As filed with the Securities and Exchange Commission on
October 24, 1996 (File No. 2-98292)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 Post-Effective Amendment No.
24 [ X ]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 Amendment No.
[ X ]
MACKENZIE SERIES TRUST
(Formerly Industrial Series Trust)
(Exact Name of Registrant as Specified in Charter)
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, Florida 33432
(Address of Principal Executive Offices)
Registrant's Telephone Number: (800) 777-6472
C. William Ferris
Mackenzie Investment Management Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Suite 300
Boca Raton, Florida 33432
(Name and Address of Agent for Service of
Process)
Copies to:
Joseph R. Fleming, Esq.
Dechert Price & Rhoads
Ten Post Office Square, Suite 1230
Boston, MA 02109
[ X ] It is proposed that this filing become
effective on October 25, 1996 pursuant
to Rule 485(b).
The Registrant has elected to register an indefinite
number of shares of beneficial interest under the
Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940; accordingly, no fee is
payable herewith. The Registrant filed its notice
pursuant to Rule 24f-2 for the Registrant's most recent
fiscal year ended June 30, 1996 on August 28, 1996.
The total number of pages is ______. The exhibit index
is on page ______.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES
ACT OF 1933
PROPOSED
MAXIMUM OFFERING
PRICE PER SHARE** TITLE OF SECURITIES
AMOUNT BEING (WITHIN 15 DAYS BEING REGISTERED
REGISTERED OF FILING)
Shares of Beneficial Indefinite*
Interest, No Par
Value Per Share
Mackenzie Limited Term
Municipal Fund - Class A 688,141.03 $ 10.46
Mackenzie Limited Term
Municipal Fund - Class B 709,158.14 $ 10.15
Mackenzie National
Municipal Fund - Class A 696,127.19 $ 10.34
Mackenzie National
Municipal Fund - Class B 731,499.50 $ 9.84
Mackenzie California
Municipal Fund - Class A 674,597.48 $ 10.67
Mackenzie California
Municipal Fund - Class B 708,460.15 $ 10.16
Mackenzie New York
Municipal Fund - Class A 698,152.78 $ 10.31
Mackenzie New York
Municipal Fund - Class B 732,989.32 $ 9.82
_________________________________________________________________
Mackenzie Series Trust 5,639,125.59 N/A
PROPOSED
MAXIMUM
AGGREGATE
AMOUNT OF TITLE OF SECURITIES OFFERING
REGISTRATION BEING REGISTERED
PRICE** FEE
Shares of Beneficial N/A N/A
Interest, No Par
Value Per Share
Mackenzie Limited Term
Municipal Fund - Class A $ 7,197,955.125 $
12.50 Mackenzie Limited Term
Municipal Fund - Class B $ 7,197,955.125 $
12.50 Mackenzie National
Municipal Fund - Class A $ 7,197,955.125 $
12.50 Mackenzie National
Municipal Fund - Class B $ 7,197,955.125 $
12.50 Mackenzie California
Municipal Fund - Class A $ 7,197,955.125 $
12.50 Mackenzie California
Municipal Fund - Class B $ 7,197,955.125 $
12.50 Mackenzie New York
Municipal Fund - Class A $ 7,197,955.125 $
12.50 Mackenzie New York
Municipal Fund - Class B $ 7,197,955.125 $
12.50
_________________________________________________________________
Mackenzie Series Trust $57,583.641.00
$100.00
=======================
* Registrant continues its election to register an
indefinite number of shares under Rule 24f-2 and
filed its Rule 24f-2 Notice for the fiscal year
ended June 30, 1996 on August 28, 1996.
** Registrant elects to calculate the maximum
aggregate offering price pursuant to Rule 24e-2.
7,294,125 shares ($73,943,752 worth of securities)
of Mackenzie Series Trust were redeemed during the
fiscal year ended June 30, 1996. 1,646,383 shares
($16,690,111 worth of securities) of Mackenzie
Series Trust were used for reduction pursuant to
paragraph (c) of Rule 24f-2 during the current year.
5,647,742 shares ($57,253,641 worth of securities) is the
amount used for reduction in this Amendment. Pursuant to
Rule 457(d) under the Securities Act of 1993, as
amended, the offering price as calculated on
October 18, 1996 for Mackenzie Limited Term
Municipal Fund is $10.46 for its Class A shares
and $10.15 for its Class B shares; for Mackenzie
National Municipal Fund is $10.34 for its Class A
shares and $9.84 for its Class B shares; for Mackenzie
California Municipal Fund is $10.67 for its Class A shares
and $10.16 for its Class B Shares; and for Mackenzie
New York Municipal Fund is $10.31 for its Class A
shares and $9.82 for its Class B shares. No fee
is required for the 684,197.43 Class A shares and
705,094.10 Class B shares of Mackenzie Limited
Term Municipal Fund, 692,137.83 Class A shares and
727,307.43 Class B shares of Mackenzie National
Municipal Fund, 670,731.50 Class A shares and 704,400.11
Class B shares of Mackenzie California Municipal Fund, and
694,151.81 Class A shares and 728,788.71 Class B
shares of Mackenzie New York Municipal Fund. The
Registrant has elected to register, for $100, an
additional $330,000 worth of shares (approximately
3,944 Class A shares and 4,064 Class B shares of
Mackenzie Limited Term Municipal Fund; 3,989 Class
A shares and 4,192 Class B shares of Mackenzie
National Municipal Fund; 3,866 Class A shares and 4,060
Class B shares of Mackenzie California Municipal Fund; and
4,001 Class A shares and 4,201 Class B shares of
Mackenzie New York Municipal Fund.
MACKENZIE SERIES TRUST
CROSS REFERENCE SHEET
Post-Effective Amendment No. 24 contains the
Prospectus and Statement of Additional Information to
be used with Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund, Mackenzie New York
Municipal Fund and Mackenzie Limited Term Municipal
Fund, the four series of Mackenzie Series Trust (the
"Trust").
Items Required by Form N-1A
PART A:
1 COVER PAGE: Cover Page
2 SYNOPSIS: Not Applicable
3 CONDENSED FINANCIAL INFORMATION: Schedule of Fees
4 GENERAL DESCRIPTION OF REGISTRANT: Investment
Objectives and Policies; Risk Factors and
Investment Techniques
5 MANAGEMENT OF THE FUND: Organization and
Management of the Fund; Investment Manager
6 CAPITAL STOCK AND OTHER SECURITIES: Dividends and
Taxes
7 PURCHASE OF SECURITIES BEING OFFERED: How to Buy
Shares; How Your Purchase Price is Determined; How
the Fund Values its Shares
8 REDEMPTION OR REPURCHASE: How to Redeem Shares;
Minimum Account Balance Requirements; Tax
Identification Number; Certificates; Exchange
Privilege; Reinvestment Privilege
9 PENDING LEGAL PROCEEDINGS: Not Applicable
PART B:
10 COVER PAGE: Cover Page
11 TABLE OF CONTENTS: Table of Contents
12 GENERAL INFORMATION AND HISTORY: Investment
Objectives and Policies
13 INVESTMENT OBJECTIVES AND POLICIES: Investment
Objectives and Policies; Investment Restrictions;
Additional Restrictions
14 MANAGEMENT OF THE FUND: Trustees and Officers;
Investment Advisory and Other Services
15 CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES: Trustees and Officers; Capitalization
and Voting Rights
16 INVESTMENT ADVISORY AND OTHER SERVICES:
Investment Advisory and Other Services
17 BROKERAGE ALLOCATION AND OTHER PRACTICES:
Brokerage Allocation; Portfolio Turnover
18 CAPITAL STOCK AND OTHER SECURITIES:
Capitalization and Voting Rights
19 PURCHASE, REDEMPTION AND PRICING OF SECURITIES
BEING OFFERED: Net Asset Value; Redemptions
20 TAX STATUS: Taxation; Appendix B
21 UNDERWRITERS: Investment Advisory and Other
Services
22 CALCULATION OF PERFORMANCE DATA: Performance
Information
23 FINANCIAL STATEMENTS: Financial Statements
<PAGE>
MACKENZIE
October 25, 1996
MACKENZIE
LIMITED TERM
MUNICIPAL FUND
MACKENZIE
NATIONAL
MUNICIPAL FUND
MACKENZIE
CALIFORNIA
MUNICIPAL FUND
MACKENZIE
NEW YORK
MUNICIPAL FUND
----------
PROSPECTUS
----------
Mackenzie Investment
Management Inc.
Via Mizner Financial
Plaza
700 South Federal Hwy.
Boca Raton, FL 33432
1-800-456-5111
THROUGHOUT THE
CENTURIES,
THE CASTLE KEEP HAS
BEEN A SOURCE
OF LONG-RANGE VISION
AND STRATEGIC
ADVANTAGE.
Mackenzie Series Trust (the "Trust") is a
registered investment company currently consisting of
four separate investment portfolios. These four
portfolios of the Trust (the "Funds"), as identified
below, are described in this Prospectus. Each Fund
has its own investment objective and policies, and a
shareholder's interest is limited to the Fund in which he or she
owns shares.
The four Funds are:
Mackenzie Limited Term Municipal Fund
Mackenzie National Municipal Fund
Mackenzie California Municipal Fund
Mackenzie New York Municipal Fund
This Prospectus sets forth concisely the
information about the Funds that a prospective
investor should know before investing and should be
read carefully and retained for future reference.
Additional information about the Funds is contained in
the Statement of Additional Information ("SAI") for the
Funds, which is incorporated by reference into this Prospectus.
The SAI, dated October 25, 1996, has been filed with
the Securities and Exchange Commission ("SEC") and is
available upon request and without charge from the
Trust at the Distributor's address and telephone
number provided below.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expense Information . . . . . . . . . . . . 2
The Funds' Financial Highlights . . . . . . 5
Investment Objectives and Policies . . . . 9 Risk
Factors and Investment Techniques . . 9
Organization and Management of the Funds. . 12
Investment Manager . . . . . . . . . . . . 12 Fund
Administration and Accounting . . . . 12 Transfer
Agent . . . . . . . . . . . . . . 12 Dividends and
Taxes . . . . . . . . . . . . 12 Performance Data .
. . . . . . . . . . . . 13 Alternative Purchase
Arrangements . . . . . 14 How to Buy Shares . . . .
. . . . . . . . . 14 How Your Purchase Price is
Determined . . . 15 How a Fund Values Its Shares .
. . . . . . 15 Initial Sales Charge Alternative -
Class A Shares . . . . . . . . . . . . .
16 Contingent Deferred Sales Charge -
Class A Shares . . . . . . . . . . . . . 16
Qualifying for a Reduced Sales Charge . . . 17
Purchases of Class A Shares at Net Asset
Value . . . . . . . . . . . . . . . 17 Contingent
Deferred Sales Charge Alternative -
Class B Shares . . . . . . 18 How to Redeem Shares
. . . . . . . . . . . 19 Minimum Account Balance
Requirements . . . 20 Signature Guarantees . . . .
. . . . . . . 20 Choosing a Distribution Option . .
. . . . 20
Tax Identification Number . . . . . . . . . 20
Certificates . . . . . . . . . . . . . . . 21
Exchange Privilege . . . . . . . . . . . . 21
Reinvestment Privilege . . . . . . . . . . 21
Systematic Withdrawal Plan . . . . . . . . 22
Automatic Investment Method . . . . . . . . 22
Consolidated Account Statements . . . . . . 22
Shareholder Inquiries . . . . . . . . . . . 22
</TABLE>
BOARD OF TRUSTEES
John S. Anderegg, Jr.
Paul H. Broyhill
Stanley Channick
Frank W. DeFriece, Jr.
Roy J. Glauber
Michael G. Landry
Joseph G. Rosenthal
J. Brendan Swan
LEGAL COUNSEL
Dechert Price & Rhoads
Boston, MA
OFFICERS
Michael G. Landry, President
Keith J. Carlson, Vice President
C. William Ferris, Secretary/Treasurer
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
TRANSFER AGENT
Ivy Mackenzie
Services Corp.
P.O. Box 3022
Boca Raton, FL 33431-0922
1-800-777-6472
AUDITORS
Coopers & Lybrand L.L.P.
Ft.Lauderdale, FL
INVESTMENT
MANAGER
Mackenzie Investment Management
Inc. Boca Raton, FL
DISTRIBUTOR
Ivy Mackenzie
Distributors, Inc.
Via Mizner Financial Plaza
700 South Federal Highway
Boca Raton, FL 33432
1-800-456-5111
[LOGO] IVY MACKENZIE
<PAGE>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
MACKENZIE
LIMITED
TERM
MUNICIPAL
FUND
------------------
CLASS A CLASS B
<S> <C> <C>
Maximum sales load imposed on purchases
(as a percentage of offering price at
time of purchase)......................
3.00%(1) None Maximum contingent deferred sales
charge (as a percentage of
original purchase
price)................................. None(2) 3.00%(3)
The Funds have no sales load on
reinvested dividends, no redemption
fees and no exchange fees
<CAPTION>
MACKENZIE
NATIONAL
MUNICIPAL
FUND
------------------
CLASS A CLASS B
<S> <C> <C>
Maximum sales load imposed on purchases
(as a percentage of offering price at
time of purchase)......................
4.75%(1) None
Maximum contingent deferred sales charge
(as a percentage of original purchase
price)................................. None(2)
5.00%(4)
The Funds have no sales load on
reinvested dividends, no redemption
fees and no exchange fees
<CAPTION>
MACKENZIE
CALIFORNIA
MUNICIPAL
FUND
------------------
CLASS A CLASS B
<S> <C> <C>
Maximum sales load imposed on purchases
(as a percentage of offering price at
time of
purchase)...................... 4.75%(1) None
Maximum contingent deferred sales charge
(as a percentage of original purchase
price)................................. None(2)
5.00%(4) The Funds have no sales load on
reinvested dividends, no redemption
fees and no exchange fees
<CAPTION>
MACKENZIE
NEW
YORK
MUNICIPAL
FUND
-----------------
CLASS A CLASS B
<S> <C> <C>
Maximum sales load imposed on purchases
(as a percentage of offering price at
time of purchase)......................
4.75%(1) None Maximum contingent deferred sales
charge (as a percentage of
original purchase
price)................................. None(2) 5.00%(4)
The Funds have no sales load on
reinvested dividends, no redemption
fees and no exchange fees
</TABLE>
(1) Class A shares of the Fund may be purchased under
a variety of plans that provide for the reduction
or elimination of the sales charge.
(2) A contingent deferred sales charge ("CDSC") may
apply to the redemption of Class A shares that are
purchased without an initial sales charge. See
"Purchases of Class A Shares at Net Asset Value"
and "Contingent Deferred Sales Charge -- Class A
Shares."
(3) The maximum CDSC on Class B shares applies to
redemptions during the first year after purchase.
The charge declines to 2 1/2% during the second
year; 2% during the third year; 1 1/2% during the
fourth year; 1% during the fifth year; and 0% in
the sixth year and thereafter.
(4) The maximum CDSC on Class B shares applies to
redemptions during the first year after purchase.
The charge declines to 4% during the second year;
3% during the third and fourth years; 2% during
the fifth year; 1% during the sixth year; and 0%
in the seventh year and thereafter.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS):
<TABLE>
<CAPTION>
MACKENZIE
LIMITED
TERM
MUNICIPAL
FUND
----------------
CLASS A CLASS B
<S> <C> <C>
Management Fees After Expense
Reimbursements(1)...................... 0.12%
0.12% 12b-1 Service/Distribution Fees.........
0.25% 0.75%(2) Other
Expenses.......................... 0.52% 0.52%
---- ----
Total Fund Operating Expenses(3)........ 0.89% 1.39%
==== ====
<CAPTION>
MACKENZIE
NATIONAL
MUNICIPAL
FUND
----------------
CLASS A CLASS B
<S> <C> <C>
Management Fees After Expense
Reimbursements(1)...................... 0.13%
0.13% 12b-1 Service/Distribution Fees.........
0.25% 1.00%(2) Other
Expenses.......................... 0.72% 0.72%
---- ----
Total Fund Operating Expenses(3)........ 1.10% 1.85%
====
====
<CAPTION>
MACKENZIE
CALIFORNIA
MUNICIPAL
FUND
----------------
CLASS A CLASS B
<S> <C> <C>
Management Fees After Expense
Reimbursements(1)...................... 0.36% 0.36%
12b-1 Service/Distribution Fees......... 0.25%
1.00%(2) Other Expenses..........................
0.49% 0.49%
---- ---- Total Fund Operating
Expenses(3)........ 1.10% 1.85%
==== ====
<CAPTION>
MACKENZIE
NEW YORK
MUNICIPAL
FUND
----------------
CLASS A CLASS B
<S> <C> <C>
Management Fees After Expense
Reimbursements(1)...................... 0.32%
0.32% 12b-1 Service/Distribution Fees.........
0.25% 1.00%(2) Other
Expenses.......................... 0.53% 0.53%
---- ----
Total Fund Operating Expenses(3)........ 1.10% 1.85%
==== ====
</TABLE>
(1) Management Fees for both Class A and Class B
shares of all Funds reflect expense reimbursements
(see note (3) below). Without expense
reimbursements, Management Fees would have been
0.55% of average net assets.
(2) Long-term investors may, as a result of the Fund's
12b-1 fees, pay more than the economic equivalent
of the maximum front-end sales charge permitted by
the Conduct Rules of the National Association of
Securities Dealers, Inc.
(3) Mackenzie Investment Management Inc. ("MIMI")
voluntarily limits each Fund's Total Fund
Operating Expenses (excluding taxes, 12b-1 fees,
brokerage commissions, interest, litigation and
indemnification expenses and other extraordinary
expenses) to an annual rate of (i) 0.64% of
the average net assets of Mackenzie Limited Term
Municipal Fund and (ii) 0.85% of the average net
assets of Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund and Mackenzie
New York Municipal Fund, as described in this
Prospectus under "Organization of the Funds." Without
expense reimbursements, Total Fund Operating Expenses for
Class A and B would have been: 1.32% and 1.82%,
respectively, for Mackenzie Limited Term Municipal Fund;
1.52% and 2.27%, respectively, for Mackenzie National
Municipal Fund; 1.29% and 2.04%, respectively, for
Mackenzie California Municipal Fund; and 1.33% and
2.08%, respectively, for Mackenzie New York
Municipal Fund.
EXAMPLE
CLASS A SHARES
You would pay the following expenses on a $1,000
investment in a Fund, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $39(1)
Mackenzie National Municipal Fund....... 58(2)
Mackenzie California Municipal Fund..... 58(2)
Mackenzie New York Municipal Fund....... 58(2)
<CAPTION>
3 YEARS
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $58
Mackenzie National Municipal Fund....... 81
Mackenzie California Municipal Fund..... 81
Mackenzie New York Municipal Fund....... 81
<CAPTION>
5 YEARS
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $ 78
Mackenzie National Municipal Fund....... 105
Mackenzie California Municipal Fund..... 105
Mackenzie New York Municipal Fund....... 105
<CAPTION>
10 YEARS
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $136
Mackenzie National Municipal Fund....... 175
Mackenzie California Municipal Fund..... 175
Mackenzie New York Municipal Fund....... 175
</TABLE>
These figures assume that the current voluntary
expense limitation is in place for each of the time
periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense
limitation at any time (on 30 days notice to
shareholders in the case of Mackenzie Limited Term Municipal
Fund and Mackenzie National Municipal Fund), which may affect
the results in years one, three, five and ten in the
preceding Example. If the voluntary expense limitation
is terminated, the Class A expenses for the one, three,
five and ten year periods are estimated to be $43, $71,
$100 and $184, respectively, for Mackenzie Limited Term
Municipal Fund; $62, $93, $126 and $220, respectively,
for Mackenzie National Municipal Fund; $60, $86, $115
and $196, respectively, for Mackenzie California Municipal
Fund; and $60, $88, $117 and $200, respectively, for Mackenzie
New York Municipal Fund.
(1) Assumes deduction of the maximum 3.00% initial
sales charge at the time of purchase and no
deduction of a contingent deferred sales charge at
the time of redemption.
(2) Assumes deduction of the maximum 4.75% initial
sales charge at the time of purchase and no
deduction of a contingent deferred sales charge at
the time of redemption.
EXAMPLE (1 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000
investment in a Fund, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $44(2)
Mackenzie National Municipal Fund....... 69(1)
Mackenzie California Municipal Fund..... 69(1)
Mackenzie New York Municipal Fund....... 69(1)
<CAPTION>
3 YEARS
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $64(3)
Mackenzie National Municipal Fund....... 88(2)
Mackenzie California Municipal Fund..... 88(2)
Mackenzie New York Municipal Fund....... 88(2)
<CAPTION>
5 YEARS
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $ 86(4)
Mackenzie National Municipal Fund....... 120(3)
Mackenzie California Municipal Fund..... 120(3)
Mackenzie New York Municipal Fund....... 120(3)
<CAPTION>
10
YEARS(5)
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $153
Mackenzie National Municipal Fund....... 197
Mackenzie California Municipal Fund..... 197
Mackenzie New York Municipal Fund....... 197
</TABLE>
These figures assume that the current voluntary
expense limitation is in place for each of the time
periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense
limitation at any time (on 30 days notice to
shareholders in the case of Mackenzie Limited Term Municipal
Fund and Mackenzie National Municipal Fund), which may affect
the results in years one, three, five and ten in the
preceding Example. If the voluntary expense limitation
is terminated, the Class B expenses for the one, three,
five and ten year periods are estimated to be $48, $77,
$109 and $201, respectively, for Mackenzie Limited Term
Municipal Fund; $73, $101, $142 and $242, respectively,
for Mackenzie National Municipal Fund; $71, $94, $130
and $218, respectively, for Mackenzie California Municipal
Fund; and $71, $95, $132 and $222, respectively, for Mackenzie
New York Municipal Fund.
EXAMPLE (2 OF 2)
CLASS B SHARES
You would pay the following expenses on a $1,000
investment in a Fund, assuming (1) 5% annual return and
(2) no redemption:
<TABLE>
<CAPTION>
1 YEAR
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $14
Mackenzie National Municipal Fund....... 19
Mackenzie California Municipal Fund..... 19
Mackenzie New York Municipal Fund....... 19
<CAPTION>
3 YEARS
---------
<S> <C>
Mackenzie Limited Term Municipal Fund... $44
Mackenzie National Municipal Fund....... 58
Mackenzie California Municipal Fund..... 58
Mackenzie New York Municipal Fund....... 58
<CAPTION>
5 YEARS
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $ 76
Mackenzie National Municipal Fund....... 100
Mackenzie California Municipal Fund..... 100
Mackenzie New York Municipal Fund....... 100
<CAPTION>
10
YEARS(5)
----------
<S> <C>
Mackenzie Limited Term Municipal Fund... $153
Mackenzie National Municipal Fund....... 197
Mackenzie California Municipal Fund..... 197
Mackenzie New York Municipal Fund....... 197
</TABLE>
These figures assume that the current voluntary
expense limitation is in place for each of the time
periods indicated. MIMI, as investment adviser, has
reserved the right to terminate or revise this expense
limitation at any time (on 30 days notice to
shareholders in the case of Mackenzie Limited Term Municipal
Fund and Mackenzie National Municipal Fund), which may affect
the results in years one, three, five and ten in the
preceding Example. If the voluntary expense limitation
is terminated, the Class B expenses for the one, three,
five and ten year periods are estimated to be $18, $57,
$99 and $201, respectively, for Mackenzie Limited Term
Municipal Fund; $23, $71, $122 and $242, respectively,
for Mackenzie National Municipal Fund; $21, $64, $110
and $218, respectively, for Mackenzie California Municipal
Fund; and $21, $65, $112 and $222, respectively, for Mackenzie
New York Municipal Fund.
(1) Assumes deduction of a 5% CDSC at the time of
redemption.
(2) Assumes deduction of a 3% CDSC at the time of
redemption.
(3) Assumes deduction of a 2% CDSC at the time of
redemption.
(4) Assumes deduction of a 1% CDSC at the time of
redemption.
(5) Ten-year figures assume conversion of Class B
shares to Class A shares at the end of the eighth
year and, therefore, reflect Class A expenses for
years nine and ten.
The purpose of the foregoing tables is to provide
an investor with an understanding of the various
expenses that an investor in a Fund will bear, directly
or indirectly. The Examples assume reinvestment of all
distributions and that the percentage amounts under
"Total Fund Operating Expenses" remain the same each
year. The assumed annual return of 5% is required by
applicable law to be applied by all investment companies and
is used for illustrative purposes only. THIS ASSUMPTION IS
NOT A PROJECTION OF FUTURE PERFORMANCE. THE ACTUAL
EXPENSES FOR THE FUNDS MAY BE HIGHER OR LOWER THAN THE
ESTIMATES GIVEN.
Except as set forth in the Funds' Financial
Highlights Table below, the percentages expressing
annual fund operating expenses are based on amounts
incurred during the fiscal year ended June 30, 1996.
The information in the tables does not reflect the
charge of $10 per transaction that would apply if a shareholder
makes a request to have redemption proceeds wired to his
or her bank account. For a more detailed discussion of
the Funds' fees and expenses, see the following
sections of the Prospectus: "Organization and
Management of the Funds," "Initial Sales Charge
Alternative -- Class A Shares," "Contingent Deferred Sales Charge
Alternative -- Class B Shares," and "How to Buy Shares,"
and the following section of the SAI: "Investment
Advisory and Other Services."
THE FUNDS' FINANCIAL HIGHLIGHTS
The following information through the year ended
June 30, 1996 has been audited by Coopers & Lybrand
L.L.P., independent accountants. The report of Coopers
& Lybrand L.L.P. on each Fund's financial statements
appears in the Fund's Annual Report to shareholders.
Each Fund's Annual Report, which is incorporated by
reference into the SAI, contains further information about and
management's discussion of the Fund's performance, and is
available to shareholders upon request and without charge.
The information presented below should be read in
conjunction with the financial statements and notes
thereto.
MACKENZIE LIMITED TERM MUNICIPAL FUND (A)
<TABLE>
<CAPTION>
FOR THE
YEAR
ENDED
JUNE 30,
--------
CLASS A 1996
-------- <S>
<C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.11
--------
Income from investment operations
Net investment income.......................
.44(b) Net gain (loss) on investments (both
realized and unrealized).................. .01
--------
Total from investment operations.......... .45
--------
Less distributions from
Net investment income....................... .44
In excess of net investment income.......... --
Net realized gain........................... --
--------
Total distributions....................... .44
--------
Net asset value, end of period............... $ 10.12
========
Total return(%)(c)........................... 4.46
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $72,126
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... .89
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.32
Ratio of net investment income to average net
assets(%)...................................
4.41(b) Portfolio turnover rate(%)...................
34
<CAPTION>
CLASS A 1995
--------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.02
--------
Income from investment operations
Net investment income....................... .43
(b) Net gain (loss) on investments (both
realized and unrealized).................. .16
-------
Total from investment operations.......... .59
--------
Less distributions from
Net investment income....................... .43
In excess of net investment income.......... .07
Net realized gain........................... --
--------
Total distributions....................... .50
--------
Net asset value, end of period............... $ 10.11
========
Total return(%)(c)........................... 6.07
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $108,000
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... .89
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.18
Ratio of net investment income to average net
assets(%)................................... 4.38
(b) Portfolio turnover rate(%)...................
53
<CAPTION>
CLASS A 1994
--------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.47
--------
Income from investment operations
Net investment income.......................
.62(b) Net gain (loss) on investments (both
realized and unrealized)..................
(.45) --
- ------ Total from investment operations..........
.17 ---
- ----- Less distributions from
Net investment income....................... .62
In excess of net investment income.......... --
Net realized gain........................... --
--------
Total distributions....................... .62
--------
Net asset value, end of period............... $ 10.02
========
Total return(%)(c)........................... 1.56
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $155,187
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... .88
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.11
Ratio of net investment income to average net
assets(%)...................................
6.06(b) Portfolio turnover rate(%)...................
36
<CAPTION>
CLASS A 1993
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.41
-------
Income from investment operations
Net investment income....................... .63
(b) Net gain (loss) on investments (both
realized and unrealized).................. .07
-------
Total from investment operations.......... .70
-------
Less distributions from
Net investment income....................... .63
In excess of net investment income.......... .01
Net realized gain........................... --
-------
Total distributions....................... .64
------- Net
asset value, end of period............... $ 10.47
======= Total
return(%)(c)........................... 6.97
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $94,460
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... .85
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.20
Ratio of net investment income to average net
assets(%)................................... 6.13
(b) Portfolio turnover rate(%)...................
32
<CAPTION>
CLASS A 1992
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.36
-------
Income from investment operations
Net investment income.......................
.63(b) Net gain (loss) on investments (both
realized and unrealized).................. .05
------
Total from investment operations.......... .68
-------
Less distributions from
Net investment income....................... .62
In excess of net investment income.......... --
Net realized gain........................... .01
-------
Total distributions....................... .63
------- Net
asset value, end of period............... $ 10.41
======= Total
return(%)(c)........................... 6.56
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $30,005
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... .97
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.25
Ratio of net investment income to average net
assets(%)...................................
6.24(b) Portfolio turnover rate(%)...................
62
<CAPTION>
FOR THE
SIX
MONTHS ENDED
JUNE 30,
------------ CLASS A
1991
------------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period......... $
10.28
- ------- Income from investment operations
Net investment income.......................
.29 Net gain (loss) on investments (both
realized and unrealized)..................
.10 -
- ------ Total from investment operations..........
.39
- ------- Less distributions from
Net investment income.......................
.29 In excess of net investment income..........
-- Net realized gain...........................
.02
- ------- Total distributions.......................
.31
------- Net asset value, end of period...............
$ 10.36
======= Total
return(%)(c)........................... 7.58(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).....
$22,568
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)..........................
- -- Without expense reimbursement and fees paid
indirectly(%)(f)..........................
1.81(d) Ratio of net investment income to average net
assets(%)...................................
5.71(d) Portfolio turnover rate(%)...................
27(d)
<CAPTION>
FOR THE
YEAR
ENDED
DECEMBER 31,
------------
CLASS A 1990
------- <S>
<C> SELECTED
PER SHARE DATA
Net asset value, beginning of period......... $ 10.33
-------
Income from investment operations
Net investment income....................... .65
Net gain (loss) on investments (both
realized and unrealized).................. (.05)
-------
Total from investment operations.......... .60
-------
Less distributions from
Net investment income....................... .65
In excess of net investment income.......... --
Net realized gain........................... --
-------
Total distributions....................... .65
------- Net
asset value, end of period............... $ 10.28
======= Total
return(%)(c)........................... 5.81
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $25,883
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... --
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.23
Ratio of net investment income to average net
assets(%)................................... 6.32
Portfolio turnover rate(%)................... 75
<CAPTION>
CLASS A 1989
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.42
-------
Income from investment operations
Net investment income....................... .69
Net gain (loss) on investments (both
realized and unrealized).................. (.09)
-------
Total from investment operations.......... .60
-------
Less distributions from
Net investment income....................... .69
In excess of net investment income.......... --
Net realized gain........................... --
-------
Total distributions....................... .69
------- Net
asset value, end of period............... $ 10.33
======= Total
return(%)(c)........................... 5.76
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $40,800
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... --
Without expense reimbursement and fees paid
indirectly(%)(f).......................... .88
Ratio of net investment income to average net
assets(%)................................... 6.75
Portfolio turnover rate(%)................... 96
<CAPTION>
CLASS A 1988
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.41
-------
Income from investment operations
Net investment income....................... .69
Net gain (loss) on investments (both
realized and unrealized).................. .01
-------
Total from investment operations.......... .70
-------
Less distributions from
Net investment income....................... .69
In excess of net investment income.......... --
Net realized gain........................... --
-------
Total distributions....................... .69
------- Net
asset value, end of period............... $ 10.42
=======
Total return(%)(c)........................... 6.72
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $60,400
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... --
Without expense reimbursement and fees paid
indirectly(%)(f).......................... .73
Ratio of net investment income to average net
assets(%)................................... 6.64
Portfolio turnover rate(%)................... 28
<CAPTION>
CLASS A 1987
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.84
-------
Income from investment operations
Net investment income....................... .69
Net gain (loss) on investments (both
realized and unrealized).................. (.41)
-------
Total from investment operations.......... .28
-------
Less distributions from
Net investment income....................... .69
In excess of net investment income.......... --
Net realized gain........................... .02
-------
Total distributions....................... .71
------- Net
asset value, end of period............... $ 10.41
======= Total
return(%)(c)........................... 2.58
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $75,500
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... --
Without expense reimbursement and fees paid
indirectly(%)(f).......................... .67
Ratio of net investment income to average net
assets(%)................................... 6.52
Portfolio turnover rate(%)................... 60
<CAPTION>
CLASS A 1986
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.24
-------
Income from investment operations
Net investment income....................... .69
Net gain (loss) on investments (both
realized and unrealized).................. .60
-------
Total from investment operations.......... 1.29
-------
Less distributions from
Net investment income....................... .69
In excess of net investment income.......... --
Net realized gain........................... --
-------
Total distributions....................... .69
------- Net
asset value, end of period............... $ 10.84
======= Total
return(%)(c)........................... 12.60
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $95,800
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... --
Without expense reimbursement and fees paid
indirectly(%)(f).......................... .74
Ratio of net investment income to average net
assets(%)................................... 6.59
Portfolio turnover rate(%)................... 137
</TABLE>
<TABLE>
<CAPTION>
FOR
THE
YEAR
ENDED
JUNE 30,
--------
CLASS B 1996
------ <S>
<C> SELECTED PER SHARE
DATA
Net asset value, beginning of period......... $10.11
------
Income from investment operations
Net investment income(b).................... .40
Net gain (loss) on investments (both .01
realized and unrealized)..................
------
Total from investment operations.......... .41
------
Less distributions from
Net investment income....................... .40
In excess of net investment income.......... --
------
Total distributions....................... .40
------ Net
asset value, end of period............... $10.12
====== Total
return(%).............................. 3.98(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $2,079
Ratio of expenses to average net assets:
With expense reimbursement and fees paid 1.39
indirectly(%)(f)..........................
Without expense reimbursement and fees paid 1.82
indirectly(%)(f)..........................
Ratio of net investment income to average net 3.91
assets(%)(b)................................
Portfolio turnover rate(%)................... 34
<CAPTION>
CLASS B 1995
------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $10.02
------
Income from investment operations
Net investment income(b).................... .38
Net gain (loss) on investments (both
realized and unrealized).................. .16
------
Total from investment operations.......... .54
------
Less distributions from
Net investment income....................... .38
In excess of net investment income.......... .07
------
Total distributions....................... .45
------ Net
asset value, end of period............... $10.11
====== Total
return(%).............................. 5.54 (c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $2,358
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... 1.39
Without expense reimbursement and fees paid
indirectly(%)(f).......................... 1.68
Ratio of net investment income to average net
assets(%)(b)................................ 3.88
Portfolio turnover rate(%)................... 53
<CAPTION>
FOR
THE PERIOD
APRIL 1, 1994
(COMMENCEMENT) TO
JUNE 30,
-----------------
CLASS B 1994
------ <S>
<C>
SELECTED PER SHARE DATA
Net asset value, beginning of period......... $ 10.11
---
- --- Income from investment operations
Net investment
income(b).................... .12 Net
gain (loss) on investments (both
realized and unrealized).................. (.06)
------
Total from investment operations..........
.06
------ Less distributions from
Net investment
income....................... .12 In
excess of net investment income.......... .03
------
Total distributions....................... .15
-
- ----- Net asset value, end of
period............... $ 10.02
====== Total
return(%).............................. .63(e)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..... $ 1,030
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).......................... 1.38(d)
Without expense reimbursement and fees paid
indirectly(%)(f)..........................
1.61(d) Ratio of net investment income to average
net
assets(%)(b)................................ 5.56(d)
Portfolio turnover rate(%)................... 36
(a) From April 22, 1985 (commencement) until August
2, 1991, this Fund (formerly Limited Term
Portfolio of the Zweig Tax-Free Fund, Inc.) was
managed by Zweig/Glaser Advisors.
(b) Net investment income is net of expenses
reimbursed by MIMI.
(c) Total return does not reflect a sales charge.
(d) Annualized.
(e) Total return represents aggregate total return
and does not reflect a sales charge.
(f) Beginning in July 1995, total expenses include
fees paid indirectly through an expense offset
arrangement.
</TABLE>
MACKENZIE NATIONAL MUNICIPAL FUND
<TABLE>
<CAPTION>
FOR THE
YEAR
ENDED
JUNE
30,
-------
CLASS A 1996
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.76
-------
Income from investment operations
Net investment income(a)............... .50
Net gain (loss) on investments (both
realized and unrealized)............. (.05)
-------
Total from investment operations..... .45
-------
Less distributions from
Net investment income.................. .48
In excess of net investment income..... --
Net realized gain...................... --
-------
Total distributions.................. .48
-------
Net asset value, end of period.......... $ 9.73
=======
Total return(%)(b)...................... 4.69
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $23,673
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.52
Ratio of net investment income to
average net assets(%)(a)............... 5.09
Portfolio turnover rate(%).............. 58
<CAPTION>
CLASS A 1995
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.60
-------
Income from investment operations
Net investment income(a)............... .48
Net gain (loss) on investments (both
realized and unrealized)............. .19
-------
Total from investment operations..... .67
-------
Less distributions from
Net investment income.................. .48
In excess of net investment income..... .03
Net realized gain...................... --
-------
Total distributions.................. .51
-------
Net asset value, end of period.......... $ 9.76
=======
Total return(%)(b)...................... 7.21
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $28,351
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.30
Ratio of net investment income to
average net assets(%)(a)............... 5.08
Portfolio turnover rate(%).............. 65
<CAPTION>
CLASS A 1994
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.17
-------
Income from investment operations
Net investment income(a)............... .57
Net gain (loss) on investments (both
realized and unrealized)............. (.48)
-------
Total from investment operations..... .09
-------
Less distributions from
Net investment income.................. .57
In excess of net investment income..... --
Net realized gain...................... .09
-------
Total distributions.................. .66
------
Net asset value, end of period.......... $ 9.60
=======
Total return(%)(b)...................... .77
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $38,406
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.24
Ratio of net investment income to
average net assets(%)(a)............... 6.65
Portfolio turnover rate(%).............. 68
<CAPTION>
CLASS A 1993
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.94
-------
Income from investment operations
Net investment income(a)............... .60
Net gain (loss) on investments (both
realized and unrealized)............. .31
-------
Total from investment operations..... .91
-------
Less distributions from
Net investment income.................. .60
In excess of net investment income..... --
Net realized gain...................... .08
-------
Total distributions.................. .68
-------
Net asset value, end of period.......... $ 10.17
=======
Total return(%)(b)...................... 9.48
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $42,739
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.29
Ratio of net investment income to
average net assets(%)(a)............... 6.06
Portfolio turnover rate(%).............. 57
<CAPTION>
CLASS A 1992
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.60
-------
Income from investment operations
Net investment income(a)............... .59
Net gain (loss) on investments (both
realized and unrealized)............. .41
-------
Total from investment operations..... 1.00
-------
Less distributions from
Net investment income.................. .59
In excess of net investment income..... .06
Net realized gain...................... .01
-------
Total distributions.................. .66
-------
Net asset value, end of period.......... $ 9.94
=======
Total return(%)(b)...................... 10.76
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $35,995
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.30
Ratio of net investment income to
average net assets(%)(a)............... 6.00
Portfolio turnover rate(%).............. 62
<CAPTION>
CLASS A 1991
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.59
-------
Income from investment operations
Net investment income(a)............... .57
Net gain (loss) on investments (both
realized and unrealized)............. .12
-------
Total from investment operations..... .69
------- Less
distributions from
Net investment income.................. .57
In excess of net investment income..... .06
Net realized gain...................... .05
-------
Total distributions.................. .68
------- Net
asset value, end of period.......... $ 9.60
======= Total
return(%)(b)...................... 7.52
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $21,527
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.07
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.54
Ratio of net investment income to
average net assets(%)(a)............... 5.89
Portfolio turnover rate(%).............. 97
<CAPTION>
CLASS A 1990
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.82
-------
Income from investment operations
Net investment income(a)............... .62
Net gain (loss) on investments (both
realized and unrealized)............. (.15)
-------
Total from investment operations..... .47
-------
Less distributions from
Net investment income.................. .62
In excess of net investment income..... .08
Net realized gain...................... --
-------
Total distributions.................. .70
-------
Net asset value, end of period.......... $ 9.59
=======
Total return(%)(b)...................... 4.99
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $12,995
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ .66
Without expense reimbursement and fees
paid indirectly(%)(f)................ 2.17
Ratio of net investment income to
average net assets(%)(a)............... 6.30
Portfolio turnover rate(%).............. 30
<CAPTION>
CLASS A 1989
1988(E) ---
- ---- ------- <S>
<C> <C> SELECTED PER SHARE DATA
Net asset value, beginning of
period.... $ 9.45 $9.55
------ ----- Income from
investment operations Net
investment income(a)............... .65 .06
Net gain (loss) on investments (both
realized and unrealized)............. .40 (.13)
------ -----
Total from investment operations..... 1.05
(.07) ----
- -- ----- Less distributions from
Net investment
income.................. .68 .03 In excess
of net investment income..... -- -- Net
realized gain...................... -- --
------ -----
Total distributions.................. .68 .03
------ -----
Net asset value, end of period.......... $ 9.82
$9.45
====== ===== Total
return(%)(b)...................... 11.56 (3.02)(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $ 6,330 $ 974
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................
.06 --(c) Without expense reimbursement and fees
paid
indirectly(%)(f)................ 3.76 10.88(c)
Ratio of net investment income to
average net assets(%)(a)............... 6.87 3.86(c)
Portfolio turnover rate(%).............. 34 0
</TABLE>
<TABLE>
<CAPTION>
FOR
THE
YEAR
ENDED
JUNE 30,
-------- CLASS B
1996
------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period.............. $
9.76
---
- --- Income from investment operations
Net investment income(a).........................
.43 Net gain (loss) on investments (both realized and
unrealized)....................................
(.05)
------ Total from investment
operations............... .38
------ Less distributions
from
Net investment income............................
.42 In excess of net investment income...............
--
- ------ Total
distributions............................ .42
------ Net
asset value, end of period.................... $ 9.72
======
Total return(%)................................... 3.88(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..........
$1,129 Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
2.27 Ratio of net investment income to average net
assets(%)(a).....................................
4.34 Portfolio turnover rate(%)........................
58
<CAPTION>
CLASS B
1995
- ----- <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period..............
$9.60
----- Income from investment operations
Net investment income(a).........................
.41 Net gain (loss) on investments (both realized and
unrealized).................................... .19
----
- - Total from investment operations...............
.60
- ----- Less distributions from
Net investment income............................
.41 In excess of net investment income...............
.03
- ----- Total distributions............................
.44
----- Net asset value, end of
period.................... $9.76
===== Total
return(%)................................... 6.42(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).......... $
767
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
2.05 Ratio of net investment income to average net
assets(%)(a).....................................
4.33 Portfolio turnover rate(%)........................
65
<CAPTION>
FOR
THE
PERIOD
APRIL 1,
1994
(COMMENCEMENT)
TO JUNE 30,
-------------- CLASS B
1994
-------- <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period........... $9.69
- -----
Income from investment operations
Net investment income(a)......................
.11 Net gain (loss) on investments (both
realized and
unrealized)............................. (.06)
-----
Total from investment operations............ .05
-----
Less distributions from
Net investment income.........................
.11
In excess of net investment income............ .03
-----
Total distributions......................... .14
-----
Net asset value, end of period................. $9.60
=====
Total return(%)................................
.55(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).......
$ 492
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)............................ 1.85(c)
Without expense reimbursement and fees paid
indirectly(%)(f)............................
1.99(c)
Ratio of net investment income to average net
assets(%)(a)..................................
5.90(c)
Portfolio turnover rate(%)..................... 68
(a) Net investment income is net of expenses
reimbursed by MIMI.
(b) Total return does not reflect a sales charge.
(c) Annualized.
(d) Total return represents aggregate total return
and does not reflect a sales charge.
(e) April 15, 1988 (commencement) to June 30, 1988.
(f) Beginning in July 1995, total expenses include fees
paid indirectly through an expense offset
arrangement.
</TABLE>
MACKENZIE CALIFORNIA MUNICIPAL FUND
<TABLE>
<CAPTION>
FOR THE
YEAR
ENDED
JUNE
30,
-------
CLASS A 1996
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.08
-------
Income from investment operations
Net investment income(a)............... .52
Net gain (loss) on investments (both
realized and unrealized)............. .03
-------
Total from investment operations..... .55
-------
Less distributions from
Net investment income.................. .50
In excess of net investment income..... --
Net realized gain...................... --
-------
Total distributions.................. .50
-------
Net asset value, end of period.......... $ 10.13
=======
Total return(%)(b)...................... 5.52
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $32,604
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.29
Ratio of net investment income to
average net assets(%)(a)............... 5.08
Portfolio turnover rate(%).............. 34
<CAPTION>
CLASS A 1995
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.91
-------
Income from investment operations
Net investment income(a)............... .49
Net gain (loss) on investments (both
realized and unrealized)............. .19
-------
Total from investment operations..... .68
-------
Less distributions from
Net investment income.................. .49
In excess of net investment income..... .02
Net realized gain...................... --
-------
Total distributions.................. .51
------
Net asset value, end of period.......... $ 10.08
=======
Total return(%)(b)...................... 7.09
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $38,963
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.22
Ratio of net investment income to
average net assets(%)(a)............... 4.94
Portfolio turnover rate(%).............. 81
<CAPTION>
CLASS A 1994
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.44
-------
Income from investment operations
Net investment income(a)............... .59
Net gain (loss) on investments (both
realized and unrealized)............. (.48)
-------
Total from investment operations..... .11
-------
Less distributions from
Net investment income.................. .59
In excess of net investment income..... --
Net realized gain...................... .05
-------
Total distributions.................. .64
-------
Net asset value, end of period.......... $ 9.91
=======
Total return(%)(b)...................... .82
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $41,423
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.18
Ratio of net investment income to
average net assets(%)(a)............... 5.65
Portfolio turnover rate(%).............. 26
<CAPTION>
CLASS A 1993
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.29
-------
Income from investment operations
Net investment income(a)............... .58
Net gain (loss) on investments (both
realized and unrealized)............. .35
-------
Total from investment operations..... .93
-------
Less distributions from
Net investment income.................. .60
In excess of net investment income..... --
Net realized gain...................... .18
-------
Total distributions.................. .78
-------
Net asset value, end of period.......... $ 10.44
=======
Total return(%)(b)...................... 9.55
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $47,493
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.20
Ratio of net investment income to
average net assets(%)(a)............... 5.80
Portfolio turnover rate(%).............. 91
<CAPTION>
CLASS A 1992
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.94
-------
Income from investment operations
Net investment income(a)............... .52
Net gain (loss) on investments (both
realized and unrealized)............. .51
-------
Total from investment operations..... 1.03
-------
Less distributions from
Net investment income.................. .52
In excess of net investment income..... .07
Net realized gain...................... .09
-------
Total distributions.................. .68
-------
Net asset value, end of period.......... $ 10.29
=======
Total return(%)(b)...................... 10.80
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $46,288
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.19
Ratio of net investment income to
average net assets(%)(a)............... 5.66
Portfolio turnover rate(%).............. 42
<CAPTION>
CLASS A 1991
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.90
-------
Income from investment operations
Net investment income(a)............... .54
Net gain (loss) on investments (both
realized and unrealized)............. .19
-------
Total from investment operations..... .73
------- Less
distributions from
Net investment income.................. .54
In excess of net investment income..... .06
Net realized gain...................... .09
------- Total
distributions.................. .69
------- Net asset value, end
of period.......... $ 9.94
======= Total
return(%)(b)...................... 7.58
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $30,556
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.07
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.34
Ratio of net investment income to
average net assets(%)(a)............... 5.73
Portfolio turnover rate(%).............. 55
<CAPTION>
CLASS A 1990
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.09
-------
Income from investment operations
Net investment income(a)............... .64
Net gain (loss) on investments (both
realized and unrealized)............. (.13)
-------
Total from investment operations..... .51
-------
Less distributions from
Net investment income.................. .64
In excess of net investment income..... .06
Net realized gain...................... --
-------
Total distributions.................. .70
-------
Net asset value, end of period.......... $ 9.90
=======
Total return(%)(b)...................... 5.28
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $17,290
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ .53
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.92
Ratio of net investment income to
average net assets(%)(a)............... 6.32
Portfolio turnover rate(%).............. 25
<CAPTION>
CLASS A 1989
1988(E) -
- ------ ------- <S>
<C> <C> SELECTED PER SHARE DATA
Net asset value,
beginning of period.... $ 9.61 $9.55
------ -----
Income from investment operations
Net investment income(a)............... .66 .05
Net gain (loss) on investments (both
realized and unrealized).............
