canadian scholarship trust group savings plan financial...the portfolio managers actively manage the...

Canadian Scholarship Trust Plan

Sponsor Canadian Scholarship Trust Foundation 2235 Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B8 1.877.333.RESP (7377)

Investment Fund Manager and Distributor C.S.T. Consultants Inc. 2235 Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B8

Trustee RBC Investor Services Trust 155 Wellington Street West, 2nd Floor Toronto, Ontario M5V 3L3

Auditor Deloitte LLP Brookfield Place 181 Bay Street, Suite 1400 Toronto, Ontario M5J 2V1

Bank Royal Bank of Canada Royal Bank Plaza South Tower 200 Bay Street, 10th Floor Toronto, Ontario M5J 2J5

For updates on your Plan account, login to Online Services at www.cst.org In Quebec, Canadian Scholarship Trust Plan is distributed by C.S.T. Consultants Inc. Scholarship Plan Brokerage Firm.

October 31, 2014 and 2013

C.S.T. Consultants Inc.

F.P.O

Canadian Scholarship Trust

Group Savings Plan Audited Financial Statements andManagement Report of Fund Performance

2003 P4-E (2014-12)

CST Financl_Stmnt_Cvr_ENG_Final_01_09_13.indd 9 2014-12-10 12:58 PM

Contents

Management Report of Fund Performance 1Management’s Responsibility for Financial Reporting 6Independent Auditor’s Report 6Statements of Net Assets Available for Education Assistance Payments 7Statements of Investment Operations 8Statements of Changes in Net Assets Available for Education Assistance Payments 8Statements of Cash Flows 9Schedule I – Statement of Investment Portfolio 10Schedule II – Subscribers’ Deposits and Accumulated Interest 12Schedule III – Education Assistance Payments 13Notes to the Financial Statements 14Government Grants (Appendix I to Schedule I) 19Sales Charge Refund Entitlements (Appendix II to Schedule I) 22

CAUTION REGARDING FORWARD-LOOKING STATEMENTSCertain portions of the Management Report of Fund Performance, including but not limited to, ‘‘Results of Operations’’ and‘‘Recent Developments’’, may contain forward-looking statements about the Plan, including its strategy, risks, expected performanceand condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future eventsor conditions, or that include words such as ‘‘expects’’, ‘‘anticipates’’, ‘‘intends’’, ‘‘plans’’, ‘‘believes’’, ‘‘estimates’’ and similar forward-looking expressions or negative versions thereof.In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Plan action, isalso a forward-looking statement. Forward-looking statements are based on current expectations and projections about future eventsand are inherently subject to, among other things, risks, uncertainties and assumptions about the Plan and economic factors.Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date.Forward-looking statements are not guarantees of future performance, and actual events could differ materially from those expressedor implied in any forward-looking statements made by the Plan. Any number of important factors could contribute to thesedigressions, including, but not limited to, general economic, political and market factors in North America and internationally, interestand foreign exchange rates, global equity and capital markets, business competition, technological change, changes in governmentregulations, unexpected judicial or regulatory proceedings, and catastrophic events.It should be stressed that the above-mentioned list of important factors is not exhaustive. You are encouraged to consider these andother factors carefully before making any investment decisions and you are urged to avoid placing undue reliance on forward-lookingstatements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report ofFund Performance.

Canadian Scholarship Trust Group Savings Plan

Management Report of Fund PerformanceIntroduction

The Canadian Scholarship Trust Foundation, as the Plan sponsor, and C.S.T.Consultants Inc., as the Investment Fund Manager, view corporate governance and complianceas critical to overall corporate performance and long-term investment returns, and as such wereview and support the proxy voting guidelines established by our investment managers. Eachinvestment manager’s proxy voting policy is available on request through our customer servicearea or by contacting us at [email protected].

Investment Objective and Strategy Limited. These assets are allocated among ETFs traded on CanadianThe Plan’s investment objectives are to protect Subscribers’ principal exchanges that replicate the performance of broad market indices of(net ‘‘Contributions’’ or ‘‘Principal’’), and to deliver a reasonable equity securities of Canadian and US companies, at our portfoliopositive return on investments over a long-term investment horizon managers’ discretion, subject to our investment policieswithin prudent risk tolerances. and mandates.

In March 2013, the Plan received regulatory approval to broadenRiskthe asset classes in which it may invest income earned on PrincipalIn 2014, the Plan implemented changes to its strategic investmentand Government Grants (‘‘Income’’). During July 2014, the Planmix as described in the Investment Objective and Strategy sectionimplemented a new strategic investment mix to diversify its assets. Aabove. These changes allowed for greater diversification in theportion of the Income assets are now invested in debt securitiesinvestment of Plan assets, and did not materially affect the overallissued by corporations, including debt securities rated BBB andlevel of risk associated with an investment in the Plan. The risksabove. Income assets have also been invested in Canadian exchangeassociated with investing in the Plan remain as outlined in the Plan’straded equity securities including certain exchange traded fundsprospectus.(‘‘ETFs’’). Subscribers’ Principal and any Government Grants

received remain invested in debt securities of the Canadian federal Results of Operationand provincial governments and therefore the Plan will continue to 2014 Plan Performancebe invested primarily in debt securities of Canadian federal or For 2014, the Plan’s rate of return, net of fees, was 2.5% compared toprovincial governments as well as corporations. the Benchmark return of 4.1% and the FTSE TMX Canada All

With these changes, the Plan modified the blend of indices Government Bond Index return of 5.9% (‘‘Broad-based Index’’).comprising its Benchmark beginning August 1, 2014 to the The Plan’s return is after the deduction of fees and expenses of 0.7%,following, which more closely reflects the Plan’s new strategic while the Benchmark and Broad-based Index returns do not includeinvestment mix (see Annual Compound Returns for further details): any costs of investing such as fees, expenses and commissions.

In comparison to the Benchmark, the Plan’s overall shorter than63% FTSE TMX Canada Short-term Government Bond Index Benchmark duration, to help protect against the possibility of rising19% FTSE TMX Canada All Corporate Bond Index interest rates, more than offset the positive effects of the Plan’s13% S&P 500 CAD Hedged Index overweight position in long-term provincial bonds as bond yields5% S&P/TSX Capped Composite Index declined during the period. In July, with the adoption of the new

strategic investment mix, the Plan allocated a portion of its assets intoThe Plan’s debt securities are managed by Beutel, Goodman & ETFs and increased its investments in corporate bonds. The

Company Ltd., Greystone Managed Investments Inc. and Canso performance in these sectors matched the Benchmark performanceInvestment Counsel Ltd. The assets are allocated among different in the latter part of the year. For the three-month period endingmarket sectors and different maturity segments at our portfolio October 31, 2014 the S&P 500 CAD Hedged Index and themanagers’ discretion, subject to our investment policies and S&P/TSX Capped Composite Index returned 5.2% and negativemandates. The portfolio managers actively manage the portion of 4.0% respectively. The Plan’s ETF mix was 73% US and 27%the Plan allocated to them, focusing on strategies where value can be Canadian at year end. Fees, expenses and commissions also detractedadded on a sustainable basis. These fixed income strategies include from the Plan’s reported performance compared to the Benchmark.sector allocation, duration management, credit research and yield In comparison to the Broad-based Index, the Plan’s asset mixcurve positioning. contained an overweight position in short-term government bonds,

The Plan’s equity ETFs are managed by BMO Asset to protect from rising interest rates, which contributed negatively toManagement Inc. and BlackRock Asset Management Canada its performance relative to the Broad-based Index as government


This annual management report of fund performance contains financial highlights but does notcontain the complete annual financial statements of the Canadian Scholarship Trust GroupSavings Plan (‘‘the Plan’’). A copy of the annual financial statements can be obtained on request,and at no cost, by visiting our website at www.cst.org, SEDAR at www.sedar.com, by callingour customer service team at 1-877-333-7377 or by writing to us by mail at 2235 SheppardAvenue East, Suite 1600, Toronto, Ontario M2J 5B8.

1 Group Savings Plan

bond yields declined and ended the year lower. In July, with the economic growth and equity markets. The S&P 500 CAD Hedgedadoption of the new strategic investment mix, the Plan allocated a Index increased 18% over the year. The Canadian equity marketsportion of its assets into ETFs and increased its investments in experienced a similar decline in September and October, combinedcorporate bonds. This contributed positively to the Plan’s overall with declines in the energy and materials sectors that were impactedperformance against the Broad-based Index, which returned 1.2% in by declining oil prices and weakening demand for commodities. Thethe last quarter of the year. Overall, the Plan’s underperformance S&P/TSX Composite Capped Index increased 13% over the year.compared to the Broad–based Index was the result of the shortened Portfolio Manager Changesduration of the portfolio for its fixed income investments, as well as With the implementation of the updated investment strategy, thefees, expenses and commissions. Plan’s portfolio managers and mandates were re-aligned. TD AssetEconomic Review Management who primarily managed government bonds on behalfThe global economy demonstrated modest growth in 2014, mainly of the Plan was replaced as assets were transferred to corporate bondsled by North American economies and balanced with ongoing and ETF mandates. BMO Asset Management Inc. and BlackRockchallenges in Europe and emerging signs of decelerating growth Asset Management Canada Limited were hired to manage the Plan’sin China. investments in ETFs.

