TD Canadian Bond Fund

Transcription

1 TD Canadian Bond Fund (03/18) TD Mutual Funds for the period ended

2 nmanagement s Responsibility for Financial Reporting The accompanying financial statements have been prepared by TD Asset Management Inc. ( TDAM ) as manager of the TD Mutual Fund Trusts, TD Managed Assets Program Portfolios and TD Managed ETF Portfolios (collectively the Funds and individually the Fund ) and approved by TDAM s board of directors. The manager is responsible for the integrity, objectivity and reliability of the data presented. This responsibility includes selecting appropriate accounting principles and making judgments and estimates consistent with International Financial Reporting Standards ( IFRS ). The manager is also responsible for the development of internal controls over the financial reporting process, which are designed to provide reasonable assurance that relevant and reliable financial informa - tion is produced, and the safeguarding of all assets of the Funds. The board of directors of TDAM is responsible for reviewing and approving the financial statements and overseeing management s performance of its financial reporting responsibilities. PricewaterhouseCoopers LLP is the external auditor of the Funds. The auditor has audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express their opinion on the financial statements. The auditor s report is included on the follow ing page of this annual report. On behalf of TDAM, manager of the Funds. Bruce Cooper David Lambie Director and Director and Chief Executive Officer Chief Financial Officer March 16, 2018 March 16,

3 nindependent Auditor s Report To the Unitholders and Trustee of: TD Canadian Money Market Fund TD Premium Money Market Fund TD U.S. Money Market Fund TD Ultra Short Term Bond Fund TD Short Term Bond Fund TD Canadian Bond Fund TD Income Advantage Portfolio TD Canadian Core Plus Bond Fund TD Canadian Corporate Bond Fund TD Corporate Bond Plus Fund TD U.S. Corporate Bond Fund TD Real Return Bond Fund TD Global Income Fund TD Global Core Plus Bond Fund TD Global Unconstrained Bond Fund TD High Yield Bond Fund TD Global Conservative Opportunities Fund TD Global Balanced Opportunities Fund TD Monthly Income Fund TD Tactical Monthly Income Fund TD U.S. Monthly Income Fund TD U.S. Monthly Income Fund C$ TD Balanced Income Fund TD Diversified Monthly Income Fund TD Strategic Yield Fund TD Balanced Growth Fund TD Dividend Income Fund TD Canadian Diversified Yield Fund TD Canadian Low Volatility Fund TD Dividend Growth Fund TD Canadian Blue Chip Dividend Fund TD Canadian Large-Cap Equity Fund TD Canadian Equity Fund TD Core Canadian Value Fund TD Canadian Value Fund TD Canadian Small-Cap Equity Fund TD U.S. Risk Managed Equity Fund TD U.S. Low Volatility Fund TD U.S. Low Volatility Currency Neutral Fund TD North American Dividend Fund TD U.S. Dividend Growth Fund TD U.S. Blue Chip Equity Fund TD U.S. Quantitative Equity Fund TD U.S. Equity Portfolio TD North American Small-Cap Equity Fund TD U.S. Mid-Cap Growth Fund TD U.S. Small-Cap Equity Fund TD Global Risk Managed Equity Fund TD Global Low Volatility Fund TD International Growth Fund TD International Stock Fund TD Emerging Markets Low Volatility Fund TD Asian Growth Fund TD Emerging Markets Fund Epoch U.S. Shareholder Yield Fund Epoch U.S. Blue Chip Equity Fund Epoch U.S. Blue Chip Equity Currency Neutral Fund Epoch U.S. Large-Cap Value Fund Epoch Global Shareholder Yield Fund Epoch Global Shareholder Yield Currency Neutral Fund Epoch Global Equity Fund Epoch International Equity Fund Epoch European Equity Fund TD Resource Fund TD Precious Metals Fund TD Entertainment & Communications Fund TD Science & Technology Fund TD Health Sciences Fund TD Canadian Bond Index Fund TD Balanced Index Fund TD Canadian Index Fund TD Dow Jones Industrial Average Index Fund TD U.S. Index Fund TD U.S. Index Currency Neutral Fund TD Nasdaq Index Fund TD International Index Fund TD International Index Currency Neutral Fund TD European Index Fund TD US$ Retirement Portfolio TD Retirement Conservative Portfolio TD Retirement Balanced Portfolio TD Advantage Balanced Income Portfolio TD Advantage Balanced Portfolio TD Advantage Balanced Growth Portfolio TD Advantage Growth Portfolio TD Advantage Aggressive Growth Portfolio TD Comfort Conservative Income Portfolio TD Comfort Balanced Income Portfolio TD Comfort Balanced Portfolio TD Comfort Balanced Growth Portfolio TD Comfort Growth Portfolio TD Comfort Aggressive Growth Portfolio TD Fixed Income Pool TD Risk Management Pool TD Canadian Equity Pool TD Global Equity Pool TD Tactical Pool TD Managed Income Portfolio TD Managed Income & Moderate Growth Portfolio TD Managed Balanced Growth Portfolio TD Managed Aggressive Growth Portfolio TD Managed Maximum Equity Growth Portfolio TD FundSmart Managed Income & Moderate Growth Portfolio TD FundSmart Managed Balanced Growth Portfolio TD FundSmart Managed Aggressive Growth Portfolio TD Managed Index Income Portfolio TD Managed Index Income & Moderate Growth Portfolio TD Managed Index Balanced Growth Portfolio TD Managed Index Aggressive Growth Portfolio TD Managed Index Maximum Equity Growth Portfolio TD Managed Income ETF Portfolio TD Managed Income & Moderate Growth ETF Portfolio TD Managed Balanced Growth ETF Portfolio TD Managed Aggressive Growth ETF Portfolio TD Managed Maximum Equity Growth ETF Portfolio (collectively, the Funds ) 2

4 nindependent Auditor s Report We have audited the accompanying financial statements of each of the Funds, which comprise the statements of financial position, comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows as at and for the periods indicated in note 1, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with Inter national Financial Reporting Standards, and for such internal control as manage ment determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on the financial statements of each of the Funds based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit pro - cedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of account - ing policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in each of our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial position, financial performance and cash flows of each of the Funds as at and for the periods indicated in note 1 in accordance with Inter national Financial Reporting Standards. Chartered Professional Accountants, Licensed Public Accountants Toronto, Ontario March 16,

