TD Monthly Income Fund

Transcription

1 (03/19) TD Mutual Funds for the period ended This contains financial highlights, but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, at no cost, by calling , by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto-Dominion Centre, Toronto, Ontario, M5K 1G8, by to td.mutualfunds@td.com, or by visiting our website at or the SEDAR website at Securityholders may also contact us or visit our website to get a copy of the investment fund s interim financial report, proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure at no cost.

2 n Management Discussion of Fund Performance Investment Objectives and Strategies The investment objective of (the Fund ) is to seek to provide a consistent level of monthly income with capital appreciation as a secondary objective, by investing primarily in income producing securities. In seeking to achieve this objective, the Fund invests primarily in a diversified portfolio of Canadian securities, utilizing a bottom-up strategy emphasizing the methodical risk/return analysis of individual corporations in the context of a global macroeconomic environment. Generally, the Fund employs a buy-and-hold strategy. Risk The risks of investing in the Fund remain as outlined in the simplified prospectus. Results of Operations The Investor Series units of the Fund returned -6.9% for the year ended ( Reporting Period ). This compares to a return of -3.9% for the Fund s product benchmark, which is composed of 50% S&P/TSX Sector Indices (financials, real estate, utilities, communication services, industrials, consumer staples, consumer discretionary, and the oil and gas storage & transportation sub-industry), 40% FTSE Canada Universe Bond Index ( Universe Bond Index ) and 10% BMO Capital Markets 50 Preferred Share Total Return Index ( BMO CM 50 Preferred Share TR Index ), and 1.4% and -8.9% for the Fund s general market indices, Universe Bond Index and S&P/TSX Composite Total Return Index ( S&P/TSX Composite TR Index ), respectively. Returns for other series of the Fund may vary, largely due to differences in fees and expenses. Unlike the benchmark and general market indices, the Fund s return is quoted after the deduction of fees and expenses. Refer to the Past Performance section for returns of various series of the Fund. Market Update While the Canadian economy benefited from labour market strength and export growth, it decelerated compared to the previous year. Canada s gross domestic product ( GDP ) growth rebounded in the second quarter but retreated in the third quarter as household consumption slowed and business investment decreased. The Bank of Canada ( BoC ) raised its benchmark interest rate by 0.25% three times during the Reporting Period. However, the BoC left its rate unchanged in December as a result of a slowing economy and declining real estate market. Canada s annual inflation rate climbed higher for much of the Reporting Period but dropped late in the year, mainly as a result of lower gas prices. The decline in inflation marked the first time since January 2018 that the rate was below the BoC s 2.0% target. Canada s labour market was positive throughout the Reporting Period and, in November, the country posted the lowest unemployment rate since The Canadian equity market was down over the Reporting Period, with eight of 11 sectors posting negative returns. Energy, consumer discretionary and health care were among the weakest-performing sectors, while information technology, real estate and consumer staples were the top-performing sectors. In the second half of the Reporting Period, a decline in oil prices negatively impacted the energy sector, as oil supply from producers worldwide rose and weak global economic activity reduced demand. Higher interest rates curbed spending on larger-ticket items, and heightened online competition and compressed margins resulted in lower retail sales, driving down the consumer discretionary sector. Volatility in the pharmaceuticals sub-sector affected the health care sector as cannabis companies faced supply issues. Government of Canada ( GoC ) bond yields climbed higher over much of the Reporting Period. GoC bonds also experienced periodic rallies in 2018 that generally coincided with widespread moves out of equities. This was in response to heightened trade uncertainty and growing concern about the potentially negative impact of higher borrowing costs on corporate profitability. In the fourth quarter of the Reporting Period, investment sentiment turned decidedly riskaverse in response to increased trade barriers, weaker economic data and signs of distress in certain areas of the global economy. In the ensuing move out of equities and into lower-risk investments, credit spreads (the difference in yields between corporate bonds and government bonds with similar maturities) widened sharply. Key Contributors/Detractors Relative to the Product Benchmark The Fund delivered a negative return, lagging the benchmark as a result of asset allocation. The Portfolio Adviser s preference for equities over fixed income and preferred shares detracted from relative performance. Within equities, both sector allocation and stock selection detracted from the Fund s performance. As oil prices declined amid a global surplus, the Portfolio Adviser s preference for the energy sector detracted from the Fund s performance. Most of the Fund s energy sector holdings are integrated oil and pipeline companies, which are less sensitive to oil prices but were also impacted by negative sentiment. The Fund s industrials sector holdings also detracted from performance. The Portfolio Adviser s preference for industrial conglomerate companies over environmental services and railway companies with higher returns detracted from the Fund s performance. Stock selection within the financials sector contributed to performance. The Portfolio Adviser s preference for Canadian banks over insurance companies contributed to the Fund s performance. Key Contributors/Detractors Relative to the General Market Indices The Fund outperformed the broader equity market, as measured by the S&P/TSX Composite TR Index. While an allocation to preferred shares and fixed income provided some cushion as equity markets declined, stock selection within equities also contributed to the Fund s performance. Compared with the Universe Bond Index, the Fund underperformed as a result of its exposure to equities. 1