.51 .04
------ ----- Total from investment
operations..... 1.17 .09
------ ---
- -- Less distributions from
Net investment income..................
.68 .03 In excess of net investment
income..... .01 -- Net realized
gain...................... -- --
------ -----
Total distributions.................. .69 .03
------ -----
Net asset value, end of period.......... $ 10.09
$9.61
====== ===== Total
return(%)(b)...................... 12.59 3.51(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $ 7,994 $
588 Ratio of expenses to average net assets:
With expense reimbursement and fees
paid
indirectly(%)(f)................ .03 --(d)
Without expense reimbursement and fees
paid indirectly(%)(f)................ 3.59 13.74(d)
Ratio of net investment income to
average net assets(%)(a)...............
6.68 3.20(d) Portfolio turnover
rate(%).............. 12 0
</TABLE>
<TABLE>
<CAPTION>
FOR
THE
YEAR
ENDED
JUNE
30,
------ CLASS B
1996
------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period..............
$10.08
------ Income from investment operations
Net investment income(a).........................
.45 Net gain (loss) on investments (both realized and
unrealized)....................................
.02
- ------ Total from investment
operations............... .47
------ Less distributions
from
Net investment income............................
.43 Net realized gain................................
--
- ------ Total
distributions............................ .43
-----
Net asset value, end of period....................
$10.12
====== Total
return(%)................................... 4.70(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..........
$1,135 Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
2.04 Ratio of net investment income to average net
assets(%)(a).....................................
4.33 Portfolio turnover rate(%)........................
34
<CAPTION>
CLASS B
1995
- ------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period.............. $
9.91
- ------ Income from investment operations
Net investment income(a).........................
.43 Net gain (loss) on investments (both realized and
unrealized)....................................
.17
- ------ Total from investment
operations............... .60
------ Less distributions
from
Net investment income............................
.43 Net realized gain................................
--
- ------ Total
distributions............................ .43
------ Net
asset value, end of period.................... $10.08
======
Total return(%)................................... 6.30(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands).......... $
993 Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
1.97 Ratio of net investment income to average net
assets(%)(a).....................................
4.19 Portfolio turnover rate(%)........................
81
<CAPTION>
FOR
THE
PERIOD
APRIL 1, 1994
(COMMENCEMENT)
TO
JUNE 30,
-------- CLASS B
1994
------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period............ $9.97
- ----- Income from investment operations
Net investment
income(a)....................... .11 Net gain
(loss) on investments (both
realized and unrealized)..................... (.03)
-----
Total from investment operations............. .08
---
- -- Less distributions from
Net investment
income.......................... .11 Net
realized gain.............................. .03
-----
Total distributions.......................... .14
-----
Net asset value, end of period..................
$9.91
===== Total
return(%)................................. .82(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........ $ 114
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)............................. 1.85(d)
Without expense reimbursement and fees paid
indirectly(%)(f)............................. 1.93(d)
Ratio of net investment income to average net
assets(%)(a)...................................
4.90(d) Portfolio turnover
rate(%)...................... 26 (a) Net
investment income is net of expenses reimbursed by
MIMI.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and
does not reflect a sales charge.
(d) Annualized.
(e) April 15, 1988 (commencement) to June 30, 1988.
(f) Beginning in July 1995, total expenses includes fees
paid indirectly through an expense offset
arrangement.
</TABLE>
MACKENZIE NEW YORK MUNICIPAL FUND
<TABLE>
<CAPTION>
FOR THE
YEAR
ENDED
JUNE
30,
-------
CLASS A 1996
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.72
-------
Income from investment operations
Net investment income(a)............... .51
Net gain (loss) on investments (both
realized and unrealized)............. (.02)
-------
Total from investment operations..... .49
-------
Less distributions from
Net investment income.................. .49
In excess of net investment income..... --
Net realized gain...................... --
-------
Total distributions.................. .49
-------
Net asset value, end of period.......... $ 9.72
=======
Total return(%)(b)...................... 5.11
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $35,533
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.33
Ratio of net investment income to
average net assets(%)(a)............... 5.19
Portfolio turnover rate(%).............. 35
<CAPTION>
CLASS A 1995
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.50
-------
Income from investment operations
Net investment income(a)............... .48
Net gain (loss) on investments (both
realized and unrealized)............. .24
-------
Total from investment operations..... .72
-------
Less distributions from
Net investment income.................. .48
In excess of net investment income..... .02
Net realized gain...................... --
-------
Total distributions.................. .50
-------
Net asset value, end of period.......... $ 9.72
=======
Total return(%)(b)...................... 7.93
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $40,290
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.24
Ratio of net investment income to
average net assets(%)(a)............... 5.12
Portfolio turnover rate(%).............. 59
<CAPTION>
CLASS A 1994
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 10.10
-------
Income from investment operations
Net investment income(a)............... .56
Net gain (loss) on investments (both
realized and unrealized)............. (.49)
-------
Total from investment operations..... .07
-------
Less distributions from
Net investment income.................. .56
In excess of net investment income..... --
Net realized gain...................... .11
-------
Total distributions.................. .67
-------
Net asset value, end of period.......... $ 9.50
=======
Total return(%)(b)...................... .58
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $42,329
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.21
Ratio of net investment income to
average net assets(%)(a)............... 5.59
Portfolio turnover rate(%).............. 44
<CAPTION>
CLASS A 1993
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.96
-------
Income from investment operations
Net investment income(a)............... .58
Net gain (loss) on investments (both
realized and unrealized)............. .38
-------
Total from investment operations..... .96
-------
Less distributions from
Net investment income.................. .58
In excess of net investment income..... --
Net realized gain...................... .24
-------
Total distributions.................. .82
-------
Net asset value, end of period.......... $ 10.10
=======
Total return(%)(b)...................... 10.07
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $42,187
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.29
Ratio of net investment income to
average net assets(%)(a)............... 5.81
Portfolio turnover rate(%).............. 87
<CAPTION>
CLASS A 1992
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.56
-------
Income from investment operations
Net investment income(a)............... .51
Net gain (loss) on investments (both
realized and unrealized)............. .62
-------
Total from investment operations..... 1.13
-------
Less distributions from
Net investment income.................. .51
In excess of net investment income..... .09
Net realized gain...................... .13
-------
Total distributions.................. .73
-------
Net asset value, end of period.......... $ 9.96
=======
Total return(%)(b)...................... 12.15
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $32,755
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.10
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.25
Ratio of net investment income to
average net assets(%)(a)............... 5.66
Portfolio turnover rate(%).............. 24
<CAPTION>
CLASS A 1991
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.55
-------
Income from investment operations
Net investment income(a)............... .54
Net gain (loss) on investments (both
realized and unrealized)............. .15
-------
Total from investment operations..... .69
------- Less
distributions from
Net investment income.................. .54
In excess of net investment income..... .10
Net realized gain...................... .04
------- Total
distributions.................. .68
------- Net asset value, end
of period.......... $ 9.56
======= Total
return(%)(b)...................... 7.55
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $26,207
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ 1.07
Without expense reimbursement and fees
paid indirectly(%)(f)................ 1.44
Ratio of net investment income to
average net assets(%)(a)............... 5.64
Portfolio turnover rate(%).............. 41
<CAPTION>
CLASS A 1990
-------
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.78
-------
Income from investment operations
Net investment income(a)............... .61
Net gain (loss) on investments (both
realized and unrealized)............. (.14)
-------
Total from investment operations..... .47
-------
Less distributions from
Net investment income.................. .61
In excess of net investment income..... .09
Net realized gain...................... --
-------
Total distributions.................. .70
-------
Net asset value, end of period.......... $ 9.55
=======
Total return(%)(b)...................... 4.97
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $14,197
Ratio of expenses to average net assets:
With expense reimbursement and fees
paid indirectly(%)(f)................ .52
Without expense reimbursement and fees
paid indirectly(%)(f)................ 2.21
Ratio of net investment income to
average net assets(%)(a)............... 6.21
Portfolio turnover rate(%).............. 18
<CAPTION>
CLASS A 1989
1988(E) ------
- - ------- <S> <C>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period.... $ 9.45
$9.55 ------
- ----
Income from investment operations
Net investment income(a)............... .65 .05
Net gain (loss) on investments (both
realized and unrealized)............. .35 (.12)
------ -----
Total from investment operations..... 1.00 (.07)
------ -----
Less distributions from Net
investment income.................. .67 .03 In
excess of net investment income..... -- --
Net realized gain...................... -- --
------ -----
Total distributions.................. .67 .03
------ -----
Net asset value, end of period.......... $ 9.78 $9.45
====== =====
Total return(%)(b)...................... 11.08 (3.02)(d)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................. $ 6,259 $1,230
Ratio of expenses to average net assets: With
expense reimbursement and fees paid
indirectly(%)(f)................ .02 --(d)
Without expense reimbursement and fees
paid indirectly(%)(f)................ 3.55 7.29(d)
Ratio of net investment income to
average net assets(%)(a)............... 6.74 3.65(d)
Portfolio turnover rate(%).............. 10 48(d)
</TABLE>
<TABLE>
<CAPTION>
FOR
THE
YEAR
ENDED
JUNE 30,
-------- CLASS B
1996
------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period.............. $
9.72
- ------ Income from investment operations
Net investment income(a).........................
.44 Net gain (loss) on investments (both realized and
unrealized)....................................
(.02)
------ Total from investment
operations............... .42
------ Less distributions
from
Net investment income............................
.42
In excess of net investment income...............
- -- Net realized gain................................
--
- ------ Total
distributions............................ .42
------ Net
asset value, end of period.................... $ 9.72
======
Total return(%)................................... 4.37(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..........
$2,178 Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
2.08 Ratio of net investment income to average net
assets(%)(a).....................................
4.44 Portfolio turnover rate(%)........................
35
<CAPTION>
CLASS B
1995
- ------ <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period.............. $
9.50
- ------ Income from investment operations
Net investment income(a).........................
.41 Net gain (loss) on investments (both realized and
unrealized)....................................
.24
- ------ Total from investment
operations............... .65
------ Less distributions
from
Net investment income............................
.41 In excess of net investment income...............
.02 Net realized
gain................................ --
------ Total
distributions............................ .43
------ Net
asset value, end of period.................... $ 9.72
======
Total return(%)................................... 7.14(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)..........
$1,436 Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f)...............................
1.85 Without expense reimbursement and fees paid
indirectly(%)(f)...............................
1.99 Ratio of net investment income to average net
assets(%)(a).....................................
4.37 Portfolio turnover rate(%)........................
59
<CAPTION>
FOR THE
PERIOD
APRIL 1,
1994
(COMMENCEMENT) TO
JUNE 30,
-------- CLASS B
1994
-------- <S>
<C> SELECTED PER SHARE DATA
Net asset value, beginning of period............ $9.65
-----
Income from investment operations
Net investment income(a)....................... .10
Net gain (loss) on investments (both
realized and unrealized).....................
(.08)
-----
Total from investment operations............. .02
-----
Less distributions from
Net investment income.......................... .14
In excess of net investment income............. --
Net realized gain.............................. .03
-----
Total distributions.......................... .17
-----
Net asset value, end of period.................. $9.50
=====
Total return(%).................................
.20(c)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands)........ $ 869
Ratio of expenses to average net assets:
With expense reimbursement and fees paid
indirectly(%)(f).............................
1.85(d)
Without expense reimbursement and fees paid
indirectly(%)(f).............................
1.96(d)
Ratio of net investment income to average net
assets(%)(a)...................................
4.84(d)
Portfolio turnover rate (%) .................... 44
(a) Net investment income is net of expenses
reimbursed by MIMI.
(b) Total return does not reflect a sales charge.
(c) Total return represents aggregate total return and
does not reflect a sales charge.
(d) Annualized.
(e) April 15, 1988 (commencement) to June 30, 1988.
(f) Beginning in July 1995, total expenses include fees
paid indirectly through an expense offset
arrangement.
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has its own investment objective and
policies, which are described below. Each Fund's
investment objective is fundamental and may not be
changed without the approval of a majority of the
outstanding voting shares of the Fund. Except for a
Fund's investment objective and those investment restrictions
specifically identified as fundamental, all investment
policies and practices described in this Prospectus and
in the SAI are non-fundamental, and may be changed by
the Trustees without shareholder approval. There can be
no assurance that a Fund's objective will be met. The
different types of securities and investment techniques
used by the Funds involve varying degrees of risk. For
more information about the particular risks associated
with each type of investment, see "Investment
Techniques and Risk Factors," below, and the SAI.
Whenever an investment objective, policy or
restriction of a Fund described in this Prospectus or
in the SAI states a maximum percentage of assets that
may be invested in a security or other asset or
describes a policy regarding quality standards, that
percentage limitation or standard will, unless otherwise
indicated, apply to the Fund only at the time a transaction takes
place. Thus, for example, if a percentage limitation is
adhered to at the time of investment, a later increase
or decrease in the percentage that results from
circumstances not involving any affirmative action by
the Fund will not be considered a violation.
Each Fund's portfolio will be actively managed in
the pursuit of its objective, and therefore may have
higher portfolio turnover than that of other funds with
similar objectives. Portfolio turnover may result in
the realization of taxable capital gains, which are not
tax exempt when distributed to shareholders. See
"Portfolio Turnover" in the SAI for further information
about portfolio turnover and portfolio transactions.
MACKENZIE LIMITED TERM MUNICIPAL FUND: Mackenzie
Limited Term Municipal Fund seeks a high a level of
interest income exempt from Federal income taxes as is
consistent with the preservation of shareholders'
capital. The Fund attempts to achieve its objective by
investing primarily in tax-exempt limited term
municipal securities. As a fundamental policy, at least
80% of the Fund's net assets will be invested, during
normal market conditions, in tax- exempt securities (exclusive of
obligations the interest on which constitutes an item of
tax preference for purposes of the Federal alternative
minimum tax). The Fund expects to maintain a dollar-
weighted average portfolio maturity of three to six
years and will only purchase instruments with remaining
maturities of ten years or less. The tax-exempt
securities in which the Fund may invest include debt obligations
issued by or on behalf of the fifty States, the District
of Columbia, and their political subdivisions,
agencies, authorities and instrumentalities and the
governments of Puerto Rico and Guam. (The Fund will not
invest more than 5% of its net assets in obligations of
each of Puerto Rico and Guam.)
MACKENZIE NATIONAL MUNICIPAL FUND: Mackenzie
National Municipal Fund seeks as high a level of
interest income exempt from Federal income taxes as is
consistent with the preservation of shareholders'
capital. The Fund attempts to achieve its objective by
investing primarily in debt securities, the interest on
which is exempt from Federal income taxes. As a fundamental
policy, at least 80% of the Fund's assets will be invested,
during normal market conditions, in municipal securities
(which may include certain private activity bonds, the
interest on which is subject to the Federal alternative
minimum tax). The tax-exempt securities in which the
Fund may invest include debt obligations issued by or
on behalf of the fifty States, the District of
Columbia, and their respective political subdivisions,
agencies, authorities and instrumentalities, including
multi-state agencies or authorities and the government
of Puerto Rico. (The Fund will not invest more than 5% of its net
assets in obligations of Puerto Rico.) The Fund has no
stated policy regarding the dollar-weighted average
portfolio maturity or the duration of the portfolio.
MACKENZIE CALIFORNIA MUNICIPAL FUND: Mackenzie
California Municipal Fund seeks as high a level of
interest income exempt from Federal income and
California personal income taxes as is consistent with
the preservation of shareholders' capital. The Fund
attempts to achieve this objective by investing primarily in
debt securities, the interest on which is exempt from Federal
income and California personal income taxes. As a
fundamental policy, at least 80% of the Fund's assets
will be invested, during normal market conditions, in
municipal securities (which may include certain private
activity bonds, the interest on which is subject to the
Federal alternative minimum tax), with 65% of those
securities being California municipal securities. The
tax-exempt securities in which the Fund may invest include debt
obligations issued by or on behalf of the State of
California and its political subdivisions (for example,
counties, cities, towns, villages, districts and
authorities). The Fund has no stated policy regarding
the dollar-weighted average portfolio maturity nor the
duration of the portfolio.
MACKENZIE NEW YORK MUNICIPAL FUND: Mackenzie New
York Municipal Fund seeks as high a level of interest
income exempt from Federal income and New York State
and New York City personal income taxes as is
consistent with preservation of shareholders' capital.
The Fund attempts to achieve its objective by investing
primarily in debt securities, the interest on which is exempt
from Federal, New York State and New York City personal
income taxes. As a fundamental policy, at least 80% of
the Fund's assets will be invested, during normal
market conditions, in municipal securities (which may
include certain private activity bonds, the interest on
which is subject to the Federal alternative minimum
tax), with at least 65% of those securities being New York
municipal securities. The tax-exempt securities in which the
Fund may invest include debt obligations issued by or
on behalf of the State of New York and its political
subdivisions, agencies, authorities and
instrumentalities. The Fund has no stated policy
regarding the dollar-weighted average portfolio maturity or the
duration of the portfolio.
RISK FACTORS AND INVESTMENT TECHNIQUES
DEBT SECURITIES, IN GENERAL: Investment in debt
securities, including municipal securities, involves
both interest rate and credit risk. Generally, the
value of debt instruments rises and falls inversely
with fluctuations in interest rates. As interest rates
decline, the value of debt securities generally increases.
Conversely, rising interest rates tend to cause the value of
debt securities to decrease. Bonds with longer
maturities generally
are more volatile than bonds with shorter maturities.
The market value of debt securities also varies
according to the relative financial condition of the
issuer. In general, lower-quality bonds offer higher
yields due to the increased risk that the issuer will
be unable to meet its obligations on interest or
principal payments at the time called for by the debt instrument.
MUNICIPAL SECURITIES: Municipal securities are
debt obligations that generally have a maturity at the
time of issue in excess of one year and are issued to
obtain funds for various public purposes. The two
principal classifications of municipal bonds are
"general obligation" and "revenue" bonds, including
industrial development bonds or private activity bonds. General
obligation bonds are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only
from the revenues derived from a particular facility or
class of facilities, or, in some cases, from the
proceeds of a special excise tax or specific revenue
source. Industrial development bonds or private activity
bonds are issued by or on behalf of public authorities to obtain
funds for privately-operated facilities and are in most
cases revenue bonds that do not carry the pledge of the
full faith and credit of the issuer of such bonds, but
depend for payment on the ability of the industrial
user to meet its obligations (or on any property
pledged as security).
The interest on municipal securities is wholly
exempt from Federal income tax in the opinion of bond
counsel to the issuers at the time of issuance.
Interest on certain municipal securities (including
certain industrial development bonds which are
specified private activity bonds, as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), issued after
August 7, 1986), while exempt from regular Federal income
tax, is a preference item for the purpose of the
Federal alternative minimum tax. Where a regulated
investment company receives such interest, a
proportionate share of any exempt-interest dividend
paid by the investment company will be treated as such a
preference item to shareholders.
Certain municipal securities that the Funds may
purchase bear interest at rates that are not fixed, but
that vary with changes in specified market rates or
indices (such as a Federal Reserve composite index).
Such securities may also carry a demand feature that
would permit the holder to tender them back to the issuer at
par value prior to maturity, and may include participation
interests in variable rate tax-exempt municipal securities
(expected to be primarily in industrial development
bonds) owned by banks. A participation interest gives a
Fund an undivided interest in the municipal securities
in the proportion that the Fund's participation
interest bears to the total principal amount of the
municipal security and provides the demand purchase
feature described above. Each participation is backed by an
irrevocable letter of credit or guarantee of a bank that MIMI
has determined meets the prescribed investment quality
standards for
that Fund. A Fund has the right to sell the instrument
back to the bank and draw on the letter of credit on
demand, after seven days notice, for all or any part of
the full principal amount of that Fund's participation
interest in the industrial development bond, plus
accrued interest. To the extent these securities are
illiquid, each Fund will limit its investments in these and all
other illiquid securities to not more than 10% of its net
assets (calculated at market value at the time of each
investment).
Mackenzie Limited Term Municipal Fund may purchase
(i) municipal securities that are backed by the full
faith and credit of the United States Government; (ii)
notes rated MIG-1, MIG-2 or MIG-3 by Moody's Investors
Service, Inc. ("Moody's") or AAA, AA, A, SP-1 or SP-2
by Standard and Poor's Corporation ("S&P"); (iii)
municipal bonds rated Aaa, Aa, A or Baa by Moody's or AAA, AA, A
or BBB by S&P; (iv) other types of municipal securities,
provided that such obligations are rated A-1 or A-2 by
S&P or Prime-1 or Prime-2 by Moody's; and (v) municipal
securities that are themselves unrated, but either are
issued by an entity that has other municipal securities
outstanding that meet one of the minimum rating
requirements listed above, or are of equivalent
investment quality as determined by MIMI pursuant to guidelines
established and maintained in good faith by the Board of
Trustees. A description of the ratings of Moody's and S&P
is contained in the SAI.
Each of Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund and Mackenzie New
York Municipal Fund may invest in municipal securities
rated within the four highest rating categories of
Moody's (Aaa, Aa, A, Baa) or S&P (AAA, AA, A, BBB).
Municipal securities rated Baa by Moody's and BBB by S&P
are regarded as having an adequate capacity to pay interest and
repay principal, although adverse economic conditions or
changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal
for bonds in this category relative to bonds in higher
rated categories. Should any individual bond held by a
Fund fall below a rating of Baa or BBB, MIMI currently
intends to dispose of the bond consistent with then
existing market conditions. Mackenzie National Municipal
Fund, Mackenzie California Municipal Fund and Mackenzie New York
Municipal Fund may also purchase unrated municipal
securities (i) where the securities are guaranteed as
to payment of principal and interest by the full faith
and credit of the U.S. Government or are short-term
municipal securities (those having a maturity of less
than one year) of issuers having outstanding at the time
of purchase an issue of municipal bonds having one of the four
highest ratings, or (ii) where, in the opinion of MIMI, the
investment adviser, the unrated municipal securities are
comparable in quality to those within the four highest
ratings. However, a Fund will not purchase an unrated
municipal security (other than a security described in
(i) above) if, after such purchase, more than 20% of
the Fund's total assets (calculated at market value at
the time of each investment) would be invested in such
securities. Under certain circumstances, each of these three
Funds may also invest a portion of its assets in short-
term municipal securities (i.e., those with less than
one year remaining to maturity). Except when one of the
Funds is in a temporary defensive investment position,
its investments in short-term municipal securities will
represent less than 20% of its total assets (calculated
at market value at the time of each investment). Where
short-term municipal securities are rated by Moody's or
S&P, a Fund will limit its investment to "high quality"
securities (i.e., within the two highest rating
categories). A Fund's investments in unrated short-term municipal
securities will be subject to the overall limitation on
investing in unrated securities described above.
Each of the Funds may invest without limit in
municipal securities with similar risk characteristics,
such as municipal securities issued by issuers located
in the same geographic region, and municipal securities
(other than those issued by non-governmental issuers)
that derive interest payments from revenues of similar
projects (for example, electric utility systems,
hospitals and other health care facilities, airport
revenue obligations, or housing finance agencies). As a result, a
Fund's portfolio of investments may be more susceptible
to adverse political, economic or regulatory
developments than a portfolio of securities that is
more diversified.
SPECIAL CONSIDERATIONS RELATING TO MACKENZIE
CALIFORNIA MUNICIPAL FUND: In recent years
"Proposition 13" and similar California constitutional
and statutory initiatives and legislative measures have
restricted the ability of California taxing entities to
increase real property tax revenues and other tax
sources. Other initiative measures adopted by California
voters, through limiting various other taxes, have resulted in a
reduction in the absolute amount, or in the rate of
growth, of certain components of state and local
revenues. From mid-1990 through late 1993, California
suffered a prolonged recession coupled with
deteriorating fiscal and budget conditions. During this
period, the state also contended with natural disasters, a
rapidly growing population and increasing social service
requirements. The prolonged recession seriously impacted
California tax revenues and produced the need for additional
expenditures and health and welfare services. As a result
of the deterioration in the State's budget and cash
situation, major rating agencies downgraded the credit
ratings of certain obligations of the State of
California and other California municipal obligations.
California continued to experience difficulty in
balancing budgets for fiscal year 1994 - 1995. The
State entered the 1995 - 1996 fiscal year, however, with
strengthening revenues based on an improving economy. Attainment
of the state's budget projections for fiscal year
1995-1996 hinge on the continuation of its economic
recovery into 1996 and the maintenance of fiscal
discipline by the state. It is not currently possible
to determine the impact of these initiatives and fiscal
developments on the ability of California governmental
issuers to pay interest or repay principal on their obligations.
Additional financial considerations relating to the
risks associated with investing in California municipal
securities are summarized in the SAI.
SPECIAL CONSIDERATIONS RELATING TO MACKENZIE NEW
YORK MUNICIPAL FUND: The State of New York and several
of its public bodies and municipalities experienced
serious financial difficulties during the 1989 - 1990
through 1991 - 1992 fiscal years that at times
jeopardized the credit standing and impaired the
borrowing abilities of the State and such other entities and
generally contributed to higher interest costs for their
borrowing and fewer markets for their outstanding debt
obligations. However, the State's financial operations have
improved during recent fiscal years. A recurrence of the
financial difficulties previously experienced by certain
issuers of New York municipal obligations could result
in defaults or declines in the market values of their
existing obligations and, possibly, in the obligations
of other issuers of New York municipal securities. If
an issuer of New York municipal obligations should
default with respect to the payment of its municipal
obligations, the market values and marketability of all
New York municipal obligations and, consequently, the net asset
value of the Fund's portfolio could be adversely affected.
Additional financial considerations relating to the
risks associated with investing in New York municipal
securities are summarized in the SAI.
U.S. GOVERNMENT SECURITIES: Each of the Funds may
invest in U.S. Government securities. U.S. Government
securities are obligations of, or guaranteed by, the
U.S. Government, its agencies or instrumentalities.
Securities guaranteed by the U.S. Government include:
(1) direct obligations of the U.S. Treasury (such as
Treasury bills, notes, and bonds) and (2) Federal agency
obligations guaranteed as to principal and interest by the U.S.
Treasury (such as GNMA certificates, which are mortgage-
backed securities).When such securities are held to
maturity, the payment of principal and interest is
unconditionally guaranteed by the U.S. Government, and
thus they are of the highest possible credit quality.
U.S. Government Securities that are not held to
maturity are subject to variations in market value caused by
fluctuations in interest rates.
Mortgage-backed securities are securities
representing part ownership of a pool of mortgage
loans. Although the mortgage loans in the pool will
have maturities of up to 30 years, the actual average
life of the loans typically will be substantially less
because the mortgages will be subject to normal principal
amortization and may be prepaid prior to maturity. In periods of
falling interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of
the security. Conversely, rising interest rates tend to
decrease the rate of prepayment, thereby lengthening
the security's actual average life and (increasing the
security's price volatility). Since it
is not possible to predict accurately the average life
of a particular pool, and because prepayments are
reinvested at current rates, the market value of
mortgage-backed securities may decline during periods
of declining interest rates.
INVESTMENT-GRADE DEBT SECURITIES: Bonds rated Aaa
by Moody's and AAA by S&P are judged to be of the best
quality (i.e., capacity to pay interest and repay
principal is extremely strong). Bonds rated Aa/AA are
considered to be of high quality (i.e., capacity to pay
interest and repay principal is very strong and differs
from the highest rated issues only to a small degree).
Bonds rated A are viewed as having many favorable
investment attributes, but elements may be present that suggest a
susceptibility to the adverse effects of changes in
circumstances and economic conditions than debt in
higher rated categories. Bonds rated Baa/BBB
(considered by Moody's to be "medium grade"
obligations) are considered to have an adequate capacity to pay
interest and repay principal, but certain protective
elements may be lacking (i.e., such bonds lack
outstanding investment characteristics and have some
speculative characteristics). The Funds may invest in
debt securities that are given an investment-grade
rating by Moody's or S&P, and may also invest in
unrated debt securities that are considered by IMI to be of
comparable quality.
CORPORATE DEBT SECURITIES: Bonds rated Aaa by
Moody's and AAA by S&P are of the highest quality,
carrying the smallest degree of investment risk. Bonds
rated Aa by Moody's and AA by S&P also are considered
very high quality, rating lower than the best bonds
because margins of protection may not be as large or
fluctuation of protective elements may be of greater amplitude.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS:
Each of the Funds may invest in bank obligations, which
may include certificates of deposit, bankers'
acceptances, and other short-term debt obligations.
Investments in certificates of deposit and bankers'
acceptances are limited to obligations of (i) banks
having total assets in excess of $1 billion, and (ii)
other banks if the principal amount of such obligation is fully
insured by the Federal Deposit Insurance Corporation
("FDIC") (currently up to $100,000). Investments in
certificates of deposit of savings associations are
limited to obligations of federal or state-chartered
institutions that have total assets in excess of $1
billion and whose deposits are insured by the FDIC.
COMMERCIAL PAPER: Commercial paper represents
short-term unsecured promissory notes issued in bearer
form by bank holding companies, corporations and
finance companies. Investments in commercial paper are
limited to obligations rated Prime-1 by Moody's or A-1
by S&P or, if not rated by Moody's or S&P, issued by
companies having an outstanding debt issue currently rated Aaa
or Aa by Moody's or AAA or AA by S&P.
REPURCHASE AGREEMENTS: Repurchase agreements are
agreements under which the Fund buys a money market
instrument and obtains a simultaneous commitment from
the seller to repurchase the instrument at a specified
time and at an agreed upon yield. A Fund will not enter
into a repurchase agreement with more than seven days
to maturity if, as a result, more than 10% of the
Fund's net assets (calculated at market value at the time of each
investment) would be invested in illiquid securities
including such repurchase agreements. A Fund may enter
into repurchase agreements with banks or broker/dealers
deemed to be creditworthy by MIMI under guidelines
approved by the Board of Trustees. In the unlikely
event of failure of the executing bank or
broker/dealer, the Fund could experience some delay in obtaining
direct ownership of the underlying collateral and might
incur a loss if the value of the security should
decline, as well as costs in disposing of the security.
BORROWING: As a fundamental policy, each Fund may
borrow from a bank up to a limit of 10% of its total
assets (calculated at market value at the time of the
borrowing), but only for temporary or emergency
purposes. Borrowing may exaggerate the effect on a
Fund's net asset value of any increase or decrease in
the value of the Fund's portfolio securities. Money borrowed will
be subject to interest costs (which may include
commitment fees and/or the cost of maintaining minimum
average balances).
TAXABLE FIXED-INCOME OBLIGATIONS: Under normal
market conditions, Mackenzie Limited Term Municipal
Fund may invest up to 20% of its net assets in taxable
fixed-income obligations. For temporary defensive
purposes, all of the Funds may invest without limit in
such securities. Taxable investments of a Fund may
consist of obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, commercial
paper, corporate obligations rated Aaa or Aa by Moody's or AAA
or AA by S&P, certificates of deposit or bankers'
acceptances or other short-term obligations of domestic
banks or thrifts, or repurchase agreements with banks
or broker-dealers.
OTHER INVESTMENT TECHNIQUES: Each Fund may make
commitments to purchase municipal obligations on a
"when-issued" or firm commitment basis. Purchasing
securities on a "when-issued" or firm commitment basis
involves a risk of loss if the value of the security to
be purchased declines prior to the settlement date.
Each Fund may also acquire third party puts or stand by
commitments to enable the Fund to improve its portfolio
liquidity by providing a ready market for certain municipal
securities at an acceptable price.
ORGANIZATION AND MANAGEMENT OF THE FUNDS
Each Fund is a separate, diversified portfolio of
the Trust, an open-end management investment company
organized as a Massachusetts business trust on April
22, 1985. (The business and affairs of each Fund are
managed under the direction of the Trustees.)
Information about the Trustees, as well as the Trust's
executive officers, may be found in the SAI. The Trust has an
unlimited number of authorized shares of beneficial
interest. The Trustees have the authority, without
shareholder approval, to classify and reclassify the
shares of any Fund into one or more classes. The
Trustees have authorized the issuance of two classes of
shares of the Funds, designated as Class A and Class B. Shares
of each Fund entitle their holders to one vote per share
(with proportionate voting for fractional shares). The
shares of each class of a Fund represent an interest in
the same portfolio of investments of the Fund. Each
class of shares has a different 12b-1 distribution plan
and bears different distribution fees. Shares of each
class have equal rights as to voting, redemption,
dividends and liquidation, but have exclusive voting rights with
respect to their Rule 12b-1 distribution plans.
[/R]
INVESTMENT MANAGER
The Trust employs MIMI to provide business
management, investment advisory, administrative and
accounting services. As of September 30, 1996, MIMI had
approximately $162 million in assets under management.
MIMI is a subsidiary of Mackenzie Financial
Corporation, which has been an investment counsel and
mutual fund manager in Toronto, Ontario, Canada for more than 25
years. MIMI's subsidiary, Ivy Management, Inc., provides
investment advice to 14 U.S. investment portfolios, which
as of September 30, 1996 had combined assets of
approximately $1.76 billion.
PORTFOLIO MANAGEMENT: The Funds are managed by a
team, with each team member having specific
responsibilities. The following individuals have
responsibilities related to the management of the
Funds. Daniel J. Johnedis, Jr., portfolio manager for the
Funds from 1993 to 1995, presently serves in an advisory
capacity to the Funds and as a consultant to MIMI. Mr.
Johnedis has nine years of professional investment
experience and is a Chartered Financial Analyst. Leslie
A. Ferris, a Vice President of MIMI and Managing
Director -- Fixed Income, has been a portfolio manager
for the Funds since 1995. Ms. Ferris joined MIMI in 1988 and has
14 years of professional investment experience. She is a
Chartered Financial Analyst and holds an MBA degree from
the University of Chicago. Prior to joining MIMI, Ms.
Ferris was a portfolio manager at Kemper Financial
Services Inc. from 1982 - 1988. Michael Borowsky has
served as a portfolio assistant to the Funds since
1994. Michael G. Landry, the President and a Director
of MIMI and the President and a Trustee of the Trust, is the
investment strategist for the Funds. Mr. Landry joined
MIMI in 1987 and has over 20 years of professional
investment experience.
INVESTMENT MANAGEMENT EXPENSES: For management of
its investments and business affairs, each Fund pays
MIMI a monthly fee calculated on the basis of each
Fund's average net assets at an annual rate of 0.55%.
Under the Funds' management agreements, MIMI pays
all expenses incurred by it in rendering management
services to the Funds. Each Fund bears its own costs of
operations. See the SAI. If, however, a Fund's total
expenses in any fiscal year exceed the permissible
limits applicable to that Fund in any state in which
its shares are then qualified for sale, MIMI will bear the
excess expenses (excluding Rule 12b-1 fees, interest, taxes,
brokerage commissions, litigation, indemnification and
extraordinary expenses), which may lower a Fund's expenses
and increase its total return. In addition, MIMI may
voluntarily limit a fund's total operating expenses.
Without voluntary expense reimbursements, the ratio of
operating expenses to average net assets for Class A
and Class B shares of the Funds for the fiscal year
ended June 30, 1996 were 1.32% and 1.82%, respectively,
for Mackenzie Limited Term Municipal Fund; 1.52% and
2.27%, respectively, for Mackenzie National Municipal Fund;
1.29% and 2.04%, respectively, for Mackenzie California
Municipal Fund; and 1.33% and 2.08%, respectively, for
Mackenzie New York Municipal Fund.
The assets received by each class of a Fund for the
issue or sale of its shares and all income, earnings,
profits, losses and proceeds therefrom, subject only to
the rights of the creditors, are allocated to, and
constitute the underlying assets of, that class of the
Fund. The underlying assets of each class of a Fund are
allocated and are charged with the expenses with respect to
that class of the Fund and with a share of the general
expenses of the Trust. General expenses of the Trust
(such as costs of maintaining the Trust's existence,
legal fees, proxy and shareholders meeting costs, etc.)
that are not readily identifiable as belonging to a
particular Fund or to a particular class of a Fund will
be allocated among and charged to the assets of each
Fund on a fair and equitable basis, which may be based on
the relative assets of each Fund or the nature of the services
performed and relative applicability to each Fund.
Expenses that relate exclusively to a particular Fund,
such as certain registration fees, brokerage
commissions and other portfolio expenses, will be borne
directly by that Fund. The fees payable to MIMI are
subject to any reimbursement or fee waiver to which
MIMI may agree.
FUND ADMINISTRATION AND ACCOUNTING
MIMI provides various administrative services for
the Funds, such as maintaining the registration of Fund
shares under state "Blue Sky" laws, and assisting with
the preparation of Federal and state income tax
returns, financial statements and periodic reports to
shareholders. MIMI also assists the Trust's legal
counsel with the filing of registration statements, proxies and
other required filings under Federal and state law. Under
this arrangement, the average net assets attributable
to each Fund's Class A and Class B shares are subject
to a fee, accrued daily and paid monthly, at an annual
rate of 0.10%.
MIMI also provides certain accounting and pricing
services for the Funds (see "Fund Accounting Services"
in the SAI for more information).
TRANSFER AGENT
IMSC is the transfer and dividend-paying agent
for the Funds, and also provides certain shareholder-
related services. Certain broker-dealers that maintain
shareholder accounts with the Funds through an omnibus
account provide transfer agent and other shareholder-
related services that would otherwise be provided by
IMSC if the individual accounts that comprise the
omnibus account were opened by their beneficial owners directly
(see "Investment Advisory and Other Services" in the SAI).
DIVIDENDS AND TAXES
Dividends and capital gain distributions that you
receive from the Funds are reinvested in additional
shares of your class unless you elect to receive them
in cash. If you elect the cash option and the U.S.
Postal Service cannot deliver your checks, your
election will be converted to the reinvestment option.
Because of the higher expenses associated with Class B shares,
any dividend on these shares will be lower than on Class A
shares.
Each Fund intends to declare and pay monthly on an
equal basis any dividends from net investment income
(to the extent not previously distributed) on both
classes of Fund shares, based on their relative net
asset value. Net investment income generally is the
income from interest earned on a Fund's investments, less
expenses incurred in its operations. Thus, the amount of
dividends paid per share may vary from month to month. Each Fund
intends to make a final distribution for each fiscal
year of any
remaining net investment income and net realized short-
term capital gain, as well as undistributed net long-
term capital gain realized during the year. An
additional distribution may be made of net investment
income, net realized short-term capital gain and net
realized long-term capital gain to comply with the
calendar year distribution requirement under the excise tax
provisions of Section 4982 of the Code.
If, for any year, the total distributions from a
Fund exceed earnings and profits of the Fund, the
excess, distributed from the assets of the Fund, will
generally be treated as return of capital. The amount
treated as a return of capital will reduce a
shareholder's adjusted basis in his/her shares (thereby
increasing the potential gain or reducing the potential loss on
the sale of the shares) and, to the extent that the amount
exceeds this basis, will be treated as a taxable gain.
However, if a Fund has current or accumulated earnings
and profits, so as to characterize all or a portion of
such excess as a dividend for Federal income tax
purposes, the distributions, to that extent, would
normally be taxable as ordinary income (unless taxable as a
capital gain dividend or exempt-interest dividend, as
described below).
TAXATION: The following discussion is intended for
general information only. An investor should consult
with his/her own tax advisor as to the tax consequences
of an investment in a Fund, including the status of
distributions from the Fund under applicable state or
local law.
Each Fund intends to qualify annually and elect to
be treated as a regulated investment company under the
Code. To qualify, a Fund must meet certain income,
distribution and diversification requirements. In any
year in which a Fund qualifies as a regulated
investment company and timely distributes all of its
taxable income and substantially all of its net tax-exempt
interest income, the Fund generally will not pay any U.S.
Federal income or excise tax.
Dividends distributed by a Fund that are derived
from interest income exempt from Federal income tax and
are designated by the Fund as "exempt interest
dividends" will be exempt from Federal income taxation.
Dividends paid out of a Fund's investment company
taxable income (including interest and net short-term
capital gain) will be taxable to a shareholder as
ordinary income. Because no portion of a Fund's income
is expected to consist of dividends paid by U.S.
corporations, no portion of the dividends paid by the
Funds is expected to be eligible for the corporate
dividends-received deduction. Distributions of net capital gain
(the excess of net long-term capital gain over net short-
term capital loss), if any, designated as capital gain
dividends are taxable as long-term capital gains,
regardless of how long the
shareholder has held the Fund's shares. Dividends are
taxable to shareholders in the same manner whether
received in cash or reinvested in additional Fund
shares.
A distribution will be treated as paid on December
31 of the current calendar year if it is declared by a
Fund in October, November or December with a record
date in such a month and paid by the Fund during
January of the following calendar year. Such
distributions will be taxable to shareholders in the calendar
year in which the distributions are declared, rather than
the calendar year in which the distributions are
received.
Each year the Funds will notify shareholders of the
tax status of distributions.
Any gain or loss realized by a shareholder upon the
sale or other disposition of shares of a Fund, or upon
receipt of a distribution in complete liquidation of a
Fund, generally will be a capital gain or loss which
will be long term or short term, generally depending
upon the shareholder's holding period for the shares.
The Funds may be required to withhold U.S. Federal
income tax at the rate of 31% of all distributions
payable to shareholders who fail to provide their
correct taxpayer identification number or to make
required certifications, or who have been notified by
the Internal Revenue Service ("IRS") that they are subject to
backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.
Further information relating to tax consequences is
contained in the SAI.
STATE AND LOCAL TAXES: Fund distributions may be
subject to state and local taxes. In certain states,
Fund distributions which are derived from interest on
obligations of that state or its municipalities or any
political subdivisions thereof may be exempt from state
and local taxes. Fund distributions which are derived
from interest on obligations of the U.S. Government and
certain of its agencies, authorities and instrumentalities also
may be exempt from state and local taxes in certain
states. California residents generally will not incur
personal income tax on the amount of dividends received
by them from Mackenzie California Municipal Fund that
the Fund designates as California exempt-interest
dividends derived from California state and local
issues or certain U.S. Government obligations. Exempt-interest
dividends received by New York residents from Mackenzie New
York Municipal Fund and derived from interest on
qualifying New York bonds generally will be exempt from
New York State and New York City personal income taxes.
Shareholders should consult their own tax advisers
regarding the particular tax consequences of an
investment in a Fund.
PERFORMANCE DATA
Performance information is computed separately for
each Fund's Class A and Class B shares in accordance
with the formulas described below. Because Class B
shares bear the expense of distribution fees, it is
expected that the level of performance of a Fund's
Class B shares will be lower than that of the Fund's
Class A shares.
Performance information for the separate classes of
shares of a Fund may be compared, in reports to
promotional literature, to indices such as the Standard
& Poor's 500 Stock Index, Dow Jones Industrial Average,
or other unmanaged indices. Further information and
comparisons is contained in the SAI. Advertisements,
sales literature and communications to shareholders may
also contain various expressions of a Fund's total
return and current distribution rate. Performance figures
will vary in part because of the different expense structures of
each Fund's different classes. Performance rankings are
based on historical information and are not intended to
indicate future performance.
"Total return" is the change in value of an
investment in a Fund for a specified period, and
assumes the reinvestment of all distributions and
imposition of the maximum applicable sales charge.
"Average annual total return" represents the average
annual compound rate of return of an investment in a particular
class of a Fund's shares assuming the investment is held
for one year, five years and ten years as of the end of
the most recent calendar quarter. Where a Fund provides
total return quotations for other periods, or based on
investments at various sales charge levels or at net
asset value, "total return" is based on the total of
all income and capital gains paid to (and reinvested
by) shareholders, plus (or minus) the change in the value of the
original investment expressed as a percentage of the
purchase price.
Current yield reflects the income per share earned
by a Fund's portfolio investments; it is calculated by
dividing the Fund's net investment income per share
during a recent 30-day period by the maximum public
offering price on the last day of that period and then
annualizing the result.
Yield, which is calculated according to a formula
prescribed by the SEC (see the SAI), is not indicative
of the dividends or distributions that were or will be
paid to a Fund's shareholders. Dividends or
distributions paid to shareholders are reflected in the
current distribution rate, which may be quoted to
shareholders. The current distribution rate is computed by
dividing the total amount of dividends per share paid
by a Fund during the 12 months by a current maximum
offering price (offering price includes sales charge).
The distribution rate will differ from the current
yield computation because it may include distributions
to shareholders from sources other than dividends and
interest, short-term capital gains and net equalization
credits and will be calculated over a different period
of time.
Performance figures are based upon past performance
and reflect all recurring charges against Fund income.
In the case of Class A shares, performance figures may
assume the payment of the maximum sales charge on the
purchase of shares, which charge would reduce a
performance figure. In the case of Class B shares,
performance figures may assume the deduction of any applicable
CDSC imposed on a redemption of shares held for the period.
The investment results of a Fund, like all others, will
fluctuate over time; thus, performance figures should
not be considered to represent what an investment may
earn in the future or what the Fund's total return may
be in any future period.
ALTERNATIVE PURCHASE ARRANGEMENTS
You can purchase shares of a Fund at a price equal
to their net asset value per share, plus a sales
charge. At your election, this charge may be imposed
either at the time of purchase (see "Initial Sales
Charge Alternative -- Class A Shares") or on a
contingent deferred basis (see "Contingent Deferred Sales Charge
Alternative -- Class B Shares"). If you do not specify on
your Account Application which class of shares you are
purchasing, it will be assumed that you are investing
in Class A shares.
CLASS A SHARES: If you elect to purchase Class A
shares, you will incur an initial sales charge unless
the amount you purchase is $500,000 or more. If you
purchase $500,000 or more of Class A shares, you will
not be subject to an initial sales charge, but you will
incur a CDSC if you redeem your shares within 24 months
of purchase. See "Contingent Deferred Sales Charge -- Class A
Shares." Class A shares of a Fund are subject to ongoing
service fees at an annual rate of up to 0.25% of the
Fund's average net assets attributable to Class A
shares. Certain purchases of Class A shares qualify for
a reduced initial sales charge. See "Qualifying for a
Reduced Sales Charge."
