MD Family of Funds 2017 ANNUAL FINANCIAL STATEMENTS

MD Family of Funds 2017 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 2017 Annual Financial Statements. The audited 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, 2017. 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, 2017 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 invest-ment 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 eight 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, MD Fossil Fuel Free Equity Fund, MDPIM S&P TSX Capped Composite Index Pool, MDPIM S&P 500 Index Pool, and MDPIM International Equity Index Pool (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 fulfills 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 auditing 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, MDPIM S&P TSX Capped Composite Index Pool, MDPIM S&P 500 Index Pool, and MDPIM International Equity Index Pool. Brian Peters President and Chief Executive Officer MD Financial Management Inc. John Riviere Chief Financial Officer MD Financial Management Inc.

March 12, 2018 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 and To the Shareholders of: MD Growth Investments Limited (collectively, the Funds) We have audited the accompanying financial statements of each of the Funds, which comprise the statements of financial position, comprehensive income, changes in net assets attributable to holders of redeemable shares/units and cash flows as at and for the years or periods indicated in the accompanying financial statements, 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 the 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 audits to obtain reasonable assurance about whether the financial statements of each Fund 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 of each Fund. 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 of each Fund presents fairly, in all material respects, the financial position of each Fund as at December 31, 2017 and 2016 and their financial performance and their cash flows for the years or periods then ended in accordance with International Financial Reporting Standards. Chartered Professional Accountants, Licensed Public Accountants

MD American Value Fund Schedule of Investment Portfolio as at December 31, 2017 (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) DOMESTIC EQUITIES Materials (1.15%) Potash Corporation of Saskatchewan Inc. 139,775 4,291 3,613 Total for Materials 4,291 3,613 Total for Domestic Equities (1.15%) 4,291 3,613 FOREIGN EQUITIES Consumer Discretionary (11.14%) Adient PLC 22,892 1,643 2,255 Comcast Corporation Cl. A 110,325 3,839 5,531 Dollar General Corp. 45,025 4,465 5,242 ebay Inc. 90,250 2,806 4,264 Omnicom Group Inc. 35,500 3,160 3,236 Target Corporation 38,688 3,753 3,160 The TJX Companies Inc. 53,825 5,075 5,152 Twenty-First Century Fox, Inc. Cl. A 16,175 601 699 Twenty-First Century Fox, Inc. Cl. B 80,775 2,925 3,450 Whirlpool Corporation 9,908 2,249 2,092 Total for Consumer Discretionary 30,516 35,081 Consumer Staples (4.84%) Nestlé SA ADR 31,125 2,717 3,350 Tyson Foods, Inc. Cl. A 23,300 1,992 2,364 Unilever PLC ADR 30,650 1,549 2,123 Wal-Mart Stores, Inc. 59,884 5,437 7,403 Total for Consumer Staples 11,695 15,240 Energy (9.01%) BP PLC ADR 126,530 5,567 6,657 Chevron Corporation 26,100 3,320 4,090 ConocoPhillips 59,353 3,889 4,078 Occidental Petroleum Corporation 41,663 4,089 3,842 Phillips 66 47,751 4,813 6,046 Schlumberger Limited 43,550 3,850 3,674 Total for Energy 25,528 28,387 Financials (21.39%) American Express Company 51,514 4,881 6,404 Bank of America Corporation 208,495 4,216 7,705 Bank of New York Mellon Corporation 55,150 1,977 3,718 Berkshire Hathaway Inc. Cl. B 24,175 3,059 5,999 HCP, Inc. 61,600 2,624 2,011 JPMorgan Chase & Co. 80,571 6,377 10,786 KeyCorp 120,500 2,871 3,043 Loews Corporation 27,866 1,398 1,745 State Street Corporation 39,442 3,639 4,819 The PNC Financial Services Group, Inc. 39,963 4,677 7,218 The Progressive Corporation 68,000 2,292 4,794 Wells Fargo & Company 82,682 5,595 6,279 XL Group, Ltd. 64,017 2,842 2,818 Total for Financials 46,448 67,339 Health Care (8.61%) Johnson & Johnson 39,205 5,136 6,857 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 2017 5

