TD Managed Assets Program INVESTOR SERIES

Transcription

1 2002 Annual Financial Statements TD MANAGED INDEX S INVESTOR AND e-series TD Managed Assets Program INVESTOR SERIES TD MANAGED INDEX INCOME RSP December 31, 2002 Mutual Funds *

2 TD MANAGED INDEX INCOME RSP STATEMENT OF INVESTMENT AS AT DECEMBER 31, 2002 NO. % OF TOTAL OF UNITS DESCRIPTION COST MARKET VALUE NET ASSETS FIXED INCOME FUND CANADIAN BOND 230,458 TD Canadian Bond Index Fund, Investor Series $ 2,355,341 $ 2,417, EQUITY FUNDS CANADIAN EQUITY 29,446 TD Canadian Index Fund, Investor Series 344, , U.S. EQUITY 34,787 TD U.S. Index Fund (CDN$), Investor Series 507, , INTERNATIONAL EQUITY 36,457 TD International Index Fund, Investor Series 354, , Total Equity Funds 1,207,299 1,014, TOTAL INVESTMENT 3,562,640 3,431, Other Net Liabilities (2,049) (2,049) 0.0 TOTAL NET ASSETS $ 3,560,591 $ 3,429, The accompanying notes to financial statements are an integral part of these statements

3 TD MANAGED INDEX INCOME RSP STATEMENTS OF NET ASSETS AS AT DECEMBER 31, 2002 AND ASSETS Investments at Market Value* $ 3,431,641 $ 2,758,925 Cash 19 42,018 Interest Receivable 1 69 Subscriptions Receivable Receivable for Investment Sales 0 27,620 3,431,661 2,829,168 LIABILITIES Accrued Liabilities 1,664 1,310 Payable for Investment Purchases 0 41,908 Redemptions Payable ,619 2,069 70,837 NET ASSETS REPRESENTING UNITHOLDERS EQUITY $ 3,429,592 $ 2,758,331 NUMBER OF UNITS OUTSTANDING - Investor Series (Note 3) 343, ,342 NUMBER OF UNITS OUTSTANDING - e-series (Note 3) 29,324 26,783 NET ASSET VALUE PER UNIT - Investor Series $ 9.17 $ 9.57 NET ASSET VALUE PER UNIT - e-series $ 9.52 $ 9.95 * Investments at cost $ 3,562,640 $ 2,766,797 On Behalf of the Board of Directors of TD Asset Management Inc. S. J. Geist, Director Marianne Harrison, Director The accompanying notes to financial statements are an integral part of these statements. 3

4 TD MANAGED INDEX INCOME RSP STATEMENTS OF INVESTMENT OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND INVESTMENT INCOME Income Distributions Received from Underlying Funds $ 130,558 $ 75,831 Foreign Withholding Taxes (901) (464) Net Income Distributions (Note 6) 129,657 75,367 Interest (Net) (552) (96) 129,105 75,271 EXPENSES (NOTE 4) Management Fee 9,472 6,577 Recordkeeping and Communications 6,648 4,347 Legal and Filing Audit ,398 11,864 GST 1, ,574 12,668 Net Investment Income 110,531 62,603 Net Realized Loss on Sale of Investments (23,993) (98,578) Net Change in Unrealized Appreciation (Depreciation) of Investments (123,127) 21,196 Capital Gains Distributions Received From Underlying Funds (Note 6) 0 4,808 Net Loss on Investments (147,120) (72,574) DECREASE IN NET ASSETS FROM INVESTMENT OPERATIONS $ (36,589) $ (9,971) The accompanying notes to financial statements are an integral part of these statements

