TD Canadian Core Plus Bond Fund 525550 (03/16) TD Mutual Funds for the period ended This contains financial highlights, but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, at no cost, by calling 1-800-386-3757, by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto-Dominion Centre, Toronto, Ontario, M5K 1G8, by e-mail to td.mutualfunds@td.com, or by visiting our website at tdassetmanagement.com or the SEDAR website at sedar.com Securityholders may also contact us or visit our website to get a copy of the investment fund s interim financial report, proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure at no cost.
ntd Canadian Core Plus Bond Fund Management Discussion of Fund Performance Investment Objectives and Strategies The investment objective of the TD Canadian Core Plus Bond Fund ( Fund ) is to seek to earn a high rate of interest income by investing primarily in Canadian dollar denominated, investmentgrade debt instruments. In seeking to achieve this objective, the Fund invests mainly in Canadian dollar denominated bonds issued by Canadian governments, Canadian corporations or foreign corporations (Maple bonds). The Fund may, from time to time, invest in non-investment-grade debt instruments to enhance total return. The Fund uses rigorous bottom-up security selection in regard to the macro environment. Risk The risks of investing in the Fund remain as outlined in the simplified prospectus. Results of Operations The Investor Series units of the Fund returned 1.8 percent for the year ended ( Reporting Period ), versus 3.5 percent for the Fund s product benchmark, the FTSE TMX Canada Universe Bond Index ( Universe Bond Index ). Returns for other series of the Fund may vary, largely due to differences in fees and expenses. Unlike the benchmark, the Fund s return is quoted after the deduction of fees and expenses. Market Update As economic weakness in Canada persisted through the Reporting Period, the Bank of Canada ( BoC ) lowered its key overnight interest rate by 25 basis points ( bps ) in January 2015, then again in July, in an attempt to stimulate the economy. While many investors had anticipated an interest rate hike at some point in the Reporting Period, the key lending rate actually finished down by 50 bps, at 0.50 percent. Over the Reporting Period, the Canadian dollar declined roughly 15 percent relative to the U.S. dollar, its steepest decline since 2008. In addition to being impacted by the low price of oil and other commodities, the Canadian dollar weakened as the U.S. raised interest rates in December 2015 while Canadian interest rates remained unchanged. Credit spreads in Canada widened over the Reporting Period. The economic impact of the significant and persistent decline in energy markets on the Canadian economy put pressure on the BoC to cut overnight interest rates despite concern over the record-high level of household debt. The broad Canadian bond market (as measured by the Universe Bond Index) rose over the Reporting Period, with longer-term bonds outperforming shorter-term bonds and government bonds outperforming corporate bonds. Among government bonds, provincial bonds outperformed both federal and municipal bonds. In the corporate sector, higher-quality bonds outperformed as AA-rated bonds led A- and BBB-rated bonds. Canadian corporate bonds were challenged as a slowing Canadian economy and uncertainty about future growth dampened investors appetite for risk. In addition, fixed income market volatility increased as investors speculated about when the U.S. Federal Reserve Board ( Fed ) would begin to raise interest rates and the pace of future interest rate increases. Finally, slowing economic growth from China further affected demand for commodities. Key Contributors/Detractors The Fund was defensively positioned with lower interest rate sensitivity relative to the Universe Bond Index. Therefore, declining yields over the Reporting Period detracted from the Fund s performance. The broad-based U.S. dollar appreciation contributed to the Fund s relative performance, as the Fund held a modest unhedged U.S. dollar position within its U.S. high-yield corporate bond exposure. The Fund s 17 percent underweight exposure to provincial bonds detracted from relative performance as provincial bonds outperformed. The Fund s strategic 33 percent overweight exposure to corporate bonds also detracted from relative performance, most notably its allocation to U.S. high-yield bonds. During the Reporting Period, heightened global financial market volatility and lower commodity prices resulted in U.S. high-yield bond spreads widening to a greater degree relative to Canadian investment-grade corporate bonds. However, the Fund s 33 percent overweight exposure to investment-grade and high-yield corporate bonds resulted in a yield advantage, which contributed to relative performance. High-yield bonds may potentially become illiquid securities. The Portfolio