Headnote

MP 11-102 and NP 11-203 – exemption granted from: a) Investment Restrictions - s. 2.3(e), (f) and (h) of NI 81-102 to permit the Fund to invest up to 100% its net assets in gold, and up to 20% of its net assets in any combination of silver, platinum, gold or palladium, provided that at no time greater than 10% of the Fund’s net assets be invested in any one of silver, platinum or palladium; and b) Custodian - s. 6.1(2), s. 6.1(3)(b), s. 6.2, s. 6.3 of NI 81-102 to permit the Fund to acquire, store and hold portfolio assets in and outside Canada through Brinks or Via Mat, for purposes other than facilitating portfolio transactions of the Fund.

Applicable Legislative Provisions

National Instrument NI 81-102 – Mutual Funds – s. 2.3(e), (f) and (h), s. 6.1(2), s. 6.1(3)(b), s. 6.2, s. 6.3 and s. 19.1.

December 18, 2009

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 Manager)

and

IN THE MATTER OF MACKENZIE UNIVERSAL GOLD BULLION CLASS (the Fund)

and

IN THE MATTER OF CANADIAN IMPERIAL BANK OF COMMERCE (the Custodian)

and

IN THE MATTER OF THE BANK OF NOVA SCOTIA (the Bullion Custodian)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Manager for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption, pursuant to section 19.1 of National Instrument 81-102 Mutual Funds (NI 81-102), from the following provisions of NI 81-102:

(a) clause 2.3(e), to permit the Fund to purchase gold or a permitted gold certificate if, immediately after the purchase, more than 10% of the assets of the mutual fund, taken at market value at the time of the purchase, would consist of gold and permitted gold certificates;

(b) clauses 2.3(f) and (h), to permit the Fund to purchase silver, silver certificates, platinum, platinum certificates, palladium, palladium certificates, and/or derivatives of which the underlying interest is silver, platinum or palladium;

(c) clause 6.1(2)(b), to permit portfolio assets of the Fund to be held outside Canada by a custodian or sub-custodian, for purposes other than facilitating portfolio transactions of the Fund outside Canada;

(d) clause 6.1(3)(b), to permit the Custodian or the Bullion Custodian to appoint the Brinks Company or its subsidiaries or affiliates (Brinks), or Via Mat International Ltd. or its subsidiaries or affiliates (Via Mat) , which are persons or companies that are not described in section 6.2 or 6.3, to act as sub-custodians to hold the Fund’s physical bullion;

(e) section 6.2 to permit Brinks and Via Mat to be appointed as sub-custodians of the Fund to hold the Fund’s physical bullion in Canada; and

(f) section 6.3, to permit Brinks and Via Mat to be appointed as sub-custodians of the Fund to hold the Fund’s physical bullion outside Canada

(collectively, 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) the Manager 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, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, the Yukon Territory and Nunavut, where applicable.

Interpretation

Terms defined in NI 81-102, 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 Manager:

The Fund

1The Manager is a corporation incorporated under the laws of the Province of Ontario and holds a registration in the category of “portfolio manager” in Ontario, Alberta and Manitoba. The head office of the Manager is in Toronto, Ontario. The Manager will act as the manager and portfolio adviser for the Fund.

2The Fund will be an open-end mutual fund. The Fund will be a class of Mackenzie Financial Capital Corporation, a mutual fund corporation existing under the laws of the Province of Ontario.

3Neither the Manager nor any of the mutual funds for which it acts as manager is in default of securities legislation in any Jurisdiction.

4A preliminary simplified prospectus and annual information form for the Fund was filed via SEDAR under project No. 1488675 on October 23, 2009. Once a final prospectus (the Final Prospectus) and annual information form (the Final Annual Information Form) for the Fund is filed and receipt is obtained, the Fund will be a “reporting issuer” or equivalent in each Jurisdiction.

5The investment objective of the Fund is to pursue long-term growth of capital by investing primarily, directly or indirectly, in gold. The Fund may also invest from time to time, directly or indirectly, in silver, platinum, palladium and/or equity securities of companies which produce or supply precious metals.

