UNAUDITED SEMI-ANNUAL FINANCIAL STATEMENTS JUNE 2018

S E M I - A N N U A L F I N A N C I A L S T A T E M E N T S
UNAUDITED SEMI-ANNUAL FINANCIAL STATEMENTS
EXEMPLAR LEADERS FUND | EXEMPLAR PERFORMANCE FUND | EXEMPLAR TACTICAL
CORPORATE BOND FUND
The accompanying notes are an integral part of these financial statements. 2
EXEMPLAR GROWTH AND INCOME FUND Statements of Financial Position (Unaudited)
As at As at
June 30, December 31,
Investments $28,597,530 $21,671,890
Cash and cash equivalents 3,214,199 2,737,271
Margin deposits 100,321 85,782
Receivable for securities sold 628,821 754,923
Receivable for units issued 135,352 65,781
32,778,049 25,474,560
Unrealized loss on forward currency contracts 80,177 13,096
Payable for securities purchased 1,650,266 474,069
Payable for units redeemed 23,375 10,812
Other liabilities (Note 10) 45,952 33,203
1,799,770 531,180
Net assets attributable to holders of redeemable units $30,978,279 $24,943,380
Continued on next page.
EXEMPLAR GROWTH AND INCOME FUND
Statements of Financial Position
As at As at
Series A $12,676,598 $10,811,870
Series AN $2,569,300 $1,469,708
Series F $3,742,970 $2,309,251
Series FN $9,958,675 $8,580,515
Series I $1,088,590 $1,069,039
Series L $670,258 $464,543
Series LN $271,888 $238,453
Series A 1,196,218 1,017,162
Series AN 238,494 138,077
Series F 355,844 219,985
Series FN 905,080 793,393
Series I 103,333 102,227
Series L 64,549 44,531
Series LN 25,143 22,287
Net assets attributable to holders of redeemable units per unit
Series A $10.60 $10.63
Series AN $10.77 $10.64
Series F $10.52 $10.50
Series FN $11.00 $10.81
Series I $10.53 $10.46
Series L $10.38 $10.43
Series LN $10.81 $10.70
Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:
“James L. McGovern” “Robert W. Maxwell”
James L. McGovern, Director Robert W. Maxwell, Director
Statements of Comprehensive Income (Unaudited)
For the periods ended June 30,
2018 2017
$ $ (Note 14)
Interest income 6,761 76,384
Dividend income 334,823 113,948
Securities lending income (net) (Note 9) 25,681 13,881
Net realized gain (loss) on investments and derivatives 292,140 840,966
Net change in unrealized appreciation (depreciation) in value of investments and derivatives (20,836) (449,786)
Net gains (losses) on investments and derivatives 638,569 595,628
Other income items:
Foreign exchange gain (loss) 211,466 (43,493)
Net change in unrealized foreign exchange gain (loss) 4,449 (613)
Total income (net) 859,536 548,689
EXPENSES
Management fees (Note 10) 192,941 121,487
Interest expense 6,786 178
Audit fees 9,981 10,416
Legal fees 4,750 893
Custodial fees 1,156 951
Commissions and other portfolio transaction costs (Note 11) 120,973 75,470
Withholding tax expense 6,924 4,369
Harmonized sales tax 19,432 12,634
Total expenses before manager absorption 449,409 293,573
Less: expenses absorbed by manager (Note 10) (62,448) (62,690)
Total expenses after manager absorption 386,961 230,883
Increase (decrease) in net assets attributable to holders of redeemable units 472,575 317,806
Increase (decrease) in net assets attributable to holders of redeemable units (Note 13)
Series A 155,678 77,790
Series AN 33,542 38,578
Series F 67,692 28,153
Series FN 182,799 134,956
Series I 24,149 30,790
Series L 5,280 5,340
Series LN 3,435 2,199 Increase (decrease) in net assets attributable to holders of redeemable units per unit (Note 13)
Series A 0.15 0.12
Series AN 0.19 0.26
Series F 0.23 0.18
Series FN 0.22 0.23
Series I 0.24 0.34
Series L 0.12 0.17
Series LN 0.15 0.12
Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (Unaudited)
2018 2017
$ $
Net assets attributable to holders of redeemable units at beginning of period
Series A 10,811,870 3,849,743
Series AN 1,469,708 1,757,300
Series F 2,309,251 918,546
Series FN 8,580,515 5,196,260
Series I 1,069,039 927,236
Series L 464,543 265,948
Series LN 238,453 113,455
24,943,379 13,028,488
Increase (decrease) in net assets attributable to holders of redeemable units
Series A 155,678 77,790
Series AN 33,542 38,578
Series F 67,692 28,153
Series FN 182,799 134,956
Series I 24,149 30,790
Series L 5,280 5,340
Series LN 3,435 2,199
From net investment income Series A (175,450) (118,731)
Series AN - -
Series AN - (22,035)
Series F - (15,465)
Series FN - (99,764)
Series I - (18,928)
Series L - (3,082)
Series LN - (2,229)
2018 2017
Series AN 1,239,057 425,394
Series F 1,742,093 1,337,781
Series FN 1,698,768 2,207,033
Series L 238,848 99,704
Series LN 30,000 100,763
Reinvestments of distributions to holders of redeemable units Series A 151,277 148,130
Series AN - 21,858
Series AN (173,007) (811,436)
Series F (361,675) (533,254)
Series FN (503,407) (371,752)
Series I (4,598) (4,160)
Net increase (decrease) from redeemable unit transactions 5,812,298 6,356,451
Net increase (decrease) in net assets attributable to holders of redeemable units 6,034,900 6,298,641
Series A 12,676,598 7,467,224
Series AN 2,569,300 1,409,659
Series F 3,742,970 1,745,864
Series FN 9,958,675 7,166,067
Series I 1,088,590 953,866
Series L 670,258 368,236
Series LN 271,888 216,213
Net assets attributable to holders of redeemable units at end of period 30,978,279 19,327,129
Statements of Cash Flows (Unaudited)
2018 2017
Cash flows from (used in) operating activities
Increase (decrease) in net assets attributable to holders of redeemable units 472,575 317,806
Adjustment for:
Unrealized foreign exchange (gain) loss on cash and cash equivalents (7,312) 2,213
Net realized (gain) loss on investments and derivatives (292,140) (840,966)
Net change in unrealized (appreciation) depreciation in value of investments and derivatives 20,836 449,786
Purchase of investments (205,913,467) (75,086,446)
Proceeds on sale of investments 200,692,921 69,528,422
Change in accrued dividends receivable (7,323) (12,826)
Change in accrued interest receivable - (1,201)
Change in accrued dividends payable - (227)
Change in other liabilities 12,749 5,908
Change in margin deposit (14,539) 372,998
Net cash from (used in) operating activities (5,035,700) (5,264,533)
Cash flows from (used in) financing activities
Proceeds from redeemable units issued 8,243,449 9,246,385
Redemption of redeemable units (2,697,621) (3,164,429)
Distributions paid to holders of redeemable units, net of reinvested distributions (40,512) (26,877)
Net cash from (used in) financing activities 5,505,316 6,055,079
Net Increase (decrease) in cash 469,616 790,546
Cash and cash equivalents at beginning of the period 2,737,271 1,029,568
Unrealized foreign exchange gain (loss) on cash and cash equivalents 7,312 (2,213)
Cash and cash equivalents at end of the period 3,214,199 1,817,901
Supplemental information:
Interest paid* 6,786 178
8
EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at June 30, 2018 (Unaudited)
Equities - Long - 71.80%
Consumer Discretionary - 7.26%
Asbury Automotive Group Inc. USD 185 18,232 16,672
AutoCanada Inc. CAD 6,000 104,917 102,060
Best Buy Co. Inc. USD 210 20,523 20,590
Bright Horizons Family Solutions Inc. USD 185 24,757 24,934
Caleres Inc. USD 445 20,558 20,119
Canadian Tire Corp. Ltd., Class 'A' CAD 120 19,802 20,592
Carter's Inc. USD 240 34,639 34,199
Chipotle Mexican Grill Inc. USD 200 120,472 113,420
Conn's Inc. USD 315 13,750 13,666
Cooper-Standard Holdings Inc. USD 85 14,050 14,602
Diversified Royalty Corp. CAD 25,000 83,030 76,750