CLASS B SHARES: You will not incur a sales charge
when you purchase Class B shares, but the shares are
subject to a CDSC if you redeem them within six years
(five years for Mackenzie Limited Term Municipal Fund)
of purchase. Class B shares are subject to ongoing
service and distribution fees at a combined annual rate
of up to 1.00% (0.75% for Mackenzie Limited Term
Municipal Fund) of a Fund's average net assets attributable to
Class B shares. The ongoing distribution fee will cause
these shares to have a higher expense ratio than that
of Class A shares. To the extent that any dividends are
paid by a Fund, these higher expenses will also result
in lower dividends than those paid on Class A shares.
FACTORS TO CONSIDER IN CHOOSING AN ALTERNATIVE:
The multi-class structure of each Fund allows you to
choose the most beneficial way to buy shares given the
amount of your purchase, the length of time you expect
to hold your shares and other circumstances. You should
consider whether, during the anticipated life of your
investment in a Fund, the accumulated fees on Class B
shares would be less than the initial sales charge and
accumulated fees on Class A shares purchased at the
same time, and to what extent this differential would be offset
by the Class A shares' potentially higher yield. To help
you make this determination, the table under the
caption "Annual Fund Operating Expenses" at the
beginning of this Prospectus gives examples of the
charges applicable to each class of shares. Class A
shares will normally be more beneficial if you qualify for a
reduced sales charge. See "Qualifying for a Reduced Sales
Charge".
Class A shares are not subject to distribution
fees, and accordingly, pay correspondingly higher
dividends per share. However, because initial sales
charges are deducted at the time of purchase, you would
not have all of your funds invested initially and,
therefore, would own fewer shares. If you do not
qualify for a reduced initial sales charge and expect to maintain
your investment for an extended period of time, you
might consider purchasing Class A shares because the
accumulated service and distribution charges on Class B
shares may exceed the initial sales charge and
accumulated service charges on Class A shares during
the life of your investment.
Alternatively, you might determine that it would be
more advantageous to purchase Class B shares in order
to have all of your funds invested initially, although
remaining subject to a CDSC over a period of six years
(five years for Mackenzie Limited Term Municipal Fund)
and a distribution fee over a period of eight years.
In the case of Class A shares, the distribution
expenses that IMDI incurs in connection with the sale
of the shares will be paid from the proceeds of the
initial sales charge and the ongoing service fees. In
the case of Class B shares, the expenses will be paid
from the proceeds of ongoing service and distribution
fees, as well as the CDSC incurred upon redemption
within six years of purchase (five years for Mackenzie Limited
Term Municipal Fund). The purpose and function of the Class
B shares' CDSC and ongoing service and distribution
fees are the same as those of the Class A shares'
initial sales charge and ongoing service fees. Sales
personnel distributing each Fund's
shares may receive different compensation for selling
each class of shares.
HOW TO BUY SHARES
The minimum initial investment for each Fund is
$1,000; the minimum additional investment is $100. All
purchases must be made in U.S. dollars. Complete the
Account Application attached to this Prospectus.
Indicate the name of the Fund in which you are
investing and whether you are purchasing Class A or Class B
shares. If you do not specify which class of shares you are
purchasing, IMSC will assume you are investing in Class A
shares. Each Fund reserves the right to reject for any
reason any purchase order or exchange (see "Exchange
Privilege" below).
OPENING AN ACCOUNT
BY CHECK
1. Make your check payable to the Fund in which
you are investing. Third party checks will
not be accepted.
2. Deliver the completed application and check
to your registered representative or selling
broker, or mail it directly to IMSC.
3. Our address is:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
4. Our courier address is:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
BY WIRE
1. Deliver a completed Account Application to
your registered representative or selling
broker, or mail it directly to IMSC. Before
wiring any funds, please contact IMSC at
1-800-777-6472 to verify your account number.
2. Instruct your bank to wire funds to:
FIRST UNION NATIONAL BANK OF FLORIDA
JACKSONVILLE, FL
ABA #063000021
ACCOUNT #2090002063833
FOR FURTHER CREDIT TO:
YOUR MACKENZIE ACCOUNT REGISTRATION
YOUR FUND NUMBER AND ACCOUNT NUMBER
Your bank may charge a fee for wiring funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place an order to purchase shares through your
Registered Securities Dealer.
BUYING ADDITIONAL CLASS A AND CLASS B SHARES
BY CHECK
1. Complete the investment stub attached to your
statement or include a note with your check
listing the name of the fund in which you are
investing, the class of shares to purchase,
your account number and the name(s) in which
the account is registered.
2. Make your check payable to the Fund in which
you are investing.
3. Mail the account information and check to:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
or deliver it to your registered representative or
selling broker.
BY WIRE
Instruct your bank to wire funds to:
FIRST UNION NATIONAL BANK OF FLORIDA
JACKSONVILLE, FL
ABA #063000021
ACCOUNT #2090002063833
FOR FURTHER CREDIT TO:
YOUR MACKENZIE ACCOUNT REGISTRATION
YOUR FUND NUMBER AND ACCOUNT NUMBER
Before wiring any funds, please call IMSC at
1-800-777-6472. Your bank may charge a fee for wiring
funds.
THROUGH A REGISTERED SECURITIES DEALER: You may
also place an order to purchase shares through your
Registered Securities Dealer.
BY AUTOMATIC INVESTMENT METHOD ("AIM")
1. Complete the "Automatic Investment Method" and
"Wire/EFT Information" sections on the Account
Application designating a bank account from which funds
may be drawn. Please note that in order to invest using
this method, your bank must be a member of the
Automated Clearing House system (ACH). The minimum investment
under this plan is $50 per month ($25 per month for
retirement plans). Please remember to attach a voided
check to your Account Application.
2. At pre-specified intervals, your bank account
will be debited and the proceeds will be credited to
your Ivy or Mackenzie fund account.
HOW YOUR PURCHASE PRICE IS DETERMINED
Your purchase price for Class A shares of a Fund is
the net asset value ("NAV") per share plus a sales
charge, which may be reduced or eliminated in certain
circumstances. The purchase price for Class A shares is
known as the public offering price. Your purchase price
for Class B shares of a Fund is the net asset value per
share.
Your purchase of shares will be made at the next
determined price after the purchase order is received.
The price is effective for orders received by IMSC or
by your Registered Securities Dealer prior to the time
of the determination of the net asset value. Any orders
received after the time of the determination of the net
asset value will be entered at the next calculated
price.
Orders placed with a securities dealer before the
time of determination of the net asset value and
transmitted through the facilities of the National
Securities Clearing Corporation by 7:00 p.m., EST, on
the same day are confirmed at that day's price. Any
loss resulting from the dealer's failure to submit an
order by the deadline will be borne by that dealer.
You will receive an account statement after any
purchase, exchange or full liquidation. Statements
related to reinvestment of distributions, automatic
investment plans (see the SAI for further explanation)
and/or systematic withdrawal plans will be sent
quarterly.
HOW A FUND VALUES ITS SHARES
The NAV per share is the value of one Fund share.
The NAV is determined in the following manner: the
total of all Fund liabilities, including accrued
expenses and taxes and any necessary reserves, is
deducted from the aggregate value of all Fund assets,
and the difference is divided by the number of shares
outstanding at the time, adjusted to the nearest cent. The
NAV per share is determined once every business day (as of the
close of regular trading on each day the New York Stock
Exchange is open, normally 4:00 p.m. EST) (see the SAI
under "Net Asset Value" for a detailed description of
how the NAV is determined).
The Trust's Board of Trustees has established
procedures to value each Fund's securities in order to
determine the NAV.
Each Fund offers two classes of shares in this
Prospectus: Class A shares, which are subject to an
initial sales charge; and Class B shares, which are
subject to a contingent deferred sales charge. IF YOU
DO NOT SPECIFY A PARTICULAR CLASS OF SHARES, IT WILL BE
ASSUMED THAT YOU ARE PURCHASING CLASS A SHARES AND AN
INITIAL SALES CHARGE WILL BE ASSESSED.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
Class A shares may be purchased at a public
offering price equal to their NAV per share plus a
sales charge, as set forth below:
MACKENZIE LIMITED TERM MUNICIPAL FUND
<TABLE>
<CAPTION>
SALES CHARGE
--------------------------
AS A AS A
PERCENTAGE
PERCENTAGE OF PUBLIC
OF NET
OFFERING AMOUNT AMOUNT
INVESTED PRICE INVESTED -------------------
- ---------------------------------------- <S>
<C> <C> Less than
$25,000.................. 3.00% 3.09%
$25,000 but less than $250,000..... 2.50% 2.56%
$250,000 but less than $500,000.... 2.00% 2.04%
$500,000 and over*................. 0.00% 0.00%
<CAPTION>
PORTION OF
PUBLIC OFFERING
PRICE
RETAINED
AMOUNT BY DEALER
--------------------------------------------------
<S> <C>
Less than $25,000.................. 2.50%
$25,000 but less than $250,000..... 2.00%
$250,000 but less than $500,000.... 1.65%
$500,000 and over*................. 0.00%
</TABLE>
MACKENZIE NATIONAL MUNICIPAL FUND
MACKENZIE CALIFORNIA MUNICIPAL FUND
MACKENZIE NEW YORK MUNICIPAL FUND
<TABLE>
<CAPTION>
SALES CHARGE
--------------
- --------- AS A
AS A
PERCENTAGE PERCENTAGE
OF PUBLIC OF NET
OFFERING AMOUNT AMOUNT INVESTED
PRICE INVESTED -------------------
- ----------------------------------------- <S>
<C> <C>
Less than $100,000................ 4.75%
4.99% 100,000 but less than $250,000.... 3.75%
3.90% $250,000 but less than $500,000... 2.50%
2.56% $500,000 and over*................ 0.00%
0.00%
<CAPTION>
PORTION OF
PUBLICOFFERING
PRICE
RETAINED
AMOUNT INVESTED BY DEALER
---------------------------------------------------
<S> <C>
Less than $100,000.................. 4.00%
100,000 but less than $250,000...... 3.00%
$250,000 but less than $500,000..... 2.00%
$500,000 and over*.................. 0.00%
</TABLE>
* A contingent deferred sales charge may apply to
the redemption of Class A shares that are
purchased on or after January 26, 1994 without an
initial sales charge. See "Contingent Deferred
Sales Charge -- Class A Shares."
Former shareholders of Zweig Limited Term
Portfolio and Zweig Money Market Portfolio who became
shareholders of Mackenzie Limited Term Municipal Fund
as a result of the transfer of all the assets of those
portfolios to the Fund may purchase Class A shares of
this Fund using the sales charges previously in effect
for Zweig Limited Term Portfolio. The sales charge on purchases
by these investors is as follows:
<TABLE>
<CAPTION>
SALES CHARGE
------------------------
AS A AS A
PERCENTAGE PERCENTAGE
OF PUBLIC OF NET
OFFERING AMOUNT
AMOUNT INVESTED PRICE INVESTED
- --------------------------------------------------------
<S> <C> <C> Less
than $250,000................ 1.50% 1.52% 250,000
but less than $500,000.... 1.00% 1.01% $500,000
and over................. 0.00% 0.00%
<CAPTION>
PORTION OF
PUBLIC OFFERING
PRICE
RETAINED
AMOUNT INVESTED BY DEALER
-------------------------------------------------------
<S> <C>
Less than $250,000.................... 1.25%
250,000 but less than $500,000........ 0.80%
$500,000 and over..................... 0.00%
</TABLE>
Sales charges are not applied to any dividends
which are reinvested in additional shares of a Fund.
IMDI may, at the time of any purchase of Class A
shares, pay out of IMDI's own resources commissions to
dealers that provided distribution assistance in
connection with the purchase. For purchases over
$500,000, the commission would be computed at 1.00% of
the first $3,000,000 invested (0.75% for Mackenzie
Limited Term Municipal Fund); 0.50% of the next $2,000,000
invested; and 0.25% of the amount invested in excess of
$5,000,000. An investor may be charged a transaction fee for
Class A shares purchased or redeemed at net asset value
through a broker or agent other than IMDI.
IMDI compensates participating brokers who sell
Class A shares through the initial sales charge. IMDI
retains that portion of the initial sales charge that
is not reallowed to the dealers, which it may use to
distribute a Fund's Class A shares. IMDI may, from time
to time, reallow the entire sales charge or a portion
of the sales charge greater than that which will normally
be reallowed to selected dealers who sell or are expected to
sell significant amounts of shares of the Funds during
specified time periods. During periods when 90% or more
of the sales commission is reallowed, such dealers may
be deemed to be underwriters, as that term is defined
in the Securities Act of 1933. Pursuant to separate
distribution plans for each Fund's Class A and Class B
shares, IMDI bears various promotional and sales-related
expenses, including the cost of printing and mailing prospectuses
to persons other than shareholders. Pursuant to each
Fund's distribution plans applicable to its Class A and
Class B shares, IMDI currently pays a continuing
service fee to qualified dealers at an annual rate of
0.25% of qualified investments.
IMDI may from time to time pay a bonus or other
incentive to dealers (other than IMDI) that employ a
registered representative who sells a minimum dollar
amount of the shares of a Fund and/or other funds
distributed by IMDI during a specified period of time.
This bonus or other incentive may take the form of payment
for travel expenses, including lodging, incurred in connection
with trips taken by qualifying registered representatives
and members of their families to places within or
without the United States or other bonuses such as gift
certificates or the cash equivalent of such bonus or
incentive.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES
Purchases of $500,000 or more of Class A shares
will be made at net asset value with no initial sales
charge, but if the shares are redeemed within 24 months
after the end of the calendar quarter in which the
purchase was made (the contingent deferred sales charge
period), a contingent deferred sales charge of 1.00%
(0.75% in the case of Mackenzie Limited Term Municipal
Fund) will be imposed.
In order to recover commissions paid to dealers on
NAV Transfers (as defined in "Purchase of Class A
Shares at Net Asset Value"), Class A shares of the Fund
are subject to a contingent deferred sales charge of
1.00% (0.75% for Mackenzie Limited Term Municipal Fund)
for certain redemptions within 24 months after the date
of purchase.
The charge will be assessed on an amount equal to
the lesser of the current market value or the original
purchase cost of the Class A shares redeemed.
Accordingly, no contingent deferred sales charge will
be imposed on increases in account value above the
initial purchase price, including any dividends which have
been reinvested in additional Class A shares.
In determining whether a contingent deferred sales
charge applies to a redemption, the calculation will be
determined in a manner that results in the lowest
possible rate being charged. Therefore, it will be
assumed that the redemption is first made from any
shares in your account not subject to the contingent
deferred sales charge. The contingent deferred sales charge is
waived in certain circumstances. See the discussion below
under the caption "Waiver of Contingent Deferred Sales
Charge."
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
contingent deferred sales charge is waived for any
partial or complete redemption following the death or
disability (as defined in Section 72(m)(7) of the Code)
of a shareholder from an account in which the deceased
or disabled is named, provided that the redemption is
requested within one year of the death or disability.
IMDI may require documentation prior to waiver of the
contingent deferred sales charge.
Class A shareholders may exchange their Class A
shares subject to a contingent deferred sales charge
("outstanding Class A shares") for Class A shares of
another Ivy or Mackenzie fund ("new Class A shares") on
the basis of the relative net asset value per Class A
share, without the payment of any contingent deferred
sales charge that otherwise would be due upon the
redemption of the outstanding Class A shares. The original
contingent deferred sales charge rate that would have been
charged if the outstanding Class A shares were redeemed will
carry over to the Class A shares received in the
exchange, and will be charged accordingly at the time
of redemption.
QUALIFYING FOR A REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION: Rights of Accumulation
("ROA") is calculated by determining the current market
value of all Class A shares in all Ivy or Mackenzie
fund accounts (except Ivy Money Market Fund) owned by
you, your spouse and your children under 21 years of
age. ROA is also applicable to accounts under a trustee
or other single fiduciary (including retirement accounts
qualified under Section 401 of the Code). The current market
value of each of your accounts as described above is added
together and then added to your current purchase amount. If
the combined total is equal to or greater than a
breakpoint amount for the Fund, then you qualify for
the reduced sales charge. To reduce or eliminate the
sales charge, you must complete Section 4B of the
Account Application. For additional information,
contact IMSC at 1-800-777-6472.
LETTER OF INTENT: A Letter of Intent ("LOI") is a
non-binding agreement that states your intention to
invest in additional Class A shares, within a thirteen
month period after the initial purchase, an amount
equal to a breakpoint amount for the Fund. The LOI may
be backdated up to 90 days. To sign a LOI, complete
Section 4B of the Account Application. For additional
information, contact IMSC at 1-800-777-6472.
Should the LOI not be fulfilled within the thirteen
month period, your account will be debited for the
difference between the full sales charge that applies
and the reduced sales charge actually paid on purchases
placed under the terms of the LOI.
PURCHASES OF CLASS A SHARES AT NET ASSET VALUE
An investor who was a shareholder of any Ivy Fund
on December 31, 1991 or a shareholder of American
Investors Income Fund, Inc. or American Investors
Growth Fund, Inc. on October 31, 1988 and who became a
shareholder of Ivy Bond Fund (formerly Mackenzie Fixed
Income Trust) or Ivy Growth Fund as a result of the
respective reorganizations of the funds will be exempt from sales
charges, including any contingent deferred sales charge,
on purchases of Class A shares of any Ivy or Mackenzie
fund. This privilege is also available to immediate
family members of a shareholder (i.e., the
shareholder's children, the shareholder's spouse and
the children of the shareholder's spouse). This no-load
privilege terminates for the investor if the investor
redeems all shares owned. Shareholders and their relatives as
described above should call 1-800-235-3322 for further
information on additional purchases or to inquire about their
account.
Officers and Trustees of the Trust (and their
relatives), MIMI, Ivy Management, Inc. (which is a
wholly owned subsidiary of MIMI) and Mackenzie
Financial Corporation (of which MIMI is a subsidiary)
and their officers, directors, employees and retired
employees (and their relatives) and legal counsel and
independent accountants (and their relatives) may buy
Class A shares of the Fund without an initial sales
charge or a contingent deferred sales charge.
Directors, officers, partners, registered
representatives, employees (and their relatives) of
dealers having a sales agreement with IMDI may buy
Class A shares of a Fund without an initial sales
charge or a contingent deferred sales charge. In
addition, certain investment advisers and financial planners who
charge a management, consulting or other fee for their
services and who place trades for their own accounts
and the accounts of their clients may purchase Class A
shares of a Fund without an initial sales charge or a
contingent deferred sales charge, provided such
purchases are placed through a broker or agent who
maintains an omnibus account with the Fund. Also, clients of
these advisers and planners may make purchases under the same
conditions if the purchases are through the master
account of such adviser or planner on the books of such
broker or agent.
Class A shares of Mackenzie Limited Term Municipal
Fund can also be purchased without an initial sales
charge, but subject to a contingent deferred sales
charge of 0.75% during the first 24 months by trust
companies, bank trust departments, credit unions,
savings and loans, and other similar organizations in their
fiduciary capacity or for their own accounts, subject to any
minimum requirements set by IMDI. Currently, these
criteria require that the amount invested or to be
invested during the subsequent 13-month period totals
at least $250,000. IMDI may, at the time of any such
purchase, pay out of IMDI's own resources commissions
to dealers which provided distribution assistance in
connection with the purchase. Commissions would be computed at
0.75% of the first $3,000,000 invested; 0.50% of the next
$2,000,000 invested; and 0.25% of the amount invested in
excess of $5,000,000.
Class A shares of Mackenzie Limited Term Municipal
Fund can also be purchased without an initial sales
charge, but subject to a contingent deferred sales
charge of 0.75% during the first 24 months by any
state, county, or city, or any instrumentality,
department, authority or agency of these entities, which is
prohibited by applicable investment laws from paying a sales
charge or commission when purchasing shares of any
registered management investment company (an "eligible
governmental authority"). IMDI may, at the time of such
purchase, pay out of IMDI's own resources commissions
to dealers which provided distribution assistance in
connection with the purchase. Commissions would be
computed at 0.75% of the first $3,000,000 invested;
0.50% of the next $2,000,000 invested; and 0.25% of the
amount invested in excess of $5,000,000.
Class A shares of Mackenzie National Municipal
Fund, Mackenzie California Municipal Fund and Mackenzie
New York Municipal Fund can be purchased without an
initial sales charge, but subject to a contingent
deferred sales charge of 1.00% during the first 24
months by trust companies, bank trust departments,
credit unions, savings and loans, and other similar organizations
in their fiduciary capacity or for their own accounts,
subject to any minimum requirements set by IMDI.
Currently, these criteria require that the amount
invested or to be invested during the subsequent 13-
month period totals at least $250,000. IMDI may, at the
time of any such purchase, pay out of IMDI's own resources
commissions to dealers which provided distribution assistance
in connection with the purchase. Commissions would be
computed at 1.00% of the first $3,000,000 invested;
0.50% of the next $2,000,000 invested; and 0.25% of the
amount invested in excess of $5,000,000.
Class A shares of Mackenzie National Municipal
Fund, Mackenzie California Municipal Fund and Mackenzie
New York Municipal Fund can also be purchased without
an initial sales charge, but subject to a contingent
deferred sales charge of 1.00% during the first 24
months by any state, county, or city, or any
instrumentality, department, authority or agency of these
entities, which is prohibited by applicable investment laws from
paying a sales charge or commission when purchasing
shares of any registered management investment company
(an "eligible government authority"). IMDI may, at the
time of any such purchase, pay out of IMDI's own
resources commissions to dealers which provided
distribution assistance in connection with the purchase.
Commissions would be computed at 1.00% of the first $3,000,000
invested; 0.50% of the next $2,000,000 invested; and 0.25%
of the amount invested in excess of $5,000,000.
Class A shares of the Fund may also be purchased
without a sales charge in connection with certain
liquidation, merger or acquisition transactions
involving other investment companies or personal
holding companies.
The Funds may, from time to time, waive the initial
sales charge on its Class A shares sold to clients of
various broker/dealers with which IMDI has a selling
relationship. This privilege will apply only to Class A
shares of the Fund that are purchased using all or a
portion of the proceeds obtained by such clients
through redemptions of shares (on which a commission has
been paid) of an investment company (other than the Trust or Ivy
Fund), unit investment trust or limited partnership ("NAV
Transfers"). Some dealers may elect not to participate
in this program. Those dealers that do elect to
participate in the program must complete certain forms
required by IMDI. The normal service fee, as described
in the "Initial Sales Charge Alternative -- Class A
Shares" and "Contingent Deferred Sales
Charge Alternative -- Class B Shares" sections of this
Prospectus, will also be paid to dealers in connection
with these purchases. Additional information on
reductions or waivers may be obtained from IMDI at the
address listed on the cover of this Prospectus.
CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE -- CLASS B
SHARES
Class B shares are offered at net asset value
without a front-end sales charge. However, Class B
shares redeemed within six years (five years in the
case of Mackenzie Limited Term Municipal Fund) of
purchase will be subject to a contingent deferred sales
charge at the rates set forth below. This charge will
be assessed on an amount equal to the lesser of the current
market value or the original cost of the shares being
redeemed. Accordingly, you will not be assessed a
contingent deferred sales charge on increases in
account value above the initial purchase price,
including shares derived from the reinvestment of
distributions. In determining whether a contingent deferred sales
charge applies to a redemption, the calculation will be
determined in a manner that results in the lowest
possible rate being charged. It will be assumed that
your redemption comes first from shares you have held
beyond the contingent deferred sales charge redemption
period or those you acquire through reinvestment of
distributions, and next from the shares you have held
the longest.
Proceeds from the contingent deferred sales charge
are paid to IMDI. IMDI uses them, in whole or in part,
to defray its expenses related to providing the Fund
with distribution services in connection with the sale
of Class B shares, such as compensating selected
dealers and agents for selling these shares. The
combination of the contingent deferred sales charge and
the service and distribution fees makes it possible for the
Fund to sell Class B shares without deducting a sales charge
at the time of purchase.
The amount of the contingent deferred sales charge,
if any, will vary depending upon the number of years
from the time of your purchase of Class B shares until
the time you redeem them. Solely for purposes of
determining this holding period, all payments during
the quarter will be aggregated and deemed to have been
made on the last day of the quarter.
MACKENZIE LIMITED TERM MUNICIPAL FUND
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT YEAR SINCE PURCHASE
SUBJECT TO CHARGE
-------------------------------------------------------
- ---- <S> <C>
First................................. 3%
Second................................ 2 1/2%
Third................................. 2%
Fourth................................. 1 1/2%
Fifth................................. 1%
Sixth and thereafter.................. 0%
</TABLE>
MACKENZIE NATIONAL MUNICIPAL FUND
MACKENZIE CALIFORNIA MUNICIPAL FUND
MACKENZIE NEW YORK MUNICIPAL FUND
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE AS A
PERCENTAGE OF
DOLLAR AMOUNT YEAR SINCE PURCHASE
SUBJECT TO CHARGE ------------------------------
- ----------------------------- <S>
<C>
First................................. 5%
Second................................ 4%
Third................................. 3%
Fourth................................. 3%
Fifth................................. 2%
Sixth and thereafter.................. 1%
Seventh and thereafter................ 0%
</TABLE>
MIMI, on behalf of IMDI, currently intends to pay
dealers a sales commission of 2.50% of the sale price
of Class B shares of Mackenzie Limited Term Municipal
Fund and 4.00% of the sale price of Class B shares of
Mackenzie National Municipal Fund, Mackenzie California
Municipal Fund and Mackenzie New York Municipal Fund
sold by such dealers, subject to future amendment or termination.
IMDI will retain 0.50% of the continuing 0.75%
service/distribution fee for Mackenzie Limited Term
Municipal Fund (0.75% of the continuing 1.00% for
Mackenzie National Municipal Fund, Mackenzie California
Municipal Fund and Mackenzie New York Municipal Fund)
assessed to Class B shareholders and will receive the
entire amount of the contingent deferred sales charge
paid by shareholders on the redemption of Class B shares
to finance the sales commission plus related marketing expenses.
CONVERSION OF CLASS B SHARES: Your Class B shares
and an appropriate portion of both reinvested
distributions on those shares will be converted into
Class A shares automatically no later than the month
following eight years after the shares were purchased,
resulting in the discontinuance of annual distribution
fees. If you exchanged Class B shares from another Ivy
or Mackenzie fund into Class B shares of a Fund, the
calculation will be based on the time the shares in the
original fund were purchased.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE: The
contingent deferred sales charge is waived for any
partial or complete redemption following the death or
disability (as defined in Section 72(m)(7) of the Code)
of a shareholder from an account in which the deceased
or disabled is named, provided that the redemption is
requested within one year of death or disability. IMDI
may require documentation prior to waiver of the contingent
deferred sales charge.
ARRANGEMENTS WITH BROKER/DEALERS AND OTHERS: IMDI
may, at its own expense, pay concessions in addition to
those described above to dealers which satisfy certain
criteria established from time to time by IMDI. These
conditions relate to increasing sales of shares of the
Fund over specified periods and to certain other
factors. These payments may, depending on the dealer's
satisfaction of the required conditions, be periodic and may be
up to (i) 0.25% of the value of Fund shares sold by such
dealer during a particular period, and (ii) 0.10% of
the value of Fund shares held by the dealer's customers
for more than one year, calculated on an annual basis.
HOW TO REDEEM SHARES
You may redeem your Fund shares through your
registered securities representative, by mail, by
telephone or by Federal Funds wire. A contingent
deferred sales charge may apply to certain Class A
share redemptions, and to Class B share redemptions
prior to conversion. All redemptions are made at the
net asset value next determined after a redemption request has
been received in good order. Requests for redemptions must
be received by 4:00 p.m. EST to be processed at the net
asset value for that day. Any redemption request in
good order that is received after 4:00 p.m. EST will be
processed at the price determined on the following
business day. IF SHARES TO BE REDEEMED WERE PURCHASED
BY CHECK, PAYMENT OF THE REDEMPTION MAY BE DELAYED
UNTIL THE CHECK HAS CLEARED OR FOR UP TO 15 DAYS AFTER
THE DATE OF PURCHASE, WHICHEVER IS LESS. If you own shares of
more than one class of a Fund, the Fund will redeem Class A
shares first; any shares subject to a contingent deferred
sales charge will be redeemed last unless you
specifically elect otherwise.
When shares are redeemed, a Fund generally sends
you payment on the next business day. Under unusual
circumstances, a Fund may suspend redemptions or
postpone payment to the extent permitted by Federal
securities laws. The proceeds of the redemption may be
more or less than the purchase price of your shares, depending
upon, among other factors, the market value of the Fund's
securities at the time of the redemption. If the
redemption is
for over $50,000, or the proceeds are to be sent to an
address other than the address of record, or an address
change has occurred in the last 30 days, it must be
requested in writing with a signature guarantee. See
"Signature Guarantees" below.
If you are not certain of the requirements for a
redemption, please contact IMSC at 1-800-777-6472.
THROUGH YOUR REGISTERED SECURITIES DEALER: The
Dealer is responsible for promptly transmitting
redemption orders. Redemptions requested by dealers
will be made at the net asset value (less any
applicable contingent deferred sales charge) determined
at the close of regular trading (4:00 p.m. EST) on the
day that a redemption request is received in good order by IMSC.
BY MAIL: Requests for redemption in writing are
considered to be in "proper or good order" if they
contain the following:
- Any outstanding certificate(s) for shares being
redeemed.
- A letter of instruction, including the fund name,
the account number, the account name(s), the
address and the dollar amount or number of shares
to be redeemed.
- Signatures of all registered owners whose names
appear on the account.
- Any required signature guarantees.
- Other supporting legal documentation, if required
(in the case of estates, trusts, guardianships,
corporations, or other representative capacities).
The dollar amount or number of shares indicated for
redemption must not exceed the available shares or net
asset value of your account at the next determined
prices. If your request exceeds these limits, then the
trade will be rejected in its entirety.
Mail your request to:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
Our courier address is:
IVY MACKENZIE SERVICES CORP.
700 SOUTH FEDERAL HIGHWAY, SUITE 300
BOCA RATON, FL 33432
BY TELEPHONE: Individual and joint accounts may
redeem up to $50,000 per day over the telephone by
contacting IMSC at 1-800-777-6472. In times of unusual
economic or market changes, the telephone redemption
privilege may be difficult to implement. If you are
unable to execute your transaction (for example, during
such times), you may want to consider placing the order in
writing and sending it by mail or overnight courier.
Checks will be made payable to the current account
registration and sent to the address of record. If there
has been a change of address in the last 30 days,
please use the instructions for redemption requests by
mail described above. A signature guarantee would be
required.
Requests for telephone redemptions will be accepted
from the registered owner of the account, the
designated registered representative or his/her
assistant.
Shares held in certificate form cannot be redeemed
by telephone.
If Section 6E of the Account Application is not
completed, telephone redemption privileges will be
provided automatically. Although telephone redemptions
may be a convenient feature, you should realize that
you may be giving up a measure of security that you may
otherwise have if you terminated the privilege and
redeemed your shares in writing. If you do not wish to make
telephone redemptions or permit your registered representative
or his/her assistant to do so on your behalf, you must
notify IMSC in writing.
The Fund employs reasonable procedures that require
personal identification prior to acting on redemption
instructions communicated by telephone to confirm that
such instructions are genuine. In the absence of such
procedures, the Fund may be liable for any losses due
to unauthorized or fraudulent telephone instructions.
CHECK WRITING: With respect to Mackenzie Limited
Term Municipal Fund, check writing is available on
Class A shares of the Fund. Checks must be written for
a minimum of $500. You may sign up for this option by
completing Section 8 (Check Writing Enrollment) on the
last page of the Account Application. If the Class A
shares to be redeemed have been purchased by check,
availability of the shares for redemption by check may be delayed
until your check clears or for up to 15 calendar days
after the date of purchase, whichever is less.
In order to qualify for check writing, Fund
shareholders must maintain a minimum average balance of
$1,000. Class A shares must be unissued (held at the
Fund) for any account requesting check writing
privileges.
Checks can be reordered by calling IMSC at
1-800-777-6472. Checking activity is reported on your
statement, and cancelled checks are returned to you
each month. There is no limitation on the number of
checks a shareholder may write.
Checks written on the Fund are redemptions of
shares and considered taxable events by the IRS. As
such, any capital gain realized must be reported on
your income tax return.
When a check is presented for payment, the Fund
redeems a sufficient number of Class A shares to cover
the amount of the check. Checks written on accounts
with insufficient shares will be returned to the payee
marked "non-sufficient funds." There is a nominal
charge for each supply of checks, copies of canceled
checks, stop payment orders, checks drawn for amounts less than
the Fund minimum (see above) and checks returned for
"non-sufficient funds." To pay for these charges, the Fund
automatically redeems an appropriate number of the
shareholder's Class A shares after the charges are
incurred.
You may not close your Fund account by writing a
check because any earned dividends will remain in your
account. Check writing is not available for accounts in
Class B of the Fund. The Fund reserves the right to
change, modify or terminate the check writing service
at any time upon notification mailed to the address of
record of the shareholder(s).
BY FEDERAL FUNDS WIRE: For shareholders who
established this feature at the time they opened their
new account, telephone instructions will be accepted
for redemption amounts up to $50,000 ($1,000 minimum)
and proceeds will be wired on the next business day to
a predesignated bank account.
In order to add this feature to an existing account
or change existing bank account information, please
submit a letter of instructions including your bank
information to IMSC at the address provided above. The
letter must be signed by all registered owners, and
their signatures must be guaranteed.
Your account will be charged a $10 fee each time
redemption proceeds are wired to your bank.
Neither IMSC nor the Fund can be responsible for
the efficiency of the Federal Funds wire system or the
shareholder's bank.
MINIMUM ACCOUNT BALANCE REQUIREMENTS
Due to the high cost of maintaining small accounts
and subject to state law requirements, the Fund may
redeem the accounts of shareholders who have maintained
an investment, including sales charges paid, of less
than $1,000 for more than 12 months. No redemption will
be made unless the shareholder has
been given at least 60 days notice of the Fund's
intention to redeem the shares. No redemption will be
made if a shareholder's account falls below the minimum
due to a reduction in the value of the Fund's portfolio
securities.
SIGNATURE GUARANTEES
For your protection, and to prevent fraudulent
redemptions, we require a signature guarantee in order
to accommodate the following requests:
- Redemption requests over $50,000.
- Requests for redemption proceeds to be sent to
someone other than the registered shareholder.
- Requests for redemption proceeds to be sent to an
address other than the address of record.
- Registration transfer requests.
- Requests for redemption proceeds to be wired to
your bank account (if this option was not
selected on your original application, or if you
are changing the bank wire information).
A signature guarantee may be obtained only from an
eligible guarantor institution. An eligible guarantor
institution includes banks, brokers, dealers, municipal
securities dealers, government securities dealers,
government securities brokers, credit unions, national
securities exchanges, registered securities
associations, clearing agencies and savings associations. The
signature guarantee must not be qualified in any way.
Notarizations from notary publics are not the same as signature
guarantees, and are not accepted.
Circumstances other than those described above may
require a signature guarantee. Please contact IMSC at
1-800-777-6472 for more information.
CHOOSING A DISTRIBUTION OPTION
You have the option of selecting the dividend and
capital gain distribution option that best suits your
needs:
1. AUTOMATIC REINVESTMENT OPTION -- Both dividends
and capital gains are automatically reinvested at
net asset value in additional shares of the same
class of the Fund unless you specify one of the
other options.
2. INVESTMENT IN ANOTHER IVY OR MACKENZIE FUND --
Both dividends and capital gains are automatically
invested at net asset value in another Ivy or
Mackenzie Fund of the same class.
3. DIVIDENDS IN CASH/CAPITAL GAINS REINVESTED --
Dividends will be paid in cash. Capital gains will
be reinvested at net asset value in additional
shares of the same class of the Fund or another
Ivy or Mackenzie fund of the same class.
4. DIVIDENDS AND CAPITAL GAINS IN CASH -- Both
dividends and capital gains will be paid in cash.
If you wish to have your cash distributions
deposited directly to your bank account via electronic
funds transfer, or if you wish to change your
distribution option, please contact IMSC at
1-800-777-6472.
If you wish to have your cash distributions go to
an address other than the address of record, a
signature guarantee is required.
TAX IDENTIFICATION NUMBER
In general, to avoid being subject to a 31%
Federal backup withholding tax on dividends, capital
gain distributions and redemption proceeds, you must
furnish the Fund with your certified tax identification
number ("TIN") and certify that you are not subject to
backup withholding due to prior under-reporting of
interest and dividends to the IRS. If you fail to
provide a certified TIN, or such other tax-related
certifications as the Fund may require, within 30 days of opening
your new account, the Fund reserves the right to
involuntarily redeem your account and send the proceeds
to the address of record.
You can avoid the above withholding and/or
redemption by correctly furnishing your TIN and making
certain certifications in Section 2 of the Account
Application at the time you open your new account,
unless the IRS requires that backup withholding be
applied to your account.
Certain payees, such as corporations, generally are
exempt from backup withholding. Please complete IRS
Form W-9 with the Account Application to claim the
exemption. If the registration is for a UGMA/UTMA
account, please provide the social security number of
the minor. Non-U.S. investors who do not have a TIN
must provide, with the Account Application, a completed IRS Form
W-8.
CERTIFICATES
In order to facilitate transfers, exchanges and
redemptions, most shareholders elect not to receive
certificates. Should you wish to have a certificate
issued, please contact IMSC at 1-800-777-6472 and
request that one be sent to you. Please note that if
you were to lose your certificate, you would incur an
expense to replace it.
Certificates for shares valued up to $50,000
will be issued to the current registration and mailed
to the address of record. Should you wish to have your
certificates mailed to a different address, or
registered differently from the current registration,
you must provide a letter of instruction, signed by all
registered owners with signature guarantee. The letter of
instruction would then be mailed to IVY MACKENZIE SERVICES
CORP., P.O. BOX 3022, BOCA RATON, FL 33431-0922.
EXCHANGE PRIVILEGE
Shareholders of the Fund have an exchange
privilege with other Ivy and Mackenzie funds. Class A
shareholders may exchange their outstanding Class A
shares for Class A shares of another Ivy or Mackenzie
fund on the basis of the net asset value per Class A
share, plus an amount equal to the difference between the
sales charge previously paid on the outstanding Class A shares
and the sales charge payable at the time of the exchange
on the new Class A shares. Incremental sales charges
are waived for outstanding Class A shares that have
been invested for 12 months or longer.
Class B shareholders may exchange their Class B
shares for Class B shares of another Ivy or Mackenzie
fund on the basis of the net asset value per Class B
share, without the payment of any contingent deferred
sales charge that would otherwise be due upon the
redemption of Class B shares. Class B shareholders who
exercise the exchange privilege would continue to be subject to
the Fund's contingent deferred sales charge schedule (or
period) following an exchange if such schedule is
higher (or longer) than the contingent deferred sales
charge for the new Class B shares.
Shares resulting from the reinvestment of
distributions will not be charged an initial sales
charge or a contingent deferred sales charge when
exchanged into another Ivy or Mackenzie fund.
Exchanges are considered to be taxable events, and
may result in a capital gain or a capital loss for tax
purposes. Prior to executing an exchange, you should
obtain and read the prospectus and consider the
investment objective of the fund to be purchased.
Shares must be unissued in order to execute an
exchange. Exchanges are available only in states where they can
be legally made. This privilege is not intended to provide
shareholders a means by which to speculate on short-term
movements in the market. Exchanges are accepted only if
the registrations of the two accounts are identical.
Amounts to be exchanged must meet minimum investment
requirements for the Ivy or Mackenzie fund into which
the exchange is made.
With respect to Fund shares subject to a contingent
deferred sales charge, if less than all of an
investment is exchanged out of the Fund, the shares
exchanged will reflect, pro rata, the
cost, capital appreciation and/or reinvestment of
distributions of the original investment as well as the
original purchase date, for purposes of calculating any
contingent deferred sales charge for future redemptions
of the exchanged shares.
An investor who was a shareholder of American
Investors Income Fund, Inc. or American Investors
Growth Fund, Inc. prior to October 31, 1988, or a
shareholder of Ivy Fund prior to December 31, 1991, who
became a shareholder of the Fund as a result of a
reorganization or merger between the Funds may exchange
between funds without paying a sales charge. An investor
who was a shareholder of American Investors Income Fund, Inc. or
American Investors Growth Fund, Inc. on or after October
31, 1988 who became a shareholder of the Fund as a
result of the reorganization between the Funds will
receive credit toward any applicable sales charge
imposed by any Ivy or Mackenzie fund into which an
exchange is made.
In calculating the sales charge assessed on an
exchange, shareholders will be allowed to use the
Rights of Accumulation privilege.
EXCHANGES BY TELEPHONE: When you fill out the
application for your purchase of Fund shares, if
Section 6E of the new Account Application is not
completed, telephone exchange privileges will be
provided automatically. Although telephone exchanges
may be a convenient feature, you should realize that
you may be giving up a measure of security that you may otherwise
have if you terminated the privilege and exchanged your
shares in writing. If you do not wish to make telephone
exchanges or permit your registered representative or
his/her assistant to do so on your behalf, you must
notify IMSC in writing.
In order to execute an exchange, please contact
IMSC at 1-800-777-6472. Have the account number of your
current fund and the exact name in which it is
registered available to give to the telephone
representative.
The Fund employs reasonable procedures that require
personal identification prior to acting on exchange
instructions communicated by telephone to confirm that
such instructions are genuine. In the absence of such
procedures, the Fund may be liable for any losses due
to unauthorized or fraudulent telephone instructions.
EXCHANGES IN WRITING: In a letter, request an
exchange and provide the following information:
- The name and class of the Fund whose shares you
currently own.
- Your account number
- The name(s) in which the account is registered.
- The name of the Fund in which you wish your
exchange to be invested.
- The number of shares, all shares or the dollar
amount you wish to exchange.
The request must be signed by all registered
owners.
Mail the request and information to:
IVY MACKENZIE SERVICES CORP.
P.O. BOX 3022
BOCA RATON, FL 33431-0922
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of
Mackenzie National Municipal Fund, Mackenzie California
Municipal Fund or Mackenzie New York Municipal Fund
have a one-time privilege of reinvesting all or a part
of the proceeds of the redemption back into Class A
shares of the Fund at net asset value (without a sales
charge), within 60 days after the date of redemption.
Investors who have redeemed Class A shares Mackenzie Limited Term
Municipal Fund have an unlimited privilege of
reinvesting all or a part of the proceeds of the
redemption back into class A shares of the Fund at net
asset value (without a sales charge) within 24 months
after the date of redemption. IN ORDER TO REINVEST WITHOUT
A SALES CHARGE, SHAREHOLDERS OR THEIR BROKERS MUST INFORM IMSC
THAT THEY ARE EXERCISING THE REINVESTMENT PRIVILEGE AT
THE TIME OF REINVESTMENT. The tax status of a gain
realized on a redemption generally will not be affected
by the exercise of the reinvestment privilege, but a
loss realized on a redemption generally may be
disallowed by the IRS if the reinvestment privilege is
exercised within 30 days after the redemption. In
addition, upon a reinvestment, the shareholder may not be
permitted to take into account sales charges incurred on the
original purchase of shares in computing their taxable gain
or loss.
SYSTEMATIC WITHDRAWAL PLAN
You must elect the Systematic Withdrawal Plan at
any time by completing the Account Application, which
is attached to this Prospectus. You can also obtain
this application by contacting your registered
representative or IMSC at 1-800-777-6472. To be
eligible, you must have at least $5,000 in your account. Payments
(minimum distribution amount -- $50) from your account
can be made monthly, quarterly, semi-annually, annually
or on a selected monthly basis, to yourself or any
other designated payee. You may elect to have your
systematic withdrawal paid directly to your bank
account via electronic funds transfer ("EFT"). Share
certificates must be unissued (held by the Fund) while
the Systematic Withdrawal Plan is in effect. A
Systematic Withdrawal Plan may not be established if
you are currently participating in the Automatic
Investment Method. For more information, please contact
IMSC at 1-800-777-6472.
If payments you receive through the Systematic
Withdrawal Plan exceed the dividends and capital
appreciation of your account, you will be reducing the
value of your account. Additional investments made by
shareholders participating in the Systematic Withdrawal
Plan must equal at least $1,000 while the plan is in
effect. However, it may not be advantageous to purchase
additional Class A or Class B shares when you have a
Systematic Withdrawal Plan, because you may be subject to an
initial sales charge on your purchase of Class A shares or to
a contingent deferred sales charge imposed on your
redemptions of Class B shares. In addition, redemptions
are taxable events.
Amounts paid to you through the Systematic
Withdrawal Plan are derived from the redemption of
shares in your account. Any applicable contingent
deferred sales charge will be assessed upon redemption.
A contingent deferred sales charge will not be assessed
on withdrawals not exceeding 12% annually of the initial
account balance when the Systematic Withdrawal Plan was started.
Should you wish at any time to add a Systematic
Withdrawal Plan to an existing account or change payee
instructions, you will need to submit a written
request, signed by all registered owners, with
signatures guaranteed.
If the U.S. Postal Service cannot deliver your
checks, or if deposits to a bank account are returned
for any reason, your redemptions will be discontinued.
AUTOMATIC INVESTMENT METHOD
You may authorize an investment to be
automatically drawn each month from your bank for
investment in Fund shares under the "Automatic
Investment Method" and "Fed Wire/EFT" sections of the
Account Application. There is no charge to you for this program.
You may terminate or suspend your Automatic
Investment Method by telephone at any time by
contacting IMSC at 1-800-777-6472.
If you have investments being withdrawn from a bank
account and we are notified that the account has been
closed, your Automatic Investment Method will be
discontinued.
CONSOLIDATED ACCOUNT STATEMENTS
Shareholders with two or more Ivy or Mackenzie fund
accounts will receive a single quarterly account
statement, unless otherwise specified. This feature
consolidates the activity for each account onto one
statement. Requests for quarterly
consolidated statements for all other accounts must be
submitted in writing and must be signed by all
registered owners.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds should be directed to
IMSC at 1-800-777-6472.
<TABLE>
<S> <C>
ACCOUNT APPLICATION
MACKENZIE LIMITED TERM MUNICIPAL FUND
MACKENZIE NATIONAL MUNICIPAL FUND
MACKENZIE CALIFORNIA MUNICIPAL FUND
MACKENZIE NEW YORK MUNICIPAL FUND
Please mail applications and checks to: Ivy
Mackenzie Services Corp., P.O. Box 3022, Boca Raton, FL
33431-0922.
(This application should not be used for
retirement accounts for which Ivy is
custodian.)
_________________________________________________________________
FUND USE ONLY
_______________________ _____________ _____________
__________ Account Number Dealer#
Branch# Rep. I.D.#
_________________________________________________________________
_________________________________________________________________
1 REGISTRATION
/ / Individual
_____________________________________________ / / Joint
Tenant Owner, Custodian or Trustee
/ / Estate
/ / UGMA/UTMA
_____________________________________________ / /
Corporation Co-owner or Minor
/ / Partnership
/ / Sole Proprietor
_____________________________________________ / / Trust
Minor's State of Residence
_________________
_____________________________________________ Date of
Trust Street
/ / Other________
_____________________________________________
_________________ City State Zip Code
- - -
- - Phone Number -- Day Phone Number
- -- Evening
_________________________________________________________________
_________________________________________________________________
2 TAX ID#
- - or - -
Social Security Number Tax Identification Number
Citizenship / / U.S. / / Other_____
Under penalties of perjury, I certify by signing in
Section 9 below that: (1) the number shown in this
section is my correct taxpayer identification number
(TIN), and (2) I am not subject to backup withholding
because: (a) I have not been notified by the Internal
Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (b) the IRS has notified me that I am no
longer subject to backup withholding. (Cross out item
(2) if you have been notified by the IRS that you are
currently subject to backup withholding because of
underreporting interest or dividends on your tax
return.) Please see the "Tax Identification Number"
section of the Prospectus for additional information on
completing this section.