3 Recent Developments Effective July 26, 2018, TD Asset Management Inc. changed the names of certain series of the Fund as follows: From H-Series to H8 Series From S-Series to FT8 Series From T-Series to T8 Series Looking ahead, the Portfolio Adviser continues to monitor a variety of macroeconomic factors that could influence the performance of financial markets. The Portfolio Adviser expects North American central banks to continue raising interest rates to more neutral levels to restrain inflationary pressure building in the global economy, while the European Central Bank begins curtailing its accommodative bond-buying program. Despite this tightening of monetary conditions, the Portfolio Adviser expects the relatively low interest rate environ - ment to continue through Going into 2019, in the Portfolio Adviser s view, global economic growth appears to be slowing. This slowdown in economic activity and the removal of monetary stimulus measures by central banks have resulted in heightened financial market volatility. While solid corporate fundamentals and valuations tend to support equity price gains, rising inflation, higher interest rates and trade tensions could lead to greater volatility in financial markets over the coming year. For decades, valuations of Canadian and U.S. stocks have been highly correlated as a result of the close relationship between the two economies. Now at a multi-year low valuation, Canadian equities are trading at a historically large discount to U.S. equities. In the Portfolio Adviser s view, Canadian equities, particularly Canadian banks, are attractively valued and should be able to maintain strong and growing income streams despite higher market volatility. Within the Fund s equity holdings, the Portfolio Adviser continues to favour stable and profitable businesses that can grow dividends over time, with a bias towards large-capitalization and high-quality companies. The financials and energy sectors are preferred with the Fund s current positioning. The Portfolio Adviser anticipates that the financials sector should benefit from modestly higher interest rates, and that energy companies should benefit as oil prices stabilize. Within the Fund s fixed income holdings, the Portfolio Adviser continues to favour the higher yields offered by corporate bonds over government bonds. The Portfolio Adviser expects corporate bonds to outperform government bonds of similar duration (a measure of a bond s sensitivity to changes in interest rates) over the medium to long term. The Fund s fixed income holdings remain focused on capital preservation by maintaining a similar duration to that of the benchmark. The Portfolio Adviser is aware of the impact that low fixed income market liquidity could have on performance and continues to structure the Fund s fixed income holdings with an emphasis on quality and liquidity. In terms of asset allocation, the Portfolio Adviser continues to prefer common equities over preferred shares and fixed income. Related Party Transactions Affiliates of TD Asset Management Inc. ( TDAM ) may earn fees and spreads in connection with various services provided to, or transactions with, the Fund, such as in connection with banking, custody, brokerage and derivatives transactions. Manager, Trustee and Portfolio Adviser: TDAM, a wholly-owned subsidiary of The Toronto-Dominion Bank ( TD ), is the manager, trustee and portfolio adviser of the Fund. The Fund pays TDAM an annual manage ment fee, which may vary for each series of Fund units, and an annual administration fee of 0.08%, calculated and accrued as a percentage of the net asset value, with respect to the Investor Series, Advisor Series, H8 Series, T8 Series and D-Series units of the Fund. Distributor: For certain series of units of the Fund, TD Investment Services Inc., a wholly-owned subsidiary of TD, is the principal distributor for which it is paid a trailer commission by TDAM. Units of the Fund are also distributed through brokers and dealers including TD Waterhouse Canada Inc. ( TDWCI ), a wholly-owned subsidiary of TD. TDWCI, like other dealers, is paid a trailer commission by TDAM for distributing certain series of units of the Fund. Trailer commissions are paid by TDAM out of the management fees it receives from the Fund and are based on the average value of assets held by each dealer. Registrar and Transfer Agent: TD is the registrar and transfer agent of the Fund, and as such maintains all unitholder records, processes purchase, switch, conversion and redemption orders, issues investor statements and prepares annual tax reporting information on behalf of the Fund. TD earns a foreign exchange spread when unitholders switch between units of funds denominated in different currencies. The Fund also maintains bank accounts and overdraft provisions with TD for which TD earns a fee. 2