Dollar General Corp. USD 205 24,619 26,573
Dollarama Inc. CAD 590 29,736 30,066
Gentex Corp. USD 635 19,758 19,217
Grand Canyon Education Inc. USD 105 15,509 15,406
Home Depot Inc. USD 85 20,821 21,802
Hudson's Bay Co. CAD 5,000 52,269 58,600
John Wiley & Sons Inc., Class A USD 285 24,976 23,380
Las Vegas Sands Corp. USD 235 24,021 23,591
Lear Corp. USD 75 19,404 18,321
Lowe's Cos. Inc. USD 160 20,461 20,103
Macy's Inc. USD 1,500 73,383 73,811
Magna International Inc. CAD 2,400 182,895 183,504
Martinrea International Inc. CAD 1,825 28,723 25,733
Monro Inc. USD 365 29,366 27,879
News Corp., Class A USD 1,355 27,315 27,611
Nike Inc., Class B USD 245 23,512 25,664
Nordstrom Inc. USD 135 8,579 9,190
Park Lawn Corp. CAD 5,000 122,500 121,750
Red Rock Resorts Inc.* USD 3,500 148,513 154,143
Roots Corp. CAD 9,000 91,787 96,300
Shaw Communications Inc., Class B CAD 10,300 287,252 275,834
Spin Master Corp. CAD 165 8,650 9,618
Stars Group Inc. (The)* CAD 2,000 94,588 95,360
Stars Group Inc. (The) USD 500 25,224 23,861
Steven Madden Ltd. USD 155 11,115 10,820
Target Corp. USD 195 19,196 19,514
theScore Inc., Class 'A' CAD 50,000 16,975 17,500
TJX Cos. Inc. USD 600 64,219 75,077
TRI Pointe Group Inc. USD 905 21,459 19,464
V.F. Corp. USD 1,200 128,596 128,604
Wynn Resorts Ltd. USD 120 28,830 26,399
2,239,700 2,248,099
Costco Wholesale Corp. USD 480 122,308 131,873
Estée Lauder Cos. Inc., Class A USD 135 26,540 25,324
Inter Parfums Inc.* USD 190 13,183 13,363
Jamieson Wellness Inc. CAD 5,000 94,071 133,100
MGP Ingredients Inc. USD 185 22,738 21,600
Neptune Technologies & Bioressources Inc.* CAD 23,000 78,408 93,840
Nu Skin Enterprises Inc., Class A USD 180 19,047 18,503
Pinnacle Foods Inc. USD 3,000 265,161 256,593
Saputo Inc. CAD 1,200 52,292 52,380
Sysco Corp. USD 205 17,070 18,404
US Foods Holding Corp. USD 1,370 65,197 68,116
807,912 864,747
9
Equities - Long (Cont’d)
No. of Average Fair
Energy - 14.29%
ARC Resources Ltd. CAD 11,000 147,832 149,380
Baytex Energy Corp.* CAD 20,500 113,252 89,585
Bonterra Energy Corp.* CAD 9,000 149,409 153,720
Canadian Natural Resources Ltd. CAD 13,100 554,800 621,595
Diamondback Energy Inc.* USD 145 23,214 25,080
Encana Corp. CAD 15,000 256,600 257,550
Enerplus Corp. CAD 11,200 162,507 185,696
Gran Tierra Energy Inc.* CAD 20,000 69,574 91,000
Helmerich & Payne Inc. USD 515 43,779 43,168
Husky Energy Inc. CAD 590 11,413 12,089
Inter Pipeline Ltd., 0.00%, CAD 9,000 220,844 221,760
Kelt Exploration Ltd. CAD 16,500 128,567 147,345
Marathon Petroleum Corp. USD 290 27,832 26,748
NexGen Energy Ltd. CAD 50,000 135,780 121,500
Parex Resources Inc. CAD 6,500 116,194 161,330
Parkland Fuel Corp. CAD 6,000 185,231 193,800
Peabody Energy Corp. USD 180 10,628 10,762
Pembina Pipeline Corp. CAD 9,500 404,111 432,535
Royal Dutch Shell PLC, ADR, Class A USD 4,000 365,025 364,053
Suncor Energy Inc. CAD 5,540 251,411 296,390
Tamarack Valley Energy Ltd. CAD 30,000 86,475 138,300
Tourmaline Oil Corp. CAD 6,000 146,520 140,940
Vermilion Energy Inc. CAD 7,000 312,735 331,870
4,128,597 4,427,546
Financials - 7.56%
Brookfield Asset Management Inc., Class A CAD 4,300 221,994 229,319
Charles Schwab Corp. (The) USD 1,200 87,771 80,614
Credit Acceptance Corp. USD 40 18,839 18,584
E*TRADE Financial Corp. USD 1,000 79,291 80,404
Echelon Financial Holdings Inc.* CAD 5,000 64,538 59,700
Fairfax Financial Holdings Ltd. CAD 225 162,278 165,749
Genworth MI Canada Inc. CAD 815 32,941 34,866
Houlihan Lokey Inc. USD 220 14,379 14,814
Manulife Financial Corp. CAD 16,000 395,359 377,920
Moody's Corp. USD 115 25,895 25,786
Piper Jaffray Cos. Inc. USD 155 15,414 15,660
S&P Global Inc. USD 80 20,942 21,444
Sun Life Financial Inc. CAD 5,000 262,876 264,150
SVB Financial Group USD 25 9,679 9,490
Toronto-Dominion Bank (The) CAD 5,800 410,339 441,322
2,305,909 2,341,344
Allergan PLC USD 1,100 234,225 241,096
athenahealth Inc. USD 800 159,096 167,371
Boston Scientific Corp. USD 2,700 103,973 116,070
CVS Health Corp. USD 1,800 151,042 152,276
GW Pharmaceuticals PLC, ADR USD 300 58,488 55,034
Halyard Health Inc. USD 185 14,057 13,924
HCA Healthcare Inc. USD 90 12,302 12,139
Humana Inc. USD 110 42,697 43,041
Medpace Holdings Inc. USD 255 14,586 14,415
10
No. of Average Fair
Merit Medical System Inc. USD 240 15,535 16,154
Select Medical Holdings Corp. USD 580 13,560 13,839
Shire PLC, ADR* USD 1,000 208,843 221,913
Stryker Corp. USD 1,300 283,866 288,589
Tesaro Inc. USD 1,000 62,019 58,462
Teva Pharmaceutical Industries Ltd., ADR USD 7,500 215,971 239,792
Varian Medical Systems Inc. USD 290 44,485 43,356
Waters Corp. USD 180 45,576 45,811
Zymeworks Inc. CAD 1,000 21,420 19,500
1,720,041 1,778,769
Industrials - 10.24%
Algoma Central Corp. CAD 7,200 109,645 106,704
American Railcar Industries Inc. USD 280 14,765 14,533
ASGN Inc. USD 260 27,312 26,726
ATS Automation Tooling Systems Inc. CAD 9,835 173,802 192,176
Badger Daylighting Ltd. CAD 220 6,423 6,967
Bombardier Inc., Class 'B' CAD 46,000 201,033 239,200
Boyd Group Income Fund CAD 1,500 167,049 175,815
CAE Inc. CAD 355 9,039 9,695
Canadian National Railway Co. CAD 3,000 307,074 322,590
Canadian Pacific Railway Ltd. CAD 1,500 340,516 361,380
Chorus Aviation Inc.* CAD 14,000 96,913 98,560
Finning International Inc. CAD 895 29,574 29,043
H&E Equipment Services Inc. USD 430 20,844 21,261
Kirby Corp. USD 225 25,125 24,729
Morneau Shepell Inc. CAD 9,385 231,292 255,084
Navistar International Corp.* USD 1,000 50,200 53,533
NFI Group Inc. CAD 1,000 49,209 49,040
Norfolk Southern Corp. USD 95 18,811 18,842
Old Dominion Freight Line Inc. USD 120 23,923 23,500
Ritchie Bros. Auctioneers Inc.* CAD 470 21,417 21,075
Robert Half International Inc. USD 255 22,663 21,824
Rush Enterprises Inc., Class B USD 400 23,912 23,085
Russel Metals Inc. CAD 1,500 43,551 40,305
SiteOne Landscape Supply Inc. USD 120 13,363 13,247
SNC-Lavalin Group Inc. CAD 3,000 169,137 174,180
Spirit Aerosystems Holdings Inc., Class A USD 295 33,099 33,318
Textron Inc. USD 1,200 92,250 103,978
TFI International Inc. CAD 4,000 143,591 162,200
Toromont Industries Ltd. CAD 520 29,560 29,567
Transcontinental Inc., Class A CAD 6,725 183,797 205,314
TransDigm Group Inc. USD 35 15,266 15,881
TriNet Group Inc. USD 90 6,451 6,619
Trinity Industries Inc. USD 305 13,895 13,737
UniFirst Corp. USD 130 30,404 30,233
Union Pacific Corp. USD 120 22,491 22,351
Waste Connections Inc. CAD 270 26,463 26,738
Werner Enterprises Inc.* USD 675 33,883 33,321
WesternOne Inc.* CAD 50,000 72,048 83,500
2,986,825 3,172,891
Activision Blizzard Inc. USD 130 12,622 13,043
Adobe Systems Inc. USD 200 64,417 64,105
Apple Inc. USD 160 39,262 38,937
Arista Networks Inc. USD 75 25,973 25,388
Cadence Design Systems Inc. USD 430 25,026 24,483
Celestica Inc. CAD 5,000 76,532 78,150
11
No. of Average Fair
CGI Group Inc., Class A CAD 1,715 138,771 142,877
Cisco Systems Inc. USD 410 23,522 23,193
Descartes Systems Group Inc. (The) CAD 440 17,612 18,845
FireEye Inc.* USD 4,400 101,536 89,023
IAC/InterActiveCorp USD 100 21,167 20,047
Legend Power Systems Inc. CAD 170,000 134,843 98,600
Microsoft Corp. USD 1,600 193,875 207,420
ON Semiconductor Corp. USD 850 27,042 24,847
Open Text Corp. CAD 5,000 223,925 231,350
Proofpoint Inc.* USD 180 28,704 27,287
Shopify Inc., Class A CAD 35 6,821 6,710
Take-Two Interactive Software Inc. USD 120 18,046 18,672
Texas Instruments Inc. USD 185 26,951 26,814