MD American Value Fund Schedule of Investment Portfolio as at December 31, 2017 (in $000's except for number of shares) Number of Shares Average Cost ($) Fair Value ($) Merck & Co., Inc. 70,693 5,139 4,979 Pfizer Inc. 114,409 4,757 5,187 Quest Diagnostics Incorporated 13,055 1,637 1,610 Sanofi ADR 45,823 2,679 2,467 UnitedHealth Group Incorporated 21,750 2,564 6,002 Total for Health Care 21,912 27,102 Industrials (16.90%) Eaton Corporation PLC 17,670 1,521 1,748 Expeditors International of Washington, Inc. 37,425 1,897 3,031 General Dynamics Corp. 10,240 1,577 2,608 General Electric Company 150,900 3,927 3,296 Honeywell International Inc. 49,432 6,614 9,490 Johnson Controls International PLC 100,543 5,909 4,796 Norfolk Southern Corporation 23,466 2,641 4,256 PACCAR Inc. 41,150 2,566 3,661 Raytheon Company 11,531 1,450 2,712 Southwest Airlines Co. 28,743 1,462 2,355 Stanley Black & Decker Inc. 47,487 6,317 10,087 United Technologies Corporation 32,400 4,236 5,174 Total for Industrials 40,117 53,214 Information Technology (9.04%) Accenture PLC Cl. A 26,425 2,710 5,064 Cerner Corporation 47,075 3,310 3,971 International Business Machines Corporation 13,674 2,810 2,626 Microsoft Corporation 26,175 1,037 2,803 Oracle Corporation 96,734 5,158 5,725 QUALCOMM Incorporated 53,604 3,741 4,296 TE Connectivity Limited 33,375 1,993 3,971 Total for Information Technology 20,759 28,456 Materials (2.05%) DowDuPont Inc. 72,310 5,399 6,447 Total for Materials 5,399 6,447 Telecommunication Services (3.27%) AT&T Inc. 66,427 3,069 3,233 CenturyLink, Inc. 124,337 3,370 2,596 Verizon Communications Inc. 67,652 4,224 4,483 Total for Telecommunication Services 10,663 10,312 Utilities (1.80%) Entergy Corporation 55,622 5,176 5,667 Total for Utilities 5,176 5,667 Exchange Traded Funds (5.41%) SPDR S&P 500 ETF Trust 51,036 15,936 17,049 Total for Exchange Traded Funds 15,936 17,049 Total for Foreign Equities (93.46%) 234,149 294,294 Total for Investments (94.61%) 238,440 297,907 Cash and Other Net Assets (5.39%) 16,980 Total Net Assets Attributable to Holders of Redeemable Units (100.00%) 314,887 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 2017

MD American Value Fund Schedule of Investment Portfolio as at December 31, 2017 (in $000's) Schedule of Derivative Instruments FUTURES CONTRACTS Description Type Contracts Expiration date Notional Amount Fair Value ($) S+P 500 E-Mini Index Futures Long 7 03/16/2018 USD 1,172 5 Total Futures Contracts 1,172 5 Total for Schedule of Derivative Instruments 5 The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2017 7

