Canadian Scholarship Trust Family Savings Plan

Transcription

1 C.S.T. Consultants Inc. Canadian Scholarship Trust Plan Sponsor Canadian Scholarship Trust Foundation 2235 Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B RESP (7377) Investment Fund Manager and Distributor C.S.T. Consultants Inc Sheppard Avenue East, Suite 1600 Toronto, Ontario M2J 5B8 Trustee RBC Investor Services Trust 155 Wellington Street West, 2nd Floor Toronto, Ontario M5V 3L3 Auditor Deloitte LLP Bay Adelaide East 22 Adelaide Street West, Suite 200 Toronto, Ontario M5H 0A9 Bank Royal Bank of Canada Royal Bank Plaza South Tower 200 Bay Street, 10th Floor Toronto, Ontario M5J 2J5 Canadian Scholarship Trust Family Savings Plan Semi-Annual Financial Statements Unaudited For updates on your Plan account, login to Online Services at In Quebec, Canadian Scholarship Trust Plan is distributed by C.S.T. Consultants Inc. Scholarship Plan Brokerage Firm. April 30, 2016 F.P.O 2002 M1-E ( ) CST Financl_Semi-Stmnt_Cvr_ENG_Final pv_01_12_15.indd :23 AM

2 Contents Statements of Financial Position 1 Statements of Comprehensive Income 2 Statements of Changes in Net Assets Attributable to Subscribers and Beneficiaries 2 Statements of Cash Flows 3 Schedule I Statement of Investment Portfolio 4 Notes to the Financial Statements 6 Government Grants (Appendix I to Schedule I) 10 Unaudited semi-annual financial statements The accompanying semi-annual financial statements have not been reviewed by the external auditors of the Plan in accordance with assurance standards applicable to a review of interim financial statements.

3 Statements of Financial Position As at April 30, 2016 and October 31, 2015 (in thousands of Canadian dollars) Apr 30, 2016 Oct 31, 2015 (Audited) Assets Cash and cash equivalents $ 15,538 $ 13,385 Receivables for securities sold Investments, at fair value (Note 4 and Schedule I) 223, ,918 Accrued interest and other receivables 37,738 34,796 Government grants receivable , ,803 Liabilities Payables for securities purchased Accounts payable, accrued liabilities and unclaimed subscribers funds Net Assets Attributable to Subscribers and Beneficiaries 276,402 1,026 1, ,553 Represented by: Non-Discretionary Funds Accumulated income held for future education assistance payments 51,315 50,564 Subscribers deposits (Note 6) 148, ,735 Government grants 54,083 51,428 Income on Government grants Unrealized Gains (Losses) 20,292 2,553 18, $ 276,402 $ 262,553 1 Family Savings Plan

4 Statements of Comprehensive Income For the six months ended April 30, 2016 and 2015 (in thousands of Canadian dollars) Income Apr 30, 2016 Apr 30, 2015 Interest for allocation to subscriber accounts $ 3,129 $ 2,936 Realized gains (losses) on sale of investments Change in unrealized gains (losses) 2,207 5,600 Dividends ,922 9,711 Expenses Administration and account maintenance fees (Note 3(a)) 1,458 1,338 Portfolio management fees Custodian and Trustee fees Independent Review Committee fees 2 2 Increase in Net Assets from Operations Attributable to Subscribers and Beneficiaries $ 4,297 1,625 1,500 $ 8,211 Statements of Changes in Net Assets Attributable to Subscribers and Beneficiaries For the six months ended April 30, 2016 and 2015 (in thousands of Canadian dollars) Apr 30, 2016 Apr 30, 2015 Net Assets Attributable to Subscribers and Beneficiaries, Beginning of Period $ 262,553 $ 239,036 Increase in Net Assets from Operations Attributable to Subscribers and Beneficiaries 4,297 8,211 Transfers from internal and external plans 11,281 15,578 11,282 19,493 Receipts Net increase in Subscribers deposits (Note 6) 6,424 7,208 Disbursements Government grants repaid (net of receipts) (587) (534) Payments to beneficiaries Education assistance payments (5,461) (5,109) Government grants (1,982) (1,709) Return of interest Total payments to beneficiaries Receipts less Disbursements Change in Net Assets Attributable to Subscribers and Beneficiaries (123) (7,566) (1,729) 13,849 (105) (6,923) (249) 19,244 Net Assets Attributable to Subscribers and Beneficiaries, End of Period $ 276,402 $ 258,280 Family Savings Plan 2

5 Statements of Cash Flows For the six months ended April 30, 2016 and 2015 (in thousands of Canadian dollars) Apr 30, 2016 Apr 30, 2015 Operating Activities Increase in Net Assets from Operations Attributable to Subscribers and Beneficiaries $ 4,297 $ 8,211 Net disbursements for investment transactions Items not affecting cash (6,281) (7,124) Realized (gains) losses on sale of investments (267) (921) Change in unrealized (gains) losses (2,207) (5,600) Change in non-cash operating working capital (Increase) decrease in Accrued interest and other receivables (2,942) (1,981) Increase in Government grants receivable (139) (118) Decrease in Accounts payable, accrued liabilities and unclaimed subscribers funds 140 (792) Cash flow used in Operating Activities (7,399) (8,325) Financing Activities Transfers from internal and external plans Government grants repaid (net of receipts) 11,281 (587) 11,282 (534) Net increase in Subscribers deposits (Note 6) 6,424 7,208 Payments to beneficiaries (7,566) (6,923) Cash flow from Financing Activities 9,552 11,033 Net increase in Cash and cash equivalents 2,153 2,708 Cash and cash equivalents, Beginning of Period Cash Cash equivalents ,043 1,104 11,428 13,385 12,532 Cash and cash equivalents, End of Period Cash Cash equivalents 14,950 14,762 $ 15,538 $ 15,240 Supplemental cash flow information: Withholding Taxes $ 29 $ 7 Interest Income Received 2,901 2,778 3 Family Savings Plan

