INTERIM MANAGEMENT REPORT

Transcription

1 17 INTERIM MANAGEMENT REPORT of Fund Performance for the period ended June 30, 2017 This Interim Management Report of Fund Performance contains financial highlights but does not contain the complete interim or annual financial statements of the Fund. You can get a copy of the Interim Financial Statements at your request, and at no cost, by calling our Advisory Services at (toll-free ), by writing to us at Gestion FÉRIQUE, Place du Canada, 1010 de La Gauchetière Street West, Suite 1400, Montréal, Québec H3B 2N2, or by visiting our Web site at ferique.com or SEDAR at sedar.com. Unitholders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record and quarterly portfolio disclosure.

2 There may be management fees and expenses associated with an investment in the Funds. Management expense ratios vary from one year to another. Please read the Prospectus before investing. Mutual funds are not guaranteed or covered by the Canada Deposit Insurance Corporation or another government deposit insurer. Their values fluctuate frequently and past performance may not be repeated. FÉRIQUE Funds are distributed by Services d investissement FÉRIQUE since July 1, 2013 and used to be by National Bank Securities Inc., until June 30, A Note on Forward looking Statements This report may contain forward looking statements about the Funds, their future performance, strategies or prospects, and possible future Fund actions. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective and similar expressions are intended to identify forward looking statements. Forward looking statements are not guarantees of future performance. Forward looking statements involve inherent risks and uncertainties, both about the Funds and general economic factors, so it is possible that predictions, forecasts, projections and other forward looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward looking statement made in relation to the Funds. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward looking statements are subject to change without notice and are provided in good faith but without legal responsibility. Some rates or returns presented in this report come from the PALTrak study as at June 30, 2017, owned by Morningstar Research Inc. Please read the following note: [2017] Morningstar Research Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Morningstar may not be held responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

3 Management Discussion of Fund Performance Results of Operations The posted a net return of 1.7% for the six-month period ended June 30, 2017, compared to 2.2% for its benchmark index. Contrary to benchmark returns, which include no investment fees, Fund returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund underperformed the industry median 1, which posted 2.1% net of fees for the six-month period. The Fund mainly invests in units of the FÉRIQUE Bond, FÉRIQUE Dividend, FÉRIQUE Equity and FÉRIQUE World Dividend Funds, as well as in money market securities. Money Market (11% of the Fund as at June 30, 2017) Minor added value over the period stems primarily from additional returns from the overweight to provincial and corporate securities compared to Canadian Treasury Bills. FÉRIQUE Bond Fund (49.3% of the Fund as at June 30, 2017) The Fund posted a net return of 1.9% for the six-month period ended June 30, 2017, compared to 2.3% for its benchmark, the FTSE TMX Canada Universe Bond Index. Contrary to benchmark returns, which include no investment fees, Fund returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund outperformed the industry median 1, which posted 1.8% net of fees for the six-month period. Addenda The portfolio s exposure to credit securities contributed to returns due to tightening yield spreads and shrewd security selection. Addenda reduced its exposure to corporate bonds, as yield spreads closed the six-month period near the target set for The portfolio manager also narrowed its underweight to provincial bonds when broadening yield spreads earlier in the year reached attractive levels, then tightened. The portfolio s exposure to some U.S. T-Bills also boosted returns. In the wake of the sharp upturns and high volatility that characterized the closing quarter of 2016, bond yields were much more stable in the opening quarter of A downward trend was observed late in the period, as the Trump administration struggled to keep its campaign promises. As a result, Addenda maintained its portfolio s duration under that of its benchmark, while keeping a similar yield to maturity, which impeded performance. Baker Gilmore Stock selection in Financials, with a focus on A- and BBB-rated securities, as well as the overweight to this sector, were the main source of added value, as credit spreads tightened. The portfolio s higher running yield relative to the