_________________________________________________________________
_________________________________________________________________
3 DEALER INFORMATION
The undersigned ("Dealer") agrees to all applicable
provisions in this Application, guarantees the
signature and DEALER legal capacity of the Shareholder,
and agrees to notify IMSC of any purchases made under a
Letter of Intent or Rights INFORMATION of Accumulation.
_____________________________
________________________________ Dealer Name
Representative's Name and Number
_____________________________
________________________________ Branch Office Address
Representative's Phone Number
_____________________________
________________________________ City State
Zip Code Authorized Signature of Dealer
_________________________________________________________________
_________________________________________________________________
4 INVESTMENTS
A. Enclosed is my check for $ _______________($1,000
minimum) made payable to the appropriate Fund. Please
invest it in the following Fund(s):
$ _______________ Mackenzie Limited Term Municipal
Fund Class A / / or Class B / / shares
$ _______________ Mackenzie National Municipal
Fund Class A / / or Class B / / shares
$ _______________ Mackenzie California Municipal
Fund Class A / / or Class B / / shares
$ _______________ Mackenzie New York Municipal
Fund Class A / / or Class B / / shares
B. I qualify for a reduced sales charge due to the
following privilege (applies only to Class A shares):
/ / New Letter of Intent (if ROA or 90-day
backdate privilege is applicable, provide
account(s) information below.)
/ / ROA with the account(s) listed below.
/ / Existing Letter of Intent with account(s)
listed below.
____________________________ ____________________
/ / or New Fund Name Account
Number
____________________________ ____________________
/ / or New Fund Name Account
Number
If establishing a Letter of Intent, you will need to
purchase Class A shares over a thirteen-month period in
accordance with the provisions in the Prospectus. The
aggregate amount of these purchases will be at least
equal to the amount indicated below (see Prospectus for
minimum amount required for reduced sales charges).
/ / $25,000 / / $100,000 / / $250,000 / /
$500,000
C. FOR DEALER USE ONLY
Confirmed trade orders:
______________ ________________ -- _______
_____________ Confirm Number Number of Shares
Trade Date
_________________________________________________________________
_________________________________________________________________
5 DISTRIBUTION OPTIONS
A. I would like to reinvest dividends and capital
gains into additional shares of the same class in
this account at net asset value unless a different
option is checked below.
B. / / Reinvest all dividends and capital gains into
additional shares of the same class in an account
in a different Ivy or Mackenzie fund.
_______________________ ____________________ / /
New Account Fund Name Account Number
C. / / Pay all dividends in cash and reinvest capital
gains into additional shares of the same class in
this account or an account in a different Ivy or
Mackenzie fund.
_______________________ ____________________ / /
New Account Fund Name Account Number
D. / / Pay all dividends and capital gains in cash.
I REQUEST THE ABOVE CASH DISTRIBUTION,
SELECTED IN C OR D ABOVE, BE:
/ / Sent to the address listed in the
registration. / / Sent to the special payee listed
in Section 7A / / (By Mail)
7B / / (By E.F.T.)
_________________________________________________________________
_________________________________________________________________
6 OPTIONAL SPECIAL FEATURES
A. / / AUTOMATIC INVESTMENT METHOD (AIM)
My bank account
I wish to invest will be debited on or
about the / / once per month.
_________________ day of the month / / twice
_________________ day of the month / / 3
times _________________ day of the month
/ / 4 times _________________ day of the month*
Please invest $ _____________ each period starting
in the Dollar Amount
month of _______ in Class A / / or Class B / / of
Month
_________________ .
Fund Name
/ / I have attached a voided check to ensure my
correct bank account will be debited.
* There must be a period of at least seven
calendar days between each investment period.
B. / / SYSTEMATIC WITHDRAWAL PLANS*
I wish to automatically withdraw funds from my
account in Class A / / or Class B / / of ___________
Fund Name
/ / Once / / Twice / / 3 times / / 4 times per
month
/ / Monthly / / Quarterly / / Semiannually / /
Annually I request the distribution be:
/ / Sent to the address listed in the
registration. / / Sent to the special payee listed
in Section 7. / / Invested into additional shares
of the same class of a different Ivy or Mackenzie
fund:
_______________________________
Fund Name
___________________________
Account Number
Amount $ _______________, starting on or about the
Minimum $50
________ day of the __________________________
month
________ day of the __________________________
month
________ day of the __________________________
month**
(choose one)
NOTE: Account minimum: $5,000 in shares at
current offering price)
** There must be a period of at least seven
calendar days between each withdrawal period.
C. / / FEDERAL FUNDS WIRE FOR REDEMPTION PROCEEDS*
I authorize the Agent to honor telephone instructions
for the redemption of Fund shares up to $50,000.
Proceeds may be wire transferred to the bank account
designated ($1,000 minimum). Shares issued in
certificate form may not be redeemed under this
privilege. (COMPLETE SECTION 7B)
D. / / TELEPHONIC EXCHANGES* / / YES / / NO
I authorize exchanges by telephone among the Ivy
and Mackenzie family of funds, upon instructions from
any person as more fully described in the Prospectus.
To change this option once established, written
instructions must be received from the shareholder of
record or the current registered representative.
If neither box is checked, the telephone
exchange privilege will be provided automatically.
E. / / TELEPHONIC REDEMPTIONS* / / YES / / NO
A Fund or its agents are authorized to honor
telephone instructions from any person as more fully
described in the Prospectus for the redemption of Fund
shares. The amount of the redemption shall not exceed
$50,000 and the proceeds are to be payable to the
shareholder of record and mailed to the address of
record. To change this option once established, written
instructions must be received from the shareholder of record or
the current registered representative.
If neither box is checked, the telephone
exchange privilege will be provided automatically.
*MAY NOT BE USED IF
SHARES ARE ISSUED IN CERTIFICATE FORM.
_________________________________________________________________
_________________________________________________________________
7 SPECIAL PAYEE
A. MAILING ADDRESS
____________________________________________________________
Please send all disbursements to this special
payee
____________________________________________
Name of Bank or Individual
____________________________________________
Account Number (if applicable)
____________________________________________
Street
____________________________________________
City/State/Zip
B. FED WIRE / E.F.T. INFORMATION
____________________________________________
Financial Institution
____________________________________________
ABA # Account #
____________________________________________
Street
____________________________________________
City/State/Zip
(Please attach a voided check)
_________________________________________________________________
_________________________________________________________________
8 CHECK WRITING ENROLLMENT FORM
MACKENZIE LIMITED TERM MUNICIPAL FUND
(checks must be written for a minimum of $500)
Check writing privileges are available to Class
A shareholders of Mackenzie Limited Term Municipal
Fund. Class A shares purchased in the Fund may be
subject to a holding period of up to 15 calendar days
before being redeemed by check. Please see this
Prospectus for details.
HOW TO ENROLL
1. ALL REGISTERED OWNERS MUST SIGN THIS FORM
IN THE SPACE PROVIDED BELOW.
2. Check the appropriate Number of
Signatures Required box to indicate the number of
signatures required when writing checks.
NUMBER OF SIGNATURES REQUIRED
/ / All signatures are required / / One
signature is required / / More than one signature is
required ___________________
number of signatures required
IF NONE OF THE ABOVE IS CHECKED THEN ALL
SIGNATURES WILL BE REQUIRED
_________________________________________________________________
Authorized Signature
Date
_________________________________________________________________
Authorized Signature
Date
_________________________________________________________________
Authorized Signature
Date
_________________________________________________________________
Authorized Signature
Date
_________________________________________________________________
_________________________________________________________________
9 SIGNATURES
Investors should be aware that failure to check "No"
under Section 6D or 6E above means that the Telephone
Exchange/Redemptions Privileges will be provided. The
Funds employ reasonable procedures that require
personal identification prior to acting on
exchange/redemption instructions communicated by
telephone to confirm that such instructions are genuine. In
the absence of such procedures, a Fund may be liable for any
losses due to unauthorized or fraudulent telephone
instructions. Please see "Exchange Privilege" and "How
to Redeem Shares" in the Prospectus for more
information on these privileges.
I certify to my legal capacity to purchase or redeem
shares of the Fund for my own account or for the
account of the organization named in Section 1. I have
received a current Prospectus and understand its terms
are incorporated in this application by reference. I am
certifying my taxpayer information as stated in Section
2.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR
CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
___________________________________________________________ _____
Signature of Owner, Custodian, Trustee or Corporate
Officer Date
___________________________________________________________ _____
Signature of Joint Owner, Co-Trustee or Corporate
Officer Date
MUNI-1-1096 (Remember to Sign
Section 9)
</TABLE>
MACKENZIE LIMITED TERM MUNICIPAL FUND
MACKENZIE NATIONAL MUNICIPAL FUND
MACKENZIE CALIFORNIA MUNICIPAL FUND
MACKENZIE NEW YORK MUNICIPAL FUND
series of
MACKENZIE SERIES TRUST
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
STATEMENT OF ADDITIONAL INFORMATION
October 25, 1996
_________________________________________________________________
Mackenzie Series Trust (the "Trust") is a
diversified open- end management investment company that
consists of four fully managed portfolios, which are
offered hereby. This Statement of Additional
Information ("SAI") describes the four portfolios
listed above (each, a "Fund," and collectively, the "Funds").
This SAI is not a prospectus and should be read in
conjunction with the prospectus for the Funds dated
October 25, 1996 (the "Prospectus"), which may be
obtained without charge from the Trust at the
Distributor's address and telephone number listed
below.
INVESTMENT MANAGER
Mackenzie Investment Management Inc. ("MIMI")
Via Mizner Financial Plaza, Suite 300
700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
DISTRIBUTOR
Mackenzie Ivy Funds Distribution, Inc.
("IMDI") Via Mizner Financial Plaza,
Suite 300 700 South Federal Highway
Boca Raton, Florida 33432
Telephone: (800) 456-5111
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . .
. . . 4
DEBT SECURITIES, IN GENERAL . . . . . . . . . . . . . .
. . . 4 MUNICIPAL SECURITIES . . . . . . . . . .
. . . . . . . . 4 RISK FACTORS AND SPECIAL
CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL
SECURITIES . . . . . . . . . . . . . 7
RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING
TO NEW YORK MUNICIPAL SECURITIES . . . . . . . . . 17
U.S. GOVERNMENT SECURITIES . . . . . . . . . . . . . . .
26 INVESTMENT-GRADE DEBT SECURITIES . . . . . . .
. . . . . 27 BANKING INDUSTRY AND SAVINGS AND
LOAN OBLIGATIONS . . . 27 COMMERCIAL PAPER . . .
. . . . . . . . . . . . . . . . . 28 REPURCHASE
AGREEMENTS . . . . . . . . . . . . . . . . . 28
BORROWING . . . . . . . . . . . . . . . . . . . . . . . 28
RESTRICTED AND ILLIQUID SECURITIES . . . . . . . . . . .
29 TEMPORARY INVESTMENTS . . . . . . . . . . . .
. . . . . 29 MACKENZIE NATIONAL MUNICIPAL
FUND, MACKENZIE CALIFORNIA MUNICIPAL FUND AND
MACKENZIE NEW YORK MUNICIPAL FUND ONLY . . .
. . . . . . . . . . . . . 30 OTHER INVESTMENT
TECHNIQUES . . . . . . . . . . . . . . 31
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 31
ADDITIONAL RESTRICTIONS . . . . . . . . . . . . . . . .
. . . 33
ADDITIONAL RIGHTS AND PRIVILEGES . . . . . . . . . . .
. . . 34 AUTOMATIC INVESTMENT METHOD . . . . . .
. . . . . . . . 35 EXCHANGE OF SHARES . . . . . .
. . . . . . . . . . . . . 35 INITIAL SALES
CHARGE SHARES . . . . . . . . . . . . 35
CONTINGENT DEFERRED SALES CHARGE SHARES . . . . . . 35
LETTER OF INTENT . . . . . . . . . . . . . . . . . . . . 38
REINVESTMENT PRIVILEGE . . . . . . . . . . . . . . .
. . 39 RIGHTS OF ACCUMULATION . . . . . . . . . .
. . . . . . . 40 SYSTEMATIC WITHDRAWAL PLAN . . .
. . . . . . . . . . . . 40
BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . .
. . . 41
TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . .
. . . 43 PERSONAL INVESTMENTS BY EMPLOYEES OF THE
ADVISER . . . . 46
COMPENSATION TABLE . . . . . . . . . . . . . . . . . .
. . . 47
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . .
. . . 48 BUSINESS MANAGEMENT AND INVESTMENT
ADVISORY SERVICES . . 48 DISTRIBUTION SERVICES .
. . . . . . . . . . . . . . . . 50 RULE
18F-3 PLAN . . . . . . . . . . . . . . . . . . 52
RULE 12b-1 DISTRIBUTION PLANS . . . . . . . . . . . 53
RULE 12B-1 PAYMENTS BY THE FUNDS FOR DISTRIBUTION-
RELATED SERVICES . . . . . . . . . . . . . .
. 54 DISTRIBUTION-RELATED EXPENSES BORNE BY
IMDI . . . . 55
CUSTODIAN . . . . . . . . . . . . . . . . . . . .
. . . 56 FUND ACCOUNTING . . . . . . . . . . . .
. . . . . . . . 56 TRANSFER AND DIVIDEND PAYING
AGENT . . . . . . . . . . . 57 ADMINISTRATOR . .
. . . . . . . . . . . . . . . . . . . 57 AUDITORS
. . . . . . . . . . . . . . . . . . . . . . . . 57
CAPITALIZATION AND VOTING RIGHTS . . . . . . . . . . .
. . . 58 PRINCIPAL HOLDERS OF SECURITIES . .
. . . . . . . . 59
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .
. . . 60
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . .
. . . 61
REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . .
. . . 61
CONVERSION OF CLASS B SHARES . . . . . . . . . . . . .
. . . 63
TAXATION . . . . . . . . . . . . . . . . . . . . . . .
. . . 64 GENERAL . . . . . . . . . . . . . . . .
. . . . . . . . 64 DISCOUNT . . . . . . . . . . .
. . . . . . . . . . . . . 65 DISTRIBUTIONS . . .
. . . . . . . . . . . . . . . . . . 66
DISPOSITION OF SHARES . . . . . . . . . . . . . . . . . 67
BACKUP WITHHOLDING . . . . . . . . . . . . . . . . . . .
68 OTHER TAXATION . . . . . . . . . . . . . . . .
. . . . . 68 SPECIAL INFORMATION RELATING TO
MACKENZIE CALIFORNIA MUNICIPAL FUND . . . .
. . . . . . . . . . . . . . 69 SPECIAL
INFORMATION RELATING TO MACKENZIE NEW YORK
MUNICIPAL FUND . . . . . . . . . . . . . . . . . . 70
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . .
. . . 70 YIELD . . . . . . . . . . . . . . .
. . . . . . . . 70 TAX-EQUIVALENT YIELD . .
. . . . . . . . . . . . . 71 AVERAGE ANNUAL
TOTAL RETURN . . . . . . . . . . . . 72
CUMULATIVE TOTAL RETURN . . . . . . . . . . . . . . 78
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . .
. . . 83
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND MOODY'S INVESTORS SERVICE, INC.
("MOODY'S") CORPORATE BOND, COMMERCIAL PAPER AND
MUNICIPAL OBLIGATIONS RATINGS . . . . . . . . . .
. . . . . . . . 84
APPENDIX B
TAX-EXEMPT VS. TAXABLE INCOME . . . .
. . . 91
INVESTMENT OBJECTIVES AND POLICIES
Mackenzie Series Trust (the "Trust") is a
diversified open- end management investment company
organized as a Massachusetts business trust on April
22, 1985 under the name Industrial Series Trust. The
Funds' investment objectives and general investment
policies are described in the Prospectus. Additional information
concerning the characteristics of the Funds' investments
is set forth below.
DEBT SECURITIES, IN GENERAL
Investment in debt securities involves both
interest rate and credit risk. Generally, the value of
debt instruments rises and falls inversely with
fluctuations in interest rates. As interest rates
decline, the value of debt securities generally
increases. Conversely, rising interest rates tend to cause the
value of debt securities to decrease. Bonds with longer
maturities generally are more volatile than bonds with
shorter maturities. The market value of debt securities
also varies according to the relative financial
condition of the issuer. In general, lower-quality
bonds offer higher yields due to the increased risk
that the issuer will be unable to meet its obligations
on interest or principal payments at the time called
for by the debt instrument.
MUNICIPAL SECURITIES
To achieve its investment objectives as described
in the Fund's Prospectus, each Fund may invest in
"investment grade" municipal securities, i.e.,
securities within the four highest rating categories
for Moody's Investors Service, Inc. ("Moody's) or
Standard & Poor's Corporation ("S&P"). A description of the
ratings is contained in Appendix A to this SAI. Baa
securities are considered "medium grade" obligations by
Moody's, and BBB is the lowest classification which is
still considered an "investment grade" rating by S&P.
Baa securities are described by Moody's as obligations
on which "[i]nterest payments and principal security
appear adequate for the present but certain protective
elements may be lacking or may be characteristically
unreliable over any great length of time." According to Moody's,
"[s]uch bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well." The ratings of Moody's and
S&P represent their respective opinions of the
qualities of the securities they undertake to rate and such
ratings are general and are not absolute standards of
quality.
Each Fund may invest in both "general obligation
bonds" and "revenue bonds." General obligation bonds
are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal
and interest. Revenue bonds are payable from the
revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special
excise tax or other specific revenue source, but not
from the general taxing power. Municipal bonds are
issued for various public purposes, including
construction of a wide range of public facilities such
as bridges, highways, housing, hospitals, mass
transportation, schools, streets, and water and sewer works.
Other public purposes for which municipal bonds may be
issued include the refunding of outstanding
obligations, obtaining funds for general operating
expenses and obtaining funds to loan to other public
institutions and facilities, including certain types of
industrial facilities for water supply, gas, electricity or
sewage or solid waste disposal.
Industrial development bonds which pay tax-exempt
interest are, in most cases, revenue bonds and do not
generally carry the pledge of the full faith and credit
of the issuer of such bonds. The payment of the
principal and interest on such industrial development
bonds depends solely on the ability of the user of the
facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property
so financed as security for such payment. A Fund will
not invest more than 5% of its assets in securities
where the principal and interest are the responsibility
of an industrial user with less than three years'
operational history. In addition, a Fund will not
invest in industrial development bonds for the use of
privately-owned electric utilities.
There are, depending on numerous factors,
variations in the risks involved in holding municipal
securities, both within a particular rating
classification and between classifications. The market
values of outstanding municipal bonds will vary as a
result of the rating of the issue and changing evaluations of the
ability of the issuer to meet interest and principal
payments. Such market values will also change in
response to changes in the interest rates payable on
new issues of municipal bonds. Should such interest
rates rise, the values of outstanding bonds, including
those held in a Fund's portfolio, would decline; should
such interest rates decline, the values of outstanding bonds
would increase.
As a result of litigation or other factors, the
power or ability of issuers of municipal bonds to pay
principal and/or interest might be adversely affected.
Municipal securities are subject to the provisions of
bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the Federal
Bankruptcy Code, and laws, if any, which may be enacted
by Congress, state legislatures extending the time for payment of
principal or interest or both, or imposing other
constraints upon enforcement of such obligations or
upon the power of municipalities to levy taxes.
A Fund may invest without percentage limitations
in issues of municipal securities which have similar
characteristics, such as the location of their issuers
in the same geographic region or the derivation of
interest payments from revenues or similar
projects (for example, electric utility systems,
hospitals, or housing finance agencies). Consequently,
a Fund's portfolio of municipal securities may be more
susceptible to the risks of adverse economic,
political, or regulatory developments than would be the
case with a portfolio of securities required to be more
diversified as to geographic region and/or source of
revenue.
For the purpose of certain requirements under the
Investment Company Act of 1940, as amended (the "1940
Act"), and revenues of a political subdivision are
separate from those of the government which created the
subdivision and the security is backed only by the
assets and revenues of the subdivision, the subdivision would
be deemed to be the sole issuer. Similarly, in the case of
an industrial development bond or private activity
bond, if that bond is backed only by the assets and
revenues of the nongovernmental user, then the
nongovernmental user would be deemed to be the sole
issuer. If, however, in either case, the creating
government or some other entity guarantees the security,
the guarantee would be considered a separate security and would
be treated as an issue of the government or other
agency.
Interest on certain types of industrial
development bonds (or private activity bonds)
(generally small issues, and obligations to finance
certain exempt facilities which may be leased to or
used by persons other than the issuer) will not be
exempt from Federal income tax when received by "substantial
users" or persons related to "substantial users" as defined
in the Internal Revenue Code of 1986, as amended (the
"Code"). The term "substantial user" generally
includes any "non-exempt person" who regularly uses in
his or her trade or business a part of a facility
financed from the proceeds of industrial development
bonds. The Funds may invest periodically in industrial
development bonds and private activity bonds and,
therefore, may not be an appropriate investment for entities
which are substantial users of facilities financed by such
bonds or "related persons" of substantial users.
Generally, an individual will not be a related person
of a substantial user under the Code unless the person
or his or her immediate family (spouse, brothers,
sisters and lineal descendants) owns directly or
indirectly in the aggregate more than 50% in value of the
equity of the substantial user.
Legislative developments may affect the value of
the securities in a Fund's portfolio, and therefore the
value of the Fund's shares, as well as the tax-exempt
status of dividends. The Board of Trustees of the
Trust will monitor the progress of any such proposals
to determine what, if any, defensive action may be
taken. If any legislation which would have a material
adverse effect on the ability of a Fund to pursue its objective
were adopted, the investment objective and policies of
that Fund would be reconsidered by the shareholders of
that Fund.
RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING
TO CALIFORNIA MUNICIPAL SECURITIES: The following
information as to certain California state (as used in
this subsection, the "State") risk factors is given to
investors in light of Mackenzie California Municipal
Fund's policy of concentrating its investments in
California municipal issuers. Certain California
constitutional amendments, legislative measures, and voter
initiatives, as discussed below, could adversely affect the
market values and marketability of, or result in default of,
existing obligations, including obligations that may be
held by the Fund. Obligations of the State or local
governments may also be affected by budgetary pressures
affecting the State and economic conditions in the
State. The following information constitutes only a
brief summary, does not purport to be a complete
description and is based on information from sources
believed by the Trust to be reliable, including official
statements relating to securities offerings of California issuers
and periodic publications by national ratings
organizations. Such information, however, has not been
independently verified by the Trust.
Certain California municipal securities held by
the Fund may be obligations of issuers that rely in
whole or in part on State revenues for payment of these
obligations. Property tax revenues and a portion of
the state's General Fund surplus are distributed to
counties, cities and their various taxing entities and the
State assumes certain obligations theretofore paid out of local
funds. Whether and to what extent a portion of the
State's General Fund will be distributed in the future
to counties, cities and their various entities, is
unclear.
Some of the California municipal securities held
by the Fund may be obligations of issuers who rely in
whole or in part on ad valorem real property taxes as a
source of revenue. On June 6, 1978, "Proposition 13"
added Article XIIIA to the California Constitution.
Briefly, Article XIIIA limits ad valorem taxes on real
property and generally restricts the ability of taxing
entities to increase real property tax revenues.
Legislation enacted by the California Legislature
to implement Article XIIIA (Statutes of 1978, Chapter
292, as amended) provides that notwithstanding any
other law, local agencies may not levy any ad valorem
property tax except to pay debt service on indebtedness
approved by the voters prior to July 1, 1978, and any
bonded indebtedness for the acquisition or improvement
of real property approved on or after July 1, 1978 must
be approved by two-thirds of the voters voting on the
proposition. In addition, each county will levy the maximum tax
permitted by Article XIIIA of $4.00 per $100 assessed
valuation. The apportionment of property taxes in
fiscal years after 1978-79 was revised pursuant to
Statutes of 1979, Chapter 282, which provided relief
funds from state moneys beginning in fiscal year
1979-80 and is designed to provide a permanent system for sharing
state taxes and budget funds with local agencies.
Under Chapter 282, cities and counties receive more of
the remaining property tax revenues collected under
Proposition 13, instead of direct state aid. School
districts receive a correspondingly reduced amount of
property taxes, but receive compensation directly from
the state and are given additional relief.
On November 6, 1979, California voters approved
Proposition 4, which added Article XIIIB to the California
Constitution. Article XIIIB may have an adverse impact
on California state and municipal issuers because it
subjects State and local governments to an annual
"appropriations limit," which prohibits them from
spending certain moneys (called "appropriations subject
to limitation") in excess of the imposed appropriations
limit. The State's appropriations limit in each year
is based on the limit for the prior year, adjusted annually
for changes in State per capita personal income and changes in
population, and adjusted, where applicable, for any
transfer of financial responsibility of providing
services to or from another unit of government. As
originally enacted, the appropriations limit was based
on certain 1978-79 expenditures and adjusted annually
to reflect changes in cost-of-living and population.
Starting in the 1991-92 fiscal year, the appropriations limit was
recalculated by taking the actual 1986-87 fiscal year
limit, and applying the annual adjustments as if
Proposition 111 (discussed below) had been in effect.
This recalculation resulted in an increase of $1
billion to the State's appropriations limit in the
1990-91 fiscal year.
On November 4, 1986, California voters approved an
initiative statute known as "Proposition 62." This
statute (i) requires that any tax for general
governmental purposes imposed by local governments be
approved by resolution or ordinance adopted by a two-
thirds vote of the governmental entity's legislative
body and by a majority vote of the electorate of the
governmental entity; (ii) requires that any special tax
(defined as taxes levied for other than general
governmental purposes) imposed by a local governmental entity be
approved by a two-thirds vote of the voters within that
jurisdiction; (iii) restricts the use of revenues from a
special tax to the purposes or for the service for
which the special tax was imposed; (iv) prohibits the
imposition of ad valorem taxes on real property by
local governmental entities except as permitted by
Article XIIIA of the California Constitution; (v) prohibits
the imposition of transaction taxes and sales taxes on the
sale of real property by local governments; (vi)
requires that any tax imposed by a local government on
or after August 1, 1985 be ratified by a majority of
the electorate within two years of the adoption of the
initiative or be terminated by November 15, 1988; (vii)
requires that, in the event a local government fails to
comply with the provisions of this measure, a reduction in the
amount of tax revenue allocated to such local government
occur in an amount equal to the revenues received by
such entity attributable to the tax levied in violation
of the initiative;
and (viii) permits these provisions to be amended
exclusively by the voters of the State. In September
1988 the California Court of Appeals held that it was
unconstitutional to require that local tax measures be
submitted to the electorate, as described in (vi)
above.
On November 8, 1988, voters approved "Proposition
98," which has significantly altered the operation and
effect of the Article XIIIB spending limit, the first
changes since its adoption in 1979. This combined
initiative, constitutional amendment and statute,
called the "Classroom Instructional Improvement and
Accountability Act" (the "Act"), changes State funding of public
education below the university level and the operation of
the State's Appropriations Limit. Specifically,
Proposition 98 requires that (a) the California
Legislature establish a prudent State reserve fund in
an amount as it shall deem reasonable and necessary,
and (b) revenues in excess of amounts permitted to be
spent and which would otherwise be returned pursuant to Article
XIIIB by revision of tax rates or fee schedules, be
transferred and allocated (up to a maximum of 4%) to
the State School Fund and be expended solely for
purposes of instructional improvement and
accountability. No such transfer or allocation of funds will
be required if certain designated State officials determine
that annual student expenditures and class size meet
certain criteria as set forth in Proposition 98. Any
funds allocated to the State School Fund shall cause
the appropriation limits established in Article XIIIB
to be annually increased for any such allocation made
in the prior year.
The Act also amends Article XVI to require that
the State provide a minimum level of funding for public
schools and community colleges. Commencing with the
1988-89 fiscal year, State moneys to support school
districts and community college districts shall equal
or exceed the lesser of: (a) an amount equaling the
percentage of State general revenue bonds for school
districts and community college districts in fiscal year 1986-87,
or (b) an amount equal to the prior year's State general
fund proceeds of taxes appropriated under Article XIIIB
plus allocated proceeds of local taxes, after
adjustment under Article XIIIB. The Act permits the
enactment of legislation, by a two-thirds vote, to
suspend the minimum funding requirement for one year.
"Proposition 111" was approved by the voters and
took effect on July 1, 1990. Among a number of
important provisions, Proposition 111 recalculates
spending limits for the State and local governments,
allows greater annual increases in the limits, allows
the averaging of two years' tax revenues before requiring
action regarding excess tax revenues, reduces the amount of the
funding guarantee in recession years for school districts
and community college districts (but with a floor of
40.9 percent of State General Fund tax revenues),
removes the provision of Proposition 98 which included
excess moneys transferred to school districts and
community college districts in the base calculation for
the next year, limits the amount of State tax revenue over
the limit which would be transferred to school
districts and community college districts, and exempts
increased gasoline taxes and truck weight fees from the
State appropriations limit. Additionally, Proposition
111 exempts from the State appropriations limit funding
for capital outlays.
In the years immediately following enactment, very
few California governmental entities operated near
their appropriations limit; in the mid-to-late 1980's,
however, many entities were at or approaching their
limit. Many local entities have successfully sought
voter approval for 4-year waivers of the limit and,
under Proposition 111, may elect among different
measures of population in setting the limit. During fiscal year
1986-87, State receipts from proceeds of taxes exceeded
its appropriations limit by $1.138 billion, which was
returned to taxpayers. Since that time, appropriations
subject to limitation were under the State limit.
State appropriations are estimated to be approximately
$6.5 billion under the limit for the 1995-96 fiscal
year.
Article XIIIB, like Article XIIIA, may require
further interpretation by both the California
Legislature and the courts to determine its
applicability to specific situations involving the
State and local taxing authorities. Depending upon such
interpretation, Article XIIIB may limit significantly a
governmental entity's ability to budget sufficient funds to meet
debt service on bonds and other obligations.
Certain California municipal securities held by
the Fund may be obligations that are secured in whole
or in part by a mortgage or deed of trust on real
property. Upon the default of a mortgage or deed of
trust with respect to California real property, the
creditor's nonjudicial foreclosure rights under the
power of sale contained in the mortgage or deed of trust are
subject to the constraints imposed by California law upon
transfers of title to real property by private power of
sale. During the three-month period beginning with the
filing of a formal notice of default, the debtor is
entitled to reinstate the home mortgage by making any
overdue payments. Under standard loan servicing
procedures, the filing of the formal notice of default
does not occur unless at least three full monthly
payments have become due and remain unpaid. The power of sale is
exercised by posting and publishing a notice of sale for
a least 20 days after expiration of the three-month
reinstatement period. Therefore, the effective minimum
period for foreclosing on a mortgage could be in excess
of seven months after the initial default. Such time
delays in collections could disrupt the flow of
revenues available to an issuer for the payment of debt
service on the outstanding obligations if such defaults occur
with respect to a substantial number of home mortgages or
deeds of trust securing an issuer's obligations.
Certain California municipal securities held by
the Fund may be obligations that finance the
acquisition of single family home
mortgages for low- and moderate-income mortgagors.
These obligations may be payable solely from revenues
derived from the home mortgages and are subject to the
California statutory limitations on the transfer of
title during foreclosure proceedings as described
above. Under California anti-deficiency legislation,
there is no personal recourse against a mortgagor of a
single family residence purchased with the loan secured by the
mortgage.
Under California law, mortgage loans secured by
single family owner-occupied dwellings may be prepaid
at any time. Prepayment charges on such mortgage loans
may be imposed only with respect to voluntary
prepayments made during the first five years of the
mortgage loan's term, and cannot in any event exceed
six months' advance interest on the amount prepaid in excess of
20% of the original principal amount of the mortgage loan.
This limitation could affect the flow of revenues
available to an issuer for debt service on the
outstanding debt obligations which financed such home
mortgages.
In December 1991, Standard and Poor's Corporation
("S&P") downgraded its rating of the State's general
obligation bonds to "AA" from "AAA". As the State's
economy worsened and its budget deficit swelled, rating
agency officials closely monitored the State's budget
progress. In February 1992, Moody's Investors Service
Inc. ("Moody's") downgraded its rating of the State's
general obligation bonds to "Aa1" from "Aaa". In April 1992, S&P
placed the State's general obligation bonds on its
CreditWatch, indicating the possibility of further
downgrades should the State's budget and recessionary
problems persist. In July 1992, Moody's and S&P
downgraded their ratings of the State's general
obligation bonds to "Aa" from "Aa1", and to "A+" from "AA",
respectively. On July 15, 1993, Moody's confirmed its "Aa"
rating of the State's general obligation bonds. However,
on July 15, 1994, Moody's, S & P and Fitch Investors
Service downgraded their ratings of the State's general
obligation bonds from "Aa" to "A1", "A+" to "A", and
"AA" to "A", respectively.
From mid-1990 until late 1993, California suffered
a prolonged recession coupled with deteriorating fiscal
and budget conditions. During this period, the state
also contended with natural disasters including fires,
a prolonged drought and a major earthquake in the Los
Angeles area (January 1994), a rapidly growing
population, and increasing social service requirements.
Since the start of 1994, however, the State's economy
has been on a steady recovery. Employment has grown by
over 500,000 in 1994 and 1995, and the pre-recession level of
total employment is expected to be matched by early 1996.
The strongest growth has been in export-related
industries, business services, electronics,
entertainment and tourism, all of which have offset the
recession-related losses which were heaviest in
aerospace and defense-related industries (which accounted for
two-thirds of the job losses), finance and insurance.
Residential housing construction, with new permits for under
100,000 annual new units issued in 1994 and 1995, is
weaker than in previous recoveries, but has been
growing slowly since 1993.
In 1994 and 1995, the State registered two
consecutive years of job growth and declining
unemployment rates. During 1994 and throughout most of
1995, California posted non-farm employment gains of
1.3% and 2.3%. This period has also seen personal
income growth exceeding 3% annually, increasing retail sales, and
increased international trade, particularly manufactured
goods. Over the next two years, non-farm employment is
projected to annually expand at rates above 2%. These
trends are expected to continue and allow the State's
recovery to gain momentum over the next two years.
Over the next two years, growth in employment and
personal income is forecast to outpace the growth of the
national economy. Any setbacks to this recovery or future
breakdowns in fiscal discipline could lead to additional
budgetary pressures on State and local governments.
The prolonged recession seriously impacted
California tax revenues and produced the need for
additional expenditures on health and welfare services.
Since the late 1980's, the State's Administrations
have recognized that its budget problems stem in part
from a structural imbalance. The largest General Fund
programs -- K-12 schools and community colleges, health and
welfare, and corrections -- have been increasing faster than
the revenue base, driven by the State's rapid
population growth. These structural concerns may be
exacerbated in coming years by the expected need to
substantially increase capital and operating funds for
corrections as a result of a "Three Strikes" law
enacted in 1994.
The principal sources of the State's General Fund
revenues are the California personal income tax, 43% of
total revenues, sales and use tax, 34%, and bank and
corporation taxes, 13%. The State maintains a Special
Fund for Economic Uncertainties (the "Special Fund")
derived from General Fund revenues as a reserve to meet
the cash requirements of the General Fund but which is
required to be replenished as soon as sufficient revenues are
available. Because of the recession, the Special Fund has
had a negative balance since 1991; the Administration
projects a positive balance of about $92 million in the
Special Fund by June 30, 1996.
The accumulated budget deficits over the past
several years, together with expenditures for school
funding, which have not been reflected in the budget,
and reduction of available internal borrowable funds,
have combined to significantly deplete the State's cash
resources to pay its ongoing expenses. In order to
meet its cash needs, the State has had to rely for several years
on a series of external borrowings, including borrowings
past the end of a fiscal year. Such borrowings are
expected to continue in future fiscal years.
Administration reports during the course of the
1993-1994 Fiscal Year indicated that while economic
recovery appeared to have started in the second half of
the fiscal year, recessionary conditions continued
longer than had been anticipated when the 1993-1994
Budget Act was adopted. Overall, revenues for the
1993-1994 Fiscal Year were approximately $800 million lower than
original projections, and expenditures were approximately
$780 million higher, primarily because of higher health
and welfare caseloads, lower property taxes which
required greater State support for K-14 education to
make up the shortfall, and lower than anticipated
federal government payments for immigration- related
costs. The reports in May and June, 1994, indicated that
revenues in the second half of the 1993-94 Fiscal Year were very
close to the projections made in the Governor's Budget
of January 10, 1994, which was consistent with a slow
turnaround in the economy.
The Department of Finance's July 1994 Bulletin
including the final June receipts, reported that June
revenues were $114 million, or 2.5%, above projections,
with final end-of-year results at $377 million, or
approximately 1.1%, above the projections in the May
1994 Revision to the 1994-95 Governor's Budget ("May
Revision"). Part of this result was due to the end- of-
year adjustments and reconciliations. Personal income tax and
sales tax continued to track projections. The largest
factor in the higher than anticipated revenues was from
bank and corporation taxes, which were $140 million, or
18.4%, above projections in June.
During the 1993-1994 Fiscal Year, the State
implemented the Deficit Retirement Plan, which was part
of the 1993-94 Budget Act, by issuing $1.2 billion of
revenue anticipation warrants in February 1994 maturing
December 21, 1994. This borrowing reduced the cash
deficit at the end of the 1993-94 Fiscal Year.
Nevertheless, because of the $1.5 billion variance from the
original 1993-1994 Budget Act assumptions, the General Fund
ended the Fiscal Year at June 30, 1994 carrying forward
an accumulated deficit of approximately $1.7 billion.
Because of the revenue shortfall and the State's
reduced internal borrowable cash resources, in addition
to the $1.2 billion or revenue anticipation warrants
issued as part of the Deficit Retirement and Reduction
Plan, the State issued an additional $2.0 billion of
revenue anticipation warrants, maturing July 26, 1994,
which were needed to fund the State's obligations and
expenses through the end of the 1993-94 Fiscal Year.
On January 17, 1994, an earthquake of the
magnitude of an estimated 6.8 on the Richter Scale
struck Los Angeles (the "Northbridge Earthquake").
Significant property damage to private and public
facilities occurred in a four-county area including
northern Los Angeles County, Ventura County, and parts
of Orange and San Bernardino Counties. Although some individuals
and businesses suffered losses totaling in the billions
of dollars, the overall effect on the earthquake on the
regional and state economy is not expected to be
serious.
The 1994-95 fiscal year represented the fourth
consecutive year that the Governor and the Legislature
were faced with a difficult budget environment. Many
program cuts and budgetary adjustments had already been
made in the last three years.
The Governor's Budget Proposal, as updated in May
and June 1994, recognized that the accumulated deficit
could not be repaid in one year, and proposed a two-
year solution. The budget proposal sets forth revenue
and expenditure forecasts and revenue and expenditure
proposals which result in operating surpluses for the
budget for both 1994-95 and 1995-96, and lead to the
elimination of the accumulated budget deficit, estimated at about
$1.7 billion at June 30, 1994, by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on
July 8, 1994, projected revenues and transfers of $41.9
billion, $2.1 billion higher than revenues in 1993-94.
This reflected the Administration's forecast of an
improving economy. Also included in this figure was
the projected receipt of about $360 million from the
Federal Government to reimburse the State's cost of
incarcerating undocumented immigrants, most of which eventually
was not received. The Legislature took no action on a
proposal in the January 1994-95 Governor's Budget to
undertake an expansion of the transfer of certain
programs to counties, which would also have transferred
to counties 0.5% of the State's current sales tax.
The 1994-95 Budget Act projected Special Fund
revenues of $12.1 billion, a decrease of 2.4% from
1993-94 estimated revenues. The 1994-95 Budget Act
projected General Fund expenditures of $40.9 billion,
an increase of $1.6 billion over 1993-94. The 1994-95
Budget Act also projected Special Fund expenditures of
$12.3 billion, a 4.7% increase over 1993-94 estimated
expenditures.
Among other major features of the 1994-95 Budget
Act were reductions in health and welfare costs,
increases in educational funding, and increased funding
for anticipated growth in the State's prison inmate
population, including provisions for implementing
recent legislation which requires mandatory life prison
terms for certain third time felony offenders.
The 1994-95 Budget Act contained no tax increases.
Under legislation enacted for the 1993-94 Budget Act,
the renters' tax credit was suspended for two years
(1993 and 1994). A ballot proposition to permanently
restore the renters' tax credit after this year failed
at the June, 1994 election. The Legislature enacted a
further one-year suspension of the renters' tax credit,
for 1995, saving approximately $390 million in the 1995-96 Fiscal
Year.
The 1994-95 Budget assumed that the State would
use a cash flow borrowing program in 1994-95 which
combined one-year notes and two-year warrants, which
have now been issued. Issuance of the warrants allows
the State to defer repayment of approximately $1.0
billion of its accumulated budget deficit into the 1995-96
Fiscal Year. The Budget Adjustment law enacted along with the
1994-95 Budget Act is designed to ensure that the
warrants will be repaid in the 1995-96 Fiscal Year.
Because of the accumulated budget deficit over the
past several years, the payment of certain unbudgeted
expenditures to schools to maintain constant per-pupil
aid levels, and a reduction of the level of available
internal borrowing, the State's cash resources have
been significantly reduced. This has required the
State to rely on a series of external borrowings for
the past several years to pay its normal expenses, including
borrowings which have gone past the end of the fiscal year.
In February 1994, the State borrowed $3.2 billion,
maturing by December 1994. In July 1994, the State
borrowed a total of $7.0 billion to meet its cash flow
requirements for the 1994-95 fiscal year and to fund
part of its deficit into the 1995-96 fiscal year. A
total of $4.0 billion of this borrowing matures in
April 1996. The State will continue to utilize external
borrowing to meet its cash needs to the foreseeable future.
In order to assure repayment of the $4 billion,
22-month borrowing, the State enacted legislation (the
"Trigger Law") which can lead to automatic, across-the-
board cuts in General Fund expenditures in either the
1994-95 or 1995-96 fiscal years if cash flow
projections made at certain times during those years
show deterioration from the projections made in July 1994 when
the borrowings were made. This plan places the burden on
the legislature to maintain ongoing control over the
annual budget, and could exert additional pressure on
local governments reliant on appropriated program
expenditures. On November 15, 1994, the State
Controller as part of the Trigger Law reported that the
cash position of the General Fund on June 30, 1995 would be about
$580 million better than earlier projected, so no
automatic budget adjustments were required in 1994-95.
The Controller's report showed that loss of federal
funds was offset by higher revenues, lower
expenditures, and certain other increases in cash
resources.
Again in 1995, the State experienced difficulties
in obtaining a consensus on the Budget which produced a
two-month delay in passage. The enacted FY1995-96
Budget projects General Fund revenues of $44.1 billion
and expenditures of $43.4 billion. Key components
built into the budget included the receipt of about
$830 million of new Federal aid for undocumented aliens'
costs and the successful resolution of litigation concerning
previous budget actions. This Budget proposes to eliminate
the outstanding deficit including all short-term
borrowings and generate a small surplus of $289 million
by year end. On October 16, 1995, the State Controller
indicated that the cash position
of the General Fund exceeded requirements for
enacting the Trigger Law. Initial results show that
the major tax sources (Income, Sales and Corporation
Taxes) of the state are exceeding projections by $440
million. The tax revenue growth provides some
evidence of the breadth of California's economic rebound
and offsets some reductions in anticipated Federal aid during
1995. Attainment of FY1995-96 Budget projections hinge on
the continuation of the economic recovery into 1996 and
the maintenance of fiscal discipline by the state.
On January 10, 1996, the Governor released his
proposed budget for the next fiscal year (the
"Governor's Budget"). The governor requested total
General Fund appropriations of about $45.2 billion,
based on projected revenues and transfers of about
$45.6 billion. The Governor renewed a proposal, which had been
rejected by the Legislature in 1995, for a 15 percent
phased cut in individual and corporate tax rates over
three years (the budget proposal assumes this will be
enacted, reducing revenues in 1996-97 by about $600
million). There was also a proposal to restructure
trial court funding in a way which would result in a
$300 million decrease in General fund revenues. The Governor's
budget projects external cash flow borrowing of up to $3.2
billion, to mature by June 30, 1997.
ORANGE COUNTY BANKRUPTCY PROCEEDINGS. On December
6, 1994, Orange County, California (the "County"),
together with its pooled investment funds (the "Pooled
Funds") filed for protection under Chapter 9 of the
Federal Bankruptcy Code, after reports that the Pooled
Funds had suffered significant market losses in their
investments, causing a liquidity crisis for the Pooled
Funds and the County. More than 200 other public entities, most
of which, but not all, are located in the County, were
also depositors in the Pooled Funds. As of mid-January
1995, following a restructuring of most of the Pooled
Funds' assets to increase their liquidity and reduce
their exposure to interest rate increases, the County
estimated the Pooled Funds' loss at about $1.69
billion, or about 23% of their initial deposits of
approximately $7.5 billion. A Recovery Plan which includes the
diversion of public transit revenues to the General Fund
was adopted by the County and approved by the State
Legislature in the fall of 1995. The most recent plan
calls for the County to pay for investment losses to
the investment pool participants over 15 years. Before
the plan can be submitted to the bankruptcy court for
approval, the proposal must be unanimously approved by
the investment pool participants. The County
anticipates receiving court approval of the plan and emerging
from bankruptcy by the end of fiscal year 1996.
The State has no existing obligation with respect
to any outstanding obligations or securities of Orange
County or any of the other participating entities.
LITIGATION. The State is a party to numerous
legal proceedings, many of which normally recur in
governmental
operations. In addition, the State is involved in
certain other legal proceedings that, if decided
against the State, may require the State to make
significant future expenditures or may impair future
revenue sources.
Among the more significant lawsuits pending
against the State are the following: (i) a lawsuit
seeking reimbursement for alleged state-mandated costs;
(ii) lawsuits related to contamination at the
Stringfellow toxic waste site; (iii) an action
involving 3,000 plaintiffs seeking recovery for damages
caused by the Yuba River flood of February, 1986; (iv) challenges
to several budget appropriations in the 1994 and 1995
budget acts; and (v) actions challenging the transfer
of moneys from special fund accounts within the State
Treasury to the State's General Fund.
RISK FACTORS AND SPECIAL CONSIDERATIONS RELATING
TO NEW YORK MUNICIPAL SECURITIES: Because Mackenzie
New York Municipal Fund intends to concentrate its
investments in issuers located in New York (as used in
this subsection, the "State"), the Fund will be
significantly affected by any economic, political or regulatory
developments which affect the ability of New York issuers
to pay interest or repay principal on their
obligations. The following information constitutes
only a brief summary, does not purport to be a complete
description and is based on information from sources
believed by the Trust to be reliable, including official
statements relating to securities offerings of New York issuers
and periodic publications by national rating
organizations. Such information, however, has not been
independently verified by the Trust.
NEW YORK STATE. The financial condition of the
State may be affected by various financial, social,
economic and political factors. Those factors can be
very complex, may vary from fiscal year to fiscal year,
and are frequently the result of actions taken not only
by the State and its agencies and
instrumentalities but also by entities that are not
under the control of the State. Adverse developments
affecting the State's financing activities, its
authorities, the City of New York (the "City") or other
localities could adversely affect the State's financial
condition.
There are a number of methods by which the State
may incur debt. Under the State Constitution, the
State may not, with limited exceptions for emergencies,
undertake long-term borrowing (i.e., borrowing for more
than one year) unless the borrowing is authorized in a
specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no
limitation on the amount of long-term debt that may be so
authorized and subsequently incurred by the State.