6The Fund will seek to achieve its investment objective by investing:

(a) a minimum of 80% and up to 100% of its net asset value, taken at the market value at the time of investment, in gold bullion and/or permitted gold certificates (as such term is defined in securities legislation); and

(b) an aggregate of up to 20% of its net asset value, taken at the market value at the time of investment, in silver bullion, platinum bullion, palladium bullion, derivatives of which the underlying interest is silver, platinum or palladium, silver certificates, platinum certificates, palladium certificates and/or equity securities of companies which produce or supply precious metals, provided that no more than 10% of the Fund’s net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

Instead of investing directly in equity securities, the Fund may also from time to time invest up to 10% of its net assets in securities of other mutual funds managed by the Manager (Underlying Funds). The criteria used for selecting Underlying Funds are the same as the criteria for selecting individual securities, as described elsewhere in the Fund’s investment objectives and strategies. There will be no duplication of management fees, incentive fees or sales charges between the mutual funds.

Custody of Bullion Held by the Fund

7Pursuant to a Master Custodian Agreement dated February 24, 2005, the Custodian acts as the custodian for all mutual funds managed by the Manager. The Custodian will hold the property of the Fund other than the Fund’s physical gold, silver, platinum and palladium bullion. The terms of the Custodian Agreement will comply with all requirements in Part 6 of NI 81-102.

8The Custodian will appoint the Bullion Custodian to be a sub-custodian of the Fund, to hold the Fund’s physical gold, silver, platinum and palladium bullion. The custody arrangements with respect to the Fund’s physical gold, silver, platinum and palladium bullion will be governed by the terms of an agreement between the Custodian and the Bullion Custodian (the Bullion Custodian Agreement). Except as represented below, the terms of the Bullion Custodian Agreement will comply with all requirements in Part 6 of NI 81-102.

9The Fund’s physical gold, silver, platinum and palladium bullion will be stored and held on an allocated and segregated basis in the vault facilities of ScotiaMocatta, a division of the Bullion Custodian, in Canada, London or New York. ScotiaMocatta is one of the largest providers of physical precious metals trading and custodial services in the world. The Manager has determined that the Bullion Custodian would be the appropriate choice to provide custodial services to the Fund, because ScotiaMocatta is experienced in providing gold, silver, platinum and palladium storage and custodial services, and is familiar with the requirements relating to the physical handling and storage of gold, silver, platinum and palladium bullion.

10The Fund will not insure its physical gold, silver, platinum or palladium bullion. The Bullion Custodian maintains insurance on such terms and conditions as it considers appropriate against all risk of physical loss of, or damage to, bullion stored in ScotiaMocatta’s vaults except the risk of war, nuclear incident, terrorism events or government confiscation. Neither the Manager, the Fund nor the Custodian is a beneficiary of any such insurance and none of them have the ability to dictate the existence, nature or amount of coverage.

11The Manager has discussed such insurance coverage with the Bullion Custodian, and believes that the insurance that the Bullion Custodian has obtained will be appropriate for the Fund. The Bullion Custodian Agreement shall provide that the Bullion Custodian shall not cancel its insurance except upon 30 days prior written notice to the Manager. The Fund will disclose the material details of that insurance arrangement in its Final Annual Information Form.

12The Bullion Custodian has advised the Manager and the Custodian that due to physical storage capacity constraints, having regard to the amount of gold, silver, platinum and palladium bullion which the Fund may acquire, there may not be sufficient space in the vault facilities of ScotiaMocatta, in Canada, London and New York, to store all of the Fund’s physical gold, silver, platinum and palladium bullion.

13As a result, the Bullion Custodian will be required to use the services of sub-custodians to store some of the Fund’s physical gold, silver, platinum and palladium bullion.

14The Bullion Custodian has advised the Custodian and the Manager that it proposes to use Brinks and Via Mat, as sub-custodians to hold the physical gold, silver, platinum and palladium bullion of the Fund. Brinks and Via Mat are not entities that are currently approved to act as a custodian or sub-custodian for assets held in Canada, or to act as a sub-custodian for assets held outside of Canada as Brinks and Via Mat are not, among other things, a bank listed in Schedule I, II or III of the Bank Act (Canada) or a trust company incorporated under the laws of Canada.