6 Schedule I Statement of Investment Portfolio As at April 30, 2016 (in thousands of Canadian dollars) Interest Maturity Par Fair Average Interest Maturity Par Fair Average Security Rate Date Value ($) Value ($) Cost ($) Security Rate Date Value ($) Value ($) Cost ($) Bonds Bonds (continued) Federal 13.9% Canada Housing Trust Dec ,380 3,429 3,397 Corporate 23.3% (continued) Caisse Centrale Desjardins Jul Canada Housing Trust Jun ,175 4,250 4,181 Canadian Imperial Bank of Canada Housing Trust Jun ,430 3,526 3,453 Commerce Apr Canada Housing Trust Jun ,150 5,135 5,129 Canadian Imperial Bank of Commerce Jan Canada Housing Trust Jun Canadian National Railway Government of Canada Jun ,870 1,869 1,873 Company Aug Government of Canada Jun Enbridge Gas Distribution Inc Sep Government of Canada Dec Enbridge Gas Distribution Inc Aug Government of Canada Dec ,100 1,444 1,490 Ford Credit Canada Limited Jun Government of Canada Dec Ford Credit Canada Limited Sep Inter-American Development Fortis BC Inc Oct Bank Jan Health Care REIT Inc Nov ,228 22,014 Honda Canada Finance Inc Feb HSBC Bank Canada May Municipal and Provincial 47.1% HSBC Bank Canada Jul Province of Alberta Dec ,935 1,959 1,941 HSBC Bank Canada Jan Province of Alberta Dec ,875 4,237 4,258 HSBC Bank Canada Sep Province of Alberta Jun Manufacturers Life Insurance Province of Alberta Dec Company Jan Province of British Columbia Jun ,200 5,202 4,843 Manufacturers Life Insurance Province of British Columbia Jun ,500 1,565 1,433 Company Jun Province of Manitoba Sep Manufacturers Life Insurance Province of Manitoba Sep ,510 4,052 4,187 Company Nov Province of New Brunswick Jun ,335 1,461 1,478 Mercedes Benz Canada Inc Mar Province of New Brunswick Jun ,360 6,959 6,827 Mercedes Benz Canada Inc Aug Province of New Brunswick Jun ,200 3,948 3,914 National Bank of Canada Mar Province of Ontario Mar ,215 4,463 4,559 North West Redwater Province of Ontario Jun ,550 3,893 3,924 Partnership Feb Province of Ontario Jun ,320 6,658 6,178 North West Redwater Province of Ontario Jun ,900 6,243 5,819 Partnership Jul North West Redwater Province of Ontario Dec Partnership Jun Province of Quebec Dec ,517 3,715 3,834 North West Redwater Province of Quebec Dec ,310 3,596 3,656 Partnership Feb Province of Quebec Dec ,315 3,689 3,698 North West Redwater Province of Quebec Sep ,370 9,387 8,886 Partnership Jul Province of Saskatchewan Mar ,270 2,320 2,280 Omers Realty Corporation Feb Omers Realty Corporation Nov Corporate 23.3% 75,054 73,391 Bank of Montreal Jun Bank of Montreal Mar Bank of Montreal Mar Bank of Montreal Sep Bank of Montreal Dec Bank of Nova Scotia Jun Bank of Nova Scotia Sep Bank of Nova Scotia Dec Bank of Nova Scotia Mar , ,042 bcimc Realty Corporation Jun Bell Canada Jun Bell Canada Oct BMW Canada Inc Sep BMW Canada Inc Nov Caisse Centrale Desjardins Nov Real Estate Asset Liquidity Trust Series Class A Jan Real Estate Asset Liquidity Trust Series Class A May Rogers Communications Inc Nov Rogers Communications Inc Sep Rogers Communications Inc Mar Royal Bank of Canada Mar Royal Bank of Canada Mar Royal Bank of Canada Jun Royal Bank of Canada Jan Royal Bank of Canada Sep ,340 1,345 1,387 Shaw Communications Inc Oct TELUS Corporation Jul TELUS Corporation Apr TELUS Corporation Mar TELUS Corporation Mar Family Savings Plan 4

7 Schedule I Statement of Investment Portfolio (continued) As at April 30, 2016 (in thousands of Canadian dollars) Interest Maturity Par Fair Average Security Rate Date Value ($) Value ($) Cost ($) Bonds (continued) Corporate 23.3% (continued) Thomson Reuters Corporation Nov Toronto Dominion Bank Apr Toronto Dominion Bank Mar Toronto Dominion Bank Jun ,750 1,724 1,723 Toronto Dominion Bank Sep ,570 1,563 1,556 Toronto Dominion Bank Mar Toronto Dominion Bank Dec Toyota Credit Canada Inc Nov Toyota Credit Canada Inc Nov TransCanada Pipelines Limited Jul Ventas Canada Finance Limited Feb VW Credit Canada Inc Aug VW Credit Canada Inc Oct VW Credit Canada Inc Jun Wells Fargo Financial Corporation Canada Jul Wells Fargo Financial Corporation Canada Mar ,220 37,155 Total Fixed Income Investments 84.3% 134, ,560 Number of Fair Average Security Securities Value ($) Cost ($) Exchange-traded Funds ishares Core S&P 500 Hedged to CAD Index ETF 436 9,648 10,804 Total Equities and ETFs 6.1% Cash and cash equivalents 9.6% Total Portfolio Assets 100.0% Investments Allocation (Note 4) Government Grants (Appendix I) Cash and cash equivalents (Appendix I) Total Investment Fund Represented by: Cash and cash equivalents Investments, at fair value 9,648 10,804 15,235 15, , ,599 79,615 77, , ,750 15, , ,303 5 Family Savings Plan

