Keystone Balanced Growth Portfolio Fund	Registered Investors	Symmetry One Registered Moderate Growth Portfolio Fund
	Non-Registered Investors	Symmetry One Moderate Growth Portfolio Class
Keystone Growth Portfolio Fund	Registered Investors	Symmetry One Registered Growth Portfolio Fund
	Non-Registered Investors	Symmetry One Growth Portfolio Class

9. The Filer believes that the Bifurcations will be beneficial to securityholders of each Fund for the following reasons:

a. generally, since the launch of the Symmetry One Funds, their performance has been superior to the performance of the corresponding Terminating Funds;

b. generally, the management fee for each series of the Continuing Funds is either the same as, or lower than, the management fee of the corresponding Terminating Funds

c. for Non-Registered Investors, the Symmetry One Classes and Symmetry Equity Class offer greater tax efficiency than the Keystone Portfolio Funds

d. Non-Registered Investors will become investors in a Continuing Fund which is a class of shares of Mackenzie Financial Capital Corporation, a mutual fund corporation which provides investors with the opportunity to change mutual fund investments while deferring the realization of any capital gains on their investments;

e. following the Bifurcations, each Continuing Fund will have more assets, thereby allowing for increased portfolio diversification opportunities and a smaller proportion of assets set aside to fund redemptions; and

f. each Continuing Fund will benefit from its larger profile in the marketplace.

10. As required by National Instrument 81-107 Independent Review Committee for Investment Funds, the Filer presented the Bifurcations to the independent review committee of the Funds (theIRC) for its review. The IRC determined that the decision of the Filer to proceed with the Bifurcations achieves a fair and reasonable result for the Funds.

11. The proposed Bifurcations were announced in:

a. a press release dated March 3, 2011;

b. a material change report dated March 3, 2011;

c. amendments dated March 11, 2011 to the current simplified prospectuses and annual information forms of the Terminating Funds,

each of which has been filed on SEDAR.

12. The Filer is convening a special meeting (each, a Meeting and, collectively, the Meetings) of the securityholders of each Terminating Fund in order to seek the approval of the securityholders of each Terminating Fund to complete its Bifurcation, as required by subsection 5.1(f) of NI 81-102. The Meetings will be held on April 20, 2011 (the Meeting Date). In connection with the Meetings, the Filer mailed to securityholders of each Terminating Fund a notice of meeting and management information circular (the Circular), a related form of proxy and a tailored simplified prospectus consisting of the current Part A and the Part B of the simplified prospectus of the corresponding Continuing Fund (each a Tailored Prospectus) and a statement explaining how investors may obtain a simplified prospectus, annual information form, fund facts document, financial statements and management reports of fund performance relating to the Continuing Funds (collectively, the Meeting Materials) on March 25, 2011 and filed these items on SEDAR on March 28, 2011.

13. If all required approvals for a Bifurcation are obtained, it is intended that the Bifurcations will occur after the close of business on or about May 27, 2011 (the Effective Date). Each Terminating Fund that completes its Bifurcation will be wound-up as soon as reasonably possible following the Effective Date.

14. All costs of implementing the Bifurcations (consisting primarily of proxy solicitation, printing, mailing, legal and regulatory fees) will be borne by the Filer.

15. Securityholders of each Terminating Fund will continue to have the right to redeem their securities of the Terminating Fund at any time up to the close of business on the Effective Date. Following each Bifucation, all optional plans (including pre-authorized purchase programs, automatic withdrawal plans, systematic switch programs and automatic rebalancing services) which were established with respect to the Terminating Fund will be re-established in comparable plans with respect to its Continuing Fund unless investors advise otherwise. The Circular discloses that securityholders who redeem units may be subject to redemption charges.

16. In the opinion of the Filer, each Bifurcation satisfies all of the criteria for pre-approved reorganizations and transfers set forth in section 5.6(1) of NI 81-102, except as follows:

a. since the Bifurcations involve the applicable Terminating Funds being reorganized with, or their assets being transferred to, more than one other mutual fund, the Birfurcations may not meet the criterion set out in paragraph 5.6(1)(a) of NI 81-102;

b. Non-Registered Investors will be able to elect to treat the portion of the Bifurcations that applies to them as a tax-deferred transaction under section 85(1) of the Income Tax Act (Canada) (the Tax Act), however the portion of the Bifurcations that applies to Registered Investors will not be implemented as either a "qualifying exchange" within the meaning of section 132.2 of or a tax-deferred transaction under section 85(1), 85.1(1), 86(1) or 87(1) of the Tax Act (a Prescribed Rollover), consequently, the Bifurcations may not meet the criteria for pre-approved reorganizations and transfers under subsection 5.6(1)(b) of NI 81-102; and

c. contrary to subsection 5.6(1)(f)(ii) of NI 81-102 (the SP Delivery Requirement), the Filer proposes sending to unitholders of the Terminating Funds a Tailored Prospectus in respect of the corresponding Continuing Funds.

17. In connection with the portion of the Bifurcations that applies to Registered Investors, the Circular explains that they will not be implemented as a Prescribed Rollover because the Filer anticipates that they will not give rise to any material adverse tax consequences for the Registered Investors or the Terminating Funds.