Adviser assesses the liquidity of securities at the time of purchase by the Fund. Existing holdings are assessed to determine liquidity by the Portfolio Adviser as part of the ongoing investment process. Consistent with National Instrument NI 81-102 Mutual Funds, the Fund will hold cash and cash equivalents to ensure sufficient liquidity to meet unitholder redemptions. Assets The F-Series, Premium F-Series and O-Series units of the Fund experienced a significant increase in assets due to investor purchase activity. Recent Developments The Portfolio Adviser continues to emphasize capital preservation within the Fund. The Portfolio Adviser is mindful of macroeconomic factors, including slow global economic growth, elevated sovereign debt levels, demographic trends and inflationary/disinflationary pressures. However, within the context of slow growth, economic improvements in the U.S. and continuing high levels of central bank liquidity globally have helped to reduce the probability of extreme outcomes. The Portfolio Adviser anticipates that global central banks should maintain their accommodative monetary policies for some time. 1
As the U.S. economic outlook continues to improve, positive developments in the labour force have provided the confidence necessary for the Fed to raise interest rates from their historically low levels. However, much of the global economy is still using accommodative monetary policies to spur economic growth. The Portfolio Adviser anticipates that this divergence in monetary policy between the U.S. and other developed economies may create periods of increased volatility. In Canada, a steeper yield curve may arise as the macroeconomic backdrop improves. In this environment, the Fund continues to focus on a defensive portfolio position that has less sensitivity to interest rate movements. The Portfolio Adviser is therefore taking a more conservative stance given the absolute low level of interest rates and the potential for increasing volatility in fixed income markets. The Portfolio Adviser anticipates that, in this environment, there may be opportunities in high-quality corporate bonds that take advantage of the incremental yield relative to government bonds. Current supply and demand dynamics remain supportive of corporate spreads, which is the additional yield that corporate bonds offer over Government of Canada bonds with similar maturities. The Portfolio Adviser anticipates that active management with a focus on quality and liquidity could serve the Fund well in the current environment. Related Party Transactions Affiliates of TD Asset Management Inc. ( TDAM ) may earn fees and spreads in connection with various services provided to, or transactions with, the Fund, such as in connection with banking, custody, brokerage and derivatives transactions. Manager, Trustee and Portfolio Adviser: TDAM, a wholly-owned subsidiary of The Toronto-Dominion Bank ( TD ), is the manager, trustee and portfolio adviser of the Fund. The Fund pays TDAM an annual manage ment fee, which may vary for each series of Fund units, and an annual administration fee of 0.15 percent with respect to the Investor Series, Advisor Series and D-Series units of the Fund. Distributor: For certain series of units of the Fund, TD Investment Services Inc., a wholly-owned subsidiary of TD, is the principal distributor for which it is paid a trailer commission by TDAM. Units of the Fund are also distributed through brokers and dealers including TD Waterhouse Canada Inc. ( TDW ), a wholly-owned subsidiary of TD. TDW, like other dealers, is paid a trailer commission by TDAM for distributing certain series of units of the Fund. Trailer commissions are paid by TDAM out of the management fees it receives from the Fund and are based on the average value of assets held by each dealer. Registrar and Transfer Agent: TD is the registrar and transfer agent of the Fund, and as such maintains all unitholder records, processes purchase, switch, conversion and redemption orders, issues investor statements and prepares annual tax reporting information on behalf of the Fund. TD earns a foreign exchange spread when unitholders switch between units of funds denominated in different currencies. The Fund also maintains bank accounts and overdraft provisions with TD for which TD earns a fee. Buying and Selling Securities: TDAM has established an independent review committee ( IRC ) which acts as an impartial and independent committee to review and provide recommendations or, if appropriate, approvals respecting any conflict of interest matters referred to it by TDAM. The IRC prepares, at least annually, a report of its activities for securityholders of the Fund. The report is available on the TDAM website at tdassetmanagement.com or at the securityholder s request at no cost by contacting TDAM (see front cover). The Fund relied on standing instructions from the IRC in respect of one or more of the following