8 Notes to the Financial Statements Six months ended April 30, 2016 and 2015 (Unaudited, in thousands of Canadian dollars) Note 1. Nature of Operations October 31, These interim financial statements were prepared in accordance with International Accounting Standard The Canadian Scholarship Trust Family Savings Plan (the Plan ) is ( IAS ) 34, Interim Financial Reporting. a self-determined Education Savings Plan that was established on These financial statements were approved by the Board of March 1, The objective of the Plan is to assist parents and the Foundation on June 9, others to save for the post-secondary education of children. The Plan (b) Basis of measurement is managed and distributed by C.S.T. Consultants Inc. ( C.S.T.C. ), a These financial statements have been prepared on the historical wholly-owned subsidiary of the Canadian Scholarship Trust cost basis except for financial instruments classified as at fair Foundation (the Foundation ). The Plan s registered place of value through profit or loss ( FVTPL ), which are measured at business is Sheppard Avenue East, Toronto, Ontario, fair value. Canada. Payments are made by a subscriber to an account maintained by (c) Future accounting standard the Plan s trustee on behalf of one or more beneficiaries. Payments of The following new accounting standard has been issued by the sales charges are made from the subscriber s initial contribution. The International Accounting Standards Board ( IASB ). This new principal accumulated over the term of the subscriber s education standard is not yet effective and the Plan has not completed its savings plan agreement (the Agreement ) is returned in whole or in assessment of the impact on the financial statements. part at any time at the request of the subscriber. A beneficiary is IFRS 9 Financial Instruments ( IFRS 9 ) deemed to be a qualified student upon receipt by the Foundation of IFRS 9 was issued in November 2009 to replace IAS 39 evidence of enrolment in a qualifying educational program at an Financial Instruments: Recognition and Measurement ( IAS 39 ). eligible institution. Education assistance payments ( EAPs ) paid to a IFRS 9 will be effective for the Plan s financial statements beneficiary from the Plan are determined by the subscriber and are during its fiscal 2019 year. paid from the income earned on the subscriber s principal. IFRS 9 introduces new requirements for the classification There are a number of government grants that may be available and measurement of financial assets, reducing the number of to beneficiaries including the Canada Education Savings Grant classifications from those in IAS 39. The approach in IFRS 9 is Program ( CESG ), the Canada Learning Bond ( CLB ), the based on how an entity manages its financial instruments in the Alberta Centennial Education Savings Grant ( ACES ), the Quebec context of its business model and the contractual cash flow Education Savings Incentive ( QESI ), the Saskatchewan Advantage characteristics of the financial assets. Grant for Education Savings ( SAGES ) and the British Columbia Training and Education Savings Grant ( BCTESG ) (collectively, (d) Financial instruments Government Grants ). The Alberta government announced that no The Plan recognizes financial assets and financial liabilities when new grants will be made under the ACES program after it becomes a party to a contract. Financial assets and financial July 31, liabilities, with the exception of those classified as FVTPL, are The Plan collects Government Grants, which are credited measured at fair value plus transaction costs on initial directly into subscribers Agreements and invests these funds in recognition. Financial assets and financial liabilities classified as accordance with the Plan s investment policies. The Government FVTPL are measured at fair value on initial recognition and Grants, along with investment income earned thereon, are paid to transaction costs are expensed when incurred. Investments, at qualified students. fair value have been designated as FVTPL Agreements are registered with appropriate government Measurement in subsequent periods depends on the authorities if all required information is provided, and once classification of the financial instrument. The financial assets registered are subject to the rules for Registered Education Savings and financial liabilities of the Plan are classified as follows: Plans under the Income Tax Act (Canada). The current tax legislation provides that income credited on subscribers principal is not taxable Financial asset or financial liability Classification income of the subscriber unless withdrawn as an Accumulated Investments, at fair value FVTPL (i) Income Payment subject to certain eligibility requirements. The Cash and cash equivalents Loans and receivables deposits are not deductible for income tax purposes and are not (ii) taxable when returned to the subscriber. Payments made to a Accrued interest and other receivables Loans and receivables (ii) beneficiary, including EAPs, Government Grants and investment Receivables for securities sold Loans and receivables (ii) income earned on Government Grants will constitute taxable Accounts payable, accrued liabilities and income of that beneficiary in the year that the payments are made. unclaimed subscriber funds Other financial liabilities (iii) Payables for securities purchased Other financial liabilities (iii) Note 2. Significant Accounting Policies (a) Statement of Compliance These financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) on a basis consistent with accounting policies as described in Note 2 of the audited annual financial statements for the year ended (i) Financial assets are designated as FVTPL when acquired principally for the purpose of trading. Financial assets classified as FVTPL are measured at fair value, with changes recognized in Net Income and Comprehensive Income Attributable to Subscribers and Beneficiaries. (ii) Loans and receivables are non-derivative financial assets that have fixed or determinable payments and are not quoted in an active market. Subsequent to Family Savings Plan 6