5 ntd Canadian Bond Fund Statements of Financial Position (in 000s except per unit amounts) as at and Assets Current Assets Investments $ 15,270,942 $ 14,842,223 Cash 139, ,234 Interest Receivable 98,649 88,070 Subscriptions Receivable 15,288 15,144 15,524,559 15,368,671 Liabilities Current Liabilities Accrued Liabilities 5 8 Redemptions Payable 21,819 21,833 Distributions Payable ,824 21,843 Net Assets Attributable to Holders of Redeemable Units $ 15,502,735 $ 15,346,828 Net Assets Attributable to Holders of Redeemable Units Per Series (Note 5) Investor Series $ 864,515 $ 1,019,052 Institutional Series $ 37,652 $ 46,112 Premium Series $ 95,871 $ 118,756 Advisor Series $ 402,505 $ 521,049 F-Series $ 146,811 $ 149,598 Premium F-Series $ 37,711 $ 43,283 D-Series $ 11,034 $ 6,901 Private Series $ 1,094,083 $ 858,437 O-Series $ 12,812,553 $ 12,583,640 $ 15,502,735 $ 15,346,828 Net Assets Attributable to Holders of Redeemable Units Per Series Unit Investor Series $ $ Institutional Series $ $ Premium Series $ $ Advisor Series $ $ F-Series $ $ Premium F-Series $ $ D-Series $ $ Private Series $ 9.81 $ 9.85 O-Series $ $ The accompanying notes are an integral part of the financial statements. 4

6 ntd Canadian Bond Fund Statements of Comprehensive Income (in 000s except per unit amounts) for the periods ended and Income Foreign Exchange Gain (Loss) on Cash $ 937 $ (3) Securities Lending Income Net Gain (Loss) on Investments and Derivatives Net Gain (Loss) on Investments Interest for Distribution Purposes 488, ,417 Net Realized Gain (Loss) (24,764) 74,704 Net Change in Unrealized Appreciation/ Depreciation (63,421) (260,057) Net Gain (Loss) on Investments 400, ,064 Net Gain (Loss) on Derivatives Net Realized Gain (Loss) 9,495 0 Net Gain (Loss) on Derivatives 9,495 0 Total Net Gain (Loss) on Investments and Derivatives 409, ,064 Total Income (Net) 411, ,843 Expenses (Note 6) Management Fees 18,158 22,609 Securityholder Reporting Costs Custodial Fees 7 15 Filing Fees 2 2 Audit Fees 1 2 Independent Review Committee Fees 2 2 Interest Charges 0 1 Total Expenses before Waivers 18,250 22,707 Less: Waived Expenses (2) (2) Total Expenses (Net) 18,248 22,705 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units before Tax 393, ,138 Tax Reclaims (Withholding Taxes) 0 0 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units $ 393,404 $ 266, Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units Per Series Investor Series $ 14,722 $ 13,247 Institutional Series $ 957 $ 957 Premium Series $ 1,840 $ 1,294 Advisor Series $ 6,997 $ 5,619 F-Series $ 2,965 $ 1,732 Premium F-Series $ 989 $ 338 D-Series $ 145 $ (82) Private Series $ 23,032 $ 10,945 O-Series $ 341,757 $ 232,088 $ 393,404 $ 266,138 Weighted Average Units Outstanding for the Period Per Series Investor Series 67,569 77,870 Institutional Series 3,776 4,403 Premium Series 10,576 11,347 Advisor Series 37,620 46,378 F-Series 12,115 11,024 Premium F-Series 4,213 3,338 D-Series Private Series 94,973 86,502 O-Series 1,193,200 1,088,501 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units Per Series Unit Investor Series $ 0.22 $ 0.17 Institutional Series $ 0.25 $ 0.22 Premium Series $ 0.17 $ 0.11 Advisor Series $ 0.19 $ 0.12 F-Series $ 0.24 $ 0.16 Premium F-Series $ 0.23 $ 0.10 D-Series $ 0.16 $ (0.18) Private Series $ 0.24 $ 0.13 O-Series $ 0.29 $ 0.21 The accompanying notes are an integral part of the financial statements. 5

7 ntd Canadian Bond Fund Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (in 000s) for the periods ended and 2016 Investor Series Institutional Series Premium Series Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 1,019,052 $ 1,152,819 $ 46,112 $ 55,031 $ 118,756 $ 118,063 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 14,722 13, ,840 1,294 Distributions to Holders of Redeemable Units From Net Investment Income (19,265) (23,634) (1,134) (1,411) (2,344) (2,669) From Net Realized Gains on Investments 0 (3,044) 0 (136) 0 (327) (19,265) (26,678) (1,134) (1,547) (2,344) (2,996) Redeemable Unit Transactions Proceeds from Redeemable Units Issued 51,263 82,879 1,222 2,120 7,296 23,431 Reinvestments of Distributions to Holders of Redeemable Units 18,689 25, ,126 2,089 2,562 Early Redemption Fees on Redeemable Units Redemption of Redeemable Units (219,946) (229,107) (10,352) (11,575) (31,766) (23,598) Net Increase (Decrease) from Redeemable Unit Transactions (149,994) (120,336) (8,283) (8,329) (22,381) 2,395 Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (154,537) (133,767) (8,460) (8,919) (22,885) 693 Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 864,515 $ 1,019,052 $ 37,652 $ 46,112 $ 95,871 $ 118,756 Redeemable Unit Transactions Redeemable Units Outstanding, Beginning of the Period 73,506 81,982 4,188 4,925 11,657 11,430 Redeemable Units Issued 3,688 5, ,242 Redeemable Units Issued on Reinvestments 1,351 1, Redeemable Units Redeemed (15,836) (16,127) (936) (1,024) (3,112) (2,262) Redeemable Units Outstanding, End of the Period 62,709 73,506 3,440 4,188 9,464 11,657 Advisor Series F-Series Premium F-Series Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 521,049 $ 605,809 $ 149,598 $ 125,215 $ 43,283 $ 27,581 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 6,997 5,619 2,965 1, Distributions to Holders of Redeemable Units From Net Investment Income (9,020) (10,736) (3,801) (3,598) (1,185) (928) From Net Realized Gains on Investments 0 (1,584) 0 (387) 0 (102) (9,020) (12,320) (3,801) (3,985) (1,185) (1,030) Redeemable Unit Transactions Proceeds from Redeemable Units Issued 36,861 75,154 47,755 73,146 6,457 21,131 Reinvestments of Distributions to Holders of Redeemable Units 8,097 11,041 2,528 2, Early Redemption Fees on Redeemable Units Redemption of Redeemable Units (161,479) (164,254) (52,234) (49,359) (12,406) (5,272) Net Increase (Decrease) from Redeemable Unit Transactions (116,521) (78,059) (1,951) 26,636 (5,376) 16,394 Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (118,544) (84,760) (2,787) 24,383 (5,572) 15,702 Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 402,505 $ 521,049 $ 146,811 $ 149,598 $ 37,711 $ 43,283 Redeemable Unit Transactions Redeemable Units Outstanding, Beginning of the Period 43,002 49,287 12,120 10,013 4,102 2,586 Redeemable Units Issued 3,033 6,045 3,853 5, ,954 Redeemable Units Issued on Reinvestments Redeemable Units Redeemed (13,296) (13,223) (4,221) (3,890) (1,172) (488) Redeemable Units Outstanding, End of the Period 33,409 43,002 11,957 12,120 3,594 4,102 The accompanying notes are an integral part of the financial statements. 6

