GROWTH AND INCOME CLASS (GWLIM)

Transcription

1 Annual Management Report of Fund Performance For the Year 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 contacting us using one of the methods noted under Fund Formation and Series Information or by visiting the SEDAR website at Securityholders may also contact us using one of these methods to request a copy of the investment fund s interim financial report, 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, Annual Information Form and Fund Facts, 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.

2 Management Discussion of Fund Performance June 7, This Management Discussion of Fund Performance presents the portfolio management team s view on the significant factors and developments during the period ended March 31,, that have affected the Fund s performance and outlook. If the Fund was established during the period, period represents the period from inception to the end of the fiscal period. For information on the Fund s longer-term performance, as applicable, please refer to the Past Performance section of the report. 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 long-term capital growth and income by investing primarily in equities issued by companies around the world and Canadian fixed income and money market securities, directly, through other investment funds or through derivatives that provide exposure to such securities or investment funds. The Fund s asset mix will generally range between 40% 70% equities and 30% 60% fixed income securities. The Fund may hold up to 49% of its assets in foreign investments. Risk The risks of the Fund remain as discussed in the Fund s Simplified Prospectus. The Fund is suitable for long-term investors looking for a Canadian incomeoriented balanced fund to hold as part of their portfolio, who can handle the volatility of stock and bond markets, and who have a low to medium tolerance for risk. The Fund is not recommended for registered plans. Results of Operations Investment Performance 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. During the year, the Fund s Quadrus Series securities returned 1.5% (after deducting fees and expenses paid by the series). This compares with a return of 1.4% for the Fund s broad-based index, the FTSE TMX Canada Universe Bond Index, and a return of 4.3% for a blended index.* 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 Canadian bond market lagged the broader global bond market during the year. After raising its policy rate three times in response to robust economic data, the Bank of Canada put further increases on hold amid uncertainty prompted by threatened U.S. tariffs and a slowdown in household borrowing. The Canadian yield curve flattened as yields on shorter- and medium-term bonds rose significantly relative to longer-term bonds. Global equity markets advanced to record highs earlier in the year in response to accelerating synchronized global growth and low inflation. However, market volatility returned in January as a result of global trade tensions, rising inflation and the removal of monetary stimulus. In Canada, equity markets were up slightly despite weak domestic economic growth. Although the West Texas Intermediate crude oil price ended the year higher, overall sentiment toward North American energy equities remained poor and their prices declined. Within the S&P/TSX Composite Index, health care, information technology and consumer discretionary were the strongest sectors, while energy, materials and utilities were the weakest. Within the S&P 500 Index, information technology, financials and consumer discretionary were the strongest sectors in Canadian dollar terms, while telecommunication services, consumer staples and energy were the weakest. Within the MSCI EAFE (Net) Index, Austria, Norway and Italy were the strongest performers in Canadian dollar terms, while Israel, Australia and New Zealand were the weakest. From a sector perspective, information technology, energy and materials were the strongest performers, while telecommunication services, health care and consumer staples were the weakest. The following discussion reflects the activities and performance of the Fund s underlying mutual funds and other directly held securities. The Fund performed in line with the broad-based index. Given the Fund s mandate, the return of the blended index is a more meaningful comparison. The Fund underperformed the blended index primarily because of stock selection in the United States, particularly exposure to value stocks, and an underweight allocation to global equities, which outperformed. Within the fixed income portion of the Fund, lack of exposure to nonviability contingent capital bonds issued by Canadian banks detracted from performance. Spreads on these subordinated debt securities narrowed (meaning the difference in yield compared to federal bonds decreased) after they were included in the FTSE TMX Canada Universe Bond Index. Lack of exposure to municipal bonds and security selection in federal bonds also detracted. Security selection in North American corporate bonds contributed to performance. Within the equity portion of the Fund, U.S. dividend equities detracted from performance. On a sector basis, underweight positions and stock selection in consumer discretionary and information technology detracted, as did stock selection in consumer staples. Conversely, stock selection in Canada, specifically exposure to growth and mid-cap equities, contributed to performance. On a sector basis, stock selection in financials and an overweight position and stock selection in industrials contributed. * The blended index is composed of a 40% weighting in the FTSE TMX Canada Universe Bond Index (returned 1.4%), a 30% weighting in the S&P/TSX Composite Index (returned 1.7%), a 15% weighting in the S&P 500 Index (returned 10.4%) and a 15% weighting in the MSCI EAFE (Net) Index (returned 11.0%).

