INTERIM FINANCIAL STATEMENTS

Transcription

1 INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2014

2 Interim Financial Statements (UNAUDITED) Notice The following Desjardins Funds Interim Financial Statements have not been subject to a review by the Funds external auditors.

3 Desjardins Global Real Estate Fund Statement of Net Assets As at March (Unaudited) September (Audited) Assets Cash 2,669,173 2,761,510 Investments at fair value 66,467, ,466,436 Subscriptions receivable 66,474 9,815 Receivable for investments sold 120, ,397 Interest, dividends and other receivables 339, ,489 69,663, ,042,647 Liabilities Accrued expenses 2,520 2,831 Redemptions payable 92,646 Payable for investments purchased 354, , , ,461 Net Assets and Unitholders Equity 69,213, ,166,186 Data per Class (Notes b and c) A-Class Net assets and unitholders equity 4,325,166 4,636,151 Net assets per unit T-Class Net assets and unitholders equity 601, ,394 Net assets per unit I-Class Net assets and unitholders equity 64,177, ,908,641 Net assets per unit C-Class Net assets and unitholders equity 29,904 Net assets per unit R-Class Net assets and unitholders equity 77,344 Net assets per unit F-Class Net assets and unitholders equity 1,079 Net assets per unit S-Class Net assets and unitholders equity 1,079 Net assets per unit Approved on behalf of the Board of Directors of Desjardins Investments Inc. Manager of the Desjardins Funds Alain Thauvette and Vincent P. Hogue, Directors STATEMENT OF OPERATIONS (Unaudited) Six-month Periods Ended March Income Interest 59, ,629 Dividends 1,280,958 2,875,804 1,340,896 2,976,433 Expenses Management fees 69,716 64,657 Audit fees 7,742 6,714 Independent Review Committee s fees 9 10 Custodian fees 58,239 71,114 Legal fees Unitholders reporting costs Filing fees 8,240 8,301 Administrative fees 27,871 28, , ,273 Expenses absorbed by the Manager (95,882) (108,588) 76,212 70,685 Net Investment Income (Loss) 1,264,684 2,905,748 Gains (Losses) on Investments and Portfolio Transaction Costs Net realized gain (loss) 33,215,025 6,232,340 Net unrealized gain (loss) (21,055,440) 23,190,792 Commissions and other portfolio transaction costs (139,075) (138,606) 12,020,510 29,284,526 Increase (Decrease) in Net Assets from Operations 13,285,194 32,190,274 Data per Class A-Class Increase (decrease) in net assets from operations 435, ,594 per unit T-Class Increase (decrease) in net assets from operations 57,504 90,761 per unit I-Class Increase (decrease) in net assets from operations 12,789,661 31,555,919 per unit C-Class* Increase (decrease) in net assets from operations (76) per unit (0.13) R-Class* Increase (decrease) in net assets from operations 2,317 per unit 0.74 F-Class* Increase (decrease) in net assets from operations 79 per unit 0.79 S-Class* Increase (decrease) in net assets from operations 79 per unit 0.78 * Beginning of operations in November The accompanying Notes are an integral part of these financial statements.

4 Desjardins Global Real Estate Fund Statement of Changes in Net Assets (Unaudited) Six-month Periods Ended March (6 months) (6 months) (6 months) (6 months) (6 months) (6 months) A-Class T-Class I-Class Net Assets, Beginning of Period 4,636,151 4,039, , , ,908, ,990,485 Increase (Decrease) in Net Assets from Operations 435, ,594 57,504 90,761 12,789,661 31,555,919 Unit Transactions Proceeds from sale of units 301,554 1,200,427 7,667 74,612 4,559,087 6,655,735 Reinvested distributions 19,165 3,871,258 6,792,630 Amounts paid for units redeemed (1,048,169) (970,829) (66,060) (94,689) (171,079,879) (7,200,844) (746,615) 248,763 (58,393) (20,077) (162,649,534) 6,247,521 Distributions to Unitholders Net investment income (19,165) (75) (114) (3,871,258) (6,792,630) Return of capital (18,994) (16,918) (19,165) (19,069) (17,032) (3,871,258) (6,792,630) Net Assets, End of Period 4,325,166 4,812, , ,040 64,177, ,001,295 Six-month Periods Ended March * 2014* 2014* 2014* (5 months) (5 months) (5 months) (5 months) C-Class R-Class F-Class S-Class Net Assets, Beginning of Period Increase (Decrease) in Net Assets from Operations (76) 2, Unit Transactions Proceeds from sale of units 31,080 76,000 1,000 1,000 Reinvested distributions Amounts paid for units redeemed (1,100) 29,980 76,027 1,000 1,027 Distributions to Unitholders Net investment income (148) (8) Return of capital (852) (19) (1,000) (27) Net Assets, End of Period 29,904 77,344 1,079 1,079 * Beginning of operations in November The accompanying Notes are an integral part of these financial statements.

