lysander balanced fundfiles.lysanderfunds.com/2015/03/lysander.balanced-fund... · 2015-03-31 ·...

Financial statements of

Lysander Balanced Fund

December 31, 2014

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Deloitte LLP Brookfield Place 181 Bay Street Suite 1400 Toronto ON M5J 2V1 Canada Tel: 416-601-6150 Fax: 416-601-6151 www.deloitte.ca

Independent Auditor’s Report To the Unitholders of the Lysander Balanced Fund We have audited the accompanying financial statements of Lysander Balanced Fund, which comprise the statements of financial position as at December 31, 2014 and 2013 and January 1, 2013, and the statements of comprehensive income, statements of changes in net assets and statements of cash flows for the years ended December 31, 2014 and December 31, 2013, 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 audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Lysander Balanced Fund as at December 31, 2014 and December 31, 2013 and January 1, 2013, its financial performance and its cash flows for the years ended December 31, 2014 and December 31, 2013 in accordance with International Financial Reporting Standards.

Chartered Professional Accountants, Chartered Accountants Licensed Public Accountants March 27, 2015

LYSANDER BALANCED FUND

Table of Contents Page

Statements of Financial Position ...................................................................................................................1

Statements of Comprehensive Income .........................................................................................................2

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units .............................................................................................3-4

Statements of Cash Flows.............................................................................................................................5

Schedule of Investment Portfolio ...............................................................................................................6-9

Notes to the Financial Statements ........................................................................................................ 10-22

• 1 •

LYSANDER BALANCED FUNDStatements of Financial Position As at December 31, 2014, December 31, 2013 and January 1, 2013

31-Dec-14 31-Dec-13 1-Jan-13 $ $ $ Restated (Note 9) Restated (Note 9)

Assets Financialassetsatfairvaluethroughprofitorloss* 67,735,074 17,033,201 2,392,831 Cashandcashequivalents 932,157 238,698 32,819 Subscriptionsreceivable 1,765,188 - - Reimbursementsreceivable - 62,296 28,813 Accruedinterestanddividends 140,717 38,829 7,530Totalassets 70,573,136 17,373,024 2,461,993

Liabilities Redemptionpayable 34,082 30,000 -Accrued expenses 116,421 49,642 19,102 Duetoinvestmentdealer 219,967 25,839 - 370,470 105,481 19,102 Netassetsattributabletoholdersofredeemableunits 70,202,666 17,267,543 2,442,891

Net assets attributable to holders of redeemable unit, by series SeriesA 47,909,449 8,130,420 167,014 SeriesF 22,293,217 9,137,123 2,275,877 Totalnetassets 70,202,666 17,267,543 2,442,891

Number of redeemable units outstanding SeriesA 2,915,553 572,554 15,190 SeriesF 1,213,418 578,238 186,542

Net assets per redeemable unit Series A 16.43 14.20 10.99 SeriesF 18.37 15.80 12.20*Financialassetsatfairvaluethroughprofitorlossatcost 59,984,101 14,625,231 2,132,177 Signed on behalf of Lysander Funds Limited, as Manager and Trustee

___________________________________ Director

___________________________________ Director

The accompanying notes form an integral part of the financial statements.

• 2 •

LYSANDER BALANCED FUNDStatements of Comprehensive Income For the year ending December 31, 2014 and 2013

31-Dec-14 31-Dec-13 $ $ Restated (Note 9)

Income Interestfordistributionpurposes 378,762 71,657 Dividendincome 453,143 88,074 Realized and unrealized gain (loss) on investments Netrealizedgainoninvestmentssold 326,727 12,197 Net realized gain (loss) on foreign currency (65,903) (10,911) Changeinappreciationunrealizedoninvestments 5,437,771 2,165,709 Change in (depreciation) appreciation unrealized on currency (253) - Total operating income 6,530,247 2,326,726

Expenses Managementfees 544,928 78,541 Transactioncost 94,769 18,125 Fundadministrationfees 29,044 6,281 Witholdingtax 26,844 5,589 Custodialfees 18,294 8,008 Filing Fees 16,699 14,936 Audit fees 4,199 14,144 Legal Fees 4,000 35,936 Independentreviewcommitteefees 1,348 323 Miscellaneous expenses 522 - Bankcharges 351 117 Unitholder reporting expense - 104 Total operating expenses 740,998 182,104Expense reimbursement - (62,296) Increase in net assets attributable to holders of redeemable units 5,789,249 2,206,918 Increase in net assets attributable to holders of redeemable units per series SeriesA 3,506,088 817,284SeriesF 2,283,161 1,389,634 5,789,249 2,206,918 Increase in net assets attributable to holders of redeemable units per unitSeries A 2.22 4.50 Series F 2.59 4.20


• 3 •

LYSANDER BALANCED FUNDStatements of Changes in Net Assets Attributable to Holders of Redeemable Units For the year ending December 31, 2014 and 2013

31-Dec-14 31-Dec-13 $ $

Net assets attributable to holders of redeemable units, beginning of year 17,267,543 2,442,891 Increaseinnetassetsattributabletoholdersofredeemableunits 5,789,249 2,206,918 Distributions to unitholders of redeemable units Fromnetinvestmentincome (207,719) (56,122) From management fee rebate income (1,104) - Return of capital - - (208,823) (56,122) Redeemable unit transactions: Proceeds from redeemable units issued SeriesA 37,878,201 7,303,344 SeriesF 13,159,579 5,895,961 51,037,780 13,199,305

Cost of units redeemed SeriesA (1,596,796) (155,612) SeriesF (2,268,478) (419,472) (3,865,274) (575,084)