8 ntd Canadian Bond Fund Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (in 000s) for the periods ended and 2016 D-Series Private Series Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 6,901 $ 1,253 $ 858,437 $ N/A Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 145 (82) 23,032 10,945 Distributions to Holders of Redeemable Units From Net Investment Income (201) (91) (29,121) (23,937) From Net Realized Gains on Investments 0 (14) 0 (2,481) (201) (105) (29,121) (26,418) Redeemable Unit Transactions Proceeds from Redeemable Units Issued 6,485 8, ,328 1,153,094 Reinvestments of Distributions to Holders of Redeemable Units , Early Redemption Fees on Redeemable Units Redemption of Redeemable Units (2,492) (2,763) (264,566) (279,214) Net Increase (Decrease) from Redeemable Unit Transactions 4,189 5, , ,910 Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 4,133 5, , ,437 Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 11,034 $ 6,901 $ 1,094,083 $ 858,437 Redeemable Unit Transactions Redeemable Units Outstanding, Beginning of the Period ,164 N/A Redeemable Units Issued , ,898 Redeemable Units Issued on Reinvestments Redeemable Units Redeemed (248) (272) (26,768) (27,737) Redeemable Units Outstanding, End of the Period 1, ,558 87,164 O-Series TOTAL Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 12,583,640 $ 10,923,812 $ 15,346,828 $ 13,009,583 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 341, , , ,138 Distributions to Holders of Redeemable Units From Net Investment Income (406,092) (383,711) (472,163) (450,715) From Net Realized Gains on Investments 0 (33,600) 0 (41,675) (406,092) (417,311) (472,163) (492,390) Redeemable Unit Transactions Proceeds from Redeemable Units Issued 1,246,382 2,244,663 1,903,049 3,684,113 Reinvestments of Distributions to Holders of Redeemable Units 406, , , ,443 Early Redemption Fees on Redeemable Units Redemption of Redeemable Units (1,359,225) (816,924) (2,114,466) (1,582,066) Net Increase (Decrease) from Redeemable Unit Transactions 293,248 1,845, ,666 2,563,497 Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 228,913 1,659, ,907 2,337,245 Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 12,812,553 $ 12,583,640 $ 15,502,735 $ 15,346,828 Redeemable Unit Transactions Redeemable Units Outstanding, Beginning of the Period 1,164, ,581 Redeemable Units Issued 114, ,274 Redeemable Units Issued on Reinvestments 37,654 37,825 Redeemable Units Redeemed (125,097) (73,461) Redeemable Units Outstanding, End of the Period 1,191,568 1,164,219 The accompanying notes are an integral part of the financial statements. 7

9 ntd Canadian Bond Fund Statements of Cash Flows (in 000s) for the periods ended and Cash Flows from (used in) Operating Activities Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units $ 393,404 $ 266,138 Adjustment For: Net Realized (Gain) Loss on Sale of Investments and Derivatives 15,269 (74,704) Net Change in Unrealized Appreciation/ Depreciation of Investments 63, ,057 Purchase of Investments (6,122,807) (43,161,790) Proceeds from Sale and/or Maturity of Investments 5,615,398 41,839,159 (Increase) Decrease in Interest Receivable (10,579) (17,392) Increase (Decrease) in Accrued Liabilities (3) (1,990) Net Cash from (used in) Operating Activities (45,897) (890,522) Cash Flows from (used in) Financing Activities Distributions Paid to Holders of Redeemable Units, Net of Reinvested Distributions (26,083) (30,947) Proceeds from Issuances of Redeemable Units 1,861,845 2,856,583 Amounts Paid on Redemption of Redeemable Units, Net of Early Redemption Fees (2,073,419) (1,513,265) Net Cash from (used in) Financing Activities (237,657) 1,312,371 Net Increase (Decrease) in Cash (283,554) 421,849 Cash (Bank Overdraft) at Beginning of the Period 423,234 1,385 Cash (Bank Overdraft) at End of the Period $ 139,680 $ 423,234 Interest for Distribution Purposes Received*, Net of Withholding Taxes $ 477,995 $ 456,025 * Included as part of Cash Flows from (used in) Operating Activities. The accompanying notes are an integral part of the financial statements. 8