Total System Service Inc. USD 275 30,752 30,556
VeriSign Inc. USD 70 12,949 12,646
VMware Inc., Class A USD 105 19,888 20,287
1,289,194 1,261,406
Materials - 6.40%
Allegheny Technologies Inc.* USD 770 27,202 25,428
B2Gold Corp.* CAD 10,000 37,000 34,100
Boise Cascade Co. USD 370 22,134 21,743
Canfor Corp. CAD 930 28,347 29,425
CF Industries Holdings Inc.* USD 250 14,076 14,593
Domtar Corp.* USD 420 25,492 26,360
Dundee Precious Metals Inc. CAD 10,000 33,482 31,400
First Majestic Silver Corp.* CAD 8,000 74,754 80,240
First Quantum Minerals Ltd. CAD 1,155 22,877 22,372
Fortuna Silver Mines Inc. CAD 25,000 181,295 187,000
Kaiser Aluminum Corp. USD 235 33,853 32,164
Kirkland Lake Gold Ltd. CAD 5,000 105,956 139,200
Labrador Iron Ore Royalty Corp. CAD 1,640 40,278 39,508
Lithium Americas Corp.* CAD 8,600 50,503 60,458
Materion Corp. USD 535 38,641 38,086
Mosaic Co. (The) USD 475 17,633 17,516
Neo Performance Materials Inc. CAD 9,000 161,320 146,520
Nevsun Resource Ltd. CAD 20,000 92,035 91,400
Newmont Mining Corp. USD 755 37,943 37,429
Norbord Inc.* CAD 1,300 70,758 70,278
Nutrien Ltd. CAD 2,000 126,565 143,040
Pan American Silver Corp. USD 7,000 159,706 164,726
Praxair Inc. USD 115 23,608 23,910
Schweitzer-Mauduit International Inc. USD 435 25,167 25,002
SEMAFO Inc. CAD 39,800 150,124 151,638
Sherritt International Corp. CAD 15,000 20,173 16,650
Southern Copper Corp. USD 595 38,189 36,663
Superior Gold Inc. CAD 15,000 22,650 18,300
Teck Resources Ltd., Class A CAD 5,850 204,231 195,917
United States Steel Corp.* USD 710 32,816 32,436
1,947,632 1,981,141
American Hotel Income Properties REIT L.P. CAD 15,000 122,136 124,800
BTB REIT* CAD 35,000 162,903 163,800
CBRE Group Inc., Class A USD 435 26,863 27,301
Chesapeake Lodging Trust USD 375 16,039 15,598
Choice Properties REIT CAD 18,000 213,981 217,980
Colliers International Group Inc. CAD 700 68,882 70,014
Corepoint Lodging Inc., REIT USD 5,250 180,653 178,760
12
No. of Average Fair
Dream Global REIT* CAD 15,500 226,300 222,580
Dream Industrial REIT CAD 10,400 107,640 107,328
Dream Office REIT CAD 6,500 156,480 152,295
FirstService Corp. CAD 225 20,479 22,498
Jones Lang LaSalle Inc. USD 130 27,825 28,368
Killam Apartment REIT* CAD 15,000 224,250 224,700
LaSalle Hotel Properties USD 185 8,553 8,325
Northview Apartment REIT CAD 15,000 391,782 394,200
Ryman Hospitality Properties Inc. USD 120 13,041 13,118
StorageVault Canada Inc. CAD 40,000 101,973 98,800
Summit Industrial Income REIT CAD 33,200 285,908 290,832
Tricon Capital Group Inc.* CAD 14,900 161,612 164,347
WPT Industrial REIT USD 13,300 222,539 242,865
2,985,839 3,019,609
187,400 186,800
Utilities - 3.06%
Maxim Power Corp.* CAD 53,500 155,643 136,425
NRG Energy Inc. USD 310 12,680 12,512
Superior Plus Corp. CAD 20,000 250,000 255,400
Superior Plus Corp. CAD 22,120 281,999 281,145
TransAlta Renewables Inc. CAD 15,000 189,825 186,600
Vistra Energy Corp. USD 435 13,634 13,531
967,513 949,113
21,566,562 22,231,465
Security Name Currency Shares Cost ($) Value ($)
Exemplar Investment Grade Fund ETF* CAD 62,400 1,250,112 1,249,872
Exemplar Tactical Corporate Bond Fund Class I CAD 90,518 911,862 904,593
iShares 20+ Year Treasury Bond ETF* USD 25,000 3,976,779 4,000,480
SPDR S&P Biotech ETF* USD 1,000 125,916 125,142
VanEck Vectors Junior Gold Miners ETF USD 2,000 85,823 85,978
6,350,492 6,366,065
Security Name Currency Price Date Quantity Cost ($) Value ($)
Ecobalt Solutions Inc. CAD 1.95 08-23-19 35,700 4 3,213
MedReleaf Corp. CAD 35.50 01-31-20 3,000 2,700 11,489
2,704 14,702
Commissions (9,660)
Derivatives (see schedule of derivative instruments) - (0.1%) (31,369)
Cash and Other Net Assets (Liabilities) - 7.7% 2,397,416
Net Assets Attributable to Holders of Redeemable Units - 100.0% 30,978,279
*Denotes all or part of securities on loan
13
Schedule of Derivative Instruments
Forward Currency Contracts - (0.10%)
Counterparty Currency Notional Value
Unrealized Gains 48,808
Unrealized Losses (80,177)
Total forward currency contracts (31,369)
EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE UNAUDITED FINANCIAL STATEMENTS – FUND SPECIFIC
INFORMATION June 30, 2018
14
The investment objective of the Exemplar Growth and Income Fund is to achieve long term growth and preservation of capital. The
Fund will invest up to all of its assets in a diversified mix of other mutual funds (in order to gain indirect exposure to securities that the
Fund would otherwise directly invest in), and may also invest in common shares, preferred shares, treasury bills, short-term notes,
debentures, and bonds. The Fund invests primarily in Canadian securities.
RISK MANAGEMENT
The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed
and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital.
The maximum loss of capital on long equity and bond investments is limited to the fair value of those positions. The maximum loss on
equities and debt sold short can be unlimited.
The management of these risks is carried out by the Manager in accordance with the Fund’s Declaration of Trust.
A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK
MANAGEMENT.
Credit Risk
As of June 30, 2018 and December 31, 2017 the Fund did not hold any interest-bearing securities, and therefore was not subject to
significant interest rate risk.
The Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default.
Management consider both historical analysis and forward looking information in determining any expected credit loss. At June 30,
2018 and December 31, 2017, all amounts due from brokers, cash and cash equivalents and margin deposits are held with
counterparties with a credit rating of Aa3 or higher. Management consider the probability of default and the counterparties have a
strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12
month expected credit losses as any such impairment would be wholly insignificant to the Fund.
The Fund is exposed to counterparty credit risk on margin on deposit, cash held at the broker and receivables for securities sold. The
Fund’s brokerage agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's prime brokerage
services are provided by BMO Nesbitt Burns which has a credit rating of Aa2 (December 31, 2017: A1) as rated by Moody's bond rating
services. Cash collateral has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is
presented as ‘Margin deposits’ in the Statements of Financial Position.
The Fund is exposed to counterparty credit risk on cash and other receivable balances. The Fund’s broker and custodial services are
provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (December 31, 2017:
A1).
The Fund is exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating
services of Aa1 (December 31, 2017: Aa2).
The Fund may participate in securities lending up to a maximum of 50% of the aggregate net asset value of the Fund, excluding the
collateral held in respect to such loans, and is exposed to counterparty risk on all such loans, if any. The credit risk related to the
securities lending program is limited as the Fund holds a minimum collateral equal to 102% of the fair value of the loaned securities.
The collateral and loaned securities are marked to market on each valuation date. All counterparties have a credit rating equivalent to a
Moody’s credit rating of not less than Aa3.
