BONAVISTA FUNDS Annual Report

Transcription

1 BONAVISTA FUNDS 2013 Annual Report

2 TABLE OF CONTENTS MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING 1 INDEPENDENT AUDITOR S REPORT 2 BonaVista Canadian Equity Fund 3 BonaVista Fixed Income Fund 7 BonaVista U.S. Equity Fund 12 BonaVista International Equity Fund 17 BonaVista Money Market Fund 22 BonaVista Balanced Fund 26 BonaVista Private Balanced Fund 33 GENERIC NOTES TO FINANCIAL STATEMENTS 40

3 Management s responsibility for financial reporting On November 1, 2013, BonaVista Asset Management Ltd. was amalgamated with RBC Global Asset Management Inc. ( RBC GAM ). The accompanying financial statements have been prepared by RBC GAM, as manager of the Funds (the Funds ), and approved by the Board of Directors of RBC GAM. We are responsible for the information contained within these financial statements. We have maintained appropriate procedures and controls to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with accounting principles generally accepted in Canada (and they include certain amounts that are based on estimates and judgments). The significant accounting policies, which we believe are appropriate for the Funds, are described in Note 3 to the financial statements. Deloitte LLP, Independent Chartered Professional Accountants, Chartered Accountants, have performed an independent audit of the financial statements in accordance with Canadian generally accepted auditing standards. Their report is set out on the next page. John S. Montalbano, CFA Chief Executive Officer RBC Global Asset Management Inc. Frank Lippa, CPA, CA CFO and Chief Operating Officer RBC Global Asset Management Inc. March 7,

4 independent auditor s report To the Unitholders of: BonaVista Canadian Equity Fund BonaVista Fixed Income Fund BonaVista U.S. Equity Fund BonaVista International Equity Fund BonaVista Money Market Fund BonaVista Balanced Fund BonaVista Private Balanced Fund (collectively referred to as the Funds ) We have audited the accompanying financial statements of each of the Funds, which comprise the statement of investment portfolio as at, the statements of net assets as at December 2013 and 2012 and the statements of operations and changes in net assets for the years then ended, and 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 these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management 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 these financial statements 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 procedures 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 accounting 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 our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as at and 2012 and the results of their operations and changes in their net assets for the years then ended in accordance with Canadian generally accepted accounting principles. Chartered Professional Accountants, Chartered Accountants, Licensed Public Accountants March 7, 2014 Toronto, Ontario 2

5 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) BONAVISTA CANADIAN EQUITY FUND Fair % of Net Holdings Security Cost Value Assets CANADIAN equities Consumer Discretionary 10 BRP Inc. $ 224 $ Canadian Tire Corp., Ltd Gildan Activewear Inc Magna International Inc Quebecor Inc Thomson Reuters Corp Consumer Staples 82 Alimentation Couche-Tard Inc Alliance Grain Traders Inc Saputo Inc Shoppers Drug Mart Corp Energy 34 Baytex Energy Corp Canadian Natural Resources Ltd Cenovus Energy Inc EnCana Corp Gran Tierra Energy Inc Husky Energy Inc MEG Energy Corp Precision Drilling Corp Suncor Energy Inc Talisman Energy Inc Financials 193 Bank of Montreal Bank of Nova Scotia Canadian Imperial Bank of Commerce Element Financial Corp Genworth MI Canada Inc Home Capital Group Inc IGM Financial Inc Intact Financial Corp Manulife Financial Corp National Bank of Canada Royal Bank of Canada* Sun Life Financial Inc The Toronto-Dominion Bank TMX Group Ltd Health Care 13 Valeant Pharmaceuticals International Inc. $ $ Industrials 702 Bombardier Inc., Class B CAE Inc Canadian National Railway Co Fair % of Net Holdings Security Cost Value Assets Industrials (cont.) 32 Canadian Pacific Railway Ltd. $ $ Finning International Inc MacDonald Dettwiler & Associates Ltd Russel Metals Inc SNC-Lavalin Group Inc Stantec Inc Information Technology 126 Aastra Technologies Ltd Blackberry Ltd CGI Group Inc Open Text Corp Materials 70 Agrium Inc Barrick Gold Corp First Quantum Minerals Ltd Goldcorp Inc HudBay Minerals Inc Lundin Mining Corp Methanex Corp Potash Corporation of Saskatchewan Inc Teck Resources Ltd Thompson Creek Metals Co., Inc Yamana Gold Inc Telecommunication Services 123 Rogers Communications Inc., Class B TELUS Corp TOTAL CANADIAN EQUITIES POOLED FUNDS 148 Bonavista Money Market Fund* TOTAL POOLED FUNDS TOTAL INVESTMENTS TRANSACTION COSTS (84) NET INVESTMENTS $ OTHER NET ASSETS NET ASSETS $ * Investment in related party (see note 6 in the generic notes). 3