10 ntd Canadian Bond Fund Schedule of Investment Portfolio (in 000s except number of Shares or Units/Par Value) as at No. of Shares or Units/ Par Value Description Cost Fair Value Canadian Bonds 95.5% FEDERAL BONDS & GUARANTEES 15.5% Business Development Bank of Canada 37,350, % due July 26, 2021 $ 37,719 $ 40,715 Canada Housing Trust No ,630, % due March 15, , , ,800, % due June 15, , ,164 20,000, % due December 15, ,915 20, ,200, % due June 15, , , ,700, % due June 15, , ,357 50,000, % due June 15, ,515 49,265 81,500, % due December 15, ,358 82,489 85,700, % due September 15, ,829 89, ,001, % due March 15, , , ,000, % due December 15, , ,939 Canada Post Corporation 47,650, % due July 16, ,353 52,928 Farm Credit Canada 65,370, % due April 12, ,667 70,426 Government of Canada 11,900, % due June 01, ,432 12,298 95,357, % due June 01, ,766 91, ,900, % due June 01, , , ,630, % due June 01, , , ,960, % due June 01, , , ,499, % due December 01, , , ,535, % due December 01, , ,447 2,415,360 2,403,193 PROVINCIAL BONDS & GUARANTEES 22.5% Hydro One Inc. 40,100,000 Callable 4.17% due June 06, ,176 44,440 Ontrea Inc. 23,111, % due April 09, ,111 23,304 Province of Alberta 150,000, % due June 01, , ,406 75,000, % due December 01, ,389 93,619 68,000, % due December 01, ,848 73, ,500, % due December 01, , ,635 Province of British Columbia 54,610, % due June 18, ,499 69,861 60,000, % due June 18, ,253 80, ,000, % due June 18, , ,925 45,200, % due June 18, ,871 44,607 Province of Manitoba 108,000, % due March 05, , , ,300, % due March 05, , ,876 66,300, % due September 05, ,096 78,558 Province of New Brunswick 19,000, % due March 26, ,985 23,128 5,000, % due September 26, ,051 6,355 93,500, % due June 03, , ,917 50,000, % due June 03, ,991 53,885 Province of Newfoundland and Labrador 61,500, % due June 02, ,103 59,897 No. of Shares or Units/ Par Value Description Cost Fair Value Province of Ontario 99,100, % due June 02, 2031 $ 130,153 $ 136,839 95,500, % due March 08, , , ,900, % due June 02, , , ,000, % due June 02, , ,587 69,000, % due June 02, ,983 87, ,500, % due June 02, , ,211 40,000, % due June 02, ,700 43, ,000, % due June 02, , , ,800, % due December 02, , , ,000, % due June 02, , ,440 Province of Ontario Residual 127,600, % due June 02, ,361 99,969 75,000, % due March 08, ,532 47,834 Province of Saskatchewan 30,000, % due December 02, ,956 28,540 3,298,906 3,480,680 MUNICIPAL BONDS 0.2% Durham District School Board 33,700, % due November 19, ,233 36,509 CORPORATE BONDS 57.3% AIMCo Realty Investors LP 46,200,000 Callable 2.266% due June 26, ,966 44,870 38,800,000 Callable 3.043% due June 01, ,800 38,681 Alberta Powerline LP 16,700, % due December 01, ,700 17,889 17,100, % due March 01, ,100 18,318 AltaLink L.P. 20,440, % due November 28, ,546 20,978 Bank of Montreal 16,100, % due May 02, ,679 16,335 65,600, % due June 04, ,822 66,537 45,000, % due October 06, ,392 44,784 78,000, % due March 31, ,263 76,828 78,300, % due April 23, ,286 80,823 69,000, % due October 28, ,790 66,960 89,100, % due March 16, ,251 87,822 51,300,000 Callable 6.17% due March 28, ,631 51,840 67,700, % due September 11, ,886 67,677 62,100,000 Callable 3.12% due September 19, ,525 62,743 41,800,000 Callable 3.34% due December 08, ,778 42,557 79,600,000 Callable 2.57% due June 01, ,600 78,359 The Bank of Nova Scotia 59,900, % due June 15, ,923 59,735 93,700, % due September 09, ,667 93,228 48,000, % due January 11, ,064 49,287 40,000, % due June 04, ,914 40,612 66,800, % due December 02, ,781 65,434 84,400, % due April 27, ,101 82,050 90,400,000 Callable 2.36% due November 08, ,422 89, ,300, % due June 28, , , ,973,000 Callable 3.036% due October 18, , ,337 64,400,000 Callable 3.367% due December 08, ,390 65,621 75,700,000 Callable 2.58% due March 30, ,381 74,554 bcimc Realty Corporation 34,000, % due January 05, ,885 34,000 55,000, % due March 07, ,979 55,656 54,900,000 Callable 2.84% due June 03, ,991 54,844 47,700,000 Callable 3.00% due March 31, ,023 47,830 9

