confidential offering memoranijum...“manager” means nicola wealth management ltd. “mortgage...

OFFERING MEMORANDUM

Form 45-106F2 – Offering Memorandum for Non-Qualifying Issuers

Date: April 30, 2016 The Issuers Name:

THE NWM FUNDS NWM Canadian Equity Income Fund NWM Global Equity Fund NWM High Yield Bond Fund NWM Real Estate Fund NWM Primary Mortgage Fund NWM Balanced Mortgage Fund NWM Global Bond Fund NWM Preferred Share Fund NWM Alternative Strategies Fund NWM Precious Metals Fund NWM Bond Fund NWM Canadian Tactical High Income Fund NWM U.S. Tactical High Income Fund NWM Core Portfolio Fund NWM U.S. Equity Income Fund (each a “Fund”, and together the “Funds”)

Head Office: c/o Nicola Wealth Management Ltd. (the “Manager”)

5th

Floor – 1508 West Broadway

Vancouver, British Columbia V6J 1W8

Phone #: 604-739-6450 1-800-219-8032 (toll free)

E-mail address: [email protected]

Fax #: 604-739-6451

Currently listed or quoted No. These securities do not trade on any exchange or market. Reporting issuer No

SEDAR filer No

The Offering

Securities offered: An unlimited number of trust units of each Fund designated as Class “O”, Class “F” or

Class “A” (each, a “Unit” and together, the “Units”). Each Unit of a particular Fund

represents an undivided interest(including a fractional interest) in a proportionate share of

the property of that Fund.

Price per security: The offering price of the Units of the Funds will be the net asset value per unit (“Net

Asset Value Per Unit”) of the Units of those Funds as determined on the Valuation Day

next following the day on which a subscription for Units is received.

Currency: All references to dollar amounts in this Offering Memorandum shall be references to Canadian dollars unless stated otherwise, except with respect to the NWM U.S. Tactical High Income Fund and the NWM U.S. Equity Income Fund, for which all references to dollar amounts shall be references to U.S. dollars unless stated otherwise.

Minimum/Maximum offering: There is no minimum or maximum. You may be the only purchaser. Funds available under the Offering may not be sufficient to accomplish our proposed objectives.

Minimum subscription amount: For Class “O” Units and Class “F” Units, $25,000 initially (subject to the Manager’s

discretion), and thereafter in minimum increments of $1,000. There is no minimum

subscription amount for Class “A” Units.

Payment Terms: The full subscription price is payable on subscription through FundSERV or other means

acceptable to the Manager. See Item 5. No financing of the subscription price will be

provided.

Proposed closing date(s): The Units are being offered on a continuous basis. Closings of the sales of Units offered

hereunder will take place at such times as are chosen by the Manager (each, a “Closing”).

A Closing may occur at any time as subscriptions are received.

Tax consequences: There are important tax consequences to these securities. See Item 6.

Selling agent: No. See Item 7.

Resale restrictions You will be restricted from selling your Units for an indefinite period. See Item 10. However, you may elect to redeem any or

all of your Units at certain times if you follow the correct procedures. See Item 5.

Purchaser’s rights You have 2 business days to cancel your agreement to purchase these securities. If there is a misrepresentation in this

Offering Memorandum, you have the right to sue either for damages or to cancel the agreement. See Item 11.

No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this Offering Memorandum. Any representation to the contrary is an offence. This is a risky investment. See Item 8.

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TABLE OF CONTENTS

Page GENERAL SUMMARY ............................................................................................................................................. 5

GLOSSARY OF TERMS.......................................................................................................................................... 10

FUND INFORMATION SUMMARIES .................................................................................................................. 14

NWM CANADIAN EQUITY INCOME FUND .................................................................................................... 15 NWM GLOBAL EQUITY FUND .......................................................................................................................... 18 NWM HIGH YIELD BOND FUND ....................................................................................................................... 23 NWM REAL ESTATE FUND ................................................................................................................................ 27 NWM PRIMARY MORTGAGE FUND ................................................................................................................ 31 NWM BALANCED MORTGAGE FUND ............................................................................................................. 34 NWM GLOBAL BOND FUND ............................................................................................................................. 37 NWM PREFERRED SHARE FUND ..................................................................................................................... 41 NWM ALTERNATIVE STRATEGIES FUND ..................................................................................................... 45 NWM PRECIOUS METALS FUND ...................................................................................................................... 49 NWM BOND FUND .............................................................................................................................................. 53 NWM CANADIAN TACTICAL HIGH INCOME FUND ..................................................................................... 56 NWM U.S. TACTICAL HIGH INCOME FUND ................................................................................................... 59 NWM CORE PORTFOLIO FUND ........................................................................................................................ 62 NWM U.S. EQUITY INCOME FUND ................................................................................................................... 65

ITEM 1 USE OF AVAILABLE FUNDS ................................................................................................................. 68

AVAILABLE FUNDS .................................................................................................................................................. 68 USE OF AVAILABLE FUNDS ...................................................................................................................................... 68 REALLOCATION ....................................................................................................................................................... 68

ITEM 2 BUSINESS OF THE FUNDS ..................................................................................................................... 68

STRUCTURE ............................................................................................................................................................. 68 OUR BUSINESS ......................................................................................................................................................... 68 DEVELOPMENT OF BUSINESS ................................................................................................................................... 69 LONG TERM OBJECTIVES ......................................................................................................................................... 76 SHORT TERM OBJECTIVES AND HOW WE INTEND TO ACHIEVE THEM ..................................................................... 76 MATERIAL AGREEMENTS ........................................................................................................................................ 77 USE OF DERIVATIVES .............................................................................................................................................. 87 INVESTMENTS IN OTHER FUNDS .............................................................................................................................. 87 USE OF LEVERAGE ................................................................................................................................................... 87

ITEM 3 DIRECTORS, MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS .............................. 88

COMPENSATION AND SECURITIES HELD .................................................................................................................. 88 MANAGEMENT EXPERIENCE .................................................................................................................................... 91 PENALTIES, SANCTIONS AND BANKRUPTCY ............................................................................................................ 92 LOANS ..................................................................................................................................................................... 93 CONFLICTS OF INTEREST ......................................................................................................................................... 93 RELATED PARTY TRANSACTIONS – NOTICE AND CONSENT ..................................................................................... 94 CLASS “N” UNITS .................................................................................................................................................... 95

ITEM 4 CAPITAL STRUCTURE ........................................................................................................................... 95

CAPITALIZATION OF THE FUNDS .............................................................................................................................. 95 UNITS ISSUABLE IN SERIES ...................................................................................................................................... 97 LONG TERM DEBT ................................................................................................................................................... 97 PRIOR SALES ........................................................................................................................................................... 97

ITEM 5 SECURITIES OFFERED ........................................................................................................................ 100

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TERMS OF SECURITIES ........................................................................................................................................... 100 SUBSCRIPTION PROCEDURE ................................................................................................................................... 102 VALUATION PROCEDURES FOR DETERMINING NET ASSET VALUE AND NET ASSET VALUE PER UNIT OF A FUND 104 RESALE RESTRICTIONS .......................................................................................................................................... 107 REDEMPTION ATTRIBUTES AND PROCEDURES ....................................................................................................... 108 SWITCHES .............................................................................................................................................................. 109 SYSTEMATIC INVESTMENT AND WITHDRAWAL PLANS AVAILABLE TO CLIENTS OF THE MANAGER ..................... 110

ITEM 6 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ....................................... 110

GENERAL ............................................................................................................................................................... 110 STATUS OF THE FUNDS .......................................................................................................................................... 111 ELIGIBILITY FOR DEFERRED INCOME PLANS ......................................................................................................... 111 TAXATION OF THE FUNDS ...................................................................................................................................... 112 TAXATION OF UNITHOLDERS ................................................................................................................................. 112

ITEM 7 COMPENSATION PAID TO SELLERS AND FINDERS ................................................................... 113

ITEM 8 RISK FACTORS ....................................................................................................................................... 115

GENERAL ............................................................................................................................................................... 115 RISKS APPLICABLE TO ALL FUNDS ........................................................................................................................ 115 ADDITIONAL RISKS APPLICABLE TO THE MORTGAGE FUNDS ................................................................................ 123

ITEM 9 REPORTING OBLIGATIONS ............................................................................................................... 125

ITEM 10 RESALE RESTRICTIONS.................................................................................................................... 125

GENERAL STATEMENT ........................................................................................................................................... 125 RESTRICTED PERIOD .............................................................................................................................................. 125

ITEM 11 PURCHASERS’ RIGHTS ...................................................................................................................... 125

ITEM 12 FINANCIAL STATEMENTS ................................................................................................................ 131

ITEM 13 DATE AND CERTIFICATE ................................................................................................................. 471

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GENERAL SUMMARY

The following is a general summary of certain information contained in this Offering Memorandum, and

reference should be made to the more detailed and additional information contained elsewhere in this

Offering Memorandum.

Private Offering This Offering Memorandum constitutes a private offering of securities

only in those jurisdictions and to those Persons where and to whom they

may be lawfully sold and therein only by those entities permitted to sell

such securities. This Offering Memorandum is not, and under no

circumstances is it to be construed as a prospectus, advertisement or public

offering of the securities referred to herein. No securities regulatory authority has assessed the merits of these securities or reviewed this Offering Memorandum. Any representation to the contrary is an offence. This is a risky investment. Persons who will be acquiring

securities pursuant to this Offering Memorandum will not have the benefit

of the review of the material by the securities commissions or similar

authorities in Canada. The securities offered hereunder will be issued

under various exemptions from the prospectus requirements of the

securities laws of all Provinces and Territories in Canada and will be

subject to certain resale restrictions. See Items 5 and 10.

These securities are not offered under this Offering Memorandum for sale in the United States of America or, subject to the exception that follows, to any “U.S. Person” as that term is defined in United States federal securities legislation. However, these securities may be sold to U.S. Persons who are managed account clients of the Manager if they are held in “Canadian Retirement Accounts” as that expression is defined in Rule 230.237 of the General Rules and Regulations of the U.S. Securities Act of 1933. These securities are not registered with the U.S. Securities and Exchange Commission and are being offered to U.S. Persons under an exemption from registration.

Continuous Offering The Manager is offering (the “Offering”), on a continuous private

placement basis, an unlimited number of Units of each Fund. Class “O”

Units are offered only to investors who are clients of the Manager, and

Class “F” Units are offered only to investors who are not clients of the

Manager. Class “A” Units are offered only to fully managed accounts of

clients of WealthBar Financial Services Inc. (“WealthBar”). See Items 5

and 7.

Minimum Subscription For Class “O” Units and Class “F” Units, $25,000 initially (subject to the

Manager’s discretion), and thereafter in minimum increments of $1,000.

There is no minimum subscription amount for Class “A” Units.

Investment Objective and Strategies of the Funds

The fundamental investment objectives and strategies of the Funds are set

out in Fund Information Summaries 1 to 15 forming part of this Offering

Memorandum (the “Fund Information Summaries”) which also include

other pertinent information specific to each Fund. These Fund Information

Summaries should be reviewed carefully.

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Risk Factors Potential Subscribers should pay particular attention to the information

under the heading “Risk Factors” in Item 8 and in the introduction to the

Fund Information Summaries. An investment in the Funds requires the

financial ability and a willingness to accept risk. No assurance can be

given that the investment objectives of the Funds will be achieved or that

Subscribers will receive a return on their capital. Further, the Units are not

“deposits” within the meaning of the Canada Deposit Insurance

Corporation Act (Canada) and are not insured under that statute or any

other legislation.

Trustee CIBC Mellon Trust Company, or any successor trustee appointed

pursuant to the master declaration of trust governing the Funds( the

“DOT” as defined in the Glossary of Terms)

Manager Nicola Wealth Management Ltd.

Custodians CIBC Mellon Trust Company, Credential Securities Inc., and/or such other

custodian or custodians appointed by the Manager

Auditors Collins Barrow, Chartered Accountants, or any successor auditors for the

Funds chosen by the Manager

Subscription Procedure Subscriptions will be received if, as and when accepted, subject to prior

sale and satisfaction of the conditions set forth under the heading

“Subscription Procedure” (See Item 5.2) and the right of the Manager to

close the subscription books at any time without notice. The Offering is

continuous. The offering price of the Units of the Funds will be the Net

Asset Value Per Unit of the Units of those Funds as determined as of the

Valuation Day next following the day on which a subscription for Units is

received. The subscription price of each fractional Unit will be the

proportionate part of such price. Except for the NWM Alternative

Strategies Fund, subscriptions will be settled on the third Business Day

(the 18th Business Day for the NWM Alternative Strategies Fund) after the

next Valuation Date that occurs following (i) in the case of Advisory

Clients and Class “F” Subscribers, receipt by the Manager of the required

subscription documents, (ii) in the case of Class “A” Subscribers, the

placement of the purchaser order on FundSERV by WealthBar, and (iii) in

the case of Managed Clients, placement of an order by the Manager for

purchase of Units. Subscribers will have two Business Days to cancel their

agreement to purchase Units. In some cases, Funds may offer Subscribers

the ability to invest in an alternate currency. See Items 4.2, 5 and 11.

Use of Proceeds The proceeds from the sale of Units of a Fund will be invested by the

Manager to achieve the fundamental investment objective described in the

Fund Information Summary applicable to that Fund.

Fees Payable in Connection with the Offering

Expenses incurred in connection with this Offering will be paid for by the

Manager and not out of the assets of any Fund.

Commissions and/or other fees may be payable to investment dealers

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acting for Subscribers who are not clients of the Manager. This is a matter

between the Subscriber and the Subscriber’s investment dealer. The

Manager does not charge a commission to any Subscriber.

Referral Fees may be paid by the Manager to one or more Persons for

providing names and contact information to the Manager of Persons

subscribing for Units.

See Item 7 and the Fund Information Summaries.

Fees and Expenses Payable by the Funds and the Manager

Operating expenses incurred in the ordinary course of business of each

Fund will be paid for by the Manager, which charges an administration fee

to each Fund calculated as a percentage of the total value of Fund assets

under management, without deduction for liabilities (the “Administration

Fee”) in respect of Units outstanding. The purpose of the Administration

Fee is to reimburse the Manager for these ordinary operating expenses and

not to generate a source of income to the Manager. The Administration

Fee is proportionately borne by all Unitholders.

In addition, each Fund will pay the Manager a Class “O” Management

Fee, a Class “F” Management Fee or a Class “A” Management Fee,

calculated as a percentage of the AUM in respect of the issued and

outstanding Units of the respective class. Such fees are proportionately

borne by Unitholders of the respective class.

The Funds are responsible for paying their own Administration Fees and

Management Fees, all taxes of any nature imposed on the applicable Fund,

brokerage commissions, all borrowing costs as well as certain other

expenses not incurred in the ordinary course of business. The Funds also

pay for the fees and charges of any Person retained by the Manager to

assist them in fulfilling the fundamental investment objective of the Funds

(including fees charged by Sub Advisors). The Funds must also pay to the

Manager all value-added taxes imposed on the Administration Fee,

Management Fee and fees of Sub Advisors. See Item 2.6, sub-headings

“Master Declaration of Trust”, “Management Agreement” and the Fund

Information Summaries.

Deferred Income Plans Based on certain assumptions set out in Item 6, the Units of the Funds

currently constitute, and are expected by the Manager to continue to

constitute, qualified investments for trusts governed by registered

retirement savings plans, registered retirement income funds or deferred

profit sharing plans (“Deferred Income Plans”). See Item 6 and the Fund


Taxation of the Funds See Item 6.

Taxation of Unitholders See Item 6.

Reinvestment of Distributions

Unless otherwise elected by a Unitholder, all distributions made by a Fund

to its Unitholders will be automatically reinvested in additional Units of

the applicable Fund.

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Fiscal Year End for the Funds

December 31.

Redemption of Units A Unitholder may redeem Units by giving notice to the Manager within a

certain time period prior to the Valuation Day next following the day on

which a redemption notice has been given. This time period is fixed by the

Manager and varies from Fund to Fund. See Item 5 and the Fund

Information Summaries. Except for the NWM Alternative Strategies Fund,

redemption proceeds will be paid within three Business Days (18 Business

Days for the NWM Alternative Strategies Fund) of the relevant Valuation

Day and will be equal to the Net Asset Value Per Unit on that Valuation

Day, multiplied by the number of Units redeemed. Redemptions will

typically be paid in cash but in circumstances under which the relevant

Fund does not have the cash available to effect the requested redemption,

or valuable assets would have to be liquidated at below market price to

effect the requested redemption, for Funds other than the NWM Canadian

Equity Income Fund, the Manager reserves the right to redeem Units by

issuing a promissory note payable within six months of the date that a

redemption notice was given. This promissory note will bear interest at the

Royal Bank of Canada Bank prime rate of interest charged to its most

credit-worthy customers. See Item 5.5.

Class “F” Unitholders may be subject to a short term redemption fee. See

Item 5.5.

The Manager reserves the right to suspend redemptions under certain

circumstances. See the Fund Information Summaries.

Disclaimers This Offering Memorandum does not constitute, and may not be used for

or in conjunction with, an offer or solicitation by anyone in any

jurisdiction or in any circumstances in which such offer or solicitation is

not authorized, or to any Person to whom it is unlawful to make such an

offer or solicitation. You are directed to inform yourself of and observe

such restrictions and all legal requirements of your jurisdiction of

residence in respect of the acquisition, holding and disposition of the

securities offered hereby. Subscribers should thoroughly review this

Offering Memorandum and are advised to consult with their professional

advisors to assess the business, legal, income tax and other aspects of this

investment.

Forward Looking Statements

Certain information contained in this Offering Memorandum may be

forward-looking statements or forward-looking information (referred to as

“forward-looking statements”). Forward-looking statements are often, but

not always, identified by the use of words such as “seek”, “anticipate”,

“plan”, “continue”, “estimate”, “expect”, “may”, “will”, “intend”, “could”,

“might”, “should”, “believe” and similar expressions. Examples of such

forward-looking statements in this Offering Memorandum include, but are

not limited to, financial and business prospects and financial outlooks. The

forward-looking statements are based on certain assumptions, which

include, amongst other things, that (i) a particular Fund can attract and

maintain Subscribers and has sufficient capital to effect its investment

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strategies, (ii) the investment strategies will produce the results intended

by the Manager, and (iii) the markets will react and perform in a manner

consistent with the investment strategies. Although the Manager believes

that the expectations reflected in such forward-looking statements are

based upon reasonable assumptions and that information received from

third parties is reliable, it can give no assurance that those expectations

will prove to have been correct.

Forward-looking statements are subject to certain risks and uncertainties

that could cause actual events or outcomes to differ materially from those

anticipated or implied by such forward-looking statements. These factors

include, but are not limited to, changes in general economic and market

conditions and other risk factors. Accordingly, readers should not place

undue reliance upon the forward-looking statements contained in this

Offering Memorandum and such forward-looking statements should not be

interpreted or regarded as guarantees of future outcomes. Any forward-

looking statements contained in this Offering Memorandum are expressly

qualified, in their entirety, by this cautionary statement.

Any forward-looking statements contained in this Offering Memorandum

are made as of the date hereof and the Manager does not undertake to

update or revise them, except as may be required by applicable securities

law.

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GLOSSARY OF TERMS

The following terms used in this Offering Memorandum have the meanings set out below:

“Administration Fee” means the fee charged to the Funds by the Manager to reimburse

the Manager for operating expenses incurred in the ordinary course

of business of the Funds and paid by the Manager. It is not

intended to produce a source of revenue for the Manager. The

Administration Fee is ultimately borne by all Unitholders. Refer

to the Fund Information Summaries for particulars of this fee

charged to each Fund.

“Advisory Client” means a client of the Manager whose account agreement stipulates

that the acquisition of securities by the client requires the client’s

prior approval.

“Auditor” means Collins Barrow, Chartered Accountants, or any successor

auditor of the Funds chosen by the Manager.

“AUM” means, with respect to a Fund, the aggregate value of the assets of

that Fund determined in accordance with the valuation procedures

set out in the DOT, without deduction of any of the liabilities of

that Fund.

“Business Day” means any day other than a Saturday, Sunday, or any other day

that is treated as a holiday in the jurisdiction in which the Trustee’s

principal office is located.

“Class “A” Management Fee” means the management fee charged to the Funds by the Manager

(and ultimately borne only by Class “A” Unitholders) in respect of

Class “A” Units of a Fund. Refer to the Fund Information

Summaries for particulars of this fee charged to each Fund.

“Class “A” Subscriber” means a Subscriber who is purchasing Class “A” Units of a Fund.

“Class “F” Management Fee” means the management fee charged to the Funds by the Manager

(and ultimately borne only by Class “F” Unitholders) in respect of

Class “F” Units of a Fund. Refer to the Fund Information


“Class “F” Subscriber” means a Subscriber who is not a client of the Manager and who is

purchasing Class “F” Units of a Fund.

“Class “O” Management Fee” means the management fee charged to the Funds by the Manager

(and ultimately borne only by Class “O” Unitholders), in respect of

Class “O” Units of a Fund. Refer to the Fund Information


“Custodial Agreement - CIBC Mellon”

means the custodial agreement entered into between CIBC Mellon

Trust Company, the Manager and the Funds, as such agreement

may be modified, supplemented or restated from time to time.

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“Custodial Agreement - Credential”

means the custodial agreement entered into between Credential

Securities Inc., the Manager and the Funds, as such agreement may

be modified, supplemented or restated from time to time.

“Custodian” CIBC Mellon Trust Company, Credential Securities Inc. and

includes any additional or substitute custodian at any time and

from time to time appointed and acting as custodian of the Funds.

“Deferred Income Plan” means a trust governed by a “registered retirement savings plan”,

“registered retirement income fund” or “deferred profit sharing

plan”, as those terms are defined in the Tax Act.

“DOT” means the amended and restated master declaration of trust dated

effective March 31, 2015, as amended, pursuant to which the

affairs of the Funds are governed, and executed by the Trustee, as

such amended and restated master declaration of trust may be

further amended, modified, supplemented or restated from time to

time.

“Fee For Service Account” means the account of a Subscriber with an investment dealer

and/or portfolio manager, in respect of which the investment

dealer and/or portfolio manager charges a fee to the Subscriber for

servicing the account calculated as a percentage of the aggregate

value of the assets in that account.

“Fund” or “Funds” means, as the case may be, one or more of the NWM Canadian

Equity Income Fund, NWM Global Equity Fund, NWM High

Yield Bond Fund, NWM Real Estate Fund, NWM Primary

Mortgage Fund, NWM Balanced Mortgage Fund, NWM Global

Bond Fund, NWM Preferred Share Fund, NWM Alternative

Strategies Fund, NWM Precious Metals Fund, NWM Bond Fund,

NWM Canadian Tactical High Income Fund, NWM U.S. Tactical

High Income Fund, NWM Core Portfolio Fund and NWM U.S.

Equity Income Fund.

“Fund Accountant” or “SS&C” means SS&C Technologies, Inc., or any successor fund accountant

of the Funds chosen by the Manager.

“Fund Information Summaries” means the fund information summaries 1 to 15 forming part of

this Offering Memorandum.

“FundSERV” means an electronic custodial fund transaction processing system

which the Manager uses to process subscriptions and redemptions

of Units, as well as distributions to Unitholders.

“Managed Client” means a client of the Manager whose account agreement stipulates

that the Manager has full discretion to trade in securities for the

client’s account without requiring the client’s express consent to

such trades.

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“Management Agreement” means the amended and restated fund management agreement

dated March 31, 2015 entered into between the Manager and the

Funds setting out the terms under which the Manager will manage

and administer the Funds, as well as the fees payable by each

Fund, as such agreement may be further modified, supplemented

or restated from time to time.

“Management Fee” means, as the case may be, one or more of the Class “O”

Management Fee, the Class “F” Management Fee and the Class

“A” Management Fee.

“Manager” means Nicola Wealth Management Ltd.

“Mortgage Funds” means, as the case may be, one or both of the NWM Primary

Mortgage Fund and the NWM Balanced Mortgage Fund.

“Net Asset Value” or “NAV” means at any particular time, in respect of a Fund, the net value of

the assets of that Fund at such time determined in accordance with

the DOT and/or applicable securities regulation.

“Net Asset Value Per Unit” means at any particular time, in respect of the Units of a Fund, the

net asset value of such Units determined in accordance with the

DOT and/or applicable securities regulation.

“Net Realized Capital Gains” means with respect to a particular fiscal year of a Fund, the

realized capital gains of the Fund for such year, less the capital

losses of the Fund for such year, determined by the Auditor in

accordance with the DOT.

“Net Income” means with respect to a particular fiscal year of a Fund, the net

income of the Fund determined by the Auditor in accordance with

the DOT.

“Person” means any individual, partnership, limited partnership, joint

venture, syndicate, sole proprietorship, company or corporation

with or without share capital, unincorporated association, trust,

trustee, executor, administrator or other legal personal

representative, regulatory body or agency, government or

governmental agency, authority or entity however designated or

constituted.

“Referral Fee” has the meaning set out in Item 7.

“Sub Advisor” means a Person retained by the Manager on behalf of a Fund for

the purpose of providing advice and making investment decisions

with respect to the assets of one or more of the Funds.

“Subscriber” means a Person who subscribes for Units of one or more of the

Funds.

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“Subscription Agreement” means a subscription agreement for Units in such form (or forms if

there is more than one) as the Manager may prescribe from time to

time.

“Tax Act” means the Income Tax Act (Canada) and the regulations

promulgated thereunder, as amended from time to time.

“Third Party Investment Funds” has the meaning set out in Item 2.8.

“Trustee” means CIBC Mellon Trust Company, and includes any successor

trustee at any time and from time to time appointed and acting as

trustee of the Funds.

“Unit” or “Units” means an undivided interest (including a fractional interest) in a

proportionate share of the property of a Fund.

“Unitholder” means a Person whose name appears on the register of Unitholders

established and maintained by the Manager pursuant to the DOT

as a holder of Units.

“Valuation Day” means the Business Day as of which the Manager determines the

Net Asset Value of a Fund and the Net Asset Value Per Unit.

Refer to the Fund Information Summaries for each Fund’s

Valuation Day.

“Valuation Time” means the particular time on a Valuation Day as of which the

Manager determines the Net Asset Value of a Fund and the

relevant Net Asset Value Per Unit.

“WealthBar” means WealthBar Financial Services Inc., a registered portfolio

manager in all provinces of Canada providing online financial

advisory services to its clients, including discretionary portfolio

management.

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FUND INFORMATION SUMMARIES

The Fund Information Summaries that follow pertain to each of the Funds. They provide information about each Fund that potential investors should know, such as the fundamental investment objectives, strategies and investment guidelines of each Fund, for whom the Fund might be a suitable investment, as well as Fund costs, distributions and redemption facts, and Fund expenses that Unitholders have pay. These summaries have to be read in conjunction with Items 1-13 of this Offering Memorandum, which contain detailed information that apply to all of the Funds.

An investment in any of the Funds is subject to the general risks associated with mutual fund investing, and in particular, investing in non-reporting (that is, non-prospectus) mutual funds where information about them may not be readily available and where there has been no review of any offering document respecting the Funds by any securities regulatory authority. There are also risks to which the Funds themselves are inherently subject when investing in their underlying assets. These risks are more fully described in Item 8, Risk Factors.

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FUND INFORMATION SUMMARY 1

NWM CANADIAN EQUITY INCOME FUND

NOTE: The name of this fund was changed on November 10, 2014. Its former name was “NWM

Strategic Income Fund”.

Fund Details

Fund Type: Equity Income Fund

Securities Offered: Class “O” Units, Class “F” Units and Class “A” Units

Start Date: February 3, 2005

Eligible for Registered Plans?: Yes

Purchase/Redemption Frequency: Daily – each Business Day shall be a Valuation Day for this

Fund

Manager: Nicola Wealth Management Ltd.

Fundamental Investment Objective

The fundamental investment objective of the NWM Canadian Equity Income Fund (the “Fund”) is to seek

a combination of current income and capital growth by investing in a diversified portfolio consisting

primarily of publicly-traded equity securities that are listed on Canadian stock exchanges.

Investment Strategies

The Fund will seek to achieve the fundamental investment objective by investing primarily in publicly-

traded equity securities that are listed on Canadian stock exchanges. Investments may also include:

preferred shares, high yield bonds, convertible debentures, options, exchange-traded securities, mutual

funds, Canadian bonds and foreign bonds. The Fund may also invest in cash and money market securities.

The Manager uses an active investment strategy for the Fund. This means that the portfolio’s underlying

investments and their percentage weightings may change from time to time. The Manager may remove or

add underlying investments to the portfolio. The Fund will maintain diversification across sectors and

companies. The Manager may use techniques such as fundamental and quantitative analyses to assess an

investment’s potential risk and reward.

Investment Guidelines

The underlying investments may include derivatives such as options, futures, forward contracts,

swaps and other similar instruments for hedging and non-hedging purposes. The underlying

investments may use these instruments to provide exposure to securities, indices, or currencies

without investing in them directly. Derivatives may also be used to manage the risks to which the

underlying investments are exposed. The portfolio may use various derivatives for hedging and

non-hedging purposes (forward, futures, options, etc.); however, the Fund will primarily write

covered-call options in order to generate additional premium income from underlying long equity

positions in the portfolio. The portfolio may buy put options in order to provide the portfolio with

downside protection, or it may sell put options in order to generate additional revenue. The Fund

- 16 -

may hold a portion of its assets in cash, money market securities or money market mutual funds

while seeking investment opportunities or for defensive purposes.

The following asset allocation guidelines may apply:

no limit to exposure to common shares and other equity securities (i.e. open &

closed-end ETFs)

no limit to exposure to foreign equities (ADRs are eligible securities)

The following additional investment guidelines will apply:

no individual security (other than a mutual fund security or an ETF security) will

exceed 10% of the value of the portfolio

no limit to cash and money market securities

all equity securities must be listed

The Fund may borrow up to 10% of its Net Asset Value – see Item 2.9.

Who Should Invest in this Fund?

The Fund is suitable for investors who:

are seeking a Canadian equity fund;

are primarily seeking a combination of current income and capital growth; and

are investing for the medium to long term.

Distribution Policy

The Fund distributes Net Income monthly and Net Realized Capital Gains annually in December of each

calendar year. Distributions are automatically reinvested in Units of the Fund, unless Subscribers specify

in advance, in writing, that they wish to receive distributions in cash.

Fees and Expenses Borne by Subscribers

The Fund will pay the Manager an Administration Fee of up to 0.13% (plus value added tax) of AUM to

cover all ordinary course expenses relating to the operation of the Fund including, but not limited to,

legal, audit, transfer agency, custodial and safekeeping fees, costs and expenses relating to the issue

and/or redemption of Units, costs and expenses of financial and other reports (including this Offering

Memorandum), and general operating and administration costs and expenses. The Administration Fee will

be ultimately borne by all Unitholders.

The Fund also pays certain Management Fees, as follows:

a Class “O” Management Fee of 0.30% (plus value added tax) of AUM in respect of Class

“O” Units outstanding. Such fee will be borne solely by Class “O” Unitholders. No portion of

such fee will be borne by any Class “A” Unitholder or Class “F” Unitholder;

- 17 -

a Class “F” Management Fee of 1.05 % (plus value added tax) of AUM in respect of Class

“F” Units outstanding. Such fee will be ultimately borne solely by Class “F” Unitholders. No

portion of such fee will be ultimately borne by Class “O” Unitholders or Class “A”

Unitholders; and

a Class “A” Management Fee of 0.50% (plus value added tax) of AUM in respect of Class

“A” Units outstanding. Such fee will be ultimately borne solely by Class “A” Unitholders. No

portion of such fee will be ultimately borne by Class “O” Unitholders or Class “F”

Unitholders.

The Manager may change the amount of the Administration Fee and/or the applicable Management Fee

but must give 60 days prior written notice to the Unitholders of the Fund before any increase in the

aggregate Administration Fee and applicable Management Fee takes effect.

The Fund is also responsible for payment of the following expenses:

(a) taxes of any nature imposed on the Fund;

(b) brokerage commissions incurred by the Fund;

(c) the fees and charges of any Person retained by the Manager to assist it in fulfilling the

fundamental investment objective of the Fund; and

(d) operating expenses not incurred in the ordinary course of business of the Fund.

Circumstances Under Which the Manager May Suspend Redemptions

The Manager may suspend the right of Unitholders to request that the Fund redeem its Units for the

whole or any part of a period during which normal trading is suspended on a stock exchange, options

exchange or futures exchange within or outside Canada on which Units are listed and traded, or on which

specified derivatives are traded, if those securities or derivatives represent more than 50 percent by value,

or underlying market exposure, of the total assets of the Fund without allowance for liabilities and if those

securities or derivatives are not traded on any other exchange that represents a reasonably practical

alternative for the Fund.

Time by Which Notices of Redemption from Unitholders Must be Received

Not later than 12:00 p.m. (Vancouver time) on a Valuation Day. If a notice of redemption is not received

by this time, the effective date of the requested redemption will be the next following Valuation Day and

the Net Asset Value Per Unit will be calculated on such next following Valuation Day.

- 18 -


NWM GLOBAL EQUITY FUND

Fund Details

Fund Type: Global Equity




Purchase/Redemption Frequency: Weekly – the last Business Day of each calendar week

will be a Valuation Day for this Fund



The fundamental investment objective of the NWM Global Equity Fund (the “Fund”) is to seek long-term

capital growth by investing in a diversified portfolio consisting primarily of Canadian, U.S. and

international equity related securities issued by corporations around the world. The portfolio will focus

primarily on long-term capital growth with a secondary focus on capital preservation.

The fundamental investment objective of the Fund may only be changed with the approval of a majority

of Unitholders at a meeting called for that purpose.




add underlying mutual funds (pooled funds)/exchange traded funds, indexes, or individual securities

(“Underlying Investments”) to the portfolio, or change the rebalancing triggers.

The principal strategy is to use a strategic asset allocation that will:

Allocate the portfolio’s assets among the Underlying Investments according to the strategic

weightings for the portfolio, which may change at the Manager’s discretion.

Monitor and rebalance the portfolio’s assets to realign the weightings within its strategic asset

mix.

Monitor and review the underlying investments on a periodic basis.


The Underlying Investments may use derivatives such as options, futures, forward contracts, swaps and

other similar instruments for hedging and non-hedging purposes. The Underlying Investments may use

these instruments to provide exposure to securities, indices, or currencies without investing in them

- 19 -

directly. Derivatives may also be used to manage the risks to which the underlying investments are

exposed.

The Fund may also invest in bonds, debentures, convertible debentures, cash and money market securities

deemed appropriate by the Manager.

The Fund may borrow up to 10% of its Net Asset Value - see Item 2.9.

Sub Advisors

The portfolio has been designed to provide Unitholders with access to professionally managed

investments that focus on: (i) Canadian equity securities; (ii) U.S. equity securities; and (iii) international

equity securities. The portfolio’s ability to diversify across these geographic regions is considered to be

the first level of diversification. As a second level of diversification, the portfolio may also benefit

through the use of a Sub Advisors. This approach provides access to different investment styles (see

below), such as value or growth-oriented strategies and small or large capitalization orientations.

The Manager may retain the services of an independent investment consulting firm to assist in the

selection and monitoring of Sub Advisors. If used, the consulting firm will help evaluate and recommend

qualified Sub Advisors who, in its opinion, are best able to carry out the Fund’s investment objective and

strategies. Sub Advisors will be selected based on their specialized expertise, performance, consistency,

investment philosophy or style, investment disciplines and quality of service. Each Sub Advisor will be

required to operate within the limits of the investment strategies, restrictions and any supplemental

guidelines developed from time to time by the Manager.

The Sub Advisors will be engaged to take advantage of their particular investment styles. A description of

some of the more common investment styles follows:

Value-Oriented Investment Style

A value-oriented investment style focuses on investments in shares of companies whose share prices are

low compared to their perceived potential value. Sub Advisors using this investment style seek long term

appreciation with moderate income and below average to average portfolio volatility. Value-oriented

portfolios generally outperform growth-oriented portfolios in falling markets due to the defensive nature

of the securities held. The risk associated with this investment style is that the share prices may remain

low if the market does not recognize the stocks as undervalued.

Growth-Oriented Investment Style

A growth-oriented investment style involves investing in companies which have higher than average

earnings, sales or asset growth potential. Sub Advisors using this investment style seek long term capital

appreciation with little emphasis on dividend income. Growth-oriented portfolios generally outperform

value oriented portfolios in rising markets when investors’ expectations for future earnings are most

optimistic. The risk with this investment style is that growth may not meet expectations, which in turn

may be reflected in the share price.

Growth at a reasonable price (GARP) Style

A modified growth-oriented investment style that is used by more conservative Sub Advisors is known as

“growth at a reasonable price”. Sub Advisors using this modified growth style look for companies with

solid growth prospects, but avoid buying them when their prices are at their peak.

- 20 -

Top-Down Approach

The Sub Advisors (or team of Sub Advisors) take a look at the “big picture”, analyzes general economic

conditions, and then determines which industries/sectors/countries should benefit from an improved

economy. After finding the industries/sectors/countries, the Sub Advisor(s) then select the individual

companies within those industries/sectors/countries that meet the mutual fund’s investment objectives.

With the “top down” approach, the Sub Advisor(s) limit the time they spend analyzing individual

companies.

Core Investment Style

Core Sub Advisors choose to ignore the investment ideology of growth and value managers. They focus

on deep fundamental analysis of individual companies to come to conclusions about their long-term

worth. Core Sub Advisors choose individual stocks that they believe will perform better than the overall

market, no matter whether they are characterized as value or growth stocks; therefore, a core Sub

Advisor’s portfolio may at times display growth or value characteristics depending on circumstances in

the market. The growth or value bias is an outcome of the core investment process rather than an

intentional strategic weighting towards either style.

Small-to-Medium Market Capitalization Focus

Small-to-medium cap investing can use any of the investing styles mentioned above. Companies are

assessed on their individual merits, giving consideration to themes and trends that may impact future

performance. The basis for analysis is to identify companies that exhibit extraordinary growth potential or

that are undervalued based on established parameters. Stocks chosen are primarily smaller cap firms

which inherently have wider price fluctuations than more widely known large cap stocks.

Index Funds or Index Exchange Traded Funds (ETFs)

Index mutual funds or index ETFs are managed to track an index. Index funds or index ETFs do not use

“active management” and therefore do not buy and sell securities based upon the investment managers’

market, financial and economic analysis – they use “passive management”. The most basic form of

passive management is investing in the same securities and in approximately the same proportion as the

market index being tracked.



are seeking portfolio diversification within a single mutual fund pool at a low cost;

are primarily seeking long-term capital growth with a secondary focus on income generation;

and


Distribution Policy

The Fund distributes Net Income and Net Realized Capital Gains annually in December of each calendar

year. Distributions are automatically reinvested in Units of the Fund, unless Subscribers specify in

advance, in writing, that they wish to receive distributions in cash.

- 21 -












a Class “F” Management Fee of 0.50% (plus value added tax) of AUM in respect of Class



Unitholders; and




Unitholders.








fundamental investment objective of the Fund;

(d) operating expenses not incurred in the ordinary course of business of the Fund; and

(e) borrowing costs incurred by the Fund including interest payable on any promissory note issued to

a redeeming Unitholder, as more particularly described in the DOT.




exchange or futures exchange within or outside Canada on which securities or derivatives owned by the

Fund are listed and traded, or on which such securities or derivatives are traded, if those securities or

derivatives represent more than 50 percent by value, or underlying market exposure, of the total assets of

the Fund without allowance for liabilities and if those securities or derivatives are not traded on any other

exchange that represents a reasonably practical alternative for the Fund.

- 22 -





- 23 -


NWM HIGH YIELD BOND FUND

Fund Details

Fund Type: High Yield Bond







NOTE: Alternative series denominated in U.S. dollars or other currencies may be offered and currently a

Class “O” – USD series of Units for this fund is available – contact the Manager for further details.


The fundamental investment objective of the NWM High Yield Bond Fund (the “Fund”) is to generate a

high level of interest income and some capital appreciation, with a secondary emphasis on capital

preservation.




The Fund invests in higher yielding bonds, debentures, and convertible debentures issued by Canadian,

U.S. & foreign governments and corporations denominated in Canadian dollars and/or foreign currencies.

The Fund may also invest in limited partnerships and hedge funds. The fundamental investment objective

of the Fund may only be changed with the approval of a majority of Unitholders at a meeting called for

that purpose.






allocate the portfolio’s assets among the Underlying Investments according to the strategic

weightings for the portfolio, which may change at the Manager’s discretion;

monitor and rebalance the portfolio’s assets to realign the weightings within its strategic asset

mix; and

- 24 -

monitor and review the Underlying Investments on a periodic basis.






exposed.

The Fund may also invest in investment grade bonds, cash and money market securities deemed

appropriate by the Manager.


Sub Advisors

The portfolio’s ability to diversify by geography, industry sector, bond duration, credit quality and credit

rating is considered to be the first level of diversification. As a second level of diversification, the

portfolio may also benefit through the use of a combination of Sub Advisors. This approach provides

access to different investment styles, (see below) and also provides exposure to a variety of issuers with

differing capital structures.



Sub Advisors who, in their opinion, are best able to carry out the Fund’s investment objective and



required to operate within the limits of the investment objectives, restrictions and any supplemental


The Sub Advisors will be engaged to take advantage of their particular investment styles. A description of

some of the more common investment styles is as follows:

Value-Oriented Investment Style

A value-oriented investment style focuses on investments in debt securities that are mispriced relative to

their intrinsic or perceived potential value. Sub Advisors using this investment style seek long-term

capital appreciation with moderate income and average to above-average portfolio volatility. Value-

oriented portfolios will tend to fluctuate in value more than pure government bond portfolios due to lower

credit quality as value managers tend to select out-of-favour and sometimes distressed debt whose credit

fundamentals at the moment appear weak, but have potential for credit upgrades.

The risk associated with this type of investment style is that the bond prices may remain low, deteriorate,

or even default if the underlying individual issuers cannot improve or repair their financial situation.

High-Income Generation Style

A high-income investment style is used by Sub Advisors seeking to generate a high level of income with

debt securities rated below investment grade but above junk-rated debt. They tend to focus on “fallen

angels”, that is, issuers that were once investment grade rated, but have since slipped below investment

grade due to a myriad of factors determined by the bond rating agencies. These Sub Advisors look for

- 25 -

issuers whose debt is still fundamentally sound, but which is yielding a high rate over Treasuries or

Federal notes (typically 200 to 400 basis points). This is a conservative style relative to distressed debt

investing and offers the rewards of high and usually consistent income.

Index Mutual Funds or Index Exchange Traded Funds (ETFs)

Index Mutual Funds or Index ETFs are used to passively track an index and therefore do not utilize an

“active management” style. The most basic form of passive management is investing in the same

securities and in approximately the same proportion as the market index being tracked.




wish to complement a traditional government bond portfolio;

desire a high level of regular interest income with capital appreciation potential; and


Distribution Policy

The Fund distributes interest income on a monthly basis and any Net Realized Capital Gains annually in

December of each calendar year. Monthly distributions are automatically reinvested in additional units of

the Fund, unless Subscribers specify in advance, in writing, that they wish to receive distributions in cash.















Unitholders; and




Unitholders.

- 26 -
























- 27 -


NWM REAL ESTATE FUND

Fund Details

Fund Type: Real Estate and Mortgages








The fundamental investment objective of the NWM Real Estate Fund (the “Fund”) is to achieve stable

income while providing long-term capital appreciation through investments in real estate, mortgages and

related investments.




The Fund invests in Canadian and U.S. REITS and real estate operating companies (REOCs), real estate

limited partnerships, segregated funds, variable rate annuity policies, mutual funds and other forms of

investment vehicles, as well as debentures, and/or bonds, cash and money market securities deemed




Are there any Additional Risks of Investing in this Fund?

In addition to the general risks associated with mutual fund investing more fully described in Item 8, Risk

Factors, given the Fund may also have exposure to mortgages through its investments in real estate

limited partnerships (each, a “Partnership”), an investment in this Fund is subject to the risks of investing

in mortgages, which risks are also described in Item 8, Risk Factors. Since investments made by the Fund

are in the business of directly or indirectly acquiring, holding, managing, improving, operating and selling

commercial real estate, this activity will also expose the Fund to additional risks relative to investments in

real estate more fully described below.

- 28 -

Competition

Commercial real estate is subject to competitive forces of supply, demand and availability of substitutes

(i.e.- the proximity and availability of competing properties to the properties owned by a Partnership).

These competitive forces may impact on the overall financial performance of the properties including

occupancy levels and potential rental rates. As a result, increased competition could adversely affect

income from, and the value of, the properties.

Quality of Management

The financial performance of a property is dependent on the performance, capability and viability of its

property manager. Property managers observe and assess market conditions and make recommendations

to owners regarding capital improvements, ongoing maintenance and changes to rental rate structures.

There can be no assurance regarding the performance of any existing or future property manager of a

property owned by a Partnership or any REIT, or that any such property manager will at all times

continue to fulfill its management responsibilities under the related property management agreement.

Reliance on a Partnership’s General Partner

To the extent the Fund invests in a Partnership, the Fund will be dependent on the knowledge and

expertise of the Partnership’s General Partner for investment advisory, asset selection and portfolio

management services. There is no certainty that the persons who are currently officers and directors of a

Partnership’s General Partner will continue to be its officers and directors.

Availability of Investments

There is no guarantee that a Partnership will be fully invested in real estate and/or mortgage assets or that

it will be able to assemble a portfolio of such investments adequate to meet the Fund’s anticipated return

objectives.

Potential Conflicts of Interest

A Partnership’s General Partner has sole discretion in determining which mortgages and real estate

investments it will make available to the Partnership for investment and may, at the same time and on an

on-going basis, be sourcing similar investment opportunities for the account of others.



seek higher current income than is available from guaranteed investment certificates

(“GIC”s), term deposits, money market funds and savings accounts;

have a medium tolerance for investment risk; and

are saving for the long term.

Given the nature of real estate as a natural inflation hedge, this Fund is an appropriate core holding for

investors who seek long-term capital growth and/or protection from inflation.

- 29 -

Distribution Policy


















Unitholders; and




Unitholders.












- 30 -


The Manager may suspend the right of Unitholders to request that the Fund redeem its Units for a period

not exceeding ten months if and so long as, in the opinion of the Manager, reasonably arrived at,

redemption of Units of the Fund could be effected only by the conversion of significant assets of the Fund

into cash at below the fair market value of those assets, or in circumstances where the conversion of

assets of the Fund into cash for the purpose of effecting redemptions is impracticable. Unitholders of the

Fund will be given written notice of any suspension of redemption of Units. If, after a period of ten

months has elapsed, the Manager is still of the opinion that redemption of Units should continue to be

suspended for either or both of the aforesaid reasons, the Manager will forthwith call a meeting of the

Unitholders of the Fund to consider the termination and winding-up of the Fund, such meeting to be held

no later than 35 days from the date of expiry of the aforesaid ten month period. Redemptions will remain

suspended until at least the date the meeting is held, and subject to such decisions reached at such

meeting.





- 31 -


NWM PRIMARY MORTGAGE FUND

Fund Details

Fund Type: Mortgage Fund








The fundamental investment objective of the NWM Primary Mortgage Fund (the “Fund”) is to achieve a

stable level of current income while also seeking to preserve capital.




The Fund invests in Canadian-dollar denominated loans secured by mortgages and/or other securities

invested in loans secured by mortgages on Canadian real property

The Manager seeks to achieve the fundamental investment objective of the Fund by investing primarily

in:

direct mortgage loan investments

mortgage loan participations

mortgage investment corporation (“MIC”) preferred shares

mutual trust fund units of mortgage mutual funds

securitized products (including mortgage backed securities, CMBS issues)

mortgage derivatives and other mortgage products deemed appropriate by the Manager from

time to time




- 32 -

Direct mortgage loans, and the underlying loans of investments in MICs and/or mortgage fund mutual

fund trusts will include term loans secured by first and second mortgages on single family homes as well

as income producing, commercial properties, except as noted below including apartment, office, retail,

industrial and warehouse buildings. Other underwriting criteria are as follows. The Manager will also

impose other portfolio management criteria in its sole discretion as part of its management and

administration of the Fund.

Maximum LTV (loan to value ratio at underwriting): 75%

Minimum cash flow coverage (actual or projected): 1.2X

Loans will be made for terms generally not greater than five years.

The Fund may borrow up to 10% of its Net Asset Value.





have a low tolerance for investment risk; and

are saving for the medium to long term.

This Fund is not appropriate as a core holding for investors who seek long-term capital growth or

protection from inflation.

Distribution Policy

The Fund allocates Net Income as received and distributes it monthly. Monthly distributions are

automatically reinvested in additional Units of the Fund, unless Subscribers specify in advance, in

writing, that they want to receive distributions in cash.

To the extent not otherwise distributed during the year, it is intended that all Net Income and Net Realized

Capital Gains of the Fund will be distributed in December of each calendar year in such amounts as will

generally result in no income tax being payable by the Fund.









- 33 -







Unitholders; and




Unitholders.
























meeting.





- 34 -


NWM BALANCED MORTGAGE FUND

Fund Details

Fund Type: Mortgage Fund


Start Date: November 30, 2009






The fundamental investment objective of the NWM Balanced Mortgage Fund (the “Fund”) is to achieve a

stable level of current income while also seeking to preserve capital.




The Fund invests in Canadian-dollar denominated loans secured by mortgages on Canadian real property

and/or other securities invested in loans secured by mortgages for construction, interim financing,

finished goods inventory financing, and term financing.

The Manager seeks to achieve the fundamental investment objective of the Fund by investing primarily

in:

direct mortgage loan investments

mortgage loan participations

mortgage investment corporation (“MIC”) preferred shares

mutual trust fund units of mortgage mutual funds

securitized product (including mortgage backed securities, CMBS issues)

mortgage derivatives and other mortgage product deemed appropriate by the Portfolio

Manager from time to time

Unsecured, publicly traded debentures issued by REITs

- 35 -




Mortgage loans may be made for land acquisition and/or servicing, and the development of residential,

recreational, commercial and industrial properties. First and second mortgages will form part of the

portfolio. Other underwriting criteria include the following. The Manager will also impose other portfolio

management criteria in its sole discretion as part of its management and administration of the Fund.

Maximum LTV (loan to value ratio at underwriting): 85%

Minimum cash flow coverage (actual or projected): 1.1X

Loans will be made for terms generally not greater than five years.






have a medium tolerance for investment risk; and

are saving for the medium to long term.

This Fund is not appropriate as a core holding for investors who seek long-term capital growth or

protection from inflation.

Distribution Policy

The Fund allocates Net Income as received and distributes it monthly. Monthly distributions are

automatically reinvested in additional Units of the Fund, unless Subscribers specify in advance, in

writing, that they want to receive distributions in cash.

To the extent not otherwise distributed during the year, it is intended that all Net Income and Net Realized

Capital Gains of the Fund will be distributed in December of each calendar year in such amounts as will

generally result in no income tax being payable by the Fund.









- 36 -







Unitholders; and




Unitholders.
























meeting.





- 37 -


NWM GLOBAL BOND FUND

Fund Details

Fund Type: Global Fixed Income


Start Date: June 4, 2010





NOTE: Alternative series denominated in U.S. dollars or other currencies may be offered and currently a

Class “O” – USD series of Units for this fund is available – contact the Manager for further details.


The fundamental investment objective of the NWM Global Bond Fund (the “Fund”) is to generate a high

level of income and some capital appreciation by investing primarily in fixed-income securities and

preferred shares issued around the world.












mix; and





- 38 -



exposed.

The underlying fund(s) may:

invest in a broad range of fixed-income securities in both developed and emerging markets;

invest in debt securities with a range of maturities from short to long term (less than 1 year to

over 10 years);

invest in debt securities that are rated below investment grade (i.e. high yield);

engage in securities lending, repurchase and reverse repurchase transactions; and

engage in short selling.


Sub Advisors

The portfolio’s ability to diversify by geography, industry sector, bond duration, currency, credit quality

and credit rating should result in reduced portfolio risk. Further diversification may be achieved the use of

a combination of Sub Advisors.



qualified Sub Advisors who, in their opinion, are best able to carry out the Fund’s investment objectives

and strategies. Sub Advisors will be selected based on their specialized expertise, performance,

consistency, investment philosophy or style, investment disciplines and quality of service. Each Sub

Advisor will be required to operate within the limits of the investment objectives, restrictions and any

supplemental guidelines developed from time to time by the Manager.




wish to complement a traditional government and corporate bond portfolio;

desire a high level of regular interest income with capital appreciation potential; and

plan on investing for the medium to long term.

Distribution Policy

The Fund distributes interest income on a monthly basis and any Net Realized Capital Gains annually in

December of each calendar year. Monthly distributions are automatically reinvested in additional units of

the Fund, unless Subscribers specify in advance, in writing, that they wish to receive distributions in cash.

- 39 -















Unitholders; and




Unitholders.




















- 40 -





- 41 -


NWM PREFERRED SHARE FUND

Fund Details

Fund Type: Preferred Shares


Start Date: March 27, 2009






The fundamental investment objective of the NWM Preferred Share Fund (the “Fund”) is to generate a

consistent cash distribution by investing in a diversified portfolio of preferred shares and preferred

securities of Canadian issuers, with a secondary emphasis on capital preservation.




The Fund will be actively managed and will invest in preferred shares and preferred securities that:

are listed on the Toronto Stock Exchange;

are not in arrears in dividends or distributions;

are generally rated in the Pfd-1 to Pfd-5 range by DBRS or equivalent rating agency; and

are denominated in Canadian dollars or U.S. dollars.









mix; and

- 42 -



The Fund may also invest in investment grade bonds, cash, money market securities and any other fixed

income securities deemed appropriate by the Manager.





exposed.

The Manager will strive to maximize income while attempting to preserve capital and maintain liquidity

by investing primarily in highly liquid, low risk U.S. and Canadian money market instruments

denominated in either U.S. dollars or Canadian dollars.


The Fund may invest in, but is not limited to, some or all of the following preferred classes:

Straight Preferred Shares (also known as perpetuals)

These are preferred shares without a fixed maturity date that pay a cumulative or non-cumulative fixed

dividend.

Floating Rate Preferred Shares

These are preferred shares without a maturity that pay a dividend as defined as a percentage of the prime

rate. These are callable at the issuer’s option (albeit, usually for a premium).

Fixed Floater Preferred Shares

These are preferred shares that pay a fixed dividend for a period established at issue, then will become

floating by default at the end of the term, unless holders choose to convert to another fixed rate preferred

share at the end of such period.

Retractable Preferred Shares

This type of preferred share has a set maturity date with options to holder and issuer to retract the

security.

Preferred Securities

These are preferred securities that are interest-bearing that typically has a fixed maturity date.

Structured Products

These types of products are based on the dividend portion of an underlying common share. These are

commonly known as split shares. Provisions within the split-share agreement usually come with

retraction features.

- 43 -

Index Mutual Funds or Index Exchange Traded Funds (ETFs)

Index Mutual Funds or Index ETFs (both open and closed) are used to passively track an index and

therefore do not utilize an “active management” style. The most basic form of passive management is

investing in the same securities and in approximately the same proportion as the market index being

tracked.

Sub Advisors

The portfolio’s ability to diversify by industry sector, preferred features (i.e. retractable, floating, split-

shares, etc.), credit quality and credit rating is considered to be the first level of diversification. As a

second level of diversification, the portfolio may also benefit through the use of a combination of Sub

Advisors. This approach provides access to different investment structures within the Fund.



qualified Sub Advisors who, in their opinion, are best able to carry out the Fund’s investment objective



Advisor will be required to operate within the limits of the investment objective, restrictions and any


What are the Risks of Investing in this Fund?

An investment in the Fund is subject to the general risks associated with mutual fund investing as well as

general risks inherent in investing in the underlying assets of the Fund. These risks are more fully

described in Item 8, Risk Factors.



desire a high level of regular dividend income with capital appreciation potential;

are seeking portfolio diversification within a single mutual fund pool at a low cost; and

with investment horizon of a medium to long term nature.

Distribution Policy

The Fund distributes dividend and interest income on a monthly basis and any Net Realized Capital Gains

annually in December of each calendar year. Monthly distributions are automatically reinvested in

additional units of the Fund, unless Subscribers specify in advance, in writing, that they wish to receive

distributions in cash.






- 44 -










Unitholders; and




Unitholders.
























- 45 -


NWM ALTERNATIVE STRATEGIES FUND

Fund Details

Fund Type: Alternative Strategies


Start Date: September 30, 2010


Purchase/Redemption Frequency: Monthly – the last Business Day of each calendar month




The fundamental investment objective of the NWM Alternative Strategies Fund (the “Fund”) is to

generate superior long-term capital growth by investing in a multi-strategy approach that often differs

from traditional asset class investing.












mix; and

monitor and review the underlying investments on a periodic basis.




these instruments to provide exposure to securities, commodities, indices, or currencies without investing

in them directly. Derivatives may also be used to manage the risks to which the underlying investments

are exposed.

- 46 -



The portfolio has been designed to provide Unitholders with access to professionally managed

investments that focuses on non-traditional investments. The portfolio’s constituent holdings may change

from time to time; however, the investment object will remain intact.

The underlying investments will be selected based on the Manager’s long-term view of the market and

how each of the underlying investments will complement each other. The Manager will be cognizant of

the portfolios exposure to certain investment strategies and styles and will make necessary adjustments if

deemed appropriate given the mandate of this pool.

The particular underlying investments chosen will display risk and return characteristics not typically

seen in traditional asset classes and traditional asset management approaches.


Sub Advisors

The Manager may retain the services of an independent investment consulting or management firm to

assist in the selection and monitoring of Sub Advisors. If used, the consulting firm will help evaluate and

recommend qualified Sub Advisors who, in its opinion, are best able to carry out the Fund’s investment

objectives and strategies. Sub Advisors will be selected based on their specialized expertise, performance,


Advisor will be required to operate within the limits of the investment strategies, restrictions and any


The Sub Advisors will be engaged to take advantage of their particular investment niches. A description

of some of the more common investment approaches employed by Sub Advisors is as follows:

Long-only positions--buying undervalued companies that is attractive on a risk-return basis.

Short-selling—short selling securities that are overvalued and/or have deteriorating

fundamentals(significant management mishaps, financial solvency concerns, major

operational deficiencies, etc).

Trend Following – uses systematic models in order to profit from long or short term trends

Global Macro – attempt to anticipate global economic events using all markets and

instruments to generate a return.

Event Driven – Exploit pricing inefficiencies caused by anticipated corporate or economic

events.

Market Neutral – Invest equally in long and short positions in order to eliminate beta or

market risk from the portfolio, leaving only non-systematic risk that will result in positive

returns due to superior stock selection.

Merger-Arbitrage—taking advantage of investment opportunities that arise from spinoffs,

mergers, restructurings, acquisitions, etc. An example of risk arbitrage would be shorting the

acquiring company and buying the target company if the manager anticipates the target to

- 47 -

have greater appreciation potential and that the target shareholders will receive shares of the

acquirer in lieu of cash—receiving acquiring shares can be used to offset short position.

Opportunistic – changing investment strategy opportunistically to profit from attractive

returns in assets classes and strategies that may arise for a period of time.

Commodity/Gold – invests in commodity/gold producing equities or the actual physical

commodity using ETF’s, futures or taking physical delivery.

Private placements – may engage in private placement transactions and structured mezzanine

investments.




are primarily seeking long-term capital growth with low market correlation asset class; and


Distribution Policy


















Unitholders; and




Unitholders.

- 48 -























the Net Asset Value Per Unit will be calculated on such next following Valuation Day. Subscribers

should note that in respect of Units of the NWM Alternative Strategies Fund, the settlement period will

not be three Business Days, it will be 18 Business Days.

- 49 -


NWM PRECIOUS METALS FUND

Fund Details

Fund Type: Precious Metals


Start Date: April 21, 2011






The fundamental investment objective of the NWM Precious Metals Fund (the “Fund”) is to generate

superior long-term capital growth by investing primarily in securities involved directly or indirectly in the

exploration, mining and production of precious metals as well as investing in bullion, coins, receipts and

certificates.






add underlying mutual funds, exchange traded funds, and/or individual securities (“Underlying

Investments”) to the portfolio, or change the rebalancing triggers.





mix; and

monitor and review the underlying investments on a periodic basis.




these instruments to provide exposure to securities, commodities, indices, or currencies without investing

- 50 -

in them directly. Derivatives may also be used to manage the risks to which the underlying investments

are exposed; however, derivatives use will be unleveraged.



The portfolio will be designed to provide Unitholders with access to professionally managed investments

that focuses on non-traditional investments. The portfolio’s constituent holdings may change from time to

time; however, the investment objective will remain intact.

The Underlying Investments will be selected based on the Manager’s long-term view of the market and

how each of the underlying investments will complement each other. The Manager will be cognizant of

the portfolios exposure to certain investment strategies and styles and will make necessary adjustments if

deemed appropriate given the mandate of this pool.

The particular underlying investments chosen will display risk and return characteristics not typically

seen in traditional asset classes and traditional asset management approaches.


The following investment restrictions will apply:

no individual security (excluding mutual funds and ETFs) will exceed 20% of the market

value of the portfolio

cash and/or cash equivalents be limited to 50% of the value of the portfolio

bullion will be limited to 50% of the market value of the portfolio

all individual equity securities must be listed

the fund may not borrow or use leverage

Sub Advisors

The Manager may retain the services of an independent investment consulting or management firm to

assist in the selection and monitoring of Sub Advisors. If used, the consulting firm will help evaluate and

recommend qualified Sub Advisors who, in its opinion, are best able to carry out the Fund’s investment

objectives and strategies. Sub Advisors will be selected based on their specialized expertise, performance,


Advisor will be required to operate within the limits of the investment strategies, restrictions and any


The Sub Advisors will be engaged to take advantage of their particular investment niches.



are seeking exposure to gold and precious metals within a single mutual fund pool at a low

cost;

- 51 -

are primarily seeking long-term capital growth with low market correlation asset class; and


Distribution Policy




Fees and Expenses Borne by Investors







The Fund also pays certain management fees, as follows:







Unitholders; and




Unitholders.












- 52 -













- 53 -


NWM BOND FUND

Fund Details

Fund Type: Canadian Fixed Income


Start Date: August 26, 2011



Fund



The fundamental investment objective of the NWM Bond Fund (the “Fund”) is to generate a high level of

interest income with minimum risk by investing primarily in Canadian fixed-income securities.






add underlying mutual funds (pooled funds)/exchange traded funds, limited partnerships, index funds, or

individual securities (“Underlying Investments”) to the portfolio, or change the rebalancing triggers.





mix.

Monitor and review the Underlying Investments on a periodic basis.


The Fund and the Underlying Investments may use derivatives such as options, futures, forward contracts,

swaps and other similar instruments for hedging and non-hedging purposes. The Fund and the Underlying

Investments may use these instruments to provide exposure to securities, indices, or currencies without

investing in them directly.


The Fund may:

- 54 -

invest in Canadian and global fixed-income securities of government and corporate issues - the

Fund’s investments will generally consist of securities issued by Canadian Issuers;

invest in any sector, term or credit quality as long the Fund adheres to the Investment Objective

set forth above. Generally, the Fund will invest in high quality (investment grade) corporate and

government fixed income securities with terms under 5 years;

use different strategies to achieve active return (managing duration, yield curve, sector and

individual credit weights);

engage in securities lending, repurchase and reverse repurchase transactions; and

invest in hedge funds and/or limited partnerships.

Sub Advisors

The Fund’s ability to diversify its portfolio by geography, industry sector, bond duration, currency, credit

quality and credit rating should result in reduced portfolio risk. Further diversification may be achieved

the use of a combination of Sub Advisors and Third Party Investment Funds (i.e. mutual funds, limited

partnerships and exchange-traded funds).



qualified Sub Advisors who, in their opinion, are best able to carry out the Fund’s investment objectives



Advisor will be required to operate within the limits of the investment objectives, restrictions and any





want the income potential of Canadian fixed income securities;

plan on investing for the medium to long term.

Distribution Policy

The Fund distributes interest income on a monthly basis and any Net Realized Capital Gains and

additionally accumulated Net Earnings annually in December of each calendar year. Monthly

distributions are automatically reinvested in additional Units of the Fund, unless investors specify in


Fees and Expenses Borne by Subscribers The Fund will pay the Manager an Administration Fee of up to 0.1% (plus value added tax) of AUM to






- 55 -

The Fund also pays certain management fees, as follows:

a Class “O” Management Fee of 0.10% (plus value added tax) of AUM in respect of Class “O”

Units outstanding. Such fee will be borne solely by Class “O” Unitholders. No portion of such

fee will be borne by any Class “A” Unitholder or Class “F” Unitholder;

a Class “F” Management Fee of 0.30% (plus value added tax) of AUM in respect of Class “F”

Units outstanding. Such fee will be ultimately borne solely by Class “F” Unitholders. No portion

of such fee will be ultimately borne by Class “O” Unitholders or Class “A” Unitholders; and

a Class “A” Management Fee of 0.30% (plus value added tax) of AUM in respect of Class “A”

Units outstanding. Such fee will be ultimately borne solely by Class “A” Unitholders. No portion

of such fee will be ultimately borne by Class “O” Unitholders or Class “F” Unitholders.























the Net Asset Value per Unit will be calculated on such next following Valuation Day.

- 56 -


NWM CANADIAN TACTICAL HIGH INCOME FUND

NOTE: The name of this fund was changed on June 6, 2013. Its former name was “NWM Tactical High

Income Fund - CAD”.

Fund Details




Eligible for Registered Plans? Yes





The fundamental investment objective of the NWM Canadian Tactical High Income Fund (the “Fund”) is

to invest in publicly traded securities (primarily denominated in Canadian dollars) whose yield exceeds

the S&P/TSX Composite Index’s yield.




The Fund’s target yield is 4% above the S&P/TSX Composite Index’s yield. The Fund will seek to

achieve this objective by investing in securities that may include income trusts, master limited

partnerships, preferred shares, common shares, REITs, high yield bonds, convertible debentures, options,

exchange-traded securities, mutual funds, mortgages, Canadian bonds and foreign bonds. The Fund may

also invest in cash and money market securities.



add securities to the portfolio, or change the rebalancing triggers.

The principal investment strategy of the Fund is to:

Allocate investments to particular asset classes based on the Manager’s assessment of the

attractiveness of the dividend or distribution expected to be paid compared to the risk of not

receiving the payment or the risk of not maintaining the Fund’s expected income distribution

rate.



The Fund may use various derivatives for hedging and non-hedging purposes (forward, futures, options,

etc.); however, the Fund will primarily write covered-call options in order to partially hedge long equity

- 57 -

positions in the portfolio and to generate income. The portfolio may buy put options in order to provide

the portfolio with downside protection, or it may sell put options in order to generate additional revenue.


no limit to exposure to income trusts, common shares, covered-call positions, put options and

other equity securities (i.e. open & closed-end ETFs)


no limit to exposure to investment grade, foreign bonds, mortgages and/or high yield bonds

no individual security will exceed 20% of the value of the portfolio, provided that this

restriction does not apply to mutual funds, LPs or money market securities



margining may not exceed 30% of the Net Asset Value of the Fund.



are primarily seeking to earn tax-efficient income consisting of a blend of dividends, return of

capital and capital gains.

are comfortable having a highly concentrated portfolio of securities that may exhibit

significant fluctuations in market value.