benchmark also contributed to returns. Term structure positioning had a slightly positive impact during the period, but gains were partially offset by the underweight to corporate bonds in Industrials and Utilities, as well as the overweight to real-return bonds, as credit spreads and implicit inflation spreads tightened. FÉRIQUE FÉRIQUE Moderate Nom du Balanced Fonds Fund During the period, geopolitical events had a reduced impact on markets. Returns were mainly affected by general interest rate fluctuations based on the economic backdrop and market conditions. Most short- and mid-term yields grew, while the majority of long-term government bond yields in developed countries shrunk, as these were affected by foreign buy-ins and central bank equities. Risky assets performed well, as credit spreads tightened and equities posted positive returns. FÉRIQUE Diversified Income Fund (9.9% of the Fund as at June 30, 2017) The Fund posted a net return of 2.6% for the six-month period ended June 30, 2017, compared to 0.8% for its benchmark index. Contrary to benchmark returns, which include no investment fees, returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund s return was similar to the industry median 1, which posted 2.6% net of fees for the six-month period. The portfolio benefitted from a number of factors throughout the first half of Specifically, its longer relative duration added value as yields declined since the start of the year, as market participants questioned the Trump trade s true impact. Sector and security selection within the Canadian bond component benefitted from exposure to investment-grade and high-yield corporate securities, which contributed positively on the back of a positive risk tone. The allocation to preferred shares and Canadian dividend equities was also a strong contributor to added value. A slight underweight to global credit relative to the benchmark hurt overall performance, as the sector performed well during the first half of the year. Overall, renewed confidence in a general market recovery is driving prices, while continuing to support a risk-on environment. The global economic backdrop is generally intact, with better-than-expected growth coming from Europe, Japan and emerging markets. While the market has effectively reduced any expected impact from President Trump s policy changes in 2017, it continues to hope for a positive stimulus impact in Central bank rhetoric and actions seeking to reduce the amount of monetary stimulus in the system have had little impact on the interest rate markets year to date, as inflation and overall growth continues at a moderate pace. FÉRIQUE Dividend Fund (10% of the Fund as at June 30, 2017) The Fund posted a net return of 0.4% for the six-month period ended June 30, 2017, compared to 0.9% for its benchmark, the S&P/TSX Composite Dividend Index. Contrary to benchmark returns, which include no investment fees, Fund returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund underperformed the industry median 1, which posted a 1.3% return net of fees for the six-month period. In terms of asset mix, exposure to preferred shares and U.S. equities contributed to its relative performance, while its position in cash detracted. In terms of Canadian common equity exposure, the Fund s overweight to the outperforming Real Estate and Telecommunications sectors contributed to its relative performance, while its overweight to the underperforming Energy sector and underweight to the outperforming Industrials sector impeded returns.

4 With regard to Canadian equities, the most significant new additions or increases in the Fund during the first six-month period were Canadian Natural Resources, Altagas, Franco Nevada, Intact Financial, Pembina Pipeline, Bank of Montreal, Scotia Bank, TD Bank, Detour Gold, Seven Generations and SNC Lavalin. Meanwhile, the most significant eliminations or reductions to the Fund were DH Corp., Jean Coutu, Canadian Apartment REIT and Cineplex. U.S. equities were reduced, including holdings in 3M and UPS, while holdings in JP Morgan were eliminated. FÉRIQUE Equity Fund (10% of the Fund as at June 30, 2017) For the six-month period ended June 30, 2017, the Fund posted a net return of -0.5%, compared to 0.7% for its benchmark, the S&P/TSX Composite Index. Contrary to benchmark returns, which include no investment fees, Fund returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund underperformed the industry median 1, which posted 0.5% net of fees for the six-month period. CC&L Security selection in Energy and Materials was the biggest detractor from returns during the period. Within the former sector, this negative performance stems from overweight exposures in the Exploration and Production sub-sector, including holdings in Cardinal Energy, Spartan Energy and Seven Generations Energy. In Materials, the overweight exposure