TD Short Term Bond Fund - TD Asset Management · TD Short Term Bond Fund for the period ended...

TD Short Term Bond Fund

for the period ended December 31, 2017

TD Mutual Funds

Annual Financial Statements

(03/18)531988

December 31, 2017 Annual Financial Statements

nManagement’s Responsibility for Financial ReportingThe accompanying financial statements have been prepared by TD AssetManagement Inc. (“TDAM”) as manager of the TD Mutual Fund Trusts,TD Managed Assets Program Portfolios and TD Managed ETF Portfolios(collectively the “Funds” and individually the “Fund”) and approved byTDAM’s board of directors. The manager is responsible for the integrity,objectivity and reliability of the data presented. This responsibility includesselecting appropriate accounting principles and making judgments andestimates consistent with International Financial Reporting Standards(“IFRS”). The manager is also responsible for the development of internalcontrols over the financial reporting process, which are designed toprovide reasonable assurance that relevant and reliable financial informa -tion is produced, and the safeguarding of all assets of the Funds.

The board of directors of TDAM is responsible for reviewing and approvingthe financial statements and overseeing management’s performance of itsfinancial reporting responsibilities.

PricewaterhouseCoopers LLP is the external auditor of the Funds. Theauditor has audited the financial statements in accordance with Canadiangenerally accepted auditing standards to enable them to express theiropinion on the financial statements. The auditor’s report is included on the follow ing page of this annual report.

On behalf of TDAM, manager of the Funds.

Bruce Cooper David LambieDirector and Director andChief Executive Officer Chief Financial OfficerMarch 16, 2018 March 16, 2018

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To the Unitholders and Trustee of:


nIndependent Auditor’s Report

TD Canadian Money Market FundTD Premium Money Market FundTD U.S. Money Market FundTD Ultra Short Term Bond FundTD Short Term Bond FundTD Canadian Bond FundTD Income Advantage PortfolioTD Canadian Core Plus Bond FundTD Canadian Corporate Bond FundTD Corporate Bond Plus FundTD U.S. Corporate Bond FundTD Real Return Bond FundTD Global Income FundTD Global Core Plus Bond FundTD Global Unconstrained Bond FundTD High Yield Bond FundTD Global Conservative Opportunities FundTD Global Balanced Opportunities FundTD Monthly Income FundTD Tactical Monthly Income FundTD U.S. Monthly Income FundTD U.S. Monthly Income Fund – C$TD Balanced Income FundTD Diversified Monthly Income FundTD Strategic Yield FundTD Balanced Growth FundTD Dividend Income FundTD Canadian Diversified Yield FundTD Canadian Low Volatility FundTD Dividend Growth FundTD Canadian Blue Chip Dividend FundTD Canadian Large-Cap Equity FundTD Canadian Equity FundTD Core Canadian Value FundTD Canadian Value FundTD Canadian Small-Cap Equity FundTD U.S. Risk Managed Equity FundTD U.S. Low Volatility FundTD U.S. Low Volatility Currency Neutral FundTD North American Dividend FundTD U.S. Dividend Growth FundTD U.S. Blue Chip Equity FundTD U.S. Quantitative Equity FundTD U.S. Equity PortfolioTD North American Small-Cap Equity FundTD U.S. Mid-Cap Growth FundTD U.S. Small-Cap Equity Fund

TD Global Risk Managed Equity FundTD Global Low Volatility FundTD International Growth FundTD International Stock FundTD Emerging Markets Low Volatility FundTD Asian Growth FundTD Emerging Markets FundEpoch U.S. Shareholder Yield FundEpoch U.S. Blue Chip Equity FundEpoch U.S. Blue Chip Equity Currency Neutral Fund

Epoch U.S. Large-Cap Value FundEpoch Global Shareholder Yield FundEpoch Global Shareholder Yield Currency Neutral Fund

Epoch Global Equity FundEpoch International Equity FundEpoch European Equity FundTD Resource FundTD Precious Metals FundTD Entertainment & Communications FundTD Science & Technology FundTD Health Sciences FundTD Canadian Bond Index FundTD Balanced Index FundTD Canadian Index FundTD Dow Jones Industrial Average Index FundTD U.S. Index FundTD U.S. Index Currency Neutral FundTD Nasdaq® Index FundTD International Index FundTD International Index Currency Neutral Fund

TD European Index FundTD US$ Retirement PortfolioTD Retirement Conservative PortfolioTD Retirement Balanced PortfolioTD Advantage Balanced Income PortfolioTD Advantage Balanced PortfolioTD Advantage Balanced Growth PortfolioTD Advantage Growth PortfolioTD Advantage Aggressive Growth PortfolioTD Comfort Conservative Income PortfolioTD Comfort Balanced Income PortfolioTD Comfort Balanced PortfolioTD Comfort Balanced Growth PortfolioTD Comfort Growth PortfolioTD Comfort Aggressive Growth Portfolio

TD Fixed Income PoolTD Risk Management PoolTD Canadian Equity PoolTD Global Equity PoolTD Tactical PoolTD Managed Income PortfolioTD Managed Income & Moderate Growth Portfolio

TD Managed Balanced Growth PortfolioTD Managed Aggressive Growth PortfolioTD Managed Maximum Equity Growth Portfolio

TD FundSmart Managed Income & Moderate Growth Portfolio

TD FundSmart Managed Balanced Growth Portfolio

TD FundSmart Managed Aggressive Growth Portfolio

TD Managed Index Income PortfolioTD Managed Index Income & Moderate Growth Portfolio

TD Managed Index Balanced Growth Portfolio

TD Managed Index Aggressive Growth Portfolio

TD Managed Index Maximum Equity Growth Portfolio

TD Managed Income ETF PortfolioTD Managed Income & Moderate Growth ETF Portfolio

TD Managed Balanced Growth ETF PortfolioTD Managed Aggressive Growth ETF PortfolioTD Managed Maximum Equity Growth ETF Portfolio

(collectively, the “Funds”)

2


nIndependent Auditor’s ReportWe have audited the accompanying financial statements of each of theFunds, which comprise the statements of financial position, comprehensiveincome, changes in net assets attributable to holders of redeemable unitsand cash flows as at and for the periods indicated in note 1, and therelated notes, which comprise a summary of significant accounting policiesand other explanatory information.

Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with Inter national Financial Reporting Standards, and for such internal control as manage ment determines is necessary to enable the preparation offinancial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on the financial statements of each of the Funds based on our audits. We conducted our audits inaccordance with Canadian generally accepted auditing standards. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the financial statements. The proceduresselected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit pro -cedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of account -ing policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained in each of our auditsis sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements of each of the Funds present fairly, in all material respects, the financial position, financial performanceand cash flows of each of the Funds as at and for the periods indicated in note 1 in accordance with Inter national Financial Reporting Standards.

Chartered Professional Accountants, Licensed Public AccountantsToronto, OntarioMarch 16, 2018

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nTD Short Term Bond FundStatements of Financial Position (in 000s except per unit amounts)as at December 31, 2017 and 2016

2017 2016

AssetsCurrent AssetsInvestments $ 6,196,165 $ 6,246,934Cash 15,049 44,410Interest Receivable 28,522 29,473Subscriptions Receivable 11,092 8,743Receivable for Investments Sold 25,110 0

6,275,938 6,329,560

LiabilitiesCurrent LiabilitiesAccrued Liabilities 1 7Redemptions Payable 19,681 9,144

19,682 9,151

Net Assets Attributable to Holders of Redeemable Units $ 6,256,256 $ 6,320,409

Net Assets Attributable to Holders of Redeemable Units – Per Series (Note 5)Investor Series $ 171,833 $ 220,667Institutional Series $ 1,065 $ 1,311Premium Series $ 28,563 $ 48,210Advisor Series $ 124,804 $ 179,510F-Series $ 100,095 $ 96,496Premium F-Series N/A $ 14,071D-Series $ 2,470 $ 1,809Private Series $ 1,326,899 $ 1,185,899O-Series $ 4,500,527 $ 4,572,436

$ 6,256,256 $ 6,320,409

Net Assets Attributable to Holders of Redeemable Units – Per Series Unit

Investor Series $ 9.60 $ 9.80

Institutional Series $ 9.86 $ 10.07

Premium Series $ 9.53 $ 9.73

Advisor Series $ 10.02 $ 10.23

F-Series $ 10.03 $ 10.24

Premium F-Series N/A $ 10.01

D-Series $ 9.73 $ 9.93

Private Series $ 9.70 $ 9.90

O-Series $ 9.92 $ 10.12

The accompanying notes are an integral part of the financial statements.

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nTD Short Term Bond FundStatements of Comprehensive Income (in 000s except per unit amounts)for the periods ended December 31, 2017 and 2016

2017 2016

IncomeForeign Exchange Gain (Loss) on Cash $ 0 $ (1)Securities Lending Income 530 614Net Gain (Loss) on InvestmentsInterest for Distribution Purposes 142,935 150,208Net Realized Gain (Loss) (33,007) (16,459)Net Change in Unrealized Appreciation/Depreciation (91,571) (47,265)

Net Gain (Loss) on Investments 18,357 86,484

Total Income (Net) 18,887 87,097

Expenses (Note 6)Management Fees 4,930 6,017Securityholder Reporting Costs 105 102Custodial Fees 9 12Filing Fees 5 5Audit Fees 3 4Independent Review Committee Fees 2 2

Total Expenses before Waivers 5,054 6,142Less: Waived Expenses (1) (1)

Total Expenses (Net) 5,053 6,141

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units before Tax 13,834 80,956

Tax Reclaims (Withholding Taxes) (11) 0

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units $ 13,823 $ 80,956

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units – Per Series*Investor Series $ (1,336) $ 823Institutional Series $ (1) $ 21Premium Series $ (176) $ 206Advisor Series $ (1,064) $ 410F-Series $ (305) $ 762Premium F-Series 60 $ 111D-Series $ (18) $ 3Private Series $ 2,988 $ 15,508O-Series $ 13,675 $ 63,112

$ 13,823 $ 80,956

2017 2016

Weighted Average Units Outstanding for the Period – Per Series*

Investor Series 19,937 20,785

Institutional Series 119 165

Premium Series 3,981 5,025

Advisor Series 14,757 18,940

F-Series 10,253 9,029

Premium F-Series 1,045 1,421

D-Series 233 138

Private Series 119,984 118,065

O-Series 433,772 442,268

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units – Per Series Unit*

Investor Series $ (0.07) $ 0.04

Institutional Series $ 0.00 $ 0.13

Premium Series $ (0.04) $ 0.04

Advisor Series $ (0.07) $ 0.02

F-Series $ (0.03) $ 0.08

Premium F-Series 0.06 $ 0.08

D-Series $ (0.08) $ 0.02

Private Series $ 0.02 $ 0.13

O-Series $ 0.03 $ 0.14

* Series related to the converted and/or terminated series are for the period ended March 28, 2017. Refer to the Significant Events in the Fund-Specific Notes to the Financial Statements for further details.


