Diversified Private Trust

Transcription

1 Financial Statements Diversified Private Trust June 30, 2015 S 0 2 E

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3 STATEMENTS OF FINANCIAL POSITION As at June 30, 2015 December 31, 2014 ASSETS Current assets Investments Non-derivative financial assets $ 73,005,393 $ 74,048,008 Cash 11,810 91,851 Receivable for securities sold 13, ,717 Subscriptions receivable 2,727 - Accrued investment income and other 73,159 96,338 73,106,519 74,395,914 LIABILITIES Current liabilities Payable for securities purchased 193, ,465 Redemptions payable 29,583 35,797 Accrued expenses 8,131 7,736 $ 230,964 $ 795,998 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS $ 72,875,555 $ 73,599,916 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS PER UNIT $ $ The accompanying notes are an integral part of the financial statements.

4 STATEMENTS OF COMPREHENSIVE INCOME For the six month periods ended June 30, INCOME Net gain on investments Dividends $ - $ 250,597 Interest for distribution purposes 781, ,882 Net realized gain (loss) on non-derivative financial assets 689,248 2,343,194 Net realized and change in unrealized gain (loss) on foreign exchange (6,747) (16,794) Change in unrealized gain (loss) on non-derivative financial assets 1,455,555 2,440,864 Net gain on investments 2,919,825 5,868,743 Net realized and change in unrealized gain (loss) on foreign exchange on cash (9) 788 Total income (loss) 2,919,816 5,869,531 EXPENSES Foreign withholding taxes 3,059 2,329 Audit fees 4,959 4,959 Custodian fees 23,866 17,737 Filing fees Legal fees 1, Unitholder administration costs 16,019 16,019 Unitholder reporting costs Harmonized Sales Tax/Goods and Services Tax 3,799 2,862 Transaction costs 73, ,022 Total expenses INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS FROM OPERATIONS 127,322 $ 2,792, ,289 $ 5,709,242 INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS FROM OPERATIONS PER UNIT $ 0.51 $ 1.00 WEIGHTED AVERAGE NUMBER OF UNITS 5,480,329 5,727,135 The increase in net assets attributable to holders of redeemable units from operations per unit is calculated by dividing the increase in net assets attributable to holders of redeemable units from operations by the weighted average number of units. The accompanying notes are an integral part of the financial statements.

5 STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS For the six month periods ended June 30, NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS, BEGINNING OF PERIOD $ 73,599,916 $ 74,585,521 INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS FROM OPERATIONS 2,792,494 5,709,242 DISTRIBUTIONS TO HOLDERS OF REDEEMABLE UNITS From net investment income (744,241) (1,064,716) REDEEMABLE UNIT TRANSACTIONS Proceeds from issue 538, ,062 Reinvested distributions 744,241 1,064,716 Payments on redemption (4,055,437) (4,773,527) (2,772,614) (2,768,749) INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (724,361) 1,875,777 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS, END OF PERIOD $ 72,875,555 $ 76,461,298 The accompanying notes are an integral part of the financial statements.

6 STATEMENTS OF CASH FLOWS For the six month periods ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets attributable to holders of redeemable units $ 2,792,494 $ 5,709,242 Adjustments for: Net realized (gain) loss on non-derivative financial assets (689,248) (2,343,194) Unrealized (gain) loss on foreign exchange of cash (11) 4 Change in unrealized (gain) loss on non-derivative financial assets (1,455,555) (2,440,864) Purchases of non-derivative financial assets (48,682,272) (49,904,478) Proceeds from sale of non-derivative financial assets 51,456,762 52,798,750 Accrued investment income and other 23,179 6,909 Accrued expenses 395 2,509 Net cash provided by (used in) operating activities 3,445,744 3,828,878 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of redeemable units 535, ,062 Amounts paid on redemption of redeemable units (4,061,651) (4,776,487) Net cash provided by (used in) financing activities (3,525,796) (3,836,425) Change in unrealized gain (loss) on foreign exchange of cash 11 (4) Net increase (decrease) in cash (80,052) (7,547) Cash (bank overdraft), beginning of period 91,851 23,235 CASH (BANK OVERDRAFT), END OF PERIOD $ 11,810 $ 15,684 Interest received (1) 256, ,233 Dividends received, net of withholding taxes (1) 5, ,070 (1) Classified as operating items. The accompanying notes are an integral part of the financial statements.

