Semi-Annual Financial Statement as at September 30, issued by Lakeview Asset Management

Transcription

1 Semi-Annual Financial Statement as at September 30, 2010 issued by Lakeview Asset Management

2 A look inside Overview... 1 About the CI Funds Board of Governors and Letter from the CI Funds Board of Governors... 2 Lakeview Disciplined Leadership Canadian Equity Fund...3 Lakeview Disciplined Leadership U.S. Equity Fund...9 Lakeview Disciplined Leadership High Income Fund...15 Notes to the Financial Statements Legal Notice...26 CI Investments Inc., the Manager of the Funds, appoints independent auditors to audit the Funds Annual Financial Statements. Under Canadian securities laws (National Instrument ), if an auditor has not reviewed the Semi-Annual Financial Statements, this must be disclosed in an accompanying notice. The Funds independent auditors have not performed a review of these Semi-Annual Financial Statements in accordance with standards established by the Canadian Institute of Chartered Accountants.

3 2 Queen Street East, Twentieth Floor Toronto, Ontario M5C 3G7 Telephone: Toll Free: Facsimile: Enclosed are the Financial Statements for your CI Investments mutual funds for the period ending September 30, Inside is important information about each fund, including its financial statements for the period and a list of the top portfolio holdings of the underlying fund as of the end of the year. Additional information about your funds can be found on our website, If you have any questions about your investments, please contact your financial advisor. CI is proud to partner with advisors across Canada. We believe investors are most successful when they follow an investment plan developed with the assistance of a qualified advisor. ABOUT CI INVESTMENTS CI has been investing on behalf of Canadians since 1965 and has grown to become one of Canada s largest investment fund companies. We manage over $64 billion on behalf of 1.7 million Canadians. CI is a subsidiary of CI Financial Corp., a TSX-listed financial services firm with $86 billion in fee-earning assets at September 30, CI provides one of the industry s widest selections of investment products and services and a strong lineup of leading portfolio management teams. Our portfolio management expertise is offered through several platforms, including mutual funds, tax-efficient funds, segregated funds, and managed solutions. You may also contact CI Client Services at Thank you for investing with us. 1

4 About the CI Funds Board of Governors The CI Funds Board of Governors was voluntarily established by CI in 1998 making it one of the first such fund governance bodies in Canada. The Board of Governors acts as an independent governance body the Funds, providing impartial judgment on conflicts of interest with a view to the best interests of the Funds and investors. The Board of Governors recommends the best course of action to achieve a fair and reasonable result on any conflict of interest issues, and CI takes into account its recommendation in accordance with its fiduciary duty to the Funds. All of the members of the Board are independent of CI. The Board of Governors are compensated as recommended by the Canadian securities regulators in their rule and as set out in its mandate. These expenses are paid by CI and charged to the Funds as part of their administration fee. The members of the Board of Governors are: William Harding, Managing Partner, Alpine Asset Advisors AG Governor since June 2005 The Board of Governors mandate is set out in a separate charter and reviewed annually by the Board to ensure its mandate conforms to the expectations and requirements of Canadian securities regulators. Along with dealing with conflicts of interest, the mandate provides that the Board acts as an audit committee for the Funds for the purpose of reviewing the financial statements of the Funds with the auditors of the Funds and reviews holdings, purchases and sales by the Funds of securities of The Bank of Nova Scotia and CI Financial Corp. The Board also reviews and discusses on a regular basis matters including compliance of the Funds with CI s relevant policies and procedures, approval of the Funds auditors and the fees paid to those auditors, and the performance of the Board and its members. The Board of Governors adheres to the requirements set out by Canadian securities regulators in National Instrument Independent Review Committee for Investment Funds which requires all mutual funds in Canada to have independent review committees. Stuart P. Hensman, Corporate Director Governor since December 2004 Christopher M. Hopper, President, KLQ Mechanical Ltd. Governor since May 2007 Sharon M. Ranson, President, The Ranson Group Governor since December 2004 Further information regarding the Board is available at including the Board s full mandate. Letter from the CI Funds Board of Governors The Funds Board of Governors is pleased to report on its activities in respect of the semi-annual period ended September 30, 2010 and to date. The Governors are appointed pursuant to the Declarations of Trust governing the Funds. The Governors have reviewed, commented on and approved the CI Code of Ethics and Conduct, which establishes rules of conduct designed to ensure fair treatment of the Funds securityholders and that, at all times, the interests of the Funds and their securityholders are placed above personal interests of employees, officers and directors of the Manager and each of its subsidiaries and affiliates, the subadvisers, and the Governors, through the application of the highest standards of integrity and ethical business conduct. The CI Code of Ethics and Conduct requires the prior clearance of personal trades and restricts the ability of staff to trade any securities held by the Funds. The objective is not only to remove any potential for real conflict of interest but to avoid any perception of conflict. The Manager's year 2009 report on compliance with the CI Code of Ethics and Conduct and other relevant policies has been provided to the Governors in a timely and satisfactory manner. The Governors report that management has been open and cooperative, permitting the Governors to meet with subadvisers, to meet with individual department heads and personnel to review control mechanisms and compliance procedures, including those relating to the personal securities trading activity of employees, and to consider other matters that affect the Funds. During 2009, the Governors also acted as the audit committee of the Funds. The audit committee reviewed, with the Funds auditors, the planning, scope and results of the audit of the financial statements of the Funds for the year In November 2010, the Board of Governors received and accepted the Semi-Annual Financial Statements of the Funds. Stuart P. Hensman Chair, Board of Governors November,

