Mackenzie Financial Corporation

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- approval of investment fund reorganization because the reorganization does not meet all the pre-approval criteria -- relief granted to permit top funds to invest in reorganized and continuing funds that hold securities of a fund established for tax deferral purposes post-reorganization -- subject to conditions.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 2.1(1), 2.5(2)(b), 5.5(1)(b), 5.6(1) and 19.1(2).

August 13, 2021

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)

DECISION

Background

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

(i) on behalf of the Reorganizing Fund (as defined below), approval under clause 5.5(1)(b) of National Instrument 81-102 Investment Funds (NI 81-102) for the proposed reorganization (the Reorganization) of certain series of the Reorganizing Fund as set out below (the Affected Series) with the applicable Canada Life Fund (as defined below) (the Approval Sought);

(ii) on behalf of the Filer's current and future mutual funds managed by the Filer or an affiliate of the Filer (the Top Funds), an exemption from the prohibition in paragraph 2.5(2)(b) of NI 81-102 to permit the Top Funds to purchase and hold a security of the Reorganizing Fund or the Canada Life Fund that holds more than 10% of its NAV in securities of its corresponding LP Fund and other investment funds in the aggregate (the Three-Tier Relief).

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) 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 each of the provinces and territories of Canada, other than Ontario (together with Ontario, the Canadian 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. The following additional terms shall have the following meanings:

Canada Life Fund means Canada Life Global Resources Fund;

CLIML means Canada Life Investment Management Ltd., an affiliate of the Filer, subsidiary of The Canada Life Assurance Company and manager and trustee and manager of the Canada Life Funds;

LP Fund means Mackenzie CL Global Resource LP;

Meeting Materials means the notice of meeting and management information circular in respect of the Meeting dated August 20, 2021;

Reorganizing Fund means Mackenzie Global Resource Fund; and

Tax Act means the Income Tax Act (Canada)

Representations

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

The Filer

1. The Filer is a corporation governed by the laws of Ontario and is registered as follows: as an investment fund manager in Ontario, Quebec and Newfoundland and Labrador; as a portfolio manager and exempt market dealer in the Canadian Jurisdictions; as an adviser in Manitoba; and as a commodity trading manager in Ontario.

2. The Filer, with its head office in Toronto, Ontario, is or will be the trustee and manager of the Reorganizing Fund, the LP Fund and the Top Funds that are not managed by its affiliates.

3. Neither the Filer, the Reorganizing Fund, the LP Fund nor the Top Funds are in default of securities legislation in any of the Canadian Jurisdictions.

CLIML

4. CLIML is a corporation governed under the laws of Canada.

5. CLIML is registered as a portfolio manager in each province and territory of Canada, as an investment fund manager in each of Ontario, Quebec and Newfoundland and Labrador, and as a commodity trading manager in Ontario.

6. CLIML will act as manager and trustee for the Canada Life Fund.

The Reorganizing Fund, Canada Life Fund and the LP Fund

7. The Reorganizing Fund is, and the Canada Life Fund is expected to be, a mutual fund established under the laws of Ontario. The Reorganizing Fund is, and the Canada Life Fund is expected to be, a reporting issuer under the securities legislation of the Canadian Jurisdictions.

8. Units of the Affected Series of the Reorganizing Fund and Canada Life Fund generally are, or will be, qualified for sale under one or more simplified prospectuses, annual information forms and fund facts documents (collectively, the Offering Documents).

9. Series S units of the Reorganizing Fund and the corresponding Canada Life Fund will be offered only on an exempt distribution basis.

10. Each of the other series of units of each of the Canada Life Fund that correspond to the Affected Series will be newly created and will be qualified for distribution under a prospectus.

11. The LP Fund will be a reporting issuer under the applicable securities legislation of the Province of Ontario.

12. Other than circumstances in which the securities regulatory authority of a province or territory of Canada has expressly exempted the Reorganizing Fund therefrom, the Reorganizing Fund follows the standard investment restrictions and practices established under NI 81-102.

13. The NAV for each series of the Funds and the LP Fund is, or will be, calculated on a daily basis in accordance with that fund's valuation policy and as described in the applicable Offering Documents.

