Financial Statements. The Fiera Capital Mutual Funds

Transcription

1 Financial Statements FOR THE YEAR ENDED DECEMBER 31, 2015 The Fiera Capital Mutual Funds Fiera Capital Balanced Fund Fiera Capital Bond Fund Fiera Capital High Income Fund Fiera Capital Equity Growth Fund Fiera Capital Global Equity Fund Fiera Capital Canadian Equity Fund Fiera Capital Defensive Global Equity Fund Fiera Capital Defensive U.S. Equity Fund Fiera Capital Core Canadian Equity Fund Fiera Capital U.S. Equity Fund

2

3 Table of contents Independent auditor s report Financial statements Fiera Capital Balanced Fund 1 Fiera Capital Bond Fund 16 Fiera Capital High Income Fund 30 Fiera Capital Equity Growth Fund 45 Fiera Capital Global Equity Fund 62 Fiera Capital Canadian Equity Fund 78 Fiera Capital Defensive Global Equity Fund 92 Fiera Capital Defensive U.S. Equity Fund 110 Fiera Capital Core Canadian Equity Fund 127 Fiera Capital U.S. Equity Fund 141

4 Independent Auditor s Report To the Unitholders of Fiera Capital Balanced Fund Fiera Capital Bond Fund Fiera Capital High Income Fund Fiera Capital Equity Growth Fund Fiera Capital Global Equity Fund Fiera Capital Canadian Equity Fund Fiera Capital Defensive Global Equity Fund Fiera Capital Defensive U.S. Equity Fund Fiera Capital Core Canadian Equity Fund Fiera Capital U.S. Equity Fund (collectively, the Funds ) We have audited the accompanying financial statements of each of the Funds, which comprise the statements of financial position as at December 31, 2015 and December 31, 2014 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for years or periods ended December 31, 2015 and December 31, 2014, as indicated in the statements of comprehensive income of each of the Funds, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with International Financial Reporting Standards, 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 the financial statements of each of the Funds based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit 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 each of our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial position of each of the Funds as at December 31, 2015 and December 31, 2014 and the financial performance and cash flows of each of the Funds for the years or periods ended December 31, 2015 and December 31, 2014, as indicated in the statements of comprehensive income of each of the Funds, in accordance with International Financial Reporting Standards. Emphasis of matter We draw attention to Note 2 to the Fiera Capital Canadian Equity Fund s financial statements which discloses the fact that the Manager has, subsequent to December 31, 2015, announced its intention to terminate the Fund. Our opinion is not qualified in respect of this matter. March 24, 2016 Montréal, Quebec 1 CPA auditor, CA, public accountancy permit No. A123633

5 Fiera Capital Balanced Fund Statements of financial position As at December 31, 2015 As at December 31, 2014 Assets Current assets Investments, at fair value through profit or loss 69,031,629 62,298,654 Accounts receivable for units sold 300 Interest receivable 1,064 4,730 Other receivables 156, ,953 Total assets 69,189,934 62,416,337 Liabilities Current liabilities Bank indebtedness 22,195 57,242 Accounts payable for units redeemed 1,122 11,510 Management fees payable 78,878 72,353 Distributions payable 26,140 Accrued liabilities 81,615 45,986 Total liabilities 183, ,231 Net assets attributable to holders of redeemable units 69,006,124 62,203,106 Net assets attributable to holders of redeemable units per class Class A 677, ,541 Class AV 2,752,591 1,023 Class B 60,804,435 57,683,220 Class F 158, ,950 Class FV 1,768,202 1,027 Class O 2,845,250 4,239,345 69,006,124 62,203,106 Number of redeemable units outstanding per class note 4 Class A 36,139 6,624 Class AV 140, Class B 3,087,106 2,927,654 Class F 7,859 7,629 Class FV 87, Class O 128, ,953 Net assets attributable to holders of redeemable units per unit per class Class A Class AV Class B Class F Class FV Class O Signed on behalf of Fiera Capital Corporation, Fund Manager Jean-Guy Desjardins, Chairman of the Board and Chief Executive Officer Statements of comprehensive income For the years ended December 31, Income Interest for distribution purposes 543, ,582 Securities lending income note 11 1, Dividends 504, ,803 Foreign exchange gain (loss) on cash 1, Other changes in fair value of investments Net realized gain (loss) on investments 2,055,713 7,061,954 Net change in unrealized appreciation (depreciation) on investments 557,276 (1,078,763) Total income (loss) 3,663,940 7,022,293 Expenses note 5 Management fees 896, ,071 Custodian fees 5,947 5,492 Fund valuation fees 49,327 50,552 Audit fees 16,888 20,530 Legal fees 7,728 13,696 Securityholder reporting costs 117, ,803 Filing fees 32,908 14,440 Fund accounting fees 9,058 6,461 Independent review committee fees 8,312 7,340 Total expenses 1,143, ,385 Increase (decrease) in net assets attributable to holders of redeemable units 2,520,296 6,153,908 Increase (decrease) in net assets attributable to holders of redeemable units per class Class A (6,400) 10,757 Class AV * (52,784) 23 Class B 2,351,575 5,604,789 Class F 6,403 10,695 Class FV * (2,982) 27 Class O 224, ,617 2,520,296 6,153,908 Weighted average redeemable units outstanding during the year per class Class A 16,912 5,674 Class AV * 83, Class B 2,968,851 2,594,686 Class F 7,793 4,800 Class FV * 37, Class O 135, ,408 Increase (decrease) in net assets attributable to holders of redeemable units per unit per class Class A (0.38) 1.90 Class AV * (0.64) 0.47 Class B Class F Class FV * (0.08) 0.56 Class O * Class AV and FV were launched on August 28, Sylvain Brosseau, Global President and Chief Operating Officer The accompanying notes are an integral part of these financial statements. 1