5 Lakeview Disciplined Leadership Canadian Equity Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) No. of Shares/ Average Fair Par Value Cost ($) Value ($) MATERIALS (28.9%) 55,400 Agrium Inc. 4,185,316 4,268, ,700 Alamos Gold Inc. 2,252,185 2,288, ,100 Canfor Pulp Income Fund 2,740,794 3,157,231 86,900 Detour Gold Corp. 2,086,492 2,578,323 48,375 Foran Mining Corp. 98,685 21, ,200 HudBay Minerals Inc. 2,968,889 3,177, ,700 Lake Shore Gold Corp. 2,480,378 2,526,120 84,800 Osisko Mining Corp. 1,236,774 1,242,320 16,600 Potash Corp. of Saskatchewan Inc. 2,538,041 2,448, ,800 SEMAFO Inc. 2,508,792 2,529, ,700 Silver Wheaton Corp. 3,908,883 4,420,878 96,300 Teck Resources Ltd., Class B 3,937,069 4,075, ,100 Western Coal Corp. 2,748,695 3,182,127 33,690,993 35,916,391 INDUSTRIALS (13.8%) 1,398,800 Air Canada, Class B 3,200,675 4,014,556 38,100 Canadian National Railway Co. 2,413,475 2,506, ,200 IESI-BFC Ltd. 2,488,275 3,394, ,200 Tata Motors Ltd., ADR* 3,594,099 4,382, ,500 Westshore Terminals Inc. 2,463,603 2,843,500 14,160,127 17,141,575 ENERGY (13.2%) 400,000 GasFrac Energy Services Inc. 2,000,000 2,460, ,000 Gran Tierra Energy Inc. 3,048,941 3,799, ,300 Inter Pipeline Fund LP 3,144,160 3,410, ,400 Pacific Rubiales Energy Corp.* 2,950,085 4,202, ,000 Provident Energy Trust 2,513,880 2,541,000 13,657,066 16,413,384 TELECOMMUNICATION SERVICES (12.5%) 58,600 American Tower Corp., 2,966,146 3,089, ,800 BCE Inc. 3,703,656 3,876, ,800 Rogers Communications Inc., Class B* 4,206,338 4,260,260 96,000 TELUS Corp. 3,899,599 4,389,120 14,775,739 15,616,097 FINANCIALS (11.4%) 109,800 Calloway REIT 2,453,612 2,647, ,350 Chartwell Seniors Housing REIT 2,642,703 2,972,210 9,500 Fairfax Financial Holdings Ltd., Sub-Voting Shares* 3,859,625 3,971, ,600 RioCan REIT 2,946,752 3,268,392 1,160,000 Suntec Real Estate Investment Trust 1,264,139 1,352,383 13,166,831 14,212,213 CONSUMER DISCRETIONARY (9.3%) 119,200 Las Vegas Sands Corp.* 3,319,940 4,274,578 44,800 Magna International Inc., 3,511,900 3,782,016 94,700 Tim Hortons Inc. 3,336,856 3,549,356 10,168,696 11,605,950 INFORMATION TECHNOLOGY (7.6%) 149,800 Aruba Networks Inc.* 2,590,915 3,284,804 34,800 Baidu Inc., ADR 2,896,750 3,669, ,200 Skyworks Solutions, Inc. 2,505,121 2,471,501 7,992,786 9,425,664 No. of Shares/ Average Fair Par Value Cost ($) Value ($) HEALTH CARE (3.0%) 144,900 Valeant Pharmaceuticals International Inc.* 3,545,187 3,739,869 Commission and other portfolio transaction costs (180,606) Total Equities (99.7%) 110,976, ,071,143 DERIVATIVE INSTRUMENTS Short Option Contracts (0.0%) (see Schedule A) (17,001) (22,029) Total Investments (99.7%) 110,959, ,049,114 Other Assets (net) (0.3%) 431,288 Net Assets (100.0%) 124,480,402 *Denotes all or part of securities on loan. Percentages shown in brackets relate investments at fair value to net assets of the Fund. 3 CIG

6 Lakeview Disciplined Leadership Canadian Equity Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) Schedule A Short Option Contracts (0.0%) No. of underlying Expiry Strike Premium Paid Fair Contracts Interest Underlying Interest Date Price ($) (Received) ($) Value ($) (151) (15,100) IESI-BFC Ltd. - Call Option 16-Oct (8,003) (13,741) (226) (22,600) IESI-BFC Ltd. - Call Option 16-Oct (3,878) (7,232) (32) (3,200) Potash Corp. of Saskatchewan Inc. - Call Option 16-Oct (5,120) (1,056) Total Short Option Contracts Value (17,001) (22,029) Percentages shown in brackets relate investments at fair value to net assets of the Fund. 4

7 Lakeview Disciplined Leadership Canadian Equity Fund Financial Statements (unaudited) Statements of Net Assets (in $000 s except for per unit amounts and units outstanding) Assets Investments at fair value* Cash Short term investments Margin for short sales Income taxes recoverable Daily variation margin on derivative investments Unrealized gain on futures and forward currency contracts Cash collateral received for securities on loan (Note 6) Swaps, swaptions and options at fair value Receivable for unit subscriptions Receivable for securities sold Management fee rebate receivable Receivable for dividends and accrued interest Liabilities Bank overdraft Management fees payable Accrued expenses Unrealized loss on futures and forward currency contracts Swaps, swaptions and options at fair value Payable for securities purchased Payable for unit redemptions Payable for cash collateral under securities lending (Note 6) Investments sold short at fair value** Distributions payable Net assets and unitholders' equity **Investments at cost **Investments sold short at cost as at as at September 30, 2010 March 31, , ,908 1,132 2, ,292 2, , , ,840 3, ,157 4,602 5, , , , ,714 Statements of Operations for the periods ended September 30 (in $000 s except for per unit amounts) Income Dividends Interest Securities lending (Note 6) Derivative income (loss) Income distribution from investments Management fee rebate Less: Foreign withholding taxes Expenses Management fees (Note 5) Administrative fees (Note 5) Interest expense Goods and services tax/harmonized sales tax Net investment income (loss) for the period Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs Realized gain (loss) on investments Foreign exchange gain (loss) Commissions and other portfolio transaction costs Capital gain distribution from investments Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments per class (6) (21) 1, ,175 1, ,409 1, (665) 5,348 14,728 (108) (597) (1,053) (1,312) (6,104) 18,710 (1,917) 31,529 (1,781) 30,864 (1,579) 26,668 (149) 2,839 (53) 1,357 Net assets per class Net assets per unit (see Schedule of Net Assets per Unit and Net Asset Value per Unit) 106, ,118 14,423 16,945 3,796 4, per unit (Note 2) (0.16) 2.32 (0.11) 2.35 (0.14) 2.71 Number of units outstanding (see Schedule of Fund Unit Transactions) 9,013,798 10,347,442 1,204,703 1,409, , ,890 5

