Mackenzie Financial Corporation and LBC Financial Services Inc.

November 20, 2017

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Relief from the requirement in s.3.2.01 of NI 81-101 to deliver a fund facts document to investors who purchase mutual fund securities of a preferred pricing series pursuant to switches from a regular retail series upon meeting certain eligibility requirements based on the amount of the investor’s investments – Preferred pricing series securities are identical to regular retail series securities except that the preferred pricing series offer management fee reductions based on the investor’s investment amounts in eligible accounts which result in lower combined management and administration fees – Investment fund manager initiating switches on behalf of investors when their investments satisfy eligibility requirements of the preferred pricing series – Switches between series of a fund are distributions of securities which trigger the requirement to deliver a fund facts document – Relief granted from requirement to deliver a fund facts document to investors for purchases of preferred pricing series securities made pursuant to such switches subject to compliance with certain notification and prospectus and fund facts disclosure requirements – National Instrument 81-101 Mutual Fund Prospectus Disclosure.

Applicable Legislative Provisions

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 3.2.01, 6.1.

November 20, 2017

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

IN THE MATTER OF

LBC FINANCIAL SERVICES INC.

(the Principal Distributor)

DECISION

Background

The principal regulator in the Jurisdiction has received an application (the Application) from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption from the requirement in the Legislation for a dealer to deliver or send the most recently filed fund facts document (Fund Facts) in the manner as required under the Legislation (the Pre-Sale Fund Facts Delivery Requirement) in respect of the purchases of Preferred Pricing Series (as defined below) securities of the Funds (as defined below) that are made pursuant to Lower Fee Switches (as defined below) (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 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 and Newfoundland and Labrador (the Other Jurisdictions, together with the Jurisdiction, the Jurisdictions).

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 Filer:

The Filer

1. The Filer is a corporation amalgamated under the laws of Ontario with its head office in Toronto, Ontario.

2. The Filer is registered as an investment fund manager, portfolio manager, exempt market dealer and commodity trading manager in the Jurisdiction. The Filer is also registered as: (a) a portfolio manager and exempt-market dealer in the Other Jurisdictions and each of the territories of Canada, and (b) as an investment fund manager in Newfoundland and Labrador and Québec.

3. The Filer is the manager of those existing mutual funds (the Existing Funds) offered under simplified prospectus dated November 28, 2016, as amended on December 21, 2016, and March 10, 2017. The Filer may offer other mutual funds under simplified prospectus in the future (those funds, together with the Existing Funds, are referred to as the Funds and, individually, as a Fund).

4. The head office of the Filer is located in Toronto, Ontario.

5. The Filer is not in default of the securities legislation in any of the Jurisdictions.

The Principal Distributor

6. Certain series of the Funds (the Laurentian Series) are, or will be, available for purchase only through LBC Financial Services Inc., the principal distributor for the Laurentian Series securities (the Principal Distributor).

7. The Principal Distributor is a member of the Mutual Fund Dealers Association of Canada and is registered in the category of mutual fund dealer in each of the Jurisdictions.

8. The Principal Distributor is not in default of securities legislation in any of the Jurisdictions.

The Funds

9. Each Fund is, or will be, an open-end mutual fund trust created under the laws of the Province of Ontario or an open-end mutual fund that is a class of shares of a mutual fund corporation.

10. Each Fund is, or will be, a reporting issuer under the laws of all of the provinces and territories of Canada and subject to National Instrument 81-102 Investment Funds (NI 81-102). The Laurentian Series securities are, or will be, qualified for distribution pursuant to a simplified prospectus, Fund Facts and annual information form that have been, or will be, prepared and filed in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure.

11. Each Fund currently offers up to four Laurentian Series: Series LB, LM, LP and LX.

12. Certain Funds intend to also offer either Series LW, or Series LW and LW6, which will be qualified for distribution by way of a simplified prospectus to be dated on or around November 23, 2017. The Filer may offer additional series under the Laurentian Prospectus in the future.