The European Union struggled to gain positive momentum As at October 31, 2014, 63.1% of the Plan’s Total Portfolio Assetsthroughout the year, as economic growth has been minimal, were invested in Government bonds, 16.9% in Corporate Bonds,unemployment levels remained high and inflation continued to 19.4% in ETFs (14.2% US and 5.2% Canadian), and 0.6% in Cashweaken. These developments led the European Central Bank to and Short-Term Investments.further cut interest rates and introduce new liquidity programs to Recent Developments and Other Informationreinforce its efforts to support lending and economic activity. The global economic outlook is positive for 2015, however growth

In the United States, the economy experienced increased Gross prospects remain divergent across regions. The U.S. economy hasDomestic Product (‘‘GDP’’) and employment growth, both of which shown signs of improvement and is positioned for furtherare positive signs of an emerging recovery. During the year, self-sustaining growth in 2015. As the economy improves,consumer confidence and business earnings continued to grow, while expectations are that the Federal Reserve will likely tighten itsconsumer spending and the housing market have been more monetary policy by beginning to raise interest rates. Although, thesubdued. The Federal Reserve Board reduced and ended its

Federal Reserve has indicated that any policy changes continue to bequantitative easing program (government bond purchases), however, dependent on improved economic signals including continued jobit continues to maintain policy interest rates at relatively low levels in

and household income growth. Offsetting the positive U.S. outlooklight of ongoing price stability and excess capacity in the is the European economy which continues to remain fragile andlabour market.

faces the possible risk of deflation. Combined with signs ofThroughout the year, the Bank of Canada maintained its policy decelerating economic growth in a number of developing economies

interest rate at 1% in light of modest economic growth and inflationsuch as China, this could potentially further suppress futureremains close to 2% being the middle of the target range of 1% toeconomic growth.3%. The Canadian economy demonstrated signs of recovery as GDP

In December 2014, the Bank of Canada signaled that its policyhas grown at a moderate pace. In the latter part of the year, theinterest rate would remain unchanged at 1%. Canadian exports aregrowth was led by an improving export sector, as the U.S. economyexpected to be the primary driver of future growth, as the Canadiancontinued to experience growing economic activity. Increasedeconomy is anticipated to benefit from an expanding U.S. economyresidential investment and consumer spending have contributedfor the remainder of 2014 and into 2015, along with increasedpositively to the overall growth.business investment and hiring to meet demand. Similarly, as theDuring the fiscal year, Canadian government bond yields rose ineconomy continues to grow, inflation is anticipated to trend higherthe first two months, with most maturities peaking inalong with strengthening labour markets and interest rates will beginDecember 2013 as investors responded to expectations that theto rise gradually. Although the Bank of Canada continues to take aU.S. Federal Reserve Board would continue to reduce itsmeasured approach to policy changes by balancing inflation andquantitative easing program. Since then, yields have proceeded togrowth, concerns have been highlighted regarding Canadiangenerally trend downwards for the remainder of the year mainly duehouseholds’ continued high debt-to-income ratios, which may limitto concerns of slower global GDP growth negatively impactingfuture household spending in response to rising interest rates. ThisCanada, as the IMF revised downwards its forecasts for futurecould also dampen future economic growth.economic activity. As a result of both global factors and Canadian

Since October 2014, the price of oil has dropped significantlyeconomic indicators, the Bank of Canada continued to commentimpacting market volatility and global uncertainty.that accommodative monetary interest rate policies shall remain in

We are confident that the changes in our investment strategy andplace until the economy demonstrates sustainable growth andconservative management approach will continue to provide valueinflation increases. Also, the flow of funds into bond markets such asover the long-term horizon of the Plan. Our goal, as always, is toCanada, on economic weakness in Europe and Asia, has added to theprovide safety of principal and deliver a reasonable return within ourdemand for bonds and suppressed yields. Compared toinvestment policy guidelines and risk tolerances for our subscribersOctober 2013, short-term yields ended the year marginally lower,and beneficiaries.while medium and long-term yields had more pronounced declines,Future Accounting Standardsas the yield curve flattened over the period. The decline in yields

contributed to the relative outperformance of medium and In December 2011, the Canadian Accounting Standards Boardamended the deadline for adoption of International Financiallong-term bonds over short-term bonds. Credit spreads between

corporate and government bonds narrowed slightly throughout the Reporting Standards (‘‘IFRS’’) by certain qualifying investmentfunds to years beginning on or after January 1, 2014. Therefore,year, as investors continued to search for higher yields in corporate

issues, resulting in corporate bonds outperforming federal IFRS will replace Canadian GAAP and become effective for thePlan’s interim and annual financial statements relating to the fiscalgovernment bonds.

Although the U.S. equity markets pulled back in September and year ending October 31, 2015 with comparatives. We are in theOctober, investors have become more positive about the prospects of process of transitioning to IFRS for the Plan.


Group Savings Plan 2

Financial and Operating Highlights

The following table is intended to help you understand the key financial results for the past five fiscal years ending October 31 for the Plan,which includes assets and income allocated from Government Grants, Group Scholarship Pool and Sales Charge Refund Entitlements. Thisinformation is derived from the Plan’s audited annual financial statements.

($ thousands) 2014 2013 2012 2011 2010

Statements of Net AssetsTotal Assets $ 823,046 $ 928,431 $1,030,378 $1,091,259 $1,110,305

Net Assets 447,827 483,334 528,230 541,313 533,710

% Change of Net Assets (7.3)% (8.5)% (2.4)% 1.4% 8.7%

Statements of Investment OperationsNet Investment Income $ 16,104 $ 19,601 $ 41,498 $ 56,786 $ 34,485

Statements of Changes in Net AssetsEducation Assistance Payments $ (32,630) $ (28,176) $ (23,185) $ (16,373) $ (14,730)

Government Grants Received (net of repayments) 2,891 4,557 4,743 5,148 8,140

Government Grant Payments to Beneficiaries (10,723) (9,179) (7,495) (5,713) (4,828)

OtherTotal number of units 463,792 492,028 511,019 529,806 543,233

% Change in the total number of units (5.7)% (3.7)% (3.6)% (2.5)% (1.8)%

Management Fees

Administration Fees Portfolio Management FeesAn administration fee of $4,764 thousand (2013 – $4,820 thousand) The Plan’s annual investment management fee was 0.13% includingcomprising Plan administration and processing fees and financial taxes (2013 – 0.12%), of the average market value of assets based onreporting expenses was paid to the Canadian Scholarship Trust current Investment Management Agreements with portfolioFoundation (‘‘the Foundation’’), the sponsor and administrator of the managers. The portfolio managers provide investment advisory andPlan, in accordance with subscribers’ Education Savings Plan discretionary managed account services with respect to purchasing,Agreements. The administration of the Plan includes processing and selling, and dealing in securities.call centre services related to new agreements, Government grants,

Trustee and Custodian Feesplan modifications, terminations, maturities and EducationThe Plan pays trustee and custodian fees to RBC Investor ServicesAssistance Payments (‘‘EAPs’’). The annual administration fee isTrust to settle all investment trades and disburse fees, EAPs and othercalculated as 0.5% of the total amount of net Contributions,amounts in accordance with the terms of the Plan Agreement. ForGovernment Grants and income earned on these amounts, subject to2014 these fees charged to the Plan amounted to $163 thousandapplicable taxes, and is paid monthly.(2013 – $172 thousand) and were 0.02% including taxes (2013 –The Foundation has delegated certain administrative and0.02%), of the average market value of assets.distribution functions to its wholly-owned subsidiary, C.S.T.

Consultants Inc., which is registered as the Plan’s Investment FundManager in Ontario, Quebec, Newfoundland and Labrador, andScholarship Plan Dealer under securities legislation of each of theprovinces and territories of Canada in which it operates to sellscholarship plans. C.S.T. Consultants Inc. is the exclusive distributorof the Canadian Scholarship Trust Plans.

In exchange for its administrative services, C.S.T.Consultants Inc. receives an amount equal to the administration costsincurred plus a percentage of such costs from the Foundation. Theadministration services agreement is renewable on an annual basis.


(with comparative figures)


6JAN201519420913

6JAN201519471306

Summary of Plan Investment Portfolio

The Plan’s Total Portfolio Assets are comprised of the Principal and Metropolitan life GlobalFunding 2.68% 16 Apr 2019 8,587 1.5%Income for all education savings plan agreements that have not

Government of Canada 1.25% 01 Sep 2018 8,377 1.5%reached their maturity date, and the assets from which eligibleCanada Housing Trust 3.15% 15 Jun 2015 7,770 1.4%beneficiaries collect EAP payments (previously the GroupToronto Dominion Bank 3.23% 24 Jul 2024 7,729 1.4%Scholarship Pool, which are considered Income assets). In July 2014Canada Housing Trust 1.75% 15 Jun 2018 7,228 1.3%the Plan’s allocation of the Group Scholarship Pool assets wereOrnge Issuer Trust 5.73% 11 Jun 2034 6,877 1.2%merged with the Total Portfolio Assets as part of the investmentProvince of Ontario 4.20% 08 Mar 2018 6,552 1.2%strategy change.GE Capital Canada 1.62% 15 Feb 2022 6,312 1.1%

Government Grant assets and related investment income areTop 25 long positions as a percentage of the Total Portfoliospecific to each beneficiary. Any payments to beneficiaries from

Assets of the PlanGovernment Grant assets are treated as separate payments and notincluded in EAP values paid out.

Sales Charge Refund assets and related investment income are Past Performanceused to pay Sales Charge Refund Entitlements to qualifiedbeneficiaries. Any payments to beneficiaries from Sales ChargeRefund assets are treated as separate payments. The returns presented in the following chart and the annual

As a result, the Plan’s Total Portfolio Assets as presented reflect compound returns table are based on the income earned on theonly the Principal and Income assets. The Plan’s Total Portfolio Plan’s Total Portfolio Assets only and do not reflect the investmentAssets do not include the allocation of assets from the Government income or allocation of assets from the Government Grants and SalesGrants and Sales Charge Refund Entitlements belonging to Charge Refund Entitlements. Investment returns have beenthis Plan. calculated using market values and time-weighted cash flows during

The following chart illustrates the Plan’s Total Portfolio Assets by the periods. Total expenses incurred by the Plan, includingappropriate investment categories. administration, portfolio management, custody and trustee fees, and

Independent Review Committee expenses have been deducted andAsset Mix as at October 31, 2014only net returns are displayed in each period. Past returns of the Plando not necessarily indicate how it will perform in the future.