3 The foreign currency exposure of the Fund was partially hedged, which contributed to performance primarily as the U.S. dollar depreciated relative to the Canadian dollar. Over the year, portfolio activity and market effect resulted in decreased exposure to equities, and to Canada. In the fixed income portion of the Fund, exposure to provincial bonds increased and exposure to corporate bonds decreased. In the equity portion of the Fund, exposure to the energy and financials sectors decreased. Net Assets The Fund s NAV increased by 5.3% to $274.7 million at March 31,, from $260.9 million at March 31,. This change was composed primarily of $7.7 million in net income (including dividend and interest income) from investment performance, after deducting fees and expenses, $3.7 million in net sales, and $2.4 million in reinvested distributions. Fees and Expenses The management expense ratio ( MER ) for Quadrus Series of 2.45% during the year ended March 31,, was slightly lower than the MER of 2.46% for the year ended March 31,. The MERs (before and after waivers or absorptions, if any) for each series are presented in the Financial Highlights section of this report. Recent Developments The portfolio management team responsible for asset allocation decisions for the Fund believes that the world economy and financial markets are progressing through the later stage of the business cycle. Synchronized global economic growth, low inflation and favourable financial conditions are powerful drivers of corporate earnings, and hence equity prices. Although equity valuations are high, the team believes the fundamentals are solid enough that equities may continue to appreciate modestly. As market volatility rose, the Fund ended the year with a neutral weighting toward Canadian equities and slightly overweight positions in U.S. and foreign equities. Although the team believes the outlook for fixed income remains challenging, fixed income remains important for mitigating risk, especially as the end of this business cycle approaches. 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 Mackenzie is wholly owned by IGM Financial Inc. ( IGM ). IGM is a subsidiary of Power Financial Corp., which in turn is a subsidiary of Power Corp. of Canada. Companies related to Power Financial Corp. are therefore considered affiliates of Mackenzie. At March 31,, the Fund held the following investment(s) in companies affiliated with Mackenzie: $2.4 million invested in securities issued by Groupe Bruxelles Lambert SA. The investment(s) represented 0.9% of the Fund s NAV. In making the investment(s), Mackenzie relied on the approval of the Mackenzie Funds Independent Review Committee. The Independent Review Committee issued the approval on the basis that the investment(s) would be made in compliance with Mackenzie s policies. Mackenzie s policies are designed to ensure that the related party transaction (i) is made free from any influence by an entity related to Mackenzie and without taking into account any considerations relevant to an entity related to Mackenzie; (ii) represents the business judgment of Mackenzie, uninfluenced by considerations other than the best interests of the Fund; and (iii) achieves a fair and reasonable result for the Fund.

4 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 each of the fiscal periods shown. 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.

