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mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
mackenzie growth fund
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mackenzie growth fund

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  • 1. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity management report Management’s Responsibility for Financial Reporting the accompanying financial statements have been prepared by mackenzie financial corporation, as manager of mackenzie Growth fund (the “fund”). the manager is responsible for the integrity, objectivity and reliability of the data presented. this responsibility includes selecting appropriate accounting principles and making judgments and estimates consistent with canadian generally accepted accounting principles. the manager is also responsible for the development of internal controls over the financial reporting process, which are designed to provide reasonable assurance that relevant and reliable financial information is produced. the Board of directors (the “Board”) of mackenzie financial corporation is responsible for reviewing and approving the financial statements and overseeing the manager’s performance of its financial reporting responsibilities. the Board is assisted in discharging this responsibility by an audit committee, which reviews the financial statements and recommends them for approval by the Board. the audit committee also meets regularly with the manager, internal auditors and external auditors to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues. deloitte & touche llP are the external auditors of the fund. they are appointed by the Board. the external auditors have audited the financial statements in accordance with canadian generally accepted auditing standards to enable them to express to the securityholders their opinion on the financial statements. their report is set out below. On behalf of mackenzie financial corporation, manager of the fund charles R. sims Venkat Kannan President and chief executive Officer chief financial Officer, funds may 14, 2010 auditors’ report to the securityholders of mackenzie Growth fund (the “fund”) We have audited the statements of net assets of the fund as at march 31, 2010 and 2009, the statements of operations and of changes in net assets for the periods then ended, as indicated in note 1, and the statement of investments as at march 31, 2010. these financial statements are the responsibility of the fund’s manager. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with canadian generally accepted auditing standards. those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. an audit also includes assessing the accounting principles used and significant estimates made by the fund’s management, as well as evaluating the overall financial statement presentation. in our opinion, these financial statements present fairly, in all material respects, the financial position of the fund as at march 31, 2010 and 2009, the results of its operations and the changes in its net assets for the periods then ended, as indicated in note 1, in accordance with canadian generally accepted accounting principles. deloitte & touche llP chartered accountants, licensed Public accountants toronto, canada may 14, 2010
  • 2. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity statements of net assets statements of operations As at March 31 For the periods ended March 31 (note 1) In thousands (except per security figures) In thousands (except per security figures) 2010 2009 2010 2009 $ $ $ $ Assets Income investments at fair value 308,036 216,178 dividends 2,189 1,423 cash and short-term investments 772 1,198 interest 1,795 2,895 accrued interest and dividends receivable 163 544 less withholding taxes (226) (113) Receivables for securities sold 2,488 3,763 income (loss) from derivative contracts (2,286) – subscriptions receivable 46 35 Revenue from securities lending 10 36 Options at fair value 26,381 – 1,482 4,241 amounts receivable – derivative transactions 1,416 298 339,302 222,016 Expenses (note 4) management fees 4,747 3,481 Liabilities administration fees 716 505 Payables for securities purchased 2,324 2,318 independent Review committee fees 2 1 Redemptions payable 390 128 interest charges 19 38 Operating expenses payable – – 5,484 4,025 amounts payable – derivative transactions 341 2,026 net investment income (loss) before 3,055 4,472 rebated and absorbed expenses (4,002) 216 net assets 336,247 217,544 Rebated and absorbed expenses 1 – Series net assets (note 2) net investment income (loss) before income taxes (4,001) – Series a 236,807 157,950 income taxes (28) – Series F 4,724 3,005 net investment income (loss) for the period (4,029) 216 Series G 1,232 1,224 Realized gain (loss) on sale of investments 9,929 (187,761) Series i 3,547 1,677 change in unrealized appreciation (depreciation) 128,134 (31,462) Series J 29 – transaction costs (2,399) (1,638) Series O 215 113 net gain (loss) on investments 135,664 (220,861) Series R 89,693 53,575 net assets per security (note 2) increase (decrease) in net assets from operations 131,635 (220,645) Series a 13.03 8.12 increase (decrease) in net assets from operations Series F 12.14 7.49 per series Series G 7.54 4.68 Series a 93,906 (175,829) Series i 5.56 3.44 Series F 1,863 (3,090) Series J 10.14 – Series G 660 (1,481) Series O 13.23 8.07 Series i 1,074 (1,704) Series R 6.52 3.97 Series J – – Series O 72 (3,260) Series R 34,060 (35,281) increase (decrease) from operations per security Series a 4.97 (8.56) Series F 4.65 (7.63) Series G 3.18 (5.03) Series i 1.99 (3.53) Series J 0.15 – Series O 5.23 (9.77) Series R 2.58 (3.05) The accompanying notes are an integral part of these financial statements.