In July 2014, the investment strategy of the Plan changed inorder to allow greater diversification and flexibility to invest theIncome assets of the Plan in debt securities issued by corporations,BBB and above rated debt securities and in exchange traded equitysecurities including certain ETFs. These changes could have affectedthe performance of the Plan’s Total Portfolio Assets had they been in

ETFs, 19.4%

Federal and Provincial Bonds, 63.1%

Cash and Short-Term Investments, 0.6%

Corporate Bonds, 16.9%

effect throughout the performance measurement periods presented.The following table details the top 25 long positions of the TotalPortfolio Assets of the Plan. The Plan is prohibited from holding Year-by-Year Returnsshort positions in securities. The following bar chart illustrates the annual performance in each of

the past ten years to October 31, 2014 of the Plan’s Total PortfolioAssets. The chart illustrates in percentage terms how much aninvestment in the Plan’s Total Portfolio Assets, made on the first dayof each financial year, would have increased or decreased by the lastCanada Housing Trust 2.45% 15 Dec 2015 52,165 9.2%day of each financial year:BMO S&P 500 Hedged to

CAD Index ETF 40,296 7.1%ISHARES CORE S&P 500

Hedged to CAD Index ETF 40,195 7.1%Government of Canada 2.05% 15 Jun 2018 35,272 6.2%Government of Canada 1.47% 15 Mar 2017 31,336 5.5%Canada Housing Trust 1.32% 15 Sep 2016 31,046 5.5%Government of Canada 1.50% 01 Aug 2015 24,500 4.3%Canada Housing Trust 1.85% 15 Dec 2016 23,694 4.2%Province of Manitoba 4.25% 05 Mar 2018 16,434 2.9%ISHARES CORE S&P/TSX

Capped Composite IndexETF 14,994 2.6%

BMO S&P/TSX Capped

% R

etur

n

Year-by-Year Returns(Net of fees, for the years ended October 31)

20122011201020092008200720062005 2013 2014

6.4

5.3

3.4

-0.5

6.6

5.3

3.4

2.4

-0.1

2.5

-1

0

1

2

3

4

5

6

7

Composite Index ETF 14,988 2.6%Canada Housing Trust 2.75% 15 Jun 2016 13,958 2.5%

Annual Compound ReturnsProvince of BritishEffective August 1, 2014, as part of the implementation of theColumbia 4.70% 01 Dec 2017 12,294 2.2%updated strategic investment mix, the asset allocation for the PlanProvince of Ontario 1.90% 08 Sep 2017 12,274 2.2%was revised and accordingly the Plan’s Benchmark was modified suchProvince of Quebec 4.50% 01 Dec 2017 12,162 2.1%

407 International Inc. 7.13% 26 Jul 2040 9,891 1.7%NAV Canada 7.56% 01 Mar 2027 9,589 1.7%


% of PlanFair Value Portfolio

Issuer Rate Maturity Date ($ 000’s) Assets

80.2%

% of PlanFair Value Portfolio

Issuer Rate Maturity Date ($ 000’s) Assets


that it currently comprises the following specified indices in the if the Benchmark was not modified as previously describedweights and for the periods of time indicated: (the ‘‘Former Benchmark’’). The Former Benchmark returns for the

above time periods were 4.0% (1 Year), 2.7% (3 year), 4.0% (5 Year)and 4.8% (10 Year).From August 1, 2014 to October 31, 2014

The Former Benchmark is comprised of the following specifiedindices in the weights and for the periods of time indicated:63% FTSE TMX Canada Short-term Government Bond Index

19% FTSE TMX Canada All Corporate Bond Index13% S&P 500 CAD Hedged Index From July 1, 2011 to October 31, 2014:5% S&P/TSX Capped Composite Index

47% FTSE TMX Canada All Government Bond Index47% FTSE TMX Canada Short-term Government Bond IndexFrom July 1, 2011 to July 31, 2014:6% FTSE TMX Canada All Corporate Bond Index

47% FTSE TMX Canada All Government Bond Index47% FTSE TMX Canada Short-term Government Bond Index Prior to July 1, 2011:6% FTSE TMX Canada All Corporate Bond Index

100% FTSE TMX Canada All Government Bond Index

Prior to July 1, 2011:In comparison to the Former Benchmark, the Plan’s overall

100% FTSE TMX Canada All Government Bond Index shorter duration, to help protect against the possibility of risinginterest rates, more than offset the positive effects of the Plan’soverweight position in long-term provincial bonds as bond yieldsThe FTSE TMX Canada All Government Bond Index is a broaddeclined during the period. The Plan benefited from its allocationmeasure of Canadian investment grade fixed income securities,into ETFs and corporate bonds in the latter part of the year, whichissued by the Government of Canada, including Crowncontributed positively to the Plan’s performance compared to theCorporations and provincial governments, with maturities greaterFormer Benchmark. For the three-month period endingthan 1 year.October 31, 2014 the S&P 500 CAD Hedged Index and S&P/TSXThe FTSE TMX Canada Short-Term Government Bond IndexCapped Composite Index returned 5.2% and negative 4.0%is a broad measure of Canadian investment grade fixed incomerespectively. The Plan’s ETF mix was 73% US and 27% Canadian atsecurities, issued by the Government of Canada, including Crownyear end. The Former Benchmark does not reflect these allocationsCorporations and provincial governments, with maturities betweento ETFs and corporate bonds. Fees, expenses and commissions also1 and 5 years.detracted from the Plan’s reported performance compared to theThe FTSE TMX Canada All Corporate Bond Index is a broadFormer Benchmark.measure of Canadian investment grade fixed income securities issued

by corporations, with maturities greater than one year.The S&P 500 CAD Hedged Index is a broad measure of the

returns of the S&P 500 while hedging Canadian dollar risk, but notthe underlying equity market risk. The S&P 500 is a market-capitalization-weighted stock market index which includes 500 ofthe top companies in industries of the U.S. economy.

The S&P/TSX Capped Composite Index reflects pricemovements of selected securities listed on the Toronto StockExchange and weighted by market capitalization, with a cappedweight of 10% on all of the constituents.

The following table illustrates the annual compound returns ofthe Plan’s Total Portfolio Assets, for the periods shown ending onOctober 31, 2014.

Period1 Yr 3 Yr 5 Yr 10 Yr

Net Plan Return* 2.5 1.6 2.7 3.4Benchmark 4.1 2.7 4.0 4.8Broad-based Index: FTSE TMX

Canada All Government BondIndex 5.9 3.3 4.7 5.1

* Note: The Plan returns are after the deduction of fees and expenses, while the Benchmarksand Broad-based Index returns do not include any costs of investing such as fees,expenses and commissions. The Plan’s fees and expenses were 0.7% for all periods.

For commentary on the market and/or information regardingthe relative performance of the Plan compared to its Broad-basedIndex and Benchmark, see the Results of Operations section ofthis report.

Securities regulations require that we also show what thebenchmark returns would have been for the applicable time periods



16JAN201510002346 15JAN201516073527

14JAN201517300461

Management’s Responsibility for Financial ReportingThe accompanying financial statements of the Canadian Scholarship Trust Group Savings Plan (the ‘‘Plan’’) are prepared by management andare approved by the Board of Directors of the Canadian Scholarship Trust Foundation (the ‘‘Foundation’’). Management is responsible for theinformation and representations contained in these financial statements. The Board of Directors is responsible for reviewing and approvingthe financial statements and overseeing management’s performance of its financial reporting responsibilities.

The Foundation, through C.S.T. Consultants Inc., a wholly-owned subsidiary which administers the Plan, maintains appropriateprocesses to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordancewith Canadian generally accepted accounting principles and include certain amounts that are based on estimates and judgments. Thesignificant accounting policies, which management believes are appropriate for the Plan, are described in Note 2 to the financial statements.

Deloitte LLP is the external auditor of the Plan. It has audited the financial statements in accordance with Canadian generally acceptedauditing standards to enable it to express to the Board of Directors and Members of the Foundation its opinion on the financial statements. Itsreport is set out below.

Sherry J. MacDonald, CPA, CA Richard D’Archivio, CPA, CA, CFAPresident and Chief Executive Officer Vice President and Chief Financial Officer

Toronto, OntarioJanuary 8, 2015

Independent Auditor’s ReportTo the Board of Directors and Members of the Canadian Scholarship Trust Foundation

We have audited the accompanying financial statements of the Canadian Scholarship Trust Group Savings Plan, which comprise thestatements of net assets available for education assistance payments as at October 31, 2014 and 2013, and the statements of investmentoperations, statements of changes in net assets available for education assistance payments and statements of cash flows for the years thenended, 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 Canadian generallyaccepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financialstatements 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 withCanadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform theaudit 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. Theprocedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall 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 the Canadian Scholarship Trust GroupSavings Plan as at October 31, 2014 and 2013 and the results of its operations, changes in its net assets and its cash flows for the years thenended in accordance with Canadian generally accepted accounting principles.

Chartered Professional Accountants, Chartered AccountantsLicensed Public AccountantsJanuary 8, 2015

Canadian Scholarship Trust Group Savings PlanAudited Financial Statements


15JAN201516053667 16JAN201510002346

2013

Investments, at fair value (Note 4 and Schedule I) $ 863,648

Cash and cash equivalents 31,585

Short-term investments 24,294

Accrued interest and other receivables 8,111

Receivables for securities sold 312

Government grants receivable 481

928,431

Accounts payable, accrued liabilities and unclaimed subscribers’ funds 8,378

Payables for securities purchased 607

Subscribers’ deposits (Schedule II) 436,112

445,097

483,334

Accumulated interest held for future education assistance payments (Schedule II) 249,663

Government grants 127,983

Interest on Government grants 61,553

Sales charge refund entitlements (Notes 3(b) and 7) 47,517

General Fund (Note 6) –

(4,614)

Donations from the Foundation (Note 6) 1,232

$ 483,334

Approved on behalf of the Board of Canadian Scholarship Trust Foundation

Colin E. Litton, FCPA, FCA Sherry J. MacDonald, CPA, CADirector Director

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


Statements of Net Assets Available for EducationAssistance PaymentsAs at October 31, 2014 and 2013 (in thousands of dollars)

2014

Assets$ 800,242

3,2641,264

17,948–

328

823,046

Liabilities4,986

187370,046

375,219

Net Assets Available for Education Assistance Payments 447,827

Represented by:Non-Discretionary Funds

218,288117,60459,30144,0711,793

Unrealized Gains (Losses) 5,538

Discretionary Funds1,232

$ 447,827


2013

Interest income $ 31,090

Realized losses on sale of investments (5,401)

Other income 161

25,850

Plan administration and processing fees (Note 3(a)) 3,711

Financial reporting (Note 3(a)) 1,109

Portfolio management fees 1,235

Custodian fees 117

Trustee fees 55

Independent review committee fees 22

6,249

19,601

(11,567)

$ 8,034

2013

$ 528,230

8,034Transfers to internal and external plans (6,041)

