GUARANTEED INVESTMENT FUNDS MAY 2016 2015 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.
TABLE OF CONTENTS DFS GUARANTEED INVESTMENT FUNDS Investment Solutions DFS GIF Conservative... 4 DFS GIF Moderate... 12 DFS GIF Balanced... 20 DFS GIF Growth... 28 DFS GIF Maximum Growth... 36 Individual Funds Income DFS GIF Money Market.... 46 DFS GIF Income Fiera Capital.... 53 DFS GIF Canadian Bond... 65 Balanced and Asset Allocation DFS GIF Diversified Income Franklin Quotential... 72 DFS GIF Balanced Income Franklin Quotential... 79 DFS GIF Canadian Balanced Fidelity.... 86 DFS GIF U.S. Monthly Income Fidelity... 93 DFS GIF Balanced Desjardins Societerra... 100 DFS GIF Global Balanced Jarislowsky Fraser... 107 DFS GIF Canadian Balanced Fiera Capital.... 114 DFS GIF Canadian Balanced Franklin Bissett... 129 DFS GIF Balanced Growth Franklin Quotential... 136 DFS GIF Canadian Balanced CI Signature... 143 DFS GIF Income and Growth CI Signature... 150 DFS GIF Growth and Income NEI Northwest... 157 DFS GIF Global Growth NEI Select... 164 DFS GIF Canadian Asset Allocation CI Cambridge... 171 DFS GIF Growth Franklin Quotential... 178 Canadian Equity DFS GIF Dividend Income Franklin Bissett... 185 DFS GIF Canadian Dividend NEI Northwest... 192 DFS GIF Canadian Equity Jarislowsky Fraser... 199 DFS GIF Canadian Equity Fidelity True North... 206 DFS GIF Canadian Equity Franklin Bissett.... 213 DFS GIF Canadian Equity Fiera Capital.... 220 DFS GIF Specialty Equity NEI Northwest.... 228 DFS GIF Small Cap Franklin Bissett.... 235 Foreign Equity DFS GIF American Equity MFS... 242 DFS GIF American Equity Desjardins... 249 DFS GIF Global Dividend Desjardins.... 256 DFS GIF Global Equity MFS... 263 DFS GIF International Equity MFS.... 270 DFS GIF International Equity Growth Desjardins... 277 NOTES TO THE FINANCIAL STATEMENTS........................................ 284 INDEPENDENT AUDITOR S REPORT... 304 MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING IN THE AUDITED ANNUAL FINANCIAL STATEMENTS... 305 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. 9000 Montréal (Québec) H5B 1H5 Or send an email to: gifclientservice@dfs.ca. Please include your name, mailing address, telephone number, email 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
DFS GUARANTEED INVESTMENT FUNDS Investment Solutions
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, 2015. 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 10,096 1.0% 10,134 1.3% Since Inception 10,082 0.8% 10,460 2.5% 10,528 2.8% * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015. 4 DFS GUARANTEED INVESTMENT FUNDS
STATEMENT OF FINANCIAL POSITION As at December 31 2015 2014 ASSETS Current Assets Cash 70,175 527 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 399 671 49,109 7,046 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 8,448,200 2,870,803 NET ASSETS PER UNIT Series 5 5.04 Series 6 5.23 5.18 Series 7 5.26 5.19 STATEMENT OF COMPREHENSIVE INCOME Periods Ended December 31 2015 2014 (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 1,630 143,856 18,298 Withholding taxes 1,599 628 145,455 18,926 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 3,919 35,165 DATA PER SERIES SERIES 5** from Operations 349 - per unit 0.07 Average Units 4,845 SERIES 6* from Operations (4,339) 34,813 - per unit 0.21 Average Units 987,539 162,537 SERIES 7* from Operations 7,909 352 - per unit 0.06 0.25 Average Units 136,776 1,382 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 5
DFS GIF CONSERVATIVE (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 2015 2014 (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 31 2015 2014* (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) 31,061 946 Proceeds from sale/maturity of investments 3,502,457 106,037 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 69,648 527 Cash (bank overdraft), beginning of period 527 CASH (BANK OVERDRAFT), END OF PERIOD 70,175 527 SUPPLEMENTAL INFORMATION ON CASH FLOWS FROM/USED IN OPERATING ACTIVITIES Interest paid 2 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. 6 DFS GUARANTEED INVESTMENT FUNDS
SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (99.4%) BlackRock Active Canadian Equity DC Fund 7,973 247,844 219,398 BlackRock CDN US Equity Index Fund, Class D 30,244 505,831 549,431 Desjardins Enhanced Bond Fund, I-Class 175,631 1,974,973 1,966,715 Desjardins Overseas Equity Growth Fund, I-Class 13,644 260,971 274,196 Desjardins Overseas Equity Fund, I-Class 18,306 267,738 259,200 DGIA Canadian Bond Fund 458,969 4,695,740 4,681,311 Fidelity True North Fund, Series O 5,166 235,847 223,068 Franklin Bissett Canadian Equity Fund, Series O 1,824 239,030 222,648 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, 2019 1.8% Canada Housing Trust, 2.35%, December 15, 2018 1.7% Canada Housing Trust, 1.70%, December 15, 2017 1.5% Government of Canada, 5.00%, June 1, 2037 1.4% Government of Canada, 4.00%, June 1, 2041 1.4% DESJARDINS ENHANCED BOND FUND 23.4% Government of Canada, 2.25%, June 1, 2025 8.4% Province of British Columbia, 2.70%, December 18, 2022 2.5% Province of Ontario, 3.15%, June 2, 2022 2.2% Province of Quebec, 2.75%, September 1, 2025 2.1% Province of Ontario, 3.50%, June 2, 2024 2.1% 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