  • 3. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity statements of changes in net assets For the periods ended March 31 (note 1) In thousands 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 Series a Series F Series G Series i Series J $ $ $ $ $ net assets – beginning of period 157,950 355,993 3,005 6,201 1,224 3,011 1,677 3,338 – – increase (decrease) in net assets from operations 93,906 (175,829) 1,863 (3,090) 660 (1,481) 1,074 (1,704) – – distributions paid to securityholders: investment income – – – – – – (1) – – – capital gains – – – – – – – – – – total distributions paid to securityholders – – – – – – (1) – – – security transactions: Proceeds from securities issued 26,114 16,873 432 368 22 156 1,085 434 29 – Reinvested distributions – – – – – – 1 – – – Value of securities redeemed (41,163) (39,087) (576) (474) (674) (462) (289) (391) – – total security transactions (15,049) (22,214) (144) (106) (652) (306) 797 43 29 – total increase (decrease) in net assets 78,857 (198,043) 1,719 (3,196) 8 (1,787) 1,870 (1,661) 29 – net assets – end of period 236,807 157,950 4,724 3,005 1,232 1,224 3,547 1,677 29 – increase (decrease) in fund securities (note 5): Securities Securities Securities Securities Securities Securities outstanding – beginning of period 19,447 21,689 401 413 262 320 488 483 – – issued for cash 2,212 1,701 41 40 3 20 205 112 3 – Reinvested distributions – – – – – – – – – – Redeemed (3,486) (3,943) (53) (52) (102) (78) (55) (107) – – Securities outstanding – end of period 18,173 19,447 389 401 163 262 638 488 3 – Series O Series R total $ $ $ net assets – beginning of period 113 16,355 53,575 66,377 217,544 451,275 increase (decrease) in net assets from operations 72 (3,260) 34,060 (35,281) 131,635 (220,645) distributions paid to securityholders: investment income – – – – (1) – capital gains – – – – – – total distributions paid to securityholders – – – – (1) – security transactions: Proceeds from securities issued 54 18 11,086 22,774 38,822 40,623 Reinvested distributions – – – – 1 – Value of securities redeemed (24) (13,000) (9,028) (295) (51,754) (53,709) total security transactions 30 (12,982) 2,058 22,479 (12,931) (13,086) total increase (decrease) in net assets 102 (16,242) 36,118 (12,802) 118,703 (233,731) net assets – end of period 215 113 89,693 53,575 336,247 217,544 increase (decrease) in fund securities (note 5): Securities Securities Securities outstanding – beginning of period 14 1,021 13,508 8,435 issued for cash 4 1 1,788 5,148 Reinvested distributions – – – – Redeemed (2) (1,008) (1,536) (75) Securities outstanding – end of period 16 14 13,760 13,508 The accompanying notes are an integral part of these financial statements.
  • 4. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity statement of investments As at March 31, 2010 no. of average Fair Shares/ cost Value country Sector Par Value ($ 000s) ($ 000s) BOndS suzano Bahia sul Papel e celulose sa f/R 12-01-2012 Brazil corporate - non convertible R$2,234,000 1,186 1,792 total bonds 1,186 1,792 equitieS 5n Plus inc. canada information technology 500,000 2,995 2,725 advantage Oil & Gas ltd. canada energy 750,000 4,806 5,153 alter nRG corp. canada energy 300,000 1,415 606 Black mountain energy corp.* canada energy 1,500,000 1,501 840 canadian natural Resources ltd. canada energy 185,000 10,083 13,906 canelson drilling inc. canada energy 711,400 1,386 1,401 cenovus energy inc. canada energy 100,000 2,578 2,651 china construction Bank corp. china financials 27,500,000 24,528 22,797 companhia de saneamento de minas Gerais - cOPasa mG Brazil utilities 350,000 3,603 5,067 covalon technologies ltd. canada Health care 7,350,000 5,606 1,617 credicorp ltd. Peru financials 50,000 2,837 4,473 first Quantum minerals ltd. canada materials 275,000 20,718 22,979 Galveston lnG inc.* canada energy 1,250,000 1,805 8,750 GasfRac energy services inc. Private Placement* canada energy 350,000 1,488 1,183 Gerdau ameristeel corp. canada materials 275,000 1,931 2,195 Hanfeng evergreen inc. canada materials 200,000 1,549 1,562 imperial Oil ltd. canada energy 275,000 11,008 10,788 industrial and commercial Bank of china ltd. H china financials 9,000,000 6,964 6,955 Konarka technologies inc. Pfd. series f* united states information technology 726,500 2,384 2,648 lundin mining corp. canada materials 750,000 3,764 4,042 manulife financial corp. canada financials 600,000 12,818 11,982 marketing exchange network inc.* canada information technology 1,897,500 3,191 323 migao corp. canada materials 1,500,000 10,610 10,545 national Bank of abu dhabi united arab emirates financials 550,000 1,711 1,824 neo material technologies inc. canada materials 500,000 1,390 1,985 Potash corp. of saskatchewan inc. canada materials 70,000 8,519 8,487 Pt Bank Rakyat indonesia tBK indonesia financials 7,000,000 4,980 6,450 Reinsurance Group of america inc. united states financials 275,000 11,582 14,651 sberbank Rf Russia financials 600,000 1,735 1,760 secure energy services inc. canada energy 1,197,900 3,876 3,869 shinhan financial Group co. ltd. south Korea financials 175,000 6,798 6,972 sino-forest corp. canada materials 1,350,000 16,576 26,798 sJm Holdings ltd. Hong Kong consumer discretionary 40,000,000 20,325 26,831 suncor energy inc. canada energy 150,000 4,747 4,949 sundance Resources ltd. australia materials 6,000,000 878 866 sunOpta BioProcess inc. Pfd. series a* canada conv. Pfd. & equity Related 50,000 1,064 102 sustainable energy technologies ltd. canada industrials 100,000 38 38 titan medical inc. canada Health care 4,100,000 1,398 1,456 trinidad drilling ltd. canada energy 150,000 753 1,038 turkiye Garanti Bankasi as turkey financials 4,000,000 12,262 18,856 turkiye Halk Bankasi as turkey financials 2,000,000 13,508 14,577 Vinacapital Vietnam Opportunity fund ltd. Vietnam exchange traded index funds 3,250,000 8,925 5,081 Wi-lan inc. canada information technology 2,502,700 8,523 7,083 Yingli Green energy Holding co. ltd. adR china industrials 350,000 4,635 4,527 total equities 273,791 303,388 The accompanying notes are an integral part of these financial statements.