6 Financial Statements Bonavista canadian Equity fund Statements of Net Assets (in $000s except per unit amounts) December 31 (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash Accrued income Subscriptions receivable TOTAL ASSETS LIABILITIES Accrued liabilities Redemptions payable TOTAL LIABILITIES NET ASSETS $ $ Investments at cost $ $ NET ASSETS, END OF PERIOD $ $ NET ASSETS PER UNIT, END OF PERIOD $ $ NET ASSET VALUE (TRANSACTIONAL NAV) PER UNIT, END OF PERIOD (see note 3 in the generic notes) $ $ Statements of Operations (in $000s except per unit amounts) For the periods ended December 31 (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Dividends $ $ Interest TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Custodial fees and servicing charges Audit fees 7 7 TOTAL EXPENSES NET INVESTMENT INCOME (LOSS) realized and unrealized gain (Loss) on investments Net realized gain (loss) on investments Change in unrealized gain (loss) on investments Transaction costs (31) (48) net gain (loss) on investments INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ $ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS per unit $ 4.67 $ 2.43 Approved by the Board of Directors of RBC Global Asset Management Inc. John S. Montalbano Director Damon G. Williams Director 4

7 Financial Statements Bonavista canadian Equity fund Statements of Changes in Net Assets (in $000s) For the periods ended December 31 (see note 2 in the generic notes) NET ASSETS BEGINNING OF PERIOD $ $ INCREASE (DECREASE) FROM OPERATIONS Early redemption fees Proceeds from units issued Proceeds from reinvestment of distributions Payments on redemption of units (36 898) (28 370) TOTAL UNIT TRANSACTIONS (3 813) Distributions from net income (8 644) (6 590) Distributions from net gains (7 066) (4 295) Distributions from capital TOTAL DISTRIBUTIONS (15 710) (10 885) TOTAL INCREASE (DECREASE) IN NET ASSETS NET ASSETS END OF PERIOD $ $

8 Notes to financial statements fund specific information Bonavista canadian Equity fund Financial instrument risk and capital management (see note 4 in the generic notes) Other price risk (% impact on net assets) The table below shows the impact of a 1% change in the broad-based index (noted below) on the Fund s net assets, using a 36-month historical correlation of data of the Fund s return and the index, with all other factors kept constant, as at: December 31 December S&P/TSX Composite Total Return Index + or or Since historical correlation may not be representative of future correlation, actual results could differ from this sensitivity analysis and the difference could be material. Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2012 in the valuation of the Fund s financial instruments carried at fair value. Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio December 31, 2012 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio Management fees (see note 6 in the generic notes) No management fees are payable by the Fund. Unitholders of the Fund pay a negotiated fee directly to RBC GAM for investment-counselling services. Unitholders equity (000s) The unitholders equity of the Fund includes amounts representing units, undistributed net income (loss), realized gain (loss) on investments and unrealized gain (loss) on investments. There is no limitation on the number of units available for issue. Units are purchased and redeemed at the transactional NAV per unit. For the periods ended December 31 (see note 2 in the generic notes) Opening units Issued number of units Reinvested number of units Redeemed number of units (1 790) (1 519) Ending number of units Transaction costs ($000s except %) Transaction costs, including brokerage commissions, in consideration of portfolio transactions for the periods ended: December 31 December $ % $ % Total transaction costs Related-party brokerage commissions* Commission arrangements * See note 6 in the generic notes. Commission arrangements are part of commission amounts paid to dealers. The Fund uses commission arrangements (formerly known as soft dollars ) for research and/or order execution goods and services. For the periods ended and 2012, there were no transfers of financial instruments between Level 1 and Level 2. Please see the generic notes at the back of the financial statements. 6

