Annual Management Report of Fund Performance For the Period Ended March 31, This Annual Management Report of Fund Performance contains financial highlights but does not contain the complete annual financial statements of the investment fund. You may obtain a copy of the annual financial statements, at no cost, by calling the toll-free number 1-888-532-3322, by writing to us at Quadrus Investment Services Ltd., 255 Dufferin Avenue, London, Ontario N6A 4K1, by visiting our website at www.quadrusgroupoffunds.com or by visiting the SEDAR website at www.sedar.com. Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure. Every effort has been made to ensure that the information contained in this report is accurate as of the dates indicated in the report; however, the Fund cannot guarantee the accuracy or the completeness of this material. For more information, please refer to the Fund s Simplified Prospectus and Annual Information Form, which may also be obtained, at no cost, using any of the methods outlined above. For the Fund s current net asset values per security and for more recent information on general market events, please visit our website. A NOTE ON FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements that reflect our current expectations or forecasts of future events. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as expects, anticipates, intends, plans, believes, estimates, preliminary, typical and other similar expressions. In addition, these statements may relate to future corporate actions, future financial performance of a fund or a security and their future investment strategies and prospects. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual events, results, performance or prospects to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, the volatility of global equity and capital markets, business competition, technological change, changes in government regulations, changes in securities laws and regulations, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events and the ability of Mackenzie to attract or retain key employees. The foregoing list of important risks, uncertainties and assumptions is not exhaustive. Please consider these and other factors carefully and do not place undue reliance on forward-looking statements. The forward-looking information contained in this report is current only as of the date of this report. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.
Management Discussion of Fund Performance June 6, This Management Discussion of Fund Performance presents the portfolio management team s view on the significant factors and developments during the period since inception to March 31,, that have affected the Fund s performance and outlook. In this report, Mackenzie refers to Mackenzie Financial Corporation, the manager of the Fund. In addition, net asset value ( NAV ) refers to the value of the Fund as calculated for transaction purposes, on which the discussion of Fund performance is based. Investment Objective and Strategies The Fund seeks above-average income with potential for long-term capital growth by investing primarily in high yield U.S. and Canadian corporate fixed income securities, either directly or through other funds. It currently invests in Mackenzie North American Corporate Bond Fund (the Underlying Fund ). Risk The risks of investing in the Fund remain as discussed in the Fund s Simplified Prospectus. The Fund is suitable for investors seeking an income-oriented investment, and the potential for growth of capital over the medium term, who have a low to medium tolerance for risk. Results of Operations From its inception on July 5, 2013, to March 31,, the Fund experienced net income of $0.8 million (including dividend and interest income) from investment performance, after deducting fees and expenses, and net sales of $22.8 million. The performance of the Fund s Quadrus Series securities is discussed below. The performance of all series is shown in the Past Performance section of the report. Where series returns differ, it is primarily because different levels of fees and expenses were charged to each series, or because securities of a series were not issued and outstanding for the entire reporting period. Please refer to the Fund Formation and Series Information section of this report for the varying management and administration fees payable by each series. Investment Performance From the series inception on July 12, 2013, to March 31,, the Fund s Quadrus Series securities returned 7.1% (after deducting fees and expenses paid by the series). This compares with the FTSE TMX Canada Universe Bond Index return of 3.0% and the blended index return of 13.0%.