18. In connection with the portion of the Bifurcations that apply to Non-Registered Investors, investors who would otherwise realize a capital gain as a result of their Bifurcation will be provided the opportunity to make a joint election (a Section 85 Election) with the Corporation under subsection 85(1) of the Tax Act in order that such securityholders may dispose of their securities of their Terminating Fund on a tax-deferred basis. Details regarding completion and submission of the Section 85 Election will be contained in a tax information package that will be available to such taxable securityholders from their financial advisors and by contacting the Filer at a toll-free number, by e-mail to the Filer, or from the Filer's website.

19. In the opinion of the Filer, the investment objectives and fee structures of the Terminating Funds are substantially similar to those of the corresponding Continuing Funds. The fees and expenses for each Continuing Fund are generally equal or less than the fees and expenses of the Terminating Fund. Where that may not be the case, securityholders who receive units of a series of a Continuing Fund that has higher fees than the Terminating Fund will receive ongoing fee rebates from the Filer so that their fees will not increase as a result of the Bifurcations.

20. Securityholders in the Terminating Funds were provided with income tax disclosure as it relates to the impact of the implementation of the Bifurcations as well as the differences between the Terminating Funds and Continuing Funds in the Circular.

21. The Symmetry One Registered Funds are structured as "funds-of-funds" which comply in all respects with subsection 2.5(2) of NI 81-102. The underlying funds of the Symmetry One Registered Funds are Symmetry Equity Class (SEC) and Symmetry Registered Fixed Income Fund (SRFIF).

22. The Symmetry One Classes are structured as a three-tiered funds which comply in all respects with subsection 2.5(2) of NI 81-102, except paragraph 2.5(2)(b). The Symmetry One Classes invest all of their assets in shares of Symmetry Equity Corporate Class (SECC) and Symmetry Fixed Income Corporate Class (SFICC), each of which is structured as a "fund-of-funds" which complies in all respects with subsection 2.5(2) of NI 81-102. The underlying fund of SECC is SEC and the underlying fund of SFICC is SRFIF. The Symmetry One Classes were granted exemptive relief (the Existing Symmetry One Class Relief) from paragraph 2.5(2)(b) of NI 81-102:

a. on August 15, 2008, permitting them to invest greater than 10% of their assets in Symmetry Managed Return Class (now known as SFICC); and

b. on November 11, 2008, permitting them to invest greater than 10% of their assets in Symmetry Equity Pool (now known as SECC).

23. If the Birfucations are approved at the Meetings, each applicable Terminating Fund will sell its existing investments and will purchase shares of SEC, SECC and SFICC and units of SRFIF (the Underlying Funds). The exact proportion of securities of the Underlying Funds that will be held by each Terminating Fund as at the Effective Date will be determined by reference to:

a. the proportion of Registered and Non-Registered investors who hold units of the applicable Terminating Fund as at the Effective Date; and

b. the proportion of securities of the Underlying Funds each Continuing Fund holds as at the Effective Date.

24. The effect of the actions described in paragraph 23 is that, as at the Effective Date, the composition of the portfolios of each Terminating Fund will be identical, on an aggregate basis, to the composition of the Continuing Funds into which that Terminating Fund's investors will become securityholders pursuant to the Bifurcation.

25. On the Effective Date, the Filer will effect the Bifurcations by causing the following actions to occur in the following order:

a. each Terminating Fund will subscribe for units of the applicable Symmetry One Registered Fund in exchange for the shares it then holds of SEC and the units it then holds of SRFIF;

b. the Filer will cause a mandatory redemption (as permitted by the Declaration of Trust for the each applicable Terminating Fund) of all units of each Terminating Fund then held by Registered Investors, with the proceeds of redemption being paid in units of the corresponding Symmetry One Registered Fund;

c. each Symmetry One Class will purchase units of the corresponding Terminating Fund then held by Non-Registered Investors, the consideration for which will be shares of the applicable Symmetry One Class; and

d. each Symmetry One Class, as the sole beneficiary of the corresponding Terminating Fund, will cause the corresponding Terminating Fund to be terminated and its remaining assets, consisting solely of shares of SECC and SFICC, will be distributed to the applicable Symmetry One Class.

26. No sales charges will be payable in connection with the above transactions.

27. Absent the Approval Sought, each of the actions described in paragraph 23 and subparagraph 25.a would result in each Terminating Fund not complying with paragraph 2.5(2)(b) of NI 81-102.

28. The Filer submits that it would not be prejudicial to the public interest to grant the requested relief from paragraph 2.5(2)(b) on the basis that:

a. non-compliance by the Terminating Funds with paragraph 2.5(2)(b) would be temporary and is a necessary step to effecting the Bifurcations;

b. the steps described in paragraph 23 and subparagraph 25.a will be described to investors in the Circular; and

c. the Terminating Funds cannot rely on the Existing Symmetry One Class Relief because:

i. in respect of the actions described in paragraph 23, the Terminating Funds are not "Symmetry Top Funds", as defined in the Existing Symmetry One Class Relief; and

ii. in respect of the actions described in subparagraph 25.a, the Terminating Funds are not "Symmetry Top Funds", and the Existing Symmetry One Class Relief only applies in respect of investments in SFICC and SECC, not in respect of investments in any of the Symmetry One Registered Funds.

29. Relief from the SP Delivery Requirement was granted to the Filer for all future pre-approved mergers of mutual funds managed by the Filer in a decision dated June 17, 2003. However, such relief cannot be relied upon for the Bifurcations as they are not pre-approved mergers pursuant to section 5.6 of NI 81-102, a condition of that relief.

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 Approval Sought is granted.