InterIm FInancIal StatementS - Jarislowsky, Fraser Limited

Inter im Financial Statements 

For the period ended 

June 30, 2011

Table of Contents 

Message to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

Investment Portfolios and Financial Statements 

Jarislowsky Fraser Select Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Jarislowsky Fraser Select Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 

Jarislowsky Fraser Select Canadian Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 

Investment Portfolios 

This section is for investors who may want to have a detailed list of the specific securities that make up 

the portfolios. For each security, you will find information such as its average cost and its market value 

as at June 30, 2011. 

Income securities denominated in currencies other than the Canadian Dollar are presented using the 

following abbreviations: 

US$: American Dollar 

AU: Australian Dollar 

CH: Swiss Franc 

DK: Danish Krone 

EU: 

GB: 

HK: 

JP: 

Euro 

Pound Sterling 

Hong Kong Dollar 

Japanese Yen 

NO: 

SG: 

SE: 

Norwegian Krone 

Singapore Dollar 

Swedish Krona 

Financial Statements 

This section contains three financial statements, each of which has a specific role and contains different 

information: 

• The Statement of net assets presents all the items that make up the fund’s net assets as at 

June 30, 2011. The main item is the “Investments” section, which reflects the overall value of the 

securities portfolio. 

• The Statement of operations breaks down the overall income and expenses generated by the fund 

during the period. 

• The Statement of changes in net assets per Series reconciles the changes in net assets per Series 

during the period, listing the unit purchases and redemptions carried out by investors, as well as 

distributions. 

Finally, the notes to the financial statements provide additional information. For example, they outline the 

main accounting policies used in the preparation of the financial statements. 

Notice to Unitholders 

Under National Instrument 81-106 – Investment Fund Continuous Disclosure, Part 2, subsection 2.12(2), if an 

auditor has not performed a review of the interim financial statements, they must be accompanied by a notice 

indicating that the financial statements have not been reviewed by an auditor. The auditors of the funds appointed 

by the unitholders, have not reviewed the accompanying financial statements.

Message to Unitholders 

The first half of 2011 has proven to be full of market ups and 

downs, leaving more than a few investors feeling unsettled. 

Geopolitical tensions, natural disasters and a faltering economy 

in some European nations cast a pall of uncertainty and volatility 

over markets. 

The MSCI World Index remained practically unchanged in June, amidst 

fears related to sovereign debt issues in certain European nations. Greece 

was in the spotlight due to new concerns related to the country’s 

financial wellbeing. One year after a €110 billion austerity plan was 

submitted by the European Union and the International Monetary Fund, 

markets now fear that a restructuring of the country’s debt is inevitable. 

Moreover, a restructuring plan put forward by France is currently being 

studied by eurozone banks and insurers. 

Despite a dour economic outlook, hopeful signs are present. The situation 

in the eurozone remains precarious, however Spain and Italy are showing 

signs of stabilization. South of the border, the declining greenback 

represents a substantial advantage for U.S. exporters. While employment 

figures continue to be scrutinized, unemployment claims are falling and 

the number of consumers planning to buy a home is rising, a sign that the 

worst may be over. Despite the major challenges that Japan still faces, 

there is every indication that a recovery will begin sooner than expected. 

Because one of our objectives is to provide you with ongoing financial 

information about developments affecting your portfolio, we are pleased 

to provide you with a copy of our 2011 interim report. We hope that it 

will answer your questions and we invite you to contact your financial 

advisor should you require any additional information. 

In the U.S., Standard & Poor’s decision to downgrade the country’s debt 

outlook from stable to negative, as it had been growing unsustainably 

since the Second World War, only impacted the U.S. dollar with markets 

escaping unscathed. In Japan, three months after the devastating 

earthquake, the after-effects are gradually fading and the country 

appears to be on the long slow road to recovery. The economy is still 

impacted by the effects of three main factors, namely the drop in 

manufacturing and exports, declining household incomes and the 

continually rising yen. Lastly, the geopolitical crisis in the Arab world has 

brought about its share of fears about the possible impact on crude 

prices in recent months. 

We constantly strive to provide you with the most beneficial investment 

solutions. Thank you for your trust in the Jarislowsky Fraser Select Funds. 

3

Jarislowsky Fraser Select Income Fund 

Investment Portfolio as at June 30, 2011 (unaudited) 

Par Average Fair 

Value Cost Value 

—————— —————— —————— 

$ $ $ 

Money Market (0.18%) 

Short-Term Notes (0.18%) 

Province of British Columbia 

0.98%, due September 30, 2011 28,000 27,924 27,903 

—————— —————— 

Bonds And Debentures (70.88%) 

Issued And Guaranteed By 

The Government Of Canada (12.39%) 

3.50%, due June 1st, 2013 278,000 288,555 288,040 

8.00%, due June 1st, 2023 341,000 505,127 502,011 

5.75%, due June 1st, 2029 164,000 214,322 213,800 

5.00%, due June 1st, 2037 176,000 219,525 218,002 

4.00%, due June 1st, 2041 269,000 285,438 291,327 

Canada Housing Trust 

4.60%, due September 15, 2011 442,000 448,686 445,010 

—————— —————— 

1,961,653 1,958,190 

—————— —————— 


A Province (5,08%) 


5.30%, due June 18, 2014 57,000 63,175 62,317 

6.35%, due June 18, 2031 80,000 103,186 102,609 

Province of Ontario 

4.85%, due June 2, 2020 337,000 364,603 365,984 

6.50%, due March 8, 2029 183,000 236,799 234,476 

Province of Quebec 

5.75%, due December 1st, 2036 30,000 36,343 35,943 

—————— —————— 

804,106 801,329 

—————— —————— 

Municipalities And Subsidized Issuers (0.69%) 

City of Toronto 

4.50%, due December 2, 2019 104,000 109,562 108,855 

—————— —————— 

Corporations (51.86%) 

407 International Inc. 

5.10%, due January 20, 2014 63,000 68,313 67,064 

5.75%, due February 14, 2036 30,000 31,615 31,510 

Alliance Pipeline 

4.93%, due December 16, 2019 49,000 51,486 50,984 

Bank of Montreal 

Floating, due June 21, 2012 98,000 101,430 101,117 

Floating, due July 8, 2016 370,000 370,015 375,360 

Bell Canada 

4.40%, due March 16, 2018 110,000 109,908 111,767 

4.95%, due May 19, 2021 134,000 133,723 134,005 

Caisse Centrale Desjardins du Québec 

3.50%, due October 5, 2017 74,000 73,828 73,591 

Cameco Corp. 

5.67%, due September 2, 2019 126,000 135,010 133,812 

Canadian Imperial Bank of Commerce 


Canadian Natural Resources Ltd. 

4.95%, due June 1st, 2015 102,000 110,297 109,349 

Canadian Utilities Inc. 

5.10%, due November 18, 2014 63,000 69,481 68,079 

Canadian Utilities Ltd. 

6.14%, due November 22, 2012 129,000 139,026 136,284 

Capital Desjardins Inc. 

6.32%, due June 1st, 2017 136,000 143,265 141,314 

CDP Financial Inc. 

4.60%, due July 15, 2020 91,000 97,202 95,484 

CIBC Capital Trust 


Cogeco Cable Inc. 

5.95%, due June 9, 2014 153,000 165,586 164,600 

5.15%, due November 16, 2020 40,000 40,040 39,660 



—————— —————— —————— 

$ $ $ 

Corporations (51.86%) (continued) 

Corus Entertainment Inc. 

7.25%, due February 10, 2017 157,000 167,409 165,015 

Empire Life Insurance 

Floating, due May 20, 2014 289,000 315,987 313,449 

Enbridge Inc. 

4.67%, due March 25, 2013 211,000 221,625 219,803 

5.00%, due August 9, 2016 79,000 85,407 85,136 

George Weston Ltd. 

5.05%, due March 10, 2014 188,000 199,234 198,426 

Great-West Lifeco Delaware Finance LP 


Great-West Lifeco Inc. 

4.65%, due August 13, 2020 49,000 50,262 49,956 

HSBC Bank Canada 

Floating, due March 16, 2016 56,000 59,262 59,219 

Husky Energy Inc. 

5.00%, due March 12, 2020 186,000 189,524 193,842 

Hydro One Inc. 

5.00%, due November 12, 2013 79,000 85,643 83,976 

Industrial Alliance, Insurance 

& Financial Services Inc. 

5.13%, due June 30, 2019 376,000 393,203 393,080 

Integrated Team Solutions SJHC Partnership 

5.95%, due November 30, 2042 65,000 65,000 67,862 

Manulife Financial (Delaware) L.P. 