11 TD Canadian Bond Fund No. of Shares or Units/ Par Value Description Cost Fair Value Bell Canada Inc. 53,600, % due June 17, 2020 $ 55,176 $ 54,746 67,000,000 Callable 3.15% due September 29, ,424 68,309 97,100, % due October 01, ,205 95,086 80,400,000 Callable 3.00% due October 03, ,670 81,373 45,000,000 Callable 2.70% due February 27, ,578 44,262 BMO Capital Trust II 32,986,000 Callable % due December 31, ,038 35,516 BMW Canada Inc. 25,400, % due September 26, ,414 25,504 25,800, % due October 19, ,792 25,411 Bow Centre Street L.P. 40,100, % due June 14, ,230 39,562 Canadian Imperial Bank of Commerce 77,140, % due July 14, ,032 76,390 35,300, % due April 26, ,282 34,783 79,300, % due July 12, ,268 77,289 78,700, % due March 21, ,419 77,334 57,200,000 Callable 6.00% due June 06, ,703 58,216 82,600,000 Callable 3.42% due January 26, ,579 84,227 Canadian Natural Resources Limited 8,300, % due December 03, ,954 8,336 45,700, % due June 01, ,689 45,226 75,170, % due August 14, ,044 75,844 60,100, % due February 11, ,288 61,329 34,400,000 Callable 3.55% due June 03, ,274 35,056 Canadian Pacific Railway Company 21,000, % due June 01, ,938 21,384 Capital Desjardins Inc. 57,000,000 Callable 4.954% due December 15, ,843 61,938 CIBC Capital Trust 95,820,000 Callable 9.976% due June 30, , ,798 Daimler Canada Finance Inc. 23,800, % due March 26, ,824 23,839 47,600, % due August 19, ,564 47,281 38,000, % due November 23, ,000 37,884 34,900, % due December 16, ,942 34,461 28,900, % due November 22, ,897 28,735 Enbridge Gas Distribution Inc. 20,900, % due November 23, ,891 21,962 13,000, % due December 17, ,748 14,191 65,400,000 Callable 3.31% due September 11, ,285 67,898 40,300,000 Callable 2.50% due August 05, ,108 39,382 24,600,000 Callable 4.00% due August 22, ,484 26,744 Enbridge Pipelines Inc. 54,000, % due April 06, ,365 56,590 71,121,000 Callable 3.45% due September 29, ,792 73,260 73,270,000 Callable 3.00% due August 10, ,227 72,819 Federation des caisses Desjardins du Quebec 46,100, % due November 19, ,189 46,504 90,800, % due March 02, ,764 89,903 First Capital Realty Inc. 10,520, % due July 30, ,042 11,032 21,800, % due April 30, ,349 23,294 20,000, % due October 30, ,907 20,691 Ford Auto Securitization Trust 15,500,000 Callable 1.423% due April 15, ,500 15,378 Ford Credit Canada Company 53,000, % due June 14, ,412 53,574 52,000, % due September 16, ,979 52,340 34,600, % due February 23, ,560 34,231 57,100, % due June 22, ,100 56,468 48,100, % due September 19, ,100 48,682 No. of Shares or Units/ Par Value Description Cost Fair Value FortisBC Inc. 25,100,000 Callable 4.00% due October 28, 2044 $ 25,079 $ 27,104 Grand Renewable Solar L.P. 20,441, % due January 31, ,441 20,197 HCN Canadian Holdings-1 L.P. 24,100, % due November 25, ,066 24,646 Honda Canada Finance Inc. 29,200, % due August 12, ,188 28,997 33,200, % due February 18, ,200 32,997 23,800, % due December 19, ,800 23,645 43,500, % due March 01, ,500 43,271 HSBC Bank Canada 66,400, % due May 13, ,400 66,764 61,050, % due January 14, ,320 61,884 80,500, % due July 07, ,241 79, ,600, % due January 29, , ,706 47,400, % due June 29, ,400 46,556 62,800, % due January 31, ,800 62,314 Husky Energy Inc. 23,986, % due March 12, ,101 25,267 Industrial Alliance Insurance and Financial Services Inc. 42,300,000 Callable 3.30% due September 15, ,654 42,892 Institutional Mortgage Securities Canada Inc. 13,400,000 Callable 4.697% due February 12, ,473 14,148 Inter Pipeline Ltd. 29,000, % due July 20, ,178 29,684 7,000, % due May 30, ,220 7,270 Kingston Solar LP 34,465, % due July 31, ,466 33,560 The Manufacturers Life Insurance Company 33,000,000 Callable 2.64% due January 15, ,485 33,184 56,800,000 Callable 2.10% due June 01, ,740 56,374 58,200,000 Callable 3.181% due November 22, ,294 59,438 Manulife Financial Capital Trust II 65,000,000 Callable 7.405% due December 31, ,846 70,881 National Bank of Canada 47,500, % due March 03, ,427 47,020 Nissan Canada Financial Services Inc. 13,600, % due April 09, ,600 13,431 40,000, % due October 19, ,019 40,029 North West Redwater Partnership/ NWR Financing Company Ltd. 35,400,000 Callable 2.10% due February 23, ,221 34,705 42,500,000 Callable 3.20% due July 22, ,740 43,244 22,880,000 Callable 3.20% due April 24, ,922 23,078 47,800,000 Callable 2.80% due June 01, ,675 46,281 64,500,000 Callable 4.25% due June 01, ,381 69,986 62,100,000 Callable 3.65% due June 01, ,137 62,784 18,800,000 Callable 3.70% due February 23, ,561 18,605 15,700,000 Callable 4.05% due July 22, ,573 16,402 Northland Power Solar Finance One L.P. 11,094, % due June 30, ,097 11,625 OMERS Realty Corporation 31,800, % due June 05, ,800 31,920 27,300, % due July 24, ,415 27,946 24,500, % due April 05, ,557 24,973 57,700,000 Callable 2.858% due February 23, ,070 58,164 30,400, % due November 12, ,869 31,457 46,300,000 Callable 3.244% due October 04, ,409 47,142 Original Wempi Inc. 23,600, % due February 13, ,703 24,183 10