The State may undertake short-term borrowings
without voter approval (i) in anticipation of the
receipt of taxes and revenues, by issuing tax and
revenue anticipation notes, and
(ii) in anticipation of the receipt of proceeds from
the sale of duly authorized but unissued bonds, by
issuing bond anticipation notes. The State may also,
pursuant to specific constitutional authorization,
directly guarantee certain obligations of the State of
New York's authorities and public benefit corporations
("Authorities"). Payments of debt service on New York State
general obligation and New York State-guaranteed bonds and
notes are legally enforceable obligations of the State
of New York.
The State also employs two other types of long-
term financing mechanisms that are State-supported but
do not result in general obligations of the State:
moral obligation and lease- purchase or contractual-
obligation financing. Payments for principal and
interest due on general obligation bonds, interest due
on bond anticipation notes and on tax and revenue
anticipation notes were $2.471 and $2.722 billion in the
aggregate for the State's 1994-95 and 1995-96 fiscal years,
respectively, and were estimated to be $2.926 billion for the
State's 1996-97 fiscal year. The State has never
defaulted on any of its general obligation indebtedness
or its obligations under lease-purchase or contractual-
obligation financing arrangements and has never been
called upon to make any direct payments pursuant to its
guarantees. There has never been a default on any
moral obligation debt of any Authority.
In 1990, as part of a State fiscal reform program,
legislation was enacted creating the New York Local
Government Assistance Corporation ("LGAC"), a public
benefit corporation empowered to issue long-term
obligations to fund certain payments to local
governments traditionally funded through New York
State's annual seasonal borrowing. The legislation empowered
LGAC to issue its bonds and notes in an amount not in excess
of $4.7 billion (exclusive of certain refunding bonds)
plus certain other amounts. As of June 1995, LGAC had
issued its bonds to provide net proceeds of $4.7
billion completing the program. The impact of LGAC's
borrowing is that the State is able to meet its cash
flow needs in the first quarter of the fiscal year without
relying on short-term seasonal borrowings. The 1996-97 State
Financial Plan includes no spring borrowing. This
reflects success of the LGAC program in permitting the
State to accelerate local aid payments from the first
quarter of the current fiscal year to the fourth
quarter of the previous fiscal year.
On January 6, 1992, Moody's lowered from "A" to
"Baa1" its rating of those New York State bonds that
are backed by annual legislative appropriations.
Moody's also placed its "A" rating of the State's
general obligation bonds under review for possible
downgrading. On January 13, 1992, S&P lowered its rating of the
State's general obligation bonds from "A" to "A-."
Moody's and S&P variously cited the State's continued
economic deterioration, chronic operating deficits, and
the legislative stalemate in closing the budget gap, as
factors contributing to the downgrades. On February
14, 1994, S&P raised its outlook to positive and, on
July 13, 1995, confirmed its "A-" rating on the
State's general obligation bonds. On July 3, 1995,
Moody's reconfirmed its "A" rating on the State's
general obligation bonds.
The State Constitution requires the Governor to
submit to the Legislature a balanced Executive Budget
which contains a complete plan of expenditures for the
ensuing fiscal year and all moneys and revenues
estimated to be available therefor, accompanied by
bills containing all proposed appropriations or
reappropriation and any new or modified revenue measures to be
enacted in connection with the Executive Budget. The
entire plan constitutes the proposed State financial
plan for that fiscal year. The Governor submits to the
Legislature, on at least a quarterly basis, reports of
actual receipts, revenues, disbursements, expenditures,
tax refunds and reimbursements, and repayment of
advances in form suitable for comparison with the State
financial plan, together with explanations of deviations
from the State financial plan. At such time, the Governor is
required to submit any amendments to the State financial
plan necessitated by such deviations.
The State ended its 1995-96 fiscal year on March
31, 1996 with a General Fund cash surplus. The
Division of the Budget reported that revenues exceeded
projections by $270 million, while spending for social
service programs was lower than forecast by $120
million and all other spending was lower by $55
million. The General Fund closing fund balance was $287 million,
an increase of $129 million from 1994-95 levels.
General Fund receipts totaled 32.81 billion, a decrease
of 1.1 percent from 1994-95 levels. This decrease
reflects the impact of tax reductions enacted and
effective in both 1994 and 1995. General Fund
disbursements totaled $32.68 billion for the 1995-96 fiscal
year, a decrease of 2.2 percent from 1994-95 levels.
The State's budget for the 1996-97 fiscal year was
enacted by the Legislature on June 13, 1996, more than
three months after the start of the fiscal year. Prior
to adoption of the budget, the Legislature enacted
appropriations for disbursements considered to be
necessary for State operations and other purposes,
including all necessary appropriations for debt
service. The State Financial Plan for 1996-97 fiscal year was
formulated on July 25, 1996 and is based on the State's
budget as enacted by the Legislature and signed into
law by the Governor.
The 1996-97 State Financial Plan is projected to
be balanced on cash basis. As compared to the
Governor's proposed budget as revised on March 20,
1996, the State's adopted budget for 1996-97 increases
General Fund spending by $842 million, primarily from
increases for education, special education and higher education
($563 million). The balance represents funding increases
to a variety of other programs, including community
projects and increased assistance to fiscally
distressed cities. Resources used to fund these
additional expenditures include $540 million
in increased revenues projected for 1996-97 based on
higher-than- projected tax collections during the first
half of calendar 1996, $110 million in projected
receipts from a new State tax amnesty program, and
other resources including certain non-recurring
resources. The total amount of non-recurring resources included
in the 1996-97 state budget is projected to be $1.3
billion, or 3.9 percent of total General Fund
receipts.
The State Financial Plan is based upon forecasts
of national and State economic activity. Economic
forecasts have frequently failed to predict accurately
the timing and magnitude of changes in the national and
State economies. Many uncertainties exist in forecasts
of both the national and State economies, including
consumer attitudes toward spending, federal financial and
monetary policies, the availability of credit and the condition
of the world economy, which could have an adverse effect
on the State. There can be no assurance that the State
economy will not experience worse-than-predicted
results in the 1995-96 fiscal year, with corresponding
material and adverse effects on the State's projections
of receipts and disbursements.
The General Fund is projected to be balanced on a
cash basis for the 1996-97 fiscal year. Total receipts
and transfers from other funds are projected to be
$33.17 billion, an increase of $365 million from the
prior fiscal year. Total General fund disbursements
and transfers to other funds are projected to be $33.12
billion, an increase of $444 million from the total amount
disbursed in the prior fiscal year.
There can be no assurance that the State will not
face substantial potential budget gaps in future years
resulting from a significant disparity between tax
revenues projected from a lower recurring receipts base
and the spending required to maintain State programs at
current levels. To address any potential budgetary
imbalance, the State may need to take significant
actions to align recurring receipts and disbursements
in future fiscal years.
The State anticipates that its borrowings for
capital purposes in its 1996-97 fiscal year will
consist of approximately $411 million in general
obligation bonds and $154 million in general obligation
commercial paper issuances. In addition, it is
anticipated that the State will issue $153.6 million in
general obligation bonds for the purpose of redeeming outstanding
bond anticipation notes. The Legislature has also
authorized the issuance of up to $101 million in
certificates of participation for equipment purchases
during the State's 1996-97 fiscal year. The projection
of the State regarding its borrowings for the 1996-97
fiscal year may change if actual receipts fall short of
State projections or if other circumstances require.
AUTHORITIES. The fiscal stability of the State is
related to the fiscal stability of its Authorities,
which generally have responsibility for financing,
constructing and operating revenue
producing public benefit facilities. Authorities are
not subject to the constitutional restrictions on the
incurrence of debt that apply to the State itself and
may issue bonds and notes within the amounts of, and as
otherwise restricted by, their legislative
authorization. As of September 30, 1995, the latest data
available, 17 Authorities had outstanding debt of $100 million
or more. The aggregate outstanding debt, including
refunding bonds, of these 17 Authorities was $73.45
billion.
Several Agencies have experienced financial
difficulties in the past. Certain Agencies continue to
experience financial difficulties requiring financial
assistance from the State. The Metropolitan
Transportation Authority (the "MTA") receives the bulk
of this financial assistance in order to carry out mass
transit and commuter services. For the 1996-97 State fiscal
year, total State assistance to the MTA is estimated at
approximately $1.09 billion. Failure of the State to
appropriate necessary amounts or to take other action
to permit certain Agencies to meet their obligations
could result in a default by one or more of such
Agencies. If a default were to occur, it would likely
have a significant effect on the marketability of
obligations of the State and the Agencies.
State legislation accompanying the 1996-97 adopted
State budget authorized the MTA, the Triborough Bridge
and Tunnel Authority (the "TBTA") and the New York City
Transit Authority and the Manhattan and Bronx Surface
Transit Operating Authority (the "TA"). TA to issue an
aggregate of $6.5 billion in bonds to finance a portion
of a new $11.98 billion MTA capital plan for the 1995
through 1999 calendar years (the "1995-99 Capital
Program"), and authorized the MTA to submit the 1995-99 Capital
Program to the Capital Program Review Board for approval.
This plan will supersede the overlapping portion of the
MTA's 1992-96 Capital Program. This is the fourth
capital plan since the Legislature authorized
procedures for the adoption, approval and amendment of
MTA capital programs and is designed to upgrade the
performance of the MTA's transportation systems by investing in
new rolling stock, maintaining replacement schedules for
existing assets and bringing the MTA system into a
state of good repair. The 1995-99 Capital Program
assumes the issuance of an estimated $5.1 billion in
bonds under this $6.5 billion aggregate bonding
authority. The remainder of the plan is projected to be financed
through assistance from the State, the federal
government, and the City of New York, and from various
other revenues generated from actions taken by the
MTA.
There can be no assurance that all the necessary
governmental actions for the 1995-99 Capital Program or
future capital programs will be taken, that funding
sources currently identified will not be decreased or
eliminated, or that the 1995- 99 Capital Program, or
parts thereof, will not be delayed or reduced. If the
1995-99 Capital Program is delayed or reduced,
ridership and fare revenues may decline, which could, among other
things, impair the MTA's ability to meet its operating
expenses without additional State assistance.
NEW YORK CITY AND MUNICIPAL ASSISTANCE
CORPORATION. The fiscal health of the State is closely
related to the fiscal health of its localities,
particularly the City of New York, which has required
and continues to require significant financial
assistance from the State. The City's independently audited
operating results for each of its 1981 through 1995 fiscal
years, which end on June 30, show a General Fund
surplus reported in accordance with GAAP. The City has
eliminated the cumulative deficit in its net General
Fund position.
The City's economy, whose rate of growth slowed
substantially over the past three years, is currently in
recession. During the 1990 and 1991 fiscal years, as a
result of the slowing economy, the City has experienced
significant shortfalls in almost all of its major tax
sources and increases in social services costs, and has
been required to take actions to close substantial
budget gaps in order to maintain balanced budgets in
accordance with the Financial Plan.
In 1975, New York City suffered a fiscal crisis
that impaired the borrowing ability of both the City
and the State. In that year the City lost access to
public credit markets and was not able to sell debt to
the public again until 1979. In response to the City's
fiscal crisis, the State created the Municipal
Assistance Corporation ("MAC") to provide financing
assistance for the City, and the New York State Financial Control
Board (the "Control Board") to exercise certain
oversight and review functions with respect to the
City's financing. Prior to 1985, MAC had the authority
to issue bonds and notes and to pay or lend the
proceeds to the City. Since 1985 MAC has been
authorized to issue bonds and notes only to refund its
outstanding bonds and notes. MAC also has the authority to
exchange its obligations for City obligations. MAC bonds are
payable from appropriations of certain State sales and
use taxes imposed by the City, the State stock transfer
tax and per capita State aid to the City. The State is
not, however, obligated to continue these taxes,
continue to appropriate revenue from these taxes or
continue the appropriation of per capita State aid to
pay MAC obligations. MAC does not have taxing powers and its
bonds are not obligations enforceable against either the
City or the State.
According to a recent OSDC economic report, the
City's economy was slow to recover from the recession
and is expected to experience a weak employment
situation, and moderate wage and income growth, during
the 1995-96 period. Also, Financial Plan reports of
OSDC, the Control Board, and the City Comptroller have
variously indicated that many of the City's balanced budgets have
been accomplished, in part, through the use of non-
recurring resource, tax and fee increases, personnel
reductions and additional State assistance; that the
City has not yet brought its long-term expenditures in
line with recurring revenues; that the City's proposed
gap-closing programs, if implemented, would narrow
future budget gaps; that these programs tend to rely
heavily on actions outside the direct control of the City; and
that the City is therefore likely to continue to face
futures projected budget gaps requiring the City to
reduce expenditures and/or increase revenues.
According to the most recent staff reports of OSDC, the
Control Board and the City Comptroller during the four-
year period covered by the current Financial Plan, the
City is relying on obtaining substantial resources from
initiatives needing approval and cooperation of its municipal
labor unions, Covered Organizations, and City Council, as
well as the State and Federal governments, among
others, and there can be no assurance that such
approval can be obtained.
On February 11, 1991, Moody's lowered its rating
on the City's general obligation bonds to "Baa1" from
"A". On July 6, 1993, S&P reaffirmed the City's "A-"
rating on $20.4 billion of general obligation bonds
stating that "[t]he City has identified additional gap-
closing measures that have recurring value and will
reduce next year's budget gap . . . by approximately $400
million." Officials at Moody's also indicated that there were
no plans to alter its "Baa1" rating on the City's
general obligation bonds.
On July 10, 1995, S&P revised its rating on the
City's general obligation bonds downward to "BBB+."
S&P stated that "structural budgetary balance remains
elusive because of persistent softness in the City's
economy, highlighted by weak job growth and a growing
dependence on the historically volatile financial
services sector." Other factors identified by S&P in
lowering its rating on City general obligation bonds, included a
trend of using one-time measures, including debt
refinancings, to close projected budget gaps,
dependence on unratified labor savings to help balance
the City's financial plan, optimistic projections of
additional federal and State aid or mandate relief, a
history of cash flow difficulties caused by State
budget delays and continued high debt levels. Since July 15,
1993, Fitch Investors Service ("Fitch") has maintained an
"A" rating on the City's general obligation bonds. On
July 12, 1995, Fitch stated that the City's credit
trend remains "declining."
The Mayor is responsible for preparing the City's
four-year financial plan. On February 10, 1994 the
City released a financial plan for the 1996 through
1999 fiscal years (the "1996
1999 Financial Plan" or "Financial Plan"). The City's
projections set forth in the Financial Plan are based on
various assumptions and contingencies which are
uncertain and which may not materialize. Changes in
major assumptions could significantly affect the City's
ability to balance its budget as required by State law
and to meet its annual cash flow and financing
requirements. Such assumptions and contingencies
include the condition of the regional and local economies, the
impact on real estate tax revenues of the real estate
market, wage increases for City employees consistent
with those assumed in the Financial Plan, employment
growth, the ability to implement proposed reductions in
City personnel and other cost reduction initiatives
which may require in certain cases the cooperation of
the City's municipal unions, the ability of the New
York City Health and Hospitals Corporation ("HHC") and the
Board of Education ("BOE") to take actions to offset reduced
revenues, the ability to complete revenue generating
transactions, provision of State and federal aid and mandate
relief and the impact on City revenues of proposals for
federal and State welfare reform.
Estimates of the City's revenues and expenditures
are based on numerous assumptions and are subject to
various uncertainties. If expected federal or State
aid is not forthcoming, if unforeseen developments in
the economy significantly reduce revenues derived from
economically sensitive taxes or necessitate increased
expenditures for public assistance, if the City should
negotiate wage increases for its employees greater than the
amounts provided for in the City's financial plan or if other
uncertainties materialize that reduce expected revenues
or increase projected expenditures, then, to avoid
operating deficits, the City may be required to
implement additional actions, including increases in
taxes and reductions in essential City services. The
City might also seek additional assistance from New
York State.
OTHER LOCALITIES. Certain localities, in addition
to the City, could have financial problems leading to
requests for additional State assistance during the
State's 1996-97 fiscal year and thereafter. The
potential impact on the State of such requests by
localities is not included in the projections of the
State receipts and disbursements in the State's 1996-97 fiscal
year.
Fiscal difficulties experienced by the City of
Yonkers ("Yonkers") resulted in the re-establishment of
the Financial Control Board for the City of Yonkers
(the "Yonkers' Board") by the State in 1984. The
Yonkers' Board is charged with oversight of the fiscal
affairs of Yonkers. Future actions taken by the
Governor or the Legislature to assist Yonkers could result in
allocation of State resources in amounts that cannot yet be
determined.
Municipalities and school districts have engaged
in substantial short-term and long-term borrowings. In
1994, the total indebtedness of all localities in the
State other than the City was approximately $17.7
billion, a small portion (approximately $82.9 million)
of that indebtedness represented borrowing to finance
budgetary deficits and was issued pursuant to enabling
State legislation. State law requires the Comptroller
to review and make recommendations concerning the
budgets of those local government units other than the City
authorized by State law to issue debt to finance deficits
during the period that such deficit financing is
outstanding. Seventeen localities had outstanding
indebtedness for deficit financing at the close of
their fiscal year ending in 1994.
From time to time, Federal expenditure reductions
could reduce, or in some cases eliminate, Federal
funding of some local programs and accordingly might
impose substantial increased expenditure requirements
on affected localities. If the State, the City or any
of the Authorities were to suffer serious financial
difficulties jeopardizing their respective access to
the public credit markets, the marketability of notes and bonds
issued by localities within the State could be adversely
affected. Localities also face anticipated and potential
problems resulting from certain pending litigation,
judicial decisions and long-range economic trends. The
longer-range problems of declining urban population,
increasing expenditures and other economic trends could
adversely affect localities and require increasing
State assistance in the future.
LITIGATION. Certain litigation pending against
the State, its subdivisions and their officers and
employees could have a substantial and long-term
adverse effect on State finances. The State is a party
to numerous legal proceedings, many of which normally
recur in governmental operations. Because of the
prospective nature of these proceedings, no estimate of the
potential loss can be made.
Among the more significant of these cases are
those that involve: (i) claims to land in upstate New
York by several Indian tribes; (ii) certain aspects of
the State's Medicaid policies and its rates and
regulations, including reimbursements to providers of
mandatory and optional Medicaid services; (iii) a challenge to
the practice of reimbursing certain Office of Mental Health
patient care expenses from the client's Social Security
benefits; (iv) an action against the State and City
officials alleging inadequate shelter allowances to
maintain proper housing; (v) a claim that the
assessment of the petroleum business tax pursuant to
Tax Law 301 to such fuel violates the Commerce Clause of the
United States Constitution; and (vi) claims against
Yonkers, its public schools, the State, the State
Education Department and the New York State Urban
Development Corporation that the defendants have not
fulfilled their responsibility to alleviate segregation
in public schools in Yonkers.
The legal proceedings noted above involve State
finances, State programs and miscellaneous tort, real
property and contract claims in which the State is a
defendant and the monetary damages sought are
substantial. These proceedings could affect adversely
the financial condition of the State in the 1996-97 fiscal year
or thereafter. Adverse developments in these proceedings
or the initiation of new proceedings could affect the
ability of the State to maintain a balanced 1996-97
State Financial Plan. An adverse decision in any of
these proceedings could exceed the amount of the
1996-97 State Financial Plan reserve for the payment of
judgments and, therefore, could affect the ability of
the State to maintain a balanced 1996-97 State Financial Plan.
The State has stated its belief that the 1996-97 State
Financial Plan includes sufficient reserves for the
payment of judgments that may be required during the
1996-97 fiscal year.
U.S. GOVERNMENT SECURITIES
The Funds may invest in U.S. Government
securities. U.S. Government securities are obligations
of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities. Securities guaranteed by the
U.S. Government include: (1) direct obligations of the
U.S. Treasury (such as Treasury bills, notes, and bonds),
and (2) Federal agency obligations guaranteed as to principal
and interest by the U.S. Treasury (such as GNMA
certificates, which are mortgage-backed securities).
When these securities are held to maturity, the payment
of principal and interest is unconditionally guaranteed
by the U.S. Government, and thus they are of the
highest possible credit quality. U.S. Government
securities that are not held to maturity are subject to
variations in market value due to fluctuations in interest
rates.
Mortgage-backed securities are securities
representing part ownership of a pool of mortgage
loans. For example, GNMA certificates are such
securities in which the timely payment of principal and
interest is guaranteed by the full faith and credit of
the U.S. Government. Although the mortgage loans in the pool
will have maturities of up to 30 years, the actual average
life of the loans typically will be substantially less
because the mortgages will be subject to normal
principal amortization and may be prepaid prior to
maturity. Prepayment rates vary widely and may be
affected by changes in market interest rates. In
periods of falling interest rates, the rate of prepayment tends
to increase, thereby shortening the actual average life of
the security. Conversely, when interest rates are
rising, the rate of prepayments tends to decrease,
thereby lengthening the actual average life of the
security (and increasing the security's price
volatility). Accordingly, it is not possible to predict
accurately the average life of a particular pool. Reinvestment
of prepayments may occur at higher or lower rates than the
original yield on the certificates. Due to the
prepayment
feature and the need to reinvest prepayments of
principal at current rates, GNMA certificates can be
less effective than typical bonds of similar maturities
at "locking in" yields during periods of declining
interest rates. GNMA certificates may appreciate or
decline in market value during periods of declining or
rising interest rates, respectively.
Securities issued by U.S. Government
instrumentalities and certain federal agencies are
neither direct obligations of nor guaranteed by the
U.S. Treasury. However, they involve Federal
sponsorship in one way or another; some are backed by specific
types of collateral; some are supported by the issuer's
right to borrow from the Treasury; some are supported
by the discretionary authority of the Treasury to
purchase certain obligations of the issuer; others are
supported only by the credit of the issuing government
agency or instrumentality. These agencies and
instrumentalities include, but are not limited to, Federal Land
Banks, Farmers Home Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Home
Loan Banks, Federal National Mortgage Association and
Student Loan Marketing Association.
INVESTMENT-GRADE DEBT SECURITIES
Bonds rated Aaa by Moody's and AAA by S&P are
judged to be of the best quality (i.e., capacity to pay
interest and repay principal is extremely strong).
Bonds rated Aa/AA are considered to be of high quality
(i.e., capacity to pay interest and repay principal is
very strong and differs from the highest rated issues
only to a small degree). Bonds rated A are viewed as
having many favorable investment attributes, but elements may be
present that suggest a susceptibility to the adverse
effects of changes in circumstances and economic
conditions than debt in higher rated categories. Bonds
rated Baa/BBB (considered by Moody's to be "medium
grade" obligations) are considered to have an adequate
capacity to pay interest and repay principal, but
certain protective elements may be lacking (i.e., such bonds lack
outstanding investment characteristics and have some
speculative characteristics). The Fund may invest in
debt securities that are given an investment-grade
rating by Moody's or S&P, and may also invest in
unrated debt securities that are considered by IMI to
be of comparable quality.
BANKING INDUSTRY AND SAVINGS AND LOAN OBLIGATIONS
The Funds may invest in bank obligations, which
may include certificates of deposit, bankers'
acceptances, and other short- term debt obligations.
Certificates of deposit are negotiable certificates
issued against funds deposited in a commercial bank for
a definite period of time and earning a specified return.
Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to
pay for specific merchandise, which are "accepted" by a
bank (meaning, in effect that the bank unconditionally
agrees to pay the face value of the
instrument on maturity). Investments in certificates
of deposit and bankers' acceptances are limited to
obligations of (i) banks having total assets in excess
of $1 billion, and (ii) other banks which do not meet
the $1 billion asset requirement, if the principal
amount of such obligation is fully insured by the
Federal Deposit Insurance Corporation ("FDIC"). Investments in
certificates of deposit of savings associations are
limited to obligations of federally or state chartered
institutions that have total assets in excess of $1
billion and whose deposits are insured by the FDIC.
COMMERCIAL PAPER
The Funds may invest in commercial paper.
Commercial paper represents short-term unsecured
promissory notes issued in bearer form by bank holding
companies, corporations and finance companies.
Investments in commercial paper are limited to
obligations rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard and Poor's Corporation ("S&P")
or, if not rated by Moody's or S&P, issued by companies
having an outstanding debt issue currently rated Aaa or
Aa by Moody's or AAA or AA by S&P.
REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements.
Repurchase agreements are contracts under which a Fund
buys a money market instrument and obtains a
simultaneous commitment from the seller to repurchase
the instrument at a specified time and at an agreed-
upon yield. A Fund will not enter into a repurchase
agreement with more than seven days to maturity if, as a result,
more than 10% of the Fund's net assets would be invested
in illiquid securities including such repurchase
agreements. The Funds may enter into repurchase
agreements with banks or broker- dealers deemed to be
creditworthy by MIMI under guidelines approved by the
Board of Trustees. In the unlikely event of failure of
the executing bank or broker-dealer, a Fund could
experience some delay in obtaining direct ownership of the
underlying collateral and might incur a loss if the value of
the security should decline, as well as costs in
disposing of the security.
BORROWING
As a fundamental policy, the Funds may borrow from
banks as a temporary measure for extraordinary or
emergency purposes. A Fund may borrow in amounts up to
10% of its total assets taken at cost or market value,
whichever is lower. All borrowings will be repaid
before any additional investments are made. A Fund may
not mortgage, pledge or in any other manner transfer any of its
assets as security for any indebtedness. Borrowing may
exaggerate the effect on a Fund's net asset value of any
increase or decrease in the value of the Fund's
portfolio securities. Money borrowed will be subject
to interest costs (which may
include commitment fees and/or the cost of maintaining
minimum average balances).
RESTRICTED AND ILLIQUID SECURITIES
It is each Fund's policy that restricted
securities, including restricted securities offered and
sold to "qualified institutional buyers" under Rule
144A under the Securities Act of 1933, as amended (the
"1933 Act"), and any other illiquid securities
(including certain repurchase agreements and other
securities which are not readily marketable) may not constitute,
at the time of purchase, more than 10% of the value of
the Fund's net assets. Issuers of restricted
securities may not be subject to the disclosure and
other investor protection requirements that would be
applicable if their securities were publicly traded.
Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which
a registration statement is in effect under the 1933
Act. Where a registration statement is required, a
Fund may be required to bear all or part of the
registration expenses. There may be a lapse of time
between the Fund's decision to sell a restricted or
illiquid security and the point at which the Fund is permitted or
able to do so. If, during such a period, adverse market
conditions were to develop, the Fund might obtain a
price less favorable than the price that prevailed when
it decided to sell. Since it is not possible to
predict with assurance that the market for securities
eligible for resale under Rule 144A will continue to be
liquid, each Fund will carefully monitor each of its
investments in these securities, focusing on factors, such as
valuation, liquidity and availability of information. This
investment practice could have the effect of increasing
the level of illiquidity in a Fund to the extent that
qualified institutional buyers become, for a time,
uninterested in purchasing these restricted securities.
TEMPORARY INVESTMENTS
From time to time on a temporary basis, a Fund may
invest in fixed-income obligations the interest on
which is subject to Federal income tax. Except when a
Fund is in a "defensive" investment position, it will
not purchase a taxable security if, as a result, more
than 20% of its total net assets would be invested in
taxable securities.
This limitation is a fundamental policy of each
Fund, i.e., it may not be changed without a majority
vote of a Fund's outstanding securities. Temporary
taxable investments of a Fund may consist of
obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, commercial paper
rated A-l by S&P or Prime-1 by Moody's, corporate
obligations rated AAA or AA by S&P or Aaa or Aa by
Moody's, certificates of deposit or bankers'
acceptances of domestic banks or thrifts with at least
$1 billion in assets, or repurchase agreements with such
banks or with broker-dealers. Repurchase agreements may be
entered into with respect to any securities eligible
for investment by a Fund, including municipal
securities. The income from a repurchase agreement
with respect to a municipal security would not be tax-
exempt. See "Repurchase Agreements," "Restricted and
Illiquid Securities" and Appendix A for a further
description of repurchase agreements, illiquid securities and of
the Moody's and S&P ratings relating to taxable
securities.
MACKENZIE NATIONAL MUNICIPAL FUND, MACKENZIE
CALIFORNIA MUNICIPAL FUND AND MACKENZIE NEW YORK
MUNICIPAL FUND ONLY: Each of these three Funds may
invest in short-term municipal securities for temporary
defensive purposes. Short-term municipal securities
consist of notes and short-term municipal loans and
obligations, including municipal paper, master demand
notes and variable rate demand notes. Short-term municipal notes
include Tax Anticipation Notes (i.e, notes issued in
anticipation of the receipt of tax funds), Bond
Anticipation Notes (i.e, notes issued in anticipation
of receipt of the proceeds of bond placements), Revenue
Anticipation Notes (i.e, notes issued in anticipation
of the receipt of revenues other than taxes or bond
placements), and Project Notes (i.e, obligations of municipal
housing agencies on which the payment of principal and
interest ordinarily is backed by the full faith and
credit of the U.S. Government) when a market for such
securities exists. Municipal paper typically consists
of the very short-term unsecured negotiable promissory
notes of municipal issuers.
A municipal master demand note is an arrangement
under which a Fund participates in a note agreement
between a bank acting on behalf of its clients and a
municipal borrower, whereby amounts maintained by the
Fund in an account with the bank are provided to the
municipal borrower and payments of interest and principal
on the note are credited to the Fund's account. Interest rates
on master demand notes typically are tied to market
interest rates, and therefore may fluctuate daily. The
amounts borrowed under these notes may be repaid at any
time by the borrower without penalty, and must be
repaid upon the demand of the Fund. Variable rate
demand notes are tax-exempt obligations that are
payable by the municipal issuer at par value plus accrued
interest on demand by the Fund (generally with three to ten
days' notice). If no demand is made, the note will
mature on a specified date from one to thirty years
from its issuance. Payment on the note may be backed
by a stand-by letter of credit. As with a master
demand note, the yield on a variable rate demand note
is adjusted automatically to reflect a particular market
rate. Variable rate demand notes typically are callable by the
issuer prior to maturity.
Where short-term municipal securities are rated, a
Fund will limit its investments to "high quality"
short-term securities. For short-term municipal notes
this includes ratings of AA or better by Standard &
Poor's Corporation ("S&P") or MIG 2 or better by
Moody's Investors Service, Inc. ("Moody's"); for
municipal paper this includes A-2 or better by S&P or Prime-2 or
better by Moody's. Unrated short-term municipal
securities will be included within the Fund's overall
limitation on investments in unrated securities. This
limitation provides that not more than 20% of a Fund's
total assets may be invested in unrated municipal
securities, exclusive of unrated securities that are
guaranteed as to principal and interest by the full faith and
credit of the U.S. Government or are issued by an issuer
having outstanding an issue of municipal bonds within
one of the four highest ratings classifications.
OTHER INVESTMENT TECHNIQUES
Although none of the Funds have done so in the
last year and have no current intention of doing so in
the foreseeable future, each Fund may (i) lend its
portfolio securities, (ii) purchase securities on a
"when-issued" or firm commitment basis, (iii) acquire
puts or standby commitments, (iv) engage in transactions
in certain types of financial futures (such as interest rate
futures) and related options, and options on individual
securities and bond indices, (v) engage in "conversion" and
spread transactions, and (vi) write straddles.
Investments in the obligations of the governments
of Puerto Rico and Guam require a careful assessment of
certain risk factors, including reliance on substantial
Federal assistance and favorable tax programs, above-
average levels of unemployment and low wealth levels,
and susceptibility to adverse shifts in the energy
prices as well as U.S. foreign trade/monetary
policies.
INVESTMENT RESTRICTIONS
The Funds' investment objectives as set forth in
the Prospectus under "Investment Objectives and
Policies," together with the investment restrictions
set forth below, are fundamental policies of the Funds
and may not be changed with respect to a particular
Fund without the approval of a majority of the Fund's
outstanding voting shares. Under these restrictions, a Fund may
not:
(i) purchase securities of any one issuer
(except U.S. government securities) if as
a result more than 5% of the Fund's total
assets would be invested in such issuer or
the Fund would own or hold more than 10%
of the outstanding voting securities of that issuer
(provided, however, that up to 25% of the value of
the Fund's total assets may be invested without
regard to these limitations);
(ii) invest in real estate, real estate
mortgage loans, commodities, commodity
futures contracts or interests in oil, gas
and/or mineral exploration or development
programs, although a Fund may purchase and
sell (a) securities that are secured by real
estate, (b) securities of issuers that
invest or deal in real estate, and (c)
futures contracts as described in the
Prospectus;
(iii) make investments in securities for the
purpose of exercising control over or
management of the issuer;
(iv) participate on a joint or a joint and
several basis in any trading account in
securities, although the "bunching" of
orders of the Funds--or of the Funds and
of other accounts under the investment
management of the persons rendering investment
advice to the Funds--for the sale or purchase of
portfolio securities shall not be considered
participation in a joint securities trading account;
(v) purchase securities on margin, except such
short- term credits as are necessary for
the clearance of transactions, although
the deposit or payment by a Fund of
initial or variation margin in connection
with futures contracts or related options
transactions is not considered the purchase of a
security on margin;
(vi) make loans, except that this restriction
shall not prohibit (a) the purchase and
holding of a portion of an issue of
publicly distributed debt securities, (b)
the lending of portfolio securities (provided
that the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or
cash equivalents maintained on daily marked-to-
market basis in an amount at least equal to
the current market value of the securities
loaned), or (c) entry into repurchase
agreements with banks or broker-dealers;
(vii) borrow amounts in excess of 10% of its
total assets, taken at lower of cost or
market value, and then only from banks as
a temporary measure for extraordinary or
emergency purposes;
(viii) mortgage, pledge, hypothecate or in any
manner transfer, as security for
indebtedness, any securities owned or held
by the Fund (except as may be necessary in
connection with permitted borrowings and
then not in excess of 20% of the Fund's total
assets); provided, however, that this does not
prohibit escrow, collateral or margin arrangements
in connection with the Fund's use of options, short
sales, futures contracts and options on
futures contracts;
(ix) purchase the securities of issuers
conducting their principal business
activities in the same industry
if immediately after such purchase the
value of the Fund's investments in such
industry would exceed 25% of the value of
the total assets of the Fund;
(x) act as an underwriter of securities;
(xi) make short sales of securities or maintain
a short position; or
(xii) issue senior securities, except insofar as
the Fund may be deemed to have issued a
senior security in connection with any
repurchase agreement or any permitted
borrowing.
ADDITIONAL RESTRICTIONS
Each Fund has adopted the following additional
restrictions, which are not fundamental and which may
be changed without shareholder approval, to the extent
permitted by applicable law, regulation or regulatory
policy. Under these restrictions, a Fund may not:
(i) purchase or sell real estate limited
partnership interests;
(ii) purchase or sell interests in oil, gas and
mineral leases (other than securities of
companies that invest in or sponsor such
programs);
(iii) purchase or retain securities of any
company if, to the knowledge of the Trust,
officers and Trustees of the Trust and
officers and directors of MIMI or
Mackenzie Financial Corporation who individually own
more than 1/2 of 1% of the securities of that
company together own beneficially more than 5% of
such securities;
(iv) purchase any security if as a result a
Fund would then have more than 5% of its
total assets (taken at current value)
invested in securities of companies
(including predecessors) less than three years old;
(v) invest more than 10% of its net assets
taken at market value at the time of the
investment in "illiquid securities."
Illiquid securities may include securities
subject to legal or contractual
restrictions on resale (including private
placements), repurchase agreements maturing in more
than seven days, certain options traded over-the-
counter that the Fund has purchased, securities
being used to cover certain options that the
Fund has written, securities for which
market quotations are not readily
available, or other securities that
legally or in the Investment Manager's opinion,
subject to the Board's supervision, may be
deemed illiquid, but shall not include any
instrument that, due to the existence of a
trading market, to the Fund's compliance
with certain conditions intended to
provide liquidity, or to other factors, is
liquid; or
(vi) purchase securities of other investment
companies, except in connection with a
merger, consolidation or sale of assets,
and except that the Fund may purchase
shares of other investment companies
subject to such restrictions as may be imposed by
the 1940 Act, and rules thereunder, or by any state
in which shares of the Fund are registered.
In addition, so long as it remains a restriction
of the Ohio Division of Securities, the Fund will treat
securities eligible for resale under Rule 144A of the
Securities Act of 1933 and securities of unseasoned
issuers as described in non-fundamental restriction
(iv) above, as subject to the Fund's restriction on
investing in restricted securities (see "Restricted and Illiquid
Securities" under "Investment Objectives and Policies,"
above).
Whenever an investment objective, policy or
restriction set forth in the Prospectus or this SAI
states a maximum percentage of assets that may be
invested in any security or other asset or describes a
policy regarding quality standards, such percentage
limitation or standard shall, unless otherwise indicated, apply
to each Fund on an individual basis, and only at the time
a transaction is entered into. Accordingly, if a
percentage limitation is adhered to at the time of
investment by a Fund, a later increase or decrease in
the percentage that results from circumstances not
involving any affirmative action by the Fund, such as a
change in market conditions or a change in the Fund's
asset level or other circumstances beyond the Fund's control,
will not be considered a violation.
ADDITIONAL RIGHTS AND PRIVILEGES
The Trust offers to investors (and except as noted
below, bears the cost of providing) the rights and
privileges described below. The Trust reserves the
right to amend or terminate any one or more of such
rights and privileges. Notice of amendments to or
terminations of rights and privileges will be provided to
shareholders in accordance with applicable law.
Certain of the rights and privileges described
below refer to other funds distributed by IMDI, which
funds are not described in this SAI. These funds are:
Ivy Bond Fund, Ivy Canada Fund, Ivy China Region Fund,
Ivy Emerging Growth Fund, Ivy Global Fund, Ivy Global
Science & Technology Fund, Ivy International Value
Fund, Ivy Global Natural Resources Fund, Ivy Asia Pacific Fund,
Ivy Growth Fund, Ivy Growth with Income Fund, Ivy
International Fund, Ivy International Bond Fund, Ivy
Latin America Strategy
Fund, Ivy Money Market Fund, Ivy New Century Fund and
Ivy Short- Term Bond Fund, the seventeen series of Ivy
Fund (collectively, with the Funds, the "Ivy and
Mackenzie Funds"). Investors should obtain a current
prospectus before exercising any right or privilege
that may relate to these funds.
AUTOMATIC INVESTMENT METHOD
The Automatic Investment Method is available for
Class A and Class B shareholders of the Funds. The
minimum initial and subsequent investment pursuant to
this plan is $50 per month. The Automatic Investment
Method may be discontinued at any time upon receipt by
Ivy Mackenzie Services Corp. ("IMSC") of telephone
instructions or written notice of such discontinuation
from the investor. See "Automatic Investment Method" in the
Account Application.
EXCHANGE OF SHARES
As described in the Prospectus, shareholders of a
Fund have an exchange privilege with certain other Ivy
and Mackenzie Funds. Before effecting an exchange,
shareholders of a Fund should obtain and read the
currently effective prospectus for the Ivy or Mackenzie
Fund into which the exchange is to be made.
INITIAL SALES CHARGE SHARES. Class A shareholders
may exchange their Class A shares ("outstanding Class A
shares") for Class A shares of another Ivy or Mackenzie
Fund (or for shares of another Ivy or Mackenzie Fund
that currently offers only a single class of shares)
("new Class A Shares") on the basis of the relative net
asset value per Class A share, plus an amount equal to
the difference, if any, between the sales charge previously
paid on the outstanding Class A shares and the sales charge
payable at the time of the exchange on the new Class A
shares. (The additional sales charge will be waived
for outstanding Class A shares that have been invested
for a period of 12 months or longer.) Class A
shareholders may also exchange their Class A shares for
Class A shares of Ivy Money Market Fund (no initial
sales charge will be assessed at the time of such an exchange).
CONTINGENT DEFERRED SALES CHARGE SHARES.
CLASS A: Class A shareholders may exchange their
Class A shares subject to a contingent deferred sales
charge, as described in the Prospectus ("outstanding
Class A shares"), for Class A shares of another Ivy or
Mackenzie Fund (or for shares of another Ivy or
Mackenzie Fund that currently offers only a single
class of shares) ("new Class A shares") on the basis of the
relative net asset value per Class A share, without the
payment of any contingent deferred sales charge that
would otherwise be due upon the redemption of the
outstanding Class A shares. Class A shareholders of
the Fund exercising the exchange privilege will
continue to be subject to the Fund's CDSC period
following an exchange if such schedule is higher (or such period
is longer) than the CDSC period, if any, applicable to
the new Class A shares.
For purposes of computing the CDSC that may be
payable upon the redemption of the new Class A shares,
the holding period of the outstanding Class A shares is
"tacked" onto the holding period of the new Class A
shares.
CLASS B: Class B shareholders may exchange their
Class B shares ("outstanding Class B shares") for Class
B shares of another Ivy or Mackenzie Fund ("new Class B
shares") on the basis of the relative net asset value
per Class B share, without the payment of any
contingent deferred sales charge that would otherwise
be due upon the redemption of the outstanding Class B
shares. Class B shareholders of the Fund exercising the exchange
privilege will continue to be subject to the Fund's CDSC
schedule (or period) following an exchange if such
schedule is higher (or such period is longer) than the
CDSC schedule (or period) applicable to the new Class B
shares.
Class B shares of the Fund acquired through an
exchange of Class B shares of another Ivy or Mackenzie
Fund will be subject to the Fund's CDSC schedule (or
period) if such schedule is higher (or such period is
longer) than the CDSC schedule (or period) applicable
to the Ivy or Mackenzie Fund from which the exchange
was made.
For purposes of both the exchange feature and
computing the contingent deferred sales charge that may
be payable upon the redemption of the new Class B
shares (prior to conversion), the holding period of the
outstanding Class B shares is "tacked" onto the holding
period of the new Class B shares.
The following contingent deferred sales charge
table ("Table 1") applies to Class B shares of
Mackenzie National Municipal Fund, Mackenzie California
Municipal Fund, Mackenzie New York Municipal Fund, Ivy
Bond Fund, Ivy Canada Fund, Ivy Global Fund, Ivy Growth
Fund, Ivy Growth with Income Fund, Ivy Emerging Growth
Fund, Ivy International Fund, Ivy International Bond Fund, Ivy
New Century Fund, Ivy Latin America Fund, Ivy China Region
Fund, Ivy International Value Fund, Ivy Global Natural
Resources Fund, Ivy Asia Pacific Fund and Ivy Global
Science & Technology Fund ("Table 1 Funds"):
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF DOLLAR
AMOUNT SUBJECT TO YEAR SINCE PURCHASE
CHARGE
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and thereafter 0%
The following contingent deferred sales charge
table ("Table 2") applies to Class B shares of
Mackenzie Limited Term Municipal Fund and Ivy Short-
Term Bond Fund ("Table 2 Funds"):
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF DOLLAR
AMOUNT SUBJECT TO YEAR SINCE PURCHASE
CHARGE
First 3%
Second 2 1/2%
Third 2%
Fourth 1 1/2%
Fifth 1%
Sixth and thereafter 0%
The CDSC schedule for Table 1 Funds is higher (and
the period is longer) than the CDSC schedule (and
period) for Table 2 Funds.
If a shareholder exchanges Class B shares of a
Table 1 Fund for Class B shares of a Table 2 Fund,
Table 1 will continue to apply to the Class B shares
following the exchange. For example, an investor may
decide to exchange Class B shares of a Table 1 Fund
("outstanding Class B shares") for Class B shares of a Table
2 Fund ("new Class B shares") after having held the
outstanding Class B shares for two years. The 4% CDSC
that generally would apply to a redemption of
outstanding Class B shares held for two years would not
be deducted at the time of the exchange. If, three
years later, the investor redeems the new Class B shares, a
2% CDSC will be assessed upon the redemption because by
"tacking" the two year holding period of the
outstanding Class B shares onto the three year holding
period of the new Class B shares, the investor will be
deemed to have held the new Class B shares for five
years.
If a shareholder exchanges Class B shares of a
Table 2 Fund for Class B shares of a Table 1 Fund,
Table 1 will apply to the Class B shares following the
exchange. For example, an investor may decide to
exchange Class B shares of a Table 2 Fund ("outstanding
Class B shares") for Class B shares of a Table 1
Fund ("new Class B shares") after having held the
outstanding Class B shares for two years. The 2.5%
CDSC that generally would apply to a redemption of
outstanding Class B shares held for two years would not
be deducted at the time of the exchange. If, three
years later, the investor redeems the new Class B shares, a
2% CDSC will be assessed upon the redemption because by
"tacking" the two year holding period of the
outstanding Class B shares onto the three year holding
period of the new Class B shares, the investor will be
deemed to have held the new Class B shares for five
years.
The minimum amount that a shareholder may exchange
into an Ivy or Mackenzie Fund in which shares are not
already held is $1,000. No exchange out of any of the
Funds (other than by a complete exchange of all shares
of that Fund) may be made if it would reduce the
shareholder's interest in that Fund to less than
$1,000. Exchanges are available only in states where the
exchange can be legally made.
Each exchange will be made on the basis of the
relative net asset values per share of each fund of the
Ivy and Mackenzie Funds next computed following receipt
of telephone instructions by IMSC or a properly
executed request by the IMSC. Exchanges, whether
written or telephonic, must be received by IMSC by the
close of regular trading on the New York Stock Exchange (the
"Exchange") (normally 4:00 p.m., eastern time), to receive
the price computed on the day of receipt; exchange
requests received after that time will receive the
price next determined following receipt of the request.
This exchange privilege may be modified or terminated
at any time, upon at least 60 days' notice when such
notice is required by Rules adopted by the Securities and
Exchange Commission ("SEC"). See "Redemptions."
An exchange of shares between any of the Ivy or
Mackenzie Funds will result in a taxable gain or loss.
Generally, any such taxable gain or loss will be a
capital gain or loss (long-term or short-term,
depending on the holding period of the shares) in the
amount of the difference between the net asset value of the
shares surrendered and the shareholder's tax basis for those
shares. However, in certain circumstances, shareholders
will be ineligible to take sales charges into account
in computing taxable gain or loss on an exchange. See
"Taxation."
With limited exceptions, gain realized by a tax-
deferred retirement plan would not be taxable to the
plan and will not be taxed to the participant until
distribution. Each investor should consult his or her
tax adviser regarding the tax consequences of an
exchange transaction.
LETTER OF INTENT
Reduced sales charges apply to initial investments
made pursuant to a non-binding Letter of Intent. A
Letter of Intent may be submitted by an individual, his
or her spouse and children
under the age of 21 or a trustee or other fiduciary of
a single trust estate or single fiduciary account. See
the Account Application in the Prospectus. Any
investor may submit a Letter of Intent stating that he
or she will invest, over a period of 13 months, at
least $100,000 in Class A shares of a Fund. A Letter
of Intent may be submitted at the time of an initial purchase of
Class A shares of a Fund or within 90 days of the initial
purchase, in which case the Letter of Intent will be
backdated. A shareholder may include the value (at the
applicable offering price) of all Class A shares of the
Funds, Ivy Short-Term Bond Fund, Ivy Bond Fund, Ivy
Canada Fund, Ivy Global Fund, Ivy Global Science &
Technology Fund, Ivy International Value Fund, Ivy
Global Natural Resources Fund, Ivy Asia Pacific Fund, Ivy Growth
Fund, Ivy Growth with Income Fund, Ivy Emerging Growth
Fund, Ivy International Fund, Ivy New Century Fund, Ivy
Latin America Strategy Fund and Ivy China Region Fund
(and shares that have been exchanged into Ivy Money
Market Fund from any of the other funds in the Ivy and
Mackenzie Funds), held of record by him or her as of
the date of his or her Letter of Intent as an
accumulation credit toward the completion of such Letter. During
the term of the Letter of Intent, the Funds' transfer
agent will hold in escrow Class A shares representing
5% of the indicated amount (less any accumulation
credit value). The escrowed Class A shares will be
released when the full indicated amount has been
purchased. If the full indicated amount is not
purchased during the term of the Letter of Intent, the investor
is required to pay IMDI an amount equal to the difference
between the dollar amount of sales charge that he or
she has paid and that which he or she would have paid
on his or her aggregate purchases if the total of such
purchases had been made at a single time. Such payment
will be made by an automatic liquidation of Class A
shares in the escrow account. A Letter of Intent does
not obligate the investor to buy or the Trust to sell
the indicated amount of Class A shares and the investor should
read carefully all the provisions thereof before
signing.