9 Notes to the Financial Statements (continued) Six months ended April 30, 2016 and 2015 (Unaudited, in thousands of Canadian dollars) Note 2. Significant Accounting Policies (continued) Cash and cash equivalents Cash and cash equivalents include deposit balances with banks and securities with a purchase date to maturity of 90 days or less and includes term deposits, treasury bills and bankers (d) Financial instruments (continued) acceptances. initial recognition, loans and receivables are carried at amortized cost using the (j) Foreign currency effective interest method. Loans and receivables are considered for impairment when they are past due or when other objective evidence is received that a The functional and presentation currency of the Plan is the specific counterparty will default. Canadian Dollar. (iii) Other financial liabilities are liabilities that are not derivative liabilities or To the extent applicable in any period, foreign currency classified as FVTPL. Subsequent to initial recognition, other financial liabilities purchases and sales of investments and foreign currency are carried at amortized cost using the effective interest method. dividend and interest income are translated into Canadian dollars at the rate of exchange prevailing at the time of the The effective interest method is a method of calculating the transactions. Realized and unrealized foreign currency gains or amortized cost of a financial instrument and allocating interest losses on investments are included in the Statements of over the relevant period. The effective interest rate is the rate Comprehensive Income in Realized gains (losses) on sale of that discounts estimated future cash flows (including all investments and Change in unrealized gains (losses), transaction costs and other premiums or discounts) through the respectively. expected life of the financial instrument to the net carrying amount on initial recognition. (k) Critical accounting estimates and judgments (f) Investment transactions and income recognition Investment transactions are accounted for on a trade-date basis. Interest for allocation to subscriber accounts represents the coupon interest received by the Plan accounted for on an accrual basis. The Plan does not amortize premiums paid or discounts received on the purchase of fixed income securities. Dividends and distributions are accrued as of the ex-dividend date and ex-distribution date, respectively. Realized gains (losses) on the sale of investments and Change in unrealized gains (losses) are calculated with reference to the average cost of the related investments and are recognized in the period that such gains (losses) occur. (g) Subscribers deposits and sales charges Subscribers deposits reflect amounts received from subscribers and do not include future amounts receivable on outstanding Agreements. A sales charge is required as part of the initial contribution under each Agreement. Sales charges collected during the reporting period are paid to C.S.T.C. (h) Income taxes The Plan is exempt from income taxes under Section of the Income Tax Act (Canada). (i) (e) Investment valuation Investments, at fair value include the following types of securities: bonds, money market securities, and exchange- traded funds ( ETF ). The fair value of fixed income securities that are not publicly traded is measured by using either the average bid price from multiple dealers, or by the present value of contractual cash flows, discounted at current market rates. Interest accrued at the reporting date is included in Accrued interest and other receivables. The fair value of securities that are publicly traded in an active market is measured using bid prices at the reporting date. Note 7 provides further guidance on fair value measurements. When preparing the financial statements, C.S.T.C management makes estimates and judgments that affect the reported amounts recognized and disclosed in the financial statements. These estimates and judgments have a direct effect on the measurement of transactions and balances recognized in the financial statements. By their nature, these estimates and judgments are subject to measurement uncertainty and actual results could differ. Note 3. Related Party Transactions Related party transactions are measured at the exchange amount, which is the amount agreed between the parties. (a) Distribution and Administration of the Plan The Foundation, as the Plan sponsor, has appointed C.S.T.C. as the Scholarship Plan Dealer and Investment Fund Manager to distribute and administer, respectively, the Plan. The distribution and administration agreements are renewable annually on November 1. Administration and account maintenance fees are paid to the Foundation. Administration fees are annual fees of 1% of the total amount of principal, Government Grants and income earned thereon. During the six months ended April 30, 2016, $1,458 was recognized as an expense for Administration and account maintenance fees (2015 $1,338). Administration and account maintenance fees included in Accounts payable, accrued liabilities and unclaimed subscribers funds at April 30, 2016 was $189 (October 31, 2015 $180). Sales charges paid by subscribers from their initial contributions are paid to C.S.T.C. as compensation for the sale and distribution of savings plans. During the six months ended April 30, 2016, $14 was paid to C.S.T.C. from sales charges collected (2015 $10). Related amounts included in Accounts payable, accrued liabilities and unclaimed subscribers funds at April 30, 2016 was $629 (October 31, 2015 $629). 7 Family Savings Plan