Distribution Policy

The Fund makes fixed monthly distributions which are reviewed annually. The distribution is currently

set at $0.05 per Unit per month, with a year end adjustment, and then reset at that time. Any Net Realized

Capital Gains will be distributed annually in December of each calendar year. Distributions are

automatically reinvested in Units of the Fund, unless Subscribers specify in advance, in writing, that they

wish to receive distributions in cash.


The Fund pays the Manager an Administration Fee of up to 0.13% (plus value added tax) of AUM to




Memorandum), and general operating and administration costs and expenses. The Administration Fee is

ultimately borne by all of the Fund’s Unitholders.







- 58 -


Unitholders; and




Unitholders.


but must give 60 days prior written notice to the fund’s Unitholders before any increase in the aggregate

Administration Fee and applicable Management Fee takes effect.





















- 59 -


NWM U.S. TACTICAL HIGH INCOME FUND

NOTE: The name of this fund was changed on June 6, 2013. Its former name was “NWM Tactical High

Income Fund - USD”.

Fund Details




Eligible for Registered Plans? Yes


will be a Valuation Day for this Fund.


NOTE: The NWM U.S. Tactical High Income Fund is denominated in U.S. dollars and references to

dollar amounts for this fund shall be references to U.S. dollars unless stated otherwise. All classes of

Units of the Fund will be denominated in U.S. dollars. All amounts paid in respect of subscriptions for

Units of this Fund will be denominated in U.S. dollars. Alternative series denominated in Canadian

dollars or other currencies may be offered and currently a Class “O” – CAD series of Units is available

for this fund – contact the Manager for further details.


The fundamental investment objective of the NWM U.S. Tactical High Income Fund (the “Fund”) is to

invest in publicly traded securities (primarily denominated in U.S. dollars) whose yield exceeds the S&P

500 Index’s yield.




The Fund’s target yield is 4% above the S&P 500 Index’s yield. The Fund will seek to achieve this

objective by investing in securities that may include income trusts, master limited partnerships, preferred

shares, common shares, REITs, high yield bonds, convertible debentures, options, exchange-traded

securities, mutual funds, Canadian bonds and foreign bonds. The Fund may also invest in cash and money

market securities.



add securities to the portfolio, or change the rebalancing triggers.

The principal investment strategy of the Fund is to:

Allocate investments to particular asset classes based on the Manager’s assessment of the

attractiveness of the dividend or distribution expected to be paid compared to the risk of not

- 60 -

receiving the payment or the risk of not maintaining the Fund’s expected income distribution

rate.



The Fund may use various derivatives for hedging and non-hedging purposes (forward, futures, options,

etc.); however, the Fund will primarily write covered-call options in order to hedge long equity positions

in the portfolio. The portfolio may buy put options in order to provide the portfolio with downside

protection, or it may sell put options in order to generate additional revenue.


no limit to exposure to income trusts, common shares, covered-call positions, put options and

other equity securities (i.e. open & closed-end ETFs)


no limit to exposure to investment grade, foreign bonds and/or high yield bonds

no individual security will exceed 20% of the value of the portfolio, provided that this

restriction does not apply to mutual funds, LPs or money market securities



margining may not exceed 30% of the Net Asset Value of the Fund.



are primarily seeking to earn tax-efficient income consisting of a blend of dividends, return of

capital and capital gains.

are comfortable having a highly concentrated portfolio of securities that may exhibit

significant fluctuations in market value.


Distribution Policy

The Fund makes fixed monthly distributions which are reviewed annually. The distribution is currently

set at $0.05 per Unit per month, with a year end adjustment, and then reset at that time. Any Net Realized

Capital Gains will be distributed annually in December of each calendar year. Distributions are

automatically reinvested in Units of the Fund, unless Subscribers specify in advance, in writing, that they

wish to receive distributions in cash.


The Fund pays the Manager an Administration Fee of up to 0.13% (plus value added tax) of AUM to





be ultimately borne by all of the Fund’s Unitholders.

- 61 -







portion of such fee will be ultimately borne by any Class “O” Unitholder or Class “A”

Unitholder; and



portion of such fee will be ultimately borne by any Class “O” Unitholders or Class “F”

Unitholder.


but must give 60 days prior written notice to the fund’s Unitholders before any increase in the aggregate

Administration Fee and applicable Management Fee takes effect.





















- 62 -


NWM CORE PORTFOLIO FUND

Fund Details

Fund Type: Multi-Asset Class Portfolio


Start Date: July 2013






The fundamental investment objective of the NWM Core Portfolio Fund (the “Fund”) is to seek a

combination of current income and long-term capital growth by investing in a diversified portfolio

consisting primarily of Class “N” Units of the NWM Funds and LP Units.






add underlying Class “N” Units, LP Units, mutual funds (pooled funds)/exchange traded funds, indexes,

or individual securities (“Underlying Investments”) to the portfolio, or change the rebalancing triggers.





mix.







exposed.

- 63 -

The portfolio has been designed to provide Unitholders with access to all of the professionally managed

investments that the Manager currently manages with a lower minimum subscription.

The portfolio will consist of multiple Funds; hence, there will be diversification by geography, asset class,

sectors, market capitalization and management style.


Sub Advisors



qualified Sub Advisors who, in its opinion, are best able to carry out the Fund’s investment objective and



required to operate within the limits of the investment strategies, restrictions and any supplemental







Distribution Policy

















- 64 -


Unitholders; and




Unitholders.









(d) operating expenses not incurred in the ordinary course of business of the Fund;















- 65 -


NWM U.S. EQUITY INCOME FUND

Fund Details

Fund Type: Equity Fund


Start Date: November 2014



Fund


NOTE: The NWM U.S. Equity Income Fund (the “Fund”) is denominated in U.S. dollars and references

to dollar amounts for the Fund shall be references to U.S. dollars unless stated otherwise. All classes of

Units of the Fund will be denominated in U.S. dollars. All amounts paid in respect of subscriptions for

Units of this Fund will be denominated in U.S. dollars. Alternative series denominated in Canadian or

other currencies may be offered and currently a Class “O” – CAD series of Units is available for this fund

– contact the Manager for further details.


The fundamental investment objective of the Fund is to seek a combination of current income and capital

growth by investing in a diversified portfolio consisting primarily of publicly-traded equity securities that

are listed on U.S. stock exchanges.






add underlying investments to the portfolio. The Fund will maintain diversification across sectors and

companies. The manager may use techniques such as fundamental and quantitative analyses to assess an

investment’s potential risk and reward.


The underlying investments may include derivatives such as options, futures, forward contracts, swaps

and other similar instruments for hedging and non-hedging purposes. The underlying investments may

use these instruments to provide exposure to securities, indices, or currencies without investing in them


exposed. The portfolio may use various derivatives for hedging and non-hedging purposes (forward,

futures, options, etc.); however, the Fund will primarily write covered-call options in order to generate

additional premium income from underlying long equity positions in the portfolio. The portfolio may buy

- 66 -

put options in order to provide the portfolio with downside protection, or it may sell put options in order

to generate additional revenue. The Fund may hold a portion of its assets in cash, money market

securities or money market mutual funds while seeking investment opportunities or for defensive

purposes.


The following asset allocation guidelines may apply:

no limit to exposure to common shares and other equity securities (i.e. open & closed-end

ETFs).



no individual security (other than a mutual fund security or an ETF security) will exceed 10%

of the value of the portfolio.

no limit to cash and money market securities.

all equity securities must be listed.



are seeking a U.S. equity fund;



Distribution Policy












- 67 -






portion of such fee will be ultimately borne by any Class “O” Unitholder or Class “A”

Unitholder; and



portion of such fee will be ultimately borne by any Class “O” Unitholders or Class “F”

Unitholder.















exchange or futures exchange within or outside the U.S. on which securities or derivatives owned by the









- 68 -

ITEM 1

USE OF AVAILABLE FUNDS

Available Funds

1.1 It is not possible to determine accurately what funds will be available as a result of the

Offering because the subscription price will vary depending on what the Net Asset Value Per Unit of a

particular Fund is at the time each Unit is purchased. There is no minimum or maximum Offering. There

are no selling commissions or fees payable by the Funds in respect of sales of Units that would reduce the

available funds.

Expenses incurred in connection with this Offering will be paid for by the Manager and not out of the

assets of any Fund.

Use of Available Funds

1.2 The funds available as a result of the Offering will be invested by the Manager to achieve

the fundamental investment objectives described in the Fund Information Summaries.

Reallocation

1.3 The Manager intends to invest funds available as a result of the Offering as stated. The

Manager will reallocate funds only for sound business reasons.

ITEM 2

BUSINESS OF THE FUNDS

Structure

2.1 The Funds are unincorporated, open-ended trusts formed under the laws of the Province

of British Columbia. The affairs of the Funds are governed by the DOT. Each Fund was formed on the

start date indicated in the applicable Fund Information Summary.

Our Business

2.2 The Funds have been established for the purpose of issuing Units and investing the

proceeds to achieve the fundamental investment objectives described in the Fund Information Summaries.

The Fund Information Summaries also provide other important information about each Fund. The

Manager is responsible for the day-to-day business of the Funds, including providing all management

services required by the Funds and for execution of their investment strategies, including the

identification and selection of investment opportunities, related due diligence, negotiation,

documentation, approval and ongoing management and administration of assets in the portfolio. The

Manager may retain Sub Advisors to assist it in the execution of the Funds’ investment strategies. See

Item 2.6, sub-headings “Management Agreement” and “Sub Advisory Agreements”.

- 69 -

To achieve each of its objectives, the Funds will benefit from the Manager’s expertise and experience

with respect to the Funds’ investments. The principals of the Manager have extensive experience in the

financial services industry related to financial services and investment management.

The Manager was amalgamated under the laws of the Province of British Columbia on December 31,

2006. The head office and principal business address of the Manager is 5th Floor – 1508 West Broadway,

Vancouver, British Columbia V6J 1W8. The registered office of the Manager is Suite 220 - 7565 – 132nd

Street, Surrey, British Columbia V3W 1K5. Directors, officers and employees of the Manager, either

directly or indirectly, may, from time to time, own Units directly or indirectly through family members

and/or associated entities. The Manager itself may, from time to time, own Units directly or indirectly.

See Items 3.1 and 3.5.

Development of Business

2.3 The Offering is intended to provide the capital needed by the Funds in order to continue

their operations as investment funds.

NWM Canadian Equity Income Fund

The NWM Canadian Equity Income Fund, formerly called the NWM Strategic Income Fund, has been

carrying on business since February 3, 2005. Its fundamental investment objective is set out in Fund

Information Summary 1. The following is a summary of the performance of the Fund since inception:

Year Return 2005 7.4%

2006 7.0%

2007 2.8%

2008 -20.3%

2009 23.4%

2010 9.9%

2011 -0.1%

2012 8.3%

2013 23.5%

2014 14.7%

2015 -4.3%

2016

(until April 30, 2016)

3.3%

(not annualized)

Since inception, the annualized performance of the Fund has been 6.1%. As at April 30, 2016, the Fund

had $272.5 million in net assets.

- 70 -

NWM Global Equity Fund

The NWM Global Equity Fund has been carrying on business since February 13, 2009. Its fundamental

investment objective is set out in Fund Information Summary 2. The following is a summary of the

performance of the Fund since inception:


2010 9.2%

2011 -11.1%

2012 17.1%

2013 30.7%

2014 11.8%

2015 17.2%

2016


-6.4%

(not annualized)



NWM High Yield Bond Fund

The NWM High Yield Bond Fund has been carrying on business since February 13, 2009. Its

fundamental investment objective is set out in Fund Information Summary 3. The following is a summary

of the performance of the Fund since inception:


2010 11.9%

2011 4.1%

2012 10.4%

2013 6.1%

2014 3.9%

2015 3.0%

2016


-0.5%

(not annualized)



- 71 -

NWM Real Estate Fund

The NWM Real Estate Fund has been carrying on business since February 13, 2009. Its fundamental




2010 27.8%

2011 20.7%

2012 15.7%

2013 -2.8%

2014 10.1%

2015 11.0%

2016


-2.5%

(not annualized)



NWM Primary Mortgage Fund

The NWM Primary Mortgage Fund has been carrying on business since February 27, 2009. Its




2010 6.0%

2011 6.4%

2012 3.9%

2013 4.4%

2014 4.4%

2015 4.1%

2016


1.2%

(not annualized)



- 72 -

NWM Balanced Mortgage Fund

The NWM Balanced Mortgage Fund has been carrying on business since November 30, 2009. Its




2010 4.4%

2011 7.0%

2012 6.8%

2013 7.5%

2014 6.5%

2015 5.7%

2016


1.8%

(not annualized)



NWM Global Bond Fund

The NWM Global Bond Fund has been carrying on business since June 4, 2010. Its fundamental




2011 1.8%

2012 8.7%

2013 4.3%

2014 5.9%

2015 11.2%

2016


-5.3%

(not annualized)



- 73 -

NWM Preferred Share Fund

The NWM Preferred Share Fund has been carrying on business since April 27, 2009. Its fundamental




2010 8.8%

2011 6.1%

2012 5.7%

2013 -1.6%

2014 6.0%

2015 -18.0%

2016


-3.1%

(not annualized)



NWM Alternative Strategies Fund

The NWM Alternative Strategies Fund has been carrying on business since September 30, 2010. Its



Year Return 2010 -2.1%

2011 3.7%

2012 -2.5%

2013 6.0%

2014 12.1%

2015 11.3%

2016


-5.2%

(not annualized)



- 74 -

NWM Precious Metals Fund

The NWM Precious Metals Fund has been carrying on business since April 21, 2011. Its fundamental



Year Return 2011 -15.3%

2012 -6.9%

2013 -42.5%

2014 4.3%

2015 -2.2%

2016


54.4%

(not annualized)

Since inception, the annualized performance of the Fund has been -6.5%. As at April 30, 2016, the Fund


NWM Bond Fund

The NWM Bond Fund has been carrying on business since August 26, 2011. Its fundamental investment

objective is set out in Fund Information Summary 11. The following is a summary of the performance of

the Fund since inception:


2012 2.0%

2013 2.9%

2014 2.8%

2015 1.2%

2016


1.7%

(not annualized)



NWM Canadian Tactical High Income Fund

The NWM Canadian Tactical High Income Fund has been carrying on business since September 30,

2010. Its fundamental investment objective is set out in Fund Information Summary 12. The following is

a summary of the performance of the Fund since inception:

- 75 -


2011 -10.6%

2012 14.0%

2013 23.2%

2014 14.7%

2015 0.4%

2016


3.6%

(not annualized)



NWM U.S. Tactical High Income Fund

The NWM U.S. Tactical High Income Fund has been carrying on business since September 30, 2010. Its

fundamental investment objective is set out in Fund Information Summary 13. The following is a

summary of the performance of the Fund since inception:


2011 2.9%

2012 8.4%

2013 12.3%

2014 5.5%

2015 1.8%

2016


5.0%

(not annualized)



NWM Core Portfolio Fund

The NWM Core Portfolio Fund has been carrying on business since July 19, 2013. Its fundamental




2014 9.4%

2015 7.9%

- 76 -

Year Return 2016


0.1%

(not annualized)



NWM U.S. Equity Income Fund

The NWM U.S. Equity Income Fund has been carrying on business since November 7, 2014. Its

fundamental investment objective is set out in Fund Information Summary 15. The following is a

summary of the performance of the Fund since inception:


2015 -0.1%

2016


0.3%

(not annualized)



THE RETURN PERCENTAGES/ANNUALIZED PERFORMANCE FIGURES LISTED ABOVE REPRESENT CHANGES IN THE VALUE OF AN INVESTMENT IN THE APPLICABLE FUND. THEY ARE USED ONLY TO ILLUSTRATE THE EFFECTS OF THE COMPOUND GROWTH RATE AND ARE NOT INTENDED TO REFLECT FUTURE VALUES OF THE APPLICABLE FUND OR FUTURE RETURNS ON INVESTMENTS IN SUCH FUND. THESE FIGURES ASSUME THAT ALL DISTRIBUTIONS MADE BY THE APPLICABLE FUND WERE RE-INVESTED IN ADDITIONAL UNITS OF THAT FUND, ARE NET OF ALL FUND EXPENSES AND DO NOT TAKE INTO ACCOUNT SALES, REDEMPTIONS, DISTRIBUTIONS OR OPTIONAL CHARGES OR INCOME TAXES PAYABLE BY ANY UNITHOLDER THAT WOULD HAVE REDUCED RETURNS. MUTUAL FUNDS ARE NOT GUARANTEED, THEIR VALUES CHANGE FREQUENTLY AND PAST PERFORMANCE MAY NOT BE REPEATED. ALL FIGURES AND PERCENTAGES LISTED ABOVE ARE UNAUDITED.

Long Term Objectives

2.4 The long-term objectives of the Funds are as set out under Item 2.2, sub-heading “Our

Business” and in the Fund Information Summaries.

Short Term Objectives and How We Intend to Achieve Them

2.5 (a) During the next 12 months, the Funds intend to invest the proceeds of the Offering in the

manner described in this Offering Memorandum.

(b) It is the intention of the Manager that the proceeds of the Offering will be invested as

quickly as is reasonably possible as described in the Fund Information Summaries. The Funds

intend to meet the following objectives for the next 12 months as follows:

- 77 -

What we must do and how we will do it

Target completion date or, if not known, number

of months to complete Cost to complete

Invest proceeds of Offering as

described in the Fund


12 months N/A – The Manager pays for Fund

operating expenses incurred in the

ordinary course of business, and

charges an Administration Fee to

each Fund based on each Fund’s

AUM. Certain other expenses are

paid for by the Funds, including

Management Fees. See the Fund


Material Agreements

2.6 The following agreements are material to the Offering and to the Funds:

Master Declaration of Trust

The DOT is the constating document of the Funds and describes the terms and conditions respecting the

issuance and redemption of Units, investment and valuation of the Funds’ assets, determination and

distribution of gains, management and administration of the Funds, duties of the Manager and Trustee,

meetings of Unitholders and how the DOT can be terminated or amended. The following is a summary of

the material provisions of the DOT, which does not purport to be complete:

While the Trustee has the power and responsibility to manage and direct the investment of the assets

of the Funds and the power to execute documents on behalf of the Funds, it has delegated these

powers and duties to the Manager.

The Trustee has the power to add new Funds whose affairs are to be governed by the DOT.

Each Fund may have an unlimited number of Units and classes of Units. See Item 4.1.

Each class of Units of each Fund has certain attributes attached to them. See Item 5.1.

The Manager may, in its sole discretion and without the need to amend the DOT, create one or more

series of any class of Units, each series denominated in an alternate currency, provided that all Units

of that class are treated equally in every respect other than the currency in which their Units are

denominated.

The Net Asset Value of each Fund will be determined as of any Valuation Time in accordance with

certain valuation procedures which are attached to and form part of the DOT and are disclosed in

Item 5.3.

The Trustee may appoint or remove a registrar and transfer agent for each Fund. The Trustee has

appointed the Manager as the initial registrar and transfer agent of each of the Funds.

Certificates representing Units will not be issued.

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Units of the Funds are non-transferable without the consent of the Manager unless the transfer is by

operation of law; however, the Units are redeemable. See Item 5.1, Item 5.5 and the Fund Information

Summaries.

The DOT permits the Funds to borrow, subject to certain specified limits. See Item 2.9 and the Fund


Funds other than the NWM Canadian Equity Income Fund may opt to issue interest bearing

promissory notes to redeeming Unitholders having a maximum term of six months. See Item 5.5.

In making Fund investments, the Funds are not restricted by the laws of any jurisdiction purporting to

limit investments that may be made by trustees.

The fiscal year end of each Fund is December 31. To the extent practicable, distributions of Net

Income and Net Realized Capital Gains are intended to be made in each fiscal year of the Fund so that

no Fund is liable for tax in any taxation year, subject to certain amounts to be retained as determined

by the Manager.

All distributions made by a Fund are automatically reinvested in additional Units of the same class of

Units of that Fund in respect of which the distribution is made unless a Unitholder requests otherwise

in writing.

Portfolio securities owned by a Fund that have voting rights attached will be voted by the Manager on

behalf of the Trustee in its discretion as it considers to be in the best interests of the Unitholders of the

applicable Fund.

The DOT provides for the appointment of the Manager to provide management, portfolio advisory

and administration services for the Funds and sets out the duties and responsibilities of the Manager

in providing these services. It also provides that a fund management agreement will be entered into

between the Funds and the Manager respecting the management of the Funds.

Documents requiring signature on behalf of the Funds, including this Offering Memorandum, may be

signed by one or more officers or directors of the Manager on behalf of the Manager.

Ordinary course expenses relating to the operation of each Fund are paid for by the Manager;

however, the Funds are responsible for paying the Administration Fee and Management Fees

(disclosed elsewhere in this Offering Memorandum) and, in addition, each Fund is responsible for

paying operating expenses not incurred in the ordinary course of business, borrowing costs, taxes of

any nature, brokerage commissions and the fees and charges of any Person retained by the Manager

to assist in fulfilling the fundamental investment objective of the Funds.

The Trustee must exercise the powers and discharge the duties of its office honestly, in good faith and

in the best interests of each Fund and in connection therewith must exercise the degree of care,

diligence and skill that a reasonable prudent trustee would exercise in comparable circumstances.

The Trustee may resign and be discharged from its duties by giving the Manager at least 180 days

prior notice in writing. In addition, the Manager may remove the Trustee with or without cause at any

time upon giving the Trustee not less than 30 days advance written notice. Prior to the effective date

of the Trustee’s resignation or removal, the Manager is required to select and appoint a successor

trustee failing which, the Unitholders may call a meeting to appoint a successor trustee.

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As long as the Trustee complies with the standard of care imposed upon it, it will not be liable to any

of the Funds or to any Unitholder of a Fund for any loss or damage relating to any matter regarding

the Funds, nor will the Trustee be liable to any Fund or to any Unitholder of a Fund or any other party

for the acts, omissions, receipts, neglects or defaults of any party appointed by the Trustee as

permitted under the DOT.

The Trustee, its directors, officers and employees, are entitled to be indemnified and saved harmless

out of the property of the Funds in respect of any claims brought against any of them arising out of

the execution of the duties of the Trustee under the DOT and in respect of all reasonable costs,

charges, expenses and liabilities that any of them may incur in relation to the affairs of the Funds. The

foregoing indemnity however, is not available to the Trustee, its directors, officers and employees if

the claims, costs, charges, expenses and liabilities referred to above resulted from wilful misfeasance,

bad faith, a breach of the Trustee’s obligations under the DOT, or the failure to meet the standard of

care required of the Trustee as described in the DOT.

The Trustee and its affiliates, directors, officers, employees and agents, so long as it and they act in

good faith: (a) will be fully protected in relying on the opinion, advice, recommendation or statement

of any professional or other consultant employed or engaged by the Trustee or the Manager and will

not be responsible for, or in respect of, the negligence or misconduct of any such professional or

consultant; (b) will be fully protected in acting in accordance with decisions or directions of the

Manager (without any obligation to inquire as to whether such decisions were duly and validly made)

and will not be responsible for the value or performance of any investment made pursuant to any such

decision; (c) will be fully protected in acting in accordance with written directions, certificates of an

officer, or opinions from the Manager or counsel for the Funds and in so doing, the Trustee has the

right to fully rely on such directions, certificates or opinions and has no duty, responsibility or

liability to assess the validity thereof; (d) will not be responsible to any Unitholder for the value of

any investment of property of the Funds; (e) will not incur any liability by acting or not acting in

reliance upon any certificate, statement or other instrument or writing believed by it to be genuine and

signed or sent by the proper party or parties; (f) will not be responsible to any Unitholder for the due

execution, legality, validity, enforceability, genuineness, effectiveness, sufficiency, or value of any

instrument or writing furnished pursuant thereto or in connection therewith, or any security or

property acquired by the Funds; and (g) will not be required to expend or risk its own funds or

otherwise incur financial liability in the performance of any of its duties or in the exercise of any of

its rights or powers under the DOT.

The DOT provides that no Unitholder will have any personal liability as such and no resort can be

had to his private property for satisfaction of any obligation in respect of or claim arising out of or in

connection with any contract or obligation of any of the Funds or the Trustee or any obligation in

respect of which the Unitholder would otherwise have to indemnify the Trustee for any liability

incurred by the Trustee, but rather only the assets of the Funds are intended to be liable and subject to

levy or execution for satisfaction of any such obligation or claim.

The Trustee is required to indemnify and save harmless out of the assets of the Funds each Unitholder

of the Funds from and against any and all claims and liabilities to which any Unitholder may become

subject by reason of being or having been a Unitholder and must reimburse each such Unitholder for

all legal and other expenses reasonably incurred in connection with any such claim or liability. The

foregoing indemnity does not apply, however, to taxes assessed against a Unitholder arising out of his

ownership of Units of a Fund or any losses suffered by reason of changes in the value of Units owned

by such Unitholder.

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The Trustee has the right to indemnify third parties out of the assets of the Funds in respect of claims

brought against such party in respect of any act done by such party in good faith in the performance

of its duties.

Meetings of the Unitholders of a Fund may be convened by the Manager or by Unitholders holdings

not less than 1/3rd

of the then issued and outstanding Units of that Fund on not less than 21 and not

more than 35 days’ notice to its Unitholders. Meetings may be convened by the Manager to consider

and approve any matter which is required by the DOT or by any agreement to which a Fund is a party

to be submitted to a vote of Unitholders of that Fund.

The Trustee may amend the DOT at the request of the Manager without Unitholder approval if the

Manager wishes to add additional funds or additional classes of Units authorized for issuance. In

addition, the Trustee may amend the DOT if the Trustee reasonably believes that the proposed

amendment is not reasonably expected to materially adversely impact the financial interests or rights

of Unitholders, or where the proposed amendment is intended to ensure compliance with applicable

laws, remove conflicts or inconsistencies or clerical errors in the DOT or to facilitate the

administration of the Funds as mutual fund trusts or make any amendment or adjustments in response

to changes or proposed changes to the Tax Act, as well as for the purposes of protecting the

Unitholders.

The Trustee may in its discretion terminate a Fund by giving Unitholders not less than 90 days notice

of its intention to do so in which case the Trustee is empowered to take all steps necessary to effect

the termination including ceasing the distribution or redemption of Units, and liquidating the assets of

the Fund being terminated.

Management Agreement

The Funds have entered into a fund management agreement with the Manager (the “Management

Agreement”). The following is a brief summary of the material provisions of the Management

Agreement, which does not purport to be complete:

As contemplated in the DOT, the Management Agreement appoints the Manager to perform portfolio

management, general management and administration services of all of the business and affairs of the

Funds and all of the powers, authorities and duties necessary to operate the business and affairs of the

Funds.

The Manager is permitted to engage third parties to assist it in the performance of its duties including

lawyers, accountants, brokers or dealers (including Sub Advisors) in one or more capacities and other

advisors.

If the Manager appoints a Sub Advisor to provide advice and make investment decisions with respect

to the assets of a Fund, the Manager will be responsible for any loss that arises in connection with

such appointment including losses that arise out of the failure by any such Sub Advisor to: (a)

exercise the powers and discharge the duties of its office honestly, in good faith and in the best

interests of the Manager and the relevant Fund; or (b) exercise the degree of care, due diligence and

skill that a reasonably prudent Person would exercise in the circumstances. The Manager may not be

relieved by any Fund or the Unitholders of any Fund from any responsibility for losses arising out of

the failure of any such Sub Advisor to meet the foregoing standard of care. Notwithstanding the

foregoing, the Manager is not responsible for any trading losses suffered by a Fund as a result of

investment advice or investment decisions given or made by a Sub Advisor provided that in so doing,

the Sub Advisor meets the standard of care described above.

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In arranging for the management of the assets of each Fund in accordance with the fundamental

investment objectives and strategies described in the applicable Fund Information Summary, the

Manager must ensure that each Sub Advisor retained by the Manager for a particular Fund for such

purpose will comply with those fundamental investment objectives and strategies.

The Manager is required to use all reasonable efforts to arrange for all documentation executed in

connection with the operations of a Fund in the name of the Fund and to ensure that all trading

accounts, bank accounts and other like accounts in which the assets of a Fund may be held are opened

and maintained in a manner approved by the Custodian.

The Manager must exercise its powers and discharge its duties honestly, in good faith with a view to

the best interests of the Funds and in connection therewith, exercise the degree of care, diligence and

skill that a reasonably prudent manager would exercise in comparable circumstances.

The Manager is not required to devote its entire time to the business and affairs of the Funds and may

serve as the manager of other trusts or entities with similar investment objectives to those of the

Funds. The Manager may also provide management and advisory services to other parties (the “Other

Clients”). The accounts of the Other Clients may follow the same investment objectives, philosophies

and strategies as those used for one or more of the Funds. The accounts of the Other Clients may

include those of the Manager itself, its directors, officers, employees and affiliates. The allocation of

investment opportunities among all of the accounts of the Manager including those of the Funds will

be effected in accordance with the following policies: (a) the Manager will exercise its best

judgement having regard to the suitability of the investment and the amount of funds available in each

client account for the purchase of such investment at the time of the proposed transaction; and (b)

each client will receive prices as close to the average price for the entire set of transactions as is

practical.

The Manager is required to use reasonable commercial efforts to maintain in good standing its

registration to conduct business as a portfolio manager, investment fund manager and exempt market

dealer in British Columbia and Ontario and a portfolio manager and exempt market dealer in Alberta.

The Manager is also registered as a portfolio manager, investment fund manager and exempt market

dealer in Newfoundland and Labrador and a portfolio manager and exempt market dealer in Nova

Scotia.

The Management Agreement provides that the Manager will be paid an Administration Fee to

reimburse it for ordinary course operating expenses of each Fund, which expenses the Manager is

responsible for paying out of its own resources, and not out of any Fund assets. The Administration

Fee is calculated as a percentage of the AUM of each Fund. The amount of the Administration Fee is

calculated and accrued daily and payable monthly in arrears within ten days of the end of each

calendar month. The Manager may change the amount of the Administration Fee for any Fund but

must give 60 days prior written notice to the Unitholders of such Fund before any increase in the

aggregate Administration Fee and Management Fee takes effect. Such fee will be paid to the Manager

by each Fund and will be ultimately borne by all Unitholders. Particulars of the Administration Fee

payable by each Fund are set out in the Fund Information Summaries.

The Management Agreement provides that the Manager will be paid Management Fees for

performing the services described in the Management Agreement. The Management Fees are

calculated as a percentage of the AUM in respect of the Class of Units outstanding of each Fund to

which the Management Fee relates. The Manager may change the amount of the Management Fee for

any Fund but must give 60 days prior written notice to the Unitholders of such Fund before any

increase in the aggregate Administration Fee and Management Fee takes effect. Such fee will be paid

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to the Manager by each Fund and will ultimately be borne by the holders of Units of the Class of

Units to which the particular Management Fee relates. Particulars of the Management Fees payable

by each Fund are set out in the Fund Information Summaries.

The Manager may, in its sole discretion, reduce the amount of the Administration Fee and/or

Management Fee charged with respect to any Fund in any given year without notice to Unitholders of

that Fund and without the requirement to amend the Management Agreement. Any such reduction

for a given year will not be binding upon future years unless an amendment to the Management

Agreement is entered into between the parties.

The Funds are responsible for paying all value-added taxes imposed on the Administration Fees and

the Management Fees.

The Manager pays for all operating expenses incurred in the ordinary course of business of each

Fund. Administration Fees and Management Fees are paid for out of the assets of the Funds. Each

Fund also pays for the fees charged by Sub Advisors retained by the Manager, all taxes, brokerage

fees and all expenses of the Fund that are not in the ordinary course of its business. See the Fund


The Management Agreement provides that the Manager will be indemnified out of the assets of the

Fund for the acts, omissions or defaults of the Manager or any Person, provided that the Manager has

met the foregoing standard of care.

The Funds may take out and pay for liability insurance for the benefit of the Manager as a result of

obligations assumed by the Funds under the Management Agreement.

The Manager and each Fund (with respect to that Fund) have the right to terminate the Management

Agreement upon thirty days’ prior written notice. In addition, the Trustee may terminate the

Management Agreement if in the Trustee’s opinion the Manager is in breach of the Management

Agreement. If the Management Agreement is terminated, the Trustee is required to enter into one or

more management agreements with one or more Persons and delegate to it or them the management

of all of the business and affairs of the Funds in respect of which the Management Agreement has

been terminated.

The Management Agreement may be terminated immediately by the applicable Fund (with respect to

that Fund) if the Fund or the Manager ceases to carry on business, becomes bankrupt or insolvent,

resolves to wind-up or liquidate or if a receiver of any of their respective assets is appointed.

The services of the Manager are not exclusive to the Funds. The Manager may serve as the manager

of other trusts or entities with similar investment objectives as the Funds and may at certain times be

simultaneously seeking to purchase or dispose of investments for the Funds, as well as for its other

clients, funds that it manages, or affiliates. The Manager is not under any obligation to cause the

Funds to invest in any investment opportunities of which it becomes aware, and is permitted to offer

any of such opportunities to other clients, other funds that it manages, or to affiliates, without

considering such investment opportunities on behalf of the Funds.

Under the Management Agreement, the Manager has agreed to perform, for and on behalf of the

Funds, all responsibilities of a reporting Canadian Financial Institution with respect to the provisions

of the Tax Act and the Canada – U.S. intergovernmental agreement concerning reporting under the

U.S. Foreign Account Tax Compliance Act.

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Custodial Agreement - CIBC Mellon

The Funds have entered into the Custodial Agreement - CIBC Mellon pursuant to which the Manager, as

agent for the Funds, has retained CIBC Mellon to act as custodian of the property of the Funds, as well as

to provide other services related to the safe custody of the Funds’ assets. The following is a brief

summary of certain provisions of the Custodial Agreement - CIBC Mellon, which does not purport to be

complete:

CIBC Mellon will have custody of the property of the Funds transferred to it by the Manager and

accepted by CIBC Mellon; however, CIBC Mellon is not responsible for any property until such

property is in fact received by CIBC Mellon (or any applicable sub-custodian).

In carrying out its duties under the Custodial Agreement - CIBC Mellon, CIBC Mellon must exercise

the degree of care, diligence and skill in the safekeeping of the property of the Funds that a

reasonably prudent person would exercise in the circumstances. CIBC Mellon shall not provide any

service or have any responsibility, duty, liability or obligation in respect of: authorized instructions

from the Manager; investment decisions by the Manager; monitoring the value of Fund property;

verifying title of Fund property; the use of depositories; failure to receive payment with respect to

securities; acts or omissions of sub-custodians or agents designated by the Manager; market losses;

errors in data sources relied upon by CIBC Mellon; and tax obligations imposed on the Funds.

CIBC Mellon has appointed CIBC Mellon Global Securities Services Company to provide certain

administrative service with respect to the Custodial Agreement - CIBC Mellon.

Securities held for the Funds under the Custodial Agreement - CIBC Mellon shall be segregated on

CIBC Mellon’s books and records from CIBC Mellon’s own property. CIBC Mellon may retain

agents (including sub-custodians, depositories and nominees) in order to perform its obligations under

the Custodial Agreement - CIBC Mellon. Securities and cash deposited by CIBC Mellon in a

depository will be held subject to the rules, terms and conditions of such depository. Unless

otherwise required by local law or practice or a particular sub-custodian agreement, securities

deposited with sub-custodians will be held in a commingled account in the name of CIBC Mellon or

an affiliate. CIBC Mellon shall identify on its books and records the securities and cash belonging to

the Funds, whether held directly or indirectly through depositories or sub-custodians.

CIBC Mellon shall exercise reasonable care, diligence and skill in the selection or retention of sub-

custodians in light of prevailing rules, practices and procedures and circumstances in the relevant

market. With respect to any losses incurred by the Funds as a result of the acts or the failure to act by

any sub-custodian (other than an affiliate of CIBC Mellon), CIBC Mellon shall take appropriate

action to recover such losses from such sub-custodian, and CIBC Mellon’s sole responsibility and

liability to the Funds, including losses resulting from insolvency, shall be limited to amounts so

received from such sub-custodian (exclusive of costs and expenses incurred by CIBC Mellon), except

to the extent that CIBC Mellon has breached its standard of care in its selection or continued retention

of such sub-custodian.

The depositories and sub-custodians may have a lien or other charge in respect of securities of the

Funds held by them in relation to claims for payment of obligations owed to them (including

administration and safe custody charges) as provided in the applicable depository agreement or sub-

custodian agreement.

CIBC Mellon is required to keep records of the property held by it on behalf of the Funds, which are

available for inspection by the Manager during normal business hours. CIBC Mellon shall make

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available to the Manager on a monthly basis, or on such other basis as agreed to in writing by CIBC

Mellon and the Manager, and within ninety (90) days after termination of the Custodial Agreement -

CIBC Mellon, a report setting forth all investments, receipts, disbursements and other transactions

effected during such period.

CIBC Mellon is not liable for losses suffered by the Funds unless there has been a failure to meet the

standard of care described above. The Funds will indemnify and hold harmless CIBC Mellon and its

respective officers, directors, employees and agents in respect of all taxes and losses arising from the

obligations set out in the Custodial Agreement - CIBC Mellon, except to the extent of any failure by

CIBC Mellon to meet the standard of care described above. CIBC Mellon shall not be responsible or

liable for any failure to perform under the Custodial Agreement - CIBC Mellon or for any losses

resulting from any event beyond the reasonable control of CIBC Mellon, its sub-custodians or agents.

No Unitholder nor the Manager (subject to it having met its standard of care to the Funds) shall be

subject to any personal liability as such to CIBC Mellon and no resort shall be had to a Unitholder’s

or the Manager’s private property, for satisfaction of any obligation or claim arising out of or in

connection with the Custodial Agreement - CIBC Mellon or obligation of the Fund, and CIBC Mellon

shall look solely to the Fund property held by CIBC Mellon for satisfaction of claims of any nature

arising out of or in connection therewith and such Fund property only shall be subject to levy or

execution.

The Manager or CIBC Mellon may terminate this Agreement without any penalty: (a) subject to any

penalties contained in the written agreement of fees and expenses, by CIBC Mellon upon at least

ninety (90) days’ written notice to the Manager, and by the Manager on at least sixty (60) days’

written notice to CIBC Mellon. The Custodial Agreement - CIBC Mellon will terminate

automatically upon the happening of certain events (breach of terms, insolvency, etc.).

CIBC Mellon is entitled to be paid a fee for acting as Custodian in accordance with its fee

Information Summary.

Custodial Agreement - Credential

The Manager, on behalf of the Funds, has entered into the Custodial Agreement – Credential pursuant to

which Credential acts as custodian of the property of the Funds, as well as provides other services related

to the safe custody of the Funds’ assets. The following is a brief summary of certain provisions of the

Custodial Agreement - Credential, which does not purport to be complete:

Credential will act as custodian over property of the Funds transferred to it by the Manager.

Credential will perform specified services upon direction of the Manager, including account

opening, trade settlement, taking specified corporate actions and processing voting materials.

Credential will further perform specified services without direction of the Manager, including

foreign exchange transactions necessary to complete trade settlement, credit accounts with

dividends, income, principal and other payments and distributions, and forward corporate action

notices and voting materials.

Either party may terminate the Custodial Agreement - Credential upon not less than ninety (90)

days’ prior written notice to the other. The Custodial Agreement - Credential will automatically

terminate upon the happening of certain events (breach of terms, insolvency etc.).

All property shall be held by Credential, by a sub-custodian or through a depository appointed

pursuant to the Custodial Agreement - Credential, except as otherwise set out in the agreement.

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Credential and any sub-custodian appointed pursuant to the Custodial Agreement - Credential

may hold securities forming part of the property through a depository on the terms of business of

such depository, and may effect settlement in accordance with the customary or established

trading and processing practices and procedures in the jurisdiction or market in which any

transaction in respect of such property occurs.

Securities forming part of the property shall be held in segregation for the Funds free and clear of

any charge, lien, claim or encumbrance of any kind in favour of Credential except as otherwise

permitted by the agreement.

Credential shall maintain records in readily accessible form sufficient to identify the property

held by it (or any sub-custodian) for the Funds pursuant to the Custodial Agreement - Credential

separate and distinct from any other securities or property held by Credential. Accounts for

property held under the agreement shall be in the name of the Funds. Credential shall permit

access to such records or provide confirmation of their contents to the auditors of the Funds upon

request by the Manager.

In consideration of the services provided under the agreement, Credential shall be paid such

compensation as set out in its fee schedule in effect from time to time.

Credential may appoint agents (including sub-custodians and nominees), which may be affiliated

with, or otherwise related to, Credential, to conduct any of the services to be performed by

Credential under the agreement. Credential shall act in accordance with its standard of care set

out in the Agreement in the selection and monitoring of such agents. Where Credential engages a

sub-custodian, nominee or other agent in a “Designated Market” (as set forth in the specified

schedule to the agreement), the Custodian shall not be held liable for a breach of the standard of

care by any such sub-custodian or other agent. A Designated Market is a market where the risks

of engaging a sub-custodian or other agent are significantly greater than they would be in more

established markets.

Subject to certain exceptions set out in the Custodial Agreement - Credential, Credential shall

indemnify and save harmless the Funds from and against any and all losses of the Funds as a

result of the failure of Credential or any sub-custodian (except any Designated Markets) to return

to the Funds any property held in accordance with the agreement, provided that the liability of

Credential shall be limited to the market value of the Fund property at the time at which

Credential was required to deliver the property to the Funds. In addition, Credential shall

indemnify and save harmless the Funds and its officers, directors, employees and agents from and

against all losses, claims, damages and liabilities whatsoever, including reasonable costs, charges

and expenses in connection therewith, suffered, brought, commenced or prosecuted against them

as a result of Credential’s gross negligence or wilful misconduct.

Credential, and its affiliates, subsidiaries and agents (including sub-custodians and nominees),

and their respective directors, officers, and employees, shall at all times be indemnified and saved

harmless by the Funds from and against any and all claims, damages, legal fees, judgments, fines,

penalties, losses and amounts paid in settlement, actually incurred by any such person in

connection with services provided under the Agreement, except to the extent incurred as a result

of a breach by Credential of the standard of care set out in the Agreement.

No Unitholder nor the Manager (subject to it having met its standard of care to the Funds) shall

be subject to any personal liability as such to Credential and no resort shall be had to a

Unitholder’s or the Manager’s private property, for satisfaction of any obligation or claim arising

- 86 -

out of or in connection with the Custodial Agreement - Credential or obligation of the Fund, and

Credential shall look solely to the Fund property held by Credential for satisfaction of claims of

any nature arising out of or in connection therewith and such Fund property only shall be subject

to levy or execution.

SS&C Services Agreement

The Manager, on behalf of the Funds, entered into a Services Agreement (the “SS&C Agreement”) with

SS&C , pursuant to which SS&C, on a fee for service basis, has agreed to perform accounting, valuation,

unitholder record-keeping and other similar services for the Funds. The term of the SS&C Agreement

expires on April 30, 2017, but is automatically renewed for one year intervals if not terminated by either

party 180 days prior to expiration of the current term.

Sub Advisory Agreements

The Manager may from time to time engage the services of Sub Advisors to assist in attaining a Fund’s

fundamental investment objective. A Sub Advisor may be engaged directly to manage a portion of a

Fund’s assets on a segregated basis. Each such engagement will be documented in a form deemed

appropriate under the circumstances by the Manager and the Sub Advisor. Management fees will be

payable to Sub Advisors by the applicable Fund, and form part of the total management expense ratio

(MER) for each Fund. Fees payable to a Sub Advisor are for the account of the Fund for which the Sub

Advisor has been engaged to provide services, and returns to that Fund will be net of the Sub Advisor’s

fee.

Each agreement with a Sub Advisor will be in writing and entered into between the Manager (on behalf of

one or more of the Funds) and the Sub Advisor. Each such agreement will contain (among other things)

substantially the following provisions:

A description of the services to be performed by the Sub Advisor.

A requirement that the Sub Advisor hold all necessary registrations, permits and licenses to carry out

services to be performed by it, and to use its best efforts to keep such registrations, permits and

licenses in good standing.

A requirement that the Sub Advisor exercise its powers and perform its duties under the agreement

honestly and in good faith and in the best interests of both the Manager and any Fund for which it acts

as Sub Advisor, and exercise that degree of care, diligence, prudence and skill that a prudent

investment manager would exercise in comparable circumstances.

A requirement that the Sub Advisor be liable for any loss suffered by a Fund for which it performs

services if it breaches the aforementioned standard of care.

Termination provisions that will allow the Manager to terminate the services of the Sub Advisor for

any reason.

A statement of fees payable by a Fund for which a Person acts as Sub Advisor.

Copies of all contracts referred to above (except the SS&C Agreement and certain portions of the

Custodial Agreement - CIBC Mellon and Custodial Agreement - Credential, which are subject to

confidentiality provisions) may be inspected during normal business hours at the principal office of the

Manager, 5th Floor – 1508 West Broadway, Vancouver, British Columbia V6J 1W8.

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WealthBar Agreement

The Manager has entered into a Standing Omnibus Subscription Agreement dated February 27, 2015 (as

amended on September 21, 2015) with WealthBar pursuant to which WealthBar may enter purchase and

redemption orders directly with FundSERV on behalf of WealthBar Managed Clients with respect to

Class “A” Units of the Funds. WealthBar is a registered portfolio manager in all provinces of Canada

providing online financial advisory services to its clients, including discretionary portfolio management.

WealthBar does not receive any Trailer Fees, commissions or other compensation for purchasing Class

“A” Units on behalf of WealthBar clients. The Manager is a minority shareholder of WealthBar but the

two companies are otherwise independent of each other and there is no overlap between the Manager and

WealthBar with respect to employees or management.

Use of Derivatives

2.7 Compared with traditional products, derivatives are often a more flexible and cost

efficient way to achieve investment objectives. Use of derivatives has gained a wider acceptance by

investors in recent years as the market has deepened and become more liquid. Consequently, the Manager

believes the use of derivatives is a value-added technique that contributes to the success of investment

objectives. Derivatives allow portfolio managers to quickly adjust investment exposures such as credit

risk, long equity positions, duration and interest rate risk, when such changes are warranted. The

Manager, Sub Advisors (if applicable) and/or funds in which the Funds may invest, may use derivatives

from time to time and when deemed warranted in order to maximize income and/or reduce risk (hedging

strategies). Derivatives are not used with the intent of leveraging the Funds.

Foreign exchange forward contracts are used for hedging purposes and to express a particular currency

view. Credit default swaps may be used to hedge against, or to acquire certain credit risks. Interest rate

swaps, forward rate agreements and other similar products may be used to express a view on the direction

of interest rates and/or to alter the duration of a fixed income portfolio. Equity options (puts and calls)

will be used to enhance earnings or to hedge against anticipated equity movements. The Manager will not

write uncovered call options (i.e. where it does not have an interest in the underlying instrument). The

Manager may write uncovered put options. This is not intended to be an exhaustive list of derivative

instruments which may be utilized by the Manager. The Manager, Sub Advisors if applicable and/or

funds in which the Funds may invest may use other types of derivative instruments in order to meet their

fundamental investment objectives.

Investments in Other Funds

2.8 The Manager may from time to time cause one or more of the Funds to invest in

investment funds which are managed by third party managers (“Third Party Investment Funds”). In such

cases, the return to a Fund making these investments will be net of the third party manager’s fee.

Use of Leverage

General

2.9 The DOT permits the Funds to borrow, subject to the following:

Any Fund (other than the NWM Balanced Mortgage Fund, NWM Canadian Tactical High Income

Fund and NWM U.S. Tactical High Income Fund) may borrow up to 10% (30% for the NWM

Balanced Mortgage Fund, NWM Canadian Tactical High Income Fund and NWM U.S. Tactical High

Income Fund) of its Net Asset Value.

- 88 -

The NWM Balanced Mortgage Fund may also borrow up to 30% of its Net Asset Value to finance

working capital requirements (including redemption of Units).

The NWM Canadian Tactical High Income Fund and NWM U.S. Tactical High Income Fund may

borrow up to 30% of the Net Asset Value of the Fund from time to time through the use of margin

trading accounts established with the Custodian.

Funds other than the NWM Canadian Equity Income Fund may opt to issue interest bearing

promissory notes to redeeming Unitholders having a maximum term of six months. See Item 5.5.

Credit facilities entered into by the NWM Primary Mortgage Fund and the NWM Balanced Mortgage

Fund

The NWM Primary Mortgage Fund and the NWM Balanced Mortgage Fund (collectively, the “Mortgage

Funds” and singularly, a “Mortgage Fund”) have entered into a credit facility agreement with the Royal

Bank of Canada (“RBC”) (the “Credit Facility Agreement”). The following is a brief summary of certain

terms of the Credit Facility Agreement, which does not purport to be complete:

The Mortgage Funds may borrow up to $20,000,000 between them. These amounts may be amended

from time to time by agreement between RBC and the Manager.

The amount borrowed by either Mortgage Fund may not exceed 10% of the AUM of the applicable

Mortgage Fund, subject to certain limitations and exceptions which may serve to reduce the AUM to

loan ratio. The percentage of AUM limit may be increased upon agreement between RBC and the

Manager, subject to the limits set out in the DOT.

The amount outstanding under the Credit Facility Agreement is repayable on demand and secured by

a first charge on all the assets of the Mortgage Funds, without any cross security. That is, amounts

borrowed by the NWM Primary Mortgage Fund are secured only by assets of that Fund, and not by

assets of the NWM Balanced Mortgage Fund, and vice versa.

The Credit Facility Agreement will be reviewed by RBC from time to time and at least annually and

is provided by RBC at its sole discretion.

ITEM 3

DIRECTORS, MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS

Compensation and Securities Held

3.1 The following table sets out certain information regarding each director and officer and

holders of greater than 10 percent of the voting securities of the Manager(1) as at April 30, 2016(2):

Name and municipality of principal residence

Positions Held and Date Joined the Manager

Compensation anticipated to be paid

by the Funds (3)

Number, type and percentage of

securities of the Funds held after completion

of Offering (4)

John Nicola

Vancouver , B. C.

Chief Executive Officer

(1993)

Nil Unknown(5)

- 89 -

Name and municipality of principal residence

Positions Held and Date Joined the Manager

Compensation anticipated to be paid

by the Funds (3)

Number, type and percentage of

securities of the Funds held after completion

of Offering (4)

Karen Ikeda

Vancouver, B.C.

Director (1999) Nil Unknown(6)

David Sung

Vancouver, B.C.

President (2003) Nil Unknown(7)

Evelyn C. Nicola

Richmond, B.C.

Treasurer and Director

(1993)

Nil Unknown(11)

Rob Edel Vancouver, B.C.

Chief Investment Officer

(2004)

Nil Unknown(8)

Michael Taylor

West Vancouver, B.C.

Chief Financial Officer

(2008)

Nil Unknown(9)

Jamie Duncan

North Vancouver, B.C.

Chief Operating Officer

and Corporate Secretary

(1993)

Nil Unknown(10)

Wayman Crosby

Vancouver, B.C.

Manager, real estate asset

management division

(2003)

Nil Unknown(11)

Dannielle MacDonald Chief Compliance Officer

(2015)

Nil Unknown(12)

Claire Nicola Holdings Ltd.

Vancouver, B.C.

Holder of greater than

10% of the voting

securities of the Manager

(48.62%)

Nil Unknown(13)

Ikeda Financial Inc.

Vancouver, B.C.


10% of the voting


(10.11%)

Nil Unknown(6)

0768243 B.C. Ltd.

Vancouver, B.C.


10% of the voting


(11.16%)

Nil Unknown(14)

(1) The Trustee is not a promoter of the Funds and is not involved in the day to day operations of the Funds. The compensation

it receives for acting as Trustee of the Funds is paid for by the Manager. Unless indicated otherwise, the Units described in

the footnotes to this table are all Class “O” Units. Information regarding securities currently held is given as of April 30,

2016.

(2) The Manager owns Units of the NWM Canadian Equity Income Fund, Units of the NWM Global Equity Fund, Units of the

NWM High Yield Bond Fund, Units of the NWM Real Estate Fund, Units of the NWM Primary Mortgage Fund, Units of

the NWM Balanced Mortgage Fund, Units of the NWM Preferred Share Fund, Units of the NWM Alternative Strategies

Fund, Units of the NWM Canadian Tactical High Income Fund, Units of the NWM Precious Metals Fund, Units of the

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NWM U.S. Tactical High Income Fund, Units of the NWM U.S. Equity Income Fund, and Unit of the NWM Core

Portfolio Fund. The Manager does not own more than 10% of the Units of any Fund, nor is it expected to own more than

10% of the Units of any Fund at any point in time.

(3) The Manager receives an Administration Fee from each Fund based on the AUM of each Fund. The Manager also receives a

Management Fee from each Fund in respect of Class “O” Units, Class “F” Units and Class “A” Units outstanding, all as

elsewhere disclosed in this Offering Memorandum. The Persons listed in the table above receive no compensation from any

Fund. Management is compensated by the Manager.

(4) The number of Units of each Fund that the named individuals will acquire under the Offering is not known. None of the

Manager, which is the promoter of the Funds, nor any of the directors, officers or greater than 10% shareholders of the

Manager owns more than 10% of the Units of any Fund.

(5) Mr. Nicola owns 129,572 Units of the NWM High Yield Bond Fund, and 160,240 Units of the NWM Balanced Mortgage

Fund. Mr. Nicola exercises control or direction over JM Nicola Ltd., a private company which owns 8,714 Units of the

NWM Global Equity Fund, 20,205 Units of the NWM Alternative Strategies Fund, 264,284 Units of the NWM Canadian

Tactical High Income Fund, and 71,927 Units of the NWM U.S. Tactical High Income Fund.

(6) Karen Ikeda exercises control or direction over Ikeda Financial Inc., a private company which owns 176,230 Units of the

NWM Canadian Equity Income Fund, 77,272 Units of the NWM Global Equity Fund, 73,327 Units of the NWM High

Yield Bond Fund, 15,036 Units of the NWM Real Estate Fund, 33,540 Units of the NWM Primary Mortgage Fund, 146,300

Units of the NWM Balanced Mortgage Fund, 23,892 Units of the NWM Global Bond Fund, 55,387 Units of the NWM

Preferred Share Fund, 23,495 Units of the NWM Alternative Strategies Fund, 17,938 Units of the NWM Canadian Tactical

High Income Fund, 28,423 Units of the NWM Precious Metals Fund, 25,970 Units of the NWM U.S. Tactical High Income

Fund, and 48,420 Units of the NWM U.S. Equity Income Fund. Ms. Ikeda also directly owns 4,864 Units of the NWM

Canadian Equity Income Fund, 9,385 Units of the NWM Global Equity Fund, 14,343 Units of the NWM High Yield Bond

Fund, 902 Units of the NWM Real Estate Fund, 8,314 Units of the NWM Primary Mortgage Fund, 48,319 Units of the

NWM Balanced Mortgage Fund, 15,053 Units of the NWM Global Bond Fund, 10,058 Units of the NWM Preferred Share

Fund, 11,466 Units of the NWM Canadian Tactical High Income Fund, 16,368 Units of the NWM Bond Fund, 9,317 Units

of the NWM U.S. Tactical High Income Fund, and 9,457 Units of the NWM U.S. Equity Income Fund.

(7) Mr. Sung exercises control or direction over Waterstreet Wealth Management Ltd., a private company which owns 26,769

Units of the NWM Canadian Equity Income Fund, 9,730 Units of the NWM Global Equity Fund, 1,430 Units of the NWM

Balanced Mortgage Fund, 13,947 Units of the NWM Preferred Share Fund, 5,718 Units of the NWM Alternative Strategies

Fund, 5,182 Units of the NWM Canadian Tactical High Income Fund, 6,451 Units of the NWM U.S. Tactical High Income

Fund, 9,781 Units of the NWM Precious Metals Fund, 3,991 Units of the NWM U.S. Equity Income Fund, and 4,375 Units

of the NWM Core Portfolio Fund. Mr. Sung also directly owns 8,667 Units of the NWM High Yield Bond Fund, 4,627

Units of the NWM Balanced Mortgage Fund, 3,711 Units of the NWM Global Bond Fund, 2,501 Units of the NWM

Canadian Tactical High Income Fund, 2,555 Units of the NWM U.S. Tactical High Income Fund and 1,855 Units of the

NWM Core Portfolio Fund.

(8) Mr. Edel exercises control or direction over Edel Ventures Inc., a private company which owns 21,237 Units of the NWM

Canadian Equity Income Fund, 10,101 Units of the NWM Global Equity Fund, 14,954 Units of the NWM High Yield Bond

Fund, 8,152 Units of the NWM Real Estate Fund, 16,319 Units of the NWM Primary Mortgage Fund, 17,368 Units of the

NWM Balanced Mortgage Fund, 13,787 Units of the NWM Global Bond Fund, 22,292 Units of the NWM Preferred Share

Fund, 31,141 Units of the NWM Alternative Strategies Fund, 6,244 Units of the NWM Canadian Tactical High Income

Fund, 59,038 Units of the NWM Precious Metals Fund, 54,485 Units of the NWM Bond Fund, 5,399 Units of the NWM

U.S. Tactical High Income Fund, and 5,087 Units of the NWM U.S. Equity Income Fund. Mr. Edel also directly owns 7,478

Units of the NWM High Yield Bond Fund, 8,010 Units of the NWM Primary Mortgage Fund, 14,509 Units of the NWM

Balanced Mortgage Fund, 4,654 Units of the NWM Global Bond Fund, 1,169 Units of the NWM Canadian Tactical High

Income Fund, 564 Units of the NWM U.S. Tactical High Income Fund and 6,776 Units of the NWM Bond Fund.

(9) Mr. Taylor owns 36,604 Units of the NWM Canadian Equity Income Fund, 17,850 Units of the NWM Global Equity Fund,

12,164 Units of the NWM High Yield Bond Fund, 3,179 Units of the NWM Real Estate Fund, 9,406 Units of the NWM

Primary Mortgage Fund, 21,662 Units of the NWM Balanced Mortgage Fund, 10,301 Units of the NWM Global Bond

Fund, 16,522 Units of the NWM Preferred Share Fund, 9,802 Units of the NWM Alternative Strategies Fund, 10,790 Units

of the NWM Canadian Tactical High Income Fund, 11,662 Units of the NWM Precious Metals Fund, 14,055 Units of the

NWM Bond Fund, 5,384 Units of the NWM U.S. Tactical High Income Fund, and 11,108 Units of the NWM U.S. Equity

Income Fund.

(10) Ms. Duncan owns 10,525 Units of the NWM Canadian Equity Income Fund, 3,586 Units of the NWM Global Equity Fund,

7,142 Units of the NWM High Yield Bond Fund, 2,771 Units of the NWM Real Estate Fund, 1,596 Units of the NWM

Primary Mortgage Fund, 9,307 Units of the NWM Balanced Mortgage Fund, 3,707 Units of the NWM Global Bond Fund,

4,270 Units of the NWM Alternative Strategies Fund, 3,783 Units of the NWM Canadian Tactical High Income Fund, 3,358

Units of the NWM Precious Metals Fund, 3,993 Units of the NWM Bond Fund, 2,331 Units of the NWM U.S. Tactical

High Income Fund, 2,846 Units of the NWM U.S. Equity Income Fund, and 1,603 Units of the NWM Core Portfolio

(11) Mr. Crosby exercises control or direction over Crosby Management (2011) Ltd., a private company which owns 11,637

Units of the NWM High Yield Bond Fund, 16,608 Units of the NWM Balanced Mortgage Fund, 35,796 Units of the NWM

- 91 -

Canadian Tactical High Income Fund, and 49,962 Units of the NWM U.S. Tactical High Income Fund. Mr. Crosby also

directly owns 20,246 Units of the NWM Balanced Mortgage Fund

(12) Dannielle MacDonald owns 2,677.227 Units of the NWM Core Portfolio Fund.

(13) Evelyn C. Nicola exercises control or direction over Claire Nicola Holdings Ltd., which owns 62,557 Units of the NWM

High Yield Bond Fund, 44,262 Units of the NWM Balanced Mortgage Fund, 188,921 Units of the NWM Preferred Share

Fund, 57,786 Units of the NWM Canadian Tactical High Income Fund, 253,027 Units of the NWM U.S. Tactical High

Income Fund, and 84894 of the NWM Core Portfolio Fund . Mrs. Nicola also directly owns 81,452 Units of the NWM High

Yield Bond Fund, and 100,193 Units of the NWM Balanced Mortgage Fund.

(14) Controlled by David Sung. See Note 7 above.

Management Experience

3.2 The directors and executive officers of the Manager have a broad background of

investment experience which will be brought to bear on the activities undertaken by the Manager on

behalf of the Funds. The following table discloses the principal occupations of directors and executive

officers of the Manager for the past five years.

Name Principal Occupation and Related Experience

John Nicola CFP, CLU, CHFC

Chief Executive Officer of the Manager

Mr. Nicola has been in the financial services industry since 1974. He provides

strategic leadership to the Manager and continues to exercise his passion in

providing innovative solutions to clients’ complex problems. His areas of

expertise include wealth accumulation and management through the use of trusts,

creative pension and insurance arrangements, and professional investment

managers.

He is a founding member of CALU (Conference for Life Underwriters) and

continues to contribute to the organization.

Jamie Duncan CFP, MBA

Chief Operating Officer and Corporate Secretary of the Manager

Ms. Duncan has been with the Manager since its inception and in the financial

planning sector since 1982. She completed her CFP designation in 1991, as well

as her MBA in 2001. Ms. Duncan has been in management for over 20 years,

and her focus is in managing the financial and operations aspects of the firm. She

is a member of TEC Canada, a leadership organization for the personal and

professional development of Chief Executives.

Rob Edel CFA

Chief Investment Officer of the Manager

Before joining the Manager, Mr. Edel spent nine years working for one of

Canada’s largest money managers and, most recently, as a portfolio manager

responsible for managing U.S. equities for that firm’s high net worth clients.

Previous to that, he spent seven years working for the Treasury Department of a

major Canadian chartered bank, splitting his time between Vancouver and

Toronto. Mr. Edel has completed his CFA and is a member of the Association

for Investment Management and Research (AIMR).

- 92 -

Name Principal Occupation and Related Experience

Karen Ikeda CFP, CLU

Director of the Manager

Ms. Ikeda has over 22 years of experience in the financial services industry and

has been with the Manager since its inception. Ms. Ikeda has a CFP designation

and has completed the Chartered Life Underwriter (CLU) designation. Her areas

of expertise include identifying clients’ retirement, investment and estate

planning objectives, completing retirement income projections and determining

the most suitable insurance and financial products to suit their needs.

Evelyn C. Nicola Treasurer and Director of the Manager

David B. Sung CFP, CLU, RHU

President of the Manager

Mr. Sung commenced his professional financial services career in the early

1990’s and has obtained his CFP, CLU and RHU designations. He is a member

of CALU (Conference for Advanced Life Underwriting) and has a passion for

designing and implementing creative financial solutions for his clients. Mr.

Sung’s areas of expertise include developing structured, goal driven investment

portfolios and customized financial plans.

Michael Taylor B.Comm, CPA, CA

Chief Financial Officer of the Manager

With over 30 years of experience in the financial services industry, Mr. Taylor is

responsible for financial management, compliance and administrative operations for the

Manager. Mr. Taylor holds a Bachelor of Commerce degree from the University of

Toronto and is a chartered accountant. His past experience includes acting as Senior Vice

President and Managing Director of RBC Financial Group.

Dannielle MacDonald

FSCI, CAMS

Chief Compliance Officer of the Manager

Dannielle MacDonald is a graduate of Athabasca University and an 18 year veteran of

the securities industry. She has been working in the field of securities regulatory

compliance for the last 12 years. She joined NWM in 2014 and is a Fellow of the

Canadian Securities Institute, where she Chairs the Designations’ Ethics Committee and

is a Certified Anti-Money Laundering Specialist.

Wayman Crosby

RI(BC) PCC

A graduate of UBC in Urban Land Economics in 1978, Mr. Crosby has had an

extensive real estate career spanning over 35 years. In addition to real estate,

Mr. Crosby has accumulated a broad range of experience in both the profit and

non-profit sectors as a principal and strategic coach/consultant. He currently

works with the management team of the Manager and heads up the Manager’s

real estate asset management group.

Penalties, Sanctions and Bankruptcy

3.3 There are no penalties, sanctions, declarations of bankruptcy, voluntary assignments in

bankruptcy, proposals under any bankruptcy or insolvency legislation or proceedings, arrangements or

compromises with creditors, appointments of a receiver, receiver manager or trustee to hold assets, that

have been in effect during the last ten years against or in connection with any of the directors, executive

- 93 -

officers, control persons or promoters of the Manager or any issuer of which any director, executive

officer, control person or promoters of the Manager was a director, executive officer or control person.

Loans

3.4 There are no loans due to or from the directors, management, promoters and principal

holders of the Manager in respect of both the Manager and the Funds.

Conflicts of Interest

3.5 Although the Manager has various obligations to each of the Funds, situations may arise

where the interests of the directors, officers, employees and shareholders of the Manager (being the

promoter of the Funds) could conflict with the interests of the Funds.

Subject to applicable regulations, the Manager, its respective officers, directors, employees, and

shareholders are not limited or affected in their ability to carry on other business ventures , and may be

engaged in the development of, investment in, or management of businesses that may compete with the

business of one or more of the Funds. Investment in the Funds does not carry with it the right of any of

the Funds or of any Unitholder to invest in any other venture of the Manager or its affiliates or associates

or to any profit therefrom or to any interest therein. The Manager may have a conflict of interest in

carrying out its obligations to one or more of the Funds as a result of its involvement in competing

activities. The Manager as well as employees, directors and officers of the Manager may invest their own

money in the Funds and may, from time to time, have substantial holdings in a Fund. Where a Fund and

one or more of the other clients of the Manager are engaged in the purchase or sale of the same security,

the transaction will be effected on an equitable basis.

The Funds do not have an independent review committee or any other form of independent oversight and

will rely exclusively upon the Manager to manage their business and to provide managerial skill. The

directors, officers, employees and shareholders of the Manager may have a conflict of interest in

allocating their time between the other business of the Manager and that of the Funds, and other

businesses or projects in which they may become involved. The directors and officers of the Manager

have, however, agreed to devote as much time to the Funds as is required for their effective management.