6 Fiera Capital Balanced Fund Statements of changes in net assets attributable to holders of redeemable units For the years ended December 31, Class A Class AV* Net assets attributable to holders of redeemable units Beginning of year 125, ,958 1,023 Increase (decrease) in net assets attributable to holders of redeemable units (6,400) 10,757 (52,784) 23 Redeemable units transactions note 4 Proceeds from redeemable units issued 716,213 30,380 2,947,688 1,000 Reinvestments of distributions to holders of redeemable units 14,535 11,795 72, Redemption of redeemable units (157,678) (47,554) (143,336) 573,070 (5,379) 2,876,821 1,069 Distributions to holders of redeemable units note 4 From net investment income From net capital gains 7,162 11,795 35, From return of capital 7,450 36,795 14,673 11,795 72, Net increase (decrease) in net assets attributable to holders of redeemable units 551,997 (6,417) 2,751,568 1,023 Net assets attributable to holders of redeemable units End of year 677, ,541 2,752,591 1, Class B Class F Net assets attributable to holders of redeemable units Beginning of year 57,683,220 47,847, ,950 72,336 Increase (decrease) in net assets attributable to holders of redeemable units 2,351,575 5,604,789 6,403 10,695 Redeemable units transactions note 4 Proceeds from redeemable units issued 6,007,949 11,669,015 15,200 71,827 Reinvestments of distributions to holders of redeemable units 2,423,046 5,249,027 6,221 11,080 Redemption of redeemable units (5,268,181) (7,204,553) (16,445) (35) 3,162,814 9,713,489 4,976 82,872 Distributions to holders of redeemable units note 4 From net investment income 10, From net capital gains 1,244,726 5,362,646 3,036 12,953 From return of capital 1,137,869 3,159 Management fee rebate 119,460 2,393,174 5,482,106 6,221 12,953 Net increase (decrease) in net assets attributable to holders of redeemable units 3,121,215 9,836,172 5,158 80,614 Net assets attributable to holders of redeemable units End of year 60,804,435 57,683, , , Class FV* Class O Net assets attributable to holders of redeemable units Beginning of year 1,027 4,239,345 5,137,083 Increase (decrease) in net assets attributable to holders of redeemable units (2,982) , ,617 Redeemable units transactions note 4 Proceeds from redeemable units issued 1,792,162 1,000 34,457 1,316,332 Reinvestments of distributions to holders of redeemable units 32, , ,943 Redemption of redeemable units (21,522) (1,649,925) (2,606,622) 1,802,738 1,069 (1,510,327) (1,012,347) Distributions to holders of redeemable units note 4 From net investment income From net capital gains 15, , ,008 From return of capital 16,543 54,964 32, , ,008 Net increase (decrease) in net assets attributable to holders of redeemable units 1,767,175 1,027 (1,394,095) (897,738) Net assets attributable to holders of redeemable units End of year 1,768,202 1,027 2,845,250 4,239,345 2 * Class AV and FV were launched on August 28, The accompanying notes are an integral part of these financial statements.

7 Fiera Capital Balanced Fund Statements of changes in net assets attributable to holders of redeemable units (continued) For the years ended December 31, Total Net assets attributable to holders of redeemable units Beginning of year 62,203,106 53,188,425 Increase (decrease) in net assets attributable to holders of redeemable units 2,520,296 6,153,908 Redeemable units transactions note 4 Proceeds from redeemable units issued 11,513,669 13,089,554 Reinvestments of distributions to holders of redeemable units 2,653,510 5,549,983 Redemption of redeemable units (7,257,087) (9,858,764) 6,910,092 8,780,773 Distributions to holders of redeemable units note 4 From net investment income 11,551 From net capital gains 1,359,039 5,800,540 From return of capital 1,256,780 Management fee rebate 119,460 2,627,370 5,920,000 Net increase (decrease) in net assets attributable to holders of redeemable units 6,803,018 9,014,681 Net assets attributable to holders of redeemable units End of year 69,006,124 62,203,106 The accompanying notes are an integral part of these financial statements. 3

