2015 Annual Report DFS Guaranteed Investment Funds

Transcription

1 GUARANTEED INVESTMENT FUNDS MAY Annual Report DFS Guaranteed Investment Funds Financial Information as of December 31, 2015 DFS Guaranteed Investment Funds are established by Desjardins Financial Security Life Assurance Company. Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company.

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3 TABLE OF CONTENTS DFS GUARANTEED INVESTMENT FUNDS Investment Solutions DFS GIF Conservative... 4 DFS GIF Moderate DFS GIF Balanced DFS GIF Growth DFS GIF Maximum Growth Individual Funds Income DFS GIF Money Market DFS GIF Income Fiera Capital DFS GIF Canadian Bond Balanced and Asset Allocation DFS GIF Diversified Income Franklin Quotential DFS GIF Balanced Income Franklin Quotential DFS GIF Canadian Balanced Fidelity DFS GIF U.S. Monthly Income Fidelity DFS GIF Balanced Desjardins Societerra DFS GIF Global Balanced Jarislowsky Fraser DFS GIF Canadian Balanced Fiera Capital DFS GIF Canadian Balanced Franklin Bissett DFS GIF Balanced Growth Franklin Quotential DFS GIF Canadian Balanced CI Signature DFS GIF Income and Growth CI Signature DFS GIF Growth and Income NEI Northwest DFS GIF Global Growth NEI Select DFS GIF Canadian Asset Allocation CI Cambridge DFS GIF Growth Franklin Quotential Canadian Equity DFS GIF Dividend Income Franklin Bissett DFS GIF Canadian Dividend NEI Northwest DFS GIF Canadian Equity Jarislowsky Fraser DFS GIF Canadian Equity Fidelity True North DFS GIF Canadian Equity Franklin Bissett DFS GIF Canadian Equity Fiera Capital DFS GIF Specialty Equity NEI Northwest DFS GIF Small Cap Franklin Bissett Foreign Equity DFS GIF American Equity MFS DFS GIF American Equity Desjardins DFS GIF Global Dividend Desjardins DFS GIF Global Equity MFS DFS GIF International Equity MFS DFS GIF International Equity Growth Desjardins NOTES TO THE FINANCIAL STATEMENTS INDEPENDENT AUDITOR S REPORT MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING IN THE AUDITED ANNUAL FINANCIAL STATEMENTS What s a DFS GIF? DFS stands for Desjardins Financial Security. GIF stands for Guaranteed Investment Fund. A Guaranteed Investment Fund (GIF), commonly known as segregated fund is an investment fund created and issued exclusively by life insurance companies. It is offered through Contracts which provide maturity and death benefit guarantees. Is this document available online? Yes, at desjardinslifeinsurance.com/ GIFreports. Is it possible to opt out of receiving paper copies of this financial report? Yes. Please send a letter to: Desjardins Financial Security GIF Administration 1, complexe Desjardins C. P Montréal (Québec) H5B 1H5 Or send an to: [email protected]. Please include your name, mailing address, telephone number, address and client number in your request, and indicate whether your request applies to the annual financial report and/or the semi-annual financial report. DFS GUARANTEED INVESTMENT FUNDS 1

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5 DFS GUARANTEED INVESTMENT FUNDS Investment Solutions

6 DFS GIF CONSERVATIVE* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio DGIA Canadian Bond Fund 55.6% Desjardins Enhanced Bond Fund 23.4% BlackRock CDN US Equity Index Fund 6.5% Desjardins Overseas Equity Growth Fund 3.3% Desjardins Overseas Equity Fund 3.1% Fidelity True North Fund 2.6% Franklin Bissett Canadian Equity Fund 2.6% BlackRock Active Canadian Equity DC Fund 2.6% Cash and Cash Equivalents 0.3% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

7 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 70, Investments at fair value through profit or loss (FVTPL) 8,395,967 2,867,854 Premiums receivable 9,468 Receivable for securities sold 31,167 8,497,309 2,877,849 LIABILITIES Current Liabilities Accrued expenses 16,359 5,197 Withdrawals payable 32,351 1,178 Payable for securities purchased ,109 7,046 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 8,448,200 2,870,803 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Periods Ended December (12 months) (11 months) INCOME Interest for attribution purposes 160,624 28,392 Dividends 33,044 9,415 Changes in fair value Net realized gain (loss) on investments (13,233) 17,230 Net unrealized gain (loss) on investments (31,061) (946) 149,374 54,091 EXPENSES Management fees and guarantee charge 130,439 16,668 Operating expenses 13,417 1, ,856 18,298 Withholding taxes 1, ,455 18,926 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 3,919 35,165 DATA PER SERIES SERIES 5** from Operations per unit 0.07 Average Units 4,845 SERIES 6* from Operations (4,339) 34,813 - per unit 0.21 Average Units 987, ,537 SERIES 7* from Operations 7, per unit Average Units 136,776 1,382 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 5

8 DFS GIF CONSERVATIVE (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 2,870,803 from operations attributable to contract owners 3,919 35,165 Premiums Series 5** 82,376 Series 6* 5,123,094 2,939,375 Series 7* 1,252,778 20,001 6,458,248 2,959,376 Withdrawals Series 5** (15,189) Series 6* (843,441) (123,738) Series 7* (26,140) (884,770) (123,738) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 8,448,200 2,870,803 STATEMENT OF CASH FLOWS Periods Ended December * (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 3,919 35,165 Adjustments for: Net realized gain (loss) 13,233 (17,230) Net unrealized gain (loss) 31, Proceeds from sale/maturity of investments 3,502, ,037 Investments purchased (9,074,864) (2,957,607) Receivable for securities sold (31,167) Accrued expenses 11,162 5,197 Payable for securities purchased (272) 671 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (5,544,471) (2,826,821) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 6,467,716 2,949,908 Amounts paid on withdrawals (853,597) (122,560) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 5,614,119 2,827,348 Increase (Decrease) in cash/bank overdraft 69, Cash (bank overdraft), beginning of period 527 CASH (BANK OVERDRAFT), END OF PERIOD 70, SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 2 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 6 DFS GUARANTEED INVESTMENT FUNDS

9 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (99.4%) BlackRock Active Canadian Equity DC Fund 7, , ,398 BlackRock CDN US Equity Index Fund, Class D 30, , ,431 Desjardins Enhanced Bond Fund, I-Class 175,631 1,974,973 1,966,715 Desjardins Overseas Equity Growth Fund, I-Class 13, , ,196 Desjardins Overseas Equity Fund, I-Class 18, , ,200 DGIA Canadian Bond Fund 458,969 4,695,740 4,681,311 Fidelity True North Fund, Series O 5, , ,068 Franklin Bissett Canadian Equity Fund, Series O 1, , ,648 TOTAL INVESTMENTS 8,427,974 8,395,967 OTHER NET ASSETS (0.6%) 52,233 NET ASSETS (100%) 8,448,200 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited Security Name Percentage of Portfolio DGIA CANADIAN BOND FUND 55.6% Canada Housing Trust, 1.95%, June 15, % Canada Housing Trust, 2.35%, December 15, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 5.00%, June 1, % Government of Canada, 4.00%, June 1, % DESJARDINS ENHANCED BOND FUND 23.4% Government of Canada, 2.25%, June 1, % Province of British Columbia, 2.70%, December 18, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 3.50%, June 2, % BLACKROCK CDN US EQUITY INDEX FUND 6.5% Apple 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 1.8% General Electric Company 1.6% Johnson & Johnson 1.6% DESJARDINS OVERSEAS EQUITY GROWTH FUND 3.3% Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat 4.7% AIA Group 4.1% DFS GUARANTEED INVESTMENT FUNDS 7

10 DFS GIF CONSERVATIVE (cont.) TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited (cont.) Security Name Percentage of Portfolio DESJARDINS OVERSEAS EQUITY VALUE FUND 3.1% Roche Holding AG 4.4% Nestlé 4.1% Japan Tobacco 4.0% Novartis AG 4.0% British American Tobacco 3.8% FIDELITY TRUE NORTH FUND 2.6% Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% FRANKLIN BISSETT CANADIAN EQUITY FUND 2.6% Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 2.6% Toronto-Dominion Bank 7.1% Royal Bank of Canada 5.7% Scotiabank 4.3% Canadian National Railway Company 3.5% Manulife Financial Corporation 3.4% 8 DFS GUARANTEED INVESTMENT FUNDS

11 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To generate a consistent flow of income with an emphasis on the preservation of capital by investing in a number of different fixed income and equity underlying funds. The principal risk factors of this Fund are interest rate, foreign currency, credit, sovereign, market, special equities and derivatives risk. Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 2,945,828 5,450,139 8,395,967 TOTAL 2,945,828 5,450,139 8,395,967 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 1,463,895 1,403,959 2,867,854 TOTAL 1,463,895 1,403,959 2,867,854 Transfers between Levels 1 and 2 During the periods ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Funds managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying funds. Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying funds. Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 9

12 DFS GIF CONSERVATIVE (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying funds. Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying funds. Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (80%) ,586 22,966 S&P/TSX (8%) ,276 6,890 S&P 500 (6%) ,207 5,167 MSCI EAFE Net (6%) ,207 5,167 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying funds. Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying funds. Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 10 DFS GUARANTEED INVESTMENT FUNDS

13 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past two periods. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () Series 5** 5.04 Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5** 68 Series 6* 7,126 2,850 Series 7* 1, Number of units outstanding (000) Series 5** 13 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series 5** 2.59 Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 11

14 DFS GIF MODERATE* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio DGIA Canadian Bond Fund 43.9% Desjardins Enhanced Bond Fund 17.6% BlackRock CDN US Equity Index Fund 11.2% Desjardins Overseas Equity Growth Fund 5.6% Desjardins Overseas Equity Fund 5.3% Fidelity True North Fund 4.6% Franklin Bissett Canadian Equity Fund 4.6% BlackRock Active Canadian Equity DC Fund 4.5% Cash and Cash Equivalents 2.7% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

15 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 453,973 29,728 Investments at fair value through profit or loss (FVTPL) 13,580,031 5,311,842 Premiums receivable 18,755 41,963 14,052,759 5,383,533 LIABILITIES Current Liabilities Accrued expenses 27,384 10,249 Withdrawals payable 7,033 2,721 Payable for securities purchased 77,584 9, ,001 22,413 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 13,940,758 5,361,120 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Periods Ended December (12 months) (11 months) INCOME Interest for attribution purposes 201,172 48,640 Dividends 90,740 30,564 Changes in fair value Net realized gain (loss) on investments 41,868 43,885 Net unrealized gain (loss) on investments (67,411) 17, , ,043 EXPENSES Management fees and guarantee charge 212,407 42,191 Operating expenses 20,939 4, ,346 46,258 Withholding taxes 4,403 2, ,749 48,299 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 28,620 92,744 DATA PER SERIES SERIES 5** from Operations per unit 0.03 Average Units 14,617 SERIES 6* from Operations 14,479 86,181 - per unit Average Units 1,682, ,351 SERIES 7* from Operations 13,717 6,563 - per unit Average Units 87,656 33,411 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 13

16 DFS GIF MODERATE (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 5,361,120 from operations attributable to contract owners 28,620 92,744 Premiums Series 5** 113,021 Series 6* 8,876,039 5,063,394 Series 7* 805, ,001 9,795,027 5,383,395 Withdrawals Series 5** (15,215) Series 6* (1,228,789) (115,019) Series 7* (5) (1,244,009) (115,019) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 13,940,758 5,361,120 STATEMENT OF CASH FLOWS Periods Ended December * (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 28,620 92,744 Adjustments for: Net realized gain (loss) (41,868) (43,885) Net unrealized gain (loss) 67,411 (17,954) Proceeds from sale/maturity of investments 4,241, ,298 Investments purchased (12,535,529) (5,362,301) Accrued expenses 17,135 10,249 Payable for securities purchased 68,141 9,443 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (8,154,293) (5,199,406) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 9,818,235 5,341,432 Amounts paid on withdrawals (1,239,697) (112,298) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 8,578,538 5,229,134 Increase (Decrease) in cash/bank overdraft 424,245 29,728 Cash (bank overdraft), beginning of period 29,728 CASH (BANK OVERDRAFT), END OF PERIOD 453,973 29,728 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 43 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 14 DFS GUARANTEED INVESTMENT FUNDS

17 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (97.4%) BlackRock Active Canadian Equity DC Fund 22, , ,655 BlackRock CDN US Equity Index Fund, Class D 86,404 1,429,852 1,569,669 Desjardins Enhanced Bond Fund, I-Class 219,698 2,470,795 2,460,177 Desjardins Overseas Equity Growth Fund, I-Class 39, , ,637 Desjardins Overseas Equity Fund, I-Class 52, , ,721 DGIA Canadian Bond Fund 600,589 6,135,719 6,125,778 Fidelity True North Fund, Series O 14, , ,147 Franklin Bissett Canadian Equity Fund, Series O 5, , ,247 TOTAL INVESTMENTS 13,629,487 13,580,031 OTHER NET ASSETS (2.6%) 360,727 NET ASSETS (100%) 13,940,758 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited Security Name Percentage of Portfolio DGIA CANADIAN BOND FUND 43.9% Canada Housing Trust, 1.95%, June 15, % Canada Housing Trust, 2.35%, December 15, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 5.00%, June 1, % Government of Canada, 4.00%, June 1, % DESJARDINS ENHANCED BOND FUND 17.6% Government of Canada, 2.25%, June 1, % Province of British Columbia, 2.70%, December 18, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 3.50%, June 2, % BLACKROCK CDN US EQUITY INDEX FUND 11.2% Apple 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 1.8% General Electric Company 1.6% Johnson & Johnson 1.6% DESJARDINS OVERSEAS EQUITY GROWTH FUND 5.6% Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat 4.7% AIA Group 4.1% DFS GUARANTEED INVESTMENT FUNDS 15

18 DFS GIF MODERATE (cont.) TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited (cont.) Security Name Percentage of Portfolio DESJARDINS OVERSEAS EQUITY VALUE FUND 5.3% Roche Holding AG 4.4% Nestlé 4.1% Japan Tobacco 4.0% Novartis AG 4.0% British American Tobacco 3.8% FIDELITY TRUE NORTH FUND 4.6% Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% FRANKLIN BISSETT CANADIAN EQUITY FUND 4.6% Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 4.5% Toronto-Dominion Bank 7.1% Royal Bank of Canada 5.7% Scotiabank 4.3% Canadian National Railway Company 3.5% Manulife Financial Corporation 3.4% 16 DFS GUARANTEED INVESTMENT FUNDS

19 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To generate income while leaving room for some capital appreciation by investing in a number of different fixed income and equity underlying funds. The principal risk factors of this Fund are interest rate, foreign currency, credit, sovereign, market, special equities and derivatives risk. Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 5,259,929 8,320,102 13,580,031 TOTAL 5,259,929 8,320,102 13,580,031 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 2,773,020 2,538,822 5,311,842 TOTAL 2,773,020 2,538,822 5,311,842 Transfers between Levels 1 and 2 During the periods ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying funds. Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying funds. Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 17

20 DFS GIF MODERATE (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying funds. Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying funds. Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (65%) ,615 34,847 S&P/TSX (14%) ,551 22,517 S&P 500 (10.5%) ,913 16,888 MSCI EAFE Net (10.5%) ,913 16,888 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying funds. Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying funds. Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 18 DFS GUARANTEED INVESTMENT FUNDS

21 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past two periods. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () Series 5** 5.04 Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5** 98 Series 6* 12,696 5,035 Series 7* 1, Number of units outstanding (000) Series 5** 19 Series 6* 2, Series 7* Management expense ratio (MER) 1 (%) Series 5** 2.64 Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 19

22 DFS GIF BALANCED* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio DGIA Canadian Bond Fund 34.1% BlackRock CDN US Equity Index Fund 15.9% Desjardins Enhanced Bond Fund 14.2% Desjardins Overseas Equity Growth Fund 8.0% Desjardins Overseas Equity Fund 7.5% Fidelity True North Fund 6.5% Franklin Bissett Canadian Equity Fund 6.5% BlackRock Active Canadian Equity DC Fund 6.4% Cash and Cash Equivalents 0.9% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

23 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 329,916 57,786 Investments at fair value through profit or loss (FVTPL) 30,993,618 9,557,197 Premiums receivable 59,798 25,503 Receivable for securities sold 3,797 31,387,129 9,640,486 LIABILITIES Current Liabilities Accrued expenses 62,246 18,810 Withdrawals payable 19,248 5,016 Payable for securities purchased 25,847 19, ,341 43,803 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 31,279,788 9,596,683 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Periods Ended December (12 months) (11 months) INCOME Interest for attribution purposes 315,733 61,736 Dividends 269,807 78,502 Changes in fair value Net realized gain (loss) on investments 182, ,398 Net unrealized gain (loss) on investments (212,494) 22, , ,520 EXPENSES Management fees and guarantee charge 417,102 71,165 Operating expenses 40,796 6, ,898 77,820 Withholding taxes 12,919 5, ,817 83,051 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 84, ,469 DATA PER SERIES SERIES 5** from Operations per unit 0.10 Average Units 8,454 SERIES 6* from Operations 70, ,343 - per unit Average Units 2,998, ,179 SERIES 7* from Operations 12,653 11,126 - per unit Average Units 404,650 24,926 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 21

24 DFS GIF BALANCED (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 9,596,683 from operations attributable to contract owners 84, ,469 Premiums Series 5** 63,359 Series 6* 18,174,904 9,394,474 Series 7* 4,859, ,840 23,097,452 10,113,314 Withdrawals Series 5** Series 6* (1,317,109) (705,854) Series 7* (181,540) (1,246) (1,498,649) (707,100) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 31,279,788 9,596,683 STATEMENT OF CASH FLOWS Periods Ended December * (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 84, ,469 Adjustments for: Net realized gain (loss) (182,073) (110,398) Net unrealized gain (loss) 212,494 (22,884) Proceeds from sale/maturity of investments 6,918, ,639 Investments purchased (28,385,439) (9,787,554) Receivable for securities sold (3,797) Accrued expenses 43,436 18,810 Payable for securities purchased 5,870 19,977 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (21,306,610) (9,327,941) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 23,063,157 10,087,811 Amounts paid on withdrawals (1,484,417) (702,084) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 21,578,740 9,385,727 Increase (Decrease) in cash/bank overdraft 272,130 57,786 Cash (bank overdraft), beginning of period 57,786 CASH (BANK OVERDRAFT), END OF PERIOD 329,916 57,786 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES: Interest paid 58 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 22 DFS GUARANTEED INVESTMENT FUNDS

25 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (99.1%) BlackRock Active Canadian Equity DC Fund 72,397 2,243,742 1,991,982 BlackRock CDN US Equity Index Fund, Class D 273,564 4,613,763 4,969,720 Desjardins Enhanced Bond Fund, I-Class 396,776 4,459,973 4,443,097 Desjardins Overseas Equity Growth Fund, I-Class 123,852 2,384,681 2,489,067 Desjardins Overseas Equity Fund, I-Class 166,695 2,447,046 2,360,230 DGIA Canadian Bond Fund 1,046,653 10,693,598 10,675,470 Fidelity True North Fund, Series O 47,162 2,163,049 2,036,348 Franklin Bissett Canadian Equity Fund, Series O 16,614 2,177,377 2,027,704 TOTAL INVESTMENTS 31,183,229 30,993,618 OTHER NET ASSETS (0.9%) 286,170 NET ASSETS (100%) 31,279,788 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited Security Name Percentage of Portfolio DGIA CANADIAN BOND FUND 34.1% Canada Housing Trust, 1.95%, June 15, % Canada Housing Trust, 2.35%, December 15, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 5.00%, June 1, % Government of Canada, 4.00%, June 1, % BLACKROCK CDN US EQUITY INDEX FUND 15.9% Apple 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 1.8% General Electric Company 1.6% Johnson & Johnson 1.6% DESJARDINS ENHANCED BOND FUND 14.2% Government of Canada, 2.25%, June 1, % Province of British Columbia, 2.70%, December 18, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 3.50%, June 2, % DESJARDINS OVERSEAS EQUITY GROWTH FUND 8.0% Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat 4.7% AIA Group 4.1% DFS GUARANTEED INVESTMENT FUNDS 23

26 DFS GIF BALANCED (cont.) TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited (cont.) Security Name Percentage of Portfolio DESJARDINS OVERSEAS EQUITY VALUE FUND 7.5% Roche Holding AG 4.4% Nestlé 4.1% Japan Tobacco 4.0% Novartis AG 4.0% British American Tobacco 3.8% FIDELITY TRUE NORTH FUND 6.5% Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% FRANKLIN BISSETT CANADIAN EQUITY FUND 6.5% Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 6.4% Toronto-Dominion Bank 7.1% Royal Bank of Canada 5.7% Scotiabank 4.3% Canadian National Railway Company 3.5% Manulife Financial Corporation 3.4% 24 DFS GUARANTEED INVESTMENT FUNDS

27 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an attractive balance of current income and capital appreciation by investing in a number of different fixed income and equity underlying funds. The principal risk factors of this Fund are interest rate, foreign currency, credit, sovereign, market, special equities and derivatives risk. Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 13,356,447 17,637,171 30,993,618 TOTAL 13,356,447 17,637,171 30,993,618 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 5,061,958 4,495,239 9,557,197 TOTAL 5,061,958 4,495,239 9,557,197 Transfers between Levels 1 and 2 During the periods ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying funds. Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying funds. Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 25

28 DFS GIF BALANCED (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying funds. Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying funds. Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (50%) ,399 47,983 S&P/TSX (20%) ,679 57,580 S&P 500 (15%) ,759 43,185 MSCI EAFE Net (15%) ,759 43,185 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying funds. Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying funds. Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 26 DFS GUARANTEED INVESTMENT FUNDS

29 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past two periods. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () Series 5** 5.05 Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5** 64 Series 6* 25,797 8,868 Series 7* 5, Number of units outstanding (000) Series 5** 13 Series 6* 4,848 1,703 Series 7* 1, Management expense ratio (MER) 1 (%) Series 5** 2.70 Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 27

30 DFS GIF GROWTH* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio DGIA Canadian Bond Fund 23.6% BlackRock CDN US Equity Index Fund 20.7% Desjardins Overseas Equity Growth Fund 10.3% Desjardins Enhanced Bond Fund 9.8% Desjardins Overseas Equity Fund 9.7% Fidelity True North Fund 8.4% Franklin Bissett Canadian Equity Fund 8.4% BlackRock Active Canadian Equity DC Fund 8.3% Cash and Cash Equivalents 0.8% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

31 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 110,798 21,720 Investments at fair value through profit or loss (FVTPL) 18,843,250 5,272,114 Premiums receivable 105,745 57,613 Receivable for securities sold 34,057 19,093,850 5,351,447 LIABILITIES Current Liabilities Accrued expenses 39,847 9,763 Withdrawals payable 18,356 3,958 Payable for securities purchased 36,091 47,245 94,294 60,966 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 18,999,556 5,290,481 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Periods Ended December (12 months) (11 months) INCOME Interest for attribution purposes 132,097 27,207 Dividends 212,835 55,593 Changes in fair value Net realized gain (loss) on investments 175,094 83,807 Net unrealized gain (loss) on investments (174,861) (5,433) 345, ,174 EXPENSES Management fees and guarantee charge 260,152 49,441 Operating expenses 24,463 4, ,615 53,903 Withholding taxes 10,258 3, ,873 57,656 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 50, ,518 DATA PER SERIES SERIES 5** from Operations per unit 0.04 Average Units 10,944 SERIES 6* from Operations 26, ,011 - per unit Average Units 1,875, ,821 SERIES 7* from Operations 23, per unit Average Units 100,183 5,154 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 29

32 DFS GIF GROWTH (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 5,290,481 from operations attributable to contract owners 50, ,518 Premiums Series 5** 161,010 Series 6* 14,121,829 5,316,303 Series 7* 716, ,488 14,999,639 5,826,791 Withdrawals Series 5** (78,976) Series 6* (1,011,364) (625,661) Series 7* (250,516) (14,167) (1,340,856) (639,828) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 18,999,556 5,290,481 STATEMENT OF CASH FLOWS Periods Ended December * (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 50, ,518 Adjustments for: Net realized gain (loss) (175,094) (83,807) Net unrealized gain (loss) 174,861 5,433 Proceeds from sale/maturity of investments 3,035, ,823 Investments purchased (16,606,184) (5,826,563) Receivable for securities sold (34,057) Accrued expenses 30,084 9,763 Payable for securities purchased (11,154) 47,245 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (13,535,971) (5,111,588) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 14,951,507 5,769,178 Amounts paid on withdrawals (1,326,458) (635,870) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 13,625,049 5,133,308 Increase (Decrease) in cash/bank overdraft 89,078 21,720 Cash (bank overdraft), beginning of period 21,720 CASH (BANK OVERDRAFT), END OF PERIOD 110,798 21,720 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 18 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 30 DFS GUARANTEED INVESTMENT FUNDS

33 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (99.2%) BlackRock Active Canadian Equity DC Fund 57,226 1,772,716 1,574,564 BlackRock CDN US Equity Index Fund, Class D 215,703 3,656,245 3,918,598 Desjardins Enhanced Bond Fund, I-Class 166,887 1,875,622 1,868,798 Desjardins Overseas Equity Growth Fund, I-Class 96,918 1,883,363 1,947,767 Desjardins Overseas Equity Fund, I-Class 130,598 1,925,972 1,849,136 DGIA Canadian Bond Fund 440,993 4,507,069 4,497,969 Fidelity True North Fund, Series O 36,959 1,695,835 1,595,791 Franklin Bissett Canadian Equity Fund, Series O 13,033 1,706,722 1,590,627 TOTAL INVESTMENTS 19,023,544 18,843,250 OTHER NET ASSETS (0.8%) 156,306 NET ASSETS (100%) 18,999,556 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited Security Name Percentage of Portfolio DGIA CANADIAN BOND FUND 23.6% Canada Housing Trust, 1.95%, June 15, % Canada Housing Trust, 2.35%, December 15, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 5.00%, June 1, % Government of Canada, 4.00%, June 1, % BLACKROCK CDN US EQUITY INDEX FUND 20.7% Apple 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 1.8% General Electric Company 1.6% Johnson & Johnson 1.6% DESJARDINS OVERSEAS EQUITY GROWTH FUND 10.3% Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat 4.7% AIA Group 4.1% DESJARDINS ENHANCED BOND FUND 9.8% Government of Canada, 2.25%, June 1, % Province of British Columbia, 2.70%, December 18, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 3.50%, June 2, % DFS GUARANTEED INVESTMENT FUNDS 31

34 DFS GIF GROWTH (cont.) TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited (cont.) Security Name Percentage of Portfolio DESJARDINS OVERSEAS EQUITY VALUE FUND 9.7% Roche Holding AG 4.4% Nestlé 4.1% Japan Tobacco 4.0% Novartis AG 4.0% British American Tobacco 3.8% FIDELITY TRUE NORTH FUND 8.4% Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% FRANKLIN BISSETT CANADIAN EQUITY FUND 8.4% Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 8.3% Toronto-Dominion Bank 7.1% Royal Bank of Canada 5.7% Scotiabank 4.3% Canadian National Railway Company 3.5% Manulife Financial Corporation 3.4% 32 DFS GUARANTEED INVESTMENT FUNDS

35 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To emphasize appreciation of capital while still generating some income by investing in a number of different fixed income and equity underlying funds. The principal risk factors of this Fund are interest rate, foreign currency, credit, sovereign, market, special equities and derivatives risk. Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 8,852,119 9,991,131 18,843,250 TOTAL 8,852,119 9,991,131 18,843,250 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 2,850,055 2,422,059 5,272,114 TOTAL 2,850,055 2,422,059 5,272,114 Transfers between Levels 1 and 2 During the periods ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying funds. Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying funds. Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 33

36 DFS GIF GROWTH (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying funds. Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying funds. Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (35%) ,498 18,517 S&P/TSX (26%) ,197 41,266 S&P 500 (19.5%) ,147 30,949 MSCI EAFE Net (19.5%) ,147 30,949 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying funds. Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying funds. Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 34 DFS GUARANTEED INVESTMENT FUNDS

37 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past two periods. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () Series 5** 5.06 Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5** 82 Series 6* 17,931 4,794 Series 7* Number of units outstanding (000) Series 5** 16 Series 6* 3, Series 7* Management expense ratio (MER) 1 (%) Series 5** 2.76 Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 35

38 DFS GIF MAXIMUM GROWTH* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio BlackRock CDN US Equity Index Fund 25.4% DGIA Canadian Bond Fund 13.5% Desjardins Overseas Equity Growth Fund 12.8% Desjardins Overseas Equity Fund 12.0% Fidelity True North Fund 10.3% Franklin Bissett Canadian Equity Fund 10.3% BlackRock Active Canadian Equity DC Fund 10.0% Desjardins Enhanced Bond Fund 5.6% Cash and Cash Equivalents 0.1% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

39 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 5,689 1,757 Investments at fair value through profit or loss (FVTPL) 1,887,056 1,026,220 Premiums receivable 1,540 2,484 1,894,285 1,030,461 LIABILITIES Current Liabilities Accrued expenses 4,251 2,271 Withdrawals payable Payable for securities purchased 1, ,700 2,608 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 1,888,585 1,027,853 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Periods Ended December (12 months) (11 months) INCOME Interest for attribution purposes 9,921 3,749 Dividends 30,906 15,908 Changes in fair value Net realized gain (loss) on investments 29,842 20,115 Net unrealized gain (loss) on investments (13,151) 9,364 57,518 49,136 EXPENSES Management fees and guarantee charge 37,528 12,236 Operating expenses 3,420 1,079 40,948 13,315 Withholding taxes 1,503 1,066 42,451 14,381 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 15,067 34,755 DATA PER SERIES SERIES 5** from Operations 2 - per unit 0.01 Average Units 208 SERIES 6* from Operations 14,255 34,448 - per unit Average Units 273, ,958 SERIES 7* from Operations per unit Average Units 3,854 1,361 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 37

40 DFS GIF MAXIMUM GROWTH (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 1,027,853 from operations attributable to contract owners 15,067 34,755 Premiums Series 5** 2,003 Series 6* 959, ,480 Series 7* 20, , ,481 Withdrawals Series 5** Series 6* (116,110) (3,383) Series 7* (116,110) (3,383) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 1,888,585 1,027,853 STATEMENT OF CASH FLOWS Periods Ended December * (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 15,067 34,755 Adjustments for: Net realized gain (loss) (29,842) (20,115) Net unrealized gain (loss) 13,151 (9,364) Proceeds from sale/maturity of investments 356,128 21,512 Investments purchased (1,200,273) (1,018,253) Accrued expenses 1,980 2,271 Payable for securities purchased NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (842,824) (988,985) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 962, ,997 Amounts paid on withdrawals (115,963) (3,255) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 846, ,742 Increase (Decrease) in cash/bank overdraft 3,932 1,757 Cash (bank overdraft), beginning of period 1,757 CASH (BANK OVERDRAFT), END OF PERIOD 5,689 1,757 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 13 * Beginning of operations in February ** Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 38 DFS GUARANTEED INVESTMENT FUNDS

41 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (99.9%) BlackRock Active Canadian Equity DC Fund 6, , ,042 BlackRock CDN US Equity Index Fund, Class D 26, , ,715 Desjardins Enhanced Bond Fund, I-Class 9, , ,697 Desjardins Overseas Equity Growth Fund, I-Class 12, , ,788 Desjardins Overseas Equity Fund, I-Class 15, , ,480 DGIA Canadian Bond Fund 25, , ,998 Fidelity True North Fund, Series O 4, , ,268 Franklin Bissett Canadian Equity Fund, Series O 1, , ,068 TOTAL INVESTMENTS 1,890,843 1,887,056 OTHER NET ASSETS (0.1%) 1,529 NET ASSETS (100%) 1,888,585 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited Security Name Percentage of Portfolio BLACKROCK CDN US EQUITY INDEX FUND 25.4% Apple 3.3% Microsoft Corporation 2.5% Exxon Mobil Corporation 1.8% General Electric Company 1.6% Johnson & Johnson 1.6% DGIA CANADIAN BOND FUND 13.5% Canada Housing Trust, 1.95%, June 15, % Canada Housing Trust, 2.35%, December 15, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 5.00%, June 1, % Government of Canada, 4.00%, June 1, % DESJARDINS OVERSEAS EQUITY GROWTH FUND 12.8% Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat 4.7% AIA Group 4.1% DESJARDINS OVERSEAS EQUITY VALUE FUND 12.0% Roche Holding AG 4.4% Nestlé 4.1% Japan Tobacco 4.0% Novartis AG 4.0% British American Tobacco 3.8% DFS GUARANTEED INVESTMENT FUNDS 39

42 DFS GIF MAXIMUM GROWTH (cont.) TOP FIVE HOLDINGS OF THE UNDERLYING FUNDS unaudited (cont.) Security Name Percentage of Portfolio FIDELITY TRUE NORTH FUND 10.3% Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% FRANKLIN BISSETT CANADIAN EQUITY FUND 10.3% Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% BLACKROCK ACTIVE CANADIAN EQUITY DC FUND 10.0% Toronto-Dominion Bank 7.1% Royal Bank of Canada 5.7% Scotiabank 4.3% Canadian National Railway Company 3.5% Manulife Financial Corporation 3.4% DESJARDINS ENHANCED BOND FUND 5.6% Government of Canada, 2.25%, June 1, % Province of British Columbia, 2.70%, December 18, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 3.50%, June 2, % 40 DFS GUARANTEED INVESTMENT FUNDS

43 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To maximize the appreciation of capital while still generating some income by investing in a number of different fixed income and equity underlying funds. The principal risk factors of this Fund are interest rate, foreign currency, credit, sovereign, market, special equities and derivatives risk. Investment Strategy To invest in a wide array of underlying funds managed by using a multi-manager approach provided by acclaimed fund managers and sub-advisors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 963, ,755 1,887,056 TOTAL 963, ,755 1,887,056 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 559, ,238 1,026,220 TOTAL 559, ,238 1,026,220 Transfers between Levels 1 and 2 During the periods ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Funds Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying funds. Detailed disclosure about the currency risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying funds. Detailed disclosure about the interest rate risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 41

44 DFS GIF MAXIMUM GROWTH (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying funds. Detailed disclosure about the concentration risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying funds. Detailed disclosure about the price risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (20%) ,777 2,056 S&P/TSX (32%) ,130 9,867 S&P 500 (24%) ,598 7,401 MSCI EAFE Net (24%) ,598 7,401 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying funds. Detailed disclosure about the credit risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in underlying funds which are exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying funds. Detailed disclosure about the liquidity risk on the underlying funds can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 42 DFS GUARANTEED INVESTMENT FUNDS

45 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past two periods. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () Series 5** 5.06 Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5** 2 Series 6* 1,865 1,008 Series 7* Number of units outstanding (000) Series 5** 1 Series 6* Series 7* 4 4 Management expense ratio (MER) 1 (%) Series 5** 2.81 Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 43

46

47 DFS GUARANTEED INVESTMENT FUNDS Individual Funds

48 Income DFS GIF MONEY MARKET* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Daimler Canada Finance, 2.23%, April 18, % Bank of Montreal, Floating Rate, April 10, % OMERS Realty Corporation, 4.75%, May 5, % Province of Quebec, Stripped, January 16, % Scotiabank, 2.74%, December 1, % Royal Bank of Canada, 2.68%, December 8, % Manufacturers Life Insurance Company, Floating Rate, November 18, % National Bank of Canada, 3.58%, April 26, % Gaz Métro, Notes, January 22, % Lower Mattagami Energy, Notes, January 8, % PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 10, % 10, % 3 Years 9, % 9, % 10, % 5 Years 9, % 9, % 10, % 10 Years 10, % 10, % Since Inception 13, % 12, % 10, % 10, % 10, % Series IGP 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 3 Years 5 Years 10 Years Since Inception 9, % * This Fund is composed of units of the corresponding underlying investment fund. 46 DFS GUARANTEED INVESTMENT FUNDS

49 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 35, ,167 Investments at fair value through profit or loss (FVTPL) 35,251,601 28,327,264 Premiums receivable 469,927 51,455 35,756,826 28,500,886 LIABILITIES Current Liabilities Accrued expenses 38,465 32,231 Withdrawals payable 584, ,985 Payable for securities purchased 17, , , ,196 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 35,116,746 28,154,690 NET ASSETS PER UNIT Series Series Series Series Series Series IGP STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 718, ,124 Revenue from securities lending and repurchase transactions 498 Changes in fair value Net realized gain (loss) on investments (407,864) (1,375,545) Net unrealized gain (loss) on investments 64,491 1,007, , ,970 EXPENSES Management fees and guarantee charge 277, ,214 Operating expenses 147, , , ,695 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (49,683) 22,275 DATA PER SERIES SERIES 1 from Operations (2,186) (1,226) - per unit (0.03) (0.01) Average Units 76,382 91,344 SERIES 3 from Operations (16,737) (7,666) - per unit (0.03) (0.01) Average Units 487, ,269 SERIES 5 from Operations (28,573) 29,356 - per unit (0.01) 0.01 Average Units 2,940,129 3,306,261 SERIES 6* from Operations (1,081) 1,917 - per unit 0.01 Average Units 1,032, ,814 SERIES 7* from Operations 5, per unit Average Units 172,366 13,098 SERIES IGP** from Operations (6,404) (514) - per unit (0.04) Average Units 172, ,737 * Beginning of operations in February ** Beginning of operations in November The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 47

50 Income DFS GIF MONEY MARKET (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 28,154,690 29,780,657 from operations attributable to contract owners (49,683) 22,275 Premiums Series 1 9,355 1,578 Series 3 1,636, ,409 Series 5 9,801,187 8,539,342 Series 6* 11,405,791 3,740,942 Series 7* 1,217,195 1,130,723 Series IGP** 421,480 1,928,308 24,492,004 16,134,302 Withdrawals Series 1 (136,401) (60,004) Series 3 (1,386,131) (1,800,372) Series 5 (9,634,371) (13,443,750) Series 6* (4,517,664) (2,115,121) Series 7* (1,243,713) (288,484) Series IGP** (561,985) (74,813) (17,480,265) (17,782,544) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 35,116,746 28,154,690 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (49,683) 22,275 Adjustments for: Net realized gain (loss) 407,864 1,375,545 Net unrealized gain (loss) (64,491) (1,007,893) Proceeds from sale/maturity of investments 9,717,910 92,751,959 Investments purchased (16,985,620) (92,517,089) Cash guarantee received for repurchase transactions 101,781 Interest, dividends and other receivables 205,709 Accrued expenses 6,234 (3,386) Commitments related to repurchase transactions (101,781) Payable for securities purchased (95,374) 112,980 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (7,063,160) 940,100 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 24,073,532 16,633,244 Amounts paid on withdrawals (17,097,241) (17,656,670) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 6,976,291 (1,023,426) Increase (Decrease) in cash/bank overdraft (86,869) (83,326) Cash (bank overdraft), beginning of year 122, ,493 CASH (BANK OVERDRAFT), END OF YEAR 35, ,167 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest received 642,275 Interest paid * Beginning of operations in February ** Beginning of operations in November The accompanying Notes are an integral part of these financial statements. 48 DFS GUARANTEED INVESTMENT FUNDS

