BEUTEL GOODMAN MANAGED FUNDS

Beutel Goodman ■ Fundamental Canadian Equity Fund
Fund Specific Notes to the Financial Statements
As at December 31, 2014
Risk Management
The investment objective of the Beutel Goodman Fundamental Canadian
Equity Fund (the “Fund”) is to seek long-term capital appreciation primarily
through investments in common shares and other equity securities of
Canadian issuers with medium to large capitalization. The Fund’s advisor
attempts to buy the best economic value in the market regardless of what
sector the issuer operates in. Research efforts will be directed to identifying
stocks that are undervalued in relation to the asset value or earnings power
of the issuer. If earnings fall short of expectations, the intrinsic value of the
underlying assets of the issuer will provide important downside protection.
The investment portfolio of the Fund will usually display a price-to-earnings
ratio and price-to-book ratio that are well below market averages. The Fund’s
overall risk management program seeks to minimize the potentially adverse
effect of risk on the Fund’s financial performance in a manner consistent with
the Fund’s investment objective.
Credit Risk
As at December 31, 2014, the Fund had no significant investments in debt
instruments, other than short-term investments. Accordingly, the Fund is not
subject to significant amounts of credit risk.
Interest Rate Risk
As at December 31, 2014, the majority of the Fund’s financial assets and
liabilities are non-interest bearing. Accordingly, the Fund is not subject to
significant amounts of risk due to fluctuations in the prevailing levels of
market interest rates.
Other Price Risk
The impact on net assets of the Fund due to a 1 percent change in benchmark,
using historical correlation between the Fund’s return as compared to the
return of the Fund’s benchmark, as at December 31, 2014 with all other
variables held constant, is included in the table below. Regression analysis
has been utilized to estimate the historical correlation. The analysis uses
7 data points based on the monthly net return of the Fund. The returns of all
classes of units of the Fund are substantially similar except for the differences
in expense structure.
Impact on net assets
($000)
Benchmark Dec. 31, 2014
S&P 500 Index 637
Total 637
The historical correlation may not be representative of the future correlation,
and accordingly the impact on net assets could be materially different.
Concentration Risk
The following is a summary of the Fund’s concentration risk as at December 31,
2014:
Market segment Dec. 31, 2014
Short-Term Investments
Treasury Bills 1.83%
Common Stocks
Energy 10.83%
Materials 5.96%
Industrial 9.27%
Consumer Discretionary 12.07%
Consumer Staples 6.53%
Financials 41.15%
Information Technology 2.19%
Telecommunication Services 10.00%
Total 99.83%
Fair Value Hierarchy
The following table analyzes the Fund’s financial instruments carried at FVTPL
within the fair value hierarchy as at December 31, 2014.
Dec. 31, 2014 Level 1 Level 2 Level 3 Total
($) ($) ($) ($)
Assets
Equity securities 73,401,068 — — 73,401,068
Total Assets 73,401,068 — — 73,401,068
There were no transfers between level 1 and 2 during the period from June 23
(commencement of operations) to December 31, 2014.
Fund Unit Transactions
For the period ended December 31
2014 Class B Class F Class I
Balance, beginning of period — — —
Redeemable units issued for cash 500 500 7,765,565
Reinvested units — 1 51,308
Redeemable units redeemed — — (471,511)
Balance, end of period 500 501 7,345,362
Foreign Currency Risk
As at December 31, 2014, the Fund did not have a significant exposure to
foreign currency risk.
30 Beutel Goodman Managed Funds Annual Report as at December 31, 2014