7.77%, due April 8, 2019 66,000 78,589 79,548 

Floating, due December 15, 2041 255,000 210,058 215,118 

Manulife Financial Corp. 


Metropolitan Life Global Funding I 

Floating, due September 17, 2011 141,000 141,000 140,550 

Molson Coors International LP 

3.95%, due October 6, 2017 202,000 198,989 200,510 

Plenary Properties LTAP LP 

6.29%, due January 31, 2044 92,000 97,938 99,889 

RBC Capital Trust 

4.87%, due December 31, 2015 140,000 147,935 147,709 

Rogers Communications Inc. 

5.38%, due November 4, 2019 50,000 52,175 51,840 

4.70%, due September 29, 2020 126,000 124,092 122,846 

Royal Bank of Canada 

Floating, due November 4, 2013 151,000 161,360 161,128 

Scotiabank Capital Trust 

Floating, due November 1st, 2012 156,000 164,253 162,534 

Floating, due October 3, 2013 30,000 32,976 32,303 

8.90%, due June 20, 2025 30,000 43,334 42,605 


Shaw Communications Inc. 

7.50%, due November 20, 2013 146,000 165,267 161,721 

5.50%, due December 7, 2020 143,000 143,823 143,110 

6.75%, due November 9, 2039 46,000 44,784 44,592 

Sun Life Assurance Company of Canada 


Floating, due June 1st, 2016 99,000 103,266 103,031 


5.86%, due December 31, 2108 256,000 264,130 270,564 

TD Capital Trust III 


Telus Corp. 

4.50%, due March 15, 2012 287,000 294,521 292,785 

5.05%, due July 23, 2020 130,000 130,335 132,082 

Thomson Reuters Corp. 

4.35%, due September 30, 2020 57,000 57,823 57,300 

Tim Hortons Inc. 

4.20%, due June 1st, 2017 49,000 51,318 50,626 

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

4

Jarislowsky Fraser Select Income Fund (continued) 




—————— —————— —————— 

$ $ $ 


Toronto-Dominion Bank 


TransCanada Pipelines Ltd. 

5.05%, due February 14, 2014 213,000 227,734 226,712 

Wells Fargo Financial Canada 

3.97%, due November 3, 2014 30,000 31,300 30,885 

—————— —————— 

8,181,655 8,197,469 

—————— —————— 

Global (0.86%) 

Anheuser-Busch InBev Worldwide Inc. 

3.65%, due January 15, 2016 134,000 134,572 135,964 

—————— —————— 

Total Bonds And Debentures 11,191,548 11,201,807 

—————— —————— 

Number 

of shares 

—————— 

Canadian Equities (21.06%) 

Consumer Discretionary (1.93%) 

Canadian Tire Ltd., Class A 710 43,400 44,737 

Cogeco Cable Inc. 1,580 64,343 71,116 

Corus Entertainment Inc., Class B 3,590 76,894 73,559 

Shaw Communications Inc., Class B 3,440 73,330 75,611 

Tim Hortons Inc. 860 35,124 40,463 

—————— —————— 

293,091 305,486 

—————— —————— 

Consumer Staples (1.67%) 

George Weston Ltd. 410 29,794 28,540 

Jean Coutu Group Inc., Class A 2,500 23,714 27,375 

Loblaw Companies Ltd. 1,050 42,068 40,792 

Metro Inc., Class A 2,080 94,644 99,798 

Shoppers Drug Mart Corp. 1,720 67,083 68,232 

—————— —————— 

257,303 264,737 

—————— —————— 

Energy (6.93%) 

Bonavista Energy Corp. 2,420 66,528 68,801 

Cameco Corp. 1,000 30,618 25,360 

Canadian Natural Resources Ltd. 2,500 104,676 100,775 

Cenovus Energy Inc. 3,010 95,436 109,293 

Enbridge Pipelines Inc. 3,000 85,273 93,810 

EnCana Corp. 3,590 110,007 106,623 

Imperial Oil Ltd. 1,390 57,024 62,342 

Nexen Inc. 3,260 73,039 70,644 

Pembina Pipeline Corp. 2,990 66,562 75,796 

Suncor Energy Inc. 2,110 76,057 79,505 

Talisman Energy Inc. 6,770 137,513 133,775 

TransCanada Corp. 2,550 97,871 107,610 

Veresen Inc. 4,340 55,570 60,239 

—————— —————— 

1,056,174 1,094,573 

—————— —————— 

Financials (6.08%) 

Bank of Montreal 1,070 64,986 65,516 

Great-West Lifeco Inc. 2,980 77,920 75,811 


& Financial Services Inc. 300 11,409 12,024 

Manulife Financial Corp. 6,900 108,289 117,507 

Power Financial Corp. 1,570 47,760 46,645 

Royal Bank of Canada 4,100 226,586 225,459 

Scotiabank Capital Trust 3,590 201,615 208,220 

Toronto-Dominion Bank 2,560 193,980 209,280 

—————— —————— 

932,545 960,462 

—————— —————— 

Number Average Fair 

of shares Cost Value 

—————— —————— —————— 

$ $ 

Industrials (2.54%) 

CAE Inc. 3,070 36,751 39,849 

Canadian National Railway Co. 1,400 96,125 107,786 

Genivar Inc. 2,280 66,525 58,642 

SNC-Lavalin Group Inc. 2,480 137,975 145,824 

Superior Plus Corp. 4,350 50,989 48,807 

—————— —————— 

388,365 400,908 

—————— —————— 

Materials (0.88%) 

Potash Corporation of Saskatchewan Inc. 1,580 79,933 86,758 

West Fraser Timber Co. Ltd. 1,010 47,295 52,530 

—————— —————— 

127,228 139,288 

—————— —————— 

Telecommunication Services (0.79%) 

BCE Inc. 840 31,501 31,769 

Rogers Communications Inc., Class B 2,430 87,218 92,486 

—————— —————— 

118,719 124,255 

—————— —————— 

Utilities (0.24%) 

Atco Ltd., Class 1 420 23,925 26,208 

Canadian Utilities Ltd., Class A 220 10,880 12,311 

—————— —————— 

34,805 38,519 

—————— —————— 

Total Canadian Equities 3,208,230 3,328,228 

—————— —————— 

Global Equities (4.42%) 

United Kingdom (1.20%) 

BP PLC, ADR 1,320 58,130 56,375 

HSBC Holdings PLC, ADR 900 47,170 43,073 

National Grid Transco PLC 990 45,672 47,218 

Vodafone Group PLC, ADR 1,680 45,683 43,280 

—————— —————— 

196,655 189,946 

—————— —————— 

United States (3.22%) 

Abbott Laboratories 880 43,483 44,628 

Colgate-Palmolive Co. 510 39,381 42,982 

CVS Caremark Corp. 1,210 40,006 43,823 

Emerson Electric Co. 940 52,072 50,980 

General Electric Co. 2,640 48,048 47,972 

Johnson & Johnson 660 41,963 42,306 

Pepsico Inc. 580 37,995 39,371 

Philip Morris International Inc. 720 42,013 46,343 

Procter & Gamble Co. 660 41,266 40,435 

Thomson Reuters Corp. 3,060 116,491 110,650 

—————— —————— 

502,718 509,490 

—————— —————— 

Total Global Equities 699,373 699,436 

—————— —————— 

Total Investments (96.54%) 15,127,075* 15,257,374 

—————— 

Cash And Other Net Assets (3.46%) 547,097 

—————— 

Net Assets (100%) 15,804,471 

—————— 

* Average cost of investments as at December 31, 2010 is $8,693,200. 


5



Currency Risk (note 4) 

June 30, 2011 December 31, 2010 

—————————————— —————————————— 

Percentage 

Percentage 

Currency Fair Value of Net Assets Fair Value of Net Assets 

—————————————— —————— —————— —————— —————— 

$ $ 

American Dollar 637,828 4.04% 354,208 4.09% 

Numbers shown include monetary and non-monetary instruments. 

Based on the assumption that the Canadian Dollar raised or lowered by 5% in relation to all other 

currencies, with all other variables held constant, net assets and results of the fund would have 

decreased or increased, respectively, by approximately $31,891 ($17,710 in 2010). 