51 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.4%) DGIA Money Market Fund 3,641,101 34,149,755 35,251,601 TOTAL INVESTMENTS 34,149,755 35,251,601 OTHER NET ASSETS (-0.4%) (134,855) NET ASSETS (100%) 35,116,746 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Daimler Canada Finance, 2.23%, April 18, % Bank of Montreal, Floating Rate, April 10, % OMERS Realty Corporation, 4.75%, May 5, % Province of Quebec, Stripped, January 16, % Scotiabank, 2.74%, December 1, % Royal Bank of Canada, 2.68%, December 8, % Manufacturers Life Insurance Company, Floating Rate, November 18, % National Bank of Canada, 3.58%, April 26, % Gaz Métro, Notes, January 22, % Lower Mattagami Energy, Notes, January 8, % Industrial Alliance, 4.75%, December 14, % Canadian Imperial Bank of Commerce, Floating Rate, July 14, % BMW Canada, Floating Rate, February 24, % Royal Bank of Canada, Notes, May 17, % BMW Canada, 2.11%, May 26, % Toronto-Dominion Bank, Notes, February 2, % City of Montreal, 2.50%, December 1, % Newfoundland & Labrador Treasury Bills, February 25, % Toronto-Dominion Bank, Notes, November 30, % Ontario Electricity Fin. Corporation, Stripped, February 18, % Province of Manitoba, Stripped, March 5, % GE Capital Canada Funding Company, Stripped, June 1, % Canadian Imperial Bank of Commerce, 2.65%, November 8, % Ontario Electricity Fin. Corporation, Stripped, April 1, % Province of Ontario, Stripped, November 3, % DFS GUARANTEED INVESTMENT FUNDS 49

52 Income DFS GIF MONEY MARKET (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a higher level of interest income than can normally be obtained from savings accounts, combined with a high level of liquidity and safety of capital. Investment Strategy To invest primarily in Canadian government treasury bills and in bankers acceptances, which have a maximum maturity of 12 months, and the dollarweighted average term to maturity of the portfolio does not exceed 180 days. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 35,251,601 35,251,601 TOTAL 35,251,601 35,251,601 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 28,327,264 28,327,264 TOTAL 28,327,264 28,327,264 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Funds performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Funds performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Funds investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 50 DFS GUARANTEED INVESTMENT FUNDS

53 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % FTSE TMX Canada 91 Day Treasury Bills ,792 70,387 In practice, actual trading results may differ from this sensitivity analysis and the difference could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 51

54 Income DFS GIF MONEY MARKET (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015*** 2014*** 2013*** Series Series Series Series 6* Series 7* Series IGP** Net Asset Per Unit as at December 31 st () Series Series Series Series 6* Series 7* Series IGP** Ratios and Supplemental Data Net Asset (000 s) Series Series 3 3,232 2,997 4,012 5,158 6,231 Series 5 20,390 20,252 25,127 30,543 38,424 Series 6* 8,515 1,628 Series 7* Series IGP** 1,706 1,853 Number of units outstanding (000) Series Series Series 5 2,999 2,975 3,695 4,502 5,664 Series 6* 1, Series 7* Series IGP** Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Series IGP** Portfolio turnover rate 2 (%) n/a n/a n/a * Beginning of operations in February ** Beginning of operations in November *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with Canadian generally accepted accounting principles as defined in Part V of the CPA Handbook ( GAAP ). 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 52 DFS GUARANTEED INVESTMENT FUNDS

55 Income DFS GIF INCOME FIERA CAPITAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Fiera Active Short Term Canadian Municipal Bond 8.3% Province of Ontario, 2.85%, June 2, % Government of Canada, 1.50%, February 1, % Province of Quebec, 3.50%, December 1, % Canada Housing Trust, 2.35%, December 15, % Province of Ontario, 3.50%, June 2, % Canadian Imperial Bank of Commerce, 2.35%, October 18, % Ontario School Boards Financing Corporation, 7.20%, June 9, % Government of Canada, 2.25%, June 1, % Royal Office Finance, 5.209%, November 12, % PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 10, % 3 Years 10, % 10, % 10, % 5 Years 11, % 11, % 11, % 10 Years 12, % 13, % Since Inception 20, % 17, % 13, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 53

56 Income DFS GIF INCOME FIERA CAPITAL (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 95,095,603 80,835,560 Investments at fair value through profit or loss (FVTPL) pledged as collateral 12,171,098 28,586,623 Premiums receivable 49, ,302 Receivable for securities sold 2,305,571 Cash guarantee received for repurchase transactions 12,107,884 28,381,328 Interest, dividends and other receivables 521, , ,945, ,932,018 LIABILITIES Current Liabilities Bank overdraft 10,221 15,642 Accrued expenses 182, ,064 Withdrawals payable 287, ,797 Payable for securities purchased 2,281,104 Commitments related to repurchase transactions 12,107,884 28,381,328 12,588,367 31,167,935 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 107,356, ,764,083 NET ASSETS PER UNIT Series Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 3,372,242 3,876,219 Revenue from securities lending and repurchase transactions 15,798 23,363 Changes in fair value Net realized gain (loss) on investments 4,184,355 (1,101,517) Net unrealized gain (loss) on investments (3,966,417) 7,104,868 3,605,978 9,902,933 EXPENSES Management fees and guarantee charge 1,461,291 1,560,019 Operating expenses 733, ,971 2,195,054 2,365,990 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 1,410,924 7,536,943 DATA PER SERIES SERIES 1 from Operations 11, ,361 - per unit Average Units 285, ,267 SERIES 3 from Operations 84, ,181 - per unit Average Units 811, ,678 SERIES 5 from Operations 1,285,549 6,766,272 - per unit Average Units 8,184,237 9,523,487 SERIES 6* from Operations 28,398 36,812 - per unit Average Units 780, ,698 SERIES 7* from Operations 1,398 1,317 - per unit Average Units 23,723 4,768 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 54 DFS GUARANTEED INVESTMENT FUNDS

57 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 109,764, ,710,520 from operations attributable to contract owners 1,410,924 7,536,943 Premiums Series 1 47, ,262 Series 3 4,944, ,602 Series 5 8,579,411 6,972,053 Series 6* 4,109,975 2,610,399 Series 7* 233,964 73,432 17,915,997 10,592,748 Withdrawals Series 1 (510,786) (908,109) Series 3 (1,953,239) (3,286,616) Series 5 (18,419,640) (32,732,481) Series 6* (846,561) (133,717) Series 7* (4,085) (15,205) (21,734,311) (37,076,128) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 107,356, ,764,083 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 1,410,924 7,536,943 Adjustments for: Net realized gain (loss) (4,184,355) 1,101,517 Net unrealized gain (loss) 3,966,417 (7,104,868) Proceeds from sale/maturity of investments 246,450, ,857,273 Investments purchased (244,077,416) (249,199,572) Receivable for securities sold 2,305,571 1,555,483 Cash guarantee received for repurchase transactions 16,273,444 (1,136,250) Interest, dividends and other receivables 98, ,263 Accrued expenses (3,417) (37,248) Commitments related to repurchase transactions (16,273,444) 1,136,250 Payable for securities purchased (2,281,104) (443,540) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 3,685,498 27,401,251 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 18,070,228 10,459,023 Amounts paid on withdrawals (21,750,493) (37,745,098) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (3,680,265) (27,286,075) Effect of exchange rate changes on foreign cash Increase (Decrease) in cash/bank overdraft 5, ,253 Cash (bank overdraft), beginning of year (15,642) (130,895) CASH (BANK OVERDRAFT), END OF YEAR (10,221) (15,642) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest received 3,441,250 4,011,427 Interest paid * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 55

58 Income DFS GIF INCOME FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 BONDS (89.0%) Par Fair Cost Government of Canada (15.6%) Broadcast Center Trust 7.530%, CAD 185, , ,830 Canada Housing Trust 2.350%, * CAD 4,335,000 4,540,966 4,519,718 Government of Canada 1.500%, CAD 5,251,000 5,328,085 5,308, %, CAD 785, , , %, * CAD 2,834,000 3,043,764 3,046,894 PSP Capital Series 7, 3.290%, CAD 345, , ,578 Royal Office Finance Series A, 5.209%, CAD 2,007,168 1,820,361 2,499,782 16,040,577 16,789,093 Provincial Governments and Crown Corporations (32.5%) New Brunswick (F-M) Project Company 6.470%, CAD 473, , ,531 Ontario Infrastructure 4.700%, CAD 80,000 71,858 94,278 Ontario School Boards Financing Corporation Series 00A1, 7.200%, CAD 2,536,809 2,707,568 3,192,431 Series 01A3, 6.550%, CAD 1,594 1,633 1,978 Private Placement, Series 06A1, 5.070%, CAD 529, , ,622 Ornge Issuer Trust 5.727%, CAD 273, , ,997 Province of Alberta 3.900%, CAD 436, , ,408 Province of British Columbia 3.200%, CAD 640, , ,905 Province of Ontario 3.150%, CAD 1,766,000 1,788,289 1,910, %, CAD 8,164,000 7,368,657 8,643, %, CAD 3,625,000 3,612,133 3,992, %, CAD 2,056,000 2,134,078 2,101, %, * CAD 1,001,000 1,018,018 1,047, %, CAD 2,555,000 2,378,273 2,402,599 Province of Québec 3.500%, CAD 190, , , %, * CAD 933, , , %, CAD 296, , , %, CAD 796, , , %, CAD 4,755,000 4,877,441 4,990,304 TCHC Issuer Trust 4.877%, CAD 287, , ,151 Series B, 5.395%, CAD 690, , ,885 31,412,160 34,811,788 * Securities pledged as collateral, in part or in whole, through the securities lending program. 56 DFS GUARANTEED INVESTMENT FUNDS

59 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Par Fair Cost Corporations (40.9%) Bank of Montreal 2.960%, CAD 955, , , %, CAD 1,680,000 1,586,377 1,709, %, CAD 1,500,000 1,423,567 1,526, %, (floating rate from ), CAD 687, , , %, (floating rate from ), CAD 775, , ,714 Blackbird Infrastructure 407 General Partners 1.713%, (floating rate from ), CAD 229, , ,738 Caisse centrale Desjardins 2.443%, CAD 1,090,000 1,045,662 1,115,796 Canadian Imperial Bank of Commerce 1.750%, CAD 277, , , %, CAD 3,635,000 3,473,468 3,701, %, * CAD 56,000 53,675 57, %, (floating rate from ), CAD 708, , ,099 Canadian Utilities 4.543%, CAD 408, , , %, CAD 142, , , %, CAD 196, , , %, CAD 169, , , %, CAD 147, , ,485 Capital City Link Series A, 4.386%, CAD 847, , ,915 Cominar Real Estate Investment Trust Series 9, 4.164%, CAD 645, , ,851 CSS (FSCC) Partnership 6.915%, CAD 88, , ,323 Enbridge 3.940%, CAD 425, , , %, CAD 150, , , %, CAD 546, , , %, CAD 479, , ,170 Health Montréal Collective, Private Placement Series 144A, 6.721%, CAD 1,370,000 1,575,576 1,782,964 Hospital Infrastructure Series A, 5.439%, CAD 630, , ,951 Integrated Team Solutions SJHC 5.946%, CAD 202, , ,550 Melancthon Wolfe Wind 3.834%, CAD 321, , ,692 North West Redwater Partnership Series A, 3.200%, CAD 505, , , %, CAD 263, , ,266 Northland Battleford Power Series A, 4.958%, CAD 514, , ,242 Plenary Properties 6.288%, CAD 842, ,547 1,091,539 Reliance Series 2, 5.187%, CAD 394, , ,165 * Securities pledged as collateral, in part or in whole, through the securities lending program. DFS GUARANTEED INVESTMENT FUNDS 57

60 Income DFS GIF INCOME FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Par Fair Cost Corporations (cont.) Royal Bank of Canada 2.364%, CAD 1,277,000 1,206,719 1,299, %, CAD 515, , , %, CAD 275, , , %, CAD 8,000 7,670 8, %, (floating rate from ), CAD 580, , , %, (floating rate from ), CAD 1,095,000 1,032,179 1,129, %, (floating rate from ), * CAD 895, , ,556 Scotiabank 2.370%, CAD 1,785,000 1,701,371 1,819, %, CAD 916, , , %, CAD 1,155,000 1,111,928 1,218, %, (floating rate from ), CAD 859, , , %, (floating rate from ), CAD 1,365,000 1,365,000 1,374,924 SGTP Highway Bypass Series A, 4.105%, CAD 435, , ,621 SNC-Lavalin Innisfree McGill Finance 6.632%, CAD 404, , ,526 Teranet Holdings 3.646%, CAD 300, , ,460 Teranet Income Fund 5.754%, CAD 780, , , %, CAD 964, ,870 1,080,495 Toronto-Dominion Bank 2.447%, * CAD 1,030, ,994 1,056, %, CAD 325, , , %, * CAD 468, , , %, (floating rate from ), CAD 516, , , %, (floating rate from ), * CAD 570, , , %, (floating rate from ), CAD 1,430,000 1,434,452 1,468, %, (floating rate from ), CAD 1,906,000 1,986,221 2,042,738 TransCanada PipeLines 6.890%, CAD 500, , , %, CAD 358, , ,663 40,785,849 43,885,470 TOTAL BONDS 88,238,586 95,486,351 Number of Units INVESTMENT FUND (8.3%) Fiera Active Short Term Canadian Municipal Bond Fund 891,343 8,914,422 8,938,322 * Securities pledged as collateral, in part or in whole, through the securities lending program. 58 DFS GUARANTEED INVESTMENT FUNDS

61 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Par Fair Cost MORTGAGE-BACKED SECURITIES (1.2%) Column Canada Issuer Corporation 4.934%, CAD 322, , ,291 Merrill Lynch Financial Assets 4.826%, CAD 400, , , %, CAD 670, , ,483 Series 2007-CA22, Class A3, 4.878%, CAD 250, , ,881 Merrill Lynch Mortgage Loans 4.711%, CAD 1,625, , ,536 Real Estate Asset Liquidity Trust 4.449%, CAD 500,000 34,512 37,880 TOTAL MORTGAGE-BACKED SECURITIES 1,225,600 1,305,466 MONEY MARKET SECURITIES (0.8%) Canada Treasury Bills CAD 790, , , CAD 90,000 89,916 89,916 TOTAL MONEY MARKET SECURITIES 879, ,174 ASSET-BACKED SECURITIES (0.6%) CHIP Mortgage Trust 3.663%, CAD 626, , ,388 TOTAL INVESTMENTS (99.9%) 99,856, ,266,701 OTHER NET ASSETS (0.1%) 89,992 NET ASSETS (100%) 107,356,693 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio FIERA ACTIVE SHORT TERM CANADIAN MUNICIPAL BOND 8.3% Province of Quebec, 4.50%, December 1, % Province of Ontario, 1.90%, September 8, % Province of Ontario, 3.20%, September 8, % Ville de Magog, 2.00%, September 2, % Ville de Granby, 2.90%, June 21, % DFS GUARANTEED INVESTMENT FUNDS 59

62 Income DFS GIF INCOME FIERA CAPITAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide above-average interest income with some potential for capital growth by investing primarily in bonds and other interest-bearing instruments of Canadian federal and provincial governments and investment-grade corporations. Investment Strategy To place emphasis primarily on medium and long-term maturities. Such maturities normally provide higher returns and better potential for capital gains but also higher variability of performance during periods of rapidly changing interest rates. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Bonds 47,190,319 48,296,032 95,486,351 Investment Funds 8,938,322 8,938,322 Mortgage-Backed Securities 1,305,466 1,305,466 Asset-Backed Securities 657, ,388 Money Market Securities 879, ,174 TOTAL 48,069,493 59,197, ,266,701 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Bonds 49,751,571 56,464, ,216,272 Mortgage-Backed Securities 1,861,862 1,861,862 Asset-Backed Securities 650, ,031 Money Market Securities 694, ,018 TOTAL 50,445,589 58,976, ,422,183 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Currency Risk As at December 31, 2015 and 2014, the majority of the Fund s financial assets and liabilities are denominated in Canadian dollars. As a result, the Fund is not significantly exposed to currency risk. 60 DFS GUARANTEED INVESTMENT FUNDS

63 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk The following table summarizes the Fund s exposure to interest rate risk. It includes the Fund s financial assets and liabilities at fair value, categorized by the earlier of contractual re-pricing or maturity dates. The table also illustrates the impact on the Net Assets Attributable to Contract Owners, had prevailing interest rates changed by 0.25%, assuming a parallel shift in the yield curve, with all other variables held constant. Less than 1 Year 1 to 5 Years 5 to 10 Years Greater than 10 Years Total Impact on Net Assets Attributable to Contract Owners December 31, ,627,791 36,027,633 28,039,485 29,623,249 98,318,158 1,616,019 December 31, ,857,575 48,201,649 18,927,386 34,419, ,406,541 1,772,037 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Concentration Risk The following table summarizes the concentration risk, as in percentages of the Net Assets Attributable to Contract Owners: December 31, 2015 MARKET SEGMENT % Bonds Corporations 40.9 Provincial Governments and Crown Corporations 32.5 Government of Canada 15.6 Investment Fund 8.3 Mortgage-Backed Securities 1.2 Money Market Securities 0.8 Asset-Backed Securities Other Net Assets TOTAL 100 December 31, 2014 MARKET SEGMENT % Bonds Corporations 40.7 Provincial Governments and Crown Corporations 32.1 Government of Canada 17.5 Municipalities and Semi-Public Institutions 6.5 Mortgage-Backed Securities 1.7 Money Market Securities 0.6 Asset-Backed Securities Other Net Assets TOTAL 100 Price Risk The Fund may trade in financial instruments and take positions in over-the-counter instruments. The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % FTSE TMX Canada Universe ,021,326 1,143,385 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. DFS GUARANTEED INVESTMENT FUNDS 61

64 Income DFS GIF INCOME FIERA CAPITAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Credit Risk The Fund s credit risk is mainly concentrated in fixed-income securities. Their fair values include consideration of the issuers creditworthiness and accordingly, represent the Fund s maximum exposure to credit risk. Portfolio s Fixed-Income Securities by Credit Rating Category Credit Rating Percentage of Fixed-Income Securities December 31, 2015 December 31, 2014 % % AAA AA A BBB 10 7 Not Rated 7 TOTAL Securities Lending and Repurchase Transactions As part of its securities lending and repurchase transactions, the Fund is exposed to counterparty credit risk. The carrying amount of financial assets lent as part of repurchase transactions is: December 31, ,113,751 December 31, ,220,076 The fair value of the financial assets held as collateral that the fund is permitted to sell or repledge in the absence of default totalled: December 31, ,988,222 December 31, ,800,940 The fair value of financial assets accepted as collateral which have been sold or repledged totalled: December 31, 2015 December 31, ,491 These financial assets were received as collateral as part of transactions involving reverse repurchase transactions. Liquidity Risk For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 62 DFS GUARANTEED INVESTMENT FUNDS

65 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION DERECOGNITION OF FINANCIAL ASSETS Securities Lending and Repurchase Transactions As part of transactions involving securities lending or repurchase transactions, the Fund transfers financial assets under terms and conditions providing for their future repurchase. These financial assets remain recognized in the Investments at fair value through profit or loss pledged as collateral of the Statement of Financial Position as the Fund retains substantially all the risks and rewards related to these assets. December 31, 2015 December 31, 2014 Investments at FVTPL pledged as Collateral 12,171,098 28,586,623 of Collateral received 12,414,521 29,158,490 The Funds require collateral in the form of cash or such other securities as may be acceptable to Desjardins Financial Security and that have an aggregate value of no less than 102% of the loaned securities fair value. The following table presents the carrying amount and the fair value of financial assets transferred by the Fund but not derecognized as well as the related liabilities recognized in Commitments related to repurchase transactions and Commitments related to securities lending of the Statement of Financial Position. Fair * December 31, 2015 December 31, 2014 Financial Assets 12,113,751 27,220,076 Related Liabilities 12,107,884 27,434,695 * The fair value equals carrying amount. DFS GUARANTEED INVESTMENT FUNDS 63

66 Income DFS GIF INCOME FIERA CAPITAL (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series Series 6* Series 7* Net Asset Per Unit as at December 31 st () Series Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 1 2,593 3,045 3,557 4,258 4,540 Series 3 11,430 8,354 10,367 14,161 13,391 Series 5 87,237 95, , , ,167 Series 6* 5,805 2,513 Series 7* Number of units outstanding (000) Series Series 3 1, ,034 1,356 1,306 Series 5 7,765 8,637 11,034 13,292 10,210 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 64 DFS GUARANTEED INVESTMENT FUNDS

67 Income DFS GIF CANADIAN BOND* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Canada Housing Trust, 2.00%, December 15, % NHA MBS Merrill Lynch, 1.35%, May 1, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 1.50%, June 1, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Toronto-Dominion Bank NHA, 1.80%, December 1, % NHA First National Financial, 1.20%, June 1, % Province of Ontario, 6.50%, March 8, % Province of Ontario, 2.85%, June 2, % PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6** Series 7** 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS 65

68 Income DFS GIF CANADIAN BOND (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 41,285,987 55,983,432 Premiums receivable 21,713 5,619 Receivable for securities sold 54,840 41,362,540 56,134,921 LIABILITIES Current Liabilities Bank overdraft 14,263 81,679 Accrued expenses 66,808 94,653 Withdrawals payable 108, , ,930 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 41,173,371 55,835,991 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Period Ended December * 2015* (3 months) (3 months) INCOME Interest for attribution purposes 264,572 2,102,087 Changes in fair value Net realized gain (loss) on investments 151,068 (2,421,483) Net unrealized gain (loss) on investments 108,110 (723,145) 523,750 (1,042,541) EXPENSES Management fees and guarantee charge 109, ,375 Operating expenses 55, , ,660 1,289,110 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 358,090 (2,331,651) DATA PER SERIES SERIES 5 from Operations 333,838 (2,049,501) - per unit 0.04 (0.28) Average Units 7,726,622 7,343,124 SERIES 6 from Operations 22,686 - per unit 0.05 Average Units 477,927 SERIES 7 from Operations 1,566 - per unit 0.05 Average Units 30,978 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 66 DFS GUARANTEED INVESTMENT FUNDS

69 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Period Ended December * 2015* (3 months) (3 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 73,643,394 from operations attributable to contract owners 358,090 (2,331,651) Premiums Series 5 39,915,913 6,880,209 Series 6 2,596,812 Series 7 154,948 42,667,673 7,198,587 Withdrawals Series 5 (1,785,192) (20,876,901) Series 6 (67,052) Series 7 (148) (1,852,392) (22,674,339) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 41,173,371 55,835,991 STATEMENT OF CASH FLOWS Period Ended December * 2015* (3 months) (3 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 358,090 (2,331,651) Adjustments for: Net realized gain (loss) (151,068) 2,421,483 Net unrealized gain (loss) (108,110) 723,145 Proceeds from sale/maturity of investments 995,716 19,573,453 Investments purchased (42,022,525) (4,867,467) Receivable for securities sold (54,840) (141,464) Accrued expenses 66,808 (36,497) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (40,915,929) 15,337,022 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 42,645,960 7,283,271 Amounts paid on withdrawals (1,744,294) (22,704,949) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 40,901,666 (15,421,678) Increase (Decrease) in cash/bank overdraft (14,263) (84,656) Cash (bank overdraft), beginning of period 2,977 CASH (BANK OVERDRAFT), END OF PERIOD (14,263) (81,679) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 14 2 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 67

70 Income DFS GIF CANADIAN BOND (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) DGIA Canadian Bond Fund 4,047,793 41,177,877 41,285,987 TOTAL INVESTMENTS 41,177,877 41,285,987 OTHER NET ASSETS (-0.3%) (112,616) NET ASSETS (100%) 41,173,371 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Canada Housing Trust, 2.00%, December 15, % NHA MBS Merrill Lynch, 1.35%, May 1, % Canada Housing Trust, 1.70%, December 15, % Government of Canada, 1.50%, June 1, % Province of Ontario, 3.15%, June 2, % Province of Quebec, 2.75%, September 1, % Toronto-Dominion Bank NHA, 1.80%, December 1, % NHA First National Financial, 1.20%, June 1, % Province of Ontario, 6.50%, March 8, % Province of Ontario, 2.85%, June 2, % Province of Ontario, 2.10%, September 8, % Canadian Imperial Bank of Commerce, 2.35%, October 18, % Scotiabank, 1.33%, May 1, % Toronto-Dominion Bank, 2.433%, August 15, % Canada Housing Trust, 2.40%, December 15, % Government of Canada, 3.50%, December 1, % Canada Housing Trust, 3.80%, June 15, % Royal Bank of Canada, 2.26%, March 12, % NHA MBS Merrill Lynch, 1.07%, July 1, % Province of Quebec, 3.75%, September 1, % Government of Canada, 5.00%, June 1, % Government of Canada, 2.25%, June 1, % Province of Quebec, 3.50%, December 1, % Province of Ontario, 3.45%, June 2, % Province of British Columbia, 2.80%, June 18, % 68 DFS GUARANTEED INVESTMENT FUNDS

71 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide regular income and capital security by investing in a portfolio of fixed-income securities from the Canadian bond market. Investment Strategy This Fund, actively managed, aims to provide regular income and capital security by investing in a portfolio of fixed-income securities from the Canadian bond market. The Fund employs a fundamental investment approach targeting a consistent allocation of value added sources. The strategy seeks to add value through management of duration, yield curve and credit risk. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following table categorizes the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 41,285,987 41,285,987 TOTAL 41,285,987 41,285,987 Transfers between Levels 1 and 2 During the period ended December 31, 2015, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 69

72 Income DFS GIF CANADIAN BOND (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Price Risk The majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmark % FTSE TMX Canada Universe ,734 In practice, actual trading results may differ from this sensitivity analysis and the difference could be significant. Credit Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 70 DFS GUARANTEED INVESTMENT FUNDS

73 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past period. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015* Series Series Series Ratios and Supplemental Data Net Asset (000 s) Series 5 38,465 Series 6 2,552 Series Number of units outstanding (000) Series 5 7,626 Series Series 7 31 Management expense ratio (MER) 1 (%) Series Series Series Portfolio turnover rate 2 (%) 2.80 * Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 71

74 Balanced and Asset Allocation DFS GIF DIVERSIFIED INCOME FRANKLIN QUOTENTIAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 26.9% Franklin Bissett Canadian Short Term Bond Fund 10.0% Templeton Global Bond Fund 8.4% BMO Mid Federal Bond Index ETF 6.8% Franklin Strategic Income Fund 6.7% Cash and Cash Equivalents 6.3% WisdomTree Australia & New Zealand Debt ETF 4.3% Franklin Mutual European Fund 3.7% Franklin U.S. Rising Dividends Fund 3.4% Franklin Bissett Canadian Dividend Fund 3.0% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 11, % 11, % 5 Years 11, % 12, % 10 Years 13, % Since Inception 14, % 13, % 10, % 10, % * This Fund is composed of units of the corresponding underlying mutual fund. 72 DFS GUARANTEED INVESTMENT FUNDS

75 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 201,049, ,413,795 Premiums receivable 130, ,666 Receivable for securities sold 37,434 47, ,217, ,606,128 LIABILITIES Current Liabilities Bank overdraft 37,246 28,347 Accrued expenses 480, ,353 Withdrawals payable 246, ,410 Payable for securities purchased 104, , , ,906 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 200,348, ,729,222 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 3,936,151 3,515,413 Changes in fair value Net realized gain (loss) on investments 10,947,671 4,587,890 Net unrealized gain (loss) on investments (5,289,596) 5,297,232 9,594,226 13,400,535 EXPENSES Management fees and guarantee charge 4,535,987 4,272,194 Operating expenses 1,113,891 1,096,119 5,649,878 5,368,313 Withholding taxes 151,411 68,949 5,801,289 5,437,262 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 3,792,937 7,963,273 DATA PER SERIES SERIES 3 from Operations 122, ,237 - per unit Average Units 901, ,397 SERIES 5 from Operations 3,584,536 7,622,082 - per unit Average Units 23,324,422 24,506,670 SERIES 6* from Operations 86,194 53,247 - per unit Average Units 2,611, ,704 SERIES 7* from Operations (163) per unit 0.13 Average Units 197,341 5,618 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 73

76 Balanced and Asset Allocation DFS GIF DIVERSIFIED INCOME FRANKLIN QUOTENTIAL (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 186,729, ,940,125 from operations attributable to contract owners 3,792,937 7,963,273 Premiums Series 3 1,147,562 1,210,716 Series 5 22,791,206 18,001,402 Series 6* 14,827,674 7,726,456 Series 7* 2,502, ,804 41,269,030 27,057,378 Withdrawals Series 3 (1,530,887) (1,864,442) Series 5 (27,964,661) (27,206,442) Series 6* (1,940,969) (160,670) Series 7* (5,839) (31,442,356) (29,231,554) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 200,348, ,729,222 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 3,792,937 7,963,273 Adjustments for: Net realized gain (loss) (10,947,671) (4,587,890) Net unrealized gain (loss) 5,289,596 (5,297,232) Proceeds from sale/maturity of investments 15,018,787 19,544,109 Investments purchased (22,996,211) (15,418,008) Receivable for securities sold 10, ,824 Accrued expenses 30,413 10,236 Payable for securities purchased (5,785) (13,618) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (9,807,701) 2,468,694 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 41,283,084 27,075,637 Amounts paid on withdrawals (31,484,282) (29,195,419) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 9,798,802 (2,119,782) Increase (Decrease) in cash/bank overdraft (8,899) 348,912 Cash (bank overdraft), beginning of year (28,347) (377,259) CASH (BANK OVERDRAFT), END OF YEAR (37,246) (28,347) * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 74 DFS GUARANTEED INVESTMENT FUNDS

77 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Quotential Diversified Income Portfolio 28,237, ,169, ,049,294 TOTAL INVESTMENTS 174,169, ,049,294 OTHER NET ASSETS (-0.3%) (700,461) NET ASSETS (100%) 200,348,833 The accompanying Notes are an integral part of these financial statements. TOP HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 26.9% Franklin Bissett Canadian Short Term Bond Fund 10.0% Templeton Global Bond Fund 8.4% BMO Mid Federal Bond Index ETF 6.8% Franklin Strategic Income Fund 6.7% Cash and Cash Equivalents 6.3% WisdomTree Australia & New Zealand Debt ETF 4.3% Franklin Mutual European Fund 3.7% Franklin U.S. Rising Dividends Fund 3.4% Franklin Bissett Canadian Dividend Fund 3.0% ishares TIPS Bond ETF 2.9% ishares iboxx High Yield Corporate Bond ETF 2.8% Templeton Emerging Markets Fund 2.5% Franklin Bissett Canadian High Dividend Fund 2.2% Franklin Global Real Estate Fund 2.0% Franklin U.S. Core Equity Fund 1.8% Franklin Bisset All Canadian Focus Fund 1.8% ishares MSCI Japan ETF 1.5% SPDR Euro Stoxx 50 ETF 1.1% Franklin Japan Fund 1.0% Franklin European Small-Mid Cap Growth Fund 0.9% DFS GUARANTEED INVESTMENT FUNDS 75

78 Balanced and Asset Allocation DFS GIF DIVERSIFIED INCOME FRANKLIN QUOTENTIAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an underlying fund in order to gain the desired exposure to the equity and fixed income markets. Investment Strategy To emphasize investments in fixed income underlying funds in order to provide income and capital preservation. The Fund also invests, to a lesser extent, in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 201,049, ,049,294 TOTAL 201,049, ,049,294 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 187,413, ,413,795 TOTAL 187,413, ,413,795 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 76 DFS GUARANTEED INVESTMENT FUNDS

79 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (55%) ,177, ,568 Barclays Capital Multiverse (25%) , ,622 S&P/TSX (15%) , ,919 MSCI All Country World Net (5%) , ,973 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 77

80 Balanced and Asset Allocation DFS GIF DIVERSIFIED INCOME FRANKLIN QUOTENTIAL (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 6,349 6,610 6,977 6,893 7,562 Series 5 170, , , , ,734 Series 6* 20,592 7,619 Series 7* 2, Number of units outstanding (000) Series ,023 1,058 1,226 Series 5 23,191 23,884 25,177 25,480 20,680 Series 6* 3,947 1,494 Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 78 DFS GUARANTEED INVESTMENT FUNDS

81 Balanced and Asset Allocation DFS GIF BALANCED INCOME FRANKLIN QUOTENTIAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 29.2% Templeton Global Bond Fund 6.2% Franklin Mutual European Fund 5.0% Franklin Bissett Canadian Equity Fund 4.5% Franklin Strategic Income Fund 4.4% Franklin U.S. Core Equity Fund 4.3% BMO Mid Federal Bond Index ETF 4.0% SPDR Euro Stoxx 50 ETF 3.6% Franklin Bisset All Canadian Focus Fund 3.4% Franklin Flex Cap Growth Fund 3.4% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 11, % 12, % 5 Years 12, % 12, % 10 Years 13, % Since Inception 13, % 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 79

82 Balanced and Asset Allocation DFS GIF BALANCED INCOME FRANKLIN QUOTENTIAL (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 31,643 Investments at fair value through profit or loss (FVTPL) 259,869, ,518,702 Premiums receivable 15, ,708 Receivable for securities sold 87, , ,973, ,917,062 LIABILITIES Current Liabilities Bank overdraft 12,448 Accrued expenses 630, ,158 Withdrawals payable 295, ,546 Payable for securities purchased 114,512 7,805 1,052,667 1,045,509 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 258,920, ,871,553 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 5,043,653 3,789,146 Changes in fair value Net realized gain (loss) on investments 18,890,498 7,774,839 Net unrealized gain (loss) on investments (6,281,089) 10,377,385 17,653,062 21,941,370 EXPENSES Management fees and guarantee charge 6,085,794 5,871,036 Operating expenses 1,526,503 1,508,429 7,612,297 7,379,465 Withholding taxes 329, ,737 7,942,284 7,525,202 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 9,710,778 14,416,168 DATA PER SERIES SERIES 3 from Operations 380, ,457 - per unit Average Units 1,537,516 1,696,166 SERIES 5 from Operations 9,100,940 13,707,398 - per unit Average Units 34,412,931 36,875,413 SERIES 6* from Operations 130,749 85,337 - per unit Average Units 1,690, ,749 SERIES 7* from Operations 98,138 26,976 - per unit Average Units 477, ,972 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 80 DFS GUARANTEED INVESTMENT FUNDS

83 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 250,871, ,860,657 from operations attributable to contract owners 9,710,778 14,416,168 Premiums Series 3 1,013,502 1,116,574 Series 5 18,438,082 15,999,252 Series 6* 12,149,558 4,588,373 Series 7* 3,936,749 1,491,847 35,537,891 23,196,046 Withdrawals Series 3 (1,948,513) (2,280,264) Series 5 (34,334,425) (29,258,721) Series 6* (871,710) (58,136) Series 7* (45,192) (4,197) (37,199,840) (31,601,318) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 258,920, ,871,553 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 9,710,778 14,416,168 Adjustments for: Net realized gain (loss) (18,890,498) (7,774,839) Net unrealized gain (loss) 6,281,089 (10,377,385) Proceeds from sale/maturity of investments 20,500,719 24,307,199 Investments purchased (16,242,066) (12,023,242) Receivable for securities sold 34, ,799 Accrued expenses 16,378 16,011 Payable for securities purchased 106,707 (77,967) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 1,517,333 8,669,744 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 35,766,791 23,110,136 Amounts paid on withdrawals (37,328,215) (31,585,701) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (1,561,424) (8,475,565) Increase (Decrease) in cash/bank overdraft (44,091) 194,179 Cash (bank overdraft), beginning of year 31,643 (162,536) CASH (BANK OVERDRAFT), END OF YEAR (12,448) 31,643 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 81

84 Balanced and Asset Allocation DFS GIF BALANCED INCOME FRANKLIN QUOTENTIAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.4%) Franklin Quotential Balanced Income Portfolio 27,734, ,522, ,869,458 TOTAL INVESTMENTS 202,522, ,869,458 OTHER NET ASSETS (-0.4%) (949,076) NET ASSETS (100%) 258,920,382 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 29.2% Templeton Global Bond Fund 6.2% Franklin Mutual European Fund 5.0% Franklin Bissett Canadian Equity Fund 4.5% Franklin Strategic Income Fund 4.4% Franklin U.S. Core Equity Fund 4.3% BMO Mid Federal Bond Index ETF 4.0% SPDR Euro Stoxx 50 ETF 3.6% Franklin Bisset All Canadian Focus Fund 3.4% Franklin Flex Cap Growth Fund 3.4% Franklin U.S. Rising Dividends Fund 3.2% WisdomTree Australia & New Zealand Debt ETF 2.6% Franklin Templeton Canadian Large Cap Fund 2.3% Franklin Japan Fund 2.2% Templeton Asian Growth Fund 2.2% ishares MSCI Japan ETF 2.2% ishares iboxx High Yield Corporate Bond ETF 2.1% Franklin European Small-Mid Cap Growth Fund 1.7% ishares TIPS Bond ETF 1.6% Franklin Bissett Small Cap Fund 1.5% ishares MSCI Japan Small-Cap ETF 1.1% SPDR S&P Bank ETF 0.8% Templeton Emerging Markets Smaller Companies Fund 0.7% ishares MSCI China ETF 0.7% Franklin India Fund 0.5% 82 DFS GUARANTEED INVESTMENT FUNDS

85 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets. Investment Strategy To invest in fixed income underlying funds in order to provide income and capital preservation. The Fund also invests in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 259,869, ,869,458 TOTAL 259,869, ,869,458 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 251,518, ,518,702 TOTAL 251,518, ,518,702 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 83

86 Balanced and Asset Allocation DFS GIF BALANCED INCOME FRANKLIN QUOTENTIAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (45%) ,279,171 1,189,381 Barclays Capital Multiverse (15%) , ,460 S&P/TSX (20%) ,705,561 1,585,842 MSCI All Country World Net (20%) ,705,561 1,585,842 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 84 DFS GUARANTEED INVESTMENT FUNDS

87 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 9,846 10,400 10,967 11,850 14,529 Series 5 227, , , , ,025 Series 6* 16,024 4,616 Series 7* 5,504 1,515 Number of units outstanding (000) Series 3 1,478 1,617 1,803 2,121 2,726 Series 5 33,382 35,692 37,751 39,436 36,312 Series 6* 2, Series 7* 1, Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 85

88 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIDELITY* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Restaurant Brands International 3.0% Brookfield Asset Management 2.9% Canadian Pacific Railway 2.2% Gildan Activewear 2.0% Toronto-Dominion Bank 1.8% CVS Health Corporation 1.6% Methanex Corporation 1.5% Alimentation Couche-Tard 1.5% Moody s Corporation 1.4% Medtronic 1.3% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 12, % 12, % 5 Years 12, % 13, % Since Inception 17, % 18, % 10, % 11, % * This Fund is composed of units of the corresponding underlying investment fund. 86 DFS GUARANTEED INVESTMENT FUNDS

89 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 102, ,454 Investments at fair value through profit or loss (FVTPL) 882,313, ,369,956 Premiums receivable 929, ,935 Receivable for securities sold 195, , ,541, ,941,641 LIABILITIES Current Liabilities Accrued expenses 2,169,456 2,156,493 Withdrawals payable 1,356,538 1,165,334 Payable for securities purchased 610,271 22,793 4,136,265 3,344,620 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 879,404, ,597,021 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 2,102,512 11,873,448 Dividends 21,500,951 10,527,481 Changes in fair value Net realized gain (loss) on investments 83,360,750 55,830,703 Net unrealized gain (loss) on investments (55,997,599) 32,032,826 50,966, ,264,458 EXPENSES Management fees and guarantee charge 21,576,240 20,706,304 Operating expenses 5,312,352 5,151,752 26,888,592 25,858,056 Withholding taxes 233,706 27,122,298 25,858,056 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 23,844,316 84,406,402 DATA PER SERIES SERIES 3 from Operations 171, ,721 - per unit Average Units 1,156,140 1,161,596 SERIES 5 from Operations 23,861,110 83,245,378 - per unit Average Units 93,583,380 99,658,634 SERIES 6* from Operations (179,117) 252,127 - per unit (0.06) 0.34 Average Units 2,922, ,529 SERIES 7* from Operations (8,828) 10,176 - per unit (0.06) 0.53 Average Units 141,100 19,176 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 87