There are risks involved in dealing with custodians or brokers who settle trades with regard to the segregation of assets. It is expected
that all securities and other assets deposited with custodians or brokers will be clearly identified as being assets of the Fund. Therefore,
the Fund should not be exposed to credit risk with respect to such parties. However, it may not always be possible to achieve this
segregation, so the portfolio of the Fund may experience increased exposure to credit risk associated with the applicable custodians or
brokers. The Fund’s custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond
rating services of A1 (December 31, 2017: A1).
Liquidity Risk
All of the Fund’s liabilities are typically due in less than 3 months. Redeemable units are redeemable on demand at the holder’s option.
However, holders of these instruments typically retain them for a longer period.
Market Risk
The following include sensitivity analyses that show how the net assets attributable to holders of redeemable units would have been
affected by a reasonably possible change in the relevant risk variable at each reporting date. In practice, the actual results may differ
and the differences could be material.
(a) Currency Risk
The table below indicates the Fund’s exposure to other currencies as at June 30, 2018 and December 31, 2017 in Canadian dollar
terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar
had strengthened or weakened by 10% in relation to each of the other currencies, with all other variables held constant. Non-monetary
items include equities, funds and warrants. Monetary items include forward currency contracts, cash, margin deposit and other current
receivables and payables.
June 30, 2018 Impact on net assets attributable to holders of redeemable units Exposure
Monetary Non-
United States Dollar - Short (8,775,485) - (8,775,485) (877,548) - (877,548)
Euro Currency - Short (118) - (118) (12) - (12)
Japanese Yen - Long 56,653 2 56,655 5,665 - 5,665
Total (3,604,527) 10,647,347 7,042,820 (360,453) 1,064,735 704,282
% of net assets attributable to holders of redeemable units (11.6%) 34.4% 22.7% (1.2%) 3.4% 2.3%
December 31, 2017 Impact on net assets attributable to holders of redeemable units Exposure
Monetary Non-
United States Dollar - Short (10,123,864) - (10,123,864) (1,012,386) - (1,012,386)
Hong Kong Dollar - Long 222,282 82,174 304,456 22,228 8,217 30,445
Japanese Yen - Long 51,928 - 51,928 5,193 - 5,193
Total (6,610,695) 7,097,215 486,520 (661,069) 709,721 48,652
% of net assets attributable to holders of redeemable units (26.5%) 28.5% 2.0% (2.7%) 2.8% 0.2%
(b) Interest Rate Risk
As at June 30, 2018 and December 31, 2017 the Fund did not hold any interest-bearing securities, and therefore was not subject to
(c) Price Risk
The Fund's policy is to manage price risk through diversification and selection of investments within specified limits established by the
investment restrictions within the prospectus, as summarized below.
To achieve the investment objective, the Manager utilizes the following allocation guidelines: 30-90% equity securities, 10-50% fixed
income securities and 0-50% money market instruments. Fixed income securities may include investment grade, non-investment grade
and distressed fixed income securities, issued by Canadian or non-Canadian corporations, trusts and international agencies and
governments. The Fund is also permitted to invest in convertible bonds and debentures, loans, preferred shares, exchange traded
funds and equities. The Fund may also hold cash. To achieve these target ranges, the Fund may invest in either individual securities
or the Manager may invest up to 100% of the assets of the Fund in underlying funds.
The Fund may invest in foreign securities to an extent that will vary from time to time but is not typically expected to exceed 49% of its
assets at the time that foreign securities are purchased, however, as the Fund intends to invest certain of its assets in securities of
other investment funds that may themselves invest in foreign securities, the actual exposure of the Fund to investments in foreign
securities may exceed this amount.
As at June 30, 2018, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is
$1,430,612 (December 31, 2017: $1,083,595) (all other variables held constant).
Concentration Risk
Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location,
product type, industry sector or counterparty type.
The following is a summary of the Fund's concentration risk as of June 30, 2018 and December 31, 2017:
June 30, 2018 December 31, 2017
Market Segment Long (%) Short (%) Long (%) Short (%)
Consumer Discretionary 7.3 - 6.6 -
Consumer Staples 2.8 - 4.2 -
Derivatives 0.0 - 0.6 (0.1)
Totals 92.4 - 87.5 (0.1)
FAIR VALUE MEASUREMENT
A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR
VALUE MEASUREMENT.
The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy
as at June 30, 2018 and December 31, 2017:
$ $ $ $
$ $ $ $
Total 19,409,445 2,377,268 - 21,786,713
All fair value measurements above are recurring. Fair values are classified as level 1 when the related security or derivative is actively
traded and a quoted price is available. If an instrument classified as level 1 subsequently ceases to be actively traded, it is transferred
out of level 1. In such cases, instruments are reclassified into level 2, unless the measurement of its fair value requires the use of
significant unobservable inputs, in which case it would be classified as level 3.
The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including level
3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the
Manager. In addition, at each financial reporting date, the Manager reviews and approves all level 3 fair value measurements, if
applicable.
a) Equities and Funds
The Fund's equity positions and some investments in funds are classified as Level 1 as the securities are actively traded on a
recognized exchange and a quoted price is available. Equity positions which have resale restrictions but otherwise trade on the market
are classified as Level 2. Funds that do not trade on an exchange are valued by valuation agents and are classified as Level 2.
Derivatives consist of warrants and forward currency contracts. Warrants are valued using models and valuation techniques commonly
used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded
warrants are classified as Level 1. When the inputs that are significant to valuation are generally observable, the warrants are classified
as level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the
contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are
classified as Level 2.
As at June 30, 2018, the Fund did not hold any level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during
the periods ended June 30, 2018 and December 31, 2017.
EXEMPLAR INVESTMENT GRADE FUND
As at As at
Investments $156,144,305 $147,194,996
Cash and cash equivalents 10,203,361 1,235,322
Margin deposits 1,797,881 1,071,828
Receivable for securities sold 7,283,744 3,027
Receivable for redeemable units issued 471,906 368,873
177,861,334 152,894,198
Unrealized loss on futures contracts - long 153,763 -
Unrealized loss on futures contracts - short 314,075 -
Unrealized loss on forward currency contracts - 18,657
Margin loan 15,859 616,658
Accrued interest payable 5,129 -
Accrued dividends payable 11,250 -
18,050,493 1,357,339
Net assets attributable to holders of redeemable units
Series A $34,688,675 $32,007,181
Series AI $4,553,671 $4,575,260
Series AN $6,319,250 $5,292,300
Series F $85,994,663 $84,466,716
Series FI $6,060,468 $5,446,419
Series FN $15,593,213 $15,980,560
Series I $5,577 $5,521
Series G $2,094,820 $1,759,517
Series ETF $4,500,504 $2,003,385
As at As at
Series A 3,598,313 3,281,116
Series AI 509,436 500,780
Series AN 613,657 515,597
Series F 8,742,005 8,506,130
Series FI 662,441 584,286
Series FN 1,499,083 1,545,306
Series I 515 515
Series G 157,509 137,568
Series ETF 225,000 100,000
Net assets attributable to holders of redeemable units per unit
Series A $9.64 $9.75
Series AI $8.94 $9.14
Series AN $10.30 $10.26
Series F $9.84 $9.93
Series FI $9.15 $9.32
Series FN $10.40 $10.34
Series I $10.82 $10.72
Series ETF $20.00 $20.03
USD/CAD Foreign Exchange Rate $0.76066 $0.79554
EXEMPLAR INVESTMENT GRADE FUND Statements of Comprehensive Income (Unaudited)
2018 2017
Interest income 2,558,050 1,515,764
Net realized gain (loss) on investments and derivatives (168,001) 1,455,168
Net change in unrealized appreciation (depreciation) in value of investments and derivatives (846,140) (257,666)
Net gains (losses) on investments and derivatives 1,880,613 2,705,423
Other income items:
Net change in unrealized foreign exchange gain (loss) (18,257) (89,336)
Total income (net) 1,933,212 2,411,717
EXPENSES
Interest expense 5,769 1,661
Audit fees 12,878 10,329
Custodial fees 7,992 4,275
Commissions on Futures (Note 11) 10,633 14,808
Total expense before manager absorption 1,078,104 667,920
Less: expenses absorbed by manager (Note 10) (53,665) (78,266)
Total expenses after manager absorption 1,024,439 589,654
Increase (decrease) in net assets attributable to holders of redeemable units 908,773 1,822,063
Series A 100,298 375,723
Series AI 15,222 64,470
Series AN 19,338 82,067
Series F 513,555 1,120,249
Series FI 35,490 111,861
Series FN 93,839 112,253
Series I 56 158
Series G 111,916 (44,718)
Series ETF 19,059 -
Increase (decrease) in net assets attributable to holders of redeemable units per unit (Note 13)
Series A 0.03 0.19
Series AI 0.03 0.20
Series AN 0.04 0.21
Series F 0.06 0.21
Series FI 0.06 0.23
Series FN 0.06 0.20
Series I 0.11 0.31
Series G 0.72 (1.07)
Series ETF 0.09 -
2018 2017
$ $
Series A 32,007,181 14,183,535
Series AI 4,575,260 2,549,060
Series AN 5,292,300 3,180,116
Series F 84,466,716 34,960,710
Series FI 5,446,419 4,103,761
Series FN 15,980,560 3,149,854
Series I 5,521 5,266
Series G 1,759,517 56,205
151,536,859 62,188,507
Series A 100,298 375,723
Series AI 15,222 64,470
Series AN 19,338 82,067
Series F 513,555 1,120,249
Series FI 35,490 111,861
Series FN 93,839 112,253
Series I 56 158
Series G 111,916 (44,718)
From net investment income Series A (492,788) (287,339)
Series AI (112,817) (73,764)
EXEMPLAR INVESTMENT GRADE FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (Unaudited) For the periods ended June 30,
2018 2017 $ $ Continued from previous page.
