MD Family of Funds 2016 ANNUAL FINANCIAL STATEMENTS

MD Family of Funds 2016 ANNUAL FINANCIAL STATEMENTS

A Message About 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 Annual Financial Statements. The Annual Financial Statements are produced on a fund-by-fund basis, and your report only includes information on the funds you owned as of December 31, 2016. If you have any questions regarding these documents, please contact your MD Advisor or the MD Trade Centre at 1 800 267-2332. We thank you for your continued investment in the MD Family of Funds. Audited Annual Financial Statements for the Year Ended December 31, 2016 These audited Annual Financial Statements do not contain the Annual Management Report of Fund Performance ( MRFP ) of the investment fund. If you have not received a copy of the Annual MRFP with this report, you may obtain a copy of the Annual MRFP at your request, and at no cost, by calling the toll-free number 1 800 267-2332, by writing to us at MD Financial Management Inc., 1870 Alta Vista Dr., Ottawa ON K1G 6R7, by visiting our website at md.cma.ca or by visiting the SEDAR website at sedar.com. 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. MD Financial Management Inc. wholly owns or has a majority interest in its seven subsidiaries (the MD Group of Companies). It provides financial products and services, is the fund manager for the MD Family of Funds and offers investment counselling services. For a detailed list of the MD Group of 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 1 800 267-2332.

MD Family of Funds Management s Responsibility for Financial Reporting Management acknowledges responsibility for the preparation and presentation of the financial statements of MD Money Fund, MD Bond Fund, MD Short-Term Bond Fund, MD Balanced Fund, MD Dividend Income Fund, MD Dividend Growth Fund, MD Equity Fund, MD Select Fund, MD American Value Fund, MD American Growth Fund, MD International Value Fund, MD International Growth Fund, MD Growth Investments Limited, MD Strategic Yield Fund, MD Strategic Opportunities Fund, MD Precision Conservative Portfolio, MD Precision Moderate Balanced Portfolio, MD Precision Balanced Growth Portfolio, MD Precision Maximum Growth Portfolio, MD Precision Balanced Income Portfolio, MD Precision Moderate Growth Portfolio, MDPIM Canadian Equity Pool, MDPIM US Equity Pool, MD Fossil Fuel Free Bond Fund and MD Fossil Fuel Free Equity Fund (collectively the funds ). These financial statements have also been approved, in its capacity as trustee, by the Board of Directors of MD Financial Management Inc., with the exception of MD Growth Investments Limited, which has been approved by its own Board of Directors. The financial statements have been prepared by management in accordance with International Financial Reporting Standards. When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Management has, where required, made these judgments and estimates on a reasonable basis to ensure that the financial statements are presented fairly in all material respects. Management also maintains strong internal controls to provide reasonable assurance that the financial information provided is reliable and accurate, that the funds assets are appropriately accounted for and safeguarded, and that any compliance requirements arising under corporate legislation, securities regulations and internal codes of business conduct are strictly adhered to. The Board of Directors of MD Financial Management Inc. and MD Growth Investments Limited are responsible to ensure that management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the respective financial statements as outlined above. The Board of Directors for MD Financial Management Inc. and MD Growth Investments Limited ( the Boards ), meet with the external auditors periodically to discuss internal control, accounting and auditing matters and financial reporting issues in order to satisfy themselves that each party s Board of Directors has properly discharged its statutory responsibilities with regard to financial reporting. The Boards review unaudited semi-annual financial statements and audited annual financial statements including the external auditors report thereon. The Boards consider these findings when making their ultimate approval of the financial statements for issuance. The Boards also review the appointment of the external auditors annually. The financial statements have been audited by PricewaterhouseCoopers LLP, the external auditors, in accordance with Canadian generally accepted standards. PricewaterhouseCoopers LLP has full and free access to the MD Financial Management Inc. and MD Growth Investment Limited Boards. Signed on behalf of MD Growth Investments Limited. Brian Peters President and Chief Executive Officer MD Growth Investments Limited John Riviere Chief Financial Officer MD Growth Investments Limited Signed on behalf of MD Financial Management Inc., in its capacity as trustee for MD Money Fund, MD Bond Fund, MD Short-Term Bond Fund, MD Balanced Fund, MD Dividend Income Fund, MD Dividend Growth Fund, MD Equity Fund, MD Select Fund, MD American Value Fund, MD American Growth Fund, MD International Value Fund, MD International Growth Fund, MD Strategic Yield Fund, MD Strategic Opportunities Fund, MD Precision Conservative Portfolio, MD Precision Moderate Balanced Portfolio, MD Precision Balanced Growth Portfolio, MD Precision Maximum Growth Portfolio, MD Precision Balanced Income Portfolio, MD Precision Moderate Growth Portfolio, MDPIM Canadian Equity Pool, MDPIM US Equity Pool, MD Fossil Fuel Free Bond Fund and MD Fossil Fuel Free Equity Fund. Brian Peters President and Chief Executive Officer MD Financial Management Inc. John Riviere Chief Financial Officer MD Financial Management Inc.