Credit Risk (note 4) 

June 30, December 31, 

Debt Securities by Credit Ratings 2011 2010 

—————————————————— —————— —————— 

AAA/Aaa/A-1/P-1 20.00% 21.99% 

AA/Aa/A-2/P-2 19.17% 18.38% 

A/A-3/P-3 30.54% 29.34% 

BBB/Baa 28.82% 28.49% 

BB/Ba 1.47% 1.80% 

Interest Rate Risk (note 4) 


Investments 2011 2010 

—————————————————— —————— —————— 

$ $ 

Less than one year 1,148,679 210,405 

From 1 year to 3 years 2,602,161 1,374,948 

From 3 years to 5 years 1,473,999 1,004,353 


More than 10 years 2,465,794 1,363,454 

Non-interest-bearing instruments 4,027,668 2,249,541 

Total 15,257,378 8,693,109 

Based on the assumption that prevailing interest rates raised or lowered by 0.25%, with all 

others variables held constant, net assets and results of the fund would have decreased or 

increased, respectively, by approximately $166,066 ($97,525 in 2010). 

Price Risk (note 4) 

June 30, 2011 December 31, 2010 

—————————————— —————————————— 

The funds’ benchmark Impact on Percentage of Impact on Percentage of 

composition Net Assets Net Assets Net Assets Net Assets 

—————————————— —————— —————— —————— —————— 

$ $ 

DEX Universe Overall Bond 

Index (70%) – S&P/TSX 

Index Capped TR (25%) – 

DEX 91 days T-Bills Index 

(5%) ± 1,194,818 7.56% ± 674,279 7.78% 

In the event that the benchmark's performance would rise or fall by 10%, with all variables held 

constant. The impact is presented on a 9-month historical correlation between the fluctuating 

performance. 

In practice, actual results may differ from this sensitivity analysis and the difference can be 

significant. 

Fair Value Of Financial Instruments Table (note 4) 

June 30, 2011 

Level 1 Level 2 Level 3 Total 

—————— —————— —————— —————— 

$ $ $ $ 

Money Market n/a 27,903 n/a 27,903 

Bonds and Debentures 1,513,179 9,688,628 n/a 11,201,807 

Common Shares 3,980,446 47,218 n/a 4,027,664 

Total Investments 5,493,625 9,763,749 n/a 15,257,374 

During the year ended June 30, 2011, investments of $47,218 were transfered from Level 1 to 

Level 2 as they ceased to be traded in an active market. 


Level 1 as they started to be traded in an active market. 

December 31, 2010 


—————— —————— —————— —————— 

$ $ $ $ 


Bonds and Debentures 1,010,483 5,222,680 n/a 6,233,163 



During the year ended December 31, 2010, there were no significant transfers of investments 

between Level 1 and Level 2. 


6



Statements of net assets as at June 30, 2011 (unaudited) and December 31, 2010 

2011 2010 

——————— ——————— 

$ $ 

Assets 

Investments, at fair value 15,257,374 8,693,109 

Cash 253,007 41,131 

Subscriptions receivable 233,278 65,600 

Interest and dividends receivable 95,112 52,771 

Other assets receivable 6,430 1,435 

——————— ——————— 

15,845,201 8,854,046 

——————— ——————— 

Liabilities 

Redeemed units payable 1,075 2,015 

Investments payable 20,311 174,624 

Accrued expenses 19,344 10,584 

——————— ——————— 

40,730 187,223 

——————— ——————— 

Net assets 15,804,471 8,666,823 

——————— ——————— 

——————— ——————— 

Net assets per Series: 

Advisor Series 10,900,919 6,711,040 

F/E Series 4,903,552 1,955,783 

——————— ——————— 

15,804,471 8,666,823 

——————— ——————— 

——————— ——————— 

Net assets per unit, per Series: 

Advisor Series 9.95 9.94 

F/E Series 10.01 9.95 

Approved on behalf of the Manager 

National Bank Securities Inc. 

Charles Guay, Director 

Éric Laflamme, Director 


7



Statement of operations for the 6-month period ended June 30 (unaudited) 

2011 

——————— 

$ 

Income 

Interest 236,331 

Dividends 51,902 

——————— 

288,233 

——————— 

Expenses 

Management fees 83,857 

Custodial fees 5,323 

Directors’ fees of independent review committee 64 

Audit fees 1,795 

Legal fees 659 

Rights and deposits 8,100 

Securityholders’ reporting costs 7,607 

Fees paid by the manager (15,372) 

——————— 

92,033 

——————— 

Net investment income 196,200 

——————— 

Net gains 

Net realized losses on sale of investments (50,719) 

Net realized losses on foreign currencies (309) 

——————— 

(51,028) 

——————— 

Change in unrealized appreciation/depreciation on investments 130,390 

Unrealized gains on foreign currencies 30 

——————— 

130,420 

——————— 

Transaction costs on purchase and sale of investments (1,126) 

——————— 

78,266 

——————— 

Increase in net assets from operations 274,466 

——————— 

Increase in net assets from operations per Series: 

Advisor Series 179,869 

F/E Series 94,597 

——————— 

274,466 

——————— 

Increase in net assets from operations per unit, per Series: 

Advisor Series 0.20 

F/E Series 0.24 


8



Statements of changes in net assets per Series for the 6-month period ended June 30 (unaudited) 

Advisor Series 

F/E Series 

2011 2011 

——————— ——————— 

$ $ 

Net assets, beginning of the period 6,711,040 1,955,783 

——————— ——————— 

Increase in net assets from operations 179,869 94,597 

——————— ——————— 

Capital unit transactions 

Units issued 4,369,574 3,148,937 

Units issued on reinvestment of distributions 140,872 70,724 

Units redeemed (316,420) (285,539) 

——————— ——————— 

4,194,026 2,934,122 

——————— ——————— 

Distributions to investors 

Net investment income 119,442 66,513 

Return of capital 64,574 14,437 

——————— ——————— 

184,016 80,950 

——————— ——————— 

Increase in net assets for the period 4,189,879 2,947,769 

——————— ——————— 

Net assets, end of the period 10,900,919 4,903,552 

——————— ——————— 

——————— ——————— 


9

Jarislowsky Fraser Select Balanced Fund 




—————— —————— —————— 

$ $ $ 




0.99%, due September 1, 2011 40,000 39,907 39,913 

0.98%, due September 30, 2011 45,000 44,878 44,844 

—————— —————— 

84,785 84,757 

—————— —————— 

Bonds And Debentures (38.24%) 

Issued And guaranteed By 

The Government Of Canada (6.21%) 

Canada Housing Trust 

4.60%, due September 15, 2011 390,000 395,895 392,656 

3.50%, due June 1st, 2013 263,000 272,853 272,498 

8.00%, due June 1st, 2023 130,000 194,133 191,383 

5.75%, due June 1st, 2029 50,000 65,231 65,183 

5.00%, due June 1st, 2037 141,000 174,855 174,649 

4.00%, due June 1st, 2041 223,000 238,164 241,509 

—————— —————— 

1,341,131 1,337,878 

—————— —————— 


A Province (3.08%) 


5.30%, due June 18, 2014 45,000 49,790 49,197 

6.35%, due June 18, 2031 18,000 23,491 23,087 


4.85%, due June 2, 2020 115,000 125,560 124,891 

6.50%, due March 8, 2029 240,000 304,427 307,510 

4.65%, due June 2, 2041 128,000 131,112 134,359 

Province of Quebec 

5.75%, due December 1st, 2036 18,000 21,819 21,566 

—————— —————— 

656,199 660,610 

—————— —————— 

Municipalities And Subsidized Issuers (0.42%) 

City of Toronto 

4.50%, due December 2, 2019 87,000 91,326 91,062 

—————— —————— 

Corporations (28.53%) 

407 International Inc. 

5.10%, due January 20, 2014 38,000 41,213 40,451 

5.75%, due February 14, 2036 18,000 18,974 18,906 

Bank of Montreal 


Floating, due July 8, 2016 262,000 262,010 265,795 

Bell Canada 

4.40%, due March 16, 2018 154,000 154,144 156,474 

Caisse Centrale Desjardins du Québec 

3.50%, due October 5, 2017 37,000 37,021 36,795 

Canadian Imperial Bank of Commerce 


Canadian Natural Resources Ltd. 

4.95%, due June 1st, 2015 30,000 32,758 32,162 

Canadian Utilities Inc. 

5.10%, due November 18, 2014 38,000 41,879 41,063 

Canadian Utilities Ltd. 

6.14%, due November 22, 2012 49,000 52,926 51,767 

Capital Desjardins Inc. 

6.32%, due June 1st, 2017 126,000 132,513 130,923 

CDP Financial Inc. 

4.60%, due July 15, 2020 58,000 61,929 60,858 

CIBC Capital Trust 


Cogeco Cable Inc. 

5.95%, due June 9, 2014 211,000 227,762 226,997 

Empire Life Insurance 




—————— —————— —————— 

$ $ $ 


Enbridge Inc. 

4.67%, due March 25, 2013 234,000 245,008 243,763 

5.00%, due August 9, 2016 40,000 43,214 43,107 

George Weston Ltd. 

