Canadian Scholarship Trust
Group Savings Plan
Audited Financial Statements and
Management Report of Fund Performance
October 31, 2012 and 2011
Canadian Scholarship Trust Group Savings Plan
Contents
Management Report of Fund Performance
Management’s Responsibility for Financial Reporting
Independent Auditor’s Report
Statements of Net Assets Available for Education Assistance Payments
Statements of Investment Operations
Statements of Changes in Net Assets Available for Education Assistance Payments
Statements of Cash Flows
Schedule I – Statement of Investment Portfolio
Schedule II – Contributors’ Deposits and Accumulated Interest
Schedule III – Education Assistance Payments
Notes to the Financial Statements
Government Grants (Appendix I to Schedule I)
Canadian Scholarship Group Savings Plan Trust Scholarship Pool
(Appendix II to Schedule I)
Enrolment Fee Refund Entitlements (Appendix III to Schedule I)
1
5
5
6
7
7
8
9
11
12
13
19
22
23
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain portions of the Management Report of Fund Performance, including but not limited to, ‘‘Results of Operations’’ and
‘‘Recent Developments’’, may contain forward-looking statements about the Plan, including 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 forwardlooking expressions or negative versions thereof.
In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Plan action, is
also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events
and are inherently subject to, among other things, risks, uncertainties and assumptions about the Plan and economic factors.
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 Plan. Any number of important factors could contribute to these
digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest
and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government
regulations, unexpected judicial or regulatory proceedings, and catastrophic events.
It should be stressed that 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 undue reliance on forward-looking
statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of
Fund Performance.
Canadian Scholarship Trust Group Savings Plan
Management Report of Fund Performance
Introduction
This annual management report of fund performance contains financial highlights but does not
contain the complete annual financial statements of the Canadian Scholarship Trust Group
Savings Plan (‘‘the Plan’’). A copy of the annual financial statements can be obtained on request,
and at no cost, by visiting our website at www.cst.org or SEDAR at www.sedar.com, or by
calling our customer service area at 1-877-333-7377, or by writing to us at 2225 Sheppard
Avenue East, Suite 600, Toronto, Ontario M2J 5C2.
The Canadian Scholarship Trust Foundation, as the Plan sponsor, and C.S.T.
Consultants Inc., as the Investment Fund Manager, view corporate governance and compliance
as important contributors to overall corporate performance and long-term investment returns,
and as such we support the proxy voting guidelines established by our investment managers.
Investment restrictions contained in Canadian Securities Administrators’ policy, as well as the
Foundation’s investment policy, result in the Plan primarily investing in federal and provincial
government fixed income securities. As a result, proxy voting is not applicable at this time.
Investment Objective and Strategy
The Plan invests in a prudent manner, with a focus over the long
term to protect your principal and deliver a positive return on your
investment. The Plan invests primarily in fixed income securities
issued by the Canadian federal or provincial governments and
corporate debt securities issued by public corporations. The Plan also
invests in variable rate securities, which are hybrid financial debt
instruments issued by governments, Canadian chartered banks and
licensed trust and loan companies that have embedded components
that change the risk/return characteristics of the security. Included in
this asset class are structured notes that are debt instruments, whose
returns are based on movements in equity indices rather than typical
interest payments.
The fixed income component of the Plan is managed by Beutel,
Goodman & Company Ltd., Greystone Managed Investments Inc.,
TD Asset Management Inc. and Canso Investment Counsel Ltd. The
assets are allocated among different market sectors and different
maturity segments at our portfolio managers’ discretion, subject to
the constraints defined in our investment policies and mandates. Our
investment professionals actively manage the Plan, focusing on
strategies where value can be added on a sustainable basis. These
strategies include sector allocation, duration management, credit
research and yield curve positioning.
Risk
The overall risk of the Plan remains as described in the prospectus.
There were no material changes to the Plan over the financial year
that affected the level of risk.
Results of Operation
For 2012, the Plan’s rate of return, net of fees, was 2.4% compared to
the investment policy benchmark (‘‘benchmark’’) return of 3.6% and
the broad-based DEX Universe All Government Bond Index return
of 5.0%. The Plan’s return is after the deduction of fees and expenses
of 0.7%, while the benchmark and broad-based index returns do not
include any costs of investing such as fees, expenses and commissions.
The DEX Universe All Government Bond Index (‘‘Index’’) is a
broad measure of Canadian investment grade fixed income securities,
issued by the Government of Canada, including Crown
Corporations and provincial governments, with maturities greater
than 1 year.
During the year, the Plan maintained its shortened duration
portfolio to help protect our contributors’ investments given
uncertain financial markets and in anticipation of rising future
interest rates. In comparison to the broad-based Index, the Plan’s
current asset mix continues to require a higher allocation to
short-to-medium term government bonds.
The benchmark for this plan is blended and comprised of 47%
DEX Universe All Government Bond Index, 47% DEX Short-Term
Government Bond Index and 6% DEX Universe Corporate Bond
Index. The DEX Short-Term Government Bond Index is a broad
measure of Canadian investment grade fixed income securities,
issued by the Government of Canada, including Crown
Corporations and provincial governments, with maturities between
1 and 5 years. The DEX Universe Corporate Bond Index is a broad
measure of Canadian investment grade fixed income securities issued
by public corporations, with maturities greater than one year.
Over the past year, investor confidence continued to be impacted
by uncertainty within the global economy. The ongoing struggle
within the European Union to stabilize a number of member
economies, especially those of Greece and Spain, sent the region
back into a recession.
The United States continued to use monetary stimulus programs
that placed downward pressure on long-term interest rates, in an
effort to maintain the economy’s positive growth. The U.S. Federal
Reserve Board has indicated its commitment to extend support for
the economy by keeping interest rates relatively unchanged until
2015. Nonetheless, the strains of the global financial markets,
combined with the threats of sizable household debt and public
deficits, continue to pose some risks to the sustainable momentum of
the U.S. economic recovery.
Canada’s economic activity expanded modestly with GDP
growth of 1.8% and 1.9% in first and second quarters of the year.
However, in the third quarter of 2012, GDP slowed to 0.6% as
exports and business investment declined, and federal and provincial
governments exercised restraint over expenditures. In July 2012, the
federal government imposed tighter mortgage rules which aimed to
ease demand in the overvalued Canadian housing market. Excessive
Group Savings Plan
1
Canadian Scholarship Trust Group Savings Plan
household debt levels, combined with ongoing uncertainty with the
U.S. economic recovery and European sovereign debt crisis will
continue to moderate Canadian GDP growth in the fourth quarter
of 2012.
Canadian government bond yields declined through
January 2012, as the European sovereign debt crisis persisted and
investors fled to quality bonds of other nations, such as Canada.
However, temporary monetary policy measures in Europe and
reassuring economic news about both the U.S. and Canada mitigated
some of these concerns and yields rose, peaking in March and April.
As the year progressed, Canadian government bond yields declined,
in the midst of renewed concerns about the global economy, largely
driven by the potential exit of Greece from the European Union and
the deterioration of the Spanish banking sector. The continued flight
to safety primarily benefited long and mid-term government bonds
over short-term issues. Furthermore, throughout the year investors
searched for higher yields in corporate issues, as credit spreads
between corporate and government bonds narrowed and corporate
bonds outperformed their government counterparts.
As at October 31, 2012, 97.5% of the Plan’s assets were invested
in Government bonds, 2.1% in Corporate Bonds and 0.4% in Cash
and Short-Term Investments.
Recent Developments and Other Information
Looking beyond 2012, the economic expansion in the U.S. is
expected to continue at a steady pace provided policymakers resolve
the so called ‘‘fiscal cliff ’’ issues – the scheduled simultaneous expiry
of tax cuts and government spending – that if unresolved, may send
the U.S. economy back into a recession. Europe will face stagnant
economic growth prospects while it continues to address the
structural adjustments required within European Union member
countries and implement necessary austerity measures. Central banks
around the world continue to aggressively maintain interest rates at
low levels in order to keep the global recovery on track.
In October 2012, the Bank of Canada indicated that some
modest withdrawal of the monetary policy stimulus will likely be
required in the future, however, it will weigh global and domestic
2
Group Savings Plan
economic developments, before raising interest rates. Economists are
looking to strong business investment, improved exports and
consumer spending, rather than government expenditures and
residential investment, to drive Canadian economic growth next
year. Unemployment is expected to gradually decline
throughout 2013.
During the year, Beutel, Goodman & Company Ltd., a leading
bond manager, was retained to focus on a government bond mandate
and enhance the Plan’s performance on a sustainable basis.
We are confident that our investment strategy and conservative
management approach will continue to provide value over the
long-term horizon of the Plan. Our goal, as always, is to provide
safety of principal and deliver steady long-term returns for our
contributors and beneficiaries.
Future Accounting Standards
In February 2008 the Canadian Accounting Standards Board
(‘‘AcSB’’) confirmed that the use of International Financial
Reporting Standards (‘‘IFRS’’) will be required for publicly
accountable enterprises. In December 2011, the AcSB amended the
deadline for adoption of IFRS by certain qualifying investment funds
to extend the adoption date to years beginning on or after January 1,
2014. Therefore, IFRS will replace Canadian GAAP and become
effective for the Plan’s interim and annual financial statements
relating to the fiscal year ending October 31, 2015 with
comparatives. We are taking the following steps to transition
to IFRS:
– Identification of areas where changes in disclosure will be
required under IFRS;
– Identification of operational areas impacted by the adoption of
IFRS;
– Identification of major differences between current accounting
policies and IFRS;
– Assessment of current reporting systems and their readiness for
IFRS implementation; and
– Implementation of an IFRS transition plan.
Canadian Scholarship Trust Group Savings Plan
Financial and Operating Highlights (with comparative figures)
The following table shows key financial data for the Plan and is intended to help you understand the financial results for the past five fiscal
years ended October 31.
($ thousands)
2012
2011
2010
2009
2008
Statement of Net Assets
Total Assets
Net Assets
% Change of Net Assets
$1,027,546
528,230
(2.4)%
$1,091,259
541,313
1.4%
$1,110,305
533,710
8.7%
$1,085,993
491,057
13.6%
$1,038,096
432,096
(3.8)%
Statement of Investment Operations
Net Investment Income
$
$
$
$
$
Statement of Changes in Net Assets
Education Assistance Payments
Government Grants Received (net of
repayments)
Government Grant Payments to Beneficiaries
Other
Total number of units
% Change in the total number of units
41,498
56,786
34,485
45,500
37,130
$ (23,185)
$ (16,373)
$ (14,730)
$ (14,180)
$ (10,947)
4,743
(7,495)
5,148
(5,713)
8,140
(4,828)
9,602
(3,819)
10,298
(2,940)
511,019
(3.5)%
529,806
(2.5)%
543,233
(1.8)%
553,168
(1.6)%
562,375
(1.4)%
Management Fees
Administration Fees
Portfolio Management Fees
An administration fee of $5,149 thousand (2011 – $5,304 thousand)
comprising Plan administration and processing fees and financial
reporting expenses was paid to the Canadian Scholarship Trust
Foundation, the sponsor and administrator of the Plan, in accordance
with contributors’ Education Savings Plan Agreements. The
administration of the Plan includes processing and call centre services
related to new agreements, Government Grants, plan modifications,
terminations, maturities and Education Assistance Payments
(‘‘EAPs’’). The annual administration fee is calculated as 1⁄2 of 1% of
the total amount of Principal, Government Grants and income in
the contributors’ accounts, which is paid monthly.