The Manager purchases Units for Managed Clients. The Manager, while not a partner, officer or director

of the Funds, manages all of the business and operations of the Funds. The Manager receives an annual

fee paid directly by the Unitholders who are clients of the Manager with fee for services accounts in

accordance with account agreements entered into between those Unitholders and the Manager. Each

Fund also pays the Manager an Administration Fee to cover operating expenses. Ordinary course

operating expenses of the Funds payable by the Manager, such as legal, custodial, audit, accounting and

recordkeeping fees are recovered by the Manager out of the Administration Fee. Except with respect to

Class “N” Units described below, each Fund also pays Management Fees to the Manager as set out in the

Fund Information Summaries (ultimately borne by the holders of the different classes of Units as

disclosed elsewhere in this Offering Memorandum). The Manager therefore receives Management Fees

from Funds that the Manager recommends to Advisory Clients and from Funds that the Manager

purchases on behalf of Managed Clients. In recommending or purchasing securities to or on behalf of

clients, the Manager acts in good faith in accordance with the Manager’s obligations to its clients as set

out in the applicable account agreements.

See Item 8, Risk Factors - Risks Applicable to All Funds – Conflicts of Interest. See also Item 3.6 and

Item 3.7 below.

- 94 -

Related Party Transactions – Notice and Consent

3.6 In the disclosure below and elsewhere in this Offering Memorandum:

“responsible person” means:

(a) the Manager;

(b) a partner, director or officer of the Manager;

(c) each of the following who has access to, or participates in formulating, an investment

decision made on behalf of the Subscriber, or advice to be given to the Subscriber:

(i) an employee or agent of the Manager;

(ii) an affiliate of the Manager;

(iii) a partner, director, officer, employee or agent of an affiliate of the Manager.

“related person” has the meaning given to that term under B.C. Instrument 81-513 – Self Dealing, and in

certain circumstances includes directors, officers and substantial shareholders of the Manager.

Subscribers are hereby informed that one or more of the NWM Funds may from time to time, and subject

to applicable law, purchase securities of a fund, limited partnership or other issuer in which a responsible

person or an associate of a responsible person is a partner, officer or director (each such issuer, a “Related

Party”). This would allow, for example, one NWM Fund (managed by the Manager) to purchase Units of

another NWM Fund (also managed by the Manager). It would also allow a NWM Fund to purchase units

of one or more limited partnerships of which a director or officer of the Manager is a director or officer of

the general partner(s) or the manager of such limited partnerships. Subscribers are also hereby informed

that each of the general partners of the limited partnerships whose units are from time to time purchased

by clients of the Manager are wholly owned subsidiaries of the Manager.

Subscribers should also be aware that investments by one or more of the NWM Funds in Related Parties

or in certain other limited partnerships, corporations, trusts or other entities (together with the Related

Parties, the “Affiliated Entities”) may result in all or a portion of any asset management, incentive,

acquisition, administration or other fees charged by such entities ultimately being received by related

persons (the “Affiliate Fees”).

The Manager will ensure that any investment by a NWM Fund in an Affiliated Entity does not result in a

duplication of management fees or other fees ultimately received by related persons. In the case where an

NWM Fund invests in another NWM Fund, the NWM Fund making the investment will subscribe for

Class “N” Units of the other NWM Fund, which do not have a management fee associated with them –

See Item 3.7 below. Where an NWM Fund invests in an Affiliated Entity that does not have Class “N”

Units or some other mechanism for backing out Affiliate Fees, the NWM Fund will deduct the amount of

the investment in the Affiliated Entity from the NWM Fund’s Assets Under Management before

calculating the Management Fee for the applicable NWM Fund. However, avoiding duplication of fees

may not entirely eliminate the potential for a conflict of interest - see Item 8, Risk Factors - Risks

Applicable to All Funds – Conflicts of Interest.

Account agreements entered into between the Manager and its Managed Clients provide blanket consent to the Manager to cause one or more of the NWM Funds to purchase securities of one or more Related Parties and/or make investments in Affiliated Entities resulting in the payment of

- 95 -

Affiliate Fees to related persons. Similarly, subscription agreements entered into by Subscribers who are not Managed Clients also provide such blanket consent.

Class “N” Units

3.7 Each of the Funds may issue Class “N” Units from time to time to other Funds solely to

enable Funds to invest in other Fund Units in accordance with applicable securities legislation without

duplication of Management Fees or other transaction fees. Any Fund issuing Class “N” Units will not

charge a Management Fee, transaction fee or redemption fee in respect of such Class “N” Units but will

charge the applicable Administration Fee. Class “N” Units may only be issued to the Funds and are not

available for purchase by any other Person. In particular, the NWM Core Portfolio Fund holds a majority

of its investments in Class “N” Units of other Funds – see Fund Information Summary 14.

ITEM 4

CAPITAL STRUCTURE

Capitalization of the Funds

4.1 Each Fund is authorized to have an unlimited number and unlimited classes of Units.

Currently, Units designated as Class “O” Units, Class “F” Units, Class “A” Units and Class “N” Units are

authorized for issuance. Additional classes of Units of any Fund may be created and classes of Units may

be re-designated. Certain of the Funds may have Units denominated in additional currencies – see the

Fund Information Summaries for further details.

The following table sets forth the capitalization of the Funds as of April 30, 2016:

Fund Class of Units Number of Units Issued

NWM Canadian Equity Income Fund Class “O” Units 38,173,146.07

Class “F” Units Nil

Class “A” Units 358,806.2376

Class “N” Units 2,825,857.721

NWM Global Equity Fund Class “O” Units 13,397,866.02


Class “A” Units 96,784.7434

Class “N” Units 901,812.5946

NWM High Yield Bond Fund Class “O” – CAD Units 21,218,935.64

Class “O” – USD Units 693,035.1512


Class “A” - CAD Units 152,689.0184

Class “A” - USD Units 1,497.8786

Class “N” – CAD Units 1,393,493.587

NWM Real Estate Fund Class “O” Units 6,936,891.138


Class “A” Units 155,060.7112

Class “N” Units 345,431.2891

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NWM Primary Mortgage Fund Class “O” Units 14,487,192.21


Class “A” Units 176,928.9341

Class “N” Units 743,793.2964

NWM Balanced Mortgage Fund Class “O” Units 34,853,300



Class “N” Units 4,421,019.477

NWM Global Bond Fund Class “O” – CAD Units 12,037,973.76

Class “O” – USD Units 414,970.8781


Class “A” - CAD Units 98,919.0107

Class “A” - USD Units 3,390.3869

Class “N” – CAD Units 905,553.7841

NWM Preferred Share Fund Class “O” Units 15,449,842.11



Class “N” Units 979,836.2332

NWM Alternative Strategies Fund Class “O” Units 8,189,421.481



Class “N” Units 737,624.6195

NWM Precious Metals Fund Class “O” Units 6,687,944.636



Class “N” Units 892,294.495

NWM Bond Fund Class “O” Units 14,194,482.58


Class “A” Units 216,355.6425

Class “N” Units 1,545,577.544

NWM Canadian Tactical High Income

Fund

Class “O” Units 13,255,734.18



Class “N” Units 825,662.6992

NWM U.S. Tactical High Income Fund Class “O” – CAD Units 6,263,428.576

Class “O” – USD Units 6,695,704.959


Class “A” CAD Units 53,931.2838

Class “A” USD Units 15,766.6174


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NWM Core Portfolio Fund Class “O” Units 15,717,089.33


Class “A” Units 2,622,941.532

NWM U.S. Equity Income Fund Class “O” – CAD Units 9,030,921.497

Class “O” – USD Units 2,215,980.508


Class “A” Units-CAD 98,618.2147

Class “A” Units-USD 3,659.6053


Units Issuable in Series

4.2 The Manager may create one or more series of any class of Units of any NWM Fund, in

the Manager’s sole discretion and without the requirement to further amend the DOT, in order for any

NWM Fund to be able to issue Units of any class in one or more alternate series, each series of which

would be denominated in an alternate currency, provided that all Units of that class are treated equally in

every respect other than the currency in which their Units are denominated, notwithstanding the series

under which the Units are issued. The Manager may, in its sole discretion, determine the manner and

times in which a series of Units is to be converted to an alternate currency for the purposes of

subscriptions, redemptions, distributions and other circumstances in which amounts are payable to or by

Unit holders of a particular series. Units of any particular series will not be afforded separate series

voting rights.

The Manager will from time to time create a new “CAD” series for the Units of certain NWM Funds that

are denominated in U.S. dollars and create a new “USD” series for the Units of certain NWM Funds that

are denominated in Canadian dollars. For NWM Funds denominated in U.S. dollars, a new “CAD” series

would enable investors who would otherwise invest in Units of that Fund to invest in Units of that Fund

denominated in Canadian dollars. For NWM Funds denominated in Canadian dollars, a new “USD”

series would enable investors who would otherwise invest in Units of that Fund to invest in Units of that

Fund denominated in U.S. dollars. As at April 30, 2016, “CAD” series are available for the NWM U.S.

Equity Income Fund and the NWM U.S. Tactical High Income Fund and a “USD” series is available for

the NWM High Yield Bond Fund and the NWM Global Bond Fund. Subscribers wishing to invest in an

alternate currency to the currency in which a Fund is denominated are advised to check with the Manager

to see if an alternate series has been created and, if so, the terms by which the currency conversions will

take place for the purposes of subscriptions, redemptions, distributions and other payments.

Long Term Debt

4.3 The Funds have no long term debt.

Prior Sales

4.4 The following Units of each Fund have been sold in the 12 month period prior to the date

of this Offering Memorandum (namely from May 1, 2015 up to and including April 30, 2016) at the

applicable Net Asset Value per Unit of each Unit sold on the day such Units were sold. The Net Asset

Value per Unit varies either daily, weekly, or monthly, depending on each Fund’s Valuation Day. As the

Units are issued frequently, the disclosure of Prior Sales has been presented on an aggregated basis during

the 12 month period referred to above, in order to be more easily understood.

- 98 -

Type of Security Issued

Number of Securities

Issued

Price Range of Securities Issued

During Time Period

Total Funds Received

NWM Canadian

Equity Income

Fund

Class “O” Units-CDN 5,539,323.2552 $5.6353 – $7.1176 $36,468,853.30

Class “N” Units 1,622,180.1496 $5.8580 - $7.1941 $10,660,000.00

Class “ A” Units 18.7649 $6.6614 $125.00

NWM Global

Equity Fund

Class “O” Units-CDN 1,820,820.4868

$18.2228 -

$24.0198

$39,028,018.46

Class “N” Units 457,136.0499 $18.4696 -

$24.1119 $9,770,000.00

NWM High Yield

Bond Fund


$10.1442 -

$11.8629

$63,068,880.20

Class “O” Units-USD 467,758.8105 $7.3741 - $9.6698 $3,848,844.34

Class “N” Units 763,443.9257 $10.368 -

$12.0357 $8,585,000.00

NWM Real Estate

Fund


$16.4063 -

$17.1775

$39,884,986.97

Class “N” Units 183,163.6562 $16.6118 -

$17.4220 $3,125,000.00

Class “ A” Units 10,618.4537 $16.5722 -

$17.2022 $178,767.07

NWM Primary

Mortgage Fund


10.2699 -

$10.3750

$45,945,621.79

Class “N” Units 576,907.0417 $10.4351 -

$10.4863 $6,035,000.00

Class “ A” Units 19,151.7625 $10.3367 -

$10.3882 $198,326.73

- 99 -



Issued


During Time Period


NWM Balanced

Mortgage Fund


$9.9921 -

$10.0443

$92,822,293.50

Class “N” Units 1,754,157.7879 $10.0683 -

$10.1199 $17,695,000.00

Class “ A” Units 3,327.4570 $10.0297 -

$10.0800 $33,479.67

NWM Global

Bond Fund


$10.8711 -

$12.1840

$33,439,896.51

Class “O” Units-USD 162,199.3432 $8.1856 - $9.6176 $1,433,320.00

Class “N” Units 507,046.8735 $11.1541 -

$12.2944 $5,900,000.00

NWM Preferred

Share Fund


$7.7357 -

$10.9457

$65,749,734.98

Class “N” Units 623,976.5915 $7.9024 -

$11.0330 $5,700,000.00

NWM Alternative

Strategies Fund


$12.2487 -

$13.2187

$21,130,403.56

Class “N” Units 391,422.2966 $12.2754 -

$13.2561 $4,950,000.00

Class “ A” Units 1,094.8502 $12.9545 $14,183.27

NWM Precious

Metals Fund

Class “O” Units-CDN 1,144,141.7065 $4.4772 - $7.1395 $5,932,038.72

Class “N” Units 633,197.9659 $4.4875 - $5.4852 $3,065,000.00

NWM Bond Fund Class “O” Units-CDN 5,280,200.4308

$9.9513 -

$10.2494

$53,562,130.09

Class “N” Units 1,040,300.7852 $10.0524 -

$10.2829 $10,590,000.00

Class “ A” Units 21,902.5199 $10.0116 -

$10.2184 $221,782.50

- 100 -



Issued


During Time Period


NWM Canadian

Tactical High

Income Fund


$8.56632 -

$10.8173

$42,487,932.65

Class “N” Units 460,591.4922 $8.8690 -

$10.7934 $4,575,000.00

NWM U.S.

Tactical High

Income Fund


$12.5203 -

$14.3861

$30,481,877.09

Class “O” Units-USD 1,039,995.6069 $9.0236 -

$11.0835 $10,771,481.45

Class “N” Units 316,284.8649 $12.6208 -

$14.3682 $4,250,000.00

Class “ A” Units-CDN 8,689.1859 $12.6437 -

$14.3620 $114,759.92

Class “ A” Units-USD 4,937.6785 $9.0605 -

$10.7821 $52,403.52

NWM Core

Portfolio Fund


$10.4328 -

$11.2230

$96,432,806.94

Class “ A” Units 852,302.2321 $10.4894 -

$11.2504 $9,317,924.66

NWM U.S. Equity

Income Fund


$12.0768 -

$14.1035

$21,953,344.63

Class “O” Units-USD 618,184.9792 $8.6029 -

$10.6575 $6,169,422.67

Class “N” Units 482,628.1377 $12.2706 -

$13.9041 $6,270,000.00

ITEM 5

SECURITIES OFFERED

Terms of Securities

5.1 The Funds have four classes of Units designated as Class “O”, Class “F” and Class “A”.

In addition, each Fund has a class of Units designated as Class “N” Units, which do not form part of this

- 101 -

Offering – see Item 3.7. The Class “N” Units will have substantially the same characteristics described

below, except that holders of Class “O”, Class “F” and Class “A” Units will not be allowed to exchange

any Units held by them for Class “N” Units in the manner described in paragraph (j) below. Units may be

issued in an alternate series designated in an alternate currency – see Item 4.2

Each class of Units of each Fund has the following attributes:

(a) each class may have an unlimited number of Units;

(b) all Units are without nominal or par value;

(c) each Unit of a particular class entitles the owner to one vote at meetings of Unitholders of

the Fund where all classes vote together and to one vote at meetings where that particular class

votes separately as a class;

(d) all Units will be issued as fully paid and non-assessable, with no liability for future

assessments;

(e) there are no cancellation or surrender provisions except as set out in the DOT;

(f) there are no pre-emptive rights attaching to the Units;

(g) each Unit of a particular class entitles the owner to participate, in accordance with the

provisions of the DOT, equally with respect to all distributions of Net Income (if any) and Net

Realized Capital Gains (if any), and of return of capital, of that Fund made to the Unitholders of

that class;

(h) distributions of Net Income (if any) and Net Realized Capital Gains (if any) will be

allocated among the classes of Units in such manner as the Manager considers appropriate and

equitable;

(i) if any distributions that have been declared or amounts payable on a return of capital in

the event of the liquidation, dissolution or winding-up of a Fund are not paid in full, all Units of

that Fund entitled to the distribution or return of capital will participate rateably based on the

relative Net Asset Value Per Unit of each class of Units;

(j) subject to requirements determined from time to time by the Manager and stated in the

relevant Subscription Agreements and/or this Offering Memorandum, each Unit of a particular

class of Units of a Fund may be changed at the option of the holder into a Unit of any other class

of Units of that Fund except for Class “N” Units at the applicable Net Asset Value Per Unit for

the other class on the date of the change. As long as Units of a class are changed for Units of

another class having substantially similar attributes (but for management fees and/or other

incidental attributes) the change will be effected (at the discretion of the Manager) by a

redesignation of the class of Units into the other class, and not by any form of disposition of Units

of the class being changed;

(k) upon liquidation of a Fund, each Unitholder will participate equally with the other

Unitholders of the same class in the net assets of the Fund remaining after the satisfaction of

outstanding liabilities of the relevant Fund; and

(l) Units of each class will rank on a parity with Units of the other classes with respect to

liquidation rights based on the relative Net Asset Value Per Unit of each class of Units.

- 102 -

Subscription Procedure

5.2 The minimum initial investment in Class “O” Units and Class “F” Units of the Funds is

$25,000 (subject to the Manager’s discretion), and thereafter, additional Units may be purchased in

minimum increments of $1,000 each subscription. There is no minimum subscription amount for Class

“A” Units. For any Class “O” Unit or Class “F” Unit denominated in U.S. dollars (e.g. the NWM U.S.

Tactical High Income Fund and the NWM U.S. Equity Income Fund), the $25,000 minimum and

additional $1,000 increments are U.S. dollar minimums. Subscribers who may be interested in investing

in a currency other than the primary currency of a Fund should contact the Manager to see if an alternate

series has been created to accommodate an alternate currency.

Subscribers who are Advisory Clients of the Manager may purchase Class “O” Units of the Funds

through the Manager. The Manager purchases Class “O” Units on behalf of its Managed Clients.

Class “F” Subscribers may purchase Units of the Funds through the Manager (but only if they reside in

Canadian jurisdictions in which the Manager is registered as an exempt market dealer), or through their

investment dealers.

Class “A” Subscribers must be managed account clients of WealthBar, which will place purchase orders

for Units on behalf of such clients through FundSERV.

The Manager will schedule Closings from time to time.

An unlimited number of Units are being offered on a continuous basis to Subscribers resident in all the

Provinces and Territories of Canada pursuant to exemptions from the prospectus requirements contained

in the securities legislation rules and regulations applicable in those jurisdictions.

The offering price of the Units of the Funds will be the Net Asset Value Per Unit of the Units of those

Funds on the Valuation Day next following the day on which a subscription for Units is received. The

subscription price of each fractional Unit will be the proportionate part of such price. If a subscription

request is received prior to 3:00 p.m. (Vancouver time) on a Valuation Day, the request will be processed

on that Valuation Day. See Item 5.3 for a description of how the Net Asset Value Per Unit is determined.

Documents Required to Complete a Subscription

The Manager may place orders for Units on behalf of Managed Clients in its discretion, giving due

consideration to the terms and stated objectives/risk tolerance/other considerations communicated to the

Manager by a Managed Client. Managed Clients are not required to complete and sign a Subscription

Agreement or any other documentation in respect of a purchase of Units.

In addition, WealthBar may place orders directly on FundSERV for Class “A” Units on behalf of

WealthBar clients in its discretion, giving due consideration to the terms and stated objectives/risk

tolerance/other considerations communicated to WealthBar by its clients. WealthBar clients are not

required to complete and sign a Subscription Agreement or any other documentation in respect of a

purchase of Class “A” Units.

Each prospective Subscriber who wants to subscribe for Units and who is (i) an Advisory Client, or (ii)

who is not a client of the Manager and is a Class “F” Subscriber:

(a) must complete and sign the form of Subscription Agreement prescribed by the Manager

from time to time specifying the aggregate dollar amount of the subscription (and if Units are

offered in an alternate currency and the Subscriber wishes to invest in the alternate currency,

- 103 -

specify the alternate currency) and class of Units being subscribed for (the Funds reserve the right

to use different forms of Subscription Agreements for different Subscribers);

(b) must, if the Subscriber:

(A) is resident in, or the purchase of the Units by the Subscriber is otherwise subject to

the securities legislation of British Columbia, Nova Scotia, New Brunswick or

Newfoundland and Labrador; and (B) is not an “accredited investor” as defined in

National Instrument 45-106 Prospectus Exemptions (“NI 45-106”) (this definition is set

out in the Subscription Agreement); and (C) is either (i) an individual or (ii) is a

corporation, partnership, trust or other legal entity and purchasing Units with an

acquisition cost to the Subscriber of less than $150,000 (for each Fund in which the

Subscriber is investing) paid in cash, complete and sign two copies of the Form 45-106F4

– Offering Memorandum Risk Acknowledgement attached to the Subscription

Agreement;

(c) must, if the Subscriber:

(A) is resident in, or the purchase of the Units by the Subscriber is otherwise subject to

the securities legislation of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,

Quebec, Nova Scotia, New Brunswick Newfoundland and Labrador or Prince Edward

Island or any Territory of Canada, and (B) is an “accredited investor” as defined in NI

45-106, complete and sign the Accredited Investor Questionnaire and, if required by NI

45-106 and the Subscription Agreement, an Accredited Investor Risk Acknowledgement

Form (in duplicate) attached to the applicable form of Subscription Agreement;

(d) must deliver (or cause to be delivered) payment of the full subscription price to the

Manager for the Units subscribed for through FundSERV or other means acceptable to the

Manager; and

(e) must deliver to the Manager the Subscription Agreement, Offering Memorandum Risk

Acknowledgement, Accredited Investor Questionnaire and Accredited Investor Risk

Acknowledgement Forms (as applicable) and any other forms, declarations and documents as

may be required by the Manager to complete the subscription. Payments delivered to the Manager

will be held pending settlement. In the case of clients of the Manager, funds will remain in client

accounts until settlement of trades.

Subscriptions will be received subject to prior sale and acceptance of the Subscriber’s subscription, in

whole or in part (subject to compliance with applicable securities laws), by the Manager on behalf of a

Fund.

Subscriptions for Units of all Funds except the NWM Alternative Strategies Fund will be settled on the

third Business Day (the 18th Business Day for subscriptions for Units of the NWM Alternative Strategies

Fund) after the next Valuation Date that occurs following (i) in the case of Advisory Clients or Class “F”

Subscribers, receipt by the Manager of the documents (and payment) described in subparagraphs (a) to (e)

above, (ii) in the case of Class “A” Subscribers, the placement of the purchaser order on FundSERV by

WealthBar and (iii) in the case of Managed Clients, placement of an order by the Manager for purchase of

Units. Upon settlement, the Subscriber will become the owner of the Units subscribed for and the full

subscription price will be released to the Fund whose Units have been issued to the Subscriber. Closings

will occur on a continuous basis.

- 104 -

Subscriptions received are subject to rejection or allotment in whole or in part by the Manager on behalf

of a Fund. The Manager reserves the right to close the subscription books at any time without notice.

Confirmation of the acceptance of a subscription will be forwarded by the Manager to the Subscriber. The

Manager is not obligated to accept any subscriptions, and will reject any subscription which the Manager

considers to not be in compliance with applicable securities laws. If a subscription is rejected, the

Manager will notify the Subscriber and will return to the Subscriber the subscription funds comprising

such subscription, without interest.

The Offering is being conducted in reliance on exemptions from the prospectus requirements of

applicable securities laws. These are set out in NI 45-106 and summarized as follows:

(a) in the Provinces of British Columbia, Nova Scotia, New Brunswick and Newfoundland

and Labrador, pursuant to an exemption from the prospectus requirements set out in Section 2.9

of NI 45-106 (the “Offering Memorandum Exemption”). The Offering Memorandum Exemption

is available for distributions to Subscribers in British Columbia, Nova Scotia, New Brunswick

and Newfoundland and Labrador, purchasing as principals, who receive this Offering

Memorandum prior to signing a Subscription Agreement and who sign a Form 45-106F4 –

Offering Memorandum Risk Acknowledgement;

(b) in each Province and Territory of Canada , pursuant to an exemption from the prospectus

requirements set out in Section 2.3 of NI 45-106 (the “Accredited Investor Exemption”). The

Accredited Investor Exemption is available for distributions to Subscribers in each Province and

Territory of Canada purchasing as principal and who are “accredited investors” as defined in NI

45-106 and, in certain cases, who sign a Form 45-106F9 – Accredited Investor Risk

Acknowledgement Form (in duplicate); and

(c) in each Province and Territory of Canada , pursuant to an exemption from the prospectus

requirements afforded by Section 2.10 of NI 45-106 (the “Minimum Amount Exemption”). The

Minimum Amount Exemption is available for distributions to Subscribers in each Province and

Territory of Canada purchasing as principal who are not individuals and who are acquiring Units

with an acquisition cost to the Subscriber of not less than $150,000 (for each Fund in which the

Subscriber is investing) paid in cash at the time of Closing.

The foregoing exemptions relieve the Funds from the provisions of the applicable securities laws, rules

and regulations of each Province and Territory of Canada to file and obtain a receipt for a prospectus in

connection with the Offering. Accordingly, prospective Subscribers for Units will not receive the benefits

associated with a subscription for securities issued pursuant to a filed prospectus, including review of the

merits of the securities by a securities regulatory authority.

Valuation Procedures for Determining Net Asset Value and Net Asset Value Per Unit of a Fund

5.3 As required by the DOT, the following valuation procedures are used in determining each

Fund’s Net Asset Value, or the Net Asset Value Per Unit of each class of Units of a Fund.

(a) The aggregate value of the property of each Fund is determined as at the applicable

Valuation Time in the following manner:

(i) cash on hand or on deposit, bills and notes and accounts receivable, prepaid

expenses, cash dividends and interest declared or accrued and not yet received are valued

at their full amount unless the Manager has determined that any of these assets is not

worth the full amount, in which event the value will be deemed to be the value as the

Manager reasonably deems to be the fair value;

- 105 -

(ii) precious metals (certificates and bullion) and other commodities are valued at

their fair market value generally based on prevailing market prices as reported on

exchanges or other markets;

(iii) securities listed on a public securities exchange are valued at their last sale price

reported before the Valuation Time on that Valuation Day or, if no sale is reported to

have taken place before the Valuation Time on that Valuation Day, at the average of the

last bid and ask prices reported before that time on that Valuation Day;

(iv) unlisted securities of a fund traded on an over-the-counter market are valued at

the last sale price reported before the Valuation Time on that Valuation Day or, if no sale

is reported to have taken place before the Valuation Time on that Valuation Day, at the

average of the last bid and ask prices reported before that time on that Valuation Day;

(v) notwithstanding the foregoing, if securities are interlisted or traded on more than

one exchange or market, the Manager uses the last sale price or the average of the last bid

and ask prices, as the case may be, reported before the Valuation Time on the exchange

or market determined by the Manager to be the principal exchange or market for such

securities;

(vi) securities and other assets for which market quotations are not readily available

are valued at their fair value, as determined by the Manager;

(vii) fixed income securities listed on a public securities exchange are valued at their

last sale price before the Valuation Time on that Valuation Day, or if no sale is reported

to have taken place before the Valuation Time on that Valuation Day, at the aver age of

the last bid and ask prices before that time on that Valuation Day;

(viii) non-exchange traded fixed income securities are valued at their fair value based

on prices supplied by established pricing vendors, market participants or pricing models,

which may be on the basis of bid side evaluations, as determined before the Valuation

Time on that Valuation Day;

(ix) long positions in options, debt-like securities and warrants are valued at the

current market value of the position, as determined by the Manager;

(x) where an option is written by a Fund, the premium received by that Fund for that

option is reflected as a deferred credit; the deferred credit is valued at an amount equal to

the current market value of the option which would have the effect of closing the

position; any difference resulting from revaluation will be treated as an unrealized gain or

loss on investment; the deferred credit will be deducted in calculating the Net Asset

Value of that Fund and the Net Asset Value Per Unit of each class of Units of that Fund;

a Fund’s portfolio securities which are the subject of a written option are valued at their

current market value as determined by the Manager;

(xi) securities quoted in foreign currencies are translated to Canadian dollars to

reflect the rate of exchange existing on that Valuation Day;

(xii) securities, the resale of which is restricted or limited by means of a

representation, undertaking or agreement by a Fund or its predecessor in title or by law,

are valued at the lesser of:

- 106 -

(A) their value based upon reported quotations in common use on that

Valuation Day; and

(B) that percentage of the market value of securities of the same class or

series of a class, the resale of which is not restricted or limited by reason of any

representation, undertaking or agreement or by law, equal to the percentage that

the Fund’s acquisition cost was of the market value of such securities at the time

of acquisition, but taking into account, if appropriate, the amount of time

remaining until the restricted securities will cease to be restricted securities;

(xiii) foreign currency hedging contracts are valued at their current market value on

that Valuation Day with any difference resulting from revaluation being treated as an

unrealized gain or loss on investment;

(xiv) the value of a forward contract or swap is the gain or loss on the contract that

would be realized if, on the Valuation Day, the position in the forward contract or swap

were to be closed out;

(xv) the value of a standardized future is:

(A) if daily limits imposed by the futures exchange through which the

standardized future was issued are not in effect, the gain or loss on the

standardized future that would be realized if, on that Valuation Day, the position

in the standardized future was closed out; or

(B) if daily limits imposed by the futures exchange through which the

standardized future was issued are in effect, based on the current market value of

the underlying interest of the standardized future;

(xvi) margin paid or deposited on standardized futures or forward contracts is reflected

as an account receivable and margin consisting of assets other than cash is noted as held

as margin;

(xvii) mortgages are valued at a principal amount which produces a yield equal to the

prevailing rate of investment return as determined by the Manager on mortgages of

similar type and term. The prevailing rate of investment return so determined by the

Manager is based on rates of interest effective in the mortgage market on any Valuation

Day. Mortgages in arrears are valued as the Manager deems appropriate, with each case

to be considered on its own merits;

(xviii) shares of mortgage investment corporations (“MICs”) are valued on the basis of

the value ascribed to them by the MICs themselves, in accordance with their respective

valuation procedures;

(xix) units of any limited partnership will be valued at the net asset value per limited

partnership unit at the end of the calendar year preceding the year in which the valuation

is made, subject to adjustments that the general partner of the limited partnership deems

necessary or advisable; and

(xx) if an investment cannot be valued under the foregoing rules or under any other

valuation rules prescribed or permitted by securities legislation or by the Canadian

Institute of Chartered Accountants as forming part of Generally Accepted Accounting

- 107 -

Principles in Canada (herein referred to as “GAAP”), or if any rules adopted by the

Manager but not prescribed or permitted by securities legislation or by GAAP are at any

time considered by the Manager to be inappropriate under the circumstances, then the

Manager will use a valuation which it considers fair and reasonable in the interests of

Unitholders.

(b) The liabilities of a Fund are deducted from the aggregate value of the property of that

Fund when calculating the Net Asset Value of that Fund or the Net Asset Value of a class of

Units of that Fund, and such liabilities include, without limitation:

(i) all bills, notes and accounts payable of which that Fund is an obligor;

(ii) all administrative or operating expenses payable or accrued or both;

(iii) all contractual obligations for the payment of money or property, including the

amount of any unpaid distributions credited to Unitholders of that Fund on or before that

Valuation Day;

(iv) all allowances authorized or approved by the Manager for taxes (if any) or

contingencies; and

(v) all other liabilities of that Fund of whatsoever kind and nature, except liabilities

represented by outstanding Units of that Fund.

(c) Each transaction of purchase or sale of a portfolio asset effected by a Fund will be

reflected in the calculation of the Net Asset Value of that Fund not later than the first calculation

of Net Asset Value made after the date on which the transaction becomes binding.

(d) The issue, redemption or change of Units of a Fund will be reflected in the first

calculation of the Net Asset Value of that Fund made after the calculation of Net Asset Value Per

Unit used to establish the issue, redemption or change price.

The Manager utilizes the services of the Fund Accountant in the process of calculating Net Asset Values;

however, the completeness and accuracy of this calculation is ultimately the responsibility of the

Manager. While the goal is to produce completely accurate valuations at all times, errors and adjustments

may occur periodically. The Manager has put in place procedures to detect and correct any such errors

and make appropriate adjustments, if necessary

Resale Restrictions

5.4 The Units are non-transferable without the consent of the Manager unless the transfer is

by operation of law, for example, to an estate on the death of a Unitholder.

The Offering is made only on a private placement basis to investors who are eligible to purchase on a

prospectus exempt basis under, and subject to compliance with, applicable securities laws. There is no market for the Units. The transferability of the Units will also be subject to resale restrictions under applicable securities laws. See Item 10. The Manager is entitled to require and may require, as a

condition of allowing any transfer of any Unit, the transferor or transferee, at their expense, to furnish to

the Manager evidence satisfactory to it in form and substance (which may include an opinion of counsel

satisfactory to the Manager) to establish that such transfer will not constitute a violation of the securities

laws of any jurisdiction whose securities laws are applicable thereto.

- 108 -

No Fund is a reporting issuer in any of the Provinces of Canada and no Fund intends to become a

reporting issuer in any Province or Territory of Canada.

This Offering Memorandum and all related subscription documents should be reviewed by prospective Subscribers and their professional advisers prior to subscribing for Units.

Redemption Attributes and Procedures

5.5 Each Unitholder of a Fund is entitled to require the relevant Fund to redeem all or any

part of the Units owned by that Unitholder. On redemption, a Unitholder will receive the Net Asset Value

per Unit of the class of Units redeemed, less any redemption charge or other fee owing by such

Unitholder.

The Manager may determine the date and time by which a redemption notice must be received. If a notice

to redeem Units is received too late to process on a Valuation Day, the redemption price will be the Net

Asset Value Per Unit for such Units calculated on the next following Valuation Day. The Valuation Day

for each Fund is set out in the Fund Information Summaries.

All redemption notices must specify the number and class of Units to be redeemed, and the name of the

relevant Fund. Redemption notices specifying a forward date or specific price will not be processed.

Unless redemptions have been suspended, the Manager will cause a Fund to pay for Units redeemed by

deposit to the Unitholder’s account with a registered dealer through FundSERV or by any other means

acceptable to the Manager. In the case of Class “A” Unit redemptions, the process is the same. Except in

the case of the NWM Canadian Equity Income Fund, such payment may be in the form of a promissory

note, as described elsewhere in this Offering Memorandum.

If all redemption documents, properly completed, are received by the Manager with a redemption order

on or before the time fixed by the Manager, the Manager will (unless redemptions have been suspended)

cause the Fund whose Units are being redeemed (with the exception of the NWM Alternative Strategies

Fund) to pay the redemption proceeds within three Business Days (18 Business Days for redemption of

Units of the NWM Alternative Strategies Fund) of the Valuation Day next following the day the aforesaid

redemption documents and redemption order are received by the Manager. Redemptions of Class “A”

Units will be entered on FundSERV directly by WealthBar.

No Fund is required to redeem or pay any redemption amounts in respect of any Units unless the above

described procedures are followed.

If at any time there is insufficient cash on hand to redeem Units of a Fund, the Manager may do any one

or more of the following:

(a) realize upon sufficient assets of that Fund selected by the Manager in its sole discretion to

redeem Units of that Fund;

(b) borrow an amount to finance the redemption of such Units (subject to the limitations set

out in the DOT, as disclosed in Item 2.6); and

(c) for Funds other than the NWM Canadian Equity Income Fund, subject to compliance

with all applicable securities laws, cause such Fund to issue a promissory note to a redeeming

Unitholder, payable not later than six months from the date a redemption notice is given in

accordance with this Indenture. Any such promissory note will bear interest at the prime rate of

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interest charged by Royal Bank of Canada at its main commercial branch in Vancouver, British

Columbia, to its most creditworthy customers, compounded annually, not in advance.

The Manager may suspend redemptions of the Units of any Fund. For further details as to the

circumstances under which the Manager may suspend redemptions of Units of a particular Fund, see the

Fund Information Summaries.

The Manager may cause a Fund to redeem the whole or any part of any Units of a Unitholder of that Fund

at the applicable Net Asset Value Per Unit of that Fund at any time without notice to the Unitholder when

Units are being redeemed. The Manager may cause that Fund to deduct from the proceeds any redemption

charge or fee payable by such Unitholder. The Manager will process the redemption in like manner to a

redemption requested by a Unitholder and the Units redeemed will be deemed to be cancelled without any

further action on the part of the Unitholder.

Short Term Redemption Fees

In order to protect the interests of the majority of Unitholders of the Funds and to discourage short term

trading in the Funds, Class “F” Unitholders may be subject to a short term redemption fee. For Funds

other than the Mortgage Funds, a Fund may deduct and retain for the benefit of the remaining Unitholders

a short term redemption fee of 2% of the Net Asset Value of the Units being redeemed if Class “F” Units

are redeemed within six months from the date of issuance. The Mortgage Funds may deduct and retain for

the benefit of the remaining Unitholders a short term redemption fee of 4% of the Net Asset Value of the

Units being redeemed if Class “F” Units are redeemed within six months from the date of issuance. The

foregoing redemption fees may be waived by the Manager in its sole discretion.

Switches

5.6 Subject to compliance with such requirements as may be imposed by the Manager

(including but not limited to, a prohibition against any Subscriber who is not a client or ceases to be a

client of the Manager switching Class “A” Units or Class “F” Units for Class “O” Units and any

Subscriber that is not a client of WealthBar switching any Class “F” Units or Class “O” Units for Class

“A” Units), Unitholders may switch any of their Units for Units of another class of the same Fund except

Class “N” Units by giving notice to the Manager of the number and class of Units to be switched. Upon

receipt of such notice, the Manager will arrange for the switch to occur on the Valuation Day next

following the day such notice is received. The ratio of Units switched will be calculated based on the

relative Net Asset Value Per Unit of each class as determined on that Valuation Day. Holders of Class

“O”, Class “F” and Class “A” Units will not be allowed to exchange any Units held by them for Class

“N” Units.

As long as Units of a class are changed for Units of another class having substantially similar attributes

(but for Management Fees or other incidental attributes) the change will be effected (unless the Manager

decides otherwise) by a redesignation of the class of Units into the other class, and not by any form of

disposition of Units of the class being changed. See also Item 6.

Unitholders who may be interested in switching to a currency other than the primary currency of any

particular class of Units held by them should contact the Manager to see if an alternate series has been

created to accommodate an alternate currency. “CAD” series are available for the NWM U.S. Equity

Income Fund and the NWM U.S. Tactical High Income Fund and “USD” series are available for the

NWM High Yield Bond Fund and the NWM Global Bond Fund. Subject to compliance with such

requirements as may be imposed by the Manager and availability of a series denominated in an alternate

currency, Unitholders may switch any of their Units for Units of the same Fund denominated in an

alternate currency. See also Item 4.2.

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Systematic Investment and Withdrawal Plans Available to Clients of the Manager

5.7 A Unitholder of one or more of the Funds who is a client of the Manager may opt to

participate in a systematic investment plan (“SIP”) pursuant to which that Unitholder may instruct the

Manager to purchase on a monthly basis additional Units of the Fund(s) in which the Unitholder has

invested. In addition, a Unitholder may participate in a systematic withdrawal plan (“SWP”) pursuant to

which that Unitholder may instruct the Manager to redeem Units of such Fund(s) on a monthly basis. The

minimum monthly dollar amount of these additional purchases and redemptions is $250, subject to

change at the discretion of the Manager. SIP participation is subject to compliance with all applicable

securities laws, and will require the execution of one or more agreements between the Unitholder and the

Manager. These agreements can be obtained from the Manager upon request. Securities laws may prohibit certain Unitholders from participating in the SIP. This matter should be discussed with the Manager.

ITEM 6

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

General

6.1 The following is, as of the date hereof, a fair summary of the principal Canadian federal

income tax considerations generally relevant to Subscribers who, for purposes of the Tax Act and at all

relevant times, are individuals resident solely in Canada, deal at arm’s length with the Funds, the Trustee,

the Custodians and the Manager, and beneficially hold their Units as capital property. Individuals who

meet all of the foregoing requirements are referred to as “Unitholder” or “Unitholders” in this summary

and this summary only addresses such Unitholders.

This summary is based on the current provisions of the Tax Act and the regulations thereunder, all

specific proposals to amend the Tax Act or the regulations (the “Proposals”) publicly announced by the

Minister of Finance prior to the date hereof, the Manager’s understanding of the administrative policy of

the Canada Revenue Agency (“CRA”), and the assumptions made throughout this summary. The

summary does not address or take into account provincial, territorial or foreign tax laws or considerations,

which may differ significantly from those described herein. It is assumed that all Proposals will be passed

as proposed, and that there will be no other relevant amendment of any relevant law, whether by

legislative or judicial action, although no assurance can be given in this respect. This summary is also

based on the assumption that investments in the Funds will not become listed or traded on a stock

exchange or other public market, and that none of the Funds will at any time be a “SIFT trust” for

purposes of the Tax Act. This summary is also based on the assumptions that none of the issuers of the

securities in the portfolio of a Fund will be foreign affiliates of the Fund or of any Unitholder within the

meaning of the Tax Act, and that none of the securities in the portfolio will be a “tax shelter investment”

or “offshore investment fund property” within the meaning of the Tax Act.

This summary is of a general nature, is not intended to be comprehensive of all tax considerations, and is

not intended and should not be construed as legal or tax advice to any particular Subscriber. All Subscribers should consult their own tax advisors with respect to the tax consequences applicable to them based on their particular circumstances. No income tax ruling or legal opinion has been

sought or obtained with respect to the tax consequences of acquiring or holding Units in the Fund, or with

respect to any of the assumptions made in this summary.

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Status of the Funds

6.2 Significant tax considerations described in this summary (including eligibility for

investment by Deferred Income Plans) depend on the Funds’ status as “mutual fund trusts” or other

relevant status for purposes of the Tax Act.

General

To qualify as a “mutual fund trust” for purposes of the Tax Act, in general terms a Fund must be a “unit

trust” resident in Canada, the sole undertaking of the Fund must be the investing of its funds in property,

and the Fund must comply on a continuous basis with certain requirements relating to the qualification of

Units for distribution to the public, the number of Unitholders and the dispersal of ownership of Units. In

addition, the Fund must not have been established or maintained primarily for the benefit of non-residents

of Canada.

Fund Status

The Manager has advised that each Fund currently meets the dispersal requirements and all other

requirements under the Tax Act to be a “mutual fund trust” for purposes of the Tax Act, and is expected

to continue to meet all relevant requirements. It has been assumed for purposes of this summary that all

such requirements will be so met on a continuous basis, although this result cannot be guaranteed.

In addition, with respect to the NWM U.S. Equity Income Fund, the Manager has advised that the Fund

has been accepted by the CRA as a “registered investment” for purposes of Deferred Income Plans.

Based in part on the foregoing, it has been assumed for all purposes of this summary that each Fund is

and will remain a “mutual fund trust” at all relevant times, and that the NWM U.S. Equity Income Fund is

and will remain a “registered investment” at all relevant times, although these results cannot be

guaranteed. If the Funds were not to qualify as so described, the income tax considerations described in

this summary would, in some respects, be materially different (and generally materially adverse,

including to Deferred Income Plans and their annuitants) than as set out below.

Eligibility for Deferred Income Plans

6.3 Based and relying on the assumptions stated under 6.2 above, Units of each Fund are a

qualified investment for Deferred Income Plans for purposes of the Tax Act.

The status of Units of any Fund as a qualified investment as of any particular time cannot be guaranteed

notwithstanding the current status of the Funds described herein or the reasonable efforts of the Manager.

Where Units of a Fund are acquired as a non-qualified investment within a Deferred Income Plan, or

where Units are acquired as a qualified investment and the Units subsequently cease to be qualified

investments, special taxes and other adverse consequences under the Tax Act will arise, not addressed in

this summary. In addition, notwithstanding that Units may be a qualified investment as referred to above,

the annuitant under a relevant plan will be subject to a penalty tax if Units constitute a “prohibited

investment”. In general terms, a “prohibited investment” includes a Unit of a Fund that does not deal at

arm’s length with the annuitant, or in which the annuitant has a “significant interest” for purposes of the

Tax Act. Annuitants who may be affected by these rules should consult with their own tax advisors in this

regard.

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Taxation of the Funds

6.4 In general, the Funds are subject to tax on their Net Income and Net Realized Capital

Gains for a year, except to the extent such amounts are distributed to Unitholders. The Funds will

generally not be subject to tax under Part I of the Tax Act if for each year the Funds distribute their Net

Income and Net Realized Capital Gains and deduct the full amount available in respect of such

distributions. Losses incurred by the Funds cannot be allocated to Unitholders but may be deducted by the

Funds in future years in accordance with the Tax Act.

To the extent the Funds’ investments include securities denominated in currencies other than Canadian

dollars, the cost and proceeds of disposition of such securities, dividends, interest and any other relevant

amounts must be determined for purposes of the Tax Act in Canadian dollars, and an affected Fund may

therefore realize gains or losses by virtue of fluctuations in the value of foreign currencies relative to

Canadian dollars. To the extent the Funds derive income or gains from investments in countries other than

Canada, the Funds may be liable to pay income or profits tax to such countries, and the utilization of

credits or deductions in respect of foreign tax so paid is subject to special rules and restrictions under the

Tax Act.

Any Fund that does not qualify, or that ceases to qualify, as a “mutual fund trust” under the Tax Act, will

in general terms be subject to a special tax under Part XII.2 of the Tax Act in respect of “designated

income” as defined for purposes of the Tax Act, and, in the case of a Fund that is a “registered

investment”, a special tax under Part X.2 of the Tax Act in respect of any non-prescribed investments for

purposes of the Tax Act.

Taxation of Unitholders

6.5 Each Unitholder will be required to include in computing his or her income for a

particular year the portion of the Net Income, and the taxable portion of Net Realized Capital Gains, of

the Fund(s) for the year that is paid or payable by the Fund(s) to the Unitholder and deducted by the

Fund(s), whether or not such amounts are distributed in cash or reinvested in additional Units.

Provided appropriate designations are made by the applicable Fund(s), any amount in excess of the Net

Income and the taxable portion of Net Realized Capital Gains of the Fund(s) that is distributed to a

Unitholder in a year is not included in computing the Unitholder’s income for the year. However, the

payment of any such excess amount (other than as proceeds of disposition of a Unit or a part thereof) will

reduce the adjusted cost base to the Unitholder of his or her Unit (except to the extent that such amount

relates to the non-taxable portion of the Net Realized Capital Gains of the Fund distributed to the

Unitholder). If the adjusted cost base of the Unit becomes “negative” as a result of this reduction or

otherwise, such “negative” amount will be deemed to be a capital gain to the Unitholder for the applicable

year for purposes of the Tax Act.

Provided appropriate designations are made by the applicable Fund(s), those portions of the income of the

Fund(s) payable to Unitholders that reflect taxable dividends received on shares of taxable Canadian

corporations, net taxable capital gains and income from foreign sources, if any, will effectively retain

their character in the hands of Unitholders. Distributed amounts that retain their character as taxable

dividends on shares of taxable Canadian corporations will be subject to the gross-up and tax credit rules

in the Tax Act applicable to individuals. To the extent a Fund designates income from a foreign source in

respect of a Unitholder, the Unitholder will, for purposes of computing any available foreign tax credit,

generally be entitled to treat the Unitholder’s share of foreign taxes paid by the Fund in respect of such

income as foreign taxes paid by the Unitholder. The availability of foreign tax credits in respect of foreign

source income designated to a Unitholder by a Fund is subject to detailed rules and restrictions under the

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Tax Act and subject to the Unitholder’s particular circumstances, and affected Unitholders should consult

their own tax advisors in this regard.

On a redemption or other disposition of Units, the Unitholder will realize a capital gain (or capital loss) to

the extent that the proceeds of disposition (whether paid in cash or by issuance of a promissory note as

described in this Offering Memorandum under “Redemption Attributes and Procedures”), less costs of

disposition, exceed (or are exceeded by, respectively) the Unitholder’s adjusted cost base of the Units.

The adjusted cost base of a Unit is subject to the averaging rules under the Tax Act, and is subject to all

relevant adjustments under the Tax Act (including the potential reductions described elsewhere above in

this summary). A Unitholder will also be required to include in computing income for the year the interest

received or receivable (depending on the method regularly followed by the Unitholder) on a promissory

note issued on redemption (if any).

One-half of a capital gain so realized (and the amount of any net taxable capital gains designated by the

Fund(s) in respect of a Unitholder) must be included in income as a taxable capital gain. One-half of a

capital loss is an allowable capital loss, which in general terms must be applied against taxable capital

gains realized in the year. Allowable capital losses in excess of taxable capital gains may be carried back

three years or forward indefinitely and applied against taxable capital gains realized in those earlier or

later years.

Unitholders are required to pay tax equal to the greater of tax determined under the ordinary rules and an

“alternative minimum tax”. Amounts distributed by the Fund(s) that are taxable dividends from taxable

Canadian corporations, capital gains realized by a Unitholder on redemption or other disposition, and

capital gains designated to a Unitholder by the Fund(s), may increase a Unitholder’s liability for the

alternative minimum tax.

The DOT provides that where Units of a class are changed for Units of another class of the same Fund

with substantially similar attributes, the change will be effected (unless the Manager decides otherwise)

by a redesignation and not by any form of disposition. In appropriate circumstances, such a redesignation

should not result in the realization of a capital gain or loss to a Unitholder in accordance with the

Manager’s understanding of the current policy of the CRA, although this result cannot be guaranteed. A

switch other than as so described will be treated in the same way as a redemption of Units as outlined

elsewhere above in this summary.

The issue or redemption of Units when the Net Asset Value Per Unit reflects realized or accrued income

or gains that have not been allocated to Unitholders can result in certain discrepancies. For example, a

Unitholder may become taxable on the Unitholder’s share of income and gains of a Fund that accrued

before the Units were acquired, notwithstanding that such amounts may have been reflected in the price

paid by the Unitholder for the Units.

For the purposes of the Tax Act, all relevant amounts must be determined in Canadian dollars at the

appropriate exchange rate.

ITEM 7

COMPENSATION PAID TO SELLERS AND FINDERS

The Manager does not charge a commission to Subscribers purchasing Units of the Funds.

Class “F” Unitholders may be subject to a short term redemption fee. See Item 5.5.

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The following is a summary of fees payable by Subscribers as well as fees and expenses payable by the

Funds and the Manager in respect of a subscription for each class of Units:

Commissions

Class “O” Units Class “O” Units are offered only to investors who are clients of the Manager. There

are no commissions or trailer fees payable in connection with sales of Class “O”

Units.

Class “F” Units Class “F” Units are not currently but may be offered in the future to investors who

are not clients of the Manager and who have accounts with investment dealers

which are Fee for Service Accounts. These investment dealers may also charge a

commission or other amounts to their clients in connection with sales of Class “F”

Units. This is a matter between the Subscriber and the Subscriber’s investment

dealer. If the Manager sells Class “F” Units directly to Class “F” Subscribers, no

commissions are payable to the Manager. There are no trailer fees payable in

respect of sales of Class “F” Units.

Class “A” Units Class “A” Units are offered solely to investors who are clients of WealthBar. There

are no commissions or trailer fees payable in connection with sales of Class “A”

Units. Clients of WealthBar have accounts with WealthBar that are Fee for Service

Accounts, once over a minimum threshold of assets under management.

Class “N” Units Class “N” Units are offered only to the Funds. There will be no commissions or

trailer fees payable in connection with issuances of Class “N” Units.

The foregoing fees and expenses vary from Fund to Fund. See the Fund Information Summaries.

Referral Fees

The Manager may pay a referral fee to one or more Persons for providing names and contact information

to the Manager of Subscribers for Units of one or more of the Funds (“Referral Fees”). These Subscribers

are considered by the Manager to be potential clients of the Manager. A Referral Fee, if paid, will be paid

under the terms of a written agreement between the Manager and the referring party. Before, or at the

time a referral service is provided, the Subscriber being referred will receive a notice from the Manager of

the terms of the referral agreement. The purpose of the notice is to ensure that the party being referred

understands:

the name of each party to the agreement;

the purpose and material terms of the agreement, including the nature of the services to be provided

by each party;

any conflicts of interest resulting from the relationship between the Manager and the referring entity

and from any other element of the referral arrangement;

how the Referral Fee is calculated and, if possible, the amount of the fee;

the category of registration of each party to the agreement with a description of the registration

activities that each party to the agreement can engage in and any limitations thereon;

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confirmation that registrable activities resulting from the referral arrangement will be performed by

the Manager; and

any other information that would be considered to be reasonably important to the Subscriber being

referred to evaluate the referral arrangement.

The Manager will give notice to any client affected by a change to the information set out above at least

30 days prior to the date on which the next referral fee payment is paid or received.

ITEM 8

RISK FACTORS

An investment in the Funds involves significant risks. In addition to the other information in this Offering Memorandum, the following risk factors should be given special consideration when evaluating an investment in any Units.

General

Investing in the Funds is only suitable for investors who understand and are capable of bearing the risks

of their investment. There is a risk that an investment in a Fund could be lost entirely or in part. There is

no assurance that any Fund will achieve its fundamental investment objectives, nor is past performance

any indication of future performance. There is no guarantee that an investment in the Units of any Fund

will earn a positive return in the short or long term.

Risks Applicable to All Funds

Market Risks

General market risk is the risk that investments made by the Funds may go down in value and in some

cases, abruptly. All investments are subject to general market risk which in turn is driven by macro-

economic factors, interest rate changes, political/governmental influence, natural disasters and other

shocks that may affect the investment market place in general. However, the Manager believes that its

investment strategies moderate this risk through careful selection of controlled investment techniques.

The Manager’s investment strategies may, however, utilize investment techniques and instruments such

as futures and options transactions, margin transactions and short sales which practices can, in certain

circumstances, increase losses. See also “Short-Selling” and “Derivatives Risk” below.

Liquidity Risk

Some of the securities in which certain Funds may invest may be thinly traded or have no trading market

and/or be restricted as to their transferability. Restricted securities have contractual or legal restrictions

applicable to a Subscriber’s ability to resell them, including “private placement” securities that a Fund

may buy directly from an issuer. It is possible that the Funds may not be able to sell or repurchase such

positions in unfavourable markets without having an adverse affect on the Funds, and/or the ability of the

Funds to effect redemptions of Units of the Funds.

Margin Risk

The NWM Canadian Tactical High Income Fund and NWM U.S. Tactical High Income Fund are

permitted to enter into arrangements with the Custodian pursuant to which one or more margin accounts

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may be opened for the purpose of trading in securities on margin – see the Fund Information Summaries.

Margin accounts permit the borrowing of monies to trade in securities. The amount of such borrowing is

limited to 30% of the total Net Asset Value of the Funds that trade in securities through margin accounts.

While the use of margin can enhance returns, it can also lead to losses that exceed the assets held in the

margin accounts if the value of the assets in those accounts were to fall below the margin limit, as the

amount of margin, or borrowing, must be repaid in any event.

Marketability of Units

There is currently no market through which the Units may be sold nor is one expected to develop.

Redemptions are permitted only as described herein and there are circumstances in which a Fund may

suspend redemptions. Also, Units are only transferable in limited circumstances with the approval of the

Manager.

Reliance on the Manager and Sub Advisors

The Funds will be dependent on the knowledge and expertise of the Manager for investment advisory and

portfolio management services. There is no certainty that the individuals who are currently officers,

directors or advising partners of the Manager will remain so for the foreseeable future. Further, the

Manager may retain various Sub Advisors to manage the investment portfolio of one or more of the

Funds, on a discretionary basis, subject to the supervision of the Manager. Each of these Sub Advisors

has, or may have, substantial discretionary authority to identify, structure, execute, administer, monitor

and liquidate investments of the applicable Fund, consistent with its fundamental investment objective. In

exercising its authority, a Sub Advisor has no responsibility to consult with any Unitholder. Substantially

all other decisions with respect to the management of a Fund’s affairs are made exclusively by the

Manager (although it may also delegate administrative responsibilities from time to time). Unitholders

have no right or power to take part in the management of a Fund. Accordingly, no one should purchase

Units unless they are willing to entrust all aspects of the management and all investment decisions of a

Fund to the Manager, applicable Sub Advisors and their officers, employees and agents from time to time.

Further, both the Manager and the Sub Advisors may direct that part of the assets of the Funds be

invested in Third Party Investment Funds. While investments in Third Party Investment Funds are subject

to careful selection, neither the Manager nor any Sub Advisor has control over how Third Party

Investment Funds conduct their business.

Operating History

Certain Funds have a limited operating history upon which to evaluate past performance.

Short Selling

Either directly or as part of an investment program being undertaken by a Sub Advisor, a Fund may

engage in the short selling of a security. While generally undertaken as part of a broader hedging strategy,

there are risks associated with short selling. Selling a security short involves borrowing a security from an

existing holder and selling the security in the market with a promise to return it at a later date. A short sale

will result in a gain if the price of the securities sold short declines between the date of the short sale and

the date on which securities are purchased to replace those borrowed. Should the security increase in

value during the shorting period, losses will be incurred by the Funds. There is in theory no upper limit as

to how high the price of a security may go which therefore exposes the portfolio to a theoretically

unlimited risk of loss. There may be investors and investment managers pursuing short selling strategies

who are seeking to borrow the same securities. Therefore, it may not be possible at times for the Funds to

borrow the particular securities it wishes to sell short. Another risk involved in shorting is the loss of the

securities borrowed; a situation where the lender of the security requests its return. In cases like this, the

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Funds must either find securities to replace those borrowed or step into the market and repurchase the

securities. Depending on the liquidity of the security shorted, if there are insufficient securities available

at current market prices, the Funds may have to purchase securities in the open market at a

disadvantageous time in order to cover the short sale, possibly at prices in excess of the proceeds received

in originally selling the securities short.

Derivatives Risk

Derivatives for hedging and other investment purposes will be used by the Funds only to the extent that

the Manager considers appropriate to help achieve the fundamental investment objective of the Funds

which trade derivatives. Hedging involves special risks including the possible default by the other party to

the transaction, illiquidity and, to the extent the Manager’s assessment of certain market movements is

incorrect, the risk that the use of hedging could result in losses greater than if hedging had not been used.

The use of currency hedging could result in the Funds incurring losses as a result of the imposition of

exchange controls, suspension of settlements, or the inability to deliver or receipt a specified currency.

Hedging against changes in the value of currency does not eliminate fluctuations in the prices of portfolio

securities and does not prevent losses if the prices of such securities decline. Hedging may also limit the

opportunity for gain if the value of the hedged currency should rise. Moreover, it may not be possible for

the Funds to enter into transactions which hedge against generally anticipated changes in currencies.

The use of options entails certain special risks. Call options will not protect the Funds from declines in the

value of the underlying security and may limit the Funds’ potential to realize a gain on the value of the

underlying security. The Funds may also forego potential returns resulting from any price appreciation of

the security underlying the option above the exercise price in favour of the certainty of receiving the

option premium. Purchasing call options may expose the Funds to losses if the value of the underlying

security has decreased when compared to the transaction price at which the Funds must purchase the

security. Selling put options may expose the Funds to losses if the value of the underlying security has

decreased when compared to the transaction price that the Funds must purchase the security. Purchasing

put options on securities exposes the Funds to losses if the value of the underlying security has increased

in value when compared to the transaction price at which the Funds may sell the security. Options

markets could be illiquid in some circumstances and certain over-the counter options could have no

markets. There can be no assurance that a market will exist to permit the Funds to realize their profits or

limit their losses by closing out certain positions. If the Funds are unable to close out a position, they will

be unable to realize its profits or limit its losses until such time as the option becomes exercisable or

expires or the forward contract terminates, as the case may be. The ability of the Funds to close out a

position may be affected by exchange imposed daily trading limits on options. The change in volatility of

an option may change the value associated with the option and the proceeds that the Funds may receive

from the sale of that option.

Smaller Capitalization Companies

The Funds may invest in the equity securities of smaller and less well established companies. The

earnings and share prices of such companies tend to be more volatile and the markets for the shares tend

to be less liquid, with resulting higher risk of loss, when compared to investments in larger and more

established companies.

Interest Rate Risk

Funds that invest in fixed income securities are subject to interest rate risk as the value of these

investments may change as the level of interest rates change. When interest rates decline, the value of

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fixed income securities tends to rise and vice versa. The Manager and/or its Sub Advisor may or may not

hedge the interest rate risk inherent in interest sensitive investments.

Currency Risk

Certain Funds invest in securities denominated in currencies other than the Canadian dollar. Changes in

foreign currency exchange rates will affect the value of these securities as well as any revenue stream

derived from the investments regardless of whether or not the price of the securities or the revenue

streams are changing in terms of the investments’ local currency. When the Canadian dollar rises in value,

investments denominated in foreign currencies will decline in terms of Canadian dollars and vice versa

since the Funds will compute and distribute income in Canadian dollars. The Manager and/or its Sub

Advisors may or may not hedge the currency risk inherent in investments denominated in foreign

currencies. Further, hedging currency risk may not provide adequate protection from such risk.

Credit Risk

Funds that invest in bonds or mortgages bear the risk that the borrower may not be able to pay interest or

principal when due. This is known as credit risk. The level of credit risk is dependent on a number of

factors including the credit worthiness of the borrower and the terms and conditions of the bond or

mortgage including the priority of the debt, security held (if any) and other terms and conditions.

Equity Risk

The value of equity securities will rise and fall with the changing financial health of their issuers. The

value of equity securities is also affected by the general health of the overall economy in the region or

regions where the issuers operate. Market sentiment may also negatively affect the value of equities

issued by otherwise healthy issuers. A Fund may select equity securities that underperform the market or

underperform relative to competing investment choices.

Foreign Markets Risk

While securities issued in foreign countries may provide significant diversification benefits over a

portfolio solely concentrated in Canada and while they may be relatively uncorrelated to Canadian

securities, they involve risks not found in domestic investments. The value of foreign investments may

fluctuate because of issues unique to the countries in question. These issues may include regional

economic influences, and foreign government actions including taxation, nationalization, creation of trade

barriers, income repatriation limits, foreign exchange limitations, diplomatic problems and other things

that could affect the value of foreign investments.

Emerging Markets Risk

Beyond the risks associated with foreign markets are the risks involved in emerging markets. An

emerging market is defined by the World Bank, or United Nations as emerging or which is included in the

MSCI Emerging Markets Index. Because these countries are less developed, their economies are more

volatile and are subject to hyper-inflation, currency devaluation, as well as weaker legal and/or regulatory

infrastructures. Consequently, securities issued by entities in these countries can be more volatile.

Developing countries will have smaller, less sophisticated trading markets with lower volumes, making

them less liquid. Prices for securities in emerging markets may fluctuate sharply because of these

considerations as well as general market perceptions of risk in dealing with the emerging markets.

Valuation models used in more mature markets may not apply to the securities of emerging markets.

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Index Risk

From time to time, some investments made by a Fund may be more passive in nature and designed to

track a particular index, such as a stock or bond index. The objective in these cases would be for the

investment to track the value of the underlying index. However, this may not always be possible since the

investments used to track a given index may not be able to hold the same securities and hold them in the

same proportion as the index. Therefore, the performance of an index investment may deviate from the

underlying index it is designed to track.

Net Asset Value, Estimated Values and the Valuation of the Funds’ Investments

While each Fund is independently audited by the Auditor on an annual basis, the periodic valuation of a

Fund’s investments may involve uncertainties and judgments that could have a material affect on the

determination of each Fund’s NAV. While NAV calculations will be made in good faith and in

accordance with the DOT and applicable securities regulation, independent pricing information regarding

the Funds’ investments may not be available at all times, or at any time. As well, all or a portion of the

calculation of the NAV of a Fund could be based on estimated values provided by underlying funds

which may be illiquid and/or which may trade infrequently, if at all. These estimated values may in turn,

be based on values attributed to the underlying assets held by such funds, which themselves may be

illiquid and/or which may trade infrequently, if at all.

Since certain Funds by their very nature may be extremely difficult to value accurately, the NAV and Net

Asset Value Per Unit of such Funds may be understated or overstated as the case may be. Consequently,

there is a risk that a Unitholder who redeems all or part of its Units while a Fund in question holds such

investments will receive less than might otherwise be paid if the exact Net Asset Value Per Unit could be

calculated. Similarly, there is a risk that a redeeming Unitholder may be overpaid. Furthermore, there is a

risk that an investment in a Fund by a new Unitholder (or a new investment by an existing Unitholder)

could dilute the value of such investments for the other Unitholders if the actual Net Asset Value Per Unit

is not definitively calculable. Further, there is a risk that new Unitholders (or an existing Unitholder

making a new investment) might pay more for the purchase of Units than it might otherwise pay.

Lower-Rated Bond Risk

A Fund may invest in lower-rated or unrated bonds as part of its investment strategy. Such bonds have a

higher risk of default than do more highly rated bonds. Consequently, the issuers of these bonds may not

be able to pay interest and/or principal when required. As well, the prices of lower rated bonds may be

more sensitive to the changing fortunes of the issuers and the economy in general and therefore may be

more volatile than more highly rated bonds. For the same reasons, it may be difficult or impossible to sell

lower rated bonds.

Administration and Management Fees

Because the Administration Fees and Management Fees paid out of the Funds’ assets (and charged to

Unitholders based on the Class of Units they hold) are calculated on a basis which includes unrealized

appreciation or losses in the value of the Funds’ assets, the fees may be greater or less than they would be

if such compensation were based solely on realized appreciation or loss.

Losses and Effects of Substantial Redemptions

Each Fund may at any time incur losses, resulting in substantial redemptions by Unitholders. Substantial

redemptions of Units could require a Fund to liquidate positions more rapidly than otherwise desirable to

raise the necessary cash to fund redemptions and achieve a market position appropriately reflecting a

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smaller asset base. There is a risk that if a Fund’s assets become depleted, the Fund’s portfolio could

become sufficiently restricted to make it difficult to achieve the Fund’s fundamental investment

objectives. Such factors could adversely affect the value of the Units redeemed and of the Units

remaining outstanding.

Not Public Mutual Funds

The Funds are not reporting issuer mutual funds for securities laws purposes and are not subject to the

restrictions placed on reporting issuer mutual funds to ensure diversification and liquidity of the Funds’

portfolios, as well as a more stringent level of public disclosure of performance. As a result, some of the

protections provided to investors in reporting issuer mutual funds under such laws are not available to

Unitholders.

Lack of Insurance

The assets of the Funds are not insured by any government or private insurer except to the extent portions

may be deposited in bank accounts insured by a government agency such as the Canada Deposit

Insurance Corporation or with brokers insured by the Canadian Investor Protection Fund and such

deposits and securities are subject to such insurance coverage (which, in any event, is limited in amount).

Therefore, in the event of the insolvency of a depository or custodian, a Fund may be unable to recover

some or all of its funds or the value of its securities so deposited.

Changes in Investment Strategy

The Manager may change a Fund’s investment strategies and restrictions, without prior approval of

Unitholders, to adapt to changing circumstances and to help achieve a Fund’s fundamental investment

objective; however, a change to a Fund’s fundamental investment objective itself requires prior

Unitholder approval.

Distribution and Allocations

If the Funds have taxable income or taxable capital gains for Canadian federal income tax purposes for a

fiscal year, such income will be allocated to their Unitholders in accordance with the provisions of the

DOT and will be required to be included in computing their income for tax purposes, irrespective of the

fact that cash may not have been distributed to the Unitholders. Since Units may in certain circumstances

be acquired or redeemed more frequently than annually and allocations of income and losses of the Funds

to Unitholders will only be made on an annual basis, such allocations may not correspond to the

economic gains and losses which the Unitholders may experience. See Item 6.