9 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) Bonavista fixed income fund Coupon Fair % of Net Par Value Security Rate % Maturity Cost Value Assets CANADIAN BONDS CORPORATE $ 505 AT&T Inc Nov-20 $ 505 $ Bank of Montreal Apr Bank of Nova Scotia Jun Bank of Nova Scotia Aug Bell Canada Jun BMW Canada Inc May Canadian Imperial Bank of Commerce Nov Canadian Western Bank Sep Caterpillar Financial Services Ltd Nov Daimler Canada Finance Inc Sep Dollarama Inc Nov Enbridge Income Fund Feb Enercare Solutions Inc Nov GE Capital Canada Funding Co May Husky Energy Inc Mar Labrador-Island Link Funding Trust Jun Laurentian Bank of Canada Oct National Bank of Canada Aug Shoppers Drug Mart Corp May Teranet Holdings LP Dec The Toronto-Dominion Bank Aug TransCanada Pipelines Ltd Jul FEDERAL 910 Government of Canada Aug Government of Canada Sep Government of Canada Sep Government of Canada Mar Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Dec Canada Housing Trust No Dec Canada Housing Trust No Dec Canada Housing Trust No Dec Canada Housing Trust No Mar Canada Housing Trust No Sep MUNICIPAL 350 British Columbia Municipal Finance Dec British Columbia Municipal Finance Sep City of Montreal Sep PROVINCIAL 900 OMERS Realty Corp Jun Province of Manitoba Sep Province of Ontario Sep

10 Statement of Investment Portfolio (in $000s) Bonavista fixed income Fund Coupon Fair % of Net Par Value Security Rate % Maturity Cost Value Assets PROVINCIAL (cont.) $ Province of Ontario Jun-23 $ $ Province of Ontario Jun Province of Ontario Jun Province of Quebec Dec Province of Quebec Dec Province of Quebec Sep Province of Quebec Dec Province of Quebec Dec TOTAL CANADIAN BONDS POOLED FUNDS 65 Bonavista Money Market Fund* TOTAL POOLED FUNDS TOTAL INVESTMENTS NET INVESTMENTS $ OTHER NET ASSETS NET ASSETS $ * Investment in related party (see note 6 in the generic notes). 8

11 Financial Statements Bonavista fixed income Fund Statements of Net Assets (in $000s except per unit amounts) December 31 (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash Accrued income Subscriptions receivable TOTAL ASSETS LIABILITIES Accrued liabilities 10 8 Redemptions payable TOTAL LIABILITIES NET ASSETS $ $ Investments at cost $ $ NET ASSETS, END OF PERIOD $ $ NET ASSETS PER UNIT, END OF PERIOD $ 9.79 $ NET ASSET VALUE (TRANSACTIONAL NAV) PER UNIT, END OF PERIOD (see note 3 in the generic notes) $ 9.80 $ Statements of Operations (in $000s except per unit amounts) For the periods ended December 31 (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Interest $ $ TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Custodial fees and servicing charges Audit fees 7 7 TOTAL EXPENSES NET INVESTMENT INCOME (LOSS) realized and unrealized gain (Loss) on investments Net realized gain (loss) on investments Change in unrealized gain (loss) on investments (2 037) (1 241) net gain (loss) on investments (1 856) 299 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (542) $ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS per unit $ (0.12) $ 0.40 Approved by the Board of Directors of RBC Global Asset Management Inc. John S. Montalbano Director Damon G. Williams Director 9

12 Financial Statements Bonavista fixed income Fund Statements of Changes in Net Assets (in $000s) For the periods ended December 31 (see note 2 in the generic notes) NET ASSETS BEGINNING OF PERIOD $ $ INCREASE (DECREASE) FROM OPERATIONS (542) Early redemption fees Proceeds from units issued Proceeds from reinvestment of distributions Payments on redemption of units (6 815) (27 335) TOTAL UNIT TRANSACTIONS 452 (20 633) Distributions from net income (1 314) (1 422) Distributions from net gains (398) (1 543) Distributions from capital TOTAL DISTRIBUTIONS (1 712) (2 965) TOTAL INCREASE (DECREASE) IN NET ASSETS (1 802) (21 870) NET ASSETS END OF PERIOD $ $