MD American Value Fund Financial Statements Statement of Financial Position (in $000's except for units outstanding and per unit amounts) December 31, 2017 December 31, 2016 Assets Current assets Investments $ 297,907 $ 334,162 Cash 16,534 23,352 Dividends receivable 626 722 Financial derivative instruments 5 - Net margin and collateral due from broker on futures contracts 74 118 Subscriptions receivable 25 8 315,171 358,362 Liabilities Current liabilities Payable for investment transactions 258 - Redemptions payable 26 216 Financial derivative instruments - 11 284 227 Net assets attributable to holders of redeemable units $ 314,887 $ 358,135 Net assets attributable to holders of redeemable units per series Series A $ 184,762 $ 188,217 Series F $ 1,105 $ - Series I $ 129,020 $ 169,736 Series T $ - $ 182 Number of redeemable units outstanding (see Supplementary Schedules) Series A 12,405,688 13,699,506 Series F 104,936 - Series I 6,963,801 9,919,428 Series T - 14,208 Net assets attributable to holders of redeemable units per unit, per series Series A $ 14.89 $ 13.74 Series F $ 10.53 $ - Series I $ 18.53 $ 17.11 Series T $ - $ 12.78 Approved by the Board of Directors of MD Financial Management Inc., Trustee Statement of Comprehensive Income for the years ended December 31 (in $000 s except for per unit amounts) 2017 2016 Income Net gain (loss) on investments Dividends $ 7,500 $ 7,111 Interest for distribution purposes 2 1 Net realized gain (loss) on sale of investments 19,130 12,197 Change in unrealized appreciation (depreciation) of investments 9,356 21,354 Net gain (loss) on investments 35,988 40,663 Net gain (loss) on derivative instruments Net realized gain (loss) on derivative instruments 332 81 Change in unrealized appreciation (depreciation) of derivative instruments 16 (32) Net gain (loss) on derivatives instruments 348 49 Other Income Foreign exchange gain (loss) on cash (1,076) 239 Early redemption fee 2 - Securities lending (see Supplementary Schedules) 19 16 Other 22 - Total other income (1,033) 255 Total income (loss) 35,303 40,967 Expenses Management fees (Note 4) 3,020 2,906 Administration fees 311 301 Interest expense 1 - Withholding tax on foreign income 1,003 1,084 Transaction costs 80 88 Total expenses 4,415 4,379 Increase (decrease) in net assets attributable to holders of redeemable units $ 30,888 $ 36,588 Increase (decrease) in net assets attributable to holders of redeemable units per series Series A $ 15,604 $ 15,665 Series F $ 25 $ - Series I $ 15,253 $ 20,913 Series T $ 6 $ 10 Increase (decrease) in net assets attributable to holders of redeemable units per unit, per series Series A $ 1.18 $ 1.09 Series F $ 0.49 $ - Series I $ 1.83 $ 3.51 Series T $ 0.35 $ 0.96 Director (Signed by John Riviere) Director (Signed by Brian Peters) The accompanying notes are an integral part of these financial statements. 8 MD Family of Funds Annual Financial Statements 2017

MD American Value 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) 2017 2016 SERIES A Net assets - beginning of year $ 188,217 $ 192,171 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 15,604 15,665 Redeemable unit transactions Proceeds from issue of redeemable units 21,467 22,161 Cash paid for redemption of redeemable units (40,516) (41,743) Units issued on reinvestment of distributions 412 2,120 (18,637) (17,462) Distributions From net investment income (422) (810) From net realized gains on investments - (1,347) (422) (2,157) Net assets - end of year $ 184,762 $ 188,217 SERIES F Net assets - beginning of year $ - $ - Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 25 - Redeemable unit transactions Proceeds from issue of redeemable units 1,080 - Units issued on reinvestment of distributions 2-1,082 - Distributions From net investment income (2) - (2) - 2017 2016 SERIES I Net assets - beginning of year $ 169,736 $ 14,846 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 15,253 20,913 Redeemable unit transactions Proceeds from issue of redeemable units 16,222 140,369 Cash paid for redemption of redeemable units (72,191) (6,392) Units issued on reinvestment of distributions 3,023 4,748 (52,946) 138,725 Distributions From net investment income (3,023) (1,769) From net realized gains on investments - (2,979) (3,023) (4,748) Net assets - end of year $ 129,020 $ 169,736 SERIES T Net assets - beginning of year $ 182 $ 168 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 6 10 Redeemable unit transactions Proceeds from issue of redeemable units 103 86 Cash paid for redemption of redeemable units (283) (75) (180) 11 Distributions From net investment income (1) (1) Return of capital (7) (6) (8) (7) Net assets - end of year $ - $ 182 Net assets - end of year $ 1,105 $ - The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2017 9