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
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
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%) 1.00 67,586 22,966 S&P/TSX (8%) 3.00 20,276 6,890 S&P 500 (6%) 3.00 15,207 5,167 MSCI EAFE Net (6%) 3.00 15,207 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
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 () 2015 2014 Series 5** 5.04 Series 6* 5.23 5.18 Series 7* 5.26 5.19 Ratios and Supplemental Data Net Asset (000 s) Series 5** 68 Series 6* 7,126 2,850 Series 7* 1,255 20 Number of units outstanding (000) Series 5** 13 Series 6* 1,363 550 Series 7* 238 4 Management expense ratio (MER) 1 (%) Series 5** 2.59 Series 6* 2.49 2.51 Series 7* 2.01 2.01 Portfolio turnover rate 2 (%) 60.19 11.83 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. 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. 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
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, 2015. 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 10,150 1.5% 10,216 2.2% Since Inception 10,082 0.8% 10,571 3.0% 10,677 3.6% * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015. 12 DFS GUARANTEED INVESTMENT FUNDS
STATEMENT OF FINANCIAL POSITION As at December 31 2015 2014 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 9,443 112,001 22,413 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 13,940,758 5,361,120 NET ASSETS PER UNIT Series 5 5.04 Series 6 5.29 5.21 Series 7 5.34 5.23 STATEMENT OF COMPREHENSIVE INCOME Periods Ended December 31 2015 2014 (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) 17,954 266,369 141,043 EXPENSES Management fees and guarantee charge 212,407 42,191 Operating expenses 20,939 4,067 233,346 46,258 Withholding taxes 4,403 2,041 237,749 48,299 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 28,620 92,744 DATA PER SERIES SERIES 5** from Operations 424 - per unit 0.03 Average Units 14,617 SERIES 6* from Operations 14,479 86,181 - per unit 0.01 0.23 Average Units 1,682,360 376,351 SERIES 7* from Operations 13,717 6,563 - per unit 0.16 0.20 Average Units 87,656 33,411 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 13
DFS GIF MODERATE (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 2015 2014 (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* 805,967 320,001 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 31 2015 2014* (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 4,241,797 112,298 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 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. 14 DFS GUARANTEED INVESTMENT FUNDS
SCHEDULE OF INVESTMENT PORTFOLIO as at December 31, 2015 Number of Units Fair Cost INVESTMENT FUNDS (97.4%) BlackRock Active Canadian Equity DC Fund 22,703 713,612 624,655 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 39,043 746,268 784,637 Desjardins Overseas Equity Fund, I-Class 52,314 769,118 740,721 DGIA Canadian Bond Fund 600,589 6,135,719 6,125,778 Fidelity True North Fund, Series O 14,779 675,941 638,147 Franklin Bissett Canadian Equity Fund, Series O 5,213 688,182 636,247 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, 2019 1.8% Canada Housing Trust, 2.35%, December 15, 2018 1.7% Canada Housing Trust, 1.70%, December 15, 2017 1.5% Government of Canada, 5.00%, June 1, 2037 1.4% Government of Canada, 4.00%, June 1, 2041 1.4% DESJARDINS ENHANCED BOND FUND 17.6% Government of Canada, 2.25%, June 1, 2025 8.4% Province of British Columbia, 2.70%, December 18, 2022 2.5% Province of Ontario, 3.15%, June 2, 2022 2.2% Province of Quebec, 2.75%, September 1, 2025 2.1% Province of Ontario, 3.50%, June 2, 2024 2.1% 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
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
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
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%) 1.00 90,615 34,847 S&P/TSX (14%) 3.00 58,551 22,517 S&P 500 (10.5%) 3.00 43,913 16,888 MSCI EAFE Net (10.5%) 3.00 43,913 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