5 Desjardins Global Real Estate Fund STATEMENT OF INVESTMENT PORTFOLIO (UNAUDITED) AS AT MARCH 31, 2014 Number Fair of Shares Cost Value Equities (96.0%) Canadian Equities (1.7%) Financials Boardwalk Real Estate Investment Trust 5, , ,484 Canadian Real Estate Investment Trust 6, , ,622 RioCan Real Estate Investment Trust 20, , ,938 Total Canadian Equities 959,498 1,147,044 U.S. Equities (50.1%) Consumer Discretionary (1.6%) Extended Stay America 4, , ,699 Hilton Worldwide Holdings 24, , ,640 Starwood Hotels & Resorts Worldwide 5, , , ,100 1,149,249 Financials (48.5%) American Homes 4 Rent 7, , ,356 AvalonBay Communities 7, ,730 1,074,723 BioMed Realty Trust 24, , ,543 Boston Properties 8, ,775 1,025,471 Brandywine Realty Trust 25, , ,755 BRE Properties 9, , ,335 Brixmor Property Group REIT 15, , ,685 DCT Industrial Trust 38, , ,771 DDR Corp. 45, , ,862 Douglas Emmett 19, , ,958 Duke Realty Corporation 39, , ,993 Equity Residential 29,071 1,696,596 1,863,347 Essex Property Trust 3, , ,591 Federal Realty Investment Trust 1, , ,810 General Growth Properties 54, ,933 1,329,443 HCP 8, , ,054 Health Care REIT 21,947 1,275,140 1,445,538 Healthcare Realty Trust 18, , ,829 Healthcare Trust of America, Class A 22, , ,981 Highwoods Properties 10, , ,925 Host Hotels & Resorts 87,000 1,201,597 1,945,343 Kilroy Realty Corporation 16, ,604 1,055,222 Kimco Realty Corporation 31, , ,031 Lexington Realty Trust 35, , ,677 Liberty Property Trust 19, , ,443 Macerich Company 13, , ,033 Pebblebrook Hotel Trust 10, , ,924 Post Properties 10, , ,795 ProLogis 39,852 1,289,506 1,798,500 Public Storage 4, , ,378 Ramco-Gershenson Properties Trust 11, , ,594 Realty Income Corporation 4, , ,748 Senior Housing Properties Trust 12, , ,244 Simon Property Group 15,081 1,581,086 2,733,893 SL Green Realty Corp. 12, ,571 1,437,460 Spirit Realty Capital 51, , ,446 Strategic Hotels & Resorts 34, , ,193 Sunstone Hotel Investors 22, , ,008 Tanger Factory Outlet Centers 7, , ,832 Taubman Centers 6, , ,622 UDR 40,200 1,007,905 1,147,264 Ventas 3, , ,055 Vornado Realty Trust 14,993 1,259,644 1,633,316 Weyerhaeuser Company 7, , ,793 25,759,315 33,582,784 Total U.S. Equities 26,703,415 34,732,033 Foreign Equities (44.2%) Australia (5.9%) Australand Property Group 49, , ,609 DEXUS Property Group 125, , ,598 Federation Centres REIT, Units 186, , ,901 Goodman Group 161, , ,303 Investa Office Fund 107, , ,697 Mirvac Group 511, , ,182 Stockland 181, , ,827 Westfield Group 40, , ,232 Westfield Retail Trust 55, , ,131 3,617,132 4,116,480 Number Fair of Shares Cost Value Bermuda (1.1%) Hongkong Land Holdings 106, , ,867 France (5.4%) Foncière des Régions 2, , ,948 Gecina 2, , ,302 ICADE 2, , ,836 Klepierre 18, , ,508 Mercialys 5, , ,167 Unibail-Rodamco (Union du Crédit-Bail Immobilier) 6,722 1,516,581 1,929,403 3,023,085 3,769,164 Germany (0.9%) LEG Immobilien 8, , ,963 Hong Kong (4.1%) China Overseas Land & Investment 103, , ,700 Link Real Estate Investment Trust 65, , ,493 Sino Land Company 85, , ,979 Sun Hung Kai Properties 68, , ,843 Swire Properties 161, , ,861 Wharf Holdings 87, , ,668 2,688,563 2,840,544 Japan (14.2%) Activia Properties , ,960 GLP, Units 64 68,724 70,938 Hulic Co. 28, , ,037 Japan Real Estate Investment Corporation , ,722 Japan Retail Fund Investment Corporation , ,488 Kenedix Realty Investment Corporation , ,431 Mitsubishi Estate Company 68,835 1,482,606 1,802,922 Mitsui Fudosan Co. 66,700 1,160,947 2,248,701 Nippon Building Fund 8 52,739 46,182 Nippon Prologis REIT , ,581 ORIX JREIT , ,260 Sumitomo Realty & Development Co. 32,770 1,078,716 1,421,257 Tokyo Tatemono 29, , ,920 UNITED URBAN INVESTMENT CORP , ,843 7,378,654 9,802,242 Netherlands (1.3%) Corio 2, , ,937 Eurocommercial Properties 5, , ,736 Nieuwe Steen Investments, Units 66, , , , ,132 Singapore (2.7%) CapitaCommercial Trust 428, , ,817 CapitaMalls Asia 200, , ,965 Global Logistic Properties 341, , ,661 Suntec REIT 164, , ,389 1,576,946 1,901,832 Sweden (0.9%) Castellum 18, , ,462 Fabege 4,700 66,636 67,673 Hufvudstaden 12, , , , ,886 Switzerland (0.7%) PSP Swiss Property 4, , ,659 United Kingdom (7.0%) British Land Company 70, , ,746 Derwent London 14, , ,282 Great Portland Estates 53, , ,463 Hammerson 71, , ,184 Land Securities Group 86,118 1,160,295 1,620,496 Safestore Holdings 56, , ,749 Unite Group 12,358 94,772 98,734 3,175,614 4,866,654 Total Foreign Equities 24,190,117 30,588,423 Total Equities 51,853,030 66,467,500 Portfolio Transaction Costs Included in the Securities Cost (10,991) Total Investments (96.0%) 51,842,039 66,467,500 Other Net Assets (4.0%) 2,746,018 Net Assets (100%) 69,213,518 The accompanying Notes are an integral part of these financial statements.