8 Lakeview Disciplined Leadership Canadian Equity Fund Financial Statements (unaudited) Statements of Changes in Net Assets for the periods ended September 30 (in $000 s) Statements of Changes in Net Assets (cont d) for the periods ended September 30 (in $000 s) Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 123, ,817 8,709 17,200 (23,987) (20,186) (15,278) (2,986) (1,579) 26, , ,499 Total Fund Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 144, ,759 10,503 21,184 (29,178) (22,543) (18,675) (1,359) (1,781) 30, , ,264 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 16,945 9,341 1,646 3,834 (4,019) (964) (2,373) 2,870 (149) 2,839 14,423 15,050 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 4,873 5, (1,172) (1,393) (1,024) (1,243) (53) 1,357 3,796 5,715 6

9 Lakeview Disciplined Leadership Canadian Equity Fund Financial Statements Supplementary Schedules (unaudited) Schedule of Fund Unit Transactions for the periods ended September 30 Schedule of Net Assets per Unit and Net Asset Value per Unit (Note 2) as at September 30 (in $) Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period 10,347,442 11,530, ,882 1,613,468 (2,085,526) (1,895,838) 9,013,798 11,247,766 1,409,844 1,008, , ,583 (345,793) (88,456) 1,204,703 1,290,925 Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period 379, ,441 11,376 13,237 (95,715) (124,098) 295, ,580 Schedule of Fees (Note 5) as at September 30 (%) 2010 Schedule of Commissions for the periods ended September 30 (in $000 s) Brokerage commissions 951 1,184 Soft Dollar commissions Annual management fee rate Annual fixed administration fee rate Paid directly by investors Schedule of Securities Lending (Note 6) as at September 30 (in $000 s) Loaned Collateral (non-cash) 19,636 29,121 20,120 29,703 A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund. 7

10 Lakeview Disciplined Leadership Canadian Equity Fund Fund Specific Financial Instruments Risks (Note 11) (unaudited) The Fund s investments were concentrated in the following segments: as at March 31, 2010 Categories Net Assets (%) Energy Materials Industrials Information Technology Financials Consumer Discretionary Health Care Telecommunication Services Other Assets (net) Warrants During the six-month period the Fund's exposure to credit risk, currency risk and interest rate risk changed significantly as disclosed in the section below. For details relating to other price risk and fair value hierarchy, refer to the audited annual financial statements as at March 31, 2010, as the Fund's exposure to those risks remains unchanged. Credit Risk As at September 30, 2010, the Fund did not have a significant exposure to credit risk as substantially all of its assets were invested in equities. As at March 31, 2010, the Fund was exposed to credit risk as some of its assets were invested in fixed income securities. The Fund was invested in fixed income securities, preferred securities and derivative instruments, as applicable, with the following credit ratings: as at March 31, 2010* Net Assets Credit Rating^ (%) AA/Aa/A+ 0.1 Not Rated 1.9 Total 2.0 *Credit ratings are obtained from Standard & Poor s, where available, otherwise ratings are obtained from: Moody's Investors Service, Dominion Bond Rating Services and Canadian Bond Rating Services, respectively. ^Refer to Note 11 for Credit Rating cross reference. Currency Risk The tables below summarize the Fund's exposure to currency risk. as at September 30, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 21,524-21, Singapore Dollar 1,352-1, Total 22,876-22, as at March 31, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 31,226 1,088 32, Total 31,226 1,088 32, As at September 30, 2010, had the Canadian dollar strengthened or weakened by 10% (March 31, %) in relation to all other foreign currencies held in the Fund, with all other variables held constant, net assets of the Fund would have decreased or increased, respectively, by approximately $2,288,000 (March 31, $3,231,000). In practice, actual results may differ from this analysis and the difference may be material. Interest Rate Risk As at September 30, 2010, the Fund did not have a significant exposure to interest rate risk as substantially all of its assets were invested in equities. As at March 31, 2010, the Fund was exposed to interest rate risk as some of its assets were invested in fixed income securities. The table below summarizes the Fund's exposure to interest rate risk, categorized by the contractual maturity date. as at March 31, 2010 Less than Greater 1 Year Years Years than 5 Years Total (in $000 s) (in $000 s) (in $000 s) (in $000 s) (in $000 s) Interest Rate Exposure 2,948-2,765-5,713 As at September 30, 2010, had the prevailing interest rates increased or decreased by 0.25% (March 31, %), with all other variables held constant, net assets of the Fund would have decreased or increased, respectively, by approximately $ - (March 31, $-). In practice, actual results may differ from this analysis and the difference may be material. 8