13. Series LW, LW6 and any future applicable preferred pricing series securities that are Laurentian Series securities (the Laurentian Preferred Pricing Series) generally have or will have lower combined management and administration fees than Series LB, LM and LX and any future applicable retail series securities that are Laurentian Series securities (the Laurentian Retail Series) and are, or will be, only available to investors who have invested at least $100,000 in one Laurentian Series of a Fund or $250,000 across a group of eligible investments (Eligibility Criteria).

14. The Existing Funds are not in default of securities legislation in any of the Jurisdictions.

Lower Fee Switches

15. The Filer is starting a program (the Preferred Pricing Program) effective December 8, 2017 (the Implementation Date) whereby investors holding Laurentian Retail Series securities will automatically be switched into the corresponding Laurentian Preferred Pricing Series securities if they meet the Eligibility Criteria and would benefit from lower fees. The Filer will automatically switch these Laurentian Retail Series holders into the Laurentian Preferred Pricing Series (the Lower Fee Switches) without the Principal Distributor or investor having to initiate the trade. If an investor holding Laurentian Preferred Pricing Series securities ceases to meet the Eligibility Criteria, the Filer may switch the Laurentian Preferred Pricing Series back into the applicable Laurentian Retail Series securities without the Principal Distributor or investor initiating the trade (the Higher Fee Switches).

16. The Laurentian Preferred Pricing Series will, relative to the applicable Laurentian Retail Series, provide investors with progressively lower combined management and administration fees. The applicable management fee reductions will be based on tiered discount rates that vary according to certain investor asset thresholds. Those management fee reductions will be determined in respect of each Fund, where Laurentian Preferred Pricing Series securities are held within eligible accounts, as follows:

(a) the Filer will calculate the “high water mark” value of the Laurentian Series securities and any other Fund securities held in eligible accounts (the Eligible Investments);

(b) the Filer will calculate the percentage of the value of the Eligible Investments within each of the tiers used in the Preferred Pricing Program;

(c) for each tier in which Eligible Investments are held, the Filer will multiply the percentage of the daily value of Eligible Investments within that tier by the daily equivalent of the management fee reduction rate that is applicable to that tier of the applicable Laurentian Preferred Pricing Series; and

(d) the management fee rate reduction equals the sum of each amount calculated in accordance with paragraph (c) above.

Management fee reductions will only be applied to investments in the Laurentian Preferred Pricing Series and will not be applied to other Eligible Investments.

17. Relevant investor accounts will be monitored by the Filer, who will apply management fee reductions using the discount rates of the applicable tier or tiers. The management fee reductions will be payable on a quarterly basis in the form of additional securities of the Funds.

18. An investor will be eligible for Lower Fee Switches when the investor purchases additional Laurentian Series securities or when positive market movement moves the investor into Laurentian Preferred Pricing Series eligibility. If an investor meets the Eligibility Criteria through a purchase or a switch transaction they will be automatically switched into the applicable Laurentian Preferred Pricing Series the following business day. In addition, the Filer will automatically switch Laurentian Retail Series securities into the applicable Laurentian Preferred Pricing Series securities on or about the second Friday of every month if positive market movement has allowed them to meet the Eligibility Criteria.

19. The Higher Fee Switches may occur because of redemptions that decrease the amount of total investments with the Filer for purposes of calculating the investor’s eligibility for Laurentian Preferred Pricing Series securities. However, in no circumstances will market value declines lead to Higher Fee Switches.

20. Once an account has qualified for the Laurentian Preferred Pricing Series, the account will continue to enjoy the benefit of lower fees associated with the applicable Laurentian Preferred Pricing Series, even if Fund performance reduces the account value below the Eligibility Criteria.

21. Investors may access Laurentian Preferred Pricing Series securities by: (a) initially investing in Laurentian Preferred Pricing Series securities if they meet the Eligibility Criteria; or (b) initially investing in Laurentian Retail Series securities and then, upon meeting the Eligibility Criteria, having those Laurentian Retail Series securities switched into Laurentian Preferred Pricing Series securities by way of a Lower Fee Switch.