6 Desjardins Global Real Estate Fund NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION PERTAINING TO THE Desjardins Global Real Estate Fund (unaudited) a) Establishment of the Fund The Desjardins Global Real Estate Fund (the Fund ) is an unincorporated mutual fund trust established on the following dates: Desjardins Fund (A-Class) Global Real Estate January 17, 2007 Desjardins Fund (T-Class) Global Real Estate January 17, 2007 Desjardins Fund (I-Class) Global Real Estate January 17, 2007 Desjardins Fund (C-Class) Global Real Estate November 25, 2013 Desjardins Fund (R-Class) Global Real Estate November 25, 2013 Desjardins Fund (F-Class) Global Real Estate November 25, 2013 Desjardins Fund (S-Class) Global Real Estate November 25, 2013 The initial net asset value of C-, R-, F- and S-Class units stood at when they were created. b) Reconciliation of Net Assets per Unit as per the Financial Statements with Net Asset Value per Unit for Purposes Other than the Financial Statements The reconciliation is presented below. Net Asset Value per Unit Net Assets per Unit per the Financial Statements for Purposes Other than the Financial Statements A-Class March 31, September 30, T-Class March 31, September 30, I-Class March 31, September 30, C-Class March 31, R-Class March 31, F-Class March 31, S-Class March 31, c) Units (Note 2) Unitholders Equity The unitholders equity of the Fund is composed of: Authorized units An unlimited number of A-Class units, intended for all investors. An unlimited number of T-Class units, designed for investors seeking additional income on a fixed and monthly basis, and that are not eligible for tax deferral plans. An unlimited number of I-Class units, aimed at institutional or high net worth investors who negotiate and pay management fees directly to the Manager. An unlimited number of C-Class units, designed for investors who purchase units on a Initial sales charge, Deferred sales charge or Low load sales charge option basis. Offered only if the investor s dealer has reached a security agreement with the Manager. An unlimited number of R-Class units, designed for investors who purchase units on a Initial sales charge, Deferred sales charge or Low load sales charge option basis, and seeking additional tax advantaged income to complement their income from other sources, and that are not eligible for tax deferral plans. Offered only if the investor s dealer has reached a security agreement with the Manager. An unlimited number of F-Class units, designed for investors who negotiate annual fees with their dealer and pay management fees directly to the Manager and where the dealer does not receive trailing commissions from the Manager. Offered only if the investor s dealer has reached a security agreement with the Manager. An unlimited number of S-Class units, designed for investors who negotiate annual fees with their dealer and pay management fees directly to the Manager and where the dealer does not receive trailing commissions from the Manager and seeking additional tax advantaged income to complement their income from other sources, and that are not eligible for tax deferral plans. Offered only if the investor s dealer has reached a security agreement with the Manager. Issued and outstanding units As at March 31 Number of Units, Beginning of Period Units Issued Reinvested Units Units Redeemed Number of Units, End of Period A-Class ,956 43, , , , ,106 3, , ,083 T-Class ,935 1,643 14, , ,558 16,609 21, ,738 I-Class ,275, , ,802 24,799,176 8,686, ,305,891 1,035,567 1,098,954 1,108,437 35,331,975 C-Class , ,785 R-Class , ,393 F-Class S-Class

7 Desjardins Global Real Estate Fund NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION PERTAINING TO THE Desjardins Global Real Estate Fund (unaudited) (continued) d) Distributions Net investment income of the Fund is distributed in cash or reinvested in additional units, as follows: A-Class annually T-Class monthly I-Class annually C-Class annually R-Class monthly F-Class annually S-Class monthly Any net capital gains realized are distributed annually in December (A-Class, I-Class, C-Class and F-Class). Return of capital, if any, is made in monthly cash distributions (T-Class, R-Class and S-Class). e) Management Fees and Other Expenses (Note 3) The Manager is authorized to charge operating expenses to the Fund, subject, however, to a management expense ratio cap (MER Cap). This ratio is broken down as follows: Desjardins Fund Management Fees 2014 annual rate % Operating Expenses MER Cap Global Real Estate (A-, T-, C- and R-Class) Global Real Estate (F-Class and S-Class) I-Class units pay reduced management and operating fees which are negociated directly with each investor. f) Related Party Transactions (Note 4) Desjardins Global Asset Management Inc. ( DGAM ) is the portfolio manager of the Fund. DGAM is an entity belonging to the same group as the Manager. DGAM s fees are entirely paid by the Manager. As at March 31, 2014, accrued expenses payable to the Manager are 2,520 (2,831 as at September 30, 2013). g) Information on Financial Instruments (Note 5) Strategy in Using Financial Instruments Investment Objective The objective of this Fund is to achieve long-term capital appreciation. This Fund consists primarily of equity securities of companies and units of real estate income trusts (REITs) that are based anywhere in the world and are involved in real estate. Financial Instruments Fair Value Measurement Classification of Financial Instruments at Fair Value Measurement The following tables categorize the Fund s financial assets fair value measurement according to a