7 SCHEDULE OF INVESTMENT PORTFOLIO As at June 30, 2015 Number of Shares / Average Carrying Par Value $ Cost Value COMMON SHARES 12.48% Canadian Equities 11.16% Consumer Discretionary 1.79% 2,200 Canadian Tire Corp. Ltd., Class 'A' 230, ,876 8,500 Hudson's Bay Co. 219, ,875 18,915 Martinrea International Inc. 195, ,515 9,000 Quebecor Inc., Class 'B' 274, ,980 41,715 Torstar Corp., Class 'B' 309, ,530 1,230,835 1,304,776 Consumer Staples 0.36% 4,200 Loblaw Cos. Ltd. 254, ,936 Energy 1.81% 109,300 Athabasca Oil Corp. 469, ,972 6,000 Canadian Natural Resources Ltd. 210, ,400 9,000 Crescent Point Energy Corp. 267, ,670 11,000 Secure Energy Services Inc. 162, ,580 8,000 Suncor Energy Inc. 278, ,200 34,220 Trinidad Drilling Ltd. 195, ,249 8,000 Whitecap Resources Inc. 97, ,440 1,681,238 1,316,511 Financials 2.98% 15,000 Artis REIT 223, ,650 3,500 Canadian Imperial Bank of Commerce 335, ,245 7,500 CI Financial Corp. 248, ,000 6,000 Great-West Lifeco Inc. 189, ,160 9,000 H&R REIT 211, ,960 10,000 Manulife Financial Corp. 221, ,100 5,137 Royal Bank of Canada 328, ,364 6,600 Toronto-Dominion Bank (The) 304, ,064 2,061,937 2,174,543 Industrials 0.64% 15,000 Air Canada 156, ,150 32,970 Transat A.T. Inc., Class 'B' 294, , , ,558 Information Technology 0.66% 3,000 Avigilon Corp. 46,108 50,520 21,400 BlackBerry Ltd. 238, ,494 3,000 CGI Group Inc., Class 'A' 108, ,550 1,332,000 Enablence Technologies Inc. 453,800 63, , ,834 The accompanying notes are an integral part of the financial statements.

8 SCHEDULE OF INVESTMENT PORTFOLIO As at June 30, 2015 Number of Shares / Average Carrying Par Value $ Cost Value Materials 2.32% 105,000 B2Gold Corp. 202, , ,787 Capstone Mining Corp. 237, ,220 8,000 Hudbay Minerals Inc. 82,333 83,200 45,000 Kirkland Lake Gold Inc. 297, ,350 32,000 Lundin Mining Corp. 166, ,160 5,000 Potash Corp. of Saskatchewan Inc. 193, ,400 47,500 Semafo Inc. 171, ,600 15,000 Semafo, Restricted 55,500 50,400 11,000 Tahoe Resources Inc. 186, ,540 49,000 Uranium Participation Corp. 269, ,270 1,862,593 1,690,690 Telecommunications Services 0.60% 4,000 Rogers Communications Inc., Class 'B' 176, ,200 6,000 TELUS Corp. 227, , , ,380 Total Canadian Equities 11.16% 8,792,290 8,129,228 United States Equities 1.32% Consumer Discretionary 0.45% 2,300 Walt Disney Co. (The) 168, ,632 Financials 0.40% 3,000 Blackstone Group L.P. (The) 117, ,072 1,600 JPMorgan Chase & Co. 81, , , ,424 Information Technology 0.47% 740 Apple Inc. 56, , Google Inc., Class 'C' 117, , , ,614 Total United States Equities 1.32% 541, ,670 TOTAL EQUITIES 12.48% 9,334,069 9,089,898 BONDS 16.88% Canadian Bonds 16.88% Government of Canada 3.24% 1,070,000 Canada Housing Trust No. 1, 2.90%, 2024/06/15 1,148,342 1,144, ,000 Government of Canada, 5.00%, 2037/06/01 607, , ,000 Government of Canada, Real Return, 4.25%, 2026/12/01 589, ,075 2,344,697 2,357,720 The accompanying notes are an integral part of the financial statements.