Unitholders Not Entitled to Participate in Management and Liability of Unitholders

The Manager acts as manager of the Funds. Unitholders as such may not participate in the management or

control of the Funds. The DOT provides, however, that certain actions may be taken but only if approved

by majority vote of the Unitholders. The DOT provides that no Unitholder will be subject to any personal

liability for satisfaction of any obligation in respect of or a claim arising out of or in connection with any

contract or obligation of the Funds. The DOT also provides that the Trustee must indemnify and hold

each Unitholder harmless out of the assets of the Funds from and against any and all claims and liabilities

to which such Unitholder may become subject, by reason of being or having been a Unitholder and must

reimburse such Unitholder for all legal and other expenses reasonably incurred in connection with any

such claim or liability. Despite the foregoing, there can be no absolute certainty that a claim will not be

made against a Unitholder for liabilities which cannot be satisfied out of the assets of the Funds. The law

relating to investment trusts such as the Funds is not certain. Consequently, there is a remote risk that a

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Unitholder could be held personally liable notwithstanding the foregoing statement in the DOT, for

obligations of the Funds (to the extent that claims are not satisfied by the assets of the Funds). The risk to

Unitholders is based on jurisprudence which has held that beneficiaries of a business trust who are given

rights to exert control over the assets of the trust will be considered to be acting as principals through the

trustee as their agent.

Conflicts of Interest

The Funds are subject to several conflicts of interest. For example, the Manager and its directors and

officers are engaged in a variety of management, advisory and other portfolio management and financial

planning activities of the Manager that may not involve an investment in any Fund. The Manager as well

as employees, directors and officers of the Manager may invest their own money in the Funds and may,

from time to time, have substantial holdings in a Fund. The Manager’s investment decisions for each of

the Funds will be made independently of those made for clients of the Manager who do not own Units of

the Funds and independently of its own investments. However, on occasion, the Manager may make the

same investment for a Fund and one or more of its clients who do not own Units of the Funds. Where a

Fund and one or more of the other clients of the Manager are engaged in the purchase or sale of the same

security, the transaction will be effected on an equitable basis. The Manager will allocate opportunities to

make and dispose of investments equitably among clients with similar investment objectives having

regard to whether the security is currently held in any of the relevant investment portfolios, the relative

size and rate of growth of a Fund and the other funds under common management and such other factors

as the Manager considers relevant in the circumstances.

The Funds do not have an independent review committee or any other form of independent oversight and

will rely exclusively upon the Manager to manage their business and to provide managerial skill. The

directors, officers, employees and shareholders of the Manager may have a conflict of interest in

allocating their time between the other business of the Manager and that of the Funds, and other

businesses or projects in which they may become involved. The directors and officers of the Manager

have, however, agreed to devote as much time to the Funds as is required for their effective management.

The Manager will receive an annual fee paid directly by the Unitholders who are clients of the Manager

with Fee For Services Accounts in accordance with account agreements entered into between those

Unitholders and the Manager. Except with respect to Class “N” Units, each Fund also pays Management

Fees to the Manager as set out in the Fund Information Summaries (ultimately borne by the holders of the

different classes of Units as disclosed elsewhere in this Offering Memorandum). The Manager therefore

receives Management Fees from Funds that the Manager recommends to Advisory Clients and from

Funds that the Manager purchases on behalf of Managed Clients. In recommending or purchasing

securities to or on behalf of all of its clients, the Manager acts in good faith in accordance with the

Manager’s obligations to them as set out in the applicable account agreements.

Subject to its fiduciary duties and the terms of the Management Agreement, the Manager has sole

discretion with respect to the terms and timing of investments of the Funds. While such investments will

be consistent with the respective fundamental investment objectives and policies of the Funds, there could

be an inherent conflict of interest as reallocation of client portfolios to the Funds could result in a benefit

to the Manager.

The Manager may cause one or more of the NWM Funds from time to time, and subject to applicable

law, to purchase securities of a Related Party. This would allow, for example, one NWM Fund (managed

by the Manager) to purchase Units of another NWM Fund (also managed by the Manager). It would also

allow a NWM Fund to purchase units of one or more limited partnerships of which a director or officer of

the Manager is a director or officer of the general partner(s) or the manager of such limited partnerships.

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Investments by one or more of the NWM Funds in Related Parties or in other Affiliated Entities may

result in all or a portion of any Affiliate Fees charged by such entities ultimately being received by related

persons. The Manager will ensure that any investment by a NWM Fund in an Affiliated Entity does not

result in a duplication of management fees or other fees ultimately received by related persons. In the

case where an NWM Fund invests in another NWM Fund, the NWM Fund making the investment will

subscribe for Class “N” Units of the other NWM Fund, which do not have a management fee associated

with them.

Where an NWM Fund invests in an Affiliated Entity that does not have Class “N” Units or some other

mechanism for backing out Affiliate Fees, the NWM Fund will deduct the amount of the investment in

the Affiliated Entity from the NWM Fund’s AUM before calculating the Management Fee for the

applicable NWM Fund. However, in this case, related persons may indirectly benefit from a NWM

Fund’s investment in an Affiliated Entity by virtue of the receipt by related persons of all or a portion of

Affiliate Fees, whether by way of management fees, dividends or otherwise. It is possible that even

though there is no duplication of management fees in respect of an investment by a NWM Fund in an

Affiliated Entity, related persons may ultimately receive more in Affiliate Fees from the Affiliated Entity

than would have been received from the NWM Fund if the NWM Fund had made an investment in a

security other than one issued by the Affiliated Entity.

As an example of an investment by an NWM Fund in an Affiliated Entity, the NWM Real Estate Fund

invests in SPIRE Real Estate Limited Partnership, SPIRE US Limited Partnership and SPIRE Value Add

Limited Partnership (the “SPIRE Partnerships”) in order to broaden its real estate investment options.

The SPIRE Partnerships provide exposure to Canadian and U.S. commercial real estate properties.

Another example is the NWM Core Portfolio Fund, which invests in Class “N” Units of other NWM

Funds, as well as make investments in the SPIRE Partnerships and other NWM sponsored limited

partnerships, including the NWM Private Equity Limited Partnership (an NWM sponsored private equity

fund investing in private companies and other private equity vehicles).

The real estate asset manager of the SPIRE Partnerships is wholly owned by the Manager and all

activities of the real estate asset manager of the SPIRE Partnerships are conducted by employees of the

Manager. In addition, the Manager wholly owns the general partner of the SPIRE Partnerships and the

general partner of the NWM Private Equity Limited Partnership and therefore related persons may receive

management or other fees and income distributions and/or dividends because of these ownership interests.

Certain related persons, through affiliated companies, may have a services contract with the manager

ofthe SPIRE Partnerships and, as a consequence, may indirectly receive fees as a result.

Account agreements entered into between the Manager and its Managed Clients provide blanket consent

to the Manager to cause one or more of the NWM Funds to purchase securities of one or more Related

Parties and/or make investments in Affiliated Entities resulting in the payment of Affiliate Fees to related

persons. Similarly, subscription agreements entered into by Subscribers who are not Managed Clients

also provide such blanket consent. The Manager will at all times comply with the requirement under the

Management Agreement for the Manager to exercise its powers and discharge its duties honestly, in good

faith and with a view to the best interests of the Funds and exercise the degree of care, diligence and skill

that a reasonably prudent person would exercise in comparable circumstances.

See also Item 3.5, “Conflicts of Interest”, Item 3.6, “Related Party Transactions – Notice and Consent”

and Item 3.7, “Class “N” Units”.

Legal, Tax and Regulatory Risks

Complying with regulations, laws and policies of various regulatory agencies and/or the effect of

potential legal actions can be costly, and therefore could adversely impact the value of the Units.

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If a Fund does not constitute a “mutual fund trust” or “registered investment” at a relevant time, Fund

Units will not be qualified investments for Deferred Income Plans for purposes of the Tax Act. In

addition, if a Fund’s relevant status as a “registered investment” and/or “mutual fund trust” (as applicable)

for the purposes of the Tax Act is lost, Fund Units would be expected to lose eligibility for investment by

Deferred Income Plans, with adverse results under the Tax Act, not described herein. Where this Offering

Memorandum has indicated that Funds have met the relevant requirements for eligibility for investment

by Deferred Income Plans as of the date of this Offering Memorandum or that such requirements are

expected to be met in the near future or on an ongoing basis, the Manager anticipates that those

requirements will be met as so indicated, although this result cannot be guaranteed.

Additional Risks Applicable to the Mortgage Funds

General Economic Conditions and Property Location

Investments in mortgages and mortgage securities are affected by general economic conditions, local real

estate markets, demand for housing or commercial property, fluctuation in occupancy rates, operating

expenses and various other factors. The location and age of a property, its construction quality and access

to transportation generally impacts on its potential to generate sustainable income during its economic

life. The characteristics of an area in which a property is located can change over time thereby adversely

affecting the property’s financial performance.

Liquidity

Mortgages themselves are relatively illiquid, which limits the Mortgage Funds’ ability to alter their

portfolios promptly in response to changing economic or investment conditions. As a hedge against this

inherent illiquidity, the Manager diversifies the number and nature of mortgage investment holdings

within the Mortgage Funds.

Uncertainty of Security

All investments in mortgage loans and related mortgage securities will be secured by mortgages on real

estate. While independent appraisals may be obtained by the Mortgage Funds (and/or Sub Advisors to the

Mortgage Funds as well as managers operating mortgage investment issuers invested in by those Funds)

before any mortgage investments are made, the appraised values provided therein may not necessarily

reflect the market value of the underlying real property, which will fluctuate. In addition, appraised values

reported in independent appraisals are subject to certain conditions, including the completion,

rehabilitation or lease-up improvements on the real property providing security for the investment. There

can be no guarantee that these conditions will be satisfied and if, and to the extent, they are not satisfied,

the appraised value may not be achieved. Even if such conditions are satisfied, the appraised value may

not necessarily reflect the market value of the real property at the time the conditions are satisfied.

Uncertainty of Property Income

Some mortgagors rely upon lease payments from tenants to pay for a property’s maintenance and other

operating expenses, to fund capital improvements and to service debt. There is no guarantee that tenants

will renew leases upon expiration or, that they will continue operations throughout the terms of their

leases. Accordingly, repayment of a mortgage loan may be affected by the expiration or termination of

leases and the ability of the mortgagors to renew those leases with the existing occupants or to re-lease the

space on economically favourable terms. No assurance can be given that leases that expire will be

renewed, or that the space will be leased in a timely manner at comparable rents and terms. If a significant

portion of a mortgaged property is leased to a single tenant, the consequences of the failure of the

mortgagor to re-lease, or in the event that such tenant vacates the space or fails to make payments during

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the lease term, will be more pronounced than if such mortgaged property were leased to many tenants.

Commercial real estate is subject to the usual competitive forces of supply, demand and availability of

substitutes (i.e., the proximity and availability of competing properties to the mortgaged properties).

These competitive forces may impact on the overall financial performance of the property including

occupancy levels and potential rental rates. As a result, increased competition could adversely affect

income from commercial properties thereby adversely affecting a mortgagor’s ability to pay interest and

principal due on the mortgage loan in a timely manner.

Mortgage Default

The Mortgage Funds’ income and funds available for distribution to Unitholders will be adversely

affected if a significant number of mortgagors were to default on their obligations or if the Mortgage

Funds are unable to invest in mortgages on economically favourable terms. On default by a mortgagor,

the Mortgage Funds (or an investment fund invested in by the Mortgage Funds) may experience delays in

enforcing its rights as lender and may incur substantial costs in protecting its investment.

Reliance on Property Managers

The financial performance of a property is also dependent on the performance, capability and viability of

its property manager. Property managers observe and assess market conditions and make

recommendations to owners/borrowers regarding capital improvements, ongoing maintenance and

changes to rental rate structures. There can be no assurance regarding the performance of any existing or

future property manager of a mortgaged property, or that any such property manager will at all times

continue to fulfill its management responsibilities.

No Insurance

Mortgage investments will not be insured or guaranteed by any government or governmental entity,

underwriter or any other person, except in circumstances where recourse to the mortgagor is negotiated as

part of a particular underwriting. In these cases, the ability of any mortgagor (or guarantor) to satisfy its

recourse obligations will be limited by the extent of their respective available assets.

Uncertainty of NAV Calculations

The Mortgage Funds’ NAV will vary in accordance with the value of the mortgages and mortgage related

investments held by the respective Mortgage Funds. There is no formal market through which mortgages

can be sold and, accordingly, there is no assurance that the mortgages invested in by the Mortgage Funds

could be sold for the values used to calculate the respective Mortgage Funds’ NAV. See 5.3 for a

discussion on how mortgage investments are valued.

Interest Rates Fluctuation

Interest rates being charged for mortgages reflect the general level of interest rates and, as interest rates

fluctuate, the Manager expects that the aggregate yield on mortgage investments will also change.

THE FOREGOING STATEMENT OF RISKS DOES NOT PURPORT TO BE A COMPLETE EXPLANATION OF ALL THE RISKS INVOLVED IN PURCHASING THE UNITS. POTENTIAL SUBSCRIBERS SHOULD READ THIS ENTIRE OFFERING MEMORANDUM AND ARE STRONGLY URGED TO CONSULT WITH THEIR LEGAL, TAX AND FINANCIAL ADVISERS, FOR ADVICE ON THE RISKS INVOLVED BEFORE MAKING A DECISION TO INVEST IN THE UNITS.

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ITEM 9

REPORTING OBLIGATIONS

The Manager will either provide or otherwise make available to each Unitholder for each Fund in which a

Unitholder holds Units annual audited financial statements and an annual statement for Canadian income

tax purposes, reflecting the Unitholder’s proportionate share of Net Asset Value and the Net Asset Value

Per Unit as at the applicable fiscal year end date, and reporting on the distributions of Net Income, Net

Realized Capital Gains and other relevant information required to assist Unitholders in the preparation of

their tax returns.

The Funds do not currently intend to become reporting issuers and therefore obligations of the Funds to

publicly disclose documents are limited. Except as required by the DOT and the Tax Act, neither the Trustee nor the Manager is required to send to Unitholders any documents on an annual or ongoing basis.

ITEM 10

RESALE RESTRICTIONS

General Statement

10.1 The Units will be subject to a number of resale restrictions including a restriction on

trading. These restrictions include those imposed under applicable securities laws, and under the DOT,

which states that the Units are not transferable except with the approval of the Manager. Until the

restriction on trading expires, you will not be able to trade Units unless you comply with an exemption

from the prospectus and registration requirements under applicable securities legislation.

Restricted Period

10.2 Unless permitted under securities legislation, you cannot trade Units of a Fund before the

date that is 4 months and a day after the date that Fund becomes a reporting issuer in any Province or

Territory of Canada. The Funds have no intention or plan to proceed with becoming reporting issuers.

ITEM 11

PURCHASERS’ RIGHTS

If you purchase these securities you will have certain rights, some of which are described below. For

information about your rights you should consult a lawyer.

Securities legislation in certain of the Provinces of Canada requires Subscribers to be provided with a

remedy for rescission or damages, or both, in addition to any other right that they may have at law, where

an offering memorandum and any amendment to it contains a misrepresentation. These rights are

available whether or not the misrepresentation was relied upon. However there are various defences

available to Persons who may be sued by a Subscriber. In particular, they have a defence if the Subscriber

knew of the misrepresentation when the Subscriber purchased Units. These remedies must be exercised

by the Subscriber within strict time limits. Subscribers should refer to the provisions of applicable

securities legislation for the complete text of these rights.

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In their client account agreements, the Manager, on behalf of the Funds, has granted the applicable contractual and statutory rights summarized below to clients of the Manager who may subscribe for Units in respect of the applicable Province of residence of such clients, no matter which exemption from the prospectus requirements the Manager will rely on in selling Units to those clients. These client account agreements are in the process of being replaced with updated client account agreements which do not grant these rights.

The following summaries are subject to the express provisions of the securities legislation of each offering jurisdiction and the regulations, rules and policy statements thereunder and reference is made thereto for the complete text of such provisions. Such provisions may contain limitations and statutory defences on which the Funds and other applicable parties may rely. Subscribers should refer to those provisions for the particulars of these rights or consult with a legal adviser.

Any rights of action described below are in addition to, and without derogation from, any right or remedy

available at law to the purchaser and are subject to the defences contained in those laws. These remedies

must be exercised by the purchaser within the time limits set out below.

Two Day Cancellation Right for All Subscribers

You can cancel your agreement to purchase these securities. To do so, you must send a notice to the

Manager by midnight on the second Business Day after (i) you sign the Subscription Agreement to buy

the securities, in the case of Advisory Clients and Class “F” Subscribers, (ii) WealthBar places an order

for the purchase of Units on your behalf, in the case of Class “A” Subscribers, and (iii) the Manager

places an order for the purchase of Units on your behalf, in the case of Managed Clients.

Rights for Subscribers in British Columbia

Securities legislation in British Columbia provides that every Subscriber pursuant to this Offering

Memorandum shall have, in addition to any other rights they may have at law, a right of action for

damages or rescission, against the issuer, every director of the issuer and every person who signs the

Offering Memorandum or any amendment thereto, in the event that the Offering Memorandum or any

amendment thereto contains a misrepresentation. However, such rights must be exercised within

prescribed time limits. Subscribers should refer to the applicable provisions of the British Columbia

securities legislation for particulars of those rights or consult with a lawyer. For these purposes, a

“misrepresentation” means an untrue statement of a material fact or an omission to state a material fact

that is required to be stated, or necessary to prevent a statement that is made from being false or

misleading in the circumstances in which it was made. A “material fact” means any fact that would

reasonably be expected to have a significant effect on the market price or the value of the Units.

In British Columbia, no action shall be commenced to enforce a statutory right of action unless the right is

exercised: (a) in the case of rescission, not later than 180 days from the day of the transaction that gave

rise to the cause of action, or (b) in the case of damages, not later than (i) 180 days from the day the

Subscriber first had knowledge of the facts giving rise to the cause of action, or (ii) three years from the

day of the transaction that gave rise to the cause of action, whichever is earlier.

Reference is made to the Securities Act (British Columbia) for the complete text of the provisions under

which these rights are conferred and this summary is subject to the express provisions of the Securities

Act (British Columbia).

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Rights for Subscribers in New Brunswick

If this Offering Memorandum, together with any amendments thereto, is delivered to a Subscriber, and

this Offering Memorandum contains a “misrepresentation” which was a misrepresentation at the time of

the purchase of the Units, the Subscriber will have a right of action against the issuer for damages, or

while still the owner of the Units, for rescission, in which case, if the Subscriber elects to exercise the

right of rescission, the Subscriber will have no right of action for damages. However, such rights must be

exercised within prescribed time limits.

Subscribers should refer to the applicable provisions of the New Brunswick securities legislation for

particulars of those rights or consult with a lawyer. For these purposes, a “misrepresentation” means an

untrue statement of a material fact or an omission to state a material fact that is necessary to make a

statement not misleading in the light of the circumstances in which it was made. A “material fact” means

any fact that would reasonably be expected to have a significant effect on the market price or the value of

the Units.

The issuer will not be liable if it proves that the Subscriber purchased the securities with knowledge of the

misrepresentation. In the case of an action for damages, the issuer will not be liable for all or any portion

of such damages that it proves do not represent the depreciation in value of the securities as a result of the

misrepresentation relied upon and in no case will the amount recoverable in any action exceed the price at

which the securities were sold to the Subscriber.

No action may be commenced to enforce any of the foregoing rights: (a) in the case of rescission, more

than 180 days after the date of the transaction that gave rise to the cause of action; or (b) in the case of

any other action, other than an action for rescission, the earlier of (i) one year after the Subscriber first

had knowledge of the facts giving rise to the cause of action, and (ii) six years after the date of the

transaction that gave rise to the cause of action.

The right of action for rescission or damages is in addition to and without derogation from any other right

the Subscriber may have at law.

Rights for Subscribers in Nova Scotia

Section 65 of the Securities Act (Nova Scotia) (the “NS Act”) requires the issuer to notify Subscribers

purchasing Units pursuant to this Offering Memorandum in the Province of Nova Scotia that they may

have the following rights of rescission or damages.

In the event that the Offering Memorandum, together with any amendments thereto, or any “advertising

or sales literature” (as defined in the NS Act) delivered to a Subscriber, contains any untrue statement of

material fact or omits to state a material fact necessary in order to make any statement not misleading in

light of circumstances in which it was made (i.e., a misrepresentation) and it is a misrepresentation on the

date of investment, a Subscriber to whom the Offering Memorandum and any amendment thereto, or any

“advertising or sales literature” (as defined in the NS Act), has been delivered on behalf of the issuer and

who purchases Units shall be deemed to have relied on such misrepresentation and such Subscriber shall

have a right of action against the issuer for damages, and, subject to certain additional defenses, against

directors of the issuer and persons who have signed the Offering Memorandum, or so long as such

Subscriber is the owner of such Units at his, her or its election, for rescission, in which case he, she or it

shall have no right of action for damages against the issuer, directors of the issuer or persons who have

signed the Offering Memorandum.

For Subscribers, this right is exercisable if an action is commenced to enforce this right within 120 days

after the date on which payment was made for the Units by the Subscribers or after the date on which the

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initial payment for the Units was made by the Subscriber where payments subsequent to the initial

payment are made by the Subscriber pursuant to a contractual commitment assumed prior to, or

concurrently with, the initial payment.

These rights are intended to correspond with the rights against a seller of securities provided in

Section 138 of the NS Act and the Rules thereto and are subject to defences contained therein such that:

(a) the issuer will not be held liable if the Subscriber purchased the Units with knowledge of

the misrepresentation;

(b) in an action for damages, the issuer will not be liable for all or any portion of such

damages that it proves do not represent the depreciation in value of the Units as a result of the

misrepresentation relied upon; and

(c) in no case will the amount recoverable by a Subscriber exceed the price at which the

Units were sold to the Subscriber.

In addition, no person or company other than the issuer is liable if the person or company proves that:

(a) the Offering Memorandum or the amendment to the Offering Memorandum was sent or

delivered to the purchaser without the person’s or company’s knowledge or consent and that, on

becoming aware of its delivery, the person or company gave reasonable general notice that it was

delivered without the person’s or company’s knowledge or consent;

(b) after delivery of the Offering Memorandum or the amendment to the Offering

Memorandum and before the purchase of the Units by the Subscriber, on becoming aware of any

misrepresentation in the Offering Memorandum, or amendment to the Offering Memorandum,

the person or company withdrew the person’s or company’s consent to the Offering

Memorandum, or amendment to the Offering Memorandum, and gave reasonable general notice

of the withdrawal and the reason for it; or

(c) with respect to any part of the Offering Memorandum or amendment to the Offering

Memorandum purporting (i) to be made on the authority of an expert, or (ii) to be a copy of, or an

extract from, a report, an opinion or a statement of an expert, the person or company had no

reasonable grounds to believe and did not believe that (iii) there had been a misrepresentation, or

(iv) the relevant part of the Offering Memorandum or amendment to the Offering Memorandum

(A) did not fairly represent the report, opinion or statement of the expert, or (B) was not a fair

copy of, or an extract from, the report, opinion or statement of the expert.

Furthermore no person or company other than the issuer is liable with respect to any part of the Offering

Memorandum or amendment to the Offering Memorandum not purporting (a) to be made on the authority

of an expert; or (b) to be a copy of, or an extract from, a report, opinion or statement of an expert, unless

the person or company (c) failed to conduct a reasonable investigation to provide reasonable grounds for a

belief that there had been no misrepresentation; or (d) believed that there had been a misrepresentation.

If a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into,

the Offering Memorandum or amendment to the Offering Memorandum, the misrepresentation is deemed

to be contained in the Offering Memorandum or amendment to the Offering Memorandum.

The right of action for rescission or damages described herein is conferred by section 138 of the NS Act

and is in addition to and without derogation from any right the purchaser may have at law.

- 129 -

Rights for Subscribers in Newfoundland and Labrador

The Securities Act (Newfoundland and Labrador) provides that where an offering memorandum (such as

this Offering Memorandum) contains a misrepresentation, a purchaser who purchases a security referred

to therein has, without regard to whether the purchaser relied on the misrepresentation, a right of action

for damages against the issuer and, subject to certain additional defenses, against directors of the issuer

and persons who have signed the offering memorandum, but may elect to exercise a right of rescission

against the issuer. Where a right of rescission is exercised, a purchaser shall have no right of action for

damages against any other person.

A defendant:

(a) is not liable if the purchaser had knowledge of the misrepresentation; and

(b) in an action for damages, is not liable for all or any portion of the damages that it proves

do not represent the depreciation in value of the security as a result of the misrepresentation relied

upon.

In an action for damages, the amount recoverable under the right of action shall not exceed the price at

which the security was offered.

In addition no person or company, other than the issuer, is liable:

(a) if the person proves that the offering memorandum was sent to the purchaser without the

person’s or company’s knowledge or consent and that, on becoming aware of its delivery, the

person or company gave reasonable notice to the issuer that it was sent without the person’s or

company’s knowledge or consent;

(b) if the person proves that on becoming aware of any misrepresentation in the offering

memorandum, the person or company proves they withdrew the person’s or company’s consent to

the offering memorandum, and gave reasonable notice to the issuer of the withdrawal and the

reason for it;

(c) with respect to any part of the offering memorandum purporting to be made on the

authority of an expert, if the person or company proves they had no reasonable grounds to believe

and did not believe that there had been a misrepresentation or the relevant part of the offering

memorandum did not fairly represent the report, opinion or statement of the expert, or was not a

fair copy of, or an extract from, the report, opinion or statement of the expert; or

(d) with respect to any part of the offering memorandum not purporting to be made on the

authority of an expert, unless the person or company did not conduct an investigation sufficient to

provide reasonable grounds for a belief that there had been no misrepresentation, or believed

there had been a misrepresentation.

If a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into,

the offering memorandum, the misrepresentation is deemed to be contained in the offering memorandum.

The right of action for rescission or damages described herein is conferred by section 130.1 of the

Securities Act (Newfoundland and Labrador) and is in addition to and without derogation from any other

right the purchaser may have at law.

- 130 -

Pursuant to section 138 of the Securities Act (Newfoundland and Labrador), no action shall be

commenced to enforce the rights conferred by section 130.1 thereof unless commenced:

(a) in the case of an action for rescission, 180 days after the date of the transaction that gave

rise to the cause of action; or

(b) in the case of an action, other than an action for rescission, the earlier of:

(i) 180 days after the plaintiff first had knowledge of the facts giving rise to the

cause of action, or

(ii) 3 years after the date of the transaction that gave rise to the cause of action.

Contractual Rights of Action for Subscribers in Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, the Yukon Territory, Northwest Territories and Nunavut (the “Contractual Jurisdictions”)

If there is a misrepresentation in the Offering Memorandum, Subscribers resident in the Contractual

Jurisdictions will have, in addition to any statutory rights that may be available to them, a contractual

right to sue the issuer:

(a) to cancel the Subscriber’s agreement to buy the Units, or

(b) for damages against

(i) the issuer;

(ii) the selling security holder on whose behalf the distribution is made;

(iii) every director of the issuer at the date of the Offering Memorandum; and

(iv) every person who signed the Offering Memorandum.

This contractual right to sue is available to the Subscriber whether or not the Subscriber relied on the

misrepresentation. However, there are various defences available to the persons or companies that you

have a right to sue. In particular, the issuer has a defence if it proves that the Subscriber knew of the

misrepresentation when the Subscriber purchased the securities.

If a Subscriber intends to rely on the rights described in (a) or (b) above, it must do so within strict time

limitations. A Subscriber must commence its action to cancel the agreement within 180 days after it

signed the agreement to purchase the securities. The Subscriber must commence its action for damages

within the earlier of 180 days after learning of the misrepresentation and 3 years after it signed the

agreement purchase the securities.

- 131 -

ITEM 12 FINANCIAL STATEMENTS

The following financial statements appear as part of this Item 12:

Audited Financial Statements for each Fund as at December 31, 2015.


FINANCIAL STATEMENTS

EXPRESSED IN CANADIAN DOLLARS

DECEMBER 31, 2015

- 132 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Canadian Equity Income Fund We have audited the accompanying financial statements of NWM Canadian Equity Income Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 133 -

Independent Auditor’s Report

NWM Canadian Equity Income Fund

Opinion

In our opinion, the financial statements present fairly, in all material respects, the

financial position of NWM Canadian Equity Income Fund as at December 31, 2015 and

the results of its financial performance and its cash flows for the year then ended in

accordance with International Financial Reporting Standards.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

March 7, 2016

- 134 -


STATEMENT OF NET ASSETS

DECEMBER 31, 2015

(In Canadian Dollars)

(In 000's except for per unit amounts and number of units outstanding)

See accompanying notes to the financial statements.

ASSETS 2015 2014 Current assets Investments $ 254,671 $ 260,921 Short-term investments 21 21 Cash 7,664 15,701 Accrued dividends, interest and other income receivable, net of withholding taxes 640 536 Subscriptions receivable 1,053 291 $ 264,049 $ 277,470

LIABILITIES Current liabilities Written options $ --- $ 358 Payable for unsettled trades --- 926 Administration and management fees payable 99 109 Distributions payable 814 7,647 Redemptions payable 1,100 791 2,013 9,831 Net assets attributable to holders of redeemable units (note 4) $ 262,036 $ 267,639 Net assets attributable to holders of redeemable units by Class Class O $ 246,200 $ 261,562 Class N 14,822 6,077 Class A 1,014 --- $ 262,036 $ 267,639 Number of redeemable units outstanding Class O 38,307,669 37,751,428 Class N 2,274,720 868,598 Class A 157,483 --- 40,739,872 38,620,026 Net assets attributable to holders of redeemable units per unit Class O $ 6.43 $ 6.93 Class N $ 6.52 $ 7.00 Class A $ 6.44 $ ---

Approved on behalf of the Fund by

Nicola Wealth Management Ltd., the Manager

(signed) “Karen Ikeda” , Director

(signed) “Evelyn C. Nicola” , Director

- 135 -


STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2015


(In 000's except for per unit amounts)


2015 2014

Income

Dividends $ 7,341 $ 8,778

Interest and other 37 183

Net realized gain on sale of investments (note 5) 2,655 50,436

Change in unrealized depreciation of investments, net (20,553) (7,883)

(10,520) 51,514

Expenses

Administration and management fees 1,123 1,557

Transaction costs 178 351

Withholding taxes 16 236

1,317 2,144

Increase (decrease) in net assets from operations

attributable to holders of redeemable units $ (11,837) $ 49,370


attributable to holders of redeemable units per class

Class O $ (11,301) $ 48,605

Class N (515) 765

Class A (21) ---

$ (11,837) $ 49,370


attributable to holders of redeemable

units per unit (note 13)

Class O $ (0.29) $ 1.35

Class N $ (0.35) $ 1.48

Class A $ (0.46) $ ---

- 136 -


STATEMENT OF CHANGES IN NET ASSETS

ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS



(In 000's)


Class O Class N Class A Total

2015 2014 2015 2014 2015 2014 2015 2014

Net assets attributable to

holders of redeemable

units at beginning of

the year $ 261,562 $ 353,955 $ 6,077 $ 2,891 $ --- $ --- $ 267,639 $ 356,846

Redeemable unit

transactions

Proceeds from

redeemable

units issued 43,141 50,407 9,260 4,470 1,138 --- 53,539 54,877

Reinvestments of

distributions to

holders of

redeemable

units 5,738 20,760 352 614 13 --- 6,103 21,374

Redemption of

redeemable

units (44,847) (78,025) --- --- (104) --- (44,951) (78,025)

4,032 (6,858) 9,612 5,084 1,047 --- 14,691 (1,774)

Distributions to holders of

redeemable units

From net

investment

income (5,872) (7,234) (256) (144) (8) --- (6,136) (7,378)

From realized gains

on sales of

Investments (2,191) (48,121) (95) (955) (4) --- (2,290) (49,076)

Return of capital (30) (78,785) (1) (1,564) --- --- (31) (80,349)

(8,093) (134,140) (352) (2,663) (12) --- (8,457) (136,803)

Increase (decrease) in

net assets from

operations attributable

to holders of

redeemable units (11,301) 48,605 (515) 765 (21) --- (11,837) 49,370



units at end of the year $ 246,200 $ 261,562 $ 14,822 $ 6,077 $ 1,014 $ --- $ 262,036 $ 267,639

- 137 -


STATEMENT OF CASH FLOWS



(In 000's)


2015 2014 Cash flows from (used in) operating activities Increase (decrease) in net assets from operations attributable to holders of redeemable units $ (11,837) $ 49,370 Adjustments for: Net realized gain on sale of investments (2,655) (50,436) Change in unrealized depreciation of investments, net 20,553 7,883 Purchases of investments (65,252) (139,603) Proceeds from sale of and gains distributions from Investments 52,320 164,790 Purchases of short-term investments --- (70) Proceeds from sale of short-term investments --- 10,592 Accrued dividends, interest and other income receivable, net of withholding taxes (104) 235 Administration and management fees payable (10) (32) Net cash flows from (used in) operating activities (6,985) 42,729 Cash flows from (used in) financing activities Distributions paid to holders of redeemable units, net of reinvested distributions (9,187) (6,568) Proceeds from issuances of redeemable units 52,777 55,300 Amounts paid on redemption of redeemable units (44,642) (78,677) Net cash flows from (used in) financing activities (1,052) (29,945) Net increase (decrease) in cash during the year (8,037) 12,784 Cash, beginning of the year 15,701 2,917 Cash, end of the year $ 7,664 $ 15,701 Supplemental disclosures on cash flows from operating activities: Interest and other income received $ 37 $ 183 Dividends received $ 7,237 $ 9,029 Withholding taxes paid $ (16) $ (250)

- 138 -


NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2015


1. General

The NWM Canadian Equity Income Fund (the Fund) is an open-ended mutual fund

trust formed under the laws of British Columbia and governed by a Declaration of Trust

(Declaration of Trust). Under the terms of the Declaration of Trust, Nicola Wealth

Management Ltd. (the Manager), provides administration and management services, CIBC Mellon Trust Company is the trustee of the Fund and CIBC Mellon Trust

Company and Credential Securities are the custodians of the Fund. The Fund’s

investment objectives are to seek a combination of current income and capital growth by

investing in a diversified portfolio consisting primarily of publicly-traded equity

securities that are listed on Canadian stock exchanges.

2. Basis of preparation and presentation

These financial statements have been prepared in compliance with International

Financial Reporting Standards (IFRS) as issued by the International Accounting

Standards Board (IASB) and Interpretation of the International Financial Reporting

Interpretations Committee (IFRIC).

The policies in these financial statements are based on IFRS issued and outstanding as

of March 7, 2016.

The financial statements for the year ended December 31, 2015, including comparatives,

were approved and authorized for issue by the Manager on March 7, 2016.

3. Summary of significant accounting policies

The following summary of significant accounting policies followed by the Fund in the

preparation of its financial statements. The accounting policies have been consistently

applied by the Fund.

(i) Use of accounting judgements and estimates

The preparation of financial statements in accordance with IFRS requires

management to make estimates and assumptions that affect the amounts reported and disclosures made in these financial statements and accompanying notes. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in the future.

In classifying and measuring financial instruments held by the Fund, the Manager

is required to make judgements about the classification of financial instruments and the applicability of the fair value option to its financial instruments which are not held for trading. The fair value option has been applied to the Fund’s investments as the investments are managed on a fair value basis in accordance with the Fund’s investment strategy.

- 139 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (i) Use of accounting judgements and estimates - continued The Fund also has made significant judgements when determining the

classification of its redeemable units as financial liabilities in accordance with IAS 32 Financial Instruments: Presentation. These judgements center upon the determination that the Fund’s redeemable units include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and, therefore, the ongoing redemption feature is not the unit’s only contractual obligation.

(ii) Financial instruments The Fund recognizes financial instruments at fair value upon initial recognition,

plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments and derivative assets and liabilities are measured at fair value through profit and loss (FVTPL), including certain investments in debt securities which have been designated at FVTPL. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.

(iii) 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. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. The Fund uses the last traded market price of both financial assets and financial liabilities where the last traded price falls within that days’ bid-ask 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. The Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.

Short-term debt instruments are valued at their bid quotations from recognized

investment dealers. If no bid price is available, they are valued at amortized cost which approximates market value.

- 140 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iii) Fair value measurement - continued Options contracts are valued at their last traded price at the balance sheet date.

The premium received/paid on options written or purchased is recorded at cost. The unrealized gain or loss is reflected in the statement of comprehensive income as part of change in unrealized appreciation (depreciation) of investments. The gain or loss on sale or expiry of options is reflected in the statement of comprehensive income as part of the net realized gain (loss) on sale of investments.

Forward contracts are valued based upon the exchange rate at the balance sheet

date. The change in net excess (shortfall) of the fair value of investments (including

unrealized gains and losses on foreign exchange) over (under) the total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

(iv) Investment transactions, income and expenses Investment transactions are accounted for as of the trade date. Interest income

and expenses are accrued on a daily basis, dividend income is recognized on the ex-dividend date and trust income is recognized on the effective date of the distribution. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses.

Transaction costs, such as brokerage commissions, incurred in the purchase and

sale of investments by the Fund is recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current year.

(v) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that

a financial asset measured at amortized cost is impaired. If such evidence exists, the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. Impairment losses on financial assets at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

- 141 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (vi) Cash Cash is comprised of deposits with the Fund’s custodians. (vii) Increase (decrease) in net assets attributable to holders of redeemable units per

unit Increase (decrease) in net assets attributable to holders of redeemable units per

unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

(viii) Income tax The Fund qualifies as a mutual fund trust under the provisions of the Income Tax

Act (Canada) (Act). A mutual fund trust is subject to tax in each taxation year under Part I of the Act on the amount of its income for the year, including net realized taxable gains, less the portion thereof that it claims in respect of the amounts paid or payable to the redeemable unitholders for the year. The Fund distributes all of the net income for tax purposes and net taxable capital gains realized so that the Fund will not generally be liable for Canadian income tax thereon. Therefore, no provision for income tax has been made in these financial statements.

(ix) Valuation of the Fund The NAV per unit is calculated by dividing the aggregate market value of the net

assets by the total number of units outstanding.

- 142 -



DECEMBER 31, 2015


4. Redeemable units of the Fund

The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and

Class O units. At December 31, 2015 Class A, Class N and Class O units were issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 37,751,428 37,527,338 868,598 305,495 --- --- 38,620,026 37,832,833

Redeemable

units

issued,

sales 6,287,131 5,467,687 1,353,677 479,198 171,685 --- 7,812,493 5,946,885

Redeemable

units

issued, re-

investment

of distrib-

utions 858,649 2,798,237 52,445 83,905 1,935 --- 913,029 2,882,142

Redeemable

units

redeemed (6,589,539) (8,041,834) --- --- (16,137) --- (6,605,676) (8,041,834)

Redeemable

units out-

standing,

end of the

year 38,307,669 37,751,428 2,274,720 868,598 157,483 --- 40,739,872 38,620,026

The Class A, Class N and Class O units of the Fund are redeemable at the option of the

holder in accordance with the provisions of the Declaration of Trust and do not have any nominal or par value. The Class N units of the Fund represent redeemable units issued and held by another fund that is managed by the Manager. The Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.

- 143 -



DECEMBER 31, 2015


5. Net realized gain on sale of investments The net realized gain on sale of investments (in 000's) is comprised of:

2015 2014

Proceeds from sale of and gains distributions from

investments $ 52,320 $ 268,723

Investments at cost, beginning of the year 222,593 300,351

Investments at cost, purchased during the year 64,326 140,529

286,919 440,880

Investments at cost, end of the year (237,254) (222,593)

Cost of investments sold during the year 49,665 218,287

Net realized gain on sale of investments $ 2,655 $ 50,436 6. Administration and management fees The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per

annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the Class O units, on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged with respect to the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.5% (0.5% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.

- 144 -



DECEMBER 31, 2015


7. Brokerage commissions on securities transactions Brokerage commissions paid on securities transactions during the year for brokerage

services provided to the Fund were $178,445 (2014 - $351,319). Neither the Manager, nor the Fund has received investment or research services from

brokers in exchange for the commissions paid by the Fund to execute securities transactions (soft dollars).

8. Capital management

Redeemable units issued and outstanding are considered to be capital of the Fund. The

net capital received by the Fund is managed in accordance with the investment objective and strategies of the Fund and to maintain adequate liquidity to meet unitholders’ redemption requests. Units are redeemable daily at the NAV per unit calculated on the valuation day. Unitholders must provide the Manager with notice of redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this time, the effective date of the requested redemption will be the next following valuation day and the NAV per unit will be calculated on such next following valuation day.

The Manager may suspend the right of unitholders to request that the Fund redeem its

units for a whole or any part of a period during which normal trading is suspended on a stock exchange, options exchange or futures exchange within or outside Canada on which securities or derivatives owned by the Fund are listed and traded, or on which such securities or derivatives are traded, if those securities or derivatives represent more than 50 percent by value, or underlying market exposure, of the total assets of the Fund without allowance for liabilities and if those securities or derivatives are not traded on any other exchange that represents a reasonably practical alternative for the Fund.

The Fund distributes net income monthly and net realized capital gains annually in

December of each calendar year. Distributions are automatically reinvested in units of the Fund, unless subscribers specify in advance, in writing, that they wish to receive distributions in cash.

9. Risk associated with financial instruments

The Fund’s activities expose it to a variety of risks associated with financial

instruments, as follows: Price risk, liquidity risk, credit risk and concentration risk. The value of investments within the Fund’s portfolio can fluctuate from day to day, reflecting changes in economic conditions, market and company news related to specific securities within the Fund.

The Manager manages the potential adverse effects of financial risks on the Fund’s

performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Fund’s positions and market events and diversify the investment portfolios, within the constraints of the Fund’s investment objectives and strategies.

- 145 -



DECEMBER 31, 2015


9. Risk associated with financial instruments - continued 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 result in a risk of loss of capital.

a) Price risk

Price risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of equity securities. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund’s investment portfolio is monitored daily by the Manager.

As at December 31, 2015, if relevant benchmark indexes and the Fund’s financial

assets and liabilities traded in active markets 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 approximately $12,734,000 (2014 - $13,046,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

b) Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty meeting the

obligations associated with the Fund’s financial liabilities. The Fund is exposed to daily cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees and by holding cash and short-term investments. The table below analyzes the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

On

2015 Demand < 3 Months Total

Financial liabilities (in 000’s)

Administration and management fees

payable $ --- $ 99 $ 99

Distributions payable --- 814 814

Redemptions payable --- 1,100 1,100

Redeemable units 262,036 --- 262,036

$ 262,036 $ 2,013 $ 264,049

- 146 -



DECEMBER 31, 2015


9. Risk associated with financial instruments - continued b) Liquidity risk - continued

On



Written options $ 358 $ --- $ 358

Payable for unsettled trades 926 --- 926


payable --- 109 109

Distributions payable --- 7,647 7,647

Redemptions payable --- 791 791


$ 268,923 $ 8,547 $ 277,470 Redeemable units are redeemable on demand at the holder’s option. However, the

Manager does not expect that the contractual maturity disclosed above will be representative of the actual cash outflows, as holders of these instruments typically retain them for a longer period.

c) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial

loss for the other party by failing to discharge an obligation. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All of the Fund’s investments, short-term investments and cash are held with two custodians and one trustee. This risk is managed by the choice of custodians and trustee.

d) Concentration risk

Concentration risk arises as a result of the concentration of net financial

instruments within the same category such as, geographic region, asset type, industry sector or market segment. Financial instruments in the same category have similar characteristics and may be affected similarly by changes in economic or other conditions. See the schedule of investment portfolio for the various segment allocations of the Fund.

- 147 -



DECEMBER 31, 2015


10. Fair value measurement

The Fund classifies fair value measurements within a hierarchy, which gives the

highest priority to unadjusted quoted prices in active markets for identical assets or

liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three

levels of the fair value hierarchy are:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities

that the entity can access at the measurement date;

Level 2 Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly; and

Level 3 Inputs are unobservable for the asset or liability.

If inputs of different levels are used to measure an asset’s or liability’s fair value, the

classification within the hierarchy is based on the lowest level input that is significant

to the fair value measurement. All of the Fund’s investments held at December 31,

2015 are classified as Level 1.

11. Financial instruments by category The following table presents the carrying amounts of the Fund’s financial instruments

by category as at December 31, 2015.

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized

2015 Inception Cost Total

Assets (in 000’s)

Investments $ 254,671 $ --- $ 254,671

Short-term investments 21 --- 21

Cash --- 7,664 7,664

Accrued dividends, interest and other

income receivable, net of withholding

taxes --- 640 640

Subscriptions receivable --- 1,053 1,053

$ 254,692 $ 9,357 $ 264,049

- 148 -



DECEMBER 31, 2015


11. Financial instruments by category - continued

Financial

Liabilities Financial

at FVTPL Liabilities

Designated at

at Amortized


Liabilities (in 000’s)


payable $ --- $ 99 $ 99



Net assets attributable to holders of

redeemable units --- 262,036 262,036

$ --- $ 264,049 $ 264,049

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 260,921 $ --- $ 260,921

Short-term investments 21 --- 21

Cash --- 15,701 15,701

Accrued dividends, interest and other

income receivable, net of withholding

taxes --- 536 536

Subscriptions receivable --- 291 291

$ 260,942 $ 16,528 $ 277,470

- 149 -



DECEMBER 31, 2015



Financial



Designated at

at Amortized




Payable for unsettled trades --- 926 926


payable --- 109 109





$ 358 $ 277,112 $ 277,470 12. Related party information

In addition to items disclosed elsewhere at December 31, 2015, the Manager and parties

related to the Manager own 527,201 (2014 – 727,650) Class O units of the Fund. 13. Increase (decrease) in net assets from operations attributable to holders of redeemable

units per unit The increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit for the year ended December 31, 2015 is calculated as follows:

2015 2014

Class O



units (in 000’s) $ (11,301) $ 48,605

Weighted average units outstanding during the year 38,727,943 35,899,444


attributable to holders of redeemable units per unit $ (0.29) $ 1.35

- 150 -



DECEMBER 31, 2015


13. Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit - continued 2015 2014

Class N



units (in 000’s) $ (515) $ 765

Weighted average units outstanding during the year 1,471,358 518,473



Class A

Decrease in net assets from operations


units (in 000’s) $ (21) $ ---

Weighted average units outstanding during the year 44,211 ---


attributable to holders of redeemable units per unit $ (0.46) $ --- 14. Recent accounting pronouncements The following pronouncements were issued by the IASB or the IFRIC. Those

pronouncements that are not applicable or do not have a significant impact to the Fund have been excluded from the summary below. The following have not yet been adopted and are being evaluated to determine the resultant impact on the Fund.

IFRS 9 Financial Instruments was issued in final form in July 2014 by the IASB and

will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 also includes requirements relating to a new hedge accounting model, which represents a substantial overhaul of hedge accounting which will allow entities to better reflect their risk management activities in the financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

- 151 -


SCHEDULE OF INVESTMENT PORTFOLIO

DECEMBER 31, 2015


No. of Shares/ Fair Units Description Cost Value CANADIAN EQUITIES - 97.19% FINANCIALS - 36.13% 175,500 Bank of Nova Scotia $ 9,998,890 $ 9,822,735 100,600 Canadian Imperial Bank of Commerce 8,075,359 9,173,714 100,000 Canadian Western Bank 3,075,263 2,338,000 362,000 Element Financial Corp. 5,096,906 6,045,400 150,000 Guardian Capital Group Ltd. – Class A 2,460,790 2,731,500 54,000 IGM Financial Inc. 2,874,614 1,908,360 29,000 Industrial Alliance Insurance & Financial Services Inc. 1,262,567 1,279,770 82,600 Intact Financial Corporation 4,832,680 7,324,968 410,300 Manulife Financial Corporation 7,641,402 8,509,622 100,000 Power Corporation of Canada 3,242,230 2,894,000 202,790 Royal Bank of Canada 11,717,483 15,036,879 202,600 Sun Life Financial Inc. 6,404,975 8,742,190 347,600 Toronto-Dominion Bank 14,358,888 18,853,824 81,042,047 94,660,962 ENERGY - 16.80% 252,800 Canadian Natural Resources Limited 9,645,785 7,642,144 98,000 Crescent Point Energy Corp. 4,095,504 1,579,760 224,000 Enbridge Inc. 8,935,145 10,304,000 162,000 PrairieSky Royalty Inc. 4,191,923 3,599,640 295,600 Suncor Energy Inc. 10,864,145 10,555,876 94,070 Transcanada Corporation 3,922,752 4,251,023 103,000 Vermillion Energy Inc. 6,467,015 3,873,830 243,000 Whitecap Resources Inc. 3,745,894 2,204,010 51,868,163 44,010,283 INDUSTRIAL - 16.31% 183,000 AG Growth International Inc. 6,741,990 6,084,750 240,000 ATS Automation Tooling Systems Inc. 3,401,252 2,731,200 185,000 CAE Inc. 2,088,331 2,839,750 104,600 Canadian National Railway Co. 5,392,519 8,090,810 22,000 Canadian Pacific Railway Ltd. 4,682,027 3,888,060 362,000 Heroux - Devtek Inc. 3,378,285 4,651,700 96,000 Progressive Waste Solutions Ltd. 2,206,317 3,129,600 48,000 SNC-Lavalin Group Inc. 2,687,952 1,973,760 95,000 Stantec Inc. 3,049,728 3,260,400 93,500 TransForce Inc. 2,197,268 2,207,535 191,000 Westjet Airlines Ltd. 5,285,413 3,888,760 41,111,082 42,746,325 Balance forward 174,021,292 181,417,570

- 152 -



DECEMBER 31, 2015


No. of Shares/ Fair Units Description Cost Value CANADIAN EQUITIES - 97.19% (continued) Balance brought forward $174,021,292 $181,417,570 CONSUMER DISCRETIONARY - 12.94% 58,000 Alimentation Couche Tard Inc. – Class B 2,747,953 3,532,780 24,000 Canadian Tire Corp. Ltd. – Class A 2,940,538 2,835,840 102,000 Dollarama Inc. 4,200,247 8,153,880 128,000 Gildan Activewear Inc. 4,008,717 5,035,520 176,925 KP Tissue Inc. 2,912,613 2,061,176 65,000 Linamar Corp. 4,807,248 4,857,450 71,600 Magna International Inc. 2,965,852 4,018,192 66,000 Restaurant Brands International 3,495,017 3,415,500 28,078,185 33,910,338 MATERIALS – 6.17% 22,000 Agrium Inc. 2,866,129 2,720,740 237,000 Canfor Corp. 5,366,582 4,785,030 69,400 Methanex Corporation 4,286,970 3,171,580 104,500 West Fraser Timber Co. Ltd. 4,997,911 5,489,385 17,517,592 16,166,735 REAL ESTATE AND INCOME TRUSTS - 3.88% 159,000 Brookfield Asset Management Inc. – Class A 4,746,663 6,940,350 100,000 Brookfield Property Partners LP 2,338,274 3,222,000 7,084,937 10,162,350 TELECOMMUNICATION SERVICES - 3.38% 126,800 Rogers Communications Inc. - Class B 5,338,904 6,050,896 118,000 Shaw Communications Inc. - Class B 2,657,257 2,808,400 7,996,161 8,859,296 INFORMATION TECHNOLOGY - 1.58% 75,000 CGI Group Inc. – Class A 2,555,445 4,155,000 TOTAL CANADIAN EQUITIES – 97.19% 237,253,612 254,671,289 OTHER NET ASSETS – 2.81% 7,364,299 7,364,299 TOTAL NET ASSETS – 100.00% $244,617,911 $262,035,588

- 153 -




DECEMBER 31, 2015

- 154 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Global Equity Fund We have audited the accompanying financial statements of NWM Global Equity Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 155 -


NWM Global Equity Fund

Opinion


financial position of NWM Global Equity Fund as at December 31, 2015 and the results of

its financial performance and its cash flows for the year then ended in accordance with

International Financial Reporting Standards.


Vancouver, Canada

March 21, 2016

- 156 -



DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 283,211 $ 240,115 Cash 9,241 5,813 Receivable from unsettled trades 149 --- Subscriptions receivable 806 --- Accrued dividends receivable, net of withholding taxes 110 37 $ 293,517 $ 245,965

LIABILITIES Current liabilities Administration and management fees payable $ 373 $ 315 Payable from unsettled trades 3,053 --- Distributions payable 4,159 858 Redemptions payable 1,093 5 8,678 1,178 Net assets attributable to holders of redeemable units (note 4) $ 284,839 $ 244,787 Net assets attributable to holders of redeemable units by Class Class O $ 269,612 $ 239,265 Class N 14,408 5,522 Class A 819 --- $ 284,839 $ 244,787 Number of redeemable units outstanding Class O 13,439,106 11,742,270 Class N 708,630 270,171 Class A 39,447 --- 14,187,183 12,012,441 Net assets attributable to holders of redeemable units per unit Class O $ 20.06 $ 20.38 Class N $ 20.33 $ 20.44 Class A $ 20.76 $ ---





- 157 -







2015 2014

Income

Dividends $ 10,806 $ 2,939

Interest and other --- 15


Change in unrealized appreciation (depreciation)

of investments, net (3,683) 15,869

45,704 27,674

Expenses




3,144 2,788

Increase in net assets from operations attributable to

holders of redeemable units $ 42,560 $ 24,886


holders of redeemable units per class

Class O $ 41,236 $ 24,339

Class N 1,301 547

Class A 23 ---

$ 42,560 $ 24,886


holders of redeemable units per unit (note 13)

Class O $ 3.52 $ 2.22

Class N $ 3.10 $ 2.30

Class A $ 2.81 $ ---

- 158 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 239,265 $ 198,537 $ 5,522 $ 1,665 $ --- $ --- $ 244,787 $ 200,202

Redeemable unit

transactions

Proceeds from

redeemable

units issued 42,365 43,959 7,585 5,410 912 --- 50,862 49,369

Reinvestments of

distributions to

holders of

redeemable

units 39,789 7,960 2,166 192 99 --- 42,054 8,152

Redemption of

redeemable

units (49,038) (26,712) --- (2,100) (116) --- (49,154) (28,812)

33,116 25,207 9,751 3,502 895 --- 43,762 28,709


redeemable units

From net

investment

income (753) (187) (37) (4) (1) --- (791) (191)

From realized gains

on sales of

investments (43,240) (8,631) (2,128) (188) (98) --- (45,466) (8,819)

Return of capital (12) --- (1) --- --- --- (13) ---

(44,005) (8,818) (2,166) (192) (99) --- (46,270) (9,010)


net assets from


to holders of

redeemable units 41,236 24,339 1,301 547 23 --- 42,560 24,886



units at end of the year $ 269,612 $ 239,265 $ 14,408 $ 5,522 $ 819 $ --- $ 284,839 $ 244,787

- 159 -





(In 000's)


2015 2014

Cash flows from (used in) operating activities



Adjustments for:

Net realized gain on sale of investments (38,581) (8,851)

Change in unrealized depreciation (appreciation)

of investments, net 3,683 (15,869)

Purchases of investments (128,906) (41,795)


Investments 123,612 23,248

Accrued dividends receivable, net of

withholding taxes (73) (15)

Administration and management fees payable 58 40

Net cash flows from (used in) operating activities 2,353 (18,356)

Cash flows from financing activities

Distributions paid to holders of redeemable units,

net of reinvested distributions (915) (606)

Proceeds from issuances of redeemable units 50,056 49,941

Amounts paid on redemption of redeemable units (48,066) (29,196)

Net cash flows from financing activities 1,075 20,139

Net increase in cash during the year 3,428 1,783

Cash, beginning of the year 5,813 4,030

Cash, end of the year $ 9,241 $ 5,813

Cash includes:

Cash and funds held by broker $ 8,223 $ 4,112

Money market mutual funds 1,018 1,701

$ 9,241 $ 5,813

Cash flows from operating activities include:

Dividends received $ 10,733 $ 2,921

- 160 -



DECEMBER 31, 2015


1. General

NWM Global Equity Fund (the Fund) is an open-ended mutual fund trust formed under

the laws of British Columbia and governed by a Declaration of Trust (Declaration of

Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd.

(the Manager), provides administration and management services, CIBC Mellon Trust

Company is the trustee of the Fund, and CIBC Mellon Trust Company and Credential

Securities are the custodians of the Fund. The address of the Fund’s registered office is

5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests directly

and indirectly in Canadian, U.S. and other foreign equity securities.







of March 21, 2016.




The following is a summary of significant accounting policies followed by the Fund in the




The preparation of financial statements in accordance with IFRS requires management to

make estimates and assumptions that affect the amounts reported and disclosures made in these financial statements and accompanying notes. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in the future.

In classifying and measuring financial instruments held by the Fund, the Manager is

required to make significant judgements about the classification of financial instruments and the applicability of the fair value option to its financial instruments which are not held for trading. The fair value option has been applied to the Fund’s investments as the investments are managed on a fair value basis in accordance with the Fund’s investment strategy.

- 161 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued

(i) Use of accounting judgements and estimates - continued

The Fund also has made significant judgements when determining the

classification of its redeemable units as financial liabilities in accordance with IAS

32 Financial Instruments: Presentation. These judgements center upon the

determination that the Fund’s redeemable units include a contractual obligation to

distribute any net income and net realized capital gains at least annually in cash

(at the request of the unitholder) and, therefore, the ongoing redemption feature is

not the unit’s only contractual obligation.

(ii) Financial instruments

The Fund recognizes financial instruments at fair value upon initial recognition,

plus transaction costs in the case of financial instruments measured at amortized

cost. Purchases and sales of financial assets are recognized at their trade date. The

Fund’s investments are measured at fair value through profit and loss (FVTPL),

including certain investments in debt securities which have been designated at

FVTPL. All other financial assets and liabilities are measured at amortized cost.

Under this method, financial assets and liabilities reflect the amount required to be

received or paid, discounted, when appropriate, at the contract’s effective interest

rate. The Fund’s accounting policies for measuring the fair value of its investments

and derivatives are identical to those used in measuring its net asset value (NAV)

for transactions with unitholders.

(iii) 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. The fair value of financial assets and liabilities traded in active markets are

based on quoted market prices at the close of trading on the reporting date. The

Fund uses the last traded market price of both financial assets and financial

liabilities where the last traded price falls within that days’ bid-ask 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. The

Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels

as of the date of the event or change in circumstances giving rise to the transfer.

The change in net excess or shortfall of the fair value of investments (including

unrealized gains and losses on foreign exchange) over (under) the total average cost

or amortized cost of the investments is included as unrealized appreciation

(depreciation) of investments in the statement of comprehensive income.

- 162 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses Investment transactions are accounted for as of the trade date. Interest income and

expenses are accrued on a daily basis, dividend income is recognized on the ex-dividend date and trust income is recognized on the effective date of the distribution. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments.


sale of investments by the Fund is recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current period.

(v) Translation of foreign currencies The reporting currency and functional currency of the Fund is the Canadian dollar. The market values of investments and other assets and liabilities denominated in a

foreign currency are translated into Canadian dollars at the rate of exchange prevailing at each balance sheet date.

The Fund's investment portfolio may consist of securities that are traded in foreign

markets. The proceeds on the sale of such securities will be realized in the respective currency. Unhedged foreign currency positions are subject to gains and losses due to fluctuations in the respective exchange rates. Foreign currency purchases and sales of investments and foreign currency dividend and interest income are translated into the reporting currency at the rate of exchange prevailing on the respective dates of the transactions. Foreign exchange gains and losses on the sale of investments and foreign currencies are included in net realized gain (loss) on sale of investments in the statement of comprehensive income. Unrealized foreign exchange gains and losses on investments held are included in change of unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

(vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that a

financial asset measured at amortized cost is impaired. If such evidence exists, the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. Impairment losses on financial assets at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

- 163 -



DECEMBER 31, 2015



(vii) Cash

Cash is comprised of deposits with the Fund’s custodians and money market

mutual funds.

(viii) Increase (decrease) in net assets attributable to holders of redeemable units per

unit

Increase (decrease) in net assets attributable to holders of redeemable units per

unit reported in the statement of comprehensive income is calculated as the

increase (decrease) in net assets attributable to holders of redeemable units

divided by the weighted average number of redeemable units outstanding during

the year. See note 13 for the calculation.

(ix) Income tax

The Fund qualifies as a mutual fund trust under the provisions of the Income Tax

Act (Canada) (Act). A mutual fund trust is subject to tax in each taxation year

under Part I of the Act on the amount of its income for the year, including net

realized taxable gains, less the portion thereof that it claims in respect of the

amounts paid or payable to the redeemable unitholders for the year. The Fund

distributes all of the net income for tax purposes and net taxable capital gains

realized so that the Fund will not generally be liable for Canadian income tax

thereon. Therefore, no provision for income tax has been made in these financial

statements.

The Fund currently incurs withholding taxes imposed by certain countries on

investment income and capital gains. Such income and gains are recorded on a

gross basis and the related withholding taxes are shown as a separate expense in

the statement of comprehensive income.

(x) Valuation of the Fund

The NAV per unit is calculated by dividing the aggregate market value of the net


- 164 -



DECEMBER 31, 2015




Class O units. At December 31, 2015, Class A, Class N and Class O units were issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 11,742,270 10,493,538 270,171 87,979 --- --- 12,012,441 10,581,517

Redeemable

units

issued,

sales 1,875,523 2,197,690 332,028 273,046 39,735 --- 2,247,286 2,470,736

Redeemable

units

issued, re-

investment

of distrib-

utions 1,980,155 390,664 106,431 9,433 4,768 --- 2,091,354 400,097

Redeemable

units

redeemed (2,158,842) (1,339,622) --- (100,287) (5,056) --- (2,163,898) (1,439,909)

Redeemable

units out-

standing,

end of the

year 13,439,106 11,742,270 708,630 270,171 39,447 --- 14,187,183 12,012,441


holder in accordance with the provisions of the Declaration of Trust and do not have any

nominal or par value. The Class N units of the Fund represent redeemable units issued

and held by another fund that is managed by the Manager. The Class A units of the

Fund represent units issued to clients of a financial advisory company related to the

Manager.

- 165 -



DECEMBER 31, 2015


5. Net realized gain on sale of investments

The net realized gain on sale of investments (in 000's) is comprised of:

2015 2014


investments $ 123,761 $ 23,248



294,235 176,673



Net realized gain on sale of investments $ 38,581 $ 8,851

6. Administration and management fees

The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per

annum) of the NAV of the Fund on the last business day of each month, calculated and

payable monthly in arrears. The Manager has rebated a portion of administration fees

based on the actual costs incurred by the Manager. The Class O units are subject to a

management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units,

on the last business day of each month calculated and payable to the Manager monthly

in arrears. The Class N units are held by another fund managed by the Manager. There

are no management fees charged with respect to the Class N units. The Class A units of

the Fund are issued to clients of a company related to the Manager. The Class A are

subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the

Class A units, on the last business day of each month calculated and payable to the

Manager monthly in arrears. In addition, from time to time the Manager may engage

sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The

Manager is responsible for the payment, out of the administration fee, of all ordinary

course expenses relating to the operation of the Fund, including, but not limited to, legal

and audit fees, bookkeeping charges, registry and transfer agency fees, distribution

costs, custodial charges, Trustee's fees, all services required in connection with the

provision of information to the redeemable unitholders and all costs relating to the

formation and organization of the Fund.

- 166 -



DECEMBER 31, 2015


7. Brokerage commissions on securities transactions

Brokerage commissions paid on securities transactions during 2015 for brokerage

services provided to the Fund were $160,962 (2014 - $40,989).

Neither the Manager, nor the Fund has received investment or research services from

brokers in exchange for the commissions paid by the Fund to execute securities

transactions (soft dollars).



net capital received by the Fund is managed in accordance with the investment objective

and strategies of the Fund and to maintain adequate liquidity to meet unitholders’

redemption requests. Units are redeemable weekly at the NAV per unit calculated on

the valuation day. Unitholders must provide the Manager with notice of redemption not

later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by

this time, the effective date of the requested redemption will be the next following

valuation day and the NAV per unit will be calculated on such next following valuation

day.


units for a whole or any part of a period during which normal trading is suspended on a

stock exchange, options exchange or futures exchange within or outside Canada on which

securities or derivatives owned by the Fund are listed and traded, or on which such

securities or derivatives are traded, if those securities or derivatives represent more than

50 percent by value, or underlying market exposure, of the total assets of the Fund

without allowance for liabilities and if those securities or derivatives are not traded on

any other exchange that represents a reasonably practical alternative for the Fund.

The Fund distributes net income and net realized capital gains annually in December of

each calendar year. Distributions are automatically reinvested in units of the Fund,

unless subscribers specify in advance, in writing, that they wish to receive distributions

in cash.


The Fund’s activities expose it to a variety of risks associated with financial instruments,

as follows: Market risk (including price risk, currency risk and interest rate risk),

liquidity risk, credit risk, and concentration risk. The value of investments with the

Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates,

economic conditions, market and company news related to specific securities within the

Fund.

- 167 -



DECEMBER 31, 2015


9. Risk associated with financial instruments - continued


performance by employing and overseeing professional and experienced portfolio

advisors that regularly monitor the Fund’s positions and market events and diversify the

investment portfolios, within the constraints of the Fund’s investment objectives and

strategies.

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 result in a risk of loss of

capital.

a) Market risk

Market risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate as a result of changes in market price. 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.

i) Price


instrument will fluctuate because of changes in market prices (other than those

arising from currency risk or interest rate risk). The Fund’s investments are

subject to the risk of changes in the prices of equity securities. The value of a

financial instrument may be affected by specific Fund developments, by stock

market conditions and by general economic and financial conditions in those

countries where the investments are listed for trading. As at December 31, 2015 -

37% (2014 – 70%) of the Fund’s net assets are held in two (2014 – four) mutual

fund investments. However, these mutual funds are invested in numerous

investments. The investments of the Fund are recognized at fair value and all

changes in market conditions directly affect changes in net assets attributable to

holders of redeemable units. The Fund’s investment portfolio is monitored daily

by the Manager.


assets and liabilities traded in active markets 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

approximately $14,161,000 (2014 - $12,006,000). In practice, actual results may

differ from this sensitivity analysis and the difference could be material.

- 168 -



DECEMBER 31, 2015



a) Market risk - continued

ii) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in foreign exchange rates. The

Fund is subject to foreign exchange rate fluctuations on cash and investments

denominated in currencies other than Canadian dollars. The amount of foreign

currency denominated investments is monitored daily by the Manager.

The table below indicates the foreign currencies to which the Fund had significant

exposure at December 31, 2015, 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 5% in

relation to each of the other currencies, with all other variables held constant. In

practice, actual results may differ from this sensitivity analysis and the difference

could be material.