8 Fiera Capital Balanced Fund Statements of cash flows For the years ended December 31, Cash flows from operating activities Increase (decrease) in net assets attributable to holders of redeemable units 2,520,296 6,153,908 Adjustments for: Foreign exchange (gain) loss on cash (1,532) (238) Net realized (gain) loss on investments (2,055,713) (7,061,954) Net change in unrealized (appreciation) depreciation on investments (557,276) 1,078,763 Purchases of investments (40,594,397) (47,184,429) Proceeds from sale and maturity of investments 36,474,411 44,145,551 Interest receivable 3,666 (2,547) Other receivables (43,988) (77,998) Accrued liabilities 35,629 (20,398) Management fees payable 6,525 13,412 Net cash used in operating activities (4,212,379) (2,955,930) Cash flows from financing activities Distributions paid to holders of redeemable units, net of reinvested distributions (343,877) Proceeds from redeemable units issued 11,513,369 13,089,554 Redemption of redeemable units (7,267,475) (9,847,254) Net cash from financing activities 4,245,894 2,898,423 Foreign exchange gain (loss) on cash 1, Net increase (decrease) in cash 33,515 (57,507) Cash (Bank indebtedness) Beginning of year (57,242) 27 Cash (Bank indebtedness) End of year (22,195) (57,242) Included in cash flows from operating activities Interest received 547, ,035 Dividends received 504, ,803 4 The accompanying notes are an integral part of these financial statements.

9 Fiera Capital Balanced Fund Schedule of investment portfolio As at December 31, 2015 Maturity date Coupon rate Number of units/ par value Average cost () Fair value () % of net asset value Short-Term Notes Treasury Bills Canadian Treasury Bill 05-Jan % 1,810,000 1,809,457 1,809,457 Canadian Treasury Bill 11-Feb % 245, , ,790 Canadian Treasury Bill 25-Feb % 1,335,000 1,333,544 1,333,544 Canadian Treasury Bill 10-Mar % 435, , ,595 Total Short-Term Notes 3,822,386 3,822, Mutual Funds Fiera Capital Bond Fund, Class O 1,441,202 17,938,415 17,696,955 Fiera Capital Canadian Equity Fund, Class O 2,126,144 22,692,654 20,555,773 Fiera Capital Equity Growth Fund, Class O 38,168 4,373,841 4,852,421 Fiera Capital Global Equity Fund, Class O 608,270 13,676,029 22,104,028 Fiera Global Equity Fund Total Mutual Funds 58,681,005 65,209, Total Investments 62,503,391 69,031,629 Net Other Assets (Liabilities) (25,505) (0.04) Net assets attributable to holders of redeemable units 62,503,391 69,006, Percentages relate investments at fair value to total net assets attributable to holder of redeemable units of the Fund. The accompanying notes are an integral part of these financial statements. 5