1,993

Government grants received (net of repayments) 4,557

Payments to beneficiariesEducation assistance payments (Schedule III) (28,176)Government grants (9,179)Refund of sales charges (8,316)Return of interest (5,775)

(51,446)

(46,889)

(44,896)

$ 483,334



Statements of Investment OperationsFor the years ended October 31, 2014 and 2013 (in thousands of dollars)

2014

Income$ 24,729

(3,655)1,112

22,186

Expenses3,768

9961,136

1045919

6,082

Net Investment Income 16,104

Change in Unrealized (Losses) Gains 10,152

Increase in Net Assets from Investment Operations $ 26,256

Statements of Changes in Net Assets Available forEducation Assistance PaymentsFor the years ended October 31, 2014 and 2013 (in thousands of dollars)

2014

Net Assets Available for Education Assistance Payments, Beginning of Year $ 483,334

Increase in Net Assets from Investment Operations 26,256(4,842)

21,414

Receipts2,891

Disbursements

(32,630)(10,723)(9,805)(6,654)

(59,812)

Receipts less Disbursements (56,921)

Decrease in Net Assets Available for Education Assistance Payments (35,507)

Net Assets Available for Education Assistance Payments, End of Year $ 447,827


2013

Increase in Net Assets from Investment Operations $ 8,034

Net disbursements from investment transactions 90,476

Items not affecting cash

Realized losses on sale of investments 5,401

Change in Unrealized Gains (Losses) 11,567

Change in non-cash operating working capital

(Increase) decrease in Accrued interest and other receivables 1,775

Decrease in Government grants receivable 84

Increase (decrease) in Accounts payable, accrued liabilities and unclaimed subscribers’ funds 3,544

120,881

Transfers to internal and external plans (6,041)

Government grants received (net of repayments) 4,557

Net decrease in Subscribers’ deposits (Schedule II) (57,579)

Payments to beneficiaries (51,446)

(110,509)

10,372

21,213

$ 31,585



Statements of Cash FlowsFor the years ended October 31, 2014 and 2013 (in thousands of dollars)

2014

Operating Activities$ 26,256

92,825

3,655(10,152)

(9,837)153

(3,392)

Cash flow from Operating Activities 99,508

Financing Activities(4,842)2,891

(66,066)(59,812)

Cash flow used in Financing Activities (127,829)

Net (decrease) increase in Cash and cash equivalents (28,321)Cash and cash equivalents, Beginning of Year 31,585

Cash and cash equivalents, End of Year $ 3,264


Province of OntarioGovernment of Canada4.30% 8 Mar 2017 3,456 3,691 3,7351.56% 1 Mar 2015 2,509 835 8361.90 8 Sep 2017 12,135 12,274 12,2214.10 1 Jul 2015 2,000 1,187 1,1974.20 8 Mar 2018 6,048 6,552 6,5881.50 1 Aug 2015 24,410 24,500 24,586

1.47 15 Mar 2017 31,079 31,336 31,364Province of Quebec

1.50 1 Sep 2017 2,202 2,222 2,2124.50 1 Dec 2016 3,843 4,097 4,152

1.77 1 Mar 2018 919 754 7644.50 1 Dec 2017 11,175 12,162 12,249

2.05 15 Jun 2018 34,702 35,272 35,124Province of Saskatchewan1.25 1 Sep 2018 8,416 8,377 8,2901.95 1 Mar 2019 3,785 3,813 3,8141.90 1 Apr 2019 5,497 5,337 5,330

1.88 1 May 2019 19 19 19 103,780 104,1651.80 1 Jun 2019 1,987 1,955 1,9491.75 1 Jul 2019 1,125 1,103 1,103

407 International Inc.Canada Housing Trust 7.13 26 Jul 2040 6,788 9,891 9,8213.15 15 Jun 2015 7,670 7,770 7,947

Access Justise Durham Ltd.2.45 15 Dec 2015 51,390 52,163 52,4585.02 31 Aug 2039 1 1 12.75 15 Jun 2016 13,606 13,958 14,008

1.32 15 Sep 2016 30,921 31,046 31,063 BAA Funding LT1.85 15 Dec 2016 23,375 23,694 23,688 4.00 3 Jul 2019 56 60 602.05 15 Jun 2017 4,400 4,481 4,479

CBC Monetization Trust1.70 15 Dec 2017 1,790 1,804 1,8004.69 15 May 2027 508 577 5401.75 15 Jun 2018 7,185 7,228 7,215

3.75 15 Mar 2020 305 333 333 Cogeco Cable Inc.4.18 26 May 2023 1,843 1,893 1,917255,376 255,765

GE Capital Canada1.63 15 Feb 2022 6,423 6,312 6,275Province of Alberta2.47 6 Feb 2023 284 294 2841.38 27 May 2016 4,294 4,310 4,299

1.85 1 Sep 2016 3,750 3,797 3,804 Greater Toronto Airport Authority1.70 15 Dec 2017 2,960 2,980 2,972 6.45 30 Jul 2029 2,447 3,050 3,0264.00 1 Dec 2019 4,230 4,650 4,660

Green Timbers LPProvince of British Columbia 6.84 30 Jun 2037 941 1,064 1,1754.70 1 Dec 2017 11,210 12,294 12,372

Honda Canada Finance Inc.4.10 18 Dec 2019 1,210 1,336 1,3402.22 23 Feb 2015 479 480 480

Province of ManitobaHydro One Inc.2.05 1 Dec 2016 2,500 2,541 2,5471.64 3 Dec 2016 4,300 4,305 4,3234.25 5 Mar 2018 15,125 16,434 16,526

1.85 5 Sep 2018 2,781 2,797 2,782 Kreditanstalt Fur Wideraufbau Global5.50 15 Nov 2018 1,262 1,445 1,455 5.05 4 Feb 2025 384 448 4561.39 2 Apr 2019 4,913 4,923 4,923

Lloyds TSB BankProvince of New Brunswick 5.28 19 Apr 2016 339 355 3596.47 30 Nov 2027 1,773 2,158 2,185

Maritimes and Northeast PipelinesProvince of Nova Scotia 4.34 30 Nov 2019 594 615 6194.60 18 Aug 2016 1,440 1,526 1,541 6.90 30 Nov 2019 110 123 127



Schedule I – Statement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)

Fair Average Fair AverageSecurity Par Value ($) Value ($) Cost ($) Security Par Value ($) Value ($) Cost ($)

Bonds Bonds (continued)Federal – 44.9% Municipal and Provincial – 18.2% (continued)

Corporate – 16.9%

Municipal and Provincial – 18.2%


Merrill Lynch Financial Assets TransCanada Pipelines4.85% 12 Dec 2015 500 115 116 11.80% 20 Nov 2020 32 48 484.66 12 Jul 2016 500 102 101

Unicredit SPA4.64 12 Oct 2016 20 11 11

2.22 29 May 2018 274 286 2854.71 12 Nov 2016 3,409 723 729

University of Ontario Infastructure5.49 12 Aug 2017 386 420 4286.35 15 Oct 2034 235 274 271

Metropolitan Life Global FundingWTH Car Rental2.68 16 Apr 2019 8,493 8,587 8,6252.62 20 Dec 2016 1,135 1,136 1,153

Milit-Air Inc.2.54 20 Aug 2019 814 815 814

5.75 30 Jun 2019 4,230 4,586 4,67896,290 96,624

Morgan Stanley455,446 456,5543.13 5 Aug 2021 3,418 3,390 3,407

NAV Canada7.56 1 Mar 2027 7,528 9,589 9,672 BMO S&P 500 Hedged7.40 1 Jun 2027 424 596 594 to CAD Index ETF 1,294 40,195 39,405

BMO S&P/TSX CappedNorth Battleford PowerComposite Index4.96 31 Dec 2032 3,594 3,976 3,988ETF 759 14,988 15,559

Ontrea Inc. ISHARES CORE4.62 9 Apr 2018 190 192 202 S&P 500 Hedged

to CAD Index ETF 1,729 40,296 39,192Ornge Issuer Trust

ISHARES CORE5.73 11 Jun 2034 6,091 6,877 6,889

S&P/TSX CappedComposite IndexPearson International Fuel Facilities CorpETF 648 14,994 15,6005.09 9 Mar 2032 1,718 1,818 1,861

110,473 109,756Plenary Health Humber LP2.63 18 May 2015 1,934 1,944 1,951 3,517 3,517

Principal Financial Global 569,436 569,8274.65 11 Oct 2016 424 443 448

Public Sector Pension Investment Board 186,353 184,5423.27 12 Jun 2020 4,422 4,474 4,455

47,970 43,852Real Estate Asset Liquidity Series Class A4.62 12 Sep 2016 185 193 185

1,011 1,011Royal Bank Scotland

804,770 799,2325.88 12 May 2016 157 165 167

Shaw Communications Inc.800,2426.75 9 Nov 2039 2,280 2,769 2,802

3,264SP1 LP 1,2643.21 15 Jun 2019 2,170 2,099 2,103

804,770Toronto Dominion Bank3.23 24 Jul 2024 7,659 7,729 7,659

Toronto Hospital5.64 8 Dec 2022 3,067 3,465 3,519



Schedule I – Statement of Investment Portfolio (continued)

As at October 31, 2014 (in thousands of dollars)


Bonds (continued) Bonds (continued)Corporate – 16.9% (continued) Corporate – 16.9% (continued)

Total Fixed Income Investments – 80.0%

Exchange-traded Funds

Total Equity – 19.4%

Cash and Short-term Investments – 0.6%

Total Portfolio Assets – 100.0%

Investments Allocation (Note 4)

Government Grants (Appendix I)

Sales Charge RefundEntitlements (Appendix II)

Cash and Short-termInvestments (Appendix I & II)

Total Investment Fund

Represented by:Investments, at fair valueCash and cash equivalentsShort-term Investments


The following table provides a summary of Group Savings Plan Units, Subscribers’ Deposits and Accumulated Interest by year of eligibility.