  • 5. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity statement of investments (cont’d) As at March 31, 2010 average Fair no. of cost Value country Sector units ($ 000s) ($ 000s) incOMe tRuStS stoneham drilling trust canada energy 564,500 7,619 2,856 total income trusts 7,619 2,856 transaction costs (709) – total investments 281,887 308,036 Options (see schedule of derivative instruments) 27,991 26,381 derivative instruments (see schedule of derivative instruments) 1,075 cash and short-term investments 772 Other assets less liabilities (17) total net assets 336,247 * illiquid securities The accompanying notes are an integral part of these financial statements.
  • 6. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity schedule of derivative instruments As at March 31, 2010 options number of exercise Price Premium Paid Fair Value contracts underlying interest expiry date $ ($ 000s) ($ 000s) 6,000 alpha natural Resources inc. Jun. 19, 2010 38.00 6,695 7,553 3,000 Barrick Gold corp. apr. 17, 2010 30.00 4,059 2,655 1,000 canadian natural Resources ltd. may 22, 2010 60.00 1,108 1,505 10,000 el Paso corp. apr. 17, 2010 7.00 4,058 3,858 2,000 massey energy co. Jul. 17, 2010 40.00 2,834 2,802 8,000 Petrohawk energy corp. Jun. 19, 2010 17.50 3,303 2,680 4,000 suncor energy inc. Jun. 19, 2010 26.00 2,492 2,800 1,500 transocean ltd. may 22, 2010 70.00 3,442 2,528 total options 27,991 26,381 current unrealized Forward amounts Bought (Sold) number of Maturity contract cost Fair Value Gain (Loss) currency contracts in canadian dollars contracts date counterparty ($ 000s) ($ 000s) ($ 000s) amounts (sold) in Brazilian real (500,000) 332,049 2 apr. 16, 2010 the toronto-dominion Bank (332) (284) 48 (5,000,000) 2,837,040 1 apr. 30, 2010 the Bank of new York mellon (2,837) (2,821) 16 (5,500,000) 3,169,089 (3,169) (3,105) 64 amounts bought (sold) in indonesian rupiahs (18,000,000,000) 2,010,050 1 may 7, 2010 Royal Bank of canada (2,010) (2,001) 9 18,000,000,000 (2,041,511) 1 may 7, 2010 Royal Bank of canada 2,042 2,001 (41) – (31,461) 32 – (32) amounts (sold) in turkish lire (12,840,000) 8,979,224 2 may 7, 2010 the Bank of nova scotia (8,979) (8,535) 444 (12,204,576) 7,996,446 1 Jun. 11, 2010 Royal Bank of canada (7,996) (8,065) (69) (26,100,000) 16,994,186 2 Jun. 18, 2010 the toronto-dominion Bank (16,994) (17,225) (231) (51,144,576) 33,969,856 (33,969) (33,825) 144 amounts (sold) in u.S. dollars (5,380,000) 5,535,606 1 apr. 30, 2010 Royal Bank of canada (5,536) (5,463) 73 (4,180,000) 4,431,252 1 apr. 30, 2010 the toronto-dominion Bank (4,431) (4,244) 187 (5,000,000) 5,350,512 1 may 7, 2010 the Bank of new York mellon (5,351) (5,077) 274 (700,000) 750,888 1 may 7, 2010 the toronto-dominion Bank (751) (711) 40 (1,800,000) 1,854,217 1 may 21, 2010 the toronto-dominion Bank (1,854) (1,828) 26 (6,000,000) 6,319,988 2 Jun. 11, 2010 Royal Bank of canada (6,320) (6,092) 228 (5,000,000) 5,147,846 1 Jun. 11, 2010 the Bank of nova scotia (5,148) (5,077) 71 (28,060,000) 29,390,309 (29,391) (28,492) 899 total forward currency contracts 1,075 total derivative instruments at fair value 27,456 The accompanying notes are an integral part of these financial statements.