Reinvested distributions SeriesA 94,995 8,731 SeriesF 87,196 40,904 182,191 49,635 47,354,697 12,673,856Increase in net assets attributable to holders of redeemable units for the year 52,935,123 14,824,652 Net assets attributable to holders of redeemable units, end of year 70,202,666 17,267,543

Series A

Net assets attributable to holders of redeemable units, beginning of year 8,130,420 167,014 Increaseinnetassetsattributabletoholdersofredeemableunits 3,506,088 817,284 Distributions to unitholders of redeemable units Fromnetinvestmentincome (103,184) (10,341) Frommanagementfeerebateincome (275) - Return of capital - - (103,459) (10,341)

Redeemable unit transactions: Proceedsfromredeemableunitsissued 37,878,201 7,303,344 Costofunitsredeemed (1,596,796) (155,612) Reinvesteddistributions 94,995 8,731 36,376,400 7,156,463Increaseinnetassetsattributabletoholdersofredeemableunitsfortheyear 39,779,029 7,963,406 Net assets attributable to holders of redeemable units, end of year 47,909,449 8,130,420

Changes in Net Assets continues on next page.


• 4 •

LYSANDER BALANCED FUNDStatements of Changes in Net Assets Attributable to Holders of Redeemable Units For the year ending December 31, 2014 and 2013

(Cont’d) 31-Dec-14 31-Dec-13

Series F $ $

Net assets attributable to holders of redeemable units, beginning of year 9,137,123 2,275,877 Increaseinnetassetsattributabletoholdersofredeemableunits 2,283,161 1,389,634 Distributions to unitholders of redeemable units Fromnetinvestmentincome (104,535) (45,781) Frommanagementfeerebateincome (829) - Return of capital - - (105,364) (45,781) Redeemable unit transactions: Proceedsfromredeemableunitsissued 13,159,579 5,895,961 Costofunitsredeemed (2,268,478) (419,472) Reinvesteddistributions 87,196 40,904 10,978,297 5,517,393 Increaseinnetassetsattributabletoholdersofredeemableunitsfortheyear 13,156,094 6,861,246 Net assets attributable to holders of redeemable units, end of year 22,293,217 9,137,123


• 5 •

LYSANDER BALANCED FUNDStatements of Cash FlowsFor the year ended December 31, 2014 and 2013

31-Dec-14 31-Dec-13 $ $

Cashflowsusedinoperatingactivities Increaseinnetassetsattributabletoholdersofredeemableunits 5,789,249 2,206,918

Adjustments for: Foreignexchangeloss(gain)oncashandcashequivalents (268) (259) Netrealizedloss(gain)onsalesofinvestments (326,727) (12,197) Changeinunrealized(appreciation)depreciationofinvestments (5,343,002) (2,147,317) Changeinunrealizeddepreciation(appreciation)depreciationofcurrency 253 (7) Purchasesofinvestments (49,909,980) (13,076,691) Proceedsfromsaleandmaturityofinvestments 4,877,837 595,834 Accruedinterestanddividends (101,888) (31,299) Reimbursementsreceivable 62,296 (33,483) Subscriptionsreceivables (1,765,188) - Duetoinvestmentdealers 194,128 25,839 Redemptionpayable 4,082 30,000 Accruedexpenses 66,779 30,540Net Cash used in operating activities (46,452,429) (12,412,122)

Cash flows used in financing activities Distributionspaidtoholdersofredeemableunits,netofreinvesteddistributions (26,632) (6,487) Proceedsfromissuancesofredeemableunits 51,037,780 13,199,305 Amountspaidonredemptionofredeemableunits (3,865,274) (575,084)Net cash from financing activities 47,145,874 12,617,734 Foreignexchangeloss(gain)oncashandcashequivalents 14 267Increase in cash and cash equivalents during the year 693,445 205,612 Balanceofcashandcashequivalents,beginningofyear 238,698 32,819Cash and cash equivalents, end of year 932,157 238,698


• 6 •

LYSANDER BALANCED FUNDSchedule of Investment Portfolio As at December 31, 2014

Average Cost Fair ValuePar Value/Number of Shares $ $

Asian Equities (1.95%)

7,983 NintendoCoLtd 1,103,872.02 973,855.67 26,300 Nintendo Co Ltd ADR (USD) 409,559.25 395,112.66 1,513,431 1,368,968

Bonds (6.68%)

173,000 BlackberryLtd.6%Nov13,2020 210,069.94 264,217.98 213,000 BNSDepNotes2.4%Oct.28,2019 212,951.01 214,660.80 5,000 BombardierInc.5.75%March15,2022(USD) 4,968.00 5,902.01 130,000 Central1CreditUnionFRNApril28,2015(3MCDOR+45) 130,002.70 130,131.51 45,000 CogecoCable4.925%Feb14,2022 47,730.65 49,902.80 75,000 CogecoCable5.15%Nov16,2020 83,618.11 84,105.59 368,000 CogecoCableInc.4.175%May26,2023 371,528.38 386,103.65 213,012 CPRail(amort)6.91%Oct1,2024 259,259.04 254,073.01 35,000 EnbridgeInc.FRNAug19,2015(QCDOR+100) 35,386.75 35,118.66 102,000 EnbridgeInc.FRNMar13,2017(QCDOR+45) 102,048.08 101,507.34 133,000 GECapitalCanadaFRNFeb6,2023(QCDOR+120) 134,531.54 138,260.15 9,000 Loblaws6.15%Jan29,2035 10,113.66 10,769.72 9,000 Loblaws6.54%Feb17,2033 10,449.90 11,139.51 131,000 ManufacturersLifeInsuranceFF2.64%Jan15,2020/2025 130,996.07 131,969.81 32,499 NavCanada(amort)7.56%Mar1,2027 