10 Fiera Capital Balanced Fund Notes to financial statements 1. Organization of Fund The Fiera Capital Balanced Fund (the Fund ) is an open-end trust established under the laws of the Province of Ontario pursuant to an Amended and Restated Master Declaration of Trust dated September 8, 2000, as amended, and as amended and restated on April 20, 2005, November 20, 2006, August 9, 2011, August 12, 2013, July 24, 2014 and as further amended and restated on January 30, 2015 by Fiera Capital Corporation. The address of the Fund s registered office is 1 Adelaide Street, Suite 600, Toronto, Ontario M5C 2V9. The objective of the Fund is to achieve over a longer-term investment horizon, the highest possible return consistent with a fundamental investment philosophy which emphasizes broad diversification across and within all major security classes. The Fund invests primarily in Canadian equity and fixed-income securities. Class AV and FV were launched on August 28, Fiera Capital Corporation ( Fiera or the Manager ) is the manager, the trustee and the portfolio manager of the Fund. RBC Investor Services Trust is the custodian and the registrar of the Fund. The financial statements of the Fund are comprised of the schedule of investment portfolio as at December 31, 2015, the statements of financial position as at and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows forthe years ended. 2. Significant accounting policies These financial statements have been prepared in compliance with International financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). These annual financial statements were authorized for issue by the Manager on March 24, The significant measurement and presentation policies applied to prepare these financial statements are described below. Financial instruments The Fund s financial assets consist primarily of investments in non-derivatives financial instruments and derivative financial instruments presented in the schedule of investment portfolio. Financial liabilities consist primarily of derivative financial instruments. The Fund recognizes financial instruments at fair value upon initial recognition, plus transaction costs in the case of financial instruments not measured at fair value through profit or loss (FVTPL). Regular way purchases and sales of financial assets are recognized at their trade date. The Fund s derivative assets and liabilities and securities sold short are classified as held for trading and are measured at fair value through profit or loss, while all debt and equity investments have been designated at FVTPL. The Fund s obligation for net assets attributable to holders of redeemable units is presented at the redemption amount, which approximates fair value. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract s effective interest rate. The Fund s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value ( NAV ) for transactions with unitholders, except where the closing price for financial assets and liabilities is not within the bid-ask spread. Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the valuation date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and marketable securities) are based onquotedmarket prices at the close of trading on the valuation date. The Fund uses the closing price for both financial assets and financial liabilities where the closing price falls within that day s bid-ask spread. In circumstances where the closing price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. The Fund s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer. Valuation of unlisted securities and other investments The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter derivatives, is determined using valuation techniques. The Fund uses a variety of methods and makes assumptions that are based on existing market conditions at each valuation date. Valuation techniques include available quotations from recognized dealers, the use of comparable recent arm s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and others commonly used by market participants and which make the maximum use of observable inputs. Refer to Note 8 Financial instrument disclosures for further information about the Fund s fair value measurements. Investment transactions Investment transactions are accounted for on the trade date. Cost is determined on an average cost basis except for money market securities, for which cost is determined using the first-in, first-out method. Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities by the Fund are recognized in the statements of comprehensive income. The difference between the fair value and cost of investments is included in Net change in unrealized appreciation (depreciation) on investments in the statements of comprehensive income. The difference between the fair value and cost from the sale of investments is included in Net realized gain (loss) on investments in the statements of comprehensive income. Cash Cash and bank indebtedness are classified as loans and receivables and other liabilities respectively and are recorded at cost which closely approximates fair value. 6 Income Dividend income is recorded on the ex-dividend date. The interest for distribution purposes shown on the statements of comprehensive income represents the coupon interest received by the Fund accounted for on an accrual basis. The Fund does not amortize premiums paid or discounts received on the purchase of fixed income securities except for zero coupon bonds which are amortized on a straight line basis. Realized gain (loss) on investments and unrealized appreciation (depreciation) on investments are determined on an average cost basis. Average cost does not include amortization of premiums or discounts on fixed income securities with the exception of zero coupon bonds. Interest and dividend distributions received from underlying funds are recorded at the date of distribution. Income received from income trusts is recorded on the ex-distribution date and allocated between income, capital gains and return of capital when the information