5.05%, due March 10, 2014 107,000 113,002 112,934 

Great-West Lifeco Inc. 

4.65%, due August 13, 2020 29,000 29,786 29,566 

HSBC Bank Canada 

Floating, due March 16, 2016 29,000 30,714 30,667 

Husky Energy Inc. 

5.00%, due March 12, 2020 133,000 135,645 138,608 

Hydro One Inc. 

5.77%, due November 15, 2012 78,000 82,423 82,139 

5.00%, due November 12, 2013 49,000 53,131 52,086 

4.40%, due June 1st, 2020 77,000 78,461 79,654 


& Financial Services Inc. 

5.13%, due June 30, 2019 309,000 322,397 323,037 

Integrated Team Solutions SJHC Partnership 

5.95%, due November 30, 2042 50,000 50,000 52,201 

Manulife Financial (Delaware) L.P. 

7.77%, due April 8, 2019 67,000 79,763 80,754 


Manulife Financial Corp. 


Metropolitan Life Global Funding I 

Floating, due September 17, 2011 107,000 107,000 106,659 

Plenary Properties LTAP LP 

6.29%, due January 31, 2044 50,000 52,914 54,287 

RBC Capital Trust 

4.87%, due December 31, 2015 123,000 129,443 129,773 

Rogers Communications Inc. 

5.38%, due November 4, 2019 50,000 52,175 51,840 

4.70%, due September 29, 2020 73,000 72,172 71,172 

6.11%, due August 25, 2040 94,000 89,526 89,630 

Royal Bank of Canada 

Floating, due November 4, 2013 114,000 122,296 121,646 

Scotiabank Capital Trust 

Floating, due November 1st, 2012 108,000 113,484 112,523 


8.90%, due June 20, 2025 17,000 24,552 24,143 


Shaw Communications Inc. 

7.50%, due November 20, 2013 58,000 65,977 64,245 

5.50%, due December 7, 2020 58,000 58,154 58,045 

6.75%, due November 9, 2039 91,000 88,547 88,214 

Sun Life Financial Inc. 


Floating, due June 1st, 2016 50,000 52,079 52,036 


5.86%, due December 31, 2108 167,000 172,433 176,501 

Suncor Energy Inc. 

5.39%, due March 26, 2037 33,000 33,296 33,507 

TD Capital Trust III 


Telus Corp. 

4.50%, due March 15, 2012 236,000 241,858 240,757 

5.05%, due July 23, 2020 163,000 163,428 165,611 

Thomson Reuters Corp. 

4.35%, due September 30, 2020 93,000 93,339 93,489 

Tim Hortons Inc. 

4.20%, due June 1st, 2017 29,000 30,393 29,962 

Toronto-Dominion Bank 



10

Jarislowsky Fraser Select Balanced Fund (continued) 




—————— —————— —————— 

$ $ $ 


TransCanada Pipelines Ltd. 

5.05%, due February 14, 2014 160,000 171,152 170,300 

5.10%, due January 11, 2017 68,000 74,936 74,313 

Wells Fargo Financial Canada 

3.97%, due November 3, 2014 38,000 39,374 39,122 

—————— —————— 

6,137,574 6,143,463 

—————— —————— 

Total Bonds And Debentures 8,226,230 8,233,013 

—————— —————— 

Number 

of shares 

—————— 



Canadian Tire Ltd., Class A 1,890 117,731 119,089 



Quebecor Inc., Class B 1,970 70,940 62,272 


Tim Hortons Inc. 1,800 75,218 84,690 

—————— —————— 

685,830 700,318 

—————— —————— 


George Weston Ltd. 840 62,138 58,472 





—————— —————— 

542,634 557,348 

—————— —————— 

Energy (9.88%) 


Cameco Corp. 2,180 68,849 55,285 




EnCana Corp. 8,180 251,569 242,946 


Nexen Inc. 8,560 196,311 185,495 


Talisman Energy Inc. 14,570 303,108 287,903 


—————— —————— 

2,109,912 2,127,599 

—————— —————— 



Bank of Nova Scotia 6,840 386,581 396,720 



& Financial Services Inc. 1,330 51,493 53,306 



Royal Bank of Canada 8,380 463,807 460,816 

Toronto-Dominion Bank 5,590 431,243 456,982 

—————— —————— 

1,924,840 1,968,944 

—————— —————— 


CAE Inc. 7,340 88,058 95,273 


SNC-Lavalin Group Inc. 5,940 334,754 349,272 


—————— —————— 

679,314 722,125 

—————— —————— 



—————— —————— —————— 

$ $ 


Canfor Corp. 3,790 42,298 39,871 



Winpak Ltd. 7,400 84,955 89,910 

—————— —————— 

371,635 391,542 

—————— —————— 


BCE Inc. 1,760 66,168 66,563 


—————— —————— 

249,901 259,147 

—————— —————— 


Canadian Utilities Ltd., Class A 1,460 74,331 81,702 

—————— —————— 


—————— —————— 


Australia (0.29%) 

BHP Billiton Ltd., ADR 690 60,176 62,950 

—————— —————— 

France (2.42%) 

Air Liquide SA 570 72,739 78,795 

Essilor International SA 1,060 71,982 82,917 

Lafarge SA 800 48,850 49,007 

Louis Vuitton Moet Hennessy 750 116,451 130,122 

Sanofi-Aventis 2,300 86,347 89,045 

Schneider Electric SA 570 87,173 91,838 

—————— —————— 

483,542 521,724 

—————— —————— 

Germany (2.16%) 

Bayer AG 1,810 137,184 140,344 

Fresenius Medical Care AG 2,040 126,728 146,595 

SAP AG, ADR 2,350 129,121 137,422 

SAP AG 710 37,944 41,433 

—————— —————— 

430,977 465,794 

—————— —————— 

Hong Kong (0.65%) 

Television Broadcasts Ltd. 22,000 122,945 140,020 

—————— —————— 

Japan (1.52%) 

Fanuc Ltd. 800 116,902 128,234 

Sumitomo Mitsui Trust Holdings Inc. 41,760 155,072 139,079 

Toyota Motor Corp., ADR 750 59,092 59,613 

—————— —————— 

331,066 326,926 

—————— —————— 

Mexico (0.44%) 

Fomento Economico Mexicano SAB de CV, ADR 1,470 82,196 94,285 

—————— —————— 

Netherlands (0.83%) 

Royal Dutch Shell PLC, ADR, Class A 2,600 173,382 178,398 

—————— —————— 

Norway (0.81%) 

Telenor ASA 11,020 173,583 173,984 

—————— —————— 

Spain (0.50%) 

Banco Santander Central Hispano SA 9,558 112,195 106,408 

—————— —————— 

Switzerland (0.84%) 

Nestlé SA 3,000 168,259 179,633 

—————— —————— 


11





—————— —————— —————— 

$ $ 


HSBC Holdings PLC, ADR 2,978 155,284 142,523 

National Grid PLC 950 8,781 8,999 

National Grid Transco PLC, ADR 2,200 103,058 104,928 

Reckitt Benckiser Group PLC 3,380 181,320 179,443 

Standard Chartered PLC 3,354 91,272 84,956 

Vodafone Group PLC 25,910 69,614 65,549 


—————— —————— 

735,382 704,902 

—————— —————— 


3M Co. 1,260 111,232 115,244 

Automatic Data Processing Inc. 2,820 133,217 143,202 

Becton, Dickinson and Co. 1,750 139,707 145,427 

Cisco Systems Inc. 8,350 163,667 125,636 

Colgate-Palmolive Co. 2,740 214,386 230,922 


Emerson Electric Co. 3,480 192,226 188,734 

Exxon Mobil Corp. 2,790 208,068 218,802 

Halliburton Co. 3,120 123,017 153,441 

International Business Machines Corp. 750 115,753 124,001 

Johnson & Johnson 3,470 214,855 222,429 

MetLife Inc. 4,310 182,922 182,284 

Monsanto Co. 1,270 81,373 88,843 

Pepsico Inc. 3,060 199,627 207,717 

Philip Morris International Inc. 2,740 163,816 176,376 

Procter & Gamble Co. 2,290 144,077 140,297 

QEP Resources Inc. 1,600 62,951 64,506 


US Bancorp 6,500 164,771 159,866 

Wells Fargo & Co. 4,670 133,493 126,343 

—————— —————— 

3,112,539 3,167,552 

—————— —————— 

Total Global Equities 5,986,242 6,122,576 

—————— —————— 


—————— 


—————— 

Net Assets (100%) 21,531,493 

—————— 



June 30, 2011 December 31, 2010 

—————————————— —————————————— 

Percentage 

Percentage 


—————————————— —————— —————— —————— —————— 

$ $ 

American Dollar 4,034,981 18.74% 1,353,460 14.60% 

Euro 886,709 4.12% 373,261 4.03% 

Hong Kong Dollar 140,020 0.65% 48,395 0.52% 

Japanese Yen 269,796 1.25% 123,817 1.34% 

Norwegian Krone 173,984 0.81% 74,992 0.81% 

Pound Sterling 352,249 1.64% 255,851 2.76% 

Swiss Franc 179,636 0.83% 112,583 1.21% 

Numbers shown include monetary and non-monetary instruments. 