13 Notes to financial statements fund specific information Bonavista fixed income Fund Financial instrument risk and capital management (see note 4 in the generic notes) Credit risk (%) The table below summarizes the Fund s credit risk exposure grouped by credit ratings as at: December 31 December 31 Rating AAA AA A BBB Total Interest rate risk (%) The table below summarizes the Fund s exposure to interest rate risk by remaining term to maturity as at: December 31 December 31 Term to maturity Less than 1 year 1 5 years years > 10 years Total As at, had prevailing interest rates risen or lowered by 1%, with all other factors kept constant, the Fund s net assets may have decreased or increased, respectively, by approximately 6.3% (December 31, %). In practice, actual results could differ from this sensitivity analysis and the difference could be material. Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2012 in the valuation of the Fund s financial instruments carried at fair value. December 31, 2012 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio For the periods ended and 2012, there were no transfers of financial instruments between Level 1 and Level 2. Management fees (see note 6 in the generic notes) No management fees are payable by the Fund. Unitholders of the Fund pay a negotiated fee directly to RBC GAM for investment-counselling services. Unitholders equity (000s) The unitholders equity of the Fund includes amounts representing units, undistributed net income (loss), realized gain (loss) on investments and unrealized gain (loss) on investments. There is no limitation on the number of units available for issue. Units are purchased and redeemed at the transactional NAV per unit. For the periods ended December 31 (see note 2 in the generic notes) Opening units Issued number of units Reinvested number of units Redeemed number of units (678) (2 620) Ending number of units Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio Please see the generic notes at the back of the financial statements. 11

14 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) Bonavista U.S. equity Fund Fair % of Net Holdings Security Cost Value Assets United states equities Consumer Discretionary 17 Bed Bath & Beyond Inc. $ $ General Motors Co Johnson Controls Inc Starz Consumer Staples 40 Archer Daniels Midland Co PepsiCo Inc Rite Aid Corp Wal-Mart Stores Inc Walgreen Co Energy 25 Apache Corp Chevron Corp Nabors Industries Ltd Noble Corp PLC Valero Energy Corp Financials 28 Aflac Inc AllianceBernstein Holding LP American International Group Inc Bank of America Corp Berkshire Hathaway Inc First Republic Bank JPMorgan Chase & Co MetLife Inc Oaktree Capital Group LLC Wells Fargo & Co Health Care 21 Becton Dickinson and Co Johnson & Johnson Medtronic Inc Pfizer Inc Varian Medical Systems Inc Waters Corp WellPoint Inc Industrials 43 Delta Air Lines Inc Emerson Electric Co Generac Holdings Inc Heartland Express Inc Raytheon Co Spirit Airlines Inc United Technologies Corp Fair % of Net Holdings Security Cost Value Assets Information Technology 5 Apple Inc. $ $ Cisco Systems Inc FLIR Systems Inc Google Inc Hewlett-Packard Co Microsoft Corp Motorola Solutions Inc. 61 Oracle Corp QUALCOMM Inc ScanSource Inc Materials 20 Mosaic Co Newmont Mining Corp Telecommunication Services 19 Verizon Communications Inc TOTAL UNITED STATES EQUITIES POOLED FUNDS 100 Bonavista Money Market Fund* TOTAL POOLED FUNDS TOTAL INVESTMENTS TRANSACTION COSTS (61) NET INVESTMENTS $ OTHER NET ASSETS NET ASSETS $ * Investment in related party (see note 6 in the generic notes). 12

15 Financial Statements Bonavista U.S. Equity Fund Statements of Net Assets (in $000s except per unit amounts) December 31 (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash Due from broker Accrued income Subscriptions receivable TOTAL ASSETS LIABILITIES Due to broker Accrued liabilities 10 7 Redemptions payable TOTAL LIABILITIES NET ASSETS $ $ Investments at cost $ $ NET ASSETS, END OF PERIOD $ $ NET ASSETS PER UNIT, END OF PERIOD $ $ NET ASSET VALUE (TRANSACTIONAL NAV) PER UNIT, END OF PERIOD (see note 3 in the generic notes) $ $ Statements of Operations (in $000s except per unit amounts) For the periods ended December 31 (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Dividends $ $ Interest TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Custodial fees and servicing charges Audit fees 7 7 TOTAL EXPENSES NET INVESTMENT INCOME (LOSS) realized and unrealized gain (Loss) on investments Net realized gain (loss) on investments Change in unrealized gain (loss) on investments Transaction costs (76) (106) net gain (loss) on investments INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ $ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS per unit $ $ 2.77 Approved by the Board of Directors of RBC Global Asset Management Inc. John S. Montalbano Director Damon G. Williams Director 13

16 Financial Statements Bonavista U.S. Equity Fund Statements of Changes in Net Assets (in $000s) For the periods ended December 31 (see note 2 in the generic notes) NET ASSETS BEGINNING OF PERIOD $ $ INCREASE (DECREASE) FROM OPERATIONS Early redemption fees Proceeds from units issued Proceeds from reinvestment of distributions Payments on redemption of units (7 108) (30 070) TOTAL UNIT TRANSACTIONS (3 187) (22 898) Distributions from net income (1 136) (1 217) Distributions from net gains Distributions from capital TOTAL DISTRIBUTIONS (1 136) (1 217) TOTAL INCREASE (DECREASE) IN NET ASSETS (17 275) NET ASSETS END OF PERIOD $ $