12 TD Canadian Bond Fund No. of Shares or Units/ Par Value Description Cost Fair Value RBC Capital Trust 10,763,000 Callable 6.821% due June 30, 2018 $ 12,616 $ 11,020 Real Estate Asset Liquidity Trust 18,070,349 Callable 2.356% due January 12, ,077 17,679 21,500,000 Callable 3.239% due May 12, ,537 20,995 30,900,000 Callable 2.588% due October 12, ,899 29,627 RioCan Real Estate Investment Trust 8,000, % due March 05, ,138 8,018 23,000, % due June 28, ,210 23,525 32,700, % due August 26, ,692 32,405 21,000, % due April 09, ,000 20,691 40,700, % due October 03, ,884 40,418 Rogers Communications Inc. 61,800, % due November 04, ,955 65,308 71,700, % due September 29, ,149 76,098 63,500, % due March 22, ,667 69,080 24,400, % due June 06, ,468 25,782 Royal Bank of Canada 3,600, % due May 07, ,609 3,645 3,300, % due December 09, ,368 3,313 56,000, % due July 17, ,910 55,531 77,900, % due March 04, ,721 79,075 96,100, % due March 15, ,063 95,085 57,600, % due September 13, ,600 55, ,300, % due March 02, , ,974 77,500, % due December 05, ,493 76,745 74,600,000 Callable 2.99% due December 06, ,181 75,581 73,800,000 Callable 2.48% due June 04, ,404 73,642 82,500,000 Callable 3.31% due January 20, ,444 83,916 73,600,000 Callable 3.45% due September 29, ,651 75,193 Scotiabank Tier 1 Trust 34,700,000 Callable 7.802% due June 30, ,542 37,275 Shaw Communications Inc. 57,000, % due October 01, ,513 60,279 10,000, % due December 07, ,926 10,846 Sun Life Capital Trust II 25,300,000 Callable 5.863% due December 31, ,900 26,830 Suncor Energy Inc. 54,981,000 Callable 3.10% due November 26, ,128 56,147 TD Capital Trust III* 118,209,000 Callable 7.243% due December 31, , ,181 TD Capital Trust IV* 32,800,000 Callable 6.631% due June 30, ,909 36,735 10,300,000 Callable 9.523% due June 30, ,900 11,298 TELUS Corporation 41,000, % due December 04, ,405 43,184 49,850, % due July 23, ,701 53,174 77,500,000 Callable 3.20% due April 05, ,867 79,136 62,000,000 Callable 2.35% due March 28, ,862 61,282 15,000,000 Callable 3.35% due April 01, ,413 15,275 Thomson Reuters Corporation 12,300,000 Callable 3.309% due November 12, ,321 12,608 Toromont Industries Ltd. 32,647,000 Callable 3.842% due October 27, ,024 33,423 The Toronto-Dominion Bank* 41,600, % due April 02, ,600 41,131 5,000, % due June 24, ,157 5,041 45,000, % due March 23, ,000 44,193 3,500,000 Callable 5.828% due July 09, ,811 3,572 84,400, % due July 18, ,414 81,415 45,200,000 Callable 2.692% due June 24, ,170 45,328 27,100,000 Callable 2.982% due September 30, ,029 27,387 55,600,000 Callable 3.224% due July 25, ,600 55,586 52,800,000 Callable 4.859% due March 04, ,800 58,330 No. of Shares or Units/ Par Value Description Cost Fair Value Toyota Credit Canada Inc. 28,000, % due July 18, 2018 $ 27,996 $ 28,166 26,200, % due October 11, ,200 26,274 TransCanada PipeLines Limited 31,300,000 Callable 3.69% due July 19, ,474 32,964 75,900,000 Callable 3.30% due July 17, ,212 78,118 74,300,000 Callable 3.39% due March 15, ,653 76,130 Union Gas Limited 16,100,000 Callable 3.79% due July 10, ,452 17,083 31,300,000 Callable 2.88% due November 22, ,278 31,271 15,300,000 Callable 4.20% due June 02, ,377 17,134 24,800,000 Callable 3.59% due November 22, ,759 25,163 Ventas Canada Finance Limited 37,500, % due September 30, ,536 37,940 30,200,000 Callable 3.30% due February 01, ,284 30,708 38,700,000 Callable 2.55% due March 15, ,682 37,870 VW Credit Canada Inc. 31,900, % due August 20, ,869 32,089 35,200, % due October 01, ,180 35,329 10,000, % due June 24, ,035 9,936 Wells Fargo Canada Corporation 40,400, % due November 15, ,466 40,741 28,680, % due July 25, ,963 29,057 82,800, % due January 29, ,940 84,353 Westcoast Energy Inc. 29,522, % due December 05, ,170 30,104 23,820,000 Callable 3.43% due September 12, ,484 24,557 40,823,000 Callable 3.77% due December 08, ,406 42,772 8,920,786 8,881,406 Total Canadian Bonds 14,673,285 14,801,788 Global Bonds 3.0% UNITED KINGDOM 0.6% HSBC Holdings PLC 95,900, % due December 05, ,900 96,862 UNITED STATES 1.6% Bank of America Corporation 74,600,000 Callable 2.604% due March 15, ,586 74,091 Wells Fargo & Company 80,200, % due March 15, ,200 79,473 55,500, % due April 25, ,500 54,149 43,510, % due October 27, ,510 42, , ,191 SUPRANATIONALS 0.8% Asian Development Bank 23,000, % due February 16, ,657 26,536 Inter-American Development Bank 85,000, % due January 26, ,133 95, , ,101 Total Global Bonds 452, ,154 TOTAL INVESTMENT PORTFOLIO 98.5% $ 15,125,771 $ 15,270,942 OTHER NET ASSETS (LIABILITIES) 1.5% 231,793 TOTAL NET ASSETS 100.0% $ 15,502,735 * Related party to the Fund as an affiliated entity of TD Asset Management Inc. 11