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Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (in 000s)for the periods ended December 31, 2017 and 2016

Investor Series Institutional Series Premium Series

2017 2016 2017 2016 2017 2016

Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 220,667 $ 135,249 $ 1,311 $ 2,131 $ 48,210 $ 46,492

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (1,336) 823 (1) 21 (176) 206

Distributions to Holders of Redeemable UnitsFrom Net Investment Income (2,523) (2,735) (23) (35) (547) (731)From Net Realized Gains on Investments 0 0 0 0 0 0

(2,523) (2,735) (23) (35) (547) (731)

Redeemable Unit TransactionsProceeds from Redeemable Units Issued 10,952 152,697 14 0 1,896 20,402Reinvestments of Distributions to Holders of Redeemable Units 2,448 2,653 23 35 416 579

Early Redemption Fees on Redeemable Units 0 0 0 0 0 0Redemption of Redeemable Units (58,375) (68,020) (259) (841) (21,236) (18,738)

Net Increase (Decrease) from Redeemable Unit Transactions (44,975) 87,330 (222) (806) (18,924) 2,243

Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (48,834) 85,418 (246) (820) (19,647) 1,718

Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 171,833 $ 220,667 $ 1,065 $ 1,311 $ 28,563 $ 48,210

Redeemable Unit TransactionsRedeemable Units Outstanding, Beginning of the Period 22,517 13,653 130 209 4,955 4,729

Redeemable Units Issued 1,122 15,476 1 1 195 2,077Redeemable Units Issued on Reinvestments 251 268 2 3 43 59Redeemable Units Redeemed (5,988) (6,880) (25) (83) (2,195) (1,910)

Redeemable Units Outstanding, End of the Period 17,902 22,517 108 130 2,998 4,955

Advisor Series F-Series Premium F-Series

2017 2016 2017 2016 2017 2016

Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 179,510 $ 185,072 $ 96,496 $ 83,571 $ 14,071 $ 11,691

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (1,064) 410 (305) 762 60 111

Distributions to Holders of Redeemable UnitsFrom Net Investment Income (1,834) (2,222) (1,849) (1,731) (46) (281)From Net Realized Gains on Investments 0 0 0 0 0 0

(1,834) (2,222) (1,849) (1,731) (46) (281)

Redeemable Unit TransactionsProceeds from Redeemable Units Issued 21,882 81,191 61,732 64,422 0 11,387Reinvestments of Distributions to Holders of Redeemable Units 1,646 1,986 1,272 1,126 43 242

Early Redemption Fees on Redeemable Units 0 0 0 0 0 0Redemption of Redeemable Units (75,336) (86,927) (57,251) (51,654) (14,128) (9,079)

Net Increase (Decrease) from Redeemable Unit Transactions (51,808) (3,750) 5,753 13,894 (14,085) 2,550

Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (54,706) (5,562) 3,599 12,925 (14,071) 2,380

Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 124,804 $ 179,510 $ 100,095 $ 96,496 $ N/A $ 14,071

Redeemable Unit TransactionsRedeemable Units Outstanding, Beginning of the Period 17,552 17,905 9,422 8,075 1,406 1,156

Redeemable Units Issued 2,152 7,879 6,062 6,236 0 1,126Redeemable Units Issued on Reinvestments 162 193 125 109 4 24Redeemable Units Redeemed (7,407) (8,425) (5,632) (4,998) (1,410) (900)

Redeemable Units Outstanding, End of the Period 12,459 17,552 9,977 9,422 N/A 1,406

nTD Short Term Bond Fund


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Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (in 000s)for the periods ended December 31, 2017 and 2016

D-Series Private Series

2017 2016 2017 2016

Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 1,809 $ 319 $ 1,185,899 $ N/A

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (18) 3 2,988 15,508

Distributions to Holders of Redeemable UnitsFrom Net Investment Income (34) (19) (27,866) (24,869)From Net Realized Gains on Investments 0 0 0 0

(34) (19) (27,866) (24,869)

Redeemable Unit TransactionsProceeds from Redeemable Units Issued 1,214 1,699 786,450 1,795,452Reinvestments of Distributions to Holders of Redeemable Units 30 18 2,019 17

Early Redemption Fees on Redeemable Units 0 0 0 0Redemption of Redeemable Units (531) (211) (622,591) (600,209)

Net Increase (Decrease) from Redeemable Unit Transactions 713 1,506 165,878 1,195,260

Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 661 1,490 141,000 1,185,899

Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 2,470 $ 1,809 $ 1,326,899 $ 1,185,899

Redeemable Unit TransactionsRedeemable Units Outstanding, Beginning of the Period 182 32 119,743 N/A

Redeemable Units Issued 122 169 80,160 179,807Redeemable Units Issued on Reinvestments 3 2 204 2Redeemable Units Redeemed (53) (21) (63,360) (60,066)

Redeemable Units Outstanding, End of the Period 254 182 136,747 119,743

O-Series TOTAL

2017 2016 2017 2016

Net Assets Attributable to Holders of Redeemable Units at Beginning of the Period $ 4,572,436 $ 4,055,279 $ 6,320,409 $ 4,519,804

Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units 13,675 63,112 13,823 80,956

Distributions to Holders of Redeemable UnitsFrom Net Investment Income (104,061) (111,196) (138,783) (143,819)From Net Realized Gains on Investments 0 0 0 0

(104,061) (111,196) (138,783) (143,819)

Redeemable Unit TransactionsProceeds from Redeemable Units Issued 778,584 956,973 1,662,724 3,084,223Reinvestments of Distributions to Holders of Redeemable Units 104,060 111,193 111,957 117,849

Early Redemption Fees on Redeemable Units 0 2 0 2Redemption of Redeemable Units (864,167) (502,927) (1,713,874) (1,338,606)

Net Increase (Decrease) from Redeemable Unit Transactions 18,477 565,241 60,807 1,863,468

Net Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units (71,909) 517,157 (64,153) 1,800,605

Net Assets Attributable to Holders of Redeemable Units at End of the Period $ 4,500,527 $ 4,572,436 $ 6,256,256 $ 6,320,409

Redeemable Unit TransactionsRedeemable Units Outstanding, Beginning of the Period 451,762 396,562

Redeemable Units Issued 77,586 93,661Redeemable Units Issued on Reinvestments 10,356 10,900Redeemable Units Redeemed (85,796) (49,361)

Redeemable Units Outstanding, End of the Period 453,908 451,762



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nTD Short Term Bond FundStatements of Cash Flows (in 000s)for the periods ended December 31, 2017 and 2016

2017 2016

Cash Flows from (used in) Operating ActivitiesIncrease (Decrease) in Net Assets Attributable to Holders of Redeemable Units $ 13,823 $ 80,956

Adjustment For:Net Realized (Gain) Loss on Sale of Investments 33,007 16,459Net Change in Unrealized Appreciation/Depreciation of Investments 91,571 47,265

Purchase of Investments (3,009,436) (8,974,414)Proceeds from Sale and/or Maturity of Investments 2,910,517 8,485,835

(Increase) Decrease in Interest Receivable 951 (5,505)Increase (Decrease) in Accrued Liabilities (6) (421)

Net Cash from (used in) Operating Activities 40,427 (349,825)

Cash Flows from (used in) Financing ActivitiesDistributions Paid to Holders of Redeemable Units, Net of Reinvested Distributions (26,826) (25,970)

Proceeds from Issuances of Redeemable Units 1,641,594 1,736,707Amounts Paid on Redemption of Redeemable Units, Net of Early Redemption Fees (1,684,556) (1,316,668)

Net Cash from (used in) Financing Activities (69,788) 394,069

Net Increase (Decrease) in Cash (29,361) 44,244Cash (Bank Overdraft) at Beginning of the Period 44,410 166

Cash (Bank Overdraft) at End of the Period $ 15,049 $ 44,410

Interest for Distribution Purposes Received*, Net of Withholding Taxes $ 143,886 $ 144,703

* Included as part of Cash Flows from (used in) Operating Activities.


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Canadian Bonds – 99.0%

FEDERAL BONDS & GUARANTEES – 21.3%

Canada Housing Trust No. 1 74,000,000 1.45% due June 15, 2020 $ 74,618 $ 73,315 100,000,000 1.25% due December 15, 2020 99,188 98,122 100,000,000 1.25% due June 15, 2021 100,923 97,558 169,000,000 1.15% due December 15, 2021 165,678 163,287 229,500,000 1.75% due June 15, 2022 227,607 226,126

Government of Canada 190,000,000 0.75% due March 01, 2021 189,535 184,069 170,000,000 0.50% due March 01, 2022 165,460 161,004 190,000,000 2.75% due June 01, 2022 201,905 197,390 139,000,000 1.00% due September 01, 2022 134,286 133,672

1,359,200 1,334,543

PROVINCIAL BONDS & GUARANTEES – 16.2%

Hydro One Inc. 30,000,000 2.78% due October 09, 2018 30,835 30,245 21,000,000 4.40% due June 01, 2020 23,056 22,110 19,500,000 1.84% due February 24, 2021 19,768 19,255

Province of Alberta 146,500,000 1.25% due June 01, 2020 146,186 144,225 30,000,000 1.35% due September 01, 2021 29,392 29,232

Province of British Columbia 20,000,000 4.10% due December 18, 2019 22,945 20,887 56,000,000 3.70% due December 18, 2020 60,629 58,823

Province of Manitoba 20,000,000 4.75% due February 11, 2020 23,249 21,182 7,000,000 4.15% due June 03, 2020 7,830 7,366 40,000,000 1.55% due September 05, 2021 39,465 39,245

Province of Ontario 115,000,000 2.10% due September 08, 2019 115,979 115,604 122,000,000 4.20% due June 02, 2020 136,855 128,557 120,000,000 4.00% due June 02, 2021 135,493 127,662 110,000,000 1.35% due March 08, 2022 108,197 106,439

Province of Quebec 95,000,000 4.25% due December 01, 2021 106,043 102,575 36,000,000 3.50% due December 01, 2022 38,416 38,115

1,044,338 1,011,522

MUNICIPAL BONDS – 0.2%

Municipal Finance Authority of British Columbia 15,000,000 2.05% due June 02, 2019 15,364 15,064

CORPORATE BONDS – 61.3%

Bank of Montreal 17,500,000 3.21% due September 13, 2018 17,824 17,676 50,000,000 2.43% due March 04, 2019 51,437 50,279 16,000,000 2.84% due June 04, 2020 16,675 16,229 57,000,000 2.10% due October 06, 2020 57,089 56,726 37,800,000 1.88% due March 31, 2021 38,127 37,232 52,600,000 1.61% due October 28, 2021 52,206 51,045 30,000,000 2.12% due March 16, 2022 30,513 29,570 21,900,000 2.27% due July 11, 2022 21,899 21,675

The Bank of Nova Scotia 40,700,000 2.462% due March 14, 2019 41,230 40,945 25,000,000 2.40% due October 28, 2019 25,403 25,130 7,500,000 2.27% due January 13, 2020 7,601 7,515 40,200,000 2.13% due June 15, 2020 40,263 40,089 66,200,000 2.09% due September 09, 2020 66,282 65,867 60,000,000 3.27% due January 11, 2021 63,371 61,609 12,000,000 2.873% due June 04, 2021 12,697 12,184 26,900,000 1.90% due December 02, 2021 26,892 26,350 39,900,000 1.83% due April 27, 2022 39,885 38,789 40,400,000 Callable 2.36% due November 08, 2022 40,394 40,018

bcIMC Realty Corporation 21,100,000 2.79% due August 02, 2018 21,095 21,242 27,000,000 2.10% due June 03, 2021 27,518 26,740