to diversified mining stocks, including Hudbay Minerals and Teck Resources, also detracted. Conversely, security selection in Technology was particularly strong, driven by overweight exposures to software companies that fared well, including Shopify and Kinaxis. Sector allocation was a detractor from relative returns due to the underweight to Telecommunications and Utilities, as both sectors performed well within the index due to a recovery in interest-sensitive stocks. This was partially offset by the overweight to Technology and Industrials, which were the index s best-performing sectors during the period. MFS During the period, the portfolio s strong stock selection in Energy (Pipelines subsector, Suncor Energy, Husky Energy, Canadian Natural Resources, Encana, lack of exposure to Cenovus Energy) was the biggest contributor to Fund returns. Moreover, its considerable overweight to Industrials (Waste Connections, New Flyer Industries) also had a positive impact on performance. Conversely, the portfolio s underweight to and stock selection in Utilities and Telecommunications (lack of exposure to Rogers Communications), as well as its modest overweight to and weak stock selection in Financials (Element Financial, lack of exposure to Brookfield Asset Management), were the main detractors from performance. Montrusco At the sector level, the overweight to Industrials and Information Technology, as well as the underweight to Energy, were the biggest contributors to the Fund s relative returns over the period. In terms of stock selection, Home Capital Group was the biggest detractor to performance, while Shopify, Dollarama, New Flyer Industries and Kinaxis had the most positive impact on relative returns. FÉRIQUE World Dividend Fund (9.8% of the Fund as at June 30, 2017) For the six-month period ended June 30, 2017, the Fund posted a net return of 5.2%, compared to 7.8% for its benchmark, the MSCI All Country World ex-canada Index (CAD). Contrary to benchmark returns, which include no investment fees, returns are expressed net of management and operating expenses payable by the Fund. On a relative basis, the Fund underperformed the industry median 1, which posted 6.8% net of fees for the six-month period. At the sector allocation level, the portfolio s biggest overweight during the period was to Financials and Health Care, while its most significant underweight was to Information Technology and Consumer Discretionary. Moreover, the underweight to Information Technology and the overweight to Energy and Financials had the most material impact, with all of these detracted from returns, as did a frictional cash balance in a rising market. Sector allocation stems from Wellington s bottom-up stock selection approach and is not specifically targeted. In terms of sector positioning, the portfolio manager increased its exposure to Consumer Staples, while still remaining modestly underweight. Wellington also decreased its exposure to Information Technology, which continues to represent the portfolio s largest underweight exposure. The portfolio manager trimmed its exposure to Financials, although it still represents its largest sector overweight, and added marginally to its Health Care overweight. Regionally, Wellington remains most overweight to Europe and most underweight to the U.S. Generally speaking, yields and valuations are more favourable for European stocks in the portfolio than for U.S. holdings, so the portfolio manager sees greater upside and lower downside outside of the U.S. One trend that had a noticeable impact on performance was the evolution of energy prices and improving supply outlook. Energy stocks underperformed meaningfully, which weighed on results, as the portfolio was overweight to this sector. In addition, a lack of progress in implementing tax policy reform or regulatory reform that would potentially support bank profitability, as well as slower-than-expected progress on interest rate hikes, meant that banking and financials stocks lost some of the gains accrued in late Recent Developments FÉRIQUE Bond Fund (49.3% of the Fund as at June 30, 2017) Addenda The global economy seems to grow in a more synchronized manner between countries, which is a first in the current cycle. While the U.S. still leads developed nations at the economic level, Europe s upward trend and shrinking unemployment rate keep turning heads. The U.S. Federal Reserve (Fed) increased its overnight rate by 0.25% in March, then by another 0.25% in June, a third increase in six months. That said, Addenda expects another round of tightening this year, as well as for the Fed to begin reducing its outlook. The European Central Bank (ECB) has left its overnight rate unchanged, but announced it would reduce its monthly bond purchases from 80 to 60 billion. However, debate over the benefits of a negative deposit rate has recently resurfaced.