Redeemable unit transactions
Proceeds from redeemable units issued (Note 1) Series A 6,581,166 12,595,653
Series AI 327,093 1,188,652
Series AN 2,358,610 2,058,446
Series F 16,994,708 39,432,910
Series FI 912,239 1,047,847
Series FN 3,652,316 5,550,916
Series ETF 2,511,810 -
Reinvestments of distributions to holders of redeemable units Series A 406,409 221,166
Series AI 38,156 23,157
Series AI (289,243) (212,485)
Series AN (1,350,998) (690,494)
Series F (15,257,973) (6,598,827)
Series FI (229,783) (495,768)
Series FN (4,133,502) (482,454)
Net increase (decrease) from redeemable unit transactions 9,530,634 52,910,856
Net increase (decrease) in net assets attributable to holders of redeemable units 8,273,982 53,502,985
Series A 34,688,675 24,326,963
Series AI 4,553,671 3,539,090
Series AN 6,319,250 4,630,135
Series F 85,994,663 68,477,899
Series FI 6,060,468 4,682,766
Series FN 15,593,213 8,330,569
Series I 5,577 5,424
Series G 2,094,820 1,698,646
Series ETF 4,500,504 -
2018 2017
Increase (decrease) in net assets attributable to holders of redeemable units 908,773 1,822,063
Adjustment for:
Unrealized foreign exchange (gain) loss on cash and cash equivalents (22,083) (79,022)
Net realized (gain) loss on investments and derivatives 168,001 (1,455,168)
Net change in unrealized (appreciation) depreciation in value of investments and derivatives 846,140 257,666
Proceeds on sale of investments and derivatives 587,831,667 313,993,931
Change in accrued interest receivable 155,080 (290,163)
Change in accrued dividend receivable 14,665 2,888
Change in accrued interest payable 5,129 58,022
Change in dividend payable 11,250 -
Change in other liabilities 2,647 48,513
Change in margin deposits (726,053) (551,025)
Change in margin loan (600,799) (11,674)
1,631,153 (51,067,377)
Cash flows from (used in) financing activities (Note 1)
Distributions paid to holders of redeemable units, net of reinvested distributions (1,023,278) (642,389)
Net cash from (used in) financing activities 7,314,803 50,148,734
Net Increase (decrease) in cash 8,945,956 (918,643)
Cash and cash equivalents at beginning of the period 1,235,322 2,992,269
Unrealized foreign exchange gain (loss) on cash and cash equivalents 22,083 79,022
Cash and cash equivalents at end of the period 10,203,361 2,152,648
Supplemental information: - -
25
EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at June 30, 2018 (Unaudited)
Equities - 5.59%
Bank of Montreal, 5.20%, Preferred, Class 'B', Series '16' CAD 35,600 886,804 894,984
Bank of Montreal, Preferred, Class 'B', Series '25', Variable Rate, Perpetual CAD 9,800 211,363 226,478
Bank of Montreal, Preferred, Class 'B', Series '17, Floating Rate, Perpetual CAD 78,500 1,952,780 1,968,780
Bank of Nova Scotia, Preferred, Series '32', Variable Rate, Convertible, Perpetual CAD 61,400 1,359,261 1,425,094
Bank of Nova Scotia, Preferred, Series '21', Variable Rate, Perpetual CAD 111,700 2,774,931 2,775,745
Enbridge Inc., Preferred, Series 'B', Variable Rate, Perpetual CAD 15,200 278,883 280,440
Enbridge Inc., Preferred, Series 'L', Variable Rate, Perpetual USD 6,746 204,719 198,835
Kinder Morgan Canada Ltd., Preferred, Series '1', Variable Rate, Perpetual CAD 30,000 746,700 748,200
Toronto-Dominion Bank (The), Preferred, Series 'S', Variable Rate* CAD 2,700 67,359 67,905
Toronto-Dominion Bank (The), Preferred,Series 'T', Variable Rate, Convertible, Perpetual* CAD 2,000 49,780 50,220
TransCanada Corp., Preferred, Series '13', Variable Rate, Perpetual CAD 11,600 305,834 304,384
8,838,414 8,941,065
Security Name Date Rate (%) Currency Value ($) Cost ($) Value ($)
Corporate Bonds - 90.49%
Alimentation Couche-Tard Inc. (2) 07-26-24 3.06 CAD 1,800,000 1,805,328 1,765,803
Artis REIT, Series 'B', Floating Rate 02-07-20 2.81 CAD 2,281,000 2,284,604 2,289,485
AT&T Inc. 11-25-20 3.83 CAD 4,618,000 4,919,899 4,724,680
Bank of Montreal 06-20-23 2.89 CAD 5,000,000 4,991,550 4,991,425
Bell Canada, Series 'M-26' (2) 03-22-23 3.35 CAD 4,955,000 5,009,986 5,010,977
Bruce Power L.P., Restricted 06-23-21 2.84 CAD 4,628,000 4,724,815 4,623,710
Canadian Imperial Bank of Commerce, Variable Rate (2) 04-04-28 3.45 CAD 7,668,000 7,639,298 7,618,071
Central 1 Credit Union, Series '16', Floating Rate 02-05-21 2.09 CAD 2,000,000 2,000,000 1,991,820
Choice Properties L.P., Series '9' (2) 09-20-21 3.60 CAD 162,000 165,093 164,654
Choice Properties REIT, Series 'K', Restricted (2) 09-09-24 3.56 CAD 2,500,000 2,500,000 2,491,557
Choice Properties REIT 02-08-21 3.50 CAD 2,403,000 2,441,953 2,437,500
Choice Properties REIT, Series 'G' (2) 03-07-23 3.20 CAD 3,878,000 3,860,159 3,861,079
Cominar REIT* 12-04-19 4.23 CAD 4,249,000 4,304,341 4,301,408
Cominar REIT, Series '7'* 06-21-19 3.62 CAD 3,500,000 3,555,108 3,516,266
Enbridge Discount Notes 08-01-18 0.00 CAD 4,000,000 3,991,640 3,991,640
Enbridge Inc., Variable Rate (2) 09-27-77 5.38 CAD 4,533,000 4,421,248 4,312,247
Enbridge Inc. Discount Note 07-30-18 0.00 CAD 6,000,000 5,987,940 5,987,940
Ford Credit Canada Co., Floating Rate 09-21-20 2.59 CAD 5,000,000 5,010,346 5,004,950
Ford Credit Canada Co. 05-10-21 2.58 CAD 1,400,000 1,390,144 1,377,146
General Motors Financial Co. Inc. (2) 06-19-23 4.15 USD 1,600,000 2,094,041 2,105,272
Goldman Sachs Group Inc. (The) 02-12-21 3.55 CAD 5,308,000 5,453,892 5,401,976
Goldman Sachs Group Inc. (The), Variable Rate (2) 04-26-23 2.43 CAD 8,425,000 8,271,971 8,192,897
Inter Pipeline Ltd. (2) 09-13-23 2.61 CAD 3,900,000 3,769,819 3,771,000
Kraft Canada Inc. (2) 07-06-20 2.70 CAD 19,000 18,994 18,986
Laurentian Bank of Canada 06-27-23 3.45 CAD 4,197,000 4,195,489 4,183,514
MCAP Commercial L.P. 12-14-22 5.00 CAD 2,402,000 2,417,037 2,387,847
Merrill Lynch & Co. Inc., Variable Rate (2) 05-30-22 2.66 CAD 14,586,000 14,572,275 14,590,230
Molson Coors International L.P. (2) 07-15-23 2.84 CAD 2,235,000 2,146,740 2,171,710
Morgan Stanley, Variable Rate (2) 12-29-20 2.47 CAD 5,753,000 5,789,013 5,783,951
Morgan Stanley, Floating Rate (2) 10-15-21 2.12 CAD 8,003,000 7,997,318 7,988,755
RioCan REIT 08-26-20 2.19 CAD 41,000 40,671 40,477
Royal Bank of Canada, Variable Rate (2) 01-20-26 3.31 CAD 6,075,000 6,114,184 6,114,553
Shaw Communications Inc.* 02-19-21 3.15 CAD 2,500,000 2,583,850 2,518,699
TransCanada Pipelines Ltd. (2) 05-15-28 4.25 USD 2,793,000 3,636,574 3,690,579
TransCanada Trust, Variable Rate (2) 03-15-77 5.30 USD 1,736,000 2,127,302 2,162,164
VW Credit Canada Inc., Floating Rate 03-30-20 2.22 CAD 3,033,000 3,033,000 3,034,911
145,265,622 144,619,879
2,592,953 2,583,361
147,858,575 147,203,240
26
EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at June 30, 2018 (Unaudited)
Fixed Income - Short - 0.00%
Security Name Date Rate (%) Currency Value ($) Cost ($) Value ($)
Commissions (3,115)
Derivatives (see schedule of derivative instruments) - 0.4% 690,430
(1) Convertible (2) Callable
Schedule of Derivative Instruments
Futures Contracts - Long - (0.10%)
Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($)
Currency Futures - (0.10%)
Futures Contracts - Short - (0.20%)
Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($)
Bond Futures - (0.20%)
Canada 5 Year Bond Futures 1,000 09-19-18 CAD (168) (19,781,276) (49,444)
Canada 10 Year Bond Futures 1,000 09-19-18 CAD (75) (10,005,750) (247,500)
Ultra 10-Year US Treasury Note Futures 1,000 09-19-18 USD (31) (3,966,922) (10,969)
US 5 Year Treasury Note Futures 1,000 09-28-18 USD (15) (1,699,570) (6,162)
(314,075)
Security Name Currency Value ($) Cost ($) Gain/(Loss) ($)