The Foundation has delegated certain administrative and
distribution functions to its wholly-owned subsidiary, C.S.T.
Consultants Inc., which is registered as the Plan’s Investment Fund
Manager in Ontario and Scholarship Plan Dealer under securities
legislation of each of the provinces and territories of Canada in
which it operates to sell scholarship plans. C.S.T. Consultants Inc. is
the exclusive distributor of the Canadian Scholarship Trust Plans.
In exchange for its administrative services, C.S.T.
Consultants Inc. receives an amount equal to the administration costs
incurred plus a percentage of such costs from the Foundation. The
administration services agreement is renewable on an annual basis.
The Plan’s annual investment management fee is 0.12% (2011 –
0.11%) of the weighted average monthly assets. The portfolio
managers provide investment advisory and discretionary managed
account services with respect to purchasing, selling, and dealing
in securities.
The Plan retains the services of Greystone Managed
Investments Inc., an investment management firm and whollyowned subsidiary of Greystone Capital Management Inc.
(‘‘Greystone’’). As at October 31, 2012, one director of the
Foundation was a member of the Board of Greystone. This director
did not have any beneficial ownership of Greystone equity. The
director does not participate in any of the Foundation’s Board
deliberations concerning the investment management of the Plan,
nor vote on any resolutions recommended by the Investment
Committee of the Foundation. The portfolio management fees in
the Statements of Investment Operations include fees paid or payable
to Greystone Managed Investment Inc. of $289 thousand (2011 –
$345 thousand).
Trustee and Custodian Fees
The Plan pays trustee and custodian fees to RBC Investor Services
Trust to settle all investment trades and disburse fees, EAPs and other
amounts in accordance with the terms of the Plan Agreement. For
2012 these fees charged to the Plan amounted to $174 thousand
(2011 – $157 thousand) and are 0.02% (2011 – 0.01%) of the
weighted average monthly assets.
Group Savings Plan
3
Canadian Scholarship Trust Group Savings Plan
Summary of Plan Investment Portfolio
Past Performance
The Plan’s Total Portfolio Assets are comprised of the principal and
accumulated investment income on all education savings plan
agreements that have not reached their maturity date. The income
earned on the Plan’s pre-maturity assets is the main component in
determining the value of EAPs to be paid to beneficiaries.
Government Grant assets and related investment income are specific
to each beneficiary. Any payments to beneficiaries from Government
Grant assets are treated as separate payments and not included in EAP
values paid out. Furthermore, income earned on Group Scholarship
Pool assets is allocated to eligible beneficiaries collecting EAP
payments that year on a pro-rata basis. As a result, the Plan’s Total
Portfolio Assets as presented reflect the pre-maturity assets and does
not include the allocation of assets from the Government Grants,
Group Scholarship Pool and Enrolment Fee Refund Entitlements
belonging to this Plan.
The following chart illustrates the Plan’s Total Portfolio assets by
appropriate investment categories.
Our investment philosophy has always been to safeguard our
contributors’ investments while providing stable and consistent
returns. The Foundation’s investment strategy is expected to return
consistent and strong financial performance and provide the
capability to deliver long-term sustainable EAP values to Plan
beneficiaries in the future.
Past performance of the Plan is set out in the following chart and
the annual compound returns table and is based on the growth in
assets over the term of the Plan to maturity. The returns presented
are based on the income earned on the Plan’s investment portfolio
only and do not reflect the investment income or allocation of assets
from the Government Grants, Group Scholarship Pool and
Enrolment Fee Refund Entitlements. Investment returns have been
calculated using market values and time-weighted cash flows during
the periods. Total expenses incurred by the Plan, including
administration, portfolio management, custody and trustee fees have
been deducted and only net returns are displayed in each period. Past
returns of the Plan do not necessarily indicate how it will perform in
the future.
Asset Mix as at October 31, 2012
Cash and Short-Term Investments 0.4%
Year-by-Year Returns
The following bar chart illustrates the Plan’s annual performance in
each of the past ten years to October 31, 2012. The chart illustrates
in percentage terms how much an investment made on the first day
of each financial year would have increased or decreased by the last
day of each financial year:
Corporate Bonds 2.1%
Federal and Provincial Bonds 97.5%
9JAN201312142471
Year-by-Year Returns
(Net of fees, for the years ended October 31)
9
The following table details the top 25 long positions in the Plan.
The Plan is prohibited from holding short positions in securities.
8
7.1
7
Rate
Canada Housing Trust
Canada Housing Trust
Canada Housing Trust
Canada Housing Trust
Canada Housing Trust
Canada Housing Trust
Province of British Columbia
Province of Manitoba
Province of New Brunswick
Province of Quebec
Province of Ontario
Province of Ontario
Province of Nova Scotia
Canada Housing Trust
Canada Housing Trust
Canada Housing Trust
Government of Canada
Province of Quebec
Canada Housing Trust
Province of Ontario
Government of Canada
Province of British Columbia
Province of British Columbia
Government of Canada
Province of New Brunswick
2.70%
2.75%
2.75%
3.15%
2.75%
3.15%
4.25%
4.40%
4.30%
5.50%
4.50%
4.40%
4.70%
1.35%
1.85%
3.60%
1.50%
4.50%
2.20%
5.00%
1.50%
5.30%
4.30%
3.00%
4.50%
15 Dec 2013
15 Sep 2014
15 Jun 2016
15 Jun 2015
15 Dec 2014
15 Jun 2014
18 Jun 2014
05 Sep 2025
03 Dec 2015
01 Dec 2014
08 Mar 2015
08 Mar 2016
14 Jan 2015
15 Sep 2016
15 Dec 2016
15 Jun 2013
01 Mar 2017
01 Dec 2016
15 Mar 2014
08 Mar 2014
01 Nov 2013
18 Jun 2014
18 Jun 2042
01 Dec 2015
04 Feb 2015
74,425
41,667
41,223
34,103
32,905
23,895
21,890
16,022
15,731
15,165
15,123
15,040
14,376
13,468
13,434
12,927
12,496
12,236
10,838
10,789
10,136
9,697
9,346
9,150
9,096
Top long positions as a percentage of Plan portfolio assets
4
Group Savings Plan
10.6%
6.0%
5.9%
4.9%
4.7%
3.4%
3.1%
2.3%
2.2%
2.2%
2.2%
2.1%
2.1%
1.9%
1.9%
1.8%
1.8%
1.7%
1.5%
1.5%
1.4%
1.4%
1.3%
1.3%
1.3%
70.5%
6.6
6.6
6.4
5.3
6
% Return
Issuer
Maturity
Date
% of Plan
Fair Value Portfolio
($ 000’s)
Assets
5.3
5
3.4
4
3.4
2.4
3
2
1
-0.5
0
-1
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
8JAN201319494549
Annual Compound Returns
The following table illustrates the Plan’s annual compounded returns,
for the periods shown ended on October 31, 2012.
The Plan’s benchmark is comprised of:
47%
47%
6%
DEX Short-Term Government Bond Index*
DEX Universe All Government Bond Index*
DEX Universe Corporate Bond Index*
The broad-based Index is the DEX Universe All Government Bond
Index.
1 Year
Net Plan Return
Benchmark*
Broad-based index: DEX Universe
All Government Bond Index*
Period
3 Years 5 Years 10 Years
2.4
3.6
3.7
5.2
3.4
5.8
4.6
5.7
5.0
6.2
6.4
6.0
* Notes: Investors cannot invest in the index without incurring fees, expenses and
commissions, which are not reflected in the index returns.
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Management’s Responsibility for Financial Reporting
The accompanying financial statements of Canadian Scholarship Trust Group Savings Plan (the ‘‘Plan’’) are prepared by management and are
approved by the Board of Directors of the Canadian Scholarship Trust Foundation (the ‘‘Foundation’’). Management is responsible for the
information and representations contained in these financial statements. The Board of Directors is responsible for reviewing and approving
the financial statements and overseeing management’s performance of its financial reporting responsibilities.
The Foundation, through C.S.T. Consultants Inc., a wholly-owned subsidiary which administers the Plan, maintains appropriate
processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance
with Canadian generally accepted accounting principles and include certain amounts that are based on estimates and judgments. The
significant accounting policies, which management believes are appropriate for the Plan, are described in Note 2 to the financial statements.
Deloitte LLP is the external auditor of the Plan. It has audited the financial statements in accordance with Canadian generally accepted
auditing standards to enable it to express to the Board of Directors and Members of the Foundation its opinion on the financial statements. Its
report is set out below.
12DEC201201273913
12DEC201201272008
Sherry J. MacDonald, CA
Joe Spagnuolo, CA
President and Chief Executive Officer
Chief Financial Officer and Treasurer
Toronto, Ontario
January 4, 2013
Independent Auditor’s Report
To the Board of Directors and Members of the Canadian Scholarship Trust Foundation
We have audited the accompanying financial statements of Canadian Scholarship Trust Group Savings Plan, which comprise the
statements of net assets available for education assistance payments as at October 31, 2012 and 2011, and the statements of investment
operations, statements of changes in net assets available for education assistance payments and statements of cash flows for the years then
ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally
accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with
Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Canadian Scholarship Trust Group
Savings Plan as at October 31, 2012 and 2011 and the results of its operations, changes in its net assets and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.
21JAN201311140961
Chartered Accountants
Licensed Public Accountants
January 4, 2013
Group Savings Plan
5
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Statements of Net Assets Available for Education
Assistance Payments
As at October 31, 2012 and 2011 (in thousands of dollars)
Assets
Investments, at fair value (Note 4 and Schedule I)
Cash and cash equivalents
Short-term investments
Accrued interest and other receivables
Receivables for securities sold
Government grants receivable
Liabilities
Accounts payable, accrued liabilities and unclaimed contributors’ funds
Payables for securities purchased
Contributors’ deposits (Schedule II)
Net Assets Available for Education Assistance Payments
2012
2011
$ 975,636
21,213
17,307
10,055
2,770
565
$ 1,052,868
7,686
15,636
10,838
3,441
790
1,027,546
1,091,259
2,002
3,623
493,691
4,168
4,984
540,794
499,316
549,946
528,230
541,313
272,482
135,286
61,874
50,379
270,033
140,567
59,369
52,584
6,953
17,578
1,256
1,182
Represented by:
Non-Discretionary Funds
Accumulated interest held for future education assistance payments (Schedule II)
Government grants
Interest on Government grants
Enrolment fee refund entitlements (Notes 3(b) and 7)
Unrealized Gains
Discretionary Funds
Donations from the Foundation (Notes 3(d) and 6)
$ 528,230
Approved on behalf of the Board of Canadian Scholarship Trust Foundation
16JAN201317584247
12DEC201201273913
Colin E. Litton, FCA
Sherry J. MacDonald, CA
Director
Director
The accompanying notes are an integral part of these financial statements.