17 Notes to financial statements fund specific information Bonavista U.S. Equity Fund Financial instrument risk and capital management (see note 4 in the generic notes) Currency risk (% of net assets) The table below summarizes the Fund s net exposure (after hedging, if any) to currency risk as at: December 31 December 31 Currency United States dollar Total As at, if the Canadian dollar had strengthened or weakened by 1% in relation to the above currency, with all other factors kept constant, the Fund s net assets may have decreased or increased, respectively, by approximately 1.0% (December 31, %). In practice, actual results could differ from this sensitivity analysis and the difference could be material. Other price risk (% impact on net assets) The table below shows the impact of a 1% change in the broad-based index (noted below) on the Fund s net assets, using a 36-month historical correlation of data of the Fund s return and the index, with all other factors kept constant, as at: December 31 December S&P 500 Total Return Index (CAD) + or or Since historical correlation may not be representative of future correlation, actual results could differ from this sensitivity analysis and the difference could be material. Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2012 in the valuation of the Fund s financial instruments carried at fair value. Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio December 31, 2012 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio For the periods ended and 2012, there were no transfers of financial instruments between Level 1 and Level 2. Management fees (see note 6 in the generic notes) No management fees are payable by the Fund. Unitholders of the Fund pay a negotiated fee directly to RBC GAM for investment-counselling services. Taxes ($000s) (see note 5 in the generic notes) The non-capital and capital losses as at for the Fund were approximately: Capital losses $ Non-capital losses $ Unitholders equity (000s) The unitholders equity of the Fund includes amounts representing units, undistributed net income (loss), realized gain (loss) on investments and unrealized gain (loss) on investments. There is no limitation on the number of units available for issue. Units are purchased and redeemed at the transactional NAV per unit. For the periods ended December 31 (see note 2 in the generic notes) Opening units Issued number of units Reinvested number of units Redeemed number of units (228) (1 221) Ending number of units Please see the generic notes at the back of the financial statements. 15

18 Notes to financial statements fund specific information Bonavista U.S. Equity Fund Transaction costs ($000s except %) Transaction costs, including brokerage commissions, in consideration of portfolio transactions for the periods ended: December 31 December $ % $ % Total transaction costs Related-party brokerage commissions* Commission arrangements * See note 6 in the generic notes. Commission arrangements are part of commission amounts paid to dealers. The Fund uses commission arrangements (formerly known as soft dollars ) for research and/or order execution goods and services. Please see the generic notes at the back of the financial statements. 16

19 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) Bonavista International equity Fund Fair % of Net Holdings Security Cost Value Assets POOLED FUNDS 776 Sprucegrove International Pooled Fund $ $ TOTAL POOLED FUNDS TOTAL INVESTMENTS NET INVESTMENTS $ OTHER NET ASSETS (222) 2.3 NET ASSETS $

20 Financial Statements Bonavista International Equity Fund Statements of Net Assets (in $000s except per unit amounts) December 31 (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash 43 7 Subscriptions receivable TOTAL ASSETS LIABILITIES Accrued liabilities 9 7 Redemptions payable TOTAL LIABILITIES NET ASSETS $ $ Investments at cost $ $ NET ASSETS, END OF PERIOD $ $ NET ASSETS PER UNIT, END OF PERIOD $ $ NET ASSET VALUE (TRANSACTIONAL NAV) PER UNIT, END OF PERIOD (see note 3 in the generic notes) $ $ Statements of Operations (in $000s except per unit amounts) For the periods ended December 31 (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Dividends $ $ TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Custodial fees and servicing charges Audit fees 7 7 TOTAL EXPENSES NET INVESTMENT INCOME (LOSS) realized and unrealized gain (Loss) on investments Net realized gain (loss) on investments 714 (3 986) Change in unrealized gain (loss) on investments net gain (loss) on investments INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ $ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS per unit $ 4.86 $ 2.48 Approved by the Board of Directors of RBC Global Asset Management Inc. John S. Montalbano Director Damon G. Williams Director 18