11 Lakeview Disciplined Leadership U.S. Equity Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) No. of Shares/ Average Fair Par Value Cost ($) Value ($) INFORMATION TECHNOLOGY (26.8%) 9,900 Akamai Technologies Inc. 488, ,984 1,800 Apple Computer Inc. 536, ,560 39,000 ARM Holdings PLC 719, ,454 15,800 Aruba Networks Inc.* 225, ,461 2,400 Baidu Inc., ADR 198, ,059 8,400 Cognizant Technology Solutions Corp. 448, ,251 13,400 Isilon Systems Inc.* 256, ,933 8,400 Red Hat Inc. 282, ,868 10,800 Riverbed Technology Inc. 354, ,316 12,400 Rovi Corp. 530, ,210 17,600 Skyworks Solutions Inc. 348, ,341 18,200 VeriFone Systems Inc. 482, ,684 4,873,722 5,712,121 CONSUMER DISCRETIONARY (16.9%) 3,000 Chipotle Mexican Grill Inc., 509, ,963 12,200 Ctrip.com International Ltd., ADR 558, ,191 35,000 Groupe Aeroplan Inc. 431, ,700 13,800 Home Inns & Hotels Management Inc. 642, ,204 18,800 Las Vegas Sands Corp.* 569, ,178 13,700 Yum! Brands Inc. 631, ,897 3,343,155 3,596,133 INDUSTRIALS (15.9%) 10,500 Baldor Electric Co. 429, ,501 5,400 Caterpillar Inc. 440, ,192 7,400 Deere & Co. 533, ,345 19,500 Oclaro Inc. 323, ,846 27,200 Tata Motors Ltd., ADR* 534, ,873 5,200 Union Pacific Corp. 434, ,373 25,000 Westshore Terminals Inc. 445, ,000 3,141,343 3,393,130 MATERIALS (9.3%) 7,700 Agnico-Eagle Mines Ltd. 563, ,946 5,800 Agrium Inc.* 418, ,890 31,000 Osisko Mining Corp. 439, ,150 19,000 Silver Wheaton Corp. 445, ,460 1,866,832 1,982,446 TELECOMMUNICATION SERVICES (9.1%) 16,100 American Tower Corp., 788, ,886 18,700 AT&T Inc. 548, ,328 16,200 BCE Inc. 511, ,376 1,849,479 1,941,590 FINANCIALS (8.7%) 27,000 Banco Bradesco SA, Preferred, ADR 531, ,660 5,800 Bank of Nova Scotia 310, , ,000 Suntec Real Estate Investment Trust 522, ,948 7,900 Ventas Inc. 395, ,810 1,760,177 1,850,954 ENERGY (7.8%) 1,600 CNOOC Ltd., ADR 309, , ,500 Gran Tierra Energy Inc. 800, ,550 4,500 Whiting Petroleum Corp. 449, ,795 1,559,693 1,665,943 No. of Shares/ Average Fair Par Value Cost ($) Value ($) CONSUMER STAPLES (2.9%) 3,100 Cia de Bebidas das Americas, ADR 352, ,302 7,000 Green Mountain Coffee Roasters Inc. 242, , , ,963 HEALTH CARE (2.5%) 19,200 Bristol-Myers Squibb Co. 535, ,605 FUNDS (2.3%) 27,600 PowerShares DWA Emerging Markets Technical Leaders Portfolio 442, ,722 Commission and other portfolio transaction costs (31,418) Total Equities (102.2%) 19,934,912 21,793,607 DERIVATIVE INSTRUMENTS Short Option Contracts (-0.2%) (see Schedule A) (40,267) (40,267) Total Investments (102.0%) 19,894,645 21,753,340 Other Assets (net) (-2.0%) (461,145) Net Assets (100.0%) 21,292,195 CI Investments Inc., the Manager, is a corporation controlled by CI Financial Corp. Bank of Nova Scotia has a significant interest in CI Financial Corp. Investments in Bank of Nova Scotia are identified above. *Denotes all or part of securities on loan. Percentages shown in brackets relate investments at fair value to net assets of the Fund. 9 CIG

12 Lakeview Disciplined Leadership U.S. Equity Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) Schedule A Short Option Contracts (-0.2%) No. of underlying Expiry Strike Premium Paid Fair Contracts Interest Underlying Interest Date Price ($) (Received) ($) Value ($) (120) (12,000) Ctrip.com International Ltd. - Call Option 20-Nov (12,462) (12,462) (80) (8,000) Red Hat Inc. - Call Option 20-Nov (6,174) (6,174) (120) (12,000) Rovi Corp. - Call Option 20-Nov (10,178) (10,179) (175) (17,500) Skyworks Solutions Inc. - Call Option 20-Nov (11,453) (11,452) Total Short Option Contracts Value (40,267) (40,267) Percentages shown in brackets relate investments at fair value to net assets of the Fund. 10

13 Lakeview Disciplined Leadership U.S. Equity Fund Financial Statements (unaudited) Statements of Net Assets (in $000 s except for per unit amounts and units outstanding) Assets Investments at fair value* Cash Short term investments Margin for short sales Income taxes recoverable Daily variation margin on derivative investments Unrealized gain on futures and forward currency contracts Cash collateral received for securities on loan (Note 6) Swaps, swaptions and options at fair value Receivable for unit subscriptions Receivable for securities sold Management fee rebate receivable Receivable for dividends and accrued interest Liabilities Bank overdraft Management fees payable Accrued expenses Unrealized loss on futures and forward currency contracts Swaps, swaptions and options at fair value Payable for securities purchased Payable for unit redemptions Payable for cash collateral under securities lending (Note 6) Investments sold short at fair value** Distributions payable Net assets and unitholders' equity **Investments at cost **Investments sold short at cost as at as at September 30, 2010 March 31, ,794 24, ,428 1, ,739 26, ,157 1, ,447 1,691 21,292 24,779 19,935 23,552 Statements of Operations for the periods ended September 30 (in $000 s except for per unit amounts) Income Dividends Interest Securities lending (Note 6) Derivative income (loss) Income distribution from investments Management fee rebate Less: Foreign withholding taxes Expenses Management fees (Note 5) Administrative fees (Note 5) Interest expense Goods and services tax/harmonized sales tax Net investment income (loss) for the period Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs Realized gain (loss) on investments Foreign exchange gain (loss) Commissions and other portfolio transaction costs Capital gain distribution from investments Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments per class (8) (12) (105) (323) 1,793 4,940 (132) (400) (322) (644) 873 1,107 2,212 5,003 2,107 4,680 1,704 3, Net assets per class Net assets per unit (see Schedule of Net Assets per Unit and Net Asset Value per Unit) 17,744 20,211 2,554 3, , per unit (Note 2) Number of units outstanding (see Schedule of Fund Unit Transactions) 1,625,405 2,021, , ,981 75, ,361 11

14 Lakeview Disciplined Leadership U.S. Equity Fund Financial Statements (unaudited) Statements of Changes in Net Assets for the periods ended September 30 (in $000 s) Statements of Changes in Net Assets (cont d) for the periods ended September 30 (in $000 s) Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 20,211 29, ,561 (5,048) (5,774) (4,171) (2,213) 1,704 3,759 17,744 31,415 Total Fund Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 24,779 36,564 1,035 4,202 (6,629) (6,457) (5,594) (2,255) 2,107 4,680 21,292 38,989 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 3,136 4, (1,023) (586) (865) ,554 4,998 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 1,432 2,342-5 (558) (97) (558) (92) ,576 12