5 TD MANAGED INDEX INCOME RSP STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2002 AND DECREASE IN NET ASSETS FROM INVESTMENT OPERATIONS $ (36,589) $ (9,971) CAPITAL UNIT TRANSACTIONS (NOTE 3) Proceeds from Sale of Units 1,332,882 1,468,645 Units Issued on Reinvestment of Distributions 110,453 62,538 Amounts Paid on Redemptions (626,228) (346,165) Early Redemption Fee 1, Net Capital Unit Transactions 818,381 1,185,529 DISTRIBUTIONS TO UNITHOLDERS From Net Investment Income 110,531 62,603 Total Distributions 110,531 62,603 INCREASE IN NET ASSETS FOR THE YEAR 671,261 1,112,955 NET ASSETS, BEGINNING OF THE YEAR 2,758,331 1,645,376 NET ASSETS, END OF THE YEAR $ 3,429,592 $ 2,758,331 STATEMENTS OF NET REALIZED LOSS ON SALE OF INVESTMENTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND Proceeds From Sale of Investments $ 525,532 $ 2,075,803 Cost of Investments, Beginning of the Year 2,766,797 1,661,452 Cost of Investments Purchased During the Year 1,345,368 3,279,726 4,112,165 4,941,178 LESS: Cost of Investments, End of the Year 3,562,640 2,766,797 Cost of Investments Sold During the Year 549,525 2,174,381 NET REALIZED LOSS ON SALE OF INVESTMENTS $ (23,993) $ (98,578) The accompanying notes to financial statements are an integral part of these statements. 5

6 TD MANAGED INDEX INCOME RSP STATEMENTS OF FINANCIAL HIGHLIGHTS (NOTE 5) FOR THE PERIODS ENDED DECEMBER 31 Investor Series PER UNIT DATA: NET ASSET VALUE PER UNIT - BEGINNING OF THE PERIOD $ 9.57 $ 9.92 $ 9.94 $ $ * INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS Net Investment Income Net Realized and Unrealized Gains (Losses) on Investments (0.40) (0.37) 0.09 (0.30) 0.11 Increase (Decrease) in Net Assets from Investment Operations (0.10) (0.09) DISTRIBUTIONS TO UNITHOLDERS From Net Investment Income (0.30) (0.26) (0.35) (0.55) (0.26) From Net Realized Gains on Investments (0.10) Total Distributions (0.30) (0.26) (0.45) (0.55) (0.26) NET ASSET VALUE PER UNIT - END OF THE PERIOD $ 9.17 $ 9.57 $ 9.92 $ 9.94 $ ADDITIONAL DATA: Total Net Assets - End of the Period ($000 s) 3,150 2,492 1,472 1, Average Net Assets ($000 s) 3,080 1,863 1,511 1, Management Expense Ratio 1.49% 1.51% 1.50% 1.49% 1.49%** Management Expense Ratio Without Expense Waivers/Absorptions 1.50% 2.81% 2.81% N/A N/A Portfolio Turnover Rate 15.78% 98.26% 57.50% 21.40% 0.60% Annual Rate of Return (1.1%) (0.8%) 4.3% 3.8% N/A * Initial Offering Price ** Annualized The accompanying notes to financial statements are an integral part of these statements

7 TD MANAGED INDEX INCOME RSP STATEMENTS OF FINANCIAL HIGHLIGHTS (NOTE 5) FOR THE PERIODS ENDED DECEMBER 31 e-series PER UNIT DATA: NET ASSET VALUE PER UNIT - BEGINNING OF THE PERIOD $ 9.95 $ $ $ * INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS Net Investment Income Net Realized and Unrealized Gains (Losses) on Investments (0.43) (0.38) 0.12 (0.12) Increase (Decrease) in Net Assets from Investment Operations (0.09) (0.06) DISTRIBUTIONS TO UNITHOLDERS From Net Investment Income (0.34) (0.31) (0.30) 0.00 From Net Realized Gains on Investments (0.05) 0.00 Total Distributions (0.34) (0.31) (0.35) 0.00 NET ASSET VALUE PER UNIT - END OF THE PERIOD $ 9.52 $ 9.95 $ $ ADDITIONAL DATA: Total Net Assets - End of the Period ($000 s) *** Average Net Assets ($000 s) *** Management Expense Ratio 1.18% 1.15% 1.13% ** N/A Management Expense Ratio Without Expense Waivers/Absorptions 1.20% 3.19% 1.19% N/A Portfolio Turnover Rate 15.78% 98.26% 57.50% 21.40% Annual Rate of Return (0.8%) (0.5%) 4.3% N/A * Initial Offering Price ** Annualized *** Less than $500 The accompanying notes to financial statements are an integral part of these statements. 7