The Top Funds

14. Each Top Fund is, or will be, a mutual fund established under the laws of Ontario. Each Top Fund is, or will be, a reporting issuer under the securities legislation of the Canadian Jurisdictions.

15. Each Top Fund distributes, or will distribute, some or all of its securities pursuant to a prospectus, annual information form and fund facts or ETF facts documents (as applicable).

16. Other than circumstances in which the securities regulatory authority of a province or territory of Canada has expressly exempted a Reorganizing Fund therefrom, each Top Fund follows, or will follow the standard investment restrictions and practices established under NI 81-102.

17. Each Top Fund is, or will be, subject to National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107).

The Proposed Reorganization and the Approval Sought

18. Pursuant to the Reorganization, unitholders of the Reorganizing Fund would become unitholders of the Canada Life Fund, as follows:

<<Reorganizing Fund>>	<<Canada Life Fund>>	<<Affected Series>>	<<Nature of Reorganization>>	<<Expected Reorganization Date>>
Mackenzie Global Resource Fund	Canada Life Global Resources Fund	Q, L, N, QF, H, QFW, HW, S	Tax Deferred	September 17, 2021

19. In the opinion of the Filer, the Qualifying Disposition (as defined below) satisfies all of the criteria for pre-approved reorganizations and transfers set forth in section 5.6 of NI 81-102 except that:

(i) The Qualifying Disposition is not a "qualifying exchange" within the meaning of section 132.2 of the Tax Act or tax deferred transactions under subsection 85(1), 85.1(1), 86(1) or 87(1) of the Tax Act;

(ii) The Reorganization does not contemplate the wind-up of the Reorganizing Fund as soon as reasonably possible following the Reorganization; and

(iii) Unitholders of the Reorganizing Fund will not be provided with a fund facts document prior to the time they are asked to approve the Reorganization for the reasons described below.

The Qualifying Disposition

20. The proposed Reorganization is in connection with a larger set of transactions that were announced on December 31, 2020. Although the Affected Series of the Reorganizing Fund are presently offered under the Filer's Mackenzie Canada Life Mutual Funds simplified prospectus and set out below, except those offered on an exempt distribution basis as described above, the Reorganizing Fund also offers series of units under the Filer's Mackenzie Investments simplified prospectus.

21. Causing the Affected Series unitholders to redeem their units (in cash or in kind) in which they are invested and using the redemption proceeds to subscribe for units of the corresponding Canada Life Fund (each, a Redemption Transaction) would in some instances trigger the realization of significant capital gains by the Affected Series unitholders.

22. The Filer intends to carry out a "qualifying disposition" with respect to the transfer of property from the Reorganizing Fund to a newly created Canada Life Fund under section107.4 of the Tax Act. That provision exempts transfers of property from one trust to another (each a Qualifying Disposition) from being a taxable event for the transferring trust (i.e., the Reorganizing Fund) and its unitholders (essentially allowing for a pro-rata partition of the Reorganizing Fund on a tax deferred basis).

23. The Canada Life Fund will have the same investment objectives as the Reorganizing Fund and substantially the same investment objectives as the LP Fund.

24. The Canada Life Fund and the LP Fund will have substantially the same investment strategies and valuation procedures and, in the case of the Canada Life Fund, the same fee structure as the Reorganizing Fund. No fees or expenses will be charged at the LP Fund level other than expenses that otherwise would have been borne at the Reorganizing Fund level had the Reorganization not occurred.

25. The chart immediately below paragraph 18 sets out the Affected Series of the Reorganizing Fund.

Details of the Proposed Reorganization

26. On completion of the Reorganization, the Filer will become sub-advisor of the Canada Life Fund. in accordance with the terms of a sub-advisory agreement between the Filer and CLIML.

27. No sales charges will be payable in connection with the transfer to the Canada Life Fund or LP Fund of the investment portfolio by the Reorganizing Fund.

28. Unitholders of each Affected Series of the Reorganizing Fund will continue to have the right to redeem their units or exchange such units for units of any other mutual fund offered under the applicable Offering Documents at any time up to close of business on the day of the Reorganization.