15 Lakeview Disciplined Leadership U.S. Equity Fund Financial Statements Supplementary Schedules (unaudited) Schedule of Fund Unit Transactions for the periods ended September 30 Schedule of Net Assets per Unit and Net Asset Value per Unit (Note 2) as at September 30 (in $) Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period 2,021,476 2,999,577 83, ,576 (479,347) (531,156) 1,625,405 2,796, , ,610 14,272 56,350 (91,263) (51,104) 220, ,856 Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period Schedule of Commissions for the periods ended September 30 (in $000 s) 119, , (44,312) (7,429) 75, ,206 Brokerage commissions Soft Dollar commissions Schedule of Fees (Note 5) as at September 30 (%) Annual management fee rate Annual fixed administration fee rate Paid directly by investors Schedule of Securities Lending (Note 6) as at September 30 (in $000 s) Loaned Collateral (non-cash) 2,814 4,490 2,896 4,580 A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund. 13

16 Lakeview Disciplined Leadership U.S. Equity Fund Fund Specific Financial Instruments Risks (Note 11) (unaudited) The Fund s investments were concentrated in the following segments: as at March 31, 2010 Categories Net Assets (%) Information Technology Consumer Discretionary Health Care Financials Industrials Consumer Staples Materials Energy Telecommunication Services Other Assets (net) Future Contracts During the six-month period the Fund's exposure to currency risk changed significantly as disclosed in the section below. For details relating to other price risk, credit risk, interest rate risk and fair value hierarchy refer to the audited annual financial statements as at March 31, 2010, as the Fund's exposure to those risks remains unchanged. Currency Risk The tables below summarize the Fund's exposure to currency risk. as at September 30, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 16,895 (40) 16, Singapore Dollar Total 17,443 (40) 17, as at March 31, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 21,976 (22,208) (232) (0.9) Total 21,976 (22,208) (232) (0.9) As at September 30, 2010, had the Canadian dollar strengthened or weakened by 10% (March 31, %) in relation to all other foreign currencies held in the Fund, with all other variables held constant, net assets of the Fund would have decreased or increased, respectively, by approximately $1,740,000 (March 31, $23,000). In practice, actual results may differ from this analysis and the difference may be material. 14

17 Lakeview Disciplined Leadership High Income Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) No. of Shares/ Average Fair Par Value Cost ($) Value ($) No. of Shares/ Average Fair Par Value Cost ($) Value ($) FINANCIALS (40.7%) 195,100 Allied Properties REIT 3,516,912 4,417, ,000 Annaly Capital Management Inc. 2,583,004 2,549, ,300 Artis REIT 4,035,093 4,555,375 2,300,000 Bank of Montreal Capital Trust II, Callable, % 12/31/2107 2,358,940 3,016, ,300 Bank of Nova Scotia 6,762,144 6,881,476 51,500 Boardwalk REIT 1,945,035 2,413,805 1,600,000 Brookfield Asset Management Inc., 8.95% 06/02/2014 1,596,832 1,879, ,400 Brookfield Properties Corp.* 4,253,999 5,622, ,000 Calloway REIT 5,840,935 7,715,200 2,000,000 Canadian Imperial Bank of Commerce 9.976% 06/30/2108 2,018,560 2,562, ,100 Chartwell Seniors Housing REIT 4,351,768 6,548, ,100 Cominar REIT 5,469,146 5,979,818 2,500,000 Cominar REIT 6.5% 09/30/2016 2,500,000 2,668,750 44,000 Digital Realty Trust Inc. 2,842,223 2,789, ,200 Extendicare REIT 4,108,241 4,494,442 3,740,000 Fairfax Financial Holdings Ltd., 7.25% 06/22/2020 3,746,600 3,975, ,150 First National Finance Income Fund 2,328,882 3,042,130 5,300,000 Ford Credit Canada Ltd., 7.5% 08/18/2025 5,303,250 5,560,698 3,250,000 Genworth MI Canada Inc., 5.68% 06/15/2020 3,248,375 3,391,596 USD 900,000 Great-West Life & Annuity Insurance Co., 7.153% 05/16/ , ,314 1,730,000 H&R Real Estate Investment Trust 6% 06/30/2017 1,808,912 1,894, ,800 H&R REIT 4,568,709 7,025,392 2,400,000 Morguard Corp., 6.5% 09/30/2014 2,400,000 2,544,000 90,900 National Bank of Canada 6,006,798 5,898,501 USD 2,200,000 National Money Mart Co., % 12/15/2016 2,366,544 2,410, ,800 Northern Property REIT 1,821,774 3,783, ,000 NorthWest Healthcare Properties REIT 2,200,000 2,536, ,100 Primaris Retail REIT 5,721,009 6,076, ,000 RioCan REIT 5,853,490 6,646,800 2,981,000 Suntec Real Estate Investment Trust 3,278,419 3,475,392 14,800 Western Financial Group Inc., 6.75%, Preferred, Series A* 1,480,000 1,243, ,189, ,499,179 ENERGY (21.7%) 202,100 Baytex Energy Trust 5,730,593 7,532, ,200 Bonavista Energy Trust 3,767,299 3,731,618 USD 2,000,000 Calfrac Holdings LP 7.75% 02/15/2015 2,041,251 2,078, ,500 Enbridge Inc.* 5,601,413 5,999, ,299 Inter Pipeline Fund LP 4,848,864 7,254, ,281 Keyera Facilities Income Fund 4,414,579 5,587,327 4,450,000 North American Energy Partners Inc., 9.125% 04/07/2017 4,458,250 4,491,719 2,000,000 Parkland Income Fund 6.5% 11/30/2014 2,000,000 2,100, ,600 Pembina Pipeline Income Fund 5,575,729 7,098,368 ENERGY (21.7%) (cont d) 3,300,000 Progress Energy Resources Corp., 5.25% 10/31/2014 3,300,000 3,315, ,100 Provident Energy Trust 4,041,435 4,160, ,200 TransCanada Corp.* 5,915,432 5,847, ,558 Vermilion Energy Inc.* 6,258,060 7,326,955 57,952,905 66,524,663 INDUSTRIALS (9.2%) 8,151,000 Air Canada % 08/01/2015 8,215,464 8,259, ,300 Jazz Air Income Fund 3,236,144 3,044,378 3,800,000 Jazz Air Income Fund 9.5% 12/31/2014 3,844,962 4,104,000 3,000,000 RTL-Westcan LP 9.5% 04/07/2017 3,000,000 3,003,750 1,300,000 SNC-Lavalin Group Inc., 6.19% 07/03/2019 1,300,000 1,471, ,838 Westshore Terminals Inc. 4,900,030 8,144,570 24,496,600 28,027,824 CONSUMER DISCRETIONARY (9.1%) 333,000 Cineplex Galaxy Income Fund 5,870,858 6,916,410 1,900,000 Corus Entertainment Inc., Callable, 7.25% 02/10/2017 1,900,000 1,979, ,900 Groupe Aeroplan Inc. 7,835,775 8,681,298 1,700,000 Groupe Aeroplan Inc., 6.95% 01/26/2017 1,706,528 1,796,638 1,700,000 Superior Plus Corp., 8.25% 10/27/2016 1,700,000 1,746,750 2,400,000 Superior Plus Corp., Convertible, 7.5% 12/31/2014 2,400,000 2,553,840 2,000,000 Videotron Ltee 7.125% 01/15/2020 2,000,000 2,105,673 2,000,000 Yellow Pages Income Fund 7.75% 03/02/2020 2,028,475 2,143,755 25,441,636 27,923,764 MATERIALS (5.7%) 421,500 Canfor Pulp Income Fund 4,434,462 6,073, ,300 Labrador Iron Ore Royalty Corp. 5,138,279 6,388,200 2,250,000 Russel Metals Inc., Convertible, 7.75% 09/30/2016 2,250,000 2,486,250 2,400,000 Uranium One Inc., 7.5% 03/13/2015 2,400,000 2,544,960 14,222,741 17,493,225 TELECOMMUNICATION SERVICES (5.5%) 198,600 BCE Inc. 6,349,445 6,649,128 2,500,000 Rogers Communications Inc., 6.11% 08/25/2040 2,497,600 2,587, ,800 TELUS Corp. 6,848,504 7,488,936 15,695,549 16,725,114 UTILITIES (3.2%) 2,000,000 Atlantic Power Corp., 6.25% 03/15/2017 2,000,000 2,181, ,500 Brookfield Renewable Power Fund 4,892,013 5,616,380 2,000,000 Innergex Renewable Energy Inc., 5.75% 04/30/2017 2,000,000 2,070,000 8,892,013 9,867,580 HEALTH CARE (1.4%) 306,100 Leisureworld Senior Care Corp.* 3,061,000 3,131,403 1,000,000 Plenary Health Bridgepoint LP 7.246% 08/31/2042 1,019,180 1,127,180 4,080,180 4,258,583 CI Investments Inc., the Manager, is a corporation controlled by CI Financial Corp. Bank of Nova Scotia has a significant interest in CI Financial Corp. Investments in Bank of Nova Scotia are identified above. *Denotes all or part of securities on loan. Percentages shown in brackets relate investments at fair value to net assets of the Fund. 15 CIG