March 10, 2017 Independent Auditor s Report To the Unitholders and Trustee of: MD American Growth Fund MD American Value Fund MD Balanced Fund MD Bond Fund MD Dividend Growth Fund MD Dividend Income Fund MD Equity Fund MD Fossil Fuel Free Bond Fund* MD Fossil Fuel Free Equity Fund* MD International Growth Fund MD International Value Fund MD Money Fund MD Select Fund MD Short-Term Bond Fund MD Strategic Opportunities Fund MD Strategic Yield Fund MDPIM Canadian Equity Pool MDPIM US Equity Pool MD Precision Moderate Balanced Portfolio MD Precision Balanced Growth Portfolio MD Precision Balanced Income Portfolio MD Precision Conservative Portfolio MD Precision Maximum Growth Portfolio MD Precision Moderate Growth Portfolio *For the period May 11 December 31, 2016 And To the Shareholders of: MD Growth Investments Limited (collectively, the Funds) We have audited the accompanying financial statements of the Funds, which comprise the statements of financial position as at the dates indicated in the accompanying financial statements and the statements of comprehensive income, statements of changes in net assets attributable to holders of redeemable shares/units and statements of cash flow for the periods then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. PricewaterhouseCoopers LLP PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2 T: +1 416 863 1133, F: +1 416 365 8215 PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as at December 31, 2016 and 2015 and their financial performance and their cash flows for the periods then ended in accordance with International Financial Reporting Standards. Chartered Professional Accountants, Licensed Public Accountants

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Maturity Date Coupon (%) Principal Amount in Currency of Issue Average Cost ($) Fair Value ($) DOMESTIC BONDS Corporate Bonds (28.06%) 407 International Inc. 05/11/2046 3.83% 3,000 2,962 3,009 407 International Inc. 02/14/2036 5.75% 1,090 1,108 1,365 Aeroports de Montreal 09/26/2042 3.92% 25 25 26 Aeroports de Montreal 09/17/2035 5.17% 1,132 1,242 1,366 Algonquin Power Co. 02/15/2022 4.65% 750 756 800 Alliance Pipeline LP 06/30/2023 7.18% 994 992 1,134 AltaGas, Ltd. 06/12/2023 3.57% 1,005 1,004 1,042 AltaGas, Ltd. 08/15/2044 4.50% 622 622 598 AltaLink, LP 06/30/2045 4.09% 2,500 2,768 2,634 AltaLink, LP 11/08/2041 4.46% 465 468 517 Bank of Montreal 10/28/2021 1.61% 600 600 589 Bank of Montreal 03/31/2021 1.88% 5,000 5,069 4,995 Bank of Montreal 09/13/2018 3.21% 4,500 4,694 4,640 Bank of Montreal 09/10/2025 4.61% 2,675 2,912 3,094 bcimc Realty Corporation 06/03/2025 2.84% 610 630 613 bcimc Realty Corporation 06/29/2022 3.51% 2,600 2,816 2,766 Bell Canada 10/03/2022 3.00% 2,740 2,729 2,816 Bell Canada 09/29/2021 3.15% 395 393 412 Bell Canada 06/12/2020 3.54% 1,360 1,407 1,432 Bell Canada 12/18/2045 4.35% 1,900 1,896 1,839 BlackBerry Limited 11/13/2020 3.75% 28,000 36,399 34,588 Brookfield Asset Management Inc. 03/16/2027 3.80% 1,000 1,000 992 Brookfield Infrastructure Finance ULC 03/11/2022 3.45% 825 826 838 Brookfield Infrastructure Finance ULC 10/30/2020 3.54% 1,365 1,367 1,397 Brookfield Renewable Energy Partners ULC 06/02/2025 3.75% 725 715 734 Brookfield Renewable Energy Partners ULC 10/13/2020 5.14% 2,500 2,728 2,737 Brookfield Renewable Energy Partners ULC 11/05/2018 5.25% 635 673 673 Caisse Centrale Desjardins 03/02/2020 1.75% 670 668 671 Caisse Centrale Desjardins 07/17/2019 2.44% 480 480 491 Canadian Imperial Bank of Commerce 04/26/2021 1.90% 5,000 5,071 4,998 Canadian Western Bank 06/26/2017 2.10% 500 500 502 Canadian Western Bank 01/14/2019 3.08% 225 225 229 Capital Desjardins Inc., Floating Rate Note 12/15/2026 4.95% 3,000 3,353 3,338 Capital Desjardins Inc. 05/05/2020 5.19% 750 830 823 Caterpillar Financial Services Limited 06/01/2018 2.29% 325 325 329 Central 1 Credit Union, Floating Rate Note 04/25/2024 2.89% 1,885 1,942 1,887 Choice Properties Limited Partnership 04/20/2020 3.60% 265 272 277 Choice Properties Limited Partnership 09/20/2022 3.60% 1,500 1,474 1,565 Choice Properties Real Estate Investment Trust 02/08/2021 3.50% 280 280 293 Choice Properties Real Estate Investment Trust 07/05/2023 4.90% 230 230 255 CIBC Capital Trust, Floating Rate Note 06/30/2108 9.98% 2,422 3,195 2,848 Cominar Real Estate Investment Trust 06/21/2019 3.62% 625 625 637 Co-operators Financial Services, Ltd. 03/10/2020 5.78% 455 503 491 CU Inc. 09/10/2042 3.81% 3,250 3,154 3,263 CU Inc. 09/02/2044 4.09% 1,500 1,678 1,574 Daimler Canada Finance Inc. 12/16/2021 2.23% 850 851 849 Eagle Credit Card Trust 10/18/2021 2.85% 300 306 308 Enbridge Gas Distribution Inc. 09/11/2025 3.31% 3,375 3,402 3,535 Enbridge Inc. 12/05/2022 3.19% 1,320 1,319 1,356 Enbridge Inc. 02/01/2021 4.26% 1,611 1,654 1,735 Enbridge Inc. 03/09/2020 4.53% 147 150 158 Enbridge Income Fund 01/13/2023 3.94% 266 266 283 Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 5

