2014 annual report - gamfunds.rbcgam.com/pdf/bonavista/financial/bv-annual-report-2014.pdf · 51...

BONAVISTA FUNDS

2014 Annual Report

TABLE OF CONTENTS

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING 1

INDEPENDENT AUDITOR’S REPORT 2

BonaVista Canadian Equity Fund 3

BonaVista Fixed Income Fund 9

BonaVista U.S. Equity Fund 16

BonaVista International Equity Fund 22

BonaVista Money Market Fund 28

BonaVista Balanced Fund 34

BonaVista Private Balanced Fund 43

GENERIC NOTES TO FINANCIAL STATEMENTS 52

11

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

On November 1, 2013, BonaVista Asset Management Ltd. was amalgamated with RBC Global Asset Management Inc. (“RBC GAM”). The

accompanying financial statements have been prepared by RBC GAM, as manager of the Funds (the “Funds”), and approved by the Board of

Directors of RBC GAM. We are responsible for the information contained within these financial statements.

We have maintained appropriate procedures and controls to ensure that relevant and reliable financial information is produced. The financial

statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”) (and they include certain amounts

that are based on estimates and judgments). The significant accounting policies, which we believe are appropriate for the Funds, are described

in Note 3 to the financial statements.

Deloitte LLP, Independent Chartered Professional Accountants, Chartered Accountants, have performed an independent audit of the financial

statements in accordance with IFRS. Their report is set out on the next page.

John S. Montalbano, CFA Frank Lippa, CPA, CAChief Executive Officer CFO and Chief Operating OfficerRBC Global Asset Management Inc. RBC Global Asset Management Inc.

March 5, 2015

2

INDEPENDENT AUDITOR’S REPORT

To the Unitholders of:

BonaVista Canadian Equity FundBonaVista Fixed Income FundBonaVista U.S. Equity FundBonaVista International Equity FundBonaVista Money Market FundBonaVista Balanced FundBonaVista Private Balanced Fund(collectively referred to as the “Funds”)

We have audited the accompanying financial statements of each of the Funds, which comprise the schedule of investment portfolio as at

December 31, 2014, the statements of financial position as at December 31, 2014, December 31, 2013 and January 1, 2013 (as applicable)

and the statements of comprehensive income, statements of cash flow and statements of changes in net assets attributable to holders of

redeemable units for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial

Reporting Standards (“IFRS”), and for such internal control as management determines is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian

generally accepted auditing standards (“GAAS”). Those standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures

selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due

to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as at December 31, 2014,

December 31, 2013 and January 1, 2013 (as applicable) and the results of their operations, their cash flows and changes in their net assets for the

years then ended in accordance with IFRS.

Chartered Professional Accountants, Chartered Accountants, Licensed Public Accountants

March 5, 2015Toronto, Ontario

SCHEDULE OF INVESTMENT PORTFOLIO (in $000s)

2014 ANNUAL FINANCIAL STATEMENTS

3

December 31, 2014

The accompanying notes are an integral part of the financial statements.

BONAVISTA CANADIAN EQUITY FUND

Fair % of Net Holdings Security Cost Value Assets

CANADIAN EQUITIESConsumer Discretionary 14 000 AutoCanada Inc. $ 626 $ 623 30 655 Canadian Tire Corp., Ltd. 1 612 3 763 68 400 Gildan Activewear Inc. 776 4 494 48 120 Magna International Inc. 1 619 6 058 115 074 Quebecor Inc. 1 883 3 675 65 500 Thomson Reuters Corp. 2 320 3 070

8 836 21 683 10.5Consumer Staples 122 400 Alimentation Couche-Tard Inc. 817 5 960 36 435 Loblaw Cos Ltd. 1 727 2 265 96 180 Saputo Inc. 1 151 3 359

3 695 11 584 5.6Energy 34 664 Baytex Energy Corp. 1 465 670 173 400 Canadian Natural Resources Ltd. 3 826 6 229 98 650 Cenovus Energy Inc. 2 369 2 365 79 850 EnCana Corp. 1 990 1 291 119 700 Gran Tierra Energy Inc. 710 534 91 300 Husky Energy Inc. 2 329 2 511 50 700 MEG Energy Corp. 1 559 991 111 115 Precision Drilling Corp. 1 789 784 272 022 Suncor Energy Inc. 7 276 10 038 51 800 Trilogy Energy Corp. 1 367 410

24 680 25 823 12.4Financials 105 200 Bank of Montreal 4 744 8 645 164 700 Bank of Nova Scotia 5 520 10 921 109 370 Canadian Imperial Bank of Commerce 6 916 10 920 111 600 Element Financial Corp. 1 315 1 578 56 600 Genworth MI Canada Inc. 1 143 2 093 84 140 Home Capital Group Inc. 2 231 4 038 54 925 IGM Financial Inc. 1 686 2 544 22 700 Intact Financial Corp. 1 372 1 903 246 580 Manulife Financial Corp. 5 595 5 469 88 640 National Bank of Canada 2 232 4 382 109 300 Royal Bank of Canada* 6 002 8 770 92 925 Sun Life Financial Inc. 3 713 3 895 242 400 The Toronto-Dominion Bank 6 548 13 456

49 017 78 614 38.0Health Care 27 000 Valeant Pharmaceuticals International Inc. 3 224 4 491

3 224 4 491 2.2Industrials 444 240 Bombardier Inc., Class B 2 225 1 844 141 227 CAE Inc. 1 313 2 130 103 750 Canadian National Railway Co. 1 708 8 302 18 550 Canadian Pacific Railway Ltd. 1 073 4 150 88 252 Finning International Inc. 2 382 2 227


Industrials (cont.) 34 350 MacDonald Dettwiler & Associates Ltd. $ 1 485 $ 3 262 34 900 Russel Metals Inc. 975 904 52 140 SNC-Lavalin Group Inc. 1 990 2 310 56 200 Stantec Inc. 681 1 794

13 832 26 923 13.0Information Technology 116 180 Blackberry Ltd. 5 476 1 480 52 300 CGI Group Inc. 1 766 2 316 317 780 Mitel Networks Corp. 3 003 3 930 77 280 Open Text Corp. 1 146 5 225

11 391 12 951 6.3Materials 37 457 Agrium Inc. 2 035 4 120 48 500 Barrick Gold Corp. 1 780 607 104 365 First Quantum Minerals Ltd. 1 866 1 723 41 270 Goldcorp Inc. 1 126 888 70 100 HudBay Minerals Inc. 842 709 186 500 Lundin Mining Corp. 1 868 1 067 30 970 Methanex Corp. 766 1 653 41 190 Potash Corporation of Saskatchewan Inc. 1 789 1 692 180 154 Teck Resources Ltd. 4 073 2 861 12 500 West Fraser Timber Co. Ltd. 603 830 73 800 Yamana Gold Inc. 875 346

17 623 16 496 8.0Telecommunication Services 50 400 Rogers Communications Inc., Class B 1 484 2 277 56 810 TELUS Corp. 1 078 2 380

2 562 4 657 2.3TOTAL CANADIAN EQUITIES 134 860 203 222 98.3POOLED FUNDS 250 499 BonaVista Money Market Fund* 2 585 2 581

TOTAL POOLED FUNDS 2 585 2 581 1.2TOTAL INVESTMENTS 137 445 205 803 99.5TRANSACTION COSTS (57) – –NET INVESTMENTS $ 137 388 205 803 99.5OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 1 044 0.5NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 206 847 100.0

* Investment in related party (see note 6 in the generic notes).

4

FINANCIAL STATEMENTS

The accompanying notes are an integral part of these financial statements.


Statements of Financial Position (in $000s except per unit amounts)

(see note 2 and note 8 in the generic notes)December 31

2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 205 803 $ 318 386 $ 277 233 Cash 315 539 983 Subscriptions receivable 1 628 349 603 Dividends receivable, interest accrued and other assets 445 738 871 TOTAL ASSETS 208 191 320 012 279 690 LIABILITIESRedemptions payable 1 324 155 5 922 Accounts payable and accrued expenses 20 14 12 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 1 344 169 5 934 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 206 847 $ 319 843 $ 273 756

Investments at cost $ 137 388 $ 216 891 $ 225 830

NAV PER UNIT $ 19.79 $ 22.71 $ 19.15

5




Statements of Cash Flow (in $000s)

For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 24 925 $ 65 610 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (52 542) (7 071)Change in unrealized loss (gain) on investments 33 080 (50 022)(Increase) decrease in accrued receivables 293 133 Increase (decrease) in accrued payables 6 2 Cost of investments purchased (22 106) (33 704)Proceeds on sales of investments 154 151 49 644 NET CASH PROVIDED BY OPERATING ACTIVITIES 137 807 24 592 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 12 313 17 629 Cash paid on redemption of redeemable units (150 344) (42 665)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ (138 031) $ (25 036)Net increase (decrease) in cash for the year (224) (444)Cash (bank overdraft), beginning of period 539 983 CASH (BANK OVERDRAFT), END OF PERIOD $ 315 $ 539

Interest received $ – $ 53 Dividends received, net of withholding taxes $ 6 030 $ 8 696

Cash consists of cash and futures contracts margin receivable/payable, as applicable.

Statements of Comprehensive Income (in $000s except per unit amounts)

For the periods ended December 31 (see note 2 in the generic notes) 2014 2013

INCOME (see note 3 in the generic notes)Dividends $ 5 732 $ 8 563 Interest for distribution purposes 5 53 Net realized gain (loss) on investments 52 542 7 071 Change in unrealized gain (loss) on investments (33 080) 50 022 TOTAL INCOME (LOSS) 25 199 65 709 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 76 61 Audit fees 7 7 Transaction costs 191 31 TOTAL EXPENSES 274 99 INCREASE (DECREASE) IN NAV $ 24 925 $ 65 610 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 2.34 $ 4.70

6




Statements of Changes in NAV (in $000s)

For the periods ended December 31 (see note 2 in the generic notes)*

Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 319 843 $ 273 756INCREASE (DECREASE) IN NAV 24 925 65 610 Early redemption fees – – Proceeds from redeemable units issued 13 592 17 375 Reinvestments of distributions to holders of redeemable units 58 347 15 710 Redemption of redeemable units (151 513) (36 898)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (79 574) (3 813)Distributions from net income (5 955) (8 644)Distributions from net gains (52 392) (7 066)Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (58 347) (15 710)NET INCREASE (DECREASE) IN NAV (112 996) 46 087 NAV AT END OF PERIOD $ 206 847 $ 319 843

* The Fund’s units meet all of the criteria in IFRS for classification as equity, and therefore continued to be classified as financial equity, similar to Canadian GAAP, as of January 1, 2013. During 2013, certain new series of units were introduced which had different features to the existing series of units. As a result, the Fund was no longer able to meet the IAS 32 requirements for classification of its units as equity, and the units were classified as financial liabilities as of December 31, 2013. The change in classification has not resulted in any contractual change in relationship with the unitholders, nor has it resulted in any change in the net asset value per unit. The above Statements of Changes in NAV presents the Fund’s units as if they were financial liabilities for the entire 2013 year. The Fund’s equity during the 2013 year comprised both retained earnings and unitholders’ capital and has been presented together. Management believes the absence of separating retained earnings and unitholders’ capital would not provide materially different information.

NOTES TO FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION

7

Please see the generic notes at the back of the financial statements.

December 31, 2014


General information (see note 1 in the generic notes)

The Fund seeks to provide long-term capital appreciation

by investing in Canadian companies with attractive relative

valuations and risk/reward characteristics based on

fundamental analysis.