18 Lakeview Disciplined Leadership High Income Fund Statement of Investment Portfolio as at September 30, 2010 (unaudited) No. of Shares/ Average Fair Par Value Cost ($) Value ($) FUNDS (1.1%) 3,300,000 IBI Income Fund 7% 12/31/2014 3,300,000 3,481,500 Commission and other portfolio transaction costs (283,639) Total Bonds & Equities (97.6%) 260,987, ,801,432 DERIVATIVE INSTRUMENTS Short Option Contracts (0.0%) (see Schedule A) (17,150) (43,400) Total Investments (97.6%) 260,970, ,758,032 Other Assets (net) (2.4%) 7,394,593 Net Assets (100.0%) 306,152,625 Principal amounts stated in: USD U.S. Dollar Schedule A Short Option Contracts (0.0%) No. of underlying Expiry Strike Premium Paid Fair Contracts Interest Underlying Interest Date Price ($) (Received) ($) Value ($) (350) (35,000) TELUS Corp. - Call Option 20-Nov (17,150) (43,400) Total Short Option Contracts Value (17,150) (43,400) Percentages shown in brackets relate investments at fair value to net assets of the Fund. 16

19 Lakeview Disciplined Leadership High Income Fund Financial Statements (unaudited) Statements of Net Assets (in $000 s except for per unit amounts and units outstanding) Assets Investments at fair value* Cash Short term investments Margin for short sales Income taxes recoverable Daily variation margin on derivative investments Unrealized gain on futures and forward currency contracts Cash collateral received for securities on loan (Note 6) Swaps, swaptions and options at fair value Receivable for unit subscriptions Receivable for securities sold Management fee rebate receivable Receivable for dividends and accrued interest Liabilities Bank overdraft Management fees payable Accrued expenses Unrealized loss on futures and forward currency contracts Swaps, swaptions and options at fair value Payable for securities purchased Payable for unit redemptions Performance fees payable Payable for cash collateral under securities lending (Note 6) Investments sold short at fair value** Distributions payable Net assets and unitholders' equity **Investments at cost **Investments sold short at cost Net assets per class as at as at September 30, 2010 March 31, , ,047 3,385 4, ,662 2,012 2,759 7,569 2,990 2, , , ,620 4, ,444 4, , , , , , ,810 26,469 14,385 18,557 16,368 Statements of Operations for the periods ended September 30 (in $000 s except for per unit amounts) Income Dividends Interest Securities lending (Note 6) Derivative income (loss) Income distribution from investments Management fee rebate Less: Foreign withholding taxes Expenses Management fees (Note 5) Administrative fees (Note 5) Interest expense Goods and services tax/harmonized sales tax Net investment income (loss) for the period Realized and unrealized gain (loss) on investments and commissions and other portfolio transaction costs Realized gain (loss) on investments Foreign exchange gain (loss) Commissions and other portfolio transaction costs Capital gain distribution from investments Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments per class per unit (Note 2) 2,605 1,627 5,570 3, (44) (24) 8,210 4,863 2,243 1, ,708 1,484 5,502 3,379 7,398 (1,902) (12) (44) (460) (298) 8,896 23,401 15,822 21,157 21,324 24,536 18,001 21,373 1,808 1,115 1,515 2, Net assets per unit (see Schedule of Net Assets per Unit and Net Asset Value per Unit) Number of units outstanding (see Schedule of Fund Unit Transactions) 21,102,540 16,814,106 2,026,173 1,160,103 1,242,837 1,165,103 17