29. In accordance with National Instrument 81-106 - Investment Fund Continuous Disclosure (NI 81-106), press releases in respect proposed Reorganization were issued and filed via SEDAR on August 4, 2020 and February 12, 2021. A material change report and amendment to the Offering Documents with respect to the proposed Reorganization was filed in accordance with NI 81-106.

30. By way of order dated October 21, 2016, the Filer was granted relief (the Notice-and-Access Relief) from the requirement set out in paragraph 12.2(2)(a) of NI 81-106 to send a printed management information circular to unitholders while proxies are being solicited, and, subject to certain conditions, instead allows a notice-and-access document (as described in the Notice-and-Access Relief) to be sent to such unitholders. Pursuant to the requirements of the Notice-and-Access Relief, the notice-and-access document and a form of proxy in connection with each special meeting of unitholders of the Affected Series of the Reorganizing Fund will be mailed to unitholders of the Affected Series of the Reorganizing Fund commencing on or about July 14, 2021 and will be concurrently filed on SEDAR. The Meeting Materials will also appear on the SEDAR website at www.sedar.com. If approved, unitholders of Affected Series of the Reorganizing Fund will receive fund facts document(s) for the corresponding Canada Life Fund in their first confirmation statement following the Reorganization.

31. The Meeting Materials describe all relevant facts concerning the Reorganization, including the Qualifying Disposition, the tax implications and other consequences of the Reorganization, as well as the view of the Reorganizing Fund's Independent Review Committee (the IRC) that the Reorganization achieves a fair and reasonable result for the Reorganizing Fund, so that unitholders of the Affected Series of the Reorganizing Fund may consider this information before voting on the Reorganization.

32. All of the series of the Canada Life Fund (other than Series S) and the single series of the LP Fund will be newly created and will be qualified for distribution under a prospectus.

33. In order to effect the Reorganization, Series S units of the Canada Life Fund will be distributed to the Canada Life Unitholders currently in the corresponding Reorganizing Fund in reliance on the prospectus exemption contained in section 2.11 of National Instrument 45-106 -- Prospectus Exemptions.

34. A current simplified prospectus and fund facts documents are not available in respect of the Canada Life Fund as that fund is new. Instead of delivering these documents, the Filer has included information in respect of the Canada Life Fund and the LP Fund in the Meeting Materials. This will include the fact that the investment objective of the Canada Life Fund and the corresponding LP Fund, will be the same as that of the Reorganizing Fund. The management fees and administration fees of the Canada Life Fund will be the same as those of the Reorganizing Fund. It will also disclose that the investment strategies and valuation procedures of the Canada Life Fund and the LP Fund will be substantially the same as those of the Reorganizing Fund. The fact that the LP Fund will not charge management fees, administration fees or other expenses (other than expenses that otherwise would have been borne at the Reorganizing Fund level had the Reorganization not occurred) will also be disclosed. The Filer believes that with this information, together with the information contained in the fund facts of the relevant series of the Reorganizing Fund that each unitholder of the Affected Series of the Reorganizing Fund received when their initial investment was made, unitholders in the Reorganizing Fund have access to prospectus-level disclosure with respect to the applicable Canada Life Fund.

35. If the necessary unitholder approval is obtained and the Filer decides to proceed with the Reorganization, it will occur at or about the close of business on or about September 17, 2021.

36. The Filer and CLIML will pay for the costs of the proposed Reorganization. No management fees, administration fees or other expenses (other than expenses that would have been borne at the Reorganizing Fund level had the Reorganization not occurred) will be charged at the LP Fund level. There are no charges payable by unitholders in the Reorganizing Fund who acquire units of the corresponding Canada Life Fund as a result of the Reorganization.

37. The LP Fund will dispose of its assets as expeditiously as is consistent with prudent portfolio management and it is not anticipated that it will accept new money or assets by way of subscription after the completion of the Reorganization. With the exception of the Reorganizing Fund and Canada Life Fund no other unitholders will be allowed to invest in the LP Fund.