  • 7. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 1. the information provided in these financial statements and notes thereto is for the periods ended or as at march 31, 2010 and march 31, 2009, as applicable. in the year a fund or series is established or reinstated, ‘period’ represents the period from inception or reinstatement to the period end of that fiscal year. Refer to note 8 for the formation date of the fund and the inception date of each series. for funds formed prior to June 30, 2008, the fiscal year-end of the fund was changed from June 30 to march 31, effective march 31, 2009. the fund is authorized to issue an unlimited number of units (referred to as “security” or “securities”) of multiple series. series of the fund are available for sale under simplified Prospectus or exempt distribution options. 2. Significant accounting Policies these financial statements have been prepared in accordance with canadian generally accepted accounting principles (“GaaP”). GaaP requires management to make estimates and assumptions that affect the amounts, primarily valuation of investments, reported in the financial statements. actual results may differ from such estimates. (a) adoption of new accounting policies in march 2009, the canadian institute of chartered accountants (“cica”) issued amendments to section 3862, financial instruments – disclosures (“section 3862”) of the cica Handbook – accounting to align with international financial Reporting standard (“ifRs”) 7, financial instruments – disclosures. the amendments require all financial instruments measured at fair value to be classified into one of three levels that distinguish fair value measurements by the inputs used for valuation. the funds adopted these amendments effective for the year ended march 31, 2010. these classifications have been disclosed in note 8. for funds formed prior to July 1, 2007, section 3862, section 3863, financial instruments – Presentation (“section 3863”) and section 1535, capital disclosure (“section 1535”) of the cica Handbook – accounting were adopted effective July 1, 2008. section 3862 and section 3863 replaced section 3861, financial instruments – disclosure and Presentation, revising and enhancing disclosure and presentation requirements. the impact of the adoption of these two sections, which place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the fund manages those risks, has been disclosed in note 8. the impact of the adoption of section 1535, which establishes standards for disclosing information about an entity’s capital and how it is managed, has been disclosed in note 5. the adoption of these new standards does not impact the daily valuation of the fund’s investments or net assets. (b) Valuation the fair value of investments as at the financial reporting period end is determined as follows: investments listed on a public securities exchange or traded on an over-the-counter market are valued at the closing bid price. Where no closing bid price is available, the last sale or close price is used. mutual fund securities of an underlying fund are valued on a business day at the price calculated by the manager of such underlying fund in accordance with the constating documents of such underlying fund. unlisted or non- exchange traded investments, or investments where a last bid, sale or close price is unavailable or investments for which market quotations are, in mackenzie financial corporation’s (“mackenzie”) opinion, inaccurate, unreliable, or not reflective of all available material information, are valued at their fair value as determined by mackenzie using appropriate and accepted industry valuation techniques including valuation models. the fair value determined using valuation models requires the use of inputs and assumptions based on observable market data including volatility and other applicable rates or prices. in limited circumstances, the fair value may be determined using valuation techniques that are not supported by observable market data. the cost of investments is determined on a weighted average cost basis. short-term notes are valued at the closing bid price. if the closing bid price is not available, such short-term notes are valued at cost plus accrued interest, which approximates fair value. short-term notes held by the fund are included in the statements of net assets – cash and short-term investments. accrued interest and dividends receivable, subscriptions receivable, receivables for securities sold, redemptions payable, management fees payable, operating expenses payable and payables for securities purchased are recorded at cost. since such assets and liabilities are short-term in nature, cost approximates fair value. (c) investment transactions and income recognition investment transactions are accounted for on a trade date basis. income from investments is recognized on an accrual basis. interest income is accrued based on the number of days the investment is held during the period. dividends are accrued as of the ex-dividend date. Gains or losses on the sale of investments, including foreign exchange gains or losses on such investments, are calculated on an average cost basis. distributions received from an underlying fund are included in interest income, dividend income or realized gains (losses) on sale of investments, as appropriate. income, realized gains (losses) and unrealized gains (losses) are allocated daily among the series on a pro-rata basis. transaction costs related to purchases and sales of investments are expensed and included in the statements of Operations – transaction costs.