3-Month CDOR, 3/1/2021, 2.3925% Interest Rate Swap CAD 10,000,000 - (15,161)
3-Month CDOR, 9/27/2019, 0.8619% Interest Rate Swap CAD 2,220,000 - 33,895
TRS R Bond Basket P CDOR, 4/11/2019, 1M+25BPS Interest Rate Swap CAD 86,095,294 - (107,619)
TRS R Preferred Basket P CDOR, 4/11/2019, 1M Interest Rate Swap CAD 26,095,454 - 86,376
- 1,122,748
Counterparty Currency Notional Value ($) Currency Notional Value ($) Rating Rate ($) Date Gain/(Loss) ($)
BNY Mellon USD 1,590,000 CAD 2,054,700 A1 0.773836 35,520
Total forward currency contracts 35,520
Total derivative instruments at fair value 690,430
EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE UNAUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION June 30, 2018
27
The investment objective of the Exemplar Investment Grade Fund is to generate income and capital preservation by investing in a
diversified portfolio of primarily North American investment grade corporate bonds.
RISK MANAGEMENT
The maximum loss of capital on long equity, options, interest rate swaps, credit default swaps and debt securities is limited to the fair
value of those positions. The maximum loss on equities, options and debt sold short can be unlimited and the maximum loss on futures
contracts is the notional contract value of those positions.
The management of these risks is carried out by the Manager and Portfolio Sub-Advisor in accordance with the Fund’s Declaration of
Trust.
The Fund's use of leverage and borrowings can increase the Fund's exposure to these risks, which in turn can also increase the
potential returns the Fund can achieve. The Portfolio Sub-Advisor uses leverage against assets with satisfactory liquidity
characteristics in order to increase return on capital subject to market conditions.
MANAGEMENT.
Credit Risk
The analysis below summarizes the credit quality of the Fund's debt portfolio at June 30, 2018 and December 31, 2017.
Percentage of total debt securities
Credit Rating* June 30, 2018 December 31, 2017
% %
Total 100.0 100.0
* Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.
counterparties with a credit rating of A3 or higher. Management consider the probability of default and the counterparties have a strong
capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12 month
expected credit losses as any such impairment would be wholly insignificant to the Fund
The Fund is exposed to counterparty credit risk on swaps, and futures contracts. The counterparties to the Fund’s swaps are Bank of
America and JP Morgan Chase & Co. which have credit ratings as rated by Moody’s bond rating services of A3 and A3, respectively
(December 31, 2017: A3 and A3, respectively). Futures contracts are exchange traded. Cash collateral has been provided to JP
Morgan Chase & Co. in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the
Statements of Financial Position.
The Fund is exposed to counterparty credit risk on cash, margin deposits and other receivable balances. The Fund’s broker and
custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of
A1 (December 31, 2017: A1).
28
The collateral and loaned securities are marked to market on each valuation date.
brokers.
Liquidity Risk
All of the Fund’s liabilities are typically due in less than 3 months. Redeemable units are redeemable on demand at the holder’s option.
However, holders of these instruments typically retain them for a longer period.
From time to time, the Fund may use margin borrowings in one or more of its brokerage accounts. For the period ending June 30,
2018, the minimum margin borrowings used was $220,664 and the maximum margin borrowings used was $1,781,909 (December 31,
2017: min: $354,574, max: $1,489,432).
Market Risk
(a) Currency Risk
The table below indicates the Fund’s exposure to USD as at June 30, 2018 and December 31, 2017 in Canadian dollar terms. The
table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had
strengthened or weakened by 10% in relation to USD, with all other variables held constant. Non-monetary items include non-financial
options. Monetary items include future contracts, forward currency contracts, bonds, cash, margin deposit, swaps and other current
receivables and payables.
Monetary Non-Monetary Total Monetary Non-Monetary Total
Currency $ $ $ $ $ $
United States Dollar - Short (186,753) - (186,753) (18,675) - (18,675)
Total 13,917,276 198,835 14,116,111 1,391,728 19,884 1,411,612
% of net assets attributable to holders of redeemable units 8.7% 0.1% 8.8% 0.9% 0.0% 0.9%
29
December 31, 2017 Impact on net assets attributable to holders of redeemable units Exposure
United States Dollar - Short (393,653) - (393,653) (39,365) - (39,365)
Total 14,053,743 202,835 14,256,578 1,405,375 20,284 1,425,659
The table below summarizes the Fund's exposure to interest rate risk as at June 30, 2018 and December 31, 2017. The table also
illustrates the potential impact, or sensitivity, on the net assets attributable to holders of redeemable units if the prevai ling levels of
market interest rates changed by 1.0%, assuming a parallel shift in the yield curve with all other variables held constant.
Total Exposure
Less than 1 year $ 125,428,502 $ 3,860,142
1-3 years 109,609,092 46,055,813
3-5 years 56,680,496 81,518,372
Total $ 288,190,546 $ 164,261,139
Sensitivity:
Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 9,478,427 +/- $ 2,970,428
Total % sensitivity to net assets attributable to holders of redeemable units 5.9% 2.0%
(c) Price Risk
The Fund's policy is to manage price risk through pursuit of a diversified investment program that focuses on investment-grade fixed
income securities while utilizing other assets such as options and credit default swaps, to extract relative value and to manage credit
exposure.
The Fund engages in short selling activities, wherein it borrows securities and sells them to third parties. Until the Fund covers its short
sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold, not yet
purchased, at prices which may be significantly higher than the fair value reflected on the financial statements.
As at June 30, 2018, if the Fund's relevant benchmark index, FTSE TMX Canada Universe Bond Index, had increased or decreased by
5%, with all other variables held constant, the net assets attributable to holders of redeemable units of the Fund would have increased
or decreased by $559,338 (December 31, 2017: $408,399).
Concentration Risk
The following is a summary of the Fund's concentration risk as of June 30, 2018 and December 31, 2017:
June 30, 2018 December 31, 2017
Equities 5.6 - 10.0 -
Derivatives 0.7 (0.3) 1.2 0.1
Totals 98.4 (0.3) 98.3 0.1
30
VALUE MEASUREMENT.
$ $ $ $
$ $ $ $
Total 15,601,299 133,623,578 - 149,224,877
All fair value measurements above are recurring. Fair values are classified as Level 1 when the related security or derivative is actively
traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred
out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of
significant unobservable inputs, in which case it would be classified as Level 3.
The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including
Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by
the finance department. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value
measurements, if applicable.
a) Equities and Funds
The Fund's equity positions and investments in funds are classified as Level 1 as the securities are actively traded on a recognized
exchange and a quoted price is available.