10 Notes to the Financial Statements (continued) Six months ended April 30, 2016 and 2015 (Unaudited, in thousands of Canadian dollars) Note 3. Related Party Transactions (continued) curve analysis, sector and credit selection. There is reduced risk to interest rate changes for cash and cash equivalents due to their short-term nature. The Plan s holdings of debt instruments by maturity are as follows: (b) Fees paid for services of an Independent Review Committee The Independent Review Committee ( IRC ) provides independent review and oversight of conflicts of interest relating Debt Instruments by Maturity Date % of Total Investment Fund to the management of the Plans. For the six-month period April 30, Oct 31, ended April 30, 2016, the Plan recognized an expense of $ (2015 $2) for the services of the IRC. IRC fees included in Less than 1 year 7% 6% Accounts payable accrued liabilities and unclaimed subscribers 1-3 years 16% 16% funds at April 30, 2016 was $nil (October 31, 2015 $nil). 3-5 years 17% 23% (c) Fees paid to monitor and manage the portfolio managers Greater than 5 years 50% 45% Included in Portfolio management fees on the Statements of Comprehensive Income is $23 (2015 $18) charged by Total debt instruments 90% 90% C.S.T.C. for expenses incurred to monitor and manage the As at April 30, 2016, if prevailing interest rates had portfolio managers. Included in Accounts payable, accrued increased by 1%, the fair value of the Total Investment Fund liabilities and unclaimed subscribers funds is $6 owing to of $239,303 (October 31, 2015 $228,303) as per the C.S.T.C. at April 30, 2016 ($6 at October 31, 2015) relating to Schedule I Statement of Investment Portfolio would have these expenses. decreased by $17,000 (October 31, 2015 $13,000). If prevailing interest rates had decreased by 1%, the fair value of Note 4. Investment Holdings the Total Investment Fund would have increased by $19,000 (October 31, 2015 $15,000). This 1% change assumes a The investment holdings are disclosed in Schedule I Statement of parallel shift in the yield curve with all other variables held Investment Portfolio and the related Appendix I to the schedule, constant. In practice, actual results may differ materially. which is explained below. The Government Grants are invested collectively in a separate ii. Other price risk fund with Government Grants of other RESP plans administered by Other price risk is the risk that the value of a financial C.S.T.C. The Government Grant principal received and income instrument will fluctuate as a result of changes in market earned thereon are separately tracked for each subscriber s prices, other than those arising from interest rate risk. Agreement. The portfolio holdings are allocated across all plans Factors specific to an individual investment, its issuer or based on the proportion of principal and income attributable to other factors affecting all instruments traded in a market or Agreements within each plan (see Appendix I to Schedule I). market segment affect other price risk. The asset class that is most impacted by other price risk is the ETFs of the Plan Note 5. Risks Associated with Financial and Government Grant asset pool, which represents 10% (October 31, %) of the Total Investment Fund as at Instruments April 30, As at April 30, 2016, if equity and underlying indices In the normal course of business the Plan may be exposed to a prices had increased or decreased by 1%, with all other variety of risks arising from financial instruments. The Plan s variables held constant, the fair value of the Total Investment exposures to such risks are concentrated in its investment holdings Fund as per Schedule I Statement of Investment Portfolio and are related to credit risk and liquidity risk. would have increased or decreased by approximately $300 The Plan s risk management process includes monitoring (October 31, 2015 $200). In practice, actual results may compliance with the Plan s investment policy. The Plan manages the differ materially. effects of these financial risks to the Plan portfolio performance by retaining and overseeing professional external investment managers. (b) Credit risk The investment managers regularly monitor the Plan s positions, Credit risk refers to the ability of the issuer of debt securities to market events, and manage the investment portfolio within the make interest payments and repay principal. The Plan s portfolio constraints of the investment policy and mandate. is comprised of bonds issued or guaranteed by federal or provincial governments along with corporate debt instruments (a) Market risk i. Interest rate risk with a minimum approved credit rating as set by Canadian Securities Administrators. The Plan has a concentration of Interest rate risk is the risk of a change in the fair value or cash flows of the Plan s investments in interest-bearing financial instruments as a result of fluctuations in market interest rates. There is an inverse relationship between changes in interest rates and changes in the fair value of bonds. This risk is actively managed using duration, yield investments in government and government guaranteed bonds, which are considered to be high credit quality investments thereby moderating credit risk. Family Savings Plan 8

11 Notes to the Financial Statements (continued) Six months ended April 30, 2016 and 2015 (Unaudited, in thousands of Canadian dollars) Note 5. Risks Associated with Financial Instruments (continued) The changes in Subscribers deposits for the six-month period ended April 30, 2016 and 2015 are as follows: (b) Credit risk (continued) April 30, 2016 April 30, 2015 The Plan s credit risk exposure is summarized below: Payments from subscribers $ 4,434 $ 3,801 April 30, 2016 October 31, 2015 Inter-plan principal transfers 17,374 17,910 % of Total % of Total Return of principal (15,384) (14,503) Investment Amount Investment Amount Credit rating Fund (in thousands) Fund (in thousands) Net increase in Subscribers deposits 6,424 7,208 AAA 18% $ 42,676 20% $ 45,043 AA/AAH/AAL 30% 71,974 29% 65,625 A/AH/AL 30% 72,916 31% 70,128 BBB 5% 10,959 3% 6,871 R-1 6% 15,083 6% 13,043 Short-term unrated 0% 589 1% 4,952 Note 6. Subscribers Deposits Balance, Beginning of Period 141, ,422 Balance, End of Period $ 148,159 $ 137,630 Note 7. Fair Value Measurements and Disclosures Total Debt instruments 89% $ 214,197 90% $ 205,642 Estimates of fair value used for measurement and disclosure are The Dominion Bond Rating Service ( DBRS ) was the designed to approximate amounts that would be received to sell an primary source for obtaining credit ratings. Secondary sources asset, or paid to discharge a liability, in an orderly transaction used include Standard & Poor s Financial Services LLC and between market participants. Moody s Investors Service, Inc. The carrying values of other financial instruments such as Cash and cash equivalents, Accrued interest and other receivables, (c) Liquidity risk Receivables for securities sold, Government grants receivable, Liquidity risk is the risk that the Plan may not be able to meet Accounts payable, accrued liabilities and unclaimed subscribers its financial obligations as they come due. The Plan s exposure funds and Payables for securities purchased approximate their fair to liquidity risk is concentrated in principal repayments to values as these financial instruments are short term in nature. subscribers and EAPs to beneficiaries. The Plan primarily The following table presents the level in the fair value hierarchy invests in securities that are traded in active markets and can be into which the Plan s financial instruments that are carried at fair readily sold. The Plan retains sufficient cash and cash equivalents value in the Statements of Financial Position are categorized: positions to meet liquidity requirements by utilizing cash i. Level 1 financial instruments are valued using quoted market forecasting models that reflect the distribution of subscribers prices. deposits and accumulated income. All other financial liabilities ii. Level 2 financial instruments are valued using directly or are short term and due within one year. indirectly observable inputs. iii. Level 3 financial instruments are valued using unobservable (d) Currency risk inputs (including the use of assumptions based on the best Currency risk is the risk that the value of a financial instrument information available). will fluctuate due to changes in foreign exchange rates. The Plan holds ETFs that invest in U.S. equities and are hedged to Assets Measured at Fair Value as of April 30, 2016 Canadian dollars by the ETF provider. Level 1 Level 2 Level 3 Total Fixed income securities $ $ 198,659 $ $ 198,659 Equity Securities 25,106 25,106 Total Investments, at fair value $ 25,106 $ 198,659 $ $ 223,765 Assets Measured at Fair Value as of October 31, 2015 Level 1 Level 2 Level 3 Total Fixed income securities $ $ 192,257 $ $ 192,257 Equity Securities 22,661 22,661 Total Investments, at fair value $ 22,661 $ 192,257 $ $ 214,918 9 Family Savings Plan For the six month period ended April 30, 2016 and year ended October 31, 2015, there were no transfers between Levels 1 or 2.