8 NOTES TO FINANCIAL STATEMENTS 1. The Portfolio The TD Managed Index Income RSP Portfolio (the Portfolio ) is an open-ended mutual fund trust established under the laws of Ontario by a Declaration of Trust dated July 31, The Portfolio invests exclusively in fixed percentages of specified mutual fund trusts ( Underlying Funds ). TD Asset Management Inc. ( TDAM ) is the manager, investment manager and Trustee of the Portfolio. TD Investment Services Inc. ( TDIS ) is the principal distributor of the Portfolio. Both TDAM and TDIS are wholly-owned subsidiaries of The Toronto-Dominion Bank (the Bank ). On November 26, 1999, e-series units of the Portfolio were made available to the public. With this launch, the Portfolio has become a Multiple Class Fund. While both Investor Series and e-series Units are generally intended for sale to retail investors, the e-series Units are sold only via electronic means. The Bank provides recordkeeping and communications services to the Portfolio for a fee. 2. Summary of Significant Accounting Policies These financial statements, prepared in accordance with Canadian generally accepted accounting principles, include estimates and assumptions by management that affect the reported amounts of assets, liabilities, income and expenses during the reporting period. Actual results may differ from these estimates. The following is a summary of significant accounting policies followed by the Portfolio. (I) Valuation of Investments The investments in the Underlying Funds are valued at the closing net asset value of each Underlying Fund on the day of valuation. (II) Investment Transactions, Income and Expenses Investment transactions are accounted for as of the trade date. Realized gains and losses from investment transactions are calculated on an average cost basis. Interest income and expenses are accrued daily. Expenses specifically related to each Series are charged directly to the Series. Other expenses are allocated proportionately to each Series based upon the average net asset value of each Series. (III) Distributions from Underlying Funds Distributions received from Underlying Funds out of interest, foreign income and related withholding taxes, Canadian dividends and net capital gains are recognized when declared. (IV) Other Assets and Liabilities Financial assets and financial liabilities recorded at cost are short-term in nature and therefore their carrying value approximates fair value. (V) Translation of Foreign Currencies The market value of investments and other assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing on each valuation date. The Underlying Funds investment portfolios may consist of securities that are traded in foreign markets. The proceeds on the sale of such securities will be realized in foreign currencies. Unhedged foreign currency positions are subject to gains and losses due to fluctuations in the respective exchange rates. Foreign currency purchases and sales of investments and foreign currency dividend and interest income are translated into Canadian dollars at the rate of exchange prevailing on the respective date of the transaction. (VI) Valuation of the Portfolio We usually calculate the Net Asset Value per series unit for each fund as at 4pm Eastern time (ET) on each day that the TorontoTStock Exchange )(TSX) is open for trading, but in some circumstances, we may calculate it at another time. A separate net asset value is calculated for each Series of units of the Portfolio. The net asset value for each Series is calculated by subtracting the liabilities specifically related to that Series from its proportionate share of the assets and liabilities of the Portfolio that are not specifically related to any Series. 3. Unitholders Equity Units of the Portfolio, which are redeemable at the option of the holder in accordance with the provisions of the Declaration of Trust, do not have any nominal or par value and the number of units which may be issued is unlimited. Units are issued or redeemed on a daily basis at the net asset value per unit next determined after the purchase order or redemption request, respectively, is received by TDIS