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6 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 each of the periods ended March 31,. Investors cannot invest in an index without incurring fees, expenses and commissions, which are not reflected in these performance figures. All index returns are calculated in Canadian dollars on a total return basis, meaning that all distributions are reinvested. Percentage Return: 1 1 Yr 3 Yr 5 Yr 10 Yr Since Inception 2 Quadrus Series n/a 6.3 H Series n/a 7.6 H5 Series n/a n/a 5.4 H8 Series n/a n/a 6.9 L Series n/a 6.9 L5 Series n/a 6.5 L8 Series 1.9 n/a n/a n/a 3.6 N Series n/a 8.9 N5 Series n/a 9.0 N8 Series n/a 8.8 D5 Series n/a 6.3 D8 Series n/a 6.3 QF Series 2.7 n/a n/a n/a 5.5 QF5 Series 2.8 n/a n/a n/a 5.5 (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 8.6%, H Series 8.7%, H5 Series 6.1%, H8 Series 7.7%, L Series 8.6%, L5 Series 8.1%, L8 Series 5.0%, N Series 8.3%, N5 Series 8.5%, N8 Series 8.2%, D5 Series 8.4%, D8 Series 8.3%, QF Series 6.2%, QF5 Series 6.2%. (4) The return of the FTSE TMX Canada Universe Bond Index since inception for each applicable series is as follows: Quadrus Series 2.8%, H Series 2.8%, H5 Series 2.4%, H8 Series 2.9%, L Series 2.9%, L5 Series 3.1%, L8 Series 1.5%, N Series 2.8%, N5 Series 2.9%, N8 Series 2.9%, D5 Series 2.9%, D8 Series 2.9%, QF Series 0.1%, QF5 Series 0.1%. (5) The return of the S&P/TSX Composite Index since inception for each applicable series is as follows: Quadrus Series 8.1%, H Series 8.3%, H5 Series 4.9%, H8 Series 7.2%, L Series 7.7%, L5 Series 6.8%, L8 Series 6.1%, N Series 7.4%, N5 Series 7.6%, N8 Series 7.2%, D5 Series 7.4%, D8 Series 7.3%, QF Series 6.5%, QF5 Series 6.5%. (6) The return of the S&P 500 Index since inception for each applicable series is as follows: Quadrus Series 19.6%, H Series 19.8%, H5 Series 13.5%, H8 Series 17.8%, L Series 20.7%, L5 Series 19.6%, L8 Series 11.2%, N Series 19.8%, N5 Series 19.7%, N8 Series 19.6%, D5 Series 20.2%, D8 Series 20.4%, QF Series 14.2%, QF5 Series 14.2%. (7) The return of the MSCI EAFE (Net) Index since inception for each applicable series is as follows: Quadrus Series 13.7%, H Series 13.8%, H5 Series 9.9%, H8 Series 10.7%, L Series 13.3%, L5 Series 11.9%, L8 Series 5.3%, N Series 13.4%, N5 Series 13.5%, N8 Series 13.2%, D5 Series 13.2%, D8 Series 12.5%, QF Series 14.5%, QF5 Series 14.5%. Blended Index n/a Note 3 FTSE TMX Canada Universe Bond Index* n/a Note 4 S&P/TSX Composite Index n/a Note 5 S&P 500 Index n/a Note 6 MSCI EAFE (Net) Index n/a Note 7 * Broad-based index The blended index is composed of 40% FTSE TMX Canada Universe Bond Index, 30% S&P/TSX Composite Index, 15% S&P 500 Index and 15% MSCI EAFE (Net) Index. The FTSE TMX Canada Universe Bond Index is a broad measure of Canadian bonds with terms to maturity of more than one year. It includes federal, provincial, municipal and corporate bonds rated BBB or higher. The S&P/TSX Composite Index is a capitalization weighted index that represents some of the largest float adjusted stocks trading on the Toronto Stock Exchange. The S&P 500 Index is a market capitalization weighted index of 500 widely held securities, designed to measure broad U.S. equity performance. The MSCI EAFE (Europe, Australasia, Far East) (Net) Index is a free float adjusted, market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. It consists of 21 developed market country indices. Net total returns are after the deduction of withholding tax from the foreign income and dividends of its constituents.