13 ntd Canadian Bond Fund Fund-Specific Notes to the Financial Statements (A) The Fund (I) The Fund start date was June 29, (II) TDAM is the manager, portfolio adviser and trustee of the Fund. TDIS is the principal distributor of the Investor Series units of the Fund. (III) At, TD and funds managed by TDAM held 81.6% (2016: 80.7%) of the net assets of the Fund. (IV) The presentation and functional currency of the Fund is the Canadian dollar. (V) The investment objective of the Fund is to seek to earn a high rate of interest income through investments in high-quality bonds and debentures issued principally by Canadian governments and corporations. In seeking to achieve this objective, the Fund employs rigorous bottom-up security selection focusing on the Canadian corporate debt market as well as global macro - economic trends. Generally, the Fund employs a buy-and-hold strategy. (VI) Private Series was launched on February 4, (VII) Any related party holdings as at (2016: 3.7%), are disclosed in the Schedule of Investment Portfolio. (B) Management Fees and Administration Fees (Note 6) for the periods ended and 2016 (I) MANAGEMENT FEES (%) (exclusive of GST and HST) Annual Maximum Actual Rate Annual Rate Annual Rate Series Investor Series Institutional Series Premium Series 0.90* Advisor Series F-Series Premium F-Series 0.45* D-Series Private Series O-Series Includes management fees paid by the Fund and the proportionate management fees, if any, of the underlying fund(s) managed by TDAM held by the Fund. However, there is no duplication of management fees paid to TDAM or its affiliates if the Fund invests in underlying fund(s) that are managed by TDAM. Effective March 28, 2017, the management fee rate charged to Advisor Series and D-Series was changed from 1.25% to 1.00% and 0.90% to 0.80%, respectively. Effective July 27, 2017, the management fee rate charged to Institutional Series was changed from 0.39% to 0.40%. Prior to July 27, 2017, TDAM was entitled to charge a maximum rate of 0.75% for the Institutional Series. * The rate disclosed represents the maximum annual rate per the simplified prospectus dated July 28, The series is no longer being offered under the most recent simplified prospectus. Refer to the Significant Events section for further details. The amount payable (in 000s) to TDAM as at for management fees is $0 (2016: $0) which is included in Accrued Liabilities in the Statements of Financial Position. (II) ADMINISTRATION FEES (%) (exclusive of GST and HST) Not applicable for the Fund. (C) Brokerage Commissions and Soft Dollars (in 000s) (Notes 3 and 6) for the periods ended and 2016 Not significant or applicable to the Fund. (D) Tax Loss Carry Forwards (in 000s) (Note 7) as at None for the Fund. (E) Securities Lent (Note 3) (I) SECURITIES LENDING INCOME A reconciliation of the gross amount generated from the securities lending transactions to the securities lending income to the Fund for the periods ended and 2016 is as follows: Percentage of Amount (in 000s) Total Amount (%) Gross Securities Lending Income $ 1,039 $ Agent fees The Bank of New York Mellon Corp. (208) (195) (20.0) (20.0) Securities Lending Income to the Fund before Tax Reclaims (Withholding Taxes) Tax Reclaims (Withholding Taxes) Net Securities Lending Income $ 831 $ (II) SECURITIES LENT AND COLLATERAL HELD (in 000s) The table below summarizes the aggregate securities lent and related collateral held by the Fund as at and Fair Value of Securities Lent $ 823,335 $ 1,781,882 Fair Value of Collateral Held 866,116 1,876,237 Collateral held is in the form of debt obligations of the Government of Canada and other countries, Canadian provincial and municipal governments or corporations and is not included in the Statements of Financial Position. (F) Financial Risk Management (Notes 3, 4 and 8) as at and 2016 (I) INTEREST RATE RISK The table below summarizes the Fund s exposure to interest rate risk as at and 2016 by remaining term to maturity. The table also illustrates the potential impact to the Fund s net assets had the prevailing interest rates changed by 1 percent, assuming a parallel shift in the yield curve, with all other variables held constant. The Fund s sensitivity to interest rate changes was estimated using the weighted average duration of the bond portfolio. In practice, the actual trading results may differ from these approx - imate sensitivity analysis amounts and the differences could be material. Term to Maturity Total Exposure (in 000s) Bonds Less than 1 year $ 502,522 $ 807, years 5,937,126 5,888, years 4,117,295 3,283,183 > 10 years 4,713,999 4,862,625 Total $ 15,270,942 $ 14,842,223 Impact on Net Assets (000s) $ 1,133,315 $ 1,065,861 Impact on Net Assets (%) (II) CURRENCY RISK Not significant or applicable to the Fund. (III) OTHER PRICE RISK Not significant or applicable to the Fund. 12

14 TD Canadian Bond Fund Fund-Specific Notes to the Financial Statements (IV) CREDIT RISK The table below summarizes the debt instruments by credit ratings as at and Percentage of Percentage of Total Bonds (%) Total Net Assets (%) Credit Rating AAA AA A BBB Total (H) Interest in Unconsolidated Structured Entities (in 000s) (Note 3) as at and 2016 Not significant or applicable to the Fund. (I) Offsetting of Financial Assets and Liabilities (in 000s) (Note 3) as at and 2016 Not significant or applicable to the Fund. (J) Significant Events Effective March 28, 2017, the Premium Series and Premium F-Series were closed to all purchases. Credit ratings are obtained from Standard & Poor s, Moody s or DBRS rating agencies. (V) FINANCIAL INSTRUMENTS BY THE LEVEL IN THE FAIR VALUE HIERARCHY (in 000s) The table below illustrates the classification of the Fund s financial instruments within the fair value hierarchy as at and Level 1 Level 2 Level 3 Total Bonds $ 0 $ 15,270,942 $ 0 $ 15,270,942 December 31, 2016 Bonds $ 0 $ 14,842,223 $ 0 $ 14,842,223 As at the end of the periods, transfers between Level 1 and Level 2 were nil. (VI) RECONCILIATION OF LEVEL 3 FAIR VALUE MEASUREMENTS (in 000s) Not significant or applicable to the Fund. (VII) CONTRACTUAL MATURITIES ANALYSIS FOR FINANCIAL LIABILITIES As at and 2016, the Fund s net assets are due on demand. All other financial liabilities of the Fund are due in less than three months. (G) Investment Portfolio Concentration (%) (Note 8) As at and 2016, the Fund s investment portfolio concentration can be summarized as follows: Canadian Bonds Federal Bonds & Guarantees Provincial Bonds & Guarantees Municipal Bonds Corporate Bonds Global Bonds United Kingdom United States Supranationals Other Net Assets (Liabilities)