  • 8. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 2. Significant accounting Policies (cont’d) (d) derivative transactions certain funds may use derivatives (such as options, futures, forward contracts, swaps or customized derivatives) to hedge against losses caused by changes in securities prices, interest rates or exchange rates. certain funds may also use derivatives for non-hedging purposes in order to invest indirectly in securities or financial markets, to gain exposure to other currencies, to seek to generate additional income, and/or for any other purpose considered appropriate by each fund’s portfolio manager(s), provided that the use of the derivative is consistent with each fund’s investment objectives. any use of derivatives will comply with canadian mutual fund laws, subject to the regulatory exemptions granted to the funds, as applicable. Refer to “exemptions from national instrument 81-102” in the annual information form of each fund for further details, including the complete conditions of these exemptions. Valuations of derivative instruments are carried out daily, using normal exchange reporting sources for exchange-traded derivatives and specific broker enquiry for over-the-counter derivatives. the value of forward contracts is the gain or loss that would be realized if, on the valuation date, the positions were to be closed out. the change in value of forward contracts is included in the statements of Operations – change in unrealized appreciation (depreciation). the value of futures contracts or swaps fluctuates daily, and cash settlements made daily, where applicable, by the fund are equal to the unrealized gains or losses on a “mark to market” basis. these unrealized gains or losses are recorded and reported as such until the fund closes out the contract or the contract expires. margin paid or deposited in respect of futures contracts or swaps is reflected as a receivable in the statements of net assets – margin on futures contracts. any change in the variation margin requirement is settled daily. the value of options is the gain or loss that would be realized if, on the valuation date, the positions were to be closed out. the premium paid for purchased options or received for written options is included in the statement of investments as a cost of the options contracts. Realized gains and losses from derivative instruments that are specific economic hedges are accounted for in the same manner as the underlying investments being hedged. Realized gains and losses from derivative instruments that are not specific economic hedges, but that are used to gain exposure to a particular market, are included in the statements of Operations – income (loss) from derivative contracts. Refer to the schedule of derivative instruments, as applicable, included in the statement of investments for a listing of derivative positions as at march 31, 2010. (e) securities lending, repurchase and reverse repurchase transactions certain funds are permitted to enter into securities lending, repurchase and reverse repurchase transactions as set out in each fund’s simplified Prospectus. these transactions involve the temporary exchange of securities for collateral with a commitment to redeliver the same securities on a future date. income is earned from these transactions in the form of fees paid by the counterparty and, in certain circumstances, interest paid on cash or securities held as collateral. income earned from these transactions is recognized on an accrual basis and included in the statements of Operations – Revenue from securities lending. all the counterparties have an approved credit rating equivalent to a standard & Poor’s credit rating of not less than a-1 (low) on their short-term debt and of a on their long-term debt. the value of cash or securities held as collateral must be at least 102% of the fair value of the securities loaned, sold or purchased. (f) foreign exchange foreign currency purchases and sales of investments and foreign currency dividend and interest income and expenses are translated to canadian dollars at the rate of exchange prevailing at the time of the transactions. foreign exchange gains (losses) on purchases and sales of foreign currencies are included in the statements of Operations – Realized gain (loss) on sale of investments. the fair value of investments and other assets and liabilities, denominated in foreign currencies, are translated to canadian dollars at the rate of exchange prevailing on each business day. (g) net assets per security net assets per security is computed by dividing the net assets attributable to a series of securities on a business day by the total number of securities of the series outstanding on that day. (h) net asset value per security the canadian securities administrators (“csa”) amended its regulations effective september 8, 2008 such that the daily net asset Value (“naV”) of an investment fund may be calculated without reference to GaaP. the difference between naV and net assets (as reported in the financial statements) is mainly due to valuing securities at bid for financial statement purposes while naV typically utilizes closing price to determine fair value. Refer to note 8 for the fund’s naV per security.
  • 9. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 2. Significant accounting Policies (cont’d) (i) increase (decrease) from operations per security increase (decrease) from operations per security in the statements of Operations represents increase (decrease) in net assets from operations attributable to the series for the period, divided by the weighted average number of securities outstanding during the period. (j) comparative amounts certain prior period comparative amounts have been reclassified to conform to the current period’s presentation. 3. income taxes the fund qualifies as a mutual fund trust under the provisions of the income tax act (canada) and, accordingly, is subject to tax on its income including net realized capital gains in the taxation year, which is not paid or payable to its securityholders as at the end of the taxation year. it is the intention of the fund to distribute all of its net income and sufficient net realized capital gains so that the fund will not be subject to income taxes other than foreign withholding taxes, if applicable. losses of the fund cannot be allocated to investors and are retained in the fund for use in future years. non-capital losses incurred in 2006 and later may be carried forward up to 20 years, and non-capital losses incurred prior to 2006 may be carried forward up to 10 years, to reduce taxable income and realized capital gains of future years. capital losses may be carried forward indefinitely to reduce future realized capital gains. Refer to note 8 for the fund’s loss carryforwards. 4. Management Fees and Operating expenses mackenzie, manager of the fund, is paid a management fee for managing the investment portfolio, providing investment analysis and recommendations, making investment decisions, making brokerage arrangements relating to the purchase and sale of the investment portfolio and making arrangements with registered dealers for the purchase and sale of securities of the fund by investors. the management fee is calculated on each series of securities as a percentage of the net asset value of the series, as of the close of business on each business day. each series of the fund is charged a fixed rate annual administration fee, including any implementation period adjustments, (“administration fee”), as applicable, and in return, mackenzie bears all of the operating expenses of the fund, other than certain specified fund costs. the administration fee is calculated as a fixed annual percentage of the daily net asset value of each relevant series of the fund. Other fund costs include taxes (including, but not limited to Gst and income tax), interest and borrowing costs, fees and expenses of the mackenzie funds’ independent Review committee, any new fees related to external services that were not commonly charged in the canadian mutual fund industry as of June 15, 2007 and the costs of complying with any new regulatory requirements after June 15, 2007. mackenzie may waive or absorb management fees and/or administration fees at its discretion and stop waiving or absorbing such fees at any time without notice. Refer to note 8 for the management fee and administration fee rates charged to each series of securities. 5. Fund’s capital the capital of the fund is divided into different series with each series having an unlimited number of securities. the securities outstanding for the fund as at march 31, 2010 and 2009 are presented in the statements of changes in net assets. mackenzie manages the capital of the fund in accordance with the investment objectives as discussed in note 8. 6. Financial instruments Risk i. Risk exposure and management the fund’s investment activities expose it to a variety of financial risks, as defined in section 3862. the fund’s exposure to financial risks is concentrated in its investments, which are presented in the statement of investments, as at march 31, 2010, grouped by asset type, with geographic and sector information. mackenzie seeks to minimize potential adverse effects of financial risks on the fund’s performance by employing professional, experienced portfolio advisors, by monitoring the fund’s positions and market events daily, by diversifying the investment portfolio within the constraints of the fund’s investment objectives, and where applicable, by using derivatives to hedge certain risk exposures. to assist in managing risks, mackenzie also uses internal guidelines that identify the target exposures for each type of risk, maintains a governance structure that oversees the fund’s investment activities and monitors compliance with the fund’s stated investment strategy, internal guidelines, and securities regulations.