Financial instrument risk and capital management (see note 4 in the generic notes)

Concentration risk (%)

The table below summarizes the Fund’s investment portfolio

(after consideration of derivative products, if any) as at:

Investment mixDecember 31

2014December 31

2013January 1

2013

Equities 98.7 99.5 96.6Short-term investments 1.3 0.5 3.4

Other price risk (% impact on net assets)

The table below shows the impact of a 1% change in the

broad-based index (noted below) on the Fund’s net assets,

using a 36-month historical correlation of data of the Fund’s

return and the index, with all other factors kept constant, as at:

December 31 December 31 January 1 2014 2013 2013

S&P/TSX Composite Total Return Index + or - 0.9 + or - 1.1 + or - 1.1

Since historical correlation may not be representative of

future correlation, actual results could differ from this

sensitivity analysis and the difference could be material.

Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes)

The following is a summary of the inputs used as of

December 31, 2014, December 31, 2013 and January 1, 2013.

December 31, 2014 Level 1 Level 2 Level 3 Total

Equities 203 222 – – 203 222Mutual fund units 2 581 – – 2 581Fixed-income and debt securities – – – –Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 205 803 – – 205 803% of total portfolio 100.0 – – 100.0


Equities 316 859 – – 316 859 Mutual fund units 1 527 – – 1 527 Fixed-income and debt securities – – – – Short-term investments – – – – Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments 318 386 – – 318 386

% of total portfolio 100.0 – – 100.0

January 1, 2013 Level 1 Level 2 Level 3 Total



For the periods ended December 31, 2014, December 31, 2013

and January 1, 2013, there were no transfers of financial

instruments between Level 1 or Level 2 and Level 3.

Management fees (see note 6 in the generic notes)

No management fees are payable by the Fund. Unitholders

of the Fund pay a negotiated fee directly to RBC GAM for

investment-counselling services.

Underlying mutual fund ownership interest (%)

The table below summarizes the Fund’s interest in the

underlying mutual funds as a percentage of net assets

of the Fund (“NAV”), and the Fund’s ownership interest

as a percentage of the net assets of the underlying funds

(“Ownership”). All underlying funds are established

and conduct business in Canada, and have an associate

relationship to the Fund.

December 31, 2014 December 31, 2013NAV Ownership NAV Ownership

BonaVista Money Market Fund 1.2 8.5 0.4 5.5

January 1, 2013NAV Ownership

BonaVista Money Market Fund 3.4 37.3

Taxes ($000s) (see note 5 in the generic notes)

The Fund had no capital or non-capital losses as at

December 31, 2014.


8


December 31, 2014


Unitholders’ equity (000s)

The unitholders’ equity of the Fund includes amounts

representing units, undistributed net income (loss), realized

gain (loss) on investments and unrealized gain (loss) on

investments. There is no limitation on the number of units

available for issue. Units are purchased and redeemed at the

NAV per unit.


Opening units 14 083 14 294 Issued number of units 634 852 Reinvested number of units 2 773 727 Redeemed number of units (7 038) (1 790) Ending number of units 10 452 14 083

Transaction costs ($000s except %)

Transaction costs, including brokerage commissions, in

consideration of portfolio transactions for the periods ended:

December 31 December 31 2014 2013 $ % $ %

Total transaction costs 191 100 31 100Related-party brokerage commissions* 22 12 1 3Commission arrangements† – – – –

* See note 6 in the generic notes.† Commission arrangements are part of commission amounts paid to dealers. The Fund uses

commission arrangements (formerly known as “soft dollars”) for research and/or order execution goods and services.

Transition to IFRS ($000s) (see note 8 in the generic notes)

Reconciliation of net assets and comprehensive income as

previously reported under Canadian GAAP to IFRS:

December 31 January 1 2013 2013

Net assetsNet assets as reported under Canadian GAAP 319 662 273 445 Revaluation of investments at FVTPL 181 311 Net assets attributable to holders of redeemable units 319 843 273 756

December 31 2013

Comprehensive incomeComprehensive income as reported under Canadian GAAP 65 740Revaluation of investments at FVTPL (see note 3 and note 8 in the generic notes) (130)Increase (decrease) in net assets attributable to holders of redeemable units 65 610



9

December 31, 2014


BONAVISTA FIXED INCOME FUND

Par Value Coupon Fair % of Net (000s) Security Rate % Maturity Cost Value Assets

CANADIAN BONDSCORPORATE 445 Bank of Nova Scotia 2.750 13-Aug-18 $ 450 $ 457 480 Bank of Nova Scotia 2.400 28-Oct-19 480 484 1 505 Bank of Nova Scotia 2.873 04-Jun-21 1 508 1 542 280 BMW Canada Inc. 2.330 23-May-18 280 284 935 Canadian Imperial Bank of Commerce 2.650 08-Nov-16 951 952 730 Canadian National Railway Co. 2.750 18-Feb-21 741 750 530 Canadian Natural Resources Ltd. 2.890 14-Aug-20 533 533 245 Canadian Pacific Railway Co. 5.100 14-Jan-22 279 282 795 Canadian Western Bank 3.077 14-Jan-19 804 818 220 Caterpillar Financial Services Ltd. 2.120 25-Nov-16 220 222 500 CU Inc. 4.801 22-Nov-21 566 577 845 Daimler Canada Finance Inc. 3.280 15-Sep-16 845 867 730 Dollarama Inc. 3.095 05-Nov-18 730 745 795 Enbridge Income Fund 4.850 22-Feb-22 831 884 335 Enercare Solutions Inc. 4.300 30-Nov-17 335 349 1 120 Ford Credit Canada Ltd. 2.939 19-Feb-19 1 120 1 139 655 GE Capital Canada Funding Co. 2.420 31-May-18 655 666 465 John Deere Canada Funding Inc. 2.350 24-Jun-19 465 470 220 Labrador-Island Link Funding Trust 3.760 01-Jun-33 224 253 280 Laurentian Bank of Canada 3.278 15-Oct-18 280 290 220 National Bank of Canada 2.794 09-Aug-18 220 226 520 National Bank of Canada 2.404 28-Oct-19 520 524 175 North West Redwater Partnership 4.050 22-Jul-44 175 182 410 Saputo Inc. 2.654 26-Nov-19 410 415 345 Shoppers Drug Mart Corp. 2.360 24-May-18 345 348 620 The Toronto-Dominion Bank 2.433 15-Aug-17 620 630 275 VW Credit Canada Inc. 2.500 01-Oct-19 275 278

14 862 15 167 31.5FEDERAL 2 395 Canada Housing Trust No 1. 2.000 15-Dec-19 2 394 2 433 1 020 Canada Housing Trust No 1. 2.900 15-Jun-24 1 017 1 076 1 570 Government of Canada 1.250 01-Feb-16 1 575 1 574 470 Government of Canada 3.750 01-Jun-19 520 520 4 700 Government of Canada 2.500 01-Jun-24 4 961 4 989 1 485 Government of Canada 5.000 01-Jun-37 2 059 2 182 1 500 Government of Canada 4.000 01-Jun-41 1 807 1 990 1 395 Government of Canada 3.500 01-Dec-45 1 618 1 752

15 951 16 516 34.3MUNICIPAL 350 British Columbia Municipal Finance 2.350 03-Dec-18 349 360 2 905 British Columbia Municipal Finance 3.750 26-Sep-23 2 994 3 180 420 City of Montreal 3.500 01-Sep-23 417 444 855 Regional Municipality of York 4.050 01-May-34 851 935

4 611 4 919 10.2

10


December 31, 2014




PROVINCIAL 900 OMERS Realty Corp. 4.740 04-Jun-18 $ 1 006 $ 988 955 Province of Alberta 3.400 01-Dec-23 973 1 034 1 085 Province of British Columbia 2.850 18-Jun-25 1 085 1 113 1 530 Province of Manitoba 3.300 02-Jun-24 1 523 1 625 935 Province of Manitoba 4.400 05-Sep-25 1 073 1 082 1 850 Province of Ontario 2.100 08-Sep-19 1 847 1 879 375 Province of Ontario 3.500 02-Jun-43 343 390 365 Province of Ontario 3.450 02-Jun-45 364 378 425 Province of Quebec 4.500 01-Dec-17 463 462 340 Province of Quebec 5.000 01-Dec-41 392 439 290 Province of Quebec 3.500 01-Dec-45 287 299 965 Province of Saskatchewan 3.200 03-Jun-24 965 1 026

10 321 10 715 22.2TOTAL CANADIAN BONDS 45 745 47 317 98.2


POOLED FUNDS 59 488 BonaVista Money Market Fund* $ 614 $ 613

TOTAL POOLED FUNDS 614 613 1.3TOTAL INVESTMENTS $ 46 359 47 930 99.5OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 288 0.5NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 48 218 100.0


11






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 47 930 $ 43 023 $ 44 341 Cash 40 64 151 Subscriptions receivable 121 6 610 Dividends receivable, interest accrued and other assets 230 239 255 TOTAL ASSETS 48 321 43 332 45 357 LIABILITIESRedemptions payable 88 90 308 Accounts payable and accrued expenses 15 10 8 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 103 100 316NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 48 218 $ 43 232 $ 45 041


NAV PER UNIT $ 10.32 $ 9.80 $ 10.32

12





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 4 070 $ (549)ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (478) (181)Change in unrealized loss (gain) on investments (2 304) 2 044 (Increase) decrease in accrued receivables 9 16 Increase (decrease) in accrued payables 5 2 Cost of investments purchased (135 518) (76 426)Proceeds on sales of investments 133 393 75 881 NET CASH PROVIDED BY OPERATING ACTIVITIES (823) 787 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 3 158 6 159 Cash paid on redemption of redeemable units (2 359) (7 033)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ 799 $ (874)Net increase (decrease) in cash for the year (24) (87)Cash (bank overdraft), beginning of period 64 151 CASH (BANK OVERDRAFT), END OF PERIOD $ 40 $ 64

Interest received $ 1 332 $ 1 365 Dividends received, net of withholding taxes $ – $ –




INCOME (see note 3 in the generic notes)Interest for distribution purposes $ 1 330 $ 1 349 Net realized gain (loss) on investments 478 181 Change in unrealized gain (loss) on investments 2 304 (2 044)TOTAL INCOME (LOSS) 4 112 (514)EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 35 28 Audit fees 7 7 TOTAL EXPENSES 42 35 INCREASE (DECREASE) IN NAV $ 4 070 $ (549)INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 0.90 $ (0.12)

13






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 43 232 $ 45 041INCREASE (DECREASE) IN NAV 4 070 (549)Early redemption fees – – Proceeds from redeemable units issued 3 273 5 555 Reinvestments of distributions to holders of redeemable units 1 756 1 712 Redemption of redeemable units (2 357) (6 815)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 2 672 452 Distributions from net income (1 290) (1 314)Distributions from net gains (466) (398)Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (1 756) (1 712)NET INCREASE (DECREASE) IN NAV 4 986 (1 809)NAV AT END OF PERIOD $ 48 218 $ 43 232



14


December 31, 2014



The Fund seeks to achieve superior long-term results through

investment in Canadian fixed-income securities that offer the

best relative value at an acceptable and prudent level of risk.


Credit risk (%)

The table below summarizes the Fund’s credit risk exposure

grouped by credit ratings as at:

December 31 December 31 January 1 Rating 2014 2013 2013

AAA 48.4 43.6 36.8AA 22.5 23.3 24.2A 20.1 24.3 25.9BBB 9.0 8.8 13.1Total 100.0 100.0 100.0





2014December 31

2013January 1

2013

Fixed income 98.7 98.4 96.2Short-term investments 1.3 1.6 3.8

Interest rate risk (%)

The table below summarizes the Fund’s exposure to interest

rate risk by remaining term to maturity as at:

December 31 December 31 January 1 Term to maturity 2014 2013 2013

Less than 1 year – – –1 – 5 years 38.9 47.2 42.95 – 10 years 37.9 41.6 26.1> 10 years 23.2 11.2 31.0Total 100.0 100.0 100.0

As at December 31, 2014, had prevailing interest rates risen

or lowered by 1%, with all other factors kept constant,

the Fund’s net assets may have decreased or increased,

respectively, by approximately 7.6% (December 31, 2013 –

6.3%, January 1, 2013 – 7.2%). In practice, actual results could

differ from this sensitivity analysis and the difference

could be material.





