mackenzie sentinel u.s. money market pool u.S. money mArKet Annual Management Report of Fund Performance For the Year Ended March 31, 2010 Portfolio Management Chris Kresic, CFA (Mackenzie Financial Corporation) Senior Vice-President Steve Locke, MBA, CFA* (Howson Tattersall Investment Counsel) Vice-President * Effective June 4, 2010, Steve Locke will take over as lead manager of the Fund. 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 1-800-387-0614, by writing to us at Mackenzie Financial Corporation, 180 Queen Street West, Toronto, Ontario M5V 3K1, by visiting our website at www.mackenziefinancial.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 disclosure record or quarterly portfolio disclosure. For current net asset values per security for the Fund, please visit our website. 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. 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 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. mackenzie sentinel u.s. money market pool annuaL managEmEnt rEPort oF Fund PErFormancE | For the Year Ended march 31, 2010 u.S. money mArKet Management Discussion of Fund Performance fees and expenses may 11, 2010 the management expense ratio (“mEr”) for Series r of 0.00% during the year ended march 31, 2010, was unchanged from the annualized mEr for this management discussion of Fund Performance presents management’s the period ended march 31, 2009. view of the significant factors and developments as at and during the year ended march 31, 2010, that have affected the Fund’s performance no management fee or administration fee, other than certain specific fund and outlook. For information on the Fund’s longer-term performance, costs, is charged to Series r. the Fund’s mEr consists of these other fund please refer to the Past Performance section of the report. In this report, costs, which include taxes (including but not limited to gSt, income tax “mackenzie” refers to mackenzie Financial corporation, the manager of the and capital tax), interest and borrowing costs, fees and expenses of the Fund. In addition, net asset value (“naV”) refers to the value of the Fund mackenzie Funds’ Independent review committee, any fees related to as calculated for transaction purposes, on which the discussion of Fund external services that were not commonly charged in the canadian mutual performance is based. fund industry as at June 15, 2007, and the costs of complying with any new regulatory requirements after June 15, 2007. Investment Objective and Strategies Large investor Activity mackenzie Sentinel u.S. money market Pool pursues a steady flow of income the Fund serves as the underlying interest for the derivative contract held while seeking to preserve investors’ capital and liquidity. the Fund seeks to by mackenzie Sentinel u.S. Short-term Yield Pool. the major investor in the achieve these objectives by investing primarily in u.S. dollar–denominated Fund is the counterparty to the derivative contract. at march 31, 2010, the money market securities that are issued or guaranteed by u.S. or counterparty held 94.1% of the Fund’s securities. canadian governments, or any agency of those governments, and in u.S. dollar–denominated money market securities issued by u.S. or canadian Recent Developments corporations. none of the money market securities in the Fund’s portfolio has a maturity exceeding 365 days, and the portfolio’s weighted average the u.S. Federal reserve Bank kept its target overnight rate at 0.25% term to maturity will not exceed 90 days. throughout the year, and rates on money market instruments remained low. although the portfolio manager expects continued firmer economic data in Risk the next few months, he believes the leading u.S. economic indicators point to a slowdown in growth in the second half of 2010. If that is the case, the risks of investing in the Fund remain as discussed in the Fund’s the Federal reserve would be unlikely to raise rates until later, and money Simplified Prospectus. market yields would likely remain low. the Fund is suitable for investors seeking a steady flow of current income in u.S. dollars who have a very low tolerance for risk and are intending to new Accounting Policy invest in the Fund over the short to long term. the canadian Institute of chartered accountants (“cIca”) issued the Fund is currently available only to certain institutional investors for amendments to Section 3862, Financial Instruments – disclosures of the mackenzie fund-of-fund arrangements. cIca Handbook, to align with International Financial reporting Standard (“IFrS”) 7, Financial Instruments – disclosures. the amendments require Results of Operations all financial instruments measured at fair value to be classified into one of the Fund’s naV of uS$2.6 million at march 31, 2010, was unchanged from three levels that distinguish fair value measurements by the inputs used march 31, 2009. the performance of the Fund’s Series r securities is for valuation. discussed below. the Fund adopted these amendments effective for the year ended march 31, 2010. investment Performance during the year, the Fund’s Series r securities returned 0.1% (after Harmonized Sales tax deducting fees and expenses paid by the series). this compares with the the governments of ontario and British columbia have taken steps to u.S. 90-day t-Bill Index return of 0.1%. all index and series returns are harmonize their provincial sales taxes with the federal goods and services calculated on a