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Maturity Date Coupon (%) Principal Amount in Currency of Issue Average Cost ($) Fair Value ($) Enbridge Income Fund 11/19/2024 3.95% 675 708 713 Enbridge Income Fund 02/22/2019 4.10% 165 165 173 Enbridge Income Fund 11/21/2044 4.87% 550 549 564 Enbridge Pipelines Inc. 08/09/2046 4.13% 950 941 927 Enbridge Pipelines Inc. 09/29/2045 4.55% 350 348 364 ENMAX Corporation 12/05/2024 3.81% 1,140 1,140 1,168 ENMAX Corporation 06/19/2018 6.15% 1,500 1,438 1,587 EPCOR Utilities Inc. 02/28/2042 4.55% 1,430 1,658 1,594 Fairfax Financial Holdings Limited 12/16/2026 4.70% 265 264 268 Fairfax Financial Holdings Limited 03/03/2025 4.95% 750 743 789 Fairfax Financial Holdings Limited 10/14/2022 5.84% 115 121 128 Fairfax Financial Holdings Limited 08/19/2019 7.50% 750 747 841 First Capital Realty Inc. 10/30/2023 3.90% 470 472 491 First Capital Realty Inc. 12/05/2022 3.95% 535 530 565 First Capital Realty Inc. 07/31/2025 4.32% 900 934 951 First Capital Realty Inc. 04/30/2020 5.60% 1,000 1,116 1,106 Ford Credit Canada Limited 05/07/2020 2.45% 750 750 749 Ford Credit Canada Limited 09/16/2020 2.92% 1,250 1,244 1,265 Fortis Inc. 12/12/2023 2.85% 500 500 501 FortisAlberta Inc. 01/03/2047 4.99% 136 148 162 FortisAlberta Inc. 10/30/2039 5.37% 632 720 774 FortisBC Energy Inc. 04/09/2046 3.67% 1,200 1,213 1,164 General Motors Financial of Canada, Ltd. 05/22/2020 3.08% 1,555 1,553 1,577 Genworth MI Canada Inc. 06/15/2020 5.68% 1,964 1,963 2,122 Grand Renewable Solar LP 01/31/2035 3.93% 212 212 209 Greater Toronto Airports Authority 06/07/2040 5.63% 1,000 1,165 1,311 Home Trust Co. 12/10/2018 3.40% 390 392 394 Honda Canada Finance Inc. 02/18/2021 2.16% 3,500 3,548 3,528 HSBC Bank Canada 05/13/2019 2.49% 1,100 1,100 1,120 HSBC Bank Canada 01/14/2020 2.94% 4,650 4,780 4,797 Husky Energy Inc. 03/12/2020 5.00% 880 982 954 Hydro One Inc. 11/18/2019 1.48% 1,500 1,500 1,502 Hydro One Inc. 02/24/2026 2.77% 4,000 4,085 4,029 Hydro One Inc. 02/23/2046 3.91% 2,500 2,680 2,550 Hydro One Inc. 06/06/2044 4.17% 1,675 1,716 1,779 Industrial Alliance Insurance and Financial Services Inc., Floating Rate Note 02/23/2027 2.64% 2,830 2,784 2,813 Industrial Alliance Insurance and Financial Services Inc., Floating Rate Note 09/15/2028 3.30% 500 500 505 Intact Financial Corporation 03/02/2026 3.77% 460 460 487 Intact Financial Corporation 11/23/2039 6.40% 224 236 294 Inter Pipeline, Ltd. 05/30/2022 3.78% 1,035 1,045 1,101 Inter Pipeline, Ltd. 07/30/2018 3.84% 475 475 493 Inter Pipeline, Ltd. 05/30/2044 4.64% 625 610 632 Kingston Solar LP 07/31/2035 3.57% 235 235 226 Loblaw Companies Limited 09/12/2023 4.86% 4,000 4,479 4,487 Loblaw Companies Limited 06/18/2020 5.22% 279 279 309 Magna International, Inc. 12/15/2022 3.10% 135 135 138 Manitoba Telecom Services Inc. 05/27/2024 4.00% 650 650 688 Manitoba Telecom Services Inc. 10/01/2018 4.59% 2,750 3,012 2,890 Manulife Financial Capital Trust II, Floating Rate Note 12/31/2108 7.41% 4,046 4,046 4,606 National Bank of Canada 03/18/2022 2.11% 4,000 3,960 3,990 North West Redwater Partnership / NWR Financing Co., Ltd. 07/22/2024 3.20% 300 300 312 NOVA Gas Transmission, Ltd. 07/16/2027 7.00% 1,000 1,081 1,253 OMERS Realty Corporation 02/23/2024 2.86% 3,000 3,137 3,058 OMERS Realty Corporation 11/12/2024 3.33% 350 374 366 Pembina Pipeline Corporation 03/25/2044 4.81% 450 450 448 Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. 6 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Maturity Date Coupon (%) Principal Amount in Currency of Issue Average Cost ($) Fair Value ($) Pembina Pipeline Corporation 03/29/2021 4.89% 1,497 1,637 1,643 PowerStream Inc. 07/30/2042 3.96% 470 470 468 Real Estate Asset Liquidity Trust 10/12/2049 2.56% 629 629 634 Reliance LP 09/15/2020 3.81% 40 40 40 Reliance LP 08/02/2021 4.08% 650 650 654 Reliance LP 03/15/2019 5.19% 275 296 287 RioCan Real Estate Investment Trust 02/12/2024 3.29% 475 475 476 RioCan Real Estate Investment Trust 05/30/2022 3.75% 225 225 235 Royal Bank of Canada 03/02/2022 1.97% 19,000 18,719 18,824 Royal Bank of Canada 03/15/2021 2.03% 2,600 2,635 2,610 Royal Bank of Canada 03/12/2018 2.26% 195 198 197 Scotiabank Capital Trust, Floating Rate Note 12/31/2056 5.65% 1,565 1,888 1,806 Shaw Communications