4 Buying and Selling Securities: TDAM has established an independent review committee ( IRC ) which acts as an impartial and independent committee to review and provide recommendations or, if appropriate, approvals respecting any conflict of interest matters referred to it by TDAM. The IRC prepares, at least annually, a report of its activities for securityholders of the Fund. The report is available on the TDAM website at or at the securityholder s request at no cost by contacting TDAM (see front cover). The Fund relied on standing instructions from the IRC in respect of one or more of the following transactions: (a) trades in securities of TD or any affiliate or associate thereof; (b) investments in the securities of an issuer where TD Securities Inc., TDWCI, or any other affiliate of TDAM (a Related Dealer ) acted as an underwriter during the distri bution of such securities and the 60-day period following the completion of the distribution of the underwritten securities; (c) purchases or sales of securities of an issuer from or to another investment fund or discretionary managed account managed by TDAM; and (d) purchases of securities from or sales of securities to a Related Dealer, where it acted as principal. The relevant standing instructions require that securities transactions with related parties conducted by TDAM (i) are free from any influ - ence by an entity related to TDAM and without taking into account any consideration relevant to an entity related to TDAM; (ii) represent the business judgment of TDAM uninfluenced by considerations other than the best interests of the Fund; (iii) comply with the applicable policies and procedures of TDAM; and (iv) achieve a fair and reasonable result for the Fund. Brokerage Arrangements (000s): From time to time, the Fund may enter into portfolio securities transactions with Related Dealers who may earn commissions or spreads provided that such trades are made on terms and conditions that are comparable to non-affiliated brokerages. During the Reporting Period, the Fund paid commissions to related parties amounting to $95 or 18.13% of total commissions paid by the Fund for portfolio transactions in total. 3

5 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five fiscal years, as applicable. Net Assets per Unit ($) 1 INVESTOR SERIES ADVISOR SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.32) (0.32) (0.29) (0.29) (0.29) (0.30) (0.30) (0.27) (0.27) (0.27) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (2.24) (1.31) 1.28 (2.10) (1.21) 1.27 Total Increase (Decrease) from Operations 2 (1.47) (0.75) 1.78 (1.37) (0.68) 1.74 Distributions: From Net Investment Income (excluding dividends) 0.00 (0.03) 0.00 (0.03) (0.03) 0.00 (0.03) 0.00 From Dividends (0.39) (0.39) (0.45) (0.39) (0.26) (0.37) (0.37) (0.42) (0.36) (0.23) From Capital Gains Return of Capital (0.10) (0.19) Total Annual Distributions 3 (0.39) (0.42) (0.45) (0.42) (0.36) (0.37) (0.40) (0.42) (0.39) (0.42) Net Assets at December F-SERIES C-SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.12) (0.12) (0.11) (0.11) (0.11) (0.16) (0.15) (0.14) (0.14) (0.14) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (1.61) (0.96) 0.84 (1.43) (0.86) 0.75 Total Increase (Decrease) from Operations 2 (0.99) (0.48) 1.27 (0.91) (0.46) 1.11 Distributions: From Net Investment Income (excluding dividends) 0.00 (0.03) 0.00 (0.03) (0.03) 0.00 (0.02) 0.00 From Dividends (0.36) (0.35) (0.38) (0.34) (0.20) (0.29) (0.28) (0.31) (0.28) (0.18) From Capital Gains Return of Capital (0.18) (0.08) Total Annual Distributions 3 (0.36) (0.38) (0.38) (0.37) (0.38) (0.29) (0.31) (0.31) (0.30) (0.26) Net Assets at December H8 SERIES FT5 SERIES * Net Assets, Beginning of Year N/A N/A N/A N/A Increase (Decrease) from Operations: Total Revenue N/A N/A N/A N/A Total Expenses (excluding distributions) (0.19) (0.20) (0.19) (0.20) (0.20) (0.05) N/A N/A N/A N/A Realized Gains (Losses) for the Period N/A N/A N/A N/A Unrealized Gains (Losses) for the Period (1.35) (0.88) 0.91 (1.51) N/A N/A N/A N/A Total Increase (Decrease) from Operations 2 (0.89) (0.50) 1.26 (1.29) N/A N/A N/A N/A Distributions: From Net Investment Income (excluding dividends) 0.00 (0.03) 0.00 (0.02) N/A N/A N/A N/A From Dividends (0.23) (0.25) (0.30) (0.26) (0.18) (0.16) N/A N/A N/A N/A From Capital Gains N/A N/A N/A N/A Return of Capital (0.71) (0.53) (0.46) (0.54) (0.61) (0.15) N/A N/A N/A N/A Total Annual Distributions 3 (0.94) (0.81) (0.76) (0.82) (0.79) (0.31) N/A N/A N/A N/A Net Assets at December N/A N/A N/A N/A Footnotes for the above table(s) can be found at the end of the Net Assets per Unit section. 4