38. In order to provide Affected Series investors that hold their units outside of a registered account with the ability to continue to indirectly benefit from the capital losses within the Reorganizing Fund following the Reorganization, we expect the Canada Life Fund will invest a portion of its assets in the Reorganizing Fund. That investment will enable these Affected Series investors to continue to indirectly benefit from the capital losses of the Mackenzie Global Resource Fund. As of March 31, 2021, Mackenzie Global Resource Fund had capital losses of approximately $124 million. The amount of the net capital losses of the Fund could change significantly in advance of the effective date of the Reorganization.

39. As required by NI 81-107, the IRC has been appointed for the Reorganizing Fund. The Canada Life mutual funds established their own independent review committee and appointed their initial members on December 22, 2020. The IRC of the LP Fund will be comprised of the same members as the IRC of the Reorganizing Fund.

40. The Filer presented the potential conflict of interest matters related to the proposed Reorganization to the IRC for a recommendation. On June 10, 2021, the IRC reviewed the potential conflict of interest matters related to the proposed Reorganization and provided its positive recommendation for the Reorganization, after determining that the proposed Reorganization, if implemented, would achieve a fair and reasonable result for the Reorganizing Fund.

Reasons for the Approval Sought

41. The purpose of the Qualifying Disposition in respect of each of the Reorganizing Fund is to allow the Affected Series unitholders to be moved to the corresponding Canada Life Fund in the most cost and/or tax-efficient manner.

42. Proceeding by way of Redemption Transactions would cause the realization of significant capital gains by certain taxable investors in the Reorganizing Fund.

43. The Reorganization is not expected to have any material impact on the unitholders in the Reorganizing Fund other than Affected Series unitholders. The Reorganization will not negatively affect any unitholder's interest in the assets and liabilities of the Reorganizing Fund and the Reorganizing Fund's investment objectives will be the same as the Canada Life Fund and substantially the same as the LP Fund. The Qualifying Disposition is being structured to be a non-taxable event to the Affected Series unitholders and the remaining unitholders of the Reorganizing Fund.

44. Affected Series unitholders will continue to have the right to redeem units of the Reorganizing Fund for cash at any time up to the close of business on the last business day before the Reorganization. Units so redeemed will be redeemed at a price equal to their NAV per unit on the redemption date.

Required Relief for the LP Fund

45. One of the requirements to effecting the Reorganization as a Qualifying Disposition is that each asset (or group of identical assets) of the Reorganizing Fund must be capable of being divided into a precise percentage allocable to each unitholder or class of unitholders (the Transfer Percentage). In recognition of the fact that it may not always be practicable to effect such a division, the Tax Act contains a "safe harbour" exception to this requirement. The "safe harbour" provides that the Canada Life Fund may receive as part of the Qualifying Disposition, in lieu of a fractional interest in a share that would otherwise be required, a disproportionate amount of money or interest in the share, provided that its value does not exceed the lesser of $200 and the fair market value of the fractional interest. This "safe harbour" only applies in respect of equity securities (and specifically equity securities that do not exceed the specified value threshold) and does not adequately address the difficulties that the precise Transfer Percentage requirement poses more generally.

46. In addition, certain assets (or group of identical assets) may not be readily divisible for other reasons. In order to meet this condition, certain assets (or groups of identical assets) will be transferred on a tax deferred basis by the Reorganizing Fund to the LP Fund in exchange for units of the LP Fund. The units of the LP Fund will then become an asset (or group of identical assets) of the corresponding Reorganizing Fund and a portion of those units will be transferred to the corresponding Canada Life Fund based on the Transfer Percentage.

47. In summary, where it would otherwise be difficult or impossible to effect a transfer in the required precise Transfer Percentage of certain assets of the Reorganizing Fund, those assets will be transferred to the LP Fund, whose units are readily capable of being transferred in the required Transfer Percentage.

The Three-Tier Relief

48. As the LP Fund is being qualified by prospectus, the Reorganizing Fund or Canada Life Fund may invest up to 100% of their NAV in the LP Fund under section 2.5 of NI 81-102.