9 SCHEDULE OF INVESTMENT PORTFOLIO As at June 30, 2015 Number of Shares / Average Carrying Par Value $ Cost Value Provincial 5.23% 270,000 Hydro-Québec, Zero Coupon, 2024/08/15 199, , ,000 Province of British Columbia, 5.70%, 2029/06/18 621, ,028 90,000 Province of Nova Scotia, 6.60%, 2027/06/01 125, , ,000 Province of Nova Scotia, 3.45%, 2045/06/01 132, ,634 1,070,000 Province of Ontario, 3.50%, 2024/06/02 1,138,136 1,169, ,000 Province of Ontario, Series 'KJ', 7.60%, 2027/06/02 843, , ,000 Province of Quebec, 5.00%, 2038/12/01 529, , ,000 Province of Saskatchewan, 2.75%, 2046/12/02 148, ,367 3,738,415 3,812,372 Municipal 0.29% 200,000 City of Montreal, 3.50%, 2023/09/01 197, ,799 Corporate 8.12% 120,000 Aéroports de Montréal, Series 'I', Callable, 5.47%, 2040/04/16 150, , ,000 AltaGas Ltd., Callable, 4.50%, 2044/08/15 123, , ,000 AltaLink L.P., Callable, 5.25%, 2036/09/22 133, , ,000 Bank of Nova Scotia, 2.46%, 2019/03/14 150, , ,000 Bank of Nova Scotia, Variable Rate, Callable, 2.58%, 2027/03/30 218, , ,000 Caisse Centrale Desjardins du Quebec, 2.80%, 2018/11/19 180, , ,000 Cominar REIT, Series '4', Callable, 4.94%, 2020/07/27 120, , , /05/31 131, , ,000 Fairfax Financial Holdings Ltd., Callable, 6.40%, 2021/05/25 128, ,728 80,000 Federated Co-Operatives Ltd., Restricted, Callable, 3.92%, 2025/06/17 80,000 81,706 90,000 Fortis Inc., Callable, 6.51%, 2039/07/04 119, , ,000 Genesis Trust II, Class 'A', Series '2014-1', 2.43%, 2026/05/15 260, , ,000 Glacier Credit Card Trust, 2.81%, 2017/05/20 120, , , /04/19 152, ,022 Hospital Infrastructure Partners NOH Partnership, Series 'A', Sinkable, 110,000 Callable, 5.44%, 2045/01/31 111, , ,000 Leisureworld Senior Care L.P., Callable, 3.47%, 2021/02/03 170, , , /12/15 186, , ,000 Master Credit Card Trust II, 2.72%, 2018/11/21 190, , , /11/15 270, , ,526 NHA MBS First National Financial Corp., 1.85%, 2019/06/01 341, , ,000 Pembina Pipeline Corp., Callable, 4.75%, 2043/04/30 156, , ,000 PowerStream Inc., Callable, 3.96%, 2042/07/30 150, , ,000 PowerStream Inc., Series 'B', Restricted, Callable, 3.24%, 2024/11/21 280, , ,000 Royal Bank of Canada, Variable Rate, Callable, 2.48%, 2025/06/04 269, , ,000 Sobeys Inc., Callable, 4.70%, 2023/08/08 110, , ,000 TD Capital Trust IV, Variable Rate, Callable, 6.63%, 2108/06/30 224, , ,000 Terasen Gas Inc., 5.90%, 2035/02/26 134, , ,000 THP Partnership, Sinkable, Restricted, 4.39%, 2046/10/31 120, , ,000 Toronto Dominion Bank (The), Variable Rate, Callable, 2.69%, 2025/06/24 150, , ,000 Toyota Credit Canada Inc., 2.48%, 2019/11/19 221, , ,000 Transpower New Zealand Ltd., Restricted, 3.00%, 2017/03/20 122, , ,000 Wells Fargo & Co., Series 'O', Restricted, 3.87%, 2025/05/21 310, , ,000 Wells Fargo Financial Canada Corp., 3.46%, 2023/01/24 139, ,367 5,727,327 5,919,311 TOTAL BONDS 16.88% 12,007,663 12,303,202 The accompanying notes are an integral part of the financial statements.

10 SCHEDULE OF INVESTMENT PORTFOLIO As at June 30, 2015 Number of Shares / Average Carrying Par Value $ Cost Value OTHER FUNDS 59.96% 411,089 Gryphon EAFE Fund 4,337,632 7,881,271 2,902,738 Lincluden Private Trust 32,108,945 35,816,879 TOTAL OTHER INVESTMENTS 59.96% 36,446,577 43,698,150 CANADIAN SHORT-TERM NOTES 10.86% Bankers' Acceptances 7.40% 1,125,000 Bank of Nova Scotia Bankers' Acceptance, 0.80%, 2015/07/02 1,123,119 1,124,974 1,440, /08/27 1,436,971 1,438,117 1,355,000 Royal Bank of Canada Bankers' Acceptance, 0.85%, 2015/09/09 1,352,168 1,352,797 1,475,000 Toronto-Dominion Bank (The) Bankers' Acceptance, 0.83%, 2015/07/15 1,471,947 1,474,531 5,384,205 5,390,419 Discount Note 1.75% 1,280,000 Province of Alberta Discount Note, 0.74%, 2015/07/28 1,278,362 1,279,298 Treasury Bills 1.71% 320,000 Province of Ontario Treasury Bill, 0.74%, 2015/07/22 319, , ,000 Province of Quebec Treasury Bill, 0.75%, 2015/07/24 923, ,561 1,243,306 1,244,426 TOTAL SHORT-TERM NOTES 10.86% 7,905,873 7,914,143 TRANSACTION COSTS (125,077) - TOTAL INVESTMENT PORTFOLIO % 65,569,105 73,005,393 OTHER ASSETS, NET OF LIABILITIES (0.18%) (129,838) NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS % 72,875,555 The accompanying notes are an integral part of the financial statements.

