TD Managed Assets Program INVESTOR SERIES

Transcription

1 2001 Annual Financial Statements TD MANAGED PORTFOLIOS TD Managed Assets Program INVESTOR SERIES TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO December 31, 2001 Mutual Funds *

2 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENT OF INVESTMENT PORTFOLIO AS AT DECEMBER 31, 2001 NO. % OF TOTAL OF UNITS DESCRIPTION COST MARKET VALUE NET ASSETS FIXED INCOME FUNDS CANADIAN BOND 8,695,585 TD Canadian Bond Fund, Investor Series $ 104,968,862 $ 105,738,308 3,132,863 TD Canadian Bond Index Fund, Investor Series 32,017,472 32,080,517 2,969,468 TD Short Term Monthly Income Fund, Investor Series 28,128,306 28,833,530 Total Fixed Income Funds 165,114, ,652, EQUITY FUNDS CANADIAN EQUITY 1,540,907 TD Canadian Blue Chip Equity Fund, Investor Series 31,134,025 32,482,327 1,156,413 TD Dividend Growth Fund, Investor Series 29,656,799 32,391,114 60,790,824 64,873, U.S. EQUITY 2,541,797 TD U.S. Index Fund (CDN$), Investor Series 35,760,172 38,914, INTERNATIONAL EQUITY 1,244,207 TD International Equity Fund, Investor Series 28,338,913 29,649, GLOBAL EQUITY 1,600,083 TD Global Select Fund, Investor Series 26,739,940 22,865, Total Equity Funds 151,629, ,302, TOTAL INVESTMENT PORTFOLIO 316,744, ,955, Other Net Assets 6,252,051 6,252, TOTAL NET ASSETS $ 322,996,540 $ 329,207, The accompanying notes to financial statements are an integral part of these statements

3 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENTS OF NET ASSETS AS AT DECEMBER 31, 2001 AND 2000 ASSETS Investments at Market Value* $ 322,955,338 $ 210,037,526 Cash 5,524, ,843 Interest Receivable 4, Subscriptions Receivable 5,119,362 60,055 Receivable for Investment Sales 0 216,350 Other Receivables ,603, ,690,814 LIABILITIES Accrued Liabilities 209,493 71,014 Redemptions Payable 137,445 18,609 Distributions Payable 0 1,708 Payable for Investment Purchases 4,049, ,456 4,396, ,787 NET ASSETS REPRESENTING UNITHOLDERS EQUITY $ 329,207,389 $ 210,105,027 NUMBER OF UNITS OUTSTANDING (Note 4) Investor Series 32,746,271 20,142,246 Advisor Series 511 N/A NET ASSET VALUE PER UNIT Investor Series $ $ Advisor Series $ N/A * Investments at cost $ 316,744,489 $ 211,313,668 On Behalf of the Board of Directors of TD Asset Management Inc. S. J. Geist, Director R. Michael Thorfinnson, Director The accompanying notes to financial statements are an integral part of these statements. 3

4 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENTS OF INVESTMENT OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 INVESTMENT INCOME Income Distributions Received from Underlying Funds $ 6,832,078 $ 3,104,956 Foreign Withholding Taxes (139,929) (6,527) Net Income Distributions (Note 7) 6,692,149 3,098,429 Interest 28,173 27,815 EXPENSES (Note 5) 6,720,322 3,126,244 Management Fee 1,116, ,803 Recordkeeping and Communications 559, ,702 Legal and Filing 44,630 33,265 Audit 4,500 3,499 1,725, ,269 GST 117,575 45,325 1,843, ,594 Net Investment Income 4,877,301 2,396,650 Net Realized Gain (Loss) on Sale of Investments (17,139,520) 323,206 Net Change in Unrealized Appreciation (Depreciation) of Investments 7,486,991 (1,082,544) Capital Gains Distributions Received from Underlying Funds (Note 7) 791,130 1,737,767 Net Gain (Loss) on Investments (8,861,399) 978,429 INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ (3,984,098) $ 3,375,079 The accompanying notes to financial statements are an integral part of these statements