* All index and series returns are calculated on a total return basis in Canadian dollar terms. Investors cannot invest in the index without incurring fees, expenses and commissions, which are not reflected in the index returns. The Fund outperformed the broad-based FTSE TMX Canada Universe Bond Index because of the Underlying Fund s overweight exposure to corporate bonds, which outperformed government bonds over the period. Given the * The blended index is composed of a 40% weight in the BofA Merrill Lynch Canada High Yield Index (returned 13.7%), a 40% weight in the BofA Merrill Lynch U.S. High Yield Master II Index (returned 14.), a 10% weight in the BofA Merrill Lynch Canada Corporates BBB-Rated Index (returned 4.9%) and a 10% weight in the BofA Merrill Lynch U.S. Corporates BBB-Rated Index (returned 12.7%). Fund s mandate, the return of the blended index is a more meaningful comparison. The Fund underperformed the blended index primarily because of the Underlying Fund s strategy of hedging the majority of its U.S. dollar exposure, as the U.S. dollar appreciated relative to the Canadian dollar. The Underlying Fund s underweight exposure to the diversified media, metals and mining, and transportation industries also detracted from performance. Its holdings in the financials sector, and in the chemicals and gaming and lodging industries, contributed to performance. Fees and Expenses The annualized management expense ratio ( MER ) for Quadrus Series was 2.2 since inception. The MERs (before and after waivers or absorptions, if any) for each series are presented in the Financial Highlights section of this report. The MER for each series consists of the management fee, administration fee and fund costs, as applicable to that series. Fund costs include taxes (including but not limited to GST/HST and income tax), interest and borrowing costs, fees and expenses of the Mackenzie Funds Independent Review Committee ( IRC ), any fees related to external services that were not commonly charged in the Canadian mutual fund industry as at June 15, 2007, and the costs of complying with any new regulatory requirements such as Fund Facts, including, without limitation, any new fees introduced after June 15, 2007. Recent Developments The Underlying Fund s portfolio management team believes the U.S. economy will grow at a rate of about 2% in, and that the improving economic backdrop should be positive for corporate earnings growth. The default rate on high-yield bonds could increase, but the team expects it to remain low, as high-yield issuers have benefited from refinancing at lower interest rates and cost-cutting initiatives. The supply of high-yield bonds reached a record high in calendar 2013 and has remained strong in. This strong supply has been met with solid demand. The team believes the high-yield market in both Canada and the United States still offers attractive loss-adjusted spreads, yet the team has a neutral outlook on the market. The team has therefore reduced the Underlying Fund s market sensitivity and will maintain its cash position in case market liquidity conditions become challenging. Furthermore, the team is increasingly vigilant in paring exposure in which constrained bond prices result in unfavourable risk-return characteristics. Future Accounting Standards Investment funds that are publicly accountable enterprises are required by the Canadian Accounting Standards Board ( AcSB ) to adopt International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) for fiscal years beginning on or after January 1,. Accordingly, the Fund will adopt IFRS for its fiscal period beginning April 1,, and will issue its initial financial statements in accordance with IFRS, including comparative information, for the interim period ending September 30,.
