TD Emerging Markets Fund

Transcription

1 (03/17) 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 tdassetmanagement.com or the SEDAR website at sedar.com 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 ntd Emerging Markets Fund Management Discussion of Fund Performance Investment Objectives and Strategies The investment objective of the TD Emerging Markets Fund ( Fund ) is to seek to achieve long-term capital growth by investing primarily in equity securities of issuers in emerging countries. In seeking to achieve this objective, the Fund generally invests at least 65 percent of the Fund s total assets in equity securities of issuers in emerging countries. However, in certain market conditions, the Fund may hold short-term securities. By investing primarily in growth-oriented equity securities in emerging markets, the investment approach combines top-down country allocation with bottom-up stock selection. The Fund may hold fixed income securities as an equity substitute when debt is the preferred way to access a market. 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 0.9 percent for the year ended ( Reporting Period ), versus 7.3 percent for the Fund s product benchmark, the MSCI Emerging Markets Index (Net Dividend, C$) ( MSCI Emerging Markets Index (ND, C$) ). Returns for other series of the Fund may vary, largely due to differences in fees and expenses. Unlike the benchmark, the Fund s return is quoted after the deduction of fees and expenses. Market Update Emerging market equities were up over the Reporting Period. Performance was highest in the first half of the Reporting Period as the asset class was buoyed by improving growth and increased interest by investors. Emerging market equities gave back some of their gains late in the Reporting Period as uncertainty increased following the result in the U.S. presidential election. Dispersion between the best and worst performing countries remained high across the emerging markets, which is a continued opportunity for active country selection. The best performing market, Brazil, ended the Reporting Period up 60.5 percent, compared to the worst performing market, Greece, which was down 15.2 percent. The best performing markets over the Reporting Period were Brazil, Peru, Russia and Hungary. Greece, Egypt, Mexico and Turkey were the worst performers. Key Contributors/Detractors The Fund s underweight allocation to China (by 8.7 percent) and stock selection in that market were the top contributors to performance. The Fund s stock selection in India was an additional contributor, in part driven by a holding in energy company Bharat Petroleum Corporation Limited. The Fund s overweight allocation to Peru (by 1.9 percent) also helped performance, as Peru was one of the best-performing markets over the Reporting Period. Stock selection in Taiwan and an underweight allocation (by 2.4 percent) to that market were the top detractors from performance. The Fund s stock selection in South Korea also detracted from performance. The Fund s underweight allocation to Russia (by 1.6 percent) was an additional detractor as that market outperformed over the Reporting Period. Emerging market equities may potentially become illiquid securities. The Sub-Adviser monitors the overall liquidity of the Fund on a regular basis, and the number of trading days required to liquidate holdings, to ensure that the Fund can meet its future cash needs. Assets The Fund s assets increased significantly resulting from the merger with the TD Latin American Growth Fund on April 22, Recent Developments The Sub-Adviser recently visited Mexico in light of the U.S. presidential election result, which has hit Mexican stocks and currency hard as investors grapple with the impact on trade relations between the two countries. The market continues to reflect near-term uncertainty around the new President s policies and politics. While uncertainty is set to continue, the Fund has added to specific stocks, which in the Sub-Adviser s view are now pricing in an overly negative scenario for 2017, such as Grupo Financiero Banorte SAB de CV and Alsea SAB de CV. The Sub-Adviser expects higher interest rates, solid credit growth and controlled asset quality should result in steady growth for Banorte in Alsea is turning around its underperforming businesses, namely Burger King and VIPs, as well as using new technology to drive improvements in efficiency at pizza chain Domino s. At the same time, Alsea is aggressively growing its highest margin business, Starbucks, which should continue to drive growth. The Sub-Adviser reduced the