49. However, if the Reorganizing Fund or Canada Life Fund invests more than 10% of their NAV in other investment funds and the LP Fund in aggregate, it would preclude other investment funds managed by the Filer or its affiliates from investing in that Reorganizing Fund or Canada Life Fund under paragraph 2.5(2)(b) of NI 81-102.

50. Prior to the Reorganization, the Top Funds would have been permitted to invest in the Reorganizing Fund and Canada Life Fund in accordance with section 2.5 of NI 81-102.

51. The Reorganization may result the Reorganizing Fund and/or the Canada Life Fund holding more than 10% of its NAV in other investment funds due to these funds holding securities of the LP Fund.

52. The Three-Tier Relief is required for the Top Funds to continue investing in the Reorganizing Fund or the Canada Life Fund that invest more than 10% of its NAV in other investment funds, which includes holdings of its corresponding LP Fund that were received as a result of the Reorganization, in order for the Top Funds to further their investment objectives and investment strategies (the Three-Tier Structure).

53. Except for paragraph 2.5(2)(b) of NI 81-102, a Fund's use of the Three-Tier Relief will be made in accordance with the provisions of section 2.5 of NI 81-102.

54. The Reorganizing Fund and Canada Life Fund that is part of a Three-Tier Structure will not invest more than 10% of its NAV in other investment funds, excluding investments in (i) one or more money market funds, (ii) one or more index participation units as defined in NI 81-102 (IPUs) and (iii) corresponding LP Fund.

55. The LP Fund is being introduced into the structure to further the best interests of unitholders in the Reorganizing Fund.

56. The LP Fund will dispose of its assets as expeditiously as is consistent with prudent portfolio management and it is not anticipated that it will accept new money or assets by way of subscription after the completion of the Reorganization.

57. There will be no duplication of fees between each tier of the Three-Tier Structure. The prospectus of the Top Fund, Reorganizing Fund and Canada Life Fund will disclose that fees and expenses will not be duplicated as a result of investments in underlying funds.

58. To ensure investors continue to have transparency into the portfolio securities attributable to the Reorganizing Fund and/or Canada Life Fund mandates, the Filer and CLIML intend to disclose the individual LP Fund positions within the quarterly portfolio disclosures, MRFP holdings disclosure and manager website holdings disclosure at the Reorganizing Fund level.

59. Each Top Fund will comply with the requirement under NI 81-106 relating to the top 25 positions portfolio holdings disclosure in its management report of fund performance and the requirements of Form 81-101F3 Contents of Fund Facts Document relating to top 10 position portfolio holdings disclosure in its fund facts documents as if the Top Fund were investing directly in the LP Fund held by the corresponding Reorganizing Fund or Canada Life Fun

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:

1. the Approval Sought is granted, provided that the Filer obtains the prior approval of the applicable unitholders of the Reorganizing Fund for the Reorganization at a special meeting held for that purpose;

2. the Three-Tier Relief is granted, provided that:

a. an investment by a Top Fund in securities of the Reorganizing Fund or the Canada Life Fund is in accordance with the investment objectives of the Top Fund;

b. the Reorganizing Fund and Canada Life Fund which are part of a Three-Tier Structure do not invest more than 10% of NAV in other investment funds, excluding investments in (i) one or more money market funds; (ii) one or more IPUs; and (ii) in its corresponding LP Fund;

c. the Reorganizing Fund and Canada Life Fund will not make additional investments in the LP Fund after the Reorganization is completed;

d. the investment of each Top Fund in securities of the Reorganizing Fund or Canada Life Fund is otherwise made in compliance with all other requirements of section 2.5 of NI 81-102, except to the extent that discretionary relief has been granted from any such requirement;

e. each Top Fund complies with the requirements under NI 81-106 relating to top 25 positions portfolio holdings disclosure in its management reports of fund performance and the requirements of Form 81-101F3 Contents of Fund Facts Document relating to top 10 position portfolio holdings disclosure in its fund facts documents as if the Reorganizing Fund or Canada Life Fund was investing directly in the LP Fund; and

f. the prospectus of each Top Fund discloses, or will disclose in the next renewal of its prospectus following the date of this decision, the fact that the Top Fund has obtained the Exemption Sought.