total return basis in u.S. dollar terms. Investors cannot tax effective July 1, 2010. Implementation of the proposed changes will invest in the index without incurring fees, expenses and commissions, which increase the amount of taxes paid by the Fund on its expenses and therefore are not reflected in the index returns. increase the mEr when the legislation comes into force. at march 31, 2010, the current yield was 0.10% for Series r securities of future Accounting Standards the Fund. Yields on u.S. 90-day treasury bills declined to 0.16% from 0.20% over the year. the canadian accounting Standards Board (“acSB”) has confirmed its plan to adopt all IFrS, as published by the International accounting Standards the performance of the Fund reflects the extremely low interest rates Board (“IaSB”), for most publicly accountable entities on or by January 1, available in the marketplace. 2011. on may 12, 2010, the acSB announced it will propose amendments which will provide most investment funds with the option to defer adoption mackenzie sentinel u.s. money market pool annuaL managEmEnt rEPort oF Fund PErFormancE | For the Year Ended march 31, 2010 u.S. money mArKet of IFrS until fiscal years beginning on or after January 1, 2012. mackenzie Past Performance is currently assessing the impact of this announcement on the Fund and its plans for adopting IFrS. accordingly, the Fund will adopt IFrS for the Fund’s past performance information is presented in the following chart, either its fiscal period beginning april 1, 2011 or 2012, and will issue its and it assumes all distributions made by the Fund in the periods presented initial financial statements in accordance with IFrS, including comparative are reinvested in additional securities of the relevant series of the Fund. the information, for either the interim period ending September 30, 2011 or chart does not take into account sales, redemption, distribution or optional 2012. charges, or income taxes payable by any investor that would have reduced returns. the past performance of the Fund is not necessarily an indication mackenzie has developed an IFrS changeover plan, which addresses of how it will perform in the future. key elements of the conversion to IFrS and includes a formal project governance structure, and has identified the key differences between IFrS Year-by-Year Returns and canadian generally accepted accounting principles (“gaaP”) that are the following bar chart presents the performance of Series r of the Fund for expected to affect the Fund. Elements of the plan include evaluating the each of the years ended march 31. the chart shows, in percentage terms, impacts of the changeover on all business activities, accounting policies, how much an investment made on the first day of each fiscal period, or information technology and data systems, internal controls over financial on the series inception or reinstatement date, as applicable, would have reporting, and disclosure controls and procedures. as the Fund’s changeover increased or decreased by the last day of the fiscal period presented. Series plans are implemented, requirements for financial reporting resources and inception or reinstatement dates can be found under Fund Formation and training are being modified appropriately. Series Information. Based on mackenzie’s current evaluation of the differences between canadian gaaP and IFrS, the adoption of IFrS is not expected to have a Series R significant impact on the calculation of naV per security. IFrS is expected to affect the overall presentation of financial statements and result in 1.0% additional disclosure in the accompanying notes. mackenzie continues to monitor changes to IFrS proposed by the IaSB and relevant amendments 0.5% by the acSB, and the current assessment and IFrS changeover plans may change if new standards are issued or if interpretations of existing 0.1 standards are revised. 0.0 0.0% Mar-09 Mar-10 Related Party Transactions For its funds, mackenzie has created an Independent review committee (“Irc”). the Irc reviews and provides impartial judgment on potential conflict of interest matters referred to it by mackenzie and makes recommendations on whether a course of action achieves a fair and reasonable result for the funds. In addition, the Irc regularly reviews mackenzie’s policies and procedures relating to conflicts of interest. the Irc will prepare, at least annually, a report of its activities for investors, which will be available at www.mackenziefinancial.com. the Irc has issued positive recommendations and standing instructions that permit the Fund to (a) purchase (and rebalance where desirable) securities of a fund managed by mackenzie and (b) purchase, hold or sell shares of related parties to the Fund (excluding Igm Financial Inc.) provided that any investment activity proposed by mackenzie relating to securities of related parties: • is free from any influence by a related party and without taking into account any consideration relevant to a related party; • represents the business judgment of the portfolio manager uninfluenced by considerations other than the best interests of the Fund; • complies with Mackenzie’s written policies and procedures; and • achieves a fair and reasonable result for the Fund. during the year, the Fund did not rely on these standing instructions as the Fund did not purchase securities of another fund managed by mackenzie or purchase, hold or sell shares of related parties to the Fund. at march 31, 2010, mackenzie had an investment of uS$0.2 million in the Fund (5.9% of the Fund’s naV). mackenzie sentinel u.s. money market pool annuaL managEmEnt rEPort oF Fund PErFormancE | For the Year Ended march 31, 2010 u.S. money mArKet Summary of Investment Portfolio at march 31, 2010 Top 25 Holdings Portfolio Allocation % of NAV issuer % of nAV cash and equivalents ..................................................................... 