MD American Value Fund Financial Statements Statement of Changes in Net Assets Attributable to Holders of Redeemable Units ("Net Assets") (Continued) for the years ended December 31 (in $000 s) 2017 2016 TOTAL FUND Net assets - beginning of year $ 358,135 $ 207,185 Add (deduct) changes during the year: Operations Increase (decrease) in net assets attributable to holders of redeemable units 30,888 36,588 Redeemable unit transactions Proceeds from issue of redeemable units 38,872 162,616 Cash paid for redemption of redeemable units (112,990) (48,210) Units issued on reinvestment of distributions 3,437 6,868 (70,681) 121,274 Distributions From net investment income (3,448) (2,580) From net realized gains on investments - (4,326) Return of capital (7) (6) (3,455) (6,912) Net assets - end of year $ 314,887 $ 358,135 Statement of Cash Flows for the years ended December 31 (in $000 s) Cash flows from (used in) operating activities 2017 2016 Increase (decrease) in net assets attributable to holders of redeemable units $ 30,888 $ 36,588 Adjustments for: Proceeds from sale of investments 151,348 95,463 Purchase of investments (86,347) (201,973) Amortization income (2) - Unrealized foreign exchange (gain) loss on cash 517 (340) Net realized (gain) loss on sale of investments (19,130) (12,197) Change in unrealized (appreciation) depreciation of investments (9,356) (21,354) Change in unrealized (appreciation) depreciation of derivative instruments (16) 32 Net change in non-cash working capital 140 (276) Net cash from (used in) operating activities 68,042 (104,057) Cash flows from (used in) financing activities Proceeds from issue of redeemable units 36,889 162,625 Distributions to holders of redeemable units, net of reinvested distribution (18) (44) Cash paid for redemption of redeemable units (111,214) (48,028) Net cash from (used in) financing activities (74,343) 114,553 Unrealized foreign exchange gain (loss) on cash (517) 340 Net increase (decrease) in cash during the year (6,818) 10,836 Cash, beginning of year 23,352 12,516 Cash, end of year $ 16,534 $ 23,352 Interest received 2 1 Dividends received, net of withholding taxes 6,826 5,792 The accompanying notes are an integral part of these financial statements. 10 MD Family of Funds Annual Financial Statements 2017

MD American Value Fund Financial Statements Supplementary Schedules Redeemable Unit Transactions for the years ended December 31 2017 2016 SERIES A Outstanding, beginning of year 13,699,506 15,069,161 Issued 1,944,793 2,299,610 Redeemed (3,238,611) (3,669,265) Outstanding, end of year 12,405,688 13,699,506 SERIES F Outstanding, beginning of year - Issued 104,949 Redeemed (13) Outstanding, end of year 104,936 - SERIES I Outstanding, beginning of year 9,919,428 934,570 Issued 1,100,355 9,365,744 Redeemed (4,055,982) (380,886) Outstanding, end of year 6,963,801 9,919,428 SERIES T* Outstanding, beginning of year 14,208 13,534 Issued 8,197 7,729 Redeemed (22,405) (7,055) Outstanding, end of year - 14,208 *Series T was terminated August 25, 2017. Soft Dollar Commissions for the years ended December 31 (in $000's) (in $000's) 2017 2016 Soft dollar commissions $ 9 $ 7 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. Securities on Loan as at December 31 (in $000 s) 2017 2016 Fair value of securities loaned $ 3,893 $ 9,821 Fair value of collateral (non-cash) $ 4,116 $ 10,323 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) 2017 2016 Gross amount generated from the securities lending transactions $ 24 $ 20 Amounts paid to State Street Bank and Trust Co. $ (5) $ (4) Net securities lending income as reported in the Statement of Comprehensive Income $ 19 $ 16 Investment in Unconsolidated Structured Entities (in $000's) As at December 31, 2017 December 31, 2016 Structure Type Number of Investee Funds Net Asset Value of Investee Funds (Range and Weighted Average) in Billions Fair Value of Fund's Investment in Underlying Funds (in thousands) Exchange Traded Funds 1 340 17,049 Exchange Traded Funds 1 303 21,630 Tax Loss Carry Forwards as at December 31 (in $000's) 2017 Net capital loss carried forward $ - Non-capital losses expiring: 2018 $ - 2019 - in 2020 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, 2017. As of the taxation year ended December 15, 2017, 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. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2017 11