15 nnotes to the Financial Statements 1. The Funds The TD Mutual Fund Trusts and TD Managed Assets Program Portfolios (collectively, the Funds and individually, the Fund ) are open-end mutual funds established under the laws of Ontario and governed by the Declaration of Trust, as amended from time to time. The TD Managed Assets Program Portfolios invest primarily in units of other investment funds including in units of exchange-traded funds. TD Asset Management Inc. ( TDAM ) is the manager, portfolio adviser and trustee of the Funds. TDAM, TDAM USA Inc., TD Investment Services Inc. ( TDIS ), TD Waterhouse Canada Inc. ( TDW ) and Epoch Investment Partners, Inc. ( Epoch ) are wholly-owned subsidiaries of The Toronto-Dominion Bank ( TD ). The registered address of the Funds is P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto-Dominion Centre, Toronto, Ontario M5K 1G8. The financial year-end for the Funds is December 31. The Statements of Financial Position are presented as at and The Statements of Comprehensive Income, Statements of Changes in Net Assets Attributable to Holders of Redeemable Units and Statements of Cash Flows are presented for the periods ended and Where a Fund or series of a Fund was established during either period, the information for that Fund or series is provided from the inception date and a comparative statement has only been presented for any period for which that Fund was in existence as at the reporting date. Each Fund s start date as indicated in the Fund-Specific Notes to the Financial Statements is the date that it commenced operations or in the case of a new series, the date the series was first offered and not its inception date. These financial statements were authorized for issue by TDAM on March 16, Basis of Presentation These financial statements have been prepared in compliance with International Financial Reporting Standards ( IFRS ) as published by the International Accounting Standards Board ( IASB ). These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss ( FVTPL ). 3. Summary of Significant Accounting Policies Financial Instruments The Funds recognize financial instruments at fair value upon initial recognition, plus transaction costs in the case of financial instruments not measured at FVTPL. Regular way purchases and sales of financial instruments are recognized at their trade date. The Funds non-derivative investments, which are designated at FVTPL, and derivative assets and liabilities, which are classified as held for trading ( HFT ), are measured at FVTPL. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract s effective interest rate. The Funds have determined that they meet the definition of an investment entity and as a result, the Funds measure subsidiaries, if any, at FVTPL. An investment entity is an entity that: obtains funds from one or more investors for the purpose of providing them with investment management services; commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and measures and evaluates the performance of substantially all of its investments on a fair value basis. The significant judgment that the Funds have made in determining that this definition is met is that fair value is the primary measurement attribute used to measure and evaluate the performance of substantially all of the Funds investments. The Funds investments may also include associates and joint ventures which are designated at FVTPL. The Funds outstanding redeemable units entitlements include a contractual obligation to distribute any net income and net realized capital gains in cash (at the request of the unitholder) and therefore the ongoing redemption feature is not the Funds only contractual obligation. Consequently, the Funds outstanding redeemable units are classified as financial liabilities in accordance with the requirements of IAS 32, Financial Instruments: Presentation ( IAS 32 ). The Funds obligations for Net Assets Attributable to Holders of Redeemable Units are presented at the redemption amount. The accounting policies for measuring the fair value of the Funds investments and derivatives are substantially similar to those used in measuring the Funds net asset value ( NAV ) for transactions with unitholders. The NAV is the value of the total assets of a fund less the value of its total liabilities determined, on each valuation day, in accordance with Part 14 of National Instrument , Investment Fund Continuous Disclosure, for the purpose of processing unitholder transactions. Net Assets Attributable to Holders of Redeemable Units, also referred to as net assets, refers to net assets calculated in accordance with IFRS. As at all dates presented, there were no differences between the Funds NAV per series unit and net assets per series unit. 14

16 nnotes to the Financial Statements Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and marketable securities) are based on quoted market prices at the close of trading on the reporting date. The Funds use the last traded market price for both financial assets and financial liabilities where the last traded price falls within that day s bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, TDAM determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. The Funds policy is to recognize transfers into and out of the fair value hierarchy levels at the end of reporting periods. The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter derivatives, is determined using valuation techniques. The Funds use a variety of methods and make assumptions that are based on market conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other techniques commonly used by market participants and which make the maximum use of observable inputs. The valuation methodology for specific types of investments held by the Funds is summarized below. (a) Securities not listed on any recognized public securities exchange are valued based on available quotations from recognized dealers in such securities, where readily available. If securities have no available broker-dealer bid/ask quotes, TDAM uses its own pricing model to price the securities. The pricing model will generally include the discounted cash flow valuation approach, the use of a credit spread based on the terms of the security and the use of such credit and yield analysis comparables as TDAM believes are relevant in the circumstances. Debt instruments are valued based on mid prices, where readily available. Other valuation techniques may be used, as described above, where applicable. (b) Short-term debt instruments, repurchase and reverse repurchase agreements are valued based on quotations received from recognized investment dealers. (c) Real return bonds are valued based on the available public quotations from recognized dealers. Changes in the inflation factor are included in Interest for Distribution Purposes in the Statements of Comprehensive Income. (d) The Funds may use foreign exchange forward contracts to hedge against or profit from fluctuations in foreign exchange rates. These contracts are valued on each valuation day based on the difference between the contract rates and the current forward rates at the measurement date applied to the contracts notional amount. The net change in unrealized appreciation or depreciation and the net realized gain or loss from closing out contracts are reflected in the Statements of Comprehensive Income as part of Net Gain (Loss) on Derivatives. (e) The Funds may enter into a forward contract to obtain exposure to a specific type of investment without actually investing directly in such investment. These contracts are valued based on the difference between the contract rate and the current market rate for the underlying investment, at the measurement date. The unrealized gain or loss and the net realized gain or loss from closing out contracts are reflected in the Statements of Comprehensive Income as part of Net Gain (Loss) on Derivatives. (f) The Funds may purchase standardized, exchange-traded futures contracts. Any difference between the value at the close of business on the current valuation day and that of the previous valuation day is settled in cash daily and recorded in the Statements of Comprehensive Income as Derivatives Income (Loss). Any amounts receivable (payable) from settlement of futures contracts are reflected in the Statements of Financial Position as Futures Margin Receivable (Payable). Short-term debt instruments as indicated in the Schedule of Investment Portfolio have been segregated and are held as margin against the futures contracts purchased by the Funds, as applicable. (g) Options contracts that are traded in exchange markets are valued at their closing prices on each valuation day. The premium received or paid on options written or purchased is included in the cost of the options. Any difference between the current value of the contract and the value of the contract originated is recognized as net change in unrealized appreciation/depreciation on derivatives. When options are closed or exercised, the difference between the premium and the amount paid or received, or the full amount of the premium if the option expires worthless, is reflected in the Statements of Comprehensive Income as part of Net Gain (Loss) on Derivatives. The cost of a security purchased will be reduced by the premium received on options when a written put option is exercised or increased by the amount paid on options when a purchased option is exercised. (h) Investments in underlying conventional mutual funds and TD Exchange-Traded Funds are generally valued at the NAV per series unit of the investment funds as reported by the investment funds managers. (i) The exchange-traded funds (ETFs) that are not managed by TDAM are valued based on quoted market prices at the close of trading on the reporting date. Fair Value Hierarchy The Funds classify their investments into fair value measurements within a hierarchy that prioritizes the inputs to fair value measurement. The fair value hierarchy has the following three levels: Level 1 Level 2 Level 3 Quoted (unadjusted) prices in active markets for identical assets or liabilities; Inputs other than quoted prices that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices); and Inputs that are not based on observable market data (that is, unobservable inputs). 15