11 TRUST SPECIFIC NOTES For the periods indicated in Note 1 1. The Trust (note 1) Diversified Private Trust s (the Trust ) actively managed balanced portfolio has an investment objective to provide long-term capital preservation and income, while preserving capital in declining market environments. 2. Risks associated with financial instruments (note 4) i) Interest rate risk The table below summarizes the Trust s exposure to interest rate risk by the remaining term to maturity (earlier of maturity date or interest reset date) of the Fund s portfolio, excluding cash, money market instruments, preferred shares and overdrafts, as applicable. June 30, 2015 December 31, 2014 Interest rate exposure Less than 1 year 508,800 2,999, years 2,310,070 1,820, years 4,725,697 5,898,808 > 5 years 19,167,981 19,167,649 26,712,548 29,886,529 As at June 30, 2015, had the prevailing interest rates increased or decreased by 0.25%, assuming a parallel shift in the yield curve and all other variables held constant, net assets attributable to holders of redeemable units would have decreased or increased, respectively, by $548,212, or approximately 0.75% (December 31, 2014 $544,798, or approximately 0.74%). In practice, actual results may differ from this sensitivity analysis and the difference could be material. ii) Currency risk The tables below indicate the currencies to which the Trust had significant exposure, net of the impact of currency forward contracts and currency spot contracts, if any, based on the monetary and non-monetary assets and liabilities of the Trust. The tables also illustrate the potential impact on the Trust if the functional currency of the Trust had strengthened or weakened by 10% in relation to each of the other currencies, with all other variables held constant. The accompanying notes are an integral part of these financial statements.

12 TRUST SPECIFIC NOTES Currency Net currency exposure Percentage of net assets (%) June 30, 2015 Impact on the Fund Percentage of net assets (%) U.S. Dollar 7,300, , Euro 3,528, , Japanese Yen 2,821, , British Pound 1,388, , Swiss Franc 863, , Swedish Krona 301, , Hong Kong Dollar 290, , Danish Krone 107, , Australian Dollar ,603, ,660, Currency Net currency exposure Percentage of net assets (%) December 31,2014 Impact on the Fund Percentage of net assets (%) U.S. Dollar 7,348, , Euro 3,206, , Japanese Yen 2,283, , British Pound 1,073, , Swiss Franc 766, , Swedish Krona 300, , Hong Kong Dollar 270, , Danish Krone 101, , Australian Dollar ,351, ,535, iii) Price risk Price risk is the risk that the carrying value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk) caused by factors specific to a security, its issuer or all factors affecting a market or a market segment. Exposure to price risk is mainly in equities, derivatives and commodities, if applicable. As at June 30, 2015, approximately 49.45% (December 31, %) of the Trust s net assets were exposed to price risk. If prices of these investments had decreased or increased by 10%, with all other variables held constant, net assets of the Trust would have decreased or increased, respectively, by approximately $3,603,533 (December 31, 2014 $3,593,484). In practice, actual results may differ from this sensitivity analysis and the difference could be material. The accompanying notes are an integral part of these financial statements.

13 TRUST SPECIFIC NOTES iv) Credit risk The table below summarizes the credit ratings of the bonds and debentures, excluding cash and money market instruments but including preferred shares and derivatives, as applicable, held by the Trust. Credit ratings Percentage of total bond and debentures (%) June 30, 2015 December 31, 2014 Percentage of Percentage of total bond and net assets debentures (%) (%) Percentage of net assets (%) AAA AA A BBB Below BBB v) Liquidity risk The table below summarizes the Trust s financial liabilities based on the remaining period to the contractual maturity date. June 30, 2015 December 31, 2014 Less than 3 months On demand Less than 3 months On demand Current liabilities - 230, ,998 Redeemable units 72,875,555-73,599,916-72,875, ,964 73,599, ,998 Redeemable units are redeemable on demand at the holder s option. However, the Manager does not expect that the contractual maturity disclosed in the table above will be representative of the actual cash outflows, as holders of these instruments typically retain them for a longer term. vi) Concentration risk Concentration risk arises as a result of the concentration of exposures within the same category, geographical location, asset type or industry sector, as applicable. The table below is a summary of the Trust s concentration risk: The accompanying notes are an integral part of these financial statements.

14 TRUST SPECIFIC NOTES Percentage of net assets (%) June 30, 2015 December 31, 2014 EQUITIES Canadian Equities Consumer Discretionary Consumer Staples 0.36 Energy Financials Health Care 0.19 Industrials Information Technology Materials Telecommunication Services Total Canadian Equities United States Equities Consumer Discretionary Financials Information Technology Total United States Equities TOTAL EQUITIES BONDS Government of Canada Provincial Government Municipal Corporate TOTAL BONDS OTHER FUNDS SHORT-TERM NOTES TOTAL INVESTMENT PORTFOLIO OTHER ASSETS, NET OF LIABILITIES (0.18) (0.61) NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS The accompanying notes are an integral part of these financial statements.

15 TRUST SPECIFIC NOTES Summary of the Investments of the Indirect Holdings Percentage of net assets (%) Gryphon EAFE Fund June 30, 2015 December 31, 2014 Belgium China 0.74 Denmark France Germany Hong Kong Japan Netherlands Spain Sweden Switzerland United Kingdom Cash and Cash Equivalents Other Assets, Net of Liabilities The accompanying notes are an integral part of these financial statements.

16 TRUST SPECIFIC NOTES Percentage of net assets (%) Lincluden Private Trust June 30, 2015 December 31, 2014 Canadian Equities Consumer Discretionary Consumer Staples Energy Financials Industrials Information Technology Materials Telecommunication Services United States Equities Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Telecommunication Services International Equities France Germany Hong Kong Israel Japan Netherlands Switzerland United Kingdom By Region Splits Canada United States International Bonds Other Funds Cash and Cash Equivalents Other Assets, Net of Liabilities The accompanying notes are an integral part of these financial statements.