Bell Canada Inc. 33,000,000 3.35% due June 18, 2019 34,434 33,570 49,000,000 3.25% due June 17, 2020 51,122 50,047 30,000,000 2.00% due October 01, 2021 30,162 29,378

BMW Canada Inc. 17,400,000 2.33% due September 26, 2018 17,497 17,471 23,800,000 2.27% due November 26, 2018 23,921 23,892 10,600,000 1.78% due October 19, 2020 10,597 10,440 42,700,000 1.88% due December 11, 2020 42,700 42,112

Canadian Imperial Bank of Commerce 28,000,000 2.35% due June 24, 2019 28,265 28,124 68,275,000 1.85% due July 14, 2020 68,239 67,611 47,100,000 1.90% due April 26, 2021 47,636 46,410 52,500,000 1.64% due July 12, 2021 52,561 51,168 67,000,000 2.04% due March 21, 2022 66,474 65,837

Canadian Natural Resources Limited 25,000,000 3.05% due June 19, 2019 25,248 25,274 5,000,000 2.60% due December 03, 2019 4,620 5,022 25,900,000 2.05% due June 01, 2020 25,894 25,631

Canadian Pacific Railway Company 5,000,000 6.25% due June 01, 2018 5,440 5,091

Capital Desjardins Inc. 25,000,000 5.187% due May 05, 2020 27,554 26,574

Caterpillar Financial Services Limited 10,000,000 1.75% due June 03, 2019 9,999 9,962

CU Inc. 3,334,000 5.432% due January 23, 2019 3,870 3,456

Daimler Canada Finance Inc. 7,300,000 1.78% due August 19, 2019 7,289 7,251 26,000,000 1.57% due May 25, 2020 26,000 25,534 14,600,000 2.30% due November 23, 2020 14,600 14,555 30,100,000 2.23% due December 16, 2021 30,090 29,722 30,900,000 2.57% due November 22, 2022 30,986 30,724

Enbridge Gas Distribution Inc. 53,000,000 4.04% due November 23, 2020 57,366 55,694

Enbridge Pipelines Inc. 40,000,000 4.49% due November 12, 2019 43,145 41,816 46,000,000 4.45% due April 06, 2020 49,546 48,206

Federation des caisses Desjardins du Quebec 62,000,000 2.795% due November 19, 2018 63,213 62,543 50,500,000 2.443% due July 17, 2019 51,107 50,783 71,000,000 1.748% due March 02, 2020 70,638 70,299 20,000,000 2.091% due January 17, 2022 19,849 19,709 22,900,000 2.394% due August 25, 2022 22,900 22,734

Finning International Inc. 1,500,000 3.232% due July 03, 2020 1,553 1,525

$ $

nTD Short Term Bond FundSchedule of Investment Portfolio (in 000s except number of Shares or Units/Par Value) as at December 31, 2017

No. of Shares or Units/ Par Value Description Cost Fair Value


9

Ford Auto Securitization Trust 6,000,000 Callable 1.423% due April 15, 2021 6,000 5,953

Ford Credit Canada Company 20,100,000 2.923% due September 16, 2020 20,078 20,231 9,500,000 2.71% due February 23, 2022 9,500 9,399 15,000,000 2.766% due June 22, 2022 15,000 14,834 18,600,000 3.349% due September 19, 2022 18,600 18,825

HCN Canadian Holdings-1 L.P. 10,000,000 3.35% due November 25, 2020 10,019 10,227

Honda Canada Finance Inc. 21,900,000 1.631% due August 12, 2019 21,911 21,747 30,000,000 2.155% due February 18, 2021 30,034 29,816 18,580,000 2.488% due December 19, 2022 18,580 18,459

HSBC Bank Canada 23,400,000 2.078% due November 26, 2018 23,421 23,451 39,000,000 2.491% due May 13, 2019 39,164 39,214 40,000,000 2.938% due January 14, 2020 41,387 40,546 29,000,000 1.816% due July 07, 2020 28,406 28,651 30,000,000 2.449% due January 29, 2021 29,876 30,032 47,800,000 2.17% due June 29, 2022 47,351 46,949

Husky Energy Inc. 27,987,000 5.00% due March 12, 2020 30,190 29,481

Inter Pipeline Ltd. 31,605,000 3.839% due July 30, 2018 32,872 31,957

John Deere Canada Funding Inc. 16,200,000 2.65% due July 16, 2018 16,161 16,290 13,300,000 1.85% due March 24, 2021 13,299 13,073

National Bank of Canada 27,000,000 2.794% due August 09, 2018 27,900 27,176 39,200,000 1.742% due March 03, 2020 39,072 38,804 30,000,000 2.105% due March 18, 2022 29,810 29,540

Nissan Canada Financial Services Inc. 30,200,000 1.75% due April 09, 2020 29,903 29,825 26,900,000 2.42% due October 19, 2020 26,900 26,919

North West Redwater Partnership/NWR Financing Company Ltd.

30,000,000 Callable 2.10% due February 23, 2022 29,819 29,411

OMERS Realty Corporation 36,400,000 2.473% due November 12, 2019 36,727 36,629 20,000,000 2.971% due April 05, 2021 21,011 20,386

RioCan Real Estate Investment Trust 26,000,000 2.87% due March 05, 2018 26,551 26,058 45,000,000 3.85% due June 28, 2019 47,577 46,028 11,700,000 2.185% due August 26, 2020 11,700 11,594 12,200,000 2.194% due April 09, 2021 12,200 12,020

Rogers Communications Inc. 36,000,000 2.80% due March 13, 2019 37,073 36,323 20,000,000 5.38% due November 04, 2019 22,499 21,135 11,000,000 4.70% due September 29, 2020 12,181 11,675 30,000,000 5.34% due March 22, 2021 33,886 32,636 25,000,000 4.00% due June 06, 2022 26,652 26,416

Royal Bank of Canada 17,750,000 2.82% due July 12, 2018 17,819 17,856 31,500,000 2.89% due October 11, 2018 31,897 31,770 49,100,000 2.77% due December 11, 2018 50,029 49,522 61,000,000 2.35% due December 09, 2019 61,672 61,240 56,900,000 1.92% due July 17, 2020 57,002 56,424 27,100,000 2.03% due March 15, 2021 27,090 26,814 49,300,000 1.65% due July 15, 2021 49,337 48,061 45,200,000 1.583% due September 13, 2021 45,054 43,851 30,000,000 2.00% due March 21, 2022 29,599 29,428 45,000,000 2.36% due December 05, 2022 44,996 44,562

$ $ Shaw Communications Inc. 35,000,000 3.15% due February 19, 2021 35,835 35,629

TELUS Corporation 67,500,000 5.05% due December 04, 2019 76,800 71,095 31,000,000 5.05% due July 23, 2020 34,604 33,067 25,000,000 Callable 2.35% due March 28, 2022 24,877 24,710

The Toronto-Dominion Bank* 73,460,000 1.693% due April 02, 2020 73,216 72,632 8,500,000 2.563% due June 24, 2020 8,766 8,569 69,600,000 2.045% due March 08, 2021 69,878 69,009 83,200,000 1.994% due March 23, 2022 82,570 81,708

Toyota Credit Canada Inc. 21,600,000 2.80% due November 21, 2018 22,026 21,789 16,000,000 2.48% due November 19, 2019 15,998 16,103 23,400,000 1.80% due February 19, 2020 23,372 23,213 15,700,000 2.02% due February 28, 2022 15,695 15,428 25,300,000 2.62% due October 11, 2022 25,413 25,372

TransCanada PipeLines Limited 45,000,000 3.65% due November 15, 2021 47,581 47,135

Ventas Canada Finance Limited 33,998,000 3.00% due September 30, 2019 34,392 34,397

VW Credit Canada Inc. 6,000,000 2.80% due August 20, 2018 5,981 6,036 30,300,000 2.50% due October 01, 2019 30,634 30,411 27,600,000 2.15% due June 24, 2020 27,311 27,424

Wells Fargo Canada Corporation 37,400,000 2.78% due November 15, 2018 37,843 37,716 54,000,000 2.944% due July 25, 2019 55,414 54,710

Westcoast Energy Inc. 40,458,000 4.57% due July 02, 2020 42,790 42,570

3,891,717 3,835,036

Total Canadian Bonds 6,310,619 6,196,165

TOTAL INVESTMENT

PORTFOLIO – 99.0% $ 6,310,619 $ 6,196,165

OTHER NET ASSETS (LIABILITIES) – 1.0% 60,091

TOTAL NET ASSETS – 100.0% $ 6,256,256

* Related party to the Fund as an affiliated entity of TD Asset Management Inc.

$ $




TD Short Term Bond Fund

10


Fund-Specific Notes to the Financial Statements

(A) The Fund(I) The Fund start date was January 23, 1989.

(II) TDAM is the manager, portfolio adviser and trustee of the Fund. TDIS is the principal distributor of the Investor Series units of the Fund.

(III) At December 31, 2017, TD and funds managed by TDAM held 54.7% (2016: 60.0%) of the net assets of the Fund.

(IV) The presentation and functional currency of the Fund is the Canadian dollar.

(V) The investment objective of the Fund is to seek to maximize income while simultaneously preserving investment capital and liquidity. In seeking to achieve this objective, the Fund invests primarily in debt obligations with the terms to maturity of up to five years issued or guaranteed by theCanadian federal or provincial governments, or any agency of such govern-ments, or any debt obligations of Schedule I Canadian chartered banks, loan or trust companies, or corporations. The Fund focuses on the Canadiancorporate debt market as well as global macroeconomic trends. Generally, the Fund utilizes a bottom-up strategy using diligent credit analysis combined with a “buy-and-hold” strategy to seek to add value, enhance long-term performance, and reduce risk.

(VI) Private Series was launched on February 4, 2016.

(VII) Any related party holdings as at December 31, 2017 (2016: 4.1%), are disclosed in the Schedule of Investment Portfolio.

(B) Management Fees and Administration Fees (Note 6)for the periods ended December 31, 2017 and 2016

(I) MANAGEMENT FEES (%) (exclusive of GST and HST)

Annual Maximum Actual Rate• Annual Rate Annual Rate•

Series 2017 2016 2016

Investor Series 1.00 1.00 1.00Institutional Series 0.40 0.75 0.39Premium Series 0.90* 0.90 0.90Advisor Series 1.00 1.25 1.21F-Series 0.55 0.75 0.55Premium F-Series 0.45* 0.45 0.45D-Series 0.80 0.90 0.90Private Series 0.00 0.00 0.00O-Series 0.00 0.00 0.00

• Includes management fees paid by the Fund and the proportionate management fees, if any, of the underlying fund(s) managed by TDAM held by the Fund. However, there is no duplication of management fees paid to TDAM or its affiliates if the Fund invests in underlying fund(s) that are managed by TDAM.

Effective March 28, 2017, the management fee rate charged to Advisor Series and D-Series was changed from 1.21% to 1.00% and 0.90% to 0.80%, respectively.Effective July 27, 2017, the management fee rate charged to Institutional Series waschanged from 0.39% to 0.40%. Prior to July 27, 2017, TDAM was entitled to charge amaximum rate of 0.75% for the Institutional Series.

* The rate disclosed represents the maximum annual rate per the simplified prospectusdated July 28, 2016. The series is no longer being offered under the most recentsimplified prospectus. Refer to the Significant Events section for further details.

