BEUTEL GOODMAN MANAGED FUNDS

Beutel Goodman ■ American Equity Fund
Fund Specific Notes to the Financial Statements
As at December 31, 2014, December 31, 2013 and January 1, 2013
Risk Management
The investment objective of Beutel Goodman American Equity Fund (the
“Fund”) is to seek long-term enhancement of capital primarily through
investments in common stocks and other equity securities of American
issuers. The investment strategy for this Fund focuses on stock selection which
the Fund’s advisor believes is the primary catalyst for superior portfolio return.
The selection process is sourced from a universe of potential candidates
whose management have consistently demonstrated a commitment to
create shareholder value without undue financial leverage. A value approach
is applied to purchase stocks at a reasonable price by analyzing relative
valuation measures such as the issuer’s price/earnings, price/cash flow
and price/book value relative to its own history, the overall market and to
its sustainable earnings growth rate. 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, December 31, 2013 and January 1, 2013, 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, December 31, 2013 and January 1, 2013, 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, December 31, 2013
and January 1, 2013, 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 36 data points based on the monthly net returns
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 Dec. 31, 2013 Jan. 1, 2013
S&P 500 Index 6,096 4,557 1,805
Total 6,096 4,557 1,805
The historical correlation may not be representative of the future correlation,
and accordingly the impact on net assets could be materially different.
Foreign Currency Risk
Currencies to which the Fund had exposure as at December 31, 2014,
December 31, 2013 and January 1, 2013 are as follows:
Dec. 31, 2014
Cash and Financial Other Percentage
cash assets at assets and of net
equivalents fair value liabilities Total assets
($000) ($000) ($000) ($000) (%)
United States Dollar 5,542 655,176 (8,517) 652,201 96.9
Total 5,542 655,176 (8,517) 652,201 96.9
Dec. 31, 2013
Cash and Financial Other Percentage
cash assets at assets and of net
equivalents fair value liabilities Total assets
($000) ($000) ($000) ($000) (%)
United States Dollar 67 471,527 480 472,074 97.7
Total 67 471,527 480 472,074 97.7
Jan. 1, 2013
Cash and Financial Other Percentage
cash assets at assets and of net
equivalents fair value liabilities Total assets
($000) ($000) ($000) ($000) (%)
United States Dollar 197 182,113 94 182,404 95.7
Total 197 182,113 94 182,404 95.7
The amounts in the above tables are based on the fair value of the Fund’s
financial instruments (including cash and cash equivalents), other financial
assets (including dividends, interest receivables and receivables for investments
sold) and financial liabilities (including payables for investments purchased).
As at December 31, 2014, December 31, 2013 and January 1, 2013, if the
Canadian dollar had strengthened or weakened by 1 percent in relation
to all currencies, with all other variables held constant, net assets would
have increased or decreased, respectively, by approximately $6,522,000
(December 31, 2013 $4,720,000; January 1, 2013 $1,824,000).
In practice, the actual trading results may differ from this sensitivity analysis
and the difference could be material.
64 Beutel Goodman Managed Funds Annual Report as at December 31, 2014