90 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIDELITY (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 881,597, ,203,162 from operations attributable to contract owners 23,844,316 84,406,402 Premiums Series 3 2,591,373 2,223,746 Series 5 86,012,903 48,667,816 Series 6* 23,196,679 8,564,660 Series 7* 906, , ,707,820 59,859,050 Withdrawals Series 3 (1,881,705) (2,402,801) Series 5 (131,863,810) (108,542,903) Series 6* (4,980,819) (923,297) Series 7* (17,999) (2,592) (138,744,333) (111,871,593) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 879,404, ,597,021 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 23,844,316 84,406,402 Adjustments for: Net realized gain (loss) (83,360,750) (55,830,703) Net unrealized gain (loss) 55,997,599 (32,032,826) Proceeds from sale/maturity of investments 69,407,253 81,982,196 Investments purchased (39,987,663) (26,328,185) Receivable for securities sold 6,159 (112,331) Accrued expenses 12,963 75,381 Payable for securities purchased 587,478 (3,046) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 26,507,355 52,156,888 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 112,044,274 60,006,245 Amounts paid on withdrawals (138,553,129) (112,255,262) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (26,508,855) (52,249,017) Increase (Decrease) in cash/bank overdraft (1,500) (92,129) Cash (bank overdraft), beginning of year 104, ,583 CASH (BANK OVERDRAFT), END OF YEAR 102, ,454 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 842 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 88 DFS GUARANTEED INVESTMENT FUNDS

91 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Fidelity Canadian Balanced Fund, Series O 39,030, ,894, ,313,517 TOTAL INVESTMENTS 740,894, ,313,517 OTHER NET ASSETS (-0.3%) (2,908,693) NET ASSETS (100%) 879,404,824 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Restaurant Brands International 3.0% Brookfield Asset Management 2.9% Canadian Pacific Railway 2.2% Gildan Activewear 2.0% Toronto-Dominion Bank 1.8% CVS Health Corporation 1.6% Methanex Corporation 1.5% Alimentation Couche-Tard 1.5% Moody s Corporation 1.4% Medtronic 1.3% Snap-On 1.2% Rogers Communications 1.2% Thermo Fisher Scientific 1.2% Alphabet 1.1% Constellation Software 1.1% Loblaw Companies 1.0% Enbridge 1.0% AutoZone 1.0% Brookfield Property Partners 1.0% Visa 1.0% Spirit Airlines Inc. 0.9% Citigroup 0.8% CCL Industries 0.8% Teva Pharmaceutical Industries ltée 0.8% Stella-Jones 0.8% DFS GUARANTEED INVESTMENT FUNDS 89

92 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIDELITY (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve high total investment return using a diversified portfolio targeting long-term capital appreciation and a regular income stream through investment in any kind of equity or fixed-income security or money market instrument. The fundamental Investment Objective is to provide investors with a balanced asset mix with the potential for capital growth. Investment Strategy Target fixed asset allocation to deliver superior long-term growth potential and reduced levels of risk. The Fund invests primarily in a mix of Canadian equity securities, investment grade bonds, high yield securities and money market instruments. The equity investment decisions are based on a thorough examination of the company, financial conditions and long-term earnings potential. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 882,313, ,313,517 TOTAL 882,313, ,313,517 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 884,369, ,369,956 TOTAL 884,369, ,369,956 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 90 DFS GUARANTEED INVESTMENT FUNDS

93 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (40%) ,477,627 2,729,893 Merrill Lynch High Yield Master II (10%) ,738,814 1,364,947 S&P/TSX Capped (50%) ,041,103 10,237,100 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 91

94 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIDELITY (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 10,805 9,925 9,205 9,577 8,361 Series 5 841, , , , ,983 Series 6* 25,930 7,893 Series 7* 1, Number of units outstanding (000) Series 3 1,206 1,132 1,152 1,335 1,221 Series 5 91,416 96, , , ,424 Series 6* 4,736 1,482 Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 92 DFS GUARANTEED INVESTMENT FUNDS

95 Balanced and Asset Allocation DFS GIF U.S. MONTHLY INCOME FIDELITY* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio U.S. Treasury Note, 0.50%, April 30, % Johnson & Johnson 2.0% Chevron Corporation 1.6% U.S. Treasury Bill, 3.00%, May 15, % ishares 20+ Year Treasury Bond ETF 1.5% JPMorgan Chase & Company 1.5% General Electric Company 1.4% Procter & Gamble Company 1.3% Verizon Communications 0.9% CVS Health Corporation 0.8% PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6** Series 7** 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS 93

96 Balanced and Asset Allocation DFS GIF U.S. MONTHLY INCOME FIDELITY (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 11,337 55,983,432 Investments at fair value through profit or loss (FVTPL) 2,641,839 5,619 Premiums receivable 34,992 2,688,168 56,134,921 LIABILITIES Current Liabilities Accrued expenses 5,288 81,679 Withdrawals payable ,653 Payable for securities purchased 46,330 52, ,930 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 2,636,157 55,835,991 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Period Ended December * 2015* (3 months) (3 months) INCOME Interest for attribution purposes 12,544 2,102,087 Dividends 14,035 2,102,087 Changes in fair value Net realized gain (loss) on investments 111,142 (2,421,483) Net unrealized gain (loss) on investments (62,342) (723,145) 75,379 (1,042,541) EXPENSES Management fees and guarantee charge 7, ,375 Operating expenses ,735 8,462 1,289,110 Withholding taxes 1, ,735 10,431 1,289,110 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 64,948 (2,331,651) DATA PER SERIES SERIES 5 from Operations 14,972 (2,049,501) - per unit 0.25 (0.28) Average Units 60,545 7,343,124 SERIES 6 from Operations 39,447 - per unit 0.23 Average Units 170,938 SERIES 7 from Operations 10,529 - per unit 0.29 Average Units 36,010 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 94 DFS GUARANTEED INVESTMENT FUNDS

97 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Period Ended December * 2015* (3 months) (3 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 73,643,394 from operations attributable to contract owners 64,948 (2,331,651) Premiums Series 5 650,588 6,880,209 Series 6 1,693,215 Series 7 229,884 2,573,687 7,198,587 Withdrawals Series 5 (1,934) (20,876,901) Series 6 (544) Series 7 (2,478) (22,674,339) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 2,636,157 55,835,991 STATEMENT OF CASH FLOWS Period Ended December * 2015* (3 months) (3 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 64,948 (2,331,651) Adjustments for: Net realized gain (loss) (111,142) 2,421,483 Net unrealized gain (loss) 62, ,145 Investments purchased (2,593,039) (4,867,467) Accrued expenses 5,288 (141,464) Payable for securities purchased 46,330 (36,497) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (2,525,273) 15,337,022 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 2,538,695 7,283,271 Amounts paid on withdrawals (2,085) (22,704,949) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 2,536,610 (15,421,678) Increase (Decrease) in cash/bank overdraft 11,337 (84,656) Cash (bank overdraft), beginning of period 2,977 CASH (BANK OVERDRAFT), END OF PERIOD 11,337 (81,679) * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 95

98 Balanced and Asset Allocation DFS GIF U.S. MONTHLY INCOME FIDELITY (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) Fidelity U.S. Monthly Income Fund, Series O 118,810 2,704,181 2,641,839 TOTAL INVESTMENTS 2,704,181 2,641,839 OTHER NET ASSETS (-0.2%) NET ASSETS (100%) 2,636,157 The accompanying Notes are an integral part of these financial statements. (5,682) TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio U.S. Treasury Note, 0.50%, April 30, % Johnson & Johnson 2.0% Chevron Corporation 1.6% U.S. Treasury Bill, 3.00%, May 15, % ishares 20+ Year Treasury Bond ETF 1.5% JPMorgan Chase & Company 1.5% General Electric Company 1.4% Procter & Gamble Company 1.3% Verizon Communications 0.9% CVS Health Corporation 0.8% United Parcel Service 0.8% Ginnie Mae, 3.50%, 30 Year 0.8% U.S. Treasury Note, 0.375%, July 15, % M&T Bank Corporation 0.8% Simon Property Group 0.7% Wells Fargo & Company 0.7% AT&T 0.7% MetLife 0.7% Microsoft Corporation 0.6% Freddie Mac, 3.50%, 30 Year 0.6% Southern Company 0.6% Cisco Systems 0.6% Chubb Corporation 0.6% International Business Machines Corporation (IBM) 0.6% Fannie Mae, 3.00%, 30 Year 0.6% 96 DFS GUARANTEED INVESTMENT FUNDS

99 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve a combination of a steady flow of income and the potential for capital gains by investing in a mix of U.S. income-producing securities. Investment Strategy The Fund invests primarily in a mix of U.S. income-producing securities, either directly or indirectly through investments in underlying funds. The Fund s neutral mix is 50% exposure to equity securities and 50% exposure to fixed-income securities. These securities may be U.S. securities or non-u.s. securities but at least 70% of the Fund s net assets will be invested in U.S. dollar-denominated investments. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following table categorizes the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 2,641,839 2,641,839 TOTAL 2,641,839 2,641,839 Transfers between Levels 1 and 2 During the period ended December 31, 2015, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 97

100 Balanced and Asset Allocation DFS GIF U.S. MONTHLY INCOME FIDELITY (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Price Risk The majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmarks % Barclays Capital US Aggregate Bond (31%) ,258 Bank of America ML all US Convertibles (5%) ,977 Bank of America ML High Yield Master II Constrained (12%) ,327 JP Morgan EMBI Global Diversified (5%) ,636 Russell 3000 (40%) ,634 FTSE NAREIT Equity REITs (7%) ,536 In practice, actual trading results may differ from this sensitivity analysis and the difference could be significant. Credit Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 98 DFS GUARANTEED INVESTMENT FUNDS

101 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past period. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015* Series Series Series Ratios and Supplemental Data Net Asset (000 s) Series Series 6 1,732 Series Number of units outstanding (000) Series Series Series 7 45 Management expense ratio (MER) 1 (%) Series Series Series Portfolio turnover rate 2 (%) 6.80 * Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 99

102 Balanced and Asset Allocation DFS GIF BALANCED DESJARDINS SOCIETERRA* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the period ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Cash and Cash Equivalents 3.1% Canada Housing Trust, 1.70%, December 15, % NHA MBS Merrill Lynch, 1.35%, May 1, % Province of Ontario, 5.85%, March 8, % Province of Quebec, 3.50%, December 1, % Province of Ontario, 2.60%, June 2, % Canada Housing Trust, 2.40%, December 15, % Government of Canada, 5.00%, June 1, % NHA First National Financial, 1.20%, June 1, % Canada Housing Trust, 3.15%, September 15, % PERFORMANCE INFORMATION FOR THE PERIOD ENDING DECEMBER 31, 2015 Series 5** Series 6** Series 7** 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year Since Inception 10, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS

103 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 8,142,045 55,983,432 Premiums receivable 109,603 5,619 Receivable for securities sold 349 8,251,997 56,134,921 LIABILITIES Current Liabilities Bank overdraft ,679 Accrued expenses 18,806 94,653 Withdrawals payable 6,385 94,653 Payable for securities purchased 13,507 39, ,930 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 8,212,944 55,835,991 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Period Ended December * 2015* (3 months) (3 months) INCOME Dividends 18,870 2,102,087 Changes in fair value Net realized gain (loss) on investments 662,294 (2,421,483) Net unrealized gain (loss) on investments (507,386) (723,145) 173,778 (1,042,541) EXPENSES Management fees and guarantee charge 36, ,375 Operating expenses 9, ,735 45,976 1,289,110 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 127,802 (2,331,651) DATA PER SERIES SERIES 5 from Operations 114,462 (2,049,501) - per unit 0.08 (0.28) Average Units 1,406,947 7,343,124 SERIES 6 from Operations 12,989 - per unit 0.08 Average Units 164,784 SERIES 7 from Operations per unit 0.09 Average Units 4,046 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 101

104 Balanced and Asset Allocation DFS GIF BALANCED DESJARDINS SOCIETERRA (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Period Ended December * 2015* (3 months) (3 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 73,643,394 from operations attributable to contract owners 127,802 (2,331,651) Premiums Series 5 7,112,836 6,880,209 Series 6 1,125,320 Series 7 20,232 8,258,388 7,198,587 Withdrawals Series 5 (171,342) (20,876,901) Series 6 (1,904) Series 7 (173,246) (22,674,339) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF PERIOD 8,212,944 55,835,991 STATEMENT OF CASH FLOWS Period Ended December * 2015* (3 months) (3 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 127,802 (2,331,651) Adjustments for: Net realized gain (loss) (662,294) 2,421,483 Net unrealized gain (loss) 507, ,145 Proceeds from sale/maturity of investments 109,884 19,573,453 Investments purchased (8,097,021) (4,867,467) Receivable for securities sold (349) (141,464) Accrued expenses 18,806 (141,464) Payable for securities purchased 13,507 (36,497) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (7,982,279) 15,337,022 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 8,148,785 7,283,271 Amounts paid on withdrawals (166,861) (22,704,949) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 7,981,924 (15,421,678) Increase (Decrease) in cash/bank overdraft (355) (84,656) Cash (bank overdraft), beginning of period 2,977 CASH (BANK OVERDRAFT), END OF PERIOD (355) (81,679) * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 102 DFS GUARANTEED INVESTMENT FUNDS

105 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (99.1%) SocieTerra Balanced Portfolio, I-Class 869,876 8,649,431 8,142,045 TOTAL INVESTMENTS 8,649,431 8,142,045 OTHER NET ASSETS (0.9%) 70,899 NET ASSETS (100%) 8,212,944 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Cash and Cash Equivalents 3.1% Canada Housing Trust, 1.70%, December 15, % NHA MBS Merrill Lynch, 1.35%, May 1, % Province of Ontario, 5.85%, March 8, % Province of Quebec, 3.50%, December 1, % Province of Ontario, 2.60%, June 2, % Canada Housing Trust, 2.40%, December 15, % Government of Canada, 5.00%, June 1, % NHA First National Financial, 1.20%, June 1, % Canada Housing Trust, 3.15%, September 15, % Province of Quebec, 2.75%, September 1, % Province of Ontario, 2.10%, September 8, % Government of Canada, 1.50%, June 1, % NHA MBS Merrill Lynch, 1.85%, September 1, % Government of Canada, 5.75%, June 1, % NHA MBS Merrill Lynch, 1.07%, July 1, % Province of British Columbia, 6.35%, June 18, % Province of British Columbia, 3.30%, December 18, % NHA MBS Merrill Lynch, 2.05%, December 1, % Royal Bank of Canada, 2.86%, March 4, % Toronto-Dominion Bank, 2.621%, December 22, % Government of Canada, 1.75%, September 1, % Royal Bank of Canada, 2.364%, September 21, % Toronto-Dominion Bank, 2.447%, April 2, % Canada Housing Trust, 2.00%, December 15, % DFS GUARANTEED INVESTMENT FUNDS 103

106 Balanced and Asset Allocation DFS GIF BALANCED DESJARDINS SOCIETERRA (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve a balance between long-term capital appreciation and income by investing primarily in Canadian, and to a lesser extent, foreign equity and fixed-income securities and/or in units of mutual funds which themselves invest primarily in Canadian or foreign equity and fixed-income securities. The Fund follows a socially responsible approach to investing. Investment Strategy To reach the Fund s investment objective, selection of the securities and/or the underlying funds as well as the percentage of the assets that will be invested in each of these securities or underlying funds will be based on the following target weightings: Fixed-income (55%) and Growth (45%). FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following table categorizes the Fund s financial assets 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 the "Significant Accounting Policies" section of Note 2. Investment Fair Measurement at the End of the Period, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 8,142,045 8,142,045 TOTAL 8,142,045 8,142,045 Transfers between Levels 1 and 2 During the period ended December 31, 2015, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 104 DFS GUARANTEED INVESTMENT FUNDS

107 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Price Risk The majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, is as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmarks % FTSE TMX Canada Universe (55%) ,171 S&P/TSX (14%) ,494 MSCI World Net (31%) ,380 In practice, actual trading results may differ from this sensitivity analysis and the difference could be significant. Credit Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015, the majority of the Fund s Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 105

108 Balanced and Asset Allocation DFS GIF BALANCED DESJARDINS SOCIETERRA (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past period. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015* Series Series Series Ratios and Supplemental Data Net Asset (000 s) Series 5 7,056 Series 6 1,136 Series 7 21 Number of units outstanding (000) Series 5 1,389 Series Series 7 4 Management expense ratio (MER) 1 (%) Series Series Series Portfolio turnover rate 2 (%) 9.64 * Beginning of operations in October The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 106 DFS GUARANTEED INVESTMENT FUNDS

109 Balanced and Asset Allocation DFS GIF GLOBAL BALANCED JARISLOWSKY FRASER* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Jarislowsky Fraser International Pooled Fund 19.6% Government of Canada, 3.50%, December 1, % Toronto-Dominion Bank 1.6% Jarislowsky Fraser Special Equity Fund 1.5% Royal Bank of Canada 1.3% Province of Ontario, 2.85%, June 2, % Microsoft Corporation 1.2% Scotiabank 1.1% Canadian Imperial Bank of Commerce, 1.70%, October 9, % Canadian National Railway Company 0.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6** Series 7** 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 3 Years 13, % 13, % 5 Years 14, % 14, % 10 Years 14, % Since Inception 16, % 14, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS 107

110 Balanced and Asset Allocation DFS GIF GLOBAL BALANCED JARISLOWSKY FRASER (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 732, ,740 Investments at fair value through profit or loss (FVTPL) 203,872, ,375,575 Premiums receivable 635,608 34, ,240, ,314,244 LIABILITIES Current Liabilities Accrued expenses 481, ,080 Withdrawals payable 448, ,494 Payable for securities purchased 54, , , ,809 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 204,256, ,384,435 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 1,810,243 1,992,796 Dividends 2,708,739 2,578,848 Changes in fair value Net realized gain (loss) on investments 11,824,467 7,538,274 Net unrealized gain (loss) on investments (1,164,405) 4,879,492 15,179,044 16,989,410 EXPENSES Management fees and guarantee charge 3,430,240 3,082,515 Operating expenses 1,392,185 1,252,406 4,822,425 4,334,921 Withholding taxes 214, ,742 5,037,392 4,477,663 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 10,141,652 12,511,747 DATA PER SERIES SERIES 3 from Operations 488, ,628 - per unit Average Units 1,096,920 1,160,401 SERIES 5 from Operations 9,564,693 11,842,119 - per unit Average Units 19,134,339 18,746,816 SERIES 6* from Operations 84,982 - per unit 0.11 Average Units 773,611 SERIES 7* from Operations 3,916 - per unit 0.12 Average Units 32,494 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 108 DFS GUARANTEED INVESTMENT FUNDS

111 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 152,384, ,273,403 from operations attributable to contract owners 10,141,652 12,511,747 Premiums Series 3 2,880, ,981 Series 5 58,363,706 14,217,039 Series 6* 7,901,781 Series 7* 596,583 69,742,330 15,023,020 Withdrawals Series 3 (1,557,555) (2,240,546) Series 5 (26,424,518) (17,183,189) Series 6* (29,627) Series 7* (265) (28,011,965) (19,423,735) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 204,256, ,384,435 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 10,141,652 12,511,747 Adjustments for: Net realized gain (loss) (11,824,467) (7,538,274) Net unrealized gain (loss) 1,164,405 (4,879,492) Proceeds from sale/maturity of investments 11,300,138 13,040,980 Investments purchased (52,136,648) (8,463,055) Receivable for securities sold 23,676 Accrued expenses 117,527 20,802 Payable for securities purchased (117,939) 172,235 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (41,355,332) 4,888,619 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 69,141,651 15,134,291 Amounts paid on withdrawals (27,957,271) (19,855,599) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 41,184,380 (4,721,308) Increase (Decrease) in cash/bank overdraft (170,952) 167,311 Cash (bank overdraft), beginning of year 903, ,429 CASH (BANK OVERDRAFT), END OF YEAR 732, ,740 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 109

112 Balanced and Asset Allocation DFS GIF GLOBAL BALANCED JARISLOWSKY FRASER (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (99.8%) Jarislowsky Fraser Global Balanced Fund 15,579, ,081, ,872,147 TOTAL INVESTMENTS 168,081, ,872,147 OTHER NET ASSETS (0.2%) 384,305 NET ASSETS (100%) 204,256,452 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Jarislowsky Fraser International Pooled Fund 19.6% Government of Canada, 3.50%, December 1, % Toronto-Dominion Bank 1.6% Jarislowsky Fraser Special Equity Fund 1.5% Royal Bank of Canada 1.3% Province of Ontario, 2.85%, June 2, % Microsoft Corporation 1.2% Scotiabank 1.1% Canadian Imperial Bank of Commerce, 1.70%, October 9, % Canadian National Railway Company 0.9% Walgreens Boots Alliance 0.8% Fiserv 0.8% CVS Health Corporation 0.8% Government of Canada, 4.00%, June 1, % Suncor Energy 0.8% Toronto-Dominion Bank, Floating Rate, December 14, % Manulife Financial Corporation 0.7% Bank of Montréal, 2.12%, March 16, % Colgate-Palmolive Company 0.7% Enbridge 0.7% National Grid Electricity Transmission, 2.90%, November 26, % Alphabet 0.7% MetLife Global Funding, 2.682%, April 16, % Government of Canada, 5.75%, June 1, % Canadian Natural Resources 0.6% 110 DFS GUARANTEED INVESTMENT FUNDS

113 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an opportunity to achieve a high rate of return by investing in a diversified portfolio consisting of a balance of equity and fixed-income securities of issuers located throughout the world. Investment Strategy To provide such an opportunity through a diversified portfolio consisting of a balance of mainly large cap equity and mainly investment grade fixed-income securities of issuers located throughout the world. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 203,872, ,872,147 TOTAL 203,872, ,872,147 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 152,375, ,375,575 TOTAL 152,375, ,375,575 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 111

114 Balanced and Asset Allocation DFS GIF GLOBAL BALANCED JARISLOWSKY FRASER (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada 91 Day Treasury Bills (6%) ,196 20,534 FTSE TMX Canada Universe (40%) , ,570 S&P/TSX (22%) ,372, ,491 S&P 500 (16%) , ,084 MSCI EAFE Net (16%) , ,084 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 112 DFS GUARANTEED INVESTMENT FUNDS

115 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* 5.12 Series 7* 5.13 Ratios and Supplemental Data Net Asset (000 s) Series 3 9,915 8,104 8,869 9,120 10,354 Series 5 185, , , , ,996 Series 6* 7,957 Series 7* 600 Number of units outstanding (000) Series 3 1,236 1,066 1,263 1,495 1,822 Series 5 22,251 18,342 18,719 17,850 17,585 Series 6* 1,553 Series 7* 117 Management expense ratio (MER) 1 (%) Series Series Series 6* 2.59 Series 7* 2.24 Portfolio turnover rate 2 (%) * Beginning of operations in October ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 113

116 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Fiera Global Equity Fund 25.4% Royal Bank of Canada 4.0% Toronto-Dominion Bank 3.6% Scotiabank 2.8% Canadian National Railway Company 2.5% Enbridge 2.5% Canada Treasury Bills, January 28, % Manulife Financial Corporation 2.2% CGI Group 2.1% Government of Canada, 1.25%, August 1, % PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 10, % 3 Years 12, % 12, % 12, % 5 Years 11, % 11, % 12, % 10 Years 12, % 13, % Since Inception 19, % 16, % 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. 114 DFS GUARANTEED INVESTMENT FUNDS

117 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 77,260 Investments at fair value through profit or loss (FVTPL) 161,011, ,212,365 Investments at fair value through profit or loss (FVTPL) pledged as collateral 21,876,504 37,183,179 Premiums receivable 64, ,363 Receivable for securities sold 2,346, ,234 Cash guarantee received for repurchase transactions 5,685,138 13,930,968 Interest, dividends and other receivables 379, , ,363, ,408,669 LIABILITIES Current Assets Bank overdraft 785 Accrued expenses 410, ,664 Withdrawals payable 67, ,102 Payable for securities purchased 553,776 Commitments related to repurchase transactions 5,685,138 13,930,968 6,164,418 15,028,510 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 185,199, ,380,159 NET ASSETS PER UNIT Series Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 1,514,193 1,535,698 Dividends 2,941,033 2,521,291 Revenue from securities lending and repurchase transactions 21,334 23,763 Foreign exchange gain (loss) on cash 10,554 2 Changes in fair value Net realized gain (loss) on investments 9,540,425 13,233,031 Net unrealized gain (loss) on investments (5,008,855) 6,361,562 9,018,684 23,675,347 EXPENSES Management fees and guarantee charge 3,987,026 3,939,495 Operating expenses 1,172,768 1,181,984 5,159,794 5,121,479 Withholding taxes 115,489 99,175 Commissions and other portfolio transaction costs 137, ,055 5,412,299 5,413,709 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 3,606,385 18,261,638 DATA PER SERIES SERIES 1 from Operations 95, ,559 - per unit Average Units 888,699 1,041,543 SERIES 3 from Operations 282,078 1,832,525 - per unit Average Units 1,749,182 2,017,127 SERIES 5 from Operations 3,310,920 15,569,198 - per unit Average Units 14,322,443 15,479,895 SERIES 6* from Operations (84,571) 35,442 - per unit (0.10) 0.31 Average Units 842, ,512 SERIES 7* from Operations 2,714 6,914 - per unit Average Units 92,935 9,684 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 115

118 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 193,380, ,758,925 from operations attributable to contract owners 3,606,385 18,261,638 Premiums Series 1 313, ,271 Series 3 1,066, ,742 Series 5 13,646,307 6,587,183 Series 6* 6,309,713 1,906,444 Series 7* 281, ,134 21,618,055 9,990,774 Withdrawals Series 1 (1,867,231) (1,696,676) Series 3 (4,430,779) (4,433,820) Series 5 (26,593,356) (19,406,918) Series 6* (450,868) (90,697) Series 7* (63,261) (3,067) (33,405,495) (25,631,178) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 185,199, ,380,159 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 3,606,385 18,261,638 Adjustments for: Foreign exchange gain (loss) on cash (10,554) (2) Net realized gain (loss) (9,540,425) (13,177,521) Net unrealized gain (loss) 5,008,855 (6,361,562) Proceeds from sale/maturity of investments 309,235, ,265,175 Investments purchased (294,190,679) (350,038,353) Receivable for securities sold (1,799,689) 227,386 Cash guarantee received for repurchase transactions 8,245,830 (5,001,188) Interest, dividends and other receivables (51,435) 28,987 Accrued expenses (15,019) 4,252 Commitments related to repurchase transactions (8,245,830) 5,001,188 Payable for securities purchased (553,776) (216,062) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 11,689,101 15,993,938 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 21,683,230 10,126,700 Amounts paid on withdrawals (33,455,747) (26,037,687) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (11,772,517) (15,910,987) Effect of exchange rate changes on foreign cash 5,371 5,529 Increase (Decrease) in cash/bank overdraft (78,045) 88,480 Cash (bank overdraft), beginning of year 77,260 (11,220) CASH (BANK OVERDRAFT), END OF YEAR (785) 77,260 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest received 1,436,771 1,534,559 Dividends received, net of withholding taxes 1,931,447 1,684,580 Interest paid 95 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 116 DFS GUARANTEED INVESTMENT FUNDS

119 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 EQUITIES (45.6%) Number Fair of Shares Cost Energy (7.9%) Canadian Natural Resources 62,027 1,995,937 1,874,456 Cenovus Energy 70,835 1,507,088 1,239,612 Enbridge 98,967 5,053,606 4,552,482 Keyera Corp. 42,800 1,818,957 1,723,128 Peyto Exploration & Development Corporation 58,795 1,732,014 1,462,232 PrairieSky Royalty 48,821 1,354,834 1,070,156 Suncor Energy 42,231 1,510,977 1,508,491 Tourmaline Oil Corp. 56,880 1,993,258 1,271,268 16,966,671 14,701,825 Materials (6.3%) Agnico Eagle Mines 35,995 1,228,522 1,309,138 Agrium 8,700 1,111,820 1,075,929 CCL Industries, Class B 10, ,277 2,282,965 First Quantum Minerals* 70,210 1,075, ,688 Franco-Nevada Corporation 23,460 1,333,325 1,485,018 Goldcorp 57, , ,628 Potash Corporation of Saskatchewan 45,316 1,444,527 1,073,989 Tahoe Resources 129,903 2,076,212 1,554,939 West Fraser Timber Co. 32,144 1,561,843 1,688,524 11,607,980 11,748,818 Industrials (4.5%) ATS Automation Tooling Systems 134,158 1,696,588 1,526,718 Canadian National Railway Company 59,534 3,627,406 4,604,955 Canadian Pacific Railway* 11,423 1,867,476 2,018,787 7,191,470 8,150,460 Consumer Discretionary (2.3%) Dollarama 16, ,582 1,321,408 Gildan Activewear* 76,540 2,325,584 3,011,084 3,100,166 4,332,492 Consumer Staples (2.7%) Alimentation Couche-Tard, Class B 31, ,583 1,893,022 Loblaw Companies 46,385 2,439,565 3,030,796 3,438,148 4,923,818 Health Care (1.3%) Valeant Pharmaceuticals International* 17,368 3,604,773 2,441,246 * Securities pledged as collateral, in part or in whole, through the securities lending program. DFS GUARANTEED INVESTMENT FUNDS 117

120 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number Fair of Shares Cost Financials (17.3%) CI Financial 78,762 2,487,368 2,410,117 Element Financial Corporation 144,349 2,323,219 2,410,628 Intact Financial Corporation 9, , ,592 Manulife Financial Corporation 197,764 4,116,386 4,101,625 Power Financial Corporation* 44,203 1,429,208 1,406,097 RioCan Real Estate Investment Trust* 64,329 1,775,191 1,523,954 Royal Bank of Canada 100,841 6,634,769 7,477,360 Scotiabank* 91,999 5,540,268 5,149,184 Toronto-Dominion Bank 122,962 5,442,290 6,669,463 30,547,219 32,029,020 Information Technology (2.1%) CGI Group, Class A* 71,637 2,749,184 3,968,690 Telecommunication Services (1.2%) TELUS Corporation 59,114 2,458,442 2,261,702 TOTAL EQUITIES 81,664,053 84,558,071 Number of Units Investment Fund (24.3%) Fiera Global Equity Fund 2,673,861 28,672,541 45,021,231 BONDS (21.4%) Par Government of Canada (4.3%) Broadcast Center Trust 7.530%, CAD 210, , ,299 Canada Housing Trust 2.350%, CAD 1,645,000 1,723,164 1,715,095 Government of Canada 1.250%, * CAD 3,231,000 3,270,006 3,270, %, * CAD 1,085,000 1,165,309 1,166, %, CAD 31,000 49,770 47, %, CAD 329, , ,701 PSP Capital Series 7, 3.290%, CAD 120, , ,592 Royal Office Finance Series A, 5.209%, CAD 721, , ,083 7,686,278 7,934,269 * Securities pledged as collateral, in part or in whole, through the securities lending program. 118 DFS GUARANTEED INVESTMENT FUNDS

121 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 BONDS (cont.) Par Fair Cost Provincial Governments and Crown Corporations (8.2%) Ontario Infrastructure 4.700%, CAD 70,000 70,093 82,493 Ontario School Boards Financing Corporation Series 00A1, 7.200%, CAD 340, , ,380 Series 04A1, 5.483%, CAD 393, , ,133 Private Placement, Series 06A1, 5.070%, CAD 378, , ,873 Province of Alberta 3.900%, CAD 132, , , %, CAD 109, , ,442 Province of British Columbia 3.200%, CAD 236, , ,759 Province of Ontario 4.400%, CAD 652, , , %, CAD 24,000 26,238 27, %, CAD 1,290,000 1,313,585 1,395, %, * CAD 2,787,000 2,744,091 2,950, %, CAD 982,000 1,040,912 1,081, %, * CAD 799, , , %, CAD 24,000 22,362 25, %, CAD 445, , , %, CAD 970, , ,141 Province of Québec 4.500%, CAD 1,110,000 1,228,858 1,247, %, CAD 612, , , %, CAD 314, , , %, CAD 103, , , %, CAD 233, , , %, CAD 1,823,000 1,898,979 1,913,212 TCHC Issuer Trust 4.877%, CAD 59,000 59,000 70,543 Series B, 5.395%, CAD 110, , ,706 14,447,650 15,116,732 Corporations (8.9%) Bank of Montreal 3.490%, CAD 46,000 48,351 46, %, CAD 450, , , %, CAD 531, , , %, (floating rate from ), CAD 437, , , %, (floating rate from ), CAD 259, , , %, (floating rate from ), CAD 290, , ,512 Blackbird Infrastructure 407 General Partners 1.713%, (floating rate from ), CAD 77,000 76,400 76,912 British Columbia Ferry Services 5.021%, CAD 70,000 70,000 81,558 Caisse centrale Desjardins 3.502%, * CAD 100, , , %, * CAD 310, , ,336 * Securities pledged as collateral, in part or in whole, through the securities lending program. DFS GUARANTEED INVESTMENT FUNDS 119

122 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Par Fair Cost Corporations (cont.) Canadian Imperial Bank of Commerce 1.750%, CAD 473, , , %, CAD 872, , , %, (floating rate from ), CAD 210, , ,623 Canadian Utilities 4.543%, CAD 150, , , %, CAD 52,000 49,911 50, %, CAD 73,000 80,090 81, %, CAD 62,000 62,916 63, %, CAD 54,000 53,602 53,443 Capital City Link Series A, 4.386%, CAD 182, , ,494 Capital Desjardins Series G, 5.187%, CAD 160, , ,819 Series F, 5.541%, (floating rate from ), CAD 130, , ,201 Cominar Real Estate Investment Trust Series 9, 4.164%, CAD 245, , ,804 CSS (FSCC) Partnership 6.915%, CAD 18,552 23,812 24,705 Enbridge 3.940%, CAD 120, , , %, CAD 229, , , %, CAD 180, , ,262 Greater Toronto Airports Authority Series 99-1, 6.450%, CAD 122, , ,497 Health Montréal Collective, Private Placement Series 144A, 6.721%, CAD 512, , ,334 Hospital Infrastructure Series A, 5.439%, CAD 155, , ,805 Integrated Team Solutions SJHC 5.946%, CAD 54,238 54,621 66,684 Melancthon Wolfe Wind 3.834%, CAD 122, , ,023 North West Redwater Partnership Series A, 3.200%, CAD 195, , , %, CAD 94,000 93,800 94,453 Northland Battleford Power Series A, 4.958%, CAD 152, , ,259 Plenary Health Care Partnerships Humber 4.895%, CAD 129, , ,032 Plenary Properties 6.288%, CAD 313, , ,753 Reliance Series 1, 4.574%, CAD 69,000 69,000 70,535 Series 2, 5.187%, CAD 149, , ,760 Royal Bank of Canada 2.364%, CAD 710, , , %, CAD 202, , , %, CAD 211, , , %, (floating rate from ), CAD 106, , , %, (floating rate from ), CAD 439, , , %, (floating rate from ), CAD 335, , , DFS GUARANTEED INVESTMENT FUNDS

123 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Par Fair Cost Corporations (cont.) Scotiabank 2.370%, CAD 321, , , %, CAD 678, , , %, CAD 325, , , %, (floating rate from ), CAD 512, , , %, (floating rate from ), CAD 505, , ,672 SGTP Highway Bypass Series A, 4.105%, CAD 164, , ,611 SNC-Lavalin Innisfree McGill Finance 6.632%, CAD 135, , ,692 Teranet Holdings 3.646%, CAD 110, , ,002 Teranet Income Fund 5.754%, CAD 90,000 90,000 98, %, CAD 477, , ,643 Toronto-Dominion Bank 3.226%, * CAD 309, , , %, (floating rate from ), CAD 196, , , %, (floating rate from ), CAD 215, , , %, (floating rate from ), CAD 533, , , %, (floating rate from ), CAD 1,085,000 1,209,077 1,162,839 TransCanada PipeLines 8.050%, CAD 133, , ,917 16,306,094 16,502,659 TOTAL BONDS 38,440,022 39,553,660 MONEY MARKET SECURITIES (7.2%) Canada Treasury Bills * CAD 1,695,000 1,693,704 1,693, CAD 4,400,000 4,395,936 4,395, CAD 265, , , CAD 1,870,000 1,868,421 1,868,421 New Brunswick Treasury Bills CAD 230, , , CAD 550, , ,406 Ontario Treasury Bills CAD 325, , ,838 Province of Nova Scotia, notes CAD 400, , ,540 Québec Treasury Bills CAD 2,000,000 1,997,760 1,997, CAD 1,525,000 1,523,948 1,523,948 TOTAL MONEY MARKET SECURITIES 13,248,173 13,248,173 * Securities pledged as collateral, in part or in whole, through the securities lending program. DFS GUARANTEED INVESTMENT FUNDS 121

124 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 MORTGAGE-BACKED SECURITIES (0.2%) Par Fair Cost Merrill Lynch Financial Assets 4.826%, CAD 100,000 35,208 40, %, CAD 400, , ,960 Series 2007-CA22, Class A3, 4.878%, CAD 50,000 45,800 51,776 Merrill Lynch Mortgage Loans 4.711%, CAD 200,000 23,348 25,666 Real Estate Asset Liquidity Trust 4.449%, CAD 100,000 6,902 7,576 TOTAL MORTGAGE-BACKED SECURITIES 280, ,077 ASSET-BACKED SECURITIES (0.1%) CHIP Mortgage Trust 3.663%, CAD 186, , ,326 PORTFOLIO TRANSACTION COSTS INCLUDED IN THE SECURITIES COST (54,879) TOTAL INVESTMENTS (98.8%) 162,436, ,887,538 OTHER NET ASSETS (1.2%) 2,311,566 NET ASSETS (100%) 185,199,104 The accompanying Notes are an integral part of these financial statements. TOP FIVE HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio FIERA GLOBAL EQUITY FUND 24.3% Moody s Corporation 4.6% Becton, Dickinson and Company 4.1% Johnson & Johnson 3.7% US Bancorp 3.3% Keyence Corporation 3.2% 122 DFS GUARANTEED INVESTMENT FUNDS

125 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with a balance of capital growth and interest income by investing primarily in Canadian fixed-income and equity securities. Investment Strategy To provide such a balance by investing a portion of its assets in the common shares of medium and large cap Canadian corporations and the remainder in Canadian government and Canadian investment-grade corporate bonds and other interest-bearing instruments. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Equities 84,558,071 84,558,071 Bonds 21,704,615 17,849,045 39,553,660 Investment Funds 45,021,231 45,021,231 Mortgage-Backed Securities 311, ,077 Asset-Backed Securities 195, ,326 Money Market Securities 13,248,173 13,248,173 TOTAL 119,510,859 63,376, ,887,538 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Equities 80,447,407 80,447,407 Bonds 22,904,527 15,597,683 38,502,210 Investment Funds 47,679,417 47,679,417 Mortgage-Backed Securities 434, ,583 Asset-Backed Securities 193, ,141 Money Market Securities 26,138,786 26,138,786 TOTAL 129,490,720 63,904, ,395,544 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Classification of Level 3 As at December 31, 2015, the Fund has no financial instruments classified within Level 3. As at December 31, 2014, the Fund has financial instruments requiring Level 3 valuation. Fair value measurements are derived from valuation techniques. The substitution of one or more data from these techniques by one or several reasonably possible assumptions should not result in significant changes in the fair value of these investments. The following table explains the classification of fair value within Level 3: December 31, 2014 Financial instruments Protective Products of America Fair value Valuation techniques Unobservable inputs Range Discounting of cash flows Recovery rate DFS GUARANTEED INVESTMENT FUNDS 123