17 TRUST SPECIFIC NOTES vii) Fair value classification (note 2) The tables below illustrate the classification of the Trust's financial instruments within the fair value hierarchy. June 30, 2015 Level 1 Level 2 Level 3 Total Equities 9,089,898 9,089,898 Short-term notes 7,914,143 7,914,143 Bonds 12,303,202 12,303,202 Investments in funds 43,698,150 43,698,150 52,788,048 20,217,345 73,005,393 December 31, 2014 Level 1 Level 2 Level 3 Total Equities 10,055,218 10,055,218 Short-term notes 5,546,224 5,546,224 Bonds 15,117,534 15,117,534 Investments in funds 43,329,032 43,329,032 53,384,250 20,663,758 74,048,008 Transfers between levels During the periods ended June 30, 2015 and December 31, 2014, there were no significant transfers between Level 1 and Level Offsetting of financial assets and liabilities (note 2) As at June 30, 2015 and December 31, 2014, the Trust did not enter into any agreement whereby the financial instruments were eligible to offset. The accompanying notes are an integral part of these financial statements.

18 TRUST SPECIFIC NOTES 4. Interest in Underlying Funds (note 2) The following tables provide information about the Trust's interest in Underlying Funds. June 30, 2015 Underlying Fund Net asset value Carrying value of Carrying value of underlying Underlying Fund of Underlying fund as a percentage Fund of net assets (%) Gryphon EAFE Fund 9,891,158 7,881, Lincluden Private Trust Fund 62,632,196 35,816, ,698, December 31, 2014 Underlying Fund Net asset value Carrying value of Carrying value of underlying Underlying Fund of Underlying fund as a percentage Fund of net assets (%) Gryphon EAFE Fund 8,510,284 6,774, Lincluden Private Trust Fund 62,787,789 36,554, ,329, Comparison of net asset value per unit and net assets per unit (note 2) The table below provides a comparison of the net asset value per unit and net assets per unit. The primary reason for the difference between the net asset value per unit and net assets per unit, if any, is described in note 2. Net asset value per unit June 30, 2015 December 31, 2014 Net assets per unit Net asset value per unit Net assets per unit Diversified Private Trust The accompanying notes are an integral part of these financial statements.

19 Notes to Financial Statements For the periods indicated in Note 1 1. The Trust 1832 Asset Management L.P., a wholly owned subsidiary of the Bank of Nova Scotia ( Scotiabank ), is the manager and trustee (where applicable) of the Trust. In this document, we, us, our, the Manager, the Trustee, and 1832 Asset Management refer to 1832 Asset Management L.P. The registered office of the Trust is 1 Adelaide St. E, 28th Floor, Toronto, Ontario, M5C 2V9. Diversified Private Trust presented in these financial statements is an open-ended investment unincorporated trust (the Trust ). The Trust issues units. Throughout this document, where applicable, reference to units and unitholders also refers to shares and shareholders. The Trust is established under the laws of the Province of Ontario pursuant to a Declaration of Trust dated June 18, The Statements of Financial Position are as at June 30, 2015 and December 31, 2014, and the Statements of Comprehensive Income, Changes in Net Assets Attributable to Holders of Redeemable Units and Cash Flows are for the six-month periods ended June 30, 2015 and The Schedule of Investment Portfolio for the Trust is as at June 30, Throughout this document, reference to the periods refers to the reporting periods described above. These financial statements were approved and authorized for issue on August 18, 2015 by the Board of Directors of 1832 Asset Management G.P. Inc., as general partner for and on behalf of 1832 Asset Management L.P., in its capacity as Trustee of the Trust. The investment objective of this Trust is provided in its Trust Specific Notes. The commencement date for the Trust was June 18, Summary of Significant Accounting Policies The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. I. Basis of preparation These interim financial statements have been prepared in compliance with International Financial Reporting Standards ( IFRS ) applicable to the preparation of interim financial statements, including International Accounting Standards ( IAS ) 34, Interim Financial Reporting. The preparation of these financial statements in accordance with IFRS requires the use of judgment in applying its accounting policies and to make estimates and assumptions concerning the future. Significant accounting judgements and estimates made by the Management are disclosed in Note 3. II. Financial instruments Classification The Trust classifies all its investments including derivatives as financial assets or financial liabilities at fair value through profit and loss (FVTPL). This category has two sub categories: financial assets and financial liabilities are either held for trading or designated at fair value through profit or loss at inception. Financial assets or financial liabilities held for trading are those acquired principally for the purpose of selling or repurchasing in the near future or on initial recognition as part of an identical portfolio of financial instruments that are managed together for which there is evidence of actual short-term profit taking. Derivatives and any short positions are also included in this category.

