MD Family of Funds 2016 INTERIM FINANCIAL STATEMENTS

Transcription

1 MD Family of Funds 2016 INTERIM FINANCIAL STATEMENTS

2 A Message Regarding Your Financial Statements Dear MD Family of Funds Investor: As part of our commitment to keeping you informed about your MD Fund investments, please find attached the 2016 interim financial statements. The interim financial statements are produced on a fund-by-fund basis, and your report only includes information on the funds you owned as of June 30, If you have any questions regarding these documents, please contact your MD advisor or the MD TradeCentre at We thank you for your continued investment in the MD Family of Funds. Interim Unaudited Financial Statements for the Six-Month Period Ended June 30, 2016 These Interim Unaudited Financial Statements do not contain the Interim Management Report of Fund Performance ( MRFP ) of the investment fund. If you have not received a copy of the Interim MRFP with this report, you may obtain a copy of the Interim MRFP at your request, and at no cost, by calling the toll-free number , by writing to us at MD Financial Management Inc., 1870 Alta Vista Drive, Ottawa ON K1G 6R7, by visiting our website at md.cma.ca or by visiting the SEDAR website at sedar.com. Copies of the Annual Financial Statements or Annual MRFP may also be obtained, at no cost, using any of the methods outlined above. Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure. NOTICE OF NO AUDITOR REVIEW OF THE INTERIM FINANCIAL STATEMENTS MD Financial Management Inc, the Manager of the Fund, appoints independent auditors to audit the Fund s Annual Financial Statements. Under Canadian securities laws (National Instrument ), if an auditor has not reviewed the Interim Financial Statements, this must be disclosed in an accompanying notice. The Fund s independent auditors have not performed a review of these Interim Financial Statements in accordance with standards established by the Canadian Institute of Chartered Accountants. MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies. For a detailed list of these companies, visit md.cma.ca. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund. Standard performance data assumes reinvestment of distributions only and does not take into account sales, redemption, distribution or optional charges payable by any securityholder which would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. You may obtain a copy of the prospectus before investing by calling your MD Advisor or the MD Trade Centre at

3 This page left intentionally blank.

4 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) FOREIGN EQUITIES Australia (1.60%) Cochlear Ltd. 8, CSL Limited 18,400 1,787 2,006 Total for Australia 2,558 2,994 Belgium (1.27%) Anheuser-Busch InBev NV 14,016 2,444 2,384 Total for Belgium 2,444 2,384 Bermuda (2.44%) Jardine Matheson Holdings Limited 27,700 1,865 2,109 Markit Limited 58,203 2,316 2,468 Total for Bermuda 4,181 4,577 Brazil (1.18%) BM&F BOVESPA SA NPV 30, CETIP SA 56, ,000 Linx SA 61, Multiplus SA 39, Total for Brazil 1,858 2,204 Cayman Islands (0.83%) Hengan International Group Company Limited 33, Qinqin Foodstuffs Group (Cayman) Company Limited 6, Tencent Holdings Limited 39,699 1,010 1,177 Total for Cayman Islands 1,405 1,551 China (0.30%) Fuyao Glass Industry Group Co., Ltd. Cl. H 182, Total for China Denmark (1.92%) Novo Nordisk A/S Cl. B 28,500 1,340 1,982 Novozymes A/S Series B 26,000 1,531 1,621 Total for Denmark 2,871 3,603 Finland (2.83%) Kone OYJ Series B 62,850 3,609 3,754 Sampo OYJ Series A 29,500 2,032 1,559 Total for Finland 5,641 5,313 France (8.09%) Air Liquide SA 27,259 4,271 3,696 Bureau Veritas SA 50,116 1,473 1,369 DANONE SA 22,000 2,072 2,007 Essilor International SA 11,900 2,053 2,049 L'Oréal SA 8,300 1,984 2,054 LVMH Moet Hennessy Louis Vuitton SA 9,600 2,145 1,880 Total SA 33,751 2,006 2,106 Total for France 16,004 15,161 Germany (5.12%) Adidas AG 11,400 1,549 2,103 BASF SE 9,700 1, Bayer AG 8,492 1,339 1,105 Percentages shown in brackets relate investments at fair value to net assets of the Fund. MD Family of Funds Interim Financial Statements

5 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) Bayerische Motoren Werke (BMW) AG 2, Bayerische Motoren Werke (BMW) AG Preferred 10,100 1, Deutsche Boerse AG 17,414 1,870 1,845 FUCHS PETROLUB SE 12, SAP SE 19,800 2,126 1,915 Total for Germany 10,026 9,604 Hong Kong (7.57%) AIA Group Limited 262,000 2,163 2,049 China Mobile Limited 278,000 4,198 4,180 CLP Holdings Limited 155,000 1,754 2,063 CNOOC Limited 1,377,000 1,998 2,235 Hang Lung Properties Ltd. 598,000 1,898 1,583 Hong Kong & China Gas Company Limited 876,600 2,110 2,085 Total for Hong Kong 14,121 14,195 Ireland (1.45%) DCC PLC 12,704 1,527 1,445 Kerry Group PLC Cl. A 11,100 1,273 1,276 Total for Ireland 2,800 2,721 Israel (0.47%) Gazit-Globe Ltd. 75,321 1, Total for Israel 1, Japan (17.34%) Daikin Industries, Ltd. 20,500 1,979 2,232 Daito Trust Construction Company Ltd. 11,300 1,701 2,393 DENSO Corporation 33,000 2,128 1,515 FANUC Corporation 9,900 2,303 2,094 Honda Motor Co., Ltd. 15, INPEX Corporation 175,000 2,256 1,784 Kansai Paint Co., Ltd. 37, Keyence Corporation 2,600 1,870 2,291 Komatsu Ltd. 65,400 1,441 1,484 Lawson, Inc. 15,200 1,640 1,574 Murata Manufacturing Company, Ltd. 6,700 1, Nihon Kohden Corp. 35,100 1,050 1,285 Rakuten, Inc. 150,200 2,517 2,117 Seven & I Holdings Co., Ltd. 19,800 1,083 1,080 Shimano Inc. 10,600 2,193 2,099 Shin-Etsu Chemical Co., Ltd. 26,600 2,001 2,027 SMC Corporation 6,200 2,188 1,976 Tokio Marine Holdings, Inc. 23,600 1,206 1,020 Tsuruha Holdings, Inc. 15,000 1,849 2,354 USS Co. Ltd. 32, Total for Japan 32,576 32,499 Jersey (1.91%) Experian PLC 85,200 2,085 2,094 WPP PLC 55,373 1,703 1,487 Total for Jersey 3,788 3,581 Percentages shown in brackets relate investments at fair value to net assets of the Fund. 4 MD Family of Funds Interim Financial Statements 2016