15Brinks and Via Mat are leading providers of secure logistics for valuables, including diamonds, jewellery, precious metals, securities, currency and secure data, serving banks, retailers, governments, mines, refiners, metal traders, and diamantaires. Brinks and Via Mat are both authorized depositories for the London Bullion Market Association and have vault facilities that are accepted as warehouses for the London Bullion Market Association. Brinks is also an authorized depository for NYMEX/COMEX.

16The number of entities in Canada which are eligible to act as sub-custodians for the physical storage of silver bullion is limited. Of these eligible entities, some already have exclusive relationships with other investment funds for storage purposes whereas others simply may not have the excess capacity that the Fund may need to store physical silver bullion and have advised that they may be required to secure additional space through the vaulting facilities of service providers. These capacity constraints have been intensified due to the relatively recent run-up in demand for physical commodities and the corresponding need to arrange for safe-keeping.

17The Manager and the Bullion Custodian believe that both Brinks and Via Mat are appropriate sub-custodians for the Fund’s physical gold, silver, platinum and palladium bullion. The Bullion Custodian has engaged in a review of the facilities, procedures, records and the level of insurance coverage of Brinks and Via Mat, and will engage in a similar review annually, to satisfy itself as to the continuing appropriateness of using Brinks and Via Mat as sub-custodians of the Fund’s physical bullion.

18The custody arrangements with respect to the holding of the Fund’s physical gold, silver, platinum and palladium bullion by Brinks or Via Mat will be governed by the terms of an agreement between the Bullion Custodian and Brinks or Via Mat, as applicable (the Bullion Sub-Custodian Agreements), the terms of which will comply with Sections 6.4 and 6.5 of NI 81-102.

19The sub-custodial activities of Brinks and Via Mat will be limited to holding the Fund’s physical gold, silver, platinum and palladium bullion. All physical gold, silver, platinum and palladium bullion of the Fund held by Brinks and Via Mat will be held in vault facilities in Canada, London or New York, on an allocated and segregated basis. The Bullion Custodian will exercise its audit rights under each Bullion Sub-Custodian Agreement on an on-going basis in order to satisfy itself that Brinks and Via Mat are in substantial compliance with the terms of the relevant Bullion Sub-Custodian Agreement and, in particular, that the bullion of the Fund which the Bullion Custodian has transferred to Brinks and Via Mat on behalf of the Fund (i) is held by Brinks and Via Mat at vault facilities that are accepted as warehouses for the London Bullion Market Association, (ii) is physically segregated and specifically identified, both in the vault facilities in which such bullion is held by Brinks and Via Mat and on the books and records of Brinks and Via Mat, as constituting the property of the Bullion Custodian or the Fund, (iii) has not sustained loss, damage or destruction (but with no obligation on the part of the Bullion Custodian to verify the weight, quality, fineness, assay characteristics, authenticity or composition of such bullion or that such bullion conforms to any good delivery standards of the London Bullion Market Association, NYMEX/COMEX, the London Platinum and Palladium Market Association or any other bullion trading body or that such bullion is otherwise fit for any purpose), and (iv) remains the subject of a subsisting policy of insurance that covers Brinks’ and Via Mat’s liability for the loss, damage or destruction of such bullion.

20The Bullion Custodian has advised the Fund and the Manager that each of Brinks and Via Mat have arranged for sufficient insurance coverage in respect of any of the Fund’s physical gold, silver, platinum and/or palladium bullion held by the Bullion Custodian through the vault facilities of Brinks or Via Mat. The Manager has discussed the insurance coverage obtained by Brinks and Via Mat with the Bullion Custodian, and believes that the insurance coverage obtained by Brinks and Via Mat is appropriate for the Fund.

21Pursuant to the Custodian Agreement, in safekeeping the property of the Fund the Custodian is required to exercise (a) the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances; or (b) at least the same degree of care as it exercises with respect to its own property of a similar kind, if this is a higher degree of care than the degree of care referred to in (a). In addition, pursuant to the Custodian Agreement, the Custodian is not entitled to an indemnity from the Fund in the event the Custodian breaches its standard of care. The Bullion Custodian Agreement will include a similar standard of care in respect of the obligations of the Bullion Custodian and a similar provision in respect of the Bullion Custodian’s indemnity. The Bullion Custodian has satisfied itself that the degree of care to which Brinks and Via Mat are subject in respect of the Bullion Sub-Custodian Agreements is no less than the degree of care referred to in (a).