6 Net Assets per Unit ($) 1 (continued) FT8 SERIES T8 SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.11) (0.12) (0.11) (0.11) (0.11) (0.19) (0.20) (0.19) (0.20) (0.20) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (1.53) (1.00) 0.91 (1.32) (0.86) 0.96 Total Increase (Decrease) from Operations 2 (0.95) (0.51) 1.36 (0.86) (0.48) 1.31 Distributions: From Net Investment Income (excluding dividends) 0.00 (0.03) 0.00 (0.03) (0.02) 0.00 (0.02) 0.00 From Dividends (0.33) (0.34) (0.38) (0.34) (0.19) (0.23) (0.25) (0.30) (0.26) (0.16) From Capital Gains Return of Capital (0.65) (0.46) (0.40) (0.47) (0.61) (0.71) (0.53) (0.46) (0.54) (0.63) Total Annual Distributions 3 (0.98) (0.83) (0.78) (0.84) (0.80) (0.94) (0.80) (0.76) (0.82) (0.79) Net Assets at December D-SERIES * 2014 Net Assets, Beginning of Year N/A Increase (Decrease) from Operations: Total Revenue N/A Total Expenses (excluding distributions) (0.14) (0.13) (0.12) (0.02) N/A Realized Gains (Losses) for the Period N/A Unrealized Gains (Losses) for the Period (1.32) (0.45) N/A Total Increase (Decrease) from Operations 2 (0.89) (0.36) N/A Distributions: From Net Investment Income (excluding dividends) 0.00 (0.02) N/A From Dividends (0.23) (0.23) (0.25) (0.07) N/A From Capital Gains N/A Return of Capital N/A Total Annual Distributions 3 (0.23) (0.25) (0.25) (0.07) N/A Net Assets at December N/A 1 This information is derived from the Fund s audited annual financial statements prepared in accordance with International Financial Reporting Standards. The Fund measures fair value of its investments based on close market prices, where the close market price falls within the bid-ask spread or based on quotations from recognized dealers. As such, the Fund s accounting policies for measuring the fair value of investments in the financial statements are substantively consistent with those used in measuring the net asset value ( NAV ) for transactions with unitholders. 2 Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations is based on the weighted average number of units outstanding over the financial periods. These tables are not intended to be a reconciliation of the net assets per unit. 3 Distributions were paid in cash or reinvested in additional units of the Fund, or both. * Data reported represents results from the commencement of operations to December 31 of the year indicated. Please refer to the Year-by-year returns charts in the Past Performance section for commencement date. Initial offering price. 5