  • 10. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 6. Financial instruments Risk (cont’d) ii. Liquidity risk liquidity risk arises when the fund encounters difficulty in meeting its financial obligations as they come due. the fund is exposed to liquidity risk due to potential daily cash redemptions of redeemable securities. in accordance with securities regulations, the fund must maintain at least 90% of its assets in liquid investments (i.e., investments that can be readily sold). in addition, the fund retains sufficient cash and short-term investment positions to maintain adequate liquidity. the fund also has the ability to borrow up to 5% of its net assets for the purposes of funding redemptions. if the fund held any illiquid investments as at march 31, 2010, they have been identified in the statement of investments. iii. Currency risk currency risk arises when the fair value of financial instruments that are denominated in a currency other than the canadian dollar, which is the fund’s reporting currency, fluctuates due to changes in exchange rates. note 8 summarizes the fund’s exposure, if applicable and significant, to currency risk. iv. Interest rate risk interest rate risk arises when the fair value of interest-bearing financial instruments fluctuates due to changes in the prevailing levels of market interest rates. cash and short-term investments do not expose the fund to significant amounts of interest rate risk. note 8 summarizes the fund’s exposure, if applicable and significant, to interest rate risk. v. Other price risk Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. all investments present a risk of loss of capital. this risk is managed through a careful selection of investments and other financial instruments within the parameters of the investment strategy. except for options written and futures contracts, the maximum risk resulting from financial instruments is equivalent to their fair value. the maximum risk of loss on options written and futures contracts is equal to their notional values. However, options written are used within the overall investment management process to manage the risk from the underlying investments and do not typically increase the overall risk of loss to the fund. note 8 summarizes the fund’s exposure, if applicable and significant, to other price risk. vi. Credit risk credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the fund. note 8 summarizes the fund’s exposure, if applicable and significant, to credit risk. all transactions in listed securities are executed with approved brokers. to minimize the possibility of settlement default, securities are exchanged for payment simultaneously, where market practices permit, through the facilities of a central depository and/or clearing agency where customary. the carrying amount of investments and other assets represents the maximum credit risk exposure as at march 31, 2010. certain funds may enter into securities lending transactions with counterparties whereby the funds temporarily exchange securities for collateral with a commitment by the counterparty to deliver the same securities on a future date. credit risk associated with these transactions is considered minimal as all counterparties have a sufficient, approved credit rating and the value of cash or securities held as collateral must be at least 102% of the fair value of the securities loaned. certain funds may be exposed to credit risk from the counterparties to the derivative instruments used by the funds. this credit risk is minimized by ensuring that all the counterparties to derivative instruments have an approved credit rating equivalent to a standard & Poor’s credit rating of not less than a-1 (low) on their short-term debt and of a on their long-term debt. vii. Underlying funds certain funds that invest in underlying funds may be indirectly exposed to currency risk, interest rate risk, other price risk and credit risk from fluctuations in the value of financial instruments held by the underlying funds. note 8 summarizes the fund’s exposure, if applicable and significant, to these risks from underlying funds. 7. Future accounting Standards the canadian accounting standards Board (“acsB”) has confirmed its plan to adopt all ifRs, as published by the international accounting standards Board, for most publicly accountable entities on or by January 1, 2011. On may 12, 2010, the acsB announced it will propose amendments which will provide most investment funds with the option to defer adoption of ifRs until fiscal years beginning on or after January 1, 2012. mackenzie is currently assessing the impact of this announcement on the fund and its plans for adopting ifRs. accordingly, the fund will adopt ifRs for either its fiscal period beginning april 1, 2011 or 2012, and will issue its initial financial statements in accordance with ifRs, including comparative information, for either the interim period ending september 30, 2011 or 2012.