7 Summary of Investment Portfolio at March 31, Effective Portfolio Allocation % of NAV Equities 60.1 Bonds 34.6 Cash and short-term investments* 5.2 Other assets (liabilities) 0.1 Effective Regional Allocation % of NAV Canada 53.0 United States 28.3 Cash and short-term investments* 5.2 United Kingdom 5.0 Ireland 1.5 Japan 1.2 Other 1.2 Switzerland 1.1 Belgium 1.1 France 0.5 Hong Kong 0.5 Sweden 0.5 Thailand 0.5 Israel 0.3 Other assets (liabilities) 0.1 Effective Sector Allocation % of NAV Corporate bonds 16.0 Financials 13.9 Provincial bonds 10.1 Federal bonds 8.4 Industrials 7.6 Energy 6.2 Information technology 5.6 Cash and short-term investments* 5.2 Consumer staples 5.0 Health care 4.6 Consumer discretionary 4.4 Real estate 3.6 Telecommunication services 3.3 Materials 3.0 Utilities 2.9 Term loans 0.1 Other assets (liabilities) 0.1 Effective Net Currency Exposure % of NAV Canadian dollar 60.7 U.S. dollar 26.7 British pound 4.4 Euro 3.7 Other 3.3 Japanese yen 1.2 Bonds by Credit Rating** % of NAV AAA 11.0 AA 13.2 A 5.6 BBB 1.3 Less than BBB 0.2 Top 25 Holdings Issuer/Underlying Fund % of NAV Dividend Fund (GWLIM) Series R 11.8 U.S. Value Fund (London Capital) Series R 10.7 Canadian Growth Fund (GWLIM) Series R 8.8 Mid Cap Canada Fund (GWLIM) Series R 4.9 Mackenzie North American Corporate Bond Fund Series R 2.9 Cash and short-term investments 2.3 Mackenzie Canadian Money Market Fund Series R 1.9 Government of Canada 3.25% Government of Canada 3.50% Government of Canada 2.50% Government of Canada 5.75% Government of Canada 2.75% Groupe Bruxelles Lambert SA (1) 0.9 Melrose Industries PLC 0.8 JPMorgan Chase & Co. 0.7 Province of Ontario 4.60% Government of Canada 3.75% Province of Ontario 2.60% The Swatch Group AG 0.6 Province of Quebec 5.00% DCC PLC 0.5 Province of Ontario 2.85% Government of Canada 2.25% Province of Ontario 3.50% Diageo PLC 0.5 Top long positions as a percentage of total net asset value 56.6 * A portion of the Fund s effective cash allocation is invested in Series R securities of a money market fund managed by Mackenzie. ** Credit ratings and rating categories are based on ratings issued by a designated rating organization. This table includes only bonds held directly by the Fund. (1) The issuer of this security is related to Mackenzie Financial Corporation. The Fund held no direct short positions at the end of the period. For the prospectus and other information about the underlying fund(s) held in the portfolio, visit or The investments and percentages may have changed since March 31,, 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. The effective allocation shows the portfolio, regional, sector or net currency exposure of the Fund calculated by combining its direct and indirect investments.

8 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 Total revenue Total expenses (0.35) (0.33) (0.32) (0.32) (0.29) Realized gains (losses) for the period Unrealized gains (losses) for the period (0.30) 0.87 (0.57) operations (0.32) From dividends (0.02) (0.11) (0.05) (0.12) From capital gains (0.10) Return of capital Total annual distributions 3 (0.02) (0.21) (0.05) (0.12) Net assets, end of period H Series Net assets, beginning of period Total revenue Total expenses (0.18) (0.20) (0.18) (0.19) (0.16) Realized gains (losses) for the period (0.22) Unrealized gains (losses) for the period (0.32) 0.92 (0.59) operations (0.09) From dividends (0.17) (0.17) (0.09) (0.12) From capital gains (0.01) (0.17) Return of capital Total annual distributions 3 (0.18) (0.34) (0.09) (0.12) Net assets, end of period H5 Series Net assets, beginning of period n/a Total revenue n/a Total expenses (0.19) (0.21) (0.21) (0.06) n/a Realized gains (losses) for the period n/a Unrealized gains (losses) for the period (0.32) 0.98 (0.67) 0.14 n/a operations (0.27) 0.73 n/a (excluding dividends) n/a From dividends (0.17) (0.18) (0.10) (0.20) n/a From capital gains (0.01) (0.18) n/a Return of capital (0.75) (0.74) (0.75) (0.19) n/a Total annual distributions 3 (0.93) (1.10) (0.85) (0.39) n/a Net assets, end of period n/a H8 Series Net assets, beginning of period Total revenue Total expenses (0.16) (0.20) (0.20) (0.23) (0.18) Realized gains (losses) for the period (0.23) 0.35 Unrealized gains (losses) for the period (0.30) 0.95 (0.65) operations (0.04) From dividends (0.17) (0.17) (0.10) (0.14) From capital gains (0.01) (0.18) Return of capital (1.14) (1.17) (1.21) (1.23) (1.11) Total annual distributions 3 (1.32) (1.52) (1.31) (1.37) (1.11) Net assets, end of period (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.