5 Despite the new U.S. administration s misfires and the total lack of tangible measures to stimulate growth, stock markets continue to trend upward, driven by better synchronized global growth and the hope for eventual tax breaks and a more business-friendly regulatory backdrop. That said, the nature and scope of what this administration can successfully implement remain unclear. Moreover, some major regulatory, trade and immigration changes could prove substantially destabilizing should they actually come to pass. Toward the end of the period, the Bank of Canada (BoC) changed its position, and it is now very likely to increase its overnight rate by the end of the year, even though inflation does not pose any short-term threat. Indeed, oil prices plummeted, closing the period at about USD 46 a barrel, and the bond yield curve flattened significantly, as long-term yield shrunk over the quarter. The period was characterized by fluctuating yields in a narrow range and a downward trend late in the period. Low volatility was also noted across stock markets. Currencies appear to have served as a safety valve, with some fluctuating considerably, especially relative to the U.S. dollar. The eventual exit from the yield range followed since the beginning of the year will undoubtedly generate several opportunities for active duration management, as well as movement on the curve and in provincial and corporate credit spreads. Against such a backdrop, Addenda will aim for an optimal risk-return ratio. Overall, in the current low-yield environment, the portfolio manager s strategy consists in building a portfolio of high-quality bonds with a rather short duration, but whose term to maturity is similar to that of the benchmark. Baker Gilmore Markets are still struggling to understand the Trump administration s platform to see the effects of economic policies, including significant income tax cuts and reforms, increase infrastructure spending, deregulation, and more restrictive trade policies. While the global economy continues to improve, it is still facing strong headwinds, as decision-makers across developed markets (particularly the eurozone and Japan), remained mired with the deflationary impact of their sizeable sovereign debt levels, stemming from the bursting credit bubble and weak population growth. In emerging markets, decreasing secular growth rates and the sharp decline among raw material prices over the past few years underscored several emerging economies vulnerability to surging market volatility. While the implementation of Trump s expansionist policies should drive growth, economic activity will probably remain inferior to historic levels at this stage of the recovery cycle, which is to be expected, in light of monetary stimulus levels. After freefalling for over three years, the Canadian dollar has recovered compared to the lows noted in January It therefore remains very competitive and should, along with stronger economic growth in the U.S., help drive goods and services exports. That said, protectionist trade restrictions that the U.S. administration could potentially implement could present a new risk for the Canadian and global economies. After a period of budgetary restrictions by the previous federal government, the new Liberal government s will include moderate fiscal recovery. While the real estate sector remains a core risk for the economy, low interest rates and sustained job growth in non-oil producing provinces suggest that demand for new and existing homes should be reasonably high, even in the wake of regulatory and fiscal changes implemented by the governments of British Columbia and Ontario. Despite the weak Energy sector, corporate and household credit continues to grow at a steady rate, which will drive the Canadian economy. Baker Gilmore believes Canadian bond yields should increase at pace with their U.S. counterparts. As a result, the BoC will probably increase its overnight rate over the upcoming year, in light of the nation s strong economy headed for full employment. Against this backdrop, Baker Gilmore will continue to favour a shorter duration than that of the benchmark, with an underweight to the mid-term portion of the yield curve. The portfolio manager will be underweight to Canadian government bonds in favour of provincial bonds, corporate bonds issued in the Financials sector and asset-backed securities due to their attractive credit spreads. Bake Gilmore will also maintain its exposure to real-return bonds in light of inflation risks, which are on the rise on the medium term. FÉRIQUE Diversified Income Fund (9.9% of the Fund as at June 30, 2017) Some risks may still impede markets and performance. Specifically, geopolitical developments will continue to drive uncertainty throughout the year, while the weak energy markets weigh on Canadian domestic economic potential and corporate profits. Central banks are moving to reduce monetary easing, and reduce or eliminate quantitative easing, which may impede equity and credit markets, as these are showing signs of stretched valuations. Moreover, the U.S. government s ability (or lack thereof) to implement stimulative policy changes has the potential to drive economic growth and profits, which will have an impact on interest rates. Addenda will continue to assess capital market valuations to seize opportunities to invest in preferred shares and/or Canadian dividend-paying stocks. The portfolio manager will also look for opportunities to increase its exposure to the global credit sector, in light of a generally weaker Canadian dollar and persistent strength across credit markets. FÉRIQUE Dividend Fund (10% of the Fund as at June 30, 2017) Over the next 12 months, global economic growth is projected to hover around 3%. Growth is expected to be about 2% for the U.S. and Canada, between 1% and 1.5% for the eurozone, and close to 4% for the rest of the world. Given this growth outlook, interest rates and monetary policies are beginning to normalize. The U.S. is expected to keep raising interest rates modestly over the next 12 months. In Canada, the economy will likely remain choppy due to a stronger Canadian dollar, subdued capital expenditure programs in the oil industry, the slow gradual recovery of Western Canadian oil production, as well as a steady employment growth picture, yet buffered by high household debt levels and the continued rise in real estate home values, mostly in the Vancouver and Toronto areas. As the Bank of Canada (BoC) has begun to turn slightly more hawkish, there is a reasonable chance that it will increase interest rates in The Canadian market is expected to post modest positive returns over the next 12 months, with periods of higher volatility. The backdrop for interest rates should favour investments in high-quality dividend yielding or above-average dividend growth stocks. As the Fund will always maintain a dividend yield greater than its benchmark, it is well positioned in sectors that exhibit attractive yield and growth prospects, such as Financials, Pipelines, Infrastructures, Real Estate and Telecommunications.