transactions: (a) trades in securities of TD or any affiliate or associate thereof; (b) investments in the securities of an issuer where TD Securities Inc., TDW, or any other affiliate of TDAM (a Related Dealer ) acted as an underwriter during the distri bution of such securities and the 60-day period following the completion of the distribution of the underwritten securities; (c) purchases or sales of securities of an issuer from or to another investment fund or discretionary managed account managed by TDAM; and (d) purchases of securities from or sales of securities to a Related Dealer, where it acted as principal. The relevant standing instructions require that securities transactions with related parties conducted by TDAM (i) are free from any influ - ence by an entity related to TDAM and without taking into account any consideration relevant to an entity related to TDAM; (ii) represent the business judgment of TDAM uninfluenced by considerations other than the best interests of the Fund; (iii) comply with the applicable policies and procedures of TDAM; and (iv) achieve a fair and reasonable result for the Fund. 2
Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past five fiscal years, as applicable. Net Assets per Unit 1 INVESTOR SERIES 2015 2014 2013 2012 2011 Net Assets, Beginning of Year $ 11.71 $ 11.15 $ 11.57 $ 11.36 $ 10.86 Total Revenue 0.40 0.41 0.45 0.60 0.50 Total Expenses (excluding distributions) (0.18) (0.17) (0.18) (0.17) (0.17) Realized Gains (Losses) for the Period (0.14) (0.01) (0.04) 0.06 0.07 Unrealized Gains (Losses) for the Period 0.15 0.57 (0.40) 0.05 0.44 Total Increase (Decrease) from Operations 2 0.23 0.80 (0.17) 0.54 0.84 From Net Investment Income (excluding dividends) (0.23) (0.20) (0.24) (0.36) (0.35) From Dividends 0.00 0.00 0.00 0.00 0.00 From Capital Gains 0.00 (0.01) (0.02) 0.00 0.00 Return of Capital 0.00 0.00 0.00 0.00 0.00 Total Annual Distributions 3 (0.23) (0.21) (0.26) (0.36) (0.35) Net Assets at December 31 $ 11.69 $ 11.71 $ 11.15 $ 11.54 $ 11.36 INSTITUTIONAL SERIES 2015 2014 2013* 2012 2011 Net Assets, Beginning of Year $ 10.43 $ 9.93 $ 10.00 N/A N/A Total Revenue 0.36 0.37 0.19 N/A N/A Total Expenses (excluding distributions) (0.05) (0.05) (0.02) N/A N/A Realized Gains (Losses) for the Period (0.12) (0.01) (0.01) N/A N/A Unrealized Gains (Losses) for the Period 0.12 0.48 (0.16) N/A N/A Total Increase (Decrease) from Operations 2 0.31 0.79 0.00 N/A N/A From Net Investment Income (excluding dividends) (0.31) (0.28) (0.15) N/A N/A From Dividends 0.00 0.00 0.00 N/A N/A From Capital Gains 0.00 (0.01) (0.01) N/A N/A Return of Capital 0.00 0.00 0.00 N/A N/A Total Annual Distributions 3 (0.31) (0.29) (0.16) N/A N/A Net Assets at December 31 $ 10.42 $ 10.43 $ 9.93 N/A N/A 1 This information is derived from the Fund s audited annual financial statements. The Fund adopted International Financial Reporting Standards ( IFRS ) on January 1, 2014 and accordingly adjusted the immediately preceding financial year ended December 31, 2013 to reflect the amounts in accordance with IFRS. Previously, financial statements were prepared as per Canadian generally accepted accounting principles ( GAAP ) under which the Fund measured fair values of its investments based on bid prices for long positions and ask prices for short positions. As such, the net assets per unit presented in the financial statements may have differed from the net asset value ( NAV ) per unit calculated for fund pricing purposes. Under IFRS, the Fund measures fair values of its investments based on close market prices, where the close market price falls within the bid-ask spread or based on quotations from recognized dealers. As such, the Fund s accounting policies for measuring the fair value of investments in the financial statements are substantively consistent with those used in measuring the NAV for transactions with unitholders. All figures presented prior to January 1, 2013 were prepared in accordance with Canadian GAAP. 2 Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations presented above starting from fiscal year 2013 are based on the weighted average number of units outstanding over the financial periods. The increase (decrease) from operations prior to 2013 were calculated by aggregating each valuation day s increase (decrease) from operations divided by the number of units outstanding on that date. This table is not intended to be a reconciliation of the net assets per unit. 3 Distributions were paid in cash or reinvested in additional units of the Fund, or both. * Data reported represents results from the commencement of operations to December 31 of the year indicated. Please refer to the Year-by-year returns charts in the Past Performance section for commencement date. Initial offering price. 3