7 Ratios and Supplemental Data INVESTOR SERIES ADVISOR SERIES Total Net Asset Value ($000s) 1 5,749,845 6,707,251 6,146,954 5,874,945 6,727, ,472 1,162,399 1,205,059 1,201,275 1,530,857 Number of Units Outstanding (000s) 1 285, , , , ,333 47,681 55,843 60,540 67,806 81,344 Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) F-SERIES C-SERIES Total Net Asset Value ($000s) 1 346, , , , , , , , ,452 83,754 Number of Units Outstanding (000s) 1 25,267 20,972 15,166 11,474 9,266 16,394 15,265 11,775 9,964 6,748 Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) H8 SERIES FT5 SERIES Total Net Asset Value ($000s) 1 42,773 50,908 50,341 49,210 59,308 2,347 N/A N/A N/A N/A Number of Units Outstanding (000s) 1 3,666 3,773 3,747 3,969 4, N/A N/A N/A N/A Management Expense Ratio (%) N/A N/A N/A N/A Management Expense Ratio Before Waivers or Absorptions (%) N/A N/A N/A N/A Trading Expense Ratio (%) N/A N/A N/A N/A Portfolio Turnover Rate (%) N/A N/A N/A N/A Net Asset Value per Unit ($) N/A N/A N/A N/A FT8 SERIES T8 SERIES Total Net Asset Value ($000s) 1 20,484 14,796 11,502 7,485 7,046 76, , , , ,985 Number of Units Outstanding (000s) 1 1,686 1, ,578 7,627 8,313 9,929 11,603 Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) D-SERIES Total Net Asset Value ($000s) 1 106,618 63,193 33,143 6,811 N/A Number of Units Outstanding (000s) 1 10,222 5,542 3, N/A Management Expense Ratio (%) N/A Management Expense Ratio Before Waivers or Absorptions (%) N/A Trading Expense Ratio (%) N/A Portfolio Turnover Rate (%) N/A Net Asset Value per Unit ($) N/A 1 This information is provided as at December 31 of the past five fiscal years, as applicable. 2 Management expense ratio ( MER ) is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) net of any waivers or absorptions for the stated period and is expressed as an annualized percentage of daily average NAV during the period. Any waivers or absorptions may be discontinued at any time by TDAM at its discretion without notice. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average NAV during the stated period. 4 The Fund s portfolio turnover rate ( PTR ) indicates how actively the Fund s portfolio adviser manages its investments. A PTR of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the stated period. The higher a fund s PTR, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the fiscal year. There is not necessarily a relationship between a high turnover rate and the performance of a fund. 6

8 Management Fees As manager and trustee of the Fund, TDAM is responsible for the overall business and affairs of the Fund, including activities related to making units of the Fund available to investors, and providing, or arranging for the provision of, investment advisory services and marketing services to the Fund. In consideration for the provision of such services, each series of the Fund pays TDAM a management fee. Management fees are calculated and accrued as a percentage of the net asset value of each series of units of the Fund, as of the close of business on each business day for each series and are paid monthly to TDAM. The simplified prospectus discloses a specified annual management fee rate that TDAM can charge for each series of the Fund. Where TDAM chooses to charge a management fee rate below the specified annual management fee rate, the difference represents a waiver of management fees. TDAM may waive all or a portion of the management fees being charged to the Fund, which may be discontinued at any time by TDAM at its discretion without notice to unitholders. The annual management fees and a breakdown of the major services rendered for each series, as a percentage of the management fees paid, are as follows: Past Performance The following charts show how the Fund has performed in the past, and can help you understand the risks of investing in the Fund. These returns include the reinvestment of all distributions and would be lower if an investor did not reinvest distributions. They do not include deduction of sales, switch, redemption, or other optional charges (which dealers may charge) or income taxes payable, and these returns would be lower if they did. The Fund s past performance does not necessarily indicate how it will perform in the future. Year-by-year returns The bar charts show how the Fund s performance has varied from year to year for each of the years shown. They show in percentage terms how an investment made on January 1 would have increased or decreased by December 31. Waived Annual Dealer Operating (expressed as a %) Mgmt. Fees Compensation Expenses Other Investor Series Advisor Series F-Series C-Series H8 Series FT5 Series FT8 Series T8 Series D-Series Investment advisory, trustee, marketing services and other. 7

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10 Annual Compound Returns The following table shows the annual compound total returns for each series of units of the Fund for each of the periods indicated ended on, compared with the following benchmarks: The Product Benchmark is composed of: 50% S&P/TSX Sector Indices This is comprised of financials, real estate, utilities, communication services, industrials, consumer staples, consumer discretionary, and the oil and gas storage & transportation sub industry within the S&P/TSX Composite Index; 40% Universe Bond Index This index is comprised of Canadian investment-grade bonds which mature in more than one year; and 10% BMO CM 50 Preferred Share TR Index This index is comprised of 50 preferred shares issued by Canadian companies. General Market Indices: Universe Bond Index. S&P/TSX Composite TR Index This index is comprised of Canadian issuers traded on the Toronto Stock Exchange. Past 10 Past 5 Past 3 Past (expressed as a %) years years years year INVESTOR SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index ADVISOR SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index F-SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index H8 SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index Past 10 Past 5 Past 3 Past (expressed as a %) years years years year FT8 SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index T8 SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index Since Past 5 Past 3 Past (expressed as a %) inception years years year (Start date October 14, 2011) C-SERIES Product Benchmark Universe Bond Index S&P/TSX Composite TR Index (Start date August 16, 2018) FT5 SERIES -7.6 N/A N/A N/A Product Benchmark -5.4 N/A N/A N/A Universe Bond Index 0.8 N/A N/A N/A S&P/TSX Composite TR Index N/A N/A N/A (Start date October 20, 2015) D-SERIES 3.6 N/A Product Benchmark 4.7 N/A Universe Bond Index 2.2 N/A S&P/TSX Composite TR Index 4.9 N/A From the month-end following the start date. A discussion of the Fund s performance compared to the product benchmark and general market indices can be found in the Results of Operations section. 9