Potential

% of Net Impact on % Change in

Assets Net Assets Net Assets

Attributable Attributable Attributable

to Holders of to Holders of to Holders of

Financial Redeemable Redeemable Redeemable

Currency (in 000’s) Assets Units Units Units

2015

Australian Dollar $ 2,834 1.00% $ 142 0.05%

Danish Krone 3,328 1.17 166 0.06

Euros 21,291 7.48 1,065 0.37

Hong Kong 2,965 1.04 148 0.05

Japanese Yen 17,797 6.25 890 0.31

Mexican Peso 415 0.15 21 0.01

New Zealand Dollar 564 0.20 28 0.01

Pound Sterling 14,607 5.13 730 0.26

Swedish Krona 3,364 1.18 168 0.06

Swiss Francs 9,337 3.28 467 0.16

Taiwan 704 0.25 35 0.01

United States Dollars 88,485 31.07 4,424 1.55

Total $ 165,691 58.20% $ 8,284 2.90%

- 169 -



DECEMBER 31, 2015




iii) Currency risk - continued Potential

% of Net Impact on % Change in

Assets Net Assets Net Assets

Attributable Attributable Attributable

to Holders of to Holders of to Holders of

Financial Redeemable Redeemable Redeemable

Currency (in 000’s) Assets Units Units Units

2014

Danish Krone $ 2,039 0.83% $ 102 0.04%

Euros 1,630 0.67 82 0.03

Japanese Yen 4,693 1.92 235 0.10

Pound Sterling 7,073 2.89 354 0.14

Swiss Francs 4,836 1.98 242 0.10

United States Dollars 43,523 17.78 2,176 0.89

Total $ 63,794 26.07% $ 3,191 1.30%

iv) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market interest rates. The Fund

is not exposed to significant interest rate risk.

b) Liquidity risk


obligations associated with the Fund’s financial liabilities. The Fund is exposed to

weekly cash redemptions. Furthermore, the Fund is unable to control the amounts of

redemption requests. The Fund manages this risk by holding cash. The Fund’s

investments are traded in an active market and can normally be readily disposed of.

The table below analyzes the Fund’s financial liabilities into relevant maturity

groupings based on the remaining period to the contractual maturity date. The

amounts in the table are the contractual undiscounted cash flows.

- 170 -



DECEMBER 31, 2015



b) Liquidity risk - continued On




Payable $ --- $ 373 $ 373

Payable from unsettled trades --- 3,053 3,053




$ 284,839 $ 8,678 $ 293,517

On




payable $ --- $ 315 $ 315




$ 244,787 $ 1,178 $ 245,965

Redeemable units are redeemable on demand at the holder’s option. However, the

Manager does not expect that the contractual maturity disclosed above will be

representative of the actual cash outflows, as holders of these instruments typically

retain them for a longer period.

- 171 -



DECEMBER 31, 2015



c) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial

loss for the other party by failing to discharge an obligation. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All of the Fund’s investments, and cash are held with two custodians and one trustee. This risk is managed by the choice of custodians and trustee.


Concentration risk arises as a result of the concentration of net financial instruments

within the same category such as, geographic region, asset type, industry sector or market segment. Financial instruments in the same category have similar characteristics and may be affected similarly by changes in economic or other conditions. See the schedule of investment portfolio for the various segment allocations of the Fund.

10. Fair value measurement The Fund classifies fair value measurements within a hierarchy, which gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:


that the entity can access at the measurement date; Level 2 Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable for the asset or liability. If inputs of different levels are used to measure an asset’s or liability’s fair value, the

classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. All of the Fund’s investments held at December 31, 2015 are classified as Level 1.

- 172 -



DECEMBER 31, 2015


11. Financial instruments by category

The following table presents the carrying amounts of the Fund’s financial assets by

category as at December 31, 2015. All of the Fund’s financial liabilities as at

December 31, 2015 were carried at amortized cost.

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 283,211 $ --- $ 283,211

Cash --- 9,241 9,241

Receivable from unsettled trades --- 149 149

Subscription receivable --- 806 806


withholding taxes --- 110 110

$ 283,211 $ 10,306 $ 293,517

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 240,115 $ --- $ 240,115

Cash --- 5,813 5,813



$ 240,115 $ 5,850 $ 245,965

12. Related party information


related to the Manager own 243,994 (2014 – 165,363) Class O units of the Fund.

- 173 -



DECEMBER 31, 2015


13. Increase in net assets from operations attributable to holders of redeemable units per unit

The increase in net assets from operations attributable to holders of redeemable units

per unit for the year ended December 31, 2015: 2015 2014

Class O


holders of redeemable units (in 000’s) $ 41,236 $ 24,339



holders of redeemable units per unit $ 3.52 $ 2.22

Class N


holders of redeemable units (in 000’s) $ 1,301 $ 547

Weighted average units outstanding during the year 419,604 237,974



Class A


holders of redeemable units (in 000’s) $ 23 $ ---



holders of redeemable units per unit $ 2.81 $ ---

14. Recent accounting pronouncements The following pronouncements were issued by the IASB or the IFRIC. Those


IFRS 9 Financial Instruments was issued in final form in July 2014 by the IASB and will

replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 also includes requirements relating to a new hedge accounting model, which represents a substantial overhaul of hedge accounting which will allow entities to better reflect their risk management activities in the financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

- 174 -



DECEMBER 31, 2015


No. of

Shares/ Market

Units Description Cost Value

CANADIAN EQUITIES - 41.37%

MUTUAL FUNDS – 39.46%

2,711,215 BMO Guardian Asian Growth and Income Fund Class I (857) $ 33,407,196 $ 44,377,443

202,200 Cymbria Corporation Class A 2,655,715 6,688,776

2,291,588 Edgepoint Global Portfolio Series I (700) 41,647,161 61,325,412

77,710,072 112,391,631

FINANCIALS – 0.76%

14,164 Alaris Royalty Corp. 473,916 332,854

34,000 Altus Group Income Fund 664,924 659,260

31,119 Element Financial Corp. 552,746 519,687

12,711 Genworth Mi Canada Inc. 400,163 338,113

11,370 Home Capital Group Inc. 478,431 306,080

2,570,180 2,155,994

CONSUMER DISCRETIONARY – 0.47%

28,325 Bauer Performance Sports Ltd. 685,475 377,856

9,923 Cineplex Inc. 486,876 471,839

22,736 Spin Master Corp. 419,580 497,009

1,591,931 1,346,704

INFORMATION TECHNOLOGY – 0.35%

21,100 Descartes Systems Group Inc. 425,684 587,424

5,108 MacDonald Dettwiler & Associates Ltd. 492,515 425,292

918,199 1,012,716

MATERIALS – 0.19%

28,709 Intertape Polymer Group Inc. 515,140 536,571

INDUSTRIAL - 0.14%

5,974 Boyd Group Income Fund 329,094 394,881

TOTAL CANADIAN EQUITIES 83,634,616 117,838,497

- 175 -



DECEMBER 31, 2015


No. of

Shares/ Market


U.S. EQUITIES - Traded in U.S. Dollars - 31.02%

FINANCIALS - 8.18%

29,200 American International Group Inc. $ 1,774,561 $ 2,504,381

33,700 Ameritrade 1,174,471 1,618,902

32,400 Citigroup Inc. 1,464,110 2,320,553

11,466 Encore Capital Group Inc. 592,246 461,469

17,800 Great Western Bancorp Inc. 515,083 714,913

66,800 HDFC Bank Ltd. 2,057,803 5,694,994

8,960 PacWest Bancorp 515,440 534,468

2,794 Signature Bank/New York NY 461,982 593,066

56,900 Visa Inc. 1,990,814 6,107,031

36,400 Wells Fargo & Co. 1,325,954 2,738,526

11,872,464 23,288,303

CONSUMER STAPLES - 6.51%

12,100 Clorox Co. 1,780,835 2,123,946

29,500 Conagra Foods Inc. 1,626,100 1,721,308

31,800 General Mills Inc. 2,327,992 2,537,686

22,000 Home Depot Inc. 1,288,239 4,026,748

21,100 Hormel Foods Corp. 1,665,275 2,309,326

14,900 Kimberly-Clark Corp. 2,118,062 2,625,129

5,600 Mondelez International Inc. 310,474 347,528

4,600 Kraft Heinz Co. 430,746 463,219

37,400 Reynolds American Inc. 2,237,175 2,388,798

13,784,898 18,543,688

INFORMATION TECHNOLOGY - 4.77%

3,600 Alliance Data Systems Corp. 760,137 1,377,982

660 Alphabet Inc. - Class A 208,832 710,665

2,687 Alphabet Inc. - Class C 1,016,687 2,822,129

9,733 Blackhawk Network Holdings Inc. 463,431 595,530

6,100 Computer Sciences Corp. 278,420 275,898

5,100 CSRA Inc. 174,150 211,752

16,185 Evertec Inc. 445,970 374,977

Balance forward - INFORMATION TECHNOLOGY 3,347,627 6,368,933

- 176 -



DECEMBER 31, 2015


No. of

Shares/ Market


INFORMATION TECHNOLOGY - 4.77% - cont’d

Balance brought forward $ 3,347,627 $ 6,368,933

20,700 Facebook Inc. 1,082,132 2,998,383

16,766 Flir Systems Inc. 636,791 651,340

6,689 Greatbatch Inc. 525,004 486,023

3,275 Littelfuse Inc. 395,322 485,033

11,518 M/A-COM Technology Solutions 484,603 651,824

17,800 Microsoft Corporation 986,031 1,366,761

7,497 Universal Display Corp. 391,170 564,861

7,848,680 13,573,158

HEALTH CARE - 4.19%

7,513 Corvel Corp. 347,303 456,680

21,100 CVS Health Corp. 1,693,901 2,855,118

21,400 Gilead Sciences Inc. 2,108,420 2,997,005

8,940 McKesson Corp. 2,306,008 2,440,319

5,589 Mednax Inc. 512,667 554,303

13,300 Merck & Co Inc. 956,394 972,268

26,200 Pfizer Inc. 1,135,264 1,170,499

11,500 Phibro Animal Health Corp. 487,374 479,549

9,547,331 11,925,741

CONSUMER DISCRETIONARY - 2.90%

7,649 Gentherm Inc. 494,246 501,787

3,853 Carter's Inc. 454,846 474,757

25,530 Chico's FAS Inc. 540,408 377,009

26,098 Fox Factory Holding Corp. 498,470 597,057

16,959 Houghton Mifflin Harcourt Co. 510,035 511,204

24,900 L Brands Inc. 1,381,300 3,302,110

15,896 Markit Ltd. 529,706 663,742

4,723 Morningstar Inc. 462,520 525,611

62,800 Staples Inc. 1,072,002 823,087

11,660 Steve Madden Ltd. 546,458 487,673

6,489,991 8,264,037

Balance forward 49,543,364 75,594,927

- 177 -



DECEMBER 31, 2015


No. of

Shares/ Market


U.S. EQUITIES - Traded in U.S. Dollars - 31.02% - cont’d


INDUSTRIAL - 2.48%

15,030 Altra Industrial Motion Corp. 520,834 521,702

7,513 B/E Aerospace Inc. 447,863 440,563

9,677 Copart Inc. 485,126 509,067

10,120 Corrections Corp. of America 439,876 371,021

12,052 Douglas Dynamics Inc. 364,944 351,447

4,334 Nordson Corp. 424,996 384,788

42,096 PGT Inc. 610,185 663,591

20,500 Sensata Technologies Holding 1,497,701 1,306,814

5,185 The Toro Co. 445,040 524,353

18,700 Waste Management Inc. 1,260,527 1,381,258

8,768 Woodward Inc. 541,234 602,620

7,038,326 7,057,224

MATERIALS - 1.45%

8,479 CSW Industrials Inc. 322,413 442,055

20,300 Ecolab Inc. 2,637,156 3,213,529

43,536 Real Industry Inc. 588,582 483,838

3,548,151 4,139,422

TELECOMMUNICATION SERVICES - 0.30%

7,495 J2 Global Inc. 644,921 853,912

ENERGY - 0.24%

4,103 Dril-Quip Inc. 311,357 336,341

14,645 Frank's International NV 349,274 338,284

660,631 674,625

TOTAL U.S. EQUITIES 61,435,393 88,320,110

- 178 -



DECEMBER 31, 2015


No. of

Shares/ Market


GLOBAL EQUITIES - 27.04%


9,891 Ain Holdings Inc. - Traded in Japanese Yen $ 491,183 $ 660,303

23,600 Asahi Group Holdings Ltd. - Traded in Japanese yen 967,584 1,031,945

350,882 Asaleo Care Ltd. - Traded in Australian Dollars 614,301 562,533

39,200 British American Tobacco PLC - Traded in Pound Sterling 1,526,397 3,016,628

20,210 Danone SA - Traded in Euros 1,672,427 1,891,668

73,953 Davide Campari - Milano SPA - Traded in Euros 737,530 889,152

10,452 Delhaize Group - Traded in Euros 1,206,352 1,410,449

57,500 Diageo PLC - Traded in Pound Sterling 1,227,884 2,178,422

88,145 Greencore Group PLC - Traded in Pound Sterling 561,652 637,306

5,200 Kao Corp. - Traded in Japanese Yen 307,486 374,374

3,300 Kerry Group PLC - Traded in Euros 322,299 381,093

30,200 Kirin Holdings Co. Ltd. - Traded in Japanese Yen 546,599 572,674

63,252 Koninklijke Ahold NV - Traded in Euros 1,622,086 1,851,321

4,800 Lawson Inc. - Traded in Japanese Yen 449,705 544,193

44,036 Nestle SA - Traded in Swiss Francs 3,383,531 4,532,021

85,400 Prudential PLC - Traded in Pound Sterling 2,259,797 2,668,162

17,896,813 23,202,244

FINANCIALS - 4.60%

15,105 Aalberts Industries NV - Traded in Euros 589,094 721,674

295,200 AIA Group Ltd. - Traded in Hong Kong Dollars 2,431,515 2,456,342

7,908 Aurelius AG - Traded in Euros 435,979 571,903

16,101 Azimut Holding SPA - Traded in Euros 583,520 558,010

62,649 Foxtons Group PLC - Traded in Pound Sterling 253,532 240,354

21,119 Grand City Properties SA - Traded in Euros 486,953 678,913

51,026 IG Group Holdings PLC - Traded in Pound Sterling 691,039 835,633

12,621 Jafco Co. Ltd. - Traded in Japanese Yen 620,645 691,474

83,593 Nordax Group AB - Traded in Swedish Krona 562,866 698,319

65,512 Permanent TSB Group Holdings P - Traded in Euros 399,668 452,907

26,942 Savills PLC - Traded in Pound Sterling 464,198 487,128

18,017 Suruga Bank Ltd. - Traded in Japanese Yen 502,361 521,135

120,400 UBS AG - Traded in Swiss Francs 2,309,861 3,244,462

96,890 Unifin Financiera SAPI De CV - Traded in Mexican Pesos 402,442 415,306

11,562 Zenkoku Hosho Co. Ltd. - Traded in Japanese Yen 541,118 535,641

11,274,791 13,109,201

Balance forward 29,171,604 36,311,445

- 179 -



DECEMBER 31, 2015


No. of

Shares/ Market


GLOBAL EQUITIES - 27.04% - cont’d


INDUSTRIAL - 4.07%

40,310 Alimak Group AB - Swedish Krona 538,907 564,538

4,369 Duerr AG - Traded in Euros 431,326 483,270

7,200 Fanuc Corp. - Traded in Japanese Yen 1,223,544 1,746,942

17,642 Galliford Try PLC - Traded Pound Sterling 495,609 549,031

6,646 Indutrade AB - Traded in Swedish Krona 449,787 523,079

10,227 Intrum Justitia AB - Traded in Swedish Krona 371,854 483,458

3,600 Keyence Corp. - Traded in Japanese Yen 2,073,071 2,779,527

7,300 Makita Corp. NPV - Traded in Japanese Yen 518,934 590,682

8,505 Norma Group SE - Traded in Euros 568,537 653,808

4,800 Secom Co. Ltd. - Traded in Japanese Yen 388,520 455,244

51,426 Securitas AB - Traded in Swedish Krona 861,988 1,095,065

54,982 Sinmag Equipment Corp. - Traded in Taiwan New Dollars 388,467 240,219

52,006 Sporton International Inc. - Traded in Taiwan New Dollars 376,931 440,232

245,169 Spotless Group Holdings Ltd. - Traded in Australian Dollars 491,046 265,744

33,882 Temp Holdings Co. Ltd. - Traded in Japanese Yen 478,123 735,116

9,656,644 11,605,955


10,248 Adidas AG - Traded in Euros 1,000,559 1,384,769

167,802 Ainsworth Game Technology Ltd. - Traded Australian Dollars 431,720 384,072

303,272 Cairn Homes PLC - Traded in Euros 498,021 544,666

13,225 Dignity PLC - Traded in Pound Sterling 498,300 689,550

9,100 Familymart Co NPV - Traded in Japanese Yen 528,272 590,739

48,270 Gulliver International Co. Ltd. - Traded in Japanese Yen 568,313 673,928

206,189 Pacific Textile Holdings Ltd. - Traded in Hong Kong Dollars 371,338 440,335

11,477 Plastic Omnium SA - Traded in Euros 403,888 505,907

17,498 Publicis Groupe SA - Traded in Euros 1,603,691 1,614,156

80,900 Rakuten Inc. - Traded in Japanese Yen 1,408,913 1,306,416

9,067 Rightmove PLC - Traded in Pound Sterling 536,832 763,250

7,849,847 8,897,788

Balance forward 46,678,095 56,815,188

- 180 -



DECEMBER 31, 2015


No. of

Shares/ Market




HEALTH CARE - 2.08%

15,946 Glaxosmithkline PLC - Traded in Pound Sterling 429,811 446,788

20,900 Mitsubishi Tanabe Pharma Corp.- Traded in Japanese Yen 469,526 504,212

40,300 Novo Nordisk A/S - Traded in Danish Krone 1,148,683 3,245,756

4,520 Roche Holding AG - Traded in Swiss Francs 1,621,870 1,724,697

3,669,890 5,921,453


24,600 Amadeus IT Holding SA - Traded in Euros 1,324,288 1,504,179

46,133 Auto Trader Group PLC - Traded in Pound Sterling 332,847 417,998

20,017 Carsales.com Ltd. - Traded in Australian Dollars 220,731 237,152

2,599 Ingenico Group - Traded in Euros 368,443 455,053

51,100 Konica Minolta Inc. - Traded in Japanese Yen 719,911 718,733

118,005 Telit Communications PLC - Traded in Pound Sterling 529,808 514,135

24,464 Topcon Corp. - Traded in Japanese Yen 644,430 579,775

4,140,458 4,427,025


18,200 KDDI Corp. - Traded in Japanese Yen 588,460 660,706

74,390 Orange SA - Traded in Euros 1,519,732 1,731,234

62,200 Vivendi SA - Traded in Euros 1,933,339 1,856,520

4,041,531 4,248,460

ENERGY - 1.13%

47,956 AGL Energy Ltd. - Traded in Australian Dollars 750,377 867,955

55,661 Hunting PLC - Traded in Pound Sterling 486,915 347,010

48,700 Inpex Corp. - Traded in Japanese Yen 606,774 664,517

152,000 Osaka Gas Co. Ltd. - Traded in Japanese Yen 785,275 766,990

88,002 Z Energy Ltd. - Traded in New Zealand Dollars 501,749 564,138

3,131,090 3,210,610

Balance forward 61,661,064 74,622,736

- 181 -



DECEMBER 31, 2015


No. of

Shares/ Market




MATERIALS - 0.85%

9,037 Air Liquide SA - Traded in Euros 1,426,830 1,407,744

104,887 Pact Group Holdings Ltd. - Traded in Australian Dollars 422,009 527,730

29,100 RPC Group PLC - Traded in Pound Sterling 475,515 494,672

2,324,354 2,430,146

TOTAL GLOBAL EQUITIES 63,985,418 77,052,882

TOTAL EQUITIES - 99.43% 209,055,427 283,211,489

OTHER NET ASSETS - 0.57% 1,627,759 1,627,759

TOTAL NET ASSETS - 100% $ 210,683,186 $ 284,839,248

- 182 -




DECEMBER 31, 2015

- 183 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM High Yield Bond Fund We have audited the accompanying financial statements of NWM High Yield Bond Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 184 -


NWM High Yield Bond Fund

Opinion


financial position of NWM High Yield Bond Fund as at December 31, 2015 and the results

of its financial performance and its cash flows for the year then ended in accordance with



Vancouver, Canada

March 10, 2016

- 185 -



DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 224,488 $ 194,486 Cash 2,144 874 Distribution receivable 907 --- Subscriptions receivable 5,014 5 $ 232,553 $ 195,365

LIABILITIES

Current liabilities Administration and management fees payable $ 189 $ 209 Distributions payable 4,600 1,585 Redemptions payable 647 44 5,436 1,838 Net assets attributable to holders of redeemable units (note 4) $ 227,117 $ 193,527 Net assets attributable to holders of redeemable units by Class Class O $ 207,299 $ 183,164 Class O US dollar, in Cdn dollars 7,331 5,837 Class N 11,747 4,526 Class A 740 --- $ 227,117 $ 193,527 Number of redeemable units outstanding Class O 19,449,790 16,273,711 Class O US dollar, in Cdn dollars 685,337 515,106 Class N 1,081,966 396,763 Class A 68,956 --- 21,286,049 17,185,580 Net assets attributable to holders of redeemable units per unit Class O $ 10.66 $ 11.26 Class O US dollar, in Cdn dollars $ 10.70 $ 11.33 Class N $ 10.86 $ 11.41 Class A $ 10.73 $ ---





- 186 -







2015 2014

Income

Interest and other $ 13,825 $ 12,470

Net realized gain on sale of investments (note 5) 7,300 335


8,117 7,748

Expenses






Class O $ 6,526 $ 6,225

Class O US dollar, in Cdn dollars 236 50

Class N 117 41

Class A (6) ---

$ 6,873 $ 6,316


attributable to holders of redeemable units per unit

(note 13)

Class O $ 0.37 $ 0.41

Class O US dollar, in Cdn dollars $ 0.52 $ 0.14

Class N $ 0.17 $ 0.16

Class A $ (0.37) $ ---

- 187 -






(In 000's)


Class O Class O US Dollar Class N Class A Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Net assets attributable to holders of redeemable units at beginning of the year $ 183,164 $ 159,911 $ 5,837 $ 2,222 $ 4,526 $ 1,475 $ --- $ --- $ 193,527 $ 163,608 Redeemable unit transactions Proceeds from

redeemable

units issued 54,612 44,253 4,119 5,551 7,160 3,010 843 --- 66,734 52,814 Reinvestments of distributions to holders of redeemable units 10,593 7,190 412 286 809 236 28 --- 11,842 7,712 Redemption of redeemable units (29,137) (22,129) (2,765) (1,954) --- --- (91) --- (31,993) (24,083) 36,068 29,314 1,766 3,883 7,969 3,246 780 --- 46,583 36,443 Distributions to holders of redeemable units From net investment

income (11,800) (10,580) (300) (274) (454) (203) (12) --- (12,566) (11,057) From realized gains on sales of investments (6,659) (321) (208) (8) (411) (6) (22) --- (7,300) (335) Return of capital --- (1,385) --- (36) --- (27) --- --- --- (1,448) (18,459) (12,286) (508) (318) (865) (236) (34) --- (19,866) (12,840) Increase (decrease) in net assets attributable to holders of redeemable units 6,526 6,225 236 50 117 41 (6) --- 6,873 6,316 Net assets attributable to holders of redeemable units at end of the year $ 207,299 $ 183,164 $ 7,331 $ 5,837 $ 11,747 $ 4,526 $ 740 $ --- $ 227,117 $ 193,527

- 188 -





(In 000's)


2015 2014

Cash flows used in operating activities



Adjustments for:

Net realized gain on sale of investments (7,300) (335)

Change in unrealized depreciation of

investments, net 13,008 5,057


Proceeds from sale of and gains distributions

from investments 73,946 1,508

Distributions receivable (907) 170

Administration and management fees payable (20) 4

Net cash flows used in operating activities (24,056) (25,267)



net of reinvested distributions (5,009) (5,452)




Net increase (decrease) in cash during the year 1,270 (1,939)

Cash, beginning of the year 874 2,813

Cash, end of the year $ 2,144 $ 874

Cash includes:

Cash and funds held by broker $ 2,130 $ 866

Money market mutual funds 14 8

$ 2,144 $ 874


Interest received and other income $ 12,918 $ 14,104

- 189 -



DECEMBER 31, 2015


1. General

The NWM High Yield Bond Fund (the Fund) is an open-ended mutual fund trust formed

under the laws of British Columbia and governed by a Declaration of Trust (Declaration

of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd.




5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests,

directly and indirectly, in higher yielding bonds, debentures and convertible debentures

issued by Canadian and foreign governments and corporations.


These financial statements have been prepared in accordance and compliance with

International Financial Reporting Standards (IFRS) as issued by the International

Accounting Standards Board (IASB) and Interpretation of the International Financial

Reporting Interpretations Committee (IFRIC).


of March 10, 2016.




The following is a summary of significant accounting policies followed by the Fund in





management to make estimates and assumptions that affect the amounts reported

and disclosures made in these financial statements and accompanying notes.

However, uncertainty about these assumptions and estimates could result in

outcomes that require a material adjustment to the carrying amount of assets or

liabilities in the future. In classifying and measuring financial instruments held by the Fund, the Manager


- 190 -



DECEMBER 31, 2015




The Fund also has made significant judgements when determining the classification

of its redeemable units as financial liabilities in accordance with IAS 32 Financial

Instruments: Presentation. These judgements center upon the determination that

the Fund’s redeemable units include a contractual obligation to distribute any net

income and net realized capital gains at least annually in cash (at the request of the

unitholder) and, therefore, the ongoing redemption feature is not the unit’s only

contractual obligation.





Fund’s investments are measured at fair value through profit and loss (FVTPL). All

other financial assets and liabilities are measured at amortized cost. Under this

method, financial assets and liabilities reflect the amount required to be received or

paid, discounted, when appropriate, at the contract’s effective interest rate. The

Fund’s accounting policies for measuring the fair value of its investments and

derivatives are identical to those used in measuring its net asset value (NAV) for

transactions with unitholders.









Manager determines the point within the bid-ask spread that is most representative

of fair value based on the specific facts and circumstances. The Fund’s policy is to

recognize transfers into and out of the fair value hierarchy levels as of the date of

the event or change in circumstances giving to the transfer.

The change in net excess (shortfall) of the fair value of investments (including


or amortized cost of the investments is included as change in unrealized

appreciation (depreciation) of investments in the statement of comprehensive

income.

- 191 -



DECEMBER 31, 2015



(iv) Investment transactions, income and expenses

Investment transactions are accounted for as of the trade date. Interest income

and expenses are accrued on a daily basis and trust income is recognized on the

effective date of the distribution. Realized gains and losses from investment

transactions are calculated on an average cost basis which excludes brokerage

commissions and other trading expenses. Distributions received from investments,

which are treated as return of capital for income tax purposes, are recorded as a

reduction of the average cost of the underlying investments.


sale of investments by the Fund is recognized in increase (decrease) in net assets

attributable to holders of redeemable units in the current year.

(v) Translation of foreign currencies

The reporting and functional currency of the Fund is the Canadian dollar.

The market values of investments and other assets and liabilities denominated in

a foreign currency are translated into Canadian dollars at the rate of exchange

prevailing at each balance sheet date.

Foreign currency purchases and sales of investments and foreign currency interest

income are translated into the reporting currency at the rate of exchange

prevailing on the respective dates of the transactions. Foreign exchange gains and

losses on the sale of investments and foreign currencies are included in net

realized gain (loss) on sale of investments in the statement of comprehensive

income. Unrealized foreign exchange gains and losses on investments held are

included in change in unrealized appreciation (depreciation) of investments in the

statement of comprehensive income.

The Class O US dollar units are issued, reinvested, redeemed and distributed in

United States dollars. The unit transactions denominated in a foreign currency

are translated into Canadian dollars at the rate of exchange prevailing on the

respective date of the transaction.

(vi) Impairment of financial assets

At each reporting date, the Fund assesses whether there is objective evidence that

a financial asset measured at amortized cost is impaired. If such evidence exists,

the Fund recognizes an impairment loss as the difference between the amortized

cost of the financial asset and the present value of the estimated future cash flows,

discounted using the instrument’s original effective interest rate. Impairment

losses on financial assets at amortized cost are reversed in subsequent periods if

the amount of the loss decreases and the decrease can be related objectively to an

event occurring after the impairment was recognized.

- 192 -



DECEMBER 31, 2015



(vii) Cash

Cash is comprised of deposits with the Fund’s custodian and money market mutual

funds.


unit



increase (decrease) in net assets attributable to holders of redeemable units


the year. Refer to note 13 for the calculation.

(ix) Income tax









statements.





The Fund is authorized to issue an unlimited number of Class A, Class F, Class N, Class

O and Class O US dollar units. At December 31, 2015 Class A, Class N, Class O and

Class O US dollar units have been issued.

- 193 -



DECEMBER 31, 2015


4. Redeemable units of the Fund - continued

Class O Class O US Dollar Class N Class A Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Redeemable units

outstanding,

beginning of

the year

y

16,273,711 13,795,164 515,106 190,747 396,763 125,900 --- --- 17,185,580 14,111,811

Redeemable units

issued, sales 4,746,891 3,730,710 368,567 463,055 612,735 250,853 74,293 --- 5,802,486 4,444,618

Redeemable units

issued,

reinvestment

of distributions 959,619 615,043 37,159 24,431 72,468 20,010 2,662 --- 1,071,908 659,484

Redeemable units

redeemed (2,530,431) (1,867,206) (235,495) (163,127) --- --- (7,999) --- (2,773,925) (2,030,333)

Redeemable units

outstanding,

end of the year 19,449,790 16,273,711 685,337 515,106 1,081,966 396,763 68,956 --- 21,286,049 17,185,580

The Class A, Class N and Class O units and Class O US dollar units of the Fund, which

are redeemable at the option of the holder in accordance with the provisions of the

Declaration of Trust, do not have any nominal or par value. The Class N units of the

Fund represent units issued and held by another Fund that is managed by the Manager.

The Class A units of the Fund represents units issued to clients of a financial advisory

company related to the Manager.



2015 2014


from investments $ 73,946 $ 1,508



301,895 193,412



Net realized gain on sale of investments $ 7,300 $ 335

- 194 -



DECEMBER 31, 2015


6. Administration fees and expenses


annum) of the NAV of the Fund on the last business day of each month calculated and

payable monthly in arrears. The Manager has rebated a portion of administration fees


management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units

and Class O US dollar units on the last business day of each month calculated and

payable to the Manager monthly in arrears. The Class N units are held by another fund

managed by the Manager. There are no management fees charged with respect to the

Class N units. The Class A units of the Fund are issued to clients of a company related

to the Manager. The Class A units are subject to a management fee equal to 1/12 of

0.3% (0.3% per annum) of the NAV of the Class A units, on the last business day of each

month calculated and payable to the Manager monthly in arrears. In addition, from

time to time the Manager may engage sub-managers. Fees paid to sub-managers are

the responsibility of the Fund. The Manager is responsible for the payment, out of the

administration fee, of all ordinary course expenses relating to the operation of the Fund,

including, but not limited to, legal and audit fees, bookkeeping charges, registry and

transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services

required in connection with the provision of information to the redeemable unitholders

and all costs relating to the formation and organization of the Fund.


The Fund did not pay any brokerage commissions on securities transactions during the

year for brokerage services provided to the Fund.






net capital received by the Fund is managed in accordance with the investment

objective and strategies of the Fund and to maintain adequate liquidity to meet

unitholders’ redemption requests. Units are redeemable weekly at the NAV per unit

calculated on the valuation day. Unitholders must provide the Manager with notice of

redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is

not received by this time, the effective date of the requested redemption will be the next

following valuation day and the NAV per unit will be calculated on such next following

valuation day.

- 195 -



DECEMBER 31, 2015


8. Capital management - continued



stock exchange, options exchange or futures exchange within or outside Canada on

which securities or derivatives owned by the Fund are listed and traded, or on which

such securities or derivatives are traded, if those securities or derivatives represent

more than 50 percent by value, or underlying market exposure, of the total assets of the

Fund without allowance for liabilities and if those securities or derivatives are not

traded on any other exchange that represents a reasonably practical alternative for the

Fund.



9. Risks associated with financial instruments


instruments, as follows: Market risk (including price risk, currency risk and interest

rate risk), liquidity risk, credit risk, and concentration risk. The value of investments

within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest

rates, economic conditions, market and company news related to specific securities

within the Fund.



advisors that regularly monitor the Fund’s positions and market events and diversify

the investment portfolios, within the constraints of the Fund’s investment objectives

and strategies.




capital.

a) Market risk






- 196 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued a) Market risk - continued

i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of mutual funds. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager. As at December 31, 2015, if relevant benchmark indexes and the Fund’s financial assets and liabilities traded in active markets 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 approximately $11,224,000 (2014 - $9,715,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

ii) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on cash and investments denominated in currencies other than Canadian dollars. Included in net assets are $104,336,547 (2014 - $37,171,379) of US dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager.

As at December 31, 2015 if the Canadian dollar had strengthened or weakened

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 approximately $5,217,000 (2014 - $1,859,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

iii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market interest rates. The Fund is exposed to interest rate risk associated with its mutual funds. The Manager manages this risk by purchasing mutual funds, which hold many investments.

A small change in the prevailing levels of market interest rates could have a significant impact on the underlying investments held by the Fund’s mutual fund investments and on the Fund’s net assets attributable to holders of redeemable units of the Fund.

- 197 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued

b) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty meeting the

obligations associated with the Fund's financial liabilities. The Fund is exposed to weekly cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees and by holding cash and short-term investments. The tables below analyze the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the tables are the contractual undiscounted cash flows.

On


Financial liabilities (in 000’s) Administration and management fees payable $ --- $ 189 $ 189 Distributions payable --- 4,600 4,600 Redemptions payable --- 647 647


$ 227,117 $ 5,436 $ 232,553

On


Financial liabilities (in 000’s) Administration and management fees payable $ --- $ 209 $ 209 Distributions payable --- 1,585 1,585 Redemptions payable --- 44 44


$ 193,527 $ 1,838 $ 195,365





- 198 -



DECEMBER 31, 2015



c) Credit risk


loss for the other party by failing to discharge an obligation. The fair value of debt

securities includes consideration of the credit worthiness of the debt issuer. All

transactions in listed securities are settled or paid for upon delivery using approved

brokers. The credit risk related to the associated receivables is considered limited,

as delivery of securities sold is only made once the broker has received payment.

Payment is made on a purchase once the broker has received the securities. The

trade will fail if either party fails to meet its obligation. However, there are risks

involved in dealing with custodians or prime brokers who settle trades and in rare

circumstances, the securities and other assets deposited with the custodians or

broker may be exposed to credit risk with regard to such parties. In addition, there

may be practical problems or time delays associated with enforcing the Fund’s rights

to its assets in the case of an insolvency of any such party. All investments and cash

are held with two custodians and one trustee. This risk is managed by the choice of

the custodians and trustee.



instruments within the same category such as, geographic region, asset type,

industry sector or market segment. Financial instruments in the same category

have similar characteristics and may be affected similarly by changes in economic or

other conditions. See the schedule of investment portfolio for the various segment

allocations of the Fund.








Level 2 Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly; and


If inputs of different levels are used to measure as asset’s or liability’s fair value, the

classification within the hierarchy is based on the lowest level input that is significant to

the fair value measurement. The following table illustrates the classification of the

Fund’s assets measured at fair value hierarchy as at December 31, 2015.

- 199 -



DECEMBER 31, 2015


10. Fair value measurement - continued

2015 Level 1 Level 2 Total

Mutual Funds $ 166,880,602 $ --- $ 166,880,602

Limited Partnerships --- 57,607,530 57,607,530

$ 166,880,602 $ 57,607,530 $ 224,488,132

2014 Level 1 Level 2 Total

Mutual Funds $ 194,486,622 $ --- $ 194,486,622

Limited Partnerships --- --- ---

$ 194,486,622 $ --- $ 194,486,622 11. Financial instruments by category The following table presents the carrying amounts of the Fund’s financial assets by

category as at December 31, 2015. All of the Fund’s financial liabilities as at December 31, 2015 were carried at amortized cost.

Financial

Assets at Financial FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 224,488 $ --- $ 224,488

Cash --- 2,144 2,144

Distribution receivable --- 907 907


$ 224,488 $ 8,065 $ 232,553

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 194,486 $ --- $ 194,486

Cash --- 874 874

Distributions receivable --- 5 5

Subscriptions receivable

$ 194,486 $ 879 $ 195,365

- 200 -



DECEMBER 31, 2015


12. Related party information In addition to items disclosed elsewhere at December 31, 2015, the Manager and parties


13. Increase (decrease) in net assets from operations attributable to holders of redeemable

units per unit

The increase (decrease) in net assets from operations attributable to holders of


2015 2014

Class O






Class O US dollar


holders of redeemable units (in 000’s) $ 236 $ 50




Class N






Class A

Decrease in net assets from operations attributable

to holders of redeemable units (in 000’s) $ (6) $ ---



to holders of redeemable units per unit $ (0.37) $ ---

- 201 -



DECEMBER 31, 2015


14. Recent accounting pronouncements

The following pronouncements were issued by the IASB or the IFRIC. Those

pronouncements that are not applicable or do not have a significant impact to the Fund

have been excluded from the summary below. The following have not yet been adopted

and are being evaluated to determine the resultant impact on the Fund.


will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses

a single approach to determine whether a financial asset is measured at amortized cost

or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based

on how an entity manages its financial instruments in the context of its business model

and the contractual cash flow characteristics of the financial assets. Most of the

requirements in IAS 39 for classification and measurement of financial liabilities were

carried forward unchanged to IFRS 9. The new standard also requires a single

impairment method to be used, replacing the multiple impairment methods in IAS 39.

IFRS 9 also includes requirements relating to a new hedge accounting model, which

represents a substantial overhaul of hedge accounting which will allow entities to better

reflect their risk management activities in the financial statements. The most

significant improvements apply to those that hedge non-financial risk, and so these

improvements are expected to be of particular interest to non-financial institutions.

IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier

application is permitted.

- 202 -



DECEMBER 31, 2015


No. of Market


CANADIAN MUTUAL FUNDS – 73.12%

1,391,348 BMO Guardian US High Yield Bond Fund – Class I $ 13,486,248 $ 12,403,173

1,403,323 Guardian Strategic Income Fund – Class I 13,756,926 13,246,722

2,071,193 Monegy Leveraged High Yield Bond Fund – USD 42,995,406 46,392,504

5,099,443 Phillips, Hager & North High Yield Bond Fund -

Series O 58,860,848 53,383,521

4,482,120 Picton Mahoney Income Opportunities Fund – Class F 48,023,777 41,454,682

TOTAL CANADIAN INVESTMENTS – 73.12% 177,123,205 166,880,602

FOREIGN INVESMENTS – traded in US dollars – 25.24%

467,743 Oaktree Global High Yield Bond Fund LP 58,125,733 57,607,530

TOTAL INVESTMENT PORTFOLIO – 98.36% 235,248,938 224,488,132

OTHER NET ASSETS – 1.64% 3,743,899 3,743,899

TOTAL NET ASSETS – 100.00% $ 238,992,837 $ 228,232,031

- 203 -




DECEMBER 31, 2015

- 204 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Real Estate Fund We have audited the accompanying financial statements of NWM Real Estate Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 205 -


NWM Real Estate Fund

Opinion


financial position of NWM Real Estate Fund as at December 31, 2015 and the results of

its financial performance and its cash flows for the year then ended in accordance with



Vancouver, Canada

March 14, 2016

- 206 -



DECEMBER 31, 2015




ASSETS 2015 2014

Current assets

Investments $ 120,416 $ 88,271

Cash 64 882

Other income receivable 381 246

Receivable for investments sold 554 ---

Subscriptions receivable 730 15

$ 122,145 $ 89,414

LIABILITIES

Current liabilities

Administration and management fees payable $ 53 $ 39

Distributions payable 2,867 1,112

Redemptions payable 669 ---

3,589 1,151

Net assets attributable to holders of redeemable

units (note 4) $ 118,556 $ 88,263


redeemable units by Class

Class O $ 112,555 $ 86,403

Class N 4,818 1,860

Class A 1,183 ---

$ 118,556 $ 88,263

Number of redeemable units outstanding

Class O 6,805,927 5,430,181

Class N 286,949 115,784

Class A 71,500 ---

7,164,376 5,545,965


redeemable units per unit

Class O $ 16.54 $ 15.91

Class N $ 16.79 $ 16.06

Class A $ 16.55 $ ---





- 207 -







2015 2014

Income



Change in unrealized appreciation of investments, net 3,251 2,255

11,836 7,693

Expenses

Administration and management fees 520 388


592 465

Increase in net assets from operations attributable

to holders of redeemable units $ 11,244 $ 7,228


to holders of redeemable units per class

Class O $ 10,907 $ 7,105

Class N 319 123

Class A 18 ---

$ 11,244 $ 7,228


to holders of redeemable units per unit (note 13)

Class O $ 1.71 $ 1.57

Class N $ 1.69 $ 1.55

Class A $ 0.96 $ ---

- 208 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 86,403 $ 60,699 $ 1,860 $ 557 $ --- $ --- $ 88,263 $ 61,256

Redeemable unit

transactions

Proceeds from

redeemable

units issued 41,951 35,333 2,725 1,380 1,240 --- 45,916 36,713

Reinvestments of

distribution to

holders of

redeemable units 4,051 4,300 182 122 26 --- 4,259 4,422

Redemption of

redeemable units (23,130) (14,777) --- (200) (53) --- (23,183) (14,977)

22,872 24,856 2,907 1,302 1,213 --- 26,992 26,158


redeemable units

From net investment

income (1,403) (829) (49) (16) (9) --- (1,462) (845)

From realized gains

on sale of

investments (6,224) (4,096) (219) (80) (39) --- (6,481) (4,176)

Return of capital --- (1,332) --- (26) --- --- --- (1,358)

(7,627) (6,257) (268) (122) (48) --- (7,943) (6,379)

Increase in net assets

from operations

attributable to holders

of redeemable units 10,907 7,105 319 123 18 --- 11,244 7,228




- 209 -





(In 000's)


2015 2014




Adjustments for:


Change in unrealized appreciation of

investments, net (3,251) (2,255)




Other income receivable (135) (41)









Net decrease in cash during the year (818) (2,242)


Cash, end of the year $ 64 $ 882

Cash flow from operating activities include:

Interest and other income received $ 1,847 $ 1,190

- 210 -



DECEMBER 31, 2015


1. General

The NWM Real Estate Fund (the Fund) is an open-ended mutual fund trust formed under

the laws of British Columbia and governed by a declaration of trust (Declaration of Trust).

Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the

Manager), provides investment management services, CIBC Mellon Trust Company is the

trustee and CIBC Mellon Trust Company and Credential Securities are the custodians of

the Fund. The address of the Fund’s registered office is 5th Floor, 1508 West Broadway,

Vancouver, British Columbia. The Fund invests in real estate investment companies,

trusts and limited partnerships.






The policies in these financial statements are based on IFRS issued and outstanding as of

March 14, 2016.






applied by the fund.





However, uncertainty about these assumptions and estimates could result in outcomes

that require a material adjustment to the carrying amount of assets or liabilities in

the future.


required to make judgements about the classification of financial instruments and the

applicability of the fair value option to its financial instruments which are not held for

trading. The fair value option has been applied to the Fund’s investments as the

investments are managed on a fair value basis in accordance with the Fund’s

investment strategy.

- 211 -



DECEMBER 31, 2015















Fund’s investments are measured at fair value through profit or loss (FVTPL). All

other financial assets and liabilities, including redeemable units, are measured at

amortized cost. Under this method, financial assets and liabilities reflect the

amount required to be received or paid, discounted, when appropriate, at the

contract’s effective interest rate. The Fund’s accounting policies for measuring fair

value of its investments are identical to those used in measuring its net asset value

(NAV) for transactions with unitholders.









Manager determines the point within the bid-ask spread that is most representative

of fair value based on the specific facts and circumstances. The fair value of the

Fund’s investments not traded in active markets is calculated by dividing the

aggregate market value of the net assets held by each investment not traded in

active markets and multiplying that by the total number of units the Fund owns.

The Fund’s policy is to recognize transfers into and out of the fair value hierarchy

levels as of the date of the event or change in circumstances giving rise to the

transfer.

The change in net excess (shortfall) of the fair value of investments over (under) the

total average cost or amortized cost of the investments is included as change in

unrealized appreciation (depreciation) of investments in the statement of

comprehensive income.

- 212 -



DECEMBER 31, 2015




Investment transactions are accounted for as of the trade date. Interest income and

expenses are accrued on a daily basis and trust income is recognized on the effective

date of the distribution. Realized gains and losses from investment transactions are

calculated on an average cost basis which excludes brokerage commissions and other

trading expenses. Distributions received from investments, which are treated as

return of capital for income tax purposes, are recorded as a reduction of the average

cost of the underlying investments.

Transaction costs, such as brokerage commissions, incurred in the purchase and sale

of investments by the Fund is recognized in increase (decrease) in net assets from

operations attributable to holders of redeemable units in the current year.


The reporting currency and functional currency of the Fund is the Canadian dollar.

The market values of investments and other assets and liabilities denominated in a

foreign currency are translated into Canadian dollars at the rate of exchange



income are translated into the reporting currency at the rate of exchange prevailing

on the respective dates of the transactions. Foreign exchange gains and losses on the

sale of investments and foreign currencies are included in net realized gain (loss) on

sale of investments in the statement of comprehensive income. Unrealized foreign

exchange gains and losses on investments held are included in change in unrealized


income.


At each reporting date, the Fund assesses whether there is objective evidence that a

financial asset measured at amortized cost is impaired. If such evidence exists, the

Fund recognizes an impairment loss as the difference between the amortized cost of

the financial asset and the present value of the estimated future cash flows,

discounted using the instrument’s original effective interest rate. Impairment losses

on financial assets at amortized cost are reversed in subsequent periods if the

amount of the loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognized.

(vii) Cash

Cash is comprised of deposits with the Fund’s custodians.

- 213 -



DECEMBER 31, 2015



(viii) Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit

Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets from operations attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. See note 13.

(ix) Income tax

The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) (Act). A mutual fund trust is subject to tax in each taxation year under Part I of the Act on the amount of its income for the year, including net realized taxable gains, less the portion thereof that it claims in respect of the amounts paid or payable to the redeemable unitholders for the year. The Fund distributes all of the net income for tax purposes and net taxable capital gains realized so that the Fund will not generally be liable for Canadian income tax thereon. Therefore, no provision for income tax has been made in these financial statements.


The NAV per unit is calculated by dividing the aggregate market value of the net assets by the total number of units outstanding.

4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and

Class O units. At December 31, 2015 only Class A, Class N and Class O units have been issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable units

outstanding,

beginning of

the year 5,430,181 3,891,314 115,784 35,510 --- --- 5,545,965 3,926,824

Redeemable

units issued,

sales 2,511,551 2,188,888 160,477 84,904 73,107 --- 2,745,135 2,273,792

Redeemable

units issued,

reinvestment

of distributions 241,896 268,527 10,688 7,542 1,534 --- 254,118 276,069

Redeemable

units redeemed (1,377,701) (918,548) --- (12,172) (3,141) --- (1,380,842) (930,720)

Redeemable units

outstanding,

end of the year 6,805,927 5,430,181 286,949 115,784 71,500 --- 7,164,376 5,545,965

- 214 -



DECEMBER 31, 2015



The Class A, Class N and Class O units of the Fund, which are redeemable at the option

of the holder in accordance with the provisions of the Declaration of Trust, do not have

any nominal or par value. The Class N units of the Fund are redeemable units issued and

held by another fund managed by the Manager. The Class A units of the Fund represent

units issued to clients of a financial advisory company related to the Manager.



2015 2014 Proceeds from sale of and gains distributions from investments $ 23,169 $ 10,162 Investments at cost, beginning of the year 76,359 50,578 Investments at cost, purchased during the year 45,460 31,736 121,819 82,314 Investments at cost, end of the year (105,253) (76,359) Cost of investments sold during the year 16,566 5,955 Net realized gain on sale of investments $ 6,603 $ 4,207



annum) of the NAV of the Fund on the last business day of each month thereafter,

calculated and payable monthly in arrears. The Manager has rebated a portion of

administration fees based on the actual costs incurred by the Manager. The Class O

units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV

of the Class O units, on the last business day of each month calculated and payable to the

Manager monthly in arrears. The Class N units are held by another fund managed by the

Manager. There are no management fees charged with respect to the Class N units. The

Class A units of the Fund are issued to clients of a company related to the Manager. The

Class A units are subject to a management fee equal to 1/12 of 0.5% (0.5% per annum) of

the NAV of the Class A units, on the last business day of each month calculated and

payable to the Manager monthly in arrears. In addition, from time to time the Manager

may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund.

The Manager is responsible for the payment, out of the administration fee, of all ordinary


and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs,

custodial charges, trustee's fees, all services required in connection with the provision of

information to the redeemable unitholders and all costs relating to the formation and

organization of the Fund.

- 215 -



DECEMBER 31, 2015



services provided to the Fund was $72,082 (2014 - $77,194). Neither the Manager, nor the Fund has received investment or research services from

brokers in exchange for the commissions paid by the Fund to execute securities transactions ("soft dollars").


Redeemable units issued and outstanding are considered to be capital of the Fund. The net capital received by the Fund is managed in accordance with the investment objective and strategies of the Fund and to maintain adequate liquidity to meet unitholders’ redemption requests. Units are redeemable weekly at the NAV per unit calculated on the valuation day. Unitholders must provide the Manager with notice of redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this time, the effective date of the requested redemption will be the next following valuation day and the NAV per unit will be calculated on such next following valuation day. The Manager may suspend the right of unitholders to request that the Fund redeem its units for a period not exceeding ten months if and so long as, in the opinion of the Manager, reasonably arrived at, redemption of units of the Fund could be effected only by the conversion of significant assets of the Fund into cash at below the fair market value of those assets, or in circumstances where the conversion of assets of the Fund into cash for the purpose of effecting redemptions is impracticable. Unitholders of the Fund will be given written notice of any suspension of redemption of units. If, after a period of ten months has elapsed, the Manager is still of the opinion that redemption of units should continue to be suspended for either or both of the aforesaid reasons, the Manager will forthwith call a meeting of the unitholders of the Fund to consider the termination and winding-up of the Fund, such meeting to be held no later than 35 days from the date of expiry of the aforesaid ten month period. Redemptions will remain suspended until at least the date the meeting is held, and subject to such decisions reached at such meeting. The Fund distributes net income monthly and net realized capital gains annually in December of each calendar year. Distributions are automatically reinvested in units of the Fund, unless subscribers specify in advance, in writing, that they wish to receive distributions in cash.


The Fund’s activities expose it to a variety of risks associated with financial instruments, as follows: Market risk (including price risk and currency risk), liquidity risk, credit risk and concentration risk. The value of investments within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates, economic conditions, market and company news related to specific securities within the Fund. The Manager manages the potential adverse effects of financial risks on the Fund’s performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Fund’s positions and market events and diversify the investment portfolio, within the constraints of the Fund’s investment objectives and strategies.

- 216 -



DECEMBER 31, 2015






capital.

a) Market risk


instrument will fluctuate as a result of changes in market price. The following include

sensitivity analyses that show how the net assets attributable to holders of



i) Price risk




subject to the risk of changes in the prices of its investments. The value of a



countries where the investments are listed for trading. The investments of the

Fund are recognized at fair value and all changes in market conditions directly

affect changes in net assets attributable to holders of redeemable units. The

Fund's investment portfolio is monitored daily by the Manager.

As at December 31, 2015, if relevant benchmark indexes and the Fund’s

investments traded in active markets 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 approximately $6,021,000

(2014 - $4,414,000). In practice, actual results may differ from this sensitivity

analysis and the difference could be material.

ii) Currency risk


instrument will fluctuate because of changes in foreign exchange rates. The Fund

is subject to foreign exchange rate fluctuations on cash and investments

denominated in currencies other than Canadian dollars. Included in net assets are

$44,437,845 (2014 - $20,806,739) of US dollar denominated financial instruments.

The amount of foreign currency denominated financial instruments is monitored

daily by the Manager.

- 217 -



DECEMBER 31, 2015




ii) Currency risk - continued

As at December 31, 2015, if the Canadian dollar had strengthened or weakened 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 approximately

$2,219,000 (2014 - $1,040,000). In practice, actual results may differ from this

sensitivity analysis and the difference could be material.

b) Liquidity risk


obligations associated with the Fund's financial liabilities. The Fund is exposed to


redemption requests. The Fund manages these risks by the choice of investees and by

holding cash and short-term investments. The table below analyzes the Fund’s

financial liabilities into relevant maturity groupings based on the remaining period to

the contractual maturity date. The amounts in the table are the contractual

undiscounted cash flows.

On




payable $ --- $ 53 $ 53




$ 118,556 $ 3,589 $ 122,145

On




payable $ --- $ 39 $ 39



$ 88,263 $ 1,151 $ 89,414

- 218 -



DECEMBER 31, 2015



b) Liquidity risk - continued





c) Credit risk





brokers. The credit risk related to the associated receivables is considered limited, as

delivery of securities sold is only made once the broker has received payment.

Payment is made on a purchase once the broker has received the securities. The trade

will fail if either party fails to meet its obligation. However, there are risks involved

in dealing with custodians or prime brokers who settle trades and in rare

circumstances, the securities and other assets deposited with the custodians or broker

may be exposed to credit risk with regard to such parties. In addition, there may be

practical problems or time delays associated with enforcing the Fund’s rights to its

assets in the case of an insolvency of any such party. All investments and cash are

held with two custodians and one trustee. This risk is managed by the choice of the

custodians and trustee.



within the same category such as, geographic region, asset type, industry sector or

market segment. Financial instruments in the same category have similar

characteristics and may be affected similarly by changes in economic or other

conditions. See the schedule of investment portfolio for the various segment



The Fund classifies fair value measurements within a hierarchy, which gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities

(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the

fair value hierarchy are:

- 219 -



DECEMBER 31, 2015



Level 1 Quoted prices (unadjusted) an active markets for identical assets or liabilities







to the fair value measurement. The following table illustrates the classification of the

Fund’s assets measured at fair value within the fair value hierarchy as at December 31,

2015:

Level 1 Level 2 Total

2015 (in 000’s)

Canadian equities $ 39,617 $ 59,851 $ 99,468

Foreign equities 2,739 18,209 20,948

$ 42,356 $ 78,060 $ 120,416

2014 (in 000’s)

Canadian equities $ 28,662 $ 52,222 $ 80,884

Foreign equities 1,587 5,800 7,387

$ 30,249 $ 58,022 $ 88,271

- 220 -



DECEMBER 31, 2015




category as at December 31, 2015. All of the Fund’s financial liabilities as at December

31, 2015 were carried at amortized cost. Financial Assets at Financial FVTPL Assets Designated at at Amortized

2015 Inception Cost Total Assets (in 000’s) Investments $ 120,416 $ --- $ 120,416 Cash --- 64 64 Other income receivable --- 381 381 Receivable for investments sold --- 554 554 Subscriptions receivable --- 730 730 $ 120,416 $ 1,729 $ 122,145

Financial Assets at Financial FVTPL Assets Designated at at Amortized

2014 Inception Cost Total Assets (in 000’s) Investments $ 88,271 $ --- $ 88,271 Cash --- 882 882 Other income receivable --- 246 246 Subscriptions receivable --- 15 15 $ 88,271 $ 1,143 $ 89,414



The Manager is the parent company of the general partner of SPIRE US Limited Partnership, an investment the Fund holds in its investment portfolio.

- 221 -



DECEMBER 31, 2015



The increase in net assets from operations attributable to holders of redeemable units per

unit for the year ended December 31, 2015 is calculated as follows:

2015 2014

Class O


to holders of redeemable units (in 000’s) $ 10,907 $ 7,105



to holders of redeemable units per unit $ 1.71 $ 1.57

Class N






Class A










- 222 -



DECEMBER 31, 2015


No. of Shares/ Market Units Description Cost Value CANADIAN EQUITIES - 83.90% 160,000 Allied Properties Real Estate Investment Trust $ 5,347,432 $ 5,051,200 231,000 Artis Real Estate Investment Trust 1,688,987 2,956,800 130,000 Boardwalk Real Estate Investment Trust 7,625,464 6,168,500 120,000 Dream Global Real Estate Investment Trust 1,039,819 1,039,200 478,700 Dream Industrial Real Estate Investment Trust 4,282,511 3,437,066 66,897 Great-West Life Assurance Company Real Estate Fund 29,948,904 27,419,103 188,000 H&R Real Estate Investment Trust – Stapled Units 2,321,571 3,769,400 105,000 Killam Properties Inc. 1,072,963 1,103,550 40,000 Mainstreet Equity Corp. 1,351,831 1,202,800 873,706 Manulife Canadian Property Portfolio - Class I 9,401,357 12,270,761 336,000 Milestone Apartments Real Estate Investment Trust 3,318,537 5,056,800 135,000 Morguard North American Residential Real Estate Investment Trust 1,319,031 1,440,450 517,700 Pure Multi-Family REIT LP - Class A Units - Traded in United States Dollars 2,599,733 3,675,628 98,400 RioCan Real Estate Investment Trust 1,545,001 2,331,096 111,947 Spire US LP – Traded in United States Dollars 13,022,371 20,161,622 144,200 WPT Industrial Real Estate Investment Trust - Traded in United States Dollars 2,026,758 2,384,895 TOTAL CANADIAN EQUITIES - 83.90% 87,912,270 99,468,871 FOREIGN EQUITIES - 17.67% 85,000 Brookfield Property Partners LP 2,290,290 2,738,700 7,577 MEPT Edgemoor LP - Class B units - Traded in United States Dollars 15,049,985 18,208,500 TOTAL FOREIGN EQUITITES - 17.67% 17,340,275 20,947,200 TOTAL INVESTMENT PORTFOLIO – 101.57% 105,252,545 120,416,071 OTHER NET ASSETS (1.57%) (1,860,015) (1,860,015) TOTAL NET ASSETS – 100.00% $ 103,392,530 $ 118,556,056

- 223 -




DECEMBER 31, 2015

- 224 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Primary Mortgage Fund We have audited the accompanying financial statements of NWM Primary Mortgage Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 225 -


NWM Primary Mortgage Fund

Opinion


financial position of NWM Primary Mortgage Fund as at December 31, 2015 and the

results of its financial performance and its cash flows for the year then ended in



Vancouver, Canada

March 16, 2016

- 226 -



DECEMBER 31, 2015




ASSETS 2015 2014

Current assets

Investments $ 156,808 $ 152,986

Cash 6,972 815

Accrued interest and other income receivable 638 629


$ 164,739 $ 154,448

LIABILITIES

Current liabilities


Distributions payable 281 239

Redemptions payable 2,700 42

3,034 334


units (note 4) $ 161,705 $ 154,114



Class O $ 152,835 $ 151,045

Class N 7,898 3,069

Class A 972 ---

$ 161,705 $ 154,114


Class O 14,853,303 14,627,922

Class N 756,327 294,184

Class A 93,960 ---

15,703,590 14,922,106



Class O $ 10.29 $ 10.33

Class N $ 10.44 $ 10.43

Class A $ 10.35 $ ---





- 227 -







2015 2014

Income


Net realized gain (loss) on sale of investments (note 5) (2) 193

Change in unrealized depreciation, net (576) (181)

7,110 7,159

Expenses






Class O $ 6,218 $ 6,429

Class N 220 95

Class A 8 ---

$ 6,446 $ 6,524



Class O $ 0.41 $ 0.44

Class N $ 0.43 $ 0.47

Class A $ 0.27 $ ---

- 228 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 151,045 $ 133,819 $ 3,069 $ 1,069 $ --- $ --- $ 154,114 $ 134,888

Redeemable unit

transactions

Proceeds from

redeemable

units issued 51,205 62,857 5,375 1,905 992 --- 57,572 64,762

Reinvestments of

distribution to

holders of


Redemption of

redeemable units (52,976) (49,731) (766) --- (27) --- (53,769) (49,731)

2,357 17,218 4,839 1,994 974 --- 8,170 19,212


redeemable units

From net investment

income (6,785) (6,421) (230) (89) (10) --- (7,025) (6,510)

Increase in net assets from



units at end of the year 6,218 6,429 220 95 8 --- 6,446 6,524




- 229 -





(In 000's)


2015 2014




Adjustments for:

Net realized loss (gain) on sale of investments 2 (193)


investments, net 576 181


Proceeds from sale of investments 57,924 37,091

Accrued interest and other income receivable (9) (133)

Administration and management fees payable --- (1)

Net cash flows from (used in) operating activities 2,615 (12,939)







Net increase (decrease) in cash during the year 6,157 (278)



Cash includes:


Money market mutual funds 2,400 511

$ 6,972 $ 815



- 230 -



DECEMBER 31, 2015


1. General

The NWM Primary Mortgage Fund (the Fund) is an open-ended mutual fund trust

formed under the laws of British Columbia and governed by a Declaration of Trust


Management Ltd. (the Manager), provides administration and management services,

CIBC Mellon Trust Company is the trustee of the Fund, and CIBC Mellon Trust

Company and Credential Securities are the custodians of the Fund. The address of the

Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia.

The Fund invests directly and indirectly in loans secured by mortgages on Canadian real

property.







of March 16, 2016.













liabilities in the future.


required to make judgements about the classification of financial instruments and

the applicability of the fair value option to its financial instruments which are not

held for trading. The fair value option has been applied to the Fund’s investments as

the investments are managed on a fair value basis in accordance with the Fund’s


- 231 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (i) Use of accounting judgements and estimates - continued


of its redeemable units as financial liabilities in accordance with IAS 32 Financial Instruments: Presentation. These judgements center upon the determination that the Fund’s redeemable units include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and, therefore, the ongoing redemption feature is not the unit’s only contractual obligation.


plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit or loss (FVTPL). All other financial assets and liabilities, including redeemable units, are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract’s effective interest rate. The Fund’s accounting policies for measuring fair value of its investments are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.


liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities not traded in active markets are valued by methods deemed to represent fair value. The fixed income investments, mortgages and mortgage pools have been valued using a yield based valuation wherein the debt instruments were valued as of December 31, 2015, at the discounted present value of future actual or estimated cash flows associated with each debt instrument. The discount rate utilized was either the sum of the risk free Government of Canada debt plus a spread premium, or a discount rate determined through the valuator’s judgemental assessment process. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. The Fund uses the last traded market price of both financial assets and financial liabilities where the last traded price falls within that days’ bid-ask 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. The Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.


total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

- 232 -



DECEMBER 31, 2015




Investment transactions are accounted for as of the trade date. Interest income and

expenses are accrued on a daily basis and trust income is recognized on the effective

date of the distribution. Distributions received from investments, which are treated

as return of capital for income tax purposes, are recorded as a reduction of the

average cost of the underlying investments. Realized gains and losses from

investment transactions are calculated on an average cost basis which excludes

brokerage commissions and other trading expenses.



attributable to holders of redeemable units in the current year.

(v) Functional currencies

The reporting and functional currency of the Fund is the Canadian dollar. The Fund does not have any foreign currency transactions.


financial asset measured at amortized cost is impaired. If such evidence exists, the

Fund recognizes an impairment loss as the difference between the amortized cost of

the financial asset and the present value of the estimated future cash flows,


losses on financial assets at amortized cost are reversed in subsequent periods if the

amount of the loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognized.

(vii) Cash

Cash is comprised of deposits with the Fund’s custodian and money market mutual funds.


unit



increase (decrease) in net assets attributable to holders of redeemable units divided

by the weighted average number of redeemable units outstanding during the year.

Refer to note 14 for the calculation.

- 233 -



DECEMBER 31, 2015



(ix) Income tax


Act (Canada) (Act). A mutual fund trust is subject to tax in each taxation year under Part I of the Act on the amount of its income for the year, including net






statements.






Class O units. At December 31, 2015 Class A, Class N and Class O units were issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 14,627,922 12,964,099 294,184 102,855 --- --- 14,922,106 13,066,954

Redeemable

units issued,

sales 4,951,902 6,080,604 513,363 182,805 95,708 --- 5,560,973 6,263,409

Redeemable

units issued,

reinvestment

of distributions 399,630 396,350 21,970 8,524 905 --- 422,505 404,874

Redeemable

units redeemed (5,126,151) (4,813,131) (73,190) --- (2,653) --- (5,201,994) (4,813,131)

Redeemable

units out-

standing, end

of the year 14,853,303 14,627,922 756,327 294,184 93,960 --- 15,703,590 14,922,106

- 234 -



DECEMBER 31, 2015





any nominal or par value. The Class N units of the Fund represent units held by

another fund that is managed by the Manager. The Class A units of the Fund represent

units issued to clients of a financial advisory company related to the Manager. 5. Net realized gain (loss) on sale of investments The net realized gain (loss) on sale of investments (in 000's) is comprised of:

2015 2014

Proceeds from sale of investments $ 57,924 $ 37,091



213,435 188,009



Net realized gain (loss) on sale of investments $ (2) $ 193


The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.2% (0.2% per annum) of the NAV of the Class O units on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged with respect to the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.4% (0.4% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund, including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.

- 235 -



DECEMBER 31, 2015



The Fund did not pay any brokerage commissions on securities transactions during 2015

for brokerage services provided to the Fund.













day.


units for a period not exceeding ten months if and so long as, in the opinion of the

Manager, reasonably arrived at, redemption of units of the Fund could be effected only

by the conversion of significant assets of the Fund into cash at below the fair market

value of those assets, or in circumstances where the conversion of assets of the Fund into

cash for the purpose of effecting redemptions is impracticable. Unitholders of the Fund

will be given written notice of any suspension of redemption of units. If, after a period of

ten months has elapsed, the Manager is still of the opinion that redemption of units

should continue to be suspended for either or both of the aforesaid reasons, the Manager

will forthwith call a meeting of the unitholders of the Fund to consider the termination

and winding-up of the Fund, such meeting to be held no later than 35 days from the date

of expiry of the aforesaid ten month period. Redemptions will remain suspended until at

least the date the meeting is held, and subject to such decisions reached at such meeting.


December of each calendar year. Distributions are automatically reinvested in units of

the Fund, unless subscribers specify in advance, in writing, that they wish to receive


- 236 -



DECEMBER 31, 2015




as follows: Market risk (including price risk and interest rate risk), liquidity risk, credit

risk, and concentration risk. The value of investments within the Fund’s portfolio can

fluctuate from day to day, reflecting changes in interest rates, economic conditions,

market and company news related to specific securities within the Fund.



advisors that regularly monitor the Fund’s positions and market events and diversify the


strategies.




capital.

a) Market risk






i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate because of changes in market prices (other than those arising from

currency risk or interest rate risk). The Fund’s investments are subject to the risk of

changes in the prices of fixed income and mutual funds. The value of a financial

instrument may be affected by specific Fund developments, by stock market

conditions and by general economic and financial conditions in those countries where

the investments are listed for trading. The investments of the Fund are recognized

at fair value and all changes in market conditions directly affect changes in net

assets attributable to holders of redeemable units. The Fund's investment portfolio is

monitored daily by the Manager.