2013 and prior to 2013 156,326 2,028 27,592 130,762 $ 19,096 $ 47,344

2014 80,084 5,406 23,171 62,319 35,399 36,767

2015 82,139 17,503 1,689 97,953 123,872 57,914

2016 72,601 384 649 72,336 84,320 35,354

2017 75,398 250 528 75,120 81,226 31,282

2018 25,107 132 327 24,912 25,748 9,425

2019 226 4 – 230 226 122

2020 107 3 1 109 95 44

2021 9 6 1 14 23 12

2022 23 – – 23 25 18

2023 and thereafter 8 6 – 14 16 6

2013

Payments from subscribers $ 19,158

Inter-Plan principal transfers (12,423)

Account maintenance fees (455)

Return of principal (63,859)

Net decrease in Subscribers’ deposits (57,579)

493,691

$ 436,112



Schedule II – Subscribers’ Deposits and AccumulatedInterestAs at October 31, 2014 and 2013 (in thousands of dollars)

Opening Subscribers’ AccumulatedYear of Eligibility Units Inflow Units1 Outflow Units2 Closing Units Deposits Interest3

TOTAL 492,028 25,722 53,958 463,792 $ 370,046 $ 218,288

1 Inflow units are comprised of transfers in.2 Outflow units are comprised of terminations, transfers out and education assistance payments.3 Accumulated interest represents both interest allocated to subscribers’ accounts and interest held for future education assistance payments.

The changes in Subscribers’ deposits are as follows:

2014

$ 13,713(11,375)

(342)(68,062)

(66,066)

Balance, Beginning of Year 436,112

Balance, End of Year $ 370,046


The following tables provide the total dollar payments, number of eligible units paid, and the education assistance payment amount by yearof eligibility

2013 2013

Current year payments $18,850 Non-Discretionary $28,152

Deferred payments 9,121 Discretionary 24

Advance payments 205$28,176

$28,176

28,622.5 23,212.2 22,148.4 $ 207 $ 227 $ 214

Second 20,275.6 18,695.1 237 256

Third 16,572.9 273

Fourth



Schedule III – Education Assistance PaymentsAs at October 31, 2014 and 2013 (in thousands of dollars, except for per unit amounts)

Education Assistance Payments 2014 Education Assistance Payments 2014

$21,385 $32,63011,047 –

198$32,630

$32,630

Number of education assistance payment units Amount of education assistance payment per unitYear of Eligibility Year of Eligibility

2014 2013 2012 2011 2014 2013 2012 2011

First 34,444.8 $ 179

24,295.1 227

18,188.2 275

14,513.1 324


The Canadian Scholarship Trust Group Savings Plan (the ‘‘GroupSavings Plan’’ or the ‘‘Plan’’) is a Pooled Education Savings Plan, that These financial statements have been prepared in accordancewas established on September 1, 1991. Since June 2001, the Plan is no with Canadian generally accepted accounting principleslonger available for sale. The objective of the Group Savings Plan is to (‘‘Canadian GAAP’’).assist parents and others to save for the post-secondary education ofchildren. The Group Savings Plan is managed by C.S.T.

In December 2011, the Canadian Accounting Standards BoardConsultants Inc. (‘‘C.S.T.C.’’), a wholly-owned subsidiary of theamended the deadline for adoption of International FinancialCanadian Scholarship Trust Foundation (the ‘‘Foundation’’).Reporting Standards (‘‘IFRS’’) by certain qualifying investmentPayments are made by a subscriber to an account maintained byfunds to years beginning on or after January 1, 2014. Therefore,the trustee on behalf of a beneficiary. Deductions of sales charges andIFRS will replace Canadian GAAP and become effective for theaccount maintenance fees are made from the subscriber’sPlan’s interim and annual financial statements relating to thecontributions. The principal accumulated over the term of thefiscal year ending October 31, 2015. Management is in thesubscriber’s education savings plan agreement (the ‘‘Agreement’’) isprocess of implementing a transition plan, which includesreturned to the subscriber when:identifying differences between the Plan’s current accountingi. the Agreement matures and the beneficiary is a qualifiedpolicies and those it expects to apply under IFRS, as well as anystudent eligible to receive the first education assistanceaccounting policy and implementation decisions and theirpayment (‘‘EAP’’),resulting impact, if any, on the financial statements and notes toii. the Agreement matures and the beneficiary is not yet athe financial statements of the Plan.qualified student, in which case the beneficiary will forfeit all

Government grants (as defined below), oriii. the Agreement is terminated. Investments, at fair value include the following types ofThe investment income earned on the subscribers’ principal securities: bonds, money market securities, exchange-traded

balance is used to provide EAPs to qualified students. A beneficiary is funds and pooled funds.deemed to be a qualified student upon receipt by the Foundation of Bonds, money market securities and exchange-traded fundsevidence of enrolment in a qualifying educational program at an are valued using bid prices at year end. In the event that quotedeligible institution. market prices are not available, the fair values are estimated

There are a number of government grants that may be available using present value or other valuation techniques.to beneficiaries including the Canada Education Savings Grant Investments in pooled funds used to pay the Sales ChargeProgram (‘‘CESG’’), the Alberta Centennial Education Savings Refund (‘‘SCR’’) Entitlements referred to in Note 3(b) areGrant (‘‘ACES’’), the Quebec Education Savings Incentive (‘‘QESI’’) valued at the net asset value per security of the pooled fund atand the Saskatchewan Advantage Grant for Education Savings the valuation date, as this represents the value that would be(‘‘SAGES’’) (collectively, ‘‘Government grants’’). received by the Plan from redeeming its securities of the

The Plan receives Government grants, which are paid directly pooled fund.into a beneficiary’s Agreement and invests these funds in accordance Note 8 provides further guidance on fair valuewith the Plan’s investment policies. The Government grants, along measurements.with investment income earned thereon, are paid to qualifiedstudents.

Investment transactions are accounted for on a trade-date basis.Agreements are registered with appropriate governmentInterest income on investments is recognized using the effectiveauthorities if all required information is provided, and onceinterest method. Dividends and distributions are accrued as ofregistered, are subject to the rules for Registered Education Savingsthe ex-dividend date and ex-distribution date, respectively.Plans under the Income Tax Act (Canada). The current tax legislationRealized gains (losses) on the sale of investments and change inprovides that income credited on subscribers’ principal is not taxableunrealized gains (losses) on investments are calculated withincome of the subscriber unless withdrawn as an Accumulatedreference to the average cost of the related investments and areIncome Payment subject to certain eligibility requirements. Therecognized in the period that such gains (losses) occur.deposits are not deductible for income tax purposes and are not

taxable when returned to the subscriber. Payments made to abeneficiary, including EAPs, Government grants and investmentincome earned on Government grants will constitute taxable income Subscribers’ deposits reflect amounts received from subscribersof that beneficiary in the year that the payments are made. net of sales charges and account maintenance fees and do not

include future amounts receivable on outstanding Agreements.Account maintenance fees are paid annually to the Foundationfrom Subscribers’ deposits and are accrued throughout the year.

The Group Savings Plan is exempt from income taxes underSection 146.1 of the Income Tax Act (Canada).


Notes to the Financial StatementsOctober 31, 2014 and 2013 (in thousands of dollars)

Note 1. Nature of Operations Note 2. Significant Accounting Policies(a) Generally accepted accounting principles

(b) Future accounting standards

(c) Investment valuation

(d) Investment transactions and income recognition

(e) Subscribers’ deposits, Sales charges and Account maintenancefees

(f) Income taxes


investments in the SCR Fund as at October 31, 2014, afteradjusting for funds transferred to the direct investment holdingsof the Plan and accrued interest, amounted to $48,189 (2013 –$49,443).

Cash and cash equivalents include short-term investments witha purchase date to maturity of 90 days or less.

During the year, the Foundation provided deficit fundingpayments of $4,000 (2013 – $3,600) to the SCR Fund

In preparing the financial statements, management is required to (see Note 7(b)).use estimates and assumptions that affect the reported amounts All related party transactions are in the normal course ofof assets and liabilities and disclosures of contingent assets and business and are measured at the exchange amountliabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period.Actual results could differ from the current estimates. Significantestimates included in these financial statements relate to SCREntitlements (see Note 3(b)) and Accounts payable, accrued The investment holdings are disclosed in Schedule I – Statementliabilities and unclaimed subscribers’ funds. of Investment Portfolio and related Appendices I – II to the

schedule, which are explained below.The Government grants received from Employment and

Social Development Canada are collectively invested togetherwith other C.S.T.C. administered plans. The principal and

The Foundation, as the Plan sponsor, has appointed C.S.T.C. as income received are separately tracked for each subscriber’sthe Investment Fund Manager to administer the Group Savings Agreement. The portfolio holdings are allocated across allPlan. The agreement is renewable annually on November 1. C.S.T.C. plans based on the proportion of principal and income

Account maintenance fees and administration fees attributable to Agreements within each plan (see Appendix I(comprising Plan administration and processing fees and to Schedule I).Financial reporting expenses) are paid to the Foundation. Investments used to fund the SCR Entitlements of theAdministration fees are annual fees of 1⁄2 of 1% of the total Group Savings Plan and the Group Savings Plan 2001 of 100%amount of principal, Government grants and income earned of service charges paid, are managed in a separate fundthereon, as well as the SCR Fund. (see Appendix II to Schedule I). The SCR Fund’s holdings and

Sales charges were paid by subscribers and deducted from income are allocated to the Plan based on the Plan’stheir contributions. In accordance with the distribution proportionate share of the SCR Entitlements.agreement, the Foundation agreed to set aside a portion of the The investment restrictions set out in National Policy 15 ofsales charges collected from subscribers to the SCR Fund each the Canadian Securities Administrators do not apply to assets inyear in order to pay SCR Entitlements when they become due. the SCR Fund.The amount funded was equivalent to 50% of the estimatedpresent value of the SCR Entitlements of $200 per unit asdetermined at the time of sale.

C.S.T.C., as the Investment Fund Manager of the Plan, hasThe Foundation is responsible to pay to beneficiaries of theprovided an undertaking (the ‘‘Undertaking’’) to thePlan the refunds of sales charges as promised. Any shortfall inCanadian Securities Administrators that modifies thethe assets of the SCR Fund to meet the SCR Entitlements willrestrictions of National Policy 15 so that any portion of thebe funded from the Foundation’s surplus (see Note 7).Plan’s income may be invested in exchange-traded securities,including index participation units of exchange-traded funds.