6 FÉRIQUE Equity Fund (10% of the Fund as at June 30, 2017) CC&L The Canadian equity market carried positive momentum from 2016 into the first few months of the period, when it was further driven by the global economy s sustained signs of a synchronized expansion. However, the market retreated in the latter stages of the period and finished close to where it started, despite a stronger-than-anticipated economic backdrop, due to uncertainty surrounding commodity prices, a frothy housing market and U.S. political events. The Bank of Canada (BoC) continued to hold interest rates steady, but indicated that the first increase since 2010 may occur sooner than expected. Meanwhile, the U.S. Federal Reserve (Fed) forged ahead with two interest-rate hikes, a decision driven by strong employment figures and stable economic growth. The price of crude oil declined, as investors feared that OPEC s new agreement to extend production cuts into 2018 would do little to decrease the current oil glut as production continued to grow in the U.S. Leading economic indicators continue to point to a positive global economic outlook. This is particularly notable in the U.S., where consumer confidence exceeded highs reached more than 15 years ago, and U.S. small-business optimism approached near-record highs. CC&L believes any increase in fiscal stimulus, tax reform or deregulation could drive additional growth, but it is increasingly apparent that many of these changes will not occur until CC&L is aware that the market is entering the later stages of this extended economic cycle, and remains vigilant of the risks to its outlook, which include elevated political uncertainty and associated implications for Canada s export sectors, a substantial increase in interest rates, and indicators that the economic cycle may be rolling over. Should signs emerge that these risks are materializing, CC&L expects to reduce its exposure to more economically sensitive companies in favour of those with more stable earnings profiles that are less sensitive to economic growth, such as those in Consumer Staples. MFS During the first six-month period, early strength in global interest rates reflecting enthusiasm in the wake of the U.S. election eventually gave way to weak interest rates overall, driven by creeping economic uncertainty partly reflecting populist and political upheaval across a variety of global regions. Trump trade was an outsized factor across stock markets, as these reacted first to the promise and then the delay in financial regulation, taxation and healthcare reforms. Amid this uncertainty, a return to a lower interest rate theme has spurred interest in the next best source of income in terms of dividend-paying stocks. Relatedly, a decline in Energy prices was in contrast to subtle strength in gold prices, setting up a defensive backdrop. Given MFS philosophy of focusing on high-quality businesses with effective management teams that trade at attractive relative valuations, and the approach of building broadly diversified portfolios, the portfolio manager does not expect any single trend or factor to have a material impact on long-term results. Given the Canadian market s cyclical nature, shorter-term effects such as those seen in 2016 (market rallies characterized by small-cap, higher-beta and lower-quality leadership) form a more challenging backdrop for MFS. However, the portfolio manager firmly believes such episodes to be short-lived and extremely difficult to anticipate, and therefore would not deviate from its investment philosophy. Montrusco Among global markets that fared well over the period, the Information Technology and Health Care sectors drove recovery. Conviction that tech and biotech companies are the most likely to benefit from sustained global economic recovery led investors to favour these sectors. As a result, their stock valuations have grown to unprecedented levels. While this upswing stayed the course in most economies, inflation levels remained weak overall. Such a backdrop enabled some central banks, like the European Central Bank (ECB) and the Bank of England (BoE), to maintain accommodating policies, while others, including the Fed, have begun normalizing at a moderate pace. The Canadian economy s growth outlook has improved, with the unemployment rate settling at 6.6% and undergoing a downward trend. Consequently, the BoC has changed its position and is poised to increase its interest rates as of July, the first of two increases the markets have already taken into account for the remainder of Despite this change, monetary policy remains accommodating, and Montrusco believes it still supports bullish prospects for the Canadian economy, which also stands to benefit from the momentum generated by a weak Canadian dollar. Canadian markets are still impeded by bearish fundamentals in Energy, from which most of the underperformance stems. Should the Fed continue to increase interest rates in the U.S., the greenback s value should remain