- 237 -



DECEMBER 31, 2015


9. Risks associated with financial instrument - continued


ii) Interest rate risk



is exposed to interest rate risk associated with investments in direct mortgages

and mortgage type investments. The Fund manages this risk through the

laddering of maturities of the direct mortgages in its portfolio and by investing in

investees with portfolios of mortgages of relatively short duration.

The table below summarizes the Fund’s exposure to interest rate risk as at

December 31, 2015 by remaining term to maturity.

2015 2014

Term to Maturity (in 000’s)

1 – 5 years $ 156,808 $ 149,995

5 – 10 years --- 2,991

Total $ 156,808 $ 152,986

As at December 31, 2015, had prevailing interest rates increased or decreased by

1%, with all other factors kept constant, the Fund’s net assets may have

decreased or increased, respectively, by approximately 1.28% (2014 - 0.77%). In

practice, actual results may differ from this sensitivity analysis and the difference

could be material.

b) Liquidity risk




redemption requests. The Fund manages these risks by the choice of investees, by

holding cash, and by its access to the operating loan facility described in note 13. The

table below analyzes the Fund’s financial liabilities into relevant maturity groupings

based on the remaining period to the contractual maturity date. The amounts in the

table are the contractual undiscounted cash flows.

- 238 -



DECEMBER 31, 2015


9. Risks associated with financial instrument - continued


On




payable $ --- $ 53 $ 53




$ 161,705 $ 3,034 $ 164,739

On




payable $ --- $ 53 $ 53




$ 154,114 $ 334 $ 154,448





- 239 -



DECEMBER 31, 2015


9. Risks associated with financial instrument - continued c) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial

loss for the other party by failing to discharge an obligation. The fair value of debt securities includes consideration of the credit worthiness of the debt issuer and in addition, the Manager and its submanagers review the credit worthiness prior to entering into a mortgage agreement. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All investments and cash are held with two custodians and one trustee. This risk is managed by the choice of the custodians and trustee.

d) Concentration risk Concentration risk arises as a result of the concentration of net financial instruments




priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities

that the entity can access at the measurement date; Level 2 Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable for the asset or liability.

If inputs of different levels are used to measure as asset’s or liability’s fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. All of the Fund’s investments held at December 31, 2015 are classified as Level 3.

- 240 -



DECEMBER 31, 2015





31, 2015 were carried at amortized cost.

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 156,808 $ --- $ 156,808

Cash --- 6,972 6,972

Accrued interest and other income

receivable --- 638 638


$ 156,808 $ 7,931 $ 164,739

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 152,986 $ --- $ 152,986

Cash --- 815 815

Accrued interest and other income

receivable --- 629 629


$ 152,986 $ 1,462 $ 154,448



related to the Manager own 297,064 (2014 - 222,750) Class O units of the Fund.

- 241 -



DECEMBER 31, 2015


13. Operating loan facility

The Fund has a $20,000,000 operating loan facility agreement subject to reduction

depending on the amount of operating loan facility drawn by another fund managed by

the Manager. The operating loan facility bears interest at the bank's prime rate plus 1%

and is secured by a general security agreement over all of the assets of the Fund. The

Fund had not drawn on the facility at December 31, 2015.

14. Increase in net assets from operations attributable to holders of redeemable units per

unit


per unit for the years ended December 31, 2015 is calculated as follows:

2015 2014

Class O






Class N






Class A






- 242 -



DECEMBER 31, 2015








replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a

single approach to determine whether a financial asset is measured at amortized cost or

fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on

how an entity manages its financial instruments in the context of its business model and

the contractual cash flow characteristics of the financial assets. Most of the











- 243 -



DECEMBER 31, 2015


Face Market

Value Description Cost Value

CANADIAN INVESTMENTS - 97.0%

FIXED INCOME - 0.6%

990,000 Merrill Lynch Financial Assets - 4.90% - October 2016 $ 925,025 $ 1,004,256

MORTGAGES AND MORTGAGE POOLS - 96.4%

2,036,582 5.75% February, 2016 2,036,580 2,036,582

1,913,247 5.67% February, 2016 1,913,245 1,913,247

2,545,556 5.61% February, 2016 2,545,554 2,545,556

1,247,080 5.48% February, 2016 1,247,078 1,247,080

831,676 5.28% February, 2016 831,674 831,676

5,300,000 4.75% February, 2016 5,300,000 5,300,000

2,500,000 6.00% March, 2016 2,500,000 2,500,000

877,256 5.26% April, 2016 877,256 906,819

2,450,000 5.00% April, 2016 2,450,000 2,450,000

2,301,299 5.00% May, 2016 2,301,298 2,301,299

3,845,000 5.00% June, 2016 3,845,000 3,845,000

800,000 4.75% July, 2016 800,000 809,920

1,660,500 4.85% August, 2016 1,660,500 1,660,500

1,254,000 5.25% September, 2016 1,254,000 1,254,000

1,809,065 5.03% September, 2016 1,809,063 1,809,065

1,479,968 5.50% October, 2016 1,479,967 1,485,740

1,504,516 4.63% October, 2016 1,504,514 1,529,190

803,657 4.50% November, 2016 803,657 803,657

1,482,139 5.05% December, 2016 1,482,139 1,482,139

1,965,870 5.75% January, 2017 1,965,870 2,021,308

4,560,320 5.25% February, 2017 4,560,319 4,694,394

1,463,171 5.00% February, 2017 1,463,170 1,502,823

4,680,437 7.00% March, 2017 4,680,436 4,707,116

1,908,952 5.63% March, 2017 1,908,952 1,972,902

4,810,945 4.85% March, 2017 4,810,945 4,810,945

3,668,796 4.75% May, 2017 3,668,796 3,775,191

2,471,416 4.50% May, 2017 2,471,434 2,535,426

1,326,729 5.25% June, 2017 1,326,729 1,326,729

2,066,945 5.20% September, 2017 2,066,945 2,057,231

1,998,731 5.00% September, 2017 1,998,731 2,071,685

2,967,521 5.00% September, 2017 2,967,521 2,967,521

1,766,420 4.75% September, 2017 1,766,420 1,817,293

11,000,000 4.49% September, 2017 11,000,000 11,000,000

1,266,683 4.75% February, 2018 1,266,683 1,310,130

13,844,645 4.45% June, 2018 13,844,645 13,844,645

3,600,000 5.00% September, 2018 3,600,000 3,600,000

7,250,000 4.95% September, 2018 7,250,000 7,250,000

1,335,603 4.75% November, 2018 1,335,603 1,411,599

Balance forward 110,594,724 111,388,408

- 244 -



DECEMBER 31, 2015


Face Market

Value Description Cost Value

MORTGAGES AND MORTGAGE POOLS - 96.4% -

continued


1,342,347 6.25% December, 2018 1,342,349 1,342,349

1,866,368 4.95% December, 2018 1,866,368 1,985,255

10,000,000 5.50% January, 2019 10,000,000 10,000,000

1,946,898 5.00% March, 2019 1,946,898 2,032,950

8,768,862 4.30% July, 2019 8,768,862 8,768,862

1,426,386 5.25% October, 2019 1,426,386 1,506,263

1,561,063 5.00% October, 2019 1,561,063 1,656,132

1,228,231 4.65% February, 2020 1,228,231 1,273,552

3,604,309 4.70% May, 2020 3,604,309 3,604,309

1,098,070 4.75% November, 2020 1,098,070 1,098,070

1,477,403 4.75% November, 2020 1,477,403 1,477,403

3,536,331 4.50% November, 2020 3,536,331 3,536,331

1,700,000 5.50% December, 2020 1,700,000 1,700,000

2,933,428 5.65% October, 2021 2,933,428 2,933,428

1,500,000 5.60% January, 2021 1,500,000 1,500,000

154,584,422 155,803,312

TOTAL INVESTMENTS PORTFOLIO - 97.0% 155,509,447 156,807,568

OTHER NET ASSETS - 3.0% 4,898,020 4,898,020

TOTAL NET ASSETS - 100% $ 160,407,467 $ 161,705,588

- 245 -




DECEMBER 31, 2015

- 246 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Balanced Mortgage Fund We have audited the accompanying financial statements of NWM Balanced Mortgage Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 247 -

Independent Auditor’s Report NWM Balanced Mortgage Fund Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of NWM Balanced Mortgage Fund as at December 31, 2015 and the results of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.


Vancouver, Canada March 18, 2016

- 248 -



DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 358,334 $ 279,048 Cash 14,432 14,525 Receivable from unsettled trades 2,385 --- Accrued dividends, interest and other income receivable 1,739 1,210 Subscriptions receivable 1,178 57 $ 378,068 $ 294,840

LIABILITIES Current liabilities Administration and management fees payable $ 135 $ 97 Distributions payable 632 436 Redemptions payable 4,348 3 5,115 536 Net assets attributable to holders of redeemable units (note 4) $ 372,953 $ 294,304 Net assets attributable to holders of redeemable units by Class Class O $ 340,724 $ 273,054 Class N 30,713 21,250 Class A 1,516 --- $ 372,953 $ 294,304 Number of redeemable units outstanding Class O 34,097,626 27,324,978 Class N 3,048,605 2,114,561 Class A 150,648 --- 37,296,879 29,439,539 Net assets attributable to holders of redeemable units per unit Class O $ 9.99 $ 9.99 Class N $ 10.07 $ 10.05 Class A $ 10.06 $ ---





- 249 -







2015 2014

Income


Net realized gain on sale of investments (note 5) 241 63


of investments, net (232) 69

20,503 15,961

Expenses

Administration and management fees 1,514 996





Class O $ 17,444 $ 13,962

Class N 1,528 1,003

Class A 17 ---

$ 18,989 $ 14,965



Class O $ 0.55 $ 0.63

Class N $ 0.58 $ 0.64

Class A $ 0.40 $ ---

- 250 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 273,054 $ 174,807 $ 21,250 $ 9,867 $ --- $ --- $ 294,304 $ 184,674

Redeemable unit

transactions

Proceeds from

redeemable

units issued 102,301 111,287 7,935 10,380 1,533 --- 111,769 121,667

Reinvestments of

distributions to

holders of

redeemable

units 11,643 9,657 1,481 957 16 --- 13,140 10,614

Redemption of

redeemable

units (46,148) (22,790) --- --- (33) --- (46,181) (22,790)

67,796 98,154 9,416 11,337 1,516 --- 78,728 109,491


redeemable units

From net

investment

income (17,499) (13,869) (1,465) (957) (17) --- (18,981) (14,826)

From realized gains

on sales of

investments (71) --- (16) --- --- --- (87) ---

(17,570) (13,869) (1,481) (957) (17) --- (19,068) (14,826)


from operations

attributable to


units 17,444 13,962 1,528 1,003 17 --- 18,989 14,965




- 251 -





(In 000's)


2015 2014




Adjustments for:

Net realized gain on sale of investments (241) (63)

Change in unrealized depreciation (appreciation) of

investments, net 232 (69)



Accrued dividends, interest and other income

receivable (529) (364)









Net increase (decrease) in cash during the year (93) 6,736



Cash includes:


Money market mutual funds 10,102 8,325

$ 14,432 $ 14,525

Cash flows from operating activities includes:


- 252 -



DECEMBER 31, 2015


1. General The NWM Balanced Mortgage Fund (the Fund) is an open-ended mutual fund trust

formed under the laws of British Columbia and governed by a Declaration of Trust (Declaration of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the Manager), provides administration and management services, CIBC Mellon Trust Company is the trustee of the Fund, and CIBC Mellon Trust Company and Credential Securities are the custodians of the Fund. The address of the Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests directly and indirectly in loans secured by mortgages on Canadian real property.

2. Basis of preparation and presentation These financial statements have been prepared in compliance with International

Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretation of the International Financial Reporting Interpretations Committee (IFRIC).


of March 18, 2016. The financial statements for the year ended December 31, 2015, including comparatives,

were approved and authorized for issue by the Manager on March 18, 2016. 3. Summary of significant accounting policies The following is a summary of significant accounting policies followed by the Fund in the

preparation of its financial statements. The accounting policies have been consistently applied by the Fund.

(i) Use of accounting judgements and estimates The preparation of financial statements in accordance with IFRS requires



required to make judgements about the classification of financial instruments and the applicability of the fair value option to its financial instruments which are not held for trading. The fair value option has been applied to the Fund’s investments as the investments are managed on a fair value basis in accordance with the Fund’s investment strategy.

- 253 -



DECEMBER 31, 2015





plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit or loss (FVTPL). All other financial assets and liabilities, including redeemable units, are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract’s effective interest rate. The Fund’s accounting policies for measuring fair value of its investments are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.


liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities not traded in active markets are valued by methods deemed to represent fair value. Fixed income investments, mortgages and mortgage pools are valued using a yield based valuation wherein the debt instruments were valued as of December 31, 2015 at the discounted present value of future actual or estimated cash flows associated with each debt instrument. The discount rate utilized is either the sum of the risk free Government of Canada debt plus a spread premium, or a discount rate determined through the valuator’s judgemental assessment process. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. The Fund uses the last traded market price of both financial assets and financial liabilities where the last traded price falls within that days’ bid-ask 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. The Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.

The change in net excess (shortfall) of the fair value of investments over (under)

the total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

- 254 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses


and expenses are accrued on a daily basis and trust income is recognized on the effective date of the distribution. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses.


sale of investments by the Fund are recognized in increase (decrease) in net assets from operations attributable to holders of redeemable units in the current year .

(v) Functional currency The reporting and functional currency of the Fund is the Canadian dollar. The

Fund does not have any foreign currency transactions. (vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that


(vii) Cash Cash is comprised of deposits with the Fund’s custodians and money market

mutual funds. (viii) Increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit Increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets from operations attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 14 for the calculation.

- 255 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (ix) Income tax



(x) Valuation of the Fund The NAV per unit is calculated by dividing the aggregate market value of the net

assets by the total number of units outstanding. 4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and

Class O units. At December 31, 2015, Class A, Class N and Class O units were issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 27,324,978 17,515,823 2,114,561 986,723 --- --- 29,439,539 18,502,546

Redeemable

units

issued,

sales 10,216,560 11,119,767 786,993 1,032,423 152,373 --- 11,155,926 12,152,190

Redeemable

units

issued, re-

investment

of distrib-

utions 1,164,678 966,872 147,051 95,415 1,564 --- 1,313,293 1,062,287

Redeemable

units

redeemed (4,608,590) (2,277,484) --- --- (3,289) --- (4,611,879) (2,277,484)

Redeemable

units out-

standing,

end of the

year 34,097,626 27,324,978 3,048,605 2,114,561 150,648 --- 37,296,879 29,439,539

- 256 -



DECEMBER 31, 2015


4. Redeemable units of the Fund - continued The Class A, Class N and Class O units of the Fund are redeemable at the option of the

holder in accordance with the provisions of the Declaration of Trust and do not have any nominal or par value. The Class N units of the Fund represent redeemable units issued and held by another fund that is managed by the Manager. The Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.


2015 2014




489,184 331,458



Net realized gain on sale of investments $ 241 $ 63

6. Administration and management fees The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per

annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fee based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.2% (0.2% per annum) of the NAV of the Class O units on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged with respect to the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.4% (0.4% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.

- 257 -



DECEMBER 31, 2015



The Fund did not pay any brokerage commissions on securities transactions during 2015

or 2014 for brokerage services provided to the Fund.













day.


units for a period not exceeding ten months if and so long as, in the opinion of the

Manager, reasonably arrived at, redemption of units of the Fund could be effected only

by the conversion of significant assets of the Fund into cash at below the fair market

value of those assets, or in circumstances where the conversion of assets of the Fund into

cash for the purpose of effecting redemptions is impracticable. Unitholders of the Fund

will be given written notice of any suspension of redemption of units. If, after a period of

ten months has elapsed, the Manager is still of the opinion that redemption of units

should continue to be suspended for either or both of the aforesaid reasons, the Manager

will forthwith call a meeting of the unitholders of the Fund to consider the termination

and winding-up of the Fund, such meeting to be held no later than 35 days from the date

of expiry of the aforesaid ten month period. Redemptions will remain suspended until at

least the date the meeting is held, and subject to such decisions reached at such meeting.





- 258 -



DECEMBER 31, 2015


9. Risks associated with financial instruments The Fund’s activities expose it to a variety of risks associated with financial instruments,

as follows: Market risk (including price risk and interest rate risk), liquidity risk, credit risk and concentration risk. The value of investments within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates, economic conditions, market and company news related to specific securities within the Fund.



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 result in a risk of loss of capital.

a) Market risk Market risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate as a result of changes in market price. 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.

i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of fixed income and mutual funds. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager.


assets and liabilities traded in active markets 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 approximately $NIL (2015 - $1,430,000). During the year, the Fund disposed of all assets and liabilities that are traded in active markets. In practice, actual results may differ from this sensitivity analysis and the difference could be material.

- 259 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued a) Market risk - continued




is exposed to interest rate risk associated with investments in direct mortgages

and mortgage type investments. The Fund manages this risk through the

laddering of maturities of the direct mortgages in its portfolio and by investing in

investees with portfolios of mortgages of relatively short duration.

The table below summarizes the remaining term of the Fund’s mortgage

investments.

Term to Maturity (in 000’s) 2015 2014

1 – 5 years $ 357,534 $ 241,330

5 – 10 years 800 9,119

Total $ 358,334 $ 250,449



decreased or increased respectively by approximately 0.91%. In practice, actual

results may differ from this sensitivity analysis and the difference could be

material.

b) Liquidity risk Liquidity risk is the risk that the Fund will encounter meeting the obligations

associated with the Fund's financial liabilities. The Fund is exposed to weekly cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees, by holding cash, and by its access to the operating loan facility described in note 13. The table below analyzes the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

- 260 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued b) Liquidity risk - continued

On




payable $ --- $ 135 $ 135




$ 372,953 $ 5,115 $ 378,068

On




payable $ --- $ 97 $ 97




$ 294,304 $ 536 $ 294,840 Redeemable units are redeemable on demand at the holder’s option. However, the



loss for the other party by failing to discharge an obligation. The fair value of debt securities includes consideration of the credit worthiness of the debt issuer and in addition, the Manager and its submanagers review the credit worthiness prior to entering into a mortgage agreement. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All investments and cash are held with two custodians and one trustee. This risk is managed by the choice of the custodians and trustee.

- 261 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued d) Concentration risk Concentration risk arises as a result of the concentration of net financial instruments

within the same category such as, geographic region, asset type, industry sector or market segment. Financial instruments in the same category have similar characteristics and may be affected similarly by changes in economic or other conditions. The mortgage investments include amounts aggregating $42,415,213 (2014 - $31,815,737) to one borrower. See the schedule of investment portfolio for the various segment allocations of the Fund.

10. Fair value measurement The Fund classifies fair value measurements within a hierarchy, which gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:



Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and



classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. The following table illustrates the classification of the Fund’s assets measured at fair value within the fair value hierarchy as at December 31, 2015:


2015 (in 000’s)

Mortgages and mortgage pools $ --- $ 358,334 $ 358,334

2014 (in 000’s)

Mortgages and mortgage pools $ --- $ 249,349 $ 249,349

Other fixed income --- 1,100 1,100

Mutual funds 28,599 --- 28,599

$ 28,599 $ 250,449 $ 279,048

- 262 -



DECEMBER 31, 2015


11. Financial instruments by category The following table presents the carrying amounts of the Fund’s financial assets by

category as at December 31, 2015. All of the Fund’s financial liabilities as at December 31, 2015 were carried at amortized cost.


2015 Inception Cost Total Assets (in 000’s) Investments $ 358,334 $ --- $ 358,334 Cash --- 14,432 14,432 Receivable from unsettled trades --- 2,385 2,385 Accrued interest and other income receivable --- 1,739 1,739 Subscriptions receivable --- 1,178 1,178 $ 358,334 $ 19,734 $ 378,068


2014 Inception Cost Total Assets (in 000’s) Investments $ 279,048 $ --- $ 279,048 Cash --- 14,525 14,525 Accrued interest and other income receivable --- 1,210 1,210 Subscriptions receivable --- 57 57 $ 279,048 $ 15,792 $ 294,840



- 263 -



DECEMBER 31, 2015


13. Operating loan facility

The Fund has a $20,000,000 operating loan facility agreement subject to reduction

depending on the amount of operating loan facility drawn by another fund managed by

the Manager. The operating loan facility bears interest at the bank's prime rate plus 1%

and is secured by a general security agreement over all of the assets of the Fund. The

Fund had not drawn on the facility at December 31, 2015.



per unit for the year ended December 31, 2015 is calculated as follows:

2015 2014

Class O






Class N






Class A


to holders of redeemable units (in 000’s) $ 17 $ ---



to holders of redeemable units per unit $ 0.40 $ ---

- 264 -



DECEMBER 31, 2015








replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a

single approach to determine whether a financial asset is measured at amortized cost or

fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on













- 265 -



DECEMBER 31, 2015


Face Value Description Cost Market Value


388,415 8.00% January, 2016 $ 388,415 $ 388,417

1,350,000 9.50% February, 2016 1,350,000 1,350,000

2,902,912 7.00% February, 2016 2,902,912 2,902,912

991,770 6.50% February, 2016 991,770 991,770

2,366,312 6.50% February, 2016 2,366,312 2,366,312

800,000 6.00% February, 2016 800,000 800,000

700,000 6.00% February, 2016 700,000 700,000

7,718,885 8.81% March, 2016 7,718,885 7,718,885

1,275,000 7.50% March, 2016 1,275,000 1,275,000

2,500,000 6.00% March, 2016 2,500,000 2,500,000

2,000,000 7.25% June, 2016 2,000,000 2,000,000

1,100,000 4.00% June, 2016 1,100,000 1,100,000

3,897,553 8.00% August, 2016 3,897,553 3,897,553

5,963,508 7.50% August, 2016 5,963,508 5,963,508

1,403,127 8.02% September, 2016 1,403,127 1,403,129

9,416,285 8.00% September, 2016 9,416,285 9,416,285

689,292 6.50% September, 2016 689,292 689,292

978,920 6.50% September, 2016 978,920 978,920

2,000,000 6.00% September, 2016 2,000,000 2,000,000

5,758,163 3.89% September, 2016 5,758,163 5,702,309

1,422,796 7.50% October, 2016 1,422,796 1,428,345

2,031,393 9.00% October, 2016 2,031,393 2,043,177

2,500,000 7.50% October, 2016 2,500,000 2,517,000

443,904 7.00% October, 2016 443,904 443,906

1,350,913 7.00% October, 2016 1,350,913 1,353,615

851,816 8.50% November, 2016 851,816 855,395

1,171,946 6.25% November, 2016 1,171,946 1,171,946

3,300,303 5.95% November, 2016 3,300,303 3,300,303

700,000 5.50% November, 2016 700,000 700,000

1,492,506 5.42% November, 2016 1,492,506 1,492,506

1,145,798 5.00% November, 2016 1,145,798 1,145,798

1,749,467 7.25% December, 2016 1,749,467 1,749,467

10,296,286 6.25% December, 2016 10,296,288 10,319,970

1,390,843 6.50% February, 2017 1,390,843 1,390,843

2,347,058 6.28% March, 2017 2,347,058 2,347,058

2,000,000 5.45% March, 2017 2,000,000 2,000,000

606,362 9.50% March, 2017 606,362 609,698

4,759,520 9.00% March, 2017 4,759,520 4,789,030

2,275,000 5.75% March, 2017 2,275,000 2,275,000

Balance forward 96,036,055 96,077,349

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DECEMBER 31, 2015




- continued


10,000,000 5.05% March, 2017 10,000,000 10,000,000

2,827,632 7.54% May, 2017 2,827,632 2,827,633

2,300,000 7.28% May, 2017 2,300,000 2,300,000

1,000,000 7.25% May, 2017 1,000,000 1,004,700

1,800,000 6.25% May, 2017 1,800,000 1,800,000

2,000,000 6.00% May, 2017 2,000,000 2,000,000

500,000 5.50% May, 2017 500,000 500,000

4,928,575 5.93% June, 2017 4,928,575 4,928,575

1,383,585 6.90% July, 2017 1,383,585 1,383,585

6,325,606 5.72% July, 2017 6,325,606 6,325,606

11,000,000 5.50% July, 2017 11,000,000 11,000,000

6,450,000 4.85% July, 2017 6,450,000 6,450,000

5,940,635 5.25% August, 2017 5,940,635 5,940,635

4,000,000 5.80% September, 2017 4,000,000 4,000,000

3,487,253 7.25% October, 2017 3,487,253 3,487,253

991,068 7.00% October, 2017 991,068 991,068

2,113,000 7.00% October, 2017 2,113,000 2,125,255

3,256,022 6.50% October, 2017 3,256,022 3,256,022

4,000,000 5.00% November, 2017 4,000,000 4,000,000

900,000 7.25% December, 2017 900,000 900,000

5,000,000 5.65% January, 2018 5,000,000 5,000,000

3,348,587 7.58% February, 2018 3,348,587 3,369,683

1,070,000 6.20% February, 2018 1,070,000 1,070,000

1,500,000 6.20% February, 2018 1,500,000 1,500,000

1,979,127 7.67% March, 2018 1,979,127 1,979,127

9,000,000 5.93% March, 2018 9,000,000 9,000,000

1,370,488 6.50% April, 2018 1,370,488 1,370,488

2,000,000 5.85% April, 2018 2,000,000 2,000,000

11,665,456 5.35% May, 2018 11,665,456 11,665,456

8,945,043 7.25% June, 2018 8,945,043 8,945,043

3,504,823 6.25% June, 2018 3,504,823 3,504,823

2,496,405 6.10% June, 2018 2,496,405 2,496,405

10,406,057 5.94% June, 2018 10,406,057 10,406,057

4,771,073 6.20% June, 2018 4,771,073 4,771,073

1,175,771 7.59% July, 2018 1,175,771 1,175,771

6,341,325 6.50% July, 2018 6,341,325 6,341,325

6,225,599 6.25% August, 2018 6,225,599 6,225,599

823,132 8.00% September, 2018 823,132 827,989

Balance forward 252,862,317 252,946,520

- 267 -



DECEMBER 31, 2015




- continued


2,878,197 6.25% September, 2018 2,878,197 2,878,197

5,467,395 6.00% September, 2018 5,467,395 5,467,395

1,450,000 5.00% September, 2018 1,450,000 1,450,000

868,444 7.00% October, 2018 868,444 873,742

2,544,457 5.61% October, 2018 2,544,457 2,544,457

678,181 7.22% December, 2018 678,181 678,181

1,000,000 6.00% December, 2018 1,000,000 1,000,000

13,350,000 5.50% December, 2018 13,350,000 13,350,000

1,950,000 8.25% March, 2019 1,950,000 1,950,000

585,543 8.00% March, 2019 585,543 585,543

1,162,696 6.25% March, 2019 1,162,696 1,162,696

1,207,631 7.10% April, 2019 1,207,631 1,207,631

2,435,461 6.00% July, 2019 2,435,461 2,435,461

26,415,310 5.33% July, 2019 26,415,310 26,415,310

4,666,625 6.25% September, 2019 4,666,625 4,666,625

1,175,578 6.25% October, 2019 1,175,578 1,175,578

982,485 6.75% November, 2019 982,485 982,485

1,614,211 5.85% November, 2019 1,614,211 1,624,865

7,874,003 6.30% January, 2020 7,874,003 7,874,003

420,153 7.80% February, 2020 420,153 420,153

1,000,000 5.00% February, 2020 1,000,000 1,000,000

1,175,000 6.00% March, 2020 1,175,000 1,175,000

779,213 6.00% March, 2020 779,213 779,213

1,101,668 7.50% April, 2020 1,101,668 1,101,668

1,189,198 5.50% April, 2020 1,189,198 1,189,198

2,539,981 6.00% May, 2020 2,539,981 2,539,981

2,570,529 5.39% May, 2020 2,570,529 2,570,529

2,982,264 6.20% June, 2020 2,982,264 2,982,264

1,250,000 6.15% June, 2020 1,250,000 1,250,000

544,450 6.00% November, 2020 544,450 544,450

4,145,403 5.50% November, 2020 4,145,403 4,145,403

6,567,472 5.42% November, 2020 6,567,472 6,567,472

800,000 7.09% January, 2021 800,000 800,000

TOTAL INVESTMENTS PORTFOLIO - 96.08% 358,233,865 358,334,020

OTHER NET ASSETS - 3.92% 14,619,230 14,619,230

TOTAL NET ASSETS - 100% $ 372,853,095 $ 372,953,250

- 268 -




DECEMBER 31, 2015

- 269 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Global Bond Fund We have audited the accompanying financial statements of NWM Global Bond Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 270 -

Independent Auditor’s Report NWM Global Bond Fund Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of NWM Global Bond Fund as at December 31, 2015 and the results of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.



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DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 150,600 $ 114,072 Cash 201 2,052 Subscriptions receivable 1,684 --- $ 152,485 $ 116,124

LIABILITIES

Current liabilities Administration and management fees payable $ 135 $ 130 Distributions payable 1,590 370 Redemptions payable 331 11 2,056 511 Net assets attributable to holders of redeemable units (note 4) $ 150,429 $ 115,613 Net assets attributable to holders of redeemable units by Class Class O $ 136,217 $ 105,741 Class O US dollar, in Cdn dollars 4,790 6,477 Class N 8,824 3,395 Class A 577 --- Class A US dollar, in Cdn dollars 21 --- $ 150,429 $ 115,613 Number of redeemable units outstanding Class O 11,775,585 9,502,253 Class O US dollar, in Cdn dollars 411,912 577,100 Class N 753,975 303,219 Class A 49,544 --- Class A US dollar, in Cdn dollars 1,765 --- 12,992,781 10,382,572 Net assets attributable to holders of redeemable units per unit Class O $ 11.57 $ 11.13 Class O US dollar, in Cdn dollars $ 11.63 $ 11.22 Class N $ 11.70 $ 11.20 Class A $ 11.65 $ --- Class A US dollar, in Cdn dollars $ 11.80 $ --- Approved on behalf of the Fund by Nicola Wealth Management Ltd., the Manager (signed) “Karen Ikeda” , Director (signed) “Evelyn C. Nicola” , Director

- 272 -







2015 2014 Income Foreign non-business income and interest $ 10,280 $ 4,201 Net realized gain on sale of investments (note 5) 528 46 Change in unrealized appreciation of investments, net 4,246 1,953 15,054 6,200 Expenses Administration and management fees 922 749 Transaction costs 84 19 Withholding taxes 221 156 1,227 924 Increase in net assets from operations attributable to holders of redeemable units $ 13,827 $ 5,276 Increase in net assets from operations attributable to holders of redeemable units per class Class O $ 12,602 $ 4,976 Class O US dollar, in Cdn dollars 618 202 Class N 590 98 Class A 16 --- Class A US dollar, in Cdn dollars 1 --- $ 13,827 $ 5,276 Increase in net assets from operations attributable to holders of redeemable units per unit (note 13) Class O $ 1.18 $ 0.60 Class O US dollar, in Cdn dollars $ 1.34 $ 0.47 Class N $ 1.19 $ 0.48 Class A $ 1.40 $ ---

Class A US dollar, in Cdn dollars $ 0.23 $ ---

- 273 -






(In 000's)


Class O Class O US Dollar Class N Class A Class A US Dollar Total 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Net assets attributable to holders of redeemable units at beginning of the year $ 105,741 $ 77,585 $ 6,477 $ 2,275 $ 3,395 $ 1,204 $ --- $ --- $ --- $ --- $ 115,613 $ 81,064 Redeemable unit transactions Proceeds from

redeemable

units issued 37,320 32,063 3,107 4,767 4,845 2,095 589 --- 21 --- 45,882 38,925 Reinvestments of distributions to holders of redeemable units 6,714 2,333 249 141 485 82 21 --- 1 --- 7,470 2,556 Redemption of redeemable units (17,341) (8,131) (5,329) (734) --- --- (27) --- --- --- (22,697) (8,865) 26,693 26,265 (1,973) 4,174 5,330 2,177 583 --- 22 --- 30,655 32,616 Distributions to holders of redeemable units From net investment

income

(5,102) (3,042) (219) (172) (236) (83) (6) --- (1) --- (5,564) (3,297) From realized gains on sales of investments (3,717) (43) (113) (2) (255) (1) (16) --- (1) --- (4,102) (46) (8,819) (3,085) (332) (174) (491) (84) (22) --- (2) --- (9,666) (3,343) Increase in net assets attributable to holders of redeemable units 12,602 4,976 618 202 590 98 16 --- 1 --- 13,827 5,276 Net assets attributable to holders of redeemable units at end of the year $ 136,217 $ 105,741 $ 4,790 $ 6,477 $ 8,824 $ 3,395 $ 577 $ --- $ 21 $ --- $ 150,429 $ 115,613

- 274 -





(In 000's)


2015 2014 Cash flows used in operating activities Increase in net assets attributable to holders of redeemable units $ 13,827 $ 5,276 Adjustments for: Net realized gain on sale of investments (528) (46) Change in unrealized appreciation of investments, net (4,246) (1,953) Purchases of investments (37,249) (33,819) Proceeds from sale of investments 5,495 593 Administration and management fees payable 5 77 Net cash flows used in operating activities (22,696) (29,872) Cash flows from financing activities Distributions paid to holders of redeemable units, net of reinvested distributions (976) (528) Proceeds from issuances of redeemable units 44,198 39,215 Amounts paid on redemption of redeemable units (22,377) (8,932) Net cash flows from financing activities 20,845 29,755 Net decrease in cash during the year (1,851) (117) Cash, beginning of the year 2,052 2,169 Cash, end of the year $ 201 $ 2,052 Cash includes: Cash and funds held by broker $ 201 $ 2,040 Money market mutual funds --- 12 $ 201 $ 2,052

- 275 -



DECEMBER 31, 2015


1. General The NWM Global Bond Fund (the Fund) is an open-ended mutual fund trust formed under

the laws of British Columbia and governed by a Declaration of Trust (Declaration of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the Manager), provides administration and management services, CIBC Mellon Trust Company is the trustee of the Fund, and CIBC Mellon Trust Company and Credential Securities are the custodians of the Fund. The address of the Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests, directly and indirectly, in fixed income securities and preferred shares issued around the world.

2. Basis of preparation and presentation These financial statements have been prepared in accordance and compliance with

International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretation of the International Financial Reporting Interpretations Committee (IFRIC).


March 7, 2016. The financial statements for the year ended December 31, 2015, including comparatives,








- 276 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (i) Use of accounting judgements and estimates - continued The Fund also has made significant judgements when determining the classification of

its redeemable units as financial liabilities in accordance with IAS 32 Financial Instruments: Presentation. These judgements center upon the determination that the Fund’s redeemable units include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and, therefore, the ongoing redemption feature is not the unit’s only contractual obligation.

(ii) Financial instruments The Fund recognizes financial instruments at fair value upon initial recognition, plus

transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit and loss (FVTPL). All other financial assets and liabilities, including redeemable units, are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.



liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. The Fund uses the last traded market price of both financial assets and financial liabilities where the last traded price falls within that days’ bid-ask 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. The Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving to the transfer.


unrealized gains and losses on foreign exchange) over (under) the total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

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DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses Investment transactions are accounted for as of the trade date. Interest income and

expenses are accrued on a daily basis and trust income is recognized on the effective date of the distribution. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments.

Transaction costs, such as brokerage commissions, incurred in the purchase and sale of

investments by the Fund are recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current year.

(v) Translation of foreign currencies The reporting and functional currency of the Fund is the Canadian dollar. The market values of investments and other assets and liabilities denominated in a

foreign currency are translated into Canadian dollars at the rate of exchange prevailing at each balance sheet date.


markets. The proceeds on the sale of such securities will be realized in the respective currency. Unhedged foreign currency positions are subject to gains and losses due to fluctuations in the respective exchange rates. Foreign currency purchases and sales of investments and foreign currency dividend and interest income are translated into the reporting currency at the rate of exchange prevailing on the respective date of the transaction. Foreign exchange gains and losses on the sale of investments, and foreign currencies are included in net realized gain (loss) on sale of investments in the statement of comprehensive income. Unrealized foreign exchange gains and losses on investments held are included in change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

The Class A US dollar and Class O US dollar units are issued, reinvested, redeemed

and distributed in United States dollars. The unit transactions denominated in a foreign currency are translated into Canadian dollars at the rate of exchange prevailing on the respective date of the transaction.



- 278 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (vii) Cash Cash is comprised of deposits with the Fund’s custodian. (viii) Increase (decrease) in net assets from operations attributable to holders of redeemable

units per unit Increase (decrease) in net assets from operations attributable to holders of redeemable

units per unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

(ix) Income tax


The Fund currently incurs withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the statement of comprehensive income.



assets by the total number of units outstanding. 4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class A US dollar, Class

F, Class N, Class O, and Class O US dollar units. At December 31, 2015 Class A, Class A US dollar, Class N, Class O, and Class O US dollar units have been issued.

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DECEMBER 31, 2015



Class O Class O US Dollar Class N Class A Class A US Dollar Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Redeemable units

outstanding,

beginning of

the year

y

9,502,253 7,164,712 577,100 209,520 303,219 110,780 --- --- --- --- 10,382,572 7,485,012

Redeemable units

issued, sales 3,178,452 2,853,606 262,665 419,676 409,697 185,205 50,047 --- 1,715 --- 3,902,576 3,458,487

Redeemable units

issued,

reinvestment

of distributions 570,948 208,055 20,892 12,535 41,059 7,234 1,798 --- 50 --- 634,747 227,824

Redeemable units

redeemed (1,476,068) (724,120) (448,745) (64,631) --- --- (2,301) --- --- --- (1,927,114) (788,751)

Redeemable units

outstanding,

end of the year 11,775,585 9,502,253 411,912 577,100 753,975 303,219 49,544 --- 1,765 --- 12,992,781 10,382,572

The Class A, Class A US dollar, Class N, Class O, and Class O US dollar units of the Fund, which are redeemable at the option of the holder in accordance with the provisions of the Declaration of Trust, do not have any nominal or par value. The Class N units of the Fund represent units issued and held by another fund that is managed by the Manager. The Class A units and Class A US dollar units of the Fund represent units issued to clients of a financial advisory company related to the Manager.


2015 2014 Proceeds from sale of investments $ 5,495 $ 593 Investments at cost, beginning of the year 108,403 75,131 Investments at cost, purchased during the year 37,249 33,819 145,652 108,950 Investments at cost, end of the year (140,685) (108,403) Cost of investments sold during the year 4,967 547 Net realized gain on sale of investments $ 528 $ 46

- 280 -



DECEMBER 31, 2015


6. Administration fees and expenses

The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per annum) of the NAV of the Fund on the last business day of each month thereafter calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged with respect to the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund, including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.





Redeemable units issued and outstanding are considered to be capital of the Fund. The net capital received by the Fund is managed in accordance with the investment objective and strategies of the Fund and to maintain adequate liquidity to meet unitholders’ redemption requests. Units are redeemable weekly at the NAV per unit calculated on the valuation day. Unitholders must provide the Manager with notice of redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this time, the effective date of the requested redemption will be the next following valuation day and the NAV per unit will be calculated on such next following valuation day.

- 281 -



DECEMBER 31, 2015


8. Capital management - continued

The Manager may suspend the right of unitholders to request that the Fund redeem its units for a whole or any part of a period during which normal trading is suspended on a stock exchange, options exchange or futures exchange within or outside Canada on which securities or derivatives owned by the Fund are listed and traded, or on which such securities or derivatives are traded, if those securities or derivatives represent more than 50 percent by value, or underlying market exposure, of the total assets of the Fund without allowance for liabilities and if those securities or derivatives are not traded on any other exchange that represents a reasonably practical alternative for the Fund. The Fund distributes net income monthly and net realized capital gains annually in December of each calendar year. Distributions are automatically reinvested in units of the Fund, unless subscribers specify in advance, in writing, that they wish to receive distributions in cash.


The Fund’s activities expose it to a variety of risks associated with financial instruments, as follows: Market risk (including price risk and currency risk), liquidity risk, credit risk and concentration risk. The value of investments within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates, economic conditions, market and company news related to specific securities within the Fund. The Manager manages the potential adverse effects of financial risks on the Fund’s performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Fund’s positions and market events and diversify the investment portfolios, within the constraints of the Fund’s investment objectives and strategies. 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 result in a risk of loss of capital.

a) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate as a result of changes in market price. 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.

- 282 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued a) Market risk - continued i) Price risk Price risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of its investments. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. As at December 31, 2015 58% (2014 - 72%) of the Fund’s net assets are held in one mutual fund, however that mutual fund has invested in a significant number of securities. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager.


assets and liabilities traded in active markets 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 approximately $7,530,000 (2014 - $5,704,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

ii) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial

instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on financial instruments denominated in currencies other than Canadian dollars. Included in net assets are $64,012,756 (2014 - $31,189,748) of US dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager.

As at December 31, 2015, if the Canadian dollar had strengthened or weakened 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 approximately $3,201,000 (2014 - $1,560,000). In practice the, actual results may differ from this sensitivity analysis and the differences could be material.

- 283 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued a) Market risk - continued iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Fund is exposed to interest rate risk associated with its mutual funds. The Manager manages this risk by purchasing mutual funds, which hold many investments.

A small change in the prevailing levels of market interest rates could have a

significant impact on the underlying investments held by the Fund’s mutual fund investments and on the Fund’s net assets attributable to holders of redeemable units of the Fund.

b) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty meeting the obligations

associated with the Fund's financial liabilities. The Fund is exposed to weekly cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees and by holding cash and short-term investments. The table below analyzes the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

On




payable $ --- $ 135 $ 135


Redemptions payable --- 331 331 Redeemable units 150,429 --- 150,429

$ 150,429 $ 2,056 $ 152,485

On 2014 Demand < 3 Months Total

Financial liabilities (in 000’s) Administration and management fees payable $ --- $ 130 $ 130 Distributions payable --- 370 370 Redemptions payable --- 11 11 Redeemable units 115,613 --- 115,613 $ 115,613 $ 511 $ 116,124

- 284 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued b) Liquidity risk - continued




loss for the other party by failing to discharge an obligation. The fair value of debt securities includes consideration of the credit worthiness of the debt issuer. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All investments and cash are held with two custodians and one trustee. This risk is managed by the choice of the custodians and trustee.


within the same category such as, geographic region, asset type, industry sector or market segment. Financial instruments in the same category have similar characteristics and may be affected similarly by changes in economic or other conditions. The Manager manages this risk by purchasing mutual funds, which hold many investments in various segments.



priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities

that the entity can access at the measurement date; Level 2 Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable for the asset or liability. If inputs of different levels are used to measure as asset’s or liability’s fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. All of the Fund’s investments held at December 31, 2015 are classified as Level 1.

- 285 -



DECEMBER 31, 2015



The following table presents the carrying amounts of the Fund’s financial assets by category as at December 31, 2015. All of the Fund’s financial liabilities as at December 31, 2015 were carried at amortized cost.

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 150,600 $ --- $ 150,600

Cash --- 201 201


$ 150,600 $ 1,885 $ 152,485

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 114,072 $ --- $ 114,072

Cash --- 2,052 2,052

Subscription receivable

$ 114,072 $ 2,052 $ 116,124


related to the Manager own 170,933 (2014 – 118,573) Class O units of the Fund. 13. Increase in net assets from operations attributable to holders of redeemable units per unit The increase in net assets from operations attributable to holders of redeemable units per

unit for the years ended December 31, 2015 is calculated as follows:

- 286 -



DECEMBER 31, 2015


13. Increase in net assets from operations attributable to holders of redeemable units per unit - continued

2015 2014

Class O






Class O US dollar






Class N






Class A






Class A US dollar






- 287 -



DECEMBER 31, 2015






- 288 -



AS AT DECEMBER 31, 2015


No. of Carrying


GLOBAL MUTUAL FUNDS – 100.01%

3,417,820 Pimco Monthly Income Series I – US$ $ 40,888,252 $ 46,358,272

6,732,082 Templeton Global Bond Fund – Class O 82,304,462 86,709,212

1,995,000 Templeton Global Income Fund – US$ 17,491,790 17,532,855


OTHER NET ASSETS – (0.01%) (8,300) (8,300)

TOTAL NET ASSETS – 100.00% $ 140,676,204 $150,592,039

- 289 -




DECEMBER 31, 2015

- 290 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Preferred Share Fund We have audited the accompanying financial statements of NWM Preferred Share Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income (loss), changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 291 -

Independent Auditor’s Report NWM Preferred Share Fund Opinion


financial position of NWM Preferred Share Fund as at December 31, 2015 and the results





- 292 -



DECEMBER 31, 2015




ASSETS 2015 2014

Current assets

Investments $ 115,760 $ 101,938

Cash 4,086 813

Dividends and other income receivable 204 114

Subscriptions receivable 3,267 ---

$ 123,317 $ 102,865

LIABILITIES

Current liabilities


Distributions payable 437 1,015

Redemptions payable 292 28

770 1,083


units (note 4) $ 122,547 $ 101,782



Class O $ 114,648 $ 99,014

Class N 7,657 2,768

Class A 242 ---

$ 122,547 $ 101,782


Class O 12,507,030 8,464,205

Class N 822,296 234,366

Class A 26,346 ---

13,355,672 8,698,571



Class O $ 9.17 $ 11.70

Class N $ 9.31 $ 11.81

Class A $ 9.19 $ --- Approved on behalf of the Fund by




- 293 -


STATEMENT OF COMPREHENSIVE INCOME (LOSS)





2015 2014

Income

Dividends and other $ 5,202 $ 4,421

Net realized gain (loss) on sale of investments (note 5) (2,343) 1,489

Change in unrealized appreciation (depreciation), net (22,203) 465

(19,344) 6,375

Expenses



557 612

Increase (decrease) in net assets from operations attributable

to holders of redeemable units $ (19,901) $ 5,763



Class O $ (19,196) $ 5,670

Class N (711) 93

Class A 6 ---

$ (19,901) $ 5,763



Class O $ (1.95) $ 0.69

Class N $ (1.48) $ 0.60

Class A $ 0.91 $ ---

- 294 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 99,014 $ 101,201 $ 2,768 $ 945 $ --- $ --- $ 101,782 $ 102,146

Redeemable unit

transactions

Proceeds from

redeemable

units issued 50,680 17,155 5,600 1,730 278 --- 56,558 18,885

Reinvestments of

distribution to

holders of


Redemption of

redeemable units (13,661) (22,296) --- --- (42) --- (13,703) (22,296)

39,379 (2,550) 5,830 1,844 238 --- 45,447 (706)


redeemable units

From net investment

income (4,460) (3,922) (226) (84) (1) --- (4,687) (4,006)

From realized

gains on sale

of investments --- (1,293) --- (28) --- --- --- (1,321)

Return of capital (89) (92) (4) (2) (1) --- (94) (94)

(4,549) (5,307) (230) (114) (2) --- (4,781) (5,421)

Increase (decrease) in net

assets from operations


of redeemable units (19,196) 5,670 (711) 93 6 --- (19,901) 5,763




- 295 -





(In 000's)


2015 2014




Adjustments for:

Net realized (gain) loss on sale of investments 2,343 (1,489)

Change in unrealized (appreciation) depreciation

of investments, net 22,203 (465)




Dividends and other income receivable (90) 33

Administration and management fees payable 1 (2)

Net cash flows from (used in) operating activities (33,812) 4,123

Cash flows from (used in) financing activities





Net cash flows from (used in) financing activities 37,085 (5,606)




Cash flow from operating activities include:

Dividends and other income received $ 5,112 $ 4,548

- 296 -



DECCEMBER 31, 2015


1. General

The NWM Preferred Share Fund (the Fund) is an open-ended mutual fund trust formed

under the laws of British Columbia and governed by a Declaration of Trust (Declaration of

Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the

Manager), provides administration and management services and CIBC Mellon Trust

Company is the trustee and custodian of the Fund. The address of the Fund’s registered

office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests

in Toronto Stock Exchange listed preferred shares and preferred securities of Canadian

issuers.







March 9, 2016.















required to make judgements about the classification of financial instruments and


held for trading. The fair value option has been applied to the Fund’s investments as

the investments are managed on a fair value basis in accordance with the Fund’s


- 297 -



DECCEMBER 31, 2015


3. Summary of significant accounting policies - continued (i) Use of accounting judgements and estimates - continued


of its redeemable units as financial liabilities in accordance with IAS 32 Financial Instruments: Presentation. These judgements center upon the determination that the Fund’s redeemable units include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and, therefore, the ongoing redemption feature is not the unit’s only contractual obligation.


plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit or loss (FVTPL). All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.




total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

(iv) Investment transactions, income and expenses Investment transactions are accounted for as of the trade date. Interest income and

expenses are accrued on a daily basis, dividend income is recognized on the ex-dividend date and trust income is recognized on the effective date of the distribution. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments.

- 298 -



DECCEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses - continued Transaction costs, such as brokerage commissions, incurred in the purchase and sale

of investments by the Fund is recognized in increase (decrease) in net assets from operations attributable to holders of redeemable units in the current period.

(v) Functional currency

The reporting currency and functional currency of the Fund is the Canadian dollar. The Fund does not have any significant foreign currency transactions.


At each reporting date, the Fund assesses whether there is objective evidence that a financial asset measured at amortized cost is impaired. If such evidence exists, the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. Impairment losses on financial assets at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

(vii) Cash Cash is comprised of deposits with the Fund’s custodian.

(viii) Increase (decrease) in net assets from operations attributable to holders of


Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets from operations attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

(ix) Income tax



assets by the total number of units.

- 299 -



DECCEMBER 31, 2015




Class O units. At December 31, 2015 Class A, Class N and Class O units have been

issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 8,464,205 8,688,692 234,366 80,723 --- --- 8,698,571 8,769,415

Redeemable

units issued,

sales 5,157,421 1,435,439 564,344 144,102 30,670 --- 5,752,435 1,579,541

Redeemable

units issued,

reinvestment


Redeemable

units redeemed (1,357,881) (1,878,470) --- --- (4,556) --- (1,362,437) (1,878,470)

Redeemable

units out-

standing,

end of the

year 12,507,030 8,464,205 822,296 234,366 26,346 --- 13,355,672 8,698,571



any nominal or par value. The Class N units of the Fund represent units issued to and

held by another fund that is managed by the Manager. The Class A units of the Fund

represent units issued to clients of a financial advisory company related to the Manager.

- 300 -



DECCEMBER 31, 2015




2015 2014





166,245 170,194



Net realized gain on sale of investments $ (2,343) $ 1,489





administration fees based on the actual costs incurred by the Manager. The Class O units

are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the

Class O units, on the last business day of each month calculated and payable to the

Manager monthly in arrears. The Class N units are held by another fund managed by the

Manager. There are no management fees charged with respect to the Class N units. The

Class A units of the Fund are issued to clients of a company related to the Manager. The

Class A units are subject to a management fee equal to 1/12 of 0.5% (0.5% per annum) of

the NAV of the Class A units, on the last business day of each month calculated and


may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund.

The Manager is responsible for the payment, out of the administration fee, of all ordinary


and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs,

custodial charges, trustee's fees, all services required in connection with the provision of

information to the redeemable unitholders and all costs relating to the formation and

organization of the Fund.

- 301 -



DECCEMBER 31, 2015



Brokerage commissions paid on securities transactions during the year for brokerage




transactions (soft dollars). 8. Capital management




redemption requests. Units are redeemable weekly at the NAV per unit calculated on the

valuation day. Unitholders must provide the Manager with notice of redemption not later

than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this

time, the effective date of the requested redemption will be the next following valuation

day and the NAV per unit will be calculated on such next following valuation day.









The Fund distributes dividend and interest income monthly and net realized capital gains

annually in December of each calendar year. Distributions are automatically reinvested

in units of the Fund, unless subscribers specify in advance, in writing, that they wish to

receive distributions in cash.



as follows: Market risk (including price risk and interest rate risk), liquidity risk, credit

risk and concentration risk. The value of investments within the Fund’s portfolio can

fluctuate from day to day, reflecting changes in interest rates, economic conditions,

market and company news related to specific securities within the Fund.


performance by employing and overseeing professional and experienced portfolio advisors

that regularly monitor the Fund’s positions and market events and diversify the


strategies.

- 302 -



DECCEMBER 31, 2015






capital.

a) Market risk


instrument will fluctuate as a result of changes in market price. 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 market

prices.

i) Price risk







countries where the investments are listed for trading. The investments of the

Fund are recognized at fair value and all changes in market conditions directly

affect changes in net assets attributable to holders of redeemable units. The

Fund's investment portfolio is monitored daily by the Manager.









instrument will fluctuate because of changes in market interest rates. The Fund is

exposed to interest rate risk associated within its preferred share investments.

A small change in the prevailing levels of market interest rates could have a

significant impact on the investments held by the Fund and on the Fund’s net

assets attributable to holders of redeemable units of the Fund.

- 303 -



DECCEMBER 31, 2015



b) Liquidity risk





holding cash and short-term investments. The tables below analyze the Fund’s


the contractual maturity date. The amounts in the tables are the contractual


On




payable $ --- $ 41 $ 41




$ 122,547 $ 770 $ 123,317

On




payable $ --- $ 40 $ 40




$ 101,782 $ 1,083 $ 102,865





- 304 -



DECCEMBER 31, 2015


9. Risk associated with financial instruments - continued c) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial

loss for the other party by failing to discharge an obligation. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All of the Fund's investments and cash are held with a custodian and trustee. This risk is managed by the choice of custodian and trustee.




The Fund classifies fair value measurements within a hierarchy, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:


that the entity can access at the measurement date; Level 2 Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable for the asset or liability. If inputs of different levels are used to measure as asset’s or liability’s fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. All of the Fund’s investments held at December 31, 2015 are classified as Level 1.


The following table presents the carrying amounts of the Fund’s financial assets by category as at December 31, 2015. All of the Fund’s financial liabilities as at December 31, 2015 were carried at amortized cost.

- 305 -



DECCEMBER 31, 2015



Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized 2015 Inception Cost Total

Assets (in 000’s)

Investments $ 115,760 $ --- $ 115,760

Cash --- 4,086 4,086

Dividends and other income receivable --- 204 204


$ 115,760 $ 7,557 $ 123,317

Financial

Assets at Financial

FVTPL Assets

Designated at at Amortized


Assets (in 000’s)

Investments $ 101,938 $ --- $ 101,938

Cash --- 813 813


$ 101,938 $ 927 $ 102,865





units per unit



- 306 -



DECCEMBER 31, 2015



units per unit - continued 2015 2014

Class O



(in 000’s)



attributable to holders of redeemable units $ (1.95) $ 0.69

per unit

Class N



units (in 000’s) $ (711) $ 93



attributable to holders of redeemable units

per unit $ (1.48) $ 0.60

Class A










- 307 -



DECEMBER 31, 2015


No. of

Shares/ Market


CANADIAN PREFERRED SHARE ISSUES - 89.51%

64,500 Aimia Inc. Cum Preferred 6.50% S-1 $ 738,777 $ 826,245

61,000 Aimia Inc. Cum Preferred S-2 1,544,423 738,100

29,000 Aimia Inc. Cum Preferred S-3 725,000 475,600

39,400 Altagas Ltd. Preferred S-E 751,311 858,132

40,000 Altagas Ltd. Preferred 4.75% S-G 1,000,000 855,200

55,000 Altagas Ltd. Preferred S-I 1,375,000 1,380,500

41,400 Bank of Montreal Preferred 5.20% S-16 1,044,060 1,020,510

68,600 Bank of Montreal Preferred S-17 1,722,409 1,594,950

105,000 Bank of Montreal Preferred 4.00% S-27 2,641,750 2,113,650

30,000 Bank of Montreal Preferred 3.90% S-29 750,000 592,800

40,000 Bank of Montreal Preferred 3.80% S-31 1,000,000 780,000

16,000 Bank of Montreal Preferred 3.80% S-33 380,934 345,760

14,200 Bank of Nova Scotia Preferred S-19 358,826 326,600

42,800 Bank of Nova Scotia Preferred S-21 1,095,166 956,580



50,000 Bank of Nova Scotia Preferred S-32 1,237,500 1,046,000

60,000 Bank of Nova Scotia Preferred 5.00% S-34 1,500,000 1,545,000

31,200 BCE Inc. Preferred 1st 6.17% S-R 580,815 532,896

15,200 BCE Inc. Preferred 1st 4.50% S-T 72,118 212,800

44,200 BCE Inc. Preferred 1st S-Y 796,354 609,960

39,900 BCE Inc. Preferred 1st S-AB 658,650 551,418

35,000 BCE Inc. Preferred 1st 4.54% S-AF 665,000 495,250

48,800 BCE Inc. Preferred 1st 4.50% S-AG 1,066,484 688,568

70,800 BCE Inc. Preferred 1st S-AI 1,377,778 1,003,236

60,700 BCE Inc. Preferred S-AJ 1,432,520 841,302

85,000 BCE Inc. Preferred 1st 4.15% S-AK 1,247,410 1,277,550

91,900 BCE Inc. Preferred 1st 4.85% S-AM 2,016,797 1,441,911

1,000 BCE Inc. Preferred 1st 4.25% S-AQ 18,644 21,440

20,000 Brookfield Asset Management Inc. Preferred 4.50% S-24 503,182 335,000


91,300 Brookfield Asset Management Inc. Preferred 4.60% S-28 2,020,083 1,460,800





40,000 Brookfield Asset Management Inc. Preferred 4.50% S-40 1,000,000 886,400


Balance forward 38,314,915 32,318,456

- 308 -



DECEMBER 31, 2015


No. of

Shares/ Market


CANADIAN PREFERRED SHARE ISSUES - 89.51% (CONT'D)

Balance carried forward $ 38,314,915 $ 32,318,456

40,000 Brookfield Office Properties Inc. Preferred 6.15% S-N 1,036,612 662,000

50,000 Brookfield Office Properties Inc. Preferred 5.15% S-P 841,318 905,000

45,000 Brookfield Office Properties Inc. Preferred 5.10% S-R 1,076,367 850,500

49,600 Brookfield Office Properties Inc. Preferred 4.60% S-T 1,003,728 957,776

80,000 Brookfield Office Properties Inc. Preferred 4.75% S-AA 2,000,000 1,560,000

80,000 Brookfield Renewable Power Preferred 4.40% S-3 1,845,188 1,556,000

30,000 Canaccord Genuity Group Inc. Preferred 1st 5.75% S-C 554,955 402,000

80,000 Canadian Imperial Bank of Commerce Preferred 3.90% S-39 1,873,060 1,627,200

60,000 Canadian Imperial Bank of Commerce Preferred 3.75% S-41 1,500,000 1,200,000

40,000 Canadian Imperial Bank of Commerce Preferred 3.60% S-43 1,000,000 830,000

15,000 Capital Power Corp. Preferred 4.60% S-3 347,981 223,200

45,600 Canadian Western Bank Preferred 4.40% S-5 1,143,525 804,840

75,000 Dundee Corp. Preferred S-3 1,941,770 645,000

110,000 Dundee Corp. Preferred 5.00% S-4 1,948,720 1,567,500

60,000 Element Financial Corp. Preferred 6.60% S-A 1,512,000 1,359,600

40,000 Element Financial Corp. Preferred 6.50% S-C 998,462 899,600

40,000 Element Financial Corp. Preferred 6.40% S-E 1,000,000 899,600

110,000 Element Financial Corp. Preferred 6.50% S-G 2,688,088 2,634,500

45,000 Emera Inc. Preferred 4.10% S-C 789,850 887,850

40,000 Emera Inc. Preferred 4.25% S-F 1,000,000 826,000

30,000 Enbridge Inc. Preferred 4.00% S-B 499,421 474,900

25,000 Enbridge Inc. Preferred 4.00% S-D 442,498 404,000

50,000 Enbridge Inc. Preferred 4.00% S-F 842,878 851,500

40,000 Enbridge Inc. Preferred 4.00% S-H 1,004,540 620,000

40,000 Enbridge Inc. Preferred 4.00% S-N 1,000,020 696,400

85,000 Enbridge Inc. Preferred 4.00% S-P 2,158,770 1,432,250

90,000 Enbridge Inc. Preferred 4.00% S-R 1,845,192 1,542,600

65,500 Enbridge Inc. Preferred S-3 1,104,761 1,116,120

93,300 Enbridge Inc. Preferred 4.40% S-7 2,043,541 1,691,529

110,000 Enbridge Inc. Preferred 4.40% S-11 2,329,888 2,058,100

40,000 Enbridge Inc. Preferred 4.40% S-13 1,000,000 753,600

35,000 Enbridge Inc. Preferred 4.40% S-15 651,106 672,350

76,000 Fairfax Financial Holdings Limited Preferred 5.75% S-D 1,930,226 1,326,200

50,000 Fairfax Financial Holdings Limited Preferred 4.70% S-E 938,788 700,000

50,000 Fairfax Financial Holdings Limited Preferred 5.00% S-G 812,500 790,000

30,000 Fairfax Financial Holdings Limited Preferred S-H 739,500 414,000

82,000 Fairfax Financial Holdings Limited Preferred 5.00% S-I 2,020,734 1,415,320

10,000 Fairfax Financial Holdings Limited Preferred 5.00% S-K 185,596 208,900

Balance forward 85,966,498 70,784,391

- 309 -



DECEMBER 31, 2015


No. of

Shares/ Market




53,500 Fortis Inc. Preferred 4.10% S-M 1,337,500 1,118,150

30,000 GMP Capital Inc. Preferred 5.50% S-B 506,727 352,500

50,000 Husky Energy Inc, Preferred 4.45% S-1 942,997 656,500

60,000 Husky Energy Inc, Preferred 4.50% S-5 1,500,000 1,174,200

65,000 Husky Energy Inc, Preferred 4.60% S-7 1,583,730 1,304,550

30,000 Intact Financial Group Preferred 4.20% S-3 750,192 627,000

60,000 Laurentian Bank of Canada Preferred 4.30% S-13 1,498,800 1,080,600

65,000 Manulife Financial Corporation Preferred 3.80% 1,370,512 1,362,400

40,000 Manulife Financial Corporation Preferred 4.40% S-9 999,320 936,000



75,000 Manulife Financial Corporation Preferred 3.90% S-15 1,682,920 1,531,500


55,000 National Bank of Canada Preferred 3.80% S-28 1,394,540 1,401,950

11,900 National Bank of Canada Preferred 4.10% S-30 302,612 233,240

60,000 National Bank of Canada Preferred 3.90% S-32 1,500,000 1,152,000

400 Northland Power Inc, Preferred 5.25% S-1 6,980 6,012

59,000 Partners Value Split Corp. Preferred S-3 941,363 1,431,340

15,000 Pembina Pipeline Corp. Preferred 4.25% S-1 254,103 250,500

40,000 Pembina Pipeline Corp. Preferred 4.70% S-3 970,500 724,000

70,000 Pembina Pipeline Corp. Preferred 5.00% S-5 1,699,633 1,358,000

110,000 Pembina Pipeline Corp. Preferred 4.75% S-9 2,738,500 2,429,900

50,000 Royal Bank of Canada Preferred 5.00% S-AJ 1,160,000 1,228,000

108,400 Royal Bank of Canada Preferred S-AK 2,798,902 2,547,400

25,000 Royal Bank of Canada Preferred 5.60% S-AL 661,250 637,250

80,000 Royal Bank of Canada Preferred 5.50% S-BK 2,000,000 2,063,200

31,000 Shaw Communications Inc. Preferred 4.50% S-A 711,421 440,200

14,600 Sun Life Financial Inc. Preferred 3.90% S-10R 365,019 277,254

62,800 Thomson Reuters Corp. Preferred 1st S-II 1,127,339 740,098

2,000 Toronto Dominion Bank Preferred 3.90% S-A 46,966 39,680

85,000 Toronto Dominion Bank Preferred 1st S-T 2,143,275 1,904,850

77,100 Toronto Dominion Bank Preferred 1.54% S-Z 1,923,645 1,727,040

60,000 Transalta Corp. Preferred 1st 4.60% S-A 902,844 594,000

40,000 Transalta Corp. Preferred 1st 4.60% S-C 1,004,388 492,000

55,000 Transalta Corp. Preferred 1st 5.00% S-E 953,070 754,600

20,000 Transalta Corp. Preferred 1st 5.30% S-G 307,000 297,000

Balance forward 125,966,331 105,572,305

- 310 -



DECEMBER 31, 2015


No. of

Shares/ Market




15,000 Transcanada Corp. Preferred 1st 4.60% S-1 225,710 249,600


65,400 Transcanada Corp. Preferred 1st 4.40% S-5 1,563,449 833,850



40,000 Valener Inc. Preferred 4.35% S-A 772,312 800,000

13,800 Veresen Inc. Preferred 5.00% S-C 346,637 242,190

35,000 Westcoast Energy Inc. Preferred 1st 5.25% S-10 875,000 868,000

TOTAL CANADIAN PREFERRED SHARE ISSUES - 89.51% 131,119,367 109,693,145

CANADIAN PREFERRED REAL ESTATE INVESTMENT

TRUST UNITS - 1.65%

48,000 Artis Reit. Preferred 4.75% S-E 1,080,491 735,360

53,000 Artis Reit. Preferred S-G 1,003,688 836,340

20,000 Riocan Real Estate Investment Trust Preferred 4.7% S-C 489,681 450,000

TOTAL CANADIAN PREFERRED REAL ESTATE INVESTMENT

TRUST UNITS - 1.65% 2,573,860 2,021,700

OTHER INVESTMENTS - 3.30%

382,300 BMO S&P/TSX Laddered Preferred Share Index ETF 4,375,838 4,044,734


OTHER NET ASSETS – 5.54% 6,787,862 6,787,862

TOTAL NET ASSETS – 100% $ 144,856,927 $ 122,547,441

- 311 -

NWM ALTERNATIVE

STRATEGIES FUND



DECEMBER 31, 2015

- 312 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Alternative Strategies Fund We have audited the accompanying financial statements of NWM Alternative Strategies Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and 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 controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 313 -

Independent Auditor’s Report NWM Alternative Strategies Fund Opinion In our opinion, the financial statements present fairly, in all material respects, the net assets of NWM Alternative Strategies Fund as at December 31, 2015 and the results of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.