MD American Value Fund Financial Statements Supplementary Schedules Management and administration fees (Note 4) As at December 31 2017 2016 Management fee* Series A 1.45% 1.45% Series F 0.50% NA Series I NA NA Series T NA 1.45% Administration fee* Series A 0.15% 0.15% Series F 0.15% NA Series I NA NA Series T NA 0.15% *Series I unitholders pay a separately negotiated management fee and administration fee directly to MD Financial Management Inc. Series F is a new series offered in 2017. Series T was terminated August 25, 2017. The accompanying notes are an integral part of these financial statements. 12 MD Family of Funds Annual Financial Statements 2017

MD American Value Fund Financial Instruments Risks (in $000's) Financial Instruments MD American Value Fund (the Fund ) invests in equity securities traded on recognized U.S. exchanges as well as futures contracts as shown in the Schedule of Investment Portfolio. The Fund invests excess cash in high grade short-term notes with maturities of less than one year. These investments expose the Fund to risks associated with financial instruments. The Fund s exposure and sensitivity to these risks are presented below. A description of the risks and how the Fund manages these risks is discussed in Note 7 of the Notes to the Financial Statements. Credit Risk The Fund does not have significant investments in debt or derivative instruments and therefore does not have exposure to credit risk. Currency Risk Exposures to foreign currencies as at December 31, 2017 and December 31, 2016 are presented in the table below. Short-term investments and debt instruments, which are monetary in nature, are included in the Investments at Fair Value column. Currency Cash and Other Net Assets Attributable to Holders of Redeemable Shares Investments at Fair Value Derivative Exposure Net Currency Exposure % of Net Assets Attributable to Holders of Redeemable Shares December 31, 2017 U.S. Dollar $ 16,945 $ 297,907 $ 5 $ 314,857 99.99% Total $ 16,945 $ 297,907 $ 5 $ 314,857 99.99% December 31, 2016 U.S. Dollar $ 24,169 $ 334,162 $ (11) $ 358,320 100.05% Total $ 24,169 $ 334,162 $ (11) $ 358,320 100.05% As at December 31, 2017, if the Canadian Dollar had strengthened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Units of the Fund could have decreased by approximately $31,486, or 10.00% of Net Assets Attributable to Holders of Redeemable Units (December 31, 2016 $35,832, or 10.0%). Conversely, had the Canadian Dollar weakened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Units of the Fund could have increased by approximately $31,486, or 10.00% of Net Assets Attributable to Holders of Redeemable Units (December 31, 2016 $35,832, or 10.0%). These sensitivities are estimates. Actual results may vary and the variance may be material. 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, 2017, 94.6% (December 31, 2016 93.3%) 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 $29,791 (December 31, 2016 $33,416). Conversely, if prices increase by 10%, Net Assets Attributable to Holders of Redeemable Units could rise by approximately $29,791 (December 31, 2016 $33,416). These sensitivities are estimates. Actual results may vary and the variance may be significant. Concentration Risk Concentration risk arises as a result of the concentration of exposures within the same category. The following table summarizes the Fund s concentration risk as a percentage of net assets attributable to holders of redeemable units: Market Segment December 31, 2017 December 31, 2016 Domestic Equities Materials 1.15% 1.22% Foreign Equities Consumer Discretionary 11.14% 11.15% Consumer Staples 4.84% 3.06% Energy 9.01% 10.19% Exchange Traded Funds 5.41% 6.04% Financials 21.39% 19.33% Health Care 8.61% 9.68% Industrials 16.90% 15.51% Information Technology 9.04% 10.69% Materials 2.05% 2.09% Telecommunication Services 3.27% 2.59% Utilities 1.80% 1.76% Cash and Other Net Assets (Liabilities) 5.39% 6.69% Total 100.00% 100.00% Interest Rate Risk The Fund does not have any investments in debt instrument or interest-bearing assets. Therefore, the Fund is not exposed to interest rate risk. The accompanying notes are an integral part of these financial statements. MD Family of Funds Annual Financial Statements 2017 13