21 Financial Statements Bonavista International Equity Fund Statements of Changes in Net Assets (in $000s) For the periods ended December 31 (see note 2 in the generic notes) NET ASSETS BEGINNING OF PERIOD $ $ INCREASE (DECREASE) FROM OPERATIONS Early redemption fees Proceeds from units issued Proceeds from reinvestment of distributions Payments on redemption of units (9 743) (31 624) TOTAL UNIT TRANSACTIONS (3 858) (21 815) Distributions from net income (2 287) (2 041) Distributions from net gains Distributions from capital TOTAL DISTRIBUTIONS (2 287) (2 041) TOTAL INCREASE (DECREASE) IN NET ASSETS (13 570) NET ASSETS END OF PERIOD $ $

22 Notes to financial statements fund specific information Bonavista International Equity Fund Financial instrument risk and capital management (see note 4 in the generic notes) Currency risk (% of net assets) The table below summarizes the Fund s net exposure (after hedging, if any) to currency risk as at: December 31 December 31 Currency Euro Japanese yen Pound sterling Swiss franc Hong Kong dollar Singapore dollar South Korean won 3.5 Indian rupee Australian dollar South African rand Chinese renminbi 1.8 Brazilian real 1.5 Norwegian krone Hungarian forint Malaysian ringgit United States dollar 8.6 Total As at, if the Canadian dollar had strengthened or weakened by 1% in relation to the above currencies, with all other factors kept constant, the Fund s net assets may have decreased or increased, respectively, by approximately 1.0% (December 31, %). In practice, actual results could differ from this sensitivity analysis and the difference could be material. Other price risk (% impact on net assets) The table below shows the impact of a 1% change in the broadbased index (noted below) on the Fund s net assets, using a 36-month historical correlation of data of the Fund s return and the index, with all other factors kept constant, as at: December 31 December Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2012 in the valuation of the Fund s financial instruments carried at fair value. Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio December 31, 2012 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio For the periods ended and 2012, there were no transfers of financial instruments between Level 1 and Level 2. Management fees (see note 6 in the generic notes) No management fees are payable by the Fund. Unitholders of the Fund pay a negotiated fee directly to RBC GAM for investment-counselling services. Taxes ($000s) (see note 5 in the generic notes) The non-capital and capital losses as at for the Fund were approximately: Capital losses $ Non-capital losses $ MSCI EAFE Total Return Net Index (CAD) + or or Since historical correlation may not be representative of future correlation, actual results could differ from this sensitivity analysis and the difference could be material. Please see the generic notes at the back of the financial statements. 20

23 Notes to financial statements fund specific information Bonavista International Equity Fund Unitholders equity (000s) The unitholders equity of the Fund includes amounts representing units, undistributed net income (loss), realized gain (loss) on investments and unrealized gain (loss) on investments. There is no limitation on the number of units available for issue. Units are purchased and redeemed at the transactional NAV per unit. For the periods ended December 31 (see note 2 in the generic notes) Opening units Issued number of units Reinvested number of units Redeemed number of units (460) (1 847) Ending number of units Investments by other related Investment Funds (000s) (see note 6 in the generic notes) The following outstanding units of the Fund were held by the following related Investment Fund as at: December 31 December BonaVista Balanced Fund Please see the generic notes at the back of the financial statements. 21

24 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) Bonavista Money Market Fund Fair % of Net Par Value Security Maturity Cost Value Assets SHORT-TERM INVESTMENTS PROVINCIAL $ Province of British Columbia 20-Jan-14 $ $ Province of British Columbia 10-Apr Province of British Columbia 29-Apr Province of British Columbia 9-May Province of British Columbia 16-May Province of British Columbia 13-Jun Province of Ontario 2-Jan Province of Ontario 29-Jan Province of Quebec 11-Apr TOTAL SHORT-TERM INVESTMENTS NET INVESTMENTS $ OTHER NET ASSETS NET ASSETS $ * Investments, which are grouped by issuer, earn interest rates ranging from 1.00% to 1.05%. 22

25 Financial Statements Bonavista Money Market Fund Statements of Net Assets (in $000s except per unit amounts) December 31 (see note 2 in the generic notes) ASSETS Investments at fair value $ $ Cash Subscriptions receivable TOTAL ASSETS LIABILITIES Accrued liabilities 11 8 Redemptions payable TOTAL LIABILITIES NET ASSETS $ $ Investments at cost $ $ NET ASSETS, END OF PERIOD $ $ NET ASSETS PER UNIT, END OF PERIOD $ $ NET ASSET VALUE (TRANSACTIONAL NAV) PER UNIT, END OF PERIOD (see note 3 in the generic notes) $ $ Statements of Operations (in $000s except per unit amounts) For the periods ended December 31 (see note 2 in the generic notes) INCOME (see note 3 in the generic notes) Interest $ 337 $ 391 TOTAL INCOME (LOSS) EXPENSES (see notes Fund Specific Information) Custodial fees and servicing charges Audit fees 7 7 TOTAL EXPENSES NET INVESTMENT INCOME (LOSS) realized and unrealized gain (Loss) on investments Change in unrealized gain (loss) on investments (13) 17 net gain (loss) on investments (13) 17 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 275 $ 363 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS per unit $ 0.10 $ 0.15 Approved by the Board of Directors of RBC Global Asset Management Inc. John S. Montalbano Director Damon G. Williams Director 23