REINVESTMENT PRIVILEGE
Investors who have redeemed Class A shares of a
Fund may reinvest all or a part of the proceeds of the
redemption back into Class A shares of that Fund at net
asset value (without a sales charge) within 60 days
from the date of redemption. This privilege may be
exercised only once. The reinvestment will be made at
the net asset value next determined after receipt by the
Funds' transfer agent of the reinvestment order accompanied by
the funds to be reinvested. No compensation will be paid
to any sales personnel or dealer in connection with the
transaction.
Any redemption is a taxable event. A loss
realized on a redemption generally may be disallowed
for tax purposes if the reinvestment privilege is
exercised within 30 days after the redemption. In
certain circumstances, shareholders will be ineligible
to take sales charges into account in computing
taxable gain or loss on a redemption if the
reinvestment privilege is exercised. See "Taxation."
RIGHTS OF ACCUMULATION
A scale of reduced sales charges applies to
certain invest- ments in Class A shares of the Funds by
an individual, his or her spouse and children under the
age of 21, or a trustee or other fiduciary of a single
trust estate or single fiduciary account (including a
pension, profit sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Code. An investment qualifies for a reduced sales charge if
the sum of: (a) the combined value, determined at the
higher of current offering price or amount invested, of
Class A shares held by the persons identified above in
(i) any of the Funds, (ii) any of the series of Ivy
Fund (except for shares of Ivy Money Market Fund, but
including shares that have been exchanged from any of
the Ivy or Mackenzie Funds into Ivy Money Market Fund), and (iii)
any other investment company distributed by IMDI
currently owned; and (b) the value of the Class A
shares being purchased, exceeds: (i) $25,000, with
respect to an investment in Mackenzie Limited Term
Municipal Fund; (ii) $50,000, with respect to an investment
in Ivy Canada Fund, Ivy Global Fund, Ivy Growth Fund, Ivy
Growth with Income Fund, Ivy Emerging Growth Fund, Ivy
International Fund, Ivy International Bond Fund, Ivy
New Century Fund, Ivy Latin America Strategy Fund, Ivy
China Region Fund, Ivy Global Science & Technology
Fund, Ivy International Value Fund, Ivy Asia Pacific
Fund or Ivy Global Natural Resources Fund; or (iii)
$100,000, with respect to an investment in Mackenzie National
Municipal Fund, Mackenzie California Municipal Fund,
Mackenzie New York Municipal Fund, Ivy Short-Term Bond
Fund or Ivy Bond Fund.
At the time an investment takes place, MIMI, in
the case of a wire order, or IMSC, in the case of a
direct mail remittance, must be notified by the
investor or his or her dealer that the investment
qualifies for the reduced charge on the basis of
previous investments. The reduced charge is subject to
confirmation of the investor's holdings through a check of the
Funds' records.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may establish a Systematic
Withdrawal Plan (the "Withdrawal Plan") by telephone
instructions to IMSC or delivery to IMSC of a written
election to so redeem, accompanied by a surrender to
IMSC of all share certificates then outstanding in the
name of such shareholder, properly endorsed by him or her.
A Withdrawal Plan may not be established if the investor is
currently participating in the Automatic Investment Method.
The Withdrawal Plan may involve the use of principal
and, to the extent that it does, depending on the
amount withdrawn, the investor's principal may be
depleted.
A redemption under the Withdrawal Plan is a
taxable event. Investors contemplating participation
in the Withdrawal Plan should consult their tax
advisers.
Additional investments made by investors
participating in the Withdrawal Plan must equal at
least $1,000 each while the Withdrawal Plan is in
effect. Making additional purchases while the
Withdrawal Plan is in effect may be disadvantageous to the
investor because of applicable initial or contingent deferred
sales changes.
An investor may terminate his or her participation
in the Withdrawal Plan at any time by delivering
written notice to IMSC. If all shares held by the
investor are liquidated at any time, the Withdrawal
Plan will terminate automatically. The Trust or MIMI
may terminate the Withdrawal Plan at any time after
reasonable notice to shareholders.
BROKERAGE ALLOCATION
Subject to the overall supervision of the
President and the Board of Trustees of the Trust, MIMI
places orders for the purchase and sale of the Funds'
portfolio securities. All portfolio transactions are
effected at the best price and execution obtainable.
Purchases and sales of debt securities are usually
principal transactions and, therefore, brokerage
commissions are usually not required to be paid by a Fund for
such purchases and sales, although the price paid generally
includes undisclosed compensation to the dealer. The
prices paid to underwriters of newly-issued securities
usually include a concession paid by the issuer to the
underwriter, and purchases of after-market securities
from dealers normally reflect the spread between the
bid and asked prices. In connection with over-the-
counter transactions, MIMI attempts to deal directly
with the principal market makers, except in those circumstances
where it believes that better prices and execution are
available elsewhere. Subject to the requirement of
best price and execution, MIMI may select broker-
dealers that provide it with research services and may
consider sales of Fund shares as a factor in the
selection of broker-dealers.
MIMI selects broker-dealers to execute
transactions and evaluates the reasonableness of
commissions on the basis of quality, quantity, and the
nature of each firm's professional services.
Commissions charged and investment services rendered,
including statistical, research, and counseling services by
brokerage firms, are among the factors that are considered in
the placing of brokerage business. The types of
research services provided by brokers may include
general economic and industry data, and information on
securities of specific companies. Research services
furnished by brokers through whom the Trust effects
securities transactions may be used by MIMI in servicing
all of its accounts. In addition, not all of these services may
be used by MIMI in connection with the services it
provides to
the Fund or the Trust. MIMI may consider sales of Fund
shares as a factor in the selection of broker-dealers
and may select broker-dealers who provide it with
research services. MIMI will not, however, execute
brokerage transactions other than at the best price and
execution.
A Fund may, under some circumstances, accept
securities in lieu of cash as payment for Fund shares.
A Fund will consider accepting securities only to
increase its holdings in a portfolio security or to
take a new portfolio position in a security that MIMI
deems to be a desirable investment for the Fund. While no
minimum has been established, it is expected that a Fund will
not accept securities having an aggregate value of less
than $1 million. The Trust may reject in whole or in
part any or all offers to pay for Fund shares with
securities and may discontinue accepting securities as
payment for Fund shares at any time without notice.
The Trust will value accepted securities in the manner
and at the same time provided for valuing portfolio
securities of a Fund, and Fund shares will be sold for net asset
value determined at the same time the accepted securities
are valued. The Trust will accept only securities that
are delivered in proper form and will not accept
securities subject to legal restrictions on transfer.
The acceptance of securities by the Trust must comply
with applicable laws of certain states.
During the fiscal years ended June 30, 1994, 1995
and 1996, none of the Funds paid brokerage
commissions.
TRUSTEES AND OFFICERS
The Trustees and Executive Officers of the Trust,
their business addresses and principal occupations
during the past five years are:
POSITION
WITH THE BUSINESS
AFFILIATIONS NAME, ADDRESS, AGE TRUST AND
PRINCIPAL OCCUPATIONS
Michael G. Landry (50) Trustee President,
Chairman and 700 South Federal Hwy. and
Director of Mackenzie Suite 300
President Investment Management Inc. Boca Raton, FL
33432 (1987-present); President [Deemed
to be an and Director of Ivy
"interested person" of Management, Inc. (1992-
the Trust, as defined present); Chairman and
under the 1940 Act.] Director of
Mackenzie Ivy
Investor Services Corp.
(1993-present); Director
and President of Mackenzie
Ivy Funds Distribution,
Inc. (1993-1994); Chairman
and Director of Mackenzie
Ivy Funds Distribution,
Inc. (1994-present);
President and
Trustee of Ivy
Fund (1992-present);
President of Mackenzie
Series Trust (1987-
present); Director and
President of The Mackenzie
Funds Inc. (1987-1995).
John S. Anderegg, Jr. Trustee Chairman,
Dynamics Research (72)
Corp. (instruments and 60 Concord Street
controls); Director, Burr- Wilmington, MA 01887
Brown Corp. (operational
amplifiers); Director,
Metritage Incorporated
(level measuring
instruments); Trustee of
Ivy Fund (1967-present).
Paul H. Broyhill (72) Trustee Chairman, BMC
Fund, Inc. 800 Hickory Blvd. (1983-
present); Chairman, Golfview Park
Broyhill Family Foundation, Lenoir, NC 28645
Inc. (1983-present);
Chairman and President,
Broyhill Investments, Inc.
(1983-present); Chairman,
Broyhill Timber Resources
(1983-present); Director
of The Mackenzie
Funds Inc.
(1988-1995);
Trustee of Ivy
Fund (1992-present);
Management of a personal
portfolio of fixed income
and equity investments
(1983-present).
Stanley Channick (72) Trustee President, The
Whitestone 11 Bala Avenue
Corporation (insurance Bala Cynwyd, PA 19004
agency); President, Scott
Management Company
(administrative services
for insurance companies);
President, The Channick
Group (consultants to
insurance companies and
national trade
associations); Trustee of
Ivy Fund (1984-1993);
Director of The
Mackenzie Funds
Inc. (1994-1995).
Frank W. DeFriece, Jr. Trustee Director of The
Mackenzie (75) Funds
Inc. (1987-1995); 322 Seventh Street
Trustee and Second Vice Bristol, TN 37620-
Chairman, East Tennessee 2218
Public Communications Corp.
(WSJK-TV) (1984-present);
Director, Manager and Vice
President, Massengill-
DeFriece Foundation
(charitable organization)
(1950-present);
Trustee of Ivy
Fund (1992-present).
Roy J. Glauber (71) Trustee Mallinckrodt
Professor of
Physics, Harvard University
(since 1974); Trustee of
Ivy Fund (1961-1991);
Trustee of Mackenzie Series
Trust (1994-present).
Joseph G. Rosenthal Trustee Chartered
Accountant (1958- (62)
present); Director of The 110 Jardin Drive
Mackenzie Funds Inc. (1987- Unit #12
1995); Trustee of Ivy Fund Concord,
Ontario (1992-present). Canada L4K
2T7
J. Brendan Swan (66) Trustee President,
Airspray 4701 North Federal
International, Inc.; Joint Hwy. #465
Managing Director, Airspray Pompano Beach, FL
International B.V. (an 33064
environmentally sensitive
packaging company); Trustee
of Ivy Fund (1992-present);
Director, The
Mackenzie Funds
Inc. (1992-1995).
Keith J. Carlson (40) Vice Senior Vice
President and 700 South Federal Hwy. President
Director of Mackenzie Suite 300
Investment Management, Inc. Boca Raton, FL 33432
(1994-present); Senior Vice
President, Secretary and
Treasurer of Mackenzie
Investment Management Inc.
(1985-1994); Senior Vice
President and
Director of Ivy
Management, Inc. (1994-
present); Senior Vice
President, Treasurer and
Director of Ivy Management,
Inc. (1992-1994); Vice
President of The Mackenzie
Funds Inc. (1987-1995);
President and Director of
Mackenzie Ivy
Investor Services
Corp. (1993-
present); Vice President of
Mackenzie Series Trust
(1994-present); Treasurer
of Mackenzie Series Trust
(1985-1994); President and
Director of Mackenzie Ivy
Funds Distribution,
Inc. (1994-
present); Executive
Vice President and Director
of Mackenzie Ivy Funds
Distribution, Inc. (1993-
1994); Treasurer of Ivy
Fund (1992-1994); Vice
President of Ivy Fund
(1994-present).
C. William Ferris (52) Secretary/ Senior Vice
President, 700 South Federal Hwy. Treasurer
Secretary/Treasurer and Suite 300
Director of Mackenzie Boca Raton, FL 33432
Investment Management Inc.
(1994-present); Senior Vice
President, Finance and
Administration/Compliance
Officer of Mackenzie
Investment Management Inc.
(1989-1994);
Senior Vice
President,
Secretary/Treasurer and
Clerk of Ivy Management,
Inc. (1989-1994); Senior
Vice President,
Secretary/Treasurer of
Mackenzie Ivy Funds
Distribution, Inc. (1993-
1994); Secretary/Treasurer
and Director of Mackenzie
Ivy Investor Services
Corp.
(1993-1994); Secretary of
Mackenzie Series Trust
(1993-1994);
Secretary/Treasurer and
Director of Mackenzie Ivy
Investor Services Corp.
(1993-present);
Secretary/Treasurer of The
Mackenzie Funds Inc. (1993-
1995); Secretary/Treasurer
of Mackenzie Series
Trust (1994-
present); Secretary
of Ivy Fund (1993-1994);
Secretary/Treasurer of Ivy
Fund (1994-present).
As of September 30, 1996, all Trustees and
executive officers of the Trust as a group owned
beneficially or of record none of the outstanding Class
A and Class B shares of any of the Funds.
PERSONAL INVESTMENTS BY EMPLOYEES OF THE ADVISER
Employees of MIMI are permitted to make personal
securities transactions, subject to requirements and
restrictions set forth in MIMI's Code of Ethics. The
Code of Ethics contains provisions and requirements
designed to identify and address certain conflicts of
interest between personal investment activities and the
interests of investment advisory clients such as the Funds.
Among other things, the Code of Ethics, which generally
complies with standards recommended by the Investment
Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions
absent prior approval, imposes time periods during
which personal transactions may not be made in certain
securities, and requires the submission of duplicate broker
confirmations and monthly reporting of securities
transactions. Additional restrictions apply to
portfolio managers, traders, research analysts and
others involved in the investment advisory process.
Exceptions to these and other provisions of the Code of
Ethics may be granted in particular circumstances after review by
appropriate personnel.
COMPENSATION TABLE
(for the fiscal year ending June 30, 1996)
PENSION OR
TOTAL RETIREMENT
ESTIMATED COMPEN- AGGREGATE
BENEFITS ANNUAL SATION COMPEN-
ACCRUED AS BENEFITS FROM TRUST NAME,
SATION PART OF UPON PAID TO
POSITION FROM TRUST FUND RETIREMENT TRUSTEE
EXPENSES
John S. 2,335 N/A N/A
2,335 Anderegg, Jr.
(Trustee)
Paul H. 2,335 N/A N/A
2,335 Broyhill
(Trustee)
Stanley 5,860 N/A N/A
5,860 Channick
(Trustee)
Frank W.
DeFriece, Jr. 2,335 N/A N/A
2,335 (Trustee)
Roy J. Glauber 5,860 N/A N/A
5,860 (Trustee)
Michael G. -0-
Landry N/A N/A -0-
(Trustee and
President)
Joseph G. 2,335 N/A N/A
2,335 Rosenthal
(Trustee)
J. Brendan 2,335 N/A N/A
2,335 Swan
(Trustee)
Keith J. -0- N/A N/A -0-
Carlson
(Vice
President)
C. William
Ferris -0- N/A N/A -0-
(Secretary/
Treasurer)
INVESTMENT ADVISORY AND OTHER SERVICES
BUSINESS MANAGEMENT AND INVESTMENT ADVISORY SERVICES
Mackenzie Investment Management Inc. ("MIMI")
provides business management and investment advisory
services to the Funds pursuant to a Business Management
and Investment Advisory Agreement (the "Agreement").
The Agreement was approved by shareholders of Mackenzie
National Municipal Fund, Mackenzie California Municipal
Fund and Mackenzie New York Municipal Fund on October
24, 1990, after having first been approved on September
5, 1990 by the Board of Trustees, including a majority
of the Trustees who neither are "interested persons" (as defined
in the 1940 Act) of the Trust nor have any direct or
indirect financial interest in the operation of the
distribution plans described below (see "Distribution
Services") or in any related agreement (the
"Independent Trustees"). The Agreement was approved by
the Board of Trustees for Mackenzie Limited Term
Municipal Fund on May 16, 1991, and by the initial shareholder of
the Fund on June 20, 1991. The continuation of the
Agreement with respect to all of the Funds was last
approved on August 24, 1996 by the Board of Trustees,
including the Independent Trustees. MIMI is a
subsidiary of Mackenzie Financial Corporation ("MFC"),
150 Bloor Street West, Toronto, Ontario, Canada, a
public corporation organized under the laws of Ontario
whose shares are listed for trading on The Toronto Stock
Exchange. MFC is registered in Ontario as a mutual fund
dealer.
Under the Agreement, MIMI makes investments for
the account of each Fund in accordance with its best
judgment and within the investment objectives and
restrictions set forth in the Prospectus, the 1940 Act
and the provisions of the Code relating to regulated
investment companies, subject to policy decisions
adopted by the Trust's Board of Trustees. MIMI also provides an
investment program, determines the securities to be
purchased or sold by a Fund and places orders with
brokers or dealers who deal in such securities.
MIMI also provides certain business management
services pursuant to the Agreement. MIMI is obligated
to (1) coordinate with the Funds' custodian and
transfer agent and monitor the services they provide to
the Funds; (2) coordinate with and monitor any other
third parties furnishing services to the Funds; (3)
provide the Funds with any necessary office space, telephones
and other communications facilities; (4) provide the
services of individuals competent to perform
administrative and clerical functions that are not
performed by employees or other agents engaged by the
Funds or by MIMI acting in some other capacity pursuant
to a separate agreement or arrangement with the Funds;
(5) maintain or supervise the maintenance by third parties of
such books and records of the Trust as may be required by
applicable Federal or state law; (6) authorize and permit
MIMI's directors, officers and employees who may be
elected or appointed
as trustees or officers of the Trust to serve in such
capacities; and (7) take such other action with respect
to the Trust, after approval by the Trust, as may be
required by applicable law, including without
limitation the rules and regulations of the SEC and of
state securities commissions and other regulatory
agencies.
For MIMI's services under the Agreement, each Fund
pays MIMI a monthly fee at an annual rate of 0.55% of
the Fund's average net assets. For the fiscal years
ended June 30, 1996, 1995 and 1994, MIMI received fees
of $513,762, $761,172 and $727,421, respectively, from
Mackenzie Limited Term Municipal Fund; $146,137,
$187,610 and $223,155, respectively, from Mackenzie
National Municipal Fund; $209,516, $221,717, and $253,535,
respectively, from Mackenzie California Municipal Fund; and
$222,574, $235,164 and $243,239, respectively, from
Mackenzie New York Municipal Fund.
The Trust pays the following expenses under the
Agreement: (1) the fees and expenses of the Trust's
Independent Trustees; (2) the salaries and expenses of
any of the Trust's officers or employees who are not
affiliated with MIMI; (3) interest expenses; (4) taxes
and governmental fees, including any original issue
taxes or transfer taxes applicable to the sale or delivery
of shares or certificates therefor; (5) brokerage commissions
and other expenses incurred in acquiring or disposing
of portfolio securities; (6) the expenses of
registering and qualifying shares for sale with the SEC
and with various state securities commissions; (7)
accounting and legal costs; (8) insurance premiums; (9)
fees and expenses of the Trust's Custodian and Transfer
Agent and any related services; (10) expenses of
obtaining quotations of portfolio securities and of pricing
shares; (11) expenses of maintaining the Trust's legal
existence and of shareholders' meetings; (12) expenses
of preparation and distribution to existing
shareholders of periodic reports, proxy materials and
prospectuses; and (13) fees and expenses of membership
in industry organizations.
MIMI voluntarily limits the total Fund expenses
(excluding interest, 12b-1 fees, taxes, brokerage
commissions, litigation and indemnification expenses,
and other extraordinary expenses) to an annual rate of
(i) 0.64% of the average net assets of Mackenzie
Limited Term Municipal Fund, and (ii) 0.85% of the
average net assets of Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund and Mackenzie New York
Municipal Fund. As long as a Fund's expense limitation
continues, it may lower the Fund's expenses and increase its
yield. A Fund's expense limitation may be terminated or
revised at any time, at which time the Fund's expenses
may increase and its yield may be reduced, depending on
the total assets of the Fund. Shareholders of
Mackenzie Limited Term Municipal Fund and Mackenzie
National Municipal Fund will receive 30 days' notice of
any termination of the Fund's expense limitation. If a Fund's
expense limitation is terminated, MIMI will comply with any
applicable state regulations, which may require MIMI to
make reimbursements to a Fund in the event that the
Fund's aggregate operating expenses, including the
management and advisory fee and shareholder and
administrative services fee, but generally excluding
interest, taxes, brokerage commissions and
extraordinary expense, are in excess of specific applicable
limitations. For the fiscal year ended June 30, 1996,
voluntary expense reimbursements for Mackenzie Limited
Term Municipal Fund, Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund and Mackenzie New
York Municipal Fund and were $373,984, $106,248,
$66,721 and $83,090, respectively.
The Agreement will continue in effect with respect
to each Fund for more than its initial two-year period
only so long as the continuance is specifically
approved at least annually (i) by the vote of a
majority of the Independent Trustees, and (ii) either
(a) by the vote of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act), or (b) by the
vote of a majority of the entire Board of Trustees. If the
question of continuance of the Agreement (or adoption of
any new agreement) is presented to a Fund's
shareholders, continuance (or adoption) shall be
effected only if approved by the affirmative vote of a
majority of the Fund's outstanding voting securities.
See "Capitalization and Voting Rights." The Agreement may be
terminated with respect to a Fund at any time, without
payment of any penalty, by the vote of a majority of
the Board of Trustees, or by the vote of a majority of
the Fund's outstanding voting securities, on 60 days'
written notice to MIMI, or by MIMI on 60 days' written
notice to the Trust. The Agreement shall terminate
automatically in the event of its assignment. MIMI and MFC
reserve all rights in the name "Mackenzie" and permit the use
of the name "Mackenzie" or any name derived from the
name "Mackenzie" by a Fund and the Trust only so long
as the Agreement or any extension, renewal or amendment
thereof remains in effect.
DISTRIBUTION SERVICES
Ivy Mackenzie Distributors, Inc. ("IMDI"), a
wholly owned subsidiary of MIMI, serves as the
exclusive distributor of the Class A and Class B shares
of the Funds pursuant to an Amended and Restated
Distribution Agreement with the Trust dated April 1,
1994 (the "Distribution Agreement").1[Effective October 1, 1993,
IMDI succeeded to and is continuing MIMI's broker-dealer
activities. The provisions of the Funds' previous
Distribution Agreements with MIMI remain unchanged by
the succession.] The Distribution Agreement does not
obligate IMDI to sell any specific amount of Fund
shares. The Distribution Agreement will continue in
effect for successive one-year periods, provided that
such continuance is specifically approved at least annually by
the vote of a majority of the Independent Trustees, cast in
person at a meeting called for that purpose and by the
vote of either a majority of the entire Board of
Trustees or a majority of the outstanding voting
securities of a Fund. The Distribution Agreement may
be terminated with respect to a Fund at any time,
without payment of any penalty, by IMDI on 60 days'
written notice to the Fund or by the Fund by vote of
either a majority of the outstanding voting securities
of the Fund or a majority of the Independent Trustees
on 60 days' written notice to IMDI. The Distribution
Agreement shall terminate automatically in the event of
its assignment.
Under the terms of the Distribution Agreement,
IMDI is entitled to deduct a contingent deferred sales
charge on the redemption of Class B shares of the Funds
in the manner set forth in the Prospectus. IMDI may
reallow all or a portion of the contingent deferred
sales charge to dealers as IMDI may determine from time
to time. During the fiscal year ended June 30, 1996,
IMDI received $15,109, $3,596, $1,154 and $5,486 in contingent
deferred sales charges on redemptions of Class B shares of
Mackenzie Limited Term Municipal Fund, Mackenzie National
Municipal Fund, Mackenzie California Municipal Fund and
Mackenzie New York Municipal Fund, respectively.
During the fiscal year ended June 30, 1995, IMDI
received $8,876, $6,798, $4,231 and $583 in contingent
deferred sales charges on redemptions of Class B shares
of Mackenzie Limited Term Municipal Fund, Mackenzie
National Municipal Fund, Mackenzie California Municipal Fund and
Mackenzie New York Municipal Fund, respectively. During
the period from April 1, 1994 (commencement of sales of
Class B shares) to June 30, 1994, IMDI received no
contingent deferred sales charges on redemptions of
Class B shares of Mackenzie Limited Term Municipal
Fund, Mackenzie National Municipal Fund and Mackenzie
California Municipal Fund. During the same period,
IMDI received $485 in contingent deferred sales charges on
redemptions of Mackenzie New York Municipal Fund.
IMDI is also entitled under the Distribution
Agreement to deduct a commission on all Class A Fund
shares sold equal to the difference, if any, between
the public offering price, as set forth in the Funds'
then-current Prospectus, and the net asset value on
which such price is based. Out of such commission, IMDI
may allow to dealers such concession as IMDI may determine from
time to time. During the last three fiscal years, the
sales commissions paid by each of the Funds to IMDI
pursuant to the Distribution Agreement for sales of
Class A shares, and the amounts reallowed to dealers,
were as follows:
MACKENZIE LIMITED TERM MUNICIPAL FUND. During the
fiscal years ended June 30, 1996 and 1995 and the nine
months ended June 30, 1994, IMDI received $36,848,
$155,685 and $816,793, respectively, in commissions
from sales of Class A shares of the Fund, of which
$8,684, $33,813 and $193,175, respectively, was
retained after dealers' reallowances. During the three months
ended September 30, 1993, MIMI received $382,984 in
commissions from sales of Class A shares of the Fund,
of which $86,956 was retained after dealers'
reallowances.
MACKENZIE NATIONAL MUNICIPAL FUND. During the
fiscal years ended June 30, 1996 and 1995, and the nine
months ended June 30,
1994, IMDI received $10,373, $52,035 and $79,937,
respectively, in commissions from sales of Class A
shares of the Fund, of which $2,051, $11,118 and
$15,708, respectively, was retained after dealers'
reallowances. During the three months ended September
30, 1993, MIMI received $34,716 in commissions from sales of
Class A shares of the Fund, of which $5,694 was retained
after dealers' reallowances.
MACKENZIE CALIFORNIA MUNICIPAL FUND. During the
fiscal years ended June 30, 1996 and 1995, and the nine
months ended June 30, 1994, IMDI received $14,119,
$49,841 and $66,168, respectively, in commissions from
sales of Class A shares of the Fund, of which $2,830,
$10,201 and $7,932, respectively, was retained after
dealers' reallowances. During the three months ended
September 30, 1993, MIMI received $38,820 in commissions
from sales of Class A shares of the Fund, of which $13,267 was
retained after dealers' reallowances.
MACKENZIE NEW YORK MUNICIPAL FUND. During the
fiscal years ended June 30, 1996 and 1995, and the nine
months ended June 30, 1994, IMDI received $29,270,
$65,484 and $164,893, respectively, in commissions from
sales of Class A shares of the Fund, of which $5,796,
$13,595 and $33,248, respectively, was retained after
dealers' reallowances. During the three months ended September
30, 1993, MIMI received $85,283 in commissions from sales
of Class A shares of the Fund, of which $16,359 was
retained after dealers' reallowances.
RULE 18F-3 PLAN. On February 23, 1995, the SEC
adopted Rule 18f-3 under the 1940 Act, which permits a
registered open-end investment company whose shares are
registered on Form N-1A to issue multiple classes of
shares in accordance with a written plan approved by
the investment company's board of directors/trustees
and filed with the SEC. At a meeting held on December
1-2, 1995, the Board of Trustees of the Trust adopted a
multi-class plan (the "Rule 18f-3 plan") on behalf of each Fund.
The key features of the Rule 18f-3 plan are as follows:
(i) shares of each class of each Fund represent an
equal pro rata interest in the Fund and generally have
identical voting, dividend, liquidation, and other
rights, preferences, powers, restrictions, limitations,
qualifications, terms and conditions, except that each
class bears certain class-specific expenses and has
separate voting rights on certain matters that relate solely
to that class or in which the interests of shareholders of
one class differ from the interests of shareholders of
another class; (ii) subject to certain limitations
described in each Fund's Prospectus, shares of a
particular class of the Fund may be exchanged for
shares of the same class of another Ivy or Mackenzie
fund; and (iii) each Fund's Class B shares will
convert automatically into Class A shares of the Fund after a
period of eight years, based on the relative net asset value
of such shares at the time of conversion.
RULE 12b-1 DISTRIBUTION PLANS. As described in
the Prospectus, each Fund has adopted pursuant to Rule
12b-1 under the 1940 Act separate distribution plans
pertaining to its Class A and Class B shares (the
"Class A Plan" and the "Class B Plan," collectively,
the "Plans"). In adopting each Plan, a majority of the
Independent Trustees have concluded in conformity with
the requirements of the 1940 Act that there is a reasonable
likelihood that the Plan will benefit a Fund and its
shareholders. The Trustees of the Trust believe that the Plans
should result in greater sales and/or fewer redemptions of
Fund shares, although it is impossible to know for
certain the level of sales and redemptions of Fund
shares in the absence of a Plan or under an alternative
distribution arrangement.
Under each Fund's Class A and Class B Plan, each
Fund pays IMDI a service fee, accrued daily and paid
monthly, at the annual rate of up to 0.25% of the
average net assets attributable to its Class A shares
or Class B shares, as the case may be. The services
for which service fees may be paid include, among other
services, advising clients or customers regarding the purchase,
sale or retention of shares of a Fund, answering routine
inquiries concerning a Fund and assisting shareholders in
changing options or enrolling in specific plans.
Pursuant to each Fund's Plans, service fee payments
made out of or charged against the assets attributable
to that Fund's Class A or Class B shares must be in
reimbursement for services rendered for or on behalf of
that class of the Fund. The expenses not reimbursed in
any one given month may be reimbursed in a subsequent month. No
Class A Plan provides for the payment of interest or
carrying charges as distribution expenses.
Each Fund also pays IMDI a distribution fee based
on the average net assets attributable to its Class B
shares, accrued daily and paid monthly at the following
annual rates: 0.50%, for Mackenzie Limited Term
Municipal Fund; and 0.75%, for Mackenzie National
Municipal Fund, Mackenzie California Municipal Fund and
Mackenzie New York Municipal Fund. IMDI may reallow all or a
portion of the service and distribution fees to dealers as
MIMI may determine from time to time. The distribution
fee compensates IMDI for expenses incurred in
connection with activities primarily intended to result
in the sale of Class B shares of a Fund, including the
printing of prospectuses for persons other than
shareholders and the preparation, printing and
distribution of sales literature and advertising materials.
Pursuant to each Fund's Class B Plan, IMDI may include
interest, carrying or other finance charges in its
calculation of Class B distribution expenses, if not
prohibited from doing so pursuant to an order of or a
regulation adopted by the SEC. The SEC order
permitting the imposition of a contingent deferred sales charge
on Class B shares does not currently permit IMDI to
recover such charges.
Among other things, each Plan provides that (1)
IMDI will submit to the Board of Trustees of the Trust
at least quarterly,
and the Trustees will review, written reports regarding
all amounts expended under the Plan and the purposes
for which such expenditures were made; (2) the Plan
will continue in effect only so long as such
continuance is approved at least annually, and any
material amendment thereto is approved, by the votes of a
majority of the Trust's Board of Trustees, including the
Independent Trustees, cast in person at a meeting called for
that purpose; (3) payments by a Fund under the Plan
shall not be materially increased without the
affirmative vote of the holders of a majority of the
outstanding shares of the relevant class; and (4) while
the Plan is in effect, the selection and nomination of
Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust shall be committed to the discretion
of the Trustees who are not "interested persons" of the
Trust.
IMDI may make payments for distribution assistance
and for administrative and accounting services from
resources that may include the management fees paid to
MIMI by the Funds. IMDI also may make payments (such
as the service fee payments described above) to
unaffiliated broker-dealers for services rendered in
the distribution of the Funds' shares. To qualify for such
payments, shares may be subject to a minimum holding period.
However, no such payments will be made to any dealer or
broker, if at the end of each year the amount of shares
held does not exceed a minimum amount. The minimum
holding period and minimum level of holdings will be
determined from time to time by IMDI.
Each Plan may be amended at any time with respect
to the class of shares of a Fund to which the Plan
relates by vote of the Trustees, including a majority
of the Independent Trustees, cast in person at a
meeting called for the purpose of considering such
amendment. Each Plan may be terminated with respect to the
class of shares of a Fund to which the Plan relates at any
time, without payment of any penalty, by vote of a
majority of the Independent Trustees, or by vote of a
majority of the outstanding voting securities of that
class.
RULE 12B-1 PAYMENTS BY THE FUNDS FOR DISTRIBUTION-
RELATED SERVICES:
MACKENZIE LIMITED TERM MUNICIPAL FUND. During the
period from July 1, 1993 to September 30, 1993, the
Fund paid MIMI $65,146 pursuant to the Class A Plan.
During the period from October 1, 1993 to June 30,
1994, and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $265,119, $340,929 and
$228,045, respectively, pursuant to the Class A plan. For the
period from April 1, 1994 (the date on which Class B shares
of the Fund were first offered for sale to the public)
to June 30, 1994 and the fiscal years ended June 30,
1995 and 1996, the Fund paid IMDI $1,115, $15,139 and
$16,450, respectively, pursuant to the Class B
Plan.
MACKENZIE NATIONAL MUNICIPAL FUND. During the
period from July 1, 1993 to September 30, 1993, the
Fund paid MIMI $26,593 pursuant to the Class A Plan.
During the period from October 1, 1993 to June 30,
1994, and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $74,712, $83,272 and $64,109,
respectively, pursuant to the Class A plan. For the period from
April 1, 1994 (the date on which Class B shares of the
Fund were first offered for sale to the public) to June
30, 1994 and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $771, $8,042 and $9,273,
respectively, pursuant to the Class B Plan.
MACKENZIE CALIFORNIA MUNICIPAL FUND. During the
period from July 1, 1993 to September 30, 1993, the
Fund paid MIMI $30,288 pursuant to the Class A Plan.
During the period from October 1, 1993 to June 30,
1994, and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $84,893, $100,518 and $92,452,
respectively, pursuant to the Class A plan. For the period from
April 1, 1994 (the date on which Class B shares of the
Fund were first offered for sale to the public) to
June 30, 1994 and the fiscal years ended June 30, 1995
and 1996, the Fund paid IMDI $168, $5,868 and 11,122,
respectively, pursuant to the Class B Plan.
MACKENZIE NEW YORK MUNICIPAL FUND. During the
period from July 1, 1993 to September 30, 1993, the
Fund paid MIMI $27,182 pursuant to the Class A Plan.
During the period from October 1, 1993 to June 30,
1994, and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $83,038, $103,901 and $96,899,
respectively, pursuant to the Class A plan. For the period from
April 1, 1994 (the date on which Class B shares of the
Fund were first offered for sale to the public) to June
30, 1994 and the fiscal years ended June 30, 1995 and
1996, the Fund paid IMDI $1,374, $11,975 and $17,083,
respectively, pursuant to the Class B Plan.
DISTRIBUTION-RELATED EXPENSES BORNE BY IMDI:
MACKENZIE LIMITED TERM MUNICIPAL FUND: During the
fiscal year ended June 30, 1996, IMDI expended the
following amounts in marketing Class A and Class B
shares of the Fund: advertising, $19,412 and $467,
respectively; printing and mailing of prospectuses to
persons other than current shareholders, $11,799 and
$284, respectively; compensation to dealers, $40,373 and
$971, respectively; compensation to sales personnel, $140,835 and
$3,386, respectively; seminars and meetings, $10,093 and
$243, respectively; travel and entertainment, $27,531
and $662, respectively; general and administrative,
$102,189 and $2,457, respectively; telephone, $4,053
and $97, respectively; and occupancy and equipment
rental, $8,981 and $216,
respectively.
MACKENZIE NATIONAL MUNICIPAL FUND: During the
fiscal year ended June 30, 1996, IMDI expended the
following amounts in
marketing Class A and Class B shares of the Fund:
advertising, $5,537 and $200, respectively; printing
and mailing of prospectuses to persons other than
current shareholders, $4,105 and $148, respectively;
compensation to dealers, $14,169 and $512,
respectively; compensation to sales personnel, $40,257 and
$1,456, respectively; seminars and meetings, $3,542 and $128,
respectively; travel and entertainment, $7,858 and $284,
respectively; general and administrative, $28,527 and
$1,032, respectively; telephone, $1,153 and $42,
respectively; and occupancy and equipment rental,
$2,558 and $92, respectively.
MACKENZIE CALIFORNIA MUNICIPAL FUND: During the
fiscal year ended June 30, 1996, IMDI expended the
following amounts in marketing Class A and Class B
shares of the Fund: advertising, $8,019 and $241,
respectively; printing and mailing of prospectuses to
persons other than current shareholders, $4,629 and
139, respectively; compensation to dealers, $18,545 and $558,
respectively; compensation to sales personnel, $57,935 and
1,742, respectively; seminars and meetings, $4,637 and
$139, respectively; travel and entertainment, $11,409
and $343, respectively; general and administrative,
$40,841 and $1,228, respectively; telephone, $1,665 and
$50, respectively; and occupancy and equipment rental,
$3,706 and $111,
respectively.
MACKENZIE NEW YORK MUNICIPAL FUND: During the
fiscal year ended June 30, 1996, IMDI expended the
following amounts in marketing Class A and Class B
shares of the Fund: advertising, $8,391 and $370,
respectively; printing and mailing of prospectuses to
persons other than current shareholders, $5,213 and
$230, respectively; compensation to dealers, $22,534 and
$993, respectively; compensation to sales personnel, $60,779 and
$2,679, respectively; seminars and meetings, $5,634 and
$248, respectively; travel and entertainment, $11,929
and $526, respectively; general and administrative,
$42,599 and 1,878, respectively; telephone, $1,742 and
$77, respectively; and occupancy and equipment rental,
$3,875 and $171,
respectively.
CUSTODIAN
Brown Brothers Harriman & Co., a private bank and
member of the principal securities exchanges, located
at 40 Water Street, Boston, Massachusetts 02109 (the
"Custodian"), has been retained to act as Custodian of
the Trust's investments. Its primary responsibility is
to maintain custody of the cash and securities in each
Fund's portfolio. Brown Brothers may receive, as partial
payment for its services, a portion of the Trust's brokerage
business, subject to its ability to provide best price and
execution. The First National Bank of Boston, One
Financial Center, Boston, Massachusetts 02111, served
as the Trust's custodian until May 31, 1993.
FUND ACCOUNTING
Pursuant to a Fund Accounting Services Agreement
dated July 1, 1991 (effective July 16, 1991), MIMI
provides certain accounting and pricing services for
the Funds. As compensation for such services, each
Fund pays MIMI a monthly fee plus out-of- pocket
expenses as incurred. The monthly fee is based on the net
assets of the Fund at the preceding month end at the following
rates: $1,000 when the net assets are less than $20
million; $1,500 when the net assets are $20 to $75
million; $4,000 when the net assets are $75 to $100
million; and $6,000 when the net assets are over $100
million. For the fiscal years ended June 30, 1996,
1995 and 1994, the Funds paid the following amounts to
MIMI pursuant to the agreement: Mackenzie Limited Term Municipal
Fund, $83,991, $104,676, and $93,126, respectively;
Mackenzie National Municipal Fund, $27,338, $27,467 and
$26,935, respectively; Mackenzie California Municipal
Fund, $26,765, $24,790 and $24,062, respectively; and
Mackenzie New York Municipal Fund, $29,975, $29,126 and
$27,625, respectively.
TRANSFER AND DIVIDEND PAYING AGENT
Ivy Mackenzie Services Corp. ("IMSC" or the
"Transfer Agent") acts as the Trust's transfer agent
and dividend paying agent pursuant to a Transfer Agency
and Shareholder Services Agreement. For transfer
agency and shareholder services, each Fund pays IMSC an
annual fee of $20.75 per open account and $4.48 for
each account that is closed. In addition, each Fund
reimburses IMSC monthly for out-of-pocket expenses. Certain
broker-dealers that maintain shareholder accounts with the
Fund through an omnibus account provide transfer agent
and other shareholder-related services that would
otherwise be provided by IMSC if the individual
accounts that comprise the omnibus account were opened
by their beneficial owners directly. IMSC pays such
broker-dealers a per account fee for each open account within the
omnibus account, or a fixed rate fee (e.g., .10%), based
on the average daily net asset value of the omnibus
account (or a combination thereof).
ADMINISTRATOR
MIMI provides various administrative services to
the Trust pursuant to an Administrative Services
Agreement. As compensation for these services, each
Fund pays MIMI a monthly fee at the annual rate of .10%
of each Fund's average daily net assets.
Outside of providing administrative services to
the Trust, as described above, MIMI may also act on
behalf of IMDI in paying commissions to broker-dealers
with respect to sales of a Fund's Class B shares.
AUDITORS
Coopers & Lybrand L.L.P., independent certified
public accountants, 200 East Las Olas Boulevard, Suite
1700, Ft.
Lauderdale, Florida 33301, has been selected as
auditors for the Trust. The audit services performed
by Coopers & Lybrand L.L.P. include audits of the
annual financial statements of each of the funds of the
Trust. Other services provided primarily relate to
filings with the SEC and the review of the Trust's tax returns.
CAPITALIZATION AND VOTING RIGHTS
The capitalization of the Trust consists of an
unlimited number of shares of beneficial interest with
a par value of $0.001 per share. When issued, shares
of each class of a Fund are fully paid, non-assessable,
redeemable and fully transferable. No class of shares
of a Fund has preemptive rights or subscription rights.
The Declaration of Trust permits the Trustees to
create separate series or portfolios and to divide any
series or portfolio into one or more classes. The
Trustees have authorized five series, each of which
represents a fund. The Trustees have further
authorized the issuance of Classes A and B shares for the
Funds.
Shareholders have the right to vote for the
election of Trustees of the Trust and on any and all
matters on which they may be entitled to vote by law or
by the provisions of the Trust's By-Laws. Shares of
each class of a Fund entitle their holders to one vote
per share (with proportionate voting for fractional
shares). On matters affecting only one Fund, only the
shareholders of that Fund are entitled to vote. All classes of
shares of a Fund will vote together, except with respect
to the distribution plan applicable to its Class A or
Class B shares or when a class vote is required by the
1940 Act. On matters relating to all of the Funds, but
affecting each Fund differently, separate votes by the
shareholders of each Fund are required. Approval of an
investment advisory agreement and a change in
fundamental policies would be regarded as matters
requiring separate voting by the shareholders of each Fund. If
the Trustees determine that a matter does not affect the
interests of a Fund, then the shareholders of that Fund
will not be entitled to vote on that matter. Matters
that affect the Trust in general, such as ratification
of the selection of independent public accountants,
will be voted upon collectively by the shareholders of
all of the Funds.
As used in this SAI and the Prospectus, the phrase
"majority vote of the outstanding shares" of a Fund
means the vote of the lesser of: (1) 67% of the shares
of the Fund (or of the Trust) present at a meeting if
the holders of more than 50% of the outstanding shares
are present in person or by proxy; or (2) more than 50%
of the outstanding shares of the Fund (or of the Trust).
With respect to the submission to shareholder vote of a matter
requiring separate voting by a Fund, the matter shall have
been effectively acted upon with respect to any Fund if
a majority of the outstanding voting securities of that
Fund votes for the
approval of the matter, notwithstanding that: (1) the
matter has not been approved by a majority of the
outstanding voting securities of any other fund of the
Trust; or (2) the matter has not been approved by a
majority of the outstanding voting securities of the
Trust. The Trust's shares do not have cumulative
voting rights and accordingly the holders of more than
50% of the outstanding shares could elect the entire Board of
Trustees, in which case the holders of the remaining shares
would not be able to elect any Trustees.
Under Massachusetts law, the Trust's shareholders
could, under certain circumstances, be held personally
liable for the obligations of the Trust. However, the
Amended and Restated Declaration of Trust disclaims
liability of the shareholders, Trustees or officers of
the Trust for acts or obligations of the Trust, which
are binding only on the assets and property of the
Trust, and requires that notice of the disclaimer be given in
each contract or obligation entered into or executed by the
Trust or its Trustees. The Amended and Restated
Declaration of Trust provides for indemnification out
of Fund property for all loss and expense of any
shareholder of a Fund held personally liable for the
obligations of that Fund. The risk of a shareholder of
the Trust incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust
itself would be unable to meet its obligations and,
thus, should be considered remote.
PRINCIPAL HOLDERS OF SECURITIES:
MACKENZIE LIMITED TERM MUNICIPAL FUND: To the
knowledge of the Trust, as of September 30, 1996, no
shareholder owned beneficially or of record 5% or more
of the Fund's total outstanding shares, except that of
the outstanding Class B shares of the Fund, Elizabeth &
B.L. Perry, 1744 Pebble Creek Drive, Prattville, AL
36066-7207, owned of record 23,099.261 shares (12.27%);
Yolanda D. Acinapura, 330 Cherry Lane, Havertown, PA
19083-1617, owned of record 21,047.910 shares (11.18%) and
William E. Anderson Consulting, 11109 NW 113th Street, Yukon,
OK 73099, owned of record 13,792.722 shares
(7.32%).
MACKENZIE NATIONAL MUNICIPAL FUND: To the
knowledge of the Trust, as of September 30, 1996, no
shareholder owned beneficially or of record 5% or more
of the Fund's total outstanding shares, except that of
the outstanding Class B shares of the Fund, Bianca Van
Der Zee, 907 Maple Branch, Pearland, TX 77584, owned of
record 32,108.408 shares (26.45%); Ruth Swartz, 1161
Cayuga Drive, Grand Blanc, MI 48439-4823, owned of record
16,114.112 shares (13.27%); Paul H. Meyer, 8172 Hunnicut,
Dallas, TX 75228-5929, owned of record 13,779.197
shares (11.35%); Smith Barney, 388 Greenwich Street,
New York, NY 10013, owned of record 12,321.858 shares
(10.15%); John and Assuata Digianno, 271-20 77th Road,
New Hyde Park, NY 11040-1428, owned of record
11,079.717 (9.12%) and Smith Barney, 388 Greenwich Street, New
York, NY 10013 owned of record 10,148.146 (8.36%). Bianca
Van
Der Zee, 907 Maple Branch, Pearland, TX 77584, may be
deemed to hold a controlling interest, as defined in
the 1940 Act, in Class B shares of the Fund.
Accordingly, as long as Bianca Van Der Zee holds such
an interest, he or she may have the ability to
influence a vote on any matter that is submitted for approval
only to Class B shareholders of the Fund.
MACKENZIE CALIFORNIA MUNICIPAL FUND: To the
knowledge of the Trust, as of September 30, 1996, no
shareholder owned beneficially or of record 5% or more
of the Fund's total outstanding shares, except that of
the outstanding Class B shares of the Fund, The Feldman
Family Trust, 25381-G Alicia Parkway - #214, Laguna
Hills, CA 92653, owned of record 22,895.412 (19.69%);
The Donald R. Melen Trust, 353 Euclid Avenue #308,
Oakland, CA 94610, owned of record 14,822.613 (12.75%); Esther
Finnigan Trust, 1512 B Granite Hills Drive, El Cajon, CA
92019, owned of record 10,557.756 (9.08%); The Bell
Trust, 27031 Vista Point, San Juan Capistrano, CA
92675, owned of record 7,387.412 shares (6.35%) and
Robert and Dorothy Kishi, 1301 W 184th Street, Gardena,
CA 90248, owned of record 6,081.153 shares (5.23%).