22The Bullion Custodian Agreement provides that, in addition to any other rights of the Fund thereunder, the Bullion Custodian shall indemnify and hold harmless the Fund in respect of all direct loss, damage or expense arising out of any negligence, wilful misconduct, fraud or lack of good faith by the Bullion Custodian or any subcustodian or sub-subcustodian (including Brinks and Via Mat) in respect of the services contemplated thereunder, provided however, that the liability for any loss, damage or expense to which the above indemnity would apply shall be limited to losses, damages or expenses as follows:

a. in the case of the loss of bullion or any other property of the Fund, such bullion or other property shall be replaced where commercially practicable and reasonably feasible; provided, however, that, in the context of bullion, the replacement bullion which is to be provided by the Bullion Custodian shall be of the same fineness and shall be in the same form as the allocated bullion actually delivered and then held by the Bullion Custodian at the time of the incurrence of the relevant loss (and, in such respect, the Bullion Custodian's opinion shall be determinative as to such fineness and form);

b. where replacement of such bullion or other property is not commercially practicable and reasonably feasible, the Fund shall be paid the market value of such bullion based upon fineness and the form of the allocated bullion actually delivered and then held by the Custodian at the time of the incurrence of the relevant loss (and, in such respect, the Bullion Custodian's opinion shall be determinative as to such fineness and form) or other property at the time the loss is discovered; and

c. in any other case, the amount of any interest or income to which the Fund is entitled, but which is not received by the Fund, shall be paid to it.

23The Bullion Custodian Agreement provides that if the Fund suffers a loss as a result of any act or omission of a subcustodian (including Brinks and Viamat), or of any other agent appointed by the Bullion Custodian (rather than appointed by the Manager) and if such loss is directly attributable to the failure of such agent to comply with its standard of care in the provision of any service to be provided by it under the Bullion Custodian Agreement or the applicable Bullion Sub-Custodian Agreement, then the Bullion Custodian shall assume liability for such loss directly, and shall reimburse the Fund accordingly.

24The Fund’s auditors will be present during, and will verify, a physical count of all of the Fund’s physical gold, silver, platinum and palladium bullion, whether held by the Bullion Custodian, Brinks or Via Mat, at least once every year. The Fund and its auditors will have the ability, with sufficient advance notice to the Bullion Custodian, Brinks and/or Via Mat, to attend at the vaults of the Bullion Custodian, Brinks and/or Via Mat as required to verify the gold, silver, platinum and palladium bullion held by the Bullion Custodian, Brinks or Via Mat on behalf of the Fund.

25All bullion purchased by the Fund will be certified by the relevant vendor as bullion conforming to the good delivery standards of the London Bullion Market Association, the London Platinum and Palladium Market, or another internationally recognized bullion trading body.

Investment in Gold

26The Fund’s investment objectives and investment strategies are designed to offer investors an opportunity to obtain exposure primarily to gold. To fulfill its investment objectives, the Fund requires the ability to invest primarily in gold and/or permitted gold certificates beyond the limits set out in clause 2.3(e) of NI 81-102.

27The Manager submits that there are no liquidity concerns with permitting the Fund to invest in gold bullion or permitted gold certificates beyond the limits of NI 81-102, since the market for gold bullion and permitted gold certificates is highly liquid.

Investment in Silver, Platinum and Palladium

28The Manager has also requested exemptive relief that would permit it to invest an aggregate of up to 20% of its net asset value, taken at the market value at the time of investment, in silver bullion, platinum bullion, palladium bullion, derivatives of which the underlying interest is silver, platinum or palladium, silver certificates, platinum certificates, palladium certificates and/or equity securities of companies which produce or supply precious metals, provided that no more than 10% of the Fund’s net asset value, taken at market value at the time of investment, will be invested in any one of silver, platinum or palladium (including derivatives or certificates).

29Similar to the market for gold bullion and gold certificates, the Manager submits that the markets for silver, platinum and palladium are also highly liquid, and there are no liquidity concerns with permitting the Fund to invest in these precious metals to a limit not to exceed an aggregate limit of 20% of the net assets of the mutual fund, taken at market value at the time of purchase.