The Group Savings Plan pays SCR Entitlements to the The Plan may also invest any portion of its income intobeneficiaries from the SCR Fund, which amount to 100% of corporate debt securities, including BBB and above ratedsales charges paid. The SCR Entitlement is paid with the first debt. The new strategic investment mix for the Plan wasinstalment of the EAP payouts to qualified beneficiaries for the implemented in July 2014.Plan. The total amount of SCR Entitlements paid for the yearended October 31, 2014 was $9,805 (2013 – $8,316).

Prior to July 2014, upon maturity of each Agreement, theAs at October 31, 2014, the SCR Entitlements amount ofinvestment income accumulated to date attributable to that$44,071 (2013 – $47,517) presented in the Statements of NetAgreement was transferred to the Canadian ScholarshipAssets Available for Education Assistance Payments representsGroup Savings Plan Trust Scholarship Pool (the ‘‘Pool’’), athe average cost of the Plan’s investments in the SCR Fund ofshared investment pool with the Canadian Scholarship Trust$44,133 (2013 – $47,646), less funds to be transferred to theGroup Savings Plan 2001, another plan administered bydirect investment holdings of the Plan of $270 (2013 – $373)C.S.T.C. The portfolio holdings of the Pool were allocatedfor SCR payments made to beneficiaries during the year, plus

accrued interest of $208 (2013 – $244). The fair value of the


Notes to the Financial Statements (continued)

October 31, 2014 and 2013 (in thousands of dollars)

Note 2. Significant Accounting Policies(continued)

(g) Cash and cash equivalents(c) SCR Deficit Funding Payments from the Canadian Scholarship

Trust Foundation

(h) Use of estimates

Note 4. Investment Holdings(a) Current holdings

Note 3. Related Party Transactions(a) Administration of the Group Savings Plan

(b) Recent developmentsi. New investment undertaking

(b) Sales Charge Refund Entitlements

ii. Transfer of Scholarship Pool assets to the Plan


$804,770 (2013 – $919,527) as per Schedule I – Statement ofInvestment Portfolio, would have decreased by $21,356(2013 – $31,978). If prevailing interest rates had decreased by(b) Recent developments (continued)1%, the total investment fund would have increased by

ii. Transfer of Scholarship Pool assets to the Plan (continued) $23,806 (2013 – $37,288). This 1% change assumes a parallelto the Plan based on the Plan’s proportionate share of shift in the yield curve with all other variables held constant.income remaining in the Pool. In practice, actual results may differ materially.

Concurrent with the implementation of theUndertaking, the Plan’s proportionate share of income Other price risk is the risk that the value of a financialremaining in the Pool was transferred to the direct instrument will fluctuate as a result of changes in marketinvestment holdings of the Plan to be invested in accordance prices, other than those arising from interest rate risk.with the terms of the Undertaking. Income earned on Factors specific to an individual investment, its issuer orsubscribers’ accumulated income from the date of maturity other factors affecting all instruments traded in a market orto the date the funds are paid to qualified students as EAPs market segment affect other price risk. The asset class that iscontinue to be credited to the General Fund (see Note 6). most impacted by other price risk is the exchange-traded

funds of the Plan and Government grant asset pool, andequity component of the SCR Fund, which represents 22%(2013 – 3%) of the total investment fund amount as atOctober 31, 2014. The risk associated with the exchange-traded funds and equity component of the SCR Fund isIn the normal course of business, the Plan may be exposed to amanaged by security selection and active management byvariety of risks arising from financial instruments. The Plan’sexternal managers within approved investment policiesexposures to such risks are concentrated in its investment holdingsand mandates.and are related to market risk (which includes interest rate risk and

As at October 31, 2014, if equity and underlying indicesother price risk), credit risk, liquidity risk and currency risk.prices had increased or decreased by 1%, with all otherThe Plan’s risk management process includes monitoringvariables held constant, the total investment fund amount ascompliance with the Plan’s investment policy. The Plan manages theper Schedule – I Statement of Investment Portfolio wouldeffects of these financial risks to the Plan’s portfolio performance byhave increased or decreased by approximately $1,761 (2013 –retaining and overseeing professional external investment managers.$288). In practice, actual results may differ materially.The investment managers regularly monitor the Plan’s positions,

market events and manage the investment portfolio within theconstraints of the investment policy and mandate. Credit risk refers to the ability of the issuer of debt securities to

make interest payments and repay principal. The Plan’s portfoliois comprised of bonds issued or guaranteed by federal orprovincial governments along with corporate debt instrumentsInterest rate risk is the risk of a decrease in the Plan’s yield onwith a minimum approved credit rating as set by Canadianinterest-bearing investments as a result of fluctuations inSecurities Administrators. The Group Savings Plan has amarket interest rates. There is an inverse relationship betweenconcentration of investments in government and governmentchanges in interest rates and changes in the fair value ofguaranteed bonds, which are considered to be high creditbonds. This risk is actively managed using duration, yieldquality investments thereby moderating credit risk.curve analysis, sector and credit selection. There is reduced

The Plan’s credit risk exposure is listed below:risk to interest rate changes for cash and cash equivalents dueto their short-term nature. October 31, 2013

The Plan’s holdings of debt instruments by maturity are % of Totalas follows: Investment Amount

Fund (in thousands)

AAA 49% $ 454,677October 31,AA/AAH/AAL 18% 166,8002013A/AH/AL 23% 207,489Less than 1 year (including short-termBBB 1% 6,375investments) 12%R-1 5% 49,1951-3 years 40%Short-term unrated 1% 6,6853-5 years 23%

Greater than 5 years 22%97% $ 891,221

Total debt instruments 78% 97%

The Dominion Bond Rating Service (‘‘DBRS’’) was theAs at October 31, 2014, if prevailing interest rates had primary source for obtaining credit ratings. Secondary sources

increased by 1%, the Total Investment Fund amount of




Note 4. Investment Holdings (continued)

ii. Other price risk

Note 5. Risks Associated with FinancialInstruments

(b) Credit risk

(a) Market riski. Interest rate risk

October 31, 2014% of Total

Investment AmountCredit rating Fund (in thousands)Debt Instruments by Maturity Date % of Total Investment Fund

43% $ 345,484October 31,17% 131,157201417% 137,1571% 10,2895%0% 2,17430%0% 2,35522%

21%Total debt instruments 78% $ 628,616


Receipts and disbursements of the General Fund for the yearsended October 31, 2014 and 2013 are as follows:

2013

(b) Credit risk (continued)Net investment income $ 1,459used include Standard & Poor’s Financial Services LLC and

Moody’s Investors Service, Inc.Education assistance payments (1,459)

Excess of Receipts over Disbursements –Liquidity risk is the risk that the Plan may not be able to meet–its obligations on time. The Plan’s exposure to liquidity risk is

concentrated in principal repayments to subscribers and EAPs $ –to beneficiaries including SCR Entitlements. The Planprimarily invests in securities that are traded in the activemarkets and can be readily sold. The Plan retains sufficient cash Donations from the Foundation represent a discretionary pool ofand cash equivalents positions to meet liquidity requirements by funds shared between the Plans. These funds are used to supplementutilizing cash forecasting models that reflect the maturity EAPs when the General Fund is depleted. The amount is allocateddistribution of subscribers’ deposits and accumulated income. annually between the Plans according to the payout forecast in eachAll other financial liabilities are short-term and due within one of the Plans.year. The Foundation directed a portion of the sales charges Receipts and disbursements in the Donations from thecollected from subscribers to the SCR Fund each year in order Foundation for the years ended October 31, 2014 and 2013 areto pay SCR Entitlements when they become due. Any shortfall as follows:in the assets to meet the SCR Entitlements will be funded by

2013the Foundation (see Note 7(b)).

Contributions received from the Foundation $ –Currency risk is the risk that the value of a financial instrumentwill fluctuate due to changes in foreign exchange rates. The

Education assistance payments (24)Plan holds foreign equity funds as part of the SCR Fund, whichrepresents 2% (2013 – 1%) of the total investment fund. The (Deficit) excess of Receipts over Disbursements (24)Plan’s total investment fund would increase or decrease by 1,256approximately $141 (2013 – $132) in response to a 1%

$ 1,232depreciation or appreciation of the Canadian dollar. In practicethe actual results may differ materially. The Plan’s total portfolioassets and or the Government grants hold ETFs that invest inU.S. equities and are hedged to Canadian dollars by theETF provider

Two separate actuarial valuations are performed for SCREntitlements. First, on an annual basis, a valuation of SCREntitlements is conducted by an external actuary based onmanagement’s best estimates. This valuation is used to estimate the

The Canadian Group Scholarship Savings Plan Trust (the ‘‘Group current funded status for SCR Entitlements. The present value of theTrust’’) is a legal trust, which includes the Group Savings Plan and SCR Entitlements is determined using the expected long-termthe Group Savings Plan 2001 (the ‘‘Plans’’). The Plans are registered investment rates of return based on the investment policy for thewith the Canada Revenue Agency as Education Savings Plans. The SCR Fund as explained in (a) below. Second, an actuarial fundingGeneral Fund is a separate account within the Group Trust and valuation is performed at least every two years to assess the adequacyderives its income from the following sources: of the assets in the SCR Fund and the Foundation’s funding

i. interest earned on subscribers’ accumulated income from the requirements to meet SCR Entitlements in future years. Thisdate of maturity to the date the funds are paid to qualified valuation uses lower than expected long-term investment rates ofstudents as EAPs; return as determined by management to calclate the present value of

ii. interest earned on the income forfeited when a subscriber’s the SCR Entitlements and to project the asset growth of the SCRAgreement is terminated prior to maturity; Fund to ensure that future SCR Entitlements will be fully funded, as

iii. income not collected by beneficiaries before the expiry of the set out in (b) below.benefit period; and

iv. unclaimed principal and income payments.According to the trust indenture, the General Fund may be used The actuarial assumptions used in determining the valuation of

to subsidize EAPs for qualified students to either of the Plans within SCR Entitlements reflect management’s best estimate of futurethe Group Trust. payments to beneficiaries and involve both economic and




Note 5. Risks Associated with FinancialInstruments (continued)

2014

Receipts$ 2,945

Disbursements(1,152)

(c) Liquidity risk1,793

Balance, Beginning of Year –


2014

Receipts(d) Currency risk

$ –Disbursements

–

–Balance, Beginning of Year 1,232


Note 7. Sales Charge Refund EntitlementsValuations

Note 6. General Fund and Donations fromthe Foundation

(a) Management’s Best Estimate Valuation


Investments, at fair value, Cash and cash equivalents and Short-term(a) Management’s Best Estimate Valuation (continued)investments are carried at fair value. The carrying values of othernon-economic assumptions. The non-economic assumptionsfinancial instruments such as Accrued interest and other receivables,include considerations such as termination of Agreements priorReceivables for securities sold, Government grants receivable,to maturity and participation of eligible students in theAccounts payable, accrued liabilities and unclaimed subscribers’collection of EAPs. The primary economic assumption is thefunds, Payables for securities purchased and Subscribers’ depositsdiscount rate, which is set at the expected long-term investmentapproximate their fair values as these financial instruments arerates of return of the SCR Fund at October 31, 2014 of 5.4%short-term in nature.(2013 – 5.9%) based on the investment policy approved by the

Fair value represents the amount at which a financial instrumentBoard of the Foundation. As underlying conditions change overcould be exchanged in an arm’s-length transaction between willingtime, actuarial assumptions may also change, which could causeparties under no compulsion to act and is best evidenced by a quoteda material change in the present value of the SCR Entitlements.bid price in an active market, if one exists.