11 Fiera Capital Balanced Fund necessary for such an allocation becomes available, or if such information is not available, the Manager will determine the split at its discretion. Income, realized gains (losses) and unrealized gains (losses) are allocated among the classes on a pro rata basis based on the weighted average NAV for each class. Derivative financial instruments The Fund may use an array of derivative financial instruments such as futures contracts, forward contracts, options and swaps for hedging purposes or purposes other than hedging, or both. The fair value of derivative financial instruments takes into account the impact of legally binding master netting agreements if applicable. a) Futures contracts To gain exposure to different financial markets, the Fund can enter into futures contracts that are presented under Margin Deposited (Payable) on futures contracts and Futures contracts, at fair value in the statements of financial position. Gains or losses arising from futures contracts are recorded as Net change in unrealized appreciation (depreciation) on futures contracts in the statements of comprehensive income until the contracts are closed out or expire, at which time the gains (losses) are realized and are recorded as Net realized gain (loss) on futures contracts in the statements of comprehensive income. The futures contracts are carried at fair value based on closing price. The Fund may also enter into futures contracts with daily cash settlements, in which case any difference between the value at the close of business on the current valuation day and that of the previous valuation day is recorded in the statements of comprehensive income as Income from derivatives or Loss from derivatives. Any amounts receivable (payable) from settlement of these futures contracts are reflected in the statements of financial position as Margin Deposited (Payable) on futures contracts. b) Forward currency contracts The Fund can also enter into forward currency contracts. The gains or losses on these forward currency contracts are reported on the statements of comprehensive income under Net realized gain (loss) on forward currency contracts. The forward currency contracts fair value corresponds to the gains (losses) that would be realized if they were liquidated at the valuation date. Realized and unrealized foreign exchange gains and losses are presented in Net realized gain (loss) on forward currency contracts and Net change in unrealized appreciation (depreciation) on forward currency contracts in the statements of comprehensive income. c) Bond forward contracts Bond forward contracts are valued at the gain or loss, if any, that would be realized if the position in the contracts were to be closed out on the valuation dateand the resulting unrealized appreciation (depreciation) is presented under Bond forward contracts, at fair value in the statements of financial position. Gains or losses arising from bond forward contracts are recorded as Net change in unrealized appreciation (depreciation) on bond forward contracts in the statements of comprehensive income until the contracts close or are delivered, at which time the gains (losses) are realized and are recorded as Net realized gain (loss) on bond forward contracts in the statements of comprehensive income. d) Purchased Options Options held are valued at the close price. Premiums paid for purchasing options which expire unexercised are recorded at the date of maturity as a realized loss. Gains or losses arising from purchasing options are recorded as Net change in unrealized appreciation (depreciation) on option contracts in the statements of comprehensive income until the contracts are exercised or expire. The Fund may sell options held before the exercise date. The difference between the premium paid and the sale proceeds is recorded as realized gain or loss. When the Fund exercises a call option, the premium paid is added to the cost of the underlying securities purchased. When the Fund exercises a put option, the difference between the proceeds from the sale of the underlying securities reduces the premium paid and the cost of these securities is recorded as realized gain or loss. These gains or losses are included in Net realized gain (loss) on option contracts in the statements of comprehensive income. e) Written Options The obligations arising from the sale of options are presented as a decrease of the portfolio. Equities are evaluated at the close price on valuation date. Premiums received for selling options that expire unexercised are recorded at the maturity date as a realized gain. Gains or losses arising from written options are recorded as Net change in unrealized appreciation (depreciation) on option contracts in the statements of comprehensive income until the contracts are exercised or expire. The Fund can be released from its obligation before the exercise of the option by liquidating its position. The difference between the amount of the premium received and the amount paid at the time of the closing transaction is recorded as realized gain or loss. Where the holder of stock options exercises its right to buy the underlying securities, the Fund must deliver the securities or cash at the exercise price. The difference between proceeds from the sale of securities and the premium and cost of these securities is recorded as a realized gain or loss. Where the holder of the put option exercises its right to sell the underlying securities, the Fund must buy these securities at the strike price. The cost of these securities corresponds to the strike price minus the premium received. These gains orlossesare included in Net realized gain (loss) on option contracts in the statements of comprehensive income. Securities lending The Fund may engage in securities lending programs in which case, income from securities lending is presented in Securities lending income in the statements of comprehensive income and any cash collateral received or cash collateral payable is presented in Cash collateral for securities on loan and Payable for cash collateral for securities on loan in the statements of financial position. Refer to Note 11 Securities lending for the value of securities lent and the value of collateral received. Offsetting financial assets and financial liabilities Financial assets and liabilities are offset in the Fund s statements of financial position when and only when there is: a legally enforceable and unconditional right to offset the recognized amounts and; an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. The Fund has a legally enforceable and unconditional right to offset a financial asset and liability when they meet the following criterias: the right is enforceable in the normal course of business, and; the right is enforceable in the event of default, insolvency or bankruptcy. Over-the-counter derivatives may also be subject to master netting or similar agreements that do not meet the criterias for offsetting in the statements of financial position, but still allow related amounts to be offset in certain circumstances such as default, insolvency or bankruptcy. 7