6 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) Netherlands (0.96%) Wolters Kluwer NV 33,921 1,610 1,793 Total for Netherlands 1,610 1,793 Singapore (1.08%) DBS Group Holdings Limited 72,500 1,163 1,109 United Overseas Bank Ltd. 50, Total for Singapore 2,119 2,022 South Africa (0.58%) Clicks Group Ltd. 99, ,081 Total for South Africa 855 1,081 Spain (1.09%) Industria de Diseno Textil, SA 47,500 2,324 2,049 Total for Spain 2,324 2,049 Sweden (1.28%) Hennes & Mauritz AB Series B 39,000 1,948 1,476 Loomis AB Cl. B 29,260 1, Total for Sweden 3,157 2,394 Switzerland (12.10%) Givaudan SA 800 2,006 2,085 Kuehne & Nagel International AG 10,900 2,037 1,976 Nestlé SA 45,600 4,531 4,562 Novartis AG 19,600 2,170 2,091 Novartis AG ADR 17,800 2,036 1,910 Roche Holding AG 12,700 4,378 4,349 SGS SA 700 1,860 2,082 Swisscom AG 2,045 1,388 1,317 Syngenta AG Registered 2,800 1,389 1,396 The Swatch Group AG Bearer Shares 2,400 1, Total for Switzerland 22,952 22,673 Taiwan (1.07%) Taiwan Semiconductor Manufacturing Company, Ltd. ADR 58,900 1,676 2,009 Total for Taiwan 1,676 2,009 Thailand (0.74%) Kasikornbank Public Company Limited 92, Minor International PCL 536, Total for Thailand 1,321 1,387 United Kingdom (16.21%) Aggreko PLC 45, ,018 Aon PLC Cl. A 23,600 3,076 3,353 ARM Holdings PLC 80,300 1,522 1,573 Burberry Group PLC 86,900 2,131 1,757 Cineworld Group PLC 60, Compass Group PLC 83,500 1,537 2,059 Croda International PLC 29,922 1,866 1,623 Diageo PLC 60,200 2,311 2,179 Halma PLC 127,087 2,228 2,231 Intertek Group PLC 78,952 4,571 4,770 NCC Group PLC 34, Percentages shown in brackets relate investments at fair value to net assets of the Fund. MD Family of Funds Interim Financial Statements

7 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) Rathbone Brothers PLC 16, Reckitt Benckiser Group PLC 23,320 2,990 3,035 Smith & Nephew PLC 134,139 3,046 2,943 Unilever PLC ADR 16, Whitbread PLC 26,700 2,090 1,614 Total for United Kingdom 30,844 30,389 United States (5.89%) ishares MSCI EAFE ETF 151,977 11,649 11,031 Total for United States 11,649 11,031 Total for Foreign Equities (95.32%) 180, ,647 Total for Long-term Investments (95.32%) 180, ,647 Maturity Date Yield (%) Principal Amount in Currency of Issue Average Cost ($) Fair Value ($) SHORT-TERM INVESTMENTS Government of Canada 09/08/ % Government of Canada 08/11/ % Government of Canada 09/22/ % 1,451 1,449 1,449 Government of Canada 10/06/ % Total for Short-term Investments (1.02%) 2,070 2,070 Total for Investments (96.34%) $182,477 $180,717 Cash and Other Net Assets (3.66%) 6,706 Total Net Assets Attributable to Holders of Redeemable Units (100.00%) $187,423 Schedule of Derivative Instruments (in $000's) FORWARD CONTRACTS Contracts Pay Receive Contract Rate Due Date Fair Value ($) Counterparty Rating of the Counterparty* 1 9,295 Canadian Dollar 9,791 Australian dollar /12/ Bank of Montreal A Canadian Dollar 410 Euro Currency /07/ State Street Bank and Trust Co. AA- 1 5,995 Canadian Dollar 36,280 Hong Kong Dollar /06/ Toronto-Dominion Bank AA- 1 12,597 Canadian Dollar 1,056,960 Japanese Yen /31/ State Street Bank and Trust Co. AA Canadian Dollar 60,400 Japanese Yen /31/ Bank of Montreal A Canadian Dollar 48,245 Japanese Yen /31/ Royal Bank of Canada AA Canadian Dollar 36,320 Japanese Yen /31/ Bank of Montreal A Canadian Dollar 45,795 Japanese Yen /31/ State Street Bank and Trust Co. AA Canadian Dollar 395 New Zealand Dollar /15/ Royal Bank of Canada AA- 1 1,688 Canadian Dollar 1,770 Singapore Dollar /20/ Toronto-Dominion Bank AA Canadian Dollar 300 Singapore Dollar /20/ State Street Bank and Trust Co. AA Canadian Dollar 210 South African Rand /31/ Goldman Sachs Bank USA A Canadian Dollar 11,255 Thailand Baht /31/ Toronto-Dominion Bank AA Canadian Dollar 1,500 Thailand Baht /31/ Royal Bank of Canada AA- 1 1,497 Canadian Dollar 1,181 U.S. Dollar /13/ Royal Bank of Canada AA Canadian Dollar 700 U.S. Dollar /13/ State Street Bank and Trust Co. AA- 1 33,905 Czech Koruna 1,818 Canadian Dollar /14/ State Street Bank and Trust Co. AA- 1 1,850 Danish Krone 359 Canadian Dollar /22/ Toronto-Dominion Bank AA- Percentages shown in brackets relate investments at fair value to net assets of the Fund. 6 MD Family of Funds Interim Financial Statements 2016