Equities – – – –Mutual fund units 613 – – 613Fixed-income and debt securities – 47 317 – 47 317Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 613 47 317 – 47 930% of total portfolio 1.3 98.7 – 100.0


Equities – – – –Mutual fund units 674 – – 674Fixed-income and debt securities – 42 349 – 42 349Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 674 42 349 – 43 023

% of total portfolio 1.6 98.4 – 100.0


Equities – – – – Mutual fund units 1 684 – – 1 684 Fixed-income and debt securities – 42 657 – 42 657 Short-term investments – – – – Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments 1 684 42 657 – 44 341










15


December 31, 2014















December 31, 2014.







NAV per unit.


Opening units 4 409 4 365 Issued number of units 323 550 Reinvested number of units 172 172 Redeemed number of units (231) (678) Ending number of units 4 673 4 409






Net assetsNet assets as reported under Canadian GAAP 43 187 44 989Revaluation of investments at FVTPL 45 52Net assets attributable to holders of redeemable units 43 232 45 041

December 31 2013

Comprehensive incomeComprehensive income as reported under Canadian GAAP (542)Revaluation of investments at FVTPL (see note 3 and note 8 in the generic notes) (7)Increase (decrease) in net assets attributable to holders of redeemable units (549)



16

December 31, 2014


BONAVISTA U.S. EQUITY FUND


UNITED STATES EQUITIESConsumer Discretionary 5 430 Advance Auto Parts Inc. $ 838 $ 1 002 12 560 Bed Bath & Beyond Inc. 913 1 108 13 430 DIRECTV 1 101 1 349 46 030 General Motors Co. 1 398 1 861 27 660 Johnson Controls Inc. 829 1 549 9 630 Ross Stores Inc. 872 1 051 28 760 Starz 811 989

6 762 8 909 9.4Consumer Staples 21 530 PepsiCo Inc. 1 422 2 358 117 980 Rite Aid Corp. 801 1 028 6 490 Walgreens Boots Alliance Inc. 295 573 25 540 Wal-Mart Stores Inc. 1 478 2 540

3 996 6 499 6.9Energy 20 370 Alliance Resource Partners LP 1 010 1 016 30 170 Apache Corp. 2 730 2 190 11 640 ConocoPhillips 1 010 931 33 420 Continental Resources Inc. 2 313 1 485 12 600 Halliburton Co. 672 574 5 230 National Oilwell Varco Inc. 401 397 28 840 Noble Corp. PLC 814 554 40 133 Paragon Offshore PLC 265 129

9 215 7 276 7.7Financials 26 770 Aflac Inc. 1 379 1 894 31 070 AllianceBernstein Holding LP 554 930 23 530 American International Group Inc. 1 124 1 526 131 460 Bank of America Corp. 1 743 2 724 16 730 Bank of the Ozarks Inc. 686 735 12 160 Berkshire Hathaway Inc. 907 2 115 13 820 First Republic Bank 585 834 40 650 JPMorgan Chase & Co. 1 570 2 946 25 380 MetLife Inc. 1 328 1 590 17 570 Oaktree Capital Group LLC 998 1 055 59 550 Wells Fargo & Co. 1 976 3 781

12 850 20 130 21.3Health Care 6 470 Anthem Inc. 404 942 16 540 Becton Dickinson and Co. 1 315 2 666 1 740 Biogen Idec Inc. 684 684 8 040 Celgene Corp. 647 1 042 13 930 Gilead Sciences Inc. 1 340 1 521 30 340 Johnson & Johnson 2 080 3 675 20 570 Medtronic Inc. 795 1 720 13 420 Varian Medical Systems Inc. 906 1 345

8 171 13 595 14.4


Industrials 23 060 American Airlines Group Inc. $ 854 $ 1 432 28 720 Delta Air Lines Inc. 668 1 636 33 870 Emerson Electric Co. 1 667 2 422 19 470 Generac Holdings Inc. 823 1 054 17 340 Raytheon Co. 1 401 2 172 24 420 United Technologies Corp. 2 218 3 253

7 631 11 969 12.7Information Technology 32 051 Apple Inc. 2 443 4 098 51 060 Cisco Systems Inc. 1 085 1 645 2 148 Google Inc., Class A 1 243 1 320 2 108 Google Inc., Class C – 1 285 35 050 Hewlett-Packard Co. 927 1 629 39 770 Microsoft Corp. 1 058 2 140 1 Motorola Solutions Inc. – – 60 800 Oracle Corp. 2 028 3 167 18 850 QUALCOMM Inc. 1 010 1 623

9 794 16 907 17.9Materials 11 800 EI du Pont de Nemours & Co. 830 1 011 10 630 United States Steel Corp. 444 329

1 274 1 340 1.4Telecommunication Services 31 580 Verizon Communications Inc. 1 696 1 710

1 696 1 710 1.8Utilities 7 240 Entergy Corp. 693 734 38 140 Public Service Enterprise Group Inc. 1 692 1 829

2 385 2 563 2.7TOTAL UNITED STATES EQUITIES 63 774 90 898 96.2POOLED FUNDS 244 852 BonaVista Money Market Fund* 2 525 2 523

TOTAL POOLED FUNDS 2 525 2 523 2.7TOTAL INVESTMENTS 66 299 93 421 98.9TRANSACTION COSTS (63) – –NET INVESTMENTS $ 66 236 93 421 98.9OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 912 1.1NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 94 333 100.0


17






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 93 421 $ 83 037 $ 60 963 Cash 76 92 298 Due from investment dealers – – 1 646 Subscriptions receivable 868 18 2 524 Dividends receivable, interest accrued and other assets 49 48 28 TOTAL ASSETS 94 414 83 195 65 459 LIABILITIESDue to investment dealers – – 2 049 Redemptions payable 65 44 28 Accounts payable and accrued expenses 16 10 7 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 81 54 2 084NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 94 333 $ 83 141 $ 63 375


NAV PER UNIT $ 40.20 $ 35.08 $ 25.71

18





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 16 390 $ 24 089 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (9 100) (5 709)Change in unrealized loss (gain) on investments (5 953) (17 292)(Increase) decrease in accrued receivables (1) (20)Increase (decrease) in accrued payables 6 3 Cost of investments purchased (34 796) (38 155)Proceeds on sales of investments 39 465 38 679 NET CASH PROVIDED BY OPERATING ACTIVITIES 6 011 1 595 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 1 515 5 291 Cash paid on redemption of redeemable units (7 542) (7 092)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ (6 027) $ (1 801)Net increase (decrease) in cash for the year (16) (206)Cash (bank overdraft), beginning of period 92 298 CASH (BANK OVERDRAFT), END OF PERIOD $ 76 $ 92

Interest received $ 13 $ 14 Dividends received, net of withholding taxes $ 1 454 $ 1 181




INCOME (see note 3 in the generic notes)Dividends $ 1 751 $ 1 435 Interest for distribution purposes 13 14 Net realized gain (loss) on investments 9 100 5 709 Net gain (loss) on foreign currencies and other net assets 1 – Change in unrealized gain (loss) on investments 5 953 17 292 TOTAL INCOME (LOSS) 16 818 24 450 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 57 44 Audit fees 7 7 Transaction costs 67 76 Withholding tax 297 234 TOTAL EXPENSES 428 361 INCREASE (DECREASE) IN NAV $ 16 390 $ 24 089 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 6.98 $ 9.79

19






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 83 141 $ 63 375INCREASE (DECREASE) IN NAV 16 390 24 089Early redemption fees – – Proceeds from redeemable units issued 2 365 2 785 Reinvestments of distributions to holders of redeemable units 4 251 1 136 Redemption of redeemable units (7 563) (7 108)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS (947) (3 187)Distributions from net income (1 492) (1 136)Distributions from net gains (2 759) – Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (4 251) (1 136)NET INCREASE (DECREASE) IN NAV 11 192 19 766 NAV AT END OF PERIOD $ 94 333 $ 83 141



20


December 31, 2014




by investing in U.S. companies with attractive relative

valuations and risk/reward characteristics based on







2014December 31

2013January 1

2013

Equities 97.3 98.8 96.3Short-term investments 2.7 1.2 3.7

Currency risk (% of net assets)

The table below summarizes the Fund’s net exposure (after

hedging, if any) to currency risk as at:

December 31 December 31 January 1 Currency 2014 2013 2013

United States dollar 96.2 98.6 92.6Total 96.2 98.6 92.6

As at December 31, 2014, if the Canadian dollar had

strengthened or weakened by 1% in relation to the above

currencies, with all other factors kept constant, the Fund’s

net assets may have decreased or increased, respectively,

by approximately 1.0% (December 31, 2013 – 1.0%,

January 1, 2013 – 0.9%). In practice, actual results could


could be material.


The table below shows the impact of a 1% change in the

broad-based index (noted below) on the Fund’s net assets,

using a 36-month historical correlation of data of the Fund’s

return and the index, with all other factors kept constant, as at:


S&P 500 Total Return Index (CAD) + or - 1.0 + or - 1.1 + or - 1.1








Equities 90 898 – – 90 898Mutual fund units 2 523 – – 2 523Fixed-income and debt securities – – – –Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 93 421 – – 93 421% of total portfolio 100.0 – – 100.0


Equities 82 006 – – 82 006Mutual fund units 1 031 – – 1 031Fixed-income and debt securities – – – –Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 83 037 – – 83 037













21


December 31, 2014
















December 31, 2014.







NAV per unit.







Total transaction costs 67 100 76 100Related-party brokerage commissions* 14 21 19 25Commission arrangements† – – – –







Net assetsNet assets as reported under Canadian GAAP 83 129 63 377Revaluation of investments at FVTPL 12 (2)Net assets attributable to holders of redeemable units 83 141 63 375

December 31 2013

Comprehensive incomeComprehensive income as reported under Canadian GAAP 24 075Revaluation of investments at FVTPL (see note 3 and note 8 in the generic notes) 14Increase (decrease) in net assets attributable to holders of redeemable units 24 089



22

December 31, 2014


BONAVISTA INTERNATIONAL EQUITY FUND


POOLED FUNDS 831 326 Sprucegrove International Pooled Fund $ 81 495 $ 94 711

TOTAL POOLED FUNDS 81 495 94 711 99.2TOTAL INVESTMENTS $ 81 495 94 711 99.2OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 778 0.8NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 95 489 100.0

23






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 94 711 $ 91 187 $ 74 296 Cash 1 43 7 Subscriptions receivable 1 447 20 3 537 TOTAL ASSETS 96 159 91 250 77 840 LIABILITIESRedemptions payable 654 276 31 Accounts payable and accrued expenses 16 9 7 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 670 285 38NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 95 489 $ 90 965 $ 77 802


NAV PER UNIT $ 23.38 $ 22.91 $ 18.73

24





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 4 581 $ 19 308 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (456) (714)Change in unrealized loss (gain) on investments 874 (16 306)(Increase) decrease in accrued receivables – – Increase (decrease) in accrued payables 7 2 Cost of investments purchased (6 480) (7 045)Proceeds on sales of investments 2 538 7 174 NET CASH PROVIDED BY OPERATING ACTIVITIES 1 064 2 419 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 2 255 7 115 Cash paid on redemption of redeemable units (3 361) (9 498)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ (1 106) $ (2 383)Net increase (decrease) in cash for the year (42) 36 Cash (bank overdraft), beginning of period 43 7 CASH (BANK OVERDRAFT), END OF PERIOD $ 1 $ 43

Interest received $ 2 $ – Dividends received, net of withholding taxes $ 2 746 $ 2 323