three-level hierarchy. The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. The fair value measurement is described in the Valuation of Instruments section of Note 1. Investment Fair Value Measurement at the End of the Period, within the Following Levels: As at March 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets Held for Trading Equities 66,467,500 66,467,500 Total 66,467,500 66,467,500 As at September 30, 2013 Level 1 Level 2 Level 3 Total Financial Assets Held for Trading Equities 220,466, ,466,436 Total 220,466, ,466,436 Transfers between Levels 1 and 2 During the periods ended March 31, 2014 and September 30, 2013, there were no transfers of securities between Levels 1 and 2. Financial Instruments Risks Currency Risk The following tables summarize the Fund s exposure to currency risk: As at March 31, 2014 Financial Financial Assets Held for Trading Other Assets Liabilities Held for Trading Other Liabilities Australian Dollar 4,116,480 Euro 5,257,476 Hong Kong Dollar 2,840,544 15,598 Japanese Yen 9,802,242 47,871 Pound Sterling 4,866,654 33,167 Singapore Dollar 1,901,832 2,717 Swedish Krona 624,205 2,046 Swiss Franc 449,659 U.S. Dollar 36,362, ,681 As at September 30, 2013 Financial Financial Assets Held for Trading Other Assets Liabilities Held for Trading Other Liabilities Australian Dollar 16,118,795 Euro 15,615,947 Hong Kong Dollar 15,240,604 39,381 Japanese Yen 38,899, ,978 Pound Sterling 12,903,394 64,779 Singapore Dollar 7,790,100 Swedish Krona 1,763,686 Swiss Franc 1,355,681 U.S. Dollar 107,164, ,264 As at March 31, 2014, had the Canadian dollar strengthened or weakened by 3% in relation to the following foreign currencies, with all other variables held constant, net assets would have decreased or increased by: As at March 31, 2014 Impact on Net Assets Australian Dollar 123,494 Euro 157,724 Japanese Yen 295,503 Pound Sterling 146,995 U.S. Dollar 1,094,485 As at March 31, 2014, had the Canadian dollar strengthened or weakened by 3% in relation to the other foreign currencies, with all other variables held constant, the impact on net assets would not have been significant.

8 Desjardins Global Real Estate Fund NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION PERTAINING TO THE Desjardins Global Real Estate Fund (unaudited) (continued) As at September 30, 2013, had the Canadian dollar strengthened or weakened by 3% in relation to the following foreign currencies, with all other variables held constant, net assets would have decreased or increased by: As at September 30, 2013 Impact on Net Assets Australian Dollar 483,564 Euro 468,478 Hong Kong Dollar 458,400 Japanese Yen 1,171,584 Pound Sterling 389,045 U.S. Dollar 3,223,872 As at September 30, 2013, had the Canadian dollar strengthened or weakened by 3% in relation to the other foreign currencies, with all other variables held constant, the impact on net assets would not have been significant. In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Interest Rate Risk As at March 31, 2014 and September 30, 2013, the majority of the Fund s financial assets and liabilities are non-interest bearing. As a result, the Fund is not subject to significant amounts of risk arising from fluctuations in the prevailing levels of market interest rates. Price Risk The Fund trades in financial instruments, taking positions in traded and over-the-counter instruments. As at March 31, 2014 and September 30, 2013, the Manager s estimate of the impact on net assets as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensibility of a security/fund in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following tables. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. As at March 31, 2014 Change in Price Impact on Net Assets Benchmark % FTSE EPRA/NAREIT Developed +/ /-2,090,920 As at September 30, 2013 Change in Price Impact on Net Assets Benchmark % FTSE EPRA/NAREIT Developed +/ /-6,801,217 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Liquidity Risk The Fund may invest in over-the-counter derivative financial instruments which are not traded in an organized market and may be illiquid. As a result, the Fund may not be able to liquidate them quickly at an amount close to their fair value to meet its liquidity requirements or to respond to specific events such as deterioration in the creditworthiness of any particular issuer. The following tables analyze the Fund s financial liabilities by relevant maturity groupings based on the remaining contractual period at the Statement of Net Assets date. The amounts in the tables are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. As at March 31, 2014 Less than 1 Month 1 to 3 Months No Stated Maturity Payable for investments purchased 354,419 Accrued expenses 2,520 Other liabilities 92,646 Total Liabilities 449,585 As at September 30, 2013 Less than 1 Month 1 to 3 Months No Stated Maturity Payable for investments purchased 873,630 Accrued expenses 2,831 Total Liabilities 876,461 h) Income Tax and Capital Gains Tax (Note 6) Capital and non-capital losses determined for tax purposes as at December 15, 2013 are as follows: Capital Losses Non-Capital Losses Amount Amount Anniversary Desjardins Fund Global Real Estate 38,689,769 i) Seed Capital At the end of the period, the Manager had the following seed capital investments: Percentage Seed Capital Ownership % March 31, , Credit Risk As at March 31, 2014 and September 30, 2013, the Fund had no significant investments in either fixed-income securities, money market securities and derivative financial instruments. As a result, the Fund is not significantly exposed to credit risk.