Inc. 01/31/2024 4.35% 2,000 2,068 2,133 Shaw Communications Inc. 12/07/2020 5.50% 1,070 1,178 1,188 Smart Real Estate Investment Trust 12/01/2017 3.39% 450 450 458 Smart Real Estate Investment Trust 02/11/2021 3.75% 20 20 21 Sun Life Financial Inc., Floating Rate Note 09/25/2025 2.60% 3,045 3,043 3,071 Sun Life Financial Inc., Floating Rate Note 09/19/2028 3.05% 2,500 2,500 2,502 TD Capital Trust IV, Floating Rate Note 06/30/2108 6.63% 735 896 850 TD Capital Trust IV, Floating Rate Note 06/30/2108 9.52% 500 640 583 TELUS Corporation 04/01/2024 3.35% 2,000 1,944 2,053 TELUS Corporation 01/26/2021 3.60% 1,050 1,122 1,109 TELUS Corporation 01/17/2025 3.75% 2,730 2,749 2,857 TELUS Corporation 03/10/2026 3.75% 1,000 1,062 1,035 TELUS Corporation 07/23/2020 5.05% 104 101 115 TELUS Corporation 11/26/2043 5.15% 371 369 395 The Bank of Nova Scotia 06/15/2020 2.13% 945 945 957 The Bank of Nova Scotia 10/28/2019 2.40% 135 140 138 The Bank of Nova Scotia 06/04/2021 2.87% 345 361 358 The Bank of Nova Scotia 01/11/2021 3.27% 7,760 8,170 8,175 The Empire Life Insurance Company, Floating Rate Note 05/31/2023 2.87% 530 530 531 The Empire Life Insurance Company, Floating Rate Note 12/16/2026 3.38% 700 700 702 The Manufacturers Life Insurance Company, Floating Rate Note 02/26/2023 2.82% 1,075 1,075 1,087 The Standard Life Assurance Company of Canada, Floating Rate Note 09/21/2022 3.94% 1,685 1,745 1,715 The Toronto-Dominion Bank 03/08/2021 2.05% 3,000 3,059 3,018 The Toronto-Dominion Bank 06/24/2020 2.56% 8,400 8,600 8,635 The Toronto-Dominion Bank, Floating Rate Note 09/30/2025 2.98% 390 390 393 The Toronto-Dominion Bank 07/24/2024 3.23% 2,000 2,097 2,103 Toyota Credit Canada Inc. 02/25/2021 2.20% 1,000 1,025 1,009 Toyota Credit Canada Inc. 07/18/2018 2.75% 800 800 816 Union Gas Limited 06/21/2041 4.88% 460 459 533 Veresen Inc. 11/10/2021 3.43% 300 300 301 Veresen Inc. 11/22/2018 4.00% 515 514 531 Wells Fargo Canada Corporation 07/25/2019 2.94% 1,028 1,028 1,062 Wells Fargo Canada Corporation 01/24/2023 3.46% 3,100 3,334 3,283 Total for Corporate Bonds 263,203 263,744 Total for Domestic Bonds (28.06%) 263,203 263,744 FOREIGN BONDS United States (0.18%) Great-West Lifeco Delaware Finance LP, Floating Rate Note 06/21/2067 5.69% 1,700 1,686 1,688 Total for United States 1,686 1,688 Total for Foreign Bonds (0.18%) 1,686 1,688 Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 7

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) DOMESTIC EQUITIES Consumer Discretionary (6.40%) Canadian Tire Corporation, Limited Cl. A 117,820 12,624 16,409 Corus Entertainment Inc. Cl. B 996,657 16,442 12,558 Magna International Inc. 376,458 19,130 21,947 Pizza Pizza Royalty Corp. 400,000 6,000 7,064 Thomson Reuters Corporation Preferred 179,500 4,256 2,208 Total for Consumer Discretionary 58,452 60,186 Consumer Staples (2.71%) Empire Company Limited Cl. A 508,760 11,988 7,998 Metro Inc. 187,665 4,472 7,536 North West Company, Inc. 361,116 8,317 9,938 Total for Consumer Staples 24,777 25,472 Energy (8.91%) Enbridge Inc. 225,850 9,954 12,761 Freehold Royalties, Ltd. 1,062,397 18,509 15,054 Imperial Oil, Ltd. 590,655 25,664 27,589 Inter Pipeline, Ltd. 221,500 5,188 6,565 ShawCor, Ltd. 136,340 4,479 4,886 Suncor Energy Inc. 217,310 9,412 9,540 TransCanada Corporation 77,280 3,361 4,679 TransCanada Corporation Preferred 100,081 2,502 2,668 Total for Energy 79,069 83,742 Financials (21.63%) AGF Management Limited Cl. B 510,098 5,827 3,198 Alaris Royalty Corp. 800,140 19,581 19,163 Bank of Montreal 79,130 7,355 7,642 Canadian Imperial Bank of Commerce 66,000 6,544 7,231 CI Financial Corp. 808,705 26,386 23,347 Cominar Real Estate Investment Trust 1,183,083 18,546 17,415 Dream Office Real Estate Investment Trust 361,600 6,208 7,069 IGM Financial Inc. 485,318 19,362 18,539 Northview Apartment REIT 382,300 6,398 7,673 Royal Bank of Canada 342,150 22,152 31,091 Sun Life Financial Inc. 138,460 6,669 7,138 The Bank of Nova Scotia 365,890 15,797 27,354 The Toronto-Dominion Bank 399,720 21,243 26,470 Total for Financials 182,068 203,330 Industrials (6.03%) Canadian National Railway Company 205,040 14,980 18,527 Canadian Pacific Railway Company 78,000 13,264 14,942 New Flyer Industries Inc. 158,303 6,492 6,465 Transcontinental Inc. Cl. A 133,349 2,479 2,959 Wajax Corporation 242,843 5,620 5,600 WestJet Airlines, Ltd. 354,012 6,427 8,157 Total for Industrials 49,262 56,650 Information Technology (2.71%) Calian Group, Ltd. 328,900 6,604 8,065 Computer Modelling Group, Ltd. 883,082 8,889 8,045 Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. 