9 THE FUND S NET ASSETS PER SECURITY ($) 1 (cont d) L Series Net assets, beginning of period Total revenue Total expenses (0.29) (0.28) (0.27) (0.27) (0.24) Realized gains (losses) for the period Unrealized gains (losses) for the period (0.30) 0.87 (0.54) operations From dividends (0.07) (0.12) (0.06) (0.15) From capital gains (0.13) Return of capital Total annual distributions 3 (0.07) (0.25) (0.06) (0.15) Net assets, end of period L5 Series Net assets, beginning of period Total revenue Total expenses (0.33) (0.34) (0.32) (0.34) (0.32) Realized gains (losses) for the period (0.97) Unrealized gains (losses) for the period (0.35) 1.05 (0.68) operations (0.03) From dividends (0.08) (0.15) (0.08) (0.18) From capital gains (0.15) Return of capital (0.80) (0.80) (0.81) (0.80) (0.76) Total annual distributions 3 (0.88) (1.10) (0.89) (0.98) (0.76) Net assets, end of period L8 Series Net assets, beginning of period n/a n/a Total revenue n/a n/a Total expenses (0.29) (0.30) (0.19) n/a n/a Realized gains (losses) for the period n/a n/a Unrealized gains (losses) for the period (0.29) 0.92 (0.38) n/a n/a operations n/a n/a (excluding dividends) n/a n/a From dividends (0.06) (0.13) (0.11) n/a n/a From capital gains (0.13) n/a n/a Return of capital (1.10) (1.13) (0.79) n/a n/a Total annual distributions 3 (1.16) (1.39) (0.90) n/a n/a Net assets, end of period n/a n/a N Series Net assets, beginning of period Total revenue Total expenses 0.02 (0.05) (0.01) (0.01) Realized gains (losses) for the period Unrealized gains (losses) for the period (0.32) 0.92 (0.58) operations From dividends (0.36) (0.24) (0.14) (0.30) From capital gains (0.01) (0.24) Return of capital Total annual distributions 3 (0.37) (0.48) (0.14) (0.30) Net assets, end of period

10 THE FUND S NET ASSETS PER SECURITY ($) 1 (cont d) N5 Series Net assets, beginning of period Total revenue Total expenses 0.03 (0.07) (0.01) (0.02) Realized gains (losses) for the period (0.72) Unrealized gains (losses) for the period (0.38) 1.15 (0.76) operations From dividends (0.42) (0.29) (0.18) (0.30) From capital gains (0.02) (0.30) Return of capital (0.88) (0.88) (0.88) (0.85) (0.78) Total annual distributions 3 (1.32) (1.47) (1.06) (1.15) (0.78) Net assets, end of period N8 Series Net assets, beginning of period Total revenue Total expenses 0.02 (0.05) (0.01) (0.02) Realized gains (losses) for the period (0.79) Unrealized gains (losses) for the period (0.32) 1.00 (0.69) operations (0.12) From dividends (0.35) (0.25) (0.16) (0.40) From capital gains (0.01) (0.26) Return of capital (1.21) (1.23) (1.28) (1.28) (1.21) Total annual distributions 3 (1.57) (1.74) (1.44) (1.68) (1.21) Net assets, end of period D5 Series Net assets, beginning of period Total revenue Total expenses (0.41) (0.40) (0.40) (0.42) (0.41) Realized gains (losses) for the period (0.31) Unrealized gains (losses) for the period (0.35) 1.06 (0.72) operations (0.17) From dividends (0.02) (0.13) (0.06) (0.14) From capital gains (0.13) Return of capital (0.80) (0.80) (0.82) (0.82) (0.77) Total annual distributions 3 (0.82) (1.06) (0.88) (0.96) (0.77) Net assets, end of period D8 Series Net assets, beginning of period Total revenue Total expenses (0.35) (0.36) (0.38) (0.40) (0.40) Realized gains (losses) for the period (0.58) Unrealized gains (losses) for the period (0.30) 0.95 (0.67) operations (0.29) From dividends (0.01) (0.11) (0.05) (0.14) From capital gains (0.11) Return of capital (1.13) (1.17) (1.22) (1.26) (1.22) Total annual distributions 3 (1.14) (1.39) (1.27) (1.40) (1.22) Net assets, end of period

