Investing for the long term

222 Pages·2009·1.6 MB·English

F O R M O R E I N F O R M AT I O N A B O U T Investing for the
ScotiaFunds™
long term
please call
1 800 268-9269 (English)
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ScotiaFunds Semi-Annual Report
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Scotiatrust or ScotiaMcLeod.
June 30, 2009
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9471219 (08/09)
1 Economic Outlook
Table
of Contents
Financial Statements
Cash Equivalent Funds Scotia Portfolios
3 ScotiaT-BillFund
5 ScotiaPremiumT-BillFund ScotiaSelected@Portfolios
7 ScotiaMoneyMarketFund 137 ScotiaSelectedIncome&Modest
12 ScotiaU.S.$MoneyMarketFund GrowthPortfolio
139 ScotiaSelectedBalancedIncome&
GrowthPortfolio
141 ScotiaSelectedModerateGrowthPortfolio
Income Funds
143 ScotiaSelectedAggressiveGrowth
15 ScotiaMortgageIncomeFund Portfolio
18 ScotiaCanadianIncomeFund
21 ScotiaU.S.$BondFund ScotiaPartnersTMPortfolios
24 ScotiaGlobalBondFund
145 ScotiaPartnersIncome&Modest
GrowthPortfolio
147 ScotiaPartnersBalancedIncome&
Balanced Funds GrowthPortfolio
150 ScotiaPartnersModerateGrowthPortfolio
28 ScotiaDiversifiedMonthlyIncomeFund
153 ScotiaPartnersAggressive
33 ScotiaCanadianBalancedFund
GrowthPortfolio
40 ScotiaCanadianTacticalAssetAllocation
Fund
ScotiaVision@Portfolios
156 ScotiaVisionConservative2010Portfolio
158 ScotiaVisionAggressive2010Portfolio
Equity Funds
160 ScotiaVisionConservative2015Portfolio
162 ScotiaVisionAggressive2015Portfolio
CanadianEquityFunds 164 ScotiaVisionConservative2020Portfolio
53 ScotiaCanadianDividendFund 166 ScotiaVisionAggressive2020Portfolio
57 ScotiaCanadianBlueChipFund 168 ScotiaVisionConservative2030Portfolio
61 ScotiaCanadianGrowthFund 170 ScotiaVisionAggressive2030Portfolio
65 ScotiaCanadianSmallCapFund
68 ScotiaResourceFund ScotiaINNOVAPortfoliosTM
172 ScotiaINNOVAIncomePortfolio
U.S.EquityFunds 174 ScotiaINNOVABalancedIncomePortfolio
71 ScotiaU.S.GrowthFund 176 ScotiaINNOVABalancedGrowthPortfolio
75 ScotiaU.S.ValueFund 178 ScotiaINNOVAGrowthPortfolio
180 ScotiaINNOVAMaximumGrowthPortfolio
InternationalEquityFunds
78 ScotiaInternationalValueFund
81 ScotiaEuropeanFund Scotia Cassels Funds
85 ScotiaPacificRimFund
182 ScotiaCasselsShort-MidGovernment
89 ScotiaLatinAmericanFund
BondFund
185 ScotiaCasselsAdvantagedIncomeFund
GlobalEquityFunds
189 ScotiaCasselsCanadianCorporateBond
92 ScotiaGlobalGrowthFund
Fund
96 ScotiaGlobalSmallCapFund
193 ScotiaCasselsCanadianEquityFund
100 ScotiaGlobalOpportunitiesFund
196 ScotiaCasselsNorthAmericanEquityFund
103 ScotiaGlobalClimateChangeFund
199 ScotiaCasselsU.S.EquityFund
202 ScotiaCasselsInternationalEquityFund
207 ScotiaCasselsCyclicalOpportunitiesFund
Index Funds
106 ScotiaCanadianBondIndexFund 210 Notes to Financial Statements
118 ScotiaCanadianIndexFund
122 ScotiaU.S.IndexFund
128 ScotiaCanAm»IndexFund
131 ScotiaNasdaqIndexFund
134 ScotiaInternationalIndexFund
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Global Economic Overview
T heglobaleconomyisshowingsignsofturningthecorner, spending,residentialconstruction,andbusinessinvestment,for
witheconomicnewslikelytomoveincreasinglyfromthe example—thepaceofdeclinehasclearlyslowed.Inother
badtowardsthegoodsideoftheledgerinthemonthsahead. cases—existinghomesales,forexample—thedatapointto
EnormousfiscalstimulushasputChinaatthevanguardof renewedstabilizationafteraprolongedperiodofweakness.
nationsstartingdowntheroadtorecovery,withtheU.S. Butforotherindicators—suchasmotorvehiclesalesand
appearingtobeinthepolepositionamongdeveloped durablegoodsorders—agradualupswingisunderway.With
countries. Washington’smassiveandincreasedfundingforjobcreation
gainingtraction,thestageissetforaresumptionofrenewed
IntheU.S.,massivegovernmentstimulusshouldsoongain
growthinthesecondhalfoftheyear—eveninpreviously
traction,bolsteringincomeandsupportingspendingwhile
hard-hitsectorslikemotorvehicles.