steady, thereby keeping pressure on commodity prices. FÉRIQUE World Dividend Fund (9.8% of the Fund as at June 30, 2017) During the early part of the year, volatility as well as economic and political uncertainty impeded returns in the Energy sector, yet proved positive for most other sectors. Indeed, there was a strong rally in Information Technology, as concerns over tax implications abated and strong returns posted by major technology companies buoyed investor expectations. While this contradictory performance was challenging for the portfolio, Wellington maintains its high conviction in its current positioning, which it believes should provide downside protection with solid upside participation in a variety of market environments. The portfolio remains global in nature and well diversified across sectors and industries in which Wellington finds compelling ideas that fit its process. With a defensive return profile historically, it expects the portfolio to maintain similar behaviour going forward. In these uncertain times, Wellington continues to focus on stocks issued by leading companies with sustainable leadership, and expects them to both create and compound value for patient investors over a market cycle. Solid balance sheets and attractive dividends protect the portfolio from spikes in volatility. 1 Source: median return of similar funds according to Fundata, as at June 30, 2017.

7 Other Material Information As manager of the FÉRIQUE Funds, Gestion FÉRIQUE modified the name of the Fund (previously FÉRIQUE Moderate Balanced Fund, now FÉRIQUE Moderate Portfolio), which will take effect on July 4 th. The objectives and investment strategy will remain the same, as well as the risk level. The change is due essentially to the need to distinguish our turnkey investment solutions (the FÉRIQUE Portfolios ) from our Funds. The benchmark index was modified during the period to better reflect the asset mix of the Funds. As manager of the FÉRIQUE Funds, Gestion FÉRIQUE has announced that on or about September 18, 2017, Lincluden Investment Management Limited (Lincluden) will replace CIBC Asset Management Inc. as portfolio manager of the Dividend Fund. Lincluden will be the sole portfolio manager of the Dividend Fund. The Dividend Fund s investment objective will remain the same. As manager of the FÉRIQUE Funds, Gestion FÉRIQUE has announced that on or about September 18, 2017, Franklin Templeton Investments Corp. (Franklin Templeton) will replace Montrusco Bolton Investments Inc. and MFS Investment Management Canada Limited as portfolio manager of the Equity Fund. As a result of this change, Franklin Templeton will manage about 40% of the portfolio, and the current portfolio manager, Connor, Clark and Lunn Investment Management, will manage about 60% of the portfolio. The FÉRIQUE Equity Fund s investment objective will remain the same. For the six-month period ended June 30, 2017, Addenda did not enter into any related party transactions as it pertains to the management of the FÉRIQUE Diversified Income Fund (N/A as at December 31, 2016). For the six-month period ended June 30, 2017, CIBC Asset Management Inc. did not enter into any related party transactions as it pertains to the management of the FÉRIQUE Dividend Fund ($42 as at December 31, 2016). For the six-month period ended June 30, 2017, portfolio managers CC&L, MFS and Montrusco did not enter into any related party transactions as it pertains to the management of the FÉRIQUE Equity Fund ($0 as at December 31, 2016). For the six-month period ended June 30, 2017, Wellington did not enter into any related party transactions as it pertains to the management of the FÉRIQUE World Dividend Fund ($0 as at December 31, 2016). Related Party Transactions The Manager of the Fund is Gestion FÉRIQUE, a not for profit organization. Gestion FÉRIQUE receives management fees to cover its expenses with respect to the day to day business and operations of the Fund, as reported under the Management Fees section. These expenses include the portfolio manager s fees, the fees relating to the marketing and distribution of the Fund, as well as the administration fees of the Manager. Services d investissement FÉRIQUE (SIF) is a not for profit subsidiary of Gestion FÉRIQUE registered as a group savings plan brokerage and financial planning firm, and acts as distributor of units of the Fund. A percentage of the management fees paid by the Fund to Gestion FÉRIQUE is used to cover the expenses of SIF with respect to its day to day activities. For the six-month period ended June 30, 2017, Baker Gilmore did not enter into any related party transactions as it pertains to the management of the money market portion of the FÉRIQUE Moderate Balanced Fund ($0 as at December 31, 2016). For the six-month period ended June 30, 2017, portfolio managers Addenda and Baker Gilmore, did not enter into any related party transactions as it pertains to the management of the FÉRIQUE Bond Fund ($0 as at December 31, 2016).