126 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION as at December 31, 2015 Reconciliation of Level 3 Fair Measurement The following table summarizes a reconciliation of movements on Level 3 financial instruments between the beginning and end of the Year: December 31, 2014 Equities Balance, Beginning of Year Proceeds from sale of investments Investments purchased 768,768 Net realized gain (loss) Net unrealized gain (loss) Transfers to (from) Level 3 (768,768) Balance, End of Year Certain securities classifieds Level 3 entailed restrictions. In April 2014, these securities valued at approximately 769,000 were transfered from Level 3 to Level 1 following the expiration of the restrictions. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Currency Risk As at December 31, 2015 and 2014, part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015 and 2014, the majority of the Fund s financial assets and liabilities are denominated in Canadian dollars. As a result, the Fund is not significantly exposed to currency risk. Interest Rate Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The following table summarizes the Fund s exposure to interest rate risk. It includes the Fund s financial assets and liabilities at fair value, categorized by the earlier of contractual re-pricing or maturity dates. The table also illustrates the impact on the Net Assets Attributable to Contract Owners, had prevailing interest rates changed by 0.25%, assuming a parallel shift in the yield curve, with all other variables held constant. Less than 1 Year 1 to 5 Years 5 to 10 Years Greater than 10 Years Total Impact on Net Assets Attributable to Contract Owners December 31, ,605,259 15,537,608 10,556,269 11,608,315 53,307, ,204 December 31, ,398,680 16,778,275 9,545,391 11,623,634 65,345, ,950 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. 124 DFS GUARANTEED INVESTMENT FUNDS

127 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The following table summarizes the concentration risk, as in percentages of the Net Assets Attributable to Contract Owners: December 31, 2015 MARKET SEGMENT % Equities Financials 17.3 Energy 7.9 Materials 6.3 Industrials 4.5 Consumer Staples 2.7 Consumer Discretionary 2.3 Information Technology 2.1 Health Care 1.3 Telecommunication Services 1.2 Investment Fund 24.3 Bonds Corporations 8.9 Provincial Governments and Crown Corporations 8.2 Government of Canada 4.3 Money Market Securities 7.2 Mortgage-Backed Securities 0.2 Asset-Backed Securities Other Net Assets TOTAL 100 December 31, 2014 MARKET SEGMENT % Equities Financials 14.4 Energy 8.1 Materials 4.3 Industrials 4.1 Consumer Discretionary 3.6 Consumer Staples 3.0 Information Technology 2.0 Telecommunication Services 1.5 Health Care 0.6 Investment Fund 24.7 Bonds Corporations 7.3 Provincial Governments and Crown Corporations 6.8 Government of Canada 5.8 Money Market Securities 13.5 Mortgage-Backed Securities Asset-Backed Securities TOTAL 100 Price Risk The Fund may trade in financial instruments and take positions in over-the-counter instruments. Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada 91 Day Treasury Bills (10%) ,580 50,705 FTSE TMX Canada Universe (30%) , ,463 S&P/TSX Capped (40%) ,283,832 2,433,852 MSCI World Net (20%) ,141,916 1,216,926 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. DFS GUARANTEED INVESTMENT FUNDS 125

128 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Credit Risk Part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Fund s credit risk concentration is separated between fixed-income and money market securities. Their fair values include consideration of the issuers creditworthiness and accordingly, represent the Fund s maximum exposure to credit risk. Portfolio s Fixed-Income Securities by Credit Rating Category Credit Rating Percentage of Fixed-Income Securities December 31, 2015 December 31, 2014 % % AAA AA A BBB 9 6 TOTAL Portfolio s Money Market Securities by Credit Rating Category Credit Rating Percentage of Money Market Securities December 31, 2015 December 31, 2014 % % R-1 (High) R-1 (Middle) 38 TOTAL Securities Lending and Repurchase Transactions As part of its securities lending and repurchase transactions, the Fund is exposed to counterparty credit risk. The carrying amount of financial assets lent as part of repurchase transactions is: December 31, ,688,216 December 31, ,331,416 The fair value of the financial assets held as collateral that the fund is permitted to sell or repledge in the absence of default totalled: December 31, ,811,681 December 31, ,737,913 The fair value of financial assets accepted as collateral which have been sold or repledged totalled: December 31, 2015 December 31, ,093 These financial assets were received as collateral as part of transactions involving reverse repurchase transactions. Liquidity Risk As at December 31, 2015 and 2014, part of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 126 DFS GUARANTEED INVESTMENT FUNDS

129 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION DERECOGNITION OF FINANCIAL ASSETS Securities Lending and Repurchase Transactions As part of transactions involving securities lending or repurchase transactions, the Fund transfers financial assets under terms and conditions providing for their future repurchase. These financial assets remain recognized in the Investments at fair value through profit or loss pledged as collateral of the Statement of Financial Position as the Fund retains substantially all the risks and rewards related to these assets. December 31, 2015 December 31, 2014 Investments at FVTPL pledged as Collateral 21,876,504 37,183,179 of Collateral received 22,314,035 37,926,959 The Funds require collateral in the form of cash or such other securities as may be acceptable to Desjardins Financial Security and that have an aggregate value of no less than 102% of the loaned securities fair value. The following table presents the carrying amount and the fair value of financial assets transferred by the Fund but not derecognized as well as the related liabilities recognized in Commitments related to repurchase transactions and Commitments related to securities lending of the Statement of Financial Position. Fair * December 31, 2015 December 31, 2014 Financial Assets 5,688,216 13,331,416 Related Liabilities 5,685,138 13,466,296 * The fair value equals carrying amount. DFS GUARANTEED INVESTMENT FUNDS 127

130 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FIERA CAPITAL (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series Series 6* Series 7* Net Asset Per Unit as at December 31 st () Series Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 1 7,752 9,210 9,743 10,555 12,947 Series 3 16,332 19,414 21,183 22,565 13,047 Series 5 152, , , ,726 67,029 Series 6* 7,625 1,851 Series 7* Number of units outstanding (000) Series ,113 1,333 1,672 Series 3 1,551 1,866 2,229 2,641 1,571 Series 5 13,843 14,988 16,230 18,032 7,864 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 128 DFS GUARANTEED INVESTMENT FUNDS

131 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FRANKLIN BISSETT* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Franklin Bissett Canadian Equity Fund 19.1% Franklin Bissett Corporate Bond Fund 13.8% Franklin Bissett Core Plus Bond Fund 13.3% Franklin Bissett Microcap Fund 5.6% Franklin Bisset All Canadian Focus Fund 5.6% Franklin Bissett Small Cap Fund 5.4% Franklin U.S. Rising Dividends Fund 4.1% Franklin Bissett U.S. Focus Fund 4.1% Templeton EAFE Developed Markets Fund 4.1% Franklin Bissett Canadian Dividend Fund 3.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 9, % 3 Years 11, % 11, % 5 Years 12, % 12, % 10 Years 13, % Since Inception 13, % 12, % 9, % 9, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 129

132 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FRANKLIN BISSETT (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 90,541 Investments at fair value through profit or loss (FVTPL) 193,040, ,992,577 Premiums receivable 442, ,453 Receivable for securities sold 68,041 36, ,550, ,518,055 LIABILITIES Current Liabilities Bank overdraft 67,886 Accrued expenses 441, ,062 Withdrawals payable 322, ,491 Payable for securities purchased 175, ,820 1,006,820 1,179,373 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 192,544, ,338,682 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 105,744 Dividends 3,531,487 4,066,464 Changes in fair value Net realized gain (loss) on investments 12,610,257 5,755,322 Net unrealized gain (loss) on investments (18,147,681) 5,608,685 (1,900,193) 15,430,471 EXPENSES Management fees and guarantee charge 4,492,189 4,542,971 Operating expenses 1,394,478 1,509,274 5,886,667 6,052,245 Withholding taxes 105, ,462 5,992,614 6,208,707 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (7,892,807) 9,221,764 DATA PER SERIES SERIES 3 from Operations (294,604) 382,109 - per unit (0.27) 0.29 Average Units 1,092,829 1,308,149 SERIES 5 from Operations (6,557,000) 8,885,884 - per unit (0.26) 0.31 Average Units 25,455,075 28,396,589 SERIES 6* from Operations (967,948) (44,030) - per unit (0.23) (0.04) Average Units 4,173,699 1,151,877 SERIES 7* from Operations (73,255) (2,199) - per unit (0.19) (0.03) Average Units 387,174 78,311 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 130 DFS GUARANTEED INVESTMENT FUNDS

133 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 226,338, ,586,751 from operations attributable to contract owners (7,892,807) 9,221,764 Premiums Series 3 547,986 1,735,671 Series 5 11,850,340 27,910,947 Series 6* 12,662,984 17,687,390 Series 7* 1,625,601 1,308,651 26,686,911 48,642,659 Withdrawals Series 3 (1,944,769) (2,955,150) Series 5 (45,955,191) (25,522,814) Series 6* (4,332,945) (611,922) Series 7* (355,869) (22,606) (52,588,774) (29,112,492) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 192,544, ,338,682 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (7,892,807) 9,221,764 Adjustments for: Net realized gain (loss) (12,610,257) (5,755,322) Net unrealized gain (loss) 18,147,681 (5,608,685) Proceeds from sale/maturity of investments 35,736,775 13,381,979 Investments purchased (7,321,831) (30,890,537) Receivable for securities sold (31,557) 24,475 Accrued expenses (75,020) 65,182 Payable for securities purchased (51,193) 106,432 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 25,901,791 (19,454,712) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 26,642,782 48,524,815 Amounts paid on withdrawals (52,703,000) (28,878,593) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (26,060,218) 19,646,222 Increase (Decrease) in cash/bank overdraft (158,427) 191,510 Cash (bank overdraft), beginning of year 90,541 (100,969) CASH (BANK OVERDRAFT), END OF YEAR (67,886) 90,541 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 203 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 131

134 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FRANKLIN BISSETT (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Bissett Canadian Balanced Fund, Series O 4,680, ,683, ,040,209 TOTAL INVESTMENTS 162,683, ,040,209 OTHER NET ASSETS (-0.3%) (496,197) NET ASSETS (100%) 192,544,012 The accompanying Notes are an integral part of these financial statements. TOP HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Franklin Bissett Canadian Equity Fund 19.1% Franklin Bissett Corporate Bond Fund 13.8% Franklin Bissett Core Plus Bond Fund 13.3% Franklin Bissett Microcap Fund 5.6% Franklin Bisset All Canadian Focus Fund 5.6% Franklin Bissett Small Cap Fund 5.4% Franklin U.S. Rising Dividends Fund 4.1% Franklin Bissett U.S. Focus Fund 4.1% Templeton EAFE Developed Markets Fund 4.1% Franklin Bissett Canadian Dividend Fund 3.9% Franklin Mutual Global Discovery Fund 3.9% Templeton Global Bond Fund 3.2% Franklin Bissett Monthly Income And Growth Fund 2.9% Franklin Bissett Canadian High Dividend Fund 2.6% Franklin Bissett Canadian Short Term Bond Fund 2.6% Templeton Global Smaller Companies Fund 2.4% Franklin Strategic Income Fund 2.1% Templeton Emerging Markets Fund 0.9% Cash and Cash Equivalents 0.4% 132 DFS GUARANTEED INVESTMENT FUNDS

135 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with a balance of current income and long-term capital appreciation primarily through the investment in Canadian fixed-income and equity securities. Investment Strategy To provide such an opportunity by investing in a diversified portfolio of Bissett mutual funds. The underlying funds may invest in foreign securities. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 193,040, ,040,209 TOTAL 193,040, ,040,209 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 226,992, ,992,577 TOTAL 226,992, ,992,577 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 133

136 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED FRANKLIN BISSETT (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (35%) , ,941 Barclays Capital U.S. Aggregate Bond (2.5%) ,361 53,710 J.P. Morgan Global Government Bond (2.5%) ,361 53,710 S&P/TSX Small Cap (5%) , ,260 S&P/TSX (32.5%) ,730,090 2,094,692 S&P 500 (10%) , ,521 MSCI EAFE Net (10%) , ,521 MSCI Emerging Markets Net (2.5%) , ,130 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 134 DFS GUARANTEED INVESTMENT FUNDS

137 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 6,724 8,415 9,253 7,874 8,335 Series 5 158, , , , ,617 Series 6* 24,394 17,031 Series 7* 2,480 1,284 Number of units outstanding (000) Series 3 1,010 1,209 1,385 1,361 1,569 Series 5 23,115 27,885 27,520 23,230 19,733 Series 6* 4,965 3,336 Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 135

138 Balanced and Asset Allocation DFS GIF BALANCED GROWTH FRANKLIN QUOTENTIAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 19.9% Franklin Mutual European Fund 6.8% Franklin Bissett Canadian Equity Fund 6.1% Franklin U.S. Core Equity Fund 5.9% SPDR Euro Stoxx 50 ETF 4.9% Franklin Bisset All Canadian Focus Fund 4.6% Franklin Flex Cap Growth Fund 4.6% Franklin U.S. Rising Dividends Fund 4.4% Templeton Global Bond Fund 4.2% Franklin Templeton Canadian Large Cap Fund 3.2% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 12, % 12, % 5 Years 12, % 12, % Since Inception 12, % 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. 136 DFS GUARANTEED INVESTMENT FUNDS

139 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 537,605, ,888,640 Premiums receivable 297, ,275 Receivable for securities sold 178, , ,080, ,626,216 LIABILITIES Current Liabilities Bank overdraft 178, ,925 Accrued expenses 1,320,670 1,274,020 Withdrawals payable 500, ,605 Payable for securities purchased 109,762 2,109,064 2,322,550 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 535,971, ,303,666 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 9,013,352 5,467,873 Changes in fair value Net realized gain (loss) on investments 40,955,691 15,530,204 Net unrealized gain (loss) on investments (9,611,349) 27,367,697 40,357,694 48,365,774 EXPENSES Management fees and guarantee charge 12,816,429 12,169,093 Operating expenses 3,170,319 3,058,246 15,986,748 15,227,339 Withholding taxes 893, ,017 16,880,013 15,632,356 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 23,477,681 32,733,418 DATA PER SERIES SERIES 3 from Operations 559, ,938 - per unit Average Units 2,077,439 2,382,259 SERIES 5 from Operations 22,645,710 31,676,645 - per unit Average Units 78,598,853 82,680,354 SERIES 6* from Operations 245, ,326 - per unit Average Units 2,809, ,486 SERIES 7* from Operations 26,123 5,509 - per unit Average Units 157,967 22,694 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 137

140 Balanced and Asset Allocation DFS GIF BALANCED GROWTH FRANKLIN QUOTENTIAL (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 516,303, ,234,701 from operations attributable to contract owners 23,477,681 32,733,418 Premiums Series 3 1,242,079 1,211,914 Series 5 43,698,156 24,542,201 Series 6* 16,316,491 8,469,284 Series 7* 2,417, ,616 63,674,531 34,667,015 Withdrawals Series 3 (2,156,808) (2,931,664) Series 5 (63,665,534) (46,977,213) Series 6* (1,640,023) (422,039) Series 7* (21,603) (552) (67,483,968) (50,331,468) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 535,971, ,303,666 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 23,477,681 32,733,418 Adjustments for: Net realized gain (loss) (40,955,691) (15,530,204) Net unrealized gain (loss) 9,611,349 (27,367,697) Proceeds from sale/maturity of investments 35,138,386 39,671,991 Investments purchased (23,510,995) (13,506,575) Receivable for securities sold 276,261 (385,885) Accrued expenses 46,650 50,923 Payable for securities purchased 109,762 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 4,193,403 15,665,971 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 63,660,463 34,447,418 Amounts paid on withdrawals (67,930,058) (50,201,697) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (4,269,595) (15,754,279) Increase (Decrease) in cash/bank overdraft (76,192) (88,308) Cash (bank overdraft), beginning of year (101,925) (13,617) CASH (BANK OVERDRAFT), END OF YEAR (178,117) (101,925) * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 138 DFS GUARANTEED INVESTMENT FUNDS

141 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Quotential Balanced Growth Portfolio 50,290, ,405, ,605,591 TOTAL INVESTMENTS 389,405, ,605,591 OTHER NET ASSETS (-0.3%) (1,633,681) NET ASSETS (100%) 535,971,910 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 19.9% Franklin Mutual European Fund 6.8% Franklin Bissett Canadian Equity Fund 6.1% Franklin U.S. Core Equity Fund 5.9% SPDR Euro Stoxx 50 ETF 4.9% Franklin Bisset All Canadian Focus Fund 4.6% Franklin Flex Cap Growth Fund 4.6% Franklin U.S. Rising Dividends Fund 4.4% Templeton Global Bond Fund 4.2% Franklin Templeton Canadian Large Cap Fund 3.2% Franklin Japan Fund 3.1% Franklin Strategic Income Fund 3.0% Templeton Asian Growth Fund 3.0% ishares MSCI Japan ETF 3.0% BMO Mid Federal Bond Index ETF 2.7% Franklin European Small-Mid Cap Growth Fund 2.3% Franklin Bissett Small Cap Fund 2.0% WisdomTree Australia & New Zealand Debt ETF 1.8% ishares MSCI Japan Small-Cap ETF 1.5% ishares iboxx High Yield Corporate Bond ETF 1.4% SPDR S&P Bank ETF 1.1% ishares TIPS Bond ETF 1.1% Templeton Emerging Markets Smaller Companies Fund 1.0% ishares MSCI China ETF 1.0% Franklin India Fund 0.7% DFS GUARANTEED INVESTMENT FUNDS 139

142 Balanced and Asset Allocation DFS GIF BALANCED GROWTH FRANKLIN QUOTENTIAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets. Investment Strategy To emphasize investments in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon. The Fund also invests, to a lesser extent, in fixed income underlying funds in order to provide stability. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 537,605, ,605,591 TOTAL 537,605, ,605,591 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 517,888, ,888,640 TOTAL 517,888, ,888,640 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 140 DFS GUARANTEED INVESTMENT FUNDS

143 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (30%) ,721,526 1,660,942 Barclays Capital Multiverse (10%) , ,647 S&P/TSX (30%) ,164,579 4,982,827 MSCI All Country World Net (30%) ,164,579 4,982,827 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 141

144 Balanced and Asset Allocation DFS GIF BALANCED GROWTH FRANKLIN QUOTENTIAL (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 12,701 13,055 13,916 13,994 16,540 Series 5 497, , , , ,824 Series 6* 23,162 8,240 Series 7* 2, Number of units outstanding (000) Series 3 2,036 2,181 2,473 2,829 3,529 Series 5 77,569 80,634 84,385 85,713 80,178 Series 6* 4,263 1,588 Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 142 DFS GUARANTEED INVESTMENT FUNDS

145 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED CI SIGNATURE* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Scotiabank 3.7% Toronto-Dominion Bank 3.5% Royal Bank of Canada 3.4% Province of Ontario, 4.20%, June 2, % Province of Quebec, 4.50%, December 1, % Alimentation Couche-Tard 1.4% Canadian National Railway Company 1.3% AstraZeneca 1.2% Citigroup 1.2% Province of Quebec, 4.25%, December 1, % PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 3 Years 12, % 5 Years 12, % Since Inception 13, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 143

146 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED CI SIGNATURE (cont.) STATEMENT OF FINANCIAL POSITION As at ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 110,268,316 96,604,912 Premiums receivable 356, ,198 Receivable for securities sold 203,681 5, ,828,579 97,005,831 LIABILITIES Current Liabilities Bank overdraft 32,321 5,623 Accrued expenses 269, ,154 Withdrawals payable 358,326 85,733 Payable for securities purchased 336, , ,294 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 110,168,851 96,345,537 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 393,670 Dividends 918,929 1,443,711 Changes in fair value Net realized gain (loss) on investments 7,903,115 7,444,603 Net unrealized gain (loss) on investments (7,814,344) 2,000,768 1,401,370 10,889,082 EXPENSES Management fees and guarantee charge 2,497,830 1,976,353 Operating expenses 683, ,649 3,181,754 2,585,002 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (1,780,384) 8,304,080 DATA PER SERIES SERIES 5 from Operations (1,213,513) 8,138,515 - per unit (0.09) 0.62 Average Units 13,312,868 13,163,749 SERIES 6* from Operations (527,911) 154,851 - per unit (0.18) 0.38 Average Units 2,986, ,041 SERIES 7* from Operations (38,960) 10,714 - per unit (0.17) 0.55 Average Units 233,451 19,316 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 144 DFS GUARANTEED INVESTMENT FUNDS

147 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 96,345,537 81,150,995 from operations attributable to contract owners (1,780,384) 8,304,080 Premiums Series 5 16,845,424 7,857,996 Series 6* 17,794,620 8,738,548 Series 7* 1,329, ,604 35,969,243 17,245,148 Withdrawals Series 5 (16,811,940) (9,947,724) Series 6* (3,436,044) (392,327) Series 7* (117,561) (14,635) (20,365,545) (10,354,686) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 110,168,851 96,345,537 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (1,780,384) 8,304,080 Adjustments for: Net realized gain (loss) (7,903,115) (7,444,603) Net unrealized gain (loss) 7,814,344 (2,000,768) Proceeds from sale/maturity of investments 8,942,776 6,205,109 Investments purchased (22,517,409) (11,766,245) Receivable for securities sold (197,960) 54,747 Accrued expenses 36,927 33,843 Payable for securities purchased (336,784) 266,580 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (15,941,605) (6,347,257) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 36,007,859 16,943,106 Amounts paid on withdrawals (20,092,952) (10,268,953) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 15,914,907 6,674,153 Increase (Decrease) in cash/bank overdraft (26,698) 326,896 Cash (bank overdraft), beginning of year (5,623) (332,519) CASH (BANK OVERDRAFT), END OF YEAR (32,321) (5,623) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 159 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 145

148 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED CI SIGNATURE (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.1%) Signature Canadian Balanced Fund, Class I 11,959, ,052, ,268,316 TOTAL INVESTMENTS 111,052, ,268,316 OTHER NET ASSETS (-0.1%) (99,465) NET ASSETS (100%) 110,168,851 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Scotiabank 3.7% Toronto-Dominion Bank 3.5% Royal Bank of Canada 3.4% Province of Ontario, 4.20%, June 2, % Province of Quebec, 4.50%, December 1, % Alimentation Couche-Tard 1.4% Canadian National Railway Company 1.3% AstraZeneca 1.2% Citigroup 1.2% Province of Quebec, 4.25%, December 1, % Province of Ontario, 3.50%, June 2, % Roche Holding AG 1.0% Province of Ontario, 2.10%, September 8, % Bristol-Myers Squibb Company 0.9% NXP Semiconductor 0.9% Province of Quebec, 3.75%, September 1, % Province of British Columbia, 3.20%, June 18, % Power Corporation of Canada 0.9% JPMorgan Chase & Company, Warrants, October 28, % UBS Group AG 0.8% Alphabet 0.8% Sony Corporation 0.8% Province of Quebec, 2.75%, September 1, % Province of Ontario, 2.60%, June 2, % Thermo Fisher Scientific 0.8% 146 DFS GUARANTEED INVESTMENT FUNDS

149 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with an attractive balance of current income and capital appreciation by investing primarily in a combination of Canadian equity and equity-related securities and fixed income securities. Investment Strategy For the equity portion, the Fund invests primarily in companies providing a stable income or consistent dividends. For the income portion, the portfolio advisor selects high-quality fixed income securities, including bank loans and floating rate debt instruments but may choose to shift the weighting of the portion of the Fund held in bonds with longer terms to maturity depending on the expected fluctuations in interest rates. The Fund may also invest in foreign securities as well as warrants and derivatives, the latter to aid in hedging against potential losses resulting from changes in the prices of the securities that the Fund has invested in as well as any exposure from foreign currencies. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 110,268, ,268,316 TOTAL 110,268, ,268,316 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 96,604,912 96,604,912 TOTAL 96,604,912 96,604,912 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 147

150 Balanced and Asset Allocation DFS GIF CANADIAN BALANCED CI SIGNATURE (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (40%) , ,005 S&P/TSX (30%) , ,012 MSCI All Country World Net (30%) , ,012 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 148 DFS GUARANTEED INVESTMENT FUNDS

151 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 5 86,020 87,200 81,151 67,092 46,848 Series 6* 22,332 8,501 Series 7* 1, Number of units outstanding (000) Series 5 13,032 13,042 13,368 12,357 9,152 Series 6* 4,204 1,584 Series 7* Management expense ratio (MER) 1 (%) Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 149

152 Balanced and Asset Allocation DFS GIF INCOME AND GROWTH CI SIGNATURE* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Scotiabank 3.5% Toronto-Dominion Bank 3.4% Royal Bank of Canada 3.3% Alimentation Couche-Tard 1.2% Citigroup 1.2% AstraZeneca 1.1% Canadian National Railway Company 1.1% Singapore Telecommunications 1.0% Bristol-Myers Squibb Company 0.9% Power Corporation of Canada 0.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 3 Years 11, % Since Inception 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. 150 DFS GUARANTEED INVESTMENT FUNDS

153 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 7,085 Investments at fair value through profit or loss (FVTPL) 69,141,832 58,358,379 Premiums receivable 232, ,455 Receivable for securities sold 28,314 69,402,415 58,556,919 LIABILITIES Current Liabilities Bank overdraft 3,897 Accrued expenses 170, ,932 Withdrawals payable 82,672 25,705 Payable for securities purchased 6, , , ,443 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 69,139,037 58,261,476 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest income for attribution purposes 1,293, ,290 Dividends 828, ,778 Changes in fair value Net realized gain (loss) on investments 2,279,667 2,682,292 Net unrealized gain (loss) on investments (4,300,254) 1,034, ,685 5,408,557 EXPENSES Management fees and guarantee charge 1,750,516 1,302,558 Operating expenses 265, ,344 2,015,598 1,519,902 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (1,913,913) 3,888,655 DATA PER SERIES SERIES 5 from Operations (1,177,760) 3,784,658 - per unit (0.14) 0.48 Average Units 8,256,775 7,858,905 SERIES 6* from Operations (713,767) 93,408 - per unit (0.28) 0.24 Average Units 2,583, ,309 SERIES 7* from Operations (22,386) 10,589 - per unit (0.13) 0.31 Average Units 166,341 33,887 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 151

154 Balanced and Asset Allocation DFS GIF INCOME AND GROWTH CI SIGNATURE (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 58,261,476 40,521,198 from operations attributable to contract owners (1,913,913) 3,888,655 Premiums Series 5 9,337,232 10,788,331 Series 6* 18,754,413 6,404,756 Series 7* 590, ,109 28,682,017 17,693,196 Withdrawals Series 5 (13,458,440) (3,713,685) Series 6* (2,378,991) (112,569) Series 7* (53,112) (15,319) (15,890,543) (3,841,573) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 69,139,037 58,261,476 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (1,913,913) 3,888,655 Adjustments for: Net realized gain (loss) (2,279,667) (2,682,292) Net unrealized gain (loss) 4,300,254 (1,034,197) Proceeds from sale/maturity of investments 6,891,566 1,813,756 Investments purchased (19,695,606) (15,890,115) Receivable for securities sold (28,314) Accrued expenses 27,274 43,081 Payable for securities purchased (120,203) (51,426) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (12,818,609) (13,912,538) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 28,641,203 17,661,283 Amounts paid on withdrawals (15,833,576) (3,830,494) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 12,807,627 13,830,789 Increase (Decrease) in cash/bank overdraft (10,982) (81,749) Cash (bank overdraft), beginning of year 7,085 88,834 CASH (BANK OVERDRAFT), END OF YEAR (3,897) 7,085 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 152 DFS GUARANTEED INVESTMENT FUNDS

155 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.0%) Signature Income & Growth Fund, Class I 7,308,862 69,108,511 69,141,832 TOTAL INVESTMENTS 69,108,511 69,141,832 OTHER NET ASSETS (-0.0%) NET ASSETS (100%) 69,139,037 The accompanying Notes are an integral part of these financial statements. (2,795) TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Scotiabank 3.5% Toronto-Dominion Bank 3.4% Royal Bank of Canada 3.3% Alimentation Couche-Tard 1.2% Citigroup 1.2% AstraZeneca 1.1% Canadian National Railway Company 1.1% Singapore Telecommunications 1.0% Bristol-Myers Squibb Company 0.9% Power Corporation of Canada 0.9% Province of Quebec, 4.50%, December 1, % JPMorgan Chase & Company, Warrants, October 28, % Province of Ontario, 4.20%, June 2, % Roche Holding AG 0.8% UBS Group AG 0.8% Telstra Corporation Ltd 0.7% Manulife Financial Corporation 0.7% NXP Semiconductor 0.7% Nestlé SA 0.7% Enbridge 0.7% Province of Quebec, 4.25%, December 1, % Total SA 0.7% Loblaw Companies 0.7% Saputo Group 0.6% TransCanada Corporation 0.6% DFS GUARANTEED INVESTMENT FUNDS 153

156 Balanced and Asset Allocation DFS GIF INCOME AND GROWTH CI SIGNATURE (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to provide a steady flow of current income while preserving capital by obtaining exposure primarily to equity, equity related and fixed income securities of Canadian issuers. Investment Strategy The Fund invests in a combination of equity, fixed income and derivatives. Broadly diversified by sector and style, preferred and common shares make up portions of the Fund s investments in equity securities. The fixed income portion of the Fund s investments is comprised of high-yielding government and corporate bonds, debentures and notes, including some securities that are unrated or have credit ratings below investment grade. The Fund may also invest in real estate investment trusts (REITs), royalty trusts, income trusts and other similar high yielding instruments. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 69,141,832 69,141,832 TOTAL 69,141,832 69,141,832 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 58,358,379 58,358,379 TOTAL 58,358,379 58,358,379 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 154 DFS GUARANTEED INVESTMENT FUNDS

157 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015, the Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmarks % FTSE TMX Canada Universe (15%) ,164 Merrill Lynch High Yield Master II (15%) ,328 S&P/TSX Composite High Dividend (10%) ,328 S&P/TSX (30%) ,985 MSCI All Country World Net (30%) ,985 As at December 31, 2014, the Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, was as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2014 Benchmarks % FTSE TMX Canada Universe (15%) ,392 Merrill Lynch High Yield Master II (15%) ,784 S&P/TSX Composite High Dividend (10%) ,784 S&P/TSX (30%) ,353 MSCI All Country World Net (30%) ,353 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 155

158 Balanced and Asset Allocation DFS GIF INCOME AND GROWTH CI SIGNATURE (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past four years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015*** 2014*** 2013*** 2012 Series 5* Series 6** Series 7** Ratios and Supplemental Data Net Asset (000 s) Series 5* 46,082 51,381 40,521 12,732 Series 6** 22,047 6,386 Series 7** 1, Number of units outstanding (000) Series 5* 7,558 8,232 7,043 2,502 Series 6** 4,250 1,205 Series 7** Management expense ratio (MER) 1 (%) Series 5* Series 6** Series 7** Portfolio turnover rate 2 (%) * Beginning of operations in September ** Beginning of operations in February *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 156 DFS GUARANTEED INVESTMENT FUNDS

159 Balanced and Asset Allocation DFS GIF GROWTH AND INCOME NEI NORTHWEST* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio NEI Northwest Global Equity Fund 35.7% NEI Canadian Bond Fund 21.7% Toronto-Dominion Bank 3.9% Canadian Imperial Bank of Commerce 3.7% Onex Corporation 2.8% Manulife Financial Corporation 2.6% Québecor 2.6% FirstService Corporation 2.6% Colliers International Group 2.3% Sun Life Financial 2.3% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 12, % 12, % 5 Years 13, % 13, % Since Inception 11, % 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 157

160 Balanced and Asset Allocation DFS GIF GROWTH AND INCOME NEI NORTHWEST (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 371, ,267 Investments at fair value through profit or loss (FVTPL) 154,530, ,523,963 Premiums receivable 17, ,433 Receivable for securities sold 31, ,950, ,107,663 LIABILITIES Current Liabilities Accrued expenses 378, ,303 Withdrawals payable 109, ,377 Payable for securities purchased 6, , , ,118 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 154,455, ,407,545 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 4,566,397 4,423,276 Changes in fair value Net realized gain (loss) on investments 5,352,155 2,079,435 Net unrealized gain (loss) on investments (603,652) 7,452,125 9,314,900 13,954,836 EXPENSES Management fees and guarantee charge 3,746,850 3,576,669 Operating expenses 863, ,670 4,610,000 4,429,339 Withholding taxes 175, ,834 4,785,641 4,542,173 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 4,529,259 9,412,663 DATA PER SERIES SERIES 3 from Operations 62, ,034 - per unit Average Units 466, ,693 SERIES 5 from Operations 4,313,778 9,176,226 - per unit Average Units 23,520,035 24,970,252 SERIES 6* from Operations 137,006 70,413 - per unit Average Units 1,691, ,083 SERIES 7* from Operations 15,508 1,990 - per unit Average Units 102,761 10,291 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 158 DFS GUARANTEED INVESTMENT FUNDS

161 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 155,407, ,924,383 from operations attributable to contract owners 4,529,259 9,412,663 Premiums Series 3 178, ,666 Series 5 10,052,579 14,340,896 Series 6* 8,519,181 6,037,916 Series 7* 346, ,033 19,097,104 21,275,511 Withdrawals Series 3 (857,033) (376,939) Series 5 (21,942,561) (14,550,382) Series 6* (1,705,765) (276,811) Series 7* (73,292) (880) (24,578,651) (15,205,012) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 154,455, ,407,545 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 4,529,259 9,412,663 Adjustments for: Net realized gain (loss) (5,352,155) (2,079,435) Net unrealized gain (loss) 603,652 (7,452,125) Proceeds from sale/maturity of investments 14,974,603 8,145,715 Investments purchased (9,232,421) (14,207,953) Receivable for securities sold (31,307) 5,556 Accrued expenses (494) 42,610 Payable for securities purchased (136,050) 54,792 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 5,355,087 (6,078,177) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 19,237,389 21,289,692 Amounts paid on withdrawals (24,647,273) (15,167,452) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (5,409,884) 6,122,240 Increase (Decrease) in cash/bank overdraft (54,797) 44,063 Cash (bank overdraft), beginning of year 426, ,204 CASH (BANK OVERDRAFT), END OF YEAR 371, ,267 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 159

162 Balanced and Asset Allocation DFS GIF GROWTH AND INCOME NEI NORTHWEST (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.0%) NEI Northwest Growth and Income Fund, Series I 23,682, ,707, ,530,284 TOTAL INVESTMENTS 115,707, ,530,284 OTHER NET ASSETS (-0.0%) (75,027) NET ASSETS (100%) 154,455,257 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio NEI Northwest Global Equity Fund 35.7% NEI Canadian Bond Fund 21.7% Toronto-Dominion Bank 3.9% Canadian Imperial Bank of Commerce 3.7% Onex Corporation 2.8% Manulife Financial Corporation 2.6% Québecor 2.6% FirstService Corporation 2.6% Colliers International Group 2.3% Sun Life Financial 2.3% BCE 2.2% Rogers Communications 2.2% TELUS Corporation 2.1% Thomson Reuters Corporation 2.0% Granite Real Estate Investment Trust 1.9% Magna International 1.5% Bombardier 1.1% Allied Properties Real Estate Investment 1.0% Extendicare 0.9% Pason Systems 0.9% Badger Daylighting 0.6% Precision Drilling Corporation 0.6% Equitable Group 0.5% TMX Group 0.5% Bonterra Energy 0.4% 160 DFS GUARANTEED INVESTMENT FUNDS

163 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a consistent stream of income and capital appreciation by investing primarily in a mix of Canadian equities and fixed-income securities. Investment Strategy To invest in a diversified portfolio consisting primarily of a balance of large cap equity and investment grade fixed-income securities issued principally by Canadian issuers. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 154,530, ,530,284 TOTAL 154,530, ,530,284 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 155,523, ,523,963 TOTAL 155,523, ,523,963 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 161

164 Balanced and Asset Allocation DFS GIF GROWTH AND INCOME NEI NORTHWEST (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (25%) , ,592 S&P/TSX (55%) ,088,309 2,201,707 MSCI World Net (20%) , ,621 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 162 DFS GUARANTEED INVESTMENT FUNDS

165 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 2,311 2,926 2,686 2,285 2,139 Series 5 138, , , ,793 89,248 Series 6* 12,782 5,832 Series 7* Number of units outstanding (000) Series Series 5 22,715 24,654 24,672 23,617 20,346 Series 6* 2,390 1,123 Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 163

166 Balanced and Asset Allocation DFS GIF GLOBAL GROWTH NEI SELECT* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio NEI Ethical International Equity Fund 13.0% NEI Ethical Global Equity Fund 13.0% NEI Northwest Global Equity Fund 12.9% NEI Northwest U.S. Dividend Fund 12.1% NEI Northwest Macro Canadian Asset Allocation Fund 8.7% NEI Global Total Return Bond Fund 7.7% NEI Northwest Specialty Global High Yield Bond Fund 7.5% NEI Northwest Specialty Equity Fund 7.0% NEI Northwest Emerging Markets Fund 7.0% NEI Northwest Canadian Dividend Fund 3.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 12, % 12, % 5 Years 12, % 13, % 10 Years 12, % Since Inception 14, % 12, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. 164 DFS GUARANTEED INVESTMENT FUNDS

167 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 59,580 43,362 Investments at fair value through profit or loss (FVTPL) 83,962,666 72,780,964 Premiums receivable 164,718 Receivable for securities sold 69,564 1,620 84,091,810 72,990,664 LIABILITIES Current Liabilities Accrued expenses 215, ,198 Withdrawals payable 101,291 53,772 Payable for securities purchased 14, , , ,318 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 83,760,452 72,620,346 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 326,645 1,684,718 Changes in fair value Net realized gain (loss) on investments 26,212,397 1,748,967 Net unrealized gain (loss) on investments (20,010,769) 2,588,236 6,528,273 6,021,921 EXPENSES Management fees and guarantee charge 2,024,025 1,832,787 Operating expenses 459, ,664 2,483,195 2,268,451 Withholding taxes 18,492 95,363 2,501,687 2,363,814 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 4,026,586 3,658,107 DATA PER SERIES SERIES 3 from Operations 205, ,931 - per unit Average Units 569, ,628 SERIES 5 from Operations 3,658,403 3,409,447 - per unit Average Units 8,930,039 9,183,263 SERIES 6* from Operations 153,040 18,104 - per unit Average Units 1,054, ,876 SERIES 7* from Operations 10,127 1,625 - per unit Average Units 74,044 3,662 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 165

168 Balanced and Asset Allocation DFS GIF GLOBAL GROWTH NEI SELECT (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 72,620,346 69,738,907 from operations attributable to contract owners 4,026,586 3,658,107 Premiums Series 3 382, ,136 Series 5 7,051,523 4,342,329 Series 6* 8,271,603 2,543,387 Series 7* 836, ,980 16,541,564 7,217,832 Withdrawals Series 3 (827,205) (1,461,721) Series 5 (8,156,269) (6,445,839) Series 6* (433,635) (73,082) Series 7* (10,935) (13,858) (9,428,044) (7,994,500) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 83,760,452 72,620,346 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 4,026,586 3,658,107 Adjustments for: Net realized gain (loss) (26,212,397) (1,748,967) Net unrealized gain (loss) 20,010,769 (2,588,236) Proceeds from sale/maturity of investments 82,163,873 6,597,560 Investments purchased (87,143,947) (5,134,918) Receivable for securities sold (67,944) 10,137 Accrued expenses 26,197 7,830 Payable for securities purchased (112,676) 61,236 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (7,309,539) 862,749 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 16,706,282 7,124,362 Amounts paid on withdrawals (9,380,525) (7,976,973) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 7,325,757 (852,611) Increase (Decrease) in cash/bank overdraft 16,218 10,138 Cash (bank overdraft), beginning of year 43,362 33,224 CASH (BANK OVERDRAFT), END OF YEAR 59,580 43,362 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 166 DFS GUARANTEED INVESTMENT FUNDS