MACKENZIE NEW YORK MUNICIPAL FUND: To the
knowledge of the Trust, as of September 30, 1996, no
shareholder owned beneficially or of record 5% or more
of the Fund's total outstanding shares, except that of
the outstanding Class B shares of the Fund, Susan E.
Madigan, 455 Village Lane, Box 126, Orient, NY 11957,
owned of record 48,836.499 shares (19.87%); Harold L.
Mendelson, 146-01 45th Avenue, Suite 402, Flushing, NY 11355,
owned of record 23,572.940 shares (9.59%); Smith Barney, 388
Greenwich Street, New York, NY 10013, owned of record
14,089.580 (5.73%) and Barbara A. Shonyo, 6 Juniper
Lane, Liverpool, NY 13090, owned of record 13,510.420
shares (5.49%).
NET ASSET VALUE
The market price of a Fund share is its net asset
value. The net asset value per share is calculated
separately for each Fund, and is computed by dividing
the value of the assets of the Fund, less its
liabilities, by the number of shares of the Fund
outstanding. A Fund's liabilities are allocated between its
Classes. The total of such liabilities allocated to a Class
plus that Class' distribution fee and any other
expenses specially allocated to that Class are then
deducted from the proportionate interest of the Class
in the Fund's assets, and the resulting amount for each
Class is divided by the number of shares of that Class
outstanding to produce the net asset value per share.
Portfolio securities are valued and net asset
value per share is determined as of the close of
regular trading on the New York Stock Exchange (the
"Exchange") (normally 4:00 p.m., Eastern Time) on each
day the Exchange is open for trading. The Trust's
offices will be closed, and net asset value will not be
calculated on the following national business holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. On any day on which either or both of
the Funds' Custodian or the Exchange close early as a
result of such day being a partial holiday or
otherwise, the Funds reserve the right to advance the
time on that day by which purchase and redemption requests must
be received.
Municipal securities held by the Funds are valued
through a pricing service and/or in accordance with
procedures approved by the Board of Trustees.
Valuations furnished by a pricing service are based on
a computerized matrix system and/or appraisals based in
each case upon information concerning market transactions and
quotations from recognized municipal securities dealers. In
valuing the Funds' municipal securities, the pricing
service considers factors such as yields or prices of
municipal bonds of comparable quality, type of issue,
coupon, maturity and rating, indications as to value
from dealers, and general market conditions. The
Trust's officers, under the general supervision of the
Board of Trustees, will regularly review procedures used
and valuations provided by the pricing service.
Taxable securities held by a Fund for which market
quotations are readily available will be valued at
market value, which is the last reported sale price or,
at the mean between the latest available bid and asked
prices. The Board of Trustees has determined that
securities having 60 days or less remaining to maturity
will be valued at their amortized cost, which
approximates market value when such amortized cost is believed to
reflect the fair market value of such securities.
The sale of a Fund's shares will be suspended
during any period when the determination of its net
asset value is suspended pursuant to rules or orders of
the SEC, and may be suspended by the Board of Trustees
whenever in its judgment it is in the best interest of
the Fund to do so.
PORTFOLIO TURNOVER
A change in securities held by a Fund is known as
"portfolio turnover" and may involve the payment by the
Fund of dealer markup or underwriting commission and
other transaction costs on the sale of securities, as
well as on the reinvestment of the proceeds in other
securities. A Fund's portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of
portfolio securities for the most recently completed fiscal
year by the monthly average of the value of the
portfolio securities owned by the Fund during that
year. For purposes of determining a Fund's portfolio
turnover rate, all securities whose maturities at the
time of acquisition were one year or less are excluded.
The annual portfolio turnover rates for the Funds are provided in
the Prospectus.
REDEMPTIONS
Shares of a Fund are redeemed at their net asset
value next determined after a redemption request in
proper form has been received by IMSC, less any
applicable contingent deferred sales charge.
Unless a shareholder requests that the proceeds of
any redemption be wired to his or her bank account,
payment for shares tendered for redemption is made by
check within seven days after tender in proper form,
except that the Trust reserves the right to suspend the
right of redemption or to postpone the date of payment
upon redemption, to the extent permitted by Federal
securities laws, (i) for any period during which the New York
Stock Exchange is closed (other than customary weekend and
holiday closing) or during which trading on the Exchange
is restricted, (ii) for any period during which an
emergency exists as determined by the SEC as a result
of which disposal of securities owned by a Fund is not
reasonably practicable or it is not reasonably
practicable for a Fund fairly to determine the value of
its net assets, or (iii) for such other periods as the
SEC may by order permit for the protection of shareholders of a
Fund.
Under unusual circumstances, when the Board of
Trustees deems it in the best interest of a Fund's
shareholders, that Fund may make payment for shares
repurchased or redeemed, in whole or in part, in
securities of the Fund taken at current value. If any
such redemption in kind is to be made, the Fund intends to
make an election pursuant to Rule 18f-1 under the 1940 Act.
This will require the Fund to redeem with cash at a
shareholder's election in any case where the redemption
involves less than $250,000 (or 1% of the Fund's net
asset value at the beginning of each 90-day period
during which such redemptions are in effect, if that
amount is less than $250,000). If payment is made in the
form of Fund securities, the redeeming shareholder may incur
brokerage costs in converting such securities to cash.
Subject to state law restrictions, the Trust may
redeem those accounts of shareholders who have
maintained an investment, including sales charges paid,
of less than $1,000 in a Fund for a period of more than
12 months. All accounts below that minimum will be
redeemed simultaneously when MIMI deems it advisable.
The $1,000 balance will be determined by actual dollar amounts
invested by the shareholder, unaffected by market
fluctuations. The Trust will notify any such
shareholder by certified mail of its intention to
redeem such account, and the shareholder shall have 60
days from the date of such letter to invest such
additional sum as shall raise the value of such account above
that minimum. Should the shareholder fail to forward such
sum within 60 days of the date of the Trust's letter of
notification, the Trust will redeem the shares held in
such account and transmit the redemption in value
thereof to the shareholder. However, those
shareholders who are investing pursuant to the
Automatic Investment Method will not be redeemed automatically
unless they have ceased making payments pursuant to the
plan for
a period of at least six consecutive months, and these
shareholders will be given six months' notice by the
Trust before such redemption. Shareholders in a
qualified retirement, pension or profit sharing plan
who wish to avoid tax consequences would have to
"rollover" any sum so redeemed into another qualified
plan within 60 days. The Trustees of the Trust may change the
minimum account size.
If a shareholder has given authorization for
telephonic redemption privilege, shares can be redeemed
and proceeds sent by Federal wire to a single
previously designated bank account. Delivery of the
proceeds of a wire redemption request of $250,000 or
more may be delayed by the Fund for up to seven days if deemed
appropriate under then current market conditions. The
Trust reserves the right to change this minimum or to
terminate the telephonic redemption privilege without
prior notice. The Trust cannot be responsible for the
efficiency of the Federal wire system of the
shareholder's dealer of record or bank. The
shareholder is responsible for any charges by the shareholder's
bank.
The Funds employ reasonable procedures that
require personal identification prior to acting on
redemption or exchange instructions communicated by
telephone to confirm that such instructions are
genuine. In the absence of such procedures, a Fund may
be liable for any losses due to unauthorized or
fraudulent telephone instructions.
CONVERSION OF CLASS B SHARES
As described in the Prospectus, Class B shares of
a Fund will convert automatically to Class A shares of
that Fund, based on the relative net asset values per
share of the two Classes, as of the close of business
on the first business day after the last day of the
calendar quarter in which the eighth anniversary of the
initial issuance of such Class B shares of the Fund occurs.
For the purpose of calculating the holding period required
for conversion of Class B shares, the date of initial
issuance shall mean: (i) the date on which such Class
B shares were issued, or (2) for Class B shares
obtained through an exchange, or a series of exchanges,
(subject to the exchange privileges for Class B shares)
the date on which the original Class B shares were
issued. For purposes of conversion of Class B shares, Class B
shares purchased through the reinvestment of dividends and
capital gain distributions paid in respect of Class B
shares will be held in a separate sub-account. Each
time any Class B shares in the shareholder's regular
account (other than those shares in the sub-account)
convert to Class A shares, a pro rata portion of the
Class B shares in the sub-account will also convert to
Class A shares. The portion will be determined by the ratio that
the shareholder's Class B shares converting to Class A
shares bears to the shareholder's total Class B shares
not acquired through the reinvestment of dividends and
capital gain distributions.
TAXATION
The following is a general discussion of certain
tax rules thought to be applicable with respect to the
Funds. It is merely a summary and is not an exhaustive
discussion of all possible situations or of all
potentially applicable taxes. Accordingly,
shareholders and prospective shareholders should consult a
competent tax advisor about the tax consequences to them of
investing in any Fund.
GENERAL
Each Fund intends to continue to qualify and elect
to be treated as a regulated investment company under
Subchapter M of the Code. In order to qualify, each
Fund must, among other things, (a) derive in each
taxable year at least 90% of its gross income from
dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of
stock, securities, or foreign currencies, or other income
(including but not limited to gains from options, futures,
and forward contracts) derived with respect to its
business of investing in such stock, securities or
currencies; (b) derive in each taxable year less than
30% of its gross income from the sale or other
disposition of certain assets (namely (i) stock or
securities, (ii) options, futures, and forward contracts (other
than those on foreign currencies), and (iii) foreign
currencies (including options, futures, and forward
contracts on such currencies) not directly related to
the Fund's principal business of investing in stocks or
securities (or options and futures with respect to
stocks and securities)) held less than three months
(the "30% Limitation"); and (c) diversify its holdings so that,
at the end of each fiscal quarter, (i) at least 50% of the
market value of the Fund's assets is represented by
cash, U.S. Government securities, the securities of
other regulated investment companies, and other
securities, with such other securities of any one
issuer limited for purposes of this calculation to an
amount not greater than 5% of the Fund's assets and 10%
of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is
invested in securities of any other issuer (other than U.S.
Government securities and the securities of other regulated
investment companies).
As a regulated investment company, a Fund
generally will not be subject to U.S. Federal income
tax on its investment company taxable income (which
includes, among other items, dividends, interest and
net short-term capital gains in excess of net long- term
capital losses) and net capital gains (net long-term capital
gains in excess of net short-term capital losses) that it
distributes to shareholders, if at least 90% of both its
investment company taxable income and its net tax-exempt
interest income for the taxable year is distributed.
Each Fund intends to distribute such income.
Amounts, other than tax-exempt interest, not
distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a
nondeductible 4% excise tax. To avoid that tax, each
Fund must distribute during each calendar year an
amount equal to (1) at least 98% of its ordinary income
(not taking into account any capital gains or losses) for the
calendar year, (2) at least 98% of its capital gains in
excess of its capital losses (adjusted for certain
ordinary losses) for the twelve-month period ending on
October 31 of the calendar year, and (3) all ordinary
income and capital gains for previous years that were
not distributed during such years. A distribution,
including an "exempt-interest dividend," will be treated as paid
on December 31 of the current calendar year if it is
declared by a Fund in October, November or December of
that year to shareholders of record at some date in
such a month and paid by the Fund during January of the
following calendar year. Such distributions will be
taken into account by shareholders in the calendar year
the distributions are declared, rather than the
calendar year in which the distributions are received.
Certain of the Funds may enter into put
transactions with respect to municipal obligations they
hold. The IRS has issued published and private rulings
concerning the treatment of such put transactions for
Federal income tax purposes. The Fund's situation is
distinguishable from those addressed in these rulings;
thus, there can be no assurance that a Fund will be
treated as the owner of the municipal obligations subject to the
puts or that the interest on such obligations received by
the Fund will be exempt from Federal income tax. If
the Fund is not treated as the owner of the municipal
obligations subject to the puts, distributions of
income derived from such obligations would be taxed as
ordinary income.
DISCOUNT
Certain of the bonds purchased by a Fund may be
treated as bonds that were originally issued at a
discount. Original issue discount represents interest
for Federal income tax purposes and can generally be
defined as the difference between the price at which a
security was issued and its stated redemption price at
maturity. Original issue discount is treated for Federal income
tax purposes as income earned by a Fund, although no cash
is actually received by a Fund, and therefore is
subject to the distribution requirements of the Code.
The amount of income earned by a Fund generally is
determined on the basis of a constant yield to maturity
that takes into account the semi- annual compounding of
accrued interest.
In addition, some of the bonds may be purchased by
a Fund at a discount that exceeds the original issue
discount on such bonds, if any. This additional
discount represents market discount for Federal income
tax purposes. The gain realized on the disposition of
any bond, including a tax-exempt bond, having market
discount will be treated as ordinary income to the extent
it does not exceed the accrued market discount on such
bond (unless a Fund elects for all its debt securities
acquired after the first day of the first taxable year
to which the election applies having a fixed maturity
date of more than one year from the date of issue to
include market discount in income in tax years to which
it is attributable). Generally, market discount
accrues on a daily basis for each day the bond is held by a Fund
at a constant rate over the time remaining to the bond's
maturity.
DISTRIBUTIONS
Each Fund intends to qualify to pay "exempt-
interest dividends" to its shareholders but there is no
guarantee that any particular Fund will so qualify. A
Fund will be so qualified if, at the close of each
quarter of its taxable year, at least 50% of the value
of its total assets consist of state and municipal
securities on which interest payments are exempt from Federal
income tax and such interest payments when distributed are
designated as exempt-interest dividends by the Fund. Exempt-
interest dividends are excludable from a shareholder's
gross income for Federal income tax purposes. Exempt-
interest dividends, however, must be taken into account
by shareholders in determining whether their total
incomes are large enough to result in taxation of up to
85% of their social security benefits or certain
railroad retirement benefits. Exempt-interest
dividends that are attributable to certain private activity bonds
may constitute an item of tax preference for purposes of
the alternative minimum tax. For corporate
shareholders, exempt- interest dividends may comprise
all or part of an adjustment to alternative minimum
taxable income, which may result in the imposition or
increase in such tax. Each Fund will inform
shareholders annually as to the portion of the distributions from
the Fund that constituted exempt-interest dividends.
Distributions of investment company taxable income
are taxable to a U.S. shareholder as ordinary income,
whether paid in cash or shares. Because no portion of
a Fund's income is expected to consist of dividends
paid by U.S. corporations, no portion of the dividends
paid by a Fund is expected to be eligible for the
corporate dividends-received deduction. Distributions
of net capital gains, if any, that are designated as
capital gain dividends are taxable as long-term capital gains,
whether paid in cash or in shares, regardless of how long
the shareholder has held a Fund's shares, and are not
eligible for the dividends received deduction. The tax
treatment of distributions from a Fund is the same
whether the dividends are received in cash or in
additional shares. Shareholders receiving
distributions in the form of newly issued shares will have a cost
basis in each share received equal to the net asset
value of a share of the Fund on the reinvestment date.
A distribution of an amount in excess of a Fund's
current and accumulated earnings and profits will be
treated by a shareholder as a return of capital that is
applied against and reduces the shareholder's basis in
his or her shares. To the extent that the amount of
any such distribution exceeds the shareholder's basis
in his or her shares, the excess will be treated by the
shareholder as gain from a sale or exchange of the
shares. Shareholders will be notified annually as to
the U.S. Federal tax status of distributions and
shareholders receiving distributions in the form of
newly issued shares will receive a report as to the net
asset value of the shares received.
If the net asset value of shares is reduced below
a shareholder's cost as a result of a distribution by a
Fund, such distribution will be taxable (unless it is
an exempt-interest dividend) even though it represents
a return of invested capital. Investors should be
careful to consider the tax implications of buying
shares just prior to a distribution. The price of shares
purchased at this time may reflect the amount of the forthcoming
distribution. Those purchasing just prior to a
distribution will receive a distribution that will
nevertheless be taxable to them (unless it is an
exempt-interest dividend).
Deductions for interest expense incurred to
acquire or carry shares of a Fund may be subject to
limitations that reduce, defer, or eliminate such
deductions. This includes limitations on deducting
interest on indebtedness properly allocable to
investment property (which may include shares of a Fund). In
addition, a shareholder may not deduct that portion of
interest on indebtedness incurred or continued to
purchase or carry shares of an investment company
paying exempt-interest dividends, which bears the same
ratio to the total of such interest as the exempt-
interest dividends bear to the total dividends, excluding capital
gain dividends received by the shareholder. Under rules
issued by the IRS for determining when borrowed funds
are considered used for the purposes of purchasing or
carrying particular assets, the purchase of shares may
be considered to have been with borrowed funds even
though the borrowed funds are not directly traceable to
the purchase of shares.
Opinions relating to the validity of municipal
securities and the exemption of interest thereon from
Federal income tax are rendered by bond counsel to the
issuers. The Funds, MIMI, MFC and their affiliates,
and the Funds' counsel make no review of proceedings
relating to the issuance of state or municipal
securities and the bases of such opinions.
DISPOSITION OF SHARES
Upon a redemption, sale or exchange of his or her
shares, a shareholder will realize a taxable gain or
loss depending upon his or her basis in the shares.
Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the
shareholder's hands and will be long-term or short-term,
generally depending upon the shareholder's holding period for the
shares. Any loss realized on a redemption, sale or
exchange will be disallowed to the extent the shares
disposed of are replaced
(including through reinvestment of dividends) within a
period of 61 days beginning 30 days before and ending
30 days after the shares are disposed of. In such a
case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss. Any loss realized by a
shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated as a long-
term capital loss to the extent of any distributions of net
capital gains received or treated as having been received
by the shareholder with respect to such shares. Any
loss realized by shareholder on the redemption, sale or
exchange of shares of a Fund with respect to which
exempt-interest dividends have been paid will, to the
extent of such exempt-interest dividends, be disallowed
if such shares have been held by the shareholder for
six months or less.
In some cases, shareholders will not be permitted
to take sales charges into account for purposes of
determining the amount of gain or loss realized on the
disposition of their stock. This prohibition generally
applies where (1) the shareholder incurs a sales charge
in acquiring the stock of a Fund, (2) the stock is
disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires the
stock of the same or another Fund and the otherwise
applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase
of regulated investment company shares. The term
"reinvestment right" means any right to acquire stock of one
or more Funds without the payment of a sales charge or with
the payment of a reduced sales charge. Sales charges
affected by this rule are treated as if they were
incurred with respect to the stock acquired under the
reinvestment right. This provision may be applied to
successive acquisitions of Fund shares.
BACKUP WITHHOLDING
Each Fund will be required to report to the IRS
all distributions (other than exempt-interest
dividends) as well as gross proceeds from the
redemption of that Fund's shares, except in the case of
certain exempt shareholders. All such reportable
distributions and proceeds will be subject to withholding of
Federal income tax at a rate of 31% ("backup withholding") in
the case of non-exempt shareholders if (1) the
shareholder fails to furnish the Fund with and to
certify the shareholder's correct taxpayer
identification number or social security number; (2) the
IRS notifies the shareholder or the Fund that the shareholder has
failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that
effect; or (3) when required to do so, the shareholder
fails to certify that he or she is not subject to
backup withholding. If the withholding provisions are
applicable, any such distributions or proceeds, whether
reinvested in additional shares or taken in cash, will be
reduced by the amounts required to be withheld.
OTHER TAXATION
The foregoing discussion relates only to U.S.
Federal income tax law as applicable to U.S. persons
(i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates).
Distributions by a Fund also may be subject to state
and local taxes, and their treatment under state and local income
tax laws may differ from the U.S. Federal income tax
treatment. In certain states, Fund distributions that
are derived from interest on obligations of that state
or its municipalities or any political subdivisions
thereof may be exempt from state and local taxes. Fund
distributions that are derived from interest on
obligations of the U.S. Government and certain of its
agencies, authorities and instrumentalities also may be exempt
from state and local taxes in certain states. Shareholders
should consult their tax advisers with respect to
particular questions of U.S. Federal, state and local
taxation. Persons who may be "substantial users" (or
"related persons" of substantial users) of facilities
financed by industrial development bonds should consult
their tax advisers before purchasing shares of a Fund.
The term "substantial user" generally includes any "non-
exempt person" who regularly uses in his or her trade or business
a part of a facility financed by industrial development
bonds. Generally, an individual will not be a "related
person" of a substantial user under the Code unless the
person or his or her immediate family owns directly or
indirectly in the aggregate more than a 50% equity
interest in the substantial user. Shareholders who are
not U.S. persons should consult their tax advisers
regarding U.S. and foreign tax consequences of ownership
of shares of a Fund, including the likelihood that distributions
to them would be subject to withholding of U.S. Federal
income tax at a rate of 30% (or at a lower rate under a
tax treaty).
SPECIAL INFORMATION RELATING TO MACKENZIE CALIFORNIA
MUNICIPAL FUND
Under California law, a mutual fund that qualifies
as a regulated investment company generally must have
at least 50% of its total assets in California state
and local issues or certain U.S. Government obligations
or a combination thereof at the end of each quarter of
its taxable year in order to be eligible to pay
dividends that will be exempt from California personal income
tax. Generally, shareholders who are California residents
will not incur California personal income tax on the
amount of dividends received by them from Mackenzie
California Municipal Fund that the Fund designates as
California exempt-interest dividends derived from
California state and local issues or certain U.S.
Government obligations, whether taken in cash or
reinvested in additional shares. Gain on the sale or redemption
of Fund shares is subject to California personal income
tax. Shareholders will normally be subject to
California personal income tax on dividends paid from
interest income derived from taxable securities and
from securities issued by states other than California
and its subsidiaries and on distribution of net capital
gains.
SPECIAL INFORMATION RELATING TO MACKENZIE NEW YORK
MUNICIPAL FUND
Exempt-interest dividends, whether received by
shareholders in cash or in additional shares, derived
by New York residents from interest on qualifying New
York bonds generally are exempt from New York State and
New York City personal income taxes, but not corporate
franchise taxes. Dividends and distributions derived
from taxable income and capital gains are not exempt from
New York State and New York City taxes. Interest on
indebtedness incurred or continued by a shareholder to
purchase or carry shares of the Fund is not deductible
for New York State or New York City personal income tax
purposes. Gain on the sale or redemption of Fund
shares generally is subject to New York State and New
York City personal income tax.
PERFORMANCE INFORMATION
Performance information for the separate classes
of shares of a Fund may be compared, in reports and
promotional literature, to: (i) the S&P 500 Index, Dow
Jones Industrial Average ("DJIA"), or other unmanaged
indices so that investors may compare a Fund's results
with those of a group of unmanaged securities widely
regarded by investors as representative of the
securities markets in general; (ii) other groups of mutual funds
tracked by Lipper Analytical Services, a widely used
independent research firm that ranks mutual funds by
overall performance, investment objectives and assets,
or tracked by other services, companies, publications,
or other criteria; and (iii) the Consumer Price Index
(measure for inflation) to assess the real rate of
return from an investment in a Fund. Unmanaged indices
may assume the reinvestment of dividends but generally do not
reflect deductions for administrative and management costs
and expenses. Performance rankings are based on
historical information and are not intended to indicate
future performance.
In addition, the Trust may, from time to time,
include various measures of a Fund's performance
including the current yield, the tax-equivalent yield
and the average annual total return of shares of the
Funds in advertisements, promotional literature or
reports to shareholders or prospective investors. Such
materials may occasionally cite statistics to reflect a
Fund's volatility or risk.
YIELD. Quotations of yield for a specific Class
of shares of a Fund will be based on all investment
income attributable to that Class earned during a
particular 30-day (or one month) period (including
dividends and interest), less expenses attributable to
that Class accrued during the period ("net investment
income"), and will be computed by dividing the net
investment income per share of that Class earned during the
period by the maximum offering price per share (in the case of
Class A shares) or the net asset value per share (in the
case of
Class B shares) on the last day of the period,
according to the following formula:
YIELD = 2[({(a-b)/cd} + 1){superscript
6}-1]
Where: a = dividends and interest
earned during the period
attributable to a
specific Class of shares,
b = expenses accrued for the
period attributable to that
Class (net of reimbursements),
c = the average daily number of
shares of that Class
outstanding during the period
that were entitled to receive dividends,
and
d = the maximum offering price per
share (in the case of Class A
shares) or the net asset value
per share (in the case of
Class B shares) on the last day of the
period.
The yield for Class A and Class B shares of the
Funds for the 30-day period ended June 30, 1996 were:
Mackenzie Limited Term Municipal Fund -- 4.24% and
3.89%, respectively; Mackenzie California Municipal
Fund -- 4.35% and 4.11%, respectively; Mackenzie
National Municipal Fund -- 4.28% and 4.36%,
respectively; and Mackenzie New York Municipal Fund -- 4.34% and
4.06%, respectively. The yield figures reflect voluntary
expense reimbursements by MIMI. Without the voluntary
reimbursements, the yield for Class A and Class B
shares of each Fund for the same 30-day period would
have been: Mackenzie Limited Term Municipal Fund --
3.68% and 3.31%, respectively; Mackenzie California
Municipal Fund -- 4.11% and 3.86%, respectively;
Mackenzie National Municipal Fund -- 3.86% and 3.91%,
respectively; and Mackenzie New York Municipal Fund -- 3.76% and
3.45%, respectively.
TAX-EQUIVALENT YIELD. Tax-equivalent yield for a
specific Class of shares of a Fund is the net
annualized taxable yield needed to produce a specified
tax-exempt yield at a given tax rate based on a
specified 30-day (or one month) period assuming semi-
annual compounding of income. Tax-equivalent yield is
calculated by dividing that portion of a Fund's yield (as
computed in the yield description above) that is tax-exempt by
one minus a stated income tax rate and adding the product
to that portion, if any, of the yield of the Fund that
is not tax-exempt. Thus, for example, for the thirty-
day period ended June 30, 1996, taxpayers with
effective combined federal, state and/or city marginal
income tax rates of 28% and 31% would have had to have
earned (i) a taxable yield of 5.89% and 6.14% (or 5.11% and 5.33%
without the voluntary reimbursements), respectively, to
receive after-tax income equal to the 4.24% (or 3.68%
without the voluntary reimbursements) tax-free yield of
Class A shares of Mackenzie Limited Term Municipal Fund
for that period; (ii) a taxable yield of 5.95% and
6.21% (or 5.37% and 5.60% without the voluntary
reimbursements), respectively, to receive after-tax
income equal to the 4.28% (or 3.86% without the voluntary
reimbursements) tax-free yield of Class A shares of Mackenzie
National Municipal Fund for that period; (iii) a taxable
yield of 6.04% and 6.30% (or 5.71% and 5.96% without
the voluntary reimbursements), respectively, to receive
after-tax income equal to the 4.35% (or 4.11% without
the voluntary reimbursements) tax- free yield of Class A
shares of Mackenzie California Municipal Fund for that
period; and (iv) a taxable yield of 6.02% and 6.28% (or
5.22% and 5.45% without the voluntary reimbursements),
respectively, to receive after-tax income equal to the 4.34% (or
3.76% without the voluntary reimbursements) tax-free
yield of Class A shares of Mackenzie New York Municipal
Fund for that period. For the thirty-day period ended
June 30, 1996, taxpayers with effective combined
federal, state and/or city marginal income tax rates of
28% and 31% would have had to have earned (i) a taxable
yield of 5.41% and 5.64% (or 4.60% and 4.80% without
the voluntary reimbursements), respectively, to receive after-tax
income equal to the 3.89% (or 3.31% without the
voluntary reimbursements) tax-free yield of Class B
shares of Mackenzie Limited Term Municipal Fund for
that period; (ii) a taxable yield of 6.05% and 6.31%
(or 5.44% and 5.67% without the voluntary
reimbursements), respectively, to receive after-tax income equal
to the 4.36% (or 3.91% without the voluntary
reimbursements) tax- free yield of Class B shares of
Mackenzie National Municipal Fund for that period;
(iii) a taxable yield of 5.70% and 5.95% (or 5.36% and
5.59% without the voluntary reimbursements),
respectively, to receive after-tax income equal to the 4.11% (or
3.86% without the voluntary reimbursements) tax-free
yield of Class B shares of Mackenzie California
Municipal Fund for that period; and (iv) a taxable
yield of 5.63% and 5.88% (or 4.79% and 5.00% without
the voluntary reimbursements), respectively, to receive
after-tax income equal to the 4.06% (or 3.45% without the
voluntary reimbursements) tax-free yield of Class B shares of
Mackenzie New York Municipal Fund for that period. For a
more detailed explanation of tax-equivalent yields, see
Appendix B of this SAI.
AVERAGE ANNUAL TOTAL RETURN. Quotations of
standardized average annual total return ("Standardized
Return") for a specific Class of shares of a Fund will
be expressed in terms of the average annual compounded
rate of return that would cause a hypothetical
investment in that Class of a Fund made on the first
day of a designated period to equal the ending redeemable value
("ERV") of such hypothetical investment on the last day of
the designated period, according to the following
formula:
P(1 + T){superscript n} = ERV
Where: P = a hypothetical initial payment of
$1,000 to purchase shares of a
specific Class
T = the average annual total return of
shares of that Class
n = the number of years
ERV = the ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the period.
For purposes of the above computation for a Fund,
it is assumed that all dividends and capital gains
distributions made by a Fund are reinvested at net
asset value in additional shares of the same Class
during the designated period. In calculating the
ending redeemable value for Class A shares and assuming
complete redemption at the end of the applicable period, the
maximum 3.00% sales charge for Mackenzie Limited Term
Municipal Fund, and the maximum 4.75% sales charge for
Mackenzie National Municipal Fund, Mackenzie California
Municipal Fund and Mackenzie New York Municipal Fund,
is deducted from the initial $1,000 payment and, for
Class B shares, the applicable contingent deferred
sales charge imposed upon redemption of Class B shares
held for the period is deducted. Standardized Return quotations
for the Funds do not take into account any required
payments for federal or state income taxes.
Standardized Return quotations for Class B shares for
periods of over eight years will reflect conversion of
the Class B shares to Class A shares at the end of the
eighth year. Standardized Return quotations are determined
to the nearest 1/100 of 1%.
A Fund may, from time to time, include in
advertisements, promotional literature or reports to
shareholders or prospective investors total return data
that are not calculated according to the formula set
forth above ("Non-Standardized Return"). Neither
initial nor contingent deferred sales charges are taken into
account in calculating Non-Standardized Return; a sales
charge, if deducted, would reduce the return.
The following tables summarize the calculation of
Standardized and Non-Standardized Return for the Class A
and Class B shares of the Funds for the periods
indicated. In determining the average annual total
return for a specific Class of shares of a Fund,
recurring fees, if any, that are charged to all
shareholder accounts are taken into consideration. For any
account fees that vary with the size of the account of a Fund,
the account fee used for purposes of the following
computations is assumed to be the fee that would be
charged to the mean account size of the Fund. Shares
of the Funds outstanding as of March 31, 1994 were
designated Class A shares.
MACKENZIE LIMITED TERM MUNICIPAL FUND:
NON-
STANDARDIZED STANDARDIZED RETURN[*]
RETURN[**] CLASS A[1] CLASS B[2]
CLASS A[3] CLASS B[4]
One year ended
June 30, 1996: 1.32% 0.98% 4.46%
3.98%
Inception to
June 30,
1996:[#] 4.44% 3.67% 5.10%
4.51% _________________________
[*] The Standardized Return figures for Class A shares
reflect the deduction of the maximum initial sales
charge of 3.00%. The Standardized Return figures
for Class B shares reflect the deduction of the
applicable contingent deferred sales charge
imposed on a redemption of Class B shares held for
the period.
[**] The Non-Standardized Return figures do not reflect
the deduction of any initial or contingent
deferred sales charge.
[#] The commencement of operations for Mackenzie
Limited Term Municipal Fund (formerly Limited Term
Portfolio of the Zweig Tax-Free Fund, Inc.), and
the Class A shares of that Fund, was April 22,
1985. From that date until August 2, 1991, the
fund was managed by Zweig/Glaser Advisors. Effective
August 2, 1991, the Fund is being managed (with the same
investment objectives) by MIMI, which date is the
"inception" date for Class A shares in the above table. The
inception date for Class B shares of the Fund was
April 1, 1994.
[1] The Standardized Return figures for Class A shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class A
shares for the one year ended June 30, 1996 and
the period from inception through June 30, 1996
would have been 0.93% and 4.14%, respectively.
[2] The Standardized Return figures for Class B shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class B
shares for the one year ended June 30, 1996 and
the period from inception through June 30, 1996
would have been 0.58% and 3.27%, respectively.
[3] The Non-Standardized Return figures for Class A
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class A shares for the one year ended June 30,
1996 and the period from inception through June
30, 1996 would have been 4.05% and 4.78%,
respectively.
[4] The Non-Standardized Return figures for Class B
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class B shares for the one year ended June 30,
1996 and the period from inception through June
30, 1996 would have been 3.58% and 4.11%,
respectively.
MACKENZIE NATIONAL MUNICIPAL FUND:
NON-
STANDARDIZED STANDARDIZED RETURN[*]
RETURN[**] CLASS A[1] CLASS B[2]
CLASS A[3] CLASS B[4]
One year ended
June 30, 1996: (0.28)% (1.12)% 4.69%
3.88%
Five years ended
June 30, 1996: 5.49% N/A 6.52%
N/A
Inception[#] to
June 30, 1996: 6.20% 3.55% 6.84%
4.82%
_________________________
[*] The Standardized Return figures for Class A shares
reflect the deduction of the maximum initial sales
charge of 4.75%. The Standardized Return figures
for Class B shares reflect the deduction of the
applicable contingent deferred sales charge
imposed on a redemption of Class B shares held for
the period.
[**] The Non-Standardized Return figures do not reflect
the deduction of any initial or contingent
deferred sales charge.
[#] The inception date for Mackenzie National
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
the Class B shares of the Fund was April 1, 1994.
[1] The Standardized Return figures for Class A shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class A
shares for the one year ended June 30, 1996, the
five years ended June 30, 1996 and the period from
inception through June 30, 1996 would have been
(.69)%, 5.23% and 5.10%, respectively.
[2] The Standardized Return figures for Class B shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class B
shares for the one year ended June 30, 1996 and
the period from inception through June 30, 1996
would have been (1.52)% and 3.22%, respectively.
(Since the inception date for Class B shares of
the Fund was April 1, 1994, there were no Class B shares
outstanding for the duration of the five year
period ending June 30, 1996.)
[3] The Non-Standardized Return figures for Class A
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class A shares for the one year ended June 30,
1996, the five years ended June 30, 1996 and the
period from inception through June 30, 1996 would
have been 4.27%, 6.26% and 5.73%, respectively.
[4] The Non-Standardized Return figures for Class B
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class B shares for the one year ended June 30,
1996 and the period from inception through June
30, 1996 would have been 3.46% and 4.49%,
respectively. (Since the inception date for
Class B shares of the Fund was April 1, 1994, there were no
Class B shares outstanding for the duration of the five
year period ending June 30, 1996.)
MACKENZIE CALIFORNIA MUNICIPAL FUND:
NON-
STANDARDIZED STANDARDIZED RETURN[*]
RETURN[**] CLASS A[1] CLASS B[2]
CLASS A[3] CLASS B[4]
One year ended
June 30, 1996: 0.51% (0.30)% 5.52%
4.70%
Five years ended
June 30, 1996: 5.67% N/A 6.70%
N/A
Inception[#] to
June 30, 1996: 6.65% 3.99% 7.29%
5.25%
[*] The Standardized Return figures for Class A shares
reflect the deduction of the maximum initial sales
charge of 4.75%. The Standardized Return figures
for Class B shares reflect the deduction of the
applicable contingent deferred sales charge
imposed on a redemption of Class B shares held for
the period.
[**] The Non-Standardized Return figures do not reflect
the deduction of any initial or contingent
deferred sales charge.
[#] The inception date for Mackenzie National
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
the Class B shares of the Fund was April 1, 1994.
[1] The Standardized Return figures for Class A shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class A
shares for the one year ended June 30, 1996, the
five years ended June 30, 1996 and the period from
inception through June 30, 1996 would have been
0.32%, 5.54% and 5.75%, respectively.
[2] The Standardized Return figures for Class B shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class B
shares for the one year ended June 30, 1996 and
the period from inception through June 30, 1996
would have been (0.51)% and 3.83%, respectively.
(Since the inception date for Class B shares of
the Fund was April 1, 1994, there were no Class B shares
outstanding for the duration of the five year period ending
June 30, 1996.)
[3] The Non-Standardized Return figures for Class A
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class A shares for the one year ended June 30,
1996, the five years ended June 30, 1996 and the
period from inception through June 30, 1996 would
have been 5.32%, 6.58% and 6.38%, respectively.
[4] The Non-Standardized Return figures for Class B
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class B shares for the one year ended June 30,
1996 and the period from inception through June
30, 1996 would have been 4.49% and 5.08%,
respectively. (Since the inception date for Class
B shares of the Fund was April 1, 1994, there were no
Class B shares outstanding for the duration of the five year
period ending June 30, 1996.)
MACKENZIE NEW YORK MUNICIPAL FUND:
NON-
STANDARDIZED STANDARDIZED RETURN[*]
RETURN[**] CLASS A[1] CLASS B[2]
CLASS A[3] CLASS B[4]
One year ended
June 30, 1996: 0.12% (0.63)% 5.11%
4.37%
Five years ended
June 30, 1996: 6.05% N/A 7.09%
N/A
Inception[#] to
June 30, 1996: 6.49% 3.92% 7.13%
5.18%
_________________________
[*] The Standardized Return figures for Class A shares
reflect the deduction of the maximum initial sales
charge of 4.75%.
The Standardized Return figures for Class B shares
reflect the deduction of the applicable contingent
deferred sales charge imposed on a redemption of
Class B shares held for the period.
[**] The Non-Standardized Return figures do not reflect
the deduction of any initial or contingent
deferred sales charge.
[#] The inception date for Mackenzie National
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
the Class B shares of the Fund was April 1, 1994.
[1] The Standardized Return figures for Class A shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class A
shares for the one year ended June 30, 1996, the
five years ended June 30, 1996 and the period from
inception through June 30, 1996 would have been
(0.09)%, 5.88% and 5.59%, respectively.
[2] The Standardized Return figures for Class B shares
reflect expense reimbursement. Without expense
reimbursement, the Standardized Return for Class B
shares for the one year ended June 30, 1996 and
the period from inception through June 30, 1996
would have been 0.85% and 3.73%, respectively.
(Since the inception date for Class B shares of the Fund was
April 1, 1994, there were no Class B shares outstanding
for the duration of the five year period ending
June 30, 1996.)
[3] The Non-Standardized Return figures for Class A
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class A shares for the one year ended June 30,
1996, the five years ended June 30, 1996 and the
period from inception through June 30, 1996 would
have been 4.90%, 6.92% and 6.23%, respectively.
[4] The Non-Standardized Return figures for Class B
shares reflect expense reimbursement. Without
expense reimbursement, the Non-Standardized Return
for Class B shares for the one year ended June 30,
1996 and the period from inception through June
30, 1996 would have been 4.15% and 4.99%,
respectively. (Since the inception date for
Class B shares of the Fund was April 1, 1994, there were no
Class B shares outstanding for the duration of the five
year period ending June 30, 1996.)
CUMULATIVE TOTAL RETURN. Cumulative total return
is the cumulative rate of return on a hypothetical
initial investment of $1,000 in a specific Class of
shares of the Fund for a specified period. Cumulative
total return quotations reflect changes in the price of
the Fund's shares and assume that all dividends and
capital gains distributions during the period were reinvested in
Fund shares. Cumulative total return is calculated by
computing the cumulative rates of return of a
hypothetical investment in a specific Class of shares
of the Fund over such periods, according to the
following formula (cumulative total return is then
expressed as a percentage):
C = (ERV/P) - 1
Where: C = cumulative total return
P = a hypothetical initial investment
of $1,000 to purchase shares of a
specific Class
ERV = ending redeemable value: ERV is
the value, at the end of the
applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
MACKENZIE LIMITED TERM MUNICIPAL FUND. The
following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 3.00% sales
charge has been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 1.32% 23.85%
Class B 0.98% 7.44%
The following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 3.00% sales
charge has not been assessed.
SINCE
ONE YEAR INCEPTION[*]
Class A 4.46% 27.68%
Class B 3.98% 10.44%
___________________________
[*] The inception date for Mackenzie Limited Term
Municipal Fund (and the Class A shares of the
Fund) was April 22, 1985; the inception date for
Class B shares of the Fund was April 1, 1994.
From commencement until August 2, 1991, this fund
(formerly Limited Term Portfolio of the Zweig Tax-Free Fund,
Inc.) was managed by Zweig/Glaser Advisors. Effective
August 2, 1991, the Fund is being managed by MIMI
with the same investment objectives.
MACKENZIE NATIONAL MUNICIPAL FUND. The following
table summarizes the calculation of Cumulative Total
Return for the periods indicated through June 30, 1996,
assuming the maximum 4.75% sales charge has been
assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A (0.28)% 30.64% 63.48%
Class B (1.12)% N/A[**] 6.16%
The following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 4.75% sales
charge has not been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A 4.69% 37.15% 71.63%
Class B 3.88% N/A[**] 11.16%
___________________________
[*] The inception date for Mackenzie National
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
Class B shares of the Fund was April 1, 1994.
[**] No Class B shares were outstanding for the
duration of the time period indicated.
MACKENZIE CALIFORNIA MUNICIPAL FUND. The
following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 4.75% sales
charge has been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A 0.51% 31.74% 69.21%
Class B (0.30)% N/A[**] 7.21%
The following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 4.75% sales
charge has not been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A 5.52% 38.31% 77.65%
Class B 4.70% N/A[**] 12.21%
___________________________
[*] The inception date for Mackenzie California
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
Class B shares of the Fund was April 1, 1994.
[**] No Class B shares were outstanding for the
duration of the time period indicated.
MACKENZIE NEW YORK MUNICIPAL FUND. The following
table summarizes the calculation of Cumulative Total
Return for the periods indicated through June 30, 1996,
assuming the maximum 4.75% sales charge has been
assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A 0.12% 34.16% 67.18%
Class B (0.63)% N/A[**] 7.04%
The following table summarizes the calculation of
Cumulative Total Return for the periods indicated
through June 30, 1996, assuming the maximum 4.75% sales
charge has not been assessed.
SINCE
ONE YEAR FIVE YEARS INCEPTION[*]
Class A 5.11% 40.85% 75.52%
Class B 4.37% N/A[**] 12.04%
___________________________
[*] The inception date for Mackenzie New York
Municipal Fund (and the Class A shares of the
Fund) was April 15, 1988; the inception date for
Class B shares of the Fund was April 1, 1994.
[**] No Class B shares were outstanding for the
duration of the time period indicated.
OTHER QUOTATIONS, COMPARISONS AND GENERAL
INFORMATION. The foregoing computation methods are
prescribed for advertising and other communications
subject to SEC Rule 482. Communications not subject to
this rule may contain a number of different measures of
performance, computation methods and assumptions, including
but not limited to: historical total returns; results of
actual or hypothetical investments; changes in
dividends, distributions or share values; or any
graphic illustration of such data. These data may
cover any period of the Trust's existence and may or may
not include the impact of sales charges, taxes or other factors.
Performance quotations for a Fund will vary from
time to time depending on market conditions, the
composition of the Fund's portfolio and operating
expenses of the Fund. These factors and possible
differences in the methods used in calculating
performance quotations should be considered when
comparing performance information regarding a Fund's shares with
information published for other investment companies and
other investment vehicles. Performance quotations
should also be considered relative to changes in the
value of a Fund's shares and the risks associated with
a Fund's investment objectives and policies. At any
time in the future, performance quotations may
be higher or lower than past performance quotations and
there can be no assurance that any historical
performance quotation will continue in the future.
The Funds may also cite endorsements or use for
comparison their performance rankings and listings
reported in such newspapers or business or consumer
publications as, among others: AAII Journal, Barron's,
Boston Business Journal, Boston Globe, Boston Herald,
Business Week, Consumer's Digest, Consumer Guide
Publications, Changing Times, Financial Planning, Financial
World, Forbes, Fortune, Growth Fund Guide, Houston Post,
Institutional Investor, International Fund Monitor, Investor's
Daily, Los Angeles Times, Medical Economics, Miami
Herald, Money Mutual Fund Forecaster, Mutual Fund
Letter, Mutual Fund Source Book, Mutual Fund Values,
National Underwriter Nelson's Director of Investment
Managers, New York Times, Newsweek, No Load Fund
Investor, No Load Fund* X, Oakland Tribune, Pension World,
Pensions and Investment Age, Personal Investor, Rugg and
Steele, Time, U.S. News and World Report, USA Today,
The Wall Street Journal, and Washington Post.
FINANCIAL STATEMENTS
The Funds' Portfolios of Investments as of June
30, 1996, Statements of Assets and Liabilities as of
June 30, 1996, Statements of Operations for the fiscal
year ended June 30, 1996, Statements of Changes in Net
Assets for the fiscal year ended June 30, 1996 and the
fiscal year ended June 30, 1995, Financial Highlights,
Notes to Financial Statements, and Reports of
Independent Accountants are included in each Fund's June 30, 1996
Annual Report to Shareholders, which is incorporated by
reference into this SAI. Copies of the Funds'
financial statements may be obtained upon request and
without charge from MIMI at the address and telephone
number provided on the cover of this SAI.
APPENDIX A
DESCRIPTION OF STANDARD & POOR'S CORPORATION
("S&P") AND MOODY'S INVESTORS SERVICE, INC.
("MOODY'S") CORPORATE BOND, COMMERCIAL PAPER
AND MUNICIPAL OBLIGATIONS RATINGS
[From "Moody's Bond Record," November 1994 Issue
(Moody's Investor Service, New York, 1994), and
"Standard & Poor's Municipal Ratings Handbook," October
1994 Issue (McGraw Hill, New York, 1994).]
(a) MOODY'S:
CORPORATE BONDS. Bonds rated Aaa by Moody's are
judged by Moody's to be of the best quality, carrying
the smallest degree of investment risk. Interest
payments are protected by a large or exceptionally
stable margin and principal is secure. Bonds rated Aa
are judged by Moody's to be of high quality by all
standards. Aa bonds are rated lower than Aaa bonds because
margins of protection may not be as large as those of Aaa
bonds, or fluctuations of protective elements may be of
greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat
larger than those applicable to Aaa securities. Bonds
which are rated A by Moody's possess many favorable
investment attributes and are considered as upper
medium-grade obligations. Factors giving security to principal
and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment
sometime in the future.
Bonds rated Baa by Moody's are considered medium-
grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well. Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered
well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes
bonds in this class. Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of
interest and principal payments of or maintenance of other
terms of the contract over any long period of time may
be small.
Bonds which are rated Caa are of poor standing.
Such issues may be in default or there may be present
elements of danger with respect to principal or
interest. Bonds which are rated Ca represent
obligations which are speculative in a high degree.
Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class
of bonds and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real
investment standing.
COMMERCIAL PAPER. The Prime rating is the highest
commercial paper rating assigned by Moody's. Among the
factors considered by Moody's in assigning ratings are
the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's
industry or industries and an appraisal of speculative-
type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the
issuer; and (8) recognition by management of
obligations which may be present or may arise as a
result of public interest questions and preparations to
meet such obligations. Issuers within this Prime
category may be given ratings 1, 2 or 3, depending on the
relative strengths of these factors. The designation of Prime-1
indicates the highest quality repayment capacity of the
rated issue.