5 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2001 AND INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS $ (3,984,098) $ 3,375,079 CAPITAL UNIT TRANSACTIONS (Note 4) Proceeds from Sale of Units 170,047,660 56,153,236 Units Issued on Merger Transactions (Note 2) 0 112,800,502 Units Issued on Reinvestment of Distributions 4,875,633 4,163,438 Amounts Paid on Redemptions (46,988,593) (30,862,957) Early Redemption Fee 29,061 18,211 Net Capital Unit Transactions 127,963, ,272,430 DISTRIBUTIONS TO UNITHOLDERS From Net Investment Income 4,877,301 2,396,648 From Net Realized Gains on Investments 0 1,769,270 Total Distributions 4,877,301 4,165,918 INCREASE IN NET ASSETS FOR THE YEAR 119,102, ,481,591 NET ASSETS, BEGINNING OF THE YEAR 210,105,027 68,623,436 NET ASSETS, END OF THE YEAR $ 329,207,389 $ 210,105,027 The accompanying notes to financial statements are an integral part of these statements. 5

6 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENTS OF NET REALIZED GAIN (LOSS) ON SALE OF INVESTMENTS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 PER UNIT DATA: Proceeds From Sale of Investments $ 136,059,176 $ 17,797,514 Cost of Investments, Beginning of the Year 211,313,668 68,760,432 Cost of Investments Purchased During the Year 258,629, ,027, ,943, ,787,976 LESS: Cost of Investments, End of the Year 316,744, ,313,668 Cost of Investments Sold During the Year 153,198,696 17,474,308 NET REALIZED GAIN (LOSS) ON SALE OF INVESTMENTS $ (17,139,520) $ 323,206 The accompanying notes to financial statements are an integral part of these statements

7 TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO STATEMENTS OF FINANCIAL HIGHLIGHTS, Investor Series (NOTE 6) FOR THE PERIODS ENDED DECEMBER 31 PER UNIT DATA: NET ASSET VALUE PER UNIT - BEGINNING OF THE PERIOD $ $ $ $ INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS Net Investment Income Net Realized and Unrealized Gains (Losses) on Investments (0.39) 0.21 (0.28) 0.14 Increase (Decrease) in Net Assets from Investment Operations (0.20) DISTRIBUTIONS TO UNITHOLDERS From Net Investment Income (0.18) (0.21) (0.52) (0.13) From Net Realized Gains on Investments 0.00 (0.09) (0.03) (0.03) Total Distributions (0.18) (0.30) (0.55) (0.16) NET ASSET VALUE PER UNIT - END OF THE PERIOD $ $ $ $ ADDITIONAL DATA: Total Net Assets - End of the Period ($ 000 s) 329, ,105 68,623 1,155 Weighted Average Net Assets ($ 000 s) 254, ,198 42, Management Expense Ratio 2.26% 2.17% 2.29% 2.30%* Portfolio Turnover Rate 53.3% 15.3% 1.6% 2.5% Annual Rate of Return (1.85%) 4.19% 4.38% N/A + Initial Offering Price * Annualized 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 Income & Moderate Growth 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 ) managed by TD Asset Management Inc. ( TDAM ). TDAM, a wholly owned subsidiary of The Toronto-Dominion Bank (the Bank ), is the trustee and manager of the Portfolio. The Portfolio is authorized to issue an unlimited number of units of two distinct classes of units, which rank equally and are available for sale under separate prospectus. The Investor Series of units ( Investor Series ) represents the original units issued since the inception of the Portfolio. Investor Series units are available for sale on a no-load basis from TD Investment Services Inc. ( TDIS ). The Advisor Series of units ( Advisor Series ) were made available for sale on November 26, Advisor Series units are distributed through registered brokers and dealers. Each series of units are sold under differing purchase options and may have higher or lower management fees, reflecting the extent of the investment advice provided. These financial statements and accompanying notes to the financial statements presented herein are for the Investor Series. Separate financial statements of the TD Managed Income & Moderate Growth RSP Portfolio have also been issued for the Advisor Series. The financial statements for this series is available upon request by writing to TDAM at the address contained in Note 9. The Bank provides recordkeeping and communications services to the Portfolio for a fee. 2. Merger of Portfolios Effective as of the close of business on October 6, 2000 the Portfolio acquired all of the assets and assumed all of the liabilities of the Canada Trust RSP Balanced Fund Portfolio ( Terminated Portfolio ) in exchange for Investor Series units in the Portfolio. The value of the units of the Portfolio issued in connection with this merger was equal to the market value of the net assets transferred from the Terminated Portfolio. The name of the Portfolio was also changed from Green Line Managed Income & Moderate Growth RSP Portfolio to TD Managed Income & Moderate Growth RSP Portfolio on October 6, The following summarizes the net assets acquired and the number of units issued in exchange for the net assets of the terminated portfolio at October 6, The financial statements of the Portfolio do not include the operating results of the Terminated Portfolio prior to the merger date. At the time of the merger a unit split was executed at such a rate that would equate the Portfolio s unit price to that of the Canada Trust RSP Balanced Fund Portfolio at the close of business on October 6, The effective rate of the split was new units per existing unit. The number of units outstanding at December 31, 1999 and all comparative per unit information for prior years have been restated accordingly. 3. 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 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. Short-term debt instruments are valued at their amortized cost which approximates market value. (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 class are charged directly to the class. Other expenses are allocated proportionately to each class based upon the average net asset value of each class. (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 at the end of the period. 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. Net Assets Transferred Number of Terminated Portfolio to the Portfolio Units Exchanged Canada Trust RSP Balanced Fund Portfolio $ 112,800,502 10,643,