householdsreducedebtandrebuildsavings.Monthlyjoblosses
appeartobecresting,withconsumersandbusinesses AlthoughtheU.S.economymaybeintheprocessofturning
becomingmoreoptimisticaboutprospectsforthebalanceof thecornerfromcontractiontoexpansion,Americansarelikely
theyear.Automakersarerestartingsomeidledplantsnowthat toremaincautiousspenders.U.S.householdsareaddressing
inventoriesarewithintheircomfortzoneandsaleshave theirover-extendedbalancesheetsbysavingmoreand
startedtorecover.U.S.housingactivityalsohasbottomed spendingless.Reinforcedbycontinuingsoftlabourmarkets,
afterthreeyearsofunrelentingdecline. generallytightcreditconditions,andrecently,renewed
increasesinenergyprices,thepersonalsavingsratehas
Whiletherecovery willbemorevisible,U.S.growththrough
jumpedtoa15-yearhighof6.9%.Nonetheless,sharplylower
2010willonlypartiallybackfilltheholecreatedbytherecent
interestrateshaveprovidedasignificantopportunityformany
steepdropinactivity.Itwilltakelongertoreversethe22%
over-extendedborrowerstorefinancetheirliabilitiesand,in
dropinU.S.householdnetworthsincemid-2007,torevitalize
somecases,increasetheirborrowing.Theprincipaldriverof
housingandtorestructurethefinancialandmotorvehicle
U.S.growthinthemonthsaheadwillbethethrustprovided
industries.Regulatoryreformandtighterlendingpracticeswill
bymassivegovernmentspending.Weestimatethat
restrictdebtleverageandraiseborrowingcostsforhigherrisk
governmentexpenditureswillaccountforroughly50%ofthe
activities.Pedal-to-the-metalgovernmentstimulusalsowillbe
expectedgainsinU.S.realGDPthroughtheendof2010,
reinedinnextyearasWashingtonisforcedtoreduceits
therebyprovidingthesupportiveeconomicgrowth
US$2trillionfiscaldeficit,Statesstruggletobalancebudgets
environmentneededtofacilitatewhatshouldbealengthy
andtheFederalReservenudgesupinterestratesfrom
periodofbalancesheetconvalescence.
unprecedentedlows.
Inthisenvironment,therisksofamuchdeeperrecessionand
TheEuropeanandJapaneseeconomiesarealsoshowing
deflationhavebeensignificantlyreduced.Butatthesame
tentativesignsofturningthecorner.Inbothareas,however,
time,renewedinflationaryconcernsassociatedwiththe
economicretrenchmentoverthewinterwasmuchdeeperthan
aggressiveeasinginmonetaryandfiscalpoliciesareunlikelyto
intheU.S.andtheperiodofconvalescenceislikelytobe
berealized.Thereisstillconsiderablelabourandindustrial
muchlongerandmoredifficult.Fortheseregions,recentGDP
slackinboththeU.S.andglobaleconomies,andtherecent
losseswon’tberecoupeduntilwellbeyond2010.
run-upinoilpricescouldworktowardssustainingaverylow
Inthisenvironment,emergingmarketswillprovidealarge inflationperiodifitdampenstheincipientrecovery.Evenso,
shareofgloballocomotion.Eveninayearwhenglobaloutput thehighlystimulativepolicyinitiativesundertakenintheUnited
isshrinkingbynearly3%,ChinaandIndiaareexpectedto Statesshouldhelprestokedemandandinflationpressures,but
expandby5-7%.Theirproductiongrowthwilldrive laterratherthansooner.
commoditymarketsandtheirinvestmentsfrommassiveforeign
exchangesurpluseswillhaveanincreasinginfluenceonglobal Canada
currenciesandinterestrates.
TheCanadianeconomycontractedata51⁄%annualratein
2
thefirstthreemonthsof2009,thelargestquarterlyoutput
United States
declinesincetheearly1990srecession,withafurther,though
Agrowingbodyoffinancialandeconomicdatasuggeststhat moremoderate,outputdeclineexpectedinthesecondquarter.
theworstoftheU.S.downturnhaspassed.Sizeableralliesin Asoneofthemostexport-orientedeconomiesoftheG7,
stocksandcommoditymarketssinceearlyMarchhighlighta Canadaisbeinghard-hitbythesharpfalloffinglobaltrade
growingsenseofconfidencethattheproblemsintheU.S. andinvestmentflows.Thedeteriorationineconomicactivityis
bankingsectorhavebeencontained.Althoughsome morebroadlybased,withalossofmomentumevidentacross
macroeconomicindicatorsarestillretrenching—consumer goods-andservice-producingindustries.
1
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Lookingahead,theoutlookismoreencouraging.With ofamoresynchronizedbusinessapproachineconomicsectors
inventoriesnowbeingaggressivelyparedback,Canadian suchasmining,financialservices,energyandutilities.
productionshouldpiggybackonanystrengtheninginU.S.and
internationaldemandformanufacturedandcommodity-related Europeand Asia
goods.However,thebiggestcontributortotheimproving
growthoutlookisthemassiverampingupoffederaland Acombinationofmonetarystimulus,directgovernment
provincialstimulusthatshouldamountto3%ofGDPin spendingmeasuresandacessationofinventorydrawdownwill
FY09/10.Governmentsarecommittedtomajorfunding serveasacatalystformodesteconomicrecoveryacross
initiativesoninfrastructure,socialhousing,andtraining,in WesternEuropeinthesecondhalfof2009.Themomentum
additiontosubstantialpermanentandtemporarytaxrelief,as willslowlybuildin2010alongsideagradualstrengtheningin
wellasenhancedautomaticstabilizerslikeemployment privatesectorspending.Nevertheless,thepickupinthemonths
insurancebenefits. aheadwillbetoolittleandtoolatetopreventasharp
contractioninoutputfortheyearasawhole;weexpectthe
Autoandhomesaleshavebeenpostingsteadygainsinrecent eurozoneeconomytoshrinkbyabout41⁄%in2009,withthe
2
months,albeitfromdepressedlevels,suggestinghistorically UKcontractingbyjustover31⁄%.Theseverityoftherecession
2
lowborrowingcostsandcompetitivepricingarerecharging isunderminingpublicsectorbalancesheetsacrossWestern
consumerspendingandhousingactivity.Businessesarestill Europe.Bytheendof2010,theratioofgovernment
sheddingworkers,butthepaceoflayoffshasmoderatedfrom debt-to-GDPfortheeurozoneasawholewillbewellover
earlierintheyear.Nonetheless,theconsumer/housingrecovery 80%.TheUK,whichhasseenitspublicsectorfinances
isexpectedtobesluggishrelativetopastcycles,ashouseholds decimatedbythecostofmassivefinancialsectorrescue
focusonrebuildingtheirsavingsandrepairingtheirheavily operations,willseeitsratioexceed80%(adoublinginthree
leveragedbalancesheets. years),andisofficiallyprojectedtoreach90%in2013.