Mackenzie has identified the key differences between IFRS and Canadian generally accepted accounting principles ( GAAP ) that are expected to affect the Fund. A changeover plan has been developed that addresses key elements of the conversion to IFRS. Elements of the plan include evaluating the impacts of the changeover on all business activities, accounting policies, information technology and data systems, internal controls over financial reporting, and disclosure controls and procedures. As the Fund s changeover plans are implemented, requirements for financial reporting resources and training will be modified appropriately. Based on Mackenzie s current assessment, the adoption of IFRS is not expected to have a significant impact on the calculation of net asset value per security (pricing NAV). The requirements under IFRS will likely result in changes to the overall presentation of the Fund s financial statements and additional disclosure in the accompanying notes. The potentially significant impacts on the Fund s financial statements under IFRS are as follows: IFRS 1 First Time Adoption of IFRS sets out requirements to be applied in the year of adoption of IFRS, including the requirement for presenting an opening statement of net assets. For the Fund, this will require the presentation of three statements of net assets as of the date of transition: April 1, 2013, March 31,, and September 30,. Any changes to recognition and measurement between GAAP and IFRS will be required to be applied retrospectively, meaning that the opening balances as of the comparative period would need to be restated to reflect IFRS. IAS 7 Statement of Cash Flows requires the Fund to present a Statement of Cash Flow as an integral part of its financial statements. Under GAAP, the Fund is exempt from this requirement. IFRS 10 Consolidated Financial Statements defines criteria for an entity to qualify as an investment entity and exempts such entities from consolidation requirements. Where the Fund holds controlling interest in an investment, Mackenzie expects that the Fund will qualify as an investment entity with accounting policies that are consistent with existing treatment under GAAP. IFRS 13 Fair Value Measurement sets out guidance on the measurement of fair value and allows for the use of closing market prices to value investments. This standard may eliminate the difference under GAAP between net assets per security and net asset value per security at the financial statement reporting date. IAS 32 Financial Instruments: Presentation requires net assets attributable to securityholders to be classified as a liability in the financial statements unless certain conditions are met. Mackenzie has assessed the Fund s capital structure and expects that net assets attributable to securityholders will be classified as a liability in the Fund s financial statements. Mackenzie continues to monitor changes to IFRS proposed by the IASB and relevant amendments by the AcSB. The current assessment and IFRS changeover plans may change in response to any new standards or new interpretations of existing standards. Related Party Transactions The following arrangements result in fees paid by the Fund to Mackenzie or to companies affiliated with the Fund. Management and Administration Services For each applicable series, the Fund paid management fees and administration fees to Mackenzie at the annual rates specified under Fund Formation and Series Information in this report and as more fully described in the Prospectus. In return for the administration fees, Mackenzie pays all costs and expenses (other than certain specified fund costs) required to operate the Fund that are not otherwise included in management fees. See also Management Fees. Other Related Party Transactions The Fund did not rely on an IRC approval, positive recommendation or standing instruction with respect to a related party transaction because it did not engage in any related party transactions.
10% 8.6 NORTH AMERICAN HIGH YIELD BOND FUND 0% (PUTNAM) Mar-14 Past Performance The Fund s past performance information is presented in the following charts and table. It assumes all distributions made by the Fund in the periods presented are reinvested in additional securities of the relevant series of the Fund. The charts and table do not take into account sales, redemption, distribution or optional charges, or income taxes payable by any investor that would have reduced returns. The past performance of the Fund is not necessarily an indication of how it will perform in the future. If you hold this Fund outside of a registered plan, income and capital gains distributions paid to you increase your income for tax purposes whether paid to you in cash or reinvested in additional securities of the Fund. The amount of reinvested taxable distributions is added to the adjusted cost base of the securities that you own. This would decrease your capital gain or increase your capital loss when you later redeem from the Fund, thereby ensuring that you are not taxed on this amount again. Please consult your tax adviser regarding your personal tax situation. Year-by-Year Returns The following bar charts present the performance of each series of the Fund for the period ended March 31. The charts show, in percentage terms, how much an investment made on the first day of each fiscal period, or on the series inception or reinstatement date, as applicable, would have increased or decreased by the last day of the fiscal period presented. Series inception or reinstatement dates can be found under Fund Formation and Series Information. L Series 1 10% 0% N Series 1 10% 0% 8.3 Mar-14 8.1 Mar-14 Quadrus Series 1 10% 0% 7.1 Mar-14 H Series 1 10% 8.6 0% Mar-14 L Series 1 10% 8.3