6
Group Savings Plan
$
541,313
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Statements of Investment Operations
For the years ended October 31, 2012 and 2011 (in thousands of dollars)
2012
Income
Interest income
Realized gains
Other income
$
Expenses
Plan administration and processing fees (Note 3(a))
Financial reporting (Note 3(a))
Portfolio management fees
Custodian fees
Trustee fees
Net Investment Income
Decrease in Unrealized Gains
Increase in Net Assets from Investment Operations
$
33,313
12,514
2,289
2011
$
33,390
28,529
1,622
48,116
63,541
3,862
1,287
1,295
118
56
3,992
1,312
1,294
109
48
6,618
6,755
41,498
56,786
(10,625)
(20,540)
30,873
$
36,246
$
533,710
Statements of Changes in Net Assets Available for
Education Assistance Payments
For the years ended October 31, 2012 and 2011 (in thousands of dollars)
2011
2012
Net Assets Available for Education Assistance Payments, Beginning of Year
$
541,313
30,873
(7,372)
36,246
(4,042)
23,501
32,204
4,743
500
5,148
5,243
5,848
(23,185)
(7,495)
(6,534)
(4,613)
(16,373)
(5,713)
(5,235)
(3,128)
(41,827)
(30,449)
Receipts less Disbursements
(36,584)
(24,601)
(Decrease) Increase in Net Assets Available for Education Assistance Payments
(13,083)
7,603
Increase in Net Assets from Investment Operations
Transfers to internal and external plans
Receipts
Government grants received (net of repayments)
Contribution received from the Foundation (Note 3(d))
Disbursements
Payments to beneficiaries
Education assistance payments (Schedule III)
Government grants
Refund of enrolment fees
Return of interest
Net Assets Available for Education Assistance Payments, End of Year
$
528,230
700
$
541,313
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
7
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Statements of Cash Flows
For the years ended October 31, 2012 and 2011 (in thousands of dollars)
2012
Operating Activities
Increase in Net Assets from Investment Operations
Net proceeds from investment transactions
Items not affecting cash
Realized gains on sale of investments
Decrease in Unrealized Gains
Change in non-cash operating working capital
Decrease (increase) in Accrued interest and other receivables
Decrease in Government grants receivable
(Decrease) increase in Accounts payable, accrued liabilities and unclaimed contributors’ funds
$
30,873
76,760
2011
$
36,246
22,955
(12,514)
10,625
(28,529)
20,540
783
225
(2,166)
(201)
297
2,135
104,586
53,443
Financing Activities
Transfers to internal and external plans
Contributions received from the Foundation (Note 3(d))
Government grants received (net of repayments)
Decrease in Contributors’ deposits (Schedule II)
Payments to beneficiaries
(7,372)
500
4,743
(47,103)
(41,827)
(4,042)
700
5,148
(30,453)
(30,449)
Cash flow from Financing Activities
(91,059)
(59,096)
13,527
7,686
(5,653)
13,339
Net increase (decrease) in Cash and cash equivalents
Cash and cash equivalents, Beginning of Year
Cash and cash equivalents, End of Year
The accompanying notes are an integral part of these financial statements.
8
Group Savings Plan
$
21,213
$
7,686
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Schedule I – Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds
Federal – 57.0%
Government of Canada
1.75%
1 Mar 2013
1.50
1 Nov 2013
0.75
1 May 2014
3.00
1 Jun 2014
2.25
1 Aug 2014
2.00
1 Dec 2014
3.00
1 Dec 2015
1.50
1 Mar 2017
3.50
1 Jun 2020
2.75
1 Jun 2022
4.25
1 Dec 2026
4.00
1 Jun 2041
1.50
1 Dec 2044
5,152
10,091
4,531
1,160
780
2,840
8,680
12,399
985
4,168
300
2,944
3,840
5,165
10,136
4,510
1,195
796
2,893
9,150
12,496
1,118
4,519
673
3,927
5,342
5,178
10,156
4,486
1,194
796
2,890
9,018
12,410
1,125
4,540
653
3,723
5,240
Canada Housing Trust
4.55
15 Dec 2012
3.60
15 Jun 2013
2.70
15 Dec 2013
2.20
15 Mar 2014
3.15
15 Jun 2014
2.75
15 Sep 2014
2.75
15 Dec 2014
1.45
15 Mar 2015
3.15
15 Jun 2015
2.45
15 Dec 2015
2.75
15 Dec 2015
1.42
15 Mar 2016
2.75
15 Jun 2016
1.35
15 Sep 2016
1.85
15 Dec 2016
1.41
15 Sep 2017
3.80
15 Jun 2021
6,675
12,731
73,125
10,680
23,148
40,475
31,862
2,159
32,531
7,000
6,534
2,460
39,441
13,456
13,273
5,510
1,255
6,702
12,927
74,425
10,838
23,895
41,667
32,905
2,169
34,103
7,230
6,809
2,468
41,223
13,468
13,434
5,524
1,417
6,786
13,101
74,864
10,837
24,129
41,836
33,237
2,162
33,521
7,239
6,645
2,469
40,473
13,436
13,378
5,511
1,405
Canada Post
4.36
16 Jul 2040
655
819
655
Ontario Infrastructure
4.70
1 Jun 2037
475
535
470
PSP Capital Inc
4.57
9 Dec 2013
4,010
4,149
4,072
398,627
397,635
Municipal and Provincial – 40.5%
55 School Board Trust
5.90
2 Jun 2033
235
301
249
Alberta Capital Finance
4.45
15 Dec 2025
562
651
557
Province of Alberta
1.42
27 May 2016
8,051
8,050
8,051
Security
Par Value ($)
Bonds (continued)
Municipal and Provincial – 40.5% (continued)
Province of Alberta (continued)
1.85%
1 Sep 2016
2,055
Fair
Value ($)
Average
Cost ($)
2,079
2,067
Province of British Columbia
4.25
18 Jun 2014
5.30
18 Jun 2014
3.70
18 Dec 2020
5.70
18 Jun 2029
6.35
18 Jun 2031
5.40
18 Jun 2035
4.95
18 Jun 2040
4.30
18 Jun 2042
20,875
9,100
1,190
2,045
2,621
2,500
2,995
7,900
21,890
9,697
1,307
2,712
3,740
3,307
3,850
9,346
22,191
10,060
1,175
2,664
3,604
3,253
3,857
9,022
Province of Manitoba
2.05
1 Dec 2016
3.85
1 Dec 2021
4.40
5 Sep 2025
7.75
22 Dec 2025
5.70
5 Mar 2037
4.60
5 Mar 2038
4.10
5 Mar 2041
4.40
5 Mar 2042
2,921
740
14,047
1,900
1,900
900
6,705
2,545
2,968
815
16,022
2,851
2,542
1,082
7,600
3,035
2,954
813
15,684
2,833
2,571
1,060
7,331
2,975
Province of New Brunswick
4.50
4 Feb 2015
4.30
3 Dec 2015
4.70
21 Jul 2016
4.55
26 Mar 2037
8,500
14,525
4,700
810
9,096
15,731
5,213
936
9,112
15,059
5,174
775
Province of Newfoundland
5.25
4 Jun 2014
3.35
3 Dec 2021
5.60
17 Oct 2033
4.50
17 Apr 2037
629
1,105
517
801
668
1,161
688
943
678
1,127
604
778
Province of Nova Scotia
4.70
14 Jan 2015
4.60
18 Aug 2016
4.10
1 Jun 2021
5.80
1 Jun 2033
4.40
1 Jun 2042
13,400
7,000
500
703
529
14,376
7,755
558
947
621
14,553
7,682
537
782
632
Province of Ontario
5.00
8 Mar 2014
4.50
8 Mar 2015
3.15
8 Sep 2015
4.40
8 Mar 2016
3.20
8 Sep 2016
4.30
8 Mar 2017
4.00
2 Jun 2021
3.15
2 Jun 2022
6.20
2 Jun 2031
10,270
14,100
2,405
13,770
5,290
6,927
1,713
860
3,106
10,789
15,123
2,518
15,040
5,589
7,654
1,899
890
4,314
11,063
15,223
2,473
14,295
5,628
7,698
1,777
896
3,983
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
9
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Schedule I – Statement of Investment Portfolio (continued)
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Bonds (continued)
Municipal and Provincial – 40.5% (continued)
Province of Quebec
5.50%
1 Dec 2014
13,970
5.00
1 Dec 2015
5,985
4.50
1 Dec 2016
11,045
11.00
15 Aug 2020
962
4.25
1 Dec 2021
2,908
6.25
1 Jun 2032
1,803
5.75
1 Dec 2036
859
4.25
1 Dec 2043
640
Province of Saskatchewan
4.65
5 Sep 2017
6.35
25 Jan 2030
6.40
5 Sep 2031
5.60
5 Sep 2035
4.75
1 Jun 2040
Fair
Value ($)
Average
Cost ($)
15,165
6,606
12,236
1,533
3,256
2,490
1,152
723
15,413
6,612
12,316
1,515
3,125
2,281
968
732
675
3,023
3,194
3,103
3,626
610
2,986
2,982
3,055
3,387
283,136
279,482
595
2,120
2,201
2,260
2,859
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds (continued)
Corporate – 2.1.% (continued)
Ontrea Inc Debentures Series B
4.62%
9 Apr 2018
197
209
210
Ornge Issuer Trust
5.73
11 Jun 2034
957
1,100
1,095
Pearson Internation Fuel Facilities Corp
5.09
9 Mar 2032
863
923
925
Real Estate Asset Liquidity Series Class A
4.62
12 Sep 2016
515
552
515
1,964
2,286
2,087
Standard Life Assurance
3.94
21 Sep 2022
258
265
258
Sun Life Financial Inc
4.80
23 Nov 2035
4.95
1 Jun 2036
180
60
188
63
182
61
Royal Office Finance
5.21
12 Nov 2032
Corporate – 2.1.%
BAC Canada Finance
2.76
21 Feb 2014
996
997
978
Toronto Hospital
5.64
8 Dec 2022
425
485
485
Blue Water Bridge Authority
6.41
9 Jul 2027
831
714
743
WTH Car Rental
4.14
20 Mar 2015
362
374
377
CBC
4.69
14,960
14,619
15 May 2027
562
635
598
Total Fixed Income Investments – 99.6%
696,723
691,736
GE Capital Canada
2.14
10 Feb 2014
1.68
15 Feb 2022
154
706
154
659
154
648
Cash and Short-term Investments – 0.4%
2,884
2,884
699,607
694,620
Greater Toronto Airports
6.45
30 Jul 2029
587
725
724
200,175
195,103
Honda Canada Finance Inc
2.27
23 Feb 2015
687
693
687
27,617
51,121
27,553
54,291
Manufacturers Life Insurance
4.17
1 Jun 2022
967
1,003
972
35,636
35,636
Maritimes and Northeast Pipelines
4.34
30 Nov 2019
6.90
30 Nov 2019
1,014,156
1,007,203
862
150
911
168
898
173
Merrill Lynch Financial Assets
4.75
12 Jan 2040
269
291
288
Represented by:
Investments, at fair value
Cash and cash equivalents
Short-term Investments
975,636
21,213
17,307
1,014,156
540
600
610
MLF ASB
4.98
12 Jun 2016
498
539
533
NAV Canada
7.56
1 Mar 2027
328
426
418
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
Investments Allocation (Note 4)
Government Grants (Appendix I)
Canadian Scholarship Group Savings Plan
Trust Scholarship Pool (Appendix II)
Enrolment Fee Refund Entitlements (Appendix III)
Cash and Short-term
Investments (Appendices I, II & III)
Total Investment Fund
Milit-Air Inc.