31
b) Bonds
The Fund's bond holdings are comprised of Canadian and US bonds. Bond pricing is obtained from bid and ask prices provided by
independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include
inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable
and therefore the Fund's bonds have been classified as Level 2.
c) Derivatives
Derivative assets and liabilities consist of futures contracts, options, interest rate swaps, credit default swaps and forward currency
contracts. Long and short futures contracts and options are exchange traded and are classified as Level 1 as they are actively traded
on a recognized exchange and a quoted price is available. Interest rate swaps are valued using indicative bid/ask prices from third
party broker dealers while credit default swaps are valued based upon quotations from independent security pricing sources. The inputs
that are significant to valuation are generally observable and therefore both interest rate swaps and credit default swaps have been
classified as Level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference
between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts
are classified as Level 2.
As at June 30, 2018 and December 31, 2017, the Fund did not hold any Level 3 financial instruments. There were no transfers between
levels 1, 2 and 3 during the periods ending June 30, 2018 and December 31, 2017.
EXEMPLAR LEADERS FUND
As at As at
Investments $36,843,125 $38,548,511
Warrants 129,501 229,689
Margin deposits 840,522 518,185
Receivable for securities sold 255,501 187,050
Receivable for redeemable units issued 529 513
38,471,244 40,250,024
Investments sold short 644,940 352,230
Payable for securities purchased 80,634 330,158
Payable for redeemable units redeemed 232,124 23,691
1,020,466 785,337
Net assets attributable to holders of redeemable units
Series A $25,857,845 $28,002,840
Series F $11,592,933 $11,461,847
Number of redeemable units outstanding (Note 7) Series A 624,329 652,627
Series F 274,540 263,335
Net assets attributable to holders of redeemable units per unit Series A $41.42 $42.91
Series F $42.23 $43.53
For the periods ended June 30, 2018 2017
$ $
Interest Income 21,886 12,984
Net realized gain (loss) on investments and derivatives 111,559 822,950
Net change in unrealized appreciation (depreciation) in value of investments and derivatives (1,592,016) 843,827
Net gains on investments and derivatives (909,615) 2,172,194
Other income items:
Net change in unrealized foreign exchange gain (loss) 16,723 (39,416)
Total income (net) (868,282) 2,118,201
EXPENSES
Performance fees (Note 10) - 3,302
Audit fees 10,537 9,395
Custodial fees 2,395 2,076
Withholding tax expense 21,790 21,982
Total expenses 448,890 489,277
Increase (decrease) in net assets attributable to holders of redeemable units (1,317,172) 1,628,924
Series A (978,884) 1,165,967
Series F (338,288) 462,957
Increase (decrease) in net assets attributable to holders of redeemable units per unit
Series A (1.52) 1.75
Series F (1.25) 1.98
$ $
Series A 28,002,840 27,576,099
Series F 11,461,847 9,665,528
39,464,687 37,241,627
Series A (978,884) 1,165,967
Series F (338,288) 462,957
Series F 654,602 430,878
Series F (185,228) (482,901)
Net increase (decrease) from redeemable unit transactions (696,737) (1,092,552)
Net increase (decrease) in net assets attributable to holders of redeemable units (2,013,909) 536,372
Series A 25,857,845 27,701,537
Series F 11,592,933 10,076,462
$ $
Increase (decrease) in net assets attributable to holders of redeemable units (1,317,172) 1,628,924
Adjustment for:
Unrealized foreign exchange (gain) loss on cash and cash equivalents 16,518 (39,342)
Net realized (gain) loss on investments and derivatives (111,559) (822,950)
Net change in unrealized (appreciation) depreciation in value of investments and derivatives 1,592,016 (843,827)
Proceeds on sale of investments 6,792,049 9,551,197
Change in accrued dividends receivable (12,531) (5,404)
Change in other liabilities (16,490) (3,406)
Change in margin deposits (322,337) 559,306
Net cash from (used in) operating activities 128,297 679,596
Cash flows from (used in) financing activities
Net cash from (used in) financing activities (488,320) (1,221,001)
Net Increase (decrease) in cash (360,023) (541,405)
Cash and cash equivalents at beginning of the period 684,291 1,455,785
Unrealized foreign exchange gain (loss) on cash and cash equivalents (16,518) 39,342
Cash and cash equivalents at end of the period 307,750 953,722
Supplemental information:
Interest paid* - -
Dividends paid* - -
36
EXEMPLAR LEADERS FUND Schedule of Investment Portfolio – As at June 30, 2018 (Unaudited)
Consumer Discretionary - 9.91%
Magna International Inc. CAD 22,900 647,695 1,750,934
Martinrea International Inc. CAD 35,100 303,749 494,910
Newell Brands Inc.* USD 4,100 140,058 139,010
Sleep Country Canada Holdings Inc. CAD 25,300 516,832 824,021
2,036,919 3,712,315
Energy - 24.80%
Cardinal Energy Ltd.* CAD 51,400 244,219 284,242
Crescent Point Energy Corp. CAD 39,100 395,878 377,706
Enbridge Inc. CAD 1,000 41,752 47,000
Enbridge Income Fund Holdings Inc. CAD 2,200 61,411 70,928
Essential Energy Services Trust* CAD 280,000 143,332 159,600
Freehold Royalties Ltd. CAD 231,300 3,074,604 2,868,120
Gran Tierra Energy Inc.* CAD 93,500 267,986 425,425
Granite Oil Corp.* CAD 28,500 128,157 86,640
High Arctic Energy Services Inc.* CAD 30,600 130,950 116,892
Inter Pipeline Ltd. CAD 14,900 398,575 367,136
Keyera Corp. CAD 9,500 333,976 347,510
Pembina Pipeline Corp. CAD 6,800 206,320 309,604
PrairieSky Royalty Ltd. CAD 10,700 332,821 277,665
ProPetro Holding Corp. USD 19,000 424,632 391,661
Raging River Exploration Inc. CAD 31,200 173,607 177,840
Razor Energy Corp.* CAD 89,900 229,134 242,730
Source Energy Services Ltd. CAD 71,700 505,943 356,349
STEP Energy Services Ltd. CAD 80,100 798,837 879,498
Tamarack Valley Energy Ltd. CAD 58,300 134,850 268,763
Tidewater Midstream and Infrastructure Ltd. CAD 118,800 182,082 147,312
Trican Well Service Ltd. CAD 66,800 240,228 199,732
US Silica Holdings Inc.* USD 7,500 266,835 253,300
ZCL Composites Inc. CAD 32,200 249,820 278,530
9,366,598 9,287,133
Financials - 9.01%
Element Fleet Management Corp. CAD 218,900 1,853,670 1,352,802
Fiera Capital Corp. CAD 3,200 41,600 37,664
Franklin Resources Inc.* USD 1,500 73,165 63,202
Legg Mason Inc.* USD 19,900 801,095 908,590
Santander Consumer USA Holdings Inc.* USD 12,900 225,802 323,747
3,691,362 3,373,315
Akumin Inc. USD 65,200 334,764 361,718
Anthem Inc. USD 8,600 1,747,454 2,691,165
Express Scripts Holding Co. (3) USD 2,300 241,611 233,459
Helius Medical Technologies Inc., Class A* CAD 6,400 60,185 79,936
IMV Inc.* CAD 36,905 81,965 249,109
Opsens Inc.* CAD 276,800 237,133 249,120
Profound Medical Corp.* CAD 187,400 177,173 179,904
Theratechnologies Inc. CAD 57,000 179,513 722,760
3,351,479 4,959,970
Industrials - 12.27%
CanWel Building Materials Group Ltd. CAD 118,800 635,678 817,344
37
No. of Average Fair
Dirtt Environmental Solutions Ltd.* CAD 77,500 432,000 496,775
Flyht Aerospace Solutions Ltd.* CAD 80,700 108,467 96,033
Generac Holdings Inc. USD 5,000 235,867 340,034
Nanotech Security Corp. CAD 88,600 101,890 102,776
United Parcel Service Inc., Class B USD 9,500 1,216,108 1,326,725
WestJet Airlines Ltd. CAD 12,100 242,112 219,373
3,246,315 4,594,602
Microsoft Corp. USD 19,800 2,075,629 2,566,825
Sierra Wireless Inc.* CAD 21,700 546,476 456,351
Smart Employee Benefits Inc. CAD 73,000 11,680 14,235
VersaPay Corp. CAD 52,400 59,978 125,760
4,349,753 5,362,416
Materials - 3.54%
Neo Performance Materials Inc. CAD 7,900 142,200 128,612
Osisko Gold Royalties Ltd.* CAD 25,500 384,347 317,475
Trevali Mining Corp. CAD 77,300 72,681 69,570
US Concrete Inc.* USD 6,400 459,724 441,722
1,495,208 1,325,657
Pure Multi-Family REIT L.P., Class A CAD 70,100 541,913 635,807
Slate Retail REIT, Class 'U'* CAD 9,300 130,929 119,598
Tricon Capital Group Inc.* CAD 29,600 216,532 326,488
1,299,329 1,606,083
493,757 588,646
Utilities - 5.05%
National Fuel Gas Co.* USD 5,300 341,443 369,006
Polaris Infrastructure Inc. CAD 76,700 681,906 1,079,936
1,578,047 1,889,757
Technology - 0.38%
Nubeva Technologies Ltd.* CAD 69,270 53,685 69,270
118,285 143,231
31,027,052 36,843,125
38
Equities - Short - (1.80%) No. of Average Fair
Security Name Currency Shares/Units Cost ($) Value ($)
Consumer Discretionary - (1.60%)
Health Care - (0.20%)
(572,010) (644,940)
Security Name Currency Price ($) Date Quantity Cost ($) Value ($)
Acasti Pharma Inc. USD 0.90 12-27-22 174,600 - -