8 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's) Schedule of Derivative Instruments (continued) Contracts Pay Receive Contract Rate Due Date Fair Value ($) Counterparty Rating of the Counterparty* 1 2,500 Danish Krone 484 Canadian Dollar /22/ Goldman Sachs Bank USA A 1 7,880 Euro Currency 11,377 Canadian Dollar /07/ State Street Bank and Trust Co. AA- 1 2,450 Euro Currency 3,535 Canadian Dollar /07/ Toronto-Dominion Bank AA Euro Currency 489 Canadian Dollar /07/ Toronto-Dominion Bank AA Euro Currency 1,322 Canadian Dollar /07/ Goldman Sachs Bank USA A Euro Currency 270 Canadian Dollar /07/ Toronto-Dominion Bank AA Euro Currency 627 Canadian Dollar /07/ State Street Bank and Trust Co. AA Euro Currency 297 Canadian Dollar /07/ State Street Bank and Trust Co. AA Euro Currency 1,286 Canadian Dollar /07/ Toronto-Dominion Bank AA Euro Currency 1,113 Canadian Dollar /07/ State Street Bank and Trust Co. AA Euro Currency 237 Canadian Dollar /07/ State Street Bank and Trust Co. AA Euro Currency 707 Canadian Dollar /07/ State Street Bank and Trust Co. AA Euro Currency 547 Canadian Dollar /07/ Goldman Sachs Bank USA A Euro Currency 575 Canadian Dollar /07/ Royal Bank of Canada AA- 1 97,672 Hong Kong Dollar 16,485 Canadian Dollar /06/ State Street Bank and Trust Co. AA- 1 3,095 Hong Kong Dollar 522 Canadian Dollar /06/ Bank of Montreal A+ 1 4,014 Japanese Yen 51 Canadian Dollar /04/ State Street Bank and Trust Co. AA- 1 3,899 Pound Sterling 7,517 Canadian Dollar /31/ Bank of Montreal A Pound Sterling 728 Canadian Dollar /31/ Bank of Montreal A Pound Sterling 582 Canadian Dollar /31/ Toronto-Dominion Bank AA Pound Sterling 310 Canadian Dollar /31/ Royal Bank of Canada AA Pound Sterling 436 Canadian Dollar /31/ State Street Bank and Trust Co. AA Pound Sterling 314 Canadian Dollar /31/ State Street Bank and Trust Co. AA Pound Sterling 466 Canadian Dollar /31/ Goldman Sachs Bank USA A 1 6,490 Swedish Krona 1,006 Canadian Dollar /22/ Toronto-Dominion Bank AA U.S. Dollar 2,190 Brazilian Real /08/ State Street Bank and Trust Co. AA U.S. Dollar 196 Canadian Dollar /13/ State Street Bank and Trust Co. AA- 1 2,886 U.S. Dollar 38,699,431 Indonesian Rupiah 13, /13/ State Street Bank and Trust Co. AA U.S. Dollar 66,750 New Russian Ruble /20/ Goldman Sachs Bank USA A U.S. Dollar 57,370 New Russian Ruble /20/ Goldman Sachs Bank USA A 1 34 U.S. Dollar 1,100 New Taiwan Dollar /06/ Royal Bank of Canada AA U.S. Dollar 1,220 New Taiwan Dollar /06/ Bank of Montreal A+ 2, ,095 Australian dollar 1,038 Canadian Dollar /12/2016 (18) State Street Bank and Trust Co. AA- 1 1,142 Australian dollar 1,071 Canadian Dollar /12/2016 (30) Royal Bank of Canada AA- 1 2,715 Australian dollar 2,586 Canadian Dollar /12/2016 (33) Toronto-Dominion Bank AA- 1 1,400 Brazilian Real 403 U.S. Dollar /08/2016 (34) Bank of Montreal A+ 1 5,430 Brazilian Real 1,492 U.S. Dollar /08/2016 (223) State Street Bank and Trust Co. AA- 1 1,178 Canadian Dollar 1,220 Australian dollar /12/2016 (2) State Street Bank and Trust Co. AA- 1 1,857 Canadian Dollar 33,905 Czech Koruna /14/2016 (58) State Street Bank and Trust Co. AA Canadian Dollar 1,812 Danish Krone /22/2016 (2) Bank of Montreal A Canadian Dollar 2,150 Danish Krone /22/2016 (4) State Street Bank and Trust Co. AA Canadian Dollar 310 Euro Currency /07/2016 (3) Royal Bank of Canada AA Canadian Dollar 440 Euro Currency /07/2016 (3) Royal Bank of Canada AA Canadian Dollar 150 Euro Currency /07/2016 (4) Royal Bank of Canada AA Canadian Dollar 140 Euro Currency /07/2016 (4) Royal Bank of Canada AA Canadian Dollar 180 Euro Currency /07/2016 (5) Bank of Montreal A Canadian Dollar 310 Euro Currency /07/2016 (5) Royal Bank of Canada AA Canadian Dollar 370 Euro Currency /07/2016 (6) State Street Bank and Trust Co. AA Canadian Dollar 350 Euro Currency /07/2016 (9) Royal Bank of Canada AA Canadian Dollar 530 Euro Currency /07/2016 (14) State Street Bank and Trust Co. AA Canadian Dollar 540 Euro Currency /07/2016 (16) Toronto-Dominion Bank AA- MD Family of Funds Interim Financial Statements