8 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help the reader understand the Fund s financial performance for the accounting periods shown. Six-month period ended Years ended (1) (5) Net Assets per Unit June (6 months) $ $ $ $ $ $ Net assets, beginning of accounting period (4) Increase (decrease) from operations Total revenues Total expenses (0.01) (0.02) (0.02) (0.02) (0.03) (0.02) Realized gains (losses) Unrealized gains (losses) (0.20) Total increase (decrease) from operations (2) Distributions From investment net income (excluding dividends) From dividends From capital gains 0.02 Total annual distributions (3) Net assets, end of accounting period (4) (1) This information is derived from the Fund s Annual Audited Financial Statements and Interim Unaudited Financial Statements. The net assets per unit presented in the financial statements could differ from the net asset value calculated for fund pricing purposes. The differences are explained in the notes to the financial statements. (2) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase or decrease from operations is based on the weighted average number of units outstanding during the accounting period. This table is not intended to show a reconciliation between net assets per unit at the beginning and at the end of the accounting period. (3) Distributions were paid in cash or reinvested in additional units of the Fund, or both. (4) Since January 1, 2013, the net assets are calculated in accordance with International Financial Reporting Standards (IFRS). Previously, it was the accounting principles as set out in Part V of the CPA Canada Handbook Accounting ( Canadian GAAP ). (5) Issued and outstanding units of the Fund have been redesignated as Series A units effective on July 1, This change relates only to the designation of the units and the rights, privileges and other attributes of units redesignated into Series A units remain unchanged. In this document, the word units indicates Series A units. Six-month period ended Years ended Ratios and Supplemental Data June (6 months) Net asset value (in thousands of $) (1) 111, ,523 84,317 71,865 50,461 46,574 Number of units outstanding (1) 9,114,763 8,448,923 7,184,856 6,122,896 4,530,892 4,290,261 Management expense ratio (%) (2) Management expense ratio before waivers or absorptions by the Manager (%) Portfolio turnover rate (%) (3) n/a n/a n/a n/a n/a n/a Trading expense ratio (%) (4) Net asset value per unit ($) (1) This information is provided as at June 30, 2017 and as at December 31 for the comparative accounting periods. (2) Management expense ratio is based on total expenses for the stated accounting period (excluding commissions, other portfolio transaction costs and withholding taxes on dividend income) and is expressed as an annualized percentage of the daily average net asset value during the accounting period. (3) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio manager manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once during the accounting period. The higher a Fund s portfolio turnover rate in the accounting period, the greater the trading costs payable by the Fund during the accounting period, and the greater the chance of an investor receiving taxable capital gains during the accounting period. There is not necessarily a relationship between a high turnover rate and the performance of a portfolio. The portfolio turnover rate is not applicable for the money market. (4) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of the daily average net asset value during the accounting period. For money market securities and fixed income securities, the transaction fees are embedded in the transaction cost since December 31, Trading expense ratios have been restated in order to include in the ratio calculation, the trading expenses held by the underlying funds, as described in Part 15.2 of the Disclosure. Since the daily information is no longer available to restate the previous year s data, an average monthly proportion of the units of the underlying fund, held by the Fund, was used in the calculation of the numerator of the ratio.