169 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) NEI Select Growth Portfolio, Series I 7,914,138 84,617,197 83,962,666 TOTAL INVESTMENTS 84,617,197 83,962,666 OTHER NET ASSETS (-0.2%) (202,214) NET ASSETS (100%) 83,760,452 The accompanying Notes are an integral part of these financial statements. TOP HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio NEI Ethical International Equity Fund 13.0% NEI Ethical Global Equity Fund 13.0% NEI Northwest Global Equity Fund 12.9% NEI Northwest U.S. Dividend Fund 12.1% NEI Northwest Macro Canadian Asset Allocation Fund 8.7% NEI Global Total Return Bond Fund 7.7% NEI Northwest Specialty Global High Yield Bond Fund 7.5% NEI Northwest Specialty Equity Fund 7.0% NEI Northwest Emerging Markets Fund 7.0% NEI Northwest Canadian Dividend Fund 3.9% NEI Northwest Canadian Equity Fund 3.8% NEI Canadian Bond Fund 2.0% Cash and Cash Equivalents 1.4% DFS GUARANTEED INVESTMENT FUNDS 167

170 Balanced and Asset Allocation DFS GIF GLOBAL GROWTH NEI SELECT (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of individual underlying funds in order to gain the desired exposure to the equity and fixed income markets. Investment Strategy To emphasize investments in equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon. The Fund also invests, to a lesser extent, in fixed income underlying funds in order to provide income and capital preservation. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (NOTE 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 83,962,666 83,962,666 TOTAL 83,962,666 83,962,666 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 72,780,964 72,780,964 TOTAL 72,780,964 72,780,964 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 168 DFS GUARANTEED INVESTMENT FUNDS

171 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (30%) , ,340 S&P/TSX (14%) , ,077 MSCI World Net (56%) ,426,037 1,452,307 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 169

172 Balanced and Asset Allocation DFS GIF GLOBAL GROWTH NEI SELECT (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 4,042 4,282 5,338 5,670 7,065 Series 5 68,260 65,707 64,401 54,175 48,309 Series 6* 10,479 2,488 Series 7* Number of units outstanding (000) Series ,319 Series 5 8,862 9,004 9,296 9,133 8,760 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 170 DFS GUARANTEED INVESTMENT FUNDS

173 Balanced and Asset Allocation DFS GIF CANADIAN ASSET ALLOCATION CI CAMBRIDGE* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Cambridge Bond Fund 19.2% Walgreens Boots Alliance 3.3% Brookfield Infrastructure Partners 3.1% US Bancorp 2.6% Anheuser-Busch Companies 2.5% Tourmaline Oil Corporation 2.3% Franco-Nevada Corporation 2.0% Acesa Infraestructuras 1.9% Brookfield Property Partners 1.8% CGI Group 1.8% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 3 Years 13, % Since Inception 13, % 11, % 11, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 171

174 Balanced and Asset Allocation DFS GIF CANADIAN ASSET ALLOCATION CI CAMBRIDGE (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 340 2,001 Investments at fair value through profit or loss (FVTPL) 10,642,981 6,713,646 Premiums receivable 173,108 1,788 Receivable for securities sold ,816,579 6,717,435 LIABILITIES Current Liabilities Accrued expenses 23,704 15,690 Withdrawals payable 21,991 1,035 Payable for securities purchased 152,878 3, ,573 20,015 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 10,618,006 6,697,420 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 32,055 26,366 Changes in fair value Net realized gain (loss) on investments 288,782 50,589 Net unrealized gain (loss) on investments 149, , , ,425 EXPENSES Management fees and guarantee charge 215, ,744 Operating expenses 24,922 17, , ,137 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 230, ,288 DATA PER SERIES SERIES 5 from Operations 196, ,656 - per unit Average Units 848, ,309 SERIES 6* from Operations 33,065 38,079 - per unit Average Units 475, ,945 SERIES 7* from Operations per unit Average Units 9,920 1,359 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 172 DFS GUARANTEED INVESTMENT FUNDS

175 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 6,697,420 3,279,439 from operations attributable to contract owners 230, ,288 Premiums Series 5 1,284,680 2,295,354 Series 6* 3,826,639 1,272,196 Series 7* 183,635 20,001 5,294,954 3,587,551 Withdrawals Series 5 (972,315) (616,322) Series 6* (632,323) (23,536) Series 7* (1,604,638) (639,858) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 10,618,006 6,697,420 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 230, ,288 Adjustments for: Net realized gain (loss) (288,782) (50,589) Net unrealized gain (loss) (149,428) (551,470) Proceeds from sale/maturity of investments 721, ,174 Investments purchased (4,212,427) (3,197,219) Receivable for securities sold (150) Interest, dividends and other receivables 190 Accrued expenses 8,014 8,167 Payable for securities purchased 149,588 (96,921) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (3,541,613) (3,066,380) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 5,123,634 3,707,554 Amounts paid on withdrawals (1,583,682) (639,172) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 3,539,952 3,068,382 Increase (Decrease) in cash/bank overdraft (1,661) 2,002 Cash (bank overdraft), beginning of year 2,001 (1) CASH (BANK OVERDRAFT), END OF YEAR 340 2,001 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 173

176 Balanced and Asset Allocation DFS GIF CANADIAN ASSET ALLOCATION CI CAMBRIDGE (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) Cambridge Canadian Asset Allocation Corporate Class, I Shares 582,220 9,722,904 10,642,981 TOTAL INVESTMENTS 9,722,904 10,642,981 OTHER NET ASSETS (-0.2%) (24,975) NET ASSETS (100%) 10,618,006 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Cambridge Bond Fund 19.2% Walgreens Boots Alliance 3.3% Brookfield Infrastructure Partners 3.1% US Bancorp 2.6% Anheuser-Busch Companies 2.5% Tourmaline Oil Corporation 2.3% Franco-Nevada Corporation 2.0% Acesa Infraestructuras 1.9% Brookfield Property Partners 1.8% CGI Group 1.8% George Weston 1.7% Store Capital 1.6% Activision Blizzard 1.6% Keyera Corporation 1.6% H&R Block 1.6% McKesson Corporation 1.5% PrairieSky Royalty Ltd 1.5% Alphabet 1.4% Extended Stay America 1.3% Bank of America Corporation 1.3% Visa 1.2% Teledyne Technologies 1.2% Restaurant Brands International 1.2% Ecolab 1.1% ACE Ltd 1.0% 174 DFS GUARANTEED INVESTMENT FUNDS

177 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve a superior total investment return directly or indirectly, in a combination of primarily equity and fixed income securities of Canadian companies. Indirect investments may include convertible securities, derivatives, equity-related securities and securities of other mutual funds. Investment Strategy The Fund is actively managed with a disciplined bottom-up selection process. The strategy uses exposure in equity, fixed income instruments and cash and cash equivalents to achieve the Fund objective. The investments in each asset class will vary dependent on market conditions. The Canadian fixed income securities portion of the portfolio will consist mainly of high quality government and corporate bonds while foreign securities can make up part of the equity portion of the portfolio. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 10,642,981 10,642,981 TOTAL 10,642,981 10,642,981 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 6,713,646 6,713,646 TOTAL 6,713,646 6,713,646 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 175

178 Balanced and Asset Allocation DFS GIF CANADIAN ASSET ALLOCATION CI CAMBRIDGE (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015, the Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmarks % FTSE TMX Canada Universe (40%) ,128 S&P/TSX (60%) ,578 As at December 31, 2014, the Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, with all other variables held constant, was as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2014 Benchmarks % FTSE TMX Canada Universe (40%) ,790 S&P/TSX (60%) ,554 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 176 DFS GUARANTEED INVESTMENT FUNDS

179 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past four years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015*** 2014*** 2013*** 2012 Series 5* Series 6** Series 7** Ratios and Supplemental Data Net Asset (000 s) Series 5* 5,899 5,390 3, Series 6** 4,514 1,287 Series 7** Number of units outstanding (000) Series 5* Series 6** Series 7** 37 4 Management expense ratio (MER) 1 (%) Series 5* Series 6** Series 7** Portfolio turnover rate 2 (%) * Beginning of operations in September ** Beginning of operations in February *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 177

180 Balanced and Asset Allocation DFS GIF GROWTH FRANKLIN QUOTENTIAL* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 11.4% Franklin U.S. Core Equity Fund 8.3% Franklin Mutual European Fund 8.3% Franklin Bissett Canadian Equity Fund 6.5% Franklin Flex Cap Growth Fund 6.4% Franklin U.S. Rising Dividends Fund 6.2% SPDR Euro Stoxx 50 ETF 5.9% Franklin Bisset All Canadian Focus Fund 4.9% Templeton Asian Growth Fund 3.9% Franklin Japan Fund 3.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 10, % 10, % 10, % 10, % 3 Years 13, % 13, % 5 Years 12, % 13, % 10 Years 13, % Since Inception 11, % 12, % 11, % 11, % * This Fund is composed of units of the corresponding underlying investment fund. 178 DFS GUARANTEED INVESTMENT FUNDS

181 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 60,640,944 59,847,080 Premiums receivable 17,818 7,443 Receivable for securities sold 4,522 20,474 60,663,284 59,874,997 LIABILITIES Current Liabilities Bank overdraft 4,124 5,487 Accrued expenses 162, ,416 Withdrawals payable 41,466 63,227 Payable for securities purchased 3, , ,603 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 60,451,849 59,645,394 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 892, ,466 Changes in fair value Net realized gain (loss) on investments 7,480,639 3,399,211 Net unrealized gain (loss) on investments (2,815,226) 2,003,504 5,558,064 5,876,181 EXPENSES Management fees and guarantee charge 1,668,022 1,617,385 Operating expenses 335, ,590 2,003,116 1,946,975 Withholding taxes 88,468 61,808 2,091,584 2,008,783 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 3,466,480 3,867,398 DATA PER SERIES SERIES 3 from Operations 175, ,861 - per unit Average Units 493, ,461 SERIES 5 from Operations 3,274,492 3,654,511 - per unit Average Units 9,276,240 10,095,366 SERIES 6* from Operations 15,612 12,684 - per unit Average Units 309,180 40,994 SERIES 7* from Operations per unit Average Units 5,373 1,375 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 179

182 Balanced and Asset Allocation DFS GIF GROWTH FRANKLIN QUOTENTIAL (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 59,645,394 59,523,769 from operations attributable to contract owners 3,466,480 3,867,398 Premiums Series 3 191, ,963 Series 5 2,049,559 2,058,307 Series 6* 2,395, ,337 Series 7* 19,385 20,001 4,655,732 3,203,608 Withdrawals Series 3 (968,215) (967,288) Series 5 (6,103,955) (5,851,825) Series 6* (243,521) (130,268) Series 7* (66) (7,315,757) (6,949,381) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 60,451,849 59,645,394 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 3,466,480 3,867,398 Adjustments for: Net realized gain (loss) (7,480,639) (3,399,211) Net unrealized gain (loss) 2,815,226 (2,003,504) Proceeds from sale/maturity of investments 7,071,488 8,171,744 Investments purchased (3,199,939) (2,865,197) Receivable for securities sold 15,952 (3,792) Accrued expenses 1,863 2,735 Payable for securities purchased 3,093 (445) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 2,693,524 3,769,728 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 4,645,357 3,198,121 Amounts paid on withdrawals (7,337,518) (6,945,051) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (2,692,161) (3,746,930) Increase (Decrease) in cash/bank overdraft 1,363 22,798 Cash (bank overdraft), beginning of year (5,487) (28,285) CASH (BANK OVERDRAFT), END OF YEAR (4,124) (5,487) * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 180 DFS GUARANTEED INVESTMENT FUNDS

183 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Quotential Growth Portfolio 5,859,028 39,650,074 60,640,944 TOTAL INVESTMENTS 39,650,074 60,640,944 OTHER NET ASSETS (-0.3%) (189,095) NET ASSETS (100%) 60,451,849 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Franklin Bissett Core Plus Bond Fund 11.4% Franklin U.S. Core Equity Fund 8.3% Franklin Mutual European Fund 8.3% Franklin Bissett Canadian Equity Fund 6.5% Franklin Flex Cap Growth Fund 6.4% Franklin U.S. Rising Dividends Fund 6.2% SPDR Euro Stoxx 50 ETF 5.9% Franklin Bisset All Canadian Focus Fund 4.9% Templeton Asian Growth Fund 3.9% Franklin Japan Fund 3.9% ishares MSCI Japan ETF 3.7% Franklin Templeton Canadian Large Cap Fund 3.4% Franklin European Small-Mid Cap Growth Fund 2.8% Templeton Global Bond Fund 2.4% Franklin Bissett Small Cap Fund 2.2% ishares MSCI Japan Small-Cap ETF 1.9% Franklin Strategic Income Fund 1.7% SPDR S&P Bank ETF 1.6% BMO Mid Federal Bond Index ETF 1.6% Templeton Emerging Markets Smaller Companies Fund 1.3% ishares MSCI China ETF 1.3% WisdomTree Australia & New Zealand Debt ETF 1.0% Franklin India Fund 0.9% ishares iboxx High Yield Corporate Bond ETF 0.8% Templeton Frontier Markets Fund 0.7% DFS GUARANTEED INVESTMENT FUNDS 181

184 Balanced and Asset Allocation DFS GIF GROWTH FRANKLIN QUOTENTIAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide a balance of capital growth and interest income by investing primarily in units of an individual underlying fund in order to gain the desired exposure to the equity and fixed income markets. Investment Strategy To emphasize investments in a diversified mix of equity underlying funds in order to increase the potential for capital appreciation over a longer investment horizon. The Fund also invests, to a lesser extent, in fixed income underlying funds in order to provide income and capital preservation. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 60,640,944 60,640,944 TOTAL 60,640,944 60,640,944 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 59,847,080 59,847,080 TOTAL 59,847,080 59,847,080 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 182 DFS GUARANTEED INVESTMENT FUNDS

185 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (15%) ,555 96,012 Barclays Capital Multiverse (5%) ,852 32,004 S&P/TSX (35%) , ,086 MSCI All Country World Net (45%) , ,111 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 183

186 Balanced and Asset Allocation DFS GIF GROWTH FRANKLIN QUOTENTIAL (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 2,473 3,075 3,411 3,448 4,381 Series 5 55,193 55,973 56,112 48,918 48,395 Series 6* 2, Series 7* Number of units outstanding (000) Series ,045 Series 5 9,018 9,673 10,348 10,719 11,337 Series 6* Series 7* 7 4 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 184 DFS GUARANTEED INVESTMENT FUNDS

187 Canadian Equity DFS GIF DIVIDEND INCOME FRANKLIN BISSETT* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Canadian Imperial Bank of Commerce 4.1% Royal Bank of Canada 3.9% Toronto-Dominion Bank 3.9% Scotiabank 3.0% Bank of Montreal 3.0% IGM Financial 2.8% Enbridge 2.6% Power Financial Corporation 2.5% Enbridge Income Fund Holdings 2.4% Canadian National Railway Company 2.4% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 9, % 3 Years 10, % 10, % 5 Years 12, % 12, % 10 Years 13, % Since Inception 21, % 12, % 9, % 9, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 185

188 Canadian Equity DFS GIF DIVIDEND INCOME FRANKLIN BISSETT (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 4,378 Investments at fair value through profit or loss (FVTPL) 196,741, ,266,605 Premiums receivable 59,622 42,134 Receivable for securities sold 144,933 44, ,945, ,357,461 LIABILITIES Current Liabilities Bank overdraft 52,415 Accrued expenses 494, ,421 Withdrawals payable 205,254 51,325 Payable for securities purchased 8,673 22, , ,903 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 196,184, ,921,558 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 4,868,710 4,079,192 Changes in fair value Net realized gain (loss) on investments 14,164,430 11,412,901 Net unrealized gain (loss) on investments (28,048,906) (5,920,368) (9,015,766) 9,571,725 EXPENSES Management fees and guarantee charge 3,382,743 3,365,927 Operating expenses 1,080,671 1,085,898 4,463,414 4,451,825 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (13,479,180) 5,119,900 DATA PER SERIES SERIES 3 from Operations (2,925,971) 1,110,396 - per unit (1.04) 0.39 Average Units 2,800,641 2,883,950 SERIES 5 from Operations (10,079,119) 4,054,930 - per unit (1.05) 0.44 Average Units 9,607,240 9,311,439 SERIES 6* from Operations (440,771) (40,883) - per unit (0.43) (0.10) Average Units 1,013, ,765 SERIES 7* from Operations (33,319) (4,543) - per unit (0.31) (0.08) Average Units 107,894 59,356 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 186 DFS GUARANTEED INVESTMENT FUNDS

189 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 145,921, ,760,442 from operations attributable to contract owners (13,479,180) 5,119,900 Premiums Series 3 18,174,951 2,690,590 Series 5 83,177,573 13,706,245 Series 6* 2,815,914 4,614,525 Series 7* 137, , ,305,796 21,612,231 Withdrawals Series 3 (7,236,271) (7,769,361) Series 5 (32,254,668) (14,539,754) Series 6* (832,496) (253,534) Series 7* (239,874) (8,366) (40,563,309) (22,571,015) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 196,184, ,921,558 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (13,479,180) 5,119,900 Adjustments for: Net realized gain (loss) (14,164,430) (11,412,901) Net unrealized gain (loss) 28,048,906 5,920,368 Proceeds from sale/maturity of investments 34,862,458 11,448,617 Investments purchased (99,221,750) (10,140,518) Receivable for securities sold (100,589) 6,680 Accrued expenses 132,348 8,920 Payable for securities purchased (13,484) (74,798) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (63,935,721) 876,268 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 104,288,308 21,756,128 Amounts paid on withdrawals (40,409,380) (22,625,718) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 63,878,928 (869,590) Increase (Decrease) in cash/bank overdraft (56,793) 6,678 Cash (bank overdraft), beginning of year 4,378 (2,300) CASH (BANK OVERDRAFT), END OF YEAR (52,415) 4,378 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 187

190 Canadian Equity DFS GIF DIVIDEND INCOME FRANKLIN BISSETT (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Bissett Dividend Income Fund, Series O 5,421, ,469, ,741,421 TOTAL INVESTMENTS 190,469, ,741,421 OTHER NET ASSETS (-0.3%) (556,556) NET ASSETS (100%) 196,184,865 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Canadian Imperial Bank of Commerce 4.1% Royal Bank of Canada 3.9% Toronto-Dominion Bank 3.9% Scotiabank 3.0% Bank of Montreal 3.0% IGM Financial 2.8% Enbridge 2.6% Power Financial Corporation 2.5% Enbridge Income Fund Holdings 2.4% Canadian National Railway Company 2.4% Brookfield Renewable Energy Partners 1.9% Capital Power Corporation 1.8% MacDonald, Dettwiler and Associates Ltd 1.7% Rogers Communications 1.7% Fortis 1.7% Inter Pipeline 1.6% ARC Resources 1.5% McDonald s Corporation 1.4% TELUS Corporation 1.4% TransCanada Corporation 1.4% Brookfield Property Partners 1.4% Johnson & Johnson 1.4% Russel Metals 1.4% JPMorgan Chase & Company 1.4% Wells Fargo & Company 1.4% 188 DFS GUARANTEED INVESTMENT FUNDS

191 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide the investor with a consistent return through investment in dividend paying common shares and preferred shares. Investment Strategy To invest in a diversified portfolio of large cap Canadian issuer preferred shares and common shares as well as common shares of large cap United States issuers with long histories of dividend growth. From time to time the Fund also invests in investment grade interest-bearing securities to a maximum of 25% of the total assets of the Fund. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 196,741, ,741,421 TOTAL 196,741, ,741,421 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 146,266, ,266,605 TOTAL 146,266, ,266,605 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 189

192 Canadian Equity DFS GIF DIVIDEND INCOME FRANKLIN BISSETT (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % FTSE TMX Canada Universe (15%) , ,315 S&P/TSX Preferred Share (5%) , ,315 S&P/TSX (60%) ,372,944 1,959,779 S&P 500 (20%) ,124, ,260 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 190 DFS GUARANTEED INVESTMENT FUNDS

193 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 39,609 31,596 35,564 34,856 36,720 Series 5 150, , ,196 77,534 68,933 Series 6* 5,863 4,320 Series 7* Number of units outstanding (000) Series 3 3,741 2,729 3,172 3,551 3,993 Series 5 13,701 9,166 9,229 7,727 7,363 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 191

194 Canadian Equity DFS GIF CANADIAN DIVIDEND NEI NORTHWEST* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Toronto-Dominion Bank 9.3% Royal Bank of Canada 9.1% Rogers Communications 6.6% Scotiabank 6.5% Kellogg Company 5.1% Cenovus Energy 4.6% Verizon Communications 4.0% Canadian Imperial Bank of Commerce 3.8% Power Financial Corporation 3.5% Baxalta 3.4% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 3 Years 13, % Since Inception 14, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. 192 DFS GUARANTEED INVESTMENT FUNDS

195 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 72,368 57,834 Investments at fair value through profit or loss (FVTPL) 19,246,335 18,087,070 Premiums receivable 56,977 8,966 19,375,680 18,153,870 LIABILITIES Current Liabilities Accrued expenses 49,268 45,771 Withdrawals payable 3,471 3,747 Payable for securities purchased 67,369 6, ,108 55,618 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 19,255,572 18,098,252 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 690, ,375 Changes in fair value Net realized gain (loss) on investments 999, ,365 Net unrealized gain (loss) on investments (1,411,817) 453, ,767 1,870,980 EXPENSES Management fees and guarantee charge 530, ,802 Operating expenses 75,986 63, , ,095 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (328,492) 1,377,885 DATA PER SERIES SERIES 5 from Operations (287,726) 1,356,546 - per unit (0.11) 0.60 Average Units 2,518,048 2,251,607 SERIES 6* from Operations (40,568) 12,962 - per unit (0.12) 0.16 Average Units 325,294 79,895 SERIES 7* from Operations (198) 8,377 - per unit (0.05) 0.69 Average Units 3,864 12,115 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 193

196 Canadian Equity DFS GIF CANADIAN DIVIDEND NEI NORTHWEST (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 18,098,252 12,133,669 from operations attributable to contract owners (328,492) 1,377,885 Premiums Series 5 4,159,753 6,102,604 Series 6* 1,364,610 1,167,869 Series 7* 235,271 5,524,363 7,505,744 Withdrawals Series 5 (3,789,333) (2,625,753) Series 6* (249,218) (70,686) Series 7* (222,607) (4,038,551) (2,919,046) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 19,255,572 18,098,252 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (328,492) 1,377,885 Adjustments for: Net realized gain (loss) (999,431) (875,365) Net unrealized gain (loss) 1,411,817 (453,240) Proceeds from sale/maturity of investments 2,209,956 1,176,583 Investments purchased (3,781,607) (5,851,672) Accrued expenses 3,497 15,901 Payable for securities purchased 61,269 (65,864) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (1,422,991) (4,675,772) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 5,476,352 7,582,035 Amounts paid on withdrawals (4,038,827) (2,915,583) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 1,437,525 4,666,452 Increase (Decrease) in cash/bank overdraft 14,534 (9,320) Cash (bank overdraft), beginning of year 57,834 67,154 CASH (BANK OVERDRAFT), END OF YEAR 72,368 57,834 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 194 DFS GUARANTEED INVESTMENT FUNDS

197 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.0%) NEI Northwest Canadian Dividend Fund, Series I 1,202,738 18,539,736 19,246,335 TOTAL INVESTMENTS 18,539,736 19,246,335 OTHER NET ASSETS (0.0%) 9,237 NET ASSETS (100%) 19,255,572 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Toronto-Dominion Bank 9.3% Royal Bank of Canada 9.1% Rogers Communications 6.6% Scotiabank 6.5% Kellogg Company 5.1% Cenovus Energy 4.6% Verizon Communications 4.0% Canadian Imperial Bank of Commerce 3.8% Power Financial Corporation 3.5% Baxalta 3.4% Baxter International 3.4% Atea 3.2% Canadian Natural Resources 3.2% Symantec Corporation 3.1% Molson Coors Canada 3.0% Magna International 2.9% Merck & Company 2.8% Manulife Financial Corporation 2.5% Eli Lilly and Company 2.4% Thomson Reuters Corporation 2.4% Agrium 2.2% Intact Financial Corporation 2.2% Parker Hannifin Corporation 2.1% Potash Corporation of Saskatchewan 1.8% SNC-Lavalin Group 1.8% DFS GUARANTEED INVESTMENT FUNDS 195

198 Canadian Equity DFS GIF CANADIAN DIVIDEND NEI NORTHWEST (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve a balance between high dividend income and capital growth by investing mainly in a diversified portfolio of blue chip Canadian common stocks and, to a lesser extent, in high-yield preferred stocks and interest bearing securities. Investment Strategy The Fund invests in primarily blue-chip common stocks but may also invest in preferred stocks, bonds, purchase warrants and rights, royalty trusts and income trusts with preference given to capital growth while still providing a high regular level of income. Quality liquid corporations whose management has built shareholder value over time not to mention a proven ability to generate free cash flow, supporting growth and profitability as well as providing management with the ability to make strategic acquisitions, buy back stock and pay increasing dividends are preferred investments for this Fund. While equity securities including preferred stocks providing stable income are favoured, any small, mid and large capitalization Canadian corporations in a variety of industries meeting these criteria will be considered. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 19,246,335 19,246,335 TOTAL 19,246,335 19,246,335 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 18,087,070 18,087,070 TOTAL 18,087,070 18,087,070 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 196 DFS GUARANTEED INVESTMENT FUNDS

199 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015, the Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmark % S&P/TSX ,830 As at December 31, 2014, the Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, with all other variables held constant, was as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2014 Benchmark % S&P/TSX ,948 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 197

200 Canadian Equity DFS GIF CANADIAN DIVIDEND NEI NORTHWEST (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past four years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015*** 2014*** 2013*** 2012 Series 5* Series 6** Series 7** Ratios and Supplemental Data Net Asset (000 s) Series 5* 17,050 16,967 12,134 6,230 Series 6** 2,185 1,110 Series 7** Number of units outstanding (000) Series 5* 2,425 2,375 1,857 1,195 Series 6** Series 7** 4 4 Management expense ratio (MER) 1 (%) Series 5* Series 6** Series 7** Portfolio turnover rate 2 (%) * Beginning of operations in September ** Beginning of operations in February *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 198 DFS GUARANTEED INVESTMENT FUNDS

201 Canadian Equity DFS GIF CANADIAN EQUITY JARISLOWSKY FRASER* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Toronto-Dominion Bank 8.2% Jarislowsky Fraser Special Equity Fund 7.9% Royal Bank of Canada 6.6% Scotiabank 5.5% Canadian National Railway Company 4.6% Suncor Energy 4.0% Manulife Financial Corporation 3.7% Enbridge 3.5% Canadian Natural Resources 3.3% Open Text Corporation 3.2% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6** Series 7** 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 3 Years 12, % 12, % 5 Years 11, % 12, % 10 Years 12, % Since Inception 13, % 11, % 9, % 9, % * This Fund is composed of units of the corresponding underlying investment fund. ** Beginning of operations in October DFS GUARANTEED INVESTMENT FUNDS 199

202 Canadian Equity DFS GIF CANADIAN EQUITY JARISLOWSKY FRASER (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Investments at fair value through profit or loss (FVTPL) 151,331, ,650,197 Premiums receivable 2,364 Receivable for securities sold 89, ,331, ,741,757 LIABILITIES Current Liabilities Bank overdraft 215, ,757 Accrued expenses 370, ,052 Withdrawals payable 72,532 63, , ,694 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 150,671, ,077,063 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 45,726 Dividends 4,955,811 5,276,926 Changes in fair value Net realized gain (loss) on investments 13,485,229 19,300,687 Net unrealized gain (loss) on investments (21,944,270) (1,786,738) (3,457,504) 22,790,875 EXPENSES Management fees and guarantee charge 3,659,561 4,050,199 Operating expenses 1,352,271 1,491,904 5,011,832 5,542,103 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (8,469,336) 17,248,772 DATA PER SERIES SERIES 3 from Operations (283,716) 560,037 - per unit (0.37) 0.58 Average Units 771, ,424 SERIES 5 from Operations (8,185,619) 16,688,735 - per unit (0.35) 0.64 Average Units 23,339,415 26,116,806 SERIES 6* from Operations per unit 0.05 Average Units 6,141 SERIES 7* from Operations (325) - per unit (0.08) Average Units 4,000 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. 200 DFS GUARANTEED INVESTMENT FUNDS

203 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 188,077, ,263,477 from operations attributable to contract owners (8,469,336) 17,248,772 Premiums Series 3 216, ,450 Series 5 3,761,592 5,033,695 Series 6* 93,329 Series 7* 20,001 4,091,903 5,239,145 Withdrawals Series 3 (1,510,767) (1,467,024) Series 5 (31,516,958) (18,207,307) Series 6* (51) Series 7* (33,027,776) (19,674,331) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 150,671, ,077,063 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (8,469,336) 17,248,772 Adjustments for: Net realized gain (loss) (13,485,229) (19,300,687) Net unrealized gain (loss) 21,944,270 1,786,738 Proceeds from sale/maturity of investments 33,962,157 19,628,097 Investments purchased (5,102,053) (4,771,070) Receivable for securities sold 89,196 (58,860) Accrued expenses (79,326) 4,602 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 28,859,679 14,537,592 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 4,094,267 5,366,955 Amounts paid on withdrawals (33,019,129) (19,869,982) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (28,924,862) (14,503,027) Increase (Decrease) in cash/bank overdraft (65,183) 34,565 Cash (bank overdraft), beginning of year (150,757) (185,322) CASH (BANK OVERDRAFT), END OF YEAR (215,940) (150,757) SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 740 * Beginning of operations in October The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 201

204 Canadian Equity DFS GIF CANADIAN EQUITY JARISLOWSKY FRASER (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.4%) Jarislowsky Fraser Canadian Equity Fund 5,154, ,018, ,331,052 TOTAL INVESTMENTS 157,018, ,331,052 OTHER NET ASSETS (-0.4%) (659,198) NET ASSETS (100%) 150,671,854 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Toronto-Dominion Bank 8.2% Jarislowsky Fraser Special Equity Fund 7.9% Royal Bank of Canada 6.6% Scotiabank 5.5% Canadian National Railway Company 4.6% Suncor Energy 4.0% Manulife Financial Corporation 3.7% Enbridge 3.5% Canadian Natural Resources 3.3% Open Text Corporation 3.2% Metro 3.2% Loblaw Companies 2.8% Alimentation Couche-Tard 2.7% Thomson Reuters Corporation 2.6% SNC-Lavalin Group 2.6% Cenovus Energy 2.5% Canadian Tire Corporation 2.5% Intact Financial Corporation 2.5% Gildan Activewear 2.4% Great-West Lifeco 2.2% CGI Group 1.8% Industrial Alliance, Insurance and Financial Services 1.8% Stantec 1.8% Cameco Corporation 1.7% Pembina Pipeline Corporation 1.6% 202 DFS GUARANTEED INVESTMENT FUNDS

205 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve long-term capital appreciation while continuing to emphasize the preservation of capital by investing primarily in large cap Canadian equity securities. Investment Strategy To invest primarily in Canadian equity securities in areas of the Canadian economy where superior rates of growth are expected. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 151,331, ,331,052 TOTAL 151,331, ,331,052 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 188,650, ,650,197 TOTAL 188,650, ,650,197 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 203

206 Canadian Equity DFS GIF CANADIAN EQUITY JARISLOWSKY FRASER (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P/TSX ,362,033 3,776,676 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 204 DFS GUARANTEED INVESTMENT FUNDS

207 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* 4.92 Series 7* 4.92 Ratios and Supplemental Data Net Asset (000 s) Series 3 4,378 5,956 6,657 6,993 5,756 Series 5 146, , , , ,834 Series 6* 94 Series 7* 20 Number of units outstanding (000) Series ,052 1,310 1,147 Series 5 21,301 25,226 27,126 28,644 21,669 Series 6* 19 Series 7* 4 Management expense ratio (MER) 1 (%) Series Series Series 6* 2.87 Series 7* 2.36 Portfolio turnover rate 2 (%) * Beginning of operations in October ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. ¹ The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 205

208 Canadian Equity DFS GIF CANADIAN EQUITY FIDELITY TRUE NORTH * SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% CGI Group 3.2% Suncor Energy 2.9% Alimentation Couche-Tard 2.7% Gildan Activewear 2.7% Metro 2.6% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 9, % 3 Years 13, % 13, % 5 Years 12, % 12, % Since Inception 19, % 19, % 10, % 10, % * This Fund is composed of units of the corresponding underlying investment fund. Fidelity True North is a registered trademark of FMR Corp. 206 DFS GUARANTEED INVESTMENT FUNDS

209 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 15,527 12,324 Investments at fair value through profit or loss (FVTPL) 29,987,011 26,593,557 Premiums receivable 142,119 54,850 30,144,657 26,660,731 LIABILITIES Current Liabilities Accrued expenses 78,289 68,980 Withdrawals payable 33,027 19,671 Payable for securities purchased 125,074 48, , ,465 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 29,908,267 26,523,266 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 316, ,034 Changes in fair value Net realized gain (loss) on investments 1,919,545 1,091,948 Net unrealized gain (loss) on investments (2,240,320) 2,011,317 (4,616) 3,522,299 EXPENSES Management fees and guarantee charge 755, ,415 Operating expenses 166, , , ,766 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (926,902) 2,762,533 DATA PER SERIES SERIES 3 from Operations (43,972) 109,321 - per unit (0.39) 1.09 Average Units 113, ,405 SERIES 5 from Operations (601,808) 2,551,356 - per unit (0.28) 1.14 Average Units 2,171,035 2,241,906 SERIES 6* from Operations (243,959) 98,181 - per unit (0.28) 0.52 Average Units 873, ,456 SERIES 7* from Operations (37,163) 3,675 - per unit (0.39) 1.81 Average Units 96,270 2,026 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 207

210 Canadian Equity DFS GIF CANADIAN EQUITY FIDELITY TRUE NORTH (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 26,523,266 20,975,982 from operations attributable to contract owners (926,902) 2,762,533 Premiums Series 3 536, ,230 Series 5 3,150,430 3,380,790 Series 6* 5,301,406 2,663,846 Series 7* 951,328 76,842 9,940,120 6,425,708 Withdrawals Series 3 (319,923) (317,337) Series 5 (3,926,848) (3,139,083) Series 6* (1,375,947) (184,530) Series 7* (5,499) (7) (5,628,217) (3,640,957) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 29,908,267 26,523,266 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (926,902) 2,762,533 Adjustments for: Net realized gain (loss) (1,919,545) (1,091,948) Net unrealized gain (loss) 2,240,320 (2,011,317) Proceeds from sale/maturity of investments 2,771,374 2,625,746 Investments purchased (6,485,603) (5,048,371) Accrued expenses 9,309 14,277 Payable for securities purchased 76,260 (6,152) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (4,234,787) (2,755,232) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 9,852,851 6,412,683 Amounts paid on withdrawals (5,614,861) (3,624,250) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 4,237,990 2,788,433 Increase (Decrease) in cash/bank overdraft 3,203 33,201 Cash (bank overdraft), beginning of year 12,324 (20,877) CASH (BANK OVERDRAFT), END OF YEAR 15,527 12,324 Fidelity True North is a registered trademark of FMR Corp. * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 208 DFS GUARANTEED INVESTMENT FUNDS

211 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Fidelity True North Fund, Series O 694,511 25,976,101 29,987,011 TOTAL INVESTMENTS 25,976,101 29,987,011 OTHER NET ASSETS (-0.3%) (78,744) NET ASSETS (100%) 29,908,267 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Toronto-Dominion Bank 7.5% Loblaw Companies 4.5% Canadian National Railway Company 3.6% Rogers Communications 3.5% Manulife Financial Corporation 3.2% CGI Group 3.2% Suncor Energy 2.9% Alimentation Couche-Tard 2.7% Gildan Activewear 2.7% Metro 2.6% Power Financial Corporation 2.4% Fairfax Financial Holdings 2.0% Restaurant Brands International 1.9% Enbridge 1.8% Intact Financial Corporation 1.7% Johnson & Johnson 1.7% Constellation Software 1.5% Open Text Corporation 1.5% Royal Bank of Canada 1.5% Peyto Exploration & Development Corporation 1.4% Canadian Natural Resources 1.4% SNC-Lavalin Group 1.3% Empire Company 1.3% Thomson Reuters Corporation 1.2% Franco-Nevada Corporation 1.1% DFS GUARANTEED INVESTMENT FUNDS 209

212 Canadian Equity DFS GIF CANADIAN EQUITY FIDELITY TRUE NORTH (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve strong long-term capital growth by investing primarily in equity securities of Canadian companies that have a history of strong capital growth over the long-term. The fundamental investment objective of this Fund is to achieve long-term capital appreciation while still emphasizing the preservation of capital by investing primarily in Canadian equity securities. Investment Strategy To invest primarily in small, medium and large Canadian companies. The Fund may also invest in a limited portion of foreign securities. The Fund may also use, to a lesser degree, derivatives such as options, futures, forward contracts and swaps to protect against losses caused by changes in stock prices or exchange rates. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 29,987,011 29,987,011 TOTAL 29,987,011 29,987,011 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 26,593,557 26,593,557 TOTAL 26,593,557 26,593,557 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 210 DFS GUARANTEED INVESTMENT FUNDS

213 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P/TSX Capped , ,871 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 211

214 Canadian Equity DFS GIF CANADIAN EQUITY FIDELITY TRUE NORTH (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 1,197 1, ,477 Series 5 21,463 22,841 20,048 14,045 12,021 Series 6* 6,259 2,577 Series 7* Number of units outstanding (000) Series Series 5 2,151 2,225 2,197 1,868 1,718 Series 6* 1, Series 7* Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 212 DFS GUARANTEED INVESTMENT FUNDS

215 Canadian Equity DFS GIF CANADIAN EQUITY FRANKLIN BISSETT* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% Bank of Montreal 4.4% Restaurant Brands International 4.1% Scotiabank 3.6% Enbridge 3.5% Onex Corporation 3.5% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 8, % 9, % 9, % 9, % 3 Years 11, % 11, % 5 Years 12, % 12, % 10 Years 13, % Since Inception 21, % 12, % 9, % 9, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 213

216 Canadian Equity DFS GIF CANADIAN EQUITY FRANKLIN BISSETT (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 88,334 89,710 Investments at fair value through profit or loss (FVTPL) 29,600,986 39,217,002 Premiums receivable 5,499 13,928 Receivable for securities sold 6,974 5,677 29,701,793 39,326,317 LIABILITIES Current Liabilities Accrued expenses 81, ,574 Withdrawals payable 9,260 16,882 Payable for securities purchased 4,460 90, ,916 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 29,611,016 39,199,401 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 650, ,621 Changes in fair value Net realized gain (loss) on investments 2,362,585 1,811,070 Net unrealized gain (loss) on investments (5,386,397) 1,804,029 (2,373,329) 4,233,720 EXPENSES Management fees and guarantee charge 939,158 1,058,027 Operating expenses 201, ,576 1,140,210 1,288,603 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (3,513,539) 2,945,117 DATA PER SERIES SERIES 3 from Operations (1,825,538) 1,650,365 - per unit (1.17) 0.91 Average Units 1,556,001 1,806,085 SERIES 5 from Operations (1,432,648) 1,314,541 - per unit (1.17) 0.96 Average Units 1,223,103 1,365,236 SERIES 6* from Operations (253,153) (19,219) - per unit (0.54) (0.09) Average Units 467, ,399 SERIES 7* from Operations (2,200) (570) - per unit (0.55) (0.43) Average Units 4,027 1,315 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 214 DFS GUARANTEED INVESTMENT FUNDS