Fund s position in Coca-Cola Femsa SAB de CV given the pressure the Mexican consumer is under in a slowing growth environment, with decelerating real wages, in the near term. The Sub-Adviser maintains a positive view of the company for the longer term, given the growth potential from consolidating the convenience store, pharmacy and gas station markets within Mexico. The Sub-Adviser added to the Fund s exposure to Brazil in October, reducing the underweight exposure to the country after a research trip confirmed an improvement in both political and economic momentum. To add to this exposure, the Sub-Adviser added energy company Petroleo Brasileiro SA ( Petrobras ). Petrobras is an integrated oil and gas company with exploration and production, refining, transportation, distribution and other businesses, and it is 64 percent-owned by the Brazilian government. Petrobras is one of the largest oil producers in the world and a global leader in deep/ultra-deep water oil production. A new board and management team were appointed in June, focused on stream-lining operations and reducing balance sheet debt. The Sub-Adviser anticipates that 1

3 more balance sheet reform should be forthcoming after the successful debt refinancing and asset sales the Sub-Adviser has seen from the new management thus far. In addition, a stronger currency and more favourable fuel pricing policy should also help drive performance. The Fund s positions were also increased in Banco Bradesco SA and apparel retailer Lojas Renner SA. These additions were financed in part by selling energy distributor Ultrapar Participacoes SA. In Eastern Europe, the Sub-Adviser added to the Fund s exposure to banks, establishing new positions in Hungarian bank OTP Bank PLC and Polish bank Bank Zachodni WBK SA ( BZW ). OTP is the largest retail bank in Hungary with 12 million customers across Hungary, Bulgaria, Ukraine, Russia, Croatia, Romania, Serbia, Slovakia and Montenegro. OTP is benefiting from renewed loan growth after years of debt reduction and more supportive government policy, as is BZW. BZW is also improving profitability by focusing its growth in select higher-margin segments, including consumer, mortgage, leasing and small and medium enterprises, and by rationalizing costs. The Sub-Adviser reduced the Fund s exposure to Turkey, selling both Arcelik AS and Ulker Biskuvi Sanayi AS as the macroeconomic and political outlook in the country deteriorated. The Fund also established a position in Russian oil company Gazprom PJSC, taking advantage of negative sentiment towards the stock, and a combination of improving operating financials and increasing pressure from the government to increase its dividend. In Asia, the newest development was the announcement of demonetization in India, where 86 percent of the legal tender in the market was taken out of circulation. As a result, the Sub-Adviser has been reducing the Fund s exposure to India given the growth shock that this move could cause over the coming year, particularly to the domestic growth and consumer stocks the Fund has exposure to. At the margin, the Sub-Adviser cut Thailand and added to Indonesia. The Sub-Adviser added PT Bank Mandiri (Persero) Tbk, a well-run bank with a focus on shareholder return, and PT Semen Indonesia (Persero) Tbk, Indonesia s largest cement company, which is benefiting from peaking capacity growth and stronger demand. Thai hotel and food and beverage company Minor International PCL was sold, as was real estate management and development company Central Pattana PCL. The Sub-Adviser added to Bangkok Dusit Medical Services PCL, a strong hospital operator in Thailand. The Sub-Adviser has added to the defense sector through South Korean companies Korea Aerospace Industries Ltd. and Hanwha Techwin Co., Ltd. The Sub-Adviser anticipates that the defense business should benefit from robust growth with improving margins, driven by a rising proportion of exports and vertical integration of the missile defense business. The Fund maintains underweight exposure to China (by an average of 8.7 percent over the Report Period), where the Sub-Adviser anticipates growth may continue to come under pressure from over-indebtedness. The other large underweight exposures in the portfolio are Malaysia (by 3.0 percent), where the Fund has no holdings, South Korea (by 2.7 percent) and Taiwan (by 2.4 percent). The Fund continues to exploit opportunities in Central Eastern Europe (with an overweight exposure of 3.1 percent), the Philippines (+2.7 percent), Mexico (+2.3 percent), Peru (+1.5 percent) and Indonesia (+1.5 percent). In