Businessesarealsolikelytoremaincautiousspenders,withthe EconomicrecoveryisunderwayacrossmostoftheAsia/Pacific
recoveryinbusinessinvestmentrestrainedbysignificantexcess region,althoughthepatternisinconsistentandvulnerableto
productioncapacityandweakcorporateearnings.Rising intermittentsetbacks.Abottomingoutinindustrialactivityand
commercialandindustrialvacancyrateswillinturnholdback inexportsisnowevident.Withtheglobalinventorycorrection
non-residentialconstruction,thoughincreasedinfrastructure- drawingtoaconclusion,creditmarketsbeginningtothawand
relatedoutlayswillprovideasubstantialboosttothebroader governmentstimulusmeasuresstartingtotakehold,the
constructionsector,withrelatedmanufacturingandservice foundationsarebeinglaidforaneconomicrevival.Thetiming
industryspinoffs. andvigourofthepickupineconomicactivitythroughthe
secondhalfof2009willbeinsufficienttopreventmarkedly
Mexico and Latin America weakeroutputnumbersfortheyearasawholeacrossthe
region.
MostdevelopingcountrieswithintheWesternHemisphereare
effectivelypositionedtomanagetheadverseeconomicimpact ThePeople’sRepublicofChina(PRC)andIndiawillremainthe
ofthecyclicaldownturn.Countriesembracinginstitutionaland pacesetters;weexpectthetwoeconomiestoregistergrowth
structuralreforms,suchasBrazil,PeruandChile,willemerge of8%and51⁄%,respectively,in2009.Whileexportsaccount
2
fromthecrisisinastrongerpositiontofacethecompetitive forarelativelysmallproportionofJapan’sGDP,thepotential
challengesofthenewbusiness/creditcycle.Amongthemajor fordomestically-ledgrowthhasbeenconstrainedby
LatinAmericaneconomies,Mexicohasbeenthemost demographicfactorsandbyfiscalconstraints.Asaresult,
adverselyaffectedbytheU.S.cyclicaleconomicdownturnand Japaneseeconomicactivityprovedinordinatelysensitivetothe
ensuingsystemicfinancialstress.RealGDPisprojectedto downturninglobaltrade,aproblemthatwascompoundedby
declineby6%thisyearhowever,thecountryiswellpositioned yenappreciation.
toregainamoderategrowthtrajectoryin2010,alongsidethe
recoveryintheU.S.industrialsector.Brazil,whichhasemerged
asapowerfulforceinthehemisphere,hasbecomeakey
magnetofforeigncapitalinvestmentintotheregion.Itsrobust
institutionalframework,itspoolofpowerfulmultinational
corporationsinmanysectors,anditseffectivepublic-private
partnershipswillallbefactorsplacingthecountryinasteady
WarrenJestin
long-termgrowthpath.ChileandPeruwillreapthebenefitsof
asustainedrecoveryinglobaldemandforcommodities,ofthe SeniorVice-President
andChiefEconomist
positivespillovereffectsfromBrazilianeconomicstrengthand
ScotiabankGroup
2
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia T-Bill Fund
(Unaudited)
STATEMENT OF NET ASSETS STATEMENT OF CHANGES IN NET ASSETS
Asat ForthesixmonthperiodsendedJune30,
June30, December31,
2009 2008 2009 2008
ASSETS NETASSETS–BEGINNINGOFPERIOD
Investmentsatfairvalue $185,932,382 $196,072,472 ClassAUnits $195,989,729 $172,961,727
Cash 73,287 99,889
INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
Accruedinvestmentincome 2,131 9,259
ClassAUnits 137,316 1,973,584
186,007,800 196,181,620
DISTRIBUTIONSTOUNITHOLDERS
LIABILITIES Fromnetinvestmentincome
Distributionspayable 464 1,336 ClassAUnits (137,316) (1,973,584)
Accruedexpenses 70,018 190,555
UNITTRANSACTIONS
70,482 191,891 Proceedsfromissue
ClassAUnits 40,618,493 47,643,041
NetAssets $185,937,318 $195,989,729
Reinvesteddistributions
NETASSETSPERCLASS ClassAUnits 135,705 1,946,710
ClassAUnits $185,937,318 $195,989,729 Paymentsonredemption
ClassAUnits (50,806,609) (43,834,874)
UNITSOUTSTANDING
ClassAUnits 18,593,732 19,598,973 (10,052,411) 5,754,877
NETASSETSPERUNIT INCREASE(DECREASE)INNETASSETS
ClassAUnits $ 10.00 $ 10.00 ClassAUnits (10,052,411) 5,754,877
NETASSETS–ENDOFPERIOD
ClassAUnits $185,937,318 $178,716,604
STATEMENT OF OPERATIONS
ForthesixmonthperiodsendedJune30,
STATEMENT OF INVESTMENT PORTFOLIO
2009 2008 AsatJune30,2009
INVESTMENTINCOME
Interest $850,596 $2,940,951 Face Average Fair
Securitieslending 23,765 22,265 Value($) Issuer Cost($) Value($)
874,361 2,963,216
SHORT-TERMNOTES–76.5%
EXPENSES TreasuryBills–76.5%
Managementfees(note4) 691,267 889,157
Auditfees 8,460 6,411 44,300,000 GovernmentofCanada
IndependentReviewCommitteefees 1,244 981 0.13%dueJul.9,2009 44,291,168 44,298,732
Custodianfees 1,580 6,207 32,675,000 GovernmentofCanada
Filingfees 11,414 10,431 0.21%dueJul.23,2009 32,659,316 32,670,892
Legalfees 5,147 3,590
41,685,000 GovernmentofCanada
Unitholderreportingcosts 29,579 31,742