9 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 The net asset value of the Portfolio is determined as at 4 p.m. (Eastern Time) each business day, other than a Saturday or Sunday, the Bank is open for business at its main branch in Toronto, Ontario, and the Toronto Stock Exchange is open for trading, but in some circumstances we may calculate it at another time. A separate net asset value is calculated for each class of units of the Portfolio. The net asset value for each class is calculated by subtracting the liabilities specifically related to that class from its proportionate share of the assets and liabilities of the Portfolio that are not specifically related to any class. 4. 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 TDAM. TDAM may at its discretion, waive or absorb a portion of the operating expenses that would otherwise be charged to the Portfolio. These waivers may be terminated at any time by TDAM, and at TDAM s direction, may be continued indefinitely. TDAM will absorb fees and expenses payable by the Portfolio to the extent necessary to ensure that the MER does not exceed the stated cap. Without such waivers or absorptions, the MER of the Investor Series for the year ended December 31, 2001 would have been 2.39% ( %). 6. Statement of Financial Highlights The information disclosed in this statement is calculated as follows: (I) Net asset value per Investor Series unit is computed by dividing the net asset value attributed to the Investor Series of the Portfolio by the total number of units of the Investor Series outstanding, as at the beginning or end of the period. (II) Net investment income per Investor Series unit is based on the net investment income allocated to the Investor Series and the average number of Investor Series units outstanding during the period. Distributions to unitholders from net investment income and net realized gains are based on the number of Investor Series units outstanding on the record date for each distribution. SUMMARY OF SALES AND REDEMPTIONS OF UNITS Beginning Sales Reinvestments Redemptions Year of period during period during period during period End of period 2001 Investor Series 20,142,246 16,866, ,941 4,752,754 32,746,271 Advisor Series Investor Series 6,660,019 16,245, ,233 3,162,750 20,142, Management Fee and Other Expenses Management Fee Other Expenses Investor Series $1,116,798 $407,803 $726,219 $321,791 Advisor Series 2 N/A 2 N/A 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, bank charges, interest and all taxes, and are charged separately to each series of the Portfolio. Effective October 9, 2001, a cap was placed on the MER for the Investor Series such that it cannot exceed 2.30%. The maximum management fee 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 2001, the management fee was charged at an average annual rate of 0.44% ( %) (III) Average net assets is calculated as the average of the daily net asset values attributed to the Investor Series of the Portfolio during the period. (IV) The Management Expense Ratio ( MER ), is based on net expenses of the Investor Series and the Underlying Funds (other than brokerage commissions on securities transactions) expressed as a percentage of the average net asset value attributed to the Investor Series during the period. For periods less than a complete financial year, the calculation has been annualized. The portion of 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 average portfolio assets for the period. 9