12 Fiera Capital Balanced Fund 8 Refer to Note 10 Offsetting of derivative assets and derivative liabilities for further information on financial assets and liabilities that are offset or not offset in the statements of financial position and subject to a master netting agreement or similar agreement. Foreign currency translation The Fund s subscriptions and redemptions are denominated in Canadian dollars, which is also its functional and presentation currency. Assets and liabilities denominated in a foreign currency are translated into the functional currency at the exchange rate on each valuation date. Purchases and sales of securities, as well as income and expenses denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Realized foreign exchange gains and losses relating to cash are presented as Foreign exchange gain (loss) on cash and those relating to other financial assets and liabilities are included in Net realized gain (loss) on investments and Net change in unrealized appreciation (depreciation) on investments in the statements of comprehensive income. Increase (decrease) in net assets attributable to holders of redeemable units per unit Increase (decrease) in net assets attributable to holders of redeemable units per unit in the statements of comprehensive income represents the increase (decrease) in net assets attributable to holders of redeemable units during the years, divided by the weighted average number of outstanding redeemable units during the year. Taxation Under the Income Tax Act (Canada), the Fund is defined as a mutual fund trust and its fiscal year-end is December 15. The Fund is not taxed on net income and net capital gains which are distributed to holders of redeemable units. All the Fund s investment income and sufficient net capital gains realized in any fiscal year are required to be distributed to holders of redeemable units to ensure no income tax is payable by the Fund. As a result, the Fund does not record income taxes. Since the Fund does not record income taxes, the tax benefit of capital and non-capital losses has not been reflected in the statements of financial position as a deferred income tax asset. The Fund may incur withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains are recorded on a gross basis, and the related withholding taxes are shown as a separate expense in the statements of comprehensive income. Capital losses can be carried forward indefinitely and used to reduce future capital gains. Non-capital losses can be carried forward 20 years and used toreduce future investment income and capital gains. Refer to Note 9 Income tax and capital gains tax for further information on taxation. Issuance and redemption of redeemable units Redeemable units are issued or redeemed at the NAV on the last business day of each valuation period during which the deposit for the purchase of units was received, or the redemption of units request was received by the trustee within the deadlines stipulated in the Trust Agreement. Distributions to holders of redeemable units Distributions to holders of redeemable units are recorded by the Fund when declared. Investment entity The Fund has determined that it is an investment entity per IFRS 10, Consolidated Financial Statements, as the following conditions exist: a) The Fund has obtained funds for the purpose of providing investors with investment management services. b) The Fund s business purpose, which was communicated directly to investors, is investing solely for returns from capital appreciation and investment income. c) The performance of investments are measured and evaluated on a fair value basis. As such, any investments in subsidiaries, associates and joint ventures have been designated at FVTPL. According to IFRS 12, Disclosure of Interests in Other Entities, the Fund must disclose specific information on its investment in other entities, as subsidiaries, associates and structured entities. Subsidiaries An entity is considered as a subsidiary when it is controlled by another entity. The Fund controls an entity when it is exposed to, or has the right to, variable returns from its involvement with the entity and through its power over the entity. Associates Associates are investments in entities over which the Fund exercises significant influence without however, exercising control. Structured Entities Structured Entities are conceived in a way that the right to vote and other similar rights are not determining factors in exercising control. The Manager has determined that its investments in underlying funds, index-based investments, mortgage-backed securities and asset-backed securities are investments in structured entities, unless the specified relationship is different. Refer to Note 8 Financial instrument disclosures for further information about investments in structured entities. Accounting standards issued but not yet adopted The final version of IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a model for classification and measurement, a single, forward-looking expected loss impairment model and a substantially reformed approach to hedge accounting. The new single, principle based approach for determining the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, which will require more timely recognition of expected credit losses. It also includes changes in respect of own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused by the deterioration of an entity s own credit risk on such liabilities are no longer recognized in profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, however is available for early adoption. In addition, the own credit changes can be early applied in isolation without otherwise changing the accounting for financial instruments. The Fund is in the process of assessing the impact of IFRS 9 and has not yet determined when it will adopt the new standard.

13 Fiera Capital Balanced Fund 3. Critical accounting judgments, estimates and assumptions The preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions about the future. Actual results may differ from these estimates. The following discusses the most significant accounting judgments and estimates that the Fund has made in preparing the financial statements. Fair value measurement of derivatives and securities not quoted in an active market The Fund may hold financial instruments that are not quoted in active markets, including derivatives. Fair values of such instruments are determined using valuation techniques and may be determined using reputable pricing sources (such as pricing agencies) or indicative prices from market makers. Broker quotes as obtained from the pricing sources may be indicative and not executable or binding. Where no market data is available, the Fund may value positions using its own models, which are usually based on valuation methods and techniques generally recognized as standard within the industry. The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Manager, independent of the party that created them. The models used for private equity securities are based mainly on earnings multiples adjusted for a lack of marketability as appropriate. Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require the Manager to make estimates. Changes in assumptions about these factors could affect the reported fair values of financial instruments. The Fund considers observable data to be market data that is readily available, regularly distributed and updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Refer to Note 8 for further information about the fair value measurement of the Fund s financial instruments. Classification and measurement of investments and application of the fair value option In classifying and measuring financial instruments held by the Fund, the Manager is required to make significant judgments about whether or not the business of the Fund is to invest on a total return basis for the purpose of applying the fair value option for the financial assets under IAS 39. The most significant judgment made includes the determination that certain investments are held-for-trading and that the fair value option can be applied to those which are not. 4. Redeemable units Capital structure The Fund is authorized to issue an unlimited number of redeemable unit classes, as well as an unlimited number of redeemable units (the units ) within each class. Each class unit enables its bearer to participate equally in the allocations the Fund completes for the given class. Unit fractions may also be issued. Class A and B units are available to all investors. Class AV and FV units are available for investors primarily through group plan arrangements with dealer advisers. Class O units are designed for institutional and high net worth investors, who are entitled to reduced management fees because of the lower cost of servicing large dollar investments. Class F units are available to investors who participate in dealer-sponsored fee-for-service or wrap programs and whose broker or dealer has entered into an agreement with the Manager to sell Class F units. Class A and B units may be changed into Class F or O units of the same Fund at the Manager s discretion and upon the agreement of the unitholder if the unitholder meets the Class O unit eligibility requirements. Class AV units may be converted into Class A, Class B, Class F or Class O units of the same Fund or another Fund at the Manager s discretion subject to certain eligibility requirements. Class FV units are available to investors who participate in dealer-sponsored fee-for-service or wrap programs and must meet the minimum investment levels as determined by the Manager. Class FV units can be converted to Class A, Class AV, Class B, Class F, or Class O units of the same or another Fund subject to Manager s approval and the eligibility requirements. Each unit entitles its holder to one vote and, in the case of a Fund liquidation, in the allocation of the unit class s net assets attributable to holders of units after all liabilities have been paid. The Manager manages the capital of the Fund in accordance with its investment objective. The Fund seeks to invest subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Issued and outstanding units Units of the Fund are composed of: Authorized An unlimited number of units. The units are issued and redeemable as per the net asset value for transactional purposes, at the holders of units discretion. Issued and outstanding Number of redeemable units beginning of year Redeemable units issued Redeemable units reinvested Redeemable units redeemed Number of redeemable units end of year (January 1) (December 31) Class A ,624 37, (8,284) 36, ,930 1, (2,463) 6,624 Class AV ,687 3,624 (7,270) 140, Class B ,927, , ,260 (259,311) 3,087, ,442, , ,362 (351,595) 2,927,654 Class F , (787) 7, ,641 3, (2) 7,629 9