8 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) DH Corporation 415,580 7,229 9,259 Total for Information Technology 22,722 25,369 Materials (1.74%) Labrador Iron Ore Royalty Corporation 404,358 9,664 7,529 Potash Corporation of Saskatchewan Inc. 365,150 8,277 8,870 Total for Materials 17,941 16,399 Telecommunication Services (4.18%) BCE Inc. 231,339 7,727 13,425 Cogeco Communications Inc. 73,230 4,587 4,851 Rogers Communications Inc. Cl. B 137,316 5,614 7,111 TELUS Corporation 325,600 12,324 13,919 Total for Telecommunication Services 30,252 39,306 Utilities (2.75%) ATCO, Ltd. 169,757 8,271 7,581 Emera Incorporated 143,949 6,024 6,534 Fortis Inc. 182,000 6,813 7,546 Hydro One Limited 177,171 3,659 4,178 Total for Utilities 24,767 25,839 Total for Domestic Equities (57.06%) 489,310 536,293 FOREIGN EQUITIES United States (9.59%) C.H. Robinson Worldwide, Inc. 46,500 4,534 4,574 Cardinal Health, Inc. 50,000 5,312 4,832 Cisco Systems, Inc. 110,000 3,966 4,463 CVS Health Corporation 45,000 5,551 4,768 Emerson Electric Co. 64,440 4,393 4,824 Equifax Inc. 31,000 4,614 4,921 International Business Machines Corporation 23,500 4,748 5,238 MasterCard Incorporated Cl. A 35,000 4,404 4,852 Microsoft Corporation 63,000 3,371 5,256 Moodys Corporation 44,500 4,254 5,633 Nordstrom, Inc. 57,400 4,192 3,694 Packaging Corp of America 42,500 2,930 4,840 Sysco Corporation 62,612 1,988 4,655 The Charles Schwab Corporation 87,500 3,745 4,637 UnitedHealth Group Incorporated 21,500 4,094 4,620 Vail Resorts, Inc. 18,476 3,737 4,002 Viacom Inc. Cl. B 103,210 5,300 4,864 W.W. Grainger Inc. 14,800 4,311 4,615 Wal-Mart Stores, Inc. 52,500 4,755 4,872 Total for United States 80,199 90,160 Total for Foreign Equities (9.59%) 80,199 90,160 Total for Long-term Investments (94.89%) $834,398 $891,885 Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 9

MD Dividend Income Fund Schedule of Investment Portfolio as at December 31, 2016 (in $000's except for number of shares) Maturity Date Yield (%) Principal Amount in Currency of Issue Average Cost ($) Fair Value ($) SHORT-TERM INVESTMENTS Banner Trust 01/03/2017 0.43% 940 940 940 Government of Canada 01/12/2017 0.47% 1,300 1,300 1,300 Government of Canada 02/09/2017 0.47% 40,700 40,679 40,679 Total for Short-term Investments (4.57%) 42,919 42,919 Total for Investments (99.46%) $877,317 $934,804 Cash and Other Net Assets (0.54%) 5,113 Total Net Assets Attributable to Holders of Redeemable Units (100.00%) $939,917 Schedule of Derivative Instruments (in $000's) FORWARD CURRENCY CONTRACTS Contracts Pay Receive Contract Rate Due Date Fair Value ($) Counterparty Rating of the Counterparty* 1 3,000 U.S. Dollar 3,966 Canadian Dollar 1.322 01/19/2017 (61) State Street Bank and Trust Co. AA- 1 86,000 U.S. Dollar 112,924 Canadian Dollar 1.313 01/19/2017 (2,525) State Street Bank and Trust Co. AA- Total Forward Currency Contracts (2,586) Total for Schedule of Derivative Instruments (2,586) * Source: Standard & Poor's Credit Rating Agency Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements. 10 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Financial Statements Statement of Financial Position (in $000's except for units outstanding and per unit amounts) December 31, 2016 December 31, 2015 Assets Current assets Investments $ 934,804 $ 949,968 Cash 2,557 - Dividends and interest receivable 5,344 4,663 Financial derivative instruments - 38 Subscriptions receivable 201 136 942,906 954,805 Liabilities Current liabilities Bank overdraft - 47 Payable for investment transactions - 6,670 Redemptions payable 403 1,916 Financial derivative instruments 2,586 4,716 2,989 13,349 Net assets attributable to holders of redeemable units $ 939,917 $ 941,456 Net assets attributable to holders of redeemable units per series Series A $ 937,575 $ 938,738 Series T $ 2,342 $ 2,718 Number of redeemable units outstanding (see Supplementary Schedules) Series A 43,125,050 44,675,911 Series T 288,649 329,381 Net assets attributable to holders of redeemable units per unit, per series Series A $ 21.74 $ 21.01 Series T $ 8.11 $ 8.25 Approved by the Board of Directors of MD Financial Management Inc., Trustee Director (Signed by John Riviere) Director (Signed by Brian Peters) Statement of Comprehensive Income for the years ended December 31 (in $000 s except for per unit amounts) 2016 2015 Income Net gain (loss) on investments Dividends $ 21,669 $ 26,342 Interest for distribution purposes 11,887 9,659 Net realized gain (loss) on sale of investments 49,006 27,946 Change in unrealized appreciation (depreciation) of investments 27,465 (87,120) Net gain (loss) on investments 110,027 (23,173) Net gain (loss) on derivative instruments Net realized gain (loss) on derivative instruments 128 (21,806) Change in unrealized appreciation (depreciation) of derivative instruments 2,092 (2,935) Net gain (loss) on derivatives instruments 2,220 (24,741) Other Income Foreign exchange gain (loss) on cash 75 2,572 Early redemption fee 1 19 Securities lending (see Supplementary Schedules) 73 107 Other 2 - Total other income 151 2,698 Total income (loss) 112,398 (45,216) Expenses Management fees (Note 4) 12,849 14,188 Administration fees 1,336 1,476 Withholding tax on foreign income 201 401 Transaction costs 408 273 Total expenses 14,794 16,338 Increase (decrease) in net assets attributable to holders of redeemable units $ 97,604 $ (61,554) Increase (decrease) in net assets attributable to holders of redeemable units, per series Series A $ 97,340 $ (61,358) Series T $ 264 $ (196) Increase (decrease) in net assets attributable to holders of redeemable units per unit, per series Series A $ 2.26 $ (1.32) Series T $ 0.90 $ (0.55) The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 11

MD Dividend Income Fund Financial Statements Statement of Changes in Net Assets Attributable to Holders of Redeemable Units ("Net Assets") for the years ended December 31 (in $000 s) 2016 2015 SERIES A Net assets - beginning of year $ 938,738 $ 1,098,174 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 97,340 (61,358) Redeemable unit transactions Proceeds from issue of redeemable units 70,336 98,183 Cash paid for redemption of redeemable units (164,412) (194,855) Units issued on reinvestment of distributions 59,873 19,676 (34,203) (76,996) Distributions From net investment income (19,940) (20,410) From net realized gains on investments (44,360) - Return of capital - (672) (64,300) (21,082) 2016 2015 TOTAL FUND Net assets beginning of year $ 941,456 $ 1,101,612 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 97,604 (61,554) Redeemable unit transactions Proceeds from issue of redeemable units 70,433 98,231 Cash paid for redemption of redeemable units (164,859) (195,210) Units issued on reinvestment of distributions 59,877 19,683 (34,549) (77,296) Distributions From net investment income (19,993) (20,464) From net realized gains on investments (44,478) - Return of capital (123) (842) (64,594) (21,306) Net assets - end of year $ 939,917 $ 941,456 Net assets - end of year $ 937,575 $ 938,738 SERIES T Net assets - beginning of year $ 2,718 $ 3,438 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 264 (196) Redeemable unit transactions Proceeds from issue of redeemable units 97 48 Cash paid for redemption of redeemable units (447) (355) Units issued on reinvestment of distributions 4 7 (346) (300) Distributions From net investment income (53) (54) From net realized gains on investments (118) - Return of capital (123) (170) (294) (224) Net assets - end of year $ 2,342 $ 2,718 The accompanying notes are an integral part of these financial statements. 12 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Financial Statements Statement of Cash Flows for the years ended December 31 (in $000 s) Cash flows from (used in) operating activities 2016 2015 Increase (decrease) in net assets attributable to holders of redeemable units $ 97,604 $ (61,554) Adjustments for: Proceeds from sale of investments 1,298,289 769,654 Purchase of investments (1,212,874) (682,750) Amortization Income (450) (710) Unrealized foreign exchange (gain) loss on cash (28) - Net realized (gain) loss on sale of investments (49,006) (27,946) Change in unrealized (appreciation) depreciation of investments (27,465) 87,120 Change in unrealized (appreciation) depreciation of derivative instruments (2,092) 2,935 Net change in non-cash working capital (681) (131) Net cash from (used in) operating activities 103,297 86,618 Cash flows from (used in) financing activities Proceeds from issue of redeemable units 70,368 99,246 Distributions to holders of redeemable units, net of reinvested distribution (4,717) (1,631) Cash paid for redemption of redeemable units (166,372) (194,566) Net cash from (used in) financing activities (100,721) (96,951) Unrealized foreign exchange gain (loss) on cash 28 - Net increase (decrease) in cash during the year 2,604 (10,333) Cash, beginning of year (47) 10,286 Cash, end of year $ 2,557 $ (47) Interest received 10,400 9,443 Dividends received, net of withholding taxes 22,274 26,027 The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 13