The amount payable (in 000s) to TDAM as at December 31, 2017 formanagement fees is $0 (2016: $0) which is included in Accrued Liabilities in the Statements of Financial Position.

(II) ADMINISTRATION FEES (%) (exclusive of GST and HST)

Not applicable for the Fund.

(C) Brokerage Commissions and Soft Dollars (in 000s) (Notes 3 and 6)for the periods ended December 31, 2017 and 2016Not significant or applicable to the Fund.

(D) Tax Loss Carry Forwards (in 000s) (Note 7)as at December 31, 2017

Capital Losses $ 51,734

Non-Capital Losses (by year of expiry) None

(E) Securities Lent (Note 3)

(I) SECURITIES LENDING INCOME

A reconciliation of the gross amount generated from the securities lendingtransactions to the securities lending income to the Fund for the periodsended December 31, 2017 and 2016 is as follows:

Percentage of Amount (in 000s) Total Amount (%)

2017 2016 2017 2016

Gross Securities Lending Income $ 660 $ 767 100.0 100.0

Agent fees – The Bank of New York Mellon Corp. (130) (153) (19.7) (19.9)

Securities Lending Income to the Fund before Tax Reclaims (Withholding Taxes) 530 614 80.3 80.1

Tax Reclaims (Withholding Taxes) (11) 0 (1.7) 0.0

Net Securities Lending Income $ 519 $ 614 78.6 80.1

(II) SECURITIES LENT AND COLLATERAL HELD (in 000s)The table below summarizes the aggregate securities lent and relatedcollateral held by the Fund as at December 31, 2017 and 2016.

2017 2016

Fair Value of Securities Lent $ 776,628 $ 745,779

Fair Value of Collateral Held 816,794 784,591

Collateral held is in the form of debt obligations of the Government ofCanada and other countries, Canadian provincial and municipal governmentsor corporations and is not included in the Statements of Financial Position.


11


(F) Financial Risk Management (Notes 3, 4 and 8)as at December 31, 2017 and 2016

(I) INTEREST RATE RISK

The table below summarizes the Fund’s exposure to interest rate risk as atDecember 31, 2017 and 2016 by remaining term to maturity. The table alsoillustrates the potential impact to the Fund’s net assets had the prevailinginterest rates changed by 1 percent, assuming a parallel shift in the yieldcurve, with all other variables held constant. The Fund’s sensitivity to interestrate changes was estimated using the weighted average duration of the bondportfolio. In practice, the actual trading results may differ from these approx -imate sensitivity analysis amounts and the differences could be material.

Term to Maturity Total Exposure (in 000s)

Bonds 2017 2016

Less than 1 year $ 467,781 $ 538,8841-5 years 5,728,384 5,708,050

Total $ 6,196,165 $ 6,246,934

Impact on Net Assets (000s) $ 175,135 $ 173,711

Impact on Net Assets (%) 2.8 2.7

(II) CURRENCY RISK

Not significant or applicable to the Fund.

(III) OTHER PRICE RISK

Not significant or applicable to the Fund.

(IV) CREDIT RISK

The table below summarizes the debt instruments by credit ratings as at December 31, 2017 and 2016.

Percentage of Percentage of Total Bonds (%) Total Net Assets (%)

Credit Rating° 2017 2016 2017 2016

AAA 23.2 25.0 22.9 24.7AA 30.5 46.6 30.3 46.1A 30.8 13.8 30.5 13.6BBB 15.5 14.6 15.3 14.4

Total 100.0 100.0 99.0 98.8

° Credit ratings are obtained from Standard & Poor’s, Moody’s or DBRS rating agencies.

(V) FINANCIAL INSTRUMENTS BY THE LEVEL IN THE FAIR VALUE HIERARCHY (in 000s)The table below illustrates the classification of the Fund’s financial instrumentswithin the fair value hierarchy as at December 31, 2017 and 2016.

Level 1 Level 2 Level 3 Total

December 31, 2017Bonds $ 0 $ 6,196,165 $ 0 $ 6,196,165

December 31, 2016Bonds $ 0 $ 6,246,934 $ 0 $ 6,246,934

As at the end of the periods, transfers between Level 1 and Level 2 were nil.

(VI) RECONCILIATION OF LEVEL 3 FAIR VALUE MEASUREMENTS (in 000s)Not significant or applicable to the Fund.

(VII) CONTRACTUAL MATURITIES ANALYSIS FOR FINANCIAL LIABILITIES

As at December 31, 2017 and 2016, the Fund’s net assets are due ondemand. All other financial liabilities of the Fund are due in less than three months.

(G) Investment Portfolio Concentration (%) (Note 8)As at December 31, 2017 and 2016, the Fund’s investment portfolioconcentration can be summarized as follows:

2017 2016

Canadian BondsFederal Bonds & Guarantees 21.3 23.7Provincial Bonds & Guarantees 16.2 14.0Municipal Bonds 0.2 0.2Corporate Bonds 61.3 60.2Global BondsUnited States 0.0 0.7Other Net Assets (Liabilities) 1.0 1.2

100.0 100.0

(H) Interest in Unconsolidated Structured Entities (in 000s) (Note 3)as at December 31, 2017 and 2016Not significant or applicable to the Fund.

(I) Offsetting of Financial Assets and Liabilities (in 000s) (Note 3)as at December 31, 2017 and 2016Not significant or applicable to the Fund.

(J) Significant EventsThe following changes were made:• The Premium Series was closed to all purchases effective March 28, 2017.• The Premium F-Series was closed to all purchases effective end of businesson November 21, 2016 and was terminated on March 28, 2017.

Fund-Specific Notes to the Financial StatementsTD Short Term Bond Fund

12

1. The Funds

The TD Mutual Fund Trusts and TD Managed Assets Program Portfolios(collectively, the “Funds” and individually, the “Fund”) are open-endmutual funds established under the laws of Ontario and governed by the Declaration of Trust, as amended from time to time.

The TD Managed Assets Program Portfolios invest primarily in units ofother investment funds including in units of exchange-traded funds.

TD Asset Management Inc. (“TDAM”) is the manager, portfolio adviserand trustee of the Funds. TDAM, TDAM USA Inc., TD Investment Services Inc. (“TDIS”), TD Waterhouse Canada Inc. (“TDW”) and EpochInvestment Partners, Inc. (“Epoch”) are wholly-owned subsidiaries of The Toronto-Dominion Bank (“TD”). The registered address of theFunds is P.O. Box 100, 66 Wellington Street West, TD Bank Tower,Toronto-Dominion Centre, Toronto, Ontario M5K 1G8.

The financial year-end for the Funds is December 31. The Statements ofFinancial Position are presented as at December 31, 2017 and 2016. The Statements of Comprehensive Income, Statements of Changes in Net Assets Attributable to Holders of Redeemable Units and Statementsof Cash Flows are presented for the periods ended December 31, 2017and 2016. Where a Fund or series of a Fund was established duringeither period, the information for that Fund or series is provided from theinception date and a comparative statement has only been presented forany period for which that Fund was in existence as at the reporting date.

Each Fund’s start date as indicated in the Fund-Specific Notes to theFinancial Statements is the date that it commenced operations or in the case of a new series, the date the series was first offered and not its inception date.

These financial statements were authorized for issue by TDAM onMarch 16, 2018.

2. Basis of Presentation

These financial statements have been prepared in compliance withInternational Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board (“IASB”). These financialstatements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities(including derivative financial instruments) at fair value through profit or loss (“FVTPL”).

3. Summary of Significant Accounting Policies

Financial InstrumentsThe Funds recognize financial instruments at fair value upon initialrecognition, plus transaction costs in the case of financial instrumentsnot measured at FVTPL. Regular way purchases and sales of financialinstruments are recognized at their trade date. The Funds’ non-derivativeinvestments, which are designated at FVTPL, and derivative assets andliabilities, which are classified as held for trading (“HFT”), are measuredat FVTPL.

All other financial assets and liabilities are measured at amortized cost.Under this method, financial assets and liabilities reflect the amountrequired to be received or paid, discounted, when appropriate, at thecontract’s effective interest rate.

The Funds have determined that they meet the definition of an‘investment entity’ and as a result, the Funds measure subsidiaries, if any, at FVTPL. An investment entity is an entity that: obtains fundsfrom one or more investors for the purpose of providing them withinvestment management services; commits to its investors that itsbusiness purpose is to invest funds solely for returns from capitalappreciation, investment income, or both; and measures and evaluatesthe performance of substantially all of its investments on a fair valuebasis. The significant judgment that the Funds have made in determiningthat this definition is met is that fair value is the primary measurementattribute used to measure and evaluate the performance of substantiallyall of the Funds’ investments. The Funds’ investments may also includeassociates and joint ventures which are designated at FVTPL.

The Funds’ outstanding redeemable units’ entitlements include acontractual obligation to distribute any net income and net realizedcapital gains in cash (at the request of the unitholder) and therefore the ongoing redemption feature is not the Funds’ only contractualobligation. Consequently, the Funds’ outstanding redeemable units areclassified as financial liabilities in accordance with the requirements ofIAS 32, “Financial Instruments: Presentation” (“IAS 32”). The Funds’obligations for Net Assets Attributable to Holders of Redeemable Unitsare presented at the redemption amount.

The accounting policies for measuring the fair value of the Funds’ investments and derivatives are substantially similar to those used inmeasuring the Funds’ net asset value (“NAV”) for transactions withunitholders. The NAV is the value of the total assets of a fund less the value of its total liabilities determined, on each valuation day, inaccordance with Part 14 of National Instrument 81-106, “InvestmentFund Continuous Disclosure”, for the purpose of processing unitholdertransactions. Net Assets Attributable to Holders of Redeemable Units,also referred to as net assets, refers to net assets calculated in accor-dance with IFRS. As at all dates presented, there were no differencesbetween the Funds’ NAV per series unit and net assets per series unit.

nNotes to the Financial Statements

December 31, 2017 Annual Financial Statements13

Fair Value MeasurementFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market partici-pants at the measurement date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivativesand marketable securities) are based on quoted market prices at theclose of trading on the reporting date. The Funds use the last traded market price for both financial assets and financial liabilities where thelast traded price falls within that day’s bid-ask spread. In circumstanceswhere the last traded price is not within the bid-ask spread, TDAM determines the point within the bid-ask spread that is most representa-tive of fair value based on the specific facts and circumstances. TheFunds’ policy is to recognize transfers into and out of the fair value hierarchy levels at the end of reporting periods.

The fair value of financial assets and liabilities that are not traded in an active market, including over-the-counter derivatives, is determinedusing valuation techniques. The Funds use a variety of methods and make assumptions that are based on market conditions existing at eachreporting date. Valuation techniques include the use of comparablerecent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricingmodels and other techniques commonly used by market participants and which make the maximum use of observable inputs.

The valuation methodology for specific types of investments held by the Funds is summarized below.

(a) Securities not listed on any recognized public securities exchange are valued based on available quotations from recognized dealers insuch securities, where readily available. If securities have no availablebroker-dealer bid/ask quotes, TDAM uses its own pricing model toprice the securities. The pricing model will generally include thediscounted cash flow valuation approach, the use of a credit spreadbased on the terms of the security and the use of such credit andyield analysis comparables as TDAM believes are relevant in thecircumstances. Debt instruments are valued based on mid prices,where readily available. Other valuation techniques may be used, as described above, where applicable.