22. Investors may access Laurentian Retail Series securities by: (a) initially investing in Laurentian Retail Series securities; or (b) initially investing in Laurentian Preferred Pricing Series securities and then, upon no longer meeting the Eligibility Criteria for the Laurentian Preferred Pricing Series securities, having those Laurentian Preferred Pricing Series securities switched into Laurentian Retail Series securities by way of a Higher Fee Switch.

23. The trailing commissions for the Laurentian Preferred Pricing Series and Laurentian Retail Series securities are, or will be, identical.

24. Further to each Lower Fee Switch, an investor’s account would continue to hold Laurentian Series securities in the same Fund(s) as before the Lower Fee Switch, with the only material differences to the investor being that the combined management and administration fees charged for the Laurentian Preferred Pricing Series securities would be lower than those charged for Laurentian Retail Series securities.

25. Further to each Higher Fee Switch, an investor’s account would continue to hold Laurentian Series securities in the same Fund(s) as before the Higher Fee Switch, with the only material differences to the investor being that the combined management and administration fees charged for the Laurentian Retail Series securities would be higher than those charged for Laurentian Preferred Pricing Series securities.

26. There are no sales charges, switch fees or other fees payable by the investor upon a Lower Fee Switch or a Higher Fee Switch.

27. Implementation of the Lower Fee Switches will have no adverse tax consequences on investors under current Canadian tax legislation.

28. Each Lower Fee Switch will entail a redemption of the Laurentian Retail Series securities, immediately followed by a purchase of the corresponding Laurentian Preferred Pricing Series securities and will be a “distribution” under the Securities Act (Ontario), which triggers the Pre-Sale Fund Facts Delivery Requirement.

29. Pursuant to the Pre-Sale Fund Facts Delivery Requirement, a dealer is required to deliver the most recently filed Fund Facts of a series of a fund to an investor before the dealer accepts an instruction from the investor for the purchase of securities of that series of the fund.

30. While the Filer will initiate each trade done as part of a Lower Fee Switch, the Filer does not propose to deliver the Fund Facts to investors in connection with the purchase of Securities made pursuant to a Lower Fee Switch for the following reasons:

(a) at no time will an account that qualifies for Laurentian Preferred Pricing Series securities pay combined management and administration fees at a rate higher than the rate of the combined management and administration fees of the Laurentian Retail Series securities for which it initially subscribed; and

(b) since Laurentian Retail Series securityholders would have received the Fund Facts disclosing the higher level of fees which applied to the Laurentian Retail Series for which they initially subscribed, the investor would derive little benefit from receiving a further Fund Facts document for each Lower Fee Switch.

31. The Principal Distributor will be required to deliver the Laurentian Retail Series Fund Facts to investors in connection with the purchase of Laurentian Retail Series securities made pursuant to a Higher Fee Switch, as required by the Pre-Sale Fund Facts Delivery Requirement.

32. The Filer will deliver or will arrange for the delivery of trade confirmations to investors in connection with each trade done further to a Lower Fee Switch. Furthermore, details of the changes in series of Laurentian Series securities held will be reflected in the account statements sent to investors for the quarter in which the change occurred.

33. The Filer will disclose the eligibility requirements and the management and administration fees applicable to the Laurentian Retail Series and the Laurentian Preferred Pricing Series in the simplified prospectus.

34. In the Fund Facts of the Laurentian Retail Series and the Laurentian Preferred Pricing Series of the Funds, as applicable, the Filer will disclose:

(a) under the heading “How much does it cost?”, a summary of the Preferred Pricing Program, consisting of:

(i) a statement explaining that the Preferred Pricing Program offers combined management and administration fee decreases;

(ii) in the case of the Laurentian Retail Series only, a statement explaining the scenarios in which the Lower Fee Switches will be made;

(iii) a statement that Higher Fee Switches may be made due to the investor no longer meeting the Eligibility Criteria;

(iv) a cross-reference to the fee decrease table under the sub-heading “Fund expenses”;

(v) a cross-reference to specific sections of the simplified prospectus of the Funds for more details about the Preferred Pricing Program; and

(vi) a statement disclosing that investors should speak to their representative for more details about the Preferred Pricing Program;

(b) at the end of the disclosure under the sub-heading “Fund expenses”:

(i) a table that discloses:

A. the name of, and qualifying investment amounts associated with, each of the tiers used in determining management fee reductions in the applicable Laurentian Preferred Pricing Series;

B. the combined management and administration fee decrease of each fee tier from the combined management and administration fee of the applicable Laurentian Retail Series, shown in percentage terms; and

(ii) an introduction to the table stating that the table sets out the combined management and administration fee decrease of each of the fee tiers from the combined management and administration fee of the applicable Laurentian Retail Series

(collectively, the Preferred Pricing Program Disclosure).

