Mackenzie Financial Corporation and Mackenzie Focus America Class

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Approval of mutual fund merger -- approval required because merger does not meet the criteria for pre-approval -- investment objectives of merging funds not substantially similar.

Applicable Legislative Provisions

National Instrument 81-102 Mutual Funds, s. 5.5(1)(b).

September 19, 2008

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

("MACKENZIE")

AND

IN THE MATTER OF

MACKENZIE FOCUS AMERICA CLASS

(the "TERMINATING FUND")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from Mackenzie for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for the approval of the merger of the Terminating Fund into Mackenzie Universal U.S. Blue Chip Class (the "Continuing Fund") (the Terminating Fund and the Continuing Fund are sometimes collectively referred to as the "Funds") (the merger is referred to as the "Proposed Merger") under clause 5.5(1)(b) of National Instrument 81-102 ("NI 81-102") (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) Mackenzie has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is to be relied on in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the "Non-Principal Jurisdictions").

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined.

Representations

This decision is based on the following facts represented by Mackenzie and the Funds:

1. Mackenzie is a corporation governed by the laws of Ontario, with its head office located in Toronto, Ontario. Mackenzie is registered as an adviser in the categories of investment counsel and portfolio manager in Ontario, Manitoba and Alberta. Mackenzie is also registered with the Ontario Securities Commission as a dealer in the category of Limited Market Dealer, as well as registered under the Commodity Futures Act (Ontario) in the categories of Commodity Trading Counsel & Commodity Trading Manager.

2. Mackenzie is the manager of the Funds, each of which is a class of shares of Mackenzie Financial Capital Corporation ("Capitalcorp"), a mutual fund corporation governed by the laws of Ontario.

3. The Funds both have the following eight series of shares: Series A, F, I, O, P, R, T6 and T8 shares. The Continuing Fund also intends to offer Series D shares on or about the date of the special meeting, which Series D shares are expected to be created specifically for Series D unit investors of Putnam U.S. Value Fund, for purpose of effecting the merger of that fund into the Continuing Fund, which merger is expected to occur on the same date as the merger contemplated in this decision. All of these series, except Series D and R, are offered for sale in all provinces and territories of Canada under a simplified prospectus and annual information form dated November 14, 2007, as amended, for the Mackenzie Mutual Funds. Series R shares are only offered on an exempt distribution basis, and are available to other Mackenzie funds and other investors as Mackenzie may determine from time to time on a case-by-case basis.

4. The Funds are reporting issuers under the applicable securities legislation of each province and territory of Canada. Neither Mackenzie nor the Funds are in default of securities legislation in any jurisdiction.

5. Other than where securities regulatory authorities (the "Authorities") have exempted the Funds therefrom, the Funds follow the standard investment restrictions and practices established by the Authorities.

6. The net asset value for each series of shares of the Funds is calculated on a daily basis on each day the Toronto Stock Exchange is open for trading.

7. A press release, material change report and amendment to the simplified prospectus and annual information form of the Mackenzie Mutual Funds were filed on SEDAR on or about July 23, 2008, in respect of the Proposed Merger.

8. Shareholders of the Terminating Fund will be asked to approve the Proposed Merger at a special meeting scheduled to occur on September 19, 2008. Implicit in the approval of shareholders of the Proposed Merger is the adoption by the Terminating Fund of the investment objectives and strategies, and fee structure of the Continuing Fund.

9. Mackenzie will pay all of the expenses incurred in connection with the Proposed Merger, including all brokerage commissions payable in connection with the acquisition by the Continuing Fund of the investment portfolio of the Terminating Fund, the costs of holding the special meeting and of soliciting proxies.

10. If the approval of the Terminating Fund's investors is not received at the special meeting, then the Proposed Merger will not proceed.

11. The Terminating Fund's investors will continue to have the right to redeem shares of the Terminating Fund for cash at any time up to the close of business on the business day immediately preceding the effective date of the Proposed Merger. Some investors may, if they choose to redeem their shares for cash, incur redemption charges and/or other fees.

12. The exchange of an investor's shares of the Terminating Fund for shares of the Continuing Fund as a consequence of the Proposed Merger will not trigger a capital gain or loss on those shares of the Terminating Fund as the Proposed Merger will be carried out on a tax-deferred basis. Shareholders of the Terminating Fund have been provided with information about the tax consequences of the Proposed Merger in the management information circular and have had the opportunity to consider this information prior to voting on the transactions.

13. A notice, management information circular and proxy in connection with the Proposed Merger were filed on SEDAR and mailed to Focus America's investors of record as at August 15, on or about August 26, 2008.

14. Subject to obtaining the required regulatory and investor approvals, the Proposed Merger will be implemented on or about September 26, 2008.