20 Notes to Financial Statements Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Trust s investment strategy as documented in the Offering Memorandum. The Trust's obligations for net assets attributable to holders of redeemable units are presented at the redemption amount. Recognition and measurement Regular purchases and sales of investments are recognized on the date on which the Trust commits to purchase or sell its investments at fair value. Transaction costs are expensed as incurred in the Statements of Comprehensive Income. Subsequent to initial recognition, financial assets and liabilities at FVTPL are measured at fair value as presented below. Gains and losses arising from changes in their fair value are included in the Statements of Comprehensive Income for the periods in which they arise. III. Fair value measurement and hierarchy of financial instruments Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and marketable securities) are based on quoted market prices at the close of trading on the reporting date. The Trust uses the last traded market price for both financial assets and financial liabilities where the last traded price falls within that day s bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. The fair value of financial assets and liabilities that are not traded in an active market, including over the-counter derivatives, is determined using valuation techniques. The Trust uses a variety of methods and make assumptions that are based on market conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and others commonly used by market participants and which make the maximum use of observable inputs. IFRS 13, Fair value measurement, requires the use and disclosure of a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value of financial instruments. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets and the lowest priority to unobservable inputs. The three level hierarchy based on inputs levels are defined as follows: Level 1: Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities; Level 2: Fair value is based on inputs other than unadjusted quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 3: Fair value is based on at least one significant non-observable input that is not supported by market data for the financial assets or liabilities. Changes in valuation methodology may results in transfer in and out of a level. The Trust s policy is to recognize these transfers as of the date of the event or circumstance giving rise to the transfer. The three level fair value hierarchy, transfers between levels and a reconciliation of level 3 financial instruments are disclosed in the Trust s Trust Specific Notes. The Manager is responsible for performing the fair value measurements included in the financial statements of the Trust, including level 3 measurements. The Manager obtains pricing from a third party pricing vendor, which is monitored and reviewed by the valuation team daily. At each financial reporting date, the Manager reviews and approves any level 3 fair value measurements.

21 Notes to Financial Statements Financial instruments are valued at their fair value as summarized below: (i) North American equities are valued at the closing market price recorded by the security exchange on which the security is principally traded. Non-North American equities are valued at fair value based on information provided by an independent pricing source. (ii) Fixed income securities, including bonds and mortgage-backed securities, are valued using quotation received from independent pricing sources. (iii) Short-term debt instruments are carried at amortized cost, which approximates fair value. (iv) Investments in underlying funds are valued based on the Net Asset Value per unit provided by the Underlying Funds manager at the end of each valuation date. IV. Net Assets versus Net Asset Value The Trust s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value for transactions with unitholders in accordance with Part 14 of National Instrument Investment Funds for Continuous Disclosure ( NI ), except where the last traded market price for financial assets and liabilities are not within the bid-ask spread as described above. A comparison of the net assets per unit in accordance to IFRS ( Net Assets per unit ) and the net assets per unit calculated in accordance to NI ( Net Asset Value per unit ) are presented in the Trust s Trust Specific Notes. V. Income recognition Gains and losses arising from changes in fair value of financial instruments, other than derivatives, are shown in the Statements of Comprehensive Income as Change in unrealized gain (loss) on non-derivative financial assets and as Net realized gain (loss) on non-derivative financial assets when the positions are closed out. Dividend income and distributions from underlying funds are recognized on the ex-dividend date. Distributions received from income trusts are recognized based on the nature of the underlying components such as dividend income, interest income, capital gains, and return of capital by applying previous year characterizations reported by the trust as current year characterizations are not available until the following year. Interest for distribution purposes represents the coupon interest received by the Trust, recognized on an accrual basis. The Trust does not amortize premiums paid or discounts received on the purchase of fixed income securities except for zero coupon bonds which are amortized on a straight line basis. Realized gain or loss on the sale of short-term debt instruments are recorded as an adjustment to interest income. VI. Functional and presentation currency and foreign exchange translation The functional and presentation currency of the Trust is the Canadian dollar. Canadian dollars is the currency of primary economic environment in which the Trust operates or where mixed indicators exist in the primary environment, the Canadian dollar is the currency in which they raise capital. Any other currency other than functional currency represents foreign currency to the Trust. Amounts denominated in foreign currencies are converted into the functional currency as follows: (i) Fair value of investments, derivative contracts and monetary and non-monetary assets and liabilities at the rates of exchange prevailing as at the valuation date; (ii) Foreign income and expenses are translated into Canadian dollars at the rates of exchange applicable on the valuation date; and (iii) Purchase or sale of investments and investment income at the rates of exchange prevailing on the respective dates of such transactions, while purchase or sale of monetary assets at the spot rate agreed upon with the counterparty. Realized and unrealized gain (loss) incurred in the Trust from monetary assets and liabilities are shown in the Statements of Comprehensive Income as Net realized and change in unrealized gain on foreign exchange of