Net Assets per Unit 1 (continued) PREMIUM SERIES 2015 2014 2013 2012 2011 Net Assets, Beginning of Year $ 10.72 $ 10.20 $ 10.57 $ 10.33 $ 9.87 Total Revenue 0.37 0.38 0.41 0.55 0.46 Total Expenses (excluding distributions) (0.12) (0.11) (0.11) (0.11) (0.11) Realized Gains (Losses) for the Period (0.12) (0.02) (0.04) 0.05 0.06 Unrealized Gains (Losses) for the Period 0.07 0.49 (0.40) 0.05 0.40 Total Increase (Decrease) from Operations 2 0.20 0.74 (0.14) 0.54 0.81 From Net Investment Income (excluding dividends) (0.25) (0.22) (0.26) (0.32) (0.34) From Dividends 0.00 0.00 0.00 0.00 0.00 From Capital Gains 0.00 (0.01) (0.01) 0.00 0.00 Return of Capital 0.00 0.00 0.00 0.00 0.00 Total Annual Distributions 3 (0.25) (0.23) (0.27) (0.32) (0.34) Net Assets at December 31 $ 10.71 $ 10.72 $ 10.20 $ 10.55 $ 10.33 ADVISOR SERIES 2015 2014 2013 2012 2011 Net Assets, Beginning of Year $ 11.91 $ 11.34 $ 11.76 $ 11.55 $ 11.05 Total Revenue 0.41 0.42 0.46 0.61 0.51 Total Expenses (excluding distributions) (0.18) (0.18) (0.18) (0.17) (0.17) Realized Gains (Losses) for the Period (0.14) (0.01) (0.04) 0.06 0.07 Unrealized Gains (Losses) for the Period 0.13 0.56 (0.42) 0.06 0.45 Total Increase (Decrease) from Operations 2 0.22 0.79 (0.18) 0.56 0.86 From Net Investment Income (excluding dividends) (0.23) (0.20) (0.25) (0.38) (0.36) From Dividends 0.00 0.00 0.00 0.00 0.00 From Capital Gains 0.00 (0.01) (0.01) 0.00 0.00 Return of Capital 0.00 0.00 0.00 0.00 0.00 Total Annual Distributions 3 (0.23) (0.21) (0.26) (0.38) (0.36) Net Assets at December 31 $ 11.90 $ 11.91 $ 11.34 $ 11.74 $ 11.55 F-SERIES 2015 2014 2013 2012 2011 Net Assets, Beginning of Year $ 11.92 $ 11.35 $ 11.76 $ 11.57 $ 11.07 Total Revenue 0.41 0.42 0.46 0.61 0.51 Total Expenses (excluding distributions) (0.08) (0.08) (0.08) (0.08) (0.08) Realized Gains (Losses) for the Period (0.15) (0.01) (0.04) 0.06 0.07 Unrealized Gains (Losses) for the Period 0.10 0.55 (0.44) 0.06 0.45 Total Increase (Decrease) from Operations 2 0.28 0.88 (0.10) 0.65 0.95 From Net Investment Income (excluding dividends) (0.32) (0.30) (0.34) (0.48) (0.45) From Dividends 0.00 0.00 0.00 0.00 0.00 From Capital Gains 0.00 (0.01) (0.01) 0.00 0.00 Return of Capital 0.00 0.00 0.00 0.00 0.00 Total Annual Distributions 3 (0.32) (0.31) (0.35) (0.48) (0.45) Net Assets at December 31 $ 11.92 $ 11.92 $ 11.35 $ 11.74 $ 11.57 1 This information is derived from the Fund s audited annual financial statements. The Fund adopted International Financial Reporting Standards ( IFRS ) on January 1, 2014 and accordingly adjusted the immediately preceding financial year ended December 31, 2013 to reflect the amounts in accordance with IFRS. Previously, financial statements were prepared as per Canadian generally accepted accounting principles ( GAAP ) under which the Fund measured fair values of its investments based on bid prices for long positions and ask prices for short positions. As such, the net assets per unit presented in the financial statements may have differed from the net asset value ( NAV ) per unit calculated for fund pricing purposes. Under IFRS, the Fund measures fair values of its investments based on close market prices, where the close market price falls within the bid-ask spread or based on quotations from recognized dealers. As such, the Fund s accounting policies for measuring the fair value of investments in the financial statements are substantively consistent with those used in measuring the NAV for transactions with unitholders. All figures presented prior to January 1, 2013 were prepared in accordance with Canadian GAAP. 2 Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations presented above starting from fiscal year 2013 are based on the weighted average number of units outstanding over the financial periods. The increase (decrease) from operations prior to 2013 were calculated by aggregating each valuation day s increase (decrease) from operations divided by the number of units outstanding on that date. This table is not intended to be a reconciliation of the net assets per unit. 3 Distributions were paid in cash or reinvested in additional units of the Fund, or both. 4
Net Assets per Unit 1 (continued) PREMIUM F-SERIES 2015 2014 2013* 2012 2011 Net Assets, Beginning of Year $ 10.57 $ 10.03 $ 10.00 N/A N/A Total Revenue 0.36 0.38 0.05 N/A N/A Total Expenses (excluding distributions) (0.06) (0.06) (0.01) N/A N/A Realized Gains (Losses) for the Period (0.16) (0.04) (0.02) N/A N/A Unrealized Gains (Losses) for the Period 0.09 0.47 (0.08) N/A N/A Total Increase (Decrease) from Operations 2 0.23 0.75 (0.06) N/A N/A From Net Investment Income (excluding dividends) (0.29) (0.25) 0.00 N/A N/A From Dividends 0.00 0.00 0.00 N/A N/A From Capital Gains 0.00 0.00 0.00 N/A N/A Return of Capital 0.00 0.00 0.00 N/A N/A Total Annual Distributions 3 (0.29) (0.25) 0.00 N/A N/A Net Assets at December 31 $ 10.57 $ 10.57 $ 10.03 N/A N/A D-SERIES 2015* 2014 2013 2012 2011 Net Assets, Beginning of Year $ 10.00 N/A N/A N/A N/A Total Revenue 0.29 N/A N/A N/A N/A Total Expenses (excluding distributions) (0.11) N/A N/A N/A N/A Realized Gains (Losses) for