11 THE FUND S NET ASSETS PER SECURITY ($) 1 (cont d) RATIOS AND SUPPLEMENTAL DATA QF Series Quadrus Series Net assets, beginning of period n/a n/a n/a Total revenue n/a n/a n/a Total expenses (0.15) (0.13) n/a n/a n/a Realized gains (losses) for the period n/a n/a n/a Unrealized gains (losses) for the period (0.23) 0.47 n/a n/a n/a operations n/a n/a n/a (excluding dividends) n/a n/a n/a From dividends (0.13) (0.14) n/a n/a n/a From capital gains (0.15) n/a n/a n/a Return of capital n/a n/a n/a Total annual distributions 3 (0.13) (0.29) n/a n/a n/a Net assets, end of period n/a n/a n/a QF5 Series Net assets, beginning of period n/a n/a n/a Total revenue n/a n/a n/a Total expenses (0.20) (0.21) n/a n/a n/a Realized gains (losses) for the period n/a n/a n/a Unrealized gains (losses) for the period (0.33) 0.69 n/a n/a n/a operations n/a n/a n/a (excluding dividends) n/a n/a n/a From dividends (0.16) (0.20) n/a n/a n/a From capital gains (0.22) n/a n/a n/a Return of capital (0.77) (0.57) n/a n/a n/a Total annual distributions 3 (0.93) (0.99) n/a n/a n/a Net assets, end of period n/a n/a n/a Total net asset value ($000) 1 64,816 67,324 57,768 84,926 34,202 Securities outstanding (000) 1 4,710 4,961 4,586 6,600 2,804 Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) H Series Total net asset value ($000) 1 6,615 6,796 7,280 14,168 4,397 Securities outstanding (000) , Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) H5 Series Total net asset value ($000) n/a Securities outstanding (000) n/a Management expense ratio (%) n/a waivers or absorptions (%) n/a Trading expense ratio (%) n/a Portfolio turnover rate (%) n/a Net asset value per security ($) n/a (1) This information is provided as at the end of the fiscal period shown. (2) 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 their discretion and stop waiving or absorbing such expenses at any time without notice. (3) 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. (4) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor 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.

12 RATIOS AND SUPPLEMENTAL DATA (cont d) H8 Series Total net asset value ($000) Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) L Series Total net asset value ($000) 1 68,127 65,128 52,672 10,158 3,883 Securities outstanding (000) 1 4,969 4,819 4, Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) L5 Series Total net asset value ($000) 1 3,823 3,537 2, Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) L8 Series Total net asset value ($000) 1 2,247 1,620 1,603 n/a n/a Securities outstanding (000) n/a n/a Management expense ratio (%) n/a n/a waivers or absorptions (%) n/a n/a Trading expense ratio (%) n/a n/a Portfolio turnover rate (%) n/a n/a Net asset value per security ($) n/a n/a N Series Total net asset value ($000) 1 112, ,637 78,213 50,659 18,944 Securities outstanding (000) 1 7,710 7,036 5,914 3,816 1,523 Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) N5 Series Total net asset value ($000) 1 5,682 6,331 4,460 3, Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) N8 Series Total net asset value ($000) 1 1,831 2,080 1,414 1, Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) D5 Series Total net asset value ($000) 1 2,633 2,420 2,562 2, Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($)

