The Trust is a securitization structure consisting of senior securities
(Preferred A Units) held by the public and subordinate securities (Mackenzie
Units) held by Mackenzie. The Trust loans money to Mackenzie through a
Secured Note, bearing 6% interest, to pay selling commissions to dealers.
The principal asset of the Trust is the Secured Note, however, the Trust
also receives a portion of Mackenzie's management fees in return for the
The Mackenzie Income Trust was initially able to raise money from the
- Approximately $200 million from the public for the purchase of
Preferred A units
- $200 million from Mackenzie Financial Corporation in return for
Therefore, there are two classes of units for the MIT:
Preferred A Units. These units were sold to the public through dealers
at $25.00/unit. The payment was required in two parts: $15.00 due on April
06,1998 and $10.00 due on November 30, 1998.
The approximate rate of return for the Preferred A Units is as follows:
- Units held in registered plans: fixed rate of return of 6.11%
- Units held in non-registered plans: rate of return will fluctuate
The rate of return for these securities held in open accounts varies
depending on the performance of the underlying assets of the Trust. A
stronger cash flow would accelerate the principal repayment and lower
the future interest income.
Preferred A Units expire December 31, 2002. (See
Mackenzie Units. These units were funded with monies from Mackenzie Financial
Corporation. The excess cash flow, that is not designated for Preferred
A Units, will go to Mackenzie Financial Corporation.
The Trust's cash flow is used to pay quarterly distributions of $1.5048/unit
to Preferred A Unitholders. These distributions consist of both income
and return of principal, with the residual cash flow distributed to Mackenzie.