20 Lakeview Disciplined Leadership High Income Fund Financial Statements (unaudited) Statements of Changes in Net Assets for the periods ended September 30 (in $000 s) Statements of Changes in Net Assets (cont d) for the periods ended September 30 (in $000 s) Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 198, ,014 67,790 27,145 5,351 4,214 (22,036) (13,740) 51,105 17,619 (1,771) - (3,294) (2,580) (1,724) (2,646) (6,789) (5,226) 18,001 21, , ,780 Total Fund Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 229, ,825 83,294 33,146 6,099 4,662 (26,348) (15,985) 63,045 21,823 (2,036) - (3,762) (2,906) (1,981) (2,972) (7,779) (5,878) 21,324 24, , ,306 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 14,385 4,566 12,362 2, (1,978) (327) 10,831 2,514 (154) - (252) (126) (149) (134) (555) (260) 1,808 1,115 26,469 7,935 Net assets, beginning of period Capital transactions Proceeds from units issued Reinvested distributions (Note 7) Amounts paid for units redeemed Distributions to investors From realized gains From net income From return of capital Net assets, end of period 16,368 11,245 3,142 3, (2,334) (1,918) 1,109 1,690 (111) - (216) (200) (108) (192) (435) (392) 1,515 2,048 18,557 14,591 18

21 Lakeview Disciplined Leadership High Income Fund Financial Statements Supplementary Schedules (unaudited) Schedule of Fund Unit Transactions for the periods ended September 30 Schedule of Net Assets per Unit and Net Asset Value per Unit (Note 2) as at September 30 (in $) Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period 16,814,106 11,455,528 5,696,575 2,649, , ,351 (1,857,862) (1,335,351) 21,102,540 13,176,874 1,160, , , ,158 35,635 20,516 (158,690) (30,431) 2,026, ,949 Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Net assets per unit Net asset value per unit Balance, beginning of period Units issued for cash Units issued for reinvested distributions (Note 7) Units redeemed Balance, end of period Schedule of Commissions for the periods ended September 30 (in $000 s) 1,165,103 1,026, , ,545 21,114 19,001 (164,967) (163,673) Brokerage commissions Soft Dollar commissions Schedule of Fees (Note 5) as at September 30 (%) 1,242,837 1,150,958 Annual management fee rate Annual fixed administration fee rate Paid directly by investors Schedule of Securities Lending (Note 6) as at September 30 (in $000 s) Loaned Collateral (non-cash) 35,763 10,759 36,700 11,006 A portion of brokerage commissions paid was used to cover research and market data services, termed soft dollar commissions. This amount has been estimated by the Manager of the Fund. 19

22 Lakeview Disciplined Leadership High Income Fund Fund Specific Financial Instruments Risks (Note 11) (unaudited) The Fund s investments were concentrated in the following segments: as at March 31, 2010 Categories Net Assets (%) Financials Energy Consumer Discretionary Industrials Utilities Materials Other Assets (net) Health Care Consumer Staples Telecommunication Services During the six-month period the Fund's exposure to other price risk, credit risk, currency risk, interest rate risk and fair value hierarchy changed significantly as disclosed in the section below. Other Price Risk As at September 30, 2010 and March 31, 2010, the Fund was invested in Canadian equities and therefore was sensitive to changes in general economic conditions in Canada, however some of the Fund's assets were invested in fixed income securities and their market risk exposure is described below. As at September 30, 2010, had the Canadian markets increased or decreased by 10% (March 31, %), with all other variables held constant, net assets of the Fund would have increased or decreased, respectively, by approximately $21,037,000 (March 31, $14,456,000). In practice, actual results may differ from this analysis and the difference may be material. Credit Risk The Fund was invested in fixed income securities, preferred securities and derivative instruments, as applicable, with the following credit ratings: as at September 30, 2010* Net Assets Credit Rating^ (%) AAA/Aaa/A++ - AA/Aa/A+ - A 4.2 BBB/Baa/B BB/Ba/B+ 1.9 B 8.4 CCC/Caa/C++ - CC/Ca/C+ - C and Lower - Not Rated 10.0 Total 29.2 Credit Risk (cont d) as at March 31, 2010* Net Assets Credit Rating^ (%) AA/Aa/A+ 1.1 A 4.8 BBB/Baa/B BB/Ba/B+ 3.8 B 4.8 Not Rated 13.0 Total 33.4 *Credit ratings are obtained from Standard & Poor s, where available, otherwise ratings are obtained from: Moody's Investors Service, Dominion Bond Rating Services and Canadian Bond Rating Services, respectively. ^Refer to Note 11 for Credit Rating cross reference. Currency Risk The tables below summarize the Fund's exposure to currency risk. as at September 30, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 10,984-10, Singapore Dollar 3,475-3, Total 14,459-14, as at March 31, 2010 Financial Instruments Derivatives Total Currency Net Exposure Exposure Exposure Assets Currency (in $000 s) (in $000 s) (in $000 s) (%) US Dollar 8,761-8, Total 8,761-8, As at September 30, 2010, had the Canadian dollar strengthened or weakened by 10% (March 31, %) in relation to all other foreign currencies held in the Fund, with all other variables held constant, net assets of the Fund would have decreased or increased, respectively, by approximately $1,446,000 (March 31, $876,000). In practice, actual results may differ from this analysis and the difference may be material. 20

23 Lakeview Disciplined Leadership High Income Fund Fund Specific Financial Instruments Risks (Note 11) (unaudited) Interest Rate Risk The tables below summarize the Fund's exposure to interest rate risk, categorized by the contractual maturity date. as at September 30, 2010 Less than Greater 1 Year Years Years than 5 Years Total (in $000 s) (in $000 s) (in $000 s) (in $000 s) (in $000 s) Interest Rate Exposure 3,385-32,861 55,570 91,816 as at March 31, 2010 Less than Greater 1 Year Years Years than 5 Years Total (in $000 s) (in $000 s) (in $000 s) (in $000 s) (in $000 s) Interest Rate Exposure 7,983 1,503 28,049 40,652 78,187 As at September 30, 2010, had the prevailing interest rates increased or decreased by 0.25% (March 31, %), with all other variables held constant, net assets of the Fund would have decreased or increased, respectively, by approximately $1,099,000 (March 31, $878,000). In practice, actual results may differ from this analysis and the difference may be material. Fair Value Hierarchy The tables below summarize the inputs used by the Fund in valuing the Fund s investments and derivatives carried at fair value. Long Positions at fair value as at September 30, 2010 Level 1 Level 2 Level 3 Total (in $000's) (in $000's) (in $000's) (in $000's) Equities 210, ,370 Bonds - 88,431-88,431 Total 210,370 88, ,801 Short Positions at fair value as at September 30, 2010 Level 1 Level 2 Level 3 Total (in $000's) (in $000's) (in $000's) (in $000's) Option Contracts (43) (43) Total (43) (43) Long Positions at fair value as at March 31, 2010 Level 1 Level 2 Level 3 Total (in $000's) (in $000's) (in $000's) (in $000's) Equities 144, ,563 Bonds - 73,484-73,484 Total 144,563 73, ,047 21