a world facing lower economic growth from a combination of demographic pressure, lower trade volumes and a large increase in debt, in China in particular, the Fund continues to own and seek companies benefiting from healthy domestic demand and the growth of the aging population, where demand is high for health care, consumer experiences and services including travel and leisure activities. Demand for financial services in countries with low credit penetration is also high. The Fund seeks to minimize exposure to countries highly dependent on trade and where credit growth has greatly exceeded the pace of economic growth over the past five years. With global trade declining as protectionism is becoming more politically appealing, and geopolitical tension rising in such areas as the South China Sea and the Middle East, the Sub-Adviser is focused on identifying innovative companies benefiting from domestic infrastructure projects and defense spending. 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. TDAM has retained Morgan Stanley Investment Management Inc. as sub-adviser for the Fund in addition to TDAM. The Fund pays TDAM an annual management fee, which may vary for each series of Fund units, and an annual administration fee of 0.35 percent with respect to the Investor Series and Advisor 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. ( TDW ), a wholly-owned subsidiary of TD. TDW, 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. 2

4 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. Administration and Securityholder Services: TDW, in addition to acting as a dealer, also provides administration and securityholder services to the Private-EM Series units of the Fund for which such costs are reflected in the operating expenses for the Private-EM Series units of the Fund. These services include securityholder account maintenance and reporting. 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 tdassetmanagement.com or at the securityholder s request at no cost by contacting TDAM (see front cover). The Fund did not engage in any portfolio transactions requiring IRC approval during the Reporting Period. 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 Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.57) (0.59) (0.56) (0.50) (0.43) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (0.99) Total Increase (Decrease) from Operations Distributions: From Net Investment Income (excluding dividends) From Dividends From Capital Gains Return of Capital Total Annual Distributions Net Assets at December ADVISOR SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.72) (0.74) (0.71) (0.63) (0.53) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (0.20) 0.35 (1.24) Total Increase (Decrease) from Operations Distributions: From Net Investment Income (excluding dividends) From Dividends From Capital Gains Return of Capital Total Annual Distributions Net Assets at December F-SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.48) (0.48) (0.47) (0.39) (0.30) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (0.04) 0.23 (1.48) Total Increase (Decrease) from Operations Distributions: From Net Investment Income (excluding dividends) From Dividends From Capital Gains (0.08) Return of Capital Total Annual Distributions 3 (0.08) Net Assets at December 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) PRIVATE-EM SERIES 2016* Net Assets, Beginning of Year N/A N/A N/A N/A Increase (Decrease) from Operations: Total Revenue 0.25 N/A N/A N/A N/A Total Expenses (excluding distributions) (0.15) N/A N/A N/A N/A Realized Gains (Losses) for the Period 0.35 N/A N/A N/A N/A Unrealized Gains (Losses) for the Period 0.62 N/A N/A N/A N/A Total Increase (Decrease) from Operations N/A N/A N/A N/A Distributions: From Net Investment Income (excluding dividends) 0.00 N/A N/A N/A N/A From Dividends 0.00 N/A N/A N/A N/A From Capital Gains (0.21) N/A N/A N/A N/A Return of Capital 0.00 N/A N/A N/A N/A Total Annual Distributions 3 (0.21) N/A N/A N/A N/A Net Assets at December N/A N/A N/A N/A O-SERIES Net Assets, Beginning of Year Increase (Decrease) from Operations: Total Revenue Total Expenses (excluding distributions) (0.08) (0.07) (0.07) (0.05) (0.04) Realized Gains (Losses) for the Period Unrealized Gains (Losses) for the Period (2.90) 0.50 (1.07) (0.24) 1.47 Total Increase (Decrease) from Operations 2 (2.48) Distributions: From Net Investment Income (excluding dividends) From Dividends From Capital Gains (0.26) Return of Capital Total Annual Distributions 3 (0.26) Net Assets at December This information is derived from the Fund s audited