12 Government Grants Appendix I to Schedule I Statement of Investment Portfolio As at April 30, 2016 (in thousands of Canadian dollars) Interest Maturity Par Fair Average Interest Maturity Par Fair Average Security Rate Date Value ($) Value ($) Cost ($) Security Rate Date Value ($) Value ($) Cost ($) Bonds Bonds (continued) Federal 19.8% Provincial 29.9% (continued) Canada Housing Trust Jun ,700 3,754 3,788 Province of British Columbia Jun ,800 4,048 3,990 Canada Housing Trust Jun ,220 1,242 1,227 Province of British Columbia Jun ,920 6,274 6,017 Canada Housing Trust Jun ,079 10,326 10,321 Province of British Columbia Jun ,700 4,953 4,777 Canada Housing Trust Nov Province of British Columbia Jun ,030 11,184 10,388 Canada Housing Trust Jun ,500 5,654 5,646 Province of British Columbia Jun ,000 1, Canada Housing Trust Aug Province of Manitoba Nov ,000 1,108 1,154 Canada Housing Trust Dec ,475 1,272 1,277 Province of Manitoba Dec ,000 1,115 1,088 Canada Housing Trust Feb ,776 3,216 3,243 Province of Manitoba Sep ,800 3,248 3,148 Canada Housing Trust Mar ,685 4,049 4,090 Province of Manitoba Mar ,400 6,196 6,101 Canada Housing Trust Apr Province of Manitoba Mar ,300 1,324 1,298 Canada Housing Trust Jun Province of Manitoba Sep ,325 9,611 9,903 Canada Housing Trust Dec ,103 9,594 9,512 Province of Manitoba Nov Canada Housing Trust Jun ,860 8,517 8,440 Province of New Brunswick Mar Canada Housing Trust Dec ,000 7,983 7,895 Province of New Brunswick Jun ,400 1,533 1,556 Canada Post Corporation Jul Province of New Brunswick Jun Government of Canada Sep Province of New Brunswick Jun Government of Canada Sep ,660 1,655 1,655 Province of New Brunswick Nov ,569 6,959 6,908 Government of Canada May ,025 1,021 1,022 Province of New Brunswick Dec ,195 1,534 1,466 Government of Canada Aug Province of New Brunswick Oct Government of Canada Sep ,091 5,146 5,134 Province of New Brunswick Jan ,075 2,698 2,441 Government of Canada Feb ,975 4,014 4,035 Province of New Brunswick Sep Government of Canada Jun Province of New Brunswick Mar ,700 2,000 1,986 Government of Canada Sep Province of New Brunswick Sep ,200 1,468 1,494 Government of Canada Sep ,150 2,222 2,230 Province of New Brunswick Jun ,000 2,047 2,016 Government of Canada Mar ,050 2,106 2,113 Province of Newfoundland and Government of Canada Jun ,775 6,399 6,479 Labrador Jun ,100 1,059 1,095 Government of Canada Sep ,200 3,191 3,179 Province of Newfoundland and Government of Canada Mar ,950 3,928 3,900 Labrador Jun ,200 1,214 1,199 Government of Canada Jun ,150 4,634 4,666 Province of Newfoundland and Government of Canada Jun ,500 1,650 1,649 Labrador Apr Government of Canada Jun ,925 2,983 2,822 Province of Newfoundland and Government of Canada Jun ,000 1,090 1,091 Labrador Oct ,350 1,571 1,593 Government of Canada Jun ,844 6,256 6,276 Province of Nova Scotia Jun ,775 3,745 3,481 Government of Canada Jun ,619 5,616 5,600 Province of Nova Scotia Jun ,600 1,910 1,813 Government of Canada Jun ,925 6,466 6,547 Province of Nova Scotia Jun ,700 1,754 1,708 Government of Canada Jun ,775 12,831 12,910 Province of Nova Scotia Jun Government of Canada Jun ,700 11,890 11,841 Province of Ontario Sep Government of Canada Jun ,922 25,377 23,489 Province of Ontario Mar ,099 4,340 4,479 Government of Canada Jun ,995 19,177 18,287 Province of Ontario Sep ,460 2,519 2,546 Government of Canada Dec ,900 22,202 21,706 Province of Ontario Jun ,000 4,388 4,386 Government of Canada Dec ,200 9,469 9,118 Province of Ontario Jun ,000 2,225 2,155 Government of Canada Dec ,800 4,614 4,386 Province of Ontario Jun ,315 7,077 6,824 Kreditanstalt Fur Province of Ontario Jun ,675 1,812 1,734 Wiederaufbau Global Feb ,211 1,463 1,493 Province of Ontario Aug ,000 1,417 1,422 Muskrat Falls Funding Trust Jun ,500 5,193 5,005 Province of Ontario Jun ,700 4,979 4,580 Muskrat Falls Funding Trust Dec ,082 1,116 Province of Ontario Jun ,690 5,162 4, , ,203 Province of Ontario Jun ,650 3,748 3,707 Province of Ontario Jun Provincial 29.9% Province of Ontario Jun ,095 3,128 3,009 Province of Alberta Dec Province of Ontario Mar ,250 4,590 4,536 Province of Alberta Jun ,902 1,890 1,883 Province of Ontario Jun ,500 2,115 2,090 Province of Alberta Jun , Province of Ontario Mar ,425 8,914 8,767 Province of Alberta Dec ,785 2,079 2,052 Province of Ontario Oct Province of Alberta Dec ,972 2,179 2,120 Province of Ontario Jun ,200 4,410 3,855 Province of Alberta Dec ,895 1,959 1,962 Province of Ontario Jun ,145 8,983 8,190 Province of British Columbia Dec ,975 4,213 4,379 Province of Ontario Jun ,340 7,936 7,415 Province of British Columbia Apr ,500 1,495 1,498 Province of Ontario Jun ,515 18,502 17,519 Province of British Columbia Dec ,275 2,495 2,358 Province of Ontario Jun ,700 6,132 6,064 Province of British Columbia Jun ,000 2,684 2,675 Province of Ontario Jun ,100 24,789 23,727 Family Savings Plan 10