14 Fiera Capital Balanced Fund Number of redeemable units beginning of year Redeemable units issued Redeemable units reinvested Redeemable units redeemed Number of redeemable units end of year (January 1) (December 31) Class FV ,643 1,567 (1,071) 87, Class O ,953 1,536 4,671 (72,621) 128, ,633 56,749 12,881 (116,310) 194,953 Valuation of redeemable units On a daily basis for each class of units, the Manager calculates the net assets attributable to holders of redeemable units per unit by dividing the net assets attributable to holders of redeemable units by the number of units outstanding. Distributions to holders of redeemable units Net investment income and net realized capital gains of the Fund are distributed and reinvested as additional units, unless the unitholder has made other arrangements with the Manager, on the following basis: Distribution type Distribution of net income and/or return of capital Distribution of net realized capital gains Distribution basis Monthly Annually The Fund aims to pay a distribution equal to a yield of 5% per annum and may, to the extent necessary, distribute return of capital. Annual distributions take place in December of each year. The Fund s units are classified as financial liabilities on the statements of financial position, since the Fund has an obligation to distribute its income to minimize taxes such that it has no discretion to avoid cash distributions, as well as the fact that the Fund has multiple classes with features that are not identical. 5. Management fees and other expenses The Manager is responsible for the management, supervision and administration of the Fund, and makes all investment decisions. Management fees The management fee rates for are set out in the following table. The rate is an annual percentage of the average NAV of the class: December 31, 2015 December 31, 2014 % % Class A Class AV Class B Class F Class FV Management fees are not charged to Class O units of the Fund. For its services in managing these assets, the Manager receives a management fee from each unitholder under the terms of an investment management contract based on a fee applied to the unitholder s total assets managed. Such fees may decrease, in percentage terms, as the assets under management increase. Performance fees The Fund is not subject to performance fees. Other expenses The Fund is responsible for the payment of all expenses relating to the operation of the Fund. Operating expenses include audit, custodian, legal, transfer agent, trustee, administration, fund accounting fees, and filing expenses specific to the Fund. The Fund also bears the cost of the Independent Review Committee ( IRC ) which was established pursuant to National Instrument Independent Review Committee for underlying funds. Operating expenses and the IRC expenses are allocated between the classes of units based on the services used by each class. This allocation is based on the proportionate NAV of each class. The Manager may absorb at its discretion all or a portion of the Fund s obligations where the aggregate expenses exceed a certain percentage of the average daily NAV perclassof the Fund. This absorption of expenses may be terminated at any time by the Manager. Amounts absorbed by the Manager, if any, are reported in Expenses waived/ absorbed by manager in the statements of comprehensive income. 6. Related party transactions Fiera is the Manager and portfolio advisor of the Fund pursuant to the administration agreement. The Manager ensures the daily administration of the Fund. It provides or ensures the Fund is provided with all services (accounting, custodial, portfolio management, record maintenance, transfer agent) required to function properly. As at December 31, 2015, National Bank of Canada and Fédération des caisses Desjardins du Québec respectively own 22.65% and 10.17% of Fiera s voting shares (22.3% and 10.56% as at December 31, 2014). The Fund may have received income from underlying funds and limited partnerships, which have the same Manager. 10