The funded status of the SCR Entitlements at October 31 was: The following table presents the level in the fair value hierarchyinto which the Plan’s financial instruments that are carried at fair2013value in the Statements of Net Assets Available for Education

Present value of SCR Entitlements $ 60,210 Assistance Payments are categorized:Fair value of SCR Fund1 49,443 i. ‘‘Level 1’’ financial instruments are valued using quoted prices

(unadjusted) in active markets for identical assets or liabilities.Underfunded portion of SCR Entitlements $ 10,767ii. ‘‘Level 2’’ financial instruments are valued using observable

inputs other than quoted prices included in Level 1.1 Average cost of assets in SCR Fund was $44,071 (2013 – $47,517); includes accruediii. ‘‘Level 3’’ financial instruments are valued using unobservableinterest of $208 (2013 – $244) and is net of funds to be transferred to the direct

investment holdings of the Plan of $270 (2013 – $373) for SCR payments made to inputs for the asset or liability.beneficiaries during the year.

A 1% decrease or increase in the discount rate used willLevel 1 Level 2 Level 3increase or decrease the present value of SCR Entitlements by

$979 or $948, respectively (2013 – $1,392 or $1,339, Cash and cashrespectively). equivalents $ 3,264 $ – $ –

Short-term investments – 1,264 –

Fixed income securities – 624,088 –An actuarial valuation was completed based on assets andExchange-traded fundsobligations as at October 31, 2013. This valuation included

and Pooled equityassumptions regarding management’s best estimate offunds 176,154 – –termination of Agreements prior to maturity and participation

of eligible students in the collection of EAPs. The discount rateused to determine the present value of SCR Entitlements wasbased on the expected long-term investment rates of return forCanadian fixed income securities. The discount rate used for

Level 1 Level 2 Level 3the Plan was 5.3%, which resulted in an unfunded liability of$11,000. The Foundation is responsible to pay beneficiaries of Cash and cashthe Plan the refund of sales charges as promised. Funding equivalents $ 31,585 $ – $ –requirements were established by the Foundation to ensure Short-term investments – 24,294 –assets are sufficient to meet future SCR Entitlements using Fixed income securities – 835,342 –lower than expected long-term investment rates of return based

Pooled equity fundson the investment policy approved by the Board of the (SCR Entitlements) 28,306 – –Foundation to project the asset growth of the SCR Fund. Anyshortfall in the assets to meet the SCR Entitlements will befunded by the Foundation.

The next actuarial funding valuation will be performed in For the years ended October 31, 2014 and 2013, there were no2016 based on assets and obligations as at October 31, 2015. transfers between Levels 1, 2 or 3.




Note 7. Sales Charge Refund Entitlements Note 8. Fair Value of FinancialValuations (continued) Instruments

2014

$ 53,51948,189

$ 5,330

Assets Measured at Fair Value as of October 31, 2014

Total

$ 3,2641,264(b) Funding Valuation

624,088

176,154

Total Investment Fund $179,418 $ 625,352 $ – $ 804,770

Assets Measured at Fair Value as of October 31, 2013

Total

$ 31,58524,294

835,342

28,306

Total Investment Fund $59,891 $ 859,636 $ – $ 919,527


Province of British Columbia (continued)Government of Canada3.30% 18 Dec 2023 17,850 18,749 18,5023.00% 1 Dec 2015 6,640 6,781 6,8155.70 18 Jun 2029 1,700 2,203 2,1951.25 1 Feb 2016 1,230 1,234 1,2346.35 18 Jun 2031 3,900 5,440 5,4111.50 1 Feb 2017 1,175 1,186 1,1864.70 18 Jun 2037 4,920 5,905 6,0171.47 15 Mar 2017 11,376 11,470 11,4844.30 18 Jun 2042 15,980 18,437 18,3841.50 1 Sep 2017 14,918 15,055 15,0083.20 18 Jun 2044 12,500 11,980 11,9461.77 1 Mar 2018 887 728 737

2.05 15 Jun 2018 26,409 26,844 26,667 Province of Manitoba1.25 1 Sep 2018 3,624 3,607 3,512 1.85 5 Sep 2018 2,208 2,220 2,1991.75 1 Mar 2019 15,455 15,643 15,533 5.50 15 Nov 2018 1,000 1,145 1,1541.75 1 Jul 2019 2,567 2,517 2,518 1.39 2 Apr 2019 3,853 3,861 3,8583.55 1 Sep 2019 5,542 4,636 4,289 3.85 1 Dec 2021 4,700 5,127 5,1111.75 1 Sep 2019 135 136 136 4.40 5 Sep 2025 2,800 3,158 3,1482.75 1 Jun 2022 2,500 2,660 2,643 4.10 5 Mar 2041 2,900 3,175 3,1631.50 1 Jun 2023 3,400 3,279 3,221

Province of New Brunswick2.50 1 Jun 2024 8,030 8,343 8,1064.50 4 Feb 2015 430 434 4395.75 1 Jun 2033 700 1,041 9874.45 26 Mar 2018 7,255 7,929 7,8955.00 1 Jun 2037 11,910 16,877 15,9494.40 3 Jun 2019 20,640 22,849 22,9414.00 1 Jun 2041 6,882 8,736 8,2792.85 2 Jun 2023 8,850 8,877 8,677

Canada Housing Trust 3.65 3 Jun 2024 6,680 7,066 7,0042.45 15 Dec 2015 5,700 5,786 5,805 6.47 30 Nov 2027 6,396 7,784 7,9342.75 15 Jun 2016 46,791 48,001 48,159 5.65 27 Dec 2028 1,195 1,504 1,4661.32 15 Sep 2016 38,278 38,433 38,467 5.50 27 Jan 2034 13,900 17,608 16,3541.85 15 Dec 2016 13,700 13,887 13,882 4.65 26 Sep 2035 710 818 7392.05 15 Jun 2017 14,390 14,656 14,732

Province of Newfoundland and Labrador1.33 15 Mar 2018 19,753 19,867 19,8763.83 1 Jun 2037 4,000 4,487 4,4141.75 15 Jun 2018 1,220 1,227 1,227

2.00 15 Dec 2019 8,659 8,701 8,645 Province of Nova Scotia3.75 15 Mar 2020 4,130 4,507 4,516 4.60 18 Aug 2016 1,055 1,118 1,1323.80 15 Jun 2021 130 143 144 5.80 1 Jun 2033 1,775 2,334 2,1602.65 15 Mar 2022 3,002 3,083 3,069 4.40 1 Jun 2042 1,600 1,822 1,813

289,064 286,826 Province of Ontario4.40 8 Mar 2016 9,905 10,332 10,4153.20 8 Sep 2016 6,840 7,088 7,024Alberta Capital Finance4.30 8 Mar 2017 8,715 9,308 8,8914.45 15 Dec 2025 1,500 1,705 1,7121.90 8 Sep 2017 9,560 9,669 9,597

Province of Alberta 4.20 8 Mar 2018 9,996 10,828 10,8991.38 27 May 2016 16,243 16,303 16,292 4.40 2 Jun 2019 6,370 7,049 6,8994.00 1 Dec 2019 155 170 171 4.20 2 Jun 2020 8,265 9,138 8,9052.55 15 Dec 2022 3,977 3,985 3,970 4.00 2 Jun 2021 5,765 6,323 6,1803.90 1 Dec 2033 3,300 3,575 3,548 3.15 2 Jun 2022 11,158 11,575 11,5243.45 1 Dec 2043 685 691 687 2.85 2 Jun 2023 8,990 9,038 8,761

3.50 2 Jun 2024 4,890 5,129 5,053Province of British Columbia7.60 2 Jun 2027 2,545 3,715 3,6554.70 1 Dec 2017 22,380 24,544 24,7076.20% 2 Jun 2031 6,500 8,807 8,7463.70 18 Dec 2020 3,200 3,483 3,4755.60 2 Jun 2035 2,195 2,862 2,509



Government GrantsAppendix I to Schedule IStatement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)


Bonds Bonds (continued)Federal – 27.9% Municipal and Provincial – 45.2% (continued)

Municipal and Provincial – 45.2%


Province of Ontario (continued) Kreditanstalt Fur Wideraufbau Global4.70 2 Jun 2037 6,210 7,307 7,012 5.05 4 Feb 2025 346 404 4114.60 2 Jun 2039 4,540 5,298 5,249

Maritimes and Northeast Pipelines4.65 2 Jun 2041 10,170 12,039 11,998

4.34 30 Nov 2019 3,565 3,690 3,685Province of Quebec 6.90 30 Nov 2019 910 1,014 1,0275.00 1 Dec 2015 27,140 28,254 29,276

Metropolitan Life Global Funding4.50 1 Dec 2016 4,170 4,446 4,524

3.03 11 Jun 2020 2,692 2,740 2,7584.50 1 Dec 2017 9,171 9,981 10,076

2.68 16 Apr 2019 3,316 3,390 3,3394.50 1 Dec 2019 26,580 29,647 29,3374.50 1 Dec 2020 6,760 7,599 7,144 Milit-Air Inc.4.25 1 Dec 2021 4,961 5,514 5,483 5.75 30 Jun 2019 2,678 2,904 2,9343.75 1 Sep 2024 7,000 7,444 7,431