13 Government Grants (continued) Appendix I to Schedule I Statement of Investment Portfolio As at April 30, 2016 (in thousands of Canadian dollars) Interest Maturity Par Fair Average Interest Maturity Par Fair Average Security Rate Date Value ($) Value ($) Cost ($) Security Rate Date Value ($) Value ($) Cost ($) Bonds (continued) Bonds (continued) Provincial 29.9% (continued) Municipal 1.1% (continued) Province of Ontario Dec ,500 6,301 5,962 Municipal Finance Authority of Province of Quebec Dec ,550 2,694 2,808 British Columbia Apr Province of Quebec Dec ,000 1,087 1,116 Region of Peel Jun Province of Quebec Dec ,550 1,725 1,711 Region of Peel Oct Province of Quebec Aug ,000 4,195 4,332 Province of Quebec Dec ,000 1,136 1,057 13,806 13,706 Province of Quebec Sep ,000 3,210 3,201 Corporate 29.5% Province of Quebec Sep East Development Group Dec Province of Quebec Sep ,775 7,599 7, East Development Group Jul ,272 1,699 1,549 Province of Quebec Sep Arrow Lakes Power Province of Quebec Oct ,000 2,728 2,693 Corporation Apr Province of Quebec Jun ,575 5,097 5,002 Bank of Montreal Jun Province of Quebec Dec Bank of Montreal Mar ,662 7,705 7,662 Province of Quebec Jun ,000 3,897 3,800 Bank of Montreal Oct ,462 2,497 2,462 Province of Quebec Feb ,000 1,496 1,463 Bank of Montreal Mar ,781 1,784 1,783 Province of Quebec Dec ,690 3,790 3,348 Bank of Montreal Sep ,650 10,199 10,011 Province of Quebec Dec ,940 3,848 3,045 Bank of Nova Scotia Jun Province of Quebec Feb ,000 11,897 11,489 Bank of Nova Scotia Jun ,870 6,051 6,129 Province of Quebec Dec ,400 15,194 14,524 Bank of Nova Scotia Mar ,090 9,229 9,236 Province of Quebec Dec ,500 5,445 5,175 Bank of Nova Scotia May ,035 1,032 1,028 Province of Quebec Feb ,450 1,974 1,901 Bank of Nova Scotia Mar ,303 17,741 17,721 Province of Quebec Dec ,000 10,786 10,111 Bank of Nova Scotia Oct ,593 8,807 8,793 Province of Quebec Dec ,000 2,176 2,043 Bank of Nova Scotia Sep ,723 2,754 2,753 Province of Quebec Feb ,500 2,103 2,014 Bank of Nova Scotia Jan ,968 7,404 7,407 Province of Saskatchewan Jun Bankers Hall L.P Nov ,507 2,681 2,507 Province of Saskatchewan Sep ,037 5,723 5,700 Caisse Centrale Desjardins Nov ,893 6,078 6,097 Province of Saskatchewan Jun ,400 1,757 1,727 Canadian Imperial Bank of Province of Saskatchewan Jun ,700 4,171 4,093 Commerce Jun Province of Saskatchewan Dec ,000 1,824 1,753 Canadian Imperial Bank of Commerce Oct ,680 6,780 6, , ,600 Canadian Imperial Bank of Commerce Oct ,394 2,410 2,393 Municipal 1.1% Canadian Imperial Bank of City of Montreal Dec Commerce Apr City of Montreal Sep Canadian Pacific Railway City of Montreal Dec Company Oct City of Montreal Jun Capital Desjardins Inc May ,790 8,696 8,711 City of Ottawa Jul Capital Desjardins Inc Dec ,333 3,759 3,731 City of Toronto Dec CBC Monetization Trust May ,527 2,934 2,729 City of Toronto Dec Central 1 Credit Union Nov ,352 1,353 1,353 City of Toronto Sep ,200 1,333 1,329 Cogeco Cable Inc May ,469 1,536 1,528 City of Toronto Apr CSS Partnership Jul ,173 2,949 2,782 City of Toronto Jun ,309 1,323 1,304 Dutch Municipal Bank, BNG Mar City of Toronto Jun Enbridge Inc Mar City of Toronto Jun Enbridge Inc Mar City of Toronto Dec EUROFIMA Maple Bond Mar ,039 1,022 City of Toronto Mar GE Capital Canada Funding City of York Dec ,900 1,894 1,853 Company Feb ,966 1,915 1,803 City of York May GE Capital Canada Funding City of York May Company Feb ,071 3,120 3,071 Municipal Finance Authority of Greater Toronto Airport British Columbia Dec Authority Jul ,632 2,067 2,006 Municipal Finance Authority of Heathrow Funding Limited May British Columbia Nov HSBC Bank Canada Nov ,025 11,080 11,091 Municipal Finance Authority of HSBC Bank Canada Jan ,266 1,277 1,265 British Columbia Jun ,000 1,020 1,024 HSBC Bank Canada Sep ,220 12,570 12,429 Municipal Finance Authority of Kraft Canada Inc Jul ,800 3,792 3,800 British Columbia Jun Labrador Island Link Funding Municipal Finance Authority of Trust Jun British Columbia Sep Family Savings Plan

