| Mackenzie
Review of Segment Operating Results
OPERATING EXPENSES Mackenzie’s operating
expenses decreased $42.0 million to $541.3 million from
$583.3 million in the previous year.
Commission expense, which represent the amortization
of deferred selling commissions, decreased $11.5 million
to $141.7 million from $153.2 million in 2002. Mackenzie
amortizes deferred selling commissions over a maximum
period of seven years. However, to the extent fees are
received on the redemption of the underlying mutual
fund units, amortization is accelerated. The decrease
in commission expense as compared to last year is consistent
with the increase in deferred selling commissions which
are now fully amortized and the decline in redemption
fees.
Trailer fees paid to dealers were $142.3 million in
2003, a decrease of $6.7 million from $149.0 million
in the previous year. This decline is consistent with
the overall decrease in Mackenzie’s average mutual
fund assets under management in the current year as
compared to 2002. Trailer fees as a percentage of average
mutual fund assets under management decreased marginally
to 0.462% from 0.464% in 2002.
Non-commission expenses include costs incurred by Mackenzie
in the administration, marketing and management of its
mutual funds and all other expenses in the operation
of its business. Non-commission expenses decreased $23.8
million to $257.3 million in 2003 from $281.1 million
in the previous year. This decline was primarily due
to:
- Synergies related to the transition work with Investors
Group.
- Management of discretionary expenditures.
- Lower distribution fees paid to a limited partnership,
consistent with the decline in average assets financed
by limited partnership vehicles.
- Reduction in sub-advisory expenses due to the internalization
of certain fund mandates and the renegotiation of
a number of sub-advisory agreements in 2002 and 2003.
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