5.75
30 Jun 2019
10
Total Portfolio Assets – 100.0%
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Schedule II – Contributors’ Deposits
and Accumulated Interest
As at October 31, 2012 and 2011 (in thousands of dollars)
The following table provides a summary of Group Savings Plan Units, Contributors’ Deposits and Accumulated Interest by year of eligibility.
Year of Eligibility
2011 and prior to 2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 and thereafter
TOTAL
Opening
Units
Inflow Units1
Outflow Units2
Closing Units
Contributors’
Deposits
Accumulated
Interest3
92,790
58,087
53,918
66,188
82,984
73,476
76,580
25,479
213
77
4
4
6
1,161
3,847
14,714
225
276
237
294
131
5
38
5
6
2
15,581
19,304
1,610
560
719
689
935
322
–
8
–
–
–
78,370
42,630
67,022
65,853
82,541
73,024
75,939
25,288
218
107
9
10
8
$
13,420
28,585
98,613
85,250
94,285
76,464
73,457
23,325
181
85
14
5
7
$
36,642
31,322
50,622
40,581
43,317
32,575
28,682
8,581
108
37
5
7
3
529,806
20,941
39,728
511,019
$
493,691
$
272,482
1 Inflow units are comprised of new units, additional units and transfers in.
2 Outflow units are comprised of maturities, terminations, transfers out and education assistance payments.
3 Accumulated interest represents both interest allocated to contributors’ accounts and interest held for future education assistance payments.
The changes in Contributors’ deposits are as follows:
2012
Payments from contributors
Inter-Plan principal transfers
Enrolment fees refunded
Account maintenance fees
Return of principal
$
23,728
(12,303)
2
(539)
(57,991)
2011
$
28,664
(9,381)
5
(623)
(49,118)
Net decrease in Contributors’ deposits
(47,103)
(30,453)
Balance, Beginning of Year
540,794
571,247
Balance, End of Year
$
493,691
$
540,794
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
11
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Schedule III – Education Assistance Payments
As at October 31, 2012 and 2011 (in thousands of dollars, except for per unit amounts)
The following tables provide the total dollar payments, number of eligible units paid, and the education assistance payment amount by year
of eligibility.
Education Assistance Payments
Current year payments
Deferred payments
Advance payments
2012
2011
$16,508
6,454
223
$12,118
4,008
247
$23,185
$16,373
Education Assistance Payments
Non-Discretionary
Discretionary
Number of Education Assistance Payment units
Year of Eligibility
First
Second
Third
Fourth
Group Savings Plan
2011
$22,759
426
$15,268
1,105
$23,185
$16,373
Amount of Education Assistance Payment per unit
Year of Eligibility
2012
2011
2010
2009
2012
2011
2010
2009
23,212.2
22,148.4
18,695.1
17,810.1
13,477.1
11,921.0
11,234.6
9,066.9
7,139.4
6,563.1
$ 227
$ 214
256
$ 223
266
320
$ 410
350
324
402
The accompanying notes are an integral part of these financial statements.
12
2012
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements
October 31, 2012 and 2011 (in thousands of dollars)
Note 1. Nature of Operations
The Canadian Scholarship Trust Group Savings Plan (‘‘Group
Savings Plan’’, or the ‘‘Plan’’) is a Pooled Education Savings Plan,
that was established on September 1, 1991. The objective of the
Group Savings Plan is to assist parents and others to save for the
post-secondary education of children. The Group Savings Plan is
managed by C.S.T. Consultants Inc. (‘‘C.S.T.C.’’), a wholly-owned
subsidiary of the Canadian Scholarship Trust Foundation
(the ‘‘Foundation’’). The Foundation was created to encourage and
promote post-secondary education by making education savings
plans available to Canadian residents.
Payments are made by a contributor to an account maintained by
the depository trustee on behalf of a beneficiary. Deductions of
enrolment fees and account maintenance fees are made from the
contributor’s contributions. The principal accumulated over the
term of the contributor’s education savings plan agreement
(‘‘Agreement’’) is returned to the contributor when:
i. the Agreement matures and the beneficiary is a qualified
student eligible to receive the first education assistance
payment,
ii. the Agreement matures and the beneficiary is not yet a
qualified student, in which case the beneficiary will forfeit all
Government grants (as defined below), or
iii. the Agreement is terminated.
The investment income earned on the contributors’ principal
balance is transferred to the scholarship pool when the Agreement
matures and is used to provide education assistance payments to
qualified students. A beneficiary is deemed to be a qualified student
upon receipt by the Foundation of evidence of enrolment in a
qualifying educational program at an eligible institution.
There are a number of government grants that may be available
to beneficiaries:
i. The Canada Education Savings Grant Program (‘‘CESG’’) is a
grant from the Federal Government whereby Registered
Education Savings Plans (‘‘RESPs’’) receive grant amounts
dependent on family income;
ii. Any child born in the province of Alberta on or after
January 1, 2005, may be eligible for the initial Alberta
Centennial Education Savings Grant (‘‘ACES’’). Subsequent
grants may be paid to all children attending school in Alberta
at certain eligible ages; and
iii. The Québec Education Savings Incentive (‘‘QESI’’) is
available for beneficiaries who are under eighteen years of age
and reside in Québec on December 31 of each year. The
amount of QESI to be received by a beneficiary will depend
on annual family income.
The Group Savings Plan receives the CESG, ACES and QESI
(collectively, ‘‘Government grants’’), which are paid directly into a
beneficiary’s RESP and invests these funds in accordance with the
Plan’s investment policies. The Government grants, along with
investment income earned thereon, are paid to qualified students.
Agreements are registered with appropriate government
authorities if all required information is provided, and once
registered, are subject to the rules for RESPs under the Income
Tax Act (Canada). The current tax legislation provides that income
credited on contributors’ principal is not taxable income of the
contributor unless withdrawn as an Accumulated Income Payment
subject to certain eligibility requirements being met. The deposits
are not deductible for income tax purposes and are not taxable when
returned to the contributor. Payments made to a qualified student,
including education assistance payments, grants and investment
income on grants will constitute taxable income of that student in
the year that the payments are made.
Note 2. Significant Accounting Policies
(a) Generally accepted accounting principles
These financial statements have been prepared in accordance
with Canadian generally accepted accounting principles
(‘‘Canadian GAAP’’).
(b) Future accounting standards
In February 2008, the Canadian Accounting Standards Board
(‘‘AcSB’’) confirmed that the use of International Financial
Reporting Standards (‘‘IFRS’’) will be required for publicly
accountable enterprises. In December 2011, the AcSB amended
the deadline for adoption of IFRS by certain qualifying
investment funds to extend the adoption date to years beginning
on or after January 1, 2014. Therefore, IFRS will replace
Canadian GAAP and become effective for the Plan’s interim
and annual financial statements relating to the fiscal year ending
October 31, 2015. Management is in the process of developing
a transition plan, which will include identifying differences
between the Plan’s current accounting policies and those it
expects to apply under IFRS, as well as any accounting policy
and implementation decisions and their resulting impact, if any,
on the financial statements of the Plan.
(c) Investment valuation
Investments, at fair value include the following types of
securities: bonds, money market securities, variable rate
securities and pooled funds.
Bonds and money market securities are valued using bid
prices at year end. In the event that quoted market prices are
not available, the fair values are estimated using present value or
other valuation techniques.
Variable rate securities are hybrid financial debt instruments
issued by governments, Canadian chartered banks and licensed
trust and loan companies that have embedded components that
change the risk/return profile of the security. Included in this
class are structured notes that are debt instruments whose
returns are based on indices or underlying assets rather than
typical interest payments. Variable rate securities are carried at
fair values using external pricing models to value their
components.
Investments in pooled funds used to pay the Enrolment Fee
Refund Entitlements (‘‘EFR Entitlements’’) referred to in
Note 3(b) are valued at net asset values of the pooled funds at
the valuation date, as these represent the value that would be
received by the Plan from redeeming its units held in the
pooled funds.
Note 8 provides further guidance on fair value
measurements.
Group Savings Plan
13
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements (continued)
October 31, 2012 and 2011 (in thousands of dollars)
Note 2. Significant Accounting Policies
(continued)
(d) Investment transactions and income recognition
Investment transactions are accounted for on a trade-date basis.
Interest income on investments is recognized using the effective
interest method. Dividends are accrued as of the ex-dividend
date. Realized gains (losses) on the sale of investments and
change in unrealized gains (losses) on investments are calculated
with reference to the average cost of the related investments and
are recognized in the period that such gains (losses) occur. All
interest income and realized gains and losses from the EFR
Entitlements Asset Fund (the ‘‘EFR Fund’’) are included in
Other income in the Statements of Investment Operations.
(e) Contributors’ deposits, Enrolment fees and Account
maintenance fees
Contributors’ deposits reflect amounts received from
contributors net of enrolment fees and account maintenance
fees and do not include future amounts receivable on
outstanding Agreements. Account maintenance fees are paid
annually to the Foundation from contributors’ deposits and are
accrued throughout the year.
(f) Income taxes
The Group Savings Plan is exempt from income taxes under
Section 146.1 of the Income Tax Act (Canada).
(g) Cash and cash equivalents
Cash and cash equivalents include short-term investments with
a purchase date to maturity of 90 days or less.
(h) Use of estimates
In preparing the financial statements, management is required to
use estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from the current estimates. Significant
estimates included in these financial statements relate to EFR
Entitlements (see Note 3(b)) and the valuation of Level 3
financial instruments as discussed in Note 8 and Accounts
payable, accrued liabilities and unclaimed contributors’ funds.