(b) Short-term debt instruments, repurchase and reverse repurchaseagreements are valued based on quotations received from recognizedinvestment dealers.

(c) Real return bonds are valued based on the available public quotations from recognized dealers. Changes in the inflation factorare included in Interest for Distribution Purposes in the Statements of Comprehensive Income.

(d) The Funds may use foreign exchange forward contracts to hedgeagainst or profit from fluctuations in foreign exchange rates. Thesecontracts are valued on each valuation day based on the differencebetween the contract rates and the current forward rates at themeasurement date applied to the contracts’ notional amount. The net change in unrealized appreciation or depreciation and the netrealized gain or loss from closing out contracts are reflected in the Statements of Comprehensive Income as part of Net Gain (Loss)on Derivatives.

(e) The Funds may enter into a forward contract to obtain exposure to a specific type of investment without actually investing directly insuch investment. These contracts are valued based on the differencebetween the contract rate and the current market rate for theunderlying investment, at the measurement date. The unrealized gainor loss and the net realized gain or loss from closing out contractsare reflected in the Statements of Comprehensive Income as part ofNet Gain (Loss) on Derivatives.

(f) The Funds may purchase standardized, exchange-traded futurescontracts. Any difference between the value at the close of businesson the current valuation day and that of the previous valuation day is settled in cash daily and recorded in the Statements ofComprehensive Income as Derivatives Income (Loss). Any amountsreceivable (payable) from settlement of futures contracts are reflectedin the Statements of Financial Position as Futures Margin Receivable(Payable). Short-term debt instruments as indicated in the Schedule of Investment Portfolio have been segregated and are held as marginagainst the futures contracts purchased by the Funds, as applicable.

(g) Options contracts that are traded in exchange markets are valued at their closing prices on each valuation day. The premium received or paid on options written or purchased is included in the cost of the options. Any difference between the current value of the contract and the value of the contract originated is recognized as net changein unrealized appreciation/depreciation on derivatives. When optionsare closed or exercised, the difference between the premium and the amount paid or received, or the full amount of the premium if the option expires worthless, is reflected in the Statements ofComprehensive Income as part of Net Gain (Loss) on Derivatives. Thecost of a security purchased will be reduced by the premium receivedon options when a written put option is exercised or increased by the amount paid on options when a purchased option is exercised.

(h) Investments in underlying conventional mutual funds andTD Exchange-Traded Funds are generally valued at the NAV perseries unit of the investment funds as reported by the investmentfunds’ managers.

(i) The exchange-traded funds (ETFs) that are not managed by TDAM are valued based on quoted market prices at the close of trading onthe reporting date.

Fair Value Hierarchy

The Funds classify their investments into fair value measurements within a hierarchy that prioritizes the inputs to fair value measurement.The fair value hierarchy has the following three levels:

Level 1 Quoted (unadjusted) prices in active markets for identicalassets or liabilities;

Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly (that is, as prices) orindirectly (that is, derived from prices); and

Level 3 Inputs that are not based on observable market data (that is, unobservable inputs).


Annual Financial StatementsDecember 31, 2017 14

All fair value measurements are recurring. The carrying values of Cash,Subscriptions Receivable, Interest Receivable, Dividends Receivable,Receivable for Investments Sold, Payable for Investments Purchased,Redemptions Payable, Distributions Payable, Accrued Liabilities and theFunds’ obligation for Net Assets Attributable to Holders of RedeemableUnits approximate their fair values due to their short-term nature.

Fair values are classified as Level 1 when the related security orderivative is actively traded and a quoted price is available. If aninstrument classified as Level 1 subsequently ceases to be activelytraded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3.

The hierarchy gives the highest priority to unadjusted quoted prices inactive markets for identical assets or liabilities (Level 1) and the lowestpriority to unobservable inputs (Level 3).

The classification within the hierarchy is based on the lowest level inputthat is significant to the fair value measurement. For this purpose, thesignificance of an input is assessed against the fair value measurementin its entirety. If a fair value measurement uses observable inputs thatrequire significant adjustment based on unobservable inputs, thatmeasurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requiresjudgment, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significantjudgment. Observable data is considered to be that market data that isreadily available, regularly distributed or updated, reliable and verifiable,not proprietary, and provided by independent sources that are activelyinvolved in the relevant market.

TDAM has a Global Fair Value Committee which oversees the perform-ance of the fair value measurements included in the financial statementsof the Funds, including any Level 3 measurements. TDAM utilizes a variety of methods (as listed in the Fair Value Measurement section) in determining the fair value of securities classified as Level 3. The committee also meets quarterly to perform reviews of the valuations of investments held by the Funds.

The classification of the Funds’ financial instruments within the fair valuehierarchy as at December 31 2017 and 2016, and any transfers betweenlevels at end of the reporting period as a result of changes in the lowestlevel input that is significant to the fair value measurement are disclosedin the Fund-Specific Notes to the Financial Statements, where applicable.

Interest in Unconsolidated Structured EntitiesA structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasksonly and the relevant activities are directed by means of contractualarrangements. TDAM has determined that all of the underlying funds in which the Funds invest are unconsolidated structured entities. Inmaking this determination, TDAM evaluated the fact that decisionmaking about underlying funds’ activities is generally not governed byvoting or similar rights held by the Funds and other investors in anyunderlying funds.

The Funds may invest in underlying funds whose investment objectivesrange from achieving short- to long-term income and capital growthpotential. The Funds’ interests in these securities as at December 31,2017 and 2016 are included at their fair value in the Statements ofFinancial Position, which represent the Funds’ exposure in theseunderlying funds. The Funds do not provide and have not committed to provide any additional significant financial or other support to theunderlying funds. The change in fair value of each of the underlying fundsduring the reporting periods is included in Net Change in UnrealizedAppreciation/Depreciation in the Statements of Comprehensive Income in Net Gain (Loss) on Investments. Additional information on the Funds’interest in underlying funds, where applicable, is provided in the Fund-Specific Notes to the Financial Statements.

The TD Mutual Fund Trusts may also invest in mortgage-related and otherasset-backed securities that directly or indirectly represent a participationin, or are secured by and payable from, mortgage loans on real property.Mortgage-related securities are created from pools of residential orcommercial mortgage loans, including mortgage loans made by savingsand loan institutions, mortgage bankers, commercial banks and others.The debt and equity securities issued by these issuers may includetranches with varying levels of subordination. These Funds may alsoinvest in senior notes that have a first lien on assets and have minimumexposure to junior or subordinate tranches. These securities may providea monthly payment which consists of both interest and principalpayments. Other asset-backed securities are created from many types ofassets, including auto loans, credit card receivables, home equity loans,and student loans.

As at December 31, 2017 and 2016, the fair value of mortgage-relatedand other asset-backed securities of these Funds, where applicable, isdisclosed as part of the Investments in the Statements of FinancialPosition. This amount represents the maximum exposure to losses at that date. The change in fair value of mortgage-related and other asset-backed securities during the reporting periods are included in theNet Change in Unrealized Appreciation/Depreciation in the Statements of Comprehensive Income in Net Gain (Loss) on Investments.

Translation of Foreign CurrenciesA Fund’s functional currency, as disclosed in the Fund-Specific Notes to the Financial Statements, represents the currency that TDAM views tomost faithfully represent the economic effects of the Fund’s underlyingtransactions, events and conditions taking into consideration how unitsare issued or redeemed and how returns are measured. Foreign currencytransactions are translated into the functional currency using theexchange rates prevailing at the dates that transactions occur. Realizedforeign exchange gains and losses on income are recognized in invest -ment income in the Statements of Comprehensive Income.



Assets and liabilities denominated in a foreign currency are translatedinto the functional currency using the exchange rate prevailing at themeasurement date. Foreign exchange gains and losses on the sale ofinvestments are included in Net Realized Gain (Loss). Unrealized foreignexchange gains and losses on investments held and other assets andliabilities are included in Net Change in Unrealized Appreciation/Depreciation. Realized and unrealized foreign exchange gains and lossesrelating to cash are presented as Foreign Exchange Gain (Loss) on Cashin the Statements of Comprehensive Income.

Offsetting Financial Assets and LiabilitiesFinancial assets and liabilities are offset and the net amount reported in the Statements of Financial Position where the Funds have a legallyenforceable right to offset the recognized amounts and there is anintention to settle on a net basis or realize the asset and settle theliability simultaneously. In all other situations they are presented on agross basis. In the normal course of business, the Funds may enter intovarious master netting agreements or other similar arrangements that do not meet the criteria for offsetting in the Statements of FinancialPosition but still allow for the related amounts to be set-off in certaincircumstances, such as bankruptcy or the termination of the contracts.Offsetting information, where applicable, is presented in the Fund-Specific Notes to the Financial Statements.

Reverse Repurchase AgreementsCertain Funds may enter into reverse repurchase transactions. In areverse repurchase transaction, a Fund buys a security at one price froma third party and agree to sell the same security back to the same partyat a specified price on an agreed future date and the difference isincluded as part of Net Gain (Loss) on Investments in the Statements of Comprehensive Income.

The risk with these types of transactions is that the other party maydefault under the agreement or go bankrupt. These risks are reduced byrequiring the other party to provide collateral to the Fund. The value ofthe collateral has to be at least 102 percent of the market value of thesecurity and the collateral is marked to market on each business day. The type of securities received and related collateral held by the Fund,where applicable, are listed in the Schedule of Investment Portfolio.

CashCash is comprised of deposits with financial institutions. Bank overdrafts are shown under Current Liabilities in the Statements ofFinancial Position.

Receivable for Investments Sold/Payable for Investments PurchasedReceivable for Investments Sold and Payable for Investments Purchasedrepresent trades that have been contracted for but not yet settled ordelivered on the Statements of Financial Position dates.

MarginMargin accounts represent margin deposits held with brokers in respect of open exchange-traded futures contracts.

Impairment of Financial AssetsAt each reporting date, the Funds assess whether there is objectiveevidence that a financial asset at amortized cost is impaired. If suchevidence exists, the Funds recognize an impairment loss as the differencebetween the amortized cost of the financial asset and the present valueof the estimated future cash flows, discounted using the instrument’soriginal effective interest rate. Impairment losses on financial assets atamortized cost are reversed in subsequent periods if the amount of theloss decreases and the decrease can be related objectively to an eventoccurring after the impairment was recognized.

Valuation of Series UnitsTDAM generally calculates the NAV for each series of the Funds as at4 p.m. Eastern Time on each day that the Toronto Stock Exchange is open for trading. However, in some unforeseen circumstances, the seriesNAV per unit may be calculated at another time.

The NAV is calculated, for processing subscription, switch, conversion or redemption orders of series units, for each series of units of the Funds by taking the series’ proportionate share of the individual Fund’scommon assets less that series’ proportionate share of its commonliabilities and deducting from this amount all liabilities that relate solelyto that specific series.

The Net Assets Attributable to Holders of Redeemable Units – Per SeriesUnit is determined by dividing the total Net Assets Attributable toHolders of Redeemable Units of each series of the Funds by the totalnumber of units outstanding of that series at the reporting date.

Income RecognitionInterest for Distribution Purposes as shown in the Statements ofComprehensive Income includes interest income from cash and thecoupon interest on debt instruments accounted for on an accrual basis.Interest Receivable is disclosed in the Statements of Financial Positionbased on the debt instruments’ stated rates of interest. The Funds do not amortize premiums paid or discounts received on the purchase ofdebt securities except for zero coupon bonds which are amortized.