—————————————————— —————— —————— 

AAA/Aaa/A-1/P-1 18.70% 23.61% 

AA/Aa/A-2/P-2 22.83% 25.04% 

A/A-3/P-3 29.89% 28.00% 

BBB/Baa 28.58% 23.35% 




—————————————————— —————— —————— 

$ $ 

Less than one year 966,070 207,595 

From 1 year to 3 years 2,272,500 725,954 

From 3 years to 5 years 909,092 611,938 


More than 10 years 1,944,200 726,196 


Total 21,249,071 9,312,876 



increased, respectively, by approximately $124,064 ($55,851 in 2010). 


June 30, 2011 December 31, 2010 

—————————————— —————————————— 



—————————————— —————— —————— —————— —————— 

$ $ 

DEX Universe Overall Bond 

Index (40%) – IShares MSCI 

World Index (23%) – S&P/TSX 

Index Capped TR (32%) – DEX 

91 days T-Bills Index (5%) ± 1,565,340 7.27% ± 665,426 7.18% 

In the event that the benchmark’s performance would rise or fall by 10%, with all variables held 


performance. 


significant. 


June 30, 2011 


—————— —————— —————— —————— 

$ $ $ $ 


Bonds and Debentures 945,221 7,287,792 n/a 8,233,013 









—————— —————— —————— —————— 

$ $ $ $ 


Bonds and Debentures 547,162 3,005,016 n/a 3,552,178 






12




2011 2010 

——————— ——————— 

$ $ 

Assets 


Cash 221,522 - 

Subscriptions receivable - 96,166 



——————— ——————— 

21,567,725 9,447,591 

——————— ——————— 

Liabilities 

Bank overdraft - 41,817 

Redeemed units payable 2,231 - 



——————— ——————— 

36,232 179,822 

——————— ——————— 

Net assets 21,531,493 9,267,769 

——————— ——————— 

——————— ——————— 



F/E Series 7,971,018 3,125,007 

——————— ——————— 

21,531,493 9,267,769 

——————— ——————— 

——————— ——————— 



F/E Series 10.29 10.15 






13




2011 

——————— 

$ 

Income 



——————— 

314,152 

——————— 

Expenses 









——————— 

135,542 

——————— 


——————— 

Net gains 


Net realized losses on foreign currencies (7,020) 

——————— 

(97,311) 

——————— 


Unrealized losses on foreign currencies (768) 

——————— 

205,772 

——————— 


——————— 

102,503 

——————— 


——————— 




——————— 

281,113 

——————— 





14





F/E Series 

2011 2011 

——————— ——————— 

$ $ 


——————— ——————— 


——————— ——————— 


Units issued 7,949,624 4,927,735 

Units issued on reinvestment of distributions 83,413 81,409 

Units redeemed (688,111) (202,489) 

——————— ——————— 

7,344,926 4,806,655 

——————— ——————— 

Distributions to investors 

Net investment income 84,304 84,666 

——————— ——————— 


——————— ——————— 


——————— ——————— 

——————— ——————— 


15

Jarislowsky Fraser Select Canadian Equity Fund 




—————— —————— —————— 

$ $ $ 


Treasury Bills (0.61%) 


1.01%, due September 14, 2011 199,000 198,510 198,476 

—————— —————— 



0.98%, due September 30, 2011 260,000 259,298 259,098 

—————— —————— 

Total Money Market 457,808 457,574 

—————— —————— 

Number 

of shares 

—————— 



Canadian Tire Ltd., Class A 7,120 443,230 448,631 



Quebecor Inc., Class B 7,500 267,888 237,075 


Tim Hortons Inc. 6,430 268,616 302,532 

—————— —————— 

2,516,694 2,571,969 

—————— —————— 


George Weston Ltd. 3,360 250,563 233,890 





—————— —————— 

2,026,923 2,067,616 

—————— —————— 

Energy (24.11%) 


Cameco Corp. 8,000 255,485 202,880 




EnCana Corp. 29,090 899,734 863,973 


Nexen Inc. 31,800 724,770 689,106 


Talisman Energy Inc. 53,760 1,121,795 1,062,298 


—————— —————— 

7,833,662 7,868,444 

—————— —————— 





& Financial Services Inc. 4,770 179,056 191,182 



Royal Bank of Canada 31,590 1,750,343 1,737,134 

Scotiabank Capital Trust 25,350 1,433,475 1,470,300 

Toronto-Dominion Bank 20,650 1,590,404 1,688,138 

—————— —————— 

7,084,619 7,244,164 

—————— —————— 


CAE Inc. 27,680 331,807 359,286 


SNC-Lavalin Group Inc. 22,190 1,241,034 1,304,772 


—————— —————— 

2,634,060 2,795,088 

—————— —————— 



—————— —————— —————— 

$ $ 


Canfor Corp. 14,370 157,802 151,172 



Winpak Ltd. 24,427 282,043 296,788 

—————— —————— 

1,359,448 1,440,353 

—————— —————— 


BCE Inc. 6,700 251,874 253,394 


—————— —————— 

921,818 963,974 

—————— —————— 


Canadian Utilities Ltd., Class A 5,610 290,699 313,936 

—————— —————— 


—————— —————— 


Australia (0.17%) 

BHP Billiton Ltd., ADR 610 52,645 55,652 

—————— —————— 

France (1.55%) 

Air Liquide SA 610 77,263 84,325 

Essilor International SA 1,040 69,910 81,353 

Lafarge SA 800 48,956 49,007 

Louis Vuitton Moet Hennessy 740 116,097 128,387 

Sanofi-Aventis 2,300 86,318 89,045 

Schneider Electric SA 450 66,752 72,503 

—————— —————— 

465,296 504,620 

—————— —————— 

Germany (1.44%) 

Bayer AG 1,860 141,324 144,221 

Fresenius Medical Care AG 2,090 129,567 150,188 

SAP AG, ADR 2,980 161,408 174,187 

—————— —————— 

432,299 468,596 

—————— —————— 

Hong Kong (0.41%) 

Television Broadcasts Ltd. 21,000 116,139 133,655 

—————— —————— 

Japan (1.00%) 

Fanuc Ltd. 900 134,020 144,263 

Sumitomo Mitsui Trust Holdings Inc. 38,270 145,594 127,456 

Toyota Motor Corp., ADR 700 55,106 55,639 

—————— —————— 

334,720 327,358 

—————— —————— 

Mexico (0.26%) 

Fomento Economico Mexicano SAB de CV, ADR 1,330 73,914 85,305 

—————— —————— 

Netherlands (0.54%) 

Royal Dutch Shell PLC, ADR, Class A 2,550 170,048 174,967 

—————— —————— 

Norway (0.53%) 

Telenor ASA 10,910 172,301 172,248 

—————— —————— 

Spain (0.33%) 

Banco Santander Central Hispano SA 9,542 110,996 106,230 

—————— —————— 

Switzerland (0.54%) 

Nestlé SA 2,930 165,060 175,442 

—————— —————— 


16

Jarislowsky Fraser Select Canadian Equity Fund (continued) 