INCOME (see note 3 in the generic notes)Dividends $ 2 746 $ 2 323 Interest for distribution purposes 2 – Capital gains received from underlying funds 2 299 – Net realized gain (loss) on investments 456 714 Change in unrealized gain (loss) on investments (874) 16 306 TOTAL INCOME (LOSS) 4 629 19 343 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 41 28 Audit fees 7 7 TOTAL EXPENSES 48 35 INCREASE (DECREASE) IN NAV $ 4 581 $ 19 308 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 1.16 $ 4.76

25






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 90 965 $ 77 802 INCREASE (DECREASE) IN NAV 4 581 19 308 Early redemption fees – – Proceeds from redeemable units issued 3 682 3 598 Reinvestments of distributions to holders of redeemable units 2 703 2 287 Redemption of redeemable units (3 739) (9 743)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 2 646 (3 858)Distributions from net income (2 703) (2 287)Distributions from net gains – – Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (2 703) (2 287)NET INCREASE (DECREASE) IN NAV 4 524 13 163 NAV AT END OF PERIOD $ 95 489 $ 90 965



26


December 31, 2014




by investing in international companies with attractive

relative valuations and risk/reward characteristics based on







2014December 31

2013January 1

2013

Mutual funds 100.0 100.0 100.0





Pound sterling 20.5 16.8 14.9Euro 20.4 21.1 17.4Japanese yen 16.5 17.3 18.7Swiss franc 9.6 11.9 11.6Singapore dollar 7.1 6.3 6.2Hong Kong dollar 6.9 8.6 7.6Indian rupee 4.4 3.1 1.3South Korean won 3.2 3.5 –Australian dollar 2.5 2.6 2.7South African rand 2.4 2.4 2.4Chinese renminbi 2.3 1.8 –Norwegian krone 2.2 0.9 0.4Brazilian real 1.3 1.5 –Malaysian ringgit 0.4 0.4 0.3Hungarian forint 0.3 0.5 0.4United States dollar – – 8.6Total 100.0 98.7 92.5







differ from this sensitivity analysis and the difference could

be material.


The table below shows the impact of a 1% change in the broad-

based index (noted below) on the Fund’s net assets, using a

36-month historical correlation of data of the Fund’s return

and the index, with all other factors kept constant, as at:


MSCI EAFE Total Return Net Index (CAD) + or - 0.8 + or - 0.8 + or - 0.8








Equities – – – –Mutual fund units 94 711 – – 94 711Fixed-income and debt securities – – – –Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 94 711 – – 94 711% of total portfolio 100.0 – – 100.0


Equities – – – –Mutual fund units 91 187 – – 91 187Fixed-income and debt securities – – – –Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 91 187 – – 91 187



Equities – – – – Mutual fund units 74 296 – – 74 296 Fixed-income and debt securities – – – – Short-term investments – – – – Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments 74 296 – – 74 296


For the periods ended December 31, 2014, December 31,

2013 and January 1, 2013, there were no transfers of financial



27


December 31, 2014






The non-capital and capital losses as at December 31, 2014

for the Fund were approximately:

Capital losses 2 760Non-capital losses –







NAV per unit.



Investments by other related investment funds (%) (see note 6 in the generic notes)

The table below summarizes, as a percentage, the net assets

of the Fund owned by other related investment funds as at:

December 31 December 31 2014 2013

BonaVista Balanced Fund 5.2 5.4






Net assetsNet assets as reported under Canadian GAAP 90 965 77 802Revaluation of investments at FVTPL – –Net assets attributable to holders of redeemable units 90 965 77 802

December 31 2013

Comprehensive incomeComprehensive income as reported under Canadian GAAP 13 308Revaluation of investments at FVTPL (see note 3 and note 8 in the generic notes) –Increase (decrease) in net assets attributable to holders of redeemable units 13 308



28

December 31, 2014


BONAVISTA MONEY MARKET FUND

Par Value Fair % of Net (000s) Security Maturity Cost Value Assets

SHORT-TERM INVESTMENTSPROVINCIAL 2 300 Province of British Columbia 02-Oct-15 $ 2 278 $ 2 282 1 800 Province of Ontario 11-Mar-15 1 789 1 797 1 520 Province of Ontario 21-Oct-15 1 505 1 506 1 700 Province of Ontario 18-Nov-15 1 683 1 684 3 750 Province of Ontario 25-Nov-15 3 712 3 714 1 500 Province of Quebec 19-Jun-15 1 488 1 493 5 100 Province of Quebec 21-Aug-15 5 054 5 067

17 509 17 543 57.8DISCOUNT COMMERCIAL PAPER 2 500 CAFO Inc. 05-Jan-15 2 493 2 500 2 300 Daimler Canada Finance Inc. 26-Jan-15 2 296 2 298 720 Imperial Oil Limited 05-Feb-15 719 719 2 500 Nestlé Capital Canada Ltd. 08-Jan-15 2 494 2 499 2 500 PACCAR Financial Ltd. 12-Jan-15 2 494 2 499 2 500 PSP Capital Inc. 26-Mar-15 2 487 2 493

12 983 13 008 42.8BEARER DEPOSIT NOTES 1 000 Caisse Centrale Desjardins 06-Jan-15 997 1 000 1 080 Caisse Centrale Desjardins 08-Jan-15 1 077 1 080

2 074 2 080 6.8TOTAL SHORT-TERM INVESTMENTS 32 566 32 631 107.4NET INVESTMENTS $ 32 566 32 631 107.4OTHER NET ASSETS (LIABILITIES) ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (2 260) (7.4)NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 30 371 100.0

29






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 32 631 $ 26 317 $ 33 174 Cash 2 40 184 Subscriptions receivable 175 1 022 6 TOTAL ASSETS 32 808 27 379 33 364 LIABILITIESRedemptions payable 2 419 34 7 891 Accounts payable and accrued expenses 18 11 8 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 2 437 45 7 899NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 30 371 $ 27 334 $ 25 465


NAV PER UNIT $ 10.30 $ 10.30 $ 10.31

30





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 229 $ 275 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments – – Change in unrealized loss (gain) on investments (1) 13 (Increase) decrease in accrued receivables – – Increase (decrease) in accrued payables 7 3 Cost of investments purchased (87 067) (80 311)Proceeds on sales of investments 80 754 87 155 NET CASH PROVIDED BY OPERATING ACTIVITIES (6 078) 7 135 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 41 998 61 261 Cash paid on redemption of redeemable units (35 958) (68 540)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ 6 040 $ (7 279)Net increase (decrease) in cash for the year (38) (144)Cash (bank overdraft), beginning of period 40 184 CASH (BANK OVERDRAFT), END OF PERIOD $ 2 $ 40

Interest received $ 288 $ 337 Dividends received, net of withholding taxes $ – $ –




INCOME (see note 3 in the generic notes)Interest for distribution purposes $ 288 $ 337 Change in unrealized gain (loss) on investments 1 (13)TOTAL INCOME (LOSS) 289 324 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 53 42 Audit fees 7 7 TOTAL EXPENSES 60 49 INCREASE (DECREASE) IN NAV $ 229 $ 275 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 0.08 $ 0.09

31






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 27 334 $ 25 465 INCREASE (DECREASE) IN NAV 229 275 Early redemption fees – – Proceeds from redeemable units issued 41 151 62 277 Reinvestments of distributions to holders of redeemable units 233 275 Redemption of redeemable units (38 343) (60 683)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 3 041 1 869 Distributions from net income (233) (275)Distributions from net gains – – Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (233) (275)NET INCREASE (DECREASE) IN NAV 3 037 1 869 NAV AT END OF PERIOD $ 30 371 $ 27 334



32


December 31, 2014



The Fund seeks to achieve superior long-term results through

investment in Canadian money market securities that

offer the best relative value at an acceptable and prudent

level of risk.


Credit risk (%)

The table below summarizes the Fund’s credit risk exposure



R-1 (H) 23.2 70.0 18.9R-1 (M) 69.7 30.0 56.1R-1 (L) 7.1 – 25.0Total 100.0 100.0 100.0





2014December 31

2013January 1

2013

Short-term investments 100.0 100.0 100.0


Due to the short-term nature of the instruments held by the

Fund, the Fund is not exposed to a significant risk that the

value of interest-bearing financial instruments will fluctuate

due to changes in the prevailing levels of market interest rates.





Equities – – – –Mutual fund units – – – –Fixed-income and debt securities – – – –Short-term investments – 32 631 – 32 631Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments – 32 631 – 32 631% of total portfolio – 100.0 – 100.0


Equities – – – –Mutual fund units – – – –Fixed-income and debt securities – – – –Short-term investments – 26 317 – 26 317Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments – 26 317 – 26 317

% of total portfolio – 100.0 – 100.0


Equities – – – – Mutual fund units – – – – Fixed-income and debt securities – – – – Short-term investments – 33 174 – 33 174 Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments – 33 174 – 33 174

% of total portfolio – 100.0 – 100.0










December 31, 2014.







NAV per unit.


Opening units 2 653 2 471 Issued number of units 3 989 6 036 Reinvested number of units 23 27 Redeemed number of units (3 717) (5 881) Ending number of units 2 948 2 653


33


December 31, 2014

Investments by other related investment funds (%) (see note 6 in the generic notes)

The table below summarizes, as a percentage, the net assets

of the Fund owned by other related investment funds as at:

December 31 December 31 2014 2013

BonaVista Canadian Equity Fund 8.5 5.5BonaVista Fixed Income Fund 2.0 2.4BonaVista U.S. Equity Fund 8.3 3.8BonaVista Balanced Fund 6.2 5.5BonaVista Private Balanced Fund 4.3 5.1Total 29.3 22.3






December 31 2013

Comprehensive incomeComprehensive income as reported under Canadian GAAP 275Revaluation of investments at FVTPL (see note 3 and note 8 in the generic notes) –Increase (decrease) in net assets attributable to holders of redeemable units 275




34

December 31, 2014


BONAVISTA BALANCED FUND


CANADIAN BONDSCORPORATE 110 Bank of Nova Scotia 2.750 13-Aug-18 $ 112 $ 113 120 Bank of Nova Scotia 2.400 28-Oct-19 120 121 290 Bank of Nova Scotia 2.873 04-Jun-21 291 297 60 BMW Canada Inc. 2.330 23-May-18 60 61 250 Canadian Imperial Bank of Commerce 2.650 08-Nov-16 254 254 165 Canadian National Railway Co. 2.750 18-Feb-21 167 170 55 Canadian Pacific Railway Co. 5.100 14-Jan-22 63 63 325 Canadian Western Bank 3.077 14-Jan-19 328 335 15 Caterpillar Financial Services Ltd. 2.120 25-Nov-16 15 15 225 Enbridge Income Fund 4.850 22-Feb-22 234 250 75 EnerCare Solutions Inc. 4.300 30-Nov-17 75 78 140 Ford Credit Canada Ltd. 2.939 19-Feb-19 140 142 130 GE Capital Canada Funding Co. 2.420 31-May-18 130 132 20 John Deere Canada Funding Inc. 2.350 24-Jun-19 20 20 40 Labrador-Island Link Funding Trust 3.760 01-Jun-33 41 46 175 Laurentian Bank of Canada 3.278 15-Oct-18 175 181 40 National Bank of Canada 2.794 09-Aug-18 40 41 100 National Bank of Canada 2.404 28-Oct-19 100 101 35 North West Redwater Partnership 4.050 22-Jul-44 35 36 185 OMERS Realty Corp. 4.740 04-Jun-18 207 203 95 Saputo Inc. 2.654 26-Nov-19 95 96 70 Shoppers Drug Mart Corp. 2.360 24-May-18 70 71 120 The Toronto-Dominion Bank 2.433 15-Aug-17 120 122 55 VW Credit Canada Inc. 2.500 01-Oct-19 55 56