Dividend income from ETFs and distributions from any underlying mutualfunds are recognized on the ex-dividend and ex-distribution date,respectively. Dividends received from ETFs are recognized and presentedin the financial statements based on the nature of the underlyingcomponents such as interest income, dividend income, capital gains and return of capital.

The TD Mutual Fund Trusts may engage in securities lending pursuant to the terms of an agreement which includes restrictions as set out inCanadian securities legislation. The income earned from securities lend-ing, where applicable, is included in the Statements of ComprehensiveIncome as it is earned. The fair value of the securities loaned and fairvalue of the collateral held is determined daily. The details of securitieslending income, aggregate values of securities on loan and related collateral held are provided in the Fund-Specific Notes to the FinancialStatements, where applicable.



Investment Transactions and Transaction CostsFor the purposes of calculating realized and unrealized gains and lossesfrom investment transactions, the cost of each investment security isdetermined on an average cost basis, excluding transactions costs.

Transaction costs, such as brokerage commissions, incurred by the Fundsin the purchase and sale of investments at fair value are recognized inthe Statements of Comprehensive Income in the period incurred.Commissions paid, where applicable, are included in the Fund-SpecificNotes to the Financial Statements. No transaction costs are incurredwhen the Funds invest in underlying mutual funds. However, theunderlying funds’ investments may be subject to transaction costs.

Allocation of Income and Expenses, Realized and Unrealized Gains (Losses)Expenses (excluding interest charges and portfolio transaction costs) areaccrued daily, separately for each series. Interest charges and portfoliotransaction costs along with income, gains and losses, are allocated toeach series based on their respective Net Assets Attributable to Holdersof Redeemable Units.

Increase (Decrease) in Net assets Attributable to Holders of Redeemable Units – Per Series UnitThe Increase (Decrease) in Net Assets Attributable to Holders ofRedeemable Units – Per Series Unit is calculated by dividing the Increase(Decrease) in Net Assets Attributable to Holders of Redeemable Units of each series by the weighted average units outstanding of that seriesfor the period, except when a series was established during a reportingperiod, in which case the Weighted Average Units Outstanding for thePeriod – Per Series is calculated from the start date.

Accounting Standards Issued but Not Yet AdoptedThe final version of IFRS 9, “Financial Instruments” (“IFRS 9”) wasissued by the IASB in July 2014 and will replace International AccountingStandards (“IAS”) 39, “Financial Instruments: Recognition andMeasurement” (“IAS 39”). IFRS 9 introduces a model for classificationand measurement, a single, forward-looking ‘expected loss’ impairmentmodel and a substantially reformed approach to hedge accounting.

The new single, principle based approach for determining the classifi -cation of financial assets is driven by cash flow characteristics and thebusiness model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments,which will require more timely recognition of expected credit losses. It also includes changes in respect of own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused bythe deterioration of an entity’s own credit risk on such liabilities are nolonger recognized in profit or loss. IFRS 9 is effective for annual periodsbeginning on or after January 1, 2018. The manager has assessed theimpact of IFRS 9 by analyzing the current business model of the Fundsand does not anticipate significant changes to the valuation of theFunds’ financial instruments. As a result, the adoption of IFRS 9 is notexpected to have a material impact on the Fund’s financial statements.

4. Critical Accounting Estimates and Judgments

The preparation of financial statements requires management to usejudgment in applying its accounting policies and to make estimates and assumptions about the future. The following discusses the mostsignificant accounting judgments and estimates that the Funds havemade in preparing the financial statements:

Fair Value Measurement of Derivatives and Securities Not Quoted in an Active MarketThe Funds may hold financial instruments that are not quoted in activemarkets, including derivatives. As described in Note 3, the use ofvaluation techniques for financial instruments and derivatives that arenot quoted in an active market requires TDAM to make assumptions that are based on market conditions existing as at the reporting date ofthe financial statements. Changes in assumptions about these factorscould affect the reported fair values of financial instruments. Refer to theFund-Specific Notes to the Financial Statements for further informationabout the fair value measurement of the Funds’ financial instruments,where applicable.

Classification and Measurement of Investments and Application of the Fair Value OptionIn classifying and measuring financial instruments held by the Funds,TDAM is required to make significant judgments about whether or notthe business of the Funds is to invest on a total return basis for thepurpose of applying the fair value option for financial assets underIAS 39. The most significant judgments made include the determinationthat certain investments are HFT and that the fair value option can beapplied to those which are not.

Investment EntityIn determining whether a Fund meets the definition of an investmententity, TDAM may be required to make significant judgments aboutwhether a Fund has the typical characteristics of an investment entity.Each Fund may hold only one investment, an underlying fund (or haveonly one investor or have investors that are its related parties), however,consistent with the investment entity definition, each Fund primarilyobtains funds from one or more investors for the purpose of providinginvestment management services, commits to its investors that thebusiness purpose is to invest the funds solely for returns from capitalappreciation, investment income or both, and measures and evaluatesthe performance of its investments on a fair value basis.



5. Redeemable Units

For TD Mutual Fund Trusts and TD Managed Assets Program Portfolios,each individual series of units is sold under differing purchase optionsand may have higher or lower management fees based on their specificattributes, as summarized below, reflecting the extent of the investmentadvice provided.

TD Mutual Fund TrustsEach TD Mutual Fund Trust is authorized to issue an unlimited number ofunits of multiple series that rank equally and are available for sale undera single simplified prospectus. In addition, each of these Funds is alsoauthorized to issue an unlimited number of units of multiple series to besold under a confidential offering memorandum or other separatesimplified prospectus. The various series that may be offered by theseFunds are as described below.

Investor Series: Offered on a no-load basis to investors.

H-Series: Offered on a no-load basis to investors who wish to receivea regular monthly cash flow from the Funds. Monthly distributions may consist of net income, net realized capitalgains and/or a return of capital.

Premium Series: Offered on a no-load basis to large investors and others who make the required minimum investment, as determinedby TDAM from time to time.

K-Series: Offered on a no-load basis to large investors and others who make the required minimum investment, as determinedby TDAM from time to time, and who wish to receive a regular monthly cash flow from the Funds. Monthly distribu-tions may consist of net income, net realized capital gains,and/or a return of capital.

e-Series: Offered on a no-load basis to investors who want to complete their transactions electronically.

D-Series: Offered on a no-load basis to investors who want to complete their transactions through TD Direct Investing, a division of TDW, or other discount brokers.

Advisor Series: Offered to investors who seek investment advice and wantthe option of transacting on a front-end load, back-end load,low-load or low-load-2 basis.

T-Series: Offered to investors who seek investment advice; want theoption of transacting on a front-end load, back-end load,low-load or low-load-2 basis; and who wish to receive a regular monthly cash flow from the Funds. Monthly distribu-tions may consist of net income, net realized capital gainsand/or a return of capital.

F-Series: Offered to investors, through fee-based financial advisors or dealer-sponsored “wrap accounts”, and others who pay an annual fee to their dealer instead of transactionalsales charges.

S-Series: Offered to investors who wish to receive a regular monthlycash flow from the Funds, through fee-based financialadvisors or dealer-sponsored “wrap accounts”. This seriesmay also be offered to other investors who pay an annualfee to their dealer instead of transactional sales charges.Monthly distributions may consist of net income, net realizedcapital gains, and/or a return of capital.

Premium Offered to large investors, through fee-based financial F-Series: advisors or dealer-sponsored “wrap accounts”, and others

who pay an annual fee to their dealer instead of trans -actional sales charges. For this series, investors must makethe required minimum investment, as determined by TDAMfrom time to time.

PS Series: Offered to large investors who wish to receive a regularmonthly cash flow from the Funds, through fee-based financial advisors or dealer-sponsored “wrap accounts”, and others who pay an annual fee to their dealer instead of transactional sales charges. For this series, investors must make the required minimum investment, as determinedby TDAM from time to time. Monthly distributions may consist of net income, net realized capital gains, and/ areturn of capital.

W-Series: Offered to investors, through certain wealth managementbusinesses of TD Bank Group, including certain divisions of TDW, or other dealers authorized by TDAM, who pay an annual fee to their dealer instead of transactional sales charges.

Private Series and Private-EM Offered on a no-load basis to large investors who make theSeries: required minimum investment as determined by TDAM, and

have entered into a Private Series agreement with TDAM.

Institutional Offered on a no-load basis to large investors, such as group Series: savings plans and others who make the required minimum

investment, as determined by TDAM from time to time.

Q-Series: Offered on a no-load basis to large investors such as groupsavings plans and others who wish to receive a regularmonthly cash flow from the Funds, and who make therequired minimum investment, as determined by TDAM from time to time. Monthly distributions may consist of netincome, net realized capital gains and/or a return of capital.

C-Series Offered on a no-load basis to large investors who make the required minimum investment as determined by TDAMand have entered into a C-Series agreement with TDAM.

O-Series: Offered on a no-load basis to large investors who make the required minimum investment as determined by TDAM,and have entered into an O-Series agreement with TDAM.



TD Managed Assets Program Portfolios

Each TD Managed Assets Program Portfolio is authorized to issue anunlimited number of units of multiple series that rank equally and are available for sale under a single simplified prospectus. The variousseries that may be offered by these Funds are as described below.

Investor Series: Offered on a no-load basis to investors.

H-Series: Offered on a no-load basis to investors who wish to receivea regular monthly cash flow from the Funds. Monthly distributions may consist of net income, net realized capitalgains and/or a return of capital.

Premium Series: Offered on a no-load basis to large investors and others who make the required minimum investment, as determinedby TDAM from time to time.

K-Series: Offered on a no-load basis to large investors and others who make the required minimum investment, as determinedby TDAM from time to time, and who wish to receive a regular monthly cash flow from the Funds. Monthly distribu-tions may consist of net income, net realized capital gains,and/or a return of capital.

e-Series: Offered on a no-load basis to investors who want to complete their transactions electronically.

D-Series: Offered on a no-load basis to investors who want to complete their transactions through TD Direct Investing, a division of TDW, or other discount brokers.

Advisor Series: Offered to investors who seek investment advice and wantthe option of transacting on a front-end load, back-end load,low-load or low-load-2 basis.

T-Series: Offered to investors who seek investment advice; want theoption of transacting on a front-end load, back-end load,low-load or low-load-2 basis; and who wish to receive a regular monthly cash flow from the Funds. Monthly distribu-tions may consist of net income, net realized capital gainsand/or a return of capital.

F-Series: Offered to investors, through fee-based financial advisors or dealer-sponsored “wrap accounts”, and others who pay an annual fee to their dealer instead of transactionalsales charges.

S-Series: Offered to investors who wish to receive a regular monthlycash flow from the Funds, through fee-based financialadvisors or dealer-sponsored “wrap accounts”. This seriesmay also be offered to other investors who pay an annualfee to their dealer instead of transactional sales charges.Monthly distributions may consist of net income, net realizedcapital gains, and/or a return of capital.