MD Dividend Income Fund Financial Statements Supplementary Schedules Redeemable Unit Transactions for the years ended December 31 2016 2015 SERIES A Outstanding, beginning of year 44,675,911 48,167,790 Issued 5,964,949 5,312,440 Redeemed (7,515,810) (8,804,319) Outstanding, end of year 43,125,050 44,675,911 SERIES T Outstanding, beginning of year 329,381 365,069 Issued 11,994 6,267 Redeemed (52,726) (41,955) Outstanding, end of year 288,649 329,381 Soft Dollar Commissions for the years ended December 31 (in $000's) 2016 2015 Soft dollar commissions $ 14 $ 12 Soft dollar commissions refers to the portion of total brokerage commissions paid to certain brokers that was available for payment to third party vendors for providing research, statistical or investment decision making services. These services assist the investment managers with their investment decision making for the Fund. Tax Loss Carry Forwards as at December 31 (in $000's) 2016 Net capital loss carried forward $ - Non-capital losses expiring: 2017 $ - 2018 - in 2019 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, 2016. As of the taxation year ended December 15, 2016, the Fund does not have any accumulated net realized capital losses or non-capital losses available for utilization against net realized capital gains in future years. Capital losses have no expiry. Noncapital losses can be carried forward for up to 20 years. Securities on Loan as at December 31 (in $000 s) 2016 2015 Fair value of securities loaned $ 34,640 $ 43,999 Fair value of collateral (non-cash) $ 35,720 $ 46,091 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 Statement of Comprehensive Income. for the years ended December 31 (in $000's) 2016 2015 Gross amount generated from the securities lending transactions $ 92 $ 134 Amounts paid to State Street Bank and Trust Co. $ (19) $ (27) Net securities lending income as reported in the Statement of Comprehensive Income $ 73 $ 107 The accompanying notes are an integral part of these financial statements. 14 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Financial Instruments Risks (in $000's) Financial Instruments MD Dividend Income Fund (the Fund ) invests primarily in dividend producing common shares, preferred shares, income trusts, domestic and foreign bonds as well as forward 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 debt and derivative instruments. The Fund s maximum exposure to credit risk from debt instruments is the carrying value of short-term investments, domestic and foreign bonds presented on the Schedule of Investment Portfolio as well as 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 December 31, 2016 and December 31, 2015, the Fund invested in preferred shares and short-term debt instruments with the following credit ratings: Credit Rating % of Net Assets Attributable to Holders of Redeemable Units December 31, 2016 % of Net Assets Attributable to Holders of Redeemable Units December 31, 2015 Debt Instruments AAA / R-1 (High) 4.6% 12.1% AA / R-1 (Mid) 9.2% 3.4% A / R-1 (Low) 8.6% 8.9% BBB 6.7% 7.0% Unrated 3.7% 4.8% 32.8% 36.2% Preferred Shares Pfd-2 (low) 0.3% 0.0% Pfd-3 (low) 0.2% 0.2% 0.5% 0.2% Total 33.3% 36.4% All credit ratings are from external credit rating agencies such as Dominion Bond Rating Service, Standard & Poor s and Moody s. Currency Risk The Fund does not have significant assets or liabilities denominated in foreign currencies and therefore does not have significant exposure to currency risk. Interest Rate Risk The Fund s exposure to interest rate risk was concentrated in investments in domestic and foreign bonds presented in the Schedule of Investment Portfolio. The amounts of these investments by term to maturity are presented in the table below. In general, longer terms to maturity result in increased interest rate risk. The sensitivity represents the expected impact to Net Assets Attributable to Holders of Redeemable Units if interest rates for all maturities fluctuate by 25 basis points (parallel yield shift). If interest rates rise, Net Assets Attributable to Holders of Redeemable Units will decrease by the amount shown. Conversely, if interest rates fall, Net Assets Attributable to Holders of Redeemable Units will increase by the amount shown. These sensitivities are estimates. Actual results may vary and the variance may be significant. As at December 31, 2016 and December 31, 2015 the Fund s exposures to debt instruments by maturity are presented in the table below: Debt Instruments December 31, 2016 December 31, 2015 by Maturity Date Fair Value % Fair Value % Less than 1 year $ 43,879 4.7% $ 119,664 12.7% 1 to 7 years 171,954 18.3% 146,049 15.6% 7 to 12 years 48,918 5.2% 45,353 4.8% 12 to 20 years 3,166 0.3% 1,364 0.1% More than 20 years 40,434 4.3% 34,894 3.7% Total $ 308,351 32.8% $ 347,324 36.9% Sensitivity (+/-) $ 4,325 0.5% $ 4,130 0.4% 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 December 31, 2016, 66.7% (December 31, 2015 64.0%) 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 $62,645 (December 31, 2015 $60,264). Conversely, if prices increase by 10%, Net Assets Attributable to Holders of Redeemable Units could rise by approximately $62,645 (December 31, 2015 $60,264). These sensitivities are estimates. Actual results may vary and the variance may be significant. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 15

MD Dividend Income Fund Financial Instruments Risks (in $000's) 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 net assets attributable to holders of redeemable units: Market Segment December 31, 2016 December 31, 2015* Domestic Bonds Corporate Bonds 28.06% 21.20% Foreign Bonds Australia - 0.51% Jersey - 0.18% Norway - 0.05% United Kingdom - 0.95% United States 0.18% 2.03% Domestic Equities Consumer Discretionary 6.40% 6.47% Consumer Staples 2.71% 4.39% Energy 8.91% 6.44% Financials 21.63% 22.31% Industrials 6.03% 2.64% Information Technology 2.71% 5.07% Materials 1.74% 0.65% Telecommunication Services 4.18% 7.01% Utilities 2.75% 2.34% Domestic Equities - Preferred Floating - 0.22% Foreign Equities United States 9.59% 6.47% Short Term Investments 4.57% 11.97% Cash and Other Net Assets (Liabilities) 0.54% (0.90)% Total 100.00% 100.00% *Comparative figures have been reclassified to conform with the presentation adopted for the current year. 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 Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Total December 31, 2016 Domestic Bonds $ - $ 229,156 $ 34,588 $ 263,744 Foreign Bonds - 1,688-1,688 Domestic Equities 536,293 - - 536,293 Foreign Equities 90,160 - - 90,160 Short-Term Investments - 42,919-42,919 Financial Derivative Instruments Liabilities - (2,586) - (2,586) Total $ 626,453 $ 271,177 $ 34,588 $ 932,218 December 31, 2015 Domestic Bonds $ - $ 199,617 $ - $ 199,617 Foreign Bonds - 35,025-35,025 Domestic Equities 539,604 - - 539,604 Domestic Equities - Preferred 2,115 - - 2,115 Foreign Equities 60,925 - - 60,925 Short-Term Investments - 112,682-112,682 Financial Derivative Instruments Assets - 38-38 Financial Derivative Instruments Liabilities - (4,716) - (4,716) Total $ 602,644 $ 342,646 $ - $ 945,290 There have been no significant transfers between Level 1 and Level 2 for the periods January 1, 2016 to December 31, 2016 and January 1, 2015 to December 31, 2015. Reconciliation of Level 3 The table below shows the reconciliation of investments measured at fair value using unobservable inputs for the year ended December 31, 2016. There were no Level 3 investments for the year ended December 31, 2015. Security Type Beginning Balance Purchases Sales, Maturities and Transfers in Repayments (out) Change in Unrealized Gain (Loss) Ending Balance Domestic Bonds - 36,399 - - (1,811) 34,588 The total change in unrealized gain (loss) on level 3 investments continued to be held as at December 31, 2016 was $(1,811) (December 31, 2015 - $Nil). The accompanying notes are an integral part of these financial statements. 16 MD Family of Funds Annual Financial Statements 2016

MD Dividend Income Fund Financial Instruments Risks (in $000's) Level 3 Valuation Techniques The table below summarizes the valuation techniques and significant unobservable inputs used in the fair value measurement of significant Level 3 holdings as at December 31, 2016. There were no Level 3 investments as at December 31, 2015. Security Type Domestic Bonds Valuation Technique Relative value models Significant Unobservable Inputs Fair value at December 31, 2016 Change in Input (bps) Change in Valuation Option adjusted spread 34,588 100/(100) (752)/752 The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2016 17

Notes to Financial Statements For the years ended December 31, 2016 and 2015 1. 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 are as 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, ON 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 March 10, 2017. 18 MD Family of Funds Annual Financial Statements 2016

Notes to Financial Statements For the years ended December 31, 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 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 investments 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 Annual Financial Statements 2016 19