22 Notes to Financial Statements cash while all other sources of foreign exchange gains and losses shown in Net realized and change in unrealized gain (loss) on foreign exchange. Investments in unconsolidated structured entities The Trust invests in mutual funds and/or exchange-traded funds managed by the Manager or by third party investment managers. The Trust considers all investments in such funds ( Underlying Funds ) to be investments in unconsolidated structured entities based on the fact that the decisions made by these Underlying Funds are not governed by voting rights or any other similar rights held by the Trust. Consequently, the Trust, as Investment Entities accounts for these unconsolidated structured entities at fair value. The Underlying Funds objectives assist the Trust in achieving its primary objectives and whose investment strategies do not include the use of leverage. The Underlying Funds finance their operations by issuing redeemable units or shares which are puttable at the holder s option, and entitle the holder to a proportional stake in the respective fund s net assets. The Trust holds redeemable shares or units in each of its Underlying Funds. These investments are included in Non-derivative financial assets in the Statements of Financial Position. The change in fair value of each Underlying Fund is included in the Statements of Comprehensive Income in Change in unrealized gain (loss) of non-derivative financial assets. The exposure to investments in Underlying Funds at fair value is disclosed in the Trust s Trust Specific Notes. The Trust s maximum exposure to loss from its interests in Underlying Funds is equal to the total carrying value of its investments in Underlying Funds. Mortgage-backed securities or asset-backed securities are also considered to be unconsolidated structured entities. Mortgage-backed securities are formed by pooling various types of mortgages while asset-backed securities are formed by pooling assets such as auto loans, credit card receivables or student loans. An interest or claim to this future cash flow (interest and principal) is then sold in the form of debt or equity securities, which could be held by the Trust. As unconsolidated structured entities, the Trust accounts for these investments at fair value as well. As at June 30, 2015 and December 31, 2014, the maximum exposure to these securities was less than 5% of the net assets of the Trust. VII. Redeemable Units Issued by the Trust The Trust s outstanding redeemable units qualify as puttable instruments as required by the International Accounting Standard 32: Financial Instruments: Presentation ( IAS 32 ) which states that units or shares of an entity that include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset should be classified as financial liability. In accordance with IAS 32, the Trust s redeemable units entitlements include a contraction obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and therefore meet the contractual obligation requirement. This feature violates one of the criteria that are required in order for the redeemable units to be presented as equity under IAS 32. Consequently, the Trust s outstanding redeemable units are classified as financial liabilities in these financial statements. VIII. Offsetting of financial instruments Financial assets and liabilities are offset and the net amount is presented in the Statement of Financial Position only if there is a legal right to offset the amounts and there is an intention either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS, for gains and losses arising from a group of similar transactions, such as gains and losses from financial instruments at fair value through profit or loss. Financial assets and liabilities that are subject to master netting or comparable agreements and the related potential effect of offsetting are disclosed in the Trust s Trust Specific Notes.

23 Notes to Financial Statements IX. Other financial assets and liabilities Other financial assets and liabilities other than investment securities are valued at cost or amortized cost. These balances are short-term in nature; therefore, their carrying values approximate fair values. X. Increase (decrease) in net assets attributable to holders of redeemable units per unit Increase (decrease) in net assets attributable to holders of redeemable units per unit is disclosed in the Statement of Comprehensive Income and represents, for each Series of units, the increase or decrease in net assets attributable to holders of redeemable units from operations for the period attributable to each Series divided by the weighted average number of units outstanding for the corresponding Series during the period. XI. Accounting standards issued but not yet effective The final version of IFRS 9, Financial Instruments, was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a model for classification and measurement, a single, forward-looking expected loss impairment model and a substantially reformed approach to hedge accounting. The new single, principle based approach for determining the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, which will require more timely recognition of expected credit losses. It also includes changes in respect of own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused by the deterioration of an entity s own credit risk on such liabilities are no longer recognized in profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, however is available for early adoption. In addition, the own credit changes can be early applied in isolation without otherwise changing the accounting for financial instruments. The Trust is in the process of assessing the impact of IFRS 9 and have not yet determined when they will adopt the new standard. 3. Significant accounting judgments and estimates The preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions about the future. These estimates are made based on information available as at the date of issuance of the financial statements. Actual results could materially differ from those estimates. The following discusses the most significant accounting judgments and estimates that the Trust has made in preparing the financial statements: Investment Entities In accordance with IFRS 10: Consolidated Financial Statements, the Manager has determined that the Trust meets the definition of an Investment Entity which requires that the Trust obtains funds from one or more investors for the purpose of providing investment management services, commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and measures and evaluates the performance of its investments on a fair value basis. Consequently, the Trust does not consolidate any interests in Underlying Funds, but instead measures these at FVTPL, as required by the accounting standard. Classification and measurement of investments and application of the fair value option In classifying and measuring financial instruments held by the Trust, the Manager is required to make significant judgments about whether or not the business of the Trust is to invest on a total return basis for the purpose of applying the fair value option for financial assets under IAS 39: Financial Instruments -- Recognition and Measurement. The most significant judgments made include the determination that certain financial instruments are held-for-trading and that the fair value option can be applied to those which are not.