Morgan Stanley6.25 1 Jun 2032 5,603 7,605 7,563

3.13 5 Aug 2021 3,010 2,985 3,0005.75 1 Dec 2036 1,690 2,232 1,974

NAV Canada5.00 1 Dec 2038 2,940 3,569 3,0457.56 1 Mar 2027 3,731 4,752 4,6965.00 1 Dec 2041 3,019 3,708 3,696

North Battleford PowerProvince of Saskatchewan4.96 31 Dec 2032 903 999 9033.20 3 Jun 2024 80 83 83

6.40 5 Sep 2031 2,400 3,372 3,351Ontrea Inc.4.62 9 Apr 2018 2,030 2,053 2,081469,445 464,918

Ornge Issuer Trust5.73 11 Jun 2034 3,513 3,967 3,989Arrow Lakes Power Corp

5.52 5 Apr 2041 847 973 847Pearson International Fuel Facilities Corporation5.09 9 Mar 2032 2,287 2,420 2,451BAA Funding LT

4.00 3 Jul 2019 42 45 45Public Sector Pension Investment Board3.27 12 Jun 2020 2,897 2,931 2,897Bankers Hall LP

4.38 20 Nov 2023 2,574 2,682 2,574Shaw Communications Inc.6.75 9 Nov 2039 1,525 1,852 1,869CBC Monetization Trust

4.69 15 May 2027 4,220 4,791 4,557SP1 LP3.21 15 Jun 2019 3,026 2,927 2,902Cogeco Cable Inc.

4.18 26 May 2023 1,469 1,509 1,528Toronto Dominion Bank3.23 24 Jul 2024 4,745 4,788 4,745CSS Partnership

6.915 31 Jul 2042 2,215 2,853 2,835Toronto Hospital5.64 8 Dec 2022 6,865 7,757 7,870ETR International Inc.

6.75 27 Jul 2039 1,304 1,684 1,588TransCanada Pipelines8.05 17 Feb 2039 1,553 2,382 2,492GE Capital Canada11.80 20 Nov 2020 1,994 2,961 3,0331.62 15 Feb 2022 1,966 1,932 1,803

2.47 6 Feb 2023 3,071 3,183 3,071University of Ontario Infrastructure6.35% 15 Oct 2034 208 242 240Greater Toronto Airport Authority

6.45% 30 Jul 2029 2,233 2,783 2,745WTH Car Rental4.14 20 Mar 2015 2 2 2



Government Grants (continued)

Appendix I to Schedule IStatement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)


Bonds (continued) Bonds (continued)Municipal and Provincial – 45.2% (continued) Corporate – 8.0% (continued)

Corporate – 8.0%


WTH Car Rental (continued)2.54 20 Aug 2019 2,960 2,964 2,960

82,559 81,877

841,068 833,621

BMO S&P 500 Hedged 2,257 70,109 68,564to CAD Index ETFBMO S&P/TSX Capped 1,323 26,125 27,024Composite Index ETFISHARES CORE 2,932 68,337 66,323S&P 500 Hedged toCAD Index ETFISHARES CORE 1,215 28,102 29,082S&P/TSX CappedComposite Index ETF

192,673 190,993

1,033,741 1,024,614

4,055 4,055

1,037,796 1,028,669

Plan II 1,725 1,709Founders’ Plan 29,361 29,058Group Savings Plan 186,353 184,542Group Savings Plan 2001 749,711 743,295Family Savings Plan 63,923 63,365Individual Savings Plan 2,668 2,645

1,033,741 1,024,614

Plan II 8 8Founders’ Plan 115 115Group Savings Plan 730 730Group Savings Plan 2001 2,941 2,941Family Savings Plan 251 251Individual Savings Plan 10 10

4,055 4,055



Government Grants (continued)

Appendix I to Schedule IStatement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)

Fair AverageSecurity Par Value ($) Value ($) Cost ($)

Bonds (continued)Corporate – 8.0% (continued)

Total Fixed Income Investments – 81.1%

Exchange-traded Funds


Total Investments – 99.6%



Government Grant Investments Allocation

Cash and Short-term Investments Allocation


Maritimes and Northeast PipelinesCanada Government4.34% 30 Nov 2019 1,421 1,471 1,4641.56% 1 Mar 2015 950 316 3136.90 30 Nov 2019 103 115 1164.45 1 Dec 2017 151 127 128

1.77 1 Mar 2018 217 178 180 McCain Finance1.80 1 Jun 2019 524 515 514 3.87 7 Feb 2023 737 770 7371.75 1 Jul 2019 481 472 472

Merrill Lynch Financial Assets1,608 1,607 4.62 12 Nov 2015 179 172 142

4.64 12 Oct 2016 285 152 154

Province of New Brunswick Metropolitan Life Global Funding6.47 30 Nov 2027 563 685 684 3.03 11 Jun 2020 859 874 880

2.68 16 Apr 2019 2,533 2,561 2,572685 684

Milit-Air Inc.

5.75 30 Jun 2019 1,332 1,444 1,467407 International Inc.

7.13 26 Jul 2040 1,033 1,505 1,259 Morgan Stanley

3.13 5 Aug 2021 1,375 1,364 1,371Bankers Hall LP

4.38 20 Nov 2023 539 561 539 NAV Canada

7.56 1 Mar 2027 2,150 2,738 2,702Blue Water Bridge Authority7.40 1 Jun 2027 107 150 1496.41 9 Jul 2027 1,246 885 993

North Battleford PowerCanadian Pacific Railway4.96 31 Dec 2032 153 170 1596.91 1 Oct 2024 643 505 520

Nova Gas TransmissionCogeco Cable Inc.9.90 16 Dec 2024 109 165 1674.18 26 May 2023 1,483 1,523 1,477

Ontrea Inc.GE Capital Canada4.62 9 Apr 2018 805 814 8161.63 15 Feb 2022 1,947 1,913 1,786

2.47 6 Feb 2023 807 836 807 Ornge Issuer Trust

5.73 11 Jun 2034 1,939 2,189 2,236Greater Toronto Airport Authority

6.45 30 Jul 2029 1,420 1,770 1,727 Public Sector Pension Investment Board

3.27 12 Jun 2020 1,529 1,547 1,529Honda Canada Finance Inc

1.92 3 Dec 2018 1,659 1,675 1,659 Royal Bank Scotland

5.88 12 May 2016 176 185 187INPower BC Group

4.47 31 Mar 2033 535 556 532 Schooner Trust

5.19 12 May 2017 185 204 155Kreditanstalt Fur Wideraufbau Global5.19 12 Jun 2022 28 11 85.05 4 Feb 2025 178 208 211

Shaw Communications Inc.Loblaw Companies6.75 9 Nov 2039 1,892 2,298 1,8366.50 22 Jan 2029 920 1,104 930

5.90 18 Jan 2036 183 209 165

6.45 9 Feb 2028 260 310 293



Sales Charge Refund EntitlementsAppendix II to Schedule IStatement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)

Agreements Purchased prior to October 2, 2007

Par Fair Average Par Fair AverageSecurity Value ($) Value ($) Cost ($) Security Value ($) Value ($) Cost ($)

Bonds Bonds (continued)Federal – 1.2% Corporate – 34.2% (continued)

Provincial – 0.5%

Corporate – 34.2%


SRA Canadian Equity Fund 2,797 44,837 41,923SNC Lavalin Group SRA US Equity Fund 1,856 20,047 14,0826.19% 3 Jul 2019 2,051 2,348 2,330 SRA International 1,734 17,465 15,775

Equity FundSP1 LP

82,349 71,7803.21 15 Jun 2019 1,373 1,328 1,317

129,025 117,131St. Clair Holding

4.88 31 Aug 2031 450 414 450 750 750

Strait Crossing Dev Inc. 129,775 117,8816.17 15 Sep 2031 451 395 382

Toronto Dominion BankGroup Savings Plan 47,970 43,8523.23 24 Jul 2024 195 197 195Group Savings Plan 2001 81,055 73,279

Toronto Hospital129,025 117,1315.64 8 Dec 2022 2,186 2,470 2,493

TransCanada Pipelines

11.80 20 Nov 2020 172 255 260 Group Savings Plan 281 281

Group Savings Plan 2001 469 469University of Ontario Infrastructure

6.35 15 Oct 2034 1,279 1,488 1,358 750 750

WTH Car Rental

2.54 20 Aug 2019 2,530 2,534 2,530

44,383 43,060

46,676 45,351



Sales Charge Refund Entitlements (continued)

Appendix II to Schedule IStatement of Investment PortfolioAs at October 31, 2014 (in thousands of dollars)

Agreements Purchased prior to October 2, 2007 (continued)

Par Fair Average Par Fair AverageSecurity Value ($) Value ($) Cost ($) Security Value ($) Value ($) Cost ($)

Pooled Equity FundsBonds (continued)Corporate – 34.2% (continued)


Total Investments – 99.4%



Total Investments Allocation

Cash and Short-term Investments Allocation

Total Fixed Investments – 35.9%


Canadian Scholarship Trust Plan

Sponsor Canadian Scholarship Trust Foundation 2235 Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B8 1.877.333.RESP (7377)

Investment Fund Manager and Distributor C.S.T. Consultants Inc. 2235 Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B8

Trustee RBC Investor Services Trust 155 Wellington Street West, 2nd Floor Toronto, Ontario M5V 3L3

Auditor Deloitte LLP Brookfield Place 181 Bay Street, Suite 1400 Toronto, Ontario M5J 2V1

Bank Royal Bank of Canada Royal Bank Plaza South Tower 200 Bay Street, 10th Floor Toronto, Ontario M5J 2J5

For updates on your Plan account, login to Online Services at www.cst.org In Quebec, Canadian Scholarship Trust Plan is distributed by C.S.T. Consultants Inc. Scholarship Plan Brokerage Firm.

October 31, 2014 and 2013

C.S.T. Consultants Inc.

F.P.O

Canadian Scholarship Trust

Group Savings Plan Audited Financial Statements andManagement Report of Fund Performance

2003 P4-E (2014-12)

CST Financl_Stmnt_Cvr_ENG_Final_01_09_13.indd 9 2014-12-10 12:58 PM

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