annual financial statements. The Fund adopted International Financial Reporting Standards ( IFRS ) on January 1, 2014 and accordingly adjusted the immediately preceding financial year ended December 31, 2013 to reflect the amounts in accordance with IFRS. Previously, financial statements were prepared as per Canadian generally accepted accounting principles ( GAAP ) under which the Fund measured fair values of its investments based on bid prices for long positions and ask prices for short positions. As such, the net assets per unit presented in the financial statements may have differed from the net asset value ( NAV ) per unit calculated for fund pricing purposes. Under IFRS, the Fund measures fair values 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 NAV for transactions with unitholders. All figures presented prior to January 1, 2013 were prepared in accordance with Canadian GAAP. 2 Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations presented in the Net Assets per Unit tables starting from fiscal year 2013 are based on the weighted average number of units outstanding over the financial periods. The increase (decrease) from operations prior to 2013 were calculated by aggregating each valuation day s increase (decrease) from operations divided by the number of units outstanding on that date. 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 Total Net Asset Value ($000s) 1 126,513 93, , , ,400 Number of Units Outstanding (000s) 1 7,441 5,538 6,369 7,897 9,152 Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) ADVISOR SERIES Total Net Asset Value ($000s) 1 12,353 14,133 14,602 17,387 19,473 Number of Units Outstanding (000s) ,027 Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) F-SERIES Total Net Asset Value ($000s) 1 3,411 2,108 1,740 1,440 1,234 Number of Units Outstanding (000s) Management Expense Ratio (%) Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) PRIVATE-EM SERIES Total Net Asset Value ($000s) 1 1,370 N/A N/A N/A N/A Number of Units Outstanding (000s) N/A N/A N/A N/A Management Expense Ratio (%) N/A N/A N/A N/A Management Expense Ratio Before Waivers or Absorptions (%) 1.14 N/A N/A N/A N/A Trading Expense Ratio (%) N/A N/A N/A N/A Portfolio Turnover Rate (%) N/A N/A N/A N/A Net Asset Value per Unit ($) N/A N/A N/A N/A O-SERIES Total Net Asset Value ($000s) 1 25,198 1,673 2,187 18,565 14,593 Number of Units Outstanding (000s) 1 1, ,513 1,271 Management Expense Ratio (%) 2, Management Expense Ratio Before Waivers or Absorptions (%) Trading Expense Ratio (%) Portfolio Turnover Rate (%) Net Asset Value per Unit ($) 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) for the stated period, including the Fund s proportionate share of the MER, if any, of the underlying fund(s) in which the Fund has invested, and is expressed as an annualized percentage of daily average NAV during the period. It excludes any operating expenses waived or absorbed by TDAM, which may be discontinued at any time by TDAM at its discretion without notice. 3 The trading expense ratio ( TER ) represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average NAV during the stated period. Where a Fund invests in units of any underlying fund, the TER presented for the Fund includes the portion of TERs, if available, of the underlying fund(s) attributable to this investment. 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, directly or indirectly, 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. 5 The Fund does not pay any management fees or operating expenses with respect to the O-Series units of the Fund, but may have a MER as a result of its holdings in underlying fund(s), representing the weighted average MER of those underlying fund(s) for the reporting period. 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, other than O-Series units, 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 maximum management fee is the maximum fee that can be charged to each series of units of the Fund according to the simplified prospectus. TDAM may charge management fees that are less than the management fees TDAM is otherwise entitled to charge each series of units of the Fund. The actual management fee is the annualized fee that was charged for the Reporting Period. TDAM may charge the maximum management fee without notice to unitholders. Management fees for the Reporting Period and a breakdown of the major services rendered for each series, as a percentage of the actual management fees, are as follows: Maximum Actual Dealer Waived (expressed as a %) Mgmt. Fee Mgmt. Fee Compensation Expenses Other Investor Series Advisor Series F-Series Private-EM Series O-Series N/A N/A N/A There are no management fees or expenses paid by the Fund in respect of O-Series units of the Fund. Unitholders in the O-Series pay a negotiated fee directly to TDAM. In addition to the management fee paid, unitholders in the Private-EM Series pay a negotiated fee directly to TDAM, their dealer or TD Waterhouse Private Investment Counsel Inc. Investment advisory, trustee, marketing services and other. 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. 7