  • 11. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 8. Fund Specific information (in ’000s, except for (a)) (a) fund formation and series information date of formation October 2, 1967 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 the statements of changes in net assets. series a securities are offered to retail investors investing a minimum of $500. series e securities are offered to investors who are enrolled in a dealer-sponsored fee-for-service or wrap program, who are subject to an asset- based fee rather than commissions on each transaction and who invest a minimum of $250,000 in mackenzie funds (excluding the mackenzie segregated funds). series f securities are offered to investors who are enrolled in a dealer-sponsored fee-for-service or wrap program and who are subject to an asset- based fee rather than commissions on each transaction, and employees of mackenzie and its subsidiaries and directors of mackenzie. series G securities are offered to retail investors investing a minimum of $500, who are members of a group RRsP, dPsP or pension plan (a “group plan”). series i securities are offered to investors investing a minimum of $500,000 in mackenzie funds (excluding the mackenzie segregated funds). series J securities are offered to investors investing a minimum of $250,000 in mackenzie funds (excluding the mackenzie segregated funds). series O securities are offered to investors investing a minimum of $5,000,000 in mackenzie funds (excluding the mackenzie segregated funds) and who have entered into a series O account agreement with mackenzie, and also available for employees of mackenzie and its subsidiaries without the minimum investment requirement. mackenzie may waive the minimum investment level for institutional accounts which are expected to exceed $5,000,000 within a period of time acceptable to mackenzie. series R securities are available only to other mackenzie funds and certain institutional investors for mackenzie fund-of-fund arrangements. an investor in the fund may choose among different purchase options that are available under each series. these purchase options include a sales charge purchase option, a redemption charge purchase option and a low-load purchase option. the charges under the sales charge purchase option are negotiated by an investor with their dealer. the charges under the redemption charge and low-load purchase options are paid to mackenzie if an investor redeems securities of the fund during specific time periods. not all series of the fund are available under each purchase option and the charges under each purchase option may vary amongst the different series. for further details on these purchase options please refer to the fund’s simplified Prospectus. inception/ Management administration net asset Value per Security ($) Series Reinstatement date Fees Fees* Mar. 31, 2010 Mar. 31, 2009 series a October 2, 1967 2.00% 0.23% 13.10 8.17 series e none issued 0.85% 0.24% – – series f October 22, 2001 1.00% 0.23% 12.21 7.53 series G april 1, 2005 1.50% 0.23% 7.58 4.70 series i October 25, 1999 1.35% 0.24% 5.59 3.46 series J november 17, 2009 1.70% 0.24% 10.19 – series O October 8, 2002 – (1) 0.15% 13.30 8.11 series R July 3, 2007 – (2) – (2) 6.55 3.99 * does not include any implementation period adjustments, as applicable. (1) the management fee for series O securities is negotiable by the investor and is payable directly to mackenzie by series O investors, not by the fund. the rate will not exceed the series i management fee rate, if any. (2) no management fees or administration fees are charged to the investor or the fund in respect of the series R securities.
  • 12. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 8. Fund Specific information (in ’000s, except for (a)) (cont’d) (b) investments by Other funds and affiliates as at march 31, 2010, other funds managed by mackenzie had an investment of $89,693 (2009 – $53,575) in the fund. (c) loss carryforwards as at the last taxation year-end, the following losses were available for carryforward for tax purposes. capital losses may be carried forward indefinitely to reduce future realized capital gains. non-capital losses may be utilized to reduce future net income and realized capital gains and expire on december 15 of the years indicated. expiration date of non-capital Losses total total capital non-capital 2029 2028 2027 2026 2015 2014 2013 2012 2011 2010 Loss $ Loss $ $ $ $ $ $ $ $ $ $ $ 147,233 227 227 – – – – – – – – – (d) securities lending the value of securities loaned and collateral received from securities lending at march 31, 2010 and 2009 were as follows: Mar. 31, 2010 Mar. 31, 2009 ($) ($) Value of securities loaned – 1,375 Value of collateral received – 1,495 collateral received is comprised of debt obligations of the Government of canada and other countries, canadian provincial and municipal governments and financial institutions. (e) commissions the brokerage commissions paid to certain dealers included an amount of $38 (2009 – $26) that was available for payment to third party vendors for the provision of investment decision making services. this amount represented 1.6% (2009 – 1.6%) of the total commissions and other transaction costs paid during the period. (f) Risks associated with financial instruments i. Risk exposure and management the fund pursues long-term capital growth and protection of capital by investing mainly in stocks of canadian companies. the portfolio managers select investments by reviewing economic and market cycles to determine themes or industry sectors that they believe will outperform the market over the next one to three years. the fund invests primarily in leading companies, but also in select smaller or non-leading companies that the portfolio managers believe have higher growth potential or that trade at a discount to their estimate of intrinsic value.