100.0% cash and equivalents 100.0% top long positions as a percentage of total net asset value 100.0% The Fund held no short positions at the end of the period. The investments and percentages may have changed since March 31, 2010, due to the ongoing portfolio transactions of the Fund. Quarterly updates of holdings are available within 60 days of the end of each quarter except for March 31, the Fund’s fiscal year- end, when they are available within 90 days. mackenzie sentinel u.s. money market pool annuaL managEmEnt rEPort oF Fund PErFormancE | For the Year Ended march 31, 2010 u.S. money mArKet Financial Highlights rAtioS And SuPPLementAL dAtA the following tables show selected key financial information about the Fund mar. 31 mar. 31 and are intended to help you understand the Fund’s financial performance Series r 2010 2009 for each of the fiscal periods presented below. If during the period a fund or series is established or reinstated, “period” represents the period from total net asset value (uS$000)1, 2 2,556 2,555 inception or reinstatement to the end of that fiscal period. the inception Securities outstanding (000)1 256 255 dates for each series of the Fund can be found under Fund Formation and management expense ratio (%)3 – – Series Information. management expense ratio before waivers or absorptions (%)3 – – tHe fund’S net ASSetS Per SeCurity (uS$)1 trading expense ratio (%)4 0.03 0.01 Portfolio turnover rate (%)5 n/a n/a mar. 31 mar. 31 net asset value per security (uS$)2 9.99 10.00 Series r 2010 2009 net assets, beginning of period 10.00 10.00 (1) this information is provided as at the end of the fiscal period shown. increase (decrease) from operations: (2) the net asset value figures presented in this table are used for fund pricing and calculating total revenue 0.01 0.01 returns by series. the net asset values may differ from the figures in the financial statements total expenses – – as a result of the requirements under cIca Handbook Section 3855, Financial Instruments – realized gains (losses) for the period – 0.01 recognition and measurement. 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. unrealized gains (losses) for the period – – (3) management expense ratio is based on total expenses (excluding commissions and other portfolio total increase (decrease) from transaction costs) for the stated period and is expressed as an annualized percentage of daily operations2 0.01 0.02 average net asset value during the period. If in the period a series is established or reinstated, distributions: the management expense ratio is annualized from the date of inception or reinstatement. mackenzie may waive or absorb operating expenses at its discretion and stop waiving or From income (excluding dividends) (0.02) – absorbing such expenses at any time without notice. From dividends – – (4) the trading expense ratio represents total commissions and other portfolio transaction costs From capital gains – – expressed as an annualized percentage of daily average net asset value during the period. return of capital – – (5) the Fund’s portfolio turnover rate indicates how actively the Fund’s portfolio advisor manages total annual distributions3 (0.02) – 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 net assets, end of period 9.99 10.00 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 (1) this information is derived from the Fund’s audited annual financial statements. the net assets portfolio turnover rate is not provided when the Fund is less than one year old. the value of any per security presented in the financial statements may differ from the net asset value per security trades to realign the Fund’s portfolio after a fund merger, if any, is excluded from the portfolio calculated for fund pricing purposes. an explanation of these differences can be found in the turnover rate. Notes to Financial Statements. (2) net assets and distributions are based on the actual number of securities outstanding at the Management Fees relevant time. the increase/decrease from operations is based on the weighted average number of securities outstanding over the fiscal period. the Fund pays no management fees on its Series r securities. (3) distributions were paid in cash/reinvested in additional securities of the Fund, or both. mackenzie sentinel u.s. money market pool annuaL managEmEnt rEPort oF Fund PErFormancE | For the Year Ended march 31, 2010 u.S. money mArKet 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 September 8, 2008 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. Series r securities are available only to other mackenzie Funds and certain institutional investors for mackenzie fund-of-fund arrangements. inception/ management Administration net Asset Value per Security (uS$) Series reinstatement date fees fees mar. 31, 2010 mar. 31, 2009 Series r January 30, 2009 – (1) – (1) 9.99 10.00 (1) no management fees or administration fees are charged to the investor or the Fund in respect of the Series r securities.
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