Note 3. Related Party Transactions
(a) Administration of the Group Savings Plan
The Foundation, as the Plan sponsor, has appointed C.S.T.C. as
the Investment Fund Manager to administer the Group Savings
Plan. The agreement is renewable annually on November 1.
Account maintenance fees and administration fees
(comprising Plan administration and processing fees and
financial reporting expenses) are paid to the Foundation.
Administration fees are annual fees of 1⁄2 of 1% of the total
amount of principal, Government grants and income
earned thereon.
Enrolment fees are paid by contributors and deducted from
their contributions. In accordance with the distribution
agreement, the Foundation agreed to set aside a portion of the
14
Group Savings Plan
enrolment fees collected from contributors to the EFR Fund
each year in order to pay EFR Entitlements when they become
due. The amount funded was equivalent to 50% of the
estimated present value of the EFR Entitlements of $200 per
unit as determined at the time of sale.
The Foundation is responsible to pay to beneficiaries of the
Plan the refunds of enrolment fees as promised. Any shortfall in
the assets to meet the EFR Entitlements will be funded from
the Foundation’s surplus (see Note 7).
(b) Enrolment Fee Refund Entitlements
Group Savings Plan pays EFR Entitlements to the beneficiaries
from the EFR Fund, which amount to 100% of enrolment fees
paid. The EFR Entitlement is paid with the first instalment of
the education assistance payment payouts to qualified
beneficiaries for the Plan. The total amount of EFR
Entitlements paid for the year ended October 31, 2012 was
$6,534 (2011 – $5,235).
As at October 31, 2012, the EFR Entitlements amount of
$50,379 (2011 – $52,584) presented in the Statements of Net
Assets Available for Education Assistance Payments represents
the average cost of the Plan’s investments in the EFR Fund of
$54,494 (2011 – $53,794), less funds to be transferred to the
Scholarship Pool of $4,368 (2011 – $1,210) for EFR payments
made to beneficiaries during the year, plus accrued interest of
$253 (2011 – $nil). The fair value of the investments in the
EFR Fund as at October 31, 2012 amounted to $47,209
(2011 – $47,826).
(c) EFR Deficit Funding Payments from the Canadian Scholarship
Trust Foundation
During the year, the Foundation provided deficit funding
payments of $1,748 (2011 – $2,000) to the EFR Fund
(see Note 7(b)).
(d) Contributions received from the Canadian Scholarship Trust
Foundation
During the year, the Foundation contributed a donation to
Group Savings Plan of $500 (2011 – $700). Donations from the
Foundation are subject to the availability of surplus revenues in
any given year, and are solely at the discretion of
the Foundation.
(e) Other Related Party Transactions
The Foundation retains the services of Greystone Managed
Investments Inc., an investment management firm and whollyowned subsidiary of Greystone Capital Management Inc.
(‘‘Greystone’’). As at October 31, 2012, one director (2011 –
two directors) of the Foundation was a member of the Board of
Directors of Greystone. This director does not have any
beneficial ownership of Greystone equity. The director does not
participate in any of the Foundation’s Board deliberations
concerning the investment management of the Plan and does
not vote on any resolutions recommended by the Investment
Committee of the Foundation.
Portfolio management fees in the Statements of Investment
Operations include fees paid or payable to Greystone of $289
(2011 – $345). Included in Accounts payable, accrued liabilities
and unclaimed contributors’ funds in the Statements of Net
Assets Available for Education Assistance Payments are the
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements (continued)
October 31, 2012 and 2011 (in thousands of dollars)
Note 3. Related Party Transactions
(continued)
(e) Other Related Party Transactions (continued)
accrued amounts owing to Greystone as at October 31, 2012,
of $95 (2011 – $113).
All related party transactions are in the normal course of
business and are measured at the exchange amount.
Note 4. Investment Holdings
The investment holdings are disclosed in Schedule I – Statement of
Investment Portfolio and the related Appendices I – III to the
schedule, which are explained below.
The Government grants received from Human Resources and
Skills Development Canada are collectively invested together with
other C.S.T.C. administered plans. The principal and income
received are separately tracked for each contributor’s Agreement.
The portfolio holdings are allocated across all plans based on the
proportion of principal and income attributable to Agreements
within each plan (see Appendix I to Schedule I).
Upon maturity of each Agreement, the investment income
accumulated to date attributable to that Agreement is transferred to
the Canadian Scholarship Group Savings Plan Trust Scholarship Pool
(the ‘‘Pool’’), a shared investment pool with the Group Savings Plan
2001, another plan administered by C.S.T.C. (see Appendix II to
Schedule I). From a contributor’s perspective, the income that is
transferred is tracked by plan and by year of eligibility. The portfolio
holdings of the Pool are allocated based on the Plan’s proportionate
share of income remaining in the Pool. The income earned from the
Pool is credited to the General Fund (see Note 6).
Investments used to fund the EFR Entitlements of the Group
Savings Plan and the Group Savings Plan 2001 of 100% of
Enrolment Fees paid, are managed in a separate fund
(see Appendix III to Schedule 1). The EFR Fund’s holdings and
income are allocated to the Plan based on the Plan’s proportionate
share of the EFR Entitlements. The investment restrictions set out in
National Policy 15 of the Canadian Securities Administrators do not
apply to assets invested in the EFR Fund.
Note 5. Risks Associated with Financial
Instruments
In the normal course of business the Plan may be exposed to a
variety of risks arising from financial instruments. The Plan’s
exposures to such risks are concentrated in its investment holdings
and are related to market risk (which includes interest rate risk and
other price risk), credit risk, liquidity risk and currency risk.
The Plan’s risk management process includes monitoring
compliance with the Plan’s investment policy. The Plan manages the
effects of these financial risks to the Plan portfolio performance by
retaining and overseeing professional external investment managers.
The investment managers regularly monitor the Plan’s positions,
market events and manage the investment portfolio within the
constraints of the investment policy.
(a) Market risk
i. Interest rate risk
Interest rate risk is the risk of a decrease in the Plan’s yield on
interest-bearing investments as a result of fluctuations in
market interest rates. There is an inverse relationship between
changes in interest rates and changes in the fair value of
bonds. This risk is actively managed using duration, yield
curve analysis, sector and credit selection. There is reduced
risk to interest rate changes for cash and cash equivalents due
to their short-term nature.
The Plan’s holdings of debt instruments by maturity are
as follows:
Debt Instruments by Maturity Date
% of Total Investment Fund
October 31, October 31,
2011
2012
Less than 1 year (including short-term
investments)
1-3 years
3-5 years
Greater than 5 years
7%
42%
27%
21%
8%
37%
32%
20%
Total debt instruments
97%
97%
3%
3%
100%
100%
Equity
Total Investment Fund
As at October 31, 2012, if prevailing interest rates had
increased by 1%, the Total Investment Fund amount of
$1,014,156 (2011 – $1,076,190) as per Schedule I –
Statement of Investment Portfolio, would have decreased by
$34,834. If prevailing interest rates had decreased by 1%, the
Total Investment Fund would have increased by $40,602.
This 1% change assumes a parallel shift in the yield curve
with all other variables held constant. In practice, the actual
trading results may differ materially.
ii. Other price risk
Other price risk is the risk that the value of a financial
instrument will fluctuate as a result of changes in market
prices, other than those arising from interest rate risk.
Factors specific to an individual investment, its issuer or all
factors affecting all instruments traded in a market or market
segment affect other price risk. The asset classes that are most
impacted by other price risk are the equity component of
the EFR Fund and variable rate securities, which combined
make up 3% (2011 – 3%) of the Total Investment Fund
amount as at October 31, 2012. The risk associated with the
equity component of the EFR Fund is managed by security
selection and active management by external managers
within investment policies approved by the Board and
manager mandates. For variable rate securities, positive
returns are capped and the return of principal at maturity is
protected from any negative performance. These features
limit volatility and mitigate the downward impact on the
value of these securities.
As at October 31, 2012, if equity and underlying indices
prices had increased or decreased by 1%, with all other
Group Savings Plan
15
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements (continued)
October 31, 2012 and 2011 (in thousands of dollars)
Note 5. Risks Associated with Financial
Instruments (continued)
(d) Currency risk
(a) Market risk (continued)
ii. Other price risk (continued)
variables held constant, the Total Investment Fund amount as
per Schedule – I Statement of Investment Portfolio would
have increased or decreased by approximately $319 (2011 –
$314). In practice, the actual trading results may differ
materially.
(b) Credit risk
Credit risk refers to the ability of the issuer of debt securities to
make interest payments and repay principal. The Plan’s portfolio
is comprised of bonds issued or guaranteed by federal or
provincial governments along with corporate debt instruments
with a minimum approved credit rating as set by the Canadian
Securities Administrators, currently A-low. Group Savings Plan
has a concentration of investments in government and
government guaranteed bonds, which are considered to be high
credit quality investments thereby moderating credit risk.
The Plan’s credit risk exposure is listed below:
Credit rating
October 31, 2012
% of Total
Investment
Amount
Fund
(in thousands)
AAA
AA/AAH/AAL
A/AH/AL
BBB
R-1
P-2
Short-term unrated
Equity
Total Investment Fund
67% $
4%
22%
0%
4%
0%
0%
3%
they become due. Any shortfall in the assets to meet the EFR
Entitlements will be funded from the Foundation’s surplus
(see Note 7(b)).
October 31, 2011
% of Total
Investment
Amount
Fund
(in thousands)
673,407
38,525
224,628
4,585
39,719
–
1,509
31,783
69%
19%
6%
1%
2%
0%
0%
3%
100% $ 1,014,156
100%
$
744,558
201,728
69,517
5,819
20,830
1,767
725
31,246
Currency risk is the risk that the value of a financial instrument
will fluctuate due to changes in foreign exchange rates. The
Plan holds foreign equity funds as part of the EFR Fund, which
represents 1% (2011 – 1%) of the Total Investment Fund. The
Plan’s Total Investment Fund would increase or decrease by
approximately $145 (2011 – $143) in response to a 1%
depreciation or appreciation of the Canadian dollar currency
exchange rate. In practice the actual change may differ
materially.
Note 6. General Fund and Donations from
the Foundation
The Canadian Group Scholarship Savings Plan Trust (the ‘‘Group
Trust’’) is a legal trust registered with the Canada Revenue Agency as
an Education Savings Plan. Included in the Group Trust are Group
Savings Plan and Group Savings Plan 2001 (the ‘‘Plans’’). According
to the trust indenture, the General Fund may be used to subsidize
Education Assistance Payments for qualified students to either of the
Plans within the Group Trust. The General Fund derives its income
from the following sources:
i. interest earned on Contributors’ deposits and Accumulated
interest from the date of maturity to the date the funds are
paid to qualified students as Education Assistance Payments;
ii. interest earned on the interest forfeited when a contributor’s
plan is terminated prior to maturity;
iii. income not collected by beneficiaries before the expiry of the
benefit period; and
iv. unclaimed principal and income payments.