Annual Compound Returns The following table compares the historical annual compound total returns for each series of the Fund with the relevant index or indices shown below for the period ended March 31,. Investors cannot invest in an index without incurring fees, expenses and commissions, which are not reflected in these performance figures. Unless otherwise noted below, all index returns are calculated in Canadian dollars on a total return basis, meaning that all distributions are reinvested. 1 3 5 10 Since Percentage Return: 1 Yr Yr Yr Yr Inception 2 Quadrus Series n/a n/a n/a n/a 7.1 H Series n/a n/a n/a n/a 8.6 L Series n/a n/a n/a n/a 8.3 N Series n/a n/a n/a n/a 8.1 Blended Index n/a n/a n/a n/a Note 3 FTSE TMX Canada Universe Bond Index* n/a n/a n/a n/a Note 4 BofA Merrill Lynch Canada High Yield Index n/a n/a n/a n/a Note 5 BofA Merrill Lynch U.S. High Yield Master II Index n/a n/a n/a n/a Note 6 BofA Merrill Lynch Canada Corporates BBB-Rated Index n/a n/a n/a n/a Note 7 BofA Merrill Lynch U.S. Corporates BBB-Rated Index n/a n/a n/a n/a Note 8 The BofA Merrill Lynch U.S. Corporates BBB-Rated Index is a subset of the Merrill Lynch U.S. Corporate Index including all securities rated BBB1 through BBB3, inclusive. (1) The percentage return differs for each series because the management fee rate and expenses differ for each series. (2) The return since inception for each series will differ when the inception date differs and is only provided when a series has been active for a period of less than 10 years. (3) The return of the blended index since inception for each applicable series is as follows: Quadrus Series 13.0%, H Series 12.7%, L Series 12.7%, N Series 12.8%. (4) The return of the FTSE TMX Canada Universe Bond Index since inception for each applicable series is as follows: Quadrus Series 3.0%, H Series 3.7%, L Series 3.4%, N Series 2.8%. (5) The return of the BofA Merrill Lynch Canada High Yield Index since inception for each applicable series is as follows: Quadrus Series 13.7%, H Series 13.2%, L Series 13.3%, N Series 13.. (6) The return of the BofA Merrill Lynch U.S. High Yield Master II Index since inception for each applicable series is as follows: Quadrus Series 14., H Series 14.0%, L Series 14.2%, N Series 14.2%. (7) The return of the BofA Merrill Lynch Canada Corporates BBB Rated Index since inception for each applicable series is as follows: Quadrus Series 4.9%, H Series 6.0%, L Series 5.4%, N Series 5.0%. (8) The return of the BofA Merrill Lynch U.S. Corporates BBB Rated Index since inception for each applicable series is as follows: Quadrus Series 12.7%, H Series 12.0%, L Series 12.1%, N Series 12.3%. * Broad-based Index The blended index is composed of 40% BofA Merrill Lynch Canada High Yield Index, 40% BofA Merrill Lynch U.S. High Yield Master II Index, 10% BofA Merrill Lynch Canada Corporates BBB-Rated Index and 10% BofA Merrill Lynch U.S. Corporates BBB-Rated Index. The FTSE TMX Canada Universe Bond Index (formerly the DEX Universe Bond Index) is a broad measure of Canadian bonds with terms to maturity of more than one year. It includes approximately 1,000 federal, provincial, municipal and corporate bonds rated BBB or higher. The BofA Merrill Lynch Canada High Yield Index tracks the performance of noninvestment grade debt publicly issued by Canadian issuers. Qualifying bonds must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum amount outstanding of C$100 million. The BofA Merrill Lynch U.S. High Yield Master II Index tracks the performance of non-investment grade U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market. Qualifying bonds must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum amount outstanding of US$100 million. The BofA Merrill Lynch Canada Corporates BBB-Rated Index tracks the performance of Canadian-dollar-denominated, investment grade, corporate debt publicly issued in the Canadian domestic bond market rated BBB1 through BBB3, inclusive. Qualifying bonds must have at least one year remaining term to maturity, a fixed coupon schedule and a minimum amount outstanding of C$100 million.