the Period (0.08) N/A N/A N/A N/A Unrealized Gains (Losses) for the Period (0.09) N/A N/A N/A N/A Total Increase (Decrease) from Operations 2 0.01 N/A N/A N/A N/A From Net Investment Income (excluding dividends) (0.17) N/A N/A N/A N/A From Dividends 0.00 N/A N/A N/A N/A From Capital Gains 0.00 N/A N/A N/A N/A Return of Capital 0.00 N/A N/A N/A N/A Total Annual Distributions 3 (0.17) N/A N/A N/A N/A Net Assets at December 31 $ 9.73 N/A N/A N/A N/A O-SERIES 2015 2014 2013 2012 2011 Net Assets, Beginning of Year $ 12.45 $ 11.85 $ 12.26 $ 12.07 $ 11.54 Total Revenue 0.43 0.44 0.48 0.64 0.53 Total Expenses (excluding distributions) 0.00 0.00 0.00 0.00 0.00 Realized Gains (Losses) for the Period (0.15) (0.01) (0.04) 0.06 0.07 Unrealized Gains (Losses) for the Period 0.07 0.55 (0.42) 0.06 0.47 Total Increase (Decrease) from Operations 2 0.35 0.98 0.02 0.76 1.07 From Net Investment Income (excluding dividends) (0.42) (0.39) (0.42) (0.60) (0.54) From Dividends 0.00 0.00 0.00 0.00 0.00 From Capital Gains 0.00 (0.01) (0.01) 0.00 0.00 Return of Capital 0.00 0.00 0.00 0.00 0.00 Total Annual Distributions 3 (0.42) (0.40) (0.43) (0.60) (0.54) Net Assets at December 31 $ 12.45 $ 12.45 $ 11.85 $ 12.24 $ 12.07 1 This information is derived from the Fund s audited annual financial statements. The Fund adopted International Financial Reporting Standards ( IFRS ) on January 1, 2014 and accordingly adjusted the immediately preceding financial year ended December 31, 2013 to reflect the amounts in accordance with IFRS. Previously, financial statements were prepared as per Canadian generally accepted accounting principles ( GAAP ) under which the Fund measured fair values of its investments based on bid prices for long positions and ask prices for short positions. As such, the net assets per unit presented in the financial statements may have differed from the net asset value ( NAV ) per unit calculated for fund pricing purposes. Under IFRS, the Fund measures fair values of its investments based on close market prices, where the close market price falls within the bid-ask spread or based on quotations from recognized dealers. As such, the Fund s accounting policies for measuring the fair value of investments in the financial statements are substantively consistent with those used in measuring the NAV for transactions with unitholders. All figures presented prior to January 1, 2013 were prepared in accordance with Canadian GAAP. 2 Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations presented above starting from fiscal year 2013 are based on the weighted average number of units outstanding over the financial periods. The increase (decrease) from operations prior to 2013 were calculated by aggregating each valuation day s increase (decrease) from operations divided by the number of units outstanding on that date. This table is not intended to be a reconciliation of the net assets per unit. 3 Distributions were paid in cash or reinvested in additional units of the Fund, or both. * Data reported represents results from the commencement of operations to December 31 of the year indicated. Please refer to the Year-by-year returns charts in the Past Performance section for commencement date. Initial offering price. 5
Ratios and Supplemental Data INVESTOR SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 152,642 $ 173,629 $ 232,121 $ 364,283 $ 220,772 Number of Units Outstanding 1 13,054,363 14,830,286 20,818,109 31,492,163 19,392,149 Management Expense Ratio (%) 2 1.50 1.50 1.51 1.51 1.51 Waivers or Absorptions (%) 1.50 1.50 1.51 1.51 1.51 Trading Expense Ratio (%) 3 0.00 0.00 0.00 0.00 0.00 Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 27.81 43.34 Net Asset Value per Unit $ 11.69 $ 11.71 $ 11.15 $ 11.57 $ 11.38 INSTITUTIONAL SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 149,938 $ 161,230 $ 165,087 N/A N/A Number of Units Outstanding 1 14,392,213 15,460,791 16,624,966 N/A N/A Management Expense Ratio (%) 2 0.48 0.48 0.49 N/A N/A Waivers or Absorptions (%) 0.48 0.48 0.49 N/A N/A Trading Expense Ratio (%) 3 0.00 0.00 0.00 N/A N/A Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 N/A N/A Net Asset Value per Unit $ 10.42 $ 10.43 $ 9.93 N/A N/A PREMIUM SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 67,124 $ 64,333 $ 53,802 $ 48,362 $ 17,000 Number of Units Outstanding 1 6,267,521 6,001,433 5,273,407 4,574,627 1,641,689 Management Expense Ratio (%) 2 1.09 1.09 1.10 1.11 1.12 Waivers or Absorptions (%) 1.09 1.09 1.10 1.11 1.12 Trading Expense Ratio (%) 3 0.00 0.00 0.00 0.00 0.00 Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 27.81 43.34 Net Asset Value per Unit $ 10.71 $ 10.72 $ 10.20 $ 10.57 $ 10.36 ADVISOR SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 254,397 $ 266,508 $ 305,516 $ 335,142 $ 201,181 Number of Units Outstanding 1 21,382,401 22,372,995 26,933,503 28,498,439 17,371,848 Management Expense Ratio (%) 2 1.50 1.51 1.51 1.48 1.48 Waivers or