Receipts and Disbursements of the General Fund for the years
ended October 31, 2012 and 2011 are as follows:
2012
$ 1,076,190
The Dominion Bond Rating Service (‘‘DBRS’’) was the
primary source for obtaining credit ratings. Secondary sources
used include Standard & Poor’s Financial Services LLC and
Moody’s Investor Service, Inc.
Receipts
Net investment income
Disbursements
2011
$ 1,613 $ 1,006
(1,613)
Education assistance payments
(1,006)
Excess of Receipts over Disbursements
–
–
Balance, Beginning of Year
–
–
– $
–
(c) Liquidity risk
Liquidity risk is the risk that the Plan may not be able to meet
its obligations on time. The Plan’s exposure to liquidity risk is
concentrated in principal repayments to subscribers and
Education Assistance Payments to beneficiaries including EFR
Entitlements. The Plan primarily invests in securities that are
traded in the active markets and can be readily sold. The Plan
retains sufficient cash and cash equivalents positions to meet
liquidity requirements by utilizing cash forecasting models that
reflect the maturity distribution of Contributors’ deposits and
accumulated income. All other financial liabilities are short term
and due within one year. The Foundation directs a portion of
the enrolment fees collected from contributors to the
EFR Fund each year in order to pay EFR Entitlements when
16
Group Savings Plan
Balance, End of Year
$
Donations from the Foundation represent a discretionary pool of
funds shared between the Plans. These funds are used to supplement
Education Assistance Payments when the General Fund is depleted.
The amount is allocated annually between the Plans according to the
payout forecast in each of the Plans.
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements (continued)
October 31, 2012 and 2011 (in thousands of dollars)
The funding status of the EFR Entitlements at October 31 was:
Note 6. General Fund and Donations from
the Foundation (continued)
Receipts and disbursements in the Donations from the
Foundation for the years ended October 31, 2012 and 2011 are
as follows:
2012
Receipts
Contributions received from the Foundation
Disbursements
Education assistance payments
Excess (deficit) of Receipts over Disbursements
Balance, Beginning of Year
Balance, End of Year
$
500
(426)
74
2011
$
700
(1,105)
(405)
1,182
1,587
$ 1,256
$ 1,182
Note 7. Enrolment Fee Refund
Entitlements Valuations
Two separate actuarial valuations are performed for EFR
Entitlements. First, on an annual basis, a valuation of EFR
Entitlements is conducted by an external actuary based on
management’s best estimates. This valuation is used to estimate the
current funded status for EFR Entitlements. The present value of the
EFR Entitlements is determined using the expected long-term
investment rates of return based on the investment policy for the
EFR Fund as explained in (a) below. Second, an actuarial funding
valuation is performed at least every two years to assess the adequacy
of the assets in the EFR Fund and the Foundation’s funding
requirements to meet EFR Entitlements in future years. This
valuation uses lower than expected long-term investment rates of
return as determined by management to determine the present value
of the EFR Entitlements and to project the asset growth of the EFR
Fund to ensure that future EFR Entitlements will be fully funded, as
set out in (b) below.
(a) Management’s Best Estimate Valuation
The actuarial assumptions used in determining the valuation of
EFR Entitlements reflect management’s best estimate of future
payments to beneficiaries and involve both economic and
non-economic assumptions. The non-economic assumptions
include considerations such as termination of Agreements prior
to maturity and participation of eligible students in the
collection of education assistance payments. The primary
economic assumption is the discount rate, which is set at the
expected long-term investment rates of return of the EFR Fund
at October 31, 2012 of 5.9% (2011 – 6.4%) based on the
investment policy approved by the Board of the Foundation. As
underlying conditions change over time, actuarial assumptions
may also change, which could cause a material change in the
present value of the EFR Entitlements.
2012
2011
Present value of EFR Entitlements
Fair value of EFR Fund1
$ 65,893
47,209
$68,403
49,036
Underfunded portion of EFR Entitlements
$ 18,684
$19,367
1
Average cost of assets in EFR Fund was $50,379 (2011 – $52,584); includes accrued
interest of $253 (2011 – $nil) and is net of funds to be transferred to the Scholarship Pool
of $4,368 (2011 – $1,210) for EFR payments made to beneficiaries during the year.
A 1% decrease or increase in the discount rate used will
increase or decrease the present value of EFR Entitlements by
$1,877 (2011 – $2,318) or $1,794, respectively.
(b) Funding Valuation
An actuarial valuation was completed based on assets and
obligations as at October 31, 2011. This valuation included
assumptions regarding management’s best estimate of
termination of Agreements prior to maturity and participation
of eligible students in the collection of education assistance
payments. The discount rate used to determine the present
value of EFR Entitlements was based on the expected
long-term investment rates of return for Canadian fixed income
securities. The discount rate used for the Plan was 2.3%, which
resulted in an unfunded liability of $30,000. The Foundation is
responsible to pay beneficiaries of the Plan the refunds of
enrolment fees as promised. Funding requirements were
established by the Foundation to ensure assets are sufficient to
meet future EFR Entitlements using lower than expected
long-term investment rates of return based on the investment
policy approved by the Board of the Foundation to project the
asset growth of the EFR Fund. Any shortfall in the assets to
meet the EFR Entitlements will be funded from the
Foundation’s surplus.
The next actuarial funding valuation will be performed in
2014 based on assets and obligations as at October 31, 2013.
Note 8. Fair Value of Financial
Instruments
Investments, at fair value, Cash and cash equivalents and Short-term
investments are carried at fair value. The carrying values of other
financial instruments such as Accrued interest and other receivables,
Receivables for securities sold, Government grants receivable,
Accounts payable, accrued liabilities and unclaimed contributors’
funds, Payables for securities purchased and Contributors’ deposits
approximate their fair values as these financial instruments are short
term in nature.
Fair value represents the amount at which a financial instrument
could be exchanged in an arm’s-length transaction between willing
parties under no compulsion to act and is best evidenced by a quoted
bid price in an active market, if one exists.
The following table presents the Plan’s financial instruments
carried at fair value in the Statements of Net Assets Available for
Education Assistance Payments, classified by the fair value hierarchy
Group Savings Plan
17
Canadian Scholarship Trust Group Savings Plan
Notes to the Financial Statements (continued)
October 31, 2012 and 2011 (in thousands of dollars)
market, credit, liquidity and currency risks referred to in Note 5.
There are no reasonable alternative assumptions.
Note 8. Fair Value of Financial
Instruments (continued)
Level 3 – Variable Rate Securities
set out in Canadian Institute of Chartered Accountants Handbook
Section 3862, Financial Instruments – Disclosures:
i. ‘‘Level 1’’ financial instruments are valued using quoted prices
(unadjusted) in active markets for identical assets or liabilities.
ii. ‘‘Level 2’’ financial instruments are valued using observable
inputs other than quoted prices included in Level 1.
iii. ‘‘Level 3’’ financial instruments are valued using unobservable
inputs for the asset or liability.
Assets Measured at Fair Value as of October 31, 2012
Level 1
Cash and Cash
Equivalents
Short-term Investments
Fixed Income Securities
Pooled Equity Funds
(EFR Entitlements)
Total Investment Fund
$ 21,213
–
–
Level 2
$
Level 3
–
17,307
943,852
31,784
–
$52,997
$ 961,159
– $
–
–
–
Total
21,213
17,307
943,852
31,784
– $ 1,014,156
Assets Measured at Fair Value as of October 31, 2011
Level 1
Cash and Cash
Equivalents
Short-term Investments
Fixed Income Securities
Variable Rate Securities
Pooled Equity Funds
(EFR Entitlements)
Total Investment Fund
$ 7,686
–
–
–
Level 2
$
–
15,636
1,020,152
–
31,246
–
$38,932
$1,035,788
Level 3
$
Total
– $
7,686
–
15,636
–
1,020,152
1,470
1,470
–
31,246
$ 1,470 $ 1,076,190
For the years ended October 31, 2012 and 2011, there were no
transfers between Levels 1, 2, or 3.
The Plan’s financial instruments classified as Level 3 represent the
Plan’s investment in Equity Linked Notes, which are principal
protected by a major Canadian bank (DBRS rating ‘‘AA’’). Equity
Linked Notes are hybrid securities comprised of a bond and an
option. The price of the variable rate securities are based on external
pricing models provided from third party brokers. These valuations
are derived from information on similar publicly traded bonds and
options using standard pricing methodology. Such techniques
include assumptions related to the assessment and quantification of
18
Group Savings Plan
October 31,
2012
Opening Balance
Sales
Increase (decrease) in Unrealized Gains/ Losses
$
Closing Balance
$
October 31,
2011
1,470 $ 107,930
(1,478)
(101,391)
8
(5,069)
–
$
1,470
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Government Grants
Appendix I to Schedule I
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds
Federal – 43.9%
Government of Canada
1.75%
1 Mar 2013
1.50
1 Nov 2013
0.75
1 May 2014
1.51
1 Mar 2015
4.10
1 Jul 2015
3.00
1 Dec 2015
1.50
1 Mar 2017
3.55
1 Sep 2019
4.40
26 Jan 2026
5.00
1 Jun 2037
4.00
1 Jun 2041
24,504
10,855
3,534
2,509
2,000
9,473
5,228
5,542
1,380
9,490
2,600
24,564
10,903
3,517
1,262
1,590
9,985
5,269
5,185
1,571
14,033
3,468
24,628
10,959
3,501
1,256
1,551
9,639
5,263
4,781
1,372
12,641
2,861
Canada Housing Trust
2.20
15 Mar 2014
3.15
15 Jun 2014
2.75
15 Sep 2014
2.75
15 Dec 2014
1.45
15 Mar 2015
3.15
15 Jun 2015
2.75
15 Dec 2015
1.42
15 Mar 2016
2.75
15 Jun 2016
1.35
15 Sep 2016
1.85
15 Dec 2016
12,380
30,759
28,255
37,366
8,264
26,906
49,422
6,830
40,422
38,083
14,577
12,563
31,752
29,087
38,590
8,303
28,207
51,498
6,853
42,249
38,117
14,754
12,566
31,881
29,299
38,857
8,277
27,187
50,750
6,853
41,230
38,052
14,731
PSP Capital Inc.