9 Management Fees The fees and expenses payable by the Fund include management fees and operating expenses. The management fees include, among others, the portfolio manager s fees, the fees relating to the marketing and distribution of the Fund, and administration fees of the Manager. These fees are calculated and credited daily and paid monthly. Operating expenses include, among others, regulatory filing fees, registrar, custodian and fiduciary fees, expenses relating to accounting and valuation of the Fund, taxes and duties, auditors and legal advisors fees, and reporting fees to unitholders. For the period, annualized management fees charged to the Fund amounted to 0.97% and are detailed as follows: Management fees: 0.81% Operating expenses: 0.16% Past Performance The performance information assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The information does not take into account purchase, redemption, investment or other optional charges that would have reduced returns or performance. The Fund s past performance is not necessarily indicative of how it will perform in the future. Annual Returns The bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the Fund s performance has changed from year to year, with the exception of the last bar, which indicates the Fund s total return for the interim six-month period ended June 30, The bar chart shows, in percentage terms, how much an investment made on the first day of each financial year would have grown or decreased by December 31 of each financial year or on the last day of the six-month period. % Annual Compound Returns (%) 1 year 3 years 5 years 10 years or since inception* FÉRIQUE Moderate Balanced Benchmark Index Median** * The Fund was created on October 1, 2009, but assets were invested in the Fund as of October 7, ** Median return of all investment funds of the same category according to Fundata. Benchmark Index The Benchmark Index reflects the performance of a benchmark portfolio invested 10% in the FTSE TMX Canada 91-day T-bills Index, 50% (60% before January 1 st, 2017) in the FTSE TMX Canada Universe Bond Index, 3% (0% before January 1 st, 2017) in the FTSE TMX Canada Short Term Bond Index, 6% (0% before January 1 st, 2017) in the Barclays Global Aggregate Bond Index $CA hedged, 1% (0% before January 1 st, 2017) in the Dow Jones Canada Select Dividend TR Index, 10% (0% before January 1 st, 2017) in the S&P/TSX Composite Dividend Index, 10% (20% before January 1 st, 2017) in the S&P/TSX Composite Index, 10% in the MSCI World ex-canada Index ($CA). Comparison with the Index The Fund posted a net return of 1.7% for the six-month period ended June 30, 2017, compared to 2.2% for its benchmark index. Please note that the Fund s return is presented net of management fees and operating expenses, while the Index s return is gross of fees. Portfolio Overview The Top Holdings in the Portfolio % of net asset value FÉRIQUE Bond Fund 49.3 Cash, Money Market and Other Net Assets 11.0 FÉRIQUE Equity Fund 10.0 FÉRIQUE Dividend Fund 10.0 FÉRIQUE Diversified Income Fund 9.9 FÉRIQUE World Dividend Fund * * From October 7 to December 31, months Asset Mix % of net asset value Bonds 56.4 Canadian Equity 20.3 Cash, Money Market and Other Net Assets 13.1 US Equity 5.1 International Equity 5.1 Net Asset Value $111,673,012 The allocation of the portfolio may vary due to the transactions carried out by the Fund. A quarterly update is available. The simplified prospectus and other information on the underlying investment funds are available on the Internet at sedar.com.

10 Gestion FÉRIQUE Place du Canada 1010 de La Gauchetière Street West Suite 1400 Montréal, Québec H3B 2N2 ferique.com Additional information about the Funds is available in the Funds Prospectus, Annual Information Form, Fund Facts and Financial Statements. You may obtain a copy of these documents, free of charge and on demand: by contacting the Manager, Gestion FÉRIQUE, at (toll free at ); by contacting the Principal Distributor, Services d investissement FÉRIQUE at (toll free at ) or client@ferique.com; by visiting ferique.com or sedar.com.