14 Government Grants (continued) Appendix I to Schedule I Statement of Investment Portfolio As at April 30, 2016 (in thousands of Canadian dollars) Interest Maturity Par Fair Average Interest Maturity Par Fair Average Security Rate Date Value ($) Value ($) Cost ($) Security Rate Date Value ($) Value ($) Cost ($) Bonds (continued) Bonds (continued) Corporate 29.5% (continued) Corporate 29.5% (continued) Labrador Island Link Funding Wells Fargo Financial Trust Dec ,600 3,106 3,131 Corporation Canada Jan Labrador Island Link Funding Wells Fargo Financial Trust Dec ,008 Corporation Canada Jan Loblaw Companies Limited Jan ,827 2,281 2,268 WTH Car Rental Aug ,960 2,977 2,960 Loblaw Companies Limited Feb Manufacturers Life Insurance 340, ,141 Company Feb ,569 1,585 1,605 Total Fixed Income Investments 80.3% 931, ,650 Manufacturers Life Insurance Company Jan ,569 1,578 1,592 Number of Fair Average Manufacturers Life Insurance Security Securities Value ($) Cost ($) Company Jun ,589 1,557 1,570 Equities 5.8% Manufacturers Life Insurance Agrium Inc. 15 1,570 1,716 Company Jan ,728 4,655 4,696 Aimia Inc Manufacturers Life Insurance Company Nov ,253 4,277 4,256 ATCO Ltd. 30 1,214 1,124 Manulife Financial Corporation Dec ,146 8,243 8,423 AutoCanada Inc Maritimes and Northeast Bank of Nova Scotia 69 4,568 3,966 Pipelines Limited Partnership Nov ,099 2,134 2,169 Birchcliff Energy Ltd Maritimes and Northeast Boardwalk Real Estate Investment Trust Pipelines Limited Partnership Nov Brookfield Asset Management Inc. 30 1,259 1,232 Master Asset Vehicle Jul CAE Inc ,856 1,771 Master Asset Vehicle Jul Milit-Air Inc Jun ,953 2,088 2,140 Canadian National Railway Company 28 2,149 2,074 National Bank of Canada Aug ,060 12,271 12,334 Canadian Natural Resources Ltd. 41 1,542 1,081 NAV Canada Mar ,157 4,084 3,974 Canadian Pacific Railway Company 9 1,566 1,555 North Battleford Power L.P Dec ,111 1,015 Canadian Western Bank 39 1, Ontrea Inc Apr ,969 2,073 2,018 Celestica Inc Ornge Issuer Trust Jun ,365 3,943 3,821 Colliers International Group Inc Pearson International Fuel Dollarama Inc Facilities Corporation Mar ,160 2,345 2,315 Dream Unlimited Corporation Public Sector Pension Investment Board Jun ,804 2,890 2,804 Empire Company Ltd Rogers Communications Inc Nov Enbridge Inc. 25 1,315 1,219 Royal Bank of Canada Jun Enerflex Ltd ,392 1,431 Royal Bank of Canada Sep ,390 5,468 5,478 Enerplus Corporation Royal Bank of Canada Mar ,590 2,630 2,630 Ensign Energy Services Inc Royal Bank of Canada Jul ,029 3,116 3,132 Fairfax Financial Holdings Limited Royal Bank of Canada Dec ,570 28,464 28,514 Finning International Inc. 67 1,496 1,275 Royal Bank of Canada Feb FirstService Corporation Royal Bank of Canada Mar ,878 5,844 5,878 Franco-Nevada Corporation Royal Bank of Canada Mar ,168 2,185 2,169 Royal Bank of Canada Mar Freehold Royalties Ltd. 84 1, Shaw Communications Inc Nov ,894 2,341 2,311 GMP Capital Inc SP1 Limited Partnership Jun ,026 2,865 2,804 Granite REIT St. Clair Holding ULC Aug Great Canadian Gaming Corporation Strait Crossing Great-West Lifeco Inc Development Inc Sep Home Capital Group Inc. 43 1,607 1,320 Sun Life Financial Inc Jun ,905 4,862 5,082 IGM Financial Inc Toronto Dominion Bank Apr ,943 8,162 8,171 Imperial Oil Limited 33 1,353 1,341 Toronto Dominion Bank Mar Intact Financial Corporation 26 2,423 2,392 Toronto Dominion Bank Jul ,670 13,479 13,251 Toronto Dominion Bank Sep ,134 6,106 6,134 Jean Coutu Group (PJC) Inc Toronto Dominion Bank Mar ,305 2,444 2,305 Laurentian Bank of Canada Toronto Dominion Bank Dec ,049 9,203 9,393 Loblaw Companies Limited 15 1,066 1,046 TransCanada Pipelines Limited Nov ,994 2,766 3,033 Magna International Inc. 28 1,497 1,637 TransCanada Pipelines Limited Feb ,553 2,304 2,492 Metro Inc UniCredit Group May ,401 2,426 2,451 Methanex Corporation 28 1,219 1,208 University Health Network Dec ,876 6,601 6,740 Morguard Corporation Family Savings Plan 12