Summary of Investment Portfolio of the Underlying Fund* at March 31, Portfolio Allocation % of NAV Bonds... 94.0 Cash and equivalents... 4.9 Equities... 2.9 Other assets (liabilities)... (1.8) Regional Allocation % of NAV United States... 73.6 Canada... 15.8 Cash and equivalents... 4.9 Luxembourg... 2.7 United Kingdom... 0.9 Netherlands... 0.7 Mexico... 0.6 Bermuda... 0.5 Other... 0.5 Japan... 0.4 France... 0.3 Spain... 0.3 Sweden... 0.2 Switzerland... 0.2 Ireland... 0.2 Other assets (liabilities)... (1.8) Sector Allocation % of NAV Corporate bonds... 88.4 Term loans... 5.6 Cash and equivalents... 4.9 Financials... 1.1 Consumer discretionary... 0.8 Energy... 0.5 Materials... 0.2 Utilities... 0.1 Industrials... 0.1 Consumer staples... 0.1 Other assets (liabilities)... (1.8) Net Currency Exposure % of NAV Canadian dollar... 99.9 Euro... 0.1 Bonds by Credit Rating** % of Bonds A... 0.6 BBB... 6.0 BB... 39.2 B... 36.9 Less than B...15.1 Unrated... 2.2 Top 25 Holdings of the Underlying Fund Issuer % of NAV Cash and equivalents 4.9 CHC Helicopter SA 9.2 10-15-2020 Callable 2015 0.8 Quebecor Media Inc. 6.62 01-15-2023 0.8 First Data Corp. 8.2 01-15-2021 Callable 2016 0.7 Intelsat Luxembourg SA 7.7 06-01-2021 Callable 2017 0.7 MEG Energy Corp. 6.37 01-30-2023 Callable 2017 0.6 Sprint Nextel Corp. 7.00% 08-15-2020 0.6 First Data Corp. 12.62 01-15-2021 Callable 2016 0.5 Travelport LLC Term Loan 1 2nd Lien F/R 01-31-2016 0.5 Lightstream Resources Ltd. 8.62 02-01-2020 Callable 2016 0.5 Valeant Pharmaceuticals International Inc. 6.87 12-01-2018 Callable 0.5 Digicel Group Ltd. 8.2 09-30-2020 Callable 2016 0.5 Ashtead Capital Inc. 6.50% 07-15-2022 Callable 2017 0.5 Sprint Corp. 7.2 09-15-2021 0.5 Gateway Casinos & Entertainment Ltd. 8.50% 11-26-2020 Callable 2016 0.5 ADS Waste Holdings Inc. 8.2 10-01-2020 Callable 2016 0.5 Clear Channel Communications Inc. Term Loan D F/R 01-31-2019 0.5 HCA Inc. 6.50% 02-15-2020 Callable 0.5 Western Energy Services Corp. 7.87 01-30-2019 Callable 2016 0.5 Alcatel-Lucent USA Inc. 6.7 11-15-2020 Callable 2016 0.4 Tervita Corp. 9.00% 11-15-2018 Callable 2015 0.4 Ceridian HCM Holding Inc. 11.00% 03-15-2021 Callable 2016 0.4 Icahn Enterprises LP 6.00% 08-01-2020 Callable 2017 0.4 Softbank Corp. 4.50% 04-15-2020 0.4 Service Corp. International 5.37 01-15-2022 Callable 2017 0.4 Top long positions as a percentage of total net asset value 17.5 The Underlying Fund held no short positions at the end of the period. The simplified prospectus and other information about the Underlying Fund are available on the SEDAR website at www.sedar.com or, when that fund is a Mackenzie fund, at www.mackenzieinvestments.com. The investments and percentages may have changed since March 31,, due to the ongoing portfolio transactions of the Fund and the Underlying Fund. Quarterly updates of holdings are available within 60 days of the end of each quarter except for March 31, the funds fiscal year-end, when they are available within 90 days. * The Fund is currently fully invested in Mackenzie North American Corporate Bond Fund (formerly Mackenzie Sentinel North American Corporate Bond Fund; the Underlying Fund ). ** Credit ratings and rating categories are based on DBRS (or equivalent ratings issued by other approved credit rating organizations).
Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for each of the fiscal periods presented below. If during the period a fund or series was established or reinstated, period represents the period from inception or reinstatement to the end of that fiscal period. Series inception or reinstatement dates can be found under Fund Formation and Series Information. THE FUND S NET ASSETS PER SECURITY ($) 1 Quadrus Series Net assets, beginning of period 10.00 Increase (decrease) from operations: Total revenue 0.46 Total expenses (0.16) Realized gains (losses) for the period 0.14 Unrealized gains (losses) for the period 0.31 Total increase (decrease) from operations 2 0.75 Distributions: From income (excluding dividends) (0.26) From dividends From capital gains Return of capital Total annual distributions 3 (0.26) Net assets, end of period 10.44 Series H Net assets, beginning of period 10.00 Increase (decrease) from operations: Total revenue 1.70 Total expenses (0.11) Realized gains (losses) for the period (1.96) Unrealized gains (losses) for the period 1.13 Total increase (decrease) from operations 2 0.76 Distributions: From income (excluding dividends) (0.46) From dividends (0.01) From capital gains Return of capital Total annual distributions 3 (0.47) Net assets, end of period 10.38 Series L Net assets, beginning of period 10.00 Increase (decrease) from operations: Total revenue 0.74 Total expenses (0.13) Realized gains (losses) for the period (0.39) Unrealized gains (losses) for the period 0.49 Total increase (decrease) from operations 2 0.71 Distributions: From income (excluding dividends) (0.34) From dividends (0.01) From capital gains Return of capital Total annual distributions 3 (0.35) Net assets, end of period 10.48 Series N Net assets, beginning of period 10.00 Increase (decrease) from operations: Total revenue 0.48 Total expenses Realized gains (losses) for the period 0.11 Unrealized gains (losses) for the period 0.32 Total increase (decrease) from operations 2 0.91 Distributions: From income (excluding dividends) (0.36) From dividends (0.01) From capital gains Return of capital Total annual distributions 3 (0.37) Net assets, end of period 10.44 (1) These calculations are prescribed by securities regulations and are not intended to be a reconciliation between opening and closing net assets per security. This information is derived from the Fund s audited annual financial statements. The net assets per security presented in the financial statements may differ from the net asset value per security calculated for fund pricing purposes. An explanation of these differences can be found in the Notes to Financial Statements. (2) Net assets and distributions are based on the actual number of securities outstanding at the relevant time. The increase/decrease from operations is based on the weighted average number of securities outstanding over the fiscal period. (3) Distributions were paid in cash/reinvested in additional securities of the Fund, or both.
RATIOS AND SUPPLEMENTAL DATA Quadrus Series Total net asset value ($000) 1, 2 18,835 Securities outstanding (000) 1 1,804 Management expense ratio (%) 3 2.25 Management expense ratio before waivers or absorptions (%) 3 2.25 Trading expense ratio (%) 4 0.01 Portfolio turnover rate (%) 5 n/a Net asset value per security ($) 2 10.44 Series H Total net asset value ($000) 1, 2 598 Securities outstanding (000) 1 58 Management expense ratio (%) 3 1.36 Management expense ratio before waivers or absorptions (%) 3 1.36 Trading expense ratio (%) 4 0.01 Portfolio turnover rate (%) 5 n/a Net asset value per security ($) 2 10.38 Series L Total net asset value ($000) 1, 2 1,717 Securities outstanding (000) 1 164 Management expense ratio (%) 3 1.80 Management expense ratio before waivers or absorptions (%) 3 1.80 Trading expense ratio (%) 4 0.01 Portfolio turnover rate (%) 5 n/a Net asset value per security ($) 2 10.48 Series N Total net asset value ($000) 1, 2 2,480 Securities outstanding (000) 1 238 Management expense ratio (%) 3 0.01 Management expense ratio before waivers or absorptions (%) 3 0.01 Trading expense ratio (%) 4 0.01 Portfolio turnover rate (%) 5 n/a Net asset value per security ($) 2 10.44 (1) This information is provided as at the end of the fiscal period shown. (2) The net asset value figures presented in this table are used for fund pricing and calculating returns by series. As a result of the requirements under Chartered Professional Accountants ( CPA ) Canada Handbook Accounting Section 3855, Financial Instruments Recognition and Measurement, these net asset values may differ from the figures in the financial statements, and the net asset value per security in this table may differ from the end of period figure in The Fund s Net Assets per Security table in this section. (3) Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset value during the period. If in the period a series was established or reinstated, the management expense ratio is annualized from the date of inception or reinstatement. Mackenzie and Quadrus may waive or absorb operating expenses at its discretion and stop waiving or absorbing such expenses at any time without notice. (4) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period. (5) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the period. The higher a fund s portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a fund. The portfolio turnover rate is not provided when the Fund is less than one year old. The value of any trades to realign the Fund s portfolio after a fund merger, if any, is excluded from the portfolio turnover rate.