11 Summary of Investment Portfolio as at % of Net Asset Value as at % of Net Asset Value ASSET ALLOCATION Canadian Equities 51.3 Canadian Corporate Bonds 18.0 Canadian Government Bonds & Guarantees 10.2 Preferred Equities 7.3 U.S. Corporate Bonds 4.6 Income Trusts 4.4 U.S. Equities 1.6 International Corporate Bonds 0.8 Mortgage-Backed Securities 0.4 Futures 0.3 U.S. Government Bonds & Guarantees 0.2 Short-Term Investments 0.4 Cash 0.7 Other Net Assets (Liabilities) (0.2) PORTFOLIO DETAILS Financials 33.1 Energy 11.2 Utilities 5.0 Industrials 4.0 Communication Services 3.9 Real Estate 2.9 Consumer Discretionary 2.2 Consumer Staples 1.4 Materials 0.6 Health Care 0.3 Bonds 33.8 Mortgage-Backed Securities 0.4 Index Equivalents 0.3 Short-Term Investments 0.4 Cash 0.7 Other Net Assets (Liabilities) (0.2) TOP 25 INVESTMENTS 1. Royal Bank of Canada The Toronto-Dominion Bank Bank of Montreal Canadian Imperial Bank of Commerce Enbridge Inc The Bank of Nova Scotia Brookfield Asset Management Inc Suncor Energy Inc TransCanada Corporation Manulife Financial Corporation Canadian National Railway Company Government of Canada 2.75% due December 01, Brookfield Infrastructure Partners L.P Province of Ontario 4.65% due June 02, TELUS Corporation Waste Connections Inc BCE Inc Magna International Inc Government of Canada 2.00% due June 01, Canadian Pacific Railway Limited National Bank of Canada Rogers Communications Inc Intact Financial Corporation Sun Life Financial Inc Province of British Columbia 4.30% due June 18, Total % of Net Asset Value represented by these holdings 55.0 Related party to the Fund as an affiliated entity of TD Asset Management Inc. Note: Totals may not add due to rounding to one decimal place of individual figures. TOTAL NET ASSET VALUE (000s) $ 7,459,113 The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund. Updates are available quarterly. You may obtain the most current quarterly information by contacting TD Mutual Funds at , by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto, Ontario, M5K 1G8, or by to td.mutualfunds@td.com 10

12 Caution regarding forward-looking statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking statements including, but not limited to, statements about the Fund, its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or 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 Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future general economic, political and relevant market factors, such as interest rates, foreign exchange rates, equity and capital markets, and the general business environment, in each case assuming no changes to applicable tax or other laws or government regulation. Expectations and projections about future events are inherently subject to, among other things, risks and uncertainties, some of which may be unforeseeable. 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 expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and relevant market factors in North America and internationally, interest and foreign exchange rates, equity and capital markets, business competition, technological change, changes in government relations, unexpected judicial or regulatory proceedings and catastrophic events. The above mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing any undue reliance on forward-looking statements. Further, there is no specific intention of updating any forward-looking statements contained herein whether as a result of new information, future events or otherwise. Source: London Stock Exchange Group plc and its group undertakings (collectively, the LSE Group ). LSE Group FTSE Russell is a trading name of certain of the LSE Group companies. FTSE, Russell, and FTSE Russell are trade marks of the relevant LSE Group companies and are used by any other LSE Group company under license. TMX is a trade mark of TSX, Inc. and used by the LSE Group under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication. TD Mutual Funds, TD Pools and the TD Managed Assets Program portfolios are managed by TD Asset Management Inc., a wholly-owned subsidiary of The Toronto-Dominion Bank and are available through authorized dealers. Epoch Investment Partners, Inc. is a wholly-owned subsidiary of The Toronto-Dominion Bank and an affiliate of TD Asset Management. TD Asset Management operates through TD Asset Management Inc. in Canada and through TDAM USA Inc. in the United States. Both are wholly-owned subsidiaries of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. The TD logo and other trade-marks are the property of The Toronto-Dominion Bank. 11