Absorptions (%) 1.50 1.51 1.51 1.48 1.48 Trading Expense Ratio (%) 3 0.00 0.00 0.00 0.00 0.00 Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 27.81 43.34 Net Asset Value per Unit $ 11.90 $ 11.91 $ 11.34 $ 11.76 $ 11.58 F-SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 105,323 $ 77,292 $ 64,299 $ 59,309 $ 37,998 Number of Units Outstanding 1 8,837,017 6,482,028 5,665,327 5,042,875 3,277,608 Management Expense Ratio (%) 2 0.66 0.66 0.66 0.66 0.67 Waivers or Absorptions (%) 0.66 0.66 0.66 0.66 0.67 Trading Expense Ratio (%) 3 0.00 0.00 0.00 0.00 0.00 Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 27.81 43.34 Net Asset Value per Unit $ 11.92 $ 11.92 $ 11.35 $ 11.76 $ 11.59 1 This information is provided as at December 31 of the past five fiscal years, as applicable. 2 Management expense ratio ( MER ) is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average NAV during the period. It excludes any operating expenses waived or absorbed by TDAM, which may be discontinued at any time by TDAM at its discretion without notice. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average NAV during the stated period. 4 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its 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 stated period. The higher a fund s portfolio turnover rate, the greater the trading costs payable by the fund in the period, 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. 6
Ratios and Supplemental Data (continued) PREMIUM F-SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 46,564 $ 17,545 $ 1,206 N/A N/A Number of Units Outstanding 1 4,405,298 1,660,367 120,254 N/A N/A Management Expense Ratio (%) 2 0.55 0.53 0.57 N/A N/A Waivers or Absorptions (%) 0.55 0.53 0.57 N/A N/A Trading Expense Ratio (%) 3 0.00 0.00 0.00 N/A N/A Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 N/A N/A Net Asset Value per Unit $ 10.57 $ 10.57 $ 10.03 N/A N/A D-SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $ 509 N/A N/A N/A N/A Number of Units Outstanding 1 52,327 N/A N/A N/A N/A Management Expense Ratio (%) 2 1.26 N/A N/A N/A N/A Waivers or Absorptions (%) 1.26 N/A N/A N/A N/A Trading Expense Ratio (%) 3 0.00 N/A N/A N/A N/A Portfolio Turnover Rate (%) 4 14.19 N/A N/A N/A N/A Net Asset Value per Unit $ 9.73 N/A N/A N/A N/A O-SERIES 2015 2014 2013 2012 2011 Total Net Asset Value (000s) 1 $10,900,134 $ 8,354,995 $ 5,615,444 $ 3,340,179 $ 2,393,275 Number of Units Outstanding 1 875,742,423 671,104,055 474,036,335 272,409,884 197,791,199 Management Expense Ratio (%) 2,5 0.00 0.00 0.00 0.00 0.00 Waivers or Absorptions (%) 0.00 0.00 0.00 0.00 0.00 Trading Expense Ratio (%) 3 0.00 0.00 0.00 0.00 0.00 Portfolio Turnover Rate (%) 4 14.19 22.90 20.05 27.81 43.34 Net Asset Value per Unit $ 12.45 $ 12.45 $ 11.85 $ 12.26 $ 12.10 1 This information is provided as at December 31 of the past five fiscal years, as applicable. 2 Management expense ratio ( MER ) is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average NAV during the period. It excludes any operating expenses waived or absorbed by TDAM, which may be discontinued at any time by TDAM at its discretion without notice. 3 The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average NAV during the stated period. 4 The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its 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 stated period. The higher a fund s portfolio turnover rate, the greater the trading costs payable by the fund in the period, 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. 5 No fees or expenses are paid by this series. 7
Management Fees As manager and trustee of the Fund, TDAM is responsible for the overall business and affairs of the Fund including activities related to making units of the Fund available to investors, and providing, or arranging for the provision of, investment advisory services and marketing services to the Fund. In consideration for the provision of such services, each series of the Fund, other than O-Series units, pays TDAM a management fee. Management fees are calculated and accrued as a percentage of the net asset value of each series of units of the Fund, as of the close of business on each business day for each series and are paid monthly to TDAM. The maximum management fee is the maximum fee that can be charged to each series of units of the Fund according to the simplified prospectus. TDAM may charge management fees that are less than the management fees TDAM is otherwise entitled to charge each series of units of the Fund. The actual management fee is the annualized fee that was charged for the Reporting Period. TDAM may charge the maximum management fee without notice to unitholders. Management fees for the Reporting Period and a breakdown of the major services rendered for each series, as a percentage of the actual management fees, are as follows: Maximum Actual Dealer Waived (expressed as a %) Mgmt. Fee Mgmt. Fee Compensation Expenses