9 Notes to the Financial Statements (UNAUDITED) Six-month Periods Ended March 31, 2014 and Significant Accounting Policies These financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles ( GAAP ) and are expressed in Canadian dollars. The significant accounting policies followed by the Funds are summarized below. Use of Estimates The preparation of the financial statements requires the Manager to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are made based on information available as at the date of issuance of the financial statements. Actual results could materially differ from those estimates. Valuation of Instruments GAAP requires the fair value of financial instruments traded in an active market to be measured based on an investment s bid/ask price depending on the investment position. For the purpose of processing unitholders or shareholders transactions, net asset value is calculated based on the closing market price of investments ( Net Asset Value ), while for financial statement purposes net assets are calculated based on bid/ask price of investments ( Net Assets ). In accordance with National Instrument , a comparison between the Net Asset Value per unit or share and the Net Assets per unit or share is disclosed in the Reconciliation of Net Assets per Unit or Share per the Financial Statements with Net Asset Value per Unit or Share for Purposes Other than the Financial Statements in the section Notes to the Financial Statements Specific Information pertaining to each Fund, except for the funds of funds. Investments and derivative financial instruments are deemed to be categorized as held for trading and, accordingly, are required to be recorded at fair value, which is determined as follows: Money Market Securities Money market securities are recorded at the bid price. Equity Securities Equity securities are recorded at the bid price of the accredited stock exchange on which the corresponding security is mainly traded for the long positions and at the ask price for the short positions. Warrants Non-rated warrants are valued with the Black & Scholes model. Bonds, Mortgage-Backed Securities and Asset-Backed Securities Bonds, mortgage-backed securities and asset-backed securities are valued based on bid prices obtained from recognized securities dealers. Interest on inflation-indexed bonds is accrued on each valuation date based on the inflation-adjusted par value at that time and is included in interest income in the Statement of Operations. The inflation adjustment of the par value is recognized as part of interest income in the Statement of Operations. Mortgages Mortgages are valued by Desjardins Group entities according to the present value of cash flows at interest rates for mortgages that are similar in nature and duration. Buildings acquired by mortgage foreclosure are valued according to the estimated realizable value, measured by the present value of future expected cash flows at the effective interest rates inherent to the loans. Investment Funds The underlying funds units or shares are valued based on the net asset value per unit or share provided by the underlying fund s manager at the end of each valuation day. Financial Derivative Instruments Certain Funds may use an array of financial derivative instruments such as foreign currencies forward contracts, forwards contracts, futures contracts and swaps, for hedging purposes or purposes other than hedging, or both. Futures Contracts The futures contracts are valued at fair value, and are settled daily through brokers acting as intermediaries. Any amounts receivable (payable) from settlement of futures contracts are recorded in Receivable (Payable) on futures contracts in the Statement of Net Assets. Foreign Currencies Forward Contracts and Swaps The fair value of these instruments corresponds to the gains or losses that would result from the contract close-out on the valuation date; this value is recorded in Unrealized appreciation (depreciation) on derivatives in the Statement of Net Assets. Forward Contracts Certain Funds may use forward contracts. The fair value of these contracts corresponds to the gains or losses that would result from the contract close-out on the valuation date; this value is recorded in Unrealized appreciation (depreciation) on derivatives in the Statement of Net Assets. For further information regarding which Funds are authorized to use financial derivative instruments, please refer to the section Notes to the Financial Statements Specific Information pertaining to each Fund. Valuation of Unlisted Securities and Other Investments When the valuation principles of the aforementioned investments are not appropriate, fair value is determined according to the Manager s best estimates, based on established valuation procedures. These procedures cover, among others, securities no longer traded, securities issued by private corporations and illiquid securities. The fair value of these securities established for the purpose of calculating the Funds net assets may differ from the securities most recent bid or ask price. Investment Transactions Investment transactions are accounted for on the trade date. Cost is determined on an average cost basis except for the money market securities, for which the cost is determined using the First In First Out method. Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities by the Funds are recognized in the Statement of Operations. The difference between the unrealized appreciation (depreciation) of investments at the beginning and at the end of the period is included in the Net unrealized gain (loss) in the Statement of Operations. When a Fund disposes of an investment, the difference between the fair value and the cost of investments is included in the Net realized gain (loss) in the Statement of Operations. Securities Lending and Repurchase Transactions Certain Desjardins Funds may enter into securities lending agreements with the Funds custodian (Desjardins Trust Inc.). A collateral representing at least 102% of the market value of the loaned securities, determined on a daily basis, is kept in bonds and in cash and cash equivalents to limit the risk that the counterparty fails to fulfill its obligations. Income from securities lending is shared between the Fund and its custodian. It is included in the Revenue from securities lending and repurchase transactions in the Statement of Operations. The value of securities and the amount of collateral are detailed in the investment portfolios. Certain Desjardins Funds may also enter into repurchase transactions with the Funds custodian. The Funds have obtained collateral of 102% of the repurchase transactions market value. However, this