4.57
9 Dec 2013
2,800
2,897
2,825
386,217
380,960
Municipal and Provincial – 23.4%
Province of Alberta
1.42
27 May 2016
13,208
1.85
1 Sep 2016
4,515
Province of British Columbia
4.25
18 Jun 2014
4.70
1 Dec 2017
4.70
18 Jun 2037
Province of Manitoba
2.05
1 Dec 2016
Province of New Brunswick
4.50
4 Feb 2015
4.45
26 Mar 2018
5.65
27 Dec 2028
5.50
27 Jan 2034
4.65
26 Sep 2035
13,206
4,568
13,207
4,531
6,418
3,390
5,890
6,493
3,184
5,919
6,120
2,975
4,820
9,256
9,404
9,354
3,530
4,780
1,195
13,600
1,270
3,778
5,370
1,533
17,552
1,483
3,784
5,197
1,468
16,020
1,311
Province of Newfoundland
5.25
4 Jun 2014
2,775
2,949
2,990
Province of Nova Scotia
5.80
1 Jun 2033
1,635
2,202
1,984
Fair
Value ($)
Average
Cost ($)
Bonds (continued)
Municipal and Provincial – 23.4% (continued)
Province of Ontario
3.25%
8 Sep 2014
6,705
3.15
8 Sep 2015
10,944
4.40
8 Mar 2016
6,278
3.20
8 Sep 2016
4,400
4.30
8 Mar 2017
9,866
4.40
2 Jun 2019
2,920
4.20
2 Jun 2020
3,890
4.00
2 Jun 2021
2,165
7.60
2 Jun 2027
2,135
5.60
2 Jun 2035
3,205
4.70
2 Jun 2037
4,175
6,948
11,459
6,857
4,649
10,902
3,306
4,370
2,401
3,227
4,282
5,027
6,898
11,267
6,996
4,479
10,254
3,056
4,048
2,238
3,094
3,648
4,602
Province of Quebec
5.50
1 Dec 2014
5.00
1 Dec 2015
4.50
1 Dec 2016
4.50
1 Dec 2019
4.50
1 Dec 2020
5.75
1 Dec 2036
5.00
1 Dec 2038
14,703
14,145
14,747
7,213
7,337
2,782
4,096
14,883
14,242
14,880
6,697
6,754
2,410
3,410
206,194
199,298
Security
Par Value ($)
13,545
12,815
13,312
6,345
6,435
2,075
3,325
Corporate – 31.2%
407 East Development Group
2.81
18 Dec 2016
2,750
2,795
2,750
407 International Inc.
7.13
26 Jul 2040
6,113
9,114
8,073
Access Justise Durham Ltd.
5.02
31 Aug 2039
318
356
302
Arrow Lakes Power Corp
5.52
5 Apr 2041
847
982
847
BAC Canada Finance
2.76
21 Feb 2014
8,217
8,227
8,004
Bank of Montreal
4.78
30 Apr 2014
5.18
10 Jun 2015
3.10
10 Mar 2016
35
3,375
2,895
37
3,659
2,994
37
3,684
2,961
Bank of Nova Scotia
3.34
25 Mar 2015
2.74
1 Dec 2016
2.60
27 Feb 2017
6.28
30 Jun 2053
4,130
3,245
300
3,365
4,279
3,317
304
3,463
4,266
3,249
299
3,614
BCIMC Realty Corporation
2.65
29 Jun 2017
3.51
29 Jun 2022
504
1,650
510
1,682
508
1,650
Blue Water Bridge Authority
6.41
9 Jul 2027
2,371
2,037
2,041
BMW Canada
2.88
9 Aug 2016
1,025
1,049
1,025
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
19
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Government Grants (continued)
Appendix I to Schedule I
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Bonds (continued)
Corporate – 31.2% (continued)
Caisse Centrale Desjardins
2.28%
17 Oct 2016
Canadian Credit Card
2.31
24 Apr 2015
Fair
Value ($)
1,840
1,844
Average
Cost ($)
1,840
145
147
145
Canadian Imperial Bank of Commerce
4.75
22 Dec 2014
2,829
2.35
18 Oct 2017
1,510
3.15
2 Nov 2020
2,750
3,008
1,512
2,819
2,901
1,508
2,761
CBC
4.69
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds (continued)
Corporate – 31.2% (continued)
Manulife Financial Capital Trust
4.85%
12 Dec 2015
2,365
1,379
1,349
Manulife Financial Corporation
4.90
2 Jun 2014
5.16
26 Jun 2015
706
1,695
735
1,811
738
1,788
Maritimes and Northeast Pipelines
4.34
30 Nov 2019
4,471
4,723
4,615
Merrill Lynch Financial Assets
4.82
12 Feb 2015
4.62
12 Nov 2015
4.66
12 Jul 2016
4.64
12 Oct 2016
4.81
12 Oct 2016
4.71
12 Nov 2016
4.48
12 Jul 2037
4.75
12 Jan 2040
1,560
1,235
500
578
2,814
3,409
920
2,009
1,634
1,305
266
384
3,038
1,158
977
2,172
1,614
1,222
269
387
2,933
1,122
900
2,155
15 May 2027
4,340
4,900
4,673
CDP Financial Inc
4.60
15 Jul 2020
164
186
181
Citigroup Finance Canada
4.75
17 Mar 2014
2,000
2,069
2,060
Claregold Trust
5.07
15 May 2044
3,853
1,208
1,255
CSS (FSCC) Partnership
6.92
31 Jul 2042
Milit-Air Inc.
5.75
30 Jun 2019
2,574
2,860
2,781
2,507
3,284
3,207
Enbridge Gas Distribution
5.16
24 Sep 2014
MLF ASB
4.98
12 Jun 2016
2,979
3,227
3,153
3,090
3,295
3,329
N-45 First CMBS
5.67
15 Nov 2020
2,048
2,121
2,179
1,267
6,761
2,181
1,778
9,459
1,550
National Bank of Canada
2.23
30 Jan 2015
3.26
11 Apr 2022
1,300
490
1,312
502
1,300
490
NAV Canada
7.56
1 Mar 2027
4,894
6,353
6,231
Northwest Connect Group
5.95
30 Apr 2041
2,446
2,957
2,554
Ontrea Inc.
4.62
9 Apr 2018
1,739
1,849
1,768
OPB Finance Trust
3.89
4 Jul 2042
3,182
3,202
3,180
Ornge Issuer Trust
5.73
11 Jun 2034
7,645
8,790
8,675
Pearson Internation Fuel Facilities Corp
5.09
9 Mar 2032
3,413
3,648
3,659
Plenary Health
3.16
13 Mar 2015
2.63
18 May 2015
1,762
5,500
1,779
5,537
1,764
5,502
Plenary Properties Ltap LP
6.29
31 Jan 2044
7,007
8,859
8,586
Power Corporation of Canada
7.57
22 Apr 2019
1,158
1,448
1,330
RBC Capital Trust
4.87
31 Dec 2049
5.81
31 Dec 2053
7,930
4,575
8,532
4,779
8,013
4,898
GE Capital Canada
2.14
10 Feb 2014
4.65
11 Feb 2015
5.10
1 Jun 2016
3.35
23 Nov 2016
1.68
15 Feb 2022
5.73
22 Oct 2037
Gloucester Credit Card Trust
5.38
15 May 2014
Greater Toronto Airports
6.45
30 Jul 2029
1,268
6,630
2,010
1,780
10,313
1,620
519
6,768
1,270
7,033
2,205
1,846
9,622
1,976
548
8,359
546
8,352
Green Timbers LP
6.84
30 Jun 2037
684
858
746
Health Partners Markham
3.43
31 Jan 2014
834
834
834
200
8,310
207
8,378
210
8,310
Honda Canada Finance Inc
5.61
12 Sep 2013
2.27
23 Feb 2015
HSBC Bank of Canada
2.57
23 Nov 2015
2.90
13 Jan 2017
1,945
1,630
1,974
1,666
1,945
1,632
Leisureworld
4.81
24 Nov 2015
3,538
3,765
3,697
Manufacturers Life Insurance
4.21
18 Nov 2021
4.17
1 Jun 2022
3,673
2,769
The accompanying notes are an integral part of these financial statements.
20
Group Savings Plan
3,818
2,872
3,659
2,777
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Government Grants (continued)
Appendix I to Schedule I
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds (continued)
Corporate – 31.2% (continued)
Real Estate Asset Liquidity Series Class A
4.62%
12 Sep 2016
1,975
5.08
12 Oct 2036
745
2,115
778
2,008
763
Royal Bank of Canada
2.68
8 Dec 2016
2.58
13 Apr 2017
1,350
1,500
1,377
1,520
1,350
1,500
Royal Office Finance
5.21
12 Nov 2032
4,048
4,712
4,781
Scotia Plaza LP
3.21
15 Jun 2019
5,196
5,242
5,197
Standard Life Assurance
3.94
21 Sep 2022
2,815
2,892
2,824
Sun Life Financial Inc
4.80
23 Nov 2035
4.95
1 Jun 2036
800
1,989
834
2,084
811
2,030
Toronto Dominion Bank
2.95
2 Aug 2016
3.37
2 Nov 2020
4.78
14 Dec 2105
3,280
3,505
550
3,388
3,616
597
3,355
3,567
594
Toronto Hospital
5.64
8 Dec 2022
4,847
5,527
5,533
Transcanada Pipelines
8.05
17 Feb 2039
4.55
15 Nov 2041
1,707
1,700
2,789
1,858
2,557
1,702
VW Credit Canada
2.90
1 Jun 2017
715
733
715
5,560
1,935
1,780
5,896
1,963
1,788
5,888
1,934
1,780
10,738
11,088
11,077
274,442
267,995
866,853
848,253
Wells Fargo Finance Canada
4.38
30 Jun 2015
2.77
9 Feb 2017
2.94
25 Jul 2019
WTH Car Rental
4.14
20 Mar 2015
Total Fixed Income Investments – 98.5%
Cash and Short-term Investments – 1.5%
Total Portfolio Assets – 100.0%
Government Grant Investments Allocation
Plan II
Founders’ Plan
Group Savings Plan
Group Savings Plan 2001
Family Savings Plan
Individual Savings Plan
13,735
13,735
880,588
861,988
442
36,342
200,175
565,789
60,088
4,017
403
35,273
195,103
554,356
59,141
3,977
866,853
848,253
Security
Par Value ($)
Cash and Short-term Investments Allocation
Plan II
Founders’ Plan
Group Savings Plan
Group Savings Plan 2001
Family Savings Plan
Individual Savings Plan
Fair
Value ($)
Average
Cost ($)
28
761
3,615
8,597
702
32
28
761
3,615
8,597
702
32
13,735
13,735
The accompanying notes are an integral part of these financial statements.