Unitholderadministration,servicefeesandGST 239,923 260,735 0.18%dueAug.6,2009 41,670,410 41,677,497
6,380,000 GovernmentofCanada
988,614 1,209,254
Absorbedexpenses (251,569) (219,622) 0.92%dueSep.3,2009 6,339,551 6,369,768
17,200,000 GovernmentofCanada
737,045 989,632
0.34%dueDec.10,2009 17,173,168 17,174,126
Netinvestmentincome(loss) 137,316 1,973,584
142,133,613 142,191,015
Increase(decrease)inNetAssetsfromoperations $137,316 $1,973,584
SHORT-TERMBONDS–23.5%
INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
ClassAUnits $137,316 $1,973,584 33,500,000 CanadaHousingTrust
4.65%dueSep.15,2009 33,754,626 34,207,559
INCREASE(DECREASE)INNETASSETSFROMOPERATIONSPERUNIT
ClassAUnits $ 0.01 $ 0.11 9,300,000 ProvinceofOntario
6.20%dueNov.19,2009 9,468,001 9,533,808 S
43,222,627 43,741,367 D
TOTALINVESTMENTPORTFOLIO 185,356,240 185,932,382 N
U
OTHERASSETS,LESSLIABILITIES–0.0% 4,936
F
NETASSETS–100.0% 185,937,318
T
N
SUMMARY OF INVESTMENT PORTFOLIO
E
PercentageofNetAssets(%) L
A
InvestmentCategory June30,2009 December31,2008
V
TreasuryBills 76.5 74.1 I
PromissoryNotes – 0.7 U
CommercialPaper – 1.9 Q
Short-TermBonds 23.5 23.3
E
H
S
A
C
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
3
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia T-Bill Fund
(Unaudited–Continued)
DISCUSSION OF FINANCIAL INSTRUMENT RISK
AsatJune30,2009
A. Riskmanagement E. Creditrisk
TheinvestmentobjectiveoftheScotiaT-BillFund(the“Fund”)istoprovide Creditriskistheriskthatthecounterpartyofafinancialinstrumentwillfailto
incomeandliquidity,whilemaintainingahighlevelofsafety.Itinvestsprimarily dischargeanobligationorcommitmentthatithasenteredintowiththeFund.
inGovernmentofCanadaTreasuryBillsandothershort-termdebtinstruments TheFund’smaincreditriskisconcentratedindebtsecurities.Allinvestment
guaranteedbytheGovernmentofCanada. transactionsaresettled(paidfor)upondeliveryusingapprovedbrokers.The
riskofdefaultisconsideredminimal,asdeliveryofsecuritiessoldisonlymade
Managingriskisamongthemostimportantfactorsintheportfoliomanagement oncethebrokerhasreceivedpayment.Paymentisonlymadeonapurchase
process,guidinginvestmentdecisionsmadefortheFund.TheFund’s oncethesecuritieshavebeenreceivedbythebroker.
investmentpracticeincludesportfoliomonitoringtoensurecompliancewith
statedinvestmentguidelines.TheManagerseekstominimizepotentialadverse WheretheFundinvestsindebtinstrumentsthisrepresentsthemain
effectsofrisksontheFund’sperformancebyemployingandoverseeing concentrationofcreditrisk.Themarketvalueofdebtinstrumentsincludes
professionalandexperiencedportfolioadvisorsthatregularlymonitorthe considerationofthecreditworthinessoftheissuer,andaccordingly,represents
Fund’ssecuritiesandfinancialmarketdevelopments. themaximumcreditriskexposuretotheFund.
TheFundentersintosecuritieslendingtransactionswithcounterparties
B. Liquidityrisk wherebytheFundtemporarilyexchangessecuritiesforcollateralwitha
TheFund’sexposuretoliquidityriskarisesprimarilyfromthedailycash commitmentbythecounterpartytodeliverthesamesecuritiesonafuture
redemptionofunits.TheFundprimarilyinvestsinsecuritiesthataretradedin date.Creditriskassociatedwiththesetransactionsisconsideredminimalasall
activemarketsandcanbereadilydisposed.Inaddition,theFundaimstoretain counterpartieshaveasufficient,approvedcreditratingandthemarketvalueof
sufficientcashandcashequivalentpositionstomaintainliquidity,andhasthe cashorsecuritiesheldascollateralmustbeatleast102%ofthefairvalueof
abilitytoborrowupto5%ofitsNetAssetValueforthepurposeoffunding thesecuritiesloanedasattheendofeachtradingday.
redemptions.AnyilliquidsecuritiesareidentifiedintheStatementof
InvestmentPortfolio. Debtinstruments,excludingcash,heldbytheFundhavecreditratingsas
follows:
C. Currencyrisk June30,2009 December31,2008
Currencyriskistheriskthatfinancialinstrumentswhicharedenominatedina Percentageof Percentageof
currencyotherthanCanadiandollars,whichistheFund’sreportingcurrency, TotalDebt Percentageof TotalDebt Percentageof
willfluctuateduetochangesinexchangerates.AsatJune30,2009and Securities(%) NetAssets(%) Securities(%) NetAssets(%)
December31,2008,theFunddidnothaveexposuretocurrencyrisk.
Short-TermRating
R1-High 76.5 76.5 73.4 73.4
D. Interestraterisk
R1-Middle – – 2.6 2.6
Interestrateriskarisesfrominterest-bearingfinancialinstruments.TheFund
R1-Low – – 0.7 0.7
hasminimalsensitivitytochangesininterestratesduetotheshort-termnature
BondCreditRating
ofinstrumentsheld.