—————— —————— —————— 

$ $ 


HSBC Holdings PLC, ADR 3,138 163,640 150,180 

National Grid PLC 670 6,187 6,347 

National Grid Transco PLC, ADR 1,900 88,842 90,620 

Reckitt Benckiser Group PLC 3,420 184,034 181,566 

Standard Chartered PLC 3,312 90,292 83,892 

Vodafone Group PLC 25,600 69,121 64,765 


—————— —————— 

725,522 693,298 

—————— —————— 


3M Co. 1,810 159,660 165,549 

Automatic Data Processing Inc. 2,880 136,632 146,249 

Becton, Dickinson and Co. 1,810 144,931 150,413 

Cisco Systems Inc. 8,200 161,363 123,379 

Colgate-Palmolive Co. 2,580 201,544 217,437 


Emerson Electric Co. 3,510 194,773 190,361 

Exxon Mobil Corp. 2,620 194,575 205,470 

Halliburton Co. 3,110 124,443 152,949 

International Business Machines Corp. 700 106,892 115,734 

Johnson & Johnson 3,320 206,210 212,814 

MetLife Inc. 4,340 187,542 183,553 

Monsanto Co. 1,070 68,105 74,852 

Pepsico Inc. 3,110 203,173 211,112 

Philip Morris International Inc. 2,660 159,469 171,226 

Procter & Gamble Co. 2,430 153,236 148,874 

QEP Resources Inc. 1,200 47,237 48,379 


US Bancorp 6,620 169,464 162,817 

Wells Fargo & Co. 4,530 130,985 122,556 

—————— —————— 

3,726,237 3,736,823 

—————— —————— 

Total Global Equities 6,545,177 6,634,194 

—————— —————— 


—————— 


—————— 

Net Assets (100%) 32,636,191 

—————— 



June 30, 2011 December 31, 2010 

—————————————— —————————————— 

Percentage 

Percentage 


—————————————— —————— —————— —————— —————— 

$ $ 

American Dollar 3,986,612 12.22% 1,567,481 10.76% 

Euro 857,533 2.63% 410,944 2.82% 

Hong Kong Dollar 137,336 0.42% 53,772 0.37% 

Japanese Yen 274,135 0.84% 136,341 0.94% 

Norwegian Krone 177,043 0.54% 79,700 0.55% 

Pound Sterling 340,576 1.04% 234,418 1.61% 

Swiss Franc 175,444 0.54% 134,816 0.93% 

Numbers shown include monetary, non-monetary and derivative instruments. 







—————————————————— —————— —————— 

AAA/Aaa/A-1/P-1 100.00% 100.00% 




—————————————————— —————— —————— 

$ $ 

Less than one year 457,574 347,109 


Total 32,357,312 14,550,208 



increased, respectively, by approximately $266 ($174 in 2010). 


June 30, 2011 December 31, 2010 

—————————————— —————————————— 



—————————————— —————— —————— —————— —————— 

$ $ 

S&P/TSX Index Capped TR 

(95%) – DEX 91 days T-Bills 

Index (5%) ± 2,434,660 7.46% ± 1,025,690 7.04% 

In the event that the benchmark’s performance would rise or fall by 10%, with all variables held 


performance. 


significant. 


June 30, 2011 


—————— —————— —————— —————— 

$ $ $ $ 



Total Investments 31,456,691 900,621 n/a 32,357,312 







—————— —————— —————— —————— 

$ $ $ $ 



Total Investments 13,927,488 622,720 n/a 14,550,208 

Derivative Assets n/a 14,884 n/a 14,884 

Derivative Liabilities n/a (14,913) n/a (14,913) 




17




2011 2010 

——————— ——————— 

$ $ 

Assets 


Cash 132,258 75,455 

Subscriptions receivable 379,643 291,048 



——————— ——————— 

32,947,719 14,941,881 

——————— ——————— 

Liabilities 

Unrealized depreciation on foreign exchange contracts - 29 

Redeemed units payable 58,843 - 



——————— ——————— 

311,528 372,422 

——————— ——————— 

Net assets 32,636,191 14,569,459 

——————— ——————— 

——————— ——————— 



F/E Series 11,648,883 3,808,077 

——————— ——————— 

32,636,191 14,569,459 

——————— ——————— 

——————— ——————— 



F/E Series 10.62 10.41 






18




2011 

——————— 

$ 

Income 



——————— 

357,650 

——————— 

Expenses 









——————— 

216,865 

——————— 


——————— 

Net losses 


Net realized losses on foreign currencies (2,134) 

——————— 

(265,572) 

——————— 


Unrealized losses on foreign currencies (2,077) 

——————— 

228,767 

——————— 


——————— 

(49,365) 

——————— 


——————— 




——————— 

91,420 

——————— 





19





F/E Series 

2011 2011 

——————— ——————— 

$ $ 


——————— ——————— 


——————— ——————— 


Units issued 11,756,484 8,239,052 

Units redeemed (1,585,953) (434,271) 

——————— ——————— 

10,170,531 7,804,781 

——————— ——————— 


——————— ——————— 


——————— ——————— 

——————— ——————— 


20

Notes to Financial Statements 

as at June 30, 2011 (unaudited) 

1- GOVERNING STATUTES 

The following are open-ended mutual fund trusts formed under the laws 

of the Province of Ontario by an instrument of trust on the following 

dates: 

Funds 

Date Established 

Jarislowsky Fraser Select Income Fund October 7, 2010 

Jarislowsky Fraser Select Balanced Fund October 7, 2010 

Jarislowsky Fraser Select Canadian Equity Fund October 7, 2010 

Collectively the mutual funds trusts are known as the “funds”. The 

managers of the funds, National Bank Securities Inc., and the trustee of 

the funds, Natcan Trust Company, are wholly-owned subsidiaries of 

National Bank of Canada. 

2- SIGNIFICANT ACCOUNTING POLICIES 

These financial statements are prepared in accordance with Canadian 

generally accepted accounting principles (“GAAP”) and with the 

Regulation 81-106 on continuous information. 

The following is a summary of the significant accounting policies 

consistently followed by the funds: 

Valuation of investments 

Investments are valued at fair value and include accrued interest on the 

money market securities. The fair value of investments as at the 

financial reporting date is determined as follows: 

• Investments held that are traded in an active market through 

recognized public stock exchanges, over-the-counter markets or 

through recognized investment dealers are valued at their bid prices 

at their valuation date. Investments held include money market 

instruments, bonds and debentures as well as shares; 

• Investments held that are not traded in an active market are valued 

based on the results of valuation techniques, using observable 

market inputs, on criteria which is designated by the manager. The 

fair value of certain securities may be estimated using valuation 

techniques based on assumptions that are not supported by 

observable market inputs. 

Cost is determined according to the average cost method. 

An adjustment factor is calculated each valuation day for securities 

traded on international markets. This factor reflects the impact on the 

fair value of securities of an event that would have occurred after the 

closing of the foreign markets. This new information available can now 

be taking into consideration in the fair value of securities. 

Transaction costs 

Transaction costs, such as brokerage commissions, incurred at the time 

of purchase and sale of securities by the funds are recognized as 

“Transaction costs on purchase and sale of investments” in the 

Statement of Operations. 

Investment transactions and recognition of income and expenses 

Investment transactions are accounted for on the trade date. Income 

and expenses are recorded using the accrual basis of accounting. 

Interest income is recorded as earned and dividend income is recorded 

on the ex-dividend date. Foreign revenue is presented net of the 

withholding taxes deducted by foreign countries. Gains or losses arising 

from the sale of investments and unrealized appreciation or depreciation 

on investments are determined from the cost using the average cost basis. 

The income, the realized and unrealized gains (losses) are divided 

between the different series to pro rata of net asset value of each series. 

The method of dividing up specific expenses is made directly between 

the funds and different series of the same fund. Specific expenses 

include the custodial fees and the rights and deposits. 

The method of splitting common expenses to all funds as well as to 

different series is calculated based on a percentage determined by the 

pro rata of the average net asset value, of the number of unitholders of 

each fund, or serie, and according to the total number of funds. Common 

expenses include the directors’ fees of independent review committee, 

audit fees, legal fees and securityholders’ reporting costs. 

Financial instruments 

The classification of financial assets and liabilities under Section 3862 

is as follows: 

• Investments, cash and bank overdraft are classified as held for 

trading and are recorded at fair value; 

• Subscriptions receivable, interest and dividends receivable and other 

assets receivable are classified as loans and amounts receivable and 

are recorded at amortized cost; 

• Unrealized depreciation on foreign exchange contracts, redeemed 

units payable, investments payable and accrued expenses are 

classified as financial liabilities and are recorded at amortized cost. 

Accounting estimates 

The preparation of financial statements in accordance with Canadian 

GAAP requires management to make estimates and assumptions that 

affect the amounts recorded in the financial statements and disclosed 

in the notes. These estimates, including the fair value of investments 

and accrued expenses, are based on management’s best knowledge of 

current events and actions that the funds may undertake in the future. 

Actual results may differ from these estimates. 

Valuation of units 

The net asset value (NAV) of a unit of each series within a fund is 

determined each business day when the Toronto Stock Exchange is open 

by dividing net asset value attributable to each serie by the number of 

units outstanding for the corresponding serie. 

21

Notes to Financial Statements (continued) 


Canadian Securities Administration (CSA) regulations allow funds to 

respect the provisions of Section 3855 of the Canadian Institute of 

Chartered Accountants (CICA) Handbook for financial statements 

reporting according to Canadian GAAP, without changing their method 

of calculating the transactional net asset value for the purposes of units 

purchases, transfers and redemptions. According to the requirements of 

the CSA, reconciliation between the transactional NAV and the net assets 

calculated under Section 3855 of the fund is presented in note 5 of the 

financial statements. 