9 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's) Schedule of Derivative Instruments (continued) Contracts Pay Receive Contract Rate Due Date Fair Value ($) Counterparty Rating of the Counterparty* Canadian Dollar 465 Euro Currency /07/2016 (18) State Street Bank and Trust Co. AA- 1 11,414 Canadian Dollar 7,880 Euro Currency /07/2016 (63) State Street Bank and Trust Co. AA- 1 16,786 Canadian Dollar 11,275 Euro Currency /07/2016 (598) Bank of Montreal A Canadian Dollar 2,110 Hong Kong Dollar /06/2016 (2) Goldman Sachs Bank USA A Canadian Dollar 1,200 Israeli Sheqel /31/2016 (5) Bank of Montreal A Canadian Dollar 75,893 Japanese Yen /31/2016 (6) State Street Bank and Trust Co. AA Canadian Dollar 2,200 Norwegian Krone /22/2016 (3) State Street Bank and Trust Co. AA- 1 1,368 Canadian Dollar 8,783 Norwegian Krone /22/2016 (10) Royal Bank of Canada AA- 1 1,789 Canadian Dollar 11,475 Norwegian Krone /22/2016 (14) State Street Bank and Trust Co. AA- 1 1,278 Canadian Dollar 3,870 Polish Zloty /07/2016 (14) Toronto-Dominion Bank AA- 1 1,210 Canadian Dollar 3,620 Polish Zloty /07/2016 (27) State Street Bank and Trust Co. AA- 1 1,040 Canadian Dollar 565 Pound Sterling /31/2016 (67) Royal Bank of Canada AA- 1 2,533 Canadian Dollar 1,385 Pound Sterling /31/2016 (146) Royal Bank of Canada AA- 1 2,190 Canadian Dollar 1,160 Pound Sterling /31/2016 (192) State Street Bank and Trust Co. AA Canadian Dollar 4,170 Swedish Krona /22/2016 (15) State Street Bank and Trust Co. AA Canadian Dollar 2,500 Swedish Krona /22/2016 (18) State Street Bank and Trust Co. AA- 1 2,394 Canadian Dollar 15,199 Swedish Krona /22/2016 (73) Bank of Montreal A Canadian Dollar 300 Swiss Franc /31/2016 (2) Goldman Sachs Bank USA A 1 3,004 Canadian Dollar 2,250 Swiss Franc /31/2016 (6) State Street Bank and Trust Co. AA- 1 3,197 Canadian Dollar 2,390 Swiss Franc /31/2016 (12) Toronto-Dominion Bank AA- 1 2,892 Canadian Dollar 2,140 Swiss Franc /31/2016 (41) State Street Bank and Trust Co. AA- 1 2,093 Canadian Dollar 1,600 U.S. Dollar /13/2016 (12) Goldman Sachs Bank USA A 1 2,270 Hong Kong Dollar 380 Canadian Dollar /06/ State Street Bank and Trust Co. AA- 1 8,900 Hong Kong Dollar 1,464 Canadian Dollar /06/2016 (29) State Street Bank and Trust Co. AA ,670 Indian Rupee 1,496 U.S. Dollar /02/2016 (12) Bank of Montreal A+ 1 8,887,220 Indonesian Rupiah 661 U.S. Dollar - 09/13/2016 (4) Toronto-Dominion Bank AA- 1 13,006,870 Indonesian Rupiah 959 U.S. Dollar - 09/13/2016 (17) State Street Bank and Trust Co. AA Israeli Sheqel 123 Canadian Dollar /31/2016 (2) Toronto-Dominion Bank AA- 1 32,945 Japanese Yen 417 Canadian Dollar /31/ Royal Bank of Canada AA- 1 58,313 Japanese Yen 737 Canadian Dollar /31/2016 (2) Royal Bank of Canada AA- 1 56,577 Japanese Yen 694 Canadian Dollar /31/2016 (23) Toronto-Dominion Bank AA- 1 82,695 Japanese Yen 1,024 Canadian Dollar /31/2016 (24) Royal Bank of Canada AA- 1 65,947 Japanese Yen 802 Canadian Dollar /31/2016 (34) State Street Bank and Trust Co. AA- 1 57,139 Japanese Yen 686 Canadian Dollar /31/2016 (39) Royal Bank of Canada AA ,857 Japanese Yen 2,245 Canadian Dollar /31/2016 (111) State Street Bank and Trust Co. AA- 1 22,400 New Russian Ruble 347 U.S. Dollar /20/2016 (2) Goldman Sachs Bank USA A 1 61,200 New Russian Ruble 930 U.S. Dollar /20/2016 (28) Goldman Sachs Bank USA A 1 59,750 New Taiwan Dollar 1,832 U.S. Dollar /06/2016 (30) State Street Bank and Trust Co. AA New Zealand Dollar 82 Canadian Dollar /15/2016 (1) Toronto-Dominion Bank AA- 1 6,250 Norwegian Krone 964 Canadian Dollar /22/2016 (3) Toronto-Dominion Bank AA- 1 9,150 Norwegian Krone 1,390 Canadian Dollar /22/2016 (26) Goldman Sachs Bank USA A 1 7,490 Polish Zloty 2,433 Canadian Dollar /07/2016 (13) State Street Bank and Trust Co. AA Pound Sterling 499 Canadian Dollar /31/2016 (1) State Street Bank and Trust Co. AA- 1 2 Singapore Dollar 2 Canadian Dollar /04/ State Street Bank and Trust Co. AA- 1 3 Singapore Dollar 3 Canadian Dollar /04/ State Street Bank and Trust Co. AA- 1 1,180 Singapore Dollar 1,122 Canadian Dollar /20/2016 (14) State Street Bank and Trust Co. AA- 1 2,419 Singapore Dollar 2,295 Canadian Dollar /20/2016 (35) Toronto-Dominion Bank AA- 1 1,820 South African Rand 156 Canadian Dollar /31/2016 (3) Toronto-Dominion Bank AA- 1 10,055 South African Rand 826 Canadian Dollar /31/2016 (48) Toronto-Dominion Bank AA Swiss Franc 153 Canadian Dollar /31/ Royal Bank of Canada AA Swiss Franc 412 Canadian Dollar /31/2016 (1) Royal Bank of Canada AA Swiss Franc 230 Canadian Dollar /31/2016 (3) Goldman Sachs Bank USA A 8 MD Family of Funds Interim Financial Statements 2016

10 Schedule of Investment Portfolio as at June 30, 2016 (unaudited) (in $000's) Schedule of Derivative Instruments (continued) Contracts Pay Receive Contract Rate Due Date Fair Value ($) Counterparty Rating of the Counterparty* Swiss Franc 1,292 Canadian Dollar /31/2016 (14) Toronto-Dominion Bank AA- 1 10,194 Swiss Franc 13,543 Canadian Dollar /31/2016 (38) State Street Bank and Trust Co. AA- 1 49,960 Thailand Baht 1,832 Canadian Dollar /31/2016 (15) Canadian Imperial Bank of Commerce A U.S. Dollar 265 Canadian Dollar /13/2016 (2) Royal Bank of Canada AA- 1 1,240 U.S. Dollar 1,588 Canadian Dollar /13/2016 (24) Toronto-Dominion Bank AA- 1 1,295 U.S. Dollar 1,651 Canadian Dollar /13/2016 (33) Royal Bank of Canada AA U.S. Dollar 33,410 Indian Rupee /02/2016 (1) Canadian Imperial Bank of Commerce A+ 1 4,965 U.S. Dollar 337,420 Indian Rupee /02/2016 (22) State Street Bank and Trust Co. AA U.S. Dollar 9,700 New Taiwan Dollar /06/2016 (1) Royal Bank of Canada AA- (2,472) Total Forward Contracts 211 FUTURES CONTRACTS Counterparty Credit Rating* Description Notional Amount Fair Value ($) Goldman Sachs A MSCI EAFE E-Mini Index Futures USD 2, Total Futures Contracts 42 Total for Schedule of Derivative Instruments 253 * Source: Standard & Poor's Credit Rating Agency MD Family of Funds Interim Financial Statements