AAA 18.4 18.4 17.5 17.5
ThetablebelowsummarizestheFund’sexposuretointerestrateriskby AA 5.1 5.1 2.6 2.6
remainingtermtomaturityoftheFund’sportfolioofdebtinstruments. A – – 3.2 3.2
BondandShort June30,2009 December31,2008 Total 100.0 100.0 100.0 100.0
TermNotes* ($) ($)
Lessthan1year 185,932,382 196,072,472 F. Otherpricerisk
1-3years – – OtherpriceriskistheriskthatthefairvalueoftheFund’sfinancial
3-5years – – instrumentswillfluctuateasaresultofchangesinmarketprices(otherthan
5-10years – – thosearisingfrominterestrateorcurrencyrisk).AsatJune30,2009and
H10years – – December31,2008,theFunddidnothavesignificantexposuretootherprice
Total 185,932,382 196,072,472 risks.
* Excludescash
S
D
N
U
F
T
N
E
L
A
V
I
U
Q
E
H
S
A
C
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
4
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia Premium T-Bill Fund
(Unaudited)
STATEMENT OF NET ASSETS STATEMENT OF CHANGES IN NET ASSETS
Asat ForthesixmonthperiodsendedJune30,
June30, December31,
2009 2008 2009 2008
ASSETS NETASSETS–BEGINNINGOFPERIOD
Investmentsatfairvalue $931,784,239 $1,001,204,867 ClassAUnits $1,000,974,230 $1,011,167,581
Cash 99,240 80,064
INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
Accruedinvestmentincome 10,560 48,574
ClassAUnits 2,901,224 15,420,789
931,894,039 1,001,333,505
DISTRIBUTIONSTOUNITHOLDERS
LIABILITIES Fromnetinvestmentincome
Distributionspayable 4,703 67,481 ClassAUnits (2,901,224) (15,420,789)
Accruedexpenses 138,966 291,794
UNITTRANSACTIONS
143,669 359,275 Proceedsfromissue
ClassAUnits 357,897,575 538,515,778
NetAssets $931,750,370 $1,000,974,230
Reinvesteddistributions
NETASSETSPERCLASS ClassAUnits 2,932,182 14,954,273
ClassAUnits $931,750,370 $1,000,974,230 Paymentsonredemption
ClassAUnits (430,053,617) (545,172,330)
UNITSOUTSTANDING
ClassAUnits 93,175,037 100,097,423 (69,223,860) 8,297,721
NETASSETSPERUNIT INCREASE(DECREASE)INNETASSETS
ClassAUnits $ 10.00 $ 10.00 ClassAUnits (69,223,860) 8,297,721
NETASSETS–ENDOFPERIOD
ClassAUnits $ 931,750,370 $1,019,465,302
STATEMENT OF OPERATIONS
ForthesixmonthperiodsendedJune30, STATEMENT OF INVESTMENT PORTFOLIO
AsatJune30,2009
2009 2008
INVESTMENTINCOME Face Average Fair
Interest $4,263,149 $16,958,902 Value($) Issuer Cost($) Value($)
Securitieslending 143,287 140,821
SHORT-TERMNOTES–77.3%
4,406,436 17,099,723
TreasuryBills–77.3%
EXPENSES
204,560,000 GovernmentofCanada
Managementfees(note4) 2,246,588 2,552,064
Auditfees 10,517 9,292 0.13%dueJul.9,2009 204,520,773 204,554,082
IndependentReviewCommitteefees 169 132 184,185,000 GovernmentofCanada
Custodianfees 5,776 31,217 0.21%dueJul.23,2009 184,096,591 184,161,845
Filingfees 19,642 17,144 197,130,000 GovernmentofCanada
Legalfees 2,116 1,380
0.18%dueAug.6,2009 197,061,005 197,094,517
Unitholderreportingcosts 7,219 7,904
Unitholderadministration,servicefeesandGST 162,024 177,999 30,300,000 GovernmentofCanada
0.53%dueSep.3,2009 30,224,250 30,271,649
2,454,051 2,797,132
Rebatedandabsorbedexpenses (948,839) (1,118,198) 104,020,000 GovernmentofCanada
0.34%dueDec.10,2009 103,857,729 103,863,524
1,505,212 1,678,934
Netinvestmentincome(loss) 2,901,224 15,420,789 719,760,348 719,945,617
Increase(decrease)inNetAssetsfromoperations $2,901,224 $15,420,789 SHORT-TERMBONDS–22.7%
163,100,000 CanadaHousingTrustNo.1
INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
ClassAUnits $2,901,224 $15,420,789 4.65%dueSep.15,2009 164,311,991 166,517,165
44,200,000 ProvinceofOntario
INCREASE(DECREASE)INNETASSETSFROMOPERATIONSPERUNIT
ClassAUnits $ 0.03 $ 0.15 6.20%dueNov.19,2009 45,008,694 45,321,457
209,320,685 211,838,622 SS
DD
TOTALINVESTMENTPORTFOLIO 929,081,033 931,784,239
NN
OTHERASSETS,LESSLIABILITIES–0.0% (33,869) UU
NETASSETS–100.0% 931,750,370 FF
TT
SUMMARY OF INVESTMENT PORTFOLIO NN
PercentageofNetAssets(%) EE
LL
InvestmentCategory June30,2009 December31,2008 AA
TreasuryBills 77.3 69.8 VV
PromissoryNotes – 1.6 II
CommercialPaper – 2.2 UU
Short-TermBonds 22.7 26.4 QQ
EE
HH
SS
AA
CC
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
5
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia Premium T-Bill Fund
(Unaudited–Continued)
DISCUSSION OF FINANCIAL INSTRUMENT RISK
AsatJune30,2009
A. Riskmanagement E. Creditrisk
TheinvestmentobjectiveoftheScotiaPremiumT-BillFund(the“Fund”)isto Creditriskistheriskthatthecounterpartyofafinancialinstrumentwillfailto
provideincomeandliquidity,whilemaintainingahighlevelofsafety.Itinvests dischargeanobligationorcommitmentthatithasenteredintowiththeFund.