Increase in net assets from operations per unit 

The increase or decrease in net assets from operations per unit 

presented in the statement of operations represents the increase or 

decrease in net assets from operations for the period, divided by the 

average number of units outstanding during the period. 

Distributions to unitholders 

The net income and net realized capital gains of each of the funds are 

distributed to unitholders according to the period specified in the 

following table, pro rata to the units held by them. 

Distribution of 

Distribution of Net Realized 

Funds Net Income Capital Gains 

Jarislowsky Fraser Select Income Fund* Monthly Annually 

Jarislowsky Fraser Select Balanced Fund Quarterly Annually 

Jarislowsky Fraser Select Canadian Equity Fund Annually Annually 

*This fund may also distribute return of capital on a monthly basis. 

All annual distributions take place in December of each year. 

Foreign currency translation 

The fair value of investments and all other assets and liabilities in 

foreign currencies is translated into Canadian dollars at exchange rates 

in effect at the date of the statement of net assets. 

Purchases and sales of investments, as well as income and expenses are 

translated at the prevailing exchange rates on the respective dates of 

such transactions. 

Realized and unrealized foreign exchange gains and losses are presented 

in “Net realized gains (losses) on foreign currencies” and “Unrealized 

gains (losses) on foreign currencies”. 

3- FUTURE ACCOUNTING STANDARDS CHANGES 

Future accounting standards 

In February 2008, the Canadian Accounting Standards Board (AcSB) 

confirmed that all publicly accountable enterprises would be required to 

report under International Financial Reporting Standards (IFRS) as 

published by the International Accounting Standards Board (IASB) for 

fiscal years beginning on or after January 1, 2011. However, in January 

2011, the AcSB approved a deferral of the effective date of entry in 

force of IFRS from January 1, 2011 to January 1, 2013 for investment 

companies that are currently applying the Accounting Guideline AcG-18 

“Investment Companies”. 

The deferral of the transition date to IFRS has been put in place to 

ensure that investment companies will not have to modify their actual 

accounting treatment for entities in which they have control while the 

IASB is completing the standard about investment companies it plans 

to publish. 

Consequently, the Funds will publish their first audited financial 

statements in accordance with IFRS for the year ending December 31, 

2013 and will present comparative figures in accordance with IFRS for 

the year ending December 31, 2012, including an opening balance sheet 

as at January 1, 2012. 

Given the deferral of the effective transition date to IFRS, management 

is closely monitoring the evolution of the standards and is adjusting its 

plan consequently. In the periods preceding the first fiscal year in which 

IFRS will be adopted, the impacts of transitioning to IFRS on the financial 

statements of the Funds will be disclosed as they become known. 

4- RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS 

Investment activities of the funds expose them to some financial risks. 

The manager of the funds seeks to minimize these risks by employing 

experienced portfolio managers that manages the security portfolios of 

the funds on a daily basis according to market events and the 

investment policy of each fund. 

The funds apply the requirements of Section 3862 of the CICA Handbook 

on presenting information with respect to the nature and extent of risks 

arising from financial instruments and how the entity manages those 

risks. This accounting standard has no impact on the daily net asset 

value of the funds. 

Currency risk 

Changes in the value of the Canadian Dollar compared to foreign 

currencies will affect the Canadian Dollars value of any foreign securities 

in a fund. Bonds issued in foreign currencies are listed in the investment 

portfolio. Foreign stocks are also exposed to currency risks since the 

value of such stocks are translated to Canadian dollars to determine 

their fair value. In order to quantify the currency risk, a table appears 

at the investment portfolio of each fund having a significant exposure 

to foreign currencies at the end of the period. Numbers shown include 

monetary and non-monetary. In practice, actual results may differ from 

this analysis and the difference can be significant. 

Credit risk 

Credit risk is the risk that a commitment with the fund is not respected 

by the counterparty of a financial instrument. The credit risk of the 

funds is derived primarily from debt securities. The fair value of 

investments represents the maximum credit risk at the end of the period. 

The fair value of a financial instrument reflects the creditworthiness and 

the credit rating of the issuer. The funds invest in financial assets whose 

rating was established by recognized rating agencies. A table containing 

22



the distribution of securities under their credit rating is in portfolio 

investments for each fund whose exposure to credit risk is important at 

the end of the period. In practice, actual results may differ from this 

analysis and the difference can be significant. 

The securities transactions are settled upon delivery by brokers. The 

default risk is considered low because the supply of securities is 

conducted once the broker has received payment. The transaction fails 

when a party fails to meet its commitments. 

According to the policy of investment funds, the credit risk is monitored 

regularly by the manager of the funds. 

Interest rate risk 

Changes in market interest rates expose income securities, such as 

bonds, to interest rate risk. Funds that hold income securities are 

exposed to this risk since changes in prevailing market interest rates will 

affect the value of income securities. The sensitivity of the funds’ 

interest rate was evaluated according to the weighted duration of the 

portfolio. In order to quantify the interest rate risk, a table appears at 

the investment portfolio of each fund having a significant exposure to 

interest rate risks at the end of the period. In practice, actual results 

may differ from this analysis and the difference can be significant. 

Price risk 

Price risk is the risk that the value of financial instruments will fluctuate 

as a result of changes in market prices caused by factors specific to a 

security, its issuer or all factors affecting a market or a market segment 

(other than those resulting from currency risk and interest rate risk). 

Maximum risk resulting from financial instruments is equivalent to their 

fair value. 

In order to quantify the price risk, a table appears at the investment 

portfolio of each fund having a significant exposure to price risk at the 

end of the period. In practice, actual results may differ from this analysis 

and the difference can be significant. 

Liquidity risk 

Liquidity risk is defined as the risk of an entity having difficulty meeting 

its obligations or making a commitment and suffering a financial loss 

to another party. The unitholders may redeem their units each valuation 

day. In accordance with securities regulations, at least 90% of a 

portfolio should be composed of liquid investments traded on active 

markets as it can fluctuate. Because the funds invest in active markets, 

they can dispose of their assets quickly. The deadlines for financial 

liabilities remain below three months for all funds, thereby the funds 

maintain a level of cash and short-term investments that the manager 

consider sufficient to maintain the necessary liquidity. 

Fair value of financial instruments 

For presentation purposes, the information on financial instruments are 

required to be presented according to a hierarchy of assessments of fair 

value. This three-level hierarchy is established according to the 

transparency of data taken into account in assessing the fair value of 

assets and liabilities and is presented below: 

• Level 1 — Inputs are quoted prices (unadjusted) of identical 

instruments in active markets that the reporting entity has the 

ability to access at the measurement date; 

• Level 2 — Inputs are quoted prices of similar instruments in active 

markets; quoted prices for identical or similar instruments in markets 

that are not active; inputs other than quoted prices used in a 

valuation model that are observable for that instrument; and inputs 

that are derived principally from or corroborated by observable 

market data by correlation or other means; 

• Level 3 — One or more significant inputs used in a valuation 

technique are unobservable for the instruments. 

Determination of fair value and the resulting hierarchy requires the use 

of observable market data whenever available. The classification of a 

financial instrument in the hierarchy is based upon the lowest level of 

input that is significant to the measurement of fair value. 

A table indicating the breakdown of securities according to their level 

appears in the investment portfolio. 

5- RECONCILIATION OF NET ASSET VALUE AND NET ASSETS 

Following the application of the Section 3855, net assets under GAAP, 

as at June 30, 2011, was determined by measuring the fair value of 

financial assets and liabilities quoted in an active market. This fair value 

is defined as the bid price for assets and the asking price for liabilities. 