30The Manager submits that permitting the investments in silver, platinum, and palladium along with gold, will give the portfolio manager additional flexibility in certain market conditions, which may have otherwise caused the Fund to have significant cash positions and therefore deter from its ability to achieve its investment objective of providing long-term growth of capital.

31The Manager submits that the potential volatility or speculative nature of silver, platinum or palladium (or the equivalent in certificates or specific derivatives of which the underlying interest is silver, platinum or palladium) is no greater than that of gold or of equity securities of issuers in which the Fund intends to invest and, in the context of the Fund’s overall portfolio, will provide investors with additional diversification.

32As the aggregate investments in silver, platinum and palladium (or the equivalent in certificates or specified derivatives of which the underlying interest is silver, platinum or palladium) would be 20% or less of the net assets of the Fund, taken at the market value thereof at the time of investment, the Manager submits that there would be no significant change in the risk profile of the Fund. The Final Prospectus will state that the Fund will invest in precious metals and the risks associated with such investments.

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 Exemption Sought is granted, provided that:

(a) no more than 10% of the Fund’s net assets, taken at the market value thereof at the time of investment, will be invested in any one of silver, platinum or palladium (including specified derivatives and certificates);

(b) the Manager, on behalf of the Fund, ensures that any silver, platinum and palladium certificates purchased by the Fund are certificates representing such metal if the metal is:

(a) available for delivery in Canada, free of charge, to or to the order of the holder of the certificate,

(ii) of a minimum fineness of 999 parts per 1,000,

(iii) held in Canada,

(iv) in the form of either bars or wafers, and

(v) if not purchased from a bank listed in Schedule I, II or III of the Bank Act (Canada), fully insured against loss and bankruptcy by an insurance company licensed under the laws of Canada or a jurisdiction;

(b) in respect of the relief granted from sections 6.1(2)(b), 6.1(3)(b), 6.2 and 6.3, the Fund, the Manager, the Custodian and the Bullion Custodian are limited to using Brinks and Via Mat as sub-custodians for the gold, silver, platinum and palladium bullion of the Fund which will be held only in Canada, London and New York;

(c) in respect of the compliance reports to be prepared by the Custodian pursuant to section 6.7 of NI 81-102, in lieu of including the information required by paragraphs 6.7(1)(a), 6.7(1)(b), 6.7(1)(c) and 6.7(2)(b) and (c) in respect of the Custodian’s review of the sub-custodian arrangements involving Brinks and Via Mat, the Custodian shall instead by entitled to rely on a certificate of the Bullion Custodian prepared in respect of the Bullion Custodian’s annual review process for Brinks and Via Mat referred to in paragraph 17 above, and whether the Bullion Custodian remains of the view that Brinks and Via Mat continue to be appropriate sub-sub-custodians to hold the Fund’s physical gold, silver, platinum and palladium bullion; and

(d) the Manager, on behalf of the Fund, ensures that the Final Prospectus of the Fund contains disclosure regarding the unique risks associated with an investment in the Fund, including the risk that direct purchases of gold, silver, platinum and palladium by the Fund may generate higher transaction and custody costs than other types of investments, which may impact the performance of the Fund.

‘Darren McKall’

Darren McKall

Assistant Manager, Investment Funds Branch

Ontario Securities Commission

SEDAR #1488706

Headnote

MP 11-102 and NP 11-203 – exemption granted from: a) Investment Restrictions - s. 2.3(e), (f) and (h) of NI 81-102 to permit the Fund to invest up to 100% its net assets in gold, and up to 20% of its net assets in any combination of silver, platinum, gold or palladium, provided that at no time greater than 10% of the Fund’s net assets be invested in any one of silver, platinum or palladium; and b) Custodian - s. 6.1(2), s. 6.1(3)(b), s. 6.2, s. 6.3 of NI 81-102 to permit the Fund to acquire, store and hold portfolio assets in and outside Canada through Brinks or Via Mat, for purposes other than facilitating portfolio transactions of the Fund.

Applicable Legislative Provisions

National Instrument NI 81-102 – Mutual Funds – s. 2.3(e), (f) and (h), s. 6.1(2), s. 6.1(3)(b), s. 6.2, s. 6.3 and s. 19.1.