Group Savings Plan
21
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Canadian Scholarship Group Savings
Plan Trust Scholarship Pool
Appendix II to Schedule I
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Bonds
Federal – 6.8%
Government of Canada
1.75%
1 Mar 2013
3.50
1 Jun 2013
2.50
1 Sep 2013
3.00
1 Jun 2014
2.50
1 Jun 2015
1.50
1 Sep 2017
3.75
1 Jun 2019
1.50
1 Jun 2023
Canada Housing Trust
2.75
15 Dec 2014
2.45
15 Dec 2015
Provincial – 7.5%
Province of British Columbia
4.25
18 Jun 2014
4.65
18 Dec 2018
Fair
Value ($)
250
355
850
1,290
1,030
365
120
125
245
505
840
390
251
360
860
1,329
1,066
368
137
120
Average
Cost ($)
251
369
863
1,329
1,064
367
138
120
253
522
251
519
5,266
5,271
881
449
884
438
Province of Ontario
4.75
2 Jun 2013
5.00
8 Mar 2014
3.25
8 Sep 2014
4.40
8 Mar 2016
3.20
8 Sep 2016
755
310
1,040
335
170
771
326
1,078
366
180
779
326
1,077
366
180
Province of Quebec
5.50
1 Dec 2014
4.50
1 Dec 2016
4.50
1 Dec 2020
1,025
170
380
1,113
188
433
1,122
190
424
5,785
5,786
Corporate – 26.6%
Bank of Montreal
5.18
10 Jun 2015
3.10
10 Mar 2016
2.96
2 Aug 2016
1,005
550
80
1,090
569
82
1,097
563
82
Bank of Nova Scotia
2.74
1 Dec 2016
6.28
30 Jun 2053
920
470
940
484
926
502
BMW Canada
2.88
9 Aug 2016
350
358
350
Caisse Centrale Desjardins
3.11
4 Dec 2014
2.28
17 Oct 2016
309
170
318
170
316
170
Canadian Imperial Bank of Commerce
2.35
18 Oct 2017
210
3.15
2 Nov 2020
1,440
210
1,475
210
1,446
Cards II Trust
3.10
15 Sep 2015
441
457
451
GE Capital Canada
5.28
22 Oct 2014
5.10
1 Jun 2016
4.55
17 Jan 2017
682
720
90
727
790
98
729
776
97
The accompanying notes are an integral part of these financial statements.
22
Group Savings Plan
Fair
Value ($)
Average
Cost ($)
370
1,188
378
1,264
371
1,271
Hydro One Inc
5.18
18 Oct 2017
400
458
459
Master Credit Card Trust
2.63
21 Jan 2017
226
231
226
Merrill Lynch Financial Assets
4.82
12 Feb 2015
280
293
298
National Bank of Canada
3.58
26 Apr 2016
3.26
11 Apr 2022
690
970
723
994
721
981
1,043
550
1,121
574
1,109
591
700
752
756
1,499
1,558
1,590
Toronto Dominion Bank
3.37
2 Nov 2020
4.78
14 Dec 2105
5.76
18 Dec 2106
260
760
520
268
825
594
264
823
589
Toyota Credit Canada Inc
3.55
22 Feb 2016
383
402
396
VW Credit Canada Inc.
3.60
1 Feb 2016
2.20
11 Oct 2016
2.90
1 Jun 2017
200
260
230
209
260
236
204
260
230
Wells Fargo Finance Canada
3.97
3 Nov 2014
3.70
30 Mar 2016
2.77
9 Feb 2017
551
685
340
574
718
345
572
702
340
Security
Par Value ($)
Bonds (continued)
Corporate – 26.6% (continued)
HSBC Bank of Canada
2.90%
13 Jan 2017
5.15
30 Jun 2049
RBC Capital Trust
4.87
31 Dec 2049
5.81
31 Dec 2053
Real Estate Asset Liquidity
4.61
12 Nov 2016
Score Trust
4.95
20 Feb 2014
Total Fixed Income Investments – 40.9%
20,545
20,468
31,596
31,525
Cash and Short-term Investments – 59.1%
45,651
45,651
Total Portfolio Assets – 100.0%
77,247
77,176
Total Investments Allocation
Group Savings Plan
Group Savings Plan 2001
27,617
3,979
27,553
3,972
31,596
31,525
31,818
13,833
31,818
13,833
45,651
45,651
Cash and Short-term Investments Allocation
Group Savings Plan
Group Savings Plan 2001
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Enrolment Fee Refund Entitlements
(Appendix III to Schedule I)
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Bonds
Federal – 0.4%
Canada Government
4.75%
1 Jun 2014
1.51
1 Mar 2015
Provincial – 1.3%
Province of Ontario
6.35
15 Oct 2034
Fair
Value ($)
27
950
1,281
Average
Cost ($)
20
478
21
475
498
496
1,487
1,355
1,487
1,355
Corporate – 38.8%
407 International Inc.
7.13
26 Jul 2040
1,033
1,540
1,259
Aon Finance
4.76
8 Mar 2018
1,844
1,967
1,876
100
116
100
Arrow Lakes Power Corp
5.52
5 Apr 2041
BAC Canada Finance
2.76
21 Feb 2014
BCIMC Realty Corporation
2.65
29 Jun 2017
3.51
29 Jun 2022
Blue Water Bridge Authority
6.41
9 Jul 2027
British Columbia Telephone Company
10.65
19 Jun 2021
2,423
300
400
1,211
530
Canadian Capital Auto Receivables Asset Trust
2.63
17 Aug 2014
152
2,426
304
408
1,041
808
2,418
302
400
1,042
736
114
114
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Bonds (continued)
Corporate – 38.8% (continued)
Green Timbers LP
6.84% 30 Jun 2037
358
449
390
Health Montreal Collective
6.72
30 Sep 2049
539
642
539
Health Partners Markham
3.43
31 Jan 2014
438
438
438
Honda Canada Finance Inc
2.27
23 Feb 2015
630
635
630
Leisureworld
4.81
24 Nov 2015
818
870
848
Loblaw Companies
6.00
3 Mar 2014
6.50
22 Jan 2029
5.90
18 Jan 2036
6.45
1 Mar 2039
14
788
183
31
15
914
201
37
15
779
165
30
1,468
1,523
1,473
730
811
736
2,063
2,180
2,126
865
883
875
Merrill Lynch Financial Assets
4.62
12 Nov 2015
4.64
12 Oct 2016
4.81
12 Oct 2016
5.25
12 Jun 2035
4.48
12 Jul 2037
4.75
12 Jan 2040
179
285
637
73
431
1,100
189
190
688
68
458
1,189
153
188
653
65
370
1,173
Manufacturers Life Insurance
4.17
1 Jun 2022
Manulife Financial Capital Trust
5.51
26 Jun 2018
Maritimes and Northeast Pipelines
4.34
30 Nov 2019
Master Credit Card Trust
2.63
21 Jan 2017
Claregold Trust
5.07
15 May 2044
253
79
83
GE Capital Canada
2.14
10 Feb 2014
1.68
15 Feb 2022
1,175
2,747
1,177
2,562
1,176
2,520
Milit-Air Inc.
5.75
30 Jun 2019
1,253
1,392
1,380
462
488
441
MLF ASB
4.98
12 Jun 2016
379
410
388
31
36
35
N-45 First CMBS
4.64
15 Dec 2019
5.67
15 Nov 2020
68
448
3
464
2
477
Group Savings Plan
23
Gloucester Credit Card Trust
5.38
15 May 2014
Great West Lifeco Inc
6.14
21 Mar 2018
The accompanying notes are an integral part of these financial statements.
Canadian Scholarship Trust Group Savings Plan
Audited Financial Statements
Enrolment Fee Refund Entitlements (continued)
(Appendix III to Schedule I)
Statement of Investment Portfolio
As at October 31, 2012 (in thousands of dollars)
Security
Par Value ($)
Fair
Value ($)
Average
Cost ($)
Fair
Value ($)
Average
Cost ($)
194
199
206
1,570
1,621
1,580
44,915
42,834
Total Fixed Investments – 40.5%
46,900
44,685
Pooled Equity Funds
SRA Canadian Equity Fund
SRA US Equity Fund
SRA International Equity Fund
37,318
15,669
15,662
40,007
16,886
20,575
Total Equity – 59.3%
68,649
77,468
115,549
122,153
247
247
115,796
122,400
51,121
64,428
54,291
67,862
115,549
122,153
203
44
203
44
247
247
Security
Par Value ($)
Bonds (continued)
Corporate – 38.8% (continued)
Northwest Connect Group
5.95%
30 Apr 2041
452
546
472
Bonds (continued)
Corporate – 38.8% (continued)
Viking Rideau Corp
6.75%
10 Mar 2014
Ontrea Inc.
4.62
9 Apr 2018
711
756
715
WTH Car Rental
4.14
20 Mar 2015
Ornge Issuer Trust
5.73
11 Jun 2034
1,868
2,148
2,156
Plenary Health
3.16
13 Mar 2015
1,110
1,121
1,113
Plenary Properties Ltap LP
6.29
31 Jan 2044
321
406
359
Real Estate Asset Liquidity Series Class A
4.27
12 Mar 2037
247
33
31
Total Investments – 99.8%
Rogers Communications
6.11
25 Aug 2040
426
491
426
Rogers Wireless Inc.
5.38
4 Nov 2019
499
569
501
Schooner Trust
5.19
12 May 2017
5.19
12 Jun 2022
Total Portfolio Assets – 100.0%
185
28
207
16
155
13
Scotia Plaza LP
3.21
15 Jun 2019
1,373
1,385
1,373
Shaw Communications Inc.
6.75
9 Nov 2039
2,283
2,490
2,216
SNC Lavalin Group
6.19
3 Jul 2019
1,220
1,403
1,392
St. Clair Holding
4.88
31 Aug 2031
493
501
493
Standard Life Assurance
3.94
21 Sep 2022
565
580
565
Strait Crossing Dev Inc.
6.17
15 Sep 2031
451
406
400
Sun Life Financial Inc
4.95
1 Jun 2036
1,342
1,406
1,373
Toronto Hospital
5.64
8 Dec 2022
803
916
900
The accompanying notes are an integral part of these financial statements.
24
Group Savings Plan
Cash and Short-term Investments – 0.2%
Total Investments Allocation
Group Savings Plan
Group Savings Plan 2001
Cash and Short-term Investments Allocation
Group Savings Plan
Group Savings Plan 2001
Canadian Scholarship Trust Plan
Sponsor
Canadian Scholarship Trust Foundation
2225 Sheppard Avenue East, Suite 600
Toronto, Ontario M2J 5C2
1.877.333.RESP (7377)
Investment Fund Manager and Distributor
C.S.T. Consultants Inc.
2225 Sheppard Avenue East, Suite 600
Toronto, Ontario M2J 5C2
Trustee
RBC Investor Services Trust
155 Wellington Street West, 2nd Floor
Toronto, ON M5V 3L3
Canada
Auditor
Deloitte LLP
Brookfield Place
181 Bay Street, Suite 1400
Toronto, Ontario M5J 2V1
Bank
Royal Bank of Canada
Royal Bank Plaza
South Tower
200 Bay Street, 10th Floor
Toronto, Ontario M5J 2J5
For updates on your Plan account, login to Online Services at www.cst.org
In Quebec, Canadian Scholarship Trust Plan is distributed by
C.S.T. Consultants Inc. Scholarship Plan Brokerage Firm.
F.P.O
2003 P4-E (2012-11)