The net asset value of operations is measured using the closing price of 

assets and liabilities. The adjustment included in the Statement of 

Operations under “Change in unrealized appreciation/depreciation on 

investments” is presented in the following table: 

Transactional 

Funds Net Asset GAAP 

Value Adjustment Net Assets 

$ $ $ 

Jarislowsky Fraser Select Income Fund 15,835,510 (31,039) 15,804,471 

Advisor Series 10,922,328 (21,409) 10,900,919 

F/E Series 4,913,182 (9,630) 4,903,552 

Jarislowsky Fraser Select Balanced Fund 21,569,745 (38,252) 21,531,493 


F/E Series 7,985,179 (14,161) 7,971,018 

Jarislowsky Fraser Select Canadian Equity Fund 32,703,336 (67,145) 32,636,191 


F/E Series 11,672,849 (23,966) 11,648,883 

23



Transactional 

Net Asset 

GAAP 

Value Adjustment Net Assets 

Funds per unit per unit per unit 

$ $ $ 


Advisor Series 9.97 (0.02) 9.95 

F/E Series 10.03 (0.02) 10.01 



F/E Series 10.30 (0.01) 10.29 



F/E Series 10.64 (0.02) 10.62 

6- UNITS 

The number of outstanding units of the Advisor Series as at June 30, 

2011 and December 31, 2010 and the number of issued and redeemed 

units of the Advisor Series for the period ended June 30, 2011 and the 

year ended December 31, 2010 is indicated in the following table: 

Jarislowsky Fraser Jarislowsky Fraser Jarislowsky Fraser 

Select Income Select Balanced Select Canadian 

Fund Fund Equity Fund 

2011 2010 2011 2010 2011 2010 

Beginning balance 675,433 - 606,534 - 1,035,974 - 

Units issued 451,822 677,174 782,401 606,837 1,105,106 1,040,121 

Units redeemed (31,653) (1,741) (66,842) (303) (149,914) (4,147) 

Ending balance 1,095,602 675,433 1,322,093 606,534 1,991,166 1,035,974 

The funds also offer units of the F and the E Series. The F Series units 

are only available to investors with a fixed fee account with dealers 

who have entered into an agreement regarding an F Series account with 

these funds, as described in the simplified prospectus of the funds. The 

E units are only intended for independent investors who have an 

account with dealers who offer discount brokerage services and who 

have entered into agreement regarding E Series account with these 

funds, as described in the simplified prospectus of the funds. The number 

of outstanding units of the F and the E Series as at June 30, 2011 and 

as at December 31, 2010 and the number of issued and redeemed units 

of the F and the E Series for the period ended June 30, 2011 and the 

year ended December 31, 2010 are indicated in the following table: 

Jarislowsky Fraser Jarislowsky Fraser Jarislowsky Fraser 

Select Income Select Balanced Select Canadian 

Fund Fund Equity Fund 

2011 2010 2011 2010 2011 2010 

Beginning balance 196,537 - 307,949 - 365,837 - 

Units issued 321,942 197,733 486,566 311,394 771,653 368,769 

Units redeemed (28,479) (1,196) (19,583) (3,445) (40,430) (2,932) 

Ending balance 490,000 196,537 774,932 307,949 1,097,060 365,837 

7- MANAGEMENT FEES AND OTHER FEES 

As manager of the funds, National Bank Securities Inc. provides 

investment and administrative services. In exchange for these services, 

each Series of every fund pays management fees based on the average 

daily net asset value of each fund for the year. These fees are paid 

monthly to the manager. The maximum annual management fees for the 

Advisor Series are indicated in the following table: 

Annual management 

Funds 

fees (maximum) 

Jarislowsky Fraser Select Income Fund 1.40% 

Jarislowsky Fraser Select Balanced Fund 1.70% 

Jarislowsky Fraser Select Canadian Equity Fund 1.75% 

The maximum annual management fees for the F and the E Series are 

indicated in the following table: 

Annual management 

Funds 

fees (maximum) 

Jarislowsky Fraser Select Income Fund 0.65% 

Jarislowsky Fraser Select Balanced Fund 0.70% 

Jarislowsky Fraser Select Canadian Equity Fund 0.75% 

Management fees are incurred in the normal course of business and have 

been recorded at the exchange amounts. 

In addition to the management fee, the funds are responsible for the 

payment of taxes pertaining to the funds, brokerage commissions and 

other expenses on the purchase and sale of securities of their portfolios. 

The funds are also responsible for the payment of all expenses related 

to their operations, including legal, audit, trustee, custodial and 

safekeeping fees, interest, operating and administrative costs (other 

than advertising and promotional expenses which are the responsibility 

of the manager), the costs of investor servicing and financial reports, 

prospectuses and other documents used by the fund. 

8- TRAILER AND SALES CHARGES 

Commissions 

As the manager of the funds, National Bank Securities Inc. pays no sales 

commission to the brokers. 

Trailer fees 

As the manager of the funds, National Bank Securities Inc. pays a 

commission to the brokers according to the rates listed below: 


Maximum annual 

Funds 

trailing commission 

Jarislowsky Fraser Select Income Fund up to 0.75% 

Jarislowsky Fraser Select Balanced Fund up to 1.00% 

Jarislowsky Fraser Select Canadian Equity Fund up to 1.00% 

F Series and E Series 

No trailer fees are paid for the F Series and E Series. 

9- BROKERAGE COMMISSIONS 

Total commissions paid to brokers in connection with investment 

portfolio transactions including the related entity, National Bank 

Financial (NBF), for the period ended June 30, 2011 are indicated in the 

following table: 

Funds 2011 

Commission 

Total paid to 

commissions 

NBF 

————— ————— 

$ $ 

Jarislowsky Fraser Select Income Fund 1,126 95 

Jarislowsky Fraser Select Balanced Fund 5,022 257 

Jarislowsky Fraser Select Canadian Equity 

Fund 11,627 1,087 

24



The soft dollars allocated to the goods and services related to the 

investment portfolio transactions for the period ended June 30, 2011 are 

indicated in the following table: 

Funds 

Soft dollars 

2011 

————— 

$ 

Jarislowsky Fraser Select Income Fund - 

Jarislowsky Fraser Select Balanced Fund 8 

Jarislowsky Fraser Select Canadian Equity Fund 29 

10- RELATED ENTITIES HOLDINGS 

As at June 30, 2011 and December 31, 2010, the National Bank of 

Canada was holding units of the following funds: 

Funds 2011 2010 

Percentage 

Percentage 

Units of Net asset Units of Net asset 

————— ————— ————— ————— 

Jarislowsky Fraser Select Income Fund, 

Advisor Series 205,409 19% 201,349 30% 

Jarislowsky Fraser Select Income Fund, 

F/E Series 15,405 3% 15,101 8% 

Jarislowsky Fraser Select Balanced Fund, 

Advisor Series 201,660 15% 200,329 33% 

Jarislowsky Fraser Select Balanced Fund, 

F/E Series 15,178 2% 15,032 5% 


Fund, Advisor Series 200,147 10% 200,147 19% 


Fund, F/E Series 15,011 1% 15,011 4% 

The transactions between the funds and related entities are traded at 

net asset value on valuation date in the normal course of operation. 

Some conditions related to redemption of the funds’ units held by the 

related entities apply. Those conditions are detailed in the simplified 

prospectus. 

11- CAPITAL MANAGEMENT 

The fund’s capital corresponds to the net assets. The fund’s capital is 

managed in accordance with each of the fund’s investment objectives, 

policies, and restrictions, as outlined in the fund’s prospectus. Changes 

in the fund’s capital during the year are reflected in the Statements of 

Changes in Net Assets. 

12- INCOME TAXES 

The funds are qualified as mutual fund trusts under the Income Tax Act 

(Canada) and the Taxation Act (Quebec). Each trust distributes all of its 

net income and a sufficient portion of its net realized capital gains in 

order to not be subject to income taxes. 

Under the Income Tax Act, mutual funds may claim a refund of the 

capital gains tax. A mathematical formula that takes units redeemed 

during the year into account is used to maximize the claim in order to 

retain capital gains in the funds and minimize income taxes payable by 

unitholders. 

The fiscal year of the mutual fund trusts ends on December 15. 

As determined on the tax returns of 2010, accumulated capital losses 

that can be used to reduce capital gains in future years and accumulated 

non-capital losses that can be used to reduce capital gains or net 

income in future years are as follows: 

Capital Non-capital 

Funds Losses Losses 

2010 2010 Maximum 

————— ————— due date 

$ $ 

Jarislowsky Fraser Select Income Fund 4,232 - n/a 

Jarislowsky Fraser Select Balanced Fund 2,804 - n/a 

Jarislowsky Fraser Select Canadian Equity Fund 2,057 - n/a 

Under the Income Tax Act (Canada), the non-capital losses can be carried 

forward for up to 20 years and capital losses can be carried forward 

indefinitely. 

13- STATEMENTS OF DETAILED PORTFOLIO MOVEMENTS 

Unaudited statements of detailed portfolio movements of the funds for 

the period ended June 30, 2011, may be obtained, without charge, by 

writing to the following address: 


1100, University Street, 10 th floor 

Montreal, Quebec, H3B 2G7 

25

How to contact us 

If you have any questions or would like to carry out National Bank Securities Funds 

transactions, contact the National Bank Securities Advisory Service, 

Monday to Friday, from 8 a.m. to 8 p.m.: 

1-888-270-3941 or 514-871-2082 

You can also e-mail us at the following address: 

securities@nbc.ca

InterIm FInancIal StatementS - Jarislowsky, Fraser Limited

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