Management Fees The management fee for each applicable series is calculated and accrued daily as a percentage of its NAV. The Fund s management fees were used by Mackenzie in part to pay Putnam Investments Limited, an affiliate of Mackenzie, for the costs of managing the investment portfolio of the underlying fund, including providing investment analysis and recommendations, making investment decisions and making brokerage arrangements for the purchase and sale of the investment portfolio. Quadrus Investment Services Ltd. ( Quadrus ), an affiliate of Mackenzie, is the principal distributor for the Fund and receives a portion of the management fees that the Fund pays to Mackenzie. Under this arrangement, Quadrus was entitled to approximately 79% of the total management fees that Mackenzie received from the Quadrus Group of Funds during the year. As the Fund s principal distributor, Quadrus is responsible for paying certain administrative costs and all sales commissions, trailing commissions and any other compensation (collectively, distribution-related payments ) to registered dealers whose clients invest in the Fund. Also, approximately 41% of the total management fee revenues paid by all Mackenzie funds during the year were used to fund distributionrelated payments to registered dealers and brokers. In comparison, such distribution-related payments for the Fund represented on average 120% of the management fees paid by all applicable series of the Fund during the year. The actual percentage for each series may be higher or lower than the average depending on the level of trailing commissions and sales commissions paid for that series. The higher proportion of distributionrelated payments is primarily attributable to sales commissions related to gross sales of redemption charge securities of the Fund. When distribution-related payments exceeded the amount paid to Quadrus under the arrangement described above, the balance was paid out of Quadrus s other revenues. Because the Fund is in its first year, the percentage of management fees used to fund such distribution-related payments is not representative.
Fund Formation and Series Information The Fund may have undergone a number of changes, such as a reorganization or a change in manager, mandate or name. A history of the major changes affecting the Fund in the last 10 years can be found in the Fund s Annual Information Form. Date of Formation June 28, 2013 The Fund may issue an unlimited number of securities of each series. The number of issued and outstanding securities of each series is disclosed in Financial Highlights. Quadrus Investment Services Ltd. ( Quadrus ) is the principal distributor of the series of securities listed below: Quadrus Series securities are offered to investors investing a minimum of $500. H Series securities are offered to investors investing a minimum of $500, who are enrolled in a Quadrus-sponsored fee-for-service or wrap program and who are subject to an asset-based fee. L Series securities are offered to investors investing a minimum of $100,000 and who have eligible minimum total holdings of $500,000. N Series securities are offered to investors investing a minimum of $100,000, who have eligible minimum total holdings of $500,000, and who have entered into an N type series account agreement with Mackenzie and Quadrus. An investor in the Fund may choose among different purchase options that are available under each series. These purchase options are a sales charge purchase option, a redemption charge purchase option and low-load purchase options. The charges under the sales charge purchase option are negotiated by investors with their dealers. The charges under the redemption charge and low-load purchase options are paid to Mackenzie if an investor redeems securities of the Fund during specific periods. Not all purchase options are available under each series of the Fund, and the charges for each purchase option may vary among the different series. For further details on these purchase options, please refer to the Fund s Simplified Prospectus. Inception/ Management Administration Net Asset Value per Security ($) Series Reinstatement Date Fees Fees, Quadrus Series July 12, 2013 1.7 0.23% 10.44 H Series July 5, 2013 1.00% 0.23% 10.38 L Series July 10, 2013 1.4 0.1 10.48 N Series July 16, 2013 (1) (1) 10.44 (1) The management and administration fees for N Series securities are negotiable and are payable directly to Mackenzie by N Series investors, not by the Fund.