26 Financial Statements Bonavista Money Market Fund Statements of Changes in Net Assets (in $000s) For the periods ended December 31 (see note 2 in the generic notes) NET ASSETS BEGINNING OF PERIOD $ $ INCREASE (DECREASE) FROM OPERATIONS Early redemption fees Proceeds from units issued Proceeds from reinvestment of distributions Payments on redemption of units (60 683) (63 797) TOTAL UNIT TRANSACTIONS (8 415) Distributions from net income (275) (363) Distributions from net gains Distributions from capital TOTAL DISTRIBUTIONS (275) (363) TOTAL INCREASE (DECREASE) IN NET ASSETS (8 415) NET ASSETS END OF PERIOD $ $

27 Notes to financial statements fund specific information Bonavista Money Market Fund Financial instrument risk and capital management (see note 4 in the generic notes) Credit risk (%) The table below summarizes the Fund s credit risk exposure grouped by credit ratings as at: December 31 December 31 Rating R-1 (H) R-1 (M) R-1 (L) 25.0 Total Interest rate risk (%) Due to the short-term nature of the instruments held by the Fund, the Fund is not exposed to a significant risk that the value of interest-bearing financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. Fair value hierarchy ($000s except % amounts) (see note 3 in the generic notes) The following is a summary of the inputs used as of and 2012 in the valuation of the Fund s financial instruments carried at fair value. Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio Management fees (see note 6 in the generic notes) No management fees are payable by the Fund. Unitholders of the Fund pay a negotiated fee directly to RBC GAM for investment-counselling services. Unitholders equity (000s) The unitholders equity of the Fund includes amounts representing units, undistributed net income (loss), realized gain (loss) on investments and unrealized gain (loss) on investments. There is no limitation on the number of units available for issue. Units are purchased and redeemed at the transactional NAV per unit. For the periods ended December 31 (see note 2 in the generic notes) Opening units Issued number of units Reinvested number of units Redeemed number of units (5 881) (6 182) Ending number of units Investments by other related Investment Funds (000s) (see note 6 in the generic notes) The following outstanding units of the Fund were held by the following related Investment Funds as at: December 31 December BonaVista Canadian Equity Fund BonaVista Fixed Income Fund BonaVista U.S. Equity Fund BonaVista Balanced Fund BonaVista Private Balanced Fund Total December 31, 2012 Level 1 Level 2 Level 3 Total Equities Mutual fund units Fixed-income and debt securities Short-term investments Derivatives assets Derivatives liabilities Total financial instruments % of total portfolio For the periods ended and 2012, there were no transfers of financial instruments between Level 1 and Level 2. Please see the generic notes at the back of the financial statements. 25

28 2013 Annual Financial Statements Statement of Investment Portfolio (in $000s) Bonavista Balanced Fund Coupon Fair % of Net Par Value Security Rate % Maturity Cost Value Assets CANADIAN BONDS CORPORATE $ 210 Bank of Montreal Apr-21 $ 210 $ Bank of Nova Scotia Jun Bank of Nova Scotia Aug BMW Canada Inc May Canadian Imperial Bank of Commerce Nov Canadian Western Bank Sep Caterpillar Financial Services Ltd Nov Enbridge Income Fund Feb Enercare Solutions Inc Nov GE Capital Canada Funding Co May Husky Energy Inc Mar Labrador-Island Link Funding Trust Jun Laurentian Bank Of Canada Feb Laurentian Bank of Canada Oct National Bank of Canada Aug Shoppers Drug Mart Corp May The Toronto-Dominion Bank Aug TransCanada Pipelines Ltd Jul FEDERAL 70 Government of Canada Sep Government of Canada Sep Government of Canada Mar Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Jun Government of Canada Dec Canada Housing Trust No Dec Canada Housing Trust No Mar Canada Housing Trust No Sep MUNICIPAL 115 British Columbia Municipal Finance Dec British Columbia Municipal Finance Sep City of Montreal Sep PROVINCIAL 185 OMERS Realty Corp Jun Province of Manitoba Sep Province of Ontario Sep Province of Ontario Jun Province of Ontario Jun Province of Ontario Jun Province of Quebec Dec Province of Quebec Dec Province of Quebec Sep