Acasti Pharma Inc. CAD 1.50 12-03-18 205,000 - -
Acasti Pharma Inc. CAD 2.15 02-21-22 70,500 - -
Acerus Pharmaceuticals Corp. CAD 0.40 06-28-20 197,000 19,700 8,865
Ceapro Inc. CAD 1.50 07-13-18 24,100 - -
CVR Medical Corp. CAD 0.70 10-19-18 69,000 - 2
Eguana Technologies Inc. CAD 0.39 12-22-19 84,000 - 2,594
Helius Med Technologies Inc. CAD 12.25 04-10-21 6,400 1 27,823
Hudson Resources Inc. CAD 0.50 02-16-20 91,500 - 7,871
Memex Inc. CAD 0.25 09-26-19 225,000 - -
Nemaska Lithium Inc. CAD 1.50 07-08-19 24,100 6,025 5,784
Pioneering Technology Corp.(3) CAD 1.80 03-21-19 33,000 - -
Prairie Provident Resources Inc. CAD 0.87 03-16-19 49,000 - 2,573
Profound Medical Corp. CAD 1.40 09-20-20 97,500 10,530 7,754
ProMetic Life Sciences Inc. CAD 6.39 09-23-19 100,000 12,000 -
QYOU Media Inc. CAD 0.55 11-21-19 162,500 - -
RepliCel Life Sciences Inc. CAD 2.00 02-24-20 64,000 - -
Royal Nickel Corp. CAD 0.50 09-23-18 81,000 - -
Tag Oil Ltd. CAD 0.90 03-20-19 96,000 192 1,680
Theralase Technologies Inc. CAD 0.38 11-10-21 258,000 2,580 43,684
Titan Medical Inc. CAD 0.75 09-20-21 195,000 9,750 20,475
Titan Medical Inc. CAD 0.40 03-16-19 32,500 - 360
Titan Medical Inc. CAD 0.50 03-16-21 32,500 - -
TrackX Holdings Inc. CAD 0.55 05-10-19 88,000 - -
ZincX Resources Corp. CAD 0.55 12-15-18 64,500 - 36
60,777 129,501
Commissions (31,824)
(1) Convertible (2) Callable
*Denotes all or part of securities on loan
EXEMPLAR LEADERS FUND NOTES TO THE UNAUDITED FINANCIAL STATEMENTS – FUND SPECIFIC
39
The investment objective of the Exemplar Leaders Fund is to maximize absolute returns on investments through securities selection
and asset allocation. The Fund focuses on achieving growth of capital through superior securities selection and pursues a long-term
investment program with the aim of generating capital gains. The Fund attempts to reduce volatility through diversifying the portfolio
across both economic sectors and market capitalizations (company size and liquidity). The Fund invests primarily in equity and equity-
related securities of North American companies. The Fund may also invest in international companies.
RISK MANAGEMENT
The maximum loss of capital on long equity, warrants and debt securities is limited to the fair value of those positions. The maximum
loss on equities and debt sold short can be unlimited.
The management of these risks is carried out by the Manager in accordance with Fund’s Declaration of Trust.
MANAGEMENT.
Credit Risk
As at June 30, 2018 and December 31, 2017, the Fund had no investments in debt instruments and therefore was not subject to related
credit risk.
counterparties with a credit rating of Aa3 or higher. Management consider the probability of default and the counterparties have a
strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12
month expected credit losses as any such impairment would be wholly insignificant to the Fund
The Fund is exposed to counterparty credit risk on margin on deposit and receivables for securities sold. The Fund’s brokerage
agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's brokerage services are provided by
BMO Nesbitt Burns which has a credit rating of Aa2 (December 31, 2017: A1) as rated by Moody's bond rating services. Cash collateral
has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is presented as “Margin
deposits” in the Statements of Financial Position.
The Fund is exposed to counterparty credit risk on cash and other receivable balances. The Fund’s custodial services are provided by
CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (December 31, 2017: A1).
The collateral and loaned securities are marked to market on each valuation date. All counterparties have a credit rating equivalent to a
Moody’s credit rating of not less than Aa3.
brokers.
Liquidity Risk
All of the Fund’s liabilities are typically due in less than 3 months except for performance fees which are accrued daily and payable
annually on December 31 (if applicable). Redeemable units are redeemable on demand at the holder’s option. However, holders of
these instruments typically retain them for a longer period.
Market Risk
(a) Currency Risk
The tables below indicate the Fund’s exposure to foreign currencies as at June 30, 2018 and December 31, 2017, in Canadian dollar
terms. The tables also illustrate the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar
had strengthened or weakened by 10% in relation to foreign currencies, with all other variables held constant. Non-monetary items
include equities, margin deposits, funds and warrants. Monetary items include cash and other current receivables and payables.
Total 883,018 12,145,770 13,028,788 88,302 1,214,577 1,302,879
December 31, 2017 Impact on net assets attributable to holders of
redeemable shares Exposure
Total 666,832 11,939,304 12,606,136 66,683 1,193,930 1,260,613
As at June 30, 2018 and December 31, 2017 the Fund did not hold any interest-bearing securities, and therefore was not subject to
(c) Price Risk
The Fund's policy is to manage price risk through diversification and selection of investments within specified limits establ ished by the
investment restrictions within the prospectus, as summarized below.
To achieve the investment objective of the Fund, the Manager: (i) makes long term investments of securities of issuers which the
Manager believes present the greatest opportunity for capital appreciation; and (ii) manages the portfolio’s sector allocation, increasing
and decreasing exposure to different sectors of the market as appropriate.
41
As at June 30, 2018, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is
$1,816,384 (all other variables held constant) (December 31, 2017: $1,921,299).
The Fund has the ability to take short positions, in total not exceeding 20% of the Net Asset Value of the Fund. Until the Fund covers
its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold
short at prices which may be significantly higher than the fair value reflected on the financial statements.
Concentration Risk
The following is a summary of the Fund's concentration risk:
June 30, 2018 December 31, 2017
Consumer Discretionary 9.9 (1.6) 10.0 (0.9)
Energy 24.8 - 20.6 -
Financials 9.0 - 9.8 -
Industrials 12.3 - 10.1 -
VALUE MEASUREMENT.
$ $ $ $
(644,940) - - (644,940)
Total 36,161,942 165,744 - 36,327,686
$ $ $ $
Funds 1,676,886 - - 1,676,886
(352,230) - - (352,230)
Total 37,414,311 934,259 77,400 38,425,970
All fair value measurements above are recurring. Fair values are classified as Level 1 when the related security or derivative is actively
traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred
out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of
significant unobservable inputs, in which case it would be classified as Level 3.
The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including
Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by
the Manager. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements.
The following table presents the movement in Level 3 instruments for the periods ended June 30, 2018 and December 31, 2017.
Equities
Net purchases and sales - 77,400
Net transfers in (out) (77,400) -
Realized gain (loss) - -
Unrealized gain (loss) - -
Closing balance, end of period - 77,400
During the period ended June 30, 2018, the Fund transferred equity securities with a fair value of $77,400 from Level 3 to Level 1 due
to resale restrictions being lifted (2017: nil).
Equities and Funds
Most of the Fund's equity positions and all investments in Funds are classified as Level 1 as the securities are actively traded on a
recognized exchange and a quoted price is available. Equity positions which have resale restrictions but otherwise trade on the market
are classified as Level 2.
At December 31 2017, the Fund classified the holding of a private company equity position – Nubeva valued at $77,400 as Level 3.
During the period ended June 30, 2018, the subscription receipts were converted to free trading common stock.
a) Warrants
Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock
price, restrictions on exercise and days to expiry. Exchange traded warrants are classified as Level 1. When the inputs that are
significant to valuation are generally observable, the warrants are classified as Level 2. Warrants that have significant unobservable
inputs are classified as Level 3.
EXEMPLAR PERFORMANCE FUND
As at As at
Investments $38,912,884 $36,017,463
Cash and cash equivalents

UNAUDITED SEMI-ANNUAL FINANCIAL STATEMENTS JUNE 2018

Documents

Transcript of UNAUDITED SEMI-ANNUAL FINANCIAL STATEMENTS JUNE 2018