collateral is composed of cash up to the market value of the repurchase transaction and in bonds and in cash and cash equivalents for the balance. Income from repurchase transactions is shared between the Fund and its custodian and it is included in the Revenue from securities lending and repurchase transactions in the Statement of Operations. The repurchase transactions in effect as at March 31, 2014 are detailed in the investment portfolios. For further information regarding the Desjardins Funds entered into securities lending agreements, please refer to the Financial Statements of each Fund. Cash Cash or bank overdraft are deemed to be held for trading and carried at fair value. Other Assets and Liabilities Margin deposited on derivatives, receivable on futures contracts, subscriptions receivable, receivable for investments sold, cash guarantee received for securities lending and repurchase transactions as well as interest, dividends and other receivables are deemed to be loans and receivables and recorded at cost. Similarly, accrued expenses, payable on derivatives, redemptions payable, payable for investments purchased, cash guarantee payable for securities lending and repurchase transactions as well as interest, dividends and other payables are deemed to be financial liabilities and recorded at cost. Given their short-term nature, their carrying amount closely approximates their fair value. Income Income is accounted for on an accrual basis. Interest income is recorded as it is earned and dividend income is recorded on the ex-dividend date. Interest and dividend distributions received from underlying funds are recorded at the day of the distributions. Distributions received from income and royalty trust investments are classified as income, capital gains or return of capital based on amounts reported by the management of these trusts, or if such specific information is not available, the Manager will determine the split at its discretion. Gains and losses realized when financial derivative instruments held for hedging purposes are closed out are included in the Net realized gain (loss) in the Statement of Operations. Gains and losses on financial derivative instruments held for purposes other than hedging are included in Net income (loss) from derivative financial instruments in that statement.

10 Notes to the Financial Statements (UNAUDITED) Six-month Periods Ended March 31, 2014 and 2013 Foreign Currency Translation The fair value of financial instruments denominated in foreign currencies is translated into Canadian dollars at the rate of exchange on each valuation date. Purchases and sales of securities as well as income and expenses denominated in foreign currencies are translated into Canadian dollars at the rate in effect at the transaction date. Realized exchange gains and losses are included in Net realized gain (loss) in the Statement of Operations. The difference between the unrealized exchange gains and losses at the beginning and at the end of the period is included in Net unrealized gain (loss) in that statement. Increase (Decrease) in Net Assets from Operations per Unit or Share Increase (decrease) in net assets from operations per unit or share in the Statement of Operations represents the increase (decrease) in net assets from operations by class or series, divided by the average number of units or shares outstanding per class or series during the period. 2. Unitholders or Shareholders Equity Capitalization Trust Funds Each Fund, except the corporate class funds, is authorized to issue an unlimited number of class of units and an unlimited number of units of each class. Each class unit entitles the holder thereof to participate equally in the distributions of the Fund made to that class. Fractions of units may be issued. The units of a Fund are of the same class and confer the same rights and privileges except that in respect of a Fund with more than one class of units, each class of units may have a different management fee, dealer compensation structure or distribution structure. As a result, each unit entitles its holder to one vote and to participate equally in distributions made in respect of the class of units by the subject Fund and, on liquidation, in the net assets of the class of units remaining after satisfaction of outstanding liabilities. A fraction of a unit will entitle the holder to similar proportionate participation and to vote. Units and fractions of units may be issued by a Fund only as fully paid and non-assessable. A unitholder will be entitled to redeem units in the manner described under Redemptions of Securities in the Annual Information Form. The Declaration of Trust does not impose any restrictions on the transfer of units. The rights and conditions attaching to the units of each Fund may be modified only in accordance with the provisions of the securities legislation applicable to such units and the provisions of the Declaration of Trust. The Manager manages the capital of the Funds in accordance with their investment objectives (refer to Note 5). Also, in accordance with securities regulations, the Funds seek to invest subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Corporate Funds Chorus II Corporate Class Portfolios are authorized to issue an unlimited number of shares of the following series: Chorus II Corporate Class Portfolio Conservative Balanced Income Balanced Growth Growth High Growth Maximum Growth Series A, T4, T6, C, R4 and R6 A, T4, T6, C, R4 and R6 A, T5, T7, C, R5 and R7 A, T5, T7, C, R5 and R7 A, T6, T8, C, R6 and R8 A, T6, T8, C, R6 and R8 Each series share entitles the holder thereof to participate equally in the distributions of the Fund made to that series. Fractions of shares may be issued. The shares of a Fund are of the same series and confer the same rights and privileges except that in respect of a Fund with more than one series of shares, each series of shares may have a different management fee, dealer compensation structure or distribution structure. As a result, each share entitles its holder to one vote and to participate equally in distributions made in respect of the series of shares by the subject Fund and, on liquidation, in the net assets of the series of shares remaining after satisfaction of outstanding liabilities. A fraction of a share will entitle the holder to similar proportionate participation, but will not entitle them to vote. Shares and fractions of shares may be issued by a Fund only as fully paid and non-assessable. A shareholder will be entitled to redeem shares in the manner described under Redemptions of Securities in the Annual Information Form. The Declaration of Trust does not impose any restrictions