15. Following the Proposed Merger, the Continuing Fund will continue as a publicly offered open-ended mutual fund and the Terminating Fund will be wound up as soon as practicable thereafter.

16. The Terminating Fund and the Continuing Fund have the same fee structure. The management fee and administration fee are the same for each series of the Funds. Accordingly, the Terminating Fund's investors should not expect to pay higher fees if their shares are merged into the Continuing Fund.

17. Approval of the Proposed Merger is required under clause 5.5(1)(b) of NI 81-102, and pre-approval under subsection 5.6(1) of NI 81-102 is unavailable, because the fundamental investment objectives of the Funds are not, or may not be considered by a reasonable person to be, "substantially similar". Otherwise, the Proposed Merger complies with all other criteria for pre-approved reorganizations and transfers set out in section 5.6 of NI 81-102, except for those criteria from which Mackenzie has previously obtained future relief. Mackenzie has previously obtained relief from the simplified prospectus and financial statement delivery requirements in subparagraph 5.6(1)(f)(ii) of NI 81-102. The conditions set out in that relief have been met with respect to the Proposed Merger.

18. The materials sent to shareholders of the Terminating Fund in connection with the approval of the Proposed Merger included a tailored document consisting of

a. The current Part A of the simplified prospectus of the Continuing Fund, as amended, and

b. The current Part B of the simplified prospectus of the Continuing Fund, as amended.

19. The Funds both pursue long-term capital growth through similar U.S. equity mandates. Accordingly, adopting the mandate of the Continuing Fund will allow investors in the Terminating Fund to continue to have investment exposure to a U.S. equity mandate.

20. A key difference in investment objectives is that the Terminating Fund has an objective of using a multi-manager investment strategy of between two to six portfolio management teams, selected by Mackenzie, to manage the Terminating Fund's portfolio investment. The Continuing Fund does not have this objective.

21. Whereas a single portfolio management team manages the Continuing Fund, the Terminating Fund is currently managed by four teams of portfolio managers, including two teams from Mackenzie, and two teams from Ivy Investment Management Company, a subsidiary of Waddell & Reed Financial, Inc. ("Waddell & Reed"). A portfolio management team from Waddell & Reed also manages the Continuing Fund. Accordingly, the Proposed Merger would allow the Terminating Fund's investors to continue to receive portfolio management from Waddell & Reed, albeit from different individual portfolio managers.

22. A further notable difference in investment objectives is that the Continuing Fund has an objective of investing primarily in U.S. equity securities of large capitalization ("blue chip") companies. The Terminating Fund has no similar investment objective, but its strategies include investing in a mix of U.S. equity securities of small, mid and large capitalization companies.

23. With respect to the Funds' strategies, whereas the Terminating Fund's overall investment style is a blend of a value and growth investment approach due to the combined styles of its portfolio managers, the Continuing Fund can hold a balance of either value or growth oriented stocks at the discretion of the sole portfolio management team.

24. Both Funds' strategies contemplate providing relatively concentrated portfolios that seek to maximize the performance of their portfolio managers' best ideas.

25. Both Funds' strategies allow for securities lending, repurchase and reverse repurchase transactions and also the use of derivatives for both hedging and non-hedging purposes.

26. Mackenzie, as manager of the Terminating Fund, believes the merger is in the best interests of the Terminating Fund's investors for the following principal reasons:

(a) The Continuing Fund's Superior Relative Performance: As more fully detailed in the circular being mailed to the Terminating Fund's investors of record as at August 15, 2008, the Continuing Fund's Series A returns were superior to the Terminating Fund's returns for the past three year and five year periods ended July 31, 2008.

(b) The Continuing Fund's Expected Lower Volatility of Returns: While the Terminating Fund invests in a mix of small, mid and large capitalization companies, the Continuing Fund invests primarily in large capitalization ("blue chip") companies. Over the long-term (15 years), blue chip stocks have demonstrated consistently lower volatility of returns than mid-size and smaller stocks in the United States. Further, blue chip stocks in the U.S. have historically delivered strong long-term investment returns.

(c) Consistency of Investment Portfolio: Although their investment approaches are somewhat different, and the Terminating Fund is a multi-manager fund whereas a single portfolio management team manages the Continuing Fund, both Funds pursue long-term growth of capital primarily by investing in U.S. equity securities. Accordingly, adopting the mandate of the Continuing Fund will allow the Terminating Fund's investors to continue to have investment exposure to a U.S. equity mandate.

(d) No Adverse Tax Consequences: The exchange of shares of the Terminating Fund for shares of the Continuing Fund as a consequence of the merger will not trigger a capital gain or loss on an investor's shares of the Terminating Fund as this transaction occurs on a tax-deferred basis.

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 is that the Exemption Sought is granted.