15 Fiera Capital Balanced Fund Management, performance and fund accounting fees presented in the statements of comprehensive income, if any, are incurred by the Fund with Fiera. Transaction costs presented in the statements of comprehensive income, if any, may include brokerage fees paid to subsidiaries of National Bank of Canada and FédérationdescaissesDesjardinsduQuébec. The following table presents, if any, the income and/or expenses presented in the statements of comprehensive income and payables and/or receivables presentedin the statements of financial position incurred by the Fund with these related parties: December 31, 2015 December 31, 2014 Income Income from underlying funds Fiera Capital Bond Fund, Class O Dividends 5,319 Interests 503, ,974 Capital gains 321,449 Fiera Capital Canadian Equity Fund, Class O Dividends 295, ,413 Capital gains 580,100 3,113,217 Fiera Capital Equity Growth Fund, Class O Dividends 9,192 Capital gains 165, ,941 Fiera Capital Global Equity Fund, Class O Distributions from underlying funds 193, ,949 Expenses Management fees 896, ,071 Fund accounting fees 9,058 6,461 As at December 31, 2015 As at December 31, 2014 Payable Management fees payable 78,878 72,353 Accrued liabilities Fund accounting fees payable 2,001 4,427 The Manager provides funding of seed capital for the Fund and as a result, the Manager holds some of the Fund s units. December 31, 2015 % December 31, 2014 % Class A Class AV Class B Class F Class FV Class O 7. Commissions to brokers In 2015 and 2014, the Fund has no soft dollars included in commissions. 8. Financial instrument disclosures Hierarchy of financial instruments at fair value measurement The fair value measurement of financial instruments is determined using the following three levels of the fair value hierarchy: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2: Valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: Valuation techniques based on inputs for the asset or liability that are not based on observable market data (unobservable inputs). If inputs of different levels are used to measure the fair value of an asset or liability, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. Classification within the Fair Value Hierarchy A change in the fair value measurement method could result in a transfer between levels. The Fund s policy is to record transfers between levels on the date of the event or change in circumstances behind the transfer. 11

16 Fiera Capital Balanced Fund 12 Money market securities Money market securities primarily include public sector and corporate securities, which are valued using models with inputs including interest rate curves, credits spreads and volatilities. Since the inputs that are significant to valuation are generally observable, money market securities have been classified as Level 2. Public sector money market securities guaranteed by the federal or provincial government have been classified as Level 1. Equities Equities are classified as Level 1 when the security is actively traded and a reliable price is observable. Certain equities do not trade frequently and therefore observable prices may not be available. In such cases, fair value is determined using observable market data and the fair value is classified as Level 2, unless the determination of fair value requires significant unobservable data, in which case the measurement is classified as Level 3. Unlisted warrants are valued using the Black- Scholes model or other valuation methods and techniques generally recognized as standard within the industry and are generally classified as Level 2. Index-based investments Index-Based Investments are classified as Level 1 when the security is actively traded and a reliable price is observable. Bonds and debentures Public sector bonds and debentures guaranteed by the federal or provincial government are classified as Level 1, other public sector bonds and debentures are classified as Level 2. Corporate bonds and debentures, are valued using models with inputs including interest rate curves, credit spreads and volatilities. Since the inputs that are significant to valuation of corporate bonds and debentures are generally observable, they are usually classified as Level 2. Mortgage-backed securities and asset-backed securities Mortgage-backed securities and asset-backed securities consist primarily of corporate securities, which are valued using models with inputs including interest rate curves, credit spreads and volatilities. Since the inputs that are significant to valuation are generally observable, mortgage-backed securities and asset-backed securities are usually classified as Level 2. Underlying funds and limited partnerships Public underlying funds and limited partnerships are classified as Level 1 when their prospectus is unrestricted and their price is reliable and observable. Since some underlying funds and limited partnerships are not public, their price is determined using observable market data and fair value is classified as Level 2, unless the measurement of fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3. Derivative financial instruments Derivative financial instruments consists of forward currency contracts, bond forward contracts, futures contracts, options contracts and credit default swap contracts. Contracts for which counterparty credit spreads are observable and reliable, or for which the credit-related inputs are determined not to be significant to fair value, are classified as Level 2. Exchange traded options and futures are classified as level 1. Unless the measurement of fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3. The following tables categorize the Fund s financial assets (liabilities) fair value measurement according to a three-level hierarchy. The methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. The fair value measurement is described in Note 2 Significant accounting policies. Financial assets at fair value through profit or loss as at December 31, 2015 Level 1 Level 2 Level 3 Assets Money market securities 3,822,386 3,822,386 Underlying funds 65,209,243 65,209,243 Total assets 69,031,629 69,031,629 Financial assets at fair value through profit or loss as at December 31, 2014 Level 1 Level 2 Level 3 Assets Money market securities 6,492,149 6,492,149 Underlying funds 55,806,505 55,806,505 Total assets 62,298,654 62,298,654 Transfers between Levels 1 and 2 During the years ended, there were no transfers of investments between Level 1 and Level 2. Structured entities Fair values of index-based investments, mortgage-backed securities, asset-backed securities, underlying funds and limited partnerships in the tables Financial assets (liabilities) at fair value through profit or loss also represent the maximum exposure to loss arising from investments in structured entities. Financial instrument risks The Fund s activities expose it to a variety of financial risks, among which are market risk (including currency risk, interest rate risk and price risk), concentration risk, credit risk and liquidity risk. The Fund s overall risk management strategy focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Fund s rate of return. Total Total