primarilyinGovernmentofCanadaTreasuryBillsandothershort-termdebt TheFund’smaincreditriskisconcentratedindebtsecurities.Allinvestment
instrumentsguaranteedbytheGovernmentofCanada. transactionsaresettled(paidfor)upondeliveryusingapprovedbrokers.The
riskofdefaultisconsideredminimal,asdeliveryofsecuritiessoldisonlymade
Managingriskisamongthemostimportantfactorsintheportfoliomanagement oncethebrokerhasreceivedpayment.Paymentisonlymadeonapurchase
process,guidinginvestmentdecisionsmadefortheFund.TheFund’s oncethesecuritieshavebeenreceivedbythebroker.
investmentpracticeincludesportfoliomonitoringtoensurecompliancewith
statedinvestmentguidelines.TheManagerseekstominimizepotentialadverse WheretheFundinvestsindebtinstrumentsthisrepresentsthemain
effectsofrisksontheFund’sperformancebyemployingandoverseeing concentrationofcreditrisk.Themarketvalueofdebtinstrumentsincludes
professionalandexperiencedportfolioadvisorsthatregularlymonitorthe considerationofthecreditworthinessoftheissuer,andaccordingly,represents
Fund’ssecuritiesandfinancialmarketdevelopments. themaximumcreditriskexposuretotheFund.
TheFundentersintosecuritieslendingtransactionswithcounterparties
B. Liquidityrisk wherebytheFundtemporarilyexchangessecuritiesforcollateralwitha
TheFund’sexposuretoliquidityriskarisesprimarilyfromthedailycash commitmentbythecounterpartytodeliverthesamesecuritiesonafuture
redemptionofunits.TheFundprimarilyinvestsinsecuritiesthataretradedin date.Creditriskassociatedwiththesetransactionsisconsideredminimalasall
activemarketsandcanbereadilydisposed.Inaddition,theFundaimstoretain counterpartieshaveasufficient,approvedcreditratingandthemarketvalueof
sufficientcashandcashequivalentpositionstomaintainliquidity,andhasthe cashorsecuritiesheldascollateralmustbeatleast102%ofthefairvalueof
abilitytoborrowupto5%ofitsNetAssetValueforthepurposeoffunding thesecuritiesloanedasattheendofeachtradingday.
redemptions.AnyilliquidsecuritiesareidentifiedintheStatementof
InvestmentPortfolio. Debtinstruments,excludingcash,heldbytheFundhavecreditratingsas
follows:
C. Currencyrisk June30,2009 December31,2008
Currencyriskistheriskthatfinancialinstrumentswhicharedenominatedina Percentageof Percentageof
currencyotherthanCanadiandollars,whichistheFund’sreportingcurrency, TotalDebt Percentageof TotalDebt Percentageof
willfluctuateduetochangesinexchangerates.AsatJune30,2009and Securities(%) NetAssets(%) Securities(%) NetAssets(%)
December31,2008,theFunddidnothaveexposuretocurrencyrisk.
Short-TermRating
R1-High 77.3 77.3 68.9 68.9
D. Interestraterisk
R1-Middle – – 3.1 3.1
Interestrateriskarisesfrominterest-bearingfinancialinstruments.TheFund
R1-Low – – 1.6 1.6
hasminimalsensitivitytochangesininterestratesduetotheshort-termnature
BondCreditRating
ofinstrumentsheld.
AAA 17.9 17.9 20.7 20.7
ThetablebelowsummarizestheFund’sexposuretointerestrateriskby AA 4.8 4.8 2.2 2.2
remainingtermtomaturityoftheFund’sportfolioofdebtinstruments. A – – 3.5 3.5
BondandShort June30,2009 December31,2008 Total 100.0 100.0 100.0 100.0
TermNotes* ($) ($)
Lessthan1year 931,784,239 1,001,204,867 F. Otherpricerisk
1-3years – – OtherpriceriskistheriskthatthefairvalueoftheFund’sfinancial
3-5years – – instrumentswillfluctuateasaresultofchangesinmarketprices(otherthan
5-10years – – thosearisingfrominterestrateorcurrencyrisk).AsatJune30,2009and
H10years – – December31,2008,theFunddidnothavesignificantexposuretootherprice
Total 931,784,239 1,001,204,867 risks.
* Excludescash
SS
DD
NN
UU
FF
TT
NN
EE
LL
AA
VV
II
UU
QQ
EE
HH
SS
AA
CC
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
6
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia Money Market Fund
(Unaudited)
STATEMENT OF NET ASSETS STATEMENT OF CHANGES IN NET ASSETS
Asat ForthesixmonthperiodsendedJune30,
June30, December31,
2009 2008 2009 2008
ASSETS NETASSETS–BEGINNINGOFPERIOD
Investmentsatfairvalue $2,538,932,653 $2,105,558,116 ClassAUnits $1,040,858,259 $ 809,889,441
Cash 49,260 99,495 AdvisorClassUnits 9,497,322 –
Accruedinvestmentincome 87,603 203,830 PremiumClassUnits 34,769,740 –
ClassIUnits 13,561,211 15,692,820
2,539,069,516 2,105,861,441
ScotiaPrivateClientUnits 1,006,082,162 799,608,345
LIABILITIES
2,104,768,694 1,625,190,606
Distributionspayable 4,711 14,185
Accruedexpenses 1,204,945 1,078,562 INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