2 947 3 004 7.8FEDERAL 190 Canada Housing Trust No 1. 2.900 15-Jun-24 189 200 125 Government of Canada 1.250 01-Feb-16 125 125 530 Government of Canada 3.750 01-Jun-19 588 587 155 Government of Canada 3.250 01-Jun-21 168 172 1 325 Government of Canada 2.500 01-Jun-24 1 397 1 407 150 Government of Canada 2.250 01-Jun-25 155 155 605 Government of Canada 5.000 01-Jun-37 836 889 45 Government of Canada 4.000 01-Jun-41 53 60 240 Government of Canada 3.500 01-Dec-45 281 301

3 792 3 896 10.1MUNICIPAL 115 British Columbia Municipal Finance 2.350 03-Dec-18 115 118 465 British Columbia Municipal Finance 3.750 26-Sep-23 480 509 120 City of Montreal 3.500 01-Sep-23 119 127 75 Regional Municipality of York 4.050 01-May-34 75 82

789 836 2.2PROVINCIAL 175 Province of Alberta 3.400 01-Dec-23 178 190 115 Province of British Columbia 2.850 18-Jun-25 115 118 130 Province of Manitoba 3.300 02-Jun-24 129 138 320 Province of Manitoba 4.400 05-Sep-25 367 370 425 Province of Ontario 2.100 08-Sep-19 424 432 75 Province of Ontario 3.500 02-Jun-43 69 78 105 Province of Ontario 3.450 02-Jun-45 105 109

35


December 31, 2014



PROVINCIAL (cont.) 300 Province of Quebec 4.500 01-Dec-17 $ 327 $ 326 65 Province of Quebec 5.000 01-Dec-41 75 84 100 Province of Quebec 3.500 01-Dec-45 99 103 180 Province of Saskatchewan 3.200 03-Jun-24 180 191



CANADIAN EQUITIESConsumer Discretionary 1 100 AutoCanada Inc. $ 49 $ 49 2 340 Canadian Tire Corp. Ltd. 124 287 4 905 Gildan Activewear Inc. 47 322 3 640 Magna International Inc. 112 458 8 460 Quebecor Inc. 144 270 4 650 Thomson Reuters Corp. 163 218

639 1 604 4.2Consumer Staples 9 310 Alimentation Couche-Tard Inc. 88 453 7 300 Saputo Inc. 77 255 2 607 Loblaw Cos. Ltd. 125 162

290 870 2.3Energy 1 835 Baytex Energy Corp. 78 35 12 340 Canadian Natural Resources Ltd. 309 443 7 475 Cenovus Energy Inc. 186 179 6 950 Encana Corp. 194 112 8 600 Gran Tierra Energy Inc. 52 38 6 950 Husky Energy Inc. 207 191 3 200 MEG Energy Corp. 90 63 9 010 Precision Drilling Corp. 113 64 19 659 Suncor Energy Inc. 586 725 9 150 Talisman Energy Inc. 117 83 3 700 Trilogy Energy Corp. 97 29

2 029 1 962 5.1Financials 7 770 Bank of Montreal 327 639 11 660 Bank of Nova Scotia 429 773 8 230 Canadian Imperial Bank of Commerce 512 822 6 900 Element Financial Corp. 82 98 3 670 Genworth MI Canada Inc. 71 136 6 360 Home Capital Group Inc. 172 305 3 840 IGM Financial Inc. 139 178 1 200 Intact Financial Corp. 70 101 17 650 Manulife Financial Corp. 421 391 6 490 National Bank of Canada 153 321 8 050 Royal Bank of Canada* 434 646 6 400 Sun Life Financial Inc. 252 268 18 280 The Toronto-Dominion Bank 547 1 015

3 609 5 693 14.8Health Care 1 900 Valeant Pharmaceuticals International Inc. 236 316

236 316 0.8


Industrials 29 030 Bombardier Inc., Class B $ 166 $ 120 10 380 CAE Inc. 102 157 8 260 Canadian National Railway Co. 157 661 1 510 Canadian Pacific Railway Ltd. 90 338 6 540 Finning International Inc. 165 165 2 660 MacDonald Dettwiler & Associates Ltd. 116 253 2 600 Russel Metals Inc. 71 67 3 730 SNC-Lavalin Group Inc. 142 165 3 500 Stantec Inc. 39 112

1 048 2 038 5.3Information Technology 2 200 Blackberry Ltd. 27 28 3 880 CGI Group Inc. 132 172 24 720 Mitel Networks Corp. 234 306 5 860 Open Text Corp. 87 396

480 902 2.3Materials 2 860 Agrium Inc. 159 315 4 100 Barrick Gold Corp. 151 51 9 887 First Quantum Minerals Ltd. 174 163 3 890 Goldcorp Inc. 117 84 7 125 HudBay Minerals Inc. 86 72 17 150 Lundin Mining Corp. 83 98 2 360 Methanex Corp. 58 126 3 520 Potash Corporation of Saskatchewan Inc. 152 145 13 615 Teck Resources Ltd. 301 216 900 West Fraser Timber Co. Ltd. 43 60 6 000 Yamana Gold Inc. 72 28

1 396 1 358 3.5Telecommunication Services 3 490 Rogers Communications Inc., Class B 116 158 4 000 TELUS Corp. 154 168

270 326 0.8TOTAL CANADIAN EQUITIES 9 997 15 069 39.1POOLED FUNDS 214 246 BonaVista International Equity Pooled Fund* 4 320 5 009 181 822 BonaVista Money Market Fund* 1 876 1 874

TOTAL POOLED FUNDS 6 196 6 883 17.9UNITED STATES EQUITIESConsumer Discretionary 340 Advance Auto Parts Inc. 52 63 770 Bed Bath & Beyond Inc. 56 68


36


December 31, 2014




Consumer Discretionary (cont.) 830 DIRECTV $ 68 $ 83 2 840 General Motors Co. 87 115 1 680 Johnson Controls Inc. 48 94 590 Ross Stores Inc. 53 64 1 700 Starz 48 58

412 545 1.4Consumer Staples 1 320 PepsiCo Inc. 86 145 7 390 Rite Aid Corp. 50 64 400 Walgreens Boots Alliance Inc. 18 35 1 560 Wal-Mart Stores Inc. 85 155

239 399 1.0Energy 1 260 Alliance Resource Partners LP 63 63 1 850 Apache Corp. 168 134 710 ConocoPhillips 62 57 2 070 Continental Resources Inc. 143 92 790 Halliburton Co. 42 36 330 National Oilwell Varco Inc. 25 25 1 780 Noble Corp. PLC. 50 34 2 476 Paragon Offshore PLC. 16 8

569 449 1.2Financials 1 650 Aflac Inc. 85 117 1 890 AllianceBernstein Holding LP 34 57 1 450 American International Group Inc. 69 94 8 120 Bank of America Corp. 108 168 1 040 Bank of the Ozarks Inc. 43 46 750 Berkshire Hathaway Inc., Class B 59 130 860 First Republic Bank 36 52 2 510 JPMorgan Chase & Co. 94 182 1 540 MetLife Inc. 81 96 1 770 Oaktree Capital Group LLC 101 106 3 670 Wells Fargo & Co. 120 233

830 1 281 3.3Health Care 400 Anthem Inc. 24 58 1 020 Becton Dickinson and Co. 80 164 110 Biogen Idec Inc. 43 43 500 Celgene Corp. 40 65 860 Gilead Sciences Inc. 83 94 1 870 Johnson & Johnson 128 226 1 270 Medtronic Inc. 48 106 830 Varian Medical Systems Inc. 55 83

501 839 2.2Industrials 1 380 American Airlines Group Inc. 51 86 1 820 Delta Air Lines Inc. 42 104 2 050 Emerson Electric Co. 100 147 1 190 Generac Holdings Inc. 50 64 1 070 Raytheon Co. 86 134 1 520 United Technologies Corp. 136 202

465 737 1.9


Information Technology 1 979 Apple Inc. $ 151 $ 253 3 100 Cisco Systems Inc. 67 100 126 Google Inc. – 77 2 130 Hewlett-Packard Co. 56 99 2 440 Microsoft Corp. 63 132 1 Motorola Solutions Inc. – – 3 740 Oracle Corp. 123 195 1 160 QUALCOMM Inc. 60 100

520 956 2.5Materials 720 EI du Pont de Nemours & Co. 50 62 640 United States Steel Corp. 27 20

77 82 0.2Telecommunication Services 1 950 Verizon Communications Inc. 105 106

105 106 0.3Utilities 450 Entergy Corp. 43 46 2 430 Public Service Enterprise Group Inc. 108 117

151 163 0.4TOTAL UNITED STATES EQUITIES 3 869 5 557 14.4TOTAL INVESTMENTS 29 658 37 384 97.0TRANSACTION COSTS (7) – –TOTAL INVESTMENTS $ 29 651 37 384 97.0OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 1 169 3.0NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 38 553 100.0


37






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 37 384 $ 34 663 $ 41 268 Cash 964 411 827 Due from investment dealers – – 145 Subscriptions receivable 4 1 20 Dividends receivable, interest accrued and other assets 238 84 278 TOTAL ASSETS 38 590 35 159 42 538 LIABILITIESDue to investment dealers – – 153 Redemptions payable 7 33 37 Accounts payable and accrued expenses 30 16 25 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 37 49 215NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 38 553 $ 35 110 $ 42 323


NAV PER UNIT $ 15.10 $ 14.48 $ 13.21

38





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 3 602 $ 6 142 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (1 610) (1 972)Change in unrealized loss (gain) on investments (1 189) (3 270)(Increase) decrease in accrued receivables (154) 194 Increase (decrease) in accrued payables 14 (9)Cost of investments purchased (33 088) (21 049)Proceeds on sales of investments 33 166 32 888 NET CASH PROVIDED BY OPERATING ACTIVITIES 741 12 924 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 4 931 3 108 Cash paid on redemption of redeemable units (5 119) (16 448)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ (188) $ (13 340)Net increase (decrease) in cash for the year 553 (416)Cash (bank overdraft), beginning of period 411 827 CASH (BANK OVERDRAFT), END OF PERIOD $ 964 $ 411

Interest received $ 277 $ 271 Dividends received, net of withholding taxes $ 613 $ 896




INCOME (see note 3 in the generic notes)Dividends $ 630 $ 688 Interest for distribution purposes 283 300 Net realized gain (loss) on investments 1 610 1 972 Change in unrealized gain (loss) on investments 1 189 3 270 TOTAL INCOME (LOSS) 3 712 6 230 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 77 51 Audit fees 7 7 Transaction costs 8 15 Withholding tax 18 15 TOTAL EXPENSES 110 88 INCREASE (DECREASE) IN NAV $ 3 602 $ 6 142 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 1.51 $ 2.33

39






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 35 110 $ 42 323 INCREASE (DECREASE) IN NAV 3 602 6 142 Early redemption fees – – Proceeds from redeemable units issued 4 934 3 089 Reinvestments of distributions to holders of redeemable units 2 370 2 941 Redemption of redeemable units (5 093) (16 444)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 2 211 (10 414)Distributions from net income (822) (936)Distributions from net gains (1 548) (2 005)Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (2 370) (2 941)NET INCREASE (DECREASE) IN NAV 3 443 (7 213)NAV AT END OF PERIOD $ 38 553 $ 35 110



40


December 31, 2014




and income generation, primarily through exposure to a

well-diversified, balanced global portfolio of common stocks,

bonds and money market securities that offer above-average

prospects for growth.