10 (VI) Annual rate of return is calculated on the basis of change in the net asset value of the Investor Series, and takes into account distributions reinvested in accordance with the terms of the Declaration of Trust. (VII) Per unit data for the Investor Series have been restated to reflect the October 6, 2000 unit split. The net asset value per unit, average number of units and per unit distributions for periods prior to the split have been adjusted accordingly. 7. Distributions Received from Underlying Funds Distributions from Total Income (net of foreign Distributions from Underlying Fund Distributions withholding taxes) Capital Gains TD Balanced Income Fund, Investor Series $ 410,995 $ 410,995 $ 0 TD Canadian Blue Chip Equity Fund, Investor Series 418, ,043 TD Canadian Bond Fund, Investor Series 4,110,007 3,736, ,087 TD Canadian Bond Index Fund, Investor Series 260, ,565 0 TD Dividend Growth Fund, Investor Series 184, ,155 0 TD Global RSP Bond Fund, Investor Series 568, ,641 0 TD International Equity Fund, Investor Series 96,516 96,516 0 TD Short Term Monthly Income Fund, Investor Series 1,231,430 1,231,430 0 TD U.S. Index Fund (CDN$), Investor Series 202, ,927 0 Total $ 7,483,279 $ 6,692,149 $ 791, 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 (capital losses have no expiry, non-capital losses can be carried forward for up to seven years): Capital Non-Capital $16,348,390 $0 9. Other Reports Unaudited statements of portfolio transactions of the Portfolio for the year ended December 31, 2001 will be provided, without charge, by writing to: TD Managed Assets Program c /o TD Asset Management Inc. Canada Trust Tower, 35 th Floor 161 Bay Street Toronto, ON M5J 2T2 Audited financial statements for the year ended December 31, 2001 for the Underlying Funds are available by writing to TDAM at the above address

11 AUDITORS REPORT To the Unitholders of the Investor Series of: TD MANAGED INCOME & MODERATE GROWTH RSP PORTFOLIO (THE PORTFOLIO ) We have audited the accompanying statement of investment portfolio of the Portfolio as at December 31, 2001, the statements of net assets as at December 31, 2001 and 2000, the statements of investment operations, changes in net assets, and net realized gain (loss) on sale of investments for the years then ended and the statements of financial highlights of the Investor Series of units for each period in the four-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, 2001 and 2000, the results of its operations and the changes in its net assets for the years then ended and the financial highlights for the Investor Series for each period in the four-year period ended December 31, 2001 in accordance with Canadian generally accepted accounting principles. We have also reported on the Portfolio s financial statements as they pertain to the unitholders of the Advisor Series. PricewaterhouseCoopers LLP Chartered Accountants Toronto, Ontario January 25,

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): 1. In Person At any TD Canada Trust Branch 2. 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, 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 3. 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) each day that TD Canada Trust is open for business at its main branch in Toronto. 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 Investor Services (Canada) Inc. (member CIPF), and independent dealers. Mutual fund investments are not insured by the Canada Deposit Insurance Corporation or the Régie de l assurance-dépôts du Québec and are not guaranteed by TD Bank. This communication was first published in March 2002 by 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 TD Asset Management Inc., which was named Fund Company of the Year in Top Funds 2002 (Prentice Hall Canada), Moynes, Fallon and Moynes (03/02)