on the transfer of shares. The rights and conditions attaching to the shares of each Fund may be modified only in accordance with the provisions of the securities legislation applicable to such shares and the provisions of the Declaration of Trust. The Manager manages the capital of the Funds in accordance with their investment objectives (refer to Note 5). Also, in accordance with securities regulations, the Funds seek to invest subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Valuation of Units or Shares On each business day and for each class of units or series of shares in each Fund, the Manager calculates the net asset value per unit or share by dividing the net assets by the number of units or shares outstanding. The net asset value of each class of units or series of shares in a Fund corresponds to the proportion of the assets of the Fund attributable to the class or series, net of the proportion of the Fund s total liabilities attributable to the class or series and the specific liabilities of the class or series. Expenses directly related to a class or series are applied against this class or series. Other income and expenses as well as realized and unrealized capital gains and losses are applied against each class or series in proportion to their respective net asset value. 3. Management Fees and Other Expenses Desjardins Trust Inc., as the Trustee, receives from each Fund weekly management fees, before taxes, calculated on the net asset value of each class of units or series of shares on each valuation date. Out of these fees, the Trustee is responsible for the fees payable to the Manager, who assumes the responsibility for the payment of the investment fees to portfolio sub-managers retained for the Funds. Each Fund assumes its own operating expenses, which include, among other things, brokerage, custody, legal, audit, filing and administration costs, as well as costs associated with the Funds Independent Review Committee. The fees and expenses associated with the Independent Review Committee include annual fees and meeting fees, if any, payable to members and the payment of any other expenses related to the operation of the Independent Review Committee. Certain Funds may invest in other mutual funds ( underlying funds ), including Desjardins Funds, in order to achieve their investment objectives. There are fees and expenses payable by the underlying funds in addition to the fees and expenses payable by the investing Fund. No management fees or incentive fees are payable by the Fund, that to a reasonable person, would duplicate a fee payable by the underlying fund for the same service. For further information regarding the Desjardins Funds authorized to invest in underlying funds, please refer to the section Notes to the Financial Statements Specific Information pertaining to each Fund. 4. Related Party Transactions Desjardins Investments Inc. (the Manager ) ensures the daily administration of the Funds. It provides the Funds or makes sure the Funds are provided with all services (accounting, custody, portfolio management, record maintenance, transfer agent) required to function properly. The Funds pay management fees to the Manager, which are calculated on a daily basis with the net asset value of the Funds and paid weekly at the annual rate specified under Note Management Fees and Other Expenses in the section Notes to the Financial Statements Specific Information pertaining to each Fund. Management, custody and administrative fees presented in the Statement of Operations were incurred with the Manager of the Desjardins Funds. Desjardins Trust Inc., an entity belonging to the same group as the Manager, is the Funds Trustee and Custodian. The Funds Trustee fees are at the Manager s expense. The custodian fees of Desjardins Trust Inc. are at the Funds expense and are established based on market conditions. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

11 Notes to the Financial Statements (UNAUDITED) Six-month Periods Ended March 31, 2014 and Financial Instruments Disclosures Classification of Financial Instruments at Fair Value Measurement The Funds present their financial instruments at fair value according to a three-level hierarchy that reflects the significance of the inputs used to determine such fair value measurements. The fair value hierarchy consists of the three following levels: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices); Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs). A change in the fair value measurements method could result in a transfer between levels. Financial Risk Management The Funds activities expose them to a variety of financial risks, among which are market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Funds overall risk management strategy focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Funds rate of return. The Manager is responsible for risk management within each Fund, as well as the selection and monitoring of the portfolio sub-managers. The Manager compares the Funds performance to their benchmarks on a monthly basis and this analysis is then reviewed every quarter by the Investment Committee of Desjardins Investments Inc. Furthermore, the Manager ensures that the Funds investment policies are rigorously followed and writes a compliance report, which is also reviewed on a quarterly basis by the Investment Committee. Every quarter, the Manager discusses the results of the performance analyses with the portfolio sub-managers and plans yearly meetings with them to keep abreast of any changes in their investment practices. Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign exchange rates. The Funds are exposed to the currency risk in holding assets and/or liabilities denominated in currencies other than the Canadian dollar, the Funds functional currency, as the value of the securities denominated in other currencies will fluctuate in accordance with the applicable exchange rates in effect. The Funds exposure to currency risk is shown based on the carrying value of monetary and non-monetary assets (including derivatives and the notional amount of forward currency contracts, if any). For the notional amount of forward currency contracts, a long position is shown under Financial Assets Held for Trading, and a short position under Financial Liabilities Held for Trading. When the Canadian dollar decreases in relation to the foreign currencies, then the value of foreign investments increases. When the value of the Canadian dollar increases, the value of foreign investments decreases. Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. Interest rate risk occurs when an investment fund invests in interest-bearing financial instruments. The Funds are exposed to the risk that the value of such financial instruments will fluctuate as a result of changes in market interest rates. Generally, the value of these securities increases if interest rates decrease and decreases if interest rates increase. There is minimal sensitivity to interest rate fluctuations on cash and cash equivalents invested at short-term market interest rates. Price Risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices other than those arising from currency risk or interest rate risk. All securities investments present a risk of loss of capital. The portfolio manager intends to manage this risk through a careful selection of securities and other financial instruments in compliance with the specified limits. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The Funds financial instruments are exposed to market price risk arising from uncertainties about the future prices of instruments. The Funds market price risk is managed through diversification of the investment portfolio s exposure ratio. Credit Risk Credit risk is the risk that the counterparty to a financial instrument will be unable to pay the full amount upon maturity. The Funds take on exposure to credit risk and default provisions are recorded for the losses incurred prior to the Statement of Net Assets issue date, if any. All transactions are settled or paid upon delivery through approved brokers. The risk of default is considered minimal as securities sold are delivered only once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party defaults on its obligation. The entity s own risk and the credit risk of the counterparty are taken in account in determining the fair value of financial assets and financial liabilities, including derivative financial instruments. Liquidity Risk Liquidity risk is the risk that a counterparty to a financial instrument may not be able to settle or meet its obligation on time or at a reasonable price. The Funds are exposed to daily cash redemptions of units or shares. They therefore invest the majority of their assets in liquid investments (i.e. investments that are traded in an active market and that can be readily disposed of). In accordance with securities regulations, the Funds must maintain at least 90% of their assets in liquid investments. Additional Information For further information regarding the financial instruments risk exposure of each Fund, please refer to the section Notes to the Financial Statements Specific Information pertaining to each Fund. 6. Income Tax and Capital Gains Tax Trust Funds Under the Income Tax Act (Canada), each Fund, except the corporate class funds, is defined as a mutual fund trust and is taxed on income and net capital gains not distributed to unitholders. It is the intention of the Funds to pay to unitholders all of their investment income and sufficient net realized capital gains so that the Funds will not be subject to income taxes. Corporate Funds The Corporation includes Chorus II Corporate Class Conservative Portfolio, Chorus II Corporate Class Balanced Income Portfolio, Chorus II Corporate Class Balanced Growth Portfolio, Chorus II Corporate Class Growth Portfolio, Chorus II Corporate Class High Growth Portfolio and Chorus II Corporate Class Maximum Growth Portfolio. The Corporation constitutes a single legal entity for tax purposes and qualifies as a public corporation under the Income Tax Act (Canada). As such, the Corporation computes its net income (net loss) and net capital gains (net capital losses) for income tax purposes as a single entity. The Corporation is subject to Part IV tax on dividends received from other Canadian corporations to the extent that they are not declared and paid to its shareholders. It is the intention of the Corporation to pay out all Canadian dividends it receives to its shareholders, such that Part IV tax would not be paid. Dividends distributed on September 25, 2013, were designated eligible dividends. Interest income and foreign dividends, net of applicable expenses, are taxed at corporate rates with credits for foreign taxes paid, subject to certain limitations. Year End Date The year-end for tax purposes is December 31 for the following Funds: Desjardins Money Market Fund Desjardins Canadian Equity Income Fund The Corporation has a year end for tax purposes of September 30. All other Funds have a year end for tax purposes of December 15.

12 Notes to the Financial Statements (UNAUDITED) Six-month Periods Ended March 31, 2014 and 2013 Loss Carry Forward Capital losses can be carried forward indefinitely and used to reduce future capital gains. Non-capital losses can be carried forward 20 years. Capital and non-capital loss balances published in the Corporation s tax return as at September 30, 2013 are as follows: Desjardins Funds Corporate Class Inc. Capital Losses Amount Non-Capital Losses Amount Anniversary 5,019,785 6,424, Comparative Figures Certain prior year-end comparative figures have been reclassified to conform with the current year-end presentation. 8. Event Subsequent to the Date of the Statement of Net Assets Fund Mergers During the special meeting held on September 18, 2013, the Manager obtained approval from unitholders and regulatory authorities to merge certain Funds. The Merger by Notice of certain Funds has been approved by the Independant Review Committee (the IRC ). These Fund mergers were completed at the end of the business day on October 18, As a result of these mergers, each Terminating Fund ceded its assets at fair value to the Continuing Fund in exchange for units. The Terminating Funds unitholders exchanged their units for units issued by the Continuing Fund. The Continuing Funds did not assume the Terminating Funds liabilities since sufficient assets were kept by the Terminating Funds to cover their liabilities. Any latent gains or losses of the Terminating Funds investment portfolio were considered realized. No fund merger fees were charged to the Funds or the unitholders. For more information regarding Fund mergers, please refer to the Notes to the Financial Statements Specific Information pertaining to each Fund. 9. Additional Information Unitholders or shareholders of the Desjardins Funds can request a copy of the Simplified Prospectus as well as the annual, and, if applicable, the interim financial statements for each of the underlying funds at no cost: by contacting their representative; or by calling , or toll-free at ; or at desjardinsfunds.com, at sedar.com by at info.fondsdesjardins@desjardins.com; or through Desjardins Investments Inc. Desjardins Funds Customer Service 2 Complexe Desjardins P.O. Box 9000, Desjardins Station Montréal, Québec H5B 1H5