Credit risk (%)

Credit-exposed securities, excluding short-term

investments, comprise 25.6% (December 31, 2013 – 23.0%,

January 1, 2013 – 29.4%) of the net assets of the Fund. The

table below summarizes the Fund’s credit risk exposure



AAA 49.9 40.8 40.4AA 22.6 25.4 24.0A 21.4 26.0 22.7BBB 6.1 7.8 12.9Total 100.0 100.0 100.0





2014December 31

2013January 1

2013

Canadian equities 40.3 43.5 44.0Fixed income 26.4 23.3 30.2United States equities 14.9 14.6 12.5International equities 13.4 14.3 12.3Short-term investments 5.0 4.3 1.0


Fixed-income and debt securities, excluding short-term



table below summarizes the Fund’s exposure to interest rate

risk by remaining term to maturity as at:



As at December 31, 2014, had prevailing interest rates risen

or lowered by 1%, with all other factors kept constant,

the Fund’s net assets may have decreased or increased,

respectively, by approximately 2.0% (December 31, 2013 –

1.5%, January 1, 2013 – 2.1%). In practice, actual results

could differ from this sensitivity analysis and the difference

could be material.









net assets may have decreased or increased, respectively, by

approximately 0.1% (December 31, 2013 – 0.1%, January 1,

2013 – 0.1%). In practice, actual results could differ from this








S&P/TSX Composite Total Return Index + or - 0.5 + or - 0.6 + or - 0.6S&P 500 Total Return Index (CAD) + or - 0.4 + or - 0.6 + or - 0.7MSCI EAFE Total Return Net Index (CAD) + or - 0.4 + or - 0.5 + or - 0.5





41


December 31, 2014






Equities 20 626 – – 20 626Mutual fund units 6 883 – – 6 883Fixed-income and debt securities – 9 875 – 9 875Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – – Total financial instruments 27 509 9 875 – 37 384 % of total portfolio 73.6 26.4 – 100.0


Equities 20 150 – – 20 150Mutual fund units 6 443 – – 6 443Fixed-income and debt securities – 8 070 – 8 070Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 26 593 8 070 – 34 663



Equities 23 336 – – 23 336 Mutual fund units 5 474 – – 5 474 Fixed-income and debt securities – 12 458 – 12 458 Short-term investments – – – – Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments 28 810 12 458 – 41 268


















BonaVista International Equity Fund 13.0 5.2 14.1 5.4BonaVista Money Market Fund 4.9 6.2 4.3 5.5


BonaVista International Equity Fund 12.3 6.5BonaVista Money Market Fund 1.0 1.6



December 31, 2014.







NAV per unit.


Opening units 2 424 3 203 Issued number of units 319 227 Reinvested number of units 157 214 Redeemed number of units (337) (1 220) Ending number of units 2 563 2 424


42


December 31, 2014






Total transaction costs 8 100 15 100 Related-party brokerage commissions* 1 12 2 12Commission arrangements† – – – –








December 31 2013




43

December 31, 2014


BONAVISTA PRIVATE BALANCED FUND

Par Value Coupon Fair % of Net (000s) Security Rate% Maturity Cost Value Assets

CANADIAN BONDSCORPORATE 50 Bank of Nova Scotia 2.750 13-Aug-18 $ 50 $ 51 50 Bank of Nova Scotia 2.400 28-Oct-19 50 50 40 Bank of Nova Scotia 2.873 04-Jun-21 40 41 35 BMW Canada Inc. 2.330 23-May-18 35 35 40 Caisse Centrale Desjardins 3.502 05-Oct-17 42 42 120 Canadian Imperial Bank of Commerce 2.650 08-Nov-16 122 122 105 Canadian National Railway Co. 2.750 18-Feb-21 107 108 85 Canadian Natural Resources Ltd. 2.890 14-Aug-20 86 85 40 Canadian Pacific Railway Co. 5.100 14-Jan-22 46 46 130 Canadian Western Bank 3.077 14-Jan-19 131 134 15 Caterpillar Financial Services Ltd. 2.120 25-Nov-16 15 15 85 CU Inc. 4.801 22-Nov-21 96 98 120 Enbridge Income Fund 4.850 22-Feb-22 125 133 50 EnerCare Solutions Inc. 4.300 30-Nov-17 50 52 90 Ford Credit Canada Ltd. 2.939 19-Feb-19 90 91 60 GE Capital Canada Funding Co. 2.420 31-May-18 60 61 15 John Deere Canada Funding Inc. 2.350 24-Jun-19 15 15 25 Labrador-Island Link Funding Trust 3.760 01-Jun-33 25 29 115 Laurentian Bank of Canada 3.278 15-Oct-18 115 120 25 National Bank of Canada 2.794 09-Aug-18 25 26 65 National Bank of Canada 2.404 28-Oct-19 65 65 25 North West Redwater Partnership 4.050 22-Jul-44 25 26 45 Saputo Inc. 2.654 26-Nov-19 45 46 40 Shoppers Drug Mart Corp. 2.360 24-May-18 40 40 75 The Toronto-Dominion Bank 2.433 15-Aug-17 75 76 35 VW Credit Canada Inc. 2.500 01-Oct-19 35 36

1 610 1 643 6.6FEDERAL 150 Canada Housing Trust No 1. 2.000 15-Dec-19 150 152 110 Canada Housing Trust No 1. 2.900 15-Jun-24 110 116 95 Government of Canada 1.250 01-Feb-16 95 95 35 Government of Canada 1.500 01-Sep-17 35 35 140 Government of Canada 1.250 01-Mar-18 140 141 365 Government of Canada 3.750 01-Jun-19 404 404 155 Government of Canada 3.250 01-Jun-21 170 172 640 Government of Canada 2.500 01-Jun-24 675 680 255 Government of Canada 5.000 01-Jun-37 351 375 175 Government of Canada 4.000 01-Jun-41 209 232 170 Government of Canada 3.500 01-Dec-45 197 213

2 536 2 615 10.5MUNICIPAL 100 British Columbia Municipal Finance 2.350 03-Dec-18 100 103 305 British Columbia Municipal Finance 3.750 26-Sep-23 316 335 80 City of Montreal 3.500 01-Sep-23 80 84 115 Regional Municipality of York 4.050 01-May-34 115 126

611 648 2.6

44


December 31, 2014


Par Value Coupon Fair % of Net (000s) Security Rate% Maturity Cost Value Assets

PROVINCIAL 135 Province of Alberta 3.400 1-Dec-23 $ 138 $ 146 125 Province of British Columbia 2.850 18-Jun-25 125 128 190 Province of Manitoba 3.300 2-Jun-24 189 202 150 Province of Manitoba 4.400 5-Sep-25 172 173 185 Province of Ontario 2.100 8-Sep-19 185 188 35 Province of Ontario 3.450 2-Jun-45 35 36 150 Province of Quebec 4.500 1-Dec-17 164 164 55 Province of Quebec 5.000 1-Dec-41 61 71 70 Province of Quebec 3.500 1-Dec-45 69 72 140 Province of Saskatchewan 3.200 3-Jun-24 140 149



CANADIAN EQUITIESConsumer Discretionary 700 AutoCanada Inc. $ 31 $ 31 1 700 Canadian Tire Corp. Ltd. 63 209 3 600 Gildan Activewear Inc. 38 237 2 530 Magna International Inc. 85 319 6 300 Quebecor Inc. 104 201 3 700 Thomson Reuters Corp. 133 173

454 1 170 4.7Consumer Staples 6 400 Alimentation Couche-Tard Inc. 41 312 1 851 Loblaw Cos. Ltd. 89 115 5 120 Saputo Inc. 39 179

169 606 2.4Energy 1 184 Baytex Energy Corp. 50 23 9 200 Canadian Natural Resources Ltd. 109 330 5 200 Cenovus Energy Inc. 102 125 5 200 Encana Corp. 100 84 4 900 Gran Tierra Energy Inc. 30 22 4 800 Husky Energy Inc. 106 132 2 200 MEG Energy Corp. 61 43 6 261 Precision Drilling Corp. 146 44 14 696 Suncor Energy Inc. 248 542 6 400 Talisman Energy Inc. 33 58 2 600 Trilogy Energy Corp. 69 21

1 054 1 424 5.7Financials 5 660 Bank of Montreal 213 465 8 700 Bank of Nova Scotia 193 577 5 800 Canadian Imperial Bank of Commerce 280 579 5 000 Element Financial Corp. 60 71 2 800 Genworth MI Canada Inc. 57 104 4 620 Home Capital Group Inc. 124 222 2 900 IGM Financial Inc. 59 134 800 Intact Financial Corp. 47 67 13 500 Manulife Financial Corp. 286 299 4 800 National Bank of Canada 132 237 6 000 Royal Bank of Canada* 317 481 5 700 Sun Life Financial Inc. 206 239 13 200 The Toronto-Dominion Bank 320 733

2 294 4 208 16.9


Health Care 1 300 Valeant Pharmaceuticals International Inc. $ 168 $ 216

168 216 0.9Industrials 17 900 Bombardier Inc., Class B 158 74 7 500 CAE Inc. 68 113 5 820 Canadian National Railway Co. 75 466 1 140 Canadian Pacific Railway Ltd. 61 255 4 500 Finning International Inc. 110 114 2 098 MacDonald Dettwiler & Associates Ltd. 89 199 1 900 Russel Metals Inc. 51 49 2 770 SNC-Lavalin Group Inc. 106 123 2 600 Stantec Inc. 34 83

752 1 476 5.9Information Technology 4 200 Blackberry Ltd. 210 54 2 840 CGI Group Inc. 97 126 19 440 Mitel Networks Corp. 184 240 4 060 Open Text Corp. 48 274

539 694 2.8Materials 1 990 Agrium Inc. 112 219 2 700 Barrick Gold Corp. 99 34 5 661 First Quantum Minerals Ltd. 102 93 2 355 Goldcorp Inc. 67 51 3 500 HudBay Minerals Inc. 42 35 10 800 Lundin Mining Corp. 126 62 1 830 Methanex Corp. 45 98 2 280 Potash Corporation of Saskatchewan Inc. 99 94 9 574 Teck Resources Ltd. 138 152 600 West Fraser Timber Co Ltd. 29 40 4 200 Yamana Gold Inc. 51 20

910 898 3.6Telecommunication Services 2 700 Rogers Communications Inc., Class B 42 122 3 000 TELUS Corp. 48 126

90 248 1.0TOTAL CANADIAN EQUITIES 6 430 10 940 43.9


45


December 31, 2014



POOLED FUNDS 126 862 BonaVista Money Market Fund* $ 1 309 $ 1 307

TOTAL POOLED FUNDS 1 309 1 307 5.3UNITED STATES EQUITIESConsumer Discretionary 370 Advance Auto Parts Inc. 57 68 850 Bed Bath & Beyond Inc. 62 75 1 CST Brands Inc. – – 930 DIRECTV 76 93 3 080 General Motors Co. 94 125 1 890 Johnson Controls Inc. 57 106 650 Ross Stores Inc. 59 71 1 870 Starz 53 64

458 602 2.4Consumer Staples 1 470 PepsiCo Inc. 96 160 7 920 Rite Aid Corp. 54 69 440 Walgreens Boots Alliance Inc. 20 39 1 750 Wal-Mart Stores Inc. 99 174

269 442 1.8Energy 1 370 Alliance Resource Partners LP 68 68 2 030 Apache Corp. 185 147 760 ConocoPhillips 66 61 2 240 Continental Resources Inc. 156 100 850 Halliburton Co. 45 39 370 National Oilwell Varco Inc. 28 28 1 930 Noble Corp. PLC 54 37 2 683 Paragon Offshore PLC 18 9

620 489 2.0Financials 1 780 Aflac Inc. 91 126 2 040 AllianceBernstein Holding LP 37 61 1 620 American International Group Inc. 77 105 9 070 Bank of America Corp. 120 188 1 120 Bank of the Ozarks Inc. 46 49 840 Berkshire Hathaway Inc. 62 146 960 First Republic Bank 41 58 2 800 JPMorgan Chase & Co. 105 203 1 710 MetLife Inc. 90 107 1 970 Oaktree Capital Group LLC 112 118 4 100 Wells Fargo & Co. 135 260

916 1 421 5.7Health Care 440 Anthem Inc. 27 64 1 140 Becton Dickinson and Co. 90 184 120 Biogen Idec Inc. 47 47 560 Celgene Corp. 45 73 950 Gilead Sciences Inc. 91 104 2 090 Johnson & Johnson 144 253 1 410 Medtronic Inc. 54 118 930 Varian Medical Systems Inc. 63 93