MD American Value Fund Financial Instruments Risks (in $000's) Fair Value Hierarchy The following is a summary of the Fund's use of quoted market prices (Level 1), internal models using observable market information as inputs (Level 2), and internal models without observable market information (Level 3) in the valuation of the Fund s securities. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs (Level 1) (Level 2) Total* December 31, 2017 Domestic Equities $ 3,613 $ - $ 3,613 Foreign Equities 294,294-294,294 Financial Derivative Instruments Assets 5-5 Total $ 297,912 $ - $ 297,912 December 31, 2016 Domestic Equities $ 4,356 $ - $ 4,356 Foreign Equities 329,806-329,806 Financial Derivative Instruments Liabilities (11) - (11) Total $ 334,151 $ - $ 334,151 *The Fund does not hold any Level 3 investments. There have been no significant transfers between Level 1 and Level 2 for the periods January 1, 2017 to December 31, 2017 and January 1, 2016 to December 31, 2016. The accompanying notes are an integral part of these financial statements. 14 MD Family of Funds Annual Financial Statements 2017

Notes to Financial Statements For the years ended December 31, 2017 and 2016 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 Series F2 Units Series F Units MD Balanced Fund September 9, 1992 October 25, 2010 May 10, 2017 MD Bond Fund April 6, 1988 October 30, 2009 May 10, 2017 MD Short-Term Bond Fund September 19, 1995 October 30, 2009 May 10, 2017 MD Dividend Income Fund September 9, 1992 October 30, 2009 October 25, 2010 May 10, 2017 MD Equity Fund March 1, 1966 October 30, 2009 October 25, 2010 May 10, 2017 MD Dividend Growth Fund January 4, 2007 October 30, 2009 October 25, 2010 May 10, 2017 MD International Growth Fund July 19, 2000 October 30, 2009 October 25, 2010 May 10, 2017 MD International Value Fund January 5, 2004 October 30, 2009 October 25, 2010 May 10, 2017 MD Money Fund July 12,1983 May 24, 2017 May 10, 2017 MD Select Fund October 29, 1993 October 30, 2009 October 25, 2010 May 10, 2017 MD American Growth Fund September 9, 1992 October 30, 2009 October 25, 2010 May 10, 2017 MD American Value Fund July 10, 2000 October 30, 2009 October 25, 2010 May 10, 2017 MD Strategic Yield Fund January 30, 2014 January 30, 2014 May 10, 2017 MD Strategic Opportunities Fund January 30, 2014 January 30, 2014 May 10, 2017 MD Precision Conservative Portfolio January 6, 2010 May 24, 2017 May 10, 2017 MD Precision Balanced Income Portfolio March 27, 2012 May 24, 2017 May 10, 2017 MD Precision Moderate Balanced Portfolio January 6, 2010 May 24, 2017 May 10, 2017 MD Precision Moderate Growth Portfolio March 27, 2012 May 24, 2017 May 10, 2017 MD Precision Balanced Growth Portfolio January 6, 2010 May 24, 2017 May 10, 2017 MD Precision Maximum Growth Portfolio January 6, 2010 May 24, 2017 May 10, 2017 MD Fossil Fuel Free Bond Fund May 11, 2016 May 11, 2016 May 10, 2017 MD Fossil Fuel Free Equity Fund May 11, 2016 May 11, 2016 May 10, 2017 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 MDPIM S&P/TSX Capped Composite Index Pool November 21, 2017 MDPIM S&P 500 Index Pool November 21, 2017 MDPIM International Equity Index Pool November 21, 2017 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 Family of Funds Annual Financial Statements 2017 15

Notes to Financial Statements For the years ended December 31, 2017 and 2016 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 12, 2018. 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 F" units are available to all MD Management Ltd. clients who are qualified eligible investors and who have a fee-based account with MD Management Ltd. "Series F2" units are available only to qualified eligible investors who open an MD ExO Direct account with MD Management Ltd. 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 generally does not increase taxable income or impact certain benefits such as Old Age Security. Series T was terminated August 25, 2017. 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. 16 MD Family of Funds Annual Financial Statements 2017