217 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 39,199,401 34,917,839 from operations attributable to contract owners (3,513,539) 2,945,117 Premiums Series 3 691,411 1,564,071 Series 5 1,183,404 4,165,867 Series 6* 1,121,082 2,515,662 Series 7* 18,549 20,376 3,014,446 8,265,976 Withdrawals Series 3 (3,786,105) (4,231,858) Series 5 (4,557,027) (2,490,313) Series 6* (745,064) (207,360) Series 7* (1,096) (9,089,292) (6,929,531) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 29,611,016 39,199,401 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (3,513,539) 2,945,117 Adjustments for: Net realized gain (loss) (2,362,585) (1,811,070) Net unrealized gain (loss) 5,386,397 (1,804,029) Proceeds from sale/maturity of investments 7,943,880 4,081,649 Investments purchased (1,351,676) (4,759,346) Receivable for securities sold (1,297) (4,738) Accrued expenses (24,057) 10,373 Payable for securities purchased (4,460) (7,123) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 6,072,663 (1,349,167) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 3,022,875 8,282,440 Amounts paid on withdrawals (9,096,914) (6,933,526) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (6,074,039) 1,348,914 Increase (Decrease) in cash/bank overdraft (1,376) (253) Cash (bank overdraft), beginning of year 89,710 89,963 CASH (BANK OVERDRAFT), END OF YEAR 88,334 89,710 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 215

218 Canadian Equity DFS GIF CANADIAN EQUITY FRANKLIN BISSETT (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.0%) Franklin Bissett Canadian Equity Fund, Series O 242,531 22,222,724 29,600,986 TOTAL INVESTMENTS 22,222,724 29,600,986 OTHER NET ASSETS (0.0%) 10,030 NET ASSETS (100%) 29,611,016 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Brookfield Asset Management 6.0% Canadian National Railway Company 5.5% Toronto-Dominion Bank 5.0% Canadian Imperial Bank of Commerce 4.8% Royal Bank of Canada 4.5% Bank of Montreal 4.4% Restaurant Brands International 4.1% Scotiabank 3.6% Enbridge 3.5% Onex Corporation 3.5% MacDonald, Dettwiler and Associates Ltd 3.4% Alimentation Couche-Tard 3.0% Canadian Pacific Railway 2.9% Metro 2.8% Saputo Group 2.7% Power Corporation of Canada 2.5% Thomson Reuters Corporation 2.5% Power Financial Corporation 2.1% Agrium 1.9% Keyera Corporation 1.8% Home Capital Group 1.8% TransCanada Corporation 1.7% Inter Pipeline 1.6% Atco Ltd 1.6% Toromont Industries Ltd 1.5% 216 DFS GUARANTEED INVESTMENT FUNDS

219 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The fundamental investment objective of this Fund is to achieve long-term capital appreciation while continuing to emphasize the preservation of capital by investing primarily in Canadian equity securities. Investment Strategy To invest primarily in mid to large cap Canadian equity securities of growth-oriented companies. The Fund may also have a foreign equity component. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 29,600,986 29,600,986 TOTAL 29,600,986 29,600,986 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 39,217,002 39,217,002 TOTAL 39,217,002 39,217,002 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 217

220 Canadian Equity DFS GIF CANADIAN EQUITY FRANKLIN BISSETT (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P/TSX , ,636 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 218 DFS GUARANTEED INVESTMENT FUNDS

221 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 15,132 20,052 21,070 20,829 22,917 Series 5 12,032 16,838 13,848 7,284 5,665 Series 6* 2,412 2,289 Series 7* Number of units outstanding (000) Series 3 1,429 1,699 1,927 2,270 2,818 Series 5 1,082 1,367 1, Series 6* Series 7* 7 4 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 219

222 Canadian Equity DFS GIF CANADIAN EQUITY FIERA CAPITAL SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Royal Bank of Canada 8.5% Toronto-Dominion Bank 7.6% Scotiabank 6.0% Canadian National Railway Company 5.4% Enbridge 5.2% Manulife Financial Corporation 4.9% CGI Group 4.6% Loblaw Companies 3.4% Gildan Activewear 3.4% CCL Industries 2.8% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 9, % 9, % 9, % 9, % 3 Years 11, % 11, % 12, % 5 Years 9, % 9, % 10, % 10 Years 11, % 12, % Since Inception 19, % 18, % 9, % 10, % 10, % Series IGP 10,000 Lump Sum Total Gain (Annualized) 1 Year 9, % 3 Years 5 Years 10 Years Since Inception 9, % 220 DFS GUARANTEED INVESTMENT FUNDS

223 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 19,683 53,946 Investments at fair value through profit or loss (FVTPL) 30,918,208 33,090,960 Investments at fair value through profit or loss (FVTPL) pledged as collateral 5,513,817 8,689,071 Premiums receivable 6,981 9,845 Receivable for securities sold 149,690 Interest, dividends and other receivables 68,855 46,007 36,677,234 41,889,829 LIABILITIES Current Liabilities Accrued expenses 102, ,823 Withdrawals payable 5,449 47, , ,060 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 36,568,801 41,731,769 NET ASSETS PER UNIT Series Series Series Series Series Series IGP * Beginning of operations in February ** Beginning of operations in November The accompanying Notes are an integral part of these financial statements. STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 41,443 17,951 Dividends 930, ,484 Revenue from securities lending and repurchase transactions 6,088 4,743 Foreign exchange gain (loss) on cash 1, Changes in fair value Net realized gain (loss) on investments 4,122,053 3,795,783 Net unrealized gain (loss) on investments (6,042,446) 741,167 (940,662) 5,317,779 EXPENSES Management fees and guarantee charge 1,018,979 1,021,138 Operating expenses 277, ,197 1,296,424 1,312,335 Commissions and other portfolio transaction costs 63,968 79,297 1,360,392 1,391,632 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (2,301,054) 3,926,147 DATA PER SERIES SERIES 1 from Operations (1,124,234) 1,677,413 - per unit (0.75) 1.02 Average Units 1,491,780 1,637,083 SERIES 3 from Operations (751,652) 1,627,296 - per unit (0.64) 1.20 Average Units 1,171,239 1,352,206 SERIES 5 from Operations (268,903) 609,600 - per unit (0.63) 1.30 Average Units 424, ,443 SERIES 6* from Operations (29,569) 7,723 - per unit (0.38) 0.34 Average Units 78,476 22,797 SERIES 7* from Operations (2,175) (500) - per unit (0.26) (0.23) Average Units 8,433 2,170 SERIES IGP** from Operations (124,521) 4,615 - per unit (0.32) 0.01 Average Units 389, ,411 DFS GUARANTEED INVESTMENT FUNDS 221

224 Canadian Equity DFS GIF CANADIAN EQUITY FIERA CAPITAL (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 41,731,769 38,037,971 from operations attributable to contract owners (2,301,054) 3,926,147 Premiums Series 1 3,988, ,058 Series 3 448,292 1,301,625 Series 5 389, ,320 Series 6* 290, ,525 Series 7* 47,042 Series IGP** 18,641 4,955,127 5,135,125 7,407,697 Withdrawals Series 1 (2,785,595) (3,023,634) Series 3 (2,652,578) (3,391,185) Series 5 (1,039,201) (988,452) Series 6* (78,562) (46,873) Series 7* (2,048) (14) Series IGP** (1,439,055) (189,888) (7,997,039) (7,640,046) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 36,568,801 41,731,769 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (2,301,054) 3,926,147 Adjustments for: Foreign exchange gain (loss) on cash (1,680) (651) Net realized gain (loss) (4,122,053) (3,795,783) Net unrealized gain (loss) 6,042,446 (741,167) Proceeds from sale/maturity of investments 62,346,071 54,537,828 Investments purchased (58,918,972) (53,655,866) Receivable for securities sold (149,690) Interest, dividends and other receivables (22,848) 1,064 Accrued expenses (7,839) 5,499 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 2,864, ,071 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 5,137,989 7,402,957 Amounts paid on withdrawals (8,038,827) (7,615,237) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (2,900,838) (212,280) Effect of exchange rate changes on foreign cash 2, Increase (Decrease) in cash/bank overdraft (34,263) 65,594 Cash (bank overdraft), beginning of year 53,946 (11,648) CASH (BANK OVERDRAFT), END OF YEAR 19,683 53,946 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest received 12,451 10,599 Dividends received, net of withholding taxes 910, ,526 Interest paid * Beginning of operations in February ** Beginning of operations in November The accompanying Notes are an integral part of these financial statements. 222 DFS GUARANTEED INVESTMENT FUNDS

225 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 EQUITIES (96.6%) Number Fair of Shares Cost Energy (16.6%) Canadian Natural Resources 25, , ,415 Cenovus Energy 28, , ,410 Enbridge 41,000 2,099,222 1,886,000 Keyera Corp. 17, , ,628 Peyto Exploration & Development Corporation 24, , ,782 PrairieSky Royalty 19, , ,328 Suncor Energy 17, , ,528 Tourmaline Oil Corp. 23, , ,645 7,101,487 6,059,736 Materials (13.4%) Agnico Eagle Mines 15, , ,715 Agrium 3, , ,111 CCL Industries, Class B 4, ,034 1,026,268 First Quantum Minerals* 31, , ,630 Franco-Nevada Corporation 9, , ,224 Goldcorp 24, , ,557 Potash Corporation of Saskatchewan 18, , ,820 Tahoe Resources 54, , ,441 West Fraser Timber Co. 13, , ,742 5,373,432 4,948,508 Industrials (9.6%) ATS Automation Tooling Systems 63, , ,923 Canadian National Railway Company 25,722 2,027,851 1,989,597 Canadian Pacific Railway* 4, , ,444 3,497,016 3,493,964 Consumer Discretionary (4.9%) Dollarama 6, , ,230 Gildan Activewear* 31, ,225 1,234,529 1,192,855 1,780,759 Consumer Staples (5.5%) Alimentation Couche-Tard, Class B 12, , ,324 Loblaw Companies 19, ,067 1,260,409 1,467,951 2,023,733 Health Care (2.8%) Valeant Pharmaceuticals International* 7,293 1,563,310 1,025,104 * Securities pledged as collateral, in part or in whole, through the securities lending program. DFS GUARANTEED INVESTMENT FUNDS 223

226 Canadian Equity DFS GIF CANADIAN EQUITY FIERA CAPITAL (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 EQUITIES (cont.) Number Fair of Shares Cost Financials (36.5%) CI Financial 30, , ,264 Element Financial Corporation 59, , ,375 Intact Financial Corporation 4, , ,367 Manulife Financial Corporation 87,151 1,893,262 1,807,512 Power Financial Corporation* 16, , ,080 RioCan Real Estate Investment Trust* 26, , ,663 Royal Bank of Canada 42,021 3,132,124 3,115,857 Scotiabank* 39,297 2,426,543 2,199,453 Toronto-Dominion Bank 51,089 2,799,636 2,771,068 13,746,681 13,336,639 Information Technology (4.6%) CGI Group, Class A* 30,291 1,686,896 1,678,121 Telecommunication Services (2.7%) TELUS Corporation 25,388 1,054, ,345 TOTAL EQUITIES 36,684,558 35,317,909 Par MONEY MARKET SECURITIES (3.0%) Canada Treasury Bills CAD 195, , , CAD 920, , ,262 TOTAL MONEY MARKET SECURITIES 1,114,116 1,114,116 PORTFOLIO TRANSACTION COSTS INCLUDED IN THE SECURITIES COST (19,104) TOTAL INVESTMENTS (99.6%) 37,779,570 36,432,025 OTHER NET ASSETS (0.4%) 136,776 NET ASSETS (100%) 36,568,801 * Securities pledged as collateral, in part or in whole, through the securities lending program. The accompanying Notes are an integral part of these financial statements. 224 DFS GUARANTEED INVESTMENT FUNDS

227 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with long-term capital growth by investing primarily in Canadian equity securities. Investment Strategy To invest primarily in the common shares of medium and large cap Canadian securities of growth-oriented companies. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Equities 35,317,909 35,317,909 Money Market Securities 1,114,116 1,114,116 TOTAL 36,432,025 36,432,025 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Equities 41,115,942 41,115,942 Money Market Securities 664, ,089 TOTAL 41,780,031 41,780,031 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. FINANCIAL INSTRUMENTS RISKS (Note 7) Currency Risk As at December 31, 2015 and 2014, the majority of the Fund s financial assets and liabilities are denominated in Canadian dollars. As a result, the Fund is not significantly exposed to currency risk. Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Fund s financial assets and liabilities are non-interest bearing. As a result, the Fund is not subject to significant amounts of risk arising from fluctuations in the prevailing levels of market interest rates. DFS GUARANTEED INVESTMENT FUNDS 225

228 Canadian Equity DFS GIF CANADIAN EQUITY FIERA CAPITAL (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk The following table summarizes the concentration risk, as in percentages of the Net Assets Attributable to Contract Owners: December 31, 2015 MARKET SEGMENT % Equities Financials 36.5 Energy 16.6 Materials 13.4 Industrials 9.6 Consumer Staples 5.5 Consumer Discretionary 4.9 Information Technology 4.6 Health Care 2.8 Telecommunication Services 2.7 Money Market Securities Other Net Assets TOTAL 100 December 31, 2014 MARKET SEGMENT % Equities Financials 34.0 Energy 18.8 Materials 10.3 Industrials 9.5 Consumer Discretionary 8.6 Consumer Staples 7.4 Information Technology 4.9 Telecommunication Services 3.6 Health Care 1.4 Money Market Securities Other Net Assets 1.6 (0.1) TOTAL 100 Price Risk The Fund may trade in financial instruments and take positions in over-the-counter instruments. The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P/TSX Capped ,014,111 1,258,028 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the Fund had no significant investments in either fixed-income securities, money market securities and derivative financial instruments. As a result, the Fund is not significantly exposed to credit risk. Liquidity Risk For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DERECOGNITION OF FINANCIAL ASSETS Securities Lending and Repurchase Transactions As part of transactions involving securities lending or repurchase transactions, the Fund transfers financial assets under terms and conditions providing for their future repurchase. These financial assets remain recognized in the Investments at fair value through profit or loss pledged as collateral of the Statement of Financial Position as the Fund retains substantially all the risks and rewards related to these assets. December 31, 2015 December 31, 2014 Investments at FVTPL pledged as Collateral 5,513,817 8,689,071 of Collateral received 5,624,094 8,862,855 The Funds require collateral in the form of cash or such other securities as may be acceptable to Desjardins Financial Security and that have an aggregate value of no less than 102% of the loaned securities fair value. 226 DFS GUARANTEED INVESTMENT FUNDS

229 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015*** 2014*** 2013*** Series Series Series Series 6* Series 7* Series IGP** Net Asset Per Unit as at December 31 st () Series Series Series Series 6* Series 7* Series IGP** Ratios and Supplemental Data Net Asset (000 s) Series 1 16,261 16,182 17,194 17,352 18,692 Series 3 11,984 14,940 15,402 16,276 9,903 Series 5 4,626 5,545 5,442 5,921 3,945 Series 6* Series 7* Series IGP** 3,225 4,770 Number of units outstanding (000) Series 1 1,628 1,511 1,770 2,022 2,206 Series 3 1,085 1,270 1,453 1,748 1,084 Series Series 6* Series 7* 8 9 Series IGP** Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Series IGP** Portfolio turnover rate 2 (%) * Beginning of operations in February ** Beginning of operations in November *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 227

230 Canadian Equity DFS GIF SPECIALTY EQUITY NEI NORTHWEST* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Descartes Systems Group 5.3% Home Capital Group 5.1% Concordia Healthcare 4.9% Premium Brands Holdings Corporation 4.5% Parex Resources 4.0% Gluskin Sheff & Associates 3.8% Winpak Ltd 3.7% Stella-Jones 3.5% Lassonde Industries 3.3% New Flyer Industries 3.2% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 8, % 8, % 8, % 8, % 3 Years 9, % 10, % 5 Years 8, % 8, % Since Inception 10, % 9, % 8, % 8, % * This Fund is composed of units of the corresponding underlying investment fund. 228 DFS GUARANTEED INVESTMENT FUNDS

231 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 38,182 20,664 Investments at fair value through profit or loss (FVTPL) 15,489,484 20,083,464 Premiums receivable 3,579 18,019 Receivable for securities sold 2,523 17,461 15,533,768 20,139,608 LIABILITIES Current Liabilities Accrued expenses 43,507 55,657 Withdrawals payable 4,677 18,499 Payable for securities purchased 11,863 18,093 60,047 92,249 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 15,473,721 20,047,359 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 5,702 Dividends 22, ,957 Changes in fair value Net realized gain (loss) on investments 89,813 2,199,267 Net unrealized gain (loss) on investments (1,588,685) (2,504,650) (1,470,749) 109,574 EXPENSES Management fees and guarantee charge 523, ,437 Operating expenses 70,946 91, , ,890 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (2,065,569) (646,316) DATA PER SERIES SERIES 3 from Operations (447,936) (155,659) - per unit (0.71) (0.21) Average Units 629, ,834 SERIES 5 from Operations (1,502,480) (449,845) - per unit (0.72) (0.19) Average Units 2,075,643 2,418,045 SERIES 6* from Operations (113,123) (39,641) - per unit (0.58) (0.83) Average Units 196,620 47,486 SERIES 7* from Operations (2,030) (1,171) - per unit (0.50) (0.82) Average Units 4,054 1,425 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 229

232 Canadian Equity DFS GIF SPECIALTY EQUITY NEI NORTHWEST (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 20,047,359 22,109,155 from operations attributable to contract owners (2,065,569) (646,316) Premiums Series 3 109, ,173 Series 5 1,592,286 1,868,910 Series 6* 797, ,463 Series 7* 20,001 2,498,902 2,752,547 Withdrawals Series 3 (871,602) (844,947) Series 5 (3,921,398) (3,254,918) Series 6* (213,971) (68,162) Series 7* (5,006,971) (4,168,027) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 15,473,721 20,047,359 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (2,065,569) (646,316) Adjustments for: Net realized gain (loss) (89,813) (2,199,267) Net unrealized gain (loss) 1,588,685 2,504,650 Proceeds from sale/maturity of investments 3,802,345 3,189,040 Investments purchased (707,237) (1,430,004) Receivable for securities sold 14,938 (12,029) Accrued expenses (12,150) (6,297) Payable for securities purchased (6,230) (14,545) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 2,524,969 1,385,232 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 2,513,342 2,763,064 Amounts paid on withdrawals (5,020,793) (4,157,375) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (2,507,451) (1,394,311) Increase (Decrease) in cash/bank overdraft 17,518 (9,079) Cash (bank overdraft), beginning of year 20,664 29,743 CASH (BANK OVERDRAFT), END OF YEAR 38,182 20,664 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 9 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 230 DFS GUARANTEED INVESTMENT FUNDS

233 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.1%) NEI Northwest Specialty Equity Fund, Series I 967,815 16,162,142 15,489,484 TOTAL INVESTMENTS 16,162,142 15,489,484 OTHER NET ASSETS (-0.1%) (15,763) NET ASSETS (100%) 15,473,721 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Descartes Systems Group 5.3% Home Capital Group 5.1% Concordia Healthcare 4.9% Premium Brands Holdings Corporation 4.5% Parex Resources 4.0% Gluskin Sheff & Associates 3.8% Winpak Ltd 3.7% Stella-Jones 3.5% Lassonde Industries 3.3% New Flyer Industries 3.2% Industrial Alliance, Insurance and Financial Services 3.2% Osisko Gold Royalties 2.8% Boyd Group Income Fund 2.7% Western Forest Products 2.7% Alaris Royalty Corporation 2.5% Stantec 2.4% Element Financial Corporation 2.3% Fortuna Silver Mines 2.3% Advantage Oil & Gas 2.3% Callidus Capital Corporation 2.2% Cogeco Cable 2.2% Primero Mining Corporation 2.0% Cipher Pharmaceuticals 2.0% Metro 1.9% Laurentian Bank of Canada 1.8% DFS GUARANTEED INVESTMENT FUNDS 231

234 Canadian Equity DFS GIF SPECIALTY EQUITY NEI NORTHWEST (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve capital appreciation over the longer term by investing primarily in the equity of smaller, fast growing Canadian companies with small market capitalizations under a billion dollars. Investment Strategy To invest primarily in common shares and other equity securities issued by companies that are financially strong and have distinct competitive advantages at relative valuations. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 15,489,484 15,489,484 TOTAL 15,489,484 15,489,484 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 20,083,464 20,083,464 TOTAL 20,083,464 20,083,464 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 232 DFS GUARANTEED INVESTMENT FUNDS

235 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % S&P/TSX Small Cap (60%) , ,241 S&P/TSX Completion (40%) , ,494 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 233

236 Canadian Equity DFS GIF SPECIALTY EQUITY NEI NORTHWEST (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 3,125 4,335 5,197 6,513 2,850 Series 5 11,244 15,076 16,912 14,787 9,390 Series 6* 1, Series 7* Number of units outstanding (000) Series , Series 5 1,948 2,317 2,511 2,568 1,644 Series 6* Series 7* 4 4 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 234 DFS GUARANTEED INVESTMENT FUNDS

237 Canadian Equity DFS GIF SMALL CAP FRANKLIN BISSETT* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Equitable Group 6.1% Indigo Books & Music 5.9% Canam Group 5.8% Leon s Furniture Ltd 5.1% Transat A.T. 4.3% Richelieu Hardware Ltd 4.0% Transcontinental 4.0% RONA 3.9% Advantage Oil & Gas 3.7% Winpak Ltd 3.3% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 7, % 7, % 7, % 7, % 3 Years 9, % 10, % 5 Years 10, % 10, % 10 Years 10, % Since Inception 27, % 11, % 7, % 7, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 235

238 Canadian Equity DFS GIF SMALL CAP FRANKLIN BISSETT (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 668 Investments at fair value through profit or loss (FVTPL) 16,213,297 25,319,150 Premiums receivable 8,296 5,199 Receivable for securities sold 4,714 25,956 16,226,975 25,350,305 LIABILITIES Current Liabilities Bank overdraft 3,863 Accrued expenses 44,878 70,384 Withdrawals payable 32,042 Payable for securities purchased 13,653 13,860 58, ,149 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 16,168,444 25,230,156 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 364, ,969 Changes in fair value Net realized gain (loss) on investments 578,120 1,553,243 Net unrealized gain (loss) on investments (4,748,834) (2,714,491) (3,805,772) (671,279) EXPENSES Management fees and guarantee charge 595, ,817 Operating expenses 93, , , ,875 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS (4,494,027) (1,616,154) DATA PER SERIES SERIES 3 from Operations (1,850,577) (649,497) - per unit (3.45) (0.99) Average Units 536, ,802 SERIES 5 from Operations (2,274,177) (816,719) - per unit (3.63) (1.06) Average Units 627, ,677 SERIES 6* from Operations (363,025) (136,172) - per unit (0.96) (0.94) Average Units 378, ,839 SERIES 7* from Operations (6,248) (13,766) - per unit (0.42) (1.08) Average Units 14,801 12,795 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 236 DFS GUARANTEED INVESTMENT FUNDS

239 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 25,230,156 25,768,597 from operations attributable to contract owners (4,494,027) (1,616,154) Premiums Series 3 227, ,480 Series 5 968,762 4,130,264 Series 6* 863,230 1,801,668 Series 7* 1, ,376 2,060,262 6,697,788 Withdrawals Series 3 (2,141,551) (2,504,204) Series 5 (3,827,903) (3,015,484) Series 6* (569,079) (99,994) Series 7* (89,414) (393) (6,627,947) (5,620,075) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 16,168,444 25,230,156 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners (4,494,027) (1,616,154) Adjustments for: Net realized gain (loss) (578,120) (1,553,243) Net unrealized gain (loss) 4,748,834 2,714,491 Proceeds from sale/maturity of investments 6,103,260 3,616,269 Investments purchased (1,168,121) (4,261,436) Receivable for securities sold 21,242 (12,244) Accrued expenses (25,506) (1,184) Payable for securities purchased (207) 11,658 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 4,607,355 (1,101,843) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 2,057,165 6,728,679 Amounts paid on withdrawals (6,659,989) (5,622,274) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (4,602,824) 1,106,405 Increase (Decrease) in cash/bank overdraft 4,531 4,562 Cash (bank overdraft), beginning of year (3,863) (8,425) CASH (BANK OVERDRAFT), END OF YEAR 668 (3,863) * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 237

240 Canadian Equity DFS GIF SMALL CAP FRANKLIN BISSETT (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.3%) Franklin Bissett Small Cap Fund, Series O 244,545 17,805,949 16,213,297 TOTAL INVESTMENTS 17,805,949 16,213,297 OTHER NET ASSETS (-0.3%) (44,853) NET ASSETS (100%) 16,168,444 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Equitable Group 6.1% Indigo Books & Music 5.9% Canam Group 5.8% Leon s Furniture Ltd 5.1% Transat A.T. 4.3% Richelieu Hardware Ltd 4.0% Transcontinental 4.0% RONA 3.9% Advantage Oil & Gas 3.7% Winpak Ltd 3.3% Westaim Corporation 2.8% Trinidad Drilling 2.6% Horizon North Logistics 2.3% Reitmans (Canada) Ltd 2.3% Xtreme Drilling and Coil Services Corporation 2.1% AGF Management Ltd 2.1% NuVista Energy Ltd 1.9% Home Capital Group 1.9% Storm Resources Ltd 1.8% Major Drilling Group International 1.7% Delphi Energy Corporation 1.7% Granite Real Estate 1.7% Sandvine Corporation 1.6% Calfrac Well Services Ltd 1.6% AKITA Drilling Ltd 1.5% 238 DFS GUARANTEED INVESTMENT FUNDS

241 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with long-term capital appreciation. The Fund invests mainly in shares of Canadian companies with small to medium market capitalizations which are expected to provide above-average returns. Investment Strategy To be fully diversified at all times to compensate for the volatility inherent in investing in small capitalization equities. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 16,213,297 16,213,297 TOTAL 16,213,297 16,213,297 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 25,319,150 25,319,150 TOTAL 25,319,150 25,319,150 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 239

242 Canadian Equity DFS GIF SMALL CAP FRANKLIN BISSETT (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P/TSX Small Cap , ,043 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 240 DFS GUARANTEED INVESTMENT FUNDS

243 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 6,594 10,359 12,882 11,189 11,372 Series 5 8,051 13,185 12,887 5,762 4,038 Series 6* 1,497 1,566 Series 7* Number of units outstanding (000) Series Series Series 6* Series 7* 7 26 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 241

244 Foreign Equity DFS GIF AMERICAN EQUITY MFS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio JPMorgan Chase & Company 3.3% Danaher Corporation 2.9% Visa 2.8% Alphabet, Class A 2.4% Thermo Fisher Scientific 2.3% Bank of America Corporation 2.1% Johnson & Johnson 2.1% Wells Fargo & Company 2.1% American Tower Corporation 1.9% Alphabet, Class C 1.9% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 11, % 3 Years 18, % 18, % 5 Years 19, % 20, % 10 Years 16, % Since Inception 13, % 16, % 13, % 13, % * This Fund is composed of units of the corresponding underlying investment fund. 242 DFS GUARANTEED INVESTMENT FUNDS

245 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 15,479 5,768 Investments at fair value through profit or loss (FVTPL) 20,461,002 13,324,614 Premiums receivable 240,009 14,155 20,716,490 13,344,537 LIABILITIES Current Liabilities Accrued expenses 50,948 34,467 Withdrawals payable 2,133 4,128 Payable for securities purchased 9,703 11,627 62,784 50,222 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 20,653,706 13,294,315 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest income for attribution purposes Dividends 387, ,660 Changes in fair value Net realized gain (loss) on investments 2,361,641 1,268,293 Net unrealized gain (loss) on investments 325, ,260 3,074,961 2,299,237 EXPENSES Management fees and guarantee charge 434, ,391 Operating expenses 94,894 68, , ,552 Withholding taxes 56,350 26, , ,384 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 2,489,513 1,904,853 DATA PER SERIES SERIES 3 from Operations 679, ,063 - per unit Average Units 709, ,065 SERIES 5 from Operations 1,435,648 1,143,844 - per unit Average Units 1,437,845 1,246,170 SERIES 6* from Operations 358, ,009 - per unit Average Units 433, ,009 SERIES 7* from Operations 16,578 1,937 - per unit Average Units 20,827 1,370 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 243

246 Foreign Equity DFS GIF AMERICAN EQUITY MFS (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 13,294,315 9,806,704 from operations attributable to contract owners 2,489,513 1,904,853 Premiums Series 3 497, ,323 Series 5 3,686,345 2,073,675 Series 6* 3,863, ,360 Series 7* 109,281 20,001 8,156,671 3,488,359 Withdrawals Series 3 (917,331) (757,676) Series 5 (1,876,284) (1,106,757) Series 6* (493,178) (41,168) Series 7* (3,286,793) (1,905,601) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 20,653,706 13,294,315 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 2,489,513 1,904,853 Adjustments for: Net realized gain (loss) (2,361,641) (1,268,293) Net unrealized gain (loss) (325,382) (827,260) Proceeds from sale/maturity of investments 1,747,342 1,126,623 Investments purchased (6,196,707) (2,535,422) Receivable for securities sold 4,883 Accrued expenses 16,481 8,934 Payable for securities purchased (1,924) 6,432 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (4,632,318) (1,579,250) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 7,930,817 3,487,791 Amounts paid on withdrawals (3,288,788) (1,903,543) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 4,642,029 1,584,248 Increase (Decrease) in cash/bank overdraft 9,711 4,998 Cash (bank overdraft), beginning of year 5, CASH (BANK OVERDRAFT), END OF YEAR 15,479 5,768 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 22 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 244 DFS GUARANTEED INVESTMENT FUNDS

247 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (99.1%) MFS U.S. Equity Core Fund 1,260,956 16,825,423 20,461,002 TOTAL INVESTMENTS 16,825,423 20,461,002 OTHER NET ASSETS (0.9%) 192,704 NET ASSETS (100%) 20,653,706 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio JPMorgan Chase & Company 3.3% Danaher Corporation 2.9% Visa 2.8% Alphabet, Class A 2.4% Thermo Fisher Scientific 2.3% Bank of America Corporation 2.1% Johnson & Johnson 2.1% Wells Fargo & Company 2.1% American Tower Corporation 1.9% Alphabet, Class C 1.9% Accenture 1.9% American Express Company 1.8% Goldman Sachs Group 1.8% Avago Technologies Ltd 1.8% Cognizant Technology Solutions Corporation 1.8% Newell Rubbermaid 1.8% Honeywell International 1.8% Mastercard 1.7% Comcast Corporation 1.7% Mondelez International 1.6% Fidelity National Information Services 1.5% BlackRock 1.5% Bristol-Myers Squibb Company 1.5% EMC Corporation 1.5% Canadian National Railway Company 1.4% DFS GUARANTEED INVESTMENT FUNDS 245

248 Foreign Equity DFS GIF AMERICAN EQUITY MFS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To outperform the S&P 500. Investment Strategy To invest mainly in large cap equity securities of corporations located in the United States. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 20,461,002 20,461,002 TOTAL 20,461,002 20,461,002 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 13,324,614 13,324,614 TOTAL 13,324,614 13,324,614 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 246 DFS GUARANTEED INVESTMENT FUNDS

249 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % S&P , ,780 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 247

250 Foreign Equity DFS GIF AMERICAN EQUITY MFS (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 4,669 4,410 4,083 3,246 3,269 Series 5 11,080 7,834 5,724 1,617 1,315 Series 6* 4,757 1,028 Series 7* Number of units outstanding (000) Series Series 5 1,536 1,272 1, Series 6* Series 7* 22 4 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 248 DFS GUARANTEED INVESTMENT FUNDS

251 Foreign Equity DFS GIF AMERICAN EQUITY VALUE DESJARDINS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Wells Fargo & Company 3.6% Exxon Mobil Corporation 3.4% JPMorgan Chase & Company 3.2% Merck & Company 3.2% Microsoft Corporation 3.1% Chevron Corporation 3.1% Intel Corporation 2.8% Cisco Systems 2.8% Bank of America Corporation 2.6% Cash and Cash Equivalents 2.3% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 11, % 11, % 3 Years 17, % 18, % 18, % 5 Years 18, % 19, % 19, % 10 Years 14, % 15, % Since Inception 16, % 11, % 16, % 13, % 13, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 249

252 Foreign Equity DFS GIF AMERICAN EQUITY VALUE DESJARDINS (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 86,275 79,584 Investments at fair value through profit or loss (FVTPL) 23,456,902 14,545,283 Premiums receivable 64, ,882 23,607,703 14,765,749 LIABILITIES Current Liabilities Accrued expenses 59,097 37,601 Withdrawals payable 4,248 17,756 Payable for securities purchased 28, ,018 91, ,375 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 23,515,828 14,570,374 NET ASSETS PER UNIT Series Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 3,016 Dividends 457,913 28,307 Changes in fair value Net realized gain (loss) on investments 715, ,473 Net unrealized gain (loss) on investments 2,162,597 1,911,887 3,336,137 2,513,683 EXPENSES Management fees and guarantee charge 514, ,702 Operating expenses 99,358 66, , ,449 Withholding taxes 45, , ,449 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 2,676,863 2,135,234 DATA PER SERIES SERIES 1 from Operations 325, ,664 - per unit Average Units 318, ,434 SERIES 3 from Operations 447, ,492 - per unit Average Units 377, ,598 SERIES 5 from Operations 1,463,273 1,192,265 - per unit Average Units 1,302, ,554 SERIES 6* from Operations 398,743 88,695 - per unit Average Units 464,645 87,692 SERIES 7* from Operations 41,995 13,118 - per unit Average Units 52,958 10,491 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 250 DFS GUARANTEED INVESTMENT FUNDS

253 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 14,570,374 9,124,286 from operations attributable to contract owners 2,676,863 2,135,234 Premiums Series 1 677, ,523 Series 3 920, ,613 Series 5 4,057,269 3,021,518 Series 6* 3,661,496 1,108,210 Series 7* 366, ,800 9,682,152 4,735,664 Withdrawals Series 1 (243,628) (269,181) Series 3 (787,420) (361,324) Series 5 (1,717,631) (713,150) Series 6* (633,242) (80,831) Series 7* (31,640) (324) (3,413,561) (1,424,810) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 23,515,828 14,570,374 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 2,676,863 2,135,234 Adjustments for: Net realized gain (loss) (715,627) (570,473) Net unrealized gain (loss) (2,162,597) (1,911,887) Proceeds from sale/maturity of investments 1,317, ,879 Investments purchased (7,352,265) (3,933,549) Receivable for securities sold 3,613 Accrued expenses 21,496 13,415 Payable for securities purchased (111,488) 140,018 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (6,325,740) (3,166,750) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 9,758,508 4,600,234 Amounts paid on withdrawals (3,427,069) (1,412,700) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 6,331,439 3,187,534 Effect of exchange rate changes on foreign cash Increase (Decrease) in cash/bank overdraft 6,691 21,052 Cash (bank overdraft), beginning of year 79,584 58,532 CASH (BANK OVERDRAFT), END OF YEAR 86,275 79,584 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 14 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 251

254 Foreign Equity DFS GIF AMERICAN EQUITY VALUE DESJARDINS (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (99.7%) Desjardins American Equity Fund, I-Class 949,980 17,769,163 23,456,902 TOTAL INVESTMENTS 17,769,163 23,456,902 OTHER NET ASSETS (0.3%) 58,926 NET ASSETS (100%) 23,515,828 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Wells Fargo & Company 3.6% Exxon Mobil Corporation 3.4% JPMorgan Chase & Company 3.2% Merck & Company 3.2% Microsoft Corporation 3.1% Chevron Corporation 3.1% Intel Corporation 2.8% Cisco Systems 2.8% Bank of America Corporation 2.6% Cash and Cash Equivalents 2.3% Citigroup 2.1% Verizon Communications 1.8% AstraZeneca 1.7% Mondelez International 1.7% Eversource Energy 1.6% CVS Health Corporation 1.6% ACE Ltd 1.6% Pfizer 1.5% Prudential Financial 1.5% Johnson & Johnson 1.4% EOG Resources 1.4% PNC Financial Services Group 1.4% Lowe s Companies 1.4% Lockheed Martin Corporation 1.4% United Parcel Service 1.4% 252 DFS GUARANTEED INVESTMENT FUNDS

255 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To provide investors with long-term capital growth by investing primarily in U.S. equities. Investment Strategy To invest primarily in the common shares of high quality, publicly traded mid to large United States companies across a wide range of market sectors. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 23,456,902 23,456,902 TOTAL 23,456,902 23,456,902 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 14,545,283 14,545,283 TOTAL 14,545,283 14,545,283 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 253

256 Foreign Equity DFS GIF AMERICAN EQUITY VALUE DESJARDINS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in benchmarks, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmarks, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmarks % S&P ,820 N/A Russell N/A 445,790 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 254 DFS GUARANTEED INVESTMENT FUNDS

257 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 1 2,971 2,212 1,963 1,514 1,648 Series 3 3,508 2,927 2,514 2,056 2,136 Series 5 11,951 8,148 4,647 1, Series 6* 4,543 1,116 Series 7* Number of units outstanding (000) Series Series Series 5 1,351 1, Series 6* Series 7* Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 255

258 Foreign Equity DFS GIF GLOBAL DIVIDEND DESJARDINS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Cash and Cash Equivalents 2.5% National Grid 2.0% Philip Morris International 2.0% AT&T 2.0% Welltower 2.0% BCE 1.9% Verizon Communications 1.9% PPL Corporation 1.8% Vodafone Group plc 1.8% Muenchener Rueckversicherung 1.8% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 3 Years 16, % Since Inception 16, % 11, % 12, % * This Fund is composed of units of the corresponding underlying investment fund. 256 DFS GUARANTEED INVESTMENT FUNDS

259 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 3,719 2,042 Investments at fair value through profit or loss (FVTPL) 15,263,692 8,061,064 Premiums receivable 97,889 6,354 15,365,300 8,069,460 LIABILITIES Current Liabilities Accrued expenses 34,373 17,996 Withdrawals payable 4,686 1,153 Payable for securities purchased 99,040 7, ,099 27,063 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 15,227,201 8,042,397 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 524, ,641 Changes in fair value Net realized gain (loss) on investments 231,218 49,166 Net unrealized gain (loss) on investments 627, ,042 1,382, ,849 EXPENSES Management fees and guarantee charge 314, ,778 Operating expenses 26,662 12, , ,463 Withholding taxes 43,296 45, , ,878 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 998, ,971 DATA PER SERIES SERIES 5 from Operations 707, ,246 - per unit Average Units 1,035, ,648 SERIES 6* from Operations 281,728 68,227 - per unit Average Units 650, ,942 SERIES 7* from Operations 9,377 2,498 - per unit Average Units 36,250 2,546 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 257

260 Foreign Equity DFS GIF GLOBAL DIVIDEND DESJARDINS (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 8,042,397 3,292,634 from operations attributable to contract owners 998, ,971 Premiums Series 5 3,931,230 3,007,440 Series 6* 4,155,351 1,755,566 Series 7* 388,971 34,352 8,475,552 4,797,358 Withdrawals Series 5 (1,869,155) (708,468) Series 6* (399,366) (34,079) Series 7* (20,480) (19) (2,289,001) (742,566) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 15,227,201 8,042,397 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 998, ,971 Adjustments for: Net realized gain (loss) (231,218) (49,166) Net unrealized gain (loss) (627,014) (484,042) Proceeds from sale/maturity of investments 1,235, ,124 Investments purchased (7,579,890) (4,521,762) Interest, dividends and other receivables 147 Accrued expenses 16,377 10,494 Payable for securities purchased 91,126 (11,982) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (6,096,872) (4,067,216) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 8,384,017 4,808,040 Amounts paid on withdrawals (2,285,468) (745,067) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 6,098,549 4,062,973 Increase (Decrease) in cash/bank overdraft 1,677 (4,243) Cash (bank overdraft), beginning of year 2,042 6,285 CASH (BANK OVERDRAFT), END OF YEAR 3,719 2,042 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 258 DFS GUARANTEED INVESTMENT FUNDS