24 Notes to Financial Statements Fair value measurement of derivatives and securities not quoted in an active market Key areas of estimation, where the Manager has made complex or subjective judgments, include the determination of fair values of financial instruments and derivatives that are not quoted in an active market. The use of valuation techniques for financial instruments and derivatives that are not quoted in an active market requires the Manager to make assumptions that are based on market conditions existing as at the date of the financial statements. Changes in these assumptions as a result of changes in market conditions could affect the reported fair value of financial instruments and derivatives. 4. Discussion of Financial Instrument Risk The Trust s investment activities expose it to a variety of financial risks: market risk (including interest rate risk, currency risk, and other price risk), credit risk and liquidity risk. The Trust s investment practices include portfolio monitoring to ensure compliance with stated investment guidelines. The Manager seeks to minimize potential adverse effects of risks on the Trust s performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Trust s securities and financial market developments. The risks are measured using a method that reflects the expected impact on the results and net assets attributable to unitholders of the Trust from reasonably possible changes in the relevant risk variables. The Manager maintains a risk management practice that includes monitoring compliance with investment restrictions to ensure that the Trust is being managed in accordance with the Trust s stated investment objectives, strategies and securities regulations. The Trust invests in underlying funds. The Trust is indirectly exposed to market risk, credit risk, and liquidity risk in the event that the underlying funds invest in financial instruments that are subject to those risks. The Trust s exposure to market risk, credit risk and liquidity risk, where applicable, is disclosed in the Trust s Trust Specific Notes. (a) Market risk (i) Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect the future cash flows or the fair values of interest-bearing financial instruments. The Trust s exposure to interest rate risk is concentrated in its investments in debt securities (such as bonds and debentures) and interest rate derivative instruments, if any. Short-term investments and other assets and liabilities are short-term in nature and/or non-interest bearing and are not subject to a significant amount of interest rate risk due to fluctuations in the prevailing levels of market interest rates. (ii) Currency risk The Trust may invest in monetary and non-monetary assets denominated in currencies other than its functional currency. Currency risk is the risk that the value of foreign investments will fluctuate due to changes in the foreign exchange rates of those currencies in relation to the Trust s functional currency. Other financial assets (including dividends and interest receivable and receivable for investments sold) and financial liabilities that are denominated in foreign currencies do not expose the Trust to significant currency risk. The Trust may enter into foreign exchange forward contracts or currency futures contracts for hedging purposes to reduce its foreign currency risk exposure. (iii) Price risk Price risk is the risk that the fair value of the Trust s financial instruments will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk) caused by factors specific to a security, its issuer or all factors affecting a market or a market segment. Exposure to other

25 Notes to Financial Statements (b) Credit risk price risk is mainly in equities, derivatives and commodities. The maximum risk resulting from these financial instruments is equivalent to its fair value, except for, if applicable, written options, short sales and futures contracts sold, where possible losses can be unlimited. Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Trust. The Trust s investment in debt instruments represents the main concentration of credit risk. The fair value of debt instruments includes consideration of the creditworthiness of the issuer, and accordingly, represents the maximum credit risk exposure to the Trust. Credit risk may also exist in relation to counterparties to derivatives. All the transactions in listed securities are settled or paid upon delivery using approved brokers. The risk of default with the counterparty is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is only made on a purchase once the securities have been received by the broker. Custody and derivative transactions are carried out by counterparties that have a Standard & Poor s credit rating of A or higher. In instances where the credit ratings were to fall below the approved rating, the Manager would take appropriate action. The Trust may enter into securities lending transactions with counterparties whereby the Trust temporarily exchanges securities for collateral with a commitment by the counterparty to deliver the same securities on a future date. Credit risk associated with these transactions is considered minimal as all counterparties have approved credit rating and the market value of cash or securities held as collateral must be at least 102% for North American equities and 105% for Non-North American equities of the market value of the securities loaned as at the end of each trading day. (c) Liquidity risk The Trust s exposure to liquidity risk arises primarily from the daily cash redemption of units. The Trust s primarily invest in securities that are traded in active markets and can be readily disposed of. In addition, the Trust aims to retain sufficient cash and cash equivalent positions to maintain liquidity. The Trust may, from time to time, enter into over-the-counter derivative contracts or invest in securities that are not traded in an active market and may be illiquid. Illiquid securities are identified in the Trust s Schedule of Investment Portfolio. (d) Concentration risk Concentrations of risk arise from financial instruments that have similar characteristics and are affected similarly by changes in economic or other conditions. The identification and disclosure of risks concentration is provided in the Trust s Trust Specific Notes. 5. Management Fees The Trust has appointed 1832 Asset Management L.P. to administer and regulate the day-to-day operations of the Trust. In return for the services provided, the Manager receives management fees from the Trust s holders of redeemable units, based on the net asset value of the Trust. These management fees are paid either by a redemption of units or the unitholder, if an institution may be invoiced and payment will be delivered to the Manager directly. There is no duplication of management fees, sales charges or redemption fees between the Trust and the Underlying Funds held directly by the Trust. 6. Operating Expenses The Trust is responsible for its operating expenses relating to the carrying on of its business, including custodial services, legal, audit fees, transfer agency services relating to the issue and redemption of units, and the cost of