9 SUMMARY OF SALES AND REDEMPTIONS OF UNITS Balance, Beginning Balance, Year Series of Period Purchases Reinvestments Redemptions End of Period 2002 Investor Series 260, ,947 10,972 69, ,394 e-series 26,783 1,728 1, , Investor Series 148, ,980 5,767 48, ,342 e-series 16,792 9, , Management Fee and Other Expenses Management Fee Other Expenses Investor Series $ 9,007 $ 6,221 $ 8,816 $ 5,814 e-series The Portfolio pays TDAM a management fee for the investment management and portfolio administration provided on behalf of the Portfolio. The management fee is a variable fee dependent upon the amount of all other fees and expenses that are paid by a Portfolio. The Management Expense Ratio ( MER ) of each Series of the Portfolio reflects the total of that Series share of all fees and expenses paid by the Portfolio, plus the Portfolio s share of the fees and expenses paid by the Underlying Funds. These expenses include recordkeeping and communications costs, legal and filing fees, audit and all taxes, and are charged separately to each Series of the Portfolio. Effective October 9, 2001, a cap was placed on the Investor Series such that the MER cannot exceed 1.50%, and on the e-series, such that the MER cannot exceed 1.20%. The maximum management fee for each Series is the amount that would be necessary to reach the cap, when combined with all expenses of the Portfolio, and its share of the Underlying Funds expenses. During the periods ended December 31, 2002 and 2001, the management fee was charged at the average annual rates stated in the table below: Management Fee Investor Series 0.29% 0.33% e-series 0.17% 0.14% TDAM will waive or absorb a portion of the operating expenses payable by the Portfolio to the extent necessary to ensure that the MER does not exceed the stated cap. TDAM may, at its discretion, waive or absorb additional fees and expenses otherwise payable by the Portfolio. These additional waivers may be terminated at any time by TDAM, and at TDAM s discretion, may be continued indefinitely. Without such waivers or absorptions, the MER would have been as reported under MER without Expense Waivers/Absorptions on the Statements of Financial Highlights. 5. Statement of Financial Highlights The information disclosed in this statement is calculated as follows: (I) Net asset value per unit is computed by dividing the net asset value of the Portfolio by the total number of units of the Portfolio outstanding, as at the beginning or end of the year. (II) Net investment income is based on net investment income allocated to each Series of units and the average number of units of that Series outstanding during the year. Distributions to unitholders from net investment income and net realized gains are based on the number of units of the Series outstanding on the record date for each distribution. (III) Average net assets is calculated as the average of the daily net asset values attributed to each Series during the year. (IV) The MER is based on the total expenses of each Series of the Portfolio and all expenses of the Underlying Funds (other than brokerage commissions on securities transactions) expressed as a percentage of the average net asset value attributed to each Series of the Portfolio during the year. For periods less than a complete financial year, the calculation has been annualized. The portion of the MER attributed to the Underlying Funds has been calculated by prorating the MER of each Underlying Fund by its target market value weighting in the Portfolio. (V) Portfolio turnover rate is a measure of portfolio activity calculated by dividing the lesser of purchases or sales of securities, excluding securities having maturity dates at acquisition of one year or less, by the average market value of the investment Portfolio for the year. (VI) Annual rate of return is calculated on the basis of change in the net asset value of the Portfolio, and takes into account distributions reinvested in accordance with the terms of the Declarations of Trust. For fiscal periods less than one year, the annual rate of return has not been provided, in accordance with securities regulations. 9

10 6. Distributions Received from Underlying Funds Distributions from Total Income (net of foreign Distributions from Underlying Fund Distributions withholding taxes) Capital Gains TD Canadian Bond Index Fund, Investor Series $ 118,429 $ 118,429 $ 0 TD Canadian Index Fund, Investor Series 1,714 1,714 0 TD International Index Fund, Investor Series 2,032 2,032 0 TD U.S. Index Fund (CDN$), Investor Series 7,482 7,482 0 Total $ 129,657 $ 129,657 $ 0 7. Tax Status The Portfolio qualifies as a mutual fund trust under the Income Tax Act (Canada). All or substantially all of the net income for tax purposes and net taxable capital gains realized in any year are distributed to unitholders such that no income tax is payable by the Portfolio. The Portfolio has accumulated the following net realized capital losses/non-capital losses which are available for utilization against net realized gains or net investment income as applicable for tax purposes in future years as follows. Capital losses have no expiry, non-capital losses can be carried forward for up to seven years: Capital Non-Capital (by year of expiry) $ 78,073 $0 $0 $0 $0 $0 8. Other Reports Unaudited statements of portfolio transactions of the Portfolio for the year ended December 31, 2002 will be provided, without charge, by writing to: TD Managed Assets Program c/o TD Asset Management Inc. Canada Trust Tower, 35th Floor 161 Bay Street, Toronto, Ontario M5J 2T2 Audited financial statements for the year ended December 31, 2002 for the Underlying Funds are available by writing to TDAM at the above address