561 936 3.8


Industrials 1 520 American Airlines Group Inc. $ 56 $ 94 1 990 Delta Air Lines Inc. 46 113 2 290 Emerson Electric Co. 113 164 1 330 Generac Holdings Inc. 56 72 1 200 Raytheon Co. 98 150 1 710 United Technologies Corp. 153 228

522 821 3.3Information Technology 2 175 Apple Inc. 168 278 3 460 Cisco Systems Inc. 74 111 143 Google Inc., Class A 80 88 143 Google Inc., Class C – 87 2 390 Hewlett-Packard Co. 63 111 2 730 Microsoft Corp. 72 147 4 120 Oracle Corp. 136 215 1 280 QUALCOMM Inc. 66 110

659 1 147 4.6Materials 810 EI du Pont de Nemours & Co. 57 69 730 United States Steel Corp. 30 23

87 92 0.4Telecommunication Services 2 140 Verizon Communications Inc. 115 116

115 116 0.5Utilities 490 Entergy Corp. 47 50 2 620 Public Service Enterprise Group Inc. 116 126

163 176 0.7TOTAL UNITED STATES EQUITIES 4 370 6 242 25.2TOTAL INVESTMENTS 18 144 24 724 99.4TRANSACTION COSTS (7) – –NET INVESTMENTS $ 18 137 24 724 99.4OTHER NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 154 0.6NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 24 878 100.0



46






2014December 31

2013January 1

2013

ASSETSInvestments at fair value $ 24 724 $ 22 473 $ 19 290 Cash 77 254 56 Due from investment dealers – – 118 Subscriptions receivable 33 – 5 Dividends receivable, interest accrued and other assets 60 57 64 TOTAL ASSETS 24 894 22 784 19 533 LIABILITIESDue to investment dealers – – 104 Redemptions payable – 45 – Accounts payable and accrued expenses 16 11 7 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS 16 56 111NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (“NAV”) $ 24 878 $ 22 728 $ 19 422


NAV PER UNIT $ 19.70 $ 18.88 $ 16.80

47





For the periods ended December 31 (see note 2 in the generic notes) 2014 2013CASH FLOWS FROM OPERATING ACTIVITIESIncrease in NAV $ 2 800 $ 3 705 ADJUSTMENTS TO RECONCILE NET CASH PROVIDED BY OPERATIONS Net realized loss (gain) on investments (1 323) (814)Change in unrealized loss (gain) on investments (983) (2 410)(Increase) decrease in accrued receivables (3) 7 Increase (decrease) in accrued payables 5 4 Cost of investments purchased (21 030) (13 355)Proceeds on sales of investments 21 085 13 410 NET CASH PROVIDED BY OPERATING ACTIVITIES 551 547 CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of redeemable units 1 549 2 021 Cash paid on redemption of redeemable units (2 277) (2 370)Distributions paid to holders of redeemable units – – NET CASH USED IN FINANCING ACTIVITIES $ (728) $ (349)Net increase (decrease) in cash for the year (177) 198 Cash (bank overdraft), beginning of period 254 56 CASH (BANK OVERDRAFT), END OF PERIOD $ 77 $ 254

Interest received $ 177 $ 158 Dividends received, net of withholding taxes $ 375 $ 384




INCOME (see note 3 in the generic notes)Dividends $ 394 $ 389 Interest for distribution purposes 181 161 Net realized gain (loss) on investments 1 323 814 Change in unrealized gain (loss) on investments 983 2 410 TOTAL INCOME (LOSS) 2 881 3 774 EXPENSES (see notes – Fund Specific Information)Custodial fees and servicing charges 48 41 Audit fees 7 7 Transaction costs 6 6 Withholding tax 20 15 TOTAL EXPENSES 81 69 INCREASE (DECREASE) IN NAV $ 2 800 $ 3 705 INCREASE (DECREASE) IN NAV PER REDEEMABLE UNIT $ 2.33 $ 3.26

48






Total2014 2013

EQUITY/NAV AT BEGINNING OF PERIOD $ 22 728 $ 19 422 INCREASE (DECREASE) IN NAV 2 800 3 705 Early redemption fees – – Proceeds from redeemable units issued 1 582 2 016 Reinvestments of distributions to holders of redeemable units 1 797 1 337 Redemption of redeemable units (2 232) (2 415)NET INCREASE (DECREASE) FROM REDEEMABLE UNIT TRANSACTIONS 1 147 938 Distributions from net income (508) (489)Distributions from net gains (1 289) (848)Distributions from capital – – TOTAL DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS (1 797) (1 337)NET INCREASE (DECREASE) IN NAV 2 150 3 306 NAV AT END OF PERIOD $ 24 878 $ 22 728



49


December 31, 2014




and income generation, primarily through exposure to a

well-diversified, balanced North American portfolio of

common stocks, bonds and money market securities that

offer above-average prospects for growth.


Credit risk (%)

Credit-exposed securities, excluding short-term



table below summarizes the Fund’s credit risk exposure



AAA 52.1 44.2 44.4AA 18.3 19.5 24.2A 22.4 28.8 19.0BBB 7.2 7.5 12.4Total 100.0 100.0 100.0





2014December 31

2013January 1

2013

Canadian equities 44.3 47.3 48.0United States equities 25.2 23.6 20.9Fixed income 25.2 23.0 29.5Short-term investments 5.3 6.1 1.6


Fixed-income and debt securities, excluding short-term



table below summarizes the Fund’s exposure to interest rate

risk by remaining term to maturity as at:



As at December 31, 2014, had prevailing interest rates risen or

lowered by 1%, with all other factors kept constant, the Fund’s





could be material.








currencies, with all other factors kept constant, the Fund’s net

assets may have decreased or increased, respectively, by

approximately 0.3% (December 31, 2013 – 0.2%, January 1,

2013 – 0.2%). In practice, actual results could differ from this








S&P/TSX Composite Total Return Index + or - 0.5 + or - 0.6 + or - 0.6S&P 500 Total Return Index (CAD) + or - 0.4 + or - 0.6 + or - 1.1





50


December 31, 2014





Equities 17 182 – – 17 182Mutual fund units 1 307 – – 1 307Fixed-income and debt securities – 6 235 – 6 235Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 18 489 6 235 – 24 724% of total portfolio 74.8 25.2 – 100.0


Equities 15 924 – – 15 924Mutual fund units 1 376 – – 1 376Fixed-income and debt securities – 5 173 – 5 173Short-term investments – – – –Derivatives – assets – – – –Derivatives – liabilities – – – –Total financial instruments 17 300 5 173 – 22 473



Equities 13 310 – – 13 310 Mutual fund units 299 – – 299 Fixed-income and debt securities – 5 681 – 5 681 Short-term investments – – – – Derivatives – assets – – – – Derivatives – liabilities – – – – Total financial instruments 13 609 5 681 – 19 290
























December 31, 2014.







NAV per unit.




51


December 31, 2014






Total transaction costs 6 100 6 100 Related-party brokerage commissions* 1 14 1 19Commission arrangements† – – – –








December 31 2013


52

GENERIC NOTES TO FINANCIAL STATEMENTS

December 31, 2014

(also see Fund Specific Information)

1. The Funds

The funds (“Fund” or “Funds”) are open-ended unit

trusts governed by the laws of the Province of Ontario

and governed by Declarations of Trust. RBC Global Asset

Management Inc. (“RBC GAM”) is the manager and

portfolio advisor of the Funds and its head office is located

at 155 Wellington Street West, 22nd Floor, Toronto, Ontario.

2. Financial year/period

The information provided in these financial statements

and notes thereto is for the 12-month periods ended or as at


In the year a Fund is established, “period” represents the

period from inception to December 31 of that fiscal year.

3. Summary of significant accounting policies

These financial statements have been prepared in

compliance with International Financial Reporting Standards

(“IFRS”), which include estimates and assumptions made by

management that may affect the reported amounts of assets

(primarily valuation of investments), liabilities, income and

expenses during the reported periods. Actual results may

differ from estimates. The significant accounting policies of

the Funds, which are investment entities, are as follows:

Fair Value Option Financial instruments are designated as

fair value through profit and loss (“FVTPL”) on their initial

recognition (the fair value option). Derivative financial

instruments are held for trading (“HFT”) and are required

to be classified as FVTPL by nature. Other non-derivative

financial instruments can be designated as FVTPL if they

have a reliably measurable fair value and satisfy some

criteria such as (i) it eliminates or significantly reduces an

accounting mismatch and (ii) it is part of a portfolio that is

managed and its performance is evaluated on a fair value

basis. Management’s judgment is that all non-derivative

financial instruments are designated as FVTPL since all

Funds satisfy the above criteria. The Funds’ financial assets

and liabilities are not offset and the gross amounts are

reported in the Statements of Financial Position, even if there

is a legally enforceable right to offset the recognized amounts.

The Funds may enter into various master netting or similar

agreements with counterparties.

Redeemable units are measured at their respective

redemption values. All other assets and liabilities are

measured at amortized cost.

Determination of Fair Value The fair value of a financial

instrument is the amount at which the financial instrument

could be exchanged in an arm’s-length transaction between

knowledgeable and willing parties under no compulsion to

act. In determining fair value, a three-tier hierarchy based on

inputs is used to value the Funds’ financial instruments. The

hierarchy of inputs is summarized below:

Level 1 – quoted prices (unadjusted) in active markets for

identical assets or liabilities;

Level 2 – inputs other than quoted prices included in Level 1

that are observable for the asset or liability, either directly (i.e.,

as prices) or indirectly (i.e., derived from prices), including

broker quotes, vendor prices and vendor fair value factors; and

Level 3 – inputs for the asset or liability that are not based on

observable market data (unobservable inputs).

Changes in valuation methods may result in transfers into or

out of an investment’s assigned level.

The three-tier hierarchy of investments and derivatives is

included in “Notes to Financial Statements – Fund Specific

Information.”

Investments are recorded at fair value, which is determined

as follows:

Equities – Common shares, preferred shares and exchange-

traded funds are valued at the closing price recorded by the

security exchange on which the security is principally traded.

Fixed-Income and Debt Securities – Bonds, mortgage-backed

securities and debentures are valued at the closing price

quoted by major dealers or independent pricing vendors in

such securities. Mortgages are valued at a principal amount,

which produces a yield equivalent to the prevailing rate of

return on mortgages of similar type and term.

Short-Term Investments – Short-term investments are

valued at fair value, which is approximated at cost plus

accrued interest.

Options – Listed options are valued at the closing price on

the recognized exchange on which the option is traded. The

premium received for written options is recorded as a credit

in the Schedule of Investment Portfolio and adjusted daily to

the fair value of the written option.

Forward Contracts – Forward contracts are valued at the gain or

loss that would arise as a result of closing the position at the

valuation date. Any gain or loss at the close of business on each

valuation date is recorded in the Statements of Comprehensive

Income. The receivable/payable on forward contracts is

recorded separately in the Statements of Financial Position.

53


December 31, 2014


Realized gain (loss) on foreign exchange contracts is included

in “Net gain (loss) on foreign currencies and other net assets”

in the Statements of Comprehensive Income.

Futures Contracts – Futures contracts entered into by the

Funds are financial agreements to purchase or sell a

financial instrument at a contracted price on a specified

future date. However, the Funds do not intend to purchase

or sell the financial instrument on the settlement date;

rather, they intend to close out each futures contract before

settlement by entering into equal, but offsetting, futures

contracts. Futures contracts are valued at the gain or loss

that would arise as a result of closing the position at the

valuation date. Any gain or loss at the close of business on

each valuation date is recorded as “Net gain (loss) from

futures contracts” in the Statements of Comprehensive

Income. The receivable/payable on futures contracts is

recorded separately in the Statements of Financial Position.