29 Statement of Investment Portfolio (in $000s) Bonavista Balanced Fund Coupon Fair % of Net Par Value Security Rate % Maturity Cost Value Assets PROVINCIAL (cont.) $ 65 Province of Quebec Dec-41 $ 75 $ Province of Quebec Dec TOTAL CANADIAN BONDS Fair % of Net Holdings Security Cost Value Assets CANADIAN EQUITIES Consumer Discretionary 3 Canadian Tire Corp Ltd. $ 145 $ Gildan Activewear Inc Magna International Inc Quebecor Inc Thomson Reuters Corp Consumer Staples 4 Alimentation Couche-Tard Inc Saputo Group Inc Shoppers Drug Mart Corp Energy 2 Baytex Energy Corp Canadian Natural Resources Ltd Cenovus Energy Inc EnCana Corp Gran Tierra Energy Inc Husky Energy Inc MEG Energy Corp Precision Drilling Corp Suncor Energy Inc Talisman Energy Inc Financials 9 Bank of Montreal Bank of Nova Scotia Canadian Imperial Bank of Commerce Element Financial Corp Genworth MI Canada Inc Home Capital Group Inc IGM Financial Inc Intact Financial Corp Manulife Financial Corp National Bank of Canada Royal Bank of Canada* Sun Life Financial Inc The Toronto-Dominion Bank Health Care 1 Valeant Pharmaceuticals International Inc Fair % of Net Holdings Security Cost Value Assets Industrials 29 Bombardier Inc., Class B $ 166 $ CAE Inc Canadian National Railway Co Canadian Pacific Railway Ltd Finning International Inc MacDonald Dettwiler & Associates Ltd Russel Metals Inc SNC-Lavalin Group Inc Stantec Inc Information Technology 7 Aastra Technologies Ltd CGI Group Inc Open Text Corp Materials 4 Agrium Inc Barrick Gold Corp First Quantum Minerals Ltd Goldcorp Inc HudBay Minerals Inc Lundin Mining Corp Methanex Corp Potash Corporation of Saskatchewan Inc Teck Resources Ltd Yamana Gold Inc Telecommunication Services 5 Rogers Communications Inc., Class B TOTAL CANADIAN EQUITIES POOLED FUNDS 216 Bonavista International Equity Pooled Fund* Bonavista Money Market Fund* TOTAL POOLED FUNDS UNITED STATES EQUITIES Consumer Discretionary 1 Bed Bath & Beyond Inc General Motors Co Johnson Controls Inc Starz

30 Statement of Investment Portfolio (in $000s) Bonavista Balanced Fund Fair % of Net Holdings Security Cost Value Assets Consumer Staples 2 Archer Daniels Midland Co. $ 72 $ PepsiCo Inc Rite Aid Corp Wal-Mart Stores Inc Walgreen Co Energy 2 Apache Corp Chevron Corp Nabors Industries Ltd Noble Corp PLC Valero Energy Corp Financials 2 Aflac Inc AllianceBernstein Holding LP American International Group Inc Bank of America Corp Berkshire Hathaway Inc., Class B First Republic Bank JPMorgan Chase & Co MetLife Inc Oaktree Capital Group LLC Wells Fargo & Co Health Care 1 Becton Dickinson and Co Johnson & Johnson Medtronic Inc Pfizer Inc Varian Medical Systems Inc Waters Corp WellPoint Inc Industrials 3 Delta Air Lines Inc Emerson Electric Co Generac Holdings Inc Heartland Express Inc Raytheon Co Spirit Airlines Inc United Technologies Corp Information Technology Apple Inc Cisco Systems Inc FLIR Systems Inc Google Inc Hewlett-Packard Co Microsoft Corp Motorola Solutions Inc. 4 Oracle Corp QUALCOMM Inc ScanSource Inc Fair % of Net Holdings Security Cost Value Assets Materials 1 Mosaic Co. $ 65 $ 63 1 Newmont Mining Corp Telecommunication Services 1 Verizon Communications Inc TOTAL UNITED STATES EQUITIES TOTAL INVESTMENTS TRANSACTION COSTS (6) NET INVESTMENTS $ OTHER NET ASSETS NET ASSETS $ * Investment in related party (see note 6 in the generic notes). 28