ClassAUnits 3,516,064 14,396,874
1,209,656 1,092,747
AdvisorClassUnits 32,896 13,920
NetAssets $2,537,859,860 $2,104,768,694 PremiumClassUnits 843,533 –
ClassIUnits 119,536 320,236
NETASSETSPERCLASS
ScotiaPrivateClientUnits 9,616,312 16,446,517
ClassAUnits $1,095,368,430 $1,040,858,259
AdvisorClassUnits $ 10,447,229 $ 9,497,322 14,128,341 31,177,547
PremiumClassUnits $ 352,096,434 $ 34,769,740 DISTRIBUTIONSTOUNITHOLDERS
ClassIUnits $ 14,112,739 $ 13,561,211 Fromnetinvestmentincome
ScotiaPrivateClientUnits $1,065,835,028 $1,006,082,162 ClassAUnits (3,516,064) (14,396,874)
UNITSOUTSTANDING AdvisorClassUnits (32,896) (13,920)
ClassAUnits 109,536,843 104,085,826 PremiumClassUnits (843,533) –
AdvisorClassUnits 1,044,723 949,732 ClassIUnits (119,536) (320,236)
PremiumClassUnits 35,209,643 3,476,974 ScotiaPrivateClientUnits (9,616,312) (16,446,517)
ClassIUnits 1,411,274 1,356,121 (14,128,341) (31,177,547)
ScotiaPrivateClientUnits 106,583,503 100,608,216
UNITTRANSACTIONS
NETASSETSPERUNIT Proceedsfromissue
ClassAUnits $ 10.00 $ 10.00 ClassAUnits 644,077,999 776,649,016
AdvisorClassUnits $ 10.00 $ 10.00 AdvisorClassUnits 11,610,636 4,818,548
PremiumClassUnits $ 10.00 $ 10.00 PremiumClassUnits 425,756,728 –
ClassIUnits $ 10.00 $ 10.00 ClassIUnits 1,204,815 561,127
ScotiaPrivateClientUnits $ 10.00 $ 10.00 ScotiaPrivateClientUnits 1,007,723,687 738,679,407
Reinvesteddistributions
ClassAUnits 3,479,420 14,246,690
AdvisorClassUnits 32,533 13,920
STATEMENT OF OPERATIONS PremiumClassUnits 837,958 –
ClassIUnits 119,536 320,236
ForthesixmonthperiodsendedJune30, ScotiaPrivateClientUnits 9,524,347 16,348,013
Paymentsonredemption
2009 2008 ClassAUnits (593,047,248) (564,870,063)
AdvisorClassUnits (10,693,262) (684,101)
INVESTMENTINCOME
PremiumClassUnits (109,267,992) –
Interest $20,746,657 $36,687,552
ClassIUnits (772,823) (1,543,392)
Securitieslending 11 31
ScotiaPrivateClientUnits (957,495,168) (740,418,239)
20,746,668 36,687,583
433,091,166 244,121,162
EXPENSES
INCREASE(DECREASE)INNETASSETS
Managementfees(note4) 5,813,321 4,812,937 ClassAUnits 54,510,171 226,025,643
Auditfees 12,207 9,420
AdvisorClassUnits 949,907 4,148,367
IndependentReviewCommitteefees 2,507 1,753 PremiumClassUnits 317,326,694 –
Custodianfees 19,558 57,119
ClassIUnits 551,528 (662,029)
Filingfees 48,599 35,222 ScotiaPrivateClientUnits 59,752,866 14,609,181
Legalfees 8,061 8,583
Unitholderreportingcosts 55,638 53,416 433,091,166 244,121,162
Unitholderadministration,servicefeesandGST 730,100 642,201 NETASSETS–ENDOFPERIOD
6,689,991 5,620,651 ClassAUnits 1,095,368,430 1,035,915,084 SS
Absorbedexpenses (71,664) (110,615) AdvisorClassUnits 10,447,229 4,148,367 DD
6,618,327 5,510,036 PremiumClassUnits 352,096,434 – NN
ClassIUnits 14,112,739 15,030,791
Netinvestmentincome(loss) 14,128,341 31,177,547 ScotiaPrivateClientUnits 1,065,835,028 814,217,526 UU
Increase(decrease)inNetAssetsfromoperations $14,128,341 $31,177,547 $2,537,859,860 $1,869,311,768 FF
INCREASE(DECREASE)INNETASSETSFROMOPERATIONS
ClassAUnits $ 3,516,064 $14,396,874 TT
AdvisorClassUnits $ 32,896 $ 13,920 NN
PremiumClassUnits $ 843,533 $ –
ClassIUnits $ 119,536 $ 320,236 EE
ScotiaPrivateClientUnits $ 9,616,312 $16,446,517 LL
AA
INCREASE(DECREASE)INNETASSETSFROMOPERATIONSPERUNIT
ClassAUnits $ 0.03 $ 0.15 VV
AdvisorClassUnits $ 0.03 $ 0.11 II
PremiumClassUnits $ 0.06 $ – UU
ClassIUnits $ 0.09 $ 0.21
ScotiaPrivateClientUnits $ 0.09 $ 0.21 QQ
EE
HH
SS
AA
CC
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
7
S C O T I A F U N D S S E M I - A N N U A L R E P O R T T O U N I T H O L D E R S – 2 0 0 9
Scotia Money Market Fund
(Unaudited–Continued)
STATEMENT OF INVESTMENT PORTFOLIO
AsatJune30,2009
Face Average Fair Face Average Fair
Value($) Issuer Cost($) Value($) Value($) Issuer Cost($) Value($)
SHORT-TERMNOTES–61.0% SHORT-TERMNOTES(cont’d)
TreasuryBills–2.5% Bearers’DepositNotes(cont’d)
4,000,000 ProvinceofNewfoundlandandLabrador 46,000,000 ManulifeBankofCanada
0.24%dueAug.20,2009 3,998,360 3,998,698 0.35%dueAug.17,2009 45,960,900 45,979,352
60,000,000 ProvinceofOntario
134,640,272 136,376,896
0.26%dueSep.16,2009 59,962,200 59,967,297
CommercialPaper–39.6%
63,960,560 63,965,995
5,000,000 BorealisFinanceTrust
PromissoryNotes–0.1% 0.29%dueJul.2,2009 4,999,200 4,999,960