Other Investor Series 1.25 1.21 40.81 0.00 59.19 Institutional Series 0.75 0.43 0.00 0.00 100.00 Premium Series 1.00 1.00 50.08 0.00 49.92 Advisor Series 1.25 1.21 49.26 0.00 50.74 F-Series 0.75 0.60 0.00 0.00 100.00 Premium F-Series 0.50 0.50 0.00 0.00 100.00 D-Series 1.00 0.99 25.31 0.00 74.69 O-Series 0.00 0.00 N/A N/A N/A There are no management fees or expenses paid by the Fund in respect of O-Series units of the Fund. Unitholders in the O-Series pay a negotiated administration fee directly to TDAM. Investment advisory, trustee, marketing services and other. Past Performance The following charts show how the Fund has performed in the past, and can help you understand the risks of investing in the Fund. These returns include the reinvestment of all distributions and would be lower if an investor did not reinvest distributions. They do not include deduction of sales, switch, redemption, or other optional charges (which dealers may charge) or income taxes payable, and these returns would be lower if they did. The Fund s past performance does not necessarily indicate how it will perform in the future. Year-by-year returns The bar charts show how the Fund s performance has varied from year to year for each of the years shown. They show in percentage terms how an investment made on January 1 would have increased or decreased by December 31. 8
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Annual Compound Returns The following table shows the annual compound total returns for each series of units of the Fund for each of the periods indicated ended on, compared with the following benchmarks: Product Benchmark: Universe Bond Index This index is comprised of Canadian investment-grade bonds which mature in more than one year. General market indices: Universe Bond Index. Since Past 5 Past 3 Past (expressed as a %) inception years years year INVESTOR SERIES (Start date September 4, 2007) TD Canadian Core Plus Bond Fund 5.0 4.0 2.4 1.8 Product Benchmark 5.5 4.8 3.6 3.5 Universe Bond Index 5.5 4.8 3.6 3.5 INSTITUTIONAL SERIES (Start date July 8, 2013) TD Canadian Core Plus Bond Fund 4.7 N/A N/A 2.9 Product Benchmark 5.1 N/A N/A 3.5 Universe Bond Index 5.1 N/A N/A 3.5 PREMIUM SERIES (Start date September 7, 2010) TD Canadian Core Plus Bond Fund 4.1 4.4 2.8 2.2 Product Benchmark 4.5 4.8 3.6 3.5 Universe Bond Index 4.5 4.8 3.6 3.5 ADVISOR SERIES (Start date September 4, 2007) TD Canadian Core Plus Bond Fund 5.0 4.0 2.4 1.8 Product Benchmark 5.5 4.8 3.6 3.5 Universe Bond Index 5.5 4.8 3.6 3.5 Since Past 5 Past 3 Past (expressed as a %) inception years years year F-SERIES (Start date September 4, 2007) TD Canadian Core Plus Bond Fund 5.9 4.8 3.3 2.7 Product Benchmark 5.5 4.8 3.6 3.5 Universe Bond Index 5.5 4.8 3.6 3.5 PREMIUM F-SERIES (Start date November 12, 2013) TD Canadian Core Plus Bond Fund 5.1 N/A N/A 2.8 Product Benchmark 5.9 N/A N/A 3.5 Universe Bond Index 5.9 N/A N/A 3.5 D-SERIES (Start date February 10, 2015) TD Canadian Core Plus Bond Fund -1.0 N/A N/A N/A Product Benchmark 0.0 N/A N/A N/A Universe Bond Index 0.0 N/A N/A N/A O-SERIES (Start date November 14, 2008) TD Canadian Core Plus Bond Fund 7.5 5.5 4.0 3.4 Product Benchmark 5.6 4.8 3.6 3.5 Universe Bond Index 5.6 4.8 3.6 3.5 Over the Reporting Period, units of the Investor Series and Advisor Series returned 1.8 percent, Institutional Series returned 2.9 percent, Premium Series returned 2.2 percent, F-Series returned 2.7 percent, Premium F-Series returned 2.8 percent, and O-Series returned 3.4 percent versus 3.5 percent for the Universe Bond Index for the same period. Since its inception on February 10, 2015, units of the D-Series returned negative 1.0 percent versus 0.0 percent for the Universe Bond Index for the same period. Unlike the Universe Bond Index, the Fund s return is quoted after the deduction of fees and expenses. The Fund s corporate bond holdings both investment grade and non-investment grade detracted from relative performance versus the Universe Bond Index as government bonds outperformed corporate bonds. 10
Summary of Investment Portfolio as at % of Net Asset Value as at % of Net Asset Value ASSET ALLOCATION Canadian Corporate Bonds 51.5 Canadian Provincial Bonds & Guarantees 17.2 Canadian Federal Bonds & Guarantees 16.3 U.S. Corporate Bonds 10.2 U.S. Federal Bonds & Guarantees 1.8 International Corporate Bonds 0.6 Mortgage-Backed Securities 0.4 Supranationals 0.3 Short-Term Investments 1.0 Cash 0.0 Other Net Assets (Liabilities) 0.7 TERM ALLOCATION Maturing in 20+ Years 20.5 Maturing in 10-20 Years 5.3 Maturing in 5-10 Years 33.3 Maturing in 1-5 Years 36.5 Maturing under 1 Year 2.7 Short-Term Investments 1.0 Cash 0.0 Other Net Assets (Liabilities) 0.7 CURRENCY WEIGHTING (after currency hedging) Canadian Dollar 100.0 TOTAL NET ASSET VALUE $11,676,630,729 TOP 25 INVESTMENTS 1. Government of Canada 4.00% due June 01, 2041 3.4 2. Government of Canada 5.00% due June 01, 2037 2.6 3. Province of Ontario 4.65% due