Units of TD Mutual Fund Trusts and TD Managed Assets ProgramPortfolios are redeemable at the option of the unitholder in accordancewith the provisions of the Declaration of Trust. Units of these Funds are issued or redeemed on a daily basis at the NAV per series unit nextdetermined after the subscription, switch, conversion order or redemp-tion request, respectively, is received by TDAM. Subscriptions andredemptions include units converted from one series to another series

within a Fund in the Statements of Changes in Net Assets Attributable to Holders of Redeemable Units. However, conversions between serieswithin a Fund are excluded from Proceeds from Issuances of RedeemableUnits and Amounts Paid on Redeemable Units, Net of Early RedemptionFees in the Statements of Cash Flows.

6. Related Party Transactions

Management Fees(a) TD Mutual Fund Trusts

In consideration for the provision of management, distribution and port-folio management services and oversight of any portfolio sub-advisoryservices provided to the TD Mutual Fund Trusts, TDAM receives an annualmanagement fee in respect of certain series of these Funds. The manage-ment fee is calculated and accrued on a daily basis for each series basedon the NAV of that series and paid monthly to TDAM. Where these Fundsinvest in any underlying funds, there are fees and expenses payable bythe underlying funds in addition to those paid by the Funds. However,there is no duplication of management fees paid to TDAM or its affiliatesif these Funds invest in underlying funds that are managed by TDAM.

No management fees are charged with respect to Private Series andO-Series units. Instead, unitholders in Private Series and O-Series unitsmay be charged a fee directly by TDAM.

Prior to July 27, 2017, the simplified prospectus disclosed the maximumannual management fee rate that TDAM could charge for each series ofunits of the TD Mutual Fund Trusts (so the actual management fee beingcharged to these Funds might have been less than the maximum annualmanagement fee rate). TDAM was able to charge the maximum annualmanagement fee without notice to unitholders. Effective July 27, 2017,the simplified prospectus discloses a specified annual management feerate. Where TDAM chooses to charge a management fee rate below thespecified annual management fee rate, the difference represents a waiverof management fees and is included as Waived Expenses in theStatements of Comprehensive Income. TDAM may waive all or a portionof the management fees charged to these Funds, which may bediscontinued at any time by TDAM at its discretion without notice tounitholders. Detailed information on the management fees of theseFunds is provided in the Fund-Specific Notes to the Financial Statements.

(b) TD Managed Assets Program Portfolios(I) TD MANAGED ASSETS PROGRAM PORTFOLIOS

(Excluding TD Managed ETF Portfolios)

In consideration for the provision of management, distribution andportfolio management services to the TD Managed Assets ProgramPortfolios (other than the TD Managed ETF Portfolios), each series ofthese Funds pay TDAM an annual management fee. The management feeis calculated and accrued on a daily basis for each series based on theNAV of that series and paid monthly to TDAM. Where these Funds investin any underlying funds, there are fees and expenses payable by theunderlying funds in addition to those paid by the Funds. However, thereis no duplication of management fees paid to TDAM or its affiliates ifthese Funds invest in underlying funds that are managed by TDAM.



Prior to October 26, 2017, the simplified prospectus disclosed themaximum annual management fee rate that TDAM could charge for eachseries of units of these Funds (so the actual management fee beingcharged to these Funds might have been less than the maximum annualmanagement fee rate). Effective October 26, 2017, the simplifiedprospectus discloses a specified annual management fee rate. WhereTDAM chooses to charge a management fee rate below the specifiedannual management fee rate, the difference represents a waiver ofmanagement fees and is included as Waived Expenses in the Statementsof Comprehensive Income. TDAM may waive all or a portion of themanagement fees being charged to these Funds, which may bediscontinued at any time by TDAM at its discretion without notice tounitholders. Detailed information on the management fees of theseFunds is provided in the Fund-Specific Notes to the Financial Statements.

(II) TD MANAGED ETF PORTFOLIOS

In consideration for the provision of management, distribution and port-folio management services to the TD Managed ETF Portfolios, each seriesof these Funds pay TDAM an annual management fee. The managementfee is calculated and accrued on a daily basis for each series based onthe NAV of that series and paid monthly to TDAM.

Where a TD Managed ETF Portfolio invests in any underlying TD ETFs,there are fees and expenses payable by the underlying TD ETFs inaddition to those paid by the Funds. However, there is no duplication of management fees paid to TDAM or its affiliates. TDAM may waive all or a portion of the management fees being charged to these Funds,which may be discontinued at any time by TDAM at its discretion without notice to unitholders. Detailed information on the managementfees of these Funds is provided in the Fund-Specific Notes to theFinancial Statements.

Administration Fees(A) TD Mutual Fund Trusts

In consideration for paying certain operating expenses, TDAM is paid anannual administration fee with respect to certain series of the TD MutualFund Trusts. The administration fee includes recordkeeping and commu -nication costs, custodial costs, certain legal fees, audit fees, regulatory filing fees and bank charges. The administration fee is calculated and accrued on a daily basis for each series based on the NAV of theapplicable series and paid monthly to TDAM. Annual administration feesfor each series of these Funds, where applicable, are provided in theFund-Specific Notes to the Financial Statements.

The administration fee is payable in respect of Investor Series, H-Series,D-Series, Advisor Series and T-Series of the TD Mutual Fund Trusts, asapplicable, other than the money market funds, TD Ultra Short Term BondFund, TD Short Term Bond Fund, TD Canadian Bond Fund, TD GlobalConservative Opportunities Fund, TD Global Balanced OpportunitiesFund, the Index funds and Advisor Series units of TD U.S. Equity Portfolio.The administration fee is also payable in respect of Premium Series andK-Series of the TD Mutual Fund Trusts other than TD U.S. Money MarketFund, TD Short Term Bond Fund, TD Canadian Bond Fund, TD IncomeAdvantage Portfolio, TD Canadian Core Plus Bond Fund, TD CorporateBond Plus Fund, TD Global Conservative Opportunities Fund andTD Global Balanced Opportunities Fund.

No administration fee is charged with respect to other series of theTD Mutual Fund Trusts.

(B) TD Managed Assets Program Portfolios

Except for the TD Managed ETF Portfolios, no administration fee ischarged to the TD Managed Assets Program Portfolios. For theTD Managed ETF Portfolios, in consideration for paying certain operating expenses, TDAM is paid an annual administration fee withrespect to D-Series of the Funds. The administration fee includesrecordkeeping and communication costs, custodial costs, certain legal fees, audit fees, regulatory filing fees and bank charges. Theadministration fee is calculated and accrued on a daily basis based onthe NAV of D-Series and paid monthly to TDAM. Annual administrationfees for D-Series of the Funds are provided in the Fund-Specific Notes to the Financial Statements.

Operating Expenses(A) Fund’s Independent Review Committee (“IRC”)

TDAM is responsible for management of the Funds’ investment portfolio,including the making of decisions relating to the investment of theFunds’ assets.

TDAM has established an IRC in respect of the Funds and the underlyingfunds managed by TDAM. The IRC acts as an impartial and independentcommittee to review and provide recommendations or, if appropriate,approvals respecting any transactions in which TDAM may have a conflictof interest.

The IRC has approved standing instructions to permit the Funds and/orthe underlying funds managed by TDAM to enter into the followingsecurities 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 distribution 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 anotherinvestment fund or discretionary managed account managed byTDAM; and

(d) purchases of securities from or sales of securities to a Related Dealer,where it acted as principal.

Investments in securities of TD, interests in underlying funds managed byTDAM, or investments in any affiliates that were held by the Funds at theend of the reporting period are disclosed in the Schedule of InvestmentPortfolio and/or the Fund-Specific Notes to the Financial Statements.

The compensation and relevant expenses of IRC members were allocated among the investment funds managed by TDAM and disclosedin the Statements of Comprehensive Income as Independent ReviewCommittee Fees.



(B) TD Mutual Fund Trusts

TDAM pays all of the operating expenses with respect to O-Series unitsof the TD Mutual Fund Trusts.

Private Series and Private–EM Series of the TD Mutual Fund Trusts and Advisor Series of TD U.S. Equity Portfolio bear their respective prorata share of the operating expenses of the applicable Fund which are common to the operation of all series of the Fund as well as thoseexpenses which are attributable solely to that series (which may bepayable to TDAM or its affiliates), including IRC costs; recordkeeping and communication costs; custodial, legal, audit and filing fees; bankcharges; borrowing costs; all taxes, and costs relating to compliance with any new governmental and regulatory requirements.

For other series of the TD Mutual Fund Trusts, TDAM pays all of theoperating expenses (including services provided by TDAM or affiliates of TDAM), other than costs and expenses associated with: all taxes;borrowing; the IRC and compliance with any new governmental andregulatory requirements and new types of costs or expenses. Any newtypes of governmental and regulatory expenses are disclosed as “OtherTrust Fund Costs” in the Statements of Comprehensive Income.

(C) TD Managed Assets Program Portfolios

Except for the TD Managed ETF Portfolios, all operating expenses of theTD Managed Assets Program Portfolios (including for services providedby TDAM or its affiliates) are paid for by TDAM, including cost of the IRC; recordkeeping and communication costs; custodial, legal, audit andfiling fees; bank charges; borrowing costs; and all taxes on such costs.

For the TD Managed ETF Portfolios, TDAM pays certain operatingexpenses. Each TD Managed ETF Portfolio is responsible for payingexpenses associated with borrowing; the IRC and compliance with anynew governmental and regulatory requirements, new types of costs orexpenses and all taxes on such costs and expenses.

Taxes on ExpensesThe Funds also pay applicable goods and services tax and harmonizedsales tax at a blended rate to TDAM on management fees, administrationfees and certain operating expenses based on the province or territory ofresidence of the investors in each series of the Funds, which are includedwith the respective expense in the Statements of Comprehensive Income.

Waived ExpensesTDAM, at its discretion, may waive or absorb a portion of the operatingexpenses otherwise payable by the Funds. These waivers or absorptionsmay be terminated at any time without notice to unitholders. The amount of expenses waived or absorbed is disclosed in the Statements of Comprehensive Income as Waived Expenses, where applicable.

Brokerage Commissions and Soft Dollars(A) TD Mutual Fund Trusts

Brokerage commissions (including other transaction costs) paid onsecurities transactions and amounts paid to related parties of TD forbrokerage services provided to these Funds for the periods endedDecember 31, 2017 and 2016, where applicable, are disclosed in theFund-Specific Notes to the Financial Statements.

Client brokerage commissions are used as payment for order executionservices or research services. The portfolio advisers or TDAM may selectbrokers including its affiliates, who charge a commission in excess of

that charged by other brokers (“soft dollars”) if they determine in goodfaith that the commission is reasonable in relation to the order executionand research services utilized.

For debt instruments traded in the over the counter markets where clientbrokerage commissions are not charged, soft dollars or client brokeragecommissions are not generated. For equities or other securities whereclient brokerage commissions are charged, the soft dollar portion of theamount paid or payable for goods and services other than order execu-tion for the Funds is not generally ascertainable. Any ascertainable softdollar value received as a percentage of total brokerage commissionspaid under the soft dollar arrangement entered into by the portfolioadvisers or TDAM, where applicable, is disclosed in the Fund-SpecificNotes to the Financial Statements.

(B) TD Managed Assets Program Portfolios

Except for the TD Managed ETF Portfolios, these Funds did not incur anybrokerage commissions during the periods ended December 31, 2017and 2016 to execute transactions in the underlying funds and debtinstruments, and accordingly did not receive any investment or researchservices from brokers in exchange for commissions paid by the Funds. For TD Managed ETF Portfolios, brokerage commissions paid on thepurchase or sale of units of the underlying TD ETFs and amounts paid to related parties of TD for brokerage services provided to the Funds forthe period ended December 31, 2017, where applicable, are disclosed in the Fund-Specific Notes to the Financial Statements.