- 314 -



DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 108,996 $ 74,689 Receivable from unsettled trades --- 3,763 Cash 3,051 1,543 Dividends and other income receivable --- 2 Subscriptions receivable 3,186 663 Other receivables --- 14 $ 115,233 $ 80,674

LIABILITIES

Current liabilities Administration and management fees payable $ 66 $ 8 Distributions payable 111 1,969 Redemptions payable 1,457 563 1,634 2,540 Net assets attributable to holders of redeemable units (note 4) $ 113,599 $ 78,134 Net assets attributable to holders of redeemable units by Class Class O $ 104,871 $ 75,039 Class N 8,076 3,095 Class A 652 --- $ 113,599 $ 78,134 Number of redeemable units outstanding Class O 8,018,700 6,542,424 Class N 615,816 267,643 Class A 49,936 --- 8,684,452 6,810,067 Net assets attributable to holders of redeemable units per unit Class O $ 13.08 $ 11.47 Class N $ 13.11 $ 11.56 Class A $ 13.06 $ ---





- 315 -







2015 2014

Income

Income (loss) from limited partnerships $ (2,227) $ 1,474

Interest and other 593 93


Change in unrealized appreciation of investments, net 9,460 5,574

10,240 8,624

Expenses






Class O $ 9,407 $ 8,159

Class N 531 271

Class A 9 ---

$ 9,947 $ 8,430



Class O $ 1.28 $ 1.29

Class N $ 1.27 $ 1.43

Class A $ 0.94 $ ---

- 316 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 75,039 $ 66,299 $ 3,095 $ 1,102 $ --- $ --- $ 78,134 $ 67,401

Redeemable unit

transactions

Proceeds from

redeemable

units issued 24,513 10,426 4,400 1,780 663 --- 29,576 12,206

Reinvestments of

distributions to

holders of

redeemable

units 1,911 --- 58 --- --- --- 1,969 ---

Redemption of

redeemable

units (5,897) (7,934) --- --- (19) --- (5,916) (7,934)

20,527 2,492 4,458 1,780 644 --- 25,629 4,272


redeemable units

From net

investment

income --- (682) --- (21) --- --- --- (703)

From realized gain

on sales of

investments (102) (1,229) (8) (37) (1) --- (111) (1,266)

(102) (1,911) (8) (58) (1) --- (111) (1,969)


from operations

attributable to


units 9,407 8,159 531 271 9 --- 9,947 8,430




- 317 -





(In 000's)


2015 2014




Adjustments for:

Loss (income) from limited partnership 2,227 (1,474)


Change in unrealized appreciation of

investments, net (9,460) (5,574)



investments 57,416 10,172

Dividends and other income receivable 2 (2)

Other receivable 14 (14)

Administration and management fees payable 58 (22)






Net increase in cash during the year 1,508 903

Cash, beginning of the year 1,543 640


Cash includes:


Money market mutual funds 642 305

$ 3,051 $ 1,543

- 318 -



DECEMBER 31, 2015


1. General The NWM Alternative Strategies Fund (the Fund) is an open-ended mutual fund trust

formed under the laws of British Columbia and governed by a Declaration of Trust (Declaration of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the Manager), provides investment management services, CIBC Mellon Trust Company is the trustee, and CIBC Mellon Trust Company and Credential Securities are the custodians of the Fund. The address of the Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund's investment objectives are to generate superior long-term capital growth by investing using a multi-strategy approach.







of March 28, 2016.


were approved and authorized for issue by the Manager on March 28, 2016. 3. Summary of significant accounting policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The accounting policies have been consistently applied by the Fund.


The preparation of financial statements in accordance with IFRS requires management

to make estimates and assumptions that affect the amounts reported and disclosures made in these financial statements and accompanying notes. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in the future.

- 319 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (i) Use of accounting judgements and estimates - continued In classifying and measuring financial instruments held by the Fund, the Manager


The Fund also has made significant judgements when determining the classification of

its redeemable units as financial liabilities in accordance with IAS 32 Financial Instruments: Presentation. These judgements center upon the determination that the Fund’s redeemable units include a contractual obligation to distribute any net income and net realized capital gains at least annually in cash (at the request of the unitholder) and, therefore, the ongoing redemption feature is not the unit’s only contractual obligation.


plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit and loss (FVTPL), including certain investments in debt securities which have been designated at FVTPL. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.


liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the close of trading on the reporting date. The Fund uses the last traded market price of both financial assets and financial liabilities where the last traded price falls within that days’ bid-ask 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. The fair value of the Fund’s investments not traded in active markets is calculated by dividing the aggregate market value of the net assets held by each investment not traded in active markets by the total number of units outstanding and multiplying that total by the total number of units the Fund owns. The Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.

- 320 -



DECEMBER 31, 2015



(iii) Fair value measurement - continued


unrealized gains and losses on foreign exchange) over (under) the total average

cost or amortized cost of the investments is included as change in unrealized

appreciation (depreciation) of investments, net in the statement of comprehensive

income.



and expenses are accrued on a daily basis, dividend income is recognized on the ex-

dividend date, trust income is recognized on the effective date of the distribution

and partnership income is recorded using the equity method. Realized gains and

losses from investment transactions are calculated on an average cost basis which

excludes brokerage commissions and other trading expenses. Distributions

received from investments, which are treated as return of capital for income tax

purposes, are recorded as a reduction of the average cost of the underlying

investments.



from operations attributable to holders of redeemable units in the current year.










realized gain (loss) on sale of investments. Unrealized foreign exchange gains and

losses on investments held are included in change in unrealized appreciation


- 321 -



DECEMBER 31, 2015







cost of the financial asset and the present value of the estimated future cash

flows, discounted using the instrument’s original effective interest rate.

Impairment losses on financial assets at amortized cost are reversed in

subsequent periods if the amount of the loss decreases and the decrease can be

related objectively to an event occurring after the impairment was recognized. (vii) Cash


mutual funds.

(viii) Increase in net assets from operations attributable to holders of redeemable units

per unit

Increase in net assets from operations attributable to holders of redeemable units

per unit reported in the statement of comprehensive income is calculated as the

increase in net assets from operations attributable to holders of redeemable units


the year. See note 13.

(ix) Income tax









statements.




- 322 -



DECEMBER 31, 2015


4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and

Class O units. At December 31, 2015, Class A, Class N and Class O units have been issued. Class O Class N Class A Total

2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 6,542,424 6,321,577 267,643 104,993 --- --- 6,810,067 6,426,570

Redeemable

units

issued,

sales 1,938,981 946,235 348,173 162,650 51,398 --- 2,338,552 1,108,885

Redeemable

units

issued, re-

investment

of distrib-

utions --- --- --- --- (1,462) --- (1,462) ---

Redeemable

units

redeemed (462,705) (725,388) --- --- --- --- (462,705) (725,388)

Redeemable

units out-

standing,

end of the

year 8,018,700 6,542,424 615,816 267,643 49,936 --- 8,684,452 6,810,067


holder in accordance with the provisions of the Declaration of Trust and do not have any nominal or par value. The Class N units of the Fund are redeemable units issued and held by another fund that is managed by the Manager. The Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.

- 323 -



DECEMBER 31, 2015




2015 2014


investments $ 53,653 $ 13,935



141,388 77,754






annum) of the NAV of the Fund on the last business day of each month calculated and

payable monthly in arrears. The Manager has rebated a portion of administration fee


management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units

on the last business day of each month calculated and payable to the Manager monthly

in arrears. The Class N units are held by another fund managed by the Manager.

There are no management fees charged with respect to the Class N units. The Class A

units of the Fund are issued to clients of a company related to the Manager. The Class

A units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the

NAV of the Class A units, on the last business day of each month calculated and


may engage sub-managers. Fees paid to sub-managers are the responsibility of the

Fund. The Manager is responsible for the payment, out of the administration fee, of all

ordinary course expenses relating to the operation of the Fund including, but not limited

to, legal and audit fees, bookkeeping charges, registry and transfer agency fees,

distribution costs, custodial charges, Trustee's fees, all services required in connection

with the provision of information to the redeemable unitholders and all costs relating to

the formation and organization of the Fund.

- 324 -



DECEMBER 31, 2015






Redeemable units issued and outstanding are considered to be capital of the Fund. The net capital received by the Fund is managed in accordance with the investment objective and strategies of the Fund and to maintain adequate liquidity to meet unitholders’ redemption requests. Units are redeemable monthly at the NAV per unit calculated on the valuation day. Unitholders must provide the Manager with notice of redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this time, the effective date of the requested redemption will be the next following valuation day and the NAV per unit will be calculated on such next following valuation day. The settlement period will not be the standard three business days, it will be 18 business days. The Manager may suspend the right of unitholders to request that the Fund redeem its units for a whole or any part of a period during which normal trading is suspended on a stock exchange, options exchange or futures exchange within or outside Canada on which securities or derivatives owned by the Fund are listed and traded, or on which such securities or derivatives are traded, if those securities or derivatives represent more than 50 percent by value, or underlying market exposure, of the total assets of the Fund without allowance for liabilities and if those securities or derivatives are not traded on any other exchange that represents a reasonably practical alternative for the Fund.

The Fund distributes net income and net realized capital gains annually in December of each calendar year. Distributions are automatically reinvested in units of the Fund, unless subscribers specify in advance, in writing, that they wish to receive distributions in cash.


The Fund’s activities expose it to a variety of risks associated with financial instruments, as follows: Market risk (including price risk and currency risk), liquidity risk, credit risk and concentration risk. The value of investments with the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates, economic conditions, market and company news related to specific securities within the Fund.

The Manager manages the potential adverse effects of financial risks on the Fund’s performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Fund’s positions and market events and diversify the investment portfolio, within the constraints of the Fund’s investment objectives and strategies.

- 325 -



DECEMBER 31, 2015




a) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate as a result of changes in market price. 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.

i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of equity securities. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. As at December 31, 2015, the Fund holds positions in a small number of investments. However, these investments respectively hold a significant number of security investments. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager.


assets 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 approximately $5,450,000 (2014 - $3,734,000). In practice, the actual results may differ from this sensitivity analysis and the differences could be material.

ii) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on financial instruments denominated in currencies other than Canadian dollars. Included in net assets are $62,938,602 (2014 - $53,963,741) of US dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager.

- 326 -



DECEMBER 31, 2015


9. Risk associated with financial instruments - continued a) Market risk - continued

ii) Currency risk - continued As at December 31, 2015, if the Canadian dollar had strengthened or weakened 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 approximately $3,146,000 (2014 - $2,698,000). In practice, the actual results may differ from this sensitivity analysis and the differences could be material.

b) Liquidity risk

Liquidity risk is the risk that the Fund will encounter difficulty meeting the obligations

associated with the Fund's financial liabilities. The Fund is exposed to monthly cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees and by holding cash and short-term investments. The table below analyzes the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

On




payable $ --- $ 66 $ 66




$ 113,599 $ 1,634 $ 115,233

- 327 -



DECEMBER 31, 2015



b) Liquidity risk - continued On




payable $ --- $ 8 $ 8




$ 78,134 $ 2,540 $ 80,674



c) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss

for the other party by failing to discharge an obligation. All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the broker has received the securities. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodians or brokers may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing the Fund’s rights to its assets in the case of an insolvency of any such party. All of the Fund's investments and cash are held with two custodians and one trustee. This risk is managed by the choice of custodians and trustee.



- 328 -



DECEMBER 31, 2015


10. Fair value measurement The Fund classifies fair value measurements within a hierarchy, which gives the

highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are:



Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and




to the fair value measurement. The following table illustrates the classification of the

Fund’s assets measured at fair value within the fair value hierarchy as at December 31,

2015:


2015 (in 000’s)

Canadian equities $ --- $ 46,125 $ 46,125

Foreign equities --- 62,871 62,871

$ --- $ 108,996 $ 108,996 2014 (in 000’s)

Canadian equities $ 398 $ 20,711 $ 21,109

Foreign equities --- 53,580 53,580

$ 398 $ 74,291 $ 74,689





- 329 -



DECEMBER 31, 2015



Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 108,996 $ --- $ 108,996

Cash --- 3,051 3,051


$ 108,996 $ 6,237 $ 115,233

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 74,689 $ --- $ 74,689

Receivable from unsettled trade -- 3,763 3,763

Cash --- 1,543 1,543



Other receivables --- 14 14

$ 74,689 $ 5,985 $ 80,674


In addition to items disclosed elsewhere, at December 31, 2015 the Manager and parties


- 330 -



DECEMBER 31, 2015


13. Increase in net assets from operations attributable to holders of redeemable units per

unit


per unit for the year ended December 31, 2015 is calculated as follows:

2015 2014

Class O






Class N


to holders of redeemable units (in 000’s) $ 531 $ 271




Class A


to holders of redeemable units (in 000’s) $ 9 $ ---



to holders of redeemable units per unit $ 0.94 $ ---






- 331 -



DECEMBER 31, 2015


14. Recent accounting pronouncements - continued

















- 332 -



DECEMBER 31, 2015


No. of

Shares/ Market



113,188 MAM Global Absolute Strategies Private Pooled Fund – Class A $ 13,004,603 $ 13,217,435

127,972 Polar Multi-Strategy Fund – Class F 13,601,766 13,717,974

940,751 RBC Multi-Strategy Alpha Fund 10,715,683 9,829,627

736,732 RP Debt Opportunities Fund 9,105,207 9,360,207

46,427,259 46,125,243

FOREIGN EQUITIES - 54.94%

6,421 Altegris Global Macro Fund, traded in United States dollars 6,536,180 8,750,232

11,358 Altegris Millenium Fund, traded in United States dollars 11,913,610 22,487,169

5,915 Altegris Multi-Strategy Fund, traded in United States dollars 8,075,823 9,330,966

14,045,428 Altegris Winton Futures Fund LP, traded in United States dollars 17,196,452 22,302,217

43,722,065 62,870,584

TOTAL INVESTMENT PORTFOLIO - 95.25% 90,149,324 108,995,827

OTHER NET ASSETS - 4.75% 4,603,487 4,603,487

TOTAL NET ASSETS - 100% $ 94,752,811 $ 113,599,314

- 333 -




DECEMBER 31, 2015

- 334 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Precious Metals Fund We have audited the accompanying financial statements of NWM Precious Metals Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 335 -


NWM Precious Metals Fund

Opinion


financial position of NWM Precious Metals Fund as at December 31, 2015 and the results




Vancouver, Canada

March 7, 2016

- 336 -



DECEMBER 31, 2015




ASSETS 2015 2014

Current assets

Investments $ 35,259 $ 29,866

Cash 1,021 1,339

Subscriptions receivable 22 ---

$ 36,302 $ 31,205

LIABILITIES

Current liabilities


Redemptions payable 107 ---

128 18


units (note 4) $ 36,174 $ 31,187



Class O $ 31,381 $ 29,298

Class N 4,679 1,889

Class A 114 ---

$ 36,174 $ 31,187


Class O 6,785,516 6,196,570

Class N 1,009,407 399,102

Class A 24,734 ---

7,819,657 6,595,672



Class O $ 4.62 $ 4.73

Class N $ 4.64 $ 4.73

Class A $ 4.62 $ ---





- 337 -







2015 2014 Income Dividends $ 2 $ 1 Foreign exchange gain 23 --- Net realized loss on sale (note 5) --- (398) Change in unrealized appreciation (depreciation) (1,124) 1,990 (1,099) 1,593 Expenses Administration and management fees 230 246 Transaction costs 3 1 233 247 Increase (decrease) in net assets from operations attributable to holders of redeemable units $ (1,332) $ 1,346 Increase (decrease) in net assets from operations attributable to holders of redeemable units per class Class O $ (1,140) $ 1,398 Class N (190) (52) Class A (2) --- $ (1,332) $ 1,346 Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit (note 13) Class O $ (0.17) $ 0.23 Class N $ (0.30) $ (0.22) Class A $ (0.41) $ ---

- 338 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 29,298 $ 27,788 $ 1,889 $ 717 $ --- $ --- $ 31,187 $ 28,505

Redeemable unit

transactions

Proceeds from

redeemable

units issued 7,392 6,876 3,230 1,224 135 --- 10,757 8,100

Redemption of


3,223 112 2,980 1,224 116 --- 6,319 1,336




of redeemable units (1,140) 1,398 (190) (52) (2) --- (1,332) 1,346




- 339 -





(In 000's)


2015 2014 Cash flows used in operating activities Increase (decrease) in net assets from operations attributable to holders of redeemable units $ (1,332) $ 1,346 Adjustments for: Net realized loss on sale of investments --- 398 Change in unrealized depreciation (appreciation) of investments 1,124 (1,990) Purchases of investments (6,517) (1,900) Proceeds from sale of investments --- 1,521 Administration and management fees payable 3 1 Net cash flows used in operating activities (6,722) (624) Cash flows from financing activities Proceeds from issuances of redeemable units 10,735 8,203 Amounts paid on redemption of redeemable units (4,331) (6,879) Net cash flows from financing activities 6,404 1,324 Net increase (decrease) in cash during the year (318) 700 Cash, beginning of the year 1,339 639 Cash, end of the year $ 1,021 $ 1,339

- 340 -



DECEMBER 31, 2015


1. General

The NWM Precious Metals Fund (the Fund) is an open-ended unit trust formed under

the laws of British Columbia and governed by a Declaration of Trust (Declaration of

Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd.

(the Manager), provides investment management services, CIBC Mellon Trust Company

is the trustee of the Fund, and CIBC Mellon Trust Company and Credential Securities

are the custodians of the Fund. The address of the Fund’s registered office is 5th Floor,

1508 West Broadway, Vancouver, British Columbia. The Fund’s objective is to invest

primarily in securities involved directly or indirectly in the exploration, mining and

production of precious metals as well as in bullion, coins, receipts, and certificates.







of March 7, 2016.





the preparation of its financial statements. The accounting policies have been

consistently applied by the Fund.









is required to make judgements about the classification of financial instruments and


held for trading. The fair value option has been applied to the Fund’s investments

as the investments are managed on a fair value basis in accordance with the Fund’s


- 341 -



DECEMBER 31, 2015





plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit and loss (FVTPL). All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.





- 342 -



DECEMBER 31, 2015



(iv) Investment transactions, income and expenses - continued



attributable to holders of redeemable units in the current period.










realized gain (loss) on sale of investments, in the statement of comprehensive

income. Unrealized foreign exchange gains and losses on investments held are

included in change in unrealized appreciation (depreciation) of investments in the

statement of comprehensive income.





cost of the financial asset and the present value of the estimated future cash flows,





(vii) Cash




Increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit reported in the statement of comprehensive income is

calculated as the increase (decrease) in net assets from operations attributable to

holders of redeemable units divided by the weighted average number of

redeemable units outstanding during the year. Refer to note 13 for the calculation.

- 343 -



DECEMBER 31, 2015



(ix) Income tax









statements.






Class O units. At December 31, 2015 Class A, Class N and Class O units have been

issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 6,196,570 6,127,473 399,102 158,004 --- --- 6,595,672 6,285,477

Redeemable

units

issued,

sales 1,432,282 1,283,145 661,601 241,098 28,742 --- 2,122,625 1,524,243

Redeemable

units

redeemed (843,336) (1,214,048) (51,296) --- (4,008) --- (898,640) (1,214,048)

Redeemable

units out-

standing,

end of the

year 6,785,516 6,196,570 1,009,407 399,102 24,734 --- 7,819,657 6,595,672

- 344 -



DECEMBER 31, 2015





any nominal or par value. The Class N units of the Fund represent units issued to and

held by another fund that is managed by the Manager. The Class A units of the Fund

represent units issued to clients of a financial advisory company related to the Manager.

5. Net realized loss on sale of investments

The net realized loss on sale of investments (in 000's) is comprised of:

2015 2014

Proceeds from sale of investments $ --- $ 1,521




Cost of investments sold during the year --- 1,919

Net realized loss on sale of investments $ --- $ (398)

6. Administration and management fees and expenses




administration fees based on the actual costs incurred by the Manager. The Class O

units are subject to a management fee equal to 1/12 of 0.1% (0.1% per annum) of the

NAV of the Class O units, on the last business day of each month calculated and









administration fee, of all ordinary course expenses relating to the operation of the Fund,

including, but not limited to, legal and audit fees, bookkeeping charges, registry and

transfer agency fees, distribution costs, custodial charges, trustee's fees, all services



- 345 -



DECEMBER 31, 2015





8. Capital management Redeemable units issued and outstanding are considered to be capital of the Fund. The

net capital received by the Fund is managed in accordance with the investment objective and strategies of the Fund and to maintain adequate liquidity to meet unitholders’ redemption requests. Units are redeemable weekly at the NAV per unit calculated on the valuation day. Unitholders must provide the Manager with notice of redemption not later than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this time, the effective date of the requested redemption will be the next following valuation day and the NAV per unit will be calculated on such next following valuation day.


units for a whole or any part of a period during which normal trading is suspended on a stock exchange, options exchange or futures exchange within or outside Canada on which securities or derivatives owned by the Fund are listed and traded, or on which such securities or derivatives are traded, if those securities or derivatives represent more than 50 percent by value, or underlying market exposure, of the total assets of the Fund without allowance for liabilities and if those securities or derivatives are not traded on any other exchange that represents a reasonably practical alternative for the Fund.



9. Risk associated with financial instruments The Fund’s activities expose it to a variety of risks associated with financial

instruments, as follows: Market risk (including price risk and currency risk), liquidity risk, credit risk, and concentration risk. The value of investments within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest rates, economic conditions, market and company news related to specific securities within the Fund.



- 346 -



DECEMBER 31, 2015






capital.

a) Market risk






i) Price risk







countries where the investments are listed for trading. As at December 31, 2015,

68% (2014 - 66%) of the Fund’s net assets are held in one mutual fund, however

that mutual fund has invested in a significant number of securities. The

investments of the Fund are recognized at fair value and all changes in market

conditions directly affect changes in net assets attributable to holders of

redeemable units. The Fund’s investment portfolio is monitored daily by the

Manager.

As at December 31, 2015, if relevant benchmark indexes and the Fund’s

investment 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 approximately $1,763,000 (2014 -

$1,493,000). In practice, actual results may differ from this sensitivity analysis

and the difference could be material.

ii) Currency risk


instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on financial instruments denominated in currencies other than Canadian dollars. Included in net assets are $2,948,404 (2014 - $2,785,890) of US dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager.

- 347 -



DECEMBER 31, 2015


9. Risk associated with financial instruments – continued a) Market risk - continued ii) Currency risk - continued As at December 31, 2015, if the Canadian dollar had strengthened or weakened

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 approximately $147,000 (2014 - $139,000). In practice, the actual results may differ from this sensitivity analysis and the differences could be material.

b) Liquidity risk


obligations associated with the Fund’s financial liabilities. The Fund is exposed to weekly cash redemptions. Furthermore, the Fund is unable to control the amounts of redemption requests. The Fund manages these risks by the choice of investees and by holding cash and short-term investments. The table below analyzes the Fund’s financial liabilities into relevant maturity groupings based on the remaining period to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.

On




payable $ --- $ 21 $ 21



$ 36,174 $ 128 $ 36,302

On




payable $ --- $ 18 $ 18

Redemptions payable --- --- ---


$ 31,187 $ 18 $ 31,205



- 348 -



DECEMBER 31, 2015


9. Risk associated with financial instruments – continued

c) Credit risk


loss for the other party by failing to discharge an obligation. All transactions in

listed securities are settled or paid for upon delivery using approved brokers. The

credit risk related to the associated receivables is considered limited, as delivery of

securities sold is only made once the broker has received payment. Payment is made

on a purchase once the broker has received the securities. The trade will fail if

either party fails to meet its obligation. However, there are risks involved in dealing

with custodians or prime brokers who settle trades and in rare circumstances, the

securities and other assets deposited with the custodians or broker may be exposed

to credit risk with regard to such parties. In addition, there may be practical

problems or time delays associated with enforcing the Fund’s rights to its assets in

the case of an insolvency of any such party. All of the Fund’s investments, and cash






















the fair value measurement. All of the Fund’s investments held at December 31, 2015

are classified as Level 1.

- 349 -



DECEMBER 31, 2015






Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 35,259 $ --- $ 35,259

Cash --- 1,021 1,021


$ 35,259 $ 1,043 $ 36,302

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 29,866 $ --- $ 29,866

Cash --- 1,339 1,339

$ 29,866 $ 1,339 $ 31,205


In addition to items disclosed elsewhere, at December 31, 2015, the Manager and

parties related to the Manager own 142,639 (2014 - 88,003) Class O units of the Fund.

- 350 -



DECEMBER 31, 2015


13. Increase (decrease) in net assets attributable to holders of redeemable units per unit The increase (decrease) in net assets attributable to holders of redeemable units per

unit for the year ended December 31, 2015 is calculated as follows:

2015 2014

Class O



(in 000’s) $ (1,140) $ 1,398




per unit $ (0.17) $ 0.23 Class N

Decrease in net assets from operations attributable to

holders of redeemable units (in 000’s) $ (190) $ (52)



holders of redeemable units per unit $ (0.30) $ (0.22) Class A


holders of redeemable units (in 000’s) $ (2) $ ---



holders of redeemable units per unit $ (0.41) $ --- 14. Recent accounting pronouncements The following pronouncements were issued by the IASB or the IFRIC. Those



will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 also includes requirements relating to a new hedge accounting model, which represents a substantial overhaul of hedge accounting which will allow entities to better reflect their risk management activities in the financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.

- 351 -



DECEMBER 31, 2015


No. of

Shares/ Fair


CANADIAN EQUITIES – 97.47%

158,000 Central Fund of Canada Ltd. $ 2,858,404 $ 2,180,400

12,700 Central Gold Trust, traded in United States dollars 772,850 662,645

801,966 Sentry Precious Metals Growth Fund Series I 45,448,352 24,605,919

75,000 Silver Bullion Trust 1,318,643 762,750

1,300 Silver Bullion Trust, traded in United States dollars 16,806 13,827

398,346 Sprott Gold Bullion Fund 5,545,377 4,839,909

2,070 Sprott Physical Gold Trust 29,798 24,953

134,530 Sprott Physical Gold Trust, traded in United States

dollars 1,909,602 1,625,434

74,500 Sprott Physical Silver Trust, traded in United States

dollars 886,730 543,379

TOTAL EQUITIES 58,786,562 35,259,216

OTHER NET ASSETS – 2.53% 914,755 914,755

TOTAL NET ASSETS – 100.00% $ 59,701,317 $ 36,173,971

- 352 -

NWM BOND FUND



DECEMBER 31, 2015

- 353 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Bond Fund We have audited the accompanying financial statements of NWM Bond Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and 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 controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 354 -


NWM Bond Fund

Opinion

In our opinion, the financial statements present fairly, in all material respects, the net

assets of NWM Bond Fund as at December 31, 2015 and the results of its financial

performance and its cash flows for the year then ended in accordance with International

Financial Reporting Standards.


Vancouver, Canada

March 7, 2016

- 355 -

NWM BOND FUND


DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 158,386 $ 158,224 Cash 1,778 2,588 Accrued interest receivable 318 287 Receivable for investments sold 2,675 --- Subscriptions receivable 349 118 $ 163,506 $ 161,217

LIABILITIES Current liabilities Administration and management fees payable $ 166 $ 167 Payable for investments purchased 565 --- Distributions payable 246 61 Redemptions payable 902 987 1,879 1,215 Net assets attributable to holders of redeemable units (note 4) $ 161,627 $ 160,002 Net assets attributable to holders of redeemable units by Class Class O $ 146,136 $ 154,402 Class N 14,361 5,600 Class A 1,130 --- $ 161,627 $ 160,002 Number of redeemable units outstanding Class O 14,502,648 15,222,944 Class N 1,418,313 550,492 Class A 111,779 --- 16,032,740 15,773,436 Net assets attributable to holders of redeemable units per unit Class O $ 10.08 $ 10.14 Class N $ 10.13 $ 10.17 Class A $ 10.11 $ ---





- 356 -

NWM BOND FUND






2015 2014

Income


Net realized gain on sale of investments (note 5) 1,924 178



3,019 6,085

Expenses






Class O $ 1,868 $ 4,949

Class N 86 85

Class A (1) ---

$ 1,953 $ 5,034



per unit (note 13)

Class O $ 0.12 $ 0.33

Class N $ 0.09 $ 0.23

Class A $ (0.02) $ ---

- 357 -

NWM BOND FUND





(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 154,402 $ 151,146 $ 5,600 $ 1,725 $ --- $ --- $ 160,002 $ 152,871

Redeemable unit

transactions

Proceeds from

redeemable

units issued 53,029 50,845 9,525 5,440 1,224 --- 63,778 56,285

Reinvestments of

distributions to

holders of

redeemable

units 1,855 1,747 193 64 7 --- 2,055 1,811

Redemption of

redeemable

units (62,105) (51,567) (850) (1,650) (93) --- (63,048) (53,217)

(7,221) 1,025 8,868 3,854 1,138 --- 2,785 4,879


redeemable units

From net

investment

income (1,428) (1,482) (95) (35) (3) --- (1,526) (1,517)

From realized gains

on sales of (1,201) --- (80) --- (3) --- (1,284) ---

investments

Return of capital (284) (1,236) (18) (29) (1) --- (303) (1,265)

(2,913) (2,718) (193) (64) (7) --- (3,113) (2,782)


net assets from


to holders of

redeemable units 1,868 4,949 86 85 (1) --- 1,953 5,034




- 358 -

NWM BOND FUND




(In 000's)


2015 2014




Adjustments for:

Net realized gain on sale of investments (1,924) (178)





Accrued interest receivable (31) 75

Administration and management fees payable (1) 5

Net cash flows used in operating activities (351) (3,693)






Net cash from (used in) financing activities (459) 4,401

Net increase (decrease) in cash (810) 708



Cash includes:


Money market mutual funds --- 2,019

$ 1,778 $ 2,588

Supplemental disclosures on cash flows from operating

activities:


- 359 -

NWM BOND FUND


DECEMBER 31, 2015


1. General

The NWM Bond Fund (the Fund) is an open-ended mutual fund trust formed under the

laws of British Columbia and governed by a Declaration of Trust (Declaration of Trust).

Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the

Manager), provides administration and management services, CIBC Mellon Trust



5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund's investment

objective is to generate a high level of interest income with minimum risk by investing

primarily in Canadian fixed income securities.



Financial Reporting Standards (IFRS) as published by the International Accounting

Standards Board (IASB) and interpretation of the International Financial Reporting



of March 7, 2016.











is required to make judgements about the classification of financial instruments and


held for trading. The fair value option has been applied to the Fund’s investments

as the investments are managed on a fair value basis in accordance with the Fund’s


- 360 -

NWM BOND FUND


DECEMBER 31, 2015





plus transaction costs in the case of financial instruments measured at amortized cost. Purchases and sales of financial assets are recognized at their trade date. The Fund’s investments are measured at fair value through profit and loss (FVTPL), including certain investments in debt securities which have been designated at FVTPL. All other financial assets and liabilities are measured at amortized cost. Under this method, financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contract’s effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value (NAV) for transactions with unitholders.




unrealized gains and losses on foreign exchange) over (under) the total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments, net in the statement of comprehensive income.

- 361 -

NWM BOND FUND


DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses Investment transactions are accounted for as of the trade date. Interest income

and expenses are accrued on a daily basis and trust income is recognized on the effective date of the distribution. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments.


sale of investments by the Fund are recognized in increase (decrease) in net assets from operations attributable to holders of redeemable units in the current year.

(v) Translation of foreign currencies The reporting and functional currency of the Fund is the Canadian dollar. The

Fund does not have any significant foreign currency transactions. (vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that



mutual funds. (viii) Increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit Increase (decrease) in net assets from operations attributable to holders of

redeemable units per unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets from operations attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

- 362 -

NWM BOND FUND


DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (ix) Income tax The Fund qualifies as a mutual fund trust under the provisions of the Income Tax



assets by the total number of units outstanding. 4. Redeemable units of the Fund

The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and Class O units. At December 31, 2015 Class A, Class N and Class O units have been issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable

units out-

standing,

beginning

of the year 15,222,944 15,122,493 550,492 171,959 --- --- 15,773,436 15,294,452

Redeemable

units

issued,

sales 5,199,435 5,008,209 932,259 534,783 120,261 --- 6,251,955 5,542,992

Redeemable

units

issued, re-

investment

of distrib-

utions 182,620 172,084 18,923 6,255 635 --- 202,178 178,339

Redeemable

units

redeemed (6,102,351) (5,079,842) (83,361) (162,505) (9,117) --- (6,194,829) (5,242,347)

Redeemable

units out-

standing,

end of the

year 14,502,648 15,222,944 1,418,313 550,492 111,779 --- 16,032,740 15,773,436

- 363 -

NWM BOND FUND


DECEMBER 31, 2015


4. Redeemable units of the Fund - continued The Class A, Class N and Class O units of the Fund, which are redeemable at the option

of the holder in accordance with the provisions of the Declaration of Trust, do not have any nominal or par value. The Class N units of the Fund represent units held by another fund that is managed by the Manager. The Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.


2015 2014






Net realized gain on sale of investments $ 1,924 $ 178

6. Administration and management fees The Fund pays to the Manager an administration fee equal to 1/12 of 0.1% (0.1% per

annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of the administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units of the Fund on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged on the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Fund will pay the Manager a management fee, if Class F units of the Fund are issued, to be borne by the investors in these units. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services required in connection with the provision of information to the unitholders and all costs relating to the formation and organization of the Fund.

- 364 -

NWM BOND FUND


DECEMBER 31, 2015



The Fund did not pay brokerage commissions on securities transactions during the year

for brokerage services provided to the Fund.








unitholders’ redemption requests. Units are redeemable daily at the NAV per unit





valuation day.









Fund.




distributions in cash. 9. Risks associated with financial instruments


instruments, as follows: Market risk (including price risk and interest rate risk),

liquidity risk, credit risk and concentration risk. The value of investments with the



Fund.

- 365 -

NWM BOND FUND


DECEMBER 31, 2015







and strategies.




capital.

a) Market risk






i) Price risk




subject to the risk of changes in the prices of fixed income and mutual funds.

The value of a financial instrument may be affected by specific Fund

developments, by stock market conditions and by general economic and financial

conditions in those countries where the investments are listed for trading. As at

December 31, 2015, 53.2% (2014 – 52.9%) of the Fund’s net assets are held in

three (2014 – three) mutual funds. The investments of the Fund are recognized

at fair value and all changes in market conditions directly affect changes in net

assets attributable to holders of redeemable units. The Fund's investment

portfolio is monitored daily by the Manager.




redeemable units of the Fund would have increased or decreased by

approximately $7,919,000 (2014 - $7,911,000). In practice, actual results may

differ from this sensitivity analysis and the difference could be material.

- 366 -

NWM BOND FUND


DECEMBER 31, 2015







is exposed to interest rate risk associated with its investments. The Manager

manages this risk by laddering their investments with varying maturities and

interest rates.

The table below summarizes the Fund’s exposure to interest rate risk as at

December 31, 2015, by remaining term to maturity.

Term to Maturity (in 000’s) 2015 2014

1 – 5 years $ 66,173 $ 61,578

5 – 10 years 5,947 2,948

Total $ 72,120 $ 64,526



decreased or increased, respectively, by approximately 2.8% (2014 – 2.5%). In

practice, actual results may differ from this sensitivity analysis and the

difference could be material.

b) Liquidity risk



daily cash redemptions. Furthermore, the Fund is unable to control the amounts of

redemption requests. The Fund manages these risks by the choice of investees and

by holding cash and short-term investments. The table below analyzes the Fund’s

financial liabilities into relevant maturity groupings based on the remaining period

to the contractual maturity date. The amounts in the table are the contractual


- 367 -

NWM BOND FUND


DECEMBER 31, 2015



b) Liquidity risk – continued On




payable $ --- $ 166 $ 166

Payable for investments purchased --- 565 565




$ 161,627 $ 1,879 $ 163,506

On




payable $ --- $ 167 $ 167




$ 160,002 $ 1,215 $ 161,217





- 368 -

NWM BOND FUND


DECEMBER 31, 2015



c) Credit risk



securities includes consideration of the credit worthiness of the debt issuer. As at

December 31, 2015, the Fund was invested in debt securities with the following

Standard & Poor’s (“S&P”) credit ratings.

Debt securities by S&P rating as a % of net assets attributable to holders of

redeemable units 2015 2014

Net Cash 3.10% 12.20%

AAA 41.20% 41.10%

AA 31.30% 27.20%

A 7.40% 6.70%

BBB 17.00% 12.30%

BB and below --- 0.50%

Total 100.00% 100.00%

All transactions in listed securities are settled or paid for upon delivery using

approved brokers. The credit risk related to the associated receivables is considered

limited, as delivery of securities sold is only made once the broker has received

payment. Payment is made on a purchase once the broker has received the

securities. The trade will fail if either party fails to meet its obligation. However,

there are risks involved in dealing with custodians or prime brokers who settle

trades and in rare circumstances, the securities and other assets deposited with the

custodians or broker may be exposed to credit risk with regard to such parties. In

addition, there may be practical problems or time delays associated with enforcing

the Fund’s rights to its assets in the case of an insolvency of any such party. All

investments and cash are held with two custodians and one trustee. This risk is

managed by the choice of the custodians and trustee.








- 369 -

NWM BOND FUND


DECEMBER 31, 2015















2015 are classified as Level 1.





Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 158,386 $ --- $ 158,386

Cash --- 1,778 1,778

Accrued interest receivable --- 318 318

Receivable for investments sold --- 2,675 2,675


$ 158,386 $ 5,120 $ 163,506

- 370 -

NWM BOND FUND


DECEMBER 31, 2015



Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 158,224 $ --- $ 158,224

Cash --- 2,588 2,588

Accrued interest receivable --- 287 287


$ 158,224 $ 2,993 $ 161,217


In addition to items disclosed elsewhere, at December 31, 2015 the Manager and parties



units per unit



2015 2014

Class O






Class N


to holders of redeemable units (in 000’s) $ 86 $ 85




- 371 -

NWM BOND FUND


DECEMBER 31, 2015



units per unit - continued 2015 2014

Class A


























- 372 -

NWM BOND FUND


DECEMBER 31, 2015


No. of Shares/ Market Units Description Cost Value

FIXED INCOME - 44.62%

315,000 407 International Inc. 3.87% 11/24/2017 $ 330,262 $ 328,581 157,000 Altagas Income Trust 5.49% 03/27/2017 170,105 163,564 35,000 Altagas Ltd. 4.55% 01/17/2019 37,264 37,148

109,000 Altalink Investment LP 2.244% 03/07/2022 109,000 105,697 150,000 Altalink Investment LP 3.265% 06/05/2020 149,993 154,846 311,000 Altalink Investment LP 3.674% 06/05/2019 311,406 325,001 283,000 Anheuser-Busch Cos LLC 3.65% 01/15/2016 295,059 283,119 365,000 AT&T Inc. 3.825% 11/25/2020 369,704 387,789 40,000 BAA Funding Ltd. 3.00% 06/17/2021 (Heathrow) 40,936 41,310

190,000 Bank of Montreal 2.24% 12/11/2017 194,077 193,339 1,464,000 Bank of Montreal 2.96% 08/02/2016 1,496,081 1,480,624

438,000 Bank of Montreal 3.12% 09/19/2024 440,471 441,151 245,000 Bank of Montreal 3.34% 12/08/2025 244,909 246,828 516,000 Bank of Montreal 3.49% 06/10/2016 538,596 521,622 135,000 Bank of Montreal 6.02% 05/02/2018 152,705 149,099 221,000 Bank of Nova Scotia 1.33% 05/01/2018 221,029 220,241 45,000 Bank of Nova Scotia 2.09% 09/09/2020 44,873 45,103

2,092,000 Bank of Nova Scotia 4.10% 06/08/2017 2,219,569 2,176,977 101,000 BC Gas Utility 10.30% 09/30/2016 123,536 107,490 84,000 BCIMC Realty Corp. 2.10% 06/03/2021 83,967 84,086

255,000 Bell Canada 3.00% 10/03/2022 253,977 257,305 225,000 Bell Canada 3.25% 06/17/2020 229,978 234,511 175,000 Bell Canada 3.50% 09/10/2018 174,897 182,550 45,000 Bell Canada 4.37% 09/13/2017 47,123 47,010 40,000 Bell Canada 4.88% 04/26/2018 42,816 42,757 25,000 Bell Canada 5.52% 02/26/2019 28,515 27,657

123,000 Blackbird Infrastructure 1.713% 10/08/2021 122,042 123,212 512,000 Brookfield Asset Management 3.95% 04/09/2019 518,320 536,312 84,000 Brookfield Infrastructure 3.452% 03/11/2022 84,000 82,645 32,000 Brookfield Infrastructure 3.455% 10/10/2017 33,013 32,635 90,000 Brookfield Infrastructure 3.538% 10/30/2020 90,000 90,685 25,000 BRP Finance ULC 5.14% 10/13/2020 27,695 27,654

119,000 Caisse Centrale Desjardins 1.748% 03/02/2020 119,000 118,148 100,000 Cameco Corp. 3.75% 11/14/2022 101,559 102,321

5,690,000 Canada Government 0.75% 09/01/2020 5,660,505 5,695,889 339,000 Canada Government 1.25% 08/01/2017 343,549 343,076 25,000 Canada Government 1.50% 03/01/2020 25,833 25,884

714,000 Canada Government 1.75% 09/01/2019 743,600 743,660 222,000 Canada Government 2.75% 09/01/2016 225,639 225,303 15,000 Canada Government 2.75% 06/01/2022 16,553 16,595

174,000 Canada Government 3.25% 06/01/2021 194,842 195,968 84,000 Canada Government 3.50% 06/01/2020 94,166 94,326

2,390,000 Canada Housing Trust 1.45% 06/15/2020 2,415,658 2,418,166 3,019,000 Canada Housing Trust 1.70% 12/15/2017 3,092,306 3,077,116

463,000 Canada Housing Trust 1.75% 06/15/2018 474,691 473,735 2,436,000 Canada Housing Trust 2.00% 12/15/2019 2,503,364 2,521,784 6,314,000 Canada Housing Trust 2.05% 06/15/2017 6,448,687 6,443,753

860,000 Canada Housing Trust 2.05% 06/15/2018 888,400 886,161 3,231,000 Canada Housing Trust 2.35% 12/15/2018 3,328,946 3,368,366

Balance forward 35,903,216 35,928,799

- 373 -

NWM BOND FUND


DECEMBER 31, 2015



FIXED INCOME - 44.62% (CONT’D) Balance brought forward $ 35,903,216 $ 35,928,799

230,000 Canadian Natural Resources Ltd. 2.60% 12/03/2019 233,621 228,283

60,000 Canadian Natural Resources Ltd. 2.89% 08/14/2020 61,159 59,741

310,000 Cards II Trust CCR-B 2.155% 10/15/2020 310,000 312,288 130,000 Choice Properties Reit 3.00% 04/20/2016 132,525 130,153 75,000 Choice Properties Reit 3.00% 04/20/2017 76,049 76,032

175,000 Choice Properties Reit 3.498% 02/08/2021 175,000 182,449 370,000 Choice Properties Reit 3.60% 04/20/2020 378,916 388,733 170,000 CI Financial Corp. 2.645% 12/07/2020 170,000 171,505 505,000 CIBC 1.70% 10/09/2018 506,043 507,656 630,000 CIBC 1.75% 06/01/2016 630,154 632,101 583,000 CIBC 2.22% 03/07/2018 594,266 593,342 52,000 CIBC 2.35% 10/18/2017 52,815 52,960

166,000 CIBC 2.65% 11/08/2016 167,281 168,196 370,000 CIBC 3.00% 10/28/2024 370,806 370,722 65,000 Cominar Reit 3.62% 06/21/2019 64,992 65,464

110,000 Cominar Reit 4.164% 06/01/2022 110,000 109,544 72,000 Cominar Reit 4.25% 12/08/2021 72,224 72,444 45,000 Cominar Reit 4.941% 07/27/2020 47,569 47,240

155,000 Crombie Real Estate 2.775% 02/10/2020 154,640 153,704 115,000 Crombie Real Estate 3.986% 10/31/2018 115,000 119,147 185,000 Eagle Credit Card Trust 2.147% 09/17/2020 185,000 185,000 352,000 Eagle Credit Card Trust 2.849% 10/17/2018 356,157 363,831

167,000 Ellisdon Infrastructure 2.018% 08/28/2018 168,907 167,374 335,000 Emera Inc. 2.96% 12/13/2016 334,859 339,248 205,000 Enbridge Gas Distribution Inc. 1.85%

04/24/2017 205,075 206,111 80,000 Enbridge Gas Distribution Inc. 4.04%

11/23/2020 84,799 87,366 236,000 Enbridge Inc. 2.92% 12/14/2017 237,837 239,292 472,000 Enbridge Inc. 3.16% 03/11/2021 481,586 465,477 50,000 Enbridge Inc. 4.26% 02/01/2021 53,592 51,828

241,000 Enbridge Inc. 4.77% 09/02/2019 265,565 255,746 52,000 Enbridge Income Fund 4.10% 02/22/2019 55,317 53,987 40,000 Enbridge Income Fund 4.85% 02/22/2022 43,777 42,332 318,000 Enbridge Pipelines Inc. 4.45% 04/06/2020 348,034 345,338 30,000 Enbridge Pipelines Inc. 4.49% 11/12/2019 33,020 32,487

305,000 Enbridge Pipelines Inc. 6.62% 11/19/2018 354,567 344,185 282,000 Enmax Corporation 6.15% 06/19/2018 321,739 310,048 33,000 First Capital Realty Inc. 4.50% 03/01/2021 35,056 35,718

545,000 Genesis Trust 1.675% 09/17/2018 545,047 545,047 60,000 Genesis Trust 1.699% 04/15/2020 60,000 59,675

1,535,000 Genesis Trust 2.295% 02/15/2017 1,550,129 1,554,418 90,000 Granite Reit 3.788% 07/05/2021 90,000 92,994

Balance forward 46,136,339 46,148,005

- 374 -

NWM BOND FUND


DECEMBER 31, 2015




55,000 H&R REIT 3.344% 06/20/2018 56,131 56,001 315,000 Hollis 2.434% 06/26/2019 323,619 322,343 275,000 HSBC Bank Canada 2.078% 11/26/2018 275,000 276,513 475,000 HSBC Bank Canada 2.449% 01/29/2021 475,005 476,425 311,000 HSBC Bank Canada 2.901% 01/13/2017 318,654 315,992 246,000 HSBC Bank Canada 2.938% 01/14/2020 246,000 253,627 211,000 Husky Energy Inc. 5.00% 03/12/2020 236,229 230,520 72,000 John Deere Canada Funding Inc. 1.95%

04/12/2017 71,950 72,558 451,000 Loblaw Companies Ltd. 3.748% 03/12/2019 451,000 476,527 55,000 Magna International Inc. 3.10% 12/15/2022 54,993 55,667 96,000 Manitoba Telecom Services 4.59% 10/01/2018 103,642 102,224

335,000 Molson Coors International LP 2.25% 09/18/2018 333,860 335,069

275,000 Molson Coors International LP 2.75% 09/18/2020 274,486 275,098

172,000 National Grid Electricity 2.73% 09/20/2017 175,911 175,551 530,000 National Grid Electricity 2.90% 11/26/2019 533,473 551,828 323,000 North West Redwtr Partnership 2.10%

02/23/2022 318,494 316,962 120,000 Omers 2.971% 04/05/2021 120,000 125,489

160,000 Pembina Pipeline Corp. 4.89% 03/29/2021 181,987 173,804 859,000 Province of Alberta 1.25% 06/01/2020 850,273 855,272

5,846,000 Province of Ontario 2.10% 09/08/2018 6,011,909 6,023,748 2,670,000 Province of Ontario 4.20% 06/02/2020 3,005,936 2,995,874

2,827,000 Province of Ontario 4.40% 06/02/2019 3,139,881 3,134,945 200,000 Rogers Communications Inc. 2.80% 03/13/2019 199,944 205,044 314,000 Rogers Communications Inc. 3.00% 06/06/2017 313,752 319,873 35,000 Rogers Communications Inc. 4.70% 09/26/2020 37,901 38,513 87,000 Royal Bank of Canada 2.26% 03/12/2018 88,818 88,583

115,000 Royal Bank of Canada 2.35% 12/09/2019 114,978 117,448 1,548,000 Royal Bank of Canada 2.58% 04/13/2017 1,578,234 1,575,284

79,000 Royal Bank of Canada 2.77% 12/11/2018 82,091 81,687 174,000 Royal Bank of Canada 2.89% 10/11/2018 181,635 180,374 139,000 Royal Bank of Canada 3.04 % 07/17/2024 142,940 139,861 301,000 Shaw Communications 5.65% 10/01/2019 340,326 334,146 116,000 Sobeys Inc. 3.52% 08/08/2018 116,943 120,077 384,000 Telus Corp. 5.05% 07/23/2020 428,796 428,888 130,000 Teranet Holdings LP 3.646% 11/18/2022 130,007 132,218 65,000 Thompson Reuters Corporation 3.309%

11/12/2021 65,000 66,675 292,000 Thompson Reuters Corporation 3.369%

05/23/2019 294,070 303,011 Balance forward 67,810,207 67,881,724

- 375 -

NWM BOND FUND


DECEMBER 31, 2015




60,000 TMX Group Limited variable rate 10/03/2016 60,436 60,058 340,000 TMX Group Limited 3.253% 10/03/2018 340,000 353,658

1,472,000 Toronto Dominion Bank 1.824% 04/03/2017 1,476,409 1,484,321 225,000 Toronto Dominion Bank 2.433% 08/15/2017 229,925 229,370 300,000 Toronto Dominion Bank 2.621% 12/22/2021 307,521 306,677 45,000 Toronto Dominion Bank 2.692% 06/24/2025 44,127 44,384

480,000 Toronto Dominion Bank 2.982% 09/30/2025 479,162 477,554 70,000 Transcanada Pipelines 5.10% 01/11/2017 74,896 72,550

369,000 Transcanada Pipelines 9.45% 03/20/2018 489,412 429,188 155,000 Union Gas Ltd. 2.76% 06/02/2021 154,950 159,719 160,000 Union Gas Ltd. 3.12% 12/05/2022 159,691 160,770 166,000 Union Gas Ltd. 4.85% 04/25/2022 189,863 189,570 135,000 Union Gas Ltd. 5.35% 04/27/2018 147,956 146,411 108,000 Union Gas Ltd. 9.70% 11/06/2017 137,487 123,717

TOTAL FIXED INCOME – 44.62% 72,102,042 72,119,671 MUTUAL FUNDS - 53.37%

2,385,647 East Coast Investment Grade II Fund Class O 25,419,630 25,894,052 2,805,839 Marret Investment Grade Hedged Strategies

Fund 29,813,864 32,519,111 21,137 Phillips Hager & North Institutional S.T.I.F.,

Series O 211,375 211,375 2,733,047 RP Fixed Income Plus Fund 27,371,265 27,642,306

TOTAL MUTUAL FUNDS – 53.37% 82,816,134 86,266,844 TOTAL INVESTMENTS – 97.99% 154,918,176 158,386,515 OTHER NET ASSETS – 2.01% 3,240,890 3,240,890 TOTAL NET ASSETS – 100% $ 158,159,066 $ 161,627,405

- 376 -

NWM CANADIAN TACTICAL HIGH

INCOME FUND



DECEMBER 31, 2015

- 377 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Canadian Tactical High Income Fund We have audited the accompanying financial statements of NWM Canadian Tactical High Income Fund which comprise the statement of net assets as at December 31, 2015, and the statements of comprehensive income (loss), changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 378 -


NWM Canadian Tactical High Income Fund

Opinion

In our opinion, the financial statements present fairly, in all material respects, the net

assets of NWM Canadian Tactical High Income Fund as at December 31, 2015 and the

results of its financial performance and its cash flows for the year then ended in



Vancouver, Canada

March 7, 2016

- 379 -



DECEMBER 31, 2015




ASSETS 2015 2014

Current assets

Investments $ 120,647 $ 80,531

Cash 472 5,471

Accrued interest, dividends and other

income receivable 281 150

Subscriptions receivable 500 ---

$ 121,900 $ 86,152

LIABILITIES

Current liabilities

Written options $ 604 $ 705


Distributions payable 875 895


2,023 1,673


units (note 4) $ 119,877 $ 84,479



Class O $ 113,243 $ 82,018

Class N 6,375 2,461

Class A 259 ---

$ 119,877 $ 84,479


Class O 11,880,168 7,874,216

Class N 662,983 235,277

Class A 27,030 ---

12,570,181 8,109,493



Class O $ 9.53 $ 10.42

Class N $ 9.62 $ 10.46

Class A $ 9.56 $ ---


Nicola Wealth Management Ltd.; the Manager



- 380 -







2015 2014

Income

Dividends and foreign income $ 3,064 $ 1,803

Interest and other 1,403 618




510 9,306

Expenses



913 582


attributable to holders of redeemable units $ (403) $ 8,724



Class O $ (361) $ 8,484

Class N (41) 240

Class A (1) ---

$ (403) $ 8,724



(note 13)

Class O $ (0.04) $ 1.48

Class N $ (0.10) $ 1.51

Class A $ (0.07) $ ---

- 381 -






(In 000's)



2015 2014 2015 2014 2015 2014 2015 2014




the year $ 82,018 $ 37,672 $ 2,461 $ 1,008 $ --- $ --- $ 84,479 $ 38,680

Redeemable unit

transactions

Proceeds from

redeemable units

issued 42,982 40,809 4,005 1,210 270 --- 47,257 42,019

Reinvestments of

distribution to

holders of


Redemption of


41,379 43,003 4,410 1,418 269 --- 46,058 44,421

Distributions to holders

of redeemable units

From net investment

income (3,546) (1,848) (165) (53) (3) --- (3,714) (1,901)

From realized gains

on sale of

investments (6,152) (5,263) (286) (151) (5) --- (6,443) (5,414)

Return of capital (95) (30) (4) (1) (1) --- (100) (31)

(9,793) (7,141) (455) (205) (9) --- (10,257) (7,346)




of redeemable units (361) 8,484 (41) 240 (1) --- (403) 8,724




- 382 -





(In 000's)


2015 2014




Adjustments for:







Accrued interest, dividends and other income

receivable, net of withholding taxes (131) (106)





net of reinvested distributions (2,006) (983)




Net increase (decrease) in cash during the year (4,999) 7


Cash, end of the year $ 472 $ 5,471

Cash includes:

Cash and funds held by broker $ 472 $ 1,469

Money market mutual funds --- 4,002

$ 472 $ 5,471

Supplemental disclosures on cash flows from operating

activities:

Dividends and foreign income received $ 2,933 $ 1,697

Interest and other received $ 1,403 $ 618

- 383 -



DECEMBER 31, 2015


1. General

The NWM Canadian Tactical High Income Fund (the Fund) is an open-ended unit trust




CIBC Mellon Trust Company is the trustee of the Fund and CIBC Mellon Trust



The Fund invests in securities that include Canadian common shares, income trust

units, bonds and options.







of March 7, 2016.















is required to make significant judgements about the classification of financial

instruments and the applicability of the fair value option to its financial instruments

which are not held for trading. The fair value option has been applied to the Fund’s

investments as the investments are managed on a fair value basis in accordance

with the Fund’s investment strategy.

- 384 -



DECEMBER 31, 2015














cost. Purchases and sales of financial assets are recognized at their trade date.

The Fund’s investments and derivative assets and liabilities are measured at fair

value through profit and loss (FVTPL), including certain investments in debt

securities which have been designated at FVTPL. All other financial assets and

liabilities are measured at amortized cost. Under this method, financial assets and

liabilities reflect the amount required to be received or paid, discounted, when

appropriate at the contract’s effective interest rate. The Fund’s accounting policies

for measuring the fair value of its investments and derivatives are identical to

those used in measuring its net asset value (NAV) for transactions with

unitholders.



liability in an orderly transaction between market participants at the

measurement date. The fair value of financial assets and liabilities traded in

active markets are based on quoted market prices at the close of trading on the

reporting date. The Fund uses the last traded market price of both financial assets

and financial liabilities where the last traded price falls within that days’ bid-ask

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


Fund’s policy is to recognize transfers into and out of the fair value hierarchy


transfer.


investment dealers. If no bid price is available, they are valued at amortized cost

which approximates market value.

- 385 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iii) Fair value measurement - continued Options contracts are valued at their last traded price at the balance sheet date.

The premium received/paid on options written or purchased is recorded at cost. The unrealized gain or loss is reflected in the statements of comprehensive income as part of change in unrealized appreciation (depreciation) of investments. The gain or loss on sale or expiry of options is reflected in the statements of comprehensive income as part of the net realized gain (loss) on sale of investments.



unrealized gains and losses on foreign exchange) over (under) the total average cost or amortized cost of the investments is included as change in unrealized appreciation (depreciation) of investments in the statements of comprehensive income.




sale of investments by the Fund is recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current year.

(v) Functional currency The reporting currency and functional currency of the Fund is the Canadian dollar.

The Fund does not have any significant foreign currency transactions. (vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that



mutual funds.

- 386 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (viii) Increase (decrease) in net assets attributable to holders of redeemable units per

unit Increase (decrease) in net assets attributable to holders of redeemable units per

unit reported in the statement of comprehensive income is calculated as the increase (decrease) in net assets attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

(ix) Income tax The Fund qualifies as a mutual fund trust under the provisions of the Income Tax




assets by the total number of units outstanding. 4. Redeemable units of the Fund

The Fund is authorized to issue an unlimited number of Class A, Class F, Class N and Class O units. At December 31, 2015 Class A, Class N and Class O units have been issued.


2015 2014 2015 2014 2015 2014 2015 2014

Redeemable units

outstanding,

beginning of

the year 7,874,216 3,755,590 235,277 100,454 --- --- 8,109,493 3,856,044

Redeemable

units issued,

sales 4,142,943 3,914,023 387,057 115,291 27,192 --- 4,557,192 4,029,314

Redeemable units

issued,

reinvestment


Redeemable units

redeemed (920,379) (329,517) (5,036) --- (1,066) --- (926,481) (329,517)

Redeemable units

outstanding,

end of the year 11,880,168 7,874,216 662,983 235,277 27,030 --- 12,570,181 8,109,493

- 387 -



DECEMBER 31, 2015


4. Redeemable units of the Fund - continued The Class A, Class N and Class O units of the Fund, which are redeemable at the option

of the holder in accordance with the provisions of the Declaration of Trust and do not have any nominal or par value. The Class N units of the Fund represent units held by another fund that is managed by the Manager. The Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.


2015 2014


investments $ 66,960 $ 52,962



186,923 123,471




6. Administration and management fees and expenses The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per

annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.30% (0.30% per annum) of the NAV of the Class O units of the Fund, on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged with respect to the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.50% (0.50% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Fund will pay the Manager a management fee, if Class F units of the Fund are issued, to be borne by the investors in these units. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund, including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.

- 388 -



DECEMBER 31, 2015



Brokerage commissions paid on securities transactions during the period for brokerage














valuation day.









Fund.

The Fund makes fixed monthly distributions, which are reviewed annually. The

distribution is currently set at $0.05 per unit per month, with a year-end adjustment,

and then reset at that time. Any net realized capital gains are distributed annually in






instruments, as follows: Market risk (including price risk and interest rate risk),

liquidity risk, credit risk and concentration risk. The value of investments with the



Fund.

- 389 -



DECEMBER 31, 2015







and strategies.




capital.

a) Price risk



arising from currency risk or interest rate risk). The Fund’s investments are subject

to the risk of changes in the prices of equity securities. The value of a financial

instrument may be affected by specific Fund developments, by stock market

conditions and by general economic and financial conditions in those countries

where the investments are listed for trading. As at December 31, 2015, 20% (2014 -

19%) of the Fund’s net assets are held in one mutual fund (2014 - one mutual fund),

however, this mutual fund has invested in a significant number of securities. The

investments of the Fund are recognized at fair value and all changes in market

conditions directly affect changes in net assets attributable to holders of redeemable

units. The Fund's investment portfolio is monitored daily by the Manager.







b) Liquidity risk



weekly cash redemptions. Furthermore, the Fund is unable to control the amounts

of redemption requests. The Fund manages these risks by the choice of investees

and by holding cash and short-term investments. The table below analyzes the

Fund’s financial liabilities into relevant maturity groupings based on the remaining

period to the contractual maturity date. The amounts in the table are the

contractual undiscounted cash flows.

- 390 -



DECEMBER 31, 2015




On





payable --- 94 94




$ 120,481 $ 1,419 $ 121,900

On





payable --- 72 72




$ 85,184 $ 968 $ 86,152





- 391 -



DECEMBER 31, 2015



c) Credit risk


loss for the other party by failing to discharge an obligation. All transactions in

listed securities are settled or paid for upon delivery using approved brokers. The

credit risk related to the associated receivables is considered limited, as delivery of

securities sold is only made once the broker has received payment. Payment is made

on a purchase once the broker has received the securities. The trade will fail if

either party fails to meet its obligation. However, there are risks involved in dealing

with custodians or prime brokers who settle trades and in rare circumstances, the

securities and other assets deposited with the custodians or broker may be exposed

to credit risk with regard to such parties. In addition, there may be practical

problems or time delays associated with enforcing the Fund’s rights to its assets in

the case of an insolvency of any such party. All of the Fund's investments and cash




















- 392 -



DECEMBER 31, 2015


10. Fair value measurement - continued If inputs of different levels are used to measure as asset’s or liability’s fair value, the

classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. All of the Fund’s investments held at December 31, 2015 are classified as Level 1.

11. Financial instruments by category The following table presents the carrying amounts of the Fund’s financial instruments


Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 120,647 $ --- $ 120,647

Cash --- 472 472


income receivable --- 281 281


$ 120,647 $ 1,253 $ 121,900

Financial


FVTPL Liabilities

Designated at

at Amortized





payable --- 94 94





$ 604 $ 121,296 $ 121,900

- 393 -



DECEMBER 31, 2015



Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 80,531 $ --- $ 80,531

Cash --- 5,471 5,471


income receivable --- 150 150

$ 80,531 $ 5,621 $ 86,152

Financial


FVTPL Liabilities

Designated at

at Amortized





payable --- 72 72





$ 705 $ 85,447 $ 86,152

- 394 -



DECEMBER 31, 2015



At December 31, 2015, the Fund owned 863,539 (2014 – 818,144) Class N redeemable

units of NWM Balanced Mortgage Fund, a fund managed by the Manager.