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 () 2015 2014 Series 5** 5.04 Series 6* 5.29 5.21 Series 7* 5.34 5.23 Ratios and Supplemental Data Net Asset (000 s) Series 5** 98 Series 6* 12,696 5,035 Series 7* 1,146 327 Number of units outstanding (000) Series 5** 19 Series 6* 2,402 967 Series 7* 215 62 Management expense ratio (MER) 1 (%) Series 5** 2.64 Series 6* 2.51 2.54 Series 7* 1.90 2.07 Portfolio turnover rate 2 (%) 46.64 5.15 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. 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. 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
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, 2015. 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 10,216 2.2% 10,269 2.7% Since Inception 10,096 1.0% 10,642 3.4% 10,754 4.0% * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015. 20 DFS GUARANTEED INVESTMENT FUNDS
STATEMENT OF FINANCIAL POSITION As at December 31 2015 2014 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 19,977 107,341 43,803 NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS 31,279,788 9,596,683 NET ASSETS PER UNIT Series 5 5.05 Series 6 5.32 5.21 Series 7 5.38 5.24 STATEMENT OF COMPREHENSIVE INCOME Periods Ended December 31 2015 2014 (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 182,073 110,398 Net unrealized gain (loss) on investments (212,494) 22,884 555,119 273,520 EXPENSES Management fees and guarantee charge 417,102 71,165 Operating expenses 40,796 6,655 457,898 77,820 Withholding taxes 12,919 5,231 470,817 83,051 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO CONTRACT OWNERS 84,302 190,469 DATA PER SERIES SERIES 5** from Operations 823 - per unit 0.10 Average Units 8,454 SERIES 6* from Operations 70,826 179,343 - per unit 0.02 0.27 Average Units 2,998,597 652,179 SERIES 7* from Operations 12,653 11,126 - per unit 0.03 0.45 Average Units 404,650 24,926 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. DFS GUARANTEED INVESTMENT FUNDS 21
DFS GIF BALANCED (cont.) STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS Periods Ended December 31 2015 2014 (12 months) (11 months) NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS, BEGINNING OF PERIOD 9,596,683 from operations attributable to contract owners 84,302 190,469 Premiums Series 5** 63,359 Series 6* 18,174,904 9,394,474 Series 7* 4,859,189 718,840 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 31 2015 2014* (12 months) (11 months) CASH FLOWS FROM/USED IN OPERATING ACTIVITIES from operations attributable to contract owners 84,302 190,469 Adjustments for: Net realized gain (loss) (182,073) (110,398) Net unrealized gain (loss) 212,494 (22,884) Proceeds from sale/maturity of investments 6,918,597 363,639 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 2014. ** Beginning of operations in October 2015. The accompanying Notes are an integral part of these financial statements. 22 DFS GUARANTEED INVESTMENT FUNDS
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, 2019 1.8% Canada Housing Trust, 2.35%, December 15, 2018 1.7% Canada Housing Trust, 1.70%, December 15, 2017 1.5% Government of Canada, 5.00%, June 1, 2037 1.4% Government of Canada, 4.00%, June 1, 2041 1.4% 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, 2025 8.4% Province of British Columbia, 2.70%, December 18, 2022 2.5% Province of Ontario, 3.15%, June 2, 2022 2.2% Province of Quebec, 2.75%, September 1, 2025 2.1% Province of Ontario, 3.50%, June 2, 2024 2.1% 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
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
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
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%) 1.00 156,399 47,983 S&P/TSX (20%) 3.00 187,679 57,580 S&P 500 (15%) 3.00 140,759 43,185 MSCI EAFE Net (15%) 3.00 140,759 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
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 () 2015 2014 Series 5** 5.05 Series 6* 5.32 5.21 Series 7* 5.38 5.24 Ratios and Supplemental Data Net Asset (000 s) Series 5** 64 Series 6* 25,797 8,868 Series 7* 5,419 729 Number of units outstanding (000) Series 5** 13 Series 6* 4,848 1,703 Series 7* 1,008 139 Management expense ratio (MER) 1 (%) Series 5** 2.70 Series 6* 2.57 2.57 Series 7* 2.13 2.13 Portfolio turnover rate 2 (%) 39.42 10.00 * Beginning of operations in February 2014. ** Beginning of operations in October 2015. 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. 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
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, 2015. 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 10,276 2.8% 10,319 3.2% Since Inception 10,114 1.1% 10,818 4.3% 10,896 4.8% * This Fund is composed of units of the corresponding underlying investment funds. ** Beginning of operations in October 2015. 28 DFS GUARANTEED INVESTMENT FUNDS