11 Financial Statements Statement of Financial Position (unaudited) (in $000's except for units outstanding and per unit amounts) June 30, 2016 December 31, 2015 Assets Current assets Investments $ 180,717 $ 247,766 Cash 5,413 9,732 Dividends receivable Financial derivative instruments 1,834 2,615 Net margin due from broker on futures contracts Receivable for investment transactions Receivable for securities lending transactions 1 1 Subscriptions receivable , ,706 Liabilities Current liabilities Payable for investment transactions 10 - Redemptions payable Financial derivative instruments 1,581 1,402 Net margin due to broker on futures contracts ,791 1,448 Net assets attributable to holders of redeemable units $ 187,423 $ 259,258 Net assets attributable to holders of redeemable units per series Series A $ 107,266 $ 112,489 Series I $ 80,109 $ 146,710 Series T $ 48 $ 59 Number of redeemable units outstanding (see Supplementary Schedules) Series A 11,256,607 11,570,504 Series I 8,352,392 14,836,667 Series T 4,748 5,603 Net assets attributable to holders of redeemable units per unit, per series Series A $ 9.53 $ 9.72 Series I $ 9.59 $ 9.89 Series T $ $ Statement of Comprehensive Income (unaudited) (in $000 s except for per unit amounts) Six months ended June 30, 2016 June 30, 2015 Income Net gain (loss) on investments Dividends $ 4,329 $ 2,719 Interest for distribution purposes Net realized gain (loss) on sale of investments (3,390) 25,421 Change in unrealized appreciation (depreciation) of investments (6,458) (1,713) Net gain (loss) on investments (5,506) 26,453 Net gain (loss) on derivative instruments Net realized gain (loss) on derivative instruments 2,822 (2,275) Change in unrealized appreciation (depreciation) of derivative instruments (961) 1,026 Net gain (loss) on derivatives instruments 1,861 (1,249) Other Income Foreign exchange gain (loss) on cash (353) 253 Securities lending (see Supplementary Schedules) 7 37 Total other income (346) 290 Total income (loss) (3,991) 25,494 Expenses Management fees (Note 4) 930 1,043 Administration fees Withholding tax on foreign income Transaction costs Total expenses 1,702 2,037 Increase (decrease) in net assets attributable to holders of redeemable units $ (5,693) $ 23,457 Increase (decrease) in net assets attributable to holders of redeemable units per series Series A $ (2,082) $ 14,214 Series I $ (3,610) $ 9,238 Series T $ (1) $ 5 Increase (decrease) in net assets attributable to holders of redeemable units per unit, per series Series A $ (0.18) $ 1.16 Series I $ (0.25) $ 1.20 Series T $ (0.27) $ MD Family of Funds Interim Financial Statements 2016

12 Financial Statements Statement of Changes in Net Assets Attributable to Holders of Redeemable Units ("Net Assets") (unaudited) (in $000 s) Six months ended June 30, 2016 June 30, 2015 SERIES A Net assets - beginning of period $ 112,489 $ 107,580 Add (deduct) changes during the period: Operations Increase (decrease) in net assets attributable to holders of redeemable units (2,082) 14,214 Redeemable unit transactions Proceeds from issue of redeemable units 6,205 4,934 Cash paid for redemption of redeemable units (9,345) (12,915) Units issued on reinvestment of distributions (2,967) (7,636) Distributions From net investment income (174) (348) (174) (348) Net assets - end of period $ 107,266 $ 113,810 SERIES I Net assets - beginning of period $ 146,710 $ 69,113 Add (deduct) changes during the period: Operations Increase (decrease) in net assets attributable to holders of redeemable units (3,610) 9,238 Redeemable unit transactions Proceeds from issue of redeemable units 10,380 98,210 Cash paid for redemption of redeemable units (73,371) (19,069) Units issued on reinvestment of distributions 1, (61,215) 79,801 Distributions From net investment income (1,776) (660) (1,776) (660) Six months ended June 30, 2016 June 30, 2015 SERIES T Net assets - beginning of period $ 59 $ 47 Add (deduct) changes during the period: Operations Increase (decrease) in net assets attributable to holders of redeemable units (1) 5 Redeemable unit transactions Proceeds from issue of redeemable units Cash paid for redemption of redeemable units (27) (5) (9) 7 Distributions Return of capital (1) (1) (1) (1) Net assets - end of period $ 48 $ 58 TOTAL FUND Net assets - beginning of period $ 259,258 $ 176,740 Add (deduct) changes during the period: Operations Increase (decrease) in net assets attributable to holders of redeemable units (5,693) 23,457 Redeemable unit transactions Proceeds from issue of redeemable units 16, ,156 Cash paid for redemption of redeemable units (82,743) (31,989) Units issued on reinvestment of distributions 1,949 1,005 (64,191) 72,172 Distributions From net investment income (1,950) (1,008) Return of capital (1) (1) (1,951) (1,009) Net assets - end of period $ 187,423 $ 271,360 Net assets - end of period $ 80,109 $ 157,492 MD Family of Funds Interim Financial Statements

13 Financial Statements Statement of Cash Flows (unaudited) (in $000 s) Six months ended Cash flows from (used in) operating activities June 30, 2016 June 30, 2015 Increase (decrease) in net assets attributable to holders of redeemable units $ (5,693) $ 23,457 Adjustments for: Proceeds from sale of investments 106, ,605 Purchase of investments (49,808) (240,546) Amortization Income (5) - Unrealized foreign exchange (gain) loss on cash (29) (32) Net realized (gain) loss on sale of investments 3,390 (25,421) Change in unrealized (appreciation) depreciation of investments 6,458 1,713 Change in unrealized (appreciation) depreciation of derivative instruments 961 (1,026) Net change in non-cash working capital (536) (728) Net cash from (used in) operating activities 61,562 (63,978) Cash flows from (used in) financing activitites Proceeds from issue of redeemable units 16, ,355 Distributions to holders of redeemable units, net of reinvested distribution (2) (4) Cash paid for redemption of redeemable units (82,547) (32,149) Net cash from (used in) financing activities (65,910) 71,202 Unrealized foreign exchange gain (loss) on cash Net increase (decrease) in cash during the period (4,319) 7,256 Cash, beginning of period 9,732 9,098 Cash, end of period $ 5,413 $ 16,354 Interest received Dividend received, net of withholding taxes 3,450 1, MD Family of Funds Interim Financial Statements 2016