35. The Filer will communicate extensively with the Principal Distributor about the Lower Fee Switches so that the Principal Distributor will be equipped to appropriately notify existing Laurentian Retail Series investors of the changes applying to their Laurentian Retail Series investments and appropriately advise new Laurentian Retail Series investors about the Lower Fee Switches.

36. In the absence of the Exemption Sought, the Filer may not carry out the Lower Fee Switches without compliance with the Pre-Sale Fund Facts Delivery Requirement.

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:

1. For investors invested in Laurentian Retail Series prior to the Implementation Date of the Lower Fee Switches, the Filer will liaise with the Principal Distributor to devise a notification plan for such investors regarding the Lower Fee Switches that addresses the following:

(a) that their investment may be switched to a Laurentian Preferred Pricing Series with lower fees upon meeting the applicable Eligibility Criteria;

(b) that other than a difference in fees, there may be no other material difference between the Laurentian Retail Series and the Laurentian Preferred Pricing Series;

(c) that if they cease to meet the Eligibility Criteria for Laurentian Preferred Pricing Series, their investment may be switched into a series with higher management and administration fees which will not exceed Laurentian Retail Series fees; and

(d) that they will not receive the Fund Facts when they purchase Securities further to a Lower Fee Switch, but that

(i) they may request the most recently filed Fund Facts for the relevant series by calling a specified toll-free number or by sending a request via email to a specified address;

(ii) the most recently filed Fund Facts will be sent or delivered to them at no cost;

(iii) the most recently filed Fund Facts may be found either on the SEDAR website or on the Filer’s website; and

(iv) they will not have the right to withdraw from an agreement of purchase and sale (a Withdrawal Right) in respect of a purchase of series securities made pursuant to a Lower Fee Switch, but they will have the right of action for damages or rescission in the event any Fund Facts or document incorporated by reference into a simplified prospectus for the relevant series contains a misrepresentation, whether or not they request the Fund Facts.

2. the Filer will incorporate disclosure in the simplified prospectus for the Laurentian Series that sets out the following:

(a) the eligibility requirements for both the Laurentian Retail Series and the Laurentian Preferred Pricing Series;

(b) the management and administration fees applicable to investments in both the Laurentian Retail Series and the Laurentian Preferred Pricing Series; and

(c) in the event investors cease to meet the Eligibility Criteria of a specified Laurentian Preferred Pricing Series, that their investment may be switched into a series with higher management and administration fees which will not exceed the applicable Laurentian Retail Series fees.

3. each Fund Facts for each Laurentian Series will contain:

(a) the Preferred Pricing Program Disclosure; and

(b) a cross-reference to the more detailed disclosure in the simplified prospectus.

4. for Laurentian Retail Series investors, the Filer sends these investors an annual reminder notice advising that they will not receive the Fund Facts when they purchase Laurentian Preferred Pricing Series securities further to a Lower Fee Switch, but that:

(a) they may request the most recently filed Fund Facts for the relevant series by calling a specified toll-free number or by sending a request via email to a specified address;

(b) the most recently filed Fund Facts will be sent or delivered to them at no cost;

(d) they will not have a Withdrawal Right in respect of a purchase of series securities made pursuant to a Lower Fee Switch, but they will have a right of action for damages or rescission in the event any Fund Facts or document incorporated by reference into a simplified prospectus for the relevant series contains a misrepresentation, whether or not they request the Fund Facts.

“Vera Nunes”

Manager

Investment Funds and Structured Products Branch

Ontario Securities Commission