In addition to items disclosed elsewhere, at December 31, 2015, the Manager and

parties related to the Manager own 630,459 (2014 – 519,107) Class O redeemable units

of the Fund.


units per unit



2015 2014

Class O



(in 000’s) $ (361) $ 8,484




Class N



(in 000’s) $ (41) $ 240




Class N



(in 000’s) $ (1) $ ---



attributable to holders of redeemable units per unit $ (0.07) $ ---

- 395 -



DECEMBER 31, 2015























- 396 -



DECEMBER 31, 2015


No. of

Shares/ Market


CANADIAN MUTUAL FUNDS - 31.1%

490,301 BMO US High Yield Bond Series I $ 4,936,989 $ 4,370,785

863,539 NWM Balanced Mortgage Fund Series N 8,684,054 8,699,850

1,746,777 Pimco Monthly Income Fund Series I 25,442,242 24,289,453

TOTAL CANADIAN MUTUAL FUNDS - 31.1% 39,063,285 37,360,088


INDUSTRIAL - 20.7%

200,000 AG Growth International Inc. 8,003,579 6,650,000

279,600 ATS Automation Tooling Systems Inc. 4,003,579 3,181,848

27,000 Canadian Pacific Railway Ltd. 5,588,185 4,771,710

113,000 Progressive Waste Solutions Ltd. 3,301,027 3,683,800

60,000 Stantec Inc. 2,022,387 2,059,200

142,000 Transforce Inc. 3,631,065 3,352,620

25,000 WSP Global Inc. 950,857 1,062,750

27,500,679 24,761,928

FINANCIALS - 20.6%

26,000 Bank of Nova Scotia 1,676,023 1,455,220

170,500 Gluskin Sheff and Associates Inc. 4,404,430 3,551,515

280,900 Guardian Capital Group Ltd. - Class A 4,495,859 5,115,189

110,000 IGM Financial Inc. 4,959,637 3,887,400

45,000 Intact Financial Corp. 4,001,900 3,990,600

213,000 Manulife Financial Corp. 4,715,800 4,417,620

30,000 Royal Bank of Canada 2,241,663 2,224,500

26,495,312 24,642,044


22,000 CCL Industries Inc. 2,680,964 4,936,140

1,455,000 Diversified Royalty Corp. 3,888,171 3,521,100

80,000 Gildan Activewear Inc. 3,305,000 3,147,200

401,500 KP Tissue Inc. 6,090,248 4,677,475

50,500 Magna International Inc. 3,120,135 2,834,060

19,084,518 19,115,975

Balance forward 73,080,509 68,519,947

- 397 -



DECEMBER 31, 2015


No. of

Shares/ Market


CANADIAN EQUITIES - 69.5% (Continued)


MATERIALS - 6.1%

80,000 Methanex Corp. 4,835,154 3,656,000

70,100 West Fraser Timber Co. Ltd. 4,292,007 3,682,353

9,127,161 7,338,353

ENERGY - 3.4%

99,500 Suncor Energy Inc. 3,747,422 3,553,145

13,000 Vermilion Energy Inc. 634,773 488,930

4,382,195 4,042,075

REAL ESTATE AND INCOME TRUSTS - 2.8%

225,000 Milestone Apartments Real Estate Investment Trust 2,115,952 3,386,250

TOTAL CANADIAN EQUITIES - 69.5% 88,705,817 83,286,625

OPTIONS WRITTEN - SHORT (0.5%)

(100) ATS Automation Tooling Systems Inc., Put 12, January 2016 (2,500) (7,000)

(500) ATS Automation Tooling Systems Inc., Put 12, February 2016 (14,500) (42,500)

(450) Bank of Nova Scotia, Put 56, January 2016 (26,700) (36,900)

(50) Canadian Pacific Railway Ltd., Call 210, January 2016 (14,750) (650)

(20) Canadian Pacific Railway Ltd., Put 155, April 2016 (16,000) (9,450)

(100) Canadian Pacific Railway Ltd., Put 160, April 2016 (71,000) (59,500)

(200) Gildan Activewear Inc., Put 34, January 2016 (13,020) (2,100)

(250) Gildan Activewear Inc., Put 38, February 2016 (17,500) (5,125)

(400) Gildan Activewear Inc., Call 44, February 2016 (16,000) (10,600)

(380) Gildan Activewear Inc., Put 36, February 2016 (18,000) (18,240)

(700) Gluskin Sheff and Associates Inc., Put 19, January 2016 (20,250) (8,750)

(100) Gluskin Sheff and Associates Inc., Put 18, February 2016 (3,500) (2,500)

(250) IGM Financial Inc., Call 38, January 2016 (15,000) (2,000)

(200) IGM Financial Inc., Call 40, January 2016 (10,000) (1,700)

(160) IGM Financial Inc., Put 34, January 2016 (9,600) (3,600)

(350) IGM Financial Inc., Put 36, January 2016 (21,000) (35,875)

(109) IGM Financial Inc., Put 34, February 2016 (7,400) (7,085)

(90) Intact Financial Corp., Put 84, January 2016 (7,650) (1,170)

Balance forward (304,370) (254,745)

- 398 -



DECEMBER 31, 2015


No. of

Shares/ Market


OPTIONS WRITTEN - SHORT (0.5%) - continued

Balance carried forward $ (304,370) $ (254,745)

(350) Magna International Inc., Put 54, January 2016 (22,250) (16,625)

(900) Manulife Financial Corp., Call 23, January 2016 (21,600) (3,600)

(165) Manulife Financial Corp., Put 20, January 2016 (3,135) (2,640)

(800) Methanex Corp., Call 58, January 2016 (94,000) (8,000)

(100) Methanex Corp., Put 40, January 2016 (11,750) (2,900)

(100) Methanex Corp., Put 44, January 2016 (6,400) (9,900)

(100) Methanex Corp., Put 40, February 2016 (16,500) (11,200)

(210) Progressive Waste Solutions Ltd., Put 27, January 2016 (9,660) (1,470)



(300) Royal Bank of Canada, Put 70, January 2016 (19,950) (7,650)

(300) Royal Bank of Canada, Call 78, March 2016 (28,500) (19,500)

(70) Royal Bank of Canada, Put 68, March 2016 (7,700) (6,405)

(500) Saputo Inc., Put 30, January 2016 (16,250) (5,250)

(500) Saputo Inc., Put 30, February 2016 (13,750) (10,000)

(300) Stantec Inc., Call 36, February 2016 (18,750) (15,000)

(250) Stantec Inc., Put 32, February 2016 (7,500) (8,750)

(500) Suncor Energy Inc., Call 40, January 2016 (17,500) (6,000)

(50) Suncor Energy Inc., Put 32, January 2016 (2,150) (500)

(50) Suncor Energy Inc., Put 34, January 2016 (2,350) (1,100)

(400) Suncor Energy Inc., Call 40, February 2016 (14,400) (8,200)

(50) Suncor Energy Inc., Put 32, February 2016 (2,400) (1,975)

(400) Suncor Energy Inc., Put 34, February 2016 (37,200) (31,800)

(200) Sunlife Financial Inc., Put 42, January 2016 (13,400) (6,100)

(100) TransForce Inc., Put 22, February 2016 (3,500) (3,000)

(130) Vermilion Energy Inc., Call 38, January 2016 (13,000) (13,650)

(351) West Fraser Timber Co. Ltd., Call 52, January 2016 (36,855) (63,180)

(350) West Fraser Timber Co. Ltd., Call 58, January 2016 (26,250) (4,550)

(100) West Fraser Timber Co. Ltd., Put 46, January 2016 (5,500) (1,300)

(200) West Fraser Timber Co. Ltd., Put 48, February 2016 (30,500) (25,000)

(250) WSP Global Inc., Call 48, January 2016 (12,500) (3,125)

(250) WSP Global Inc., Put 42, January 2016 (8,750) (13,125)

TOTAL OPTIONS WRITTEN - SHORT (0.5%) (892,080) (603,320)

TOTAL INVESTMENT PORTFOLIO - 100.1% 126,877,022 120,043,393 OTHER NET ASSETS - (0.1%) (166,716) (166,716)

TOTAL NET ASSETS - 100.0% $ 126,710,306 $ 119,876,677

- 399 -



EXPRESSED IN UNITED STATES DOLLARS

DECEMBER 31, 2015

- 400 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM U.S. Tactical High Income Fund We have audited the accompanying financial statements of NWM U.S. Tactical High Income Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 401 -


NWM U.S. Tactical High Income Fund

Opinion


financial position of NWM U.S. Tactical High Income Fund as at December 31, 2015 and

the results of its financial performance and its cash flows for the year then ended in



Vancouver, Canada

March 14, 2016

- 402 -




(In United States Dollars)



ASSETS 2015 2014

Current assets

Investments $ 122,579 $ 103,344

Cash 7,036 2,386

Dividends receivable, net of withholding taxes 61 49

Receivable for unsettled trades 1,387 ---


$ 131,614 $ 105,996

LIABILITIES

Current liabilities

Written options $ 1,786 $ 1,618

Payable for unsettled trades 1,488 644


Distributions payable 10,200 3,450


14,302 6,009


redeemable units (note 4) $ 117,312 $ 99,987


units by Class

Class O $ 59,861 $ 59,392

Class O Cdn dollar, in US dollars 52,782 38,578

Class N --- 2,017

Class N Cdn dollar, in US dollars 4,314 ---

Class A 108 ---

Class A Cdn dollar, in US dollars 247 ---

$ 117,312 $ 99,987


Class O 6,636,279 5,767,510

Class O Cdn dollar, in US dollars 5,827,113 3,733,388

Class N --- 194,857

Class N Cdn dollar, in US dollars 472,740 ---

Class A 11,863 ---

Class A Cdn dollar, in US dollars 27,064 ---

12,975,059 9,695,755

- 403 -







Continued 2015 2014



Class O $ 9.02 $ 10.30

Class O Cdn dollar, in US dollars $ 9.06 $ 10.33

Class N $ --- $ 10.35

Class N Cdn dollar, in US dollars $ 9.13 $ ---

Class A $ 9.10 $ ---

Class A Cdn dollar, in US dollars $ 9.13 $ ---





- 404 -







2015 2014

Income

Dividends $ 4,189 $ 2,957

Interest and other 1,375 412



2,574 5,322

Expenses




1,312 945





Class O $ 966 $ 2,930

Class O Cdn dollar, in US dollars 312 1,365

Class N 62 82

Class N Cdn dollar, in US dollars (68) ---

Class A (5) ---

Class A Cdn dollar, in US dollars (5) ---

$ 1,262 $ 4,377



(note 13)

Class O $ 0.16 $ 0.59

Class O Cdn dollar, in US dollars $ 0.07 $ 0.58

Class N $ 0.31 $ 0.60

Class N Cdn dollar, in US dollars $ (0.21) $ ---

Class A $ (0.78) $ ---

Class A Cdn dollar, in US dollars $ (0.47) $ ---

- 405 -



ATTRIBUTABLE TO REDEEMABLE UNITS



(In 000's)


Class O Class O Cdn Dollar Class N Class N Cdn Dollar Class A Class A Cdn Dollar Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014



units at beginning

of the year $ 59,392 $ 47,976 $ 38,578 $ 8,882 $ 2,017 $ 973 $ --- $ --- $ --- $ --- $ --- $ --- $ 99,987 $ 57,831

Redeemable unit

transactions

Proceeds from

redeemable

units issued 13,899 15,594 25,111 31,852 100 1,015 4,688 --- 122 --- 279 --- 44,199 48,461

Reinvestments of

distributions to

holders of

redeemable units 5,846 3,969 6,032 2,654 62 161 389 --- 5 --- 13 --- 12,347 6,784

Redemption of

redeemable units (9,049) (4,242) (7,854) (2,249) (2,231) --- --- --- --- --- (9) --- (19,143) (6,491)

10,696 15,321 23,289 32,257 (2,069) 1,176 5,077 --- 127 --- 283 --- 37,403 48,754


redeemable units

From net investment

income (2,289) (1,568) (1,921) (901) (2) (49) (142) --- (3) --- (6) --- (4,363) (2,518)

From realized gains

on sale of

investments (8,904) (5,267) (7,476) (3,025) (8) (165) (553) --- (11) --- (25) --- (16,977) (8,457)

(11,193) (6,835) (9,397) (3,926) (10) (214) (695) --- (14) --- (31) --- (21,340) (10,975)




of redeemable units 966 2,930 312 1,365 62 82 (68) --- (5) --- (5) --- 1,262 4,377



units at end of

the year $ 59,861 $ 59,392 $ 52,782 $ 38,578 $ --- $ 2,017 $ 4,314 $ --- $ 108 $ --- $ 247 $ --- $ 117,312 $ 99,987

- 406 -





(In 000's)


2015 2014




Adjustments for:



investments, net 8,386 4,603




Dividends receivable, net of withholding taxes (12) (42)












Cash includes:


Money market mutual funds 5,009 850

$ 7,036 $ 2,386


Dividends received $ 4,175 $ 2,909

Interest and other income received $ 1,375 $ 412

Withholding taxes paid $ (201) $ (149)

- 407 -



DECEMBER 31, 2015


1. General

The NWM U.S. Tactical High Income Fund (the Fund) is an open-ended unit trust




CIBC Mellon Trust Company is the trustee of the Fund, and CIBC Mellon Trust



The Fund invests in publicly traded securities and limited partnerships primarily

denominated in United States dollars.







of March 14, 2016.















is required to make judgements about the classification of financial instruments

and the applicability of the fair value option to its financial instruments which are

not held for trading. The fair value option has been applied to the Fund’s

investments as the investments are managed on a fair value basis in accordance

with the Fund’s investment strategy.

- 408 -



DECEMBER 31, 2015


















liabilities are measured at amortized cost. Under this method, financial assets

and liabilities reflect the amount required to be received or paid, discounted, when

appropriate at the contract’s effective interest rate. The Fund’s accounting

policies for measuring the fair value of its investments and derivatives are

identical to those used in measuring its net asset value (NAV) for transactions with

unitholders.











Fund’s policy is to recognize transfers into and out of the fair value hierarchy levels

as of the date of the event or change in circumstances giving rise to the transfer.


investment dealers. If no bid price is available, they are valued at amortized cost

which approximates market value.

- 409 -



DECEMBER 31, 2015



(iii) Fair value measurement – continued

Option contracts are valued at their last traded price at the balance sheet date.

The premium received/paid on options written or purchased is recorded at cost.

The unrealized gain or loss is reflected in the statement of comprehensive income

as part of change in unrealized appreciation (depreciation) of investments. The

gain or loss on sale or expiry of options is reflected in the statement of

comprehensive income as part of the net realized gain (loss) on sale of investments.


date.


unrealized gains and losses on foreign exchange) over (under) the total average

cost or amortized cost of the investments is included as change in unrealized


income.



and expenses are accrued on a daily basis, dividend income is recognized on the ex-

dividend date and trust income is recognized on the effective date of the

distribution. Distributions received from investments, which are treated as return

of capital for income tax purposes, are recorded as a reduction of the average cost

of the underlying investments. Realized gains and losses from investment

transactions are calculated on an average cost basis which excludes brokerage

commissions and other trading expenses.



from operations attributable to holders of redeemable units in the current year.


The reporting and functional currency of the Fund is the United States dollar.

The market values of investments and other assets and liabilities denominated in a

foreign currency are translated into United States dollars at the rate of exchange


- 410 -



DECEMBER 31, 2015


3. Summary of significant accounting policies – continued

(v) Translation of foreign currencies - continued


markets. The proceeds on the sale of such securities will be realized in the respective currency. Unhedged foreign currency positions are subject to gains and losses due to fluctuations in the respective exchange rates. Foreign currency purchases and sales of investments and foreign currency dividend and interest income are translated into the reporting currency at the rate of exchange prevailing on the respective date of the transaction. Foreign exchange gains and losses on the sale of investments and foreign currencies are included in net realized gain (loss) on sale of investments in the statement of comprehensive income. Unrealized foreign exchange gains and losses on investments held are included in change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

The Class A Cdn dollar, Class N Cdn dollar and Class O Cdn dollar units are

issued, reinvested, redeemed and distributed in Canadian dollars. The unit

transactions denominated in a foreign currency are translated into United States

dollars at the rate of exchange prevailing on the respective dates of the transaction. (vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that


the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of the estimated future cash flows,





(vii) Cash


mutual funds.

(viii) Increase (decrease) in net assets from operations attributable to holders of redeemable units per unit



calculated as the increase (decrease) in net assets attributable to holders of

redeemable units divided by the weighted average number of redeemable units

outstanding during the year. Refer to note 13 for the calculation.

- 411 -



DECEMBER 31, 2015


3. Summary of significant accounting policies – continued

(ix) Income tax

The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) (Act). A mutual fund trust is subject to tax in each taxation year under Part I of the Act on the amount of its income for the year, including net realized taxable gains, less the portion thereof that it claims in respect of the amounts paid or payable to the redeemable unitholders for the year. The Fund distributes all of the net income for tax purposes and net taxable capital gains realized so that the Fund will not generally be liable for Canadian income tax thereon. Therefore, no provision for income tax has been made in these financial statements. The Fund currently incurs withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the statement of comprehensive income.




The Fund is authorized to issue an unlimited number of Class A Cdn dollar, Class A, Class F, Class N Cdn dollar, Class N, Class O Cdn dollar and Class O units. At December 31, 2015 Class A Cdn dollar, Class A, Class N Cdn dollar, Class O Cdn dollar and Class O units were issued.

Class O Class O Cdn Dollar Class N Class N Cdn Dollar Class A Class A Cdn Dollar Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Redeemable units

outstanding,

beginning of

the year

y

5,767,510 4,367,328 3,733,388 807,062 194,857 88,370 --- --- --- --- --- --- 9,695,755 5,262,760

Redeemable units

issued, sales 1,295,517 1,419,064 2,333,862 2,883,182 9,291 91,660 434,478 --- 11,390 --- 26,619 --- 4,111,157 4,393,906

Redeemable units

issued,

reinvestment

of distributions 419,389 367,402 492,344 245,375 964 14,827 38,262 --- 473 --- 1,338 --- 952,770 627,604

Redeemable units

redeemed (846,137) (386,284) (732,481) (202,231) (205,112) --- --- --- --- --- (893) --- (1,784,623) (588,515)

Redeemable units

outstanding,

end of the year 6,636,279 5,767,510 5,827,113 3,733,388 --- 194,857 472,740 --- 11,863 --- 27,064 --- 12,975,059 9,695,755

- 412 -



DECEMBER 31, 2015


4. Redeemable units of the Fund - continued The Class A Cdn dollar, Class A, Class N Cdn dollar, Class O Cdn dollar and Class O

units of the Fund, which are redeemable at the option of the holder in accordance with the provisions of the Declaration of Trust, do not have any par value. The Class N Cdn dollar units of the Fund represent units held by another fund that is managed by the Manager. The Class A Cdn dollar and Class A units of the Fund represent units issued to clients of a financial advisory company related to the Manager.


2015 2014 Proceeds from sale and gains distributions from investments $ 100,769 $ 48,367 Investments at cost, beginning of the year 104,244 32,883 Investments at cost, purchased during the year 122,826 113,172 227,070 146,055 Investments at cost, end of the year (131,697) (104,244) Cost of investments sold during the year 95,373 41,811



The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.30% (0.30% per annum) of the NAV of the Class O units of the Fund on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class N units are held by another fund managed by the Manager. There are no management fees charged on the Class N units. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.50% (0.50% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Fund will pay the Manager a management fee, if Class F units of the Fund are issued, to be borne by the investors in these units. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund, including, but not limited to legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, trustee's fees, all services required in connection with the provision of information to the unitholders and all costs relating to the formation and organization of the Fund.

- 413 -



DECEMBER 31, 2015


7. Brokerage commissions on securities transactions Brokerage commissions paid on securities transactions during the period for brokerage







objectives and strategies of the Fund and to maintain adequate liquidity to meet






valuation day.









Fund.

The Fund makes fixed monthly distributions, which are reviewed annually. The

distribution is currently set at $0.05 per unit per month, with a year-end adjustment,

and then reset at that time. Any net realized capital gains are distributed annually in






instruments, as follows: Market risk (including price risk, currency risk and interest

rate risk), liquidity risk, credit risk and concentration risk. The value of investments

within the Fund’s portfolio can fluctuate from day to day, reflecting changes in interest

rates, economic conditions, market and company news related to specific securities

within the Fund.

- 414 -



DECEMBER 31, 2015







and strategies.




capital.

a) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate because of changes in market prices (other than those arising from

currency risk or interest rate risk). The Fund’s investments are subject to the risk of

changes in the prices of its investments. The value of a financial instrument may be

affected by specific Fund developments, by stock market conditions and by general

economic and financial conditions in those countries where the investments are

listed for trading. As at December 31, 2015 41% (2014 - 49%) of the Fund’s net

assets are held in one mutual fund (2014 - two mutual funds), however the mutual

fund has invested in a significant number of securities. The investments of the Fund

are recognized at fair value and all changes in market conditions directly affect

changes in net assets attributable to holders of redeemable units. The Fund's

investment portfolio is monitored daily by the Manager.


assets and liabilities traded in an active market had increased or decreased by 5%





b) Liquidity risk



weekly cash redemptions. Furthermore, the Fund is unable to control the amounts

of redemption requests. The Fund manages these risks by the choice of investees

and by holding cash and short-term investments. The table below analyzes the

Fund’s financial liabilities into relevant maturity groupings based on the remaining

period to the contractual maturity date. The amounts in the table are the

contractual undiscounted cash flows.

- 415 -



DECEMBER 31, 2015




On


Financial liabilities (in 000’s) Written options $ 1,786 $ --- $ 1,786 Payable for unsettled trades --- 1,488 1,488 Administration and management fees payable --- 110 110 Distributions payable --- 10,200 10,200 Redemptions payable --- 718 718


$ 119,098 $ 12,516 $ 131,614

On


Financial liabilities (in 000’s) Written options $ 1,618 $ --- $ 1,618 Payable for unsettled trades --- 644 644 Administration and management fees payable --- 82 82 Distributions payable --- 3,450 3,450 Redemptions payable --- 215 215


$ 101,605 $ 4,391 $ 105,996





- 416 -



DECEMBER 31, 2015



c) Credit risk



































the fair value measurement. All of the Fund’s investments held at December 31, 2015

are classified as Level 1.

- 417 -



DECEMBER 31, 2015



The following table presents the carrying amounts of the Fund’s financial instruments


2015 Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized

Inception Cost Total

Assets (in 000’s)

Investments $ 122,579 $ --- $ 122,579

Cash --- 7,036 7,036

Dividends receivable, net of


Receivable for unsettled trades --- 1,387 1,387


$ 122,579 $ 9,035 $ 131,614

Financial



Designated at

at Amortized



Written options $ 1,786 $ --- $ 1,786

Payable for unsettled trades --- 1,488 1,488


payable --- 110 110





$ 1,786 $ 129,828 $ 131,614

- 418 -



DECEMBER 31, 2015



2014 Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 103,344 $ --- $ 103,344

Cash --- 2,386 2,386

Dividends receivable, net of



$ 103,344 $ 2,652 $ 105,996

Financial



Designated at

at Amortized



Written options $ 1,618 $ --- $ 1,618



payable --- 82 82





$ 1,618 $ 104,378 $ 105,996


In addition to items disclosed elsewhere, at December 31, 2015, the Manager and parties

related to the Manager own 544,616 (2014 – 552,986) Class O units and 638,610 (2014 -

49,412) Class O Cdn dollar units of the Fund.

- 419 -



DECEMBER 31, 2015



units per unit - continued



2015 2014

Class O


holders of redeemable units (in 000’s) $ 966 $ 2,930




Class O Cdn dollar


holders of redeemable units (in 000’s) $ 312 $ 1,365




Class N






Class N Cdn dollar





holders of redeemable units per unit $ (0.21) $ ---

Class A






Class A Cdn dollar






- 420 -



DECEMBER 31, 2015










or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on













- 421 -



DECEMBER 31, 2015


No. of

Shares/ Fair


CANADIAN MUTUAL FUNDS - 54.21%

204 Hollis Investment Savings Fund US$ $ 2,037 $ 2,037

1,005,151 Monegy Low Volatility High Yield Bond US$ 19,136,134 16,267,558

5,292,131 Pimco Monthly Income Series I - US$ 54,132,612 51,884,313

TOTAL CANADIAN MUTUAL FUNDS - 54.21% 73,270,783 68,153,908

U.S. EQUITIES - 34.42%

INDUSTRIAL - 9.79%

15,000 Multi-Color Corp. 1,035,450 897,150

64,000 Union Pacific Corp. 6,814,988 5,004,800

20,000 United Technologies Corp. 2,272,207 1,921,400

84,000 Waste Management Inc. 4,116,687 4,483,080

14,239,332 12,306,430

FINANCIAL - 9.49%

15,000 American International Group Inc. 890,250 929,550

7,700 BlackRock Inc. 2,547,572 2,622,004

78,000 Citigroup Inc. 4,191,301 4,036,500

91,000 Oaktree Capital Group LLC 4,593,617 4,342,520

12,222,740 11,930,574


83,000 Coach Inc. 3,347,432 2,716,590

31,000 Walt Disney Co., The 3,229,845 3,257,480

6,577,277 5,974,070


104,000 Verizon Communications Inc. 4,915,637 4,806,880


80,000 HP Inc. 1,289,687 947,200

69,000 Oracle Corp. 2,776,235 2,520,570

4,065,922 3,467,770

Balance forward 42,020,908 38,485,724

- 422 -



DECEMBER 31, 2015


No. of

Shares/ Fair


U.S. EQUITIES - 34.42% - continued


MATERIALS - 2.07%

138,700 US Silica Holdings Inc. 3,868,102 2,597,851

HEALTH CARE - 1.69%

31,000 Merck & Co Inc. 1,751,946 1,637,420

15,100 Pfizer Inc. 419,075 487,428

2,171,021 2,124,848

ENERGY - 0.06%

1,000 Valero Energy Corp. 51,833 70,710

TOTAL U.S. EQUITIES - 34.42% 48,111,864 43,279,133

GLOBAL EQUITIES - 8.86%


Diageo PLC 3,319,145 3,152,123

Unilever PLC 2,497,841 2,462,152

5,816,986 5,614,275

MATERIALS - 3.18%

LyondellBasell Industries NV 4,282,186 3,997,400

ENERGY - 1.20%

115,000 Teekay LNG Partners LP 1,481,979 1,512,250

INDUSTRIAL - .02%

2,200 Teekay Corp. 73,328 21,714

TOTAL GLOBAL EQUITIES - 8.86% 11,654,479 11,145,639

- 423 -



DECEMBER 31, 2015


No. of

Shares/ Fair


OPTIONS WRITTEN - (1.42%)

GLOBAL EQUITIES - (0.71%)

(28,900) Diageo PLC, Call 120, January 2016 $ (33,234) $ (1,445)

(5,000) LyondellBasell Industries NV, Put 75, January 2016 (2,750) (1,000)

(5,000) LyondellBasell Industries NV, Put 85, January 2016 (3,750) (5,750)

(5,000) LyondellBasell Industries NV, Put 72.5, March 2016 (7,750) (4,750)

(2,200) Teekay Corp., Call 32.5, January 2016 (770) (110)

(35,500) Teekay Corp., Put 25, January 2016 (30,674) (544,925)

(11,500) Teekay Corp., Put 27.5, January 2016 (13,025) (205,275)

(13,400) Teekay Corp., Put 15, April 2016 (12,410) (76,380)

(57,100) Unilever PLC, Call 45, February 2016 (47,179) (32,547)

(52,000) Unilever PLC, Put 40, February 2016 (30,299) (23,400)

(181,841) (895,582)

U.S. EQUITIES - (0.71%)

(30,000) American International Group Inc., Put 57.5, January 2016 (14,400) (4,200)

(15,000) American International Group Inc., Call 67.5, February 2016 (12,150) (4,950)

(10,000) American International Group Inc., Put 55, February 2016 (6,500) (4,000)

(31,000) American International Group Inc., Put 57.5, February 2016 (27,260) (18,290)

(7,700) BlackRock Inc., Call 350, February 2016 (26,950) (68,530)

(8,000) BlackRock Inc., Put 300, February 2016 (40,019) (18,000)

(10,000) Boeing Co., Put 140, January 2016 (14,492) (8,600)

(26,000) Boeing Co., Put 125, February 2016 (37,699) (18,200)

(10,000) Boeing Co., Put 135, February 2016 (14,200) (18,400)

(48,000) Citigroup Inc., Call 54, January 2016 (20,640) (14,400)

(10,000) Citigroup Inc., Put 50, February 2016 (9,500) (11,000)

(15,000) Coach Inc., Call 34, January 2016 (7,500) (3,750)

(68,000) Coach Inc., Call 34.5, January 2016 (25,275) (10,200)

(5,000) Costco Wholesale Corp., Put 130, January 2016 (13,600) (500)

(60,000) Franklin Resources Inc., Put 34.5, January 2016 (15,000) (10,500)

(50,000) Franklin Resources Inc., Put 39.5, January 2016 (25,000) (130,000)

(30,000) Franklin Resources Inc., Put 35, April 2016 (40,499) (43,500)

(10,000) Home Depot Co., The, Put 125, January 2016 (11,500) (3,100)

(16,600) Home Depot Co., The, Put 120, February 2016 (19,054) (10,956)

(15,000) L Brands Inc., Put 83, January 2016 (32,054) (750)

(10,000) L Brands Inc., Put 88, January 2016 (10,500) (2,000)

(22,000) L Brands Inc., Put 85, February 2016 (27,799) (15,400)

Balance forward (451,591) (419,226)

- 424 -



DECEMBER 31, 2015


No. of

Shares/ Fair


U.S. EQUITIES - (0.71%) - continued

Balance brought forward $ (451,591) $ (419,226)

(31,000) Merck & Co. Inc., Call 55, February 2016 (13,950) (20,150)

(43,000) Merck & Co. Inc., Put 47.5, February 2016 (24,940) (12,040)

(45,000) Microsoft Corp., Put 50, January 2016 (22,250) (1,800)

(40,000) Microsoft Corp., Put 49, February 2016 (25,400) (16,400)

(28,000) Multi-Color Corp., Put 55, January 2016 (42,549) (70,700)

(35,000) Multi-Color Corp., Put 60, January 2016 (65,999) (45,500)

(6,200) Multi-Color Corp., Put 55, February 2016 (6,720) (8,370)

(10,000) Oaktree Capital Group LLC, Call 50, January 2016 (10,000) (3,000)

(5,000) Oaktree Capital Group LLC, Put 45, January 2016 (3,000) (1,250)

(10,000) Oracle Corp., Put 34, January 2016 (3,700) (900)

(18,000) Oracle Corp., Put 36, January 2016 (6,660) (7,560)

(5,000) Oracle Corp., Put 33, February 2016 (1,450) (1,150)



(45,000) Pfizer Inc., Put 29, January 2016 (17,100) (1,350)

(60,000) Pfizer Inc., Put 30, February 2016 (22,200) (16,800)

(73,400) U.S. Silica Holdings Inc., Call 22.5, January 2016 (73,399) (12,845)

(65,300) U.S. Silica Holdings Inc., Call 24, January 2016 (59,959) (9,795)

(35,000) U.S. Silica Holdings Inc., Put 15, January 2016 (20,500) (9,625)

(6,000) U.S. Silica Holdings Inc., Put 15, February 2016 (6,000) (4,350)

(10,000) Union Pacific Corp., Put 80, January 2016 (14,550) (23,200)

(5,500) Union Pacific Corp., Put 82.5, January 2016 (9,020) (24,200)

(5,000) Union Pacific Corp., Put 65, February 2016 (3,900) (1,575)

(52,000) V.F. Corp., Put 55, February 2016 (39,599) (26,000)

(30,000) V.F. Corp., Put 57.5, February 2016 (28,499) (27,000)

(25,000) Valero Energy Corp., Put 60, January 2016 (15,750) (3,500)

(10,000) Valero Energy Corp., Put 65, January 2016 (8,300) (4,400)

(5,000) Verizon Communications Inc., Put 40, January 2016 (4,000) (225)

(51,000) Visa Inc., Put 70, February 2016 (44,999) (32,130)

(31,000) Walt Disney Co., The, Call 120, January 2016 (39,369) (310)

(16,000) Walt Disney Co., The, Put 105, January 2016 (22,880) (30,240)

(20,200) Waste Management Inc., Put 50, January 2016 (7,570) (2,020)

(17,000) Waste Management Inc., Put 50, February 2016 (11,050) (6,800)

(1,158,573) (889,921)

TOTAL OPTIONS WRITTEN - (1.42%) (1,340,414) (1,785,503)

- 425 -



DECEMBER 31, 2015


No. of

Shares/ Fair


TOTAL INVESTMENT PORTFOLIO - 96.07% $131,696,712 $ 120,793,177

OTHER NET ASSETS - 3.93% (3,481,505) (3,481,505)

TOTAL NET ASSETS - 100.00% $ 128,215,207 $ 117,311,672

- 426 -




DECEMBER 31, 2015

- 427 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM Core Portfolio Fund We have audited the accompanying financial statements of NWM Core Portfolio Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 428 -


NWM Core Portfolio Fund

Opinion


financial position of NWM Core Portfolio Fund as at December 31, 2015 and its financial

performance and its cash flows for the year then ended in accordance with International

Financial Reporting Standards.


Vancouver, Canada

March 30, 2016

- 429 -



DECEMBER 31, 2015




ASSETS 2015 2014 Current assets Investments $ 158,224 $ 61,997 Cash 1,291 598 Distributions receivable 858 224 Subscriptions receivable 4,921 39 $ 165,294 $ 62,858

LIABILITIES

Current liabilities Payable for unsettled trades $ 2,050 $ 250 Administration and management fees payable 31 14 Distributions payable 1,610 384 Redemptions payable 1,551 --- 5,242 648 Net assets attributable to holders of redeemable units (note 4) $ 160,052 $ 62,210 Net assets attributable to holders of redeemable units by class Class O $ 146,104 $ 62,210 Class A 13,948 --- $ 160,052 $ 62,210 Number of redeemable units outstanding Class O 13,510,241 5,851,776 Class A 1,285,029 --- 14,795,270 5,851,776 Net assets attributable to holders of redeemable units per unit Class O $ 10.81 $ 10.63 Class A $ 10.85 $ --- Approved on behalf of the Fund by Nicola Wealth Management Ltd., the Manager (signed) “Karen Ikeda” , Director (signed) “Evelyn C. Nicola” , Director

- 430 -







2015 2014

Income

Trust income and income from limited partnerships $ 2,712 $ 1,104


Change in unrealized appreciation, net (764) 941

7,263 4,040

Expenses



292 131





Class O $ 6,768 $ 3,909

Class A 203 ---

$ 6,971 $ 3,909



Class O $ 0.71 $ 0.97

Class A $ 0.44 $ ---

- 431 -






(In 000's)


Class O Class A Total

2015 2014 2015 2014 2015 2014




the year $ 62,210 $ 21,979 $ --- $ --- $ 62,210 $ 21,979

Redeemable unit

transactions

Proceeds from

redeemable

units issued 101,197 42,006 13,996 --- 115,193 42,006

Reinvestments of

distribution to

holders of

redeemable units 5,101 2,391 433 --- 5,534 2,391

Redemption of

redeemable units (21,914) (5,118) (202) --- (22,116) (5,118)

84,384 39,279 14,227 --- 98,611 39,279


redeemable units

From net investment

income (2,274) (963) (151) --- (2,425) (963)

From realized gains

on sale of

investments (4,984) (1,994) (331) --- (5,315) (1,994)

(7,258) (2,957) (482) --- (7,740) (2,957)


from operations


of redeemable units 6,768 3,909 203 --- 6,971 3,909



units at end of the year $ 146,104 $ 62,210 $ 13,948 $ --- $ 160,052 $ 62,210

- 432 -





(In 000's)


2015 2014




Adjustments for:



of investments, net 764 (941)




Distributions receivable (634) (224)









Net increase (decrease) in cash during the year 693 (541)



- 433 -



DECEMBER 31, 2015


1. General The NWM Core Portfolio Fund (the Fund) is an open-ended mutual fund trust formed

under the laws of British Columbia and governed by a Declaration of Trust (Declaration of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd. (the Manager), provides administration and management services, CIBC Mellon Trust Company is the trustee of the Fund, and CIBC Mellon Trust Company and Credential Securities are the custodians of the Fund. The address of the Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver, British Columbia. The Fund invests in other funds and limited partnerships managed by the Manager.







March 30, 2016.





The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts reported and disclosures made in these financial statements and accompanying notes. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in the future.



- 434 -



DECEMBER 31, 2015















Fund’s investments are measured at fair value through profit and loss (FVTPL). All

other financial assets and liabilities, including redeemable units, are measured at

amortized cost. Under this method, financial assets and liabilities reflect the

amount required to be received or paid, discounted, when appropriate, at the

contract’s effective interest rate. The Fund’s accounting policies for measuring the

fair value of its investments are identical to those used in measuring its net asset

value (NAV) for transactions with unitholders.




date. The fair value of the Fund’s investments is calculated by dividing the aggregate

market value of the net assets held by each investment not traded in active markets

and multiplying that by the total number of units the Fund owns. The Fund’s policy

is to recognize transfers into and out of the fair value hierarchy levels as of the date

of the event or change in circumstances giving rise to the transfer.



or amortized cost of the investments is included as change in unrealized appreciation


- 435 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iv) Investment transactions, income and expenses

Investment transactions are accounted for as of the trade date. Interest income and expenses are accrued on a daily basis, trust income is recognized on the effective date of the distribution, and partnership income is recognized when allocated. Distributions received from investments, which are treated as return of capital for income tax purposes, are recorded as a reduction of the average cost of the underlying investments. Realized gains and losses from investment transactions are calculated on an average cost basis which excludes brokerage commissions and other trading expenses.

Transaction costs, such as brokerage commissions, incurred in the purchase and sale

of investments by the Fund is recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current period.

(v) Translation of foreign currencies The reporting currency and functional currency of the Fund is the Canadian dollar.

The market values of investments and other assets and liabilities denominated in a foreign currency are translated into Canadian dollars at the rate of exchange prevailing at each balance sheet date.

Foreign currency purchases and sales of investments and foreign currency interest income are translated into the reporting currency at the rate of exchange prevailing on the respective dates of the transactions. Foreign exchange gains and losses on the sale of investments and foreign currencies are included in net realized gain (loss) on sale of investments in the statement of comprehensive income. Unrealized foreign exchange gains and losses on investments held are included in change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.



(vii) Cash Cash is comprised of deposits with the Fund’s custodians.

(viii) Increase in net assets from operations attributable to holders of redeemable units

per unit

Increase in net assets from operations attributable to holders of redeemable units per unit reported in the statement of comprehensive income is calculated as the increase in net assets from operations attributable to holders of redeemable units divided by the weighted average number of redeemable units outstanding during the year. Refer to note 13 for the calculation.

- 436 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (ix) Income tax



investment income and capital gains. Such income and gains are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the statement of comprehensive income.

(ix) Valuation of the Fund


4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class F, and Class O

units. At December 31, 2015 Class A and Class O units were issued.

Class O Class A Total

2015 2014 2015 2014 2015 2014

Redeemable units outstanding,

beginning of the year 5,851,776 2,149,930 --- --- 5,851,776 2,149,930

Redeemable units issued, sales 9,178,464 3,955,867 1,263,456 --- 10,441,920 3,955,867

Redeemable units issued,

reinvestment of distributions 468,012 225,332 39,696 --- 507,708 225,332

Redeemable units redeemed (1,988,011) (479,353) (18,123) --- (2,006,134) (479,353)

Redeemable units outstanding,

end of the year 13,510,241 5,851,776 1,285,029 --- 14,795,270 5,851,776

The Class A and Class O units of the Fund, which are redeemable at the option of the

holder in accordance with the provisions of the Declaration of Trust, do not have any

nominal or par value. The Class A units of the Fund represent units issued to clients of a

financial advisory company related to the Manager.

- 437 -



DECEMBER 31, 2015



2015 2014





163,111 64,471




6. Administration and management fees and expenses

The Fund paid to the Manager an administration fee equal to 1/12 of 0.13% (0.13% per annum) of the NAV of the Fund on the last business day of each month calculated and payable monthly in arrears. The Manager has rebated a portion of administration fees based on the actual costs incurred by the Manager. The Class O units are subject to a management fee equal to 1/12 of 0.1% (0.1% per annum) of the NAV of the Class O units on the last business day of each month calculated and payable to the Manager monthly in arrears. The Class A units of the Fund are issued to clients of a company related to the Manager. The Class A units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the NAV of the Class A units, on the last business day of each month calculated and payable to the Manager monthly in arrears. In addition, from time to time the Manager may engage sub-managers. Fees paid to sub-managers are the responsibility of the Fund. The Manager is responsible for the payment, out of the administration fee, of all ordinary course expenses relating to the operation of the Fund, including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services required in connection with the provision of information to the redeemable unitholders and all costs relating to the formation and organization of the Fund.

7. Brokerage commissions on securities transactions Brokerage commissions paid on securities transactions during the period for brokerage

services provided to the Fund were $Nil (2014 - $Nil). Neither the Manager, nor the Fund has received investment or research services from


- 438 -



DECEMBER 31, 2015






redemption requests. Units are redeemable weekly at the NAV per unit calculated on the

valuation day. Unitholders must provide the Manager with notice of redemption not later

than 12:00 pm PST on a valuation day. If a notice of redemption is not received by this

time, the effective date of the requested redemption will be the next following valuation

day and the NAV per unit will be calculated on such next following valuation day.















as follows: Market risk (including price risk, currency risk, and interest rate risk),

liquidity risk, credit risk, and concentration risk. The value of investments within the



Fund.


performance by employing and overseeing professional and experienced portfolio advisors

that regularly monitor the Fund’s positions and market events and diversify the

investment portfolio, within the constraints of the Fund’s investment objectives and

strategies.




capital.

- 439 -



DECEMBER 31, 2015


9. Risk associated with financial instruments - continued a) Market risk Market risk is the risk that the fair value or future cash flows of a financial


i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk). The Fund’s investments are subject to the risk of changes in the prices of investments. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the underlying investments are listed for trading. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager. As at December 31, 2015, if relevant benchmark indexes and the Fund’s investments 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 approximately $7,911,000 (2014 - $3,100,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

ii) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on cash and investments denominated in currencies other than Canadian dollars. Included in net assets are $12,613,485 (2014 - $7,418,620) of US dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager. As at December 31, 2015, if the Canadian dollar had strengthened or weakened 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 approximately $631,000 (2014 - $371,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Fund is exposed to interest rate risk associated with its mutual funds. The Manager manages this risk by purchasing mutual funds that hold many investments. A small change in the prevailing levels of market interest rates could have a significant impact on the underlying investments held by the Fund’s mutual fund investments and on the Fund’s net assets attributable to holders of redeemable units of the Fund.

- 440 -



DECEMBER 31, 2015



b) Liquidity risk





holding cash and short-term investments. The table below analyzes the Fund’s


the contractual maturity date. The amounts in the table are the contractual


On



Payable for unsettled trades $ --- $ 2,050 $ 2,050


payable --- 31 31


Redemptions payable 1,551 1,551


$ 160,052 $ 5,242 $ 165,294

On



Payable for unsettled trades $ --- $ 250 $ 250


payable --- 14 14



$ 62,210 $ 648 $ 62,858





- 441 -



DECEMBER 31, 2015



c) Credit risk


loss for the other party by failing to discharge an obligation. All transactions in listed

securities are settled or paid for upon delivery using approved brokers. The credit risk

related to the associated receivables is considered limited, as delivery of securities sold

is only made once the broker has received payment. Payment is made on a purchase

once the broker has received the securities. The trade will fail if either party fails to

meet its obligation. However, there are risks involved in dealing with custodians or

prime brokers who settle trades and in rare circumstances, the securities and other

assets deposited with the custodians or broker may be exposed to credit risk with

regard to such parties. In addition, there may be practical problems or time delays

associated with enforcing the Fund’s rights to its assets in the case of an insolvency of

any such party. All of the Fund's investments and cash are held with two custodians

and one trustee. This risk is managed by the choice of custodians and trustee.



within the same category such as, geographic region, asset type, industry sector or

market segment. Financial instruments in the same category have similar

characteristics and may be affected similarly by changes in economic or other

conditions. See the schedule of investment portfolio for the various segment









Level 2 Inputs other than quoted prices included within Level 1 that are observable or



- 442 -



DECEMBER 31, 2015





the fair value measurement. All of the Fund’s investments held at December 31, 2015 are

classified as Level 2.





Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 158,224 $ --- $ 158,224

Cash --- 1,291 1,291

Distributions receivable --- 858 858 Subscriptions receivable --- 4,921 4,921

$ 158,224 $ 7,070 $ 165,294

Financial Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 61,997 $ --- $ 61,997

Cash --- 598 598

Distributions receivable --- 224 224


$ 61,997 $ 861 $ 62,858

- 443 -



DECEMBER 31, 2015



related to the Manager own 238,765 (2014 - 35,073) Class O units of the Fund and 930 (2014 – Nil) Class A units of the Fund. The Fund only invests in related funds and limited partnerships.


The increase in net assets from operations attributable to holders of redeemable units per

unit for the year ended December 31, 2015:

2015 2014

Class O






Class A









replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 also includes requirements relating to a new hedge accounting model, which represents a substantial overhaul of hedge accounting which will allow entities to better reflect their risk management activities in the financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted

- 444 -



DECEMBER 31, 2015


Market


CANADIAN EQUITIES – 98.86%

CANADIAN MUTUAL FUNDS – 80.69%

615,816 NWM Alternative Strategies Fund $ 7,331,374 $ 8,005,507

1,021,015 NWM Balanced Mortgage Fund 10,276,984 10,286,373

1,418,313 NWM Bond Fund 14,401,179 14,361,341

2,274,720 NWM Canadian Equity Income Fund 15,899,714 14,820,872

662,983 NWM Canadian Tactical High Income Fund 6,782,574 6,375,140

753,975 NWM Global Bond Fund 8,697,912 8,831,710

708,630 NWM Global Equity Fund 14,992,678 14,408,743

1,081,966 NWM High Yield Bond Fund 12,674,221 11,733,317

1,009,407 NWM Precious Metals Fund 4,950,016 4,679,298

822,297 NWM Preferred Share Fund 8,632,515 7,657,130

756,327 NWM Primary Mortgage Fund 7,896,923 7,897,912

286,949 NWM Real Estate Fund 4,772,175 4,888,073

686,120 NWM U.S. Equity Income Fund 8,458,102 9,165,428

472,740 NWM U.S. Tactical High Income Fund 6,476,596 6,025,187

132,242,963 129,136,031

CANADIAN LIMITED PARTNERSHIPS – 18.17%

535,427 NWM Private Equity Limited Partnership 6,167,460 6,382,911

81,567 Spire Real Estate Limited Partnership 9,135,654 9,594,719

70,016 Spire US Limited Partnership, traded in United

States Dollars 9,640,869 12,609,956

4,507 Spire Value Add Limited Partnership 500,000 500,000

25,443,983 29,087,586

TOTAL CANADIAN EQUITIES – 98.86% 157,686,946 158,223,617

OTHER NET ASSETS – 1.14% 1,828,346 1,828,346

TOTAL NET ASSETS – 100% $ 159,515,292 $ 160,051,963

- 445 -



EXPRESSED IN UNITED STATES DOLLARS

DECEMBER 31, 2015

- 446 -

INDEPENDENT AUDITOR'S REPORT To the Unitholders of NWM U.S. Equity Income Fund We have audited the accompanying financial statements of NWM U.S. Equity Income Fund which comprise the statement of net assets as at December 31, 2015 and the statements of comprehensive income (loss), changes in net assets attributable to holders of redeemable units and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 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 judgement, 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 controls 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

. . . 2

- 447 -


NWM U.S. Equity Income Fund

Opinion


financial position of NWM U.S. Equity Income Fund as at December 31, 2015 and its

financial performance and its cash flows for the year then ended in accordance with



Vancouver, Canada

March 9, 2016

- 448 -



DECEMBER 31, 2015

(In United States Dollars) (In 000's except for per unit amounts and number of units outstanding)


ASSETS 2015 2014 (note 1) Current assets Investments $ 118,802 $ 99,458 Cash 1,522 4,725 Receivable for unsettled trades 497 --- Accrued dividends receivable, net of withholding taxes 111 87 Subscriptions receivable 686 191 $ 121,618 $ 104,461

LIABILITIES LIABILITIES Current liabilities Written options $ 47 $ 295 Payable for unsettled trades 647 --- Administration and management fees payable 45 41 Redemptions payable 1,276 265 Distributions payable 3,905 131 5,920 732 Net assets attributable to holders of redeemable units (note 4) $ 115,698 $ 103,729 Net assets attributable to holders of redeemable units by Class Class O $ 21,863 $ 17,801 Class O Cdn dollar, in US dollars 86,790 82,709 Class N Cdn dollar, in US dollars 6,607 3,219 Class A 22 --- Class A Cdn dollar, in US dollars 416 --- $ 115,698 $ 103,729 Number of redeemable units outstanding Class O 2,281,528 1,753,565 Class O Cdn dollar, in US dollars 9,066,071 8,153,792 Class N Cdn dollar, in US dollars 686,121 316,881 Class A 2,395 --- Class A Cdn dollar, in US dollars 43,641 --- 12,079,756 10,224,238 Net assets attributable to holders of redeemable units per unit Class O $ 9.58 $ 10.15 Class O Cdn dollar, in US dollars $ 9.57 $ 10.15 Class N Cdn dollar, in US dollars $ 9.63 $ 10.16 Class A $ 9.39 $ --- Class A Cdn dollar, in US dollars $ 9.52 $ --- Approved on behalf of the Fund by Nicola Wealth Management Ltd., the Manager (signed) “Karen Ikeda” , Director (signed) “Evelyn C. Nicola” , Director

- 449 -







2015 2014

(note 1)

Income

Dividends $ 2,390 $ 256

Net realized gain on sale of investments (note 5) 925 66

Change in unrealized appreciation (depreciation), net (2,658) 2,168

657 2,490

Expenses




930 117





Class O $ (42) $ 320

Class O Cdn dollar, in US dollars (204) 2,004

Class N Cdn dollar, in US dollars (21) 49

Class A (1) ---

Class A Cdn dollar, in US dollars (5) ---

$ (273) $ 2,373



(note 13)

Class O $ (0.02) $ 0.21

Class O Cdn dollar, in US dollars $ (0.02) $ 0.25

Class N Cdn dollar, in US dollars $ (0.04) $ 0.18

Class A $ (0.21) $ ---

Class A Cdn dollar, in US dollars $ (0.39) $ ---

- 450 -






(In 000's)


Class O Class O Cdn Dollar Class N Cdn Dollar Class A Class A Cdn Dollar Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 (note 1) (note 1) (note 1) (note 1) (note 1) (note 1)

Net assets attributable to holders of redeemable units at beginning of the year $ 17,801 $ --- $ 82,709 $ --- $ 3,219 $ --- $ --- $ --- $ --- $ --- $ 103,729 $ --- Redeemable unit transactions Proceeds from

redeemable

units issued 9,602 17,826 23,678 95,902 3,603 3,170 24 --- 446 --- 37,353 116,898 Reinvestments of distributions to holders of redeemable units 434 50 1,873 265 163 12 --- --- 8 --- 2,478 327 Redemption of redeemable units (4,647) (328) (16,207) (15,083) --- --- --- --- (14) --- (20,868) (15,411)

5,389 17,548 9,344 81,084 3,766 3,182 24 --- 440 --- 18,963 101,814 Distributions to holders of redeemable units From net investment

income (277) (9) (1,092) (51) (77) (2) --- --- (4) --- (1,450) (62) From realized gains on sales of investments (1,008) (58) (3,967) (328) (280) (10) (1) --- (15) --- (5,271) (396)

(1,285) (67) (5,059) (379) (357) (12) (1) --- (19) --- (6,721) (458) Increase (decrease) in net assets attributable to holders of redeemable units (42) 320 (204) 2,004 (21) 49 (1) --- (5) --- (273) 2,373 Net assets attributable to holders of redeemable units at end of the year $ 21,863 $ 17,801 $ 86,790 $ 82,709 $ 6,607 $ 3,219 $ 22 $ --- $ 416 $ --- $ 115,698 $ 103,729

- 451 -





(In 000's)


2015 2014

(note 1)




Adjustments for:

Net realized gain on sale of investments (925) (66)





Accrued dividends receivable, net of withholding

taxes (24) (87)





net of reinvested distributions (469) ---




Net increase (decrease) in cash during the year (3,203) 4,725

Cash, beginning of the year 4,725 ---

Cash, end of the year $ 1,522 $ ---


Dividends received $ 2,362 $ 154

Withholding taxes paid $ 325 $ 21

- 452 -



DECEMBER 31, 2015


1. General

The NWM U.S. Equity Income Fund (the Fund) is an open-ended unit trust formed

under the laws of British Columbia and governed by a Declaration of Trust (Declaration

of Trust). Under the terms of the Declaration of Trust, Nicola Wealth Management Ltd.



Securities are the custodians of the Fund. The Fund’s investment objective is to seek a

combination of current income and capital growth by investing in a diversified portfolio

consisting primarily of publicly-traded securities listed on U.S. stock exchanges. The

address of the Fund’s registered office is 5th Floor, 1508 West Broadway, Vancouver,

British Columbia.

The Fund issued its first unit on June 6, 2013 for $10 to the Manager of the Fund and

commenced operations on November 6, 2014 when the Manager arranged for the non-

monetary transfer of the United States’ dollar securities held in NWM Canadian Equity

Income Fund (Cdn Income Fund), a fund managed by the Manager, with a fair value in

US dollars of $92,374,774 to the Fund, in exchange for 9,109,146 Class O Canadian

dollar units and 180,374 Class N Canadian dollar units of the Fund. Cdn Income Fund

then distributed the units of the Fund to its unitholders.







of March 9, 2016.














- 453 -



DECEMBER 31, 2015





is required to make significant judgements about the classification of financial

instruments and the applicability of the fair value option to its financial

instruments which are not held for trading. The fair value option has been applied

to the Fund’s investments as the investments are managed on a fair value basis in

accordance with the Fund’s investment strategy.















liabilities are measured at amortized cost. Under this method, financial assets and

liabilities reflect the amount required to be received or paid, discounted, when

appropriate at the contract’s effective interest rate. The Fund’s accounting policies

for measuring the fair value of its investments and derivatives are identical to

those used in measuring its net asset value (NAV) for transactions with

unitholders.











Fund’s policy is to recognize transfers into and out of the fair value hierarchy


transfer.

- 454 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (iii) Fair value measurement - continued Short-term debt instruments are valued at their bid quotations from recognized

investment dealers. If no bid price is available, they are valued at amortized cost which approximates market value.

Options contracts are valued at their last traded price at the balance sheet date.

Option contracts with no bid/ask prices available are valued at their closing prices. The premium received/paid on options written or purchased is recorded at cost. The unrealized gain or loss is reflected in the statement of comprehensive income as part of change in unrealized appreciation (depreciation) of investments. The gain or loss on sale or expiry of options is reflected in the statement of comprehensive income as part of the net realized gain (loss) on sale of investments.



unrealized gains and losses on foreign exchange) over (under) the total average cost or amortized cost of the investments is included as unrealized appreciation (depreciation) of investments in the statement of comprehensive income.




sale of investments by the Fund is recognized in increase (decrease) in net assets attributable to holders of redeemable units in the current period.

(v) Translation of foreign currencies The reporting currency and functional currency of the Fund is the United States

dollar. The market values of investments and other assets and liabilities denominated in a

foreign currency are translated into United States dollars at the rate of exchange prevailing at each balance sheet date.

- 455 -



DECEMBER 31, 2015



(v) Translation of foreign currencies - continued The Fund's investment portfolio may consist of securities that are traded in

foreign markets. The proceeds on the sale of such securities will be realized in the respective currency. Unhedged foreign currency positions are subject to gains and losses due to fluctuations in the respective exchange rates. Foreign currency purchases and sales of investments and foreign currency dividend and interest income are translated into the reporting currency at the rate of exchange prevailing on the respective date of the transaction. Foreign exchange gains and losses on the sale of investments and foreign currencies are included in realized gain (loss) on sale of investments in the statement of comprehensive income. Unrealized foreign exchange gains and losses on investments held are included in change in unrealized appreciation (depreciation) of investments in the statement of comprehensive income.

The Class O Cdn dollar units, Class A Cdn dollar units and Class N Cdn dollar

units are issued, reinvested, redeemed and distributed in Canadian dollars. The

unit transactions denominated in a foreign currency are translated into United

States dollars at the rate of exchange prevailing on the respective date of the

transaction. (vi) Impairment of financial assets At each reporting date, the Fund assesses whether there is objective evidence that


the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of the estimated future cash

flows, discounted using the instrument’s original effective interest rate.

Impairment losses on financial assets at amortized cost are reversed in

subsequent periods if the amount of the loss decreases and the decrease can be

related objectively to an event occurring after the impairment was recognized.

(vii) Cash






calculated as the increase (decrease) in net assets from operations attributable to

holders of redeemable units divided by the weighted average number of

redeemable units outstanding during the year. Refer to note 13 for the

calculation.

- 456 -



DECEMBER 31, 2015


3. Summary of significant accounting policies - continued (ix) Income tax The Fund qualifies as a mutual fund trust under the provisions of the Income Tax



investment income and capital gains. Such income and gains are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the statement of comprehensive income.


assets by the total number of units outstanding. 4. Redeemable units of the Fund The Fund is authorized to issue an unlimited number of Class A, Class A Cdn dollar,

Class F, Class N, Class N Cdn dollar, Class O, and Class O Cdn dollar units. At December 31, 2015, Class A, Class A Cdn dollar, Class N Cdn dollar, Class O, and Class O Cdn dollar units have been issued.

Class O Class O Cdn Dollar Class N Cdn Dollar Class A Class A Cdn Dollar Total

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

(note 1) (note 1) (note 1) (note 1) (note 1) (note 1)

Redeemable units

outstanding,

beginning of

the year

y

1,753,565 1 8,153,792 --- 316,881 --- --- --- --- --- 10,224,238 1

Redeemable units

issued, sales 941,476 1,781,546 2,307,667 9,636,695 352,887 315,731 2,366 --- 44,379 --- 3,648,775 11,733,972

Redeemable units

issued,

reinvestment

of distributions 43,740 4,946 188,316 26,097 16,353 1,150 29 --- 706 --- 249,144 32,193

Redeemable units

redeemed (457,253) (32,928) (1,583,704) (1,509,000) --- --- --- --- (1,444) --- (2,042,401) (1,541,928)

Redeemable units

outstanding,

end of the year 2,281,528 1,753,565 9,066,071 8,153,792 686,121 316,881 2,395 --- 43,641 --- 12,079,756 10,224,238

- 457 -



DECEMBER 31, 2015



The Class A, Class A Cdn dollar, Class N Cdn dollar, Class O and Class O Cdn dollar

units of the Fund, which are redeemable at the option of the holder in accordance with

the provisions of the Declaration of Trust, do not have any nominal or par value. The

Class N Cdn dollar units of the Fund represent redeemable units held by another fund

that is managed by the Manager. The Class A units and the Class A Cdn dollar units of

the Fund represent units issued to clients of a financial advisory company related to the

Manager. 5. Net realized gain on sale of investments The net realized gain on sale of investments (in 000's) is comprised of:

2015 2014 (note 1) Proceeds from sale of investments $ 39,264 $ 5,811 Investments at cost, beginning of the year 96,995 --- Investments at cost, purchased during the year 60,589 102,740 157,584 102,740 Investments at cost, end of the year (119,245) (96,995) Cost of investments sold during the year 38,339 5,745 Net realized gain on sale of investments $ 925 $ 66

6. Administration fees and expenses The Fund has agreed to pay the Manager an administration fee equal to 1/12 of 0.13%

(0.13% per annum) of the NAV of the Fund on the last business day of each month

calculated and payable monthly in arrears. The Class O units are subject to a management fee equal to 1/12 of 0.3% (0.3% per annum) of the aggregate fair value of

assets of the Class O units on the last business day of each month calculated and









administration fee, of all ordinary course expenses relating to the operation of the Fund

including, but not limited to, legal and audit fees, bookkeeping charges, registry and transfer agency fees, distribution costs, custodial charges, Trustee's fees, all services



- 458 -



DECEMBER 31, 2015



Brokerage commissions paid on securities transactions during the period for brokerage









unitholders’ redemption requests. Units are redeemable daily at the NAV per unit





valuation day.









Fund.







instruments, as follows: Market risk (including price risk and currency risk), liquidity

risk, credit risk, and concentration risk. The value of investments within the Fund’s

portfolio can fluctuate from day to day, reflecting changes in interest rates, economic

conditions, market and company news related to specific securities within the Fund.

- 459 -



DECEMBER 31, 2015



The Manager manages the potential adverse effects of financial risks on the Fund’s performance by employing and overseeing professional and experienced portfolio advisors that regularly monitor the Fund’s positions and market events and diversify the investment portfolios, within the constraints of the Fund’s investment objectives and strategies.


a) Market risk Market risk is the risk that the fair value or future cash flows of a financial


i) Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from currency risk or interest rate risk). The Fund’s investments are subject to the risk of changes in the prices of its investments. The value of a financial instrument may be affected by specific Fund developments, by stock market conditions and by general economic and financial conditions in those countries where the investments are listed for trading. The investments of the Fund are recognized at fair value and all changes in market conditions directly affect changes in net assets attributable to holders of redeemable units. The Fund's investment portfolio is monitored daily by the Manager.

As at December 31, 2015, if relevant benchmark indexes and the Fund’s financial assets and liabilities traded in active markets 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 approximately $5,938,000 (2014 - $4,958,000). In practice, actual results may differ from this sensitivity analysis and the difference could be material.

ii) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund is subject to foreign exchange rate fluctuations on financial instruments denominated in currencies other than United States dollars. Included in net assets are $420,542 (2014 - $1,251,507) of Canadian dollar denominated financial instruments. The amount of foreign currency denominated financial instruments is monitored daily by the Manager.

- 460 -



DECEMBER 31, 2015


9. Risks associated with financial instruments - continued a) Market risk - continued ii) Currency risk - continued

As at December 31, 2015, if the Canadian dollar had strengthened or weakened

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

approximately $21,000 (2014 - $63,000). In practice, actual results may differ

from this sensitivity analysis and the difference could be material.

b) Liquidity risk



daily cash redemptions. Furthermore, the Fund is unable to control the amounts of

redemption requests. The Fund manages these risks by the choice of investees and

by holding cash and short-term investments. The tables below analyze the Fund’s

financial liabilities into relevant maturity groupings based on the remaining period

to the contractual maturity date. The amounts in the tables are the contractual

undiscounted cash flows. On

2015 Demand < 3 Months Total Financial liabilities (in 000’s) Written options $ 47 $ --- $ 47 Payable for unsettled trades --- 647 647 Administration and management fees payable --- 45 45 Redemptions payable --- 1,276 1,276 Distributions payable --- 3,905 3,905 Redeemable units 115,698 --- 115,698 $ 115,745 $ 5,873 $ 121,618

On

2014 Demand < 3 Months Total (note 1) Financial liabilities (in 000’s) Written options $ 295 $ --- $ 295 Administration and management fees payable --- 41 41 Redemptions payable --- 265 265 Distributions payable --- 131 131 Redeemable units 103,729 --- 103,729 $ 104,024 $ 437 $ 104,461

- 461 -



DECEMBER 31, 2015








c) Credit risk
















b) Concentration risk












- 462 -



DECEMBER 31, 2015











2015, are classified as Level 1.


The following table presents the carrying amounts of the Fund’s financial instruments


Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


Assets (in 000’s)

Investments $ 118,802 $ --- $ 118,802

Cash --- 1,522 1,522

Receivable for unsettled trade --- 497 497

Accrued dividends receivable,

net of withholding taxes --- 111 111


$ 118,802 $ 2,816 $ 121,618

- 463 -



DECEMBER 31, 2015



Financial



Designated at

at Amortized






payable --- 45 45





$ 47 $ 121,571 $ 121,618

Financial

Assets at Financial

FVTPL Assets

Designated at

at Amortized


(note 1)

Assets (in 000’s)

Investments $ 99,458 $ --- $ 99,458

Cash --- 4,725 4,725

Accrued dividends receivable,

net of withholding taxes --- 87 87


$ 99,458 $ 5,003 $ 104,461

- 464 -



DECEMBER 31, 2015



Financial



Designated at

at Amortized


(note 1)




payable --- 41 41





$ 295 $ 104,166 $ 104,461



related to the Manager own 190,000 (2014 – 168,425) Class O units and 11,176 (2014 –

11,213) Class O Cdn dollar units of the Fund.

- 465 -



DECEMBER 31, 2015


13. Increase (decrease) in net assets attributable to holders of redeemable units per unit

The increase (decrease) in net assets attributable to holders of redeemable units per

unit for the years ended December 31, 2015:

2015 2014

(note 1)

Class O



(in 000’s) $ (42) $ 320




Class O Cdn Dollar



(in 000’s)




Class N Cdn Dollar



(in 000’s) $ (21) $ 49




Class A






Class A Cdn Dollar






- 466 -



DECEMBER 31, 2015










or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on













- 467 -



DECEMBER 31, 2015


No. of Shares/ Fair Units Description Cost Value U.S. EQUITIES - 95.12% FINANCIALS - 22.51% 30,000 American International Group Inc. $ 1,854,066 $ 1,859,100 214,000 Bank of America Corp. 3,713,772 3,601,620 7,400 BlackRock Inc. 2,583,721 2,519,848 55,000 Blackstone Group LP 1,845,378 1,608,200 65,000 Citigroup Inc. 3,532,428 3,363,750 59,000 JPMorgan Chase & Co. 3,613,228 3,895,770 58,000 Synchrony Financial 1,819,204 1,763,780 21,000 Visa Inc. 1,458,177 1,628,550 75,000 Wells Fargo & Co. 4,157,120 4,077,000 83,300 Weyerhaeuser Co. 2,850,543 2,497,334 27,427,637 26,814,952 INFORMATION TECHNOLOGY – 18.90% 20,000 Accenture PLC 1,961,190 2,090,000 6,200 Alphabet Inc. 4,121,850 4,823,662 27,600 Apple Inc. 3,327,408 2,905,176 146,000 HP Inc. 2,120,537 1,728,640 40,000 Intel Corporation 1,391,106 1,378,000 59,860 Microsoft Corporation 2,902,758 3,321,033 55,000 Oracle Corp. 2,243,996 2,009,150 18,000 Qualcomm Inc. 1,270,440 899,730 12,800 Schlumberger Ltd. 1,116,966 892,800 25,700 United Technologies Corporation 2,790,506 2,468,999 23,246,757 22,517,190 CONSUMER DISCRETIONARY - 12.16% 40,000 CBS Corp. 2,404,540 1,885,200 29,000 Delphi Automotive PLC 2,042,470 2,486,170 163,000 Ford Motor Co. 2,436,738 2,296,670 90,000 General Electric Co. 2,372,400 2,803,500 6,000 Time Warner Cable Inc. 906,344 1,113,540 26,000 Walgreens Boots Alliance Inc. 2,252,394 2,214,030 16,000 Walt Disney Co. 1,784,808 1,681,280 14,199,694 14,480,390 HEALTH CARE - 11.97% 17,000 Bristol-Meyers Squibb Co. 1,030,466 1,169,430 38,000 HCA Holdings Inc. 2,620,860 2,569,940 9,500 McKesson Corp. 1,927,058 1,873,685 40,500 Merck & Co. Inc. 2,400,030 2,139,210 114,080 Pfizer Inc. 3,426,963 3,682,502 24,000 UnitedHealth Group Inc. 2,530,232 2,823,360 13,935,609 14,258,127

Balance forward 78,809,697 78,070,659

- 468 -



DECEMBER 31, 2015


Units Description Cost Value U.S. EQUITIES - 95.12% - continued Balance brought forward $ 78,809,697 $ 78,070,659 INDUSTRIAL – 10.24% 38,000 AerCap Holdings NV 1,707,291 1,640,080 22,000 Boeing Co. 2,740,760 3,180,980 37,000 Delta Airlines Inc. 1,702,105 1,875,530 42,000 Ingersoll-Rand PLC 2,708,015 2,322,180 16,800 Union Pacific Corp. 1,998,192 1,313,760 35,000 Waste Management Inc. 1,825,844 1,867,950 12,682,207 12,200,480 CONSUMER STAPLES - 8.61% 15,000 Costco Wholesale Corp. 2,194,965 2,422,500 17,000 CVS Caremark Corp. 1,731,889 1,662,090 21,000 Estee Lauder Cos Inc. 1,700,345 1,849,260 31,000 PepsiCo Inc. 3,001,110 3,097,520 20,000 Walmart Stores Inc. 1,177,022 1,226,000 9,805,331 10,257,370 ENERGY – 4.67% 27,000 EOG Resources Inc. 2,541,602 1,911,330 16,000 Exxon Mobil Corp. 1,167,910 1,247,200 50,000 Teekay LNG Partners LP 644,410 657,500 24,700 Valero Energy Corp. 1,342,056 1,746,537 5,695,978 5,562,567 TELECOMMUNICATION SERVICES - 3.88% 17,000 Comcast Corp. 941,460 959,310 79,200 Verizon Communications Inc. 3,967,716 3,660,624 4,909,176 4,619,934 MATERIALS - 2.18% 10,000 Sherwin-Williams Co. 2,565,202 2,596,000 TOTAL U.S. EQUITIES 114,467,591 113,307,010 GLOBAL EQUITIES - 4.62% 37,000 LyondellBasell Industries NV 3,173,061 3,215,300 29,636 Medtronic Inc. 1,779,710 2,279,601 TOTAL GLOBAL EQUITIES 4,952,771 5,494,901

- 469 -



DECEMBER 31, 2015


Units Description Cost Value OPTIONS WRITTEN (0.04%) U.S. EQUITIES (0.04%) (140) Apple Inc., Call 125, January 2016 $ (44,799) $ (420) (50) Mckesson Corp., Call 200, January 2016 (10,915) (11,900) (500) Pfizer Inc., Call 37, January 2016 (32,499) (1,000) (50) Sherwin-Williams, Call 280, January 2016 (31,499) (1,250) (100) UnitedHealth Group Inc., Call 120, January 2016 (12,211) (11,500) (50) Walt Disney Co., Call 120, January 2016 (10,600) (50) (833) Weyerhaeuser Co., Call 32, February 2016 (33,319) (20,825) TOTAL OPTIONS (175,842) (46,945)

TOTAL INVESTMENT PORTFOLIO – 99.70% 119,244,520 118,754,966 OTHER NET ASSETS – 0.30% 362,534 362,534 TOTAL NET ASSETS – 100.00% $119,607,054 $119,117,500

- 470 -

ITEM 13

DATE AND CERTIFICATE

Dated: April 30, 2016

This Offering Memorandum does not contain a misrepresentation.

NWM CANADIAN EQUITY INCOME FUND NWM GLOBAL EQUITY FUND

NWM HIGH YIELD BOND FUND NWM REAL ESTATE FUND

NWM PRIMARY MORTGAGE FUND NWM BALANCED MORTGAGE FUND

NWM GLOBAL BOND FUND NWM PREFERRED SHARE FUND

NWM ALTERNATIVE STRATEGIES FUND NWM PRECIOUS METALS FUND

NWM BOND FUND NWM CANADIAN TACTICAL HIGH INCOME FUND

NWM U.S. TACTICAL HIGH INCOME FUND NWM CORE PORTFOLIO FUND


by their Manager and sole Promoter and duly authorized to sign this Certificate

by the DOT

NICOLA WEALTH MANAGEMENT LTD.

(signed) John Nicola (signed) Michael Taylor JOHN NICOLA MICHAEL TAYLOR Chief Executive Officer Chief Financial Officer

(signed) Karen Ikeda (signed) Evelyn C. Nicola KAREN IKEDA EVELYN C. NICOLA Director Director

- 471 -