Pooled Fund Unit Valuation – Units of Funds are valued at their

respective net asset value per unit from fund companies on

the relevant valuation dates.

Fair Valuation of Investments (including unlisted securities) – If the

valuation methods described above are not appropriate,

RBC GAM will estimate the fair value of an investment using

established fair valuation procedures, such as consideration

of public information, broker quotes, valuation models,

fundamental analysis, matrix pricing, discounts from market

prices of similar securities or discounts applied due to

restrictions on the disposition of securities, and external fair

value service providers.

Procedures are in place to determine the fair value of foreign

securities traded in countries outside North America daily,

to avoid stale prices and to take into account, among other

things, any significant events occurring after the close of a

foreign market. This fair valuation process takes into account

the last quoted price of the security and adjusts the price

based on inputs such as related indices, changes in foreign

markets and American Depository Receipts (“ADR”) prices.

These securities are classified as Level 2.

Foreign Exchange The value of investments and other

assets and liabilities in foreign currencies is translated into

Canadian dollars at the rate of exchange on each valuation

date. Purchases and sales of investments, income and

expenses are translated at the rate of exchange prevailing on

the respective dates of such transactions. Realized foreign

exchange gains/losses are included in “Net gain (loss) on

foreign currencies and other net assets” in the Statements of

Comprehensive Income.

Investment Transactions Investment transactions are

accounted for as of the trade date. Transaction costs, such as

brokerage commissions, incurred by the Funds are recorded

in the Statements of Comprehensive Income for the period.

The unrealized gain and loss on investments is the difference

between fair value and average cost for the period. The basis

of determining the cost of portfolio assets, and realized

and unrealized gains and losses on investments, is average

cost which does not include amortization of premiums

or discounts on fixed income and debt securities with the

exception of zero coupon bonds.

Income Recognition Dividend income is recognized on

the ex-dividend date and interest for distribution purposes

is coupon interest recognized on an accrual basis and/or

imputed interest on zero coupon bonds.

Increase (Decrease) in NAV per Redeemable Unit Increase

(decrease) in NAV per redeemable unit in the Statements of

Comprehensive Income represents the increase (decrease) in

net assets attributable to holders of redeemable units, divided

by the average units outstanding during the period.

4. Financial instrument risk and capital management

RBC GAM is responsible for managing each Fund’s

capital, which is its net assets and consists primarily of its

financial instruments.

A Fund’s investment activities expose it to a variety of

financial risks. RBC GAM seeks to minimize potential adverse

effects of these risks on a Fund’s performance by employing

professional, experienced portfolio advisors, daily monitoring

of the Fund’s holdings and market events, diversifying its

investment portfolio within the constraints of its investment

objectives, and, in some cases, periodically hedging certain

risk exposures through the use of derivatives.

To assist in managing risks, RBC GAM also uses internal

guidelines, maintains a governance structure that oversees

each Fund’s investment activities and monitors compliance

with the Fund’s investment strategies, internal guidelines and

securities regulations.

Financial instrument risk, as applicable to a Fund, is

disclosed in its “Notes to Financial Statements – Fund

Specific Information.”

54


December 31, 2014


Liquidity risk

Liquidity risk is the possibility that investments in a Fund

cannot be readily converted into cash when required. A

Fund is exposed to daily cash redemptions of redeemable

units. Liquidity risk is managed by investing the majority of

a Fund’s assets in investments that are traded in an active

market and that can be readily disposed. In accordance with

securities regulations, a Fund must maintain at least 90%

of its assets in liquid investments. In addition, a Fund aims

to retain sufficient cash and cash equivalent positions to

maintain liquidity, and has the ability to borrow up to 5%

of its net assets for the purpose of funding redemptions. All

non-derivative financial liabilities, other than redeemable

units, are due within 90 days.

Credit risk

Credit risk is the risk that a loss could arise from a security

issuer or counterparty not being able to meet its financial

obligations. The carrying amount of investments and

other assets represents the maximum credit risk exposure

as disclosed in a Fund’s Statements of Financial Position.

The fair value of fixed-income and debt securities includes

a consideration of the credit worthiness of the debt

issuer. Credit risk exposure to over-the-counter derivative

instruments is based on a Fund’s unrealized gain on the

contractual obligations with the counterparty. RBC GAM

monitors each Fund’s credit exposure and counterparty

ratings daily.

Concentration risk

Concentration risk arises as a result of net financial

instrument exposures to the same category such as,

geographical region, asset type, industry sector or market

segment. Financial instruments in the same category have

similar characteristics and may be affected similarly by

changes in economic or other conditions.

Interest rate risk

Interest rate risk is the risk that the fair value of a Fund’s

interest-bearing investments will fluctuate due to changes

in market interest rates. The value of fixed-income and debt

securities, such as bonds, debentures, mortgages or other

income-producing securities, is affected by interest rates.

Generally, the value of these securities increases if interest

rates fall and decreases if interest rates rise.

Currency risk

Currency risk is the risk that the value of investments

denominated in currencies, other than the functional

currency of a Fund, will fluctuate due to changes in foreign

exchange rates. The value of investments denominated in a

currency other than Canadian dollars is affected by changes

in the value of the Canadian dollar or a Fund’s functional

currency, in relation to the value of the currency in which the

investment is denominated. When the value of the Canadian

dollar falls in relation to foreign currencies, then the value of

foreign investments rises. When the value of the Canadian

dollar rises, the value of foreign investments falls.

Other price risk

Other price risk is the risk that the value of financial

instruments will fluctuate as a result of changes in market

prices (other than those arising from interest rate or currency

risk), whether caused by factors specific to an individual

investment, its issuer, or all factors affecting all instruments

traded in a market or market segment.

5. Taxes

The Funds qualify as open-ended mutual fund trusts or unit

trusts under the Income Tax Act (Canada). In general, the

Funds are subject to income tax, however, no income tax

is payable on net income and/or net realized capital gains

which are distributed to unitholders. In addition, income

taxes payable on net realized capital gains are refundable on

a formula basis when units of the Funds are redeemed.

Capital losses are available to be carried forward indefinitely

and applied against future capital gains. Non-capital losses

may be carried forward to reduce future taxable income

for up to 10 years, with the exception of non-capital losses

realized in 2006 and later years, which may be carried

forward up to 20 years.

6. Administrative and other related-party transactions

Manager and Distributor

RBC GAM is an indirect wholly-owned subsidiary of Royal

Bank of Canada (“Royal Bank”). RBC GAM is the manager

and distributor of the Funds. RBC GAM is responsible for

the Funds’ day-to-day operations and provides investment

advice and portfolio management services to the Funds. No

management fees are paid by the Funds. RBC GAM is paid a

negotiated fee directly by unitholders as compensation for

its services.

The Funds pay for their operating expenses. These expenses

include regulatory filing fees and other day-to-day operating

expenses including, but not limited to, recordkeeping,

55


December 31, 2014


accounting and fund valuation costs, custody fees, audit

and legal fees, and the costs of preparing and distributing

annual and semi-annual reports, prospectuses, statements

and investor communications. The Funds also pay certain

operating expenses directly, including the costs related to the

Board of Governors (“BoG”) of the Funds and the cost of any

new government or regulatory requirements introduced and

any borrowing costs (collectively, other fund costs), and taxes

(including, but not limited to, GST/HST). Other Fund costs

will be allocated among the units of a fund in accordance

with the services used. RBC GAM may, in some years and

in certain cases, absorb a portion of operating expenses.

The decision to absorb the operating expenses is reviewed

annually and determined at the discretion of RBC GAM,

without notice to unitholders.

Affiliates of RBC GAM that provide services to the Funds in

the course of their normal businesses are discussed below.

Portfolio Advisor

RBC GAM is the principal portfolio advisor of the Funds.

Brokerage

The Funds have established standard brokerage agreements

at market rates with related-party dealers.

Trustee and Custodian

RBC Investor Trust Services (“RBC IS”) is the trustee,

custodian and valuation agent of the Funds. RBC IS calculates

the transactional NAV for the Funds, and is paid custodial

fees for holding the assets of the Funds and trustee fees for

acting as the trustee.

Other Related-Party Transactions

Pursuant to applicable securities legislation, the Funds relied

on the standing instructions from the BoG in its capacity as

the Independent Review Committee with respect to one or

more of the following related-party transactions:

Related-Party Trading Activities(a) trades in securities of Royal Bank;

(b) investments in the securities of issuers for which a

related-party dealer acted as an underwriter during the

distribution of such securities and the 60-day period

following the conclusion of such distribution of the

underwritten securities to the public;

(c) purchases of equity and debt securities from or sales of

equity or debt securities to a related-party dealer, where it

acted as principal; and

Inter-Fund Trading(d) purchases or sales of securities of an issuer from or to

another investment fund or managed account managed

by RBC GAM.

The applicable standing instructions require that Related-

Party Trading Activities and Inter-Fund Trading be conducted

in accordance with RBC GAM policy and that RBC GAM

advise the BoG of a material breach of any standing

instruction. RBC GAM policy requires that an investment

decision in respect of Related-Party Trading Activities:

(i) is made free from any influence of Royal Bank or its

associates or affiliates and without taking into account

any consideration relevant to Royal Bank or its affiliates

or associates, (ii) represents the business judgment of the

portfolio manager, uninfluenced by considerations other

than the best interests of the Funds, (iii) is in compliance

with RBC GAM policies and procedures, and (iv) achieves

a fair and reasonable result for the Funds. RBC GAM policy

requires that an investment decision in respect of Inter-Fund

Trading is in the best interests of each Fund.

7. Regulatory Exemption

The Funds are relying on the exemption in section 2.11

of National Instrument 81-106 – Investment Funds from

the requirement to file their financial statements with the

securities regulatory authorities.

8. Transition to IFRS

The effect of the Funds’ transition to IFRS from Canadian

generally accepted accounting principles (“GAAP”) is

summarized as follows:

Statements of cash flows – All Funds are required under IFRS

to provide cash flow statements. Under Canadian GAAP most

Funds were exempt from this requirement.

Revaluation of investments as FVTPL – Under Canadian GAAP, the

fair value of investments was generally required to use bid

prices for long positions and ask prices for short positions.

Under IFRS, the fair value of investments is generally

measured using closing prices – that is, in the same manner

in which the daily net asset value per unit is measured for

unitholder transaction purposes. As a result, upon adoption

of IFRS, adjustments were recognized at January 1, 2013 and

December 31, 2013.

All financial assets and financial liabilities were classified as

FVTPL upon transition to IFRS. Previously financial assets

and financial liabilities were carried at fair value under

Canadian GAAP.

56


December 31, 2014


Reconciliation of net assets and comprehensive income

previously reported under Canadian GAAP to IFRS are

disclosed in the Fund Specific Information.

Classification of redeemable units of the Fund – Management has

determined that the Funds’ units do not meet all the criteria in

IAS 32, Financial Instruments Presentation to be classified as

equity and, therefore, by exception to those criteria, have been

reclassified as financial liabilities upon transition to IFRS.

Under Canadian GAAP the units were accounted for as equity.

Investment entity – Management has determined that the Funds

meet the definition of “investment entity” and as a result,

investments in other mutual funds managed by RBC GAM are

measured at FVTPL. An investment entity is an entity that:

obtains funds from one or more investors for the purpose

of providing them with investment management services;

commits to its investors that its business purpose is to invest

funds solely for returns from capital appreciation, investment

income, or both; and measures and evaluates the performance

of substantially all of its investments on a fair value basis. The

most significant judgment that has been made in determining

that the Funds meet this definition is that fair value is used as

the primary measurement attribute to measure and evaluate

the performance of substantially all of their investments.

9. Future accounting changes

The following IFRS standard has been issued, but is not yet in

effect:

IFRS 9 – Financial Instruments. IFRS 9 replaces parts of

IAS 39 related to the classification and measurement of

financial assets and liabilities.

The new standard is not expected to have a significant impact

on the Funds.

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