9 From February 4, 2016 (commencement of operations) to 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: Product Benchmark: MSCI Emerging Markets Index (ND, C$) This index includes stocks of companies in the emerging market countries of the world, net of withholding taxes. General market indices: MSCI Emerging Markets Index (ND, C$). Past 10 Past 5 Past 3 Past (expressed as a %) years years years year INVESTOR SERIES Product Benchmark General market: MSCI Emerging Markets Index (ND, C$) ADVISOR SERIES Product Benchmark General market: MSCI Emerging Markets Index (ND, C$) F-SERIES Product Benchmark General market: MSCI Emerging Markets Index (ND, C$) Since Past 5 Past 3 Past (expressed as a %) inception years years year (Start date February 4, 2016) PRIVATE-EM SERIES 11.3 N/A N/A N/A Product Benchmark 16.9 N/A N/A N/A General market: MSCI Emerging Markets Index (ND, C$) 16.9 N/A N/A N/A (Start date April 6, 2010) O-SERIES Product Benchmark General market: MSCI Emerging Markets Index (ND, C$) Over the Reporting Period, units of the Investor Series and Advisor Series returned 0.9 percent, F-Series returned 2.4 percent and O-Series returned 3.8 percent. This compares to a return of 7.3 percent for the MSCI Emerging Markets Index (ND, C$). Since its inception on February 4, 2016, the Private-EM Series returned 11.3 percent versus 16.9 percent for the MSCI Emerging Markets Index (ND, C$) over the same period. Variations in the returns for the different series of the Fund are largely due to differences in fees and expenses. Unlike the index, the Fund s return is quoted after the deduction of fees and expenses. The Fund s stock selection and underweight in Taiwan was the top detractor from performance. 8

10 Summary of Investment Portfolio as at % of Net Asset Value as at % of Net Asset Value ASSET ALLOCATION Emerging Markets Equities 88.0 Non-Emerging Markets Equities 10.2 Cash 1.6 Other Net Assets (Liabilities) 0.2 GEOGRAPHIC ALLOCATION China 14.6 South Korea 10.7 Taiwan 9.1 India 8.1 Brazil 7.8 Mexico 5.8 Indonesia 5.4 South Africa 4.5 Hong Kong 4.2 Philippines 3.7 Other Countries Emerging Markets 18.3 Other Countries Non-Emerging Markets 6.0 Cash 1.6 Other Net Assets (Liabilities) 0.2 TOTAL NET ASSET VALUE (000s) $ 168,845 TOP 25 INVESTMENTS 1. Tencent Holdings Limited Samsung Electronics Co., Ltd Taiwan Semiconductor Manufacturing Company Limited China Mobile Limited China Construction Bank Corporation Naspers Limited Itau Unibanco Holding SA Credicorp Ltd Cash Banco Bradesco SA Bank of China Limited Grupo Financiero Banorte SAB de CV Petroleo Brasileiro SA Petrobras Alibaba Group Holding Limited Samsonite International SA CEMEX SAB de CV Fomento Economico Mexicano SAB de CV BRF SA PAO Gazprom Ashok Leyland Limited AIA Group Ltd MercadoLibre Inc Shree Cement Limited Steinhoff International Holdings NV Raia Drogasil SA 1.0 Total % of Net Asset Value represented by these holdings 43.3 Note: Totals may not add due to rounding to one decimal place of individual figures. 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 9

11 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. For Funds with references to FTSE TMX Canada indices: FTSE TMX Global Debt Capital Markets Inc 2017 FTSE is a trade mark of FTSE International Ltd and is used under licence. TMX is a trade mark of TSX Inc. and is used under licence. All rights in the FTSE TMX Global Debt Capital Markets Inc s indices and/or FTSE TMX Global Debt Capital Markets Inc s ratings vest in FTSE TMX Global Debt Capital Markets Inc and/or its licensors. Neither FTSE TMX Global Debt Capital Markets Inc nor its licensors accept any liability for any errors or omissions in such indices and/or ratings or underlying data. No further distribution of FTSE TMX Global Debt Capital Markets Inc s data is permitted without FTSE TMX Global Debt Capital Markets Inc s express written consent. 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. All trademarks are the property of their respective owners. The TD logo and other trade-marks are the property of The Toronto-Dominion Bank. 10