11 AUDITORS REPORT To the Unitholders and Trustee of: TD MANAGED INDEX INCOME RSP (THE ) We have audited the accompanying statement of investment portfolio of the Portfolio as at December 31, 2002, the statements of net assets as at December 31, 2002 and 2001, the statements of investment operations, changes in net assets, and statement of net realized loss on sale of investments for the years then ended and the statements of financial highlights for each period in the five-year period ended December 31, These financial statements are the responsibility of the Portfolio s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Portfolio s management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Portfolio as at December 31, 2002 and 2001, the results of its operations and the changes in its net assets for the years then ended and the financial highlights for each period in the five-year period ended December 31, 2002 in accordance with Canadian generally accepted accounting principles. PricewaterhouseCoopers LLP Chartered Accountants Toronto, Ontario January 31,

12 SELLING YOUR INVESTMENTS You may sell units of your Portfolio in the following ways (orders involving e-series units may only be made through the Internet): In Person At any TD Canada Trust Branch By Telephone for TD Canada Trust customers By Mail Send a written request with your name, account number, the Portfolio name, the dollar amount or number of units to be sold, the Series of units, and specifics on where you would like the proceeds to be sent. We can send proceeds to either a mailing address or a TD Canada Trust account. The request must be signed by you. To confirm that the signature is genuine, TD Investment Services Inc. (TDIS) may request that your signature be guaranteed by an officer of a Canadian chartered bank or trust company or by any member of a recognized stock exchange who knows you. Send your request to: TD Managed Assets Program c/o TD Investment Services Inc. Toronto-Dominion Bank Tower P.O. Box 100 Toronto-Dominion Centre Toronto, ON M5K 1G8 Internet If you have an active TD Canada Trust EasyWeb account: Broker/Dealer If you have purchased units through a registered dealer, you may request a sale of Portfolio units through that dealer. You may be charged a commission or a fee. Processing Orders Orders received by TDIS before 4:00 pm (Eastern Time), or before 3:00 pm (Eastern Time) for TD Canada Trust EasyWeb orders on any valuation day will receive that day s Portfolio value. Orders received after 4:00 pm (Eastern Time), or after 3:00 pm for TD Canada Trust EasyWeb orders (Eastern Time) on any valuation day or on any day that is not a valuation day will receive the Portfolio price for the next valuation day. The valuation day for your Portfolio is each day on which a net asset value per unit is determined. Net asset values are generally determined at 4:00 pm (Eastern Time) on each day that the Toronto Stock Exchange (TSX) is open for trading, but in some circumstances, we may calculate it at another time. Other Selling Information An early redemption fee of up to 2% of the purchase cost is payable to the Portfolio if you redeem units within 90 days of purchase. Otherwise, there are no charges for selling units of the Portfolios directly through TDIS or branches of TD Canada Trust. There may be a charge if you sell your units through a broker or dealer. Sale proceeds will be mailed to you or deposited to a designated account within three business days of the valuation date on which the redemption order is processed. If you wish to have the sale proceeds wired to a designated account, there is an administrative handling fee of up to $25 in addition to the wire costs. Any previously issued certificates for units that you intend to sell must be included with the sale request in order to complete the transaction. TDIS may require further documentation from corporations, fiduciaries and other institutional investors. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. Available through TD Investment Services Inc. (principal distributor), TD Waterhouse Canada Inc. (member CIPF), and independent dealers. This communication was first published in March 2003 by TD Asset Management ( TDAM ). 8 Trade-mark of The Toronto-Dominion Bank. TDAM is a licensed user. TD Mutual Funds and the TD Managed Assets Program are managed by TDAM (03/03)