Notes to Financial Statements For the years ended December 31, 2017 and 2016 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. Transactions with counterparties are governed by separate master netting agreements. Each agreement allows for net settlement of certain open contracts where the Fund and respective counterparty both elect to settle on a net basis. In the absence of such an election, contracts will be settled on a gross basis. However, each party to the master netting agreement will have the option to settle all open contracts on a net basis in the event of default of the other party. FAIR VALUE MEASUREMENT Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are categorized as FVTPL and are recorded at fair value. In the case of securities traded in an active market, fair value is based on quoted market prices at the close of trading on the reporting date as provided by independent pricing services. The Funds use the last traded market price for both financial assets and financial liabilities where the last traded price falls within the day s bidask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. In the case of investments not traded in an active market, or for those securities for which the Manager feels the latest market prices are not reliable, fair value is estimated based on valuation techniques established by the Manager. Valuation techniques established by the Manager are based on observable market data except in situations where there is no relevant or reliable market data. The value of securities estimated using valuation techniques not based on observable market data, if any, is disclosed in the Financial Instruments Risks section of the financial statements. FINANCIAL DERIVATIVES INSTRUMENTS A derivative is a financial contract between two parties, the value of which is derived from the value of an underlying asset such as equity, bond, commodity, interest rate or currency. Certain Funds may use derivatives, such as options, futures, forward contracts, swap contracts, and other similar instruments, in a manner considered appropriate to achieving the Fund s investment objectives. Derivatives may be used to protect a security price, currency exchange rate or interest rate from negative changes (hedging) or to provide exposure to securities, indices, or currencies without investing in them directly (non-hedging). Derivatives contain various risks including the potential inability for the counterparty to fulfil their obligations under the terms of the contract, the potential for illiquid markets and the potential price risk which may expose the Funds to gains and/or losses in excess of the amounts shown on the Statement of Financial Position. Derivatives with unrealized gains are reported as financial derivative instruments under current assets and derivatives with unrealized losses are reported as financial derivative instruments under current liabilities. Forward Currency Contracts Certain Funds may enter into forward currency contracts for either hedging or nonhedging purposes where such activity is consistent with their investment objectives and as permitted by the Canadian securities regulatory authorities. A forward currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. Investments in forward currency contracts are entered into with approved counterparties and are recorded at fair value. The fair value of a forward currency contract fluctuates with changes in foreign currency exchange rates. The fair value of forward currency contracts is reported as financial derivative instruments in the Statement of Financial Position. Forward currency contracts are marked to market daily and the changes in fair value of forward currency contracts are recorded in Change in unrealized appreciation (depreciation) of derivatives. Upon closing of the contracts, the accumulated gains or losses are reported in Net realized gain (loss) on sale of derivative instruments. The contractual amounts of open contracts are disclosed in the Schedule of Investment Portfolio in the Schedule of Derivative Instruments. Futures Contracts Futures contracts are valued on each valuation day using the closing market price posted on the related public exchange. The fair value of future contracts is reported as Financial Derivative Instruments in the Statement of Financial Position. All gains or losses arising from futures contracts are recorded as part of Change in unrealized appreciation (depreciation) of derivatives in the Statement of Comprehensive Income until the contracts are closed out or expire, at which time the gains or losses are realized and reported as Net realized gain (loss) on derivative instruments. Credit Default Swaps Certain Funds may enter into credit default swap contracts, primarily to manage and/or gain exposure to credit risk where such activity is consistent with their investment objectives and as permitted by the Canadian securities regulatory authorities. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. The credit risk exposure of a Fund to the referenced asset is comparable to the exposure that would have resulted if the Fund were invested directly in the referenced debt obligation. In the event of a default of the underlying referenced debt obligation, the buyer of the contract is entitled to receive the notional amount of the credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal to the notional amount of the credit default swap contract less the recovery amount of value of the referenced debt obligation, or other agreed upon amount. Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default has occurred. Such periodic payments paid or received are accrued daily and are included in the Statement of Comprehensive Income in Net Interest Income (Expense) from Swap Contracts. Credit Default Swaps are disclosed in the Schedule of Derivative Instruments. The change in value of a credit default swap contract and any upfront premium paid or received is included in the Statement of Financial Position as Financial Derivative Instruments. When the credit default swap contracts are closed out, gains or losses, including upfront premiums, are realized and included in the Statement of Comprehensive Income in Net realized gain (loss) on derivatives instruments. Pursuant to the terms of the credit default swap contract, cash or securities may be required to be deposited as collateral. MD Family of Funds Annual Financial Statements 2017 17