24 Lakeview Disciplined Leadership Funds Notes to the Financial Statements as at September 30, 2010 (unaudited) 1. THE FUND The Lakeview Disciplined leadership Funds consist of Lakeview Disciplined Leadership High Income Fund, Lakeview Disciplined Leadership Canadian Equity Fund and Lakeview Disciplined Leadership U.S. Equity Fund collectively ( the Funds ) and are mutual fund trusts governed by the laws of Ontario pursuant to a master declaration of trust. The Funds were established on June 15, 2004 and operations commenced on July 5, At the financial reporting date, listed securities are valued based on the bid price for securities held long and the ask price for securities held short. Unlisted securities are valued based on price quotations from recognized investment dealers, or failing that, their fair value is determined by the Manager on the basis of the latest reported information available. Fixed income securities, debentures, money market investments and other debt instruments including short-term investments, are valued at the bid quotation from recognized investment dealers. The Funds Amended and Restated Master Declaration of Trust dated July 20, 2007 established the creation of three classes for each Fund:, and units. units are available to all investors. units are available to investors who participate in certain programs or are members of certain groups. units are available to institutional clients and investors who have been approved and have entered into a Account Agreement with CI Investments Inc. Effective October 1, 2008, the Lakeview Funds changed their financial year end from December 31 to March 31. The fair value of private placements is determined by using valuation models that are based, in part, on assumptions that are not supported by observable market inputs. These methods and procedures may include, but are not limited to, performing comparisons with prices of comparable or similar securities, obtaining valuation related information from issuers and/or other analytical data relating to the investment and using other available indications of value. These values are independently assessed by the Manager to ensure that they are reasonable. However, because of the inherent uncertainty of valuation, the estimated fair values for the aforementioned securities and interests may be materially different from the values that would have been used had a ready market for the investment existed. The fair values of private placements are affected by the perceived credit risks of the issuer, predictability of cash flows and the length of time to maturity. The Statement of Investment Portfolio and Schedule of Fees for each of the Funds are as at September 30, The Statements of Net Assets for each of the Funds are as at September 30, 2010 and March 31, The Schedule of Net Assets per Unit and Net Asset Value per Unit and Schedule of Securities Lending are as at September 30, 2010 and The Statements of Operations, Statements of Changes in Net Assets, Schedule of Fund Unit Transactions and Schedule of Commissions are for the periods ended September 30, 2010 and The Fund Specific Financial Instruments Risks for each of the Funds are as at September 30, 2010 and March 31, 2010, where applicable. 2. SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared in accordance with Canadian Generally Accepted Accounting Principles ( Canadian GAAP ). Significant accounting policies used in preparing the semi-annual financial statements are consistent with those used in preparing the annual financial statements. The semi-annual financial statements should be read in conjunction with the Funds March 31, 2010 annual financial statements. (a) Accounting Amendments The Canadian Institute of Chartered Accountants ( CICA ) amended Section 3862 Financial Instruments Disclosures to require disclosures about the inputs to fair value measurements. Amended Section 3862 became effective for annual financial statements relating to fiscal years ending after September 30, The Funds adopted the amendments to Section 3862 in the March 31, 2010 financial statements. (c) Options Contracts Option contracts are valued each valuation day according to the gain or loss that would be realized if the contracts were closed out. All gains or losses arising from option contracts are recorded as part of Change in unrealized appreciation (depreciation) of investments until the contracts are closed out or expire, at which time the gains (losses) are realized and reflected in the Statements of Operations in Realized gain (loss) on investments. Over-the-counter options are valued using the Black & Scholes model, whereas, exchange traded options are valued at bid/ask price taken from the exchange. 3. UNITHOLDERS EQUITY Units issued and outstanding represent the capital of each Fund. Each Fund is authorized to issue an unlimited number of redeemable, transferable units of each class. Generally the Funds have no restrictions or specific capital requirements, except for the minimum subscription / redemption amounts. The relevant changes pertaining to subscription and redemption of each Fund s units are disclosed in the Statements of Changes in Net Assets and the Schedule of Fund Unit Transactions. In accordance with the objectives and risk management polices outlined in Note 11, the Funds endeavor to invest subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions through utilizing a short-term borrowing facility or disposal of investments when necessary. (b) Valuation of Investments Canadian GAAP requires the fair value of financial instruments traded in an active market to be measured based on an investment s bid/ask price depending on the investment position (long/short). For the purpose of processing unitholder transactions, net asset value is calculated based on the closing market price of investments (referred to as Net Asset Value ), while for financial statement purposes net assets are calculated based on bid/ask price of investments (referred to as Net Assets ). In accordance with National Instrument , a comparison between the Net Asset Value per unit and the Net Assets per unit is disclosed in the Schedule of Net Assets per Unit and Net Asset Value per Unit. 4. INCOME TAXES The Funds qualify as mutual fund trusts under the provisions of the Income Tax Act (Canada) and are not subject to tax on net income, including net realized taxable capital gains for the taxation year, which is paid or payable to unitholders at the end of the taxation year. However, such part of each Fund s taxable income and net realized capital gains that is not so paid or payable will be taxable to that Fund. Income tax on net realized capital gains not paid or payable will generally be recoverable by virtue of refunding provisions contained in the Income Tax Act (Canada) and provincial income tax legislation, as redemptions occur. It is the intention of each Fund to distribute all net income and sufficient net realized capital gains so that the Fund will not generally be liable for income tax thereon. Occasionally, a Fund may distribute more than it earns. This excess distribution is a return of capital and is not taxable to unitholders. 22