(b) S&P:
CORPORATE BONDS. An S&P corporate debt rating is
a current assessment of the creditworthiness of an
obligor with respect to a specific obligation. The
ratings are based on current information furnished by
the issuer or obtained by S&P from other sources it
considers reliable. The ratings described below may be
modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
Debt rated AAA by S&P is considered by S&P to be
the highest grade obligation. Capacity to pay interest
and repay principal is extremely strong. Debt rated AA
is judged by S&P to have a very strong capacity to pay
interest and repay principal and differs from the
highest rated issues only in small degree. Debt rated
A by S&P has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
Debt rated BBB by S&P is regarded by S&P as having
an adequate capacity to pay interest and repay
principal. Although such bonds normally exhibit
adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay
principal than debt in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as
having predominately speculative characteristics with
respect to capacity to pay interest and repay
principal. BB indicates the least degree of
speculation and C the highest. While such debt will
likely have some quality and protective characteristics,
these are outweighed by large uncertainties or exposures to
adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative issues. However,
it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions
which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating
category is also used for debt subordinated to senior
debt that is assigned an actual or implied BBB- rating.
Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating
category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB-
rating. Debt rated CCC has a currently identifiable
vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to
pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior
debt that is assigned an actual or implied B or B-
rating. The rating CC typically is applied to debt
subordinated to senior debt which is assigned an actual or
implied CCC debt rating. The rating C typically is applied to
debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are
continued.
COMMERCIAL PAPER. An S&P commercial paper rating
is a current assessment of the likelihood of timely
payment of debt having an original maturity of no more
than 365 days.
Commercial paper rated A by S&P has the following
characteristics: (i) liquidity ratios are adequate to
meet cash requirements; (ii) long-term senior debt
rating should be A or better, although in some cases
BBB credits may be allowed if other factors outweigh
the BBB; (iii) the issuer should have access to at
least one additional channel of borrowing; (iv) basic
earnings and cash flow should have an upward trend with
allowances made for unusual circumstances; and (v) typically the
issuer's industry should be well established and the
issuer should have a strong position within its
industry and the reliability and quality of management
should be unquestioned. Issues rated A are further
referred to by use of numbers 1, 2 and 3 to denote
relative strength within this highest classification.
For example, the A-1 designation indicates that the degree of
safety regarding timely payment of debt is strong.
Issues rated B are regarded as having only
speculative capacity for timely payment. The C rating
is assigned to short- term debt obligations with a
doubtful capacity for payment.
II. MUNICIPAL OBLIGATIONS RATINGS
(a) MOODY'S:
Aaa
Bonds rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa
Bonds rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in
Aaa securities.
A
Bonds rated A possess many favorable investment
attributes and are to be considered as upper medium
grade obligations. Factors giving security to
principal and interest are considered adequate, but
elements may be present which suggest a suscepti- bility
to impairment sometime in the future.
Baa
Bonds rated Baa are considered medium grade
obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain
protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Moody's letter ratings may be modified by the
addition of a numerical modifier, which is used to show
relative standing within the major rating categories,
except in the Aaa grade.
MIG Ratings: Moody's ratings for state and
municipal short- term obligations will be designated
Moody's Investment Grade or MIG. Such ratings
recognize the differences between short-term credit
risk and long-term risk. Factors affecting the liquidity
of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of the major
importance
in bond risk, long-term secular trends for example, may
be less important over the short run.
VMIG Ratings: A short-term rating may also be
assigned on an issue having a demand feature. Such
ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on
issues with demand features are differentiated by the
use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed
maturity dates and payment relying on external liquidity.
Additionally, investors should be alert to the fact that the
source of payment may be limited to the external liquidity
with no or limited legal recourse to the issuer in the
event the demand is not met.
MIG 1/VMIG 1
This designation denotes best quality. There is
present strong protection by established cash flows,
superior liquidity support or demonstrated broad-based
access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of
protection are ample although not so large as in the
preceding group.
MIG 3/VMIG 3
This designation denotes favorable quality. All
security elements are accounted for but there is
lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to
be less well established.
MIG 4/VMIG 4
This designation denotes adequate quality.
Protection commonly regarded as required of an
investment security is present and although not
distinctly or predominantly speculative, there is
specific risk.
(b) S&P:
S&P's Municipal Bond Ratings cover obligations of
states and political subdivisions. Ratings are
assigned to general obligation and revenue bonds.
General obligation bonds are usually secured by all
resources available to the municipality and the factors
outlined in the rating definitions below are weighted
in determining the rating. Because revenue bonds in
general are payable from specifically pledged revenues, the
essential element in the security for a revenue bond is the
quantity and quality of the pledged revenues available
to pay debt service.
Although an appraisal of most of the same factors
that bear on the quality of general obligation bond
credit is usually appropriate in the rating analysis of
a revenue bond, other factors are important, including
particularly the competitive position of the municipal
enterprise under review and the basic security
covenants. Although a rating reflects S&P's judgment as
to the issuer's capacity for the timely payment of debt service,
in certain instances it may also reflect a mechanism or
procedure for an assured and prompt cure of a default,
should one occur, i.e., an insurance program, Federal
or State guaranty, or the automatic withholding and use
of State aid to pay the defaulted debt service.
AAA
PRIME -- These are obligations of the highest
quality. They have the strongest capacity for timely
payment of debt service.
GENERAL OBLIGATION BONDS -- In a period of
economic stress, the issuers will suffer the smallest
declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong
revenue structure appears more than adequate to meet
future expenditure requirements. Quality of management
appears superior.
REVENUE BONDS -- Debt service coverage has been,
and is expected to remain, substantial. Stability of
the pledged revenues is also exceptionally strong, due
to the competitive position of the municipal enterprise
or to the nature of the revenues. Basic security
provisions (including rate covenant, earnings test for
issuance of additional bonds, and debt service reserve
requirements) are rigorous. There is evidence of
superior management.
AA
HIGH GRADE -- The investment characteristics of
general obligation and revenue bonds in this group
differ in only small degrees from those of the prime
quality issues. Bonds rated "AA" have the second
strongest capacity for payment of debt service.
GOOD GRADE -- Principal and interest payments on
bonds in this category are regarded as safe. This
rating describes the third strongest capacity for
payment of debt service. It differs from the two
higher ratings because:
GENERAL OBLIGATION BONDS -- There is some
weakness, either in the local economic base, in debt
burden, in the balance between revenues and
expenditures, or in quality of management. Under
certain adverse circumstances, any one such weakness might
impair the ability of the issuer to meet debt
obligations at some future date.
REVENUE BONDS -- Debt service coverage is good,
but not exceptional. Stability of the pledged revenues
could show some variations because of increased
competition or economic influences on revenues. Basic
security provisions, while satisfactory, are less
stringent. Management performance appears adequate.
BBB
Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas
they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category
than for bonds in higher rated categories.
S&P's letter ratings may be modified by the
addition of a plus or a minus sign, which is used to
show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
SP-1
These notes show a very strong or strong capacity
to pay principal and interest. Those issues with
overwhelming safety characteristics will be given a
plus (+) designation.
SP-2
These notes show a satisfactory capacity to pay
principal and interest.
APPENDIX B
TAX-EXEMPT VS. TAXABLE INCOME
MACKENZIE NATIONAL MUNICIPAL FUND, MACKENZIE LIMITED
TERM MUNICIPAL FUND
The following table illustrates the approximate taxable
yields for individuals that are equivalent to various
tax-exempt yields, based upon 1996 Federal income tax
rates. The table illustrates the approximate yield you
would have to earn on taxable investments to equal a
given tax-exempt yield in your income tax bracket.
Locate your taxable income, then locate your tax
bracket based on joint or single tax return filing. Read across
to find the approximate equivalent taxable yield you
would need to match a given tax-exempt yield. There
is, of course, no assurance that an investment in a
Fund will result in the realization of any particular
return.
1996[*]
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 5% 6%
7% Return Return
$0-40,100 $0-24,000 15% 5.88% 7.06%
8.24%
$40,101- $24,001- 28 6.94 8.33
9.72 96,900 58,150
$96,901- $58,151- 31 7.25 8.70
10.14 147,700 121,300
$147,701- $121,301- 36 7.81 9.38
10.94 263,750 263,750
Over Over 39.6 8.28 9.93
11.59 $263,750 $263,750
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 8% 9%
10% Return Return
$0-40,100 $0-24,000 15% 9.41% 10.59%
11.76%
$40,101- $24,001- 28 11.11 12.50
13.89 96,900 58,150
$96,901- $58,151- 31 11.59 13.04
14.49 147,700 121,300
$147,701- $121,301- 36 12.50 14.06
15.63 263,750 263,750
Over Over 39.6 13.25 14.90
16.56 $263,750 $263,750
INCOME
TAX TAX-EXEMPT
TAXABLE INCOME BRACKET YIELD OF:
Joint Single 11% 12%
Return Return
$0-40,100 $0-24,000 15% 12.94% 14.12%
$40,101- $24,001- 28 15.28 16.67
96,900 58,150
$96,901- $58,151- 31 15.94 17.39
147,700 121,300
$147,701- $121,301- 36 17.19 18.75
263,750 263,750
Over Over 39.6 18.21 19.87
$263,750 $263,750
[*] This table does not purport to deal with a
shareholder's particular situation. Shareholders
are advised to consult their own tax advisor with
respect to the particular tax consequences to them
of an investment in a Fund. This table does not
take into account any taxes other than the regular
Federal income tax. This table reflects certain
assumptions, including: (i) the Federal alternative minimum
tax is not applicable, and (ii) a shareholder has no net
capital gain for the taxable year. Depending upon
the circumstances, a shareholder's effective
marginal tax rate may differ from his or her tax
bracket rate. This can be attributable to a
variety of factors, including the phase out of
personal exemptions and the reduction of certain
itemized deductions for taxpayers whose adjusted gross
incomes exceed specified thresholds.
MACKENZIE CALIFORNIA MUNICIPAL FUND
The following table illustrates the approximate taxable
yields for individuals that are equivalent to various
tax-exempt yields, based upon combined 1996 Federal and
California income tax rates. For cases in which two or
more state or Federal brackets fall within a bracket
shown, the highest state bracket is combined with the
highest Federal bracket. The combined Federal and
California income tax brackets shown reflect the fact that state
income taxes are currently deductible as an itemized
deduction for Federal tax purposes (however, a
taxpayer's itemized deductions may be subject to an
overall limitation, the effect of which has not been
taken into account in preparing this table). The table
illustrates the approximate yield you would have to
earn on taxable investments to equal a given tax-exempt yield in
your income tax bracket. Locate your taxable income,
then locate your tax bracket based on joint or single
tax return filing. Read across to find the approximate
equivalent taxable yield you would need to match a
given tax-exempt yield. There is, of course, no
assurance that an investment in a Fund will result in
the realization of any particular return.
1996[*]
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 5% 6%
7% Return Return
$0-40,100 $0-24,000 20.10% 6.26% 7.51%
8.76%
$40,101- $24,001- 34.70 7.66 9.19
10.72 96,900 58,150
$96,901- $58,151- 37.42 7.99 9.59
11.19 147,700 111,695
$147,701- $111,696- 42.40 8.68 10.42
12.15 263,750 223,390
Over Over 46.24 9.30 11.16
13.02 $263,750 $223,390
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 8% 9%
10% Return Return
$0-40,100 $0-24,000 20.10% 10.01% 11.26%
12.52%
$30,101- $24,001- 34.70 12.25 13.78
15.31 96,900 58,150
$96,901- $58,151- 37.42 12.78 14.38
15.98 147,700 111,695
$147,701- $111,696- 42.40 13.89 15.63
17.36 263,750 223,390
Over Over 46.24 14.88 16.74
18.60 $263,750 $223,390
INCOME
TAX TAX-EXEMPT
TAXABLE INCOME BRACKET YIELD OF:
Joint Single 11% 12%
Return Return
$0-40,100 $0-24,000 20.10% 13.77% 15.02%
$30,101- $24,001- 34.70 16.85 18.38
96,900 58,150
$96,901- $58,151- 37.42 17.58 19.18
147,700 111,695
$147,701- $111,696- 42.40 19.31 21.07
263,750 223,390
Over Over 46.24 20.46 22.32
$263,750 $223,390
[*] This table does not purport to deal with a
shareholder's particular situation. Shareholders
are advised to consult their own tax advisor with
respect to the particular tax
consequences to them of an investment in a Fund.
This table does not take into account any taxes
other than the regular Federal income tax and the
regular California personal income tax. This
table reflects certain assumptions, including:
(i) there are no Federal or California minimum
taxes applicable, and (ii) a shareholder has no net capital
gain for the taxable year. In addition, this table does
not reflect the fact that a shareholder's taxable
income for Federal income tax purposes may not be
the same as the shareholder's taxable income for
California personal income tax purposes.
Depending upon the circumstances, a shareholder's
effective marginal tax rate may differ from his or
her tax bracket rate. This can be attributable to a
variety of factors, including the Federal phase out of
personal exemptions and reduction of certain itemized
deductions for taxpayers whose adjusted gross incomes
exceed specified thresholds.
MACKENZIE NEW YORK MUNICIPAL FUND
The following tables illustrate the approximate taxable
yields for individuals that are equivalent to various
tax-exempt yields, based upon, in the case of the first
table, 1996 combined Federal and New York State income
tax rates and, in the case of the second table, 1996
combined Federal, New York State and New York City
income tax rates. For cases in which two or more state (or
city) brackets fall within a Federal bracket, the highest
state (or city) bracket is combined with the Federal
bracket. The combined income tax brackets shown
reflect the fact that city and state income taxes are
currently deductible as an itemized deduction for
Federal tax purposes (however, a taxpayer's itemized
deductions may be subject to an overall limitation, the
effect of which has not been taken into account in preparing
these tables). The tables illustrate the approximate yield
you would have to earn on taxable investments to equal
a given tax- exempt yield in your income tax bracket.
Locate your taxable income, then locate your tax
bracket based on joint or single tax return filing.
Read across to find the approximate equivalent taxable
yield you would need to match a given tax-exempt yield.
There is, of course, no assurance that an investment in a Fund
will result in the realization of any particular return.
NEW YORK STATE
1996[*]
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 5% 6%
7% Return Return
$0-40,100 $0-24,000 21.06% 6.33% 7.60%
8.87%
$40,101- $24,001- 33.13 7.48 8.97
10.47 96,900 58,150
$96,901- $58,151- 35.92 7.80 9.36
10.92 147,700 121,300
$147,701- $121,301- 40.56 8.41 10.09
11.78 263,750 263,750
Over Over 43.90 8.91 10.70
12.48 $263,750 $263,750
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 8% 9%
10% Return Return
$0-40,100 $0-24,000 21.06% 10.13% 11.40%
12.67%
$40,101- $24,001- 33.13 11.96 13.46
14.95 96,900 58,150
$96,901- $58,151- 35.92 12.48 14.04
15.61 147,700 121,300
$147,701- $121,301- 40.56 13.46 15.14
16.82 263,750 263,750
Over Over 43.90 14.26 16.04
17.83 $263,750 $263,750
INCOME
TAX TAX-EXEMPT
TAXABLE INCOME BRACKET YIELD OF:
Joint Single 11% 12%
Return Return
$0-40,100 $0-24,000 21.06% 13.93% 15.20%
$40,101- $24,001- 33.13 16.45 17.95
96,900 58,150
$96,901- $58,151- 35.92 17.17 18.73
147,700 121,300
$147,701- $121,301- 40.56 18.51 20.19
263,750 263,750
Over Over 43.90 19.61 21.39
$263,750 $263,750
[*] This table does not purport to deal with a
shareholder's particular situation. Shareholders
are advised to consult their own tax advisor with
respect to the particular tax consequences to them
of an investment in a Fund. This table
does not take into account: (i) any taxes other
than the regular Federal income tax and the
regular New York State personal income tax, or
(ii) the New York State tax table benefit
recapture tax. This table reflects certain
assumptions, including: (i) there are no Federal or New
York State minimum taxes applicable, and (ii) a shareholder
has no net capital gain for the taxable year. In
addition, this table does not reflect the fact
that a shareholder's taxable income for Federal
income tax purposes may not be the same as the
shareholder's taxable income for New York State
income tax purposes. Depending upon the
circumstances, a shareholder's effective marginal tax rate
may differ from his or her tax bracket rate. This can be
attributable to a variety of factors, including the
Federal phase out of personal exemptions and
reduction of certain itemized deductions for
taxpayers whose adjusted gross incomes exceed
specified thresholds.
NEW YORK STATE AND CITY
1996[*]
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 5% 6%
7% Return Return
$0-40,100 $0-24,000 24.79% 6.65% 7.98%
9.31%
$40,101- $24,001- 36.30 7.85 9.42
10.99 96,900 50,000
$96,901- $50,001- 39.00 8.20 9.84
11.48 147,700 121,300
$147,701- $121,301- 43.42 8.84 10.60
12.37 263,750 263,750
Over Over 46.60 9.36 11.24
13.11 $263,750 $263,750
INCOME
TAX
TAXABLE INCOME BRACKET TAX-EXEMPT YIELD
OF:
Joint Single 8% 9%
10% Return Return
$0-40,100 $0-24,000 24.79% 10.64% 11.97%
13.30%
$40,001- $24,001- 36.30 12.56 14.13
15.70 96,900 50,000
96,901- 50,001- 39.00 13.11 14.75
16.39 147,700 121,300
$147,701- $121,301- 43.42 14.14 15.91
17.67 263,750 263,750
Over Over 46.60 14.98 16.85
18.73 $263,750 $263,750
INCOME
TAX TAX-EXEMPT
TAXABLE INCOME BRACKET YIELD OF:
Joint Single 11% 12%
Return Return
$0-40,100 $0-24,000 24.79% 14.63% 15.96%
$39,001- $24,001- 36.30 17.27 18.84
96,900 50,000
$96,901- $50,001- 39.00 18.03 19.67
147,700 121,300
$147,701- $121,301- 43.42 19.44 21.21
263,750 263,750
Over Over 46.60 20.60 22.47
$263,750 $263,750
[*] This table does not purport to deal with a
shareholder's particular situation. Shareholders
are advised to consult their own tax advisor with
respect to the particular tax consequences to them
of an investment in a Fund. This table
does not take into account: (i) any taxes other
than the regular Federal income tax, the regular
New York State personal income tax, and the
regular New York City personal income tax
(including the temporary tax surcharge and the
additional tax), or (ii) the New York State tax table
benefit recapture tax. This table reflects certain
assumptions, including: (i) there are no Federal, state, or
city minimum taxes applicable, and (ii) a shareholder
has no net capital gain for the taxable year. In
addition, this table does not reflect the fact
that a shareholder's taxable income for Federal
income tax purposes may not be the same as the
shareholder's taxable income for state and city tax
purposes. Depending upon the circumstances, a shareholder's
effective marginal tax rate may differ from his or her
tax bracket rate. This can be attributable to a
variety of factors, including the Federal phase
out of personal exemptions and reduction of
certain itemized deductions for taxpayers whose
adjusted gross incomes exceed specified
thresholds.
PART C. OTHER INFORMATION
Item 24 Financial Statements and Exhibits
(a) Financial Statements:
Contained in Part A: Financial
Highlights
Incorporated by reference in Part B:
June 30, 1996 Annual Report to
Shareholders of Mackenzie National
Municipal Fund: - Portfolio of
Investments at June 30, 1996 -
Statement of Assets and Liabilities as of
June 30, 1996
- Statement of Operations for the
Year ended June 30, 1996
- Statement of Changes in Net Assets
for the Years ended June 30, 1996
and 1995 - Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
June 30, 1996 Annual Report to
Shareholders of Mackenzie California
Municipal Fund: - Portfolio of
Investments at June 30, 1996 -
Statement of Assets and Liabilities as of
June 30, 1996
- Statement of Operations for the
Year ended June 30, 1996
- Statement of Changes in Net Assets
for the Years ended June 30, 1996
and 1995 - Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
June 30, 1996 Annual Report to
Shareholders of Mackenzie New York
Municipal Fund: - Portfolio of
Investments at June 30, 1996 -
Statement of Assets and Liabilities as of
June 30, 1996
- Statement of Operations for the
Year ended June 30, 1996
- Statement of Changes in Net Assets
for the Years ended June 30, 1996
and 1995 - Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
June 30, 1996 Annual Report to
Shareholders of Mackenzie Limited Term
Municipal Fund: - Portfolio of
Investments at June 30, 1996 -
Statement of Assets and Liabilities as of
June 30, 1996
- Statement of Operations for the
Year ended June 30, 1996
- Statement of Changes in Net Assets
for the Years ended June 30, 1996
and 1995 - Financial Highlights
- Notes to Financial Statements
- Report of Independent Accountants
(b) Exhibits:
1. (a) Declaration of Trust filed
with Registration Statement
No. 2-98292 and incorporated
by reference herein. (b)
Establishment and Designation of
Additional Series (Mackenzie National
Municipal Fund, Mackenzie California
Municipal Fund, and Mackenzie New York
Municipal Fund) filed with Post-
Effective Amendment No. 13 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(c) Establishment and Designation of
Additional Series (Mackenzie Limited
Term Municipal Fund) filed with Post-
Effective Amendment No. 13 to
Registration Statement No.
2-98292 and incorporated by
reference herein. (d) Declaration
of Trust, as amended and
restated November 5, 1992 filed with
Post-Effective Amendment No. 17 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(e) Establishment and Designation of
Additional Series (Mackenzie Florida
Limited Term Municipal Fund) filed with
Post-Effective Amendment No. 20 to
Registration Statement No.
2-98292 and incorporated by
reference herein. (f)
Redesignation of Shares (Mackenzie
National Municipal Fund--Class A,
Mackenzie California Municipal Fund--
Class A, Mackenzie New York Municipal
Fund--Class A, Mackenzie Limited Term
Municipal Fund--Class A) filed with
Post-Effective Amendment No. 20 to
Registration Statement No. 2-98292
and incorporated by reference
herein. (g) Establishment and
Designation of Additional
Class (Mackenzie National
Municipal Fund--Class B, Mackenzie
California Municipal Fund--Class B,
Mackenzie New York Municipal Fund--Class
B, Mackenzie Limited Term Municipal
Fund--Class B, Mackenzie Florida Limited
Term Municipal Fund--Class B)
filed with Post-Effective
Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(h) Amendment to Amended and Restated
Declaration of Trust filed with Post-
Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
2. By-Laws filed with Registration
Statement No. 2-98292 and
incorporated by reference herein.
3. Not Applicable
4. (a) Specimen Securities for
Mackenzie National Municipal
Fund, Mackenzie California
Municipal Fund and Mackenzie
New York Municipal Fund filed with Post-
Effective Amendment No. 13 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(b) Specimen Security for Mackenzie Limited
Term Municipal Fund filed with Post-
Effective Amendment No. 13 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(c) Specimen Security for Mackenzie
Florida Limited Term Municipal
Fund filed with Post-Effective
Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
5. (a) Master Business Management and
Investment Advisory Agreement
and Supplements for Mackenzie
National Municipal Fund,
Mackenzie California Municipal
Fund and Mackenzie New York
Municipal Fund filed with Post-Effective
Amendment No. 11 to Registration
Statement No. 2-98292 and incorporated
by reference herein.
(b) Addendum to Master Business
Management and Investment
Advisory Agreement and Addenda
to Supplements for Mackenzie
National Municipal Fund, Mackenzie
California Municipal Fund, and
Mackenzie New York Municipal Fund filed
with Post-Effective Amendment No. 17 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(c) Business Management and Investment
Advisory Agreement Supplement for
Mackenzie Limited Term Municipal
Fund
filed with Post-Effective
Amendment No. 13 to
Registration Statement No. 2-98292
and incorporated by reference herein.
(d) Addendum to Business Management and
Investment Advisory Agreement Supplement
for Mackenzie Limited Term Municipal
Fund filed with Post-Effective
Amendment No. 17 to
Registration Statement No. 2-
98292 and incorporated by reference
herein.
(e) Business Management and
Investment Advisory Agreement
Supplement for Mackenzie
Florida Limited Term Municipal
Fund filed with Post-Effective Amendment
No. 20 to Registration Statement No. 2-
98292 and incorporated by reference
herein.
6. (a) Amended and Restated
Distribution Agreement for
Mackenzie National Municipal
Fund, Mackenzie California
Municipal Fund, Mackenzie New York
Municipal Fund, Mackenzie Limited Term
Municipal Fund, and Mackenzie Florida
Limited Term Municipal Fund filed with
Post-Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference
herein. (f) Dealer Agreement, as
amended filed with Post-
Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
7. Not Applicable
8. (a) Custodian Agreement with Brown
Brothers Harriman & Co. filed
with Post-Effective Amendment
No. 18 to Registration
Statement No. 2-98292 and incorporated
by reference herein.
(b) Form of Agreement with The
First National Bank of Boston
and Futures Commission
Merchants filed with Pre-
Effective Amendment No. 2 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
9. (a) Master Administrative Services
Agreement and Supplements for
Mackenzie National Municipal
Fund, Mackenzie California
Municipal Fund, Mackenzie New York
Municipal Fund, Mackenzie Limited Term
Municipal Fund, and Mackenzie Florida
Limited Term Municipal Fund filed with
Post-Effective Amendment No.
17 to Registration Statement
No. 2-98292 and incorporated
by reference herein. (b) Addendum
to Master Administrative
Services Agreement and Addenda to
Supplements for Mackenzie National
Municipal Fund, Mackenzie California
Municipal Fund, Mackenzie New York
Municipal Fund, Mackenzie Limited Term
Municipal Fund, and Mackenzie Florida
Limited Term Municipal Fund filed with
Post-Effective Amendment No. 17
to Registration Statement No.
2-98292 and incorporated by
reference herein. (c)
Administrative Services Agreement
Supplement for Mackenzie Florida Limited
Term Municipal Fund filed with Post-
Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(d) Transfer Agency and Shareholder Services
Agreement filed with Post-
Effective Amendment No. 17 to
Registration Statement No.
2-98292 and incorporated by
reference herein.
(e) Addendum to Transfer Agency
and Shareholder Services
Agreement filed with Post-
Effective Amendment No. 17 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(f) Assignment Agreement relating to
Transfer Agency and Shareholder Services
Agreement filed with Post-Effective
Amendment No. 18 to Registration
Statement No. 2-98292 and incorporated
by reference herein.
(g) Addendum to Transfer Agency
and Shareholder Services
Agreement filed with Post-
Effective Amendment No. 18 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(h) Addendum to Transfer Agency and
Shareholder Services Agreement filed
with Post-Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(i) Fund Accounting Services Agreement
filed with Post-Effective
Amendment No. 17 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(j) Addendum to Fund Accounting Services
Agreement filed with Post-Effective
Amendment No. 17 to Registration
Statement No. 2-98292 and
incorporated by reference
herein.
(k) Addendum to Fund Accounting
Services Agreement filed with
Post-Effective Amendment No.
20 to Registration Statement
No. 2-98292 and incorporated
by reference herein.
10. Opinion and Consent of Dechert
Price & Rhoads filed with
Registrant's most recent Rule 24f-2
Notice on August 28, 1996 and
incorporated by reference herein.
11. (a) Opinion of Dechert Price &
Rhoads regarding Rule 24e-2,
filed herewith.
(b) Consent of Coopers & Lybrand
L.L.P., filed herewith.
12. Reports of Coopers & Lybrand
L.L.P., filed herewith, and the
following Financial Statements
filed electronically on September
3, 1996 and incorporated by reference herein:
(a) Annual Report to Shareholders
of Mackenzie National
Municipal Fund for the year
ended June 30, 1996
(b) Annual Report to Shareholders
of Mackenzie California
Municipal Fund for the year
ended June 30, 1996
(c) Annual Report to Shareholders
of Mackenzie New York Fund for
the year ended June 30, 1996
(d) Annual Report to Shareholders
of Mackenzie Limited Term
Municipal Fund for the year
ended June 30, 1996
13. Agreement relating to initial
capital, as amended filed with Pre-
Effective Amendment No. 3 to
Registration Statement No. 2-98292
and incorporated by reference herein.
14. Retirement Plans filed with Pre-
Effective Amendment No. 2 to
Registration Statement No. 2-98292
and incorporated by reference herein.
15. (a) Master Amended and Restated
Distribution Plan (and Addenda
thereto) and Supplements
thereto for Mackenzie National
Municipal Fund, Mackenzie
California Municipal Fund, Mackenzie
New York Municipal Fund,
Mackenzie Limited Term
Municipal Fund, and Mackenzie
Florida Limited Term Municipal
Fund filed with Post-Effective Amendment
No. 18 to Registration Statement No. 2-
98292 and incorporated by reference
herein.
(b) Addenda to Amended and
Restated Distribution Plan
Supplements for Mackenzie
National Municipal Fund,
Mackenzie California Municipal Fund,
Mackenzie New York Municipal Fund,
Mackenzie Limited Term Municipal Fund,
and Mackenzie Florida Limited Term
Municipal Fund filed with Post-Effective
Amendment No. 20 to Registration
Statement No. 2-98292 and
incorporated by reference
herein.
(c) Amended and Restated
Distribution Plan Supplement
for Mackenzie Florida Limited
Term Municipal Fund (Class A) filed with
Post-Effective Amendment No. 20 to
Registration Statement No. 2-98292 and
incorporated by reference herein.
(d) Master Distribution Plan for Class B and
Supplements thereto for Mackenzie
National Municipal Fund,
Mackenzie California Municipal
Fund, Mackenzie New York
Municipal Fund, Mackenzie Limited
Term Municipal Fund, and Mackenzie
Florida Limited Term Municipal Fund
filed with Post-Effective Amendment No.
20 to Registration Statement No. 2-98292
and incorporated by reference herein.
(e) Form of Rule 12b-1 Related
Agreement filed with Post-
Effective Amendment No. 18 to
Registration Statement No. 2-98292
and incorporated by reference herein.
16. Schedule showing computation of
performance quotations filed with
Post-Effective Amendment No. 18 to
Registration Statement No. 2-98292
and incorporated by reference
herein.
17. Financial Data Schedules filed
herewith.
18. Not applicable.
Item 25 Persons Controlled By or Under Common Control
With Registrant: Not Applicable.
Item 26 Number of Holders of Securities
NUMBER OF
FUND DATE RECORD
HOLDERS
Mackenzie National 9/30/96 765
Municipal Fund--Class A
Mackenzie California 9/30/96 574
Municipal Fund--Class A
Mackenzie New York 9/30/96 1,096
Municipal Fund--Class A
Mackenzie Limited Term 9/30/96 2,184
Municipal Fund--Class A
Mackenzie National 9/30/96 17
Municipal Fund--Class B
Mackenzie California 9/30/96 25
Municipal Fund--Class B
Mackenzie New York 9/30/96 43
Municipal Fund--Class B
Mackenzie Limited Term 9/30/96 80
Municipal Fund--Class B
Item 27 Indemnification
Reference is made to Article IV of the
Registrant's Declaration of Trust, filed as
an exhibit to Registration Statement No.
2-98292. Insofar as indemnification for
liabilities arising under the Securities Act
of 1933 may be permitted to trustees,
officers and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that in the
opinion of the Securities and Exchange
Commission, such indemnification is against
public policy as expressed in the Act and,
therefore, is unenforceable. In the event
that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by trustees, officers of
controlling persons of the Registrant in connection
with the successful defense of any act, suit
or proceeding) is asserted by such trustees,
officers or controlling persons in connection
with the shares being registered, the
Registrant will, unless in the opinion of its
counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification
by it is against public policy as expressed in
the Act and will be governed by the final
adjudication of such issuers.
Item 28 Business and Other Connections of Investment
Adviser
Information Regarding Advisers Under Advisory
Agreements: Reference is made to the Form AD
of each of Mackenzie Investment Management
Inc. ("MIMI"), investment adviser to
Mackenzie National Municipal Fund, Mackenzie
California Municipal Fund, Mackenzie New York
Municipal Fund, Mackenzie Limited Term
Municipal Fund and Mackenzie Florida Limited Term
Municipal Fund.
The list required by this Item 28 of officers
and directors of MIMI, together with
information as to any other business
profession, vocation or employment of a
substantial nature engaged in by such officers and
directors during the past two years, is incorporated by
reference to MIMI's Form AD.
Item 29 Principal Underwriters
(a) Ivy Mackenzie Distributors, Inc.
("IMDI"), Via Mizner Financial Plaza,
700 South Federal Highway, Suite 300,
Boca Raton, Florida 33432, Registrant's
principal underwriter, is a wholly-owned
subsidiary of Mackenzie Investment Management Inc.
("MIMI"), Via Mizner Financial Plaza, 700 South
Federal Highway, Suite 300, Boca Raton, Florida
33432. IMDI also serves as the principal
underwriter for Ivy Fund and The Mackenzie
Funds Inc. IMDI is the successor to
MIMI's distribution activities.
(b) The information required by this Item 29
regarding each director, officer or
partner of IMDI is incorporated by
reference to Schedule A of Form BD filed by IMDI
pursuant to the Securities Exchange Act of 1934.
(c) Not applicable.
Item 30 Location of Accounts and Records
Mackenzie Investment Management Inc., Via
Mizner Financial Plaza, 700 South Federal
Highway, Suite 300, Boca Raton, Florida
33432; Mackenzie Financial Corporation, 150 Bloor
Street West, Toronto, Ontario, Canada M5S 3B5; Ivy Mackenzie
Distributors, Inc., Via Mizner Financial Plaza,
700 South Federal Highway, Suite 300, Boca
Raton, Florida 33432; Brown Brothers Harriman
& Co., 40 Water Street, Boston, Massachusetts
02109; The Shareholder Services Group, 53
State Street, Boston, Massachusetts 02109.
Item 31 Not applicable
Item 32 Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish each
person to whom a prospectus is delivered
with a copy of the Registrant's latest
annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective
Amendment No. 24 to its Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No. 24 to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston, in
the Commonwealth of Massachusetts, on the 24th day of
October, 1996.
MACKENZIE SERIES TRUST
By: MICHAEL G. LANDRY*
President
* By: JOSEPH R. FLEMING
Attorney-in-fact
Pursuant to the requirements of the Securities Act
of 1933, this Post-Effective Amendment No. 24 to the
Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated.
SIGNATURES TITLE DATE
MICHAEL G. LANDRY* Trustee and
10/24/96 President (Chief
Executive Officer)
C. WILLIAM FERRIS++ Treasurer (Chief
10/24/96 Financial
Officer)
JOHN S. ANDEREGG, JR.** Trustee
10/24/96
STANLEY CHANNICK+ Trustee
10/24/96
FRANK W. DEFRIECE, JR.** Trustee
10/24/96
JOSEPH G. ROSENTHAL* Trustee
10/24/96
PAUL H. BROYHILL* Trustee
10/24/96
J. BRENDAN SWAN** Trustee
10/24/96
* By: JOSEPH R. FLEMING
Attorney-in-fact
* Powers of attorney filed with Post-Effective
Amendments Nos. 13 and 14 to Registration
Statement No. 2-98292.
** Powers of attorney filed with Post-Effective
Amendment No. 18 to Registration Statement
No. 2-98292.
+ Power of attorney filed with Post-Effective
Amendment No. 19 to Registration Statement
No. 2-98292.
++ Power of attorney filed with Post-Effective
Amendment No. 20 to Registration Statement
No. 2-98292.
EXHIBIT INDEX
11a. Opinion of Dechert Price & Rhoads regarding
Rule 24e-2
11b. Consents of Coopers & Lybrand L.L.P.
12 Reports of Coopers & Lybrand L.L.P.
17 Financial Data Schedules
EXHIBIT 11A
[DP&R LETTERHEAD]
October 24, 1996
Mackenzie Series Trust
700 South Federal Highway
Suite 300
Boca Raton, FL 33432
Ladies and Gentlemen:
As counsel for Mackenzie Series Trust (the "Trust"), we are
familiar with the registration of the Trust under the Investment
Company Act of 1940 (File No. 811-4322) and the registration
statement relating to its shares of beneficial interest (the
"Shares") under the Securities Act of 1933 (File No. 2-98292)
(the "Registration Statement"). We also have examined such other
records of the Trust, agreements, documents and instruments as we
deemed appropriate.
Based upon the foregoing, it is our opinion that the Shares
being registered pursuant to Post-Effective Amendment No. 24 to
the Trust's Registration Statement will, when sold at the public
offering price and delivered by the Trust against receipt of the
net asset value of the Shares in accordance with the terms of the
Registration Statement and the requirements of applicable law,
have been duly and validly authorized, legally and validly
issued, and fully paid and non-assessable.
We consent to the filing of this opinion on behalf of the
Trust with the Securities and Exchange Commission in connection
with the filing of Post-Effective Amendment No. 24.
Very truly yours,
DECHERT PRICE & RHOADS
EXHIBIT 11B
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Mackenzie Series Trust
We hereby consent to the incorporation by reference in Post-
Effective Amendment No. 24 to the Registration Statement on Form
N-1A (File No. 2-98292, hereafter the "Registration Statement")
of Mackenzie Series Trust (the "Trust") of our report dated
August 15, 1996, relating to the financial statements and
financial highlights of Mackenzie National Municipal Fund,
Mackenzie California Municipal Fund, Mackenzie New York Municipal
Fund and Mackenzie Limited Term Municipal Fund (hereafter the
"Funds") appearing in the June 30, 1996 Annual Reports to
Shareholders of the Funds, which annual reports are incorporated
by reference in the Registration Statement.
We also consent to the reference to our Firm under the caption
"Financial Highlights" in the Prospectus and "Auditors" in the
Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
October 24, 1996
EXHIBIT 12
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Trustees of
Mackenzie California Municipal Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of June 30, 1996, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of June 30, 1996 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of June 30, 1996, the results
of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
August 15, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Trustees of
Mackenzie Limited Term Municipal Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of June 30, 1996, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of June 30, 1996 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of June 30, 1996, the results
of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
August 15, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Trustees of
Mackenzie National Municipal Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of June 30, 1996, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of June 30, 1996 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of June 30, 1996, the results
of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
August 15, 1996
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and
Board of Trustees of
Mackenzie New York Municipal Fund (the Fund)
We have audited the accompanying statement of assets and
liabilities of the Fund, including the schedule of portfolio
investments, as of June 30, 1996, and the related statement of
operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended,
and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of June 30, 1996 by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Fund as of June 30, 1996, the results
of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Lauderdale, Florida
August 15, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 071
<NAME> MACKENZIE LIMITED TERM MUNICIPAL FUND - CLASS A
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 69,538
<INVESTMENTS-AT-VALUE> 69,496
<RECEIVABLES> 1,252
<ASSETS-OTHER> 20
<OTHER-ITEMS-ASSETS> 3,506
<TOTAL-ASSETS> 74,274
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 69
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,869
<SHARES-COMMON-STOCK> 7,125
<SHARES-COMMON-PRIOR> 8,516
<ACCUMULATED-NII-CURRENT> 47
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,670)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (41)
<NET-ASSETS> 74,205
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,953
<OTHER-INCOME> 0
<EXPENSES-NET> 842
<NET-INVESTMENT-INCOME> 4,111
<REALIZED-GAINS-CURRENT> 536
<APPREC-INCREASE-CURRENT> (113)
<NET-CHANGE-FROM-OPS> 4,534
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3954
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 670
<NUMBER-OF-SHARES-REDEEMED> 4,468
<SHARES-REINVESTED> 242
<NET-CHANGE-IN-ASSETS> 3,556
<ACCUMULATED-NII-PRIOR> (230)
<ACCUMULATED-GAINS-PRIOR> (3,633)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 514
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,243
<AVERAGE-NET-ASSETS> 91,218
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> .01
<PER-SHARE-DIVIDEND> .44
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> .89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 072
<NAME> MACKENZIE LIMITED TERM MUNICIPAL FUND - CLASS B
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 69,538
<INVESTMENTS-AT-VALUE> 69,496
<RECEIVABLES> 1,252
<ASSETS-OTHER> 20
<OTHER-ITEMS-ASSETS> 3,506
<TOTAL-ASSETS> 74,274
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 69
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 75,869
<SHARES-COMMON-STOCK> 205
<SHARES-COMMON-PRIOR> 211
<ACCUMULATED-NII-CURRENT> 47
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,670)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (41)
<NET-ASSETS> 74,205
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,953
<OTHER-INCOME> 0
<EXPENSES-NET> 842
<NET-INVESTMENT-INCOME> 4,111
<REALIZED-GAINS-CURRENT> 536
<APPREC-INCREASE-CURRENT> (113)
<NET-CHANGE-FROM-OPS> 4,534
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 84
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 60
<NUMBER-OF-SHARES-REDEEMED> 93
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> 28
<ACCUMULATED-NII-PRIOR> (230)
<ACCUMULATED-GAINS-PRIOR> (3,633)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 514
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,243
<AVERAGE-NET-ASSETS> 2,193
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> .01
<PER-SHARE-DIVIDEND> .40
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 1.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> MACKENZIE NATIONAL MUNICIPAL FUND - CLASS A
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 23,466
<INVESTMENTS-AT-VALUE> 23,672
<RECEIVABLES> 597
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 552
<TOTAL-ASSETS> 24,826
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24
<TOTAL-LIABILITIES> 24
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,871
<SHARES-COMMON-STOCK> 2,434
<SHARES-COMMON-PRIOR> 2,576
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (304)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 206
<NET-ASSETS> 24,802
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,645
<OTHER-INCOME> 0
<EXPENSES-NET> 299
<NET-INVESTMENT-INCOME> 1,346
<REALIZED-GAINS-CURRENT> 581
<APPREC-INCREASE-CURRENT> (654)
<NET-CHANGE-FROM-OPS> 1,272
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,264
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 235
<NUMBER-OF-SHARES-REDEEMED> 770
<SHARES-REINVESTED> 64
<NET-CHANGE-IN-ASSETS> 471
<ACCUMULATED-NII-PRIOR> (83)
<ACCUMULATED-GAINS-PRIOR> (810)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 411
<AVERAGE-NET-ASSETS> 25,643
<PER-SHARE-NAV-BEGIN> 9.76
<PER-SHARE-NII> .50
<PER-SHARE-GAIN-APPREC> (.04)
<PER-SHARE-DIVIDEND> .48
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.73
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> MACKENZIE NATIONAL MUNICIPAL FUND - CLASS B
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 23,466
<INVESTMENTS-AT-VALUE> 23,672
<RECEIVABLES> 597
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 552
<TOTAL-ASSETS> 24,826
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24
<TOTAL-LIABILITIES> 24
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,871
<SHARES-COMMON-STOCK> 116
<SHARES-COMMON-PRIOR> 83
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (304)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 206
<NET-ASSETS> 24,802
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,645
<OTHER-INCOME> 0
<EXPENSES-NET> 299
<NET-INVESTMENT-INCOME> 1,346
<REALIZED-GAINS-CURRENT> 581
<APPREC-INCREASE-CURRENT> (654)
<NET-CHANGE-FROM-OPS> 1,272
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 39
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 49
<NUMBER-OF-SHARES-REDEEMED> 12
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 38
<ACCUMULATED-NII-PRIOR> (83)
<ACCUMULATED-GAINS-PRIOR> (810)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 411
<AVERAGE-NET-ASSETS> 927
<PER-SHARE-NAV-BEGIN> 9.76
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> (.05)
<PER-SHARE-DIVIDEND> .42
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.72
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> MACKENZIE CALIFORNIA MUNICIPAL FUND - CLASS A
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 31,530
<INVESTMENTS-AT-VALUE> 32,387
<RECEIVABLES> 627
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 806
<TOTAL-ASSETS> 33,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85
<TOTAL-LIABILITIES> 85
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,606
<SHARES-COMMON-STOCK> 3,220
<SHARES-COMMON-PRIOR> 3,665
<ACCUMULATED-NII-CURRENT> 49
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 227
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 857
<NET-ASSETS> 33,738
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,356
<OTHER-INCOME> 0
<EXPENSES-NET> 427
<NET-INVESTMENT-INCOME> 1,929
<REALIZED-GAINS-CURRENT> 935
<APPREC-INCREASE-CURRENT> (778)
<NET-CHANGE-FROM-OPS> 2,086
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,815
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 120
<NUMBER-OF-SHARES-REDEEMED> 851
<SHARES-REINVESTED> 86
<NET-CHANGE-IN-ASSETS> 645
<ACCUMULATED-NII-PRIOR> (102)
<ACCUMULATED-GAINS-PRIOR> (289)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 501
<AVERAGE-NET-ASSETS> 36,981
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .52
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> .50
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> MACKENZIE CALIFORNIA MUNICIPAL FUND - CLASS B
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 31,530
<INVESTMENTS-AT-VALUE> 32,387
<RECEIVABLES> 627
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 806
<TOTAL-ASSETS> 33,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85
<TOTAL-LIABILITIES> 85
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,606
<SHARES-COMMON-STOCK> 112
<SHARES-COMMON-PRIOR> 110
<ACCUMULATED-NII-CURRENT> 49
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 227
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 857
<NET-ASSETS> 33,738
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,356
<OTHER-INCOME> 0
<EXPENSES-NET> 427
<NET-INVESTMENT-INCOME> 1,929
<REALIZED-GAINS-CURRENT> 935
<APPREC-INCREASE-CURRENT> (778)
<NET-CHANGE-FROM-OPS> 2,086
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 46
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18
<NUMBER-OF-SHARES-REDEEMED> 8
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 14
<ACCUMULATED-NII-PRIOR> (102)
<ACCUMULATED-GAINS-PRIOR> (289)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 210
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 501
<AVERAGE-NET-ASSETS> 1,112
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> .45
<PER-SHARE-GAIN-APPREC> .02
<PER-SHARE-DIVIDEND> .43
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 1.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 051
<NAME> MACKENZIE NEW YORK MUNICIPAL FUND - CLASS A
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 35,969
<INVESTMENTS-AT-VALUE> 36,755
<RECEIVABLES> 716
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 266
<TOTAL-ASSETS> 37,744
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,045
<SHARES-COMMON-STOCK> 3,656
<SHARES-COMMON-PRIOR> 3,990
<ACCUMULATED-NII-CURRENT> 58
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (179)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 786
<NET-ASSETS> 37,710
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,545
<OTHER-INCOME> 0
<EXPENSES-NET> 458
<NET-INVESTMENT-INCOME> 2,087
<REALIZED-GAINS-CURRENT> 310
<APPREC-INCREASE-CURRENT> (341)
<NET-CHANGE-FROM-OPS> 2,056
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1941
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 150
<NUMBER-OF-SHARES-REDEEMED> 758
<SHARES-REINVESTED> 119
<NET-CHANGE-IN-ASSETS> 489
<ACCUMULATED-NII-PRIOR> (112)
<ACCUMULATED-GAINS-PRIOR> (396)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 549
<AVERAGE-NET-ASSETS> 38,760
<PER-SHARE-NAV-BEGIN> 9.72
<PER-SHARE-NII> .51
<PER-SHARE-GAIN-APPREC> (.02)
<PER-SHARE-DIVIDEND> .49
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.72
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 052
<NAME> MACKENZIE NEW YORK MUNICIPAL FUND - CLASS B
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 35,969
<INVESTMENTS-AT-VALUE> 36,755
<RECEIVABLES> 716
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 266
<TOTAL-ASSETS> 37,744
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
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<APPREC-INCREASE-CURRENT> (341)
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<ACCUMULATED-GAINS-PRIOR> (396)
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</TABLE>