2,200,000 ProvinceofPrinceEdwardIsland 5,000,000 BorealisFinanceTrust
0.24%dueAug.11,2009 2,199,230 2,199,415 0.33%dueJul.17,2009 4,996,700 4,999,277
15,000,000 BorealisFinanceTrust
Bankers’Acceptances–13.4%
5,000,000 BankofMontreal 0.33%dueJul.20,2009 14,989,650 14,997,413
21,000,000 BorealisFinanceTrust
0.26%dueJul.2,2009 4,999,150 4,999,965
0.30%dueJul.22,2009 20,994,960 20,996,350
12,800,000 BankofMontreal
20,500,000 BorealisFinanceTrust
0.45%dueOct.30,2009 12,771,072 12,780,977
0.32%dueJul.28,2009 20,490,430 20,495,153
8,000,000 BankofNovaScotia,The
55,200,000 BorealisFinanceTrust
0.29%dueJul.8,2009 7,998,240 7,999,560
0.33%dueAug.6,2009 55,158,893 55,182,312
8,000,000 CanadianImperialBankofCommerce
3,000,000 BorealisFinanceTrust
0.25%dueJul.6,2009 7,998,960 7,999,726
0.30%dueAug.14,2009 2,998,440 2,998,910
10,900,000 CanadianImperialBankofCommerce
5,300,000 CaterpillarFinancialServicesLimited
0.26%dueAug.6,2009 10,896,185 10,897,197
0.80%dueJul.23,2009 5,289,347 5,297,453
6,000,000 CanadianImperialBankofCommerce
5,000,000 CaterpillarFinancialServicesLimited
3.31%dueAug.12,2009 5,814,900 5,977,851
0.65%dueAug.7,2009 4,991,900 4,996,707
18,000,000 CanadianImperialBankofCommerce
8,000,000 CaterpillarFinancialServicesLimited
3.30%dueAug.26,2009 17,429,580 17,911,758
0.55%dueAug.10,2009 7,988,480 7,995,200
26,000,000 CanadianImperialBankofCommerce
6,800,000 CaterpillarFinancialServicesLimited
2.00%dueNov.10,2009 25,246,780 25,726,102
0.50%dueAug.14,2009 6,792,792 6,795,934
32,025,000 CanadianImperialBankofCommerce
0.65%dueApr.28,2010 31,818,758 31,854,455 25,000,000 CanadaPensionPlanInvestmentBoard
0.24%dueAug.4,2009 24,993,250 24,994,402
4,200,000 NationalBankofCanada
7,000,000 Coca-ColaEnterprisesInc.
0.24%dueJul.2,2009 4,199,916 4,199,972
0.27%dueJul.7,2009 6,999,230 6,999,692
10,000,000 NationalBankofCanada
10,000,000 Coca-ColaEnterprisesInc.
0.26%dueJul.16,2009 9,998,300 9,998,938
0.27%dueJul.8,2009 9,998,900 9,999,487
18,000,000 RoyalBankofCanada
10,000,000 Coca-ColaEnterprisesInc.
0.25%dueJul.3,2009 17,996,940 17,999,755
0.25%dueJul.9,2009 9,998,900 9,999,450
45,000,000 RoyalBankofCanada
15,000,000 Coca-ColaEnterprisesInc.
0.25%dueJul.6,2009 44,991,450 44,998,473
0.26%dueJul.13,2009 14,998,200 14,998,729
17,800,000 RoyalBankofCanada
15,000,000 Coca-ColaEnterprisesInc.
0.24%dueJul.7,2009 17,796,796 17,799,288
0.27%dueJul.14,2009 14,998,250 14,998,577
20,000,000 RoyalBankofCanada
5,000,000 Coca-ColaEnterprisesInc.
0.23%dueJul.8,2009 19,996,400 19,999,100
0.27%dueJul.15,2009 4,999,450 4,999,487
8,600,000 RoyalBankofCanada
30,000,000 CPPIBCapitalInc.
SS 0.27%dueJul.15,2009 8,598,108 8,599,117
0.25%dueJul.9,2009 29,994,000 29,998,345
DD 6,000,000 Toronto-DominionBank,The
18,400,000 CPPIBCapitalInc.
0.26%dueJul.2,2009 5,998,740 5,999,958
NN 0.25%dueJul.15,2009 18,395,967 18,398,224
24,300,000 Toronto-DominionBank,The
UU 16,000,000 EnbridgeInc.
0.25%dueJul.3,2009 24,294,167 24,299,667
FF 15,000,000 Toronto-DominionBank,The 0.35%dueJul.9,2009 15,996,605 15,998,790
5,050,000 EnbridgeInc.
0.25%dueJul.6,2009 14,995,950 14,999,494
0.34%dueJul.13,2009 5,049,344 5,049,437
TT 8,800,000 Toronto-DominionBank,The
15,400,000 EnbridgeInc.
NN 0.25%dueJul.22,2009 8,798,240 8,798,726
0.33%dueJul.20,2009 15,396,555 15,397,395
EE 38,000,000 Toronto-DominionBank,The 13,000,000 EnCanaCorporation
LL 0.25%dueJul.28,2009 37,991,640 37,992,946 0.60%dueJul.21,2009 12,980,630 12,995,743
AA 340,630,272 341,833,025 3,100,000 EnCanaCorporation
VV Bearers’DepositNotes–5.4% 0.50%dueJul.28,2009 3,096,683 3,098,852
II 63,000,000 BankofMontreal 10,800,000 EnCanaCorporation
UU
3.48%dueSep.8,2009 60,886,980 62,599,455 0.40%dueJul.29,2009 10,794,816 10,796,701
QQ 800,000 ManulifeBankofCanada 10,000,000 EnCanaCorporation
EE 0.33%dueJul.2,2009 799,832 799,993 0.50%dueAug.10,2009 9,987,500 9,994,505
2,000,000 ManulifeBankofCanada 22,300,000 EnCanaCorporation
0.33%dueJul.3,2009 1,999,560 1,999,963 0.50%dueAug.11,2009 22,271,902 22,287,478
HH
25,000,000 ManulifeBankofCanada 200,000 EnCanaCorporation
SS 0.34%dueJul.9,2009 24,993,000 24,998,133 0.45%dueAug.13,2009 199,776 199,894
AA 8,500,000 EnCanaCorporation
CC 0.45%dueAug.20,2009 8,490,395 8,494,780
Theaccompanyingnotesareanintegralpartofthefinancialstatements.
8