14 Financial Statements Supplementary Schedules (unaudited) Redeemable Unit Transactions For the periods ended June SERIES A Outstanding, beginning of period 11,570,504 12,679,151 Issued 683, ,293 Redeemed (997,795) (1,355,686) Outstanding, end of period 11,256,607 11,876,758 SERIES I Outstanding, beginning of period 14,836,667 8,079,471 Issued 1,296,130 10,049,418 Redeemed (7,780,405) (1,944,511) Outstanding, end of period 8,352,392 16,184,378 SERIES T Outstanding, beginning of period 5,603 4,831 Issued 1,835 1,137 Redeemed (2,690) (502) Outstanding, end of period 4,748 5,466 Soft Dollar Commissions The term soft dollar is used to describe a widely accepted business practice by which the investment advisors receive various benefits from the broker through the course of a normal business relationship. Such benefits may be in the form of research or other materials that aid in the investment process, thus contributing to the long-term realization of returns for the unitholders. The soft dollar portion of the commissions paid to dealers for executing portfolio transactions is not ascertainable for the first six months of 2016 and Securities on Loan as at June 30 (in $000's) Fair value of securities loaned $ - $ - Fair value of collateral (non-cash) $ - $ - State Street Bank and Trust Co. is entitled to receive payments out of the gross amount generated from the securities lending transactions of the Fund and bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. The table below sets out a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from securities lending disclosed under securities lending income in the Fund s Statements of Comprehensive Income. Tax Loss Carry Forwards as at June 30 (in $000's) 2016 Net capital loss carried forward $ 13,196 Non-capital losses expiring: 2016 $ in 2018 and thereafter - Total $ - The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) and, accordingly, is subject to tax on its income for the year, including net realized capital gains which is not paid or payable to its unitholders as at the end of the year. It is the intention of management that all annual net investment income and sufficient net realized taxable capital gains will be distributed to unitholders annually by December 31, such that there are no Canadian income taxes payable by the Fund. As a result, the Fund does not record income taxes. Since the Fund does not record income taxes, no benefit has been recorded by the Fund in its financial statements in respect of its unused losses as at December 31, As of the taxation year ended December 15, 2015, the Fund has accumulated net realized capital losses of $13,196 available for utilization against net realized capital gains in future years. Capital losses have no expiry. Non-capital losses realized in 2005 can be carried forward for up to ten years. Non-capital losses realized in 2006 and after can be carried forward for up to twenty years. Amounts Subject to Master Netting Arrangements (in $000's) In the normal course of business, the Fund enters into various enforceable master netting arrangements with its derivative counterparties. The following tables present the Fund's financial assets and liabilities subject to enforceable master netting arrangements. The tables are presented by financial instrument type. FINANCIAL ASSETS Gross Asset Gross Liabilities Offset Net Amounts Presented Financial Instruments Eligible for Offset June 30, 2016 Derivative assets $ 2,725 $ 891 $ 1,834 $ 1,291 $ 543 Dec 31, 2015 Derivative assets $ 3,569 $ 954 $ 2,615 $ 1,375 $ 1,240 Net for the periods ended June 30 (in $000's) Gross amount generated from the securities lending transactions $ 9 $ 42 Amounts paid to State Street Bank and Trust Co. $ (2) $ (5) Net securities lending income as reported in the Statement of Comprehensive Income $ 7 $ 37 MD Family of Funds Interim Financial Statements

15 Financial Statements Supplementary Schedules (unaudited) FINANCIAL LIABILITIES Gross Liabilities Gross Assets Offset Net Amounts Presented Financial Instruments Eligible for Offset June 30, 2016 Derivative liabilities $ 2,472 $ 891 $ 1,581 $ 1,291 $ 290 Dec 31, 2015 Derivative liabilities $ 2,356 $ 954 $ 1,402 $ 1,375 $ 27 Net 14 MD Family of Funds Interim Financial Statements 2016

16 Financial Instruments Risks (unaudited) (in $000's) Financial Instruments MD International Growth Fund (the Fund ) invests in a diversified portfolio of global equity securities as well as forward and futures contracts, as shown in the Schedule of Investment Portfolio. The Fund invests excess cash in high grade short-term notes with maturities of less than one year. These investments expose the Fund to risks associated with financial instruments. The Fund s exposure and sensitivity to these risks are presented below. A description of the risks and how the Fund manages these risks is discussed in Note 7 of the Notes to the Financial Statements. Credit Risk The Fund s credit risk is concentrated in investments in short-term debt and derivative instruments. The Fund s maximum exposure to credit risk from shortterm debt is the carrying value as presented on the Schedule of Portfolio Investments and the cash as shown on the Statement of Financial Position. The Fund s maximum exposure to credit risk from derivative instruments is the carrying value of derivative instrument asset as presented on the Statement of Financial Position. As at June 30, 2016 and December 31, 2015, the Fund invested in preferred shares and short-term debt instruments with the following credit ratings: Currency Cash and Other Net Assets Attributable to Holders of Redeemable Units Investments at Fair Value Derivative Exposure Net Currency Exposure % of Net Assets Attributable to Holders of Redeemable Units Hong Kong Dollar ,299 (12,335) 4, % Indian Rupee - - 5,114 5, % Indonesian Rupiah - - 1,634 1, % Israeli Shekel , % Japanese Yen ,499 9,695 42, % New Russian Ruble % New Taiwan Dollar - - (1,927) (1,927) (1.03)% New Zealand Dollar % Norwegian Krone - - 1,092 1, % Polish Zloty % British Pound 90 31,063 (4,521) 26, % Singapore Dollar 18 2,022 (1,491) % South African Rand 6 1,081 (1,015) % Swedish Krona - 2,394 2,348 4, % Swiss Franc ,762 (6,253) 14, % Thailand Baht 26 1,387 (1,397) % Total $ 3,501 $ 178,646 $ 4,415 $ 186, % Credit Rating % of Net Assets Attributable to Holders of Redeemable Units June 30, 2016 % of Net Assets Attributable to Holders of Redeemable Units December 31, 2015 Debt Instruments AAA / R-1 (High) 1.1% 0.0% 1.1% 0.0% Preferred Shares Pfd-2 0.7% 0.5% Total 1.8% 0.5% All credit ratings are from external credit rating agencies such as Dominion Bond Rating Service, Standard & Poor s and Moody s. Currency Risk Exposures to foreign currencies as at June 30, 2016 and December 31, 2015 are presented in the table below. Short-term investments, which are monetary in nature, are included in the Investments at Fair Value column. Currency Cash and Other Net Assets Attributable to Holders of Redeemable Units Investments at Fair Value Derivative Exposure Net Currency Exposure % of Net Assets Attributable to Holders of Redeemable Units June 30, 2016 U.S. Dollar $ 2,424 $ 23,880 $ (3,181) $ 23, % European Euro ,580 11,351 49, % Australian Dollar - 2,994 5,843 8, % Brazilian Real 11 2,204 (1,848) % Danish Krone 15 3,603 (75) 3, % December 31, 2015 U.S. Dollar $ 2,002 $ 35,104 $ (7,517) $ 29, % European Euro ,814 17,230 68, % Australian Dollar - 4,627 9,543 14, % Brazilian Real 2 1,863 (1,828) % Czech Koruna - - 1,886 1, % Danish Krone 8 2,933 1,682 4, % Hong Kong Dollar - 19,875 (18,785) 1, % Indian Rupee - - 6,992 6, % Indonesian Rupiah - - 4,594 4, % Israeli Shekel (13) 1, , % Japanese Yen ,838 16,125 58, % New Russian Ruble - - 2,382 2, % New Taiwan Dollar 36 - (2,814) (2,778) (1.07)% New Zealand Dollar % Norwegian Krone - - 1,313 1, % Polish Zloty - - 1,924 1, % British Pound ,195 (2,871) 40, % Singapore Dollar - 6,098 (5,483) % South African Rand - 1,001 (1,014) (13) 0.01% Swedish Krona - 6,707 1,578 8, % Swiss Franc ,346 (15,840) 15, % Thailand Baht - 1,838 (1,792) % Total $ 3,372 $ 247,766 $ 7,919 $ 259, % MD Family of Funds Interim Financial Statements