261 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) Desjardins Global Dividend Fund, I-Class 797,310 13,774,377 15,263,692 TOTAL INVESTMENTS 13,774,377 15,263,692 OTHER NET ASSETS (-0.2%) (36,491) NET ASSETS (100%) 15,227,201 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Cash and Cash Equivalents 2.5% National Grid 2.0% Philip Morris International 2.0% AT&T 2.0% Welltower 2.0% BCE 1.9% Verizon Communications 1.9% PPL Corporation 1.8% Vodafone Group plc 1.8% Muenchener Rueckversicherung 1.8% WEC Energy Group 1.7% Terna - Rete Elettricita Nazionale 1.7% Imperial Tobacco Group plc 1.7% Duke Energy Corporation 1.6% Rogers Communications 1.5% Reynolds American 1.5% AstraZeneca 1.5% Altria Group 1.5% GlaxoSmithKline plc 1.5% SSE 1.5% Swisscom 1.4% Total SA 1.4% British American Tobacco 1.4% McDonald s Corporation 1.4% BAE Systems plc 1.3% DFS GUARANTEED INVESTMENT FUNDS 259

262 Foreign Equity DFS GIF GLOBAL DIVIDEND DESJARDINS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to provide dividend income and long term capital appreciation through the investment in equity and equity related securities of companies around the world, including, when deemed appropriate, emerging markets. Investment Strategy In order to achieve its investment objective, the Fund invests in companies with high dividend yields and whose management teams optimize their balance sheets through the redemption of shares or reducing debt or by opting to increase cash flows sufficiently to allow for the opportunity for dividend growth. Companies are selected which show stable or high profit growth, a lower than average debt in comparison to their industry average and whose securities are traded at a reasonable price in relation to other companies with similar characteristics. Equity related securities such as American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) may be used to gain exposure to a particular stock or sector. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 15,263,692 15,263,692 TOTAL 15,263,692 15,263,692 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 8,061,064 8,061,064 TOTAL 8,061,064 8,061,064 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 260 DFS GUARANTEED INVESTMENT FUNDS

263 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015, the Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmark % MSCI World Net ,431 As at December 31, 2014, the Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, with all other variables held constant, was as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2014 Benchmark % MSCI World Net ,272 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. DFS GUARANTEED INVESTMENT FUNDS 261

264 Foreign Equity DFS GIF GLOBAL DIVIDEND DESJARDINS (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past four years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015*** 2014*** 2013*** 2012 Series 5* Series 6** Series 7** Ratios and Supplemental Data Net Asset (000 s) Series 5* 8,985 6,216 3, Series 6** 5,827 1,790 Series 7** Number of units outstanding (000) Series 5* 1, Series 6** Series 7** 69 7 Management expense ratio (MER) 1 (%) Series 5* Series 6** Series 7** Portfolio turnover rate 2 (%) * Beginning of operations in September ** Beginning of operations in February *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 262 DFS GUARANTEED INVESTMENT FUNDS

265 Foreign Equity DFS GIF GLOBAL EQUITY MFS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Danaher Corporation 1.8% Alphabet 1.6% Novartis AG 1.3% Wells Fargo & Company 1.3% Roche Holding AG 1.3% Visa 1.3% CMS Energy Corporation 1.2% JPMorgan Chase & Company 1.2% Facebook 1.2% Nestlé SA 1.2% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 11, % 3 Years 16, % 16, % 5 Years 14, % 14, % Since Inception 16, % 9, % 12, % 12, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 263

266 Foreign Equity DFS GIF GLOBAL EQUITY MFS (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 23,690 32,356 Investments at fair value through profit or loss (FVTPL) 62,025,234 23,205,563 Premiums receivable 48, Receivable for securities sold 1,617 62,098,541 23,237,944 LIABILITIES Current Liabilities Accrued expenses 149,485 56,001 Withdrawals payable 63, Payable for securities purchased 6, ,014 63,200 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 61,885,527 23,174,744 NET ASSETS PER UNIT Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes Dividends 793, ,550 Changes in fair value Net realized gain (loss) on investments 4,650, ,346 Net unrealized gain (loss) on investments 893,583 1,594,778 6,338,120 2,643,699 EXPENSES Management fees and guarantee charge 730, ,587 Operating expenses 224, , , ,049 Withholding taxes 91,340 58,105 1,045, ,154 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 5,292,300 1,933,545 DATA PER SERIES SERIES 3 from Operations 150,910 12,901 - per unit Average Units 185,279 42,345 SERIES 5 from Operations 5,073,491 1,915,497 - per unit Average Units 7,061,133 5,873,617 SERIES 6* from Operations 64,453 4,369 - per unit Average Units 107,159 8,804 SERIES 7* from Operations 3, per unit Average Units 3,940 1,389 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 264 DFS GUARANTEED INVESTMENT FUNDS

267 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 23,174,744 21,982,867 from operations attributable to contract owners 5,292,300 1,933,545 Premiums Series 3 2,873,729 14,950 Series 5 32,722, ,090 Series 6* 1,418, ,850 Series 7* 20,001 37,014, ,891 Withdrawals Series 3 (94,643) (4,680) Series 5 (3,413,672) (1,518,692) Series 6* (88,088) (187) Series 7* (3,596,403) (1,523,559) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 61,885,527 23,174,744 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 5,292,300 1,933,545 Adjustments for: Net realized gain (loss) (4,650,269) (533,346) Net unrealized gain (loss) (893,583) (1,594,778) Proceeds from sale/maturity of investments 2,822,202 1,897,988 Investments purchased (36,098,021) (965,957) Receivable for securities sold (1,617) 15,254 Accrued expenses 93,484 4,182 Payable for securities purchased (6,898) 6,898 NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (33,442,402) 763,786 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 36,966, ,941 Amounts paid on withdrawals (3,533,175) (1,538,373) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 33,433,736 (756,432) Increase (Decrease) in cash/bank overdraft (8,666) 7,354 Cash (bank overdraft), beginning of year 32,356 25,002 CASH (BANK OVERDRAFT), END OF YEAR 23,690 32,356 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 35 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 265

268 Foreign Equity DFS GIF GLOBAL EQUITY MFS (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) MFS Global Research Fund 3,199,448 54,260,956 62,025,234 TOTAL INVESTMENTS 54,260,956 62,025,234 OTHER NET ASSETS (-0.2%) (139,707) NET ASSETS (100%) 61,885,527 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Danaher Corporation 1.8% Alphabet 1.6% Novartis AG 1.3% Wells Fargo & Company 1.3% Roche Holding AG 1.3% Visa 1.3% CMS Energy Corporation 1.2% JPMorgan Chase & Company 1.2% Facebook 1.2% Nestlé SA 1.2% Allergan 1.1% KDDI Corporation 1.1% Exxon Mobil Corporation 1.1% CVS Health Corporation 1.1% BG Group 1.1% Alexion Pharmaceuticals 1.1% Eli Lilly and Company 1.0% UBS Group AG 1.0% Stryker Corporation 1.0% Coca-Cola Company 1.0% Cisco Systems 1.0% HSBC Holdings plc 1.0% American International Group 1.0% Northrop Grumman Corporation 1.0% Mondelez International 0.9% 266 DFS GUARANTEED INVESTMENT FUNDS

269 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective To achieve long-term capital growth by investing primarily in equity securities. Investment Strategy To control the level of volatility of return relative to the overall stock markets by maintaining strong geographic diversification and by investing in attractively-valued securities. The Fund will primarily invest in common stocks of American, European, and Asian corporations. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 62,025,234 62,025,234 TOTAL 62,025,234 62,025,234 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 23,205,563 23,205,563 TOTAL 23,205,563 23,205,563 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 267

270 Foreign Equity DFS GIF GLOBAL EQUITY MFS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % MSCI All Country World Net ,775, ,608 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. RECONCILIATION OF NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS ( NET ASSET ) PER UNIT AS PER THE FINANCIAL STATEMENTS WITH NET ASSET VALUE PER UNIT FOR PURPOSES OTHER THAN THE FINANCIAL STATEMENTS As a result of new information received in January 2015, the Net Asset per unit as per the financial statements was adjusted to consider the new information. This created a difference between the Net Asset per unit as per financial statements and the Net Asset per unit for purposes other than the financial statements. As at December 31, 2014 For the Series 3, the Net Asset per unit as per the financial statements is 3.86 (the Net Asset per unit for purposes other than the financial statements is 3.88). For the Series 5, the Net Asset per unit as per the financial statements is 3.97 (the Net Asset per unit for purposes other than the financial statements is 3.99). For the Series 6, the Net Asset per unit as per the financial statements is 5.25 (the Net Asset per unit for purposes other than the financial statements is 5.28). For the Series 7, the Net Asset per unit as per the financial statements is 5.27 (the Net Asset per unit for purposes other than the financial statements is 5.30). 268 DFS GUARANTEED INVESTMENT FUNDS

271 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series 6* Series 7* Net Asset Per Unit as at December 31 st () Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 3 3, Series 5 57,250 22,984 21,840 17,000 17,832 Series 6* 1, Series 7* Number of units outstanding (000) Series Series 5 12,426 5,764 6,000 6,071 6,630 Series 6* Series 7* 4 4 Management expense ratio (MER) 1 (%) Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 269

272 Foreign Equity DFS GIF INTERNATIONAL EQUITY MFS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Nestlé 3.6% Bayer AG 3.4% Compass Group plc 3.4% WPP Group plc 3.2% Roche Holding AG 3.0% Hoya Corporation 2.6% UBS Group AG 2.5% Taiwan Semiconductor Manufacturing Company 2.4% Reckitt Benckiser Group plc 2.3% Groupe Danone 2.3% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 1 Series 3 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 11, % 11, % 3 Years 14, % 14, % 14, % 5 Years 13, % 13, % 13, % 10 Years 9, % 10, % Since Inception 12, % 10, % 9, % 11, % 11, % * This Fund is composed of units of the corresponding underlying investment fund. 270 DFS GUARANTEED INVESTMENT FUNDS

273 STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash 5,443 23,667 Investments at fair value through profit or loss (FVTPL) 12,617,872 11,123,562 Premiums receivable 17,684 1,041 Receivable for securities sold 634 Interest, dividends and other receivables ,641,271 11,149,237 LIABILITIES Current Liabilities Accrued expenses 34,159 31,234 Withdrawals payable 2, Payable for securities purchased 2, ,111 32,256 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 12,602,160 11,116,981 NET ASSETS PER UNIT Series Series Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Interest for attribution purposes 256 Dividends 298, ,295 Foreign exchange gain (loss) on cash 98 Changes in fair value Net realized gain (loss) on investments 1,075, ,694 Net unrealized gain (loss) on investments 781,607 (516,120) 2,156, ,967 EXPENSES Management fees and guarantee charge 322, ,809 Operating expenses 84,010 82, , ,637 Withholding taxes 27,220 33, , ,336 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 1,722,870 87,631 DATA PER SERIES SERIES 1 from Operations 306,371 3,647 - per unit Average Units 352, ,183 SERIES 3 from Operations 817,536 31,150 - per unit Average Units 846, ,069 SERIES 5 from Operations 583,468 52,313 - per unit Average Units 577, ,913 SERIES 6* from Operations 2,435 (214) - per unit 0.04 (0.07) Average Units 68,236 2,862 SERIES 7* from Operations 13, per unit Average Units 23,181 1,969 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 271

274 Foreign Equity DFS GIF INTERNATIONAL EQUITY MFS (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 11,116,981 12,263,629 from operations attributable to contract owners 1,722,870 87,631 Premiums Series 1 180,034 61,028 Series 3 360, ,379 Series 5 1,050, ,736 Series 6* 976,196 27,258 Series 7* 58,000 74,900 2,625, ,301 Withdrawals Series 1 (258,988) (223,166) Series 3 (1,387,084) (1,073,722) Series 5 (1,107,634) (736,034) Series 6* (109,923) (12,658) Series 7* (2,863,629) (2,045,580) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 12,602,160 11,116,981 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 1,722,870 87,631 Adjustments for: Foreign exchange gain (loss) on cash (98) Net realized gain (loss) (1,075,912) (685,694) Net unrealized gain (loss) (781,607) 516,120 Proceeds from sale/maturity of investments 2,340,321 1,884,711 Investments purchased (1,977,112) (561,047) Receivable for securities sold 634 3,134 Interest, dividends and other receivables 61 9,485 Accrued expenses 2,925 (2,232) Payable for securities purchased 1,365 (146) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES 233,545 1,251,864 CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 2,609, ,520 Amounts paid on withdrawals (2,861,064) (2,050,301) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES (251,769) (1,238,781) Effect of exchange rate changes on foreign cash 69 Increase (Decrease) in cash/bank overdraft (18,224) 13,152 Cash (bank overdraft), beginning of year 23,667 10,515 CASH (BANK OVERDRAFT), END OF YEAR 5,443 23,667 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Dividends received, net of withholding taxes 9,910 Interest paid 13 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 272 DFS GUARANTEED INVESTMENT FUNDS

275 SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.1%) MFS International Equity Fund 988,861 10,070,521 12,617,872 TOTAL INVESTMENTS 10,070,521 12,617,872 OTHER NET ASSETS (-0.1%) (15,712) NET ASSETS (100%) 12,602,160 The accompanying Notes are an integral part of these financial statements. TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Nestlé 3.6% Bayer AG 3.4% Compass Group plc 3.4% WPP Group plc 3.2% Roche Holding AG 3.0% Hoya Corporation 2.6% UBS Group AG 2.5% Taiwan Semiconductor Manufacturing Company 2.4% Reckitt Benckiser Group plc 2.3% Groupe Danone 2.3% AIA Group 2.2% Pernod-Ricard SA 2.2% Denso Corporation 2.1% SAP SE 2.1% Air Liquide 2.0% Honda Motor Company 2.0% Yum! Brands 2.0% Beiersdorf AG 1.9% ING Groep 1.9% Novartis AG 1.9% HSBC Holdings plc 1.8% Sky plc 1.8% Schneider Electric 1.8% Akzo Nobel NV 1.7% Diageo plc 1.7% DFS GUARANTEED INVESTMENT FUNDS 273

276 Foreign Equity DFS GIF INTERNATIONAL EQUITY MFS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The fundamental investment objective of this Fund is to provide investors with long-term capital growth based on an internationally diversified equity portfolio by investing primarily in Europe and the Far East. Investment Strategy To invest its assets primarily in the common shares of large corporations with attractive relative valuations located in many countries. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 12,617,872 12,617,872 TOTAL 12,617,872 12,617,872 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 11,123,562 11,123,562 TOTAL 11,123,562 11,123,562 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). 274 DFS GUARANTEED INVESTMENT FUNDS

277 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). The Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 December 31, 2014 Benchmark % MSCI EAFE Net , ,426 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. RECONCILIATION OF NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS ( NET ASSET ) PER UNIT AS PER THE FINANCIAL STATEMENTS WITH NET ASSET VALUE PER UNIT FOR PURPOSES OTHER THAN THE FINANCIAL STATEMENTS As a result of new information received in January 2015, the Net Asset per unit as per the financial statements was adjusted to consider the new information. This created a difference between the Net Asset per unit as per financial statements and the Net Asset per unit for purposes other than the financial statements. As at December 31, 2014 For the Series 1, the Net Asset per unit as per the financial statements is 5.57 (the Net Asset per unit for purposes other than the financial statements is 5.45). For the Series 3, the Net Asset per unit as per the financial statements is 5.75 (the Net Asset per unit for purposes other than the financial statements is 5.62). For the Series 5, the Net Asset per unit as per the financial statements is 6.15 (the Net Asset per unit for purposes other than the financial statements is 6.01). For the Series 6, the Net Asset per unit as per the financial statements is 4.91 (the Net Asset per unit for purposes other than the financial statements is 4.80). For the Series 7, the Net Asset per unit as per the financial statements is 4.93 (the Net Asset per unit for purposes other than the financial statements is 4.82). DFS GUARANTEED INVESTMENT FUNDS 275

278 Foreign Equity DFS GIF INTERNATIONAL EQUITY MFS (cont.) FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past five years. This information is derived from the Fund s audited annual financial statements. The net assets per unit presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. Net Assets Per Unit as at December 31 st () 2015** 2014** 2013** Series Series Series Series 6* Series 7* Net Asset Per Unit as at December 31 st () Series Series Series Series 6* Series 7* Ratios and Supplemental Data Net Asset (000 s) Series 1 2,240 1,967 2,171 1,892 2,115 Series 3 5,158 5,249 6,171 6,105 5,837 Series 5 4,175 3,566 3,922 2,437 1,503 Series 6* Series 7* Number of units outstanding (000) Series Series ,077 1,300 1,382 Series Series 6* Series 7* Management expense ratio (MER) 1 (%) Series Series Series Series 6* Series 7* Portfolio turnover rate 2 (%) * Beginning of operations in February ** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. 276 DFS GUARANTEED INVESTMENT FUNDS

279 Foreign Equity DFS GIF INTERNATIONAL EQUITY GROWTH DESJARDINS* SUMMARY FACTS STATEMENT unaudited The following unaudited section shows the Top holdings of the Fund and performance data for the year ending December 31, The current objective and strategy of the Fund can be found in the audited Financial Instruments Disclosures as at December 31, 2015 section of this document under the section heading Strategy in using Financial Instruments. For a detailed description of each Fund s investment policy and where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s) is available upon request by writing to the Company at 1, complexe Desjardins, C. P. 9000, Montréal, Québec, H5B 1H5. TOP MAJOR HOLDINGS AS OF DECEMBER 31, 2015 Security Name Percentage of Portfolio Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat Chrysler Automobiles 4.7% AIA Group 4.1% Alibaba Group Holding 3.4% Softbank Corporation 3.4% Illumina 3.3% Atlas Copco 2.8% Prudential Financial 2.7% PERFORMANCE INFORMATION FOR THE YEAR ENDING DECEMBER 31, 2015 Series 5 Series 6 Series 7 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 10,000 Lump Sum Total Gain (Annualized) 1 Year 11, % 11, % 11, % 3 Years 15, % Since Inception 16, % 11, % 11, % * This Fund is composed of units of the corresponding underlying investment fund. DFS GUARANTEED INVESTMENT FUNDS 277

280 Foreign Equity DFS GIF INTERNATIONAL EQUITY GROWTH DESJARDINS (cont.) STATEMENT OF FINANCIAL POSITION As at December ASSETS Current Assets Cash Investments at fair value through profit or loss (FVTPL) 2,531,545 1,869,392 Premiums receivable Receivable for securities sold 2,078 2,534,279 1,869,973 LIABILITIES Current Liabilities Accrued expenses 6,375 4,656 Withdrawals payable 2, Payable for securities purchased ,907 4,936 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 2,525,372 1,865,037 NET ASSETS PER UNIT Series Series Series STATEMENT OF COMPREHENSIVE INCOME Years Ended December INCOME Dividends 27,316 19,567 Changes in fair value Net realized gain (loss) on investments 86,840 43,187 Net unrealized gain (loss) on investments 206,862 (24,120) 321,018 38,634 EXPENSES Management fees and guarantee charge 62,125 37,243 Operating expenses 7,575 4,944 69,700 42,187 Withholding taxes 1,547 3,002 71,247 45,189 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 249,771 (6,555) DATA PER SERIES SERIES 5 from Operations 169,080 (6,295) - per unit 0.89 (0.04) Average Units 189, ,851 SERIES 6* from Operations 77,888 (454) - per unit 0.55 (0.01) Average Units 142,802 51,107 SERIES 7* from Operations 2, per unit Average Units 4,150 1,455 * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. 278 DFS GUARANTEED INVESTMENT FUNDS

281 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Years Ended December NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF YEAR 1,865, ,456 from operations attributable to contract owners 249,771 (6,555) Premiums Series 5 293, ,849 Series 6* 377, ,670 Series 7* 20, ,724 1,148,520 Withdrawals Series 5 (167,424) (202,873) Series 6* (92,736) (10,511) Series 7* (260,160) (213,384) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, END OF YEAR 2,525,372 1,865,037 STATEMENT OF CASH FLOWS Years Ended December CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 249,771 (6,555) Adjustments for: Net realized gain (loss) (86,840) (43,187) Net unrealized gain (loss) (206,862) 24,120 Proceeds from sale/maturity of investments 243, ,172 Investments purchased (611,534) (1,103,153) Receivable for securities sold (2,078) Interest, dividends and other receivables 114 Accrued expenses 1,719 2,263 Payable for securities purchased 50 (5,396) NET CASH FLOWS FROM/USED IN OPERATING ACTIVITIES (412,691) (940,622) CASH FLOWS FROM/USED IN FINANCING ACTIVITIES Premium payments 670,649 1,151,290 Amounts paid on withdrawals (257,958) (215,612) NET CASH FLOWS FROM/USED IN FINANCING ACTIVITIES 412, ,678 Increase (Decrease) in cash/bank overdraft (4,944) Cash (bank overdraft), beginning of year 496 5,440 CASH (BANK OVERDRAFT), END OF YEAR * Beginning of operations in February The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 279

282 Foreign Equity DFS GIF INTERNATIONAL EQUITY GROWTH DESJARDINS (cont.) SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUND (100.2%) Desjardins Overseas Equity Growth Fund, I-Class 125,967 2,167,405 2,531,545 TOTAL INVESTMENTS 2,167,405 2,531,545 OTHER NET ASSETS (-0.2%) NET ASSETS (100%) 2,525,372 The accompanying Notes are an integral part of these financial statements. (6,173) TOP 25 HOLDINGS OF THE UNDERLYING FUND unaudited Security Name Percentage of Portfolio Baidu, ADR 5.3% Inditex 5.1% Tencent Holdings 4.8% Fiat Chrysler Automobiles 4.7% AIA Group 4.1% Alibaba Group Holding 3.4% Softbank Corporation 3.4% Illumina 3.3% Atlas Copco 2.8% Prudential Financial 2.7% Cash and Cash Equivalents 2.6% ARM Holdings 2.6% L Oréal 2.6% Rakuten 2.4% Investment AB Kinnevik 2.4% Zalando 2.3% Rolls-Royce Holdings 2.3% Svenska Handelsbanken 2.1% ASML Holding 2.0% M3 2.0% Novo Nordisk 1.9% SMC Corporation 1.9% Banco Popular Espanol 1.9% Compagnie Financière Richemont 1.8% Unicredit 1.7% 280 DFS GUARANTEED INVESTMENT FUNDS

283 NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION STRATEGY IN USING FINANCIAL INSTRUMENTS Investment Objective The objective of this Fund is to achieve long term capital growth by investing in equity and equity related securities of companies located or operating outside of North America, while when appropriate, also investing in equity and equity related securities of companies located or operating in emerging markets. Investment Strategy Investment decisions are backed by extensive research and analysis with preference given to those companies that can sustain above average growth in earnings and cash flow and whose securities are traded at a reasonable price. The investment approach involves a bottom-up, stock driven approach to country and sector allocation and more specifically, those companies with sustainable competitive advantages and strong management teams operating in a favourable market background and display solid financial characteristics. FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENT (Note 7) Hierarchy of Financial Instruments at Fair Measurement The following tables categorize the Fund s financial assets 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 the Significant Accounting Policies section of Note 2. Investment Fair Measurement at the End of the Year, within the Following Levels: December 31, 2015 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 2,531,545 2,531,545 TOTAL 2,531,545 2,531,545 December 31, 2014 Level 1 Level 2 Level 3 Total Financial Assets at FVTPL Investment Funds 1,869,392 1,869,392 TOTAL 1,869,392 1,869,392 Transfers between Levels 1 and 2 During the years ended December 31, 2015 and 2014, there were no transfers of securities between Levels 1 and 2. Investments Entities (Note 2) Total values of index-based investments, mortgage-backed securities, asset-backed securities, investment funds and limited partnerships in the table Investment Fair Measurement within the Levels also represent the fair value of investments in structured entities. FINANCIAL INSTRUMENTS RISKS (Note 7) Underlying Fund Risk Management Monthly, the investment strategy team compares the Fund s performance to similar funds as well as to the related benchmarks. Quarterly, this team makes an analysis of the Fund s performance. This analysis includes among others a review of the securities having obtained a greater or lower performance than forecasts, an evaluation of the strategies used as well as a complete analysis of the sector. It also ensures the compliance with the Fund s investment policies. Furthermore, it examines thoughtfully any change within the organization, such as the recruitment, the departure of key staff or any structure modification. Annually, this team reviews the practices and processes used by the Fund s managers through an exhaustive questionnaire and periodic meetings. Currency Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to currency risk. As a result, the Fund may be exposed to currency risk related to the current underlying fund. Detailed disclosure about the currency risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). DFS GUARANTEED INVESTMENT FUNDS 281

284 Foreign Equity DFS GIF INTERNATIONAL EQUITY GROWTH DESJARDINS (cont.) NOTES TO THE FINANCIAL STATEMENTS SPECIFIC INFORMATION Interest Rate Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to interest rate risk. As a result, the Fund may be exposed to interest rate risk related to the current underlying fund. Detailed disclosure about the interest rate risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Concentration Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to concentration risk. As a result, the Fund is exposed to concentration risk related to the current underlying fund. Detailed disclosure about the concentration risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Price Risk The majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to price risk. As a result, the Fund is exposed to price risk related to the current underlying fund. Detailed disclosure about the price risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). As at December 31, 2015, the Manager s estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, using a historical beta coefficient (a measure of the sensitivity of a security in comparison to the market) between the Fund s return as compared to the return of the Fund s benchmark, with all other variables held constant, is included in the following table. A 36-month regression analysis has been utilized to estimate the historical beta coefficient. The regression analysis uses data based on the monthly returns of the Fund. Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2015 Benchmark % MSCI EAFE Net ,143 As at December 31, 2014, the Manager s best estimate of the impact on Net Assets Attributable to Contract Owners as a result of a reasonably possible change in the benchmark, with all other variables held constant, was as follows: Impact on Net Assets Change in Price Attributable to Contract Owners December 31, 2014 Benchmark % MSCI EAFE Net ,951 In practice, actual trading results may differ from these sensitivity analyses and the differences could be significant. Credit Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which may be exposed to credit risk. As a result, the Fund may be exposed to credit risk related to the current underlying fund. Detailed disclosure about the credit risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). Liquidity Risk As at December 31, 2015 and 2014, the majority of the Net Assets Attributable to Contract Owners are invested in an underlying fund which is exposed to liquidity risk. As a result, the Fund is exposed to liquidity risk related to the current underlying fund. Detailed disclosure about the liquidity risk on the underlying fund can be obtained from Desjardins Financial Security (see Note 7). For further information on maturity of financial liabilities and liquidity risk management of the Fund, please refer to Note 7 Financial Instruments Disclosures. 282 DFS GUARANTEED INVESTMENT FUNDS

285 FINANCIAL HIGHLIGHTS unaudited The following table shows selected key financial information about the Fund and is intended to help you understand the Fund s financial performance for the past four years. This information is derived from the Fund s audited annual financial statements. Net Assets and Net Asset Per Unit as at December 31 st () 2015*** 2014*** 2013*** 2012 Series 5* Series 6** Series 7** Ratios and Supplemental Data Net Asset (000 s) Series 5* 1,571 1, Series 6** Series 7** Number of units outstanding (000) Series 5* Series 6** Series 7** 4 4 Management expense ratio (MER) 1 (%) Series 5* Series 6** Series 7** Portfolio turnover rate 2 (%) * Beginning of operations in September ** Beginning of operations in February *** For the period beginning on or after January 1, 2013, financial information is shown in accordance with IFRS, while for the years ended December 31, 2012 and prior, financial information is shown in accordance with GAAP. 1 The management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs and withholding taxes) for the stated year and is expressed as an annualized percentage of the daily average net asset value during the year. Starting in 2013, the determination of the management expense ratio was revised to include all taxes (not included before 2013). The management expense ratios reflected are those presented in the Fund Facts for each series. 2 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and the performance of a Fund. DFS GUARANTEED INVESTMENT FUNDS 283

286 NOTES TO THE FINANCIAL STATEMENTS Years ended December 31, 2015 and ESTABLISHMENT OF THE FUNDS The Desjardins Financial Security Guaranteed Investment Funds (the Funds ) consist of thirty-seven Funds established by Desjardins Financial Security Life Assurance Company ( Desjardins Financial Security or the Company ) in respect of individual variable insurance contracts issued under the Desjardins Financial Security Guaranteed Investment Funds Plan Helios, Helios2, the Millennia III Plan and the Imperial Growth Plan. The assets of each Fund are segregated from the Company s other assets and are owned by Desjardins Financial Security. The Funds are not separate legal entities. The Company s head office is located at 200, rue des Commandeurs, Lévis, Québec, Canada G6V 6R2. The Funds were established on the following dates by resolutions of the Board of Directors: Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP INVESTMENT SOLUTIONS Conservative Oct. 19, 2015 Feb. 24, 2014 Feb. 24, 2014 Moderate Oct. 19, 2015 Feb. 24, 2014 Feb. 24, 2014 Balanced Oct. 19, 2015 Feb. 24, 2014 Feb. 24, 2014 Growth Oct. 19, 2015 Feb. 24, 2014 Feb. 24, 2014 Maximum Growth Oct. 19, 2015 Feb. 24, 2014 Feb. 24, 2014 INDIVIDUAL FUNDS Income Money Market Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Nov. 7, 2014 Income Fiera Capital Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Bond Oct. 19, 2015 Oct. 19, 2015 Oct. 19, 2015 Balanced and Asset Allocation Diversified Income Franklin Quotential Oct. 30, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Balanced Income Franklin Quotential Oct. 30, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Balanced Fidelity Dec. 1, 2008 Dec. 1, 2008 Feb. 24, 2014 Feb. 24, 2014 U.S. Monthly Income Fidelity Oct. 19, 2015 Oct. 19, 2015 Oct. 19, 2015 Balanced Desjardins SocieTerra Oct. 19, 2015 Oct. 19, 2015 Oct. 19, 2015 Global Balanced Jarislowsky Fraser Nov. 17, 2003 Oct. 29, 2007 Oct. 19, 2015 Oct. 19, 2015 Canadian Balanced Fiera Capital Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Balanced Franklin Bissett Dec. 5, 2005 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Balanced Growth Franklin Quotential Dec. 11, 2006 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Balanced CI Signature May 3, 2010 Feb. 24, 2014 Feb. 24, 2014 Income and Growth CI Signature Sept. 24, 2012 Feb. 24, 2014 Feb. 24, 2014 Growth and Income NEI Northwest Dec. 11, 2006 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Global Growth NEI Select Jan. 14, 2002 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Asset Allocation CI Cambridge Sept. 24, 2012 Feb. 24, 2014 Feb. 24, 2014 Growth Franklin Quotential Oct. 30, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Equity Dividend Income Franklin Bissett Apr. 17, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Dividend NEI Northwest Sept. 24, 2012 Feb. 24, 2014 Feb. 24, 2014 Canadian Equity Jarislowsky Fraser Dec. 5, 2005 Oct. 29, 2007 Oct. 19, 2015 Oct. 19, 2015 Canadian Equity Fidelity True North Dec. 1, 2008 Dec. 1, 2008 Feb. 24, 2014 Feb. 24, 2014 Canadian Equity Franklin Bissett Apr. 17, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Canadian Equity Fiera Capital Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Nov. 7, 2014 Specialty Equity NEI Northwest Dec. 11, 2006 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Small Cap Franklin Bissett Apr. 17, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Foreign Equity American Equity MFS Apr. 17, 2000 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 American Equity Desjardins Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 Global Dividend Desjardins Sept. 24, 2012 Feb. 24, 2014 Feb. 24, 2014 Global Equity MFS Dec. 1, 2008 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 International Equity MFS Nov. 15, 1995 Dec. 14, 1998 Oct. 29, 2007 Feb. 24, 2014 Feb. 24, 2014 International Equity Growth Desjardins Sept. 24, 2012 Feb. 24, 2014 Feb. 24, DFS GUARANTEED INVESTMENT FUNDS

287 The annual financial statements ( financial statements ) of the Funds are presented in Canadian dollars (CAD), the Funds functional and presentation currency. The main activities of the Funds are disclosed in the section Strategy in Using Financial Instruments in the section Notes to the Financial Statements Specific Information pertaining to each Fund. In October 2015, the Company made modifications to the Fund names for the following Funds: Old Fund name DFS GIF Diversified Income Quotential DFS GIF Balanced Income Quotential DFS GIF Canadian Balanced Bissett DFS GIF Balanced Growth Quotential DFS GIF Growth Quotential DFS GIF Dividend Income Bissett DFS GIF Canadian Equity Bissett DFS GIF Small Cap Bissett DFS GIF Income Fiera DFS GIF Canadian Balanced Fiera DFS GIF Canadian Equity Fiera DFS GIF Growth and Income Northwest DFS GIF Canadian Dividend Northwest DFS GIF Specialty Equity Northwest DFS GIF Global Growth Northwest Select New Fund name DFS GIF Diversified Income Franklin Quotential DFS GIF Balanced Income Franklin Quotential DFS GIF Canadian Balanced Franklin Bissett DFS GIF Balanced Growth Franklin Quotential DFS GIF Growth Franklin Quotential DFS GIF Dividend Income Franklin Bissett DFS GIF Canadian Equity Franklin Bissett DFS GIF Small Cap Franklin Bissett DFS GIF Income Fiera Capital DFS GIF Canadian Balanced Fiera Capital DFS GIF Canadian Equity Fiera Capital DFS GIF Growth and Income NEI Northwest DFS GIF Canadian Dividend NEI Northwest DFS GIF Specialty Equity NEI Northwest DFS GIF Global Growth NEI Select In October 2015, the Company closed the following Funds: Fund name DFS GIF Canadian Dividend Fiera DFS GIF Income Beutel Goodman DFS GIF Global High Income Multi-managers DFS GIF Balanced Ethical DFS GIF Global Fidelity 2. BASIS OF PRESENTATION International Financial Reporting Standards ( IFRS ) These financial statements have been prepared in compliance with International Financial Reporting Standards ( IFRS ), applicable to the preparation of financial statements. The Funds adopted this basis of accounting in 2014, as required by Canadian securities legislation and the Canadian Accounting Standards Board. Statement of Compliance The policies applied in these financial statements are based on IFRS in effect as of April 14, 2016, the date on which financial statements have been approved for publication by the Audit and Risk Management Committee of the Company. Significant Accounting Policies The significant measurement and presentation policies applied to prepare these financial statements are described below. Financial Assets and Liabilities The Funds financial assets consist primarily of investments in non-derivative financial instruments and derivative financial instruments presented in the schedule of investment portfolio. Financial liabilities consist primarily of derivative financial instruments. Financial assets and liabilities are recognized on the date the Funds become a party to the contractual provisions of the instrument, namely the trade date. DFS GUARANTEED INVESTMENT FUNDS 285

288 NOTES TO THE FINANCIAL STATEMENTS (cont.) Classification of Financial Instruments The Funds classify their financial assets and liabilities in the following categories: Financial assets at fair value through profit or loss ( FVTPL ): Held for trading: derivative financial instruments; Designated at FVTPL: all other investments including equity and fixed-income securities. Financial assets at amortized cost: Loans and receivables: cash and all other receivables. Financial liabilities at FVTPL: Held for trading: derivative financial instruments and short positions. Financial liabilities at amortized cost: Bank overdraft and other payables. A financial instrument is designated at FVTPL if it eliminates or significantly reduces a measurement or a recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Funds obligation concerning net assets attributable to Contract Owners is recorded at the redemption amount that approximates fair value. The accounting policies used to measure the fair value of investments and derivatives are identical to those used in measuring the net asset value for transactions with Contract Owners except where the closing price for financial assets and liabilities is not within the bid-ask spread. As at December 31, 2015 and 2014, there were no differences between the Funds net asset value per unit for transactions and their net assets attributable to Contract Owners per unit, in accordance with IFRS except for the DFS GIF Global Equity MFS and the DFS GIF International Equity MFS as at December 31, Refer to the Notes to the Financial Statements Specific Information. Determination of the Fair of Financial Instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an ordinary transaction between market participants at the valuation date. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the disclosure date and there is little subjectivity in its determination. The Funds use the closing price for both financial assets and financial liabilities where this price falls within the bid-ask spread. In circumstances where the closing price is not within the bid-ask spread, the Company determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. 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 Funds use a variety of methods and make assumptions that are based on existing market conditions at each disclosure date. Valuation techniques include the use of comparable recent arm s length transactions, the fair value of other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other techniques commonly used by market participants and which make the maximum use of observable inputs. Refer to Note 7, Financial Instruments Disclosures for further information about the Funds fair value measurements. Liquidity Cash (bank overdraft) is measured at cost, which closely approximates fair value. Money Market Securities Money market securities are recorded at cost, together with accrued interest, which closely approximates fair value. Equities and Index-Based Investments Equity and index-based investments securities are recorded at the closing price of the accredited stock exchange on which the corresponding security is principally traded. Non-rated warrants are valued with a recognized valuation model, including Black & Scholes. Bonds, Mortgage-Backed Securities and Asset-Backed Securities Bonds, mortgage-backed securities and asset-backed securities are valued based on prices obtained from recognized securities dealers. Investment Funds Units of underlying funds are generally valued based on the net asset value per unit provided by the underlying fund s manager at the end of each valuation day. Derivative Financial Instruments Certain Funds may use an array of derivative financial instruments such as foreign currency forward and futures contracts 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. Refer to the section Offsetting Financial Assets and Liabilities for further information about the Fund s offsetting. Foreign Currency Forward Contracts and Forward Contracts The fair value of these instruments corresponds to the gains or losses that would result from the contract close-out on the valuation date; this value is recorded in Unrealized appreciation (depreciation) on derivatives in the Statement of Financial Position. 286 DFS GUARANTEED INVESTMENT FUNDS

289 Futures Contracts Futures contracts are valued at fair value and are settled daily through brokers acting as intermediaries. Any amounts receivable (payable) from the settlement of futures contracts are recorded in Receivable (Payable) on futures contracts in the Statement of Financial Position. Valuation of Unlisted Securities and Other Investments When the valuation principles of the aforementioned investments are not appropriate, fair value is determined according to the Company s best estimates, based on established valuation procedures and on prevailing market conditions on each valuation date. These procedures cover, among others, securities no longer traded, securities issued by private corporations and illiquid securities. For further information, refer to Note 3 Critical Accounting Judgments, Estimates and Assumptions. 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 the cost is determined using the First In First Out method. The average cost does not include amortization of premiums or discounts on fixed-income securities with the exception of stripped bonds. Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities by the Funds are recognized in the Statement of Comprehensive Income. The difference between the unrealized appreciation (depreciation) of investments at the beginning and at the end of the year is included in Net unrealized gain (loss) on investments in the Statement of Comprehensive Income. On disposal of an investment, the difference between the fair value and the cost of the investment is included in Net realized gain (loss) on investments in the Statement of Comprehensive Income. Offsetting Financial Assets and Financial Liabilities Financial assets and liabilities are offset in the Statement of Financial Position for the Funds if and only if a Fund has: a legally enforceable and unconditional right to offset the recognized amounts and; an intention to settle on a net amount, or to close-out the asset and settle the liability simultaneously. The Funds have a legally enforceable and unconditional right to offset a financial asset and liability when they meet the following criteria: 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, securities lending, repurchase transactions and receivable for investments sold and payable for investments purchased that are subject to master netting or similar agreements do not meet the criteria for offsetting in the Statement of Financial Position, as they give a right to an offset that is enforceable only in the event of default, insolvency or bankruptcy. Exchange-traded derivatives traded through brokers that are also subject to master netting agreements do not meet the criteria for offsetting, as they give a right to an offset that is only enforceable in the normal course of business. In conclusion, the Funds cannot offset the amounts in the Statement of Financial Position, as the conditions mentioned above have not been met. Other Assets and Liabilities Premiums receivable, receivable for investments sold, interest, dividends and other receivables and cash guarantee received for repurchase transactions are classified as loans and receivables and are recorded at cost. Similarly, accrued expenses, withdrawals payable, payable for investments purchased and interest, dividends and others payables, as well as commitments related to repurchase transactions, are classified as financial liabilities and recorded at amortized cost. Given their short-term maturity, their carrying amount approximates their fair value. Securities Lending and Repurchase Transactions Certain Funds may enter into securities lending and repurchase transactions through the securities lending program of the Funds custodian, Desjardins Trust Inc. (Trust). The loaned securities and repurchased securities are not derecognized in the Statement of Financial Position as substantially all the risks and advantages of ownership of these securities is kept. To limit the risk that the counterparty fails to fulfill its obligations, the Funds obtain collateral, representing at least 102% of the contract amount, determined daily based on the fair value of the previous business day s loaned securities or repurchase transactions. Securities received as collateral in securities lending transactions are not recognized in the Statement of Financial Position as substantially all the risks and advantages of ownership of these securities have not been transferred to the Funds. Cash guarantees received for securities lending and repurchase transactions are recognized as financial assets in Cash guarantee received for securities lending and/or Cash guarantee received for repurchase transactions, as appropriate in the Statement of Financial Position. A liability representing the obligation to return the securities is recognized in Commitments related to securities lending and/or Commitments related to repurchase transactions, as appropriate. Revenue generated through the securities lending program is recognized at a predetermined rate. This revenue is included in Revenue from securities lending and repurchase transactions in the Statement of Comprehensive Income. For further information regarding the Funds authorized to engage in repurchase and securities lending transactions, please refer to the Notes to the Financial Statements Specific Information pertaining to each Fund. DFS GUARANTEED INVESTMENT FUNDS 287