  • 13. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 8. Fund Specific information (in ’000s, except for (a)) (cont’d) (f) Risks associated with financial instruments (cont’d) ii. Currency risk the table below indicates currencies to which the fund had significant exposure as at period end in canadian dollar terms, including the underlying principal amount of any forward currency contracts. Other financial assets and liabilities (including accrued interest and dividends receivable, and receivables/payables for securities sold/purchased) that are denominated in foreign currencies do not expose the fund to significant currency risk. Mar. 31, 2010 Mar. 31, 2009 cash and cash and Forward Short-term derivative net Short-term currency net investments investments instruments exposure* investments investments contracts exposure* currency ($) ($) ($) ($) ($) ($) ($) ($) Hong Kong dollars 56,583 – – 56,583 7,485 – – 7,485 u.s. dollars 33,242 – (9,071) 24,171 61,265 – (59,594) 1,671 Others 9,662 – – 9,662 11,907 – (1,265) 10,642 indonesian rupiahs 6,450 – – 6,450 6,793 – (6,650) 143 Brazilian real 6,859 – (3,105) 3,754 6,425 3 (3,227) 3,201 turkish lire 33,433 – (33,825) (392) 9,802 – (8,772) 1,030 total 146,229 – (46,001) 100,228 103,677 3 (79,508) 24,172 as Percent of net assets (%) 43.5 – (13.7) 29.8 47.7 – (36.5) 11.1 * includes both monetary and non-monetary financial instruments as of march 31, 2010, had the canadian dollar increased or decreased by 5% relative to all foreign currencies, with all other variables held constant, net assets would have decreased or increased, respectively, by approximately $5,011 or 1.5% of total net assets (2009 – $1,209 or 0.6%). in practice, the actual trading results may differ and the difference could be material. iii. Interest rate risk the table below summarizes the fund’s exposure to interest rate risks from its investments in bonds by term to maturity. Mar. 31, 2010 Mar. 31, 2009 Bonds ($) ($) less than 1 year – – 1-5 years 1,792 12,687 5-10 years – – Greater than 10 years – – total 1,792 12,687 as at march 31, 2010, had prevailing interest rates increased or decreased by 1%, assuming a parallel shift in the yield curve, with all other variables held constant, net assets would have decreased or increased, respectively, by approximately $43 or 0.01% of total net assets (2009 – $377 or 0.2%). in practice, the actual trading results may differ and the difference could be material.
  • 14. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 8. Fund Specific information (in ’000s, except for (a)) (cont’d) (f) Risks associated with financial instruments (cont’d) iv. Other price risk the fund’s most significant exposure to price risk arises from its investment in equity securities, income trusts and options. as at march 31, 2010, had the prices on the respective stock exchanges for these securities increased or decreased by 10%, with all other variables held constant, net assets would have increased or decreased by approximately $33,263 or 9.9% of total net assets (2009 – $20,349 or 9.4%). in practice, the actual trading results may differ and the difference could be material. v. Credit risk the fund’s greatest concentration of credit risk is in debt securities, such as bonds. the fair value of debt securities includes consideration of the creditworthiness of the debt issuer. the maximum exposure to any one debt issuer as of march 31, 2010, was 0.5% of the net assets of the fund (2009 – 3.5%). as of march 31, 2010 and 2009, debt securities by credit rating are as follows: Mar. 31, 2010 Mar. 31, 2009 Percent of total Percent of total Rating* Bonds (%) Bonds (%) less than BBB or unrated 100.0 100.0 total 100.0 100.0 *credit ratings and rating categories are based on dBRs (or equivalent ratings issued by other approved credit rating organizations) (g) fair Value classification the table below summarizes the fair value of the fund’s financial instruments using the following fair value hierarchy: level 1 – unadjusted quoted prices in active markets for identical assets or liabilities; level 2 – inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and level 3 – inputs that are not based on observable market data. Financial instruments at fair value as of March 31, 2010 Level 1 Level 2 Level 3 total ($) ($) ($) ($) Bonds – 1,792 – 1,792 equities 289,542 – 13,846 303,388 income trusts 2,856 – – 2,856 total investments 292,398 1,792 13,846 308,036 derivative assets 26,381 1,416 – 27,797 derivative liabilities – (341) – (341) short-term investments – 770 – 770 total 318,779 3,637 13,846 336,262 in accordance with the fund’s valuation policy, the fund applies fair value adjustment factors to the quoted market prices for non-north-american equities when north american intraday stock market movements exceed pre-determined tolerances. the adjustment factors are applied in order to estimate the impact on fair values of events occurring between the close of the non-north american stock markets and the close of business for the fund. if fair value adjustment factors are applied, non-north american equities are classified as level 2. consequently, during the period ended march 31, 2010, non-north american equities frequently transferred between level 1 (unadjusted quoted market prices) and level 2 (adjusted market prices). as of march 31, 2010, these securities were classified as level 1. north american equity positions with a fair value of $1,401 were transferred from level 2 to level 1 during the period as a result of changes in activities in the market for those equities.
  • 15. mackenzie growth fund annual audited financial statements | march 31, 2010 canadian equity notes to financial statements 8. Fund Specific information (in ’000s, except for (a)) (cont’d) (g) fair Value classification (cont’d) the table below presents a reconciliation of financial instruments measured at fair value using unobservable inputs (level 3) for the period ended march 31, 2010: equities ($) Balance – beginning of period 12,531 Purchases 931 sales (15) net transfers in (out) (3,594) Gains (losses) during the period: Realized (240) unrealized 4,233 Balance – end of period 13,846 unrealized gains (losses) during the period attributable to securities held at end of period 4,514

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