13 RATIOS AND SUPPLEMENTAL DATA (cont d) D8 Series Total net asset value ($000) 1 1,617 2,243 2,253 2, Securities outstanding (000) Management expense ratio (%) waivers or absorptions (%) Net asset value per security ($) QF Series Total net asset value ($000) 1 4,285 1,807 n/a n/a n/a Securities outstanding (000) n/a n/a n/a Management expense ratio (%) n/a n/a n/a waivers or absorptions (%) n/a n/a n/a Trading expense ratio (%) n/a n/a n/a Portfolio turnover rate (%) n/a n/a n/a Net asset value per security ($) n/a n/a n/a QF5 Series Total net asset value ($000) n/a n/a n/a Securities outstanding (000) n/a n/a n/a Management expense ratio (%) n/a n/a n/a waivers or absorptions (%) n/a n/a n/a Trading expense ratio (%) n/a n/a n/a Portfolio turnover rate (%) n/a n/a n/a Net asset value per security ($) n/a n/a n/a 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 GLC Asset Management Group Ltd. and Setanta Asset Management Ltd., both affiliates of Mackenzie, for investment advisory services, including managing the investment portfolio of the Fund and/or the underlying funds, as applicable, 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, distributionrelated payments ) to registered dealers whose clients invest in the Fund. Mackenzie used approximately 43% of the total management fee revenues received from all Mackenzie funds during the year to fund distributionrelated payments to registered dealers and brokers. In comparison, such distribution-related payments for the Fund represented on average 44% 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.

14 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 29, 2012 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 Distributed by Quadrus Investment Services Ltd. (255 Dufferin Ave., London, Ontario, N6A 4K1; ; Quadrus Investment Services Ltd. ( Quadrus ) is the principal distributor of the series of securities listed below: Quadrus Series, D5 Series and D8 Series securities are offered to investors investing a minimum of $500. Investors in D5 Series and D8 Series securities also want to receive a regular monthly cash flow of 5% or 8% per year, respectively. H Series, H5 Series and H8 Series securities are offered to investors investing a minimum of $500, who are enrolled in a Quadrus-sponsored fee-forservice or wrap program and who are subject to an asset-based fee. Investors in H5 Series and H8 Series securities also want to receive a monthly cash flow of 5% or 8% per year, respectively. L Series, L5 Series and L8 Series securities are offered to investors investing a minimum of $100,000 and who have eligible minimum total holdings of $500,000. Investors in L5 Series and L8 Series securities also want to receive a regular monthly cash flow of 5% or 8% per year, respectively. N Series, N5 Series and N8 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. Investors in N5 Series and N8 Series securities also want to receive a regular monthly cash flow of 5% or 8% per year, respectively. QF Series and QF5 Series securities are offered to retail investors investing a minimum of $500. Investors are required to negotiate their advisor service fee, which cannot exceed 1.25%, with their financial advisor. Investors in QF5 Series securities also want to receive a monthly cash flow of 5% per year. An investor in the Fund may choose among different purchase options that are available under each series. These purchase options are a sales charge purchase option, a redemption charge purchase option, a low-load purchase option and a no-load purchase option. The charges under the sales charge purchase option are negotiated by investors with their dealers. The charges under the redemption charge and low-load purchase options are paid to Mackenzie if an investor redeems securities of the Fund during specific periods. Not all purchase options are available under each series of the Fund, and the charges for each purchase option may vary among the different series. For further details on these purchase options, please refer to the Fund s Simplified Prospectus and Fund Facts. Series Inception/ Reinstatement Date Management Fees Administration Fees Net Asset Value per Security ($),, Quadrus Series July 19, % 0.21% H Series July 11, % 0.16% H5 Series December 19, 1.00% 0.16% H8 Series May 23, % 0.16% L Series November 27, % 0.15% L5 Series February 5, % 0.15% L8 Series August 13, 1.70% 0.15% N Series September 26, 2012 (1) (1) N5 Series August 27, 2012 (1) (1) N8 Series October 16, 2012 (1) (1) D5 Series October 26, % 0.21% D8 Series December 20, % 0.21% QF Series July 12, 1.00% 0.21% QF5 Series July 12, 1.00% 0.21% (1) This fee is negotiable and payable directly to Mackenzie by investors in this series.