290 NOTES TO THE FINANCIAL STATEMENTS (cont.) Income Interest for attribution purposes from investments in debt securities and presented in the Statement of Comprehensive Income is recognized as it is earned. The Funds do not amortize premiums paid or discounts received on the purchase of debt securities except for stripped bonds, which are amortized on a straight line basis. Dividends are recognized as income on the ex-dividend date. Interest and dividend distributions received from underlying funds are recorded at the date of distribution. Distributions received from income and royalty trust investments are classified as income, capital gains or return of capital based on amounts reported by the management of these trusts. If such specific information is not available, the Company will determine the split at its discretion. Foreign income is accounted for on a gross amount received and is included in the income section in the Statement of Comprehensive Income. On derivative contract close-out, the gains and losses from derivatives held for hedging purposes are included in Net realized gain (loss) on derivatives in the Statement of Comprehensive Income. Gains and losses from derivatives held for purposes other than hedging are included in Net income (loss) from derivative financial instruments in the Statement of Comprehensive Income. Foreign Currency Translation The Funds premiums and withdrawals are denominated in Canadian dollars. Foreign 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. 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 presented within Net realized gain (loss) on investments and Net unrealized gain (loss) on investments in the Statement of Comprehensive Income. per Unit from Operations Attributable to Contract Owners The increase (decrease) in net assets per unit from operations attributable to Contract Owners, presented in the Statement of Comprehensive Income is calculated by dividing the increase (decrease) in net assets from operations attributable to Contract Owners per unit by the average number of units outstanding during the year. Taxation Under the Income Tax Act (Canada), each Fund is treated as a segregated fund trust. The Fund s income, as well as gains or losses realized, if any, are allocated to Contract Owners on a regular basis. In the case of interest that accumulates in a registered account, Contract Owners will not receive annual tax slips. However, any amount paid to Contract Owners or former Contract Owners may be subject to be taxed in their hands. On the other hand, for interest that accumulates in a non-registered account, Contract Owners will receive an annual tax slip for any income, gains or losses allocated. Under current tax laws, Funds do not pay income taxes, with the exception of foreign tax withholdings that may apply. In certain circumstances, to avoid double taxation to the Contract Owners, the Funds adjust the cost of the investments held to properly reflect the adjusted cost base for tax purposes. Investment in Entities The Funds meet the definition of IFRS 10, Consolidated Financial Statements, of investment entities and account for their investments in underlying funds at FVTPL. According to IFRS 12, Disclosure of Interests in Other Entities, the Funds must disclose specific information on their investments in other entities, as Subsidiaries, Associates and Structured Entities. Subsidiaries An entity, including investments in any other investment 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 who exercises control. The Company has determined that its investments in underlying funds, index-based investments, asset-backed securities and mortgage-backed securities are Structured Entities, unless the specified relationship is different. Refer to the section Notes to the Financial Statements Specific Information pertaining to each Fund for more information on these entities. Accounting Standards Issued but not yet Applied In November 2009, IFRS 9, Financial Instruments, was issued and subsequently amended in October This was the first phase of the project on classification and measurement of financial assets and liabilities. IFRS 9 will replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has been completed in three phases, including minor amendments to classification and measurement of financial assets and liabilities, impairment of financial assets, and general hedge accounting. Accounting for macro hedging has been removed from IFRS 9 and is expected to be issued as a separate standard. The effective date will be January 1, 2018 with early adoption permitted. The Company is currently assessing the impact of the adoption of these amendments on the financial statements. 288 DFS GUARANTEED INVESTMENT FUNDS

291 3. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS The preparation of financial statements requires the Management of the Company 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 paragraphs discuss the most significant accounting judgments and estimates that the Funds have made in preparing the financial statements. Fair Measurement of Derivatives and Securities not Quoted in an Active Market The Funds may hold financial instruments that are not quoted in active markets, including derivatives. Fair value is determined based on models that make maximum use of observable inputs and rely as little as possible on unobservable inputs. The Funds consider the data observable if market data is readily available, distributed or updated on a regular basis, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market. The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Company. When no quoted prices are available, the fair value is estimated using present value or other valuation methods, which are influenced by the assumptions used concerning the amount and timing of estimated future cash flows and discount rates, which reflect varying degrees of risk, including liquidity risk, credit risk, and risks related to interest rates, exchange rates, and price and rate volatility. The calculation of the fair values may differ given the role that judgment plays in applying the acceptable estimation and valuation techniques. Estimated fair value reflects market conditions on a given date and for this reason, it may not be representative of future fair values. Refer to Note 7, Financial Instruments Disclosures for further information on fair value measurement of financial instruments. Classification and Measurement of Investments and Application of the Fair Option In classifying and measuring financial instruments held by the Funds, the Company is required to make significant judgments about whether or not the business of the Funds is to invest on a total return basis for the purpose of applying the fair value option for financial assets under IAS 39. The most significant judgment lies in determining if certain investments are held-for-trading, and whether the fair value option can be applied to those that are not. For further information on financial instruments, refer to Note 2, Basis of Presentation. 4. NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Structure of the Funds and the Units attributed The Funds are wholly owned assets of Desjardins Financial Security, which have been segregated from the Company s other assets. Except for instances where the Company has acquired an interest in a Fund, the Funds assets may only be used to pay benefits under the Contracts. Each Fund has a series of units, which are attributed to Contracts for the purpose of determining the value of benefits to the units attributable to those Contracts. A Contract Owner acquires no direct claim on the units or assets of a Fund by purchasing a Contract but only the benefits that are provided under the Contract. Units within the same series of Funds have the same net asset value per unit. Subject to the Company s administrative rules, Contract Owners have the right to make transactions under their Contracts such as premiums, withdrawals and switches between units of Funds. As a result of these transactions, units are attributed to and withdrawn from the Contract based on each Contract s terms and conditions or as provided by law. Since the Contract Owner does not own units of a Fund, ownership of units cannot be sold or transferred to another party. There are no voting rights associated with the units of the Fund. Classification of Units Attributable to Contract Owners Under IFRS, IAS 32, Financial Instruments: Presentation ( IAS 32 ), requires that units or shares of an entity which include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset be classified as financial liability. Since the units of the Funds do not meet the criteria in IAS 32 for classification as equity, they are presented as financial liabilities. The Funds issue series of units to Contract Owners that include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset. These series of units attributable to Contract Owners have different characteristics and are therefore classified as financial liabilities. Valuation of the Units The units of a Fund are valued according to the administrative rules established by the Company and in accordance with the Contract and all laws and regulations applicable to the Funds. These units differ with respect to redemption charges and management fees charged to each series (See Note 5). The net asset value per unit is determined on each market day by dividing the net assets attributable to Contract Owners by its outstanding units. Series of Units available The Desjardins Financial Security Guaranteed Investment Funds Plan, the Millennia III Plan, and the Imperial Growth Plan, as well as the various Contract versions offered under each of these Plans, offers different Series providing different guarantees and provisions as well as varying Management Expense Ratios (MERs). Series 1: This Series was offered under the Millennia III Plan through two different Contracts: the Millennia lll and Millennia lll New Era Contracts. The Millennia III Plan was offered from November 15, 1995 to October 28, Series 3: This Series was offered under the Millennia III Plan through two different Contracts: the Millennia lll Classic and Millennia lll New Era Contracts. The Millennia III Plan was offered from November 15, 1995 to October 28, DFS GUARANTEED INVESTMENT FUNDS 289

292 NOTES TO THE FINANCIAL STATEMENTS (cont.) Series 5: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios Contract. The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract. Series 6: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios2 Contract. The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract. Series 7: This Series was offered under the Desjardins Financial Security Guaranteed Investment Funds Plan through the Helios2 Contract. The Desjardins Financial Security Guaranteed Investment Funds Plan was first offered starting on October 29, 2007 and currently, the only Contract available is the Helios2 Contract. Series IGP: This Series was offered under the Imperial Growth Plan through the three remaining Contracts (C71, C81, and C88). The Imperial Growth Plan was offered pre Number of Units The number of units outstanding in each Fund as at December 2015 and 2014, and the number of units attributed to and withdrawn from Contracts during the years are as follows: Outstanding Units Attributed Units Withdrawn Units INVESTMENT SOLUTIONS Conservative Series ,397 16,435 3,038 Series ,362, , , , ,946 24,301 Series ,400 3, ,440 3,918 4,958 Moderate Series ,486 22,517 3,031 Series ,402, ,811 1,666, , ,959 22,303 Series ,703 62, ,214 62,490 1 Balanced Series ,714 12,714 Series ,848,127 1,702,661 3,393,702 1,839, , ,666 Series ,007, , , ,416 33, Growth Series ,307 32,041 15,734 Series ,315, ,750 2,591,622 1,032, , ,726 Series ,018 94, ,455 96,803 46,537 2,703 Maximum Growth Series Series , , , ,807 21, Series ,854 3,854 3,854 INDIVIDUAL FUNDS Income Money Market Series ,554 87,684 1, ,545 9,025 Series , , , , , ,451 Series ,999,289 2,974,880 1,438,897 1,254,715 1,414,488 1,975,249 Series ,698, ,195 2,273, , , ,947 Series , , , , ,187 57,493 Series IGP , ,350 42, ,831 56,208 7,481 Income Fiera Capital Series , ,096 4,666 21,462 50,176 91,865 Series ,068, , ,491 70, , ,339 Series ,764,680 8,636, , ,324 1,633,950 3,042,237 Series ,096, , , , ,683 25,908 Series ,411 11,359 43,819 14, ,924 Canadian Bond Series ,626,091 7,983, ,795 Series , ,193 13,380 Series ,960 30, DFS GUARANTEED INVESTMENT FUNDS

293 Outstanding Units Attributed Units Withdrawn Units Balanced and Asset Allocation Diversified Income Franklin Quotential Series , , , , , ,436 Series ,190,596 23,884,320 3,075,265 2,531,238 3,768,989 3,823,523 Series ,946,703 1,493,655 2,822,916 1,525, , ,638 Series ,674 23, ,483 23,300 1,109 Balanced Income Franklin Quotential Series ,478,170 1,616, , , , ,753 Series ,381,738 35,691,703 2,700,920 2,496,875 5,010,885 4,556,434 Series ,980, ,106 2,250, , ,267 11,445 Series ,016, , , ,900 8, Canadian Balanced Fidelity Series ,206,178 1,132, , , , ,435 Series 5 91,416,057 96,288,756 9,199,383 5,658,027 14,072,082 12,606,852 Series ,735,977 1,482,116 4,159,132 1,658, , ,143 Series ,707 76, ,143 77,289 3, U.S. Monthly Income Fidelity Series , , Series , , Series ,476 45,476 Balanced Desjardins SocieTerra Series ,388,622 1,422,454 33,832 Series , , Series ,046 4,046 Global Balanced Jarislowsky Fraser Series ,235,932 1,066, , , , ,453 Series ,251,488 18,342,150 7,115,465 1,897,823 3,206,127 2,274,688 Series ,552,841 1,558,652 5,811 Series , , Canadian Balanced Fiera Capital Series , ,804 32,454 37, , ,841 Series ,551,148 1,865,729 98,613 82, , ,625 Series ,842,680 14,987,766 1,217, ,052 2,362,091 1,876,873 Series ,400, ,235 1,135, ,487 81,471 17,252 Series ,956 60,134 50,290 60,709 11, Canadian Balanced Franklin Bissett Series ,009,984 1,209,296 78, , , ,255 Series ,114,831 27,885,251 1,661,612 3,858,588 6,432,032 3,593,363 Series ,964,550 3,336,259 2,478,482 3,455, , ,669 Series , , , ,240 69,365 4,404 Balanced Growth Franklin Quotential Series ,036,476 2,181, , , , ,183 Series ,569,281 80,633,606 6,788,994 4,113,804 9,853,319 7,865,075 Series ,262,879 1,587,822 2,977,327 1,669, ,270 81,825 Series ,873 86, ,744 86,170 3, Canadian Balanced CI Signature Series ,031,694 13,042,080 2,480,240 1,224,616 2,490,626 1,550,984 Series ,204,058 1,583,530 3,258,074 1,657, ,546 74,153 Series , , , ,326 21,601 2,744 Income and Growth CI Signature Series ,558,081 8,232,329 1,471,848 1,800,826 2,146, ,990 Series ,249,549 1,205,144 3,494,017 1,226, ,612 21,549 Series ,152 93, ,890 96,131 9,979 2,890 Growth and Income NEI Northwest Series , ,186 30,669 81, ,825 66,734 Series ,715,281 24,654,403 1,649,411 2,485,656 3,588,533 2,503,549 Series ,389,822 1,122,868 1,584,984 1,176, ,030 53,553 Series ,977 85,393 64,394 85,562 13, DFS GUARANTEED INVESTMENT FUNDS 291

294 NOTES TO THE FINANCIAL STATEMENTS (cont.) Outstanding Units Attributed Units Withdrawn Units Global Growth NEI Select Series , ,107 52,599 25, , ,212 Series ,861,708 9,004, , ,359 1,060, ,531 Series ,933, ,328 1,529, ,634 80,514 14,306 Series ,684 27, ,709 30,710 2,018 2,717 Canadian Asset Allocation CI Cambridge Series , , , , ,482 98,575 Series , , , , ,765 4,547 Series ,731 3,847 32,884 3,847 Growth Franklin Quotential Series , ,920 31,766 79, , ,137 Series ,017,907 9,673, , , ,603 1,044,247 Series , , , ,352 43,183 25,532 Series ,282 3,897 3,397 3, Canadian Equity Dividend Income Franklin Bissett Series ,740,873 2,728,513 1,658, , , ,782 Series ,700,901 9,166,439 7,330,662 1,166,903 2,796,200 1,229,850 Series ,227, , , , ,659 48,406 Series , ,990 26, ,611 46,070 1,621 Canadian Dividend NEI Northwest Series ,425,115 2,374, , , , ,152 Series , , , ,908 45,314 12,872 Series ,864 3,864 43,901 40,037 Canadian Equity Jarislowsky Fraser Series , ,098 32,225 30, , ,239 Series ,300,878 25,225, , ,756 4,456,573 2,627,803 Series ,043 19, Series ,000 4,000 Canadian Equity Fidelity True North Series , ,972 52,672 32,181 31,538 33,711 Series ,151,295 2,225, , , , ,086 Series ,178, , , , ,270 34,834 Series ,500 14, ,777 14, Canadian Equity Franklin Bissett Series ,429,085 1,698,893 59, , , ,608 Series ,082,089 1,367,461 97, , , ,096 Series , , , , ,175 39,095 Series ,293 3,745 3,766 3, Canadian Equity Fiera Capital Series ,627,523 1,511, ,533 31, , ,323 Series ,084,988 1,270,209 37, , , ,248 Series , ,443 30,604 40,159 83,467 83,078 Series ,364 46,502 53,855 55,228 14,993 8,726 Series ,308 8,667 8, Series IGP , ,490 1, , ,697 19,014 Specialty Equity NEI Northwest Series , ,381 18,132 21, , ,959 Series ,947,641 2,316, , , , ,116 Series , , , ,351 47,005 14,036 Series ,054 4,054 4,054 Small Cap Franklin Bissett Series , ,457 14,560 34, , ,934 Series , ,318 57, , , ,743 Series , , , , ,811 19,569 Series ,003 25, ,637 18, DFS GUARANTEED INVESTMENT FUNDS

295 Outstanding Units Attributed Units Withdrawn Units Foreign Equity American Equity MFS Series , ,876 77,396 80, , ,125 Series ,536,194 1,272, , , , ,770 Series , , , ,133 77,952 7,908 Series ,229 3,882 18,347 3,882 American Equity Desjardins Series , ,617 85,832 24,942 31,957 42,484 Series , , ,163 42,641 96,288 52,846 Series ,350,585 1,064, , , , ,610 Series , , , , ,407 14,788 Series ,739 28,835 57,405 28,894 5, Global Dividend Desjardins Series ,104, , , , , ,606 Series , , , ,524 68,327 6,599 Series ,742 6,782 65,525 6,785 3,565 3 Global Equity MFS Series ,899 43, ,482 4,134 21,658 1,281 Series ,426,283 5,763,818 7,429, , , ,879 Series ,381 22, ,538 22,883 15, Series ,940 3,940 3,940 International Equity MFS Series , ,283 28,607 10,799 40,827 39,754 Series , ,724 55,309 41, , ,089 Series , , ,430 66, , ,264 Series ,017 2, ,781 5,480 19,696 2,548 Series ,532 15,357 10,175 15,357 International Equity Growth Desjardins Series , ,567 36,954 76,475 21,285 28,722 Series , ,181 68, ,333 16,649 2,152 Series ,150 4,150 4, MANAGEMENT FEES AND OTHER EXPENSES Management fees In return for investment management, Desjardins Financial Security is paid a management fee from the Funds based on the net asset value of the units attributed to each series of each Fund and calculated daily. The management fees, as a percentage of the daily average net assets, are as follows: Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP % % % % % % INVESTMENT SOLUTIONS Conservative Moderate Balanced Growth Maximum Growth INDIVIDUAL FUNDS Income Money Market Income Fiera Capital Canadian Bond DFS GUARANTEED INVESTMENT FUNDS 293

296 NOTES TO THE FINANCIAL STATEMENTS (cont.) Series 1 Series 3 Series 5 Series 6 Series 7 Series IGP % % % % % % Balanced and Asset Allocation Diversified Income Franklin Quotential Balanced Income Franklin Quotential Canadian Balanced Fidelity U.S. Monthly Income Fidelity Balanced Desjardins SocieTerra Global Balanced Jarislowsky Fraser Canadian Balanced Fiera Capital Canadian Balanced Franklin Bissett Balanced Growth Franklin Quotential Canadian Balanced CI Signature Income and Growth CI Signature Growth and Income NEI Northwest Global Growth NEI Select Canadian Asset Allocation CI Cambridge Growth Franklin Quotential Canadian Equity Dividend Income Franklin Bissett Canadian Dividend NEI Northwest Canadian Equity Jarislowsky Fraser Canadian Equity Fidelity True North Canadian Equity Franklin Bissett Canadian Equity Fiera Capital Specialty Equity NEI Northwest Small Cap Franklin Bissett Foreign Equity American Equity MFS American Equity Desjardins Global Dividend Desjardins Global Equity MFS International Equity MFS International Equity Growth Desjardins Operating expenses In addition to management fees, a charge is applied to each Fund for operating and administrative expenses relating to the Fund. Each Fund is also responsible for all applicable taxes, including Goods and Services Tax ( GST ) and Harmonized Sales Tax ( HST ) if any, and all brokerage commissions incurred by a Fund in buying and selling investments on behalf of a Fund. 294 DFS GUARANTEED INVESTMENT FUNDS

297 Management Expense Ratios Some expenses (audit fees, legal fees, custodial fees, marketing costs, etc.) have been absorbed by the Company. Management expense ratios for all the Funds would be nine basis points higher if these expenses had been charged to the Funds. The Company does not intend to change its method of allocating costs. The management expense ratios for each of the past five years, which includes management, guarantee and operating expenses, are as follows*: December December December December December % % % % % INVESTMENT SOLUTIONS Conservative Series ** Series ** Series ** Moderate Series ** Series ** Series ** Balanced Series ** Series ** Series ** Growth Series ** Series ** Series ** Maximum Growth Series ** Series ** Series ** INDIVIDUAL FUNDS Income Money Market*** Series Series Series Series ** Series ** Series IGP ** Income Fiera Capital Series Series Series Series ** Series ** Canadian Bond Series ** Series ** Series ** Balanced and Asset Allocation Diversified Income Franklin Quotential Series Series Series ** Series ** DFS GUARANTEED INVESTMENT FUNDS 295

298 NOTES TO THE FINANCIAL STATEMENTS (cont.) December December December December December % % % % % Balanced Income Franklin Quotential Series Series Series ** Series ** Canadian Balanced Fidelity Series Series Series ** Series ** U.S. Monthly Income Fidelity Series ** Series ** Series ** Balanced Desjardins SocieTerra Series ** Series ** Series ** Global Balanced Jarislowsky Fraser Series Series Series ** Series ** Canadian Balanced Fiera Capital*** Series Series Series Series ** Series ** Canadian Balanced Franklin Bissett Series Series Series ** Series ** Balanced Growth Franklin Quotential Series Series Series ** Series ** Canadian Balanced CI Signature Series Series ** Series ** Income and Growth CI Signature Series ** Series ** Series ** Growth and Income NEI Northwest Series Series Series ** Series ** 296 DFS GUARANTEED INVESTMENT FUNDS

299 December December December December December % % % % % Global Growth NEI Select Series Series Series ** Series ** Canadian Asset Allocation CI Cambridge Series ** Series ** Series ** Growth Franklin Quotential Series Series Series ** Series ** Canadian Equity Dividend Income Franklin Bissett Series Series Series ** Series ** Canadian Dividend NEI Northwest Series ** Series ** Series ** Canadian Equity Jarislowsky Fraser Series Series Series ** Series ** Canadian Equity Fidelity True North Series Series Series ** Series ** Canadian Equity Franklin Bissett Series Series Series ** Series ** Canadian Equity Fiera Capital Series Series Series Series ** Series ** Series IGP ** Specialty Equity NEI Northwest Series Series Series ** Series ** Small Cap Franklin Bissett Series Series Series ** Series ** DFS GUARANTEED INVESTMENT FUNDS 297

300 NOTES TO THE FINANCIAL STATEMENTS (cont.) December December December December December % % % % % Foreign Equity American Equity MFS*** Series Series Series ** Series ** American Equity Desjardins Series Series Series Series ** Series ** Global Dividend Desjardins Series ** Series ** Series ** Global Equity MFS*** Series Series Series ** Series ** International Equity MFS*** Series Series Series Series ** Series ** International Equity Growth Desjardins Series ** Series ** Series ** * Starting in 2013, management expense ratios include all applicable sales taxes (sales taxes not included before 2013). ** Annualized. *** The management expense ratios for these Funds include underlying fund managers fees, ranging from 0.01 to 0.05%. 6. RELATED PARTY TRANSACTIONS The Funds pay management fees and operating expenses to the Company, which are presented in the Statement of Comprehensive Income. Those fees are calculated on a daily basis with the net asset value of the Fund. The management fees are paid monthly at the annual rate specified in Note 5. Accrued expenses, presented in the Statement of Financial Position, are to be paid to the Company. Some Funds have investments in underlying funds from related parties. As at December 31, 2015 and 2014, the Company had the following seed capital investments: December 31, 2015 December 31, 2014 Conservative 141, ,434 Moderate 169, ,098 Balanced 197, ,131 Growth 227, ,331 Maximum Growth 255, ,692 Money Market 82,464 54,250 Income Fiera Capital 21,886 41,425 Canadian Bond 21,451 Diversified Income Franklin Quotential 21,797 29,420 Balanced Income Franklin Quotential 22,256 26, DFS GUARANTEED INVESTMENT FUNDS

301 December 31, 2015 December 31, 2014 Canadian Balanced Fidelity 22,336 35,477 U.S. Monthly Income Fidelity 443,758 Balanced Desjardins SocieTerra 139,525 Global Balanced Jarislowsky Fraser 77,425 Canadian Balanced Fiera Capital 22,113 38,354 Canadian Balanced Franklin Bissett 116, ,086 Balanced Growth Franklin Quotential 22,440 24,518 Canadian Balanced CI Signature 219, ,133 Income and Growth CI Signature 203, ,195 Growth and Income NEI Northwest 60, ,529 Global Growth NEI Select 22,518 28,721 Canadian Asset Allocation CI Cambridge 226, ,803 Growth Franklin Quotential 22,777 23,032 Dividend Income Franklin Bissett 36,927 45,911 Canadian Dividend NEI Northwest 231, ,009 Canadian Equity Jarislowsky Fraser 20,657 Canadian Equity Fidelity True North 133, ,445 Canadian Equity Franklin Bissett 18,612 45,719 Canadian Equity Fiera Capital 38,843 81,710 Specialty Equity NEI Northwest 245, ,620 Small Cap Franklin Bissett 15,725 70,727 American Equity MFS 27,133 23,878 American Equity Desjardins 819, ,756 Global Dividend Desjardins 268, ,239 Global Equity MFS 247, ,012 International Equity MFS 24,386 23,122 International Equity Growth Desjardins 265, ,116 The related parties transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. 7. FINANCIAL INSTRUMENTS DISCLOSURES DFS Preliminary Information The net assets of the DFS Guaranteed Investment Funds are held by the Company on behalf of all Contract Owners. These Funds are not separate legal entities. The Contract Owners do not own any of the assets of the Funds nor own an interest in the Funds. However, the financial instrument risks resulting from the Funds are assumed by the Contract Owners. The value of the segregated fund may increase or decrease according to market fluctuations. Moreover, the Funds are offered with a deposit guarantee of 75 to 100% that protects the deposits until specific maturity dates. For the Fund of funds, details regarding the top holdings of the underlying fund(s) are shown in the appendix of the schedule of investment portfolio. Hierarchy of Financial Instruments at Fair The fair value measurement of financial instruments is determined using the following three levels of the fair value hierarchy: Level 1 Measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 Valuation techniques based primarily on observable market data; Level 3 Valuation techniques not based primarily on observable market data. 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. DFS GUARANTEED INVESTMENT FUNDS 299

302 NOTES TO THE FINANCIAL STATEMENTS (cont.) Measurement Monitoring The Company is responsible for establishing the fair value measurements included in the Funds financial statements, including Level 3 measurements. The Company obtains prices from a pricing agency, monitors and analyzes these prices on a daily basis. A Measurement Monitoring Committee established by the Company ensures that appropriate operating procedures and a proper monitoring structure are in place and followed. Monthly monitoring reports are prepared and sent to each member for approval. The Measurement Monitoring Committee verifies the measurements on a monthly basis. On a quarterly basis, this committee examines and approves the Level 3 measurements after obtaining confirmation of the measurements from each portfolio manager, as needed. The committee signs off on any adjustments made to prices or estimates provided by the pricing agency. Classification within the Fair Hierarchy A change in the fair value measurement method could result in a transfer between levels. The Funds policy is to record the impacts of transfers between levels on the date of the event or change in circumstances behind the transfer. The following types of investments may be classified Level 3 if their prices are no longer based on observable inputs. a) Money Market Securities Money market securities primarily include public sector and corporate securities, which are valued using models with inputs including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable. Public sector money market securities guaranteed by the federal and provincial government have been classified as Level 1. Other money market securities have been classified as Level 2. b) 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 generally classified as Level 2. c) Index-Based Investments Index-based Investments are classified as Level 1 when the security is actively traded and a reliable price is observable. d) Bonds Public sector bonds guaranteed by the federal and provincial government are classified as Level 1. Corporate bonds, which are valued using models with inputs including interest rate curves, credit spreads and volatilities are usually classified as Level 2. e) 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, mortgagebacked securities and asset-backed securities are usually classified as Level 2. f) Investment Funds Public investment funds are classified as Level 1 when their prospectus is unrestricted and their price is reliable and observable. Since some investment funds 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. g) Derivative Financial Instruments Derivative instruments consist of foreign currency forward contracts for which counterparty credit spreads are observable and reliable or for which the credit-related inputs are determined to be significant to fair value, are classified as Level 2. Detailed information concerning the fair value hierarchy of each Fund is available in their respective Notes to the Financial Statements pertaining to each Fund. For securities classified as Level 3, the valuation techniques and assumptions are also presented in their respective notes. Management of Risks Arising from Financial Instruments During the course of their activities, the Funds are exposed to a variety of risks associated with financial instruments such as market risk (including currency risk, interest rate risk and price risk), concentration risk, credit risk and liquidity risk. The overall strategy of the Funds risk management focuses on the unpredictability of financial markets and optimizes the Funds financial performance. Most investments involve a risk of loss. For the purpose of the financial statements, certain risks detailed in the Contract and Information Folder are associated with other risks. The market risk, the special equity risk and the sovereign risk are presented under price risk. The credit risk and the derivatives risk are presented under credit risk. In accordance with the Funds investment policy, the Company monitors the Funds risks on a quarterly basis. 300 DFS GUARANTEED INVESTMENT FUNDS

303 Market Risk Market risk is the risk that the fair value, or cash flows associated with, a financial instrument will fluctuate because of a change in the relevant risk variables, such as interest rates and equity prices. The Funds market risk is managed through diversification of the investment portfolio s exposure ratio. The return on investments held by the Funds is monitored by the Company on a monthly basis and reviewed by the investment committee on a quarterly basis. Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in foreign exchange rates. Currency risk is composed of monetary items (usually including cash, receivable amounts in foreign currency, and investments in fixed-income and money market securities) and non-monetary items (usually including investments in equities and investment funds). The non-monetary assets are classified according to the currency of which the security was purchased. The Funds are exposed to the currency risk in holding assets and/or liabilities denominated in currencies other than the Canadian dollar, the Funds functional currency, as the value of the securities denominated in other currencies will fluctuate according to the prevailing exchange rates. The Funds may enter into foreign currency forward contracts to reduce their exposure to currency risk. The Funds exposure to currency risk is shown based on the carrying value of financial assets and financial liabilities (including the notional amount of foreign currency forward contracts and foreign currency futures, if any). If the Canadian dollar decreases in relation to foreign currencies, the value of foreign investments increases. Conversely, if the value of the Canadian dollar increases, the value of foreign investments decreases. Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. Interest rate risk occurs when an investment fund invests in interest-bearing financial instruments. Generally, the value of these securities increases if interest rates decrease, and decreases if interest rates increase. The Company manages this risk by calculating and monitoring the average effective duration of the portfolio of these securities. The Funds hold a limited amount of cash subject to variable interest rates, which expose them to cash flow interest rate risk. Price Risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices, other than those arising from currency risk or interest rate risk. The Company manages this risk by carefully selecting securities and other financial instruments, in accordance with defined limits. The maximum risk resulting from financial instruments is determined by the fair value or contract value of the financial instruments. The Funds overall market positions are monitored on a monthly basis by the Company and reviewed on a quarterly basis by the investment committee. The Funds financial instruments are exposed to price risk arising from uncertainties about the future prices of instruments. Concentration Risk Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location or industry sector. For Funds with an international investment strategy, the concentration by geographic location will be presented according to, among other things, the country of incorporation or region. For Funds with a domestic investment strategy, the concentration by industry sector will be presented according to, among other things, their investments in finance, healthcare or energy sectors, etc. Credit Risk Credit risk is the risk that the financial instrument counterparty will be unable to pay the full amount at maturity. Financial Instrument Transactions The Funds are exposed to credit risk. The Funds and counterparty s respective credit risk are taken into account when determining the fair value of financial assets and liabilities. Transactions are settled or paid on delivery using approved brokers. The risk of default is considered limited as delivery of the securities sold is made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligations. However, there are risks involved in dealing with custodians or prime brokers who settle trades and, in rare circumstances, the securities and other assets deposited with the custodian or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Funds rights to their assets in the case of an insolvency of any such party. The investment grade for fixed-income securities and money market securities is rated by credit rating agencies, such as the Dominion Bond Rating Service ( DBRS ), Standard & Poor s and Moody s. In cases where the credit rating agencies do not agree on a credit rating for fixedincome securities and money market securities, they will be classified following these rules: If two credit ratings are available, but the ratings are different, the lowest rating is used; If three credit ratings are available, the most common credit rating is used; If all three credit rating agencies have different ratings, the middle credit rating is used. DFS GUARANTEED INVESTMENT FUNDS 301

304 NOTES TO THE FINANCIAL STATEMENTS (cont.) The credit rating is then converted to DBRS format. Generally, the greater the credit rating of a security, the lower the probability of it defaulting on its obligations. Derivative financial instruments are financial contracts whose value depends on underlying assets, including interest rates and foreign exchange rates. The vast majority of derivative financial instruments is negotiated by mutual agreement between the Funds and its counterparties, and include foreign currency forward contracts, swaps and options. Other transactions are carried out as part of trades and mainly consist of futures contracts. Securities Lending and Repurchase Transactions Securities lending and repurchase transactions expose the Funds to credit risk. These transactions are governed by Investment Industry Regulatory Organization of Canada participation agreements. The Funds also use netting agreements with counterparties to mitigate credit risk and require a percentage of collateralization (a pledge) on these transactions. The Funds only accept pledges from counterparties that comply with the eligibility criteria defined in their policies. These criteria promote quick realization, if necessary, of collateral in case of default. The collateral received and given by the Funds are mainly cash and government securities. Further information on assets pledged and received as collateral is presented in the Notes to the Financial Statements Specific Information pertaining to each Fund. Liquidity Risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities. The Funds are exposed to daily cash redemptions of units. Most of their assets are therefore invested in liquid investments (i.e. investments that are traded in an active market and that can be readily disposed of). Some Funds may invest in derivatives, debt securities and unlisted equity investments that are not traded in an active market. As a result, some Funds may not be able to quickly liquidate their investments at amounts approximating their fair values, or be able to respond to specific effects such as deterioration in the creditworthiness of any particular issuer. Units attributable to Contract Owners are redeemable on demand at the owner s option. However, the Company does not expect that the contractual maturity disclosed will be representative of the actual cash outflows, as Contract Owners of the instruments typically retain them for a longer period. The majority of the remaining liabilities are due within the next 3 months. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Management of Risks from Units Attributable to Contract Owners Units attributed and outstanding are considered as the Funds capital. The Funds are not subject to specific capital requirements on the premiums and withdrawals, other than certain minimum subscription requirements. Contract Owners are entitled to require payment of the net asset value per unit for all or any of the units they hold by giving an official notice to the Company within the prescribed time period. Units attributable to Contract Owners are redeemable for cash equal to a pro rata share of the Funds net asset value. Additional Information For further information regarding the hierarchy of financial instruments at fair value measurement and risk exposure of each Fund, please refer to the Notes to the Financial Statements Specific Information pertaining to each Fund. Details on risks and various documents on underlying funds (detailed description of each Fund s investment policy and, where applicable, the investment policy and/or prospectus and financial statements of the underlying fund(s)) are available upon request by writing to the Company at its address: 1 Complexe Desjardins P. O. Box 9000 Montréal, Québec H5B 1H5 302 DFS GUARANTEED INVESTMENT FUNDS

305 INDEPENDENT AUDITOR S REPORT To the Contract Owners of: DFS GIF Conservative DFS GIF Moderate DFS GIF Balanced DFS GIF Growth DFS GIF Maximum Growth DFS GIF Money Market DFS GIF Income Fiera Capital DFS GIF Diversified Income Franklin Quotential DFS GIF Balanced Income Franklin Quotential DFS GIF Canadian Balanced Fidelity DFS GIF Global Balanced Jarislowsky Fraser DFS GIF Canadian Balanced Fiera Capital DFS GIF Canadian Balanced Franklin Bissett DFS GIF Balanced Growth Franklin Quotential DFS GIF Canadian Balanced CI Signature DFS GIF Income and Growth CI Signature DFS GIF Growth & Income NEI Northwest (collectively the Existing Funds ) DFS GIF Balanced Desjardins SocieTerra DFS GIF Canadian Bond DFS GIF U.S. Monthly Income Fidelity DFS GIF Global Growth NEI Select DFS GIF Canadian Asset Allocation CI Cambridge DFS GIF Growth Franklin Quotential DFS GIF Dividend Income Franklin Bissett DFS GIF Canadian Dividend NEI Northwest DFS GIF Canadian Equity Jarislowsky Fraser DFS GIF Canadian Equity Fidelity True North DFS GIF Canadian Equity Franklin Bissett DFS GIF Canadian Equity Fiera Capital DFS GIF Specialty Equity NEI Northwest DFS GIF Small Cap Franklin Bissett DFS GIF American Equity MFS DFS GIF American Equity Desjardins DFS GIF Global Dividend Desjardins DFS GIF Global Equity MFS DFS GIF International Equity MFS DFS GIF International Equity Growth Desjardins (collectively the New Funds and together with the Existing Funds, the Funds ) We have audited the accompanying financial statements of each of the Funds, which comprise the statement of financial position of the Existing Funds as at December 31, 2015 and December 31, 2014 and the New Funds as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to contract owners and cash flows for years or periods then ended, 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. THE COMPANY S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Company 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 Existing Funds as at December 31, 2015 and December 31, 2014 and the New Funds as at December 31, 2015 and the financial performance and cash flows of each of the Funds for the years or periods then ended, as indicated in the statements of comprehensive income of each of the Funds in accordance with International Financial Reporting Standards. 1 Lévis, Québec April 14, CPA auditor, CA, public accountancy permit No. A DFS GUARANTEED INVESTMENT FUNDS 303

306 MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING IN THE AUDITED ANNUAL FINANCIAL STATEMENTS Management The accompanying financial statements have been prepared by the management of the Funds trustee, Desjardins Financial Security Life Assurance Company ( Desjardins Financial Security ), in accordance with International Financial Reporting Standards. Management is responsible for the information contained in the financial statements. Desjardins Financial Security maintains an appropriate system of internal control to ensure that relevant and reliable financial information is produced and that the Funds assets are appropriately accounted for and safeguarded. A summary of the significant accounting policies applicable to the Funds can be found in Note 2 of the Notes to the Financial Statements. Independent Auditor PricewaterhouseCoopers LLP have been appointed by the shareholder, Desjardins Financial Corporation Inc., as the independent auditor of the Funds. Their responsibility is to audit the annual financial statements in accordance with Canadian generally accepted auditing standards and to report to the contract owners of the fairness of the Funds financial position and results of operations as reflected in the annual financial statements. Denis Berthiaume François Drouin Éric Landry President and Chief Operating Officer Senior Vice-President, Finance Vice-President, Investment Solutions Lévis, Québec April 14, DFS GUARANTEED INVESTMENT FUNDS

307

308 GUARANTEED INVESTMENT FUNDS Thank you. Thank you for choosing the strength and stability of a company specialized in providing individual insurance and retirement savings products to over five million Canadians, every day, to ensure their financial security. Thank you for also choosing Desjardins Group, the largest cooperative financial group in Canada, whose financial stability is recognized by the following credit ratings which are comparable, if not superior to those of the five largest Canadian banks and insurance companies: Standard and Poor s A+ Moody s Aa2 Dominion Bond Rating Service AA Fitch AA- The Contract and Information Folder contains important information on the DFS Guaranteed Investment Funds. Please read it carefully before investing. DFS Guaranteed Investment Funds is a registered trademark owned by Desjardins Financial Security Life Assurance Company. DFS Guaranteed Investment Funds are established by Desjardins Financial Security Life Assurance Company. DFS stands for Desjardins Financial Security. This Document is also available on our website: desjardinslifeinsurance.com Desjardins Insurance refers to Desjardins Financial Security Life Assurance Company. 100% This document is printed on Rolland Enviro paper E (16-05)