June 02, 2041 2.5 4. Government of Canada 1.50% due June 01, 2023 2.2 5. Province of Ontario 2.85% due June 02, 2023 1.6 6. Province of Ontario 3.45% due June 02, 2045 1.3 7. Government of Canada 2.50% due June 01, 2024 1.2 8. Government of Canada 1.75% due March 01, 2019 1.1 9. Province of British Columbia 4.30% due June 18, 2042 1.0 10. Bank of Montreal 0.45% due January 04, 2016 1.0 11. Province of Manitoba 4.10% due March 05, 2041 1.0 12. United States Treasury Inflation Indexed Bonds (USD) 0.125% due April 15, 2019 0.9 13. Province of New Brunswick 2.85% due June 02, 2023 0.9 14. United States Treasury Inflation Indexed Bonds (USD) 1.375% due February 15, 2044 0.9 15. Province of Ontario 2.90% due December 02, 2046 0.9 16. Province of New Brunswick 4.80% due June 03, 2041 0.9 17. Canada Housing Trust No. 1 3.80% due June 15, 2021 0.9 18. Government of Canada 3.50% due December 01, 2045 0.8 19. The Bank of Nova Scotia 3.27% due January 11, 2021 0.8 20. The Bank of Nova Scotia, Callable 2.58% due March 30, 2027 0.8 21. The Bank of Nova Scotia, Callable 3.367% due December 08, 2025 0.7 22. Royal Bank of Canada, Callable 2.48% due June 04, 2025 0.7 23. The Toronto-Dominion Bank, Callable 2.692% due June 24, 2025 0.7 24. Canada Housing Trust No. 1 1.20% due June 15, 2020 0.7 25. Province of Newfoundland and Labrador 2.30% due June 02, 2025 0.6 Total % of Net Asset Value represented by these holdings 30.1 Related party to the Fund as an affiliated entity of TD Asset Management Inc. Note: Totals may not add due to rounding to one decimal place of individual figures. CURRENCY LEGEND (USD) United States Dollar The Summary of Investment Portfolio may change due to ongoing portfolio transactions of the Fund. Updates are available quarterly. You may obtain the most current quarterly information by contacting TD Mutual Funds at 1-800-386-3757, by writing to us at TD Asset Management Inc., P.O. Box 100, 66 Wellington Street West, TD Bank Tower, Toronto, Ontario, M5K 1G8, or by e-mail to td.mutualfunds@td.com 11
Caution regarding forward-looking statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking state ments including, but not limited to, statements about the Fund, its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates and similar forward-looking expressions or negative versions thereof. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future general economic, political and relevant market factors, such as interest rates, foreign exchange rates, equity and capital markets, and the general business environment, in each case assuming no changes to applicable tax or other laws or government regulation. Expectations and projections about future events are inherently subject to, among other things, risks and uncertainties, some of which may be unforeseeable. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date. Forward-looking statements are not guarantees of future performance, and actual events could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could con tribute to these digressions, including, but not limited to, general economic, political and relevant market factors in North America and internationally, interest and foreign exchange rates, equity and capital markets, business competition, tech nological change, changes in government relations, unexpected judicial or regulatory proceedings and catastrophic events. The above mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing any undue reliance on forward-looking statements. Further, there is no specific intention of updating any forward-looking statements contained herein whether as a result of new information, future events or otherwise. For Funds with references to FTSE TMX Canada indices: FTSE TMX Global Debt Capital Markets Inc. ( FTDCM ), FTSE International Limited ( FTSE ), the London Stock Exchange Group companies (the Exchange ) or TSX INC. ( TSX and together with FTDCM, FTSE and the Exchange, the Licensor Parties ). The Licensor Parties make no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the index/indices ( the Index/Indices ) and/or the figure at which the said Index/Indices stand at any particular time on any particular day or otherwise. The Index/Indices are compiled and calculated by FTDCM and all copyright in the Index/Indices values and constituent lists vests in FTDCM. The Licensor Parties shall not be liable (whether in negligence or otherwise) to any person for any error in the Index/Indices and the Licensor Parties shall not be under any obligation to advise any person of any error therein. TMX is a trade mark of TSX Inc. and is used under licence. FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTDCM under licence. TD Mutual Funds, TD Pools and TD Private Funds are managed by TD Asset Management Inc., a wholly-owned subsidiary of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. The TD logo and other trade-marks are the property of The Toronto-Dominion Bank. 12