Certain of the underlying funds have incurred brokerage commissions, a portion of which may have been received by the underlying funds’investment advisers in the form of investment or research services (“softdollars”). Such amounts for each of the underlying funds are disclosed inthe underlying funds’ financial statements, where ascertainable.

7. Taxation

The Funds (except for TD Managed ETF Portfolios) qualify or intend toqualify as mutual fund trusts under the Income Tax Act (Canada) (“Tax Act”), unless otherwise disclosed in the Fund-Specific notes to theFinancial Statements. TD Managed ETF Portfolios qualify as unit trustsunder the Tax Act. All or substantially all of the net investment incomeand sufficient amounts of net capital gains realized in any period aredistributed to unitholders such that no income tax is payable by theFunds, except that in certain circumstances, a Fund that is not a mutualfund trust may become liable to pay alternative minimum tax under theTax Act . As a result of the distribution, the Funds have determined thatthey are in substance not taxable and therefore, do not record incometaxes in the Statements of Comprehensive Income nor do they recognizeany deferred tax assets or liabilities in the Statements of FinancialPosition. The Funds’ capital and/or non-capital losses, where applicable,are provided in the Fund-Specific Notes to the Financial Statements.Capital losses have no expiry. Non-Capital losses can be carried forwardfor up to twenty years.

The Funds currently incur withholding taxes imposed by certain countries on investment income and capital gains. Such income andgains are recorded on a gross basis and the related withholding taxesare reported as Tax Reclaims (Withholding Taxes) in the Statements of Comprehensive Income.



8. Financial Risk Management

Financial Risk FactorsEach Fund is exposed to a variety of financial risks: these may includemarket risk (including interest rate risk, currency risk, and other pricerisk), credit risk, liquidity risk and concentration risk. All investmentspresent a risk of loss of capital.

TDAM seeks to reduce financial risks by employing and overseeingprofessional and experienced portfolio advisers that regularly monitorthe Funds’ positions and market events and diversify investmentportfolios within the constraints of each Fund’s investment objectives,investment strategies and applicable TDAM policies and procedures(collectively referred to as “Investment Restrictions”).

If a Fund invests in underlying funds, TDAM seeks to reduce financialrisks by diversifying investments across the three main asset classes:money market investments for safety, bonds for income and equityinvestments for growth, where applicable. Since different types of invest-ments tend to move independently from one another, positive perform-ance in one asset class can help offset negative performance in another,thereby reducing volatility and overall risk in the long-term.

The Funds are managed in accordance with their respective InvestmentRestrictions.

(a) Market Risk(i) Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect the future cash flows or the fair values of interest-bearing investments.

A Fund’s exposure to interest rate risk is concentrated in its investmentsin debt instruments (such as bonds and debentures) and interest ratederivative instruments, if any. Short-term investments, currencies andother assets and liabilities are short-term in nature and/or non-interestbearing and not subject to significant amounts of risk due to fluctuationsin the prevailing levels of market interest rates.

If a Fund invests in underlying funds, it is exposed to indirect interestrate risk to the extent of the interest-bearing financial instruments held by the underlying funds. A Fund’s sensitivity exposure to interestrate risk, where significant, is disclosed in the Fund-Specific Notes to the Financial Statements.

(ii) Currency Risk

A Fund may hold assets denominated in currencies other than itsfunctional currency. It is therefore exposed to currency risk, as the valueof the securities denominated in other currencies will fluctuate due tochanges in the foreign exchange rates of those currencies in relation tosuch Fund’s functional currency. Where a Fund invests in any underlyingfunds, it is exposed to indirect currency risk in the event that theunderlying funds invest in financial instruments that are denominated ina currency other than the underlying funds’ functional currency.

A Fund may also enter into foreign exchange forward contracts forhedging purposes to reduce its foreign currency exposure or to establishexposure to foreign currencies.

A Fund’s direct exposure to currency risk, where significant, is disclosedin the Fund-Specific Notes to the Financial Statements.

(iii) Other Price RiskOther price risk is the risk that securities will fluctuate in value becauseof changes in market prices (other than those arising from interest rate risk or currency risk). TDAM seeks to reduce this risk through itsInvestment Restrictions.

In determining each Fund’s sensitivity impact from exposure to otherprice risk, a historical beta may be used when applicable. Historical beta,a measure of the sensitivity of a Fund’s returns to market returns, isgenerally derived from comparing 36 months of returns between a Fundand its benchmark. As such, beta inherently includes effects previouslyreflected in the interest rate and currency risk disclosures. Historical betamay not be representative of future beta.

Where a Fund invests in a single underlying fund, it is exposed toindirect other price risk in the event that the underlying fund invests inequity securities that trade on a market. Where a Fund invests in severalunderlying funds, the exposure to other price risk includes allinvestments in underlying funds.

A Fund’s direct exposure to other price risk, where applicable, isdisclosed in the Fund-Specific Notes to the Financial Statements.

Except for written options and equities sold short, the maximum riskresulting from financial instruments is the fair value of the financialinstruments as presented in the Statements of Financial Position. Possiblelosses from written options and equities sold short can be unlimited.

(b) Credit RiskCredit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation.Where applicable, a Fund’s main credit risk concentration is in debtinstruments and derivative instruments it holds. A Fund’s exposure tocredit risk is the risk that an issuer of investments or a counterparty toderivative instruments will be unable to pay amounts in full when due.All transactions in listed securities are settled or paid for upon deliveryusing approved brokers. The risk of default with a broker is consideredminimal, as delivery of securities sold is only made once the broker hasreceived payment. Payment is made on a purchase once the securitieshave been received by the broker. The trade will fail if either party fails to meet its obligation.

A Fund may also be exposed indirectly to credit risk if it invests inunderlying funds in the event that the underlying funds invest in debtinstruments and derivatives.



The Funds and the underlying funds only buy and hold short-term noteswith a minimum R1- Low credit rating by DBRS Limited or an equivalentrating from another recognized credit rating agency. The credit risk fromthe use of counterparties for foreign exchange forward contracts is,where applicable, minimized by:

(i) using counterparties with a minimum credit rating of A by S&P Global Ratings (“SPGR”) or an equivalent rating from anotherrecognized credit rating agency;

(ii) limiting the term of the foreign exchange forward contracts to a maximum of 365 days; and,

(iii) limiting the mark-to-market exposure to any one counterparty to 10 percent of the portfolio value.

A Fund’s direct exposure to short term and/or debt instruments, byratings categories, where applicable, are disclosed in the Fund-SpecificNotes to the Financial Statements.

The TD Mutual Fund Trusts may also engage in securities lendingtransactions with counterparties that have a minimum credit rating ofA by SPGR or an equivalent rating from another credit agency. The value of cash or securities held as collateral by these Funds in connection with these transactions is at least 102 percent of the fair value of thesecurities loaned. The collateral and loaned securities are marked tomarket on each business day. The aggregate fair value of the securitiesloaned is limited to 50 percent of each Fund’s NAV. Information aboutthe fair values of securities lent and collateral held and securities lendingincome earned, where applicable, is disclosed in the Fund-Specific Notesto the Financial Statements.

In the TD Managed Assets Program Portfolios, where applicable, theportfolio adviser reviews these Funds’ credit positions as part of theinvestment management process.

(c) Liquidity RiskLiquidity risk is defined as the risk that a fund may not be able to settleor meet its obligations on time or at a reasonable price. A Fund’sexposure to this risk is concentrated in the daily cash redemptions ofredeemable units. The Funds primarily invest in securities that are tradedin active markets and can be readily disposed. In addition, the Fundsretain sufficient cash and cash equivalents to maintain liquidity, andhave the ability to borrow up to 5 percent of their respective NAV for the purpose of funding redemptions.

The contractual maturities analysis for a Fund’s financial liabilities, where applicable, is disclosed in the Fund-Specific Notes to the Financial Statements.

(d) Concentration RiskConcentration risk arises as a result of the concentration of exposureswithin the same category, whether it is geographical location, producttype or industry sector. A Fund’s concentration risk is disclosed in theFund-Specific Notes to the Financial Statements.

9. Capital Risk Management

Units issued and outstanding represent the capital of the Funds. The Funds do not have any specific capital requirements on thesubscription and redemption of units, other than certain minimumsubscription requirements. Changes in a Fund’s capital during thereporting periods are reflected in the Statements of Changes in Net Assets Attributable to Holders of Redeemable Units. TDAM isresponsible for managing the capital of the Funds in accordance witheach Fund’s investment objectives and for managing liquidity in order to meet redemption requests.

If applicable, the most recent financial statements of the underlyingfunds managed by TDAM are available, without charge, by writing to:

TD Asset Management Inc.P.O. Box 10066 Wellington Street WestTD Bank TowerToronto-Dominion CentreToronto, OntarioM5K 1G8



Currency codes used throughout the report:

Currency Code Description

ARS Argentine PesoAUD Australian DollarBRL Brazilian RealCAD/C$ Canadian DollarCHF Swiss FrancCLP Chilean PesoCZK Czech KorunaDEM German Deutsche MarkDKK Danish KroneEGP Egyptian PoundEUR EuroGBP British PoundHKD Hong Kong DollarHUF Hungarian ForintIDR Indonesian RupiahINR Indian RupeeILS Israeli ShekelJOD Jordanian DinarJPY Japanese YenKRW South Korean WonLKR Sri Lanka RupeeMAD Moroccan DirhamMYR Malaysian RinggitNOK Norwegian KroneNZD New Zealand DollarPHP Philippine PesoPKR Pakistan RupeePLN Polish ZlotyRON Romanian LeuSEK Swedish KronaSGD Singapore DollarTHB Thai BahtTRY New Turkish LiraTWD New Taiwan DollarUSD/US$ United States DollarZAR South African Rand

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For Funds with references to FTSE TMX Canada indices:FTSE TMX Global Debt Capital Markets Inc. 2018 “FTSE®” is a trade mark of FTSE International Ltd and is used under licence. “TMX” is a trade mark of TSX Inc. and is used under licence. All rights in the FTSE TMX Global Debt Capital Markets Inc.’s indices and/or FTSE TMX Global Debt Capital Markets Inc.’s ratings vest in FTSE TMX Global Debt Capital Markets Inc. and/or its licensors.Neither FTSE TMX Global Debt Capital Markets Inc. nor its licensors accept any liability for any errors or omissions in such indices and/or ratings or underlying data. No further distribution of FTSE TMX Global Debt Capital Markets Inc.’s data is permitted without FTSE TMX Global Debt Capital Markets Inc.’s express written consent.

TD Mutual Funds, TD Pools and the TD Managed Assets Program portfolios are managed by TD Asset Management Inc., a wholly-ownedsubsidiary of The Toronto-Dominion Bank and are available through authorized dealers.

Epoch Investment Partners, Inc. (“Epoch”) is a wholly-owned subsidiary of The Toronto-Dominion Bank and an affiliate of TD AssetManagement. TD Asset Management operates in Canada through TD Asset Management, Inc. and in the U.S. through TDAM USA Inc.

All trademarks are the property of their respective owners.

® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank.

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