17 Financial Instruments Risks (unaudited) (in $000's) As at June 30, 2016, if the Canadian Dollar had strengthened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Units of the Fund could have decreased by approximately $18,656, or 9.95% of Net Assets Attributable to Holders of Redeemable Units (December 31, 2015 $25,906, or 9.99%). Conversely, had the Canadian Dollar weakened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Units of the Fund could have increased by approximately $18,656, or 9.95% of Net Assets Attributable to Holders of Redeemable Units (December 31, 2015 $25,906, or 9.99%). These sensitivities are estimates. Actual results may vary and the variance may be material. Interest Rate Risk The majority of the Fund s financial assets are non-interest bearing. The maturity dates of the interest bearing assets held by the Fund are less than one year. Therefore, the Fund s exposure to interest rate risk is not significant. Liquidity Risk The Fund s financial liabilities are all due within one year. Redeemable units are redeemable on demand at the holder s option; however, the Fund does not expect the contractual maturity will be representative of the actual cash outflows, as holders of these instruments typically retain them for a longer period. Other Price Risk As at June 30, 2016, 95.3% (December 31, %) of the Fund s Net Assets Attributable to Holders of Redeemable Units were invested in equity financial instruments traded in active markets. If prices of securities traded on these markets decrease by 10%, with all other factors remaining constant, Net Assets Attributable to Holders of Redeemable Units could fall by approximately $17,865 (December 31, 2015 $24,777). Conversely, if prices increase by 10%, Net Assets Attributable to Holders of Redeemable Units could rise by approximately $17,865 (December 31, 2015 $24,777). These sensitivities are estimates. Actual results may vary and the variance may be significant. Concentration Risk Concentration risk arises as a result of the concentration of exposures within the same category. The following table summarizes the Fund s concentration risk as a percentage of total investments: Market Segment June 30, 2016 December 31, 2015 Foreign Equities Australia 1.68% 1.87% Belgium 1.33% 1.29% Bermuda 2.56% 2.85% Brazil 1.23% 0.74% Cayman Islands 0.87% 0.40% China 0.31% 0.33% Denmark 2.02% 1.18% Finland 2.97% 3.22% France 8.49% 7.81% Germany 5.38% 5.68% Hong Kong 7.95% 7.70% Ireland 1.52% 1.83% Israel 0.49% 0.62% Japan 18.19% 16.89% Jersey 2.00% 1.95% Netherlands 1.00% 0.73% Singapore 1.13% 2.47% South Africa 0.61% 0.40% Spain 1.15% 1.11% Sweden 1.34% 2.71% Switzerland 12.69% 13.77% Taiwan 1.13% 1.16% Thailand 0.78% 0.73% United Kingdom 17.01% 16.55% United States 6.17% 6.01% Total % % 16 MD Family of Funds Interim Financial Statements 2016

18 Financial Instruments Risks (unaudited) (in $000's) Fair Value Hierarchy The following is a summary of the Fund's use of quoted market prices (Level 1), internal models using observable market information as inputs (Level 2), and internal models without observable market information (Level 3) in the valuation of the Fund s securities. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (Level 1) (Level 2) Total* June 30, 2016 Foreign Equities $ 23,799 $ 154,848 $ 178,647 Short-Term Investments - 2,070 2,070 Financial Derivative Instruments Assets 42 1,792 1,834 Financial Derivative Instruments Liabilities - (1,581) (1,581) Total $ 23,841 $ 157,129 $ 180,970 December 31, 2015 Foreign Equities $ 77,783 $ 169,983 $ 247,766 Financial Derivative Instruments Assets 51 2,564 2,615 Financial Derivative Instruments Liabilities - (1,402) (1,402) Total $ 77,834 $ 171,145 $ 248,979 *The Fund does not hold any Level 3 investments. For the period from January 1, 2016 to June 30, 2016, equity investment of approximately $37,437 were transferred from Level 1 to Level 2. For the period from January 1, 2015 to December 31, 2015, there have been no significant transfer between Level 1 and Level 2. MD Family of Funds Interim Financial Statements

19 Notes to Financial Statements For the periods ended June 30, 2016 and Name and formation of the Funds ESTABLISHMENT OF THE FUNDS The MD Family of Mutual Funds (individually a Fund and collectively the Funds ) are unincorporated mutual fund trusts formed under the laws of the Province of Ontario pursuant to the Declarations of Trust, and the creation dates areas follows: Series A Units Series I Units Series T Units Private Trust Series MD Balanced Fund September 9, 1992 October 25, 2010 MD Bond Fund April 6, 1988 October 30, 2009 MD Short-Term Bond Fund September 19, 1995 October 30, 2009 MD Dividend Income Fund September 9, 1992 October 30, 2009 October 25, 2010 MD Equity Fund March 1, 1966 October 30, 2009 October 25, 2010 MD Dividend Growth Fund January 4, 2007 October 30, 2009 October 25, 2010 MD International Growth Fund July 19, 2000 October 30, 2009 October 25, 2010 MD International Value Fund January 5, 2004 October 30, 2009 October 25, 2010 MD Money Fund July 12,1983 MD Select Fund October 29, 1993 October 30, 2009 October 25, 2010 MD American Growth Fund September 9, 1992 October 30, 2009 October 25, 2010 MD American Value Fund July 10, 2000 October 30, 2009 October 25, 2010 MD Strategic Yield Fund January 30, 2014 January 30, 2014 MD Strategic Opportunities Fund January 30, 2014 January 30, 2014 MD Precision Conservative Portfolio January 6, 2010 MD Precision Balanced Income Portfolio March 27, 2012 MD Precision Moderate Balanced Portfolio January 6, 2010 MD Precision Moderate Growth Portfolio March 27, 2012 MD Precision Balanced Growth Portfolio January 6, 2010 MD Precision Maximum Growth Portfolio January 6, 2010 MD Fossil Fuel Free Bond Fund May 11, 2016 May 11, 2016 MD Fossil Fuel Free Equity Fund May 11, 2016 May 11, 2016 MDPIM Canadian Equity Pool June 16, 1999 October 25, 2010 August 9, 2000 MDPIM US Equity Pool August 6, 1999 October 25, 2010 August 9, 2000 MD Growth Investments Limited is a mutual fund corporation incorporated under the laws of Ontario pursuant to the Letters Patent and the Series creation dates are as follows: Series A Series I MD Growth Investments Limited July 18, 1969 October 30, 2009 MD Financial Management Inc. ( the Manager ) is the Manager and Trustee of the Funds. The address of the Funds registered office is 1870 Alta Vista Drive, Ottawa, Ontario, Canada, K1G 6R7. Throughout these Notes to the Financial Statements, the shares of MD Growth Investments Limited have been referred to as units to simplify the presentation. These financial statements were authorized for issue by the Manager on August 9, MD Family of Funds Interim Financial Statements 2016

20 Notes to Financial Statements For the periods ended June 30, 2016 and 2015 SERIES OF UNITS Each of the MD Funds other than MDPIM Canadian Equity Pool and MDPIM US Equity Pool offer Series A units which are available to all MD Management Ltd. clients who are qualified eligible investors. The MDPIM Canadian Equity Pool and MDPIM US Equity Pool Funds offer Private Trust Series and Series T units which may be purchased by either MD Private Investment Counsel (an operating division of MD Financial Management Inc.) or MD Private Trust Company clients who have appointed MD Private Investment Counsel to provide discretionary portfolio management services and advice to them or MD Private Trust Company to provide trust services. Series A units are closed to new subscribers. Investors holding Series A units of these Funds are allowed to hold their units, as well as subscribe for additional Series A units of the Funds. Series I units were established to support the MD Precision Conservative Portfolio, the MD Precision Moderate Balanced Portfolio, the MD Precision Balanced Growth Portfolio, the MD Precision Maximum Growth Portfolio, the MD Precision Balanced Income Portfolio and the MD Precision Moderate Growth Portfolio. These units are only available to the six Funds listed above and certain institutional investors, and are not charged management fees. Series T units were established in order to support a new tax-efficient investment solution for clients. The series T units generate steady tax-efficient cash flow that does not increase taxable income or impact certain benefits such as Old Age Security. 2. Basis of presentation and adoption of IFRS These financial statements have been prepared in compliance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB). 3. Significant accounting policies FUNCTIONAL AND PRESENTATION CURRENCY The financial statements are presented in Canadian dollars, which is the Funds functional currency. Cash, investments and other assets and liabilities denominated in foreign currencies are translated into Canadian Dollars at the rate of exchange prevailing on each valuation date. Transactions during the year in currencies other than Canadian Dollars are translated into Canadian Dollars at the rate of exchange prevailing on the trade date of the transaction. The difference in the foreign exchange rate between trade date and settlement date of a transaction is recognized in income on the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash are presented as Foreign exchange gain (loss) on cash and those relating to other financial assets and liabilities are presented within net gains or losses on the sale of investments or derivatives. All financial information is presented in Canadian dollars and has been rounded to the nearest thousand, unless otherwise stated. FINANCIAL INSTRUMENTS The Funds recognize financial instruments at fair value upon initial recognition. The Funds financial assets and financial liabilities, other than derivatives, are designated as fair value through profit or loss (FVTPL), as these financial assets and liabilities are managed together and their performance is evaluated on a fair value basis in accordance with the Funds investment strategy. Derivative financial instruments are classified as held for trading and measured at FVTPL. The Funds do not classify any derivatives as hedges in a hedging relationship. Cash is measured at fair value upon recognition and subsequently at amortized cost. Regular way purchases and sales of financial assets are recognized at their trade date. Transaction costs related to investments and derivatives are expensed as incurred in the Statement of Comprehensive Income. Subsequent to initial recognition, all financial assets and liabilities at FVTPL are measured at fair value. Gains and losses arising from changes in the fair value are presented in the Statement of Comprehensive Income within Change in unrealized appreciation (depreciation) of investments for financial assets and liabilities designated at FVTPL and within Change in unrealized appreciation (depreciation) of derivatives for derivatives in the periods in which they arise. The interest for distribution purposes shown on the Statement of Comprehensive Income represents the coupon interest received by the Funds accounted for on an accrual basis. Dividend income and distributions to unitholders are recorded on the ex-dividend date. Distributions from underlying funds out of interest, foreign income and related withholding taxes, Canadian dividends and net realized capital gains are recognized when declared. Realized gains or losses from investment transactions and the unrealized appreciation or depreciation of investments are computed on an average cost basis, which exclude brokerage commissions and other trading expenses. Brokerage commissions and other trading expenses are charged to income as incurred. Other financial assets and liabilities, such as accrued interest and dividends receivable, accounts receivable for investment transactions, subscriptions receivable, amounts receivable for securities lending transactions, distributions payable, accounts payable for investment transactions and redemptions payable are recognized initially at fair value, net of transaction costs, and subsequently stated at amortized cost using the effective interest rate method. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contracts effective interest rate. The Funds accounting policies for measuring the fair value of their investments and derivatives are identical to those used in measuring the net asset value (NAV) for transactions with unitholders. The Funds obligation for net assets attributable to holders of redeemable units is presented at the redemption amount. OFFSETTING FINANCIAL INSTRUMENTS Financial assets and liabilities are offset and the net amount reported in the statement of financial position where the Funds currently have a legally enforceable right to set-off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. In the normal course of business, the Funds may enter into various master netting agreements or similar agreements that do not meet the criteria for offsetting in the statement of financial position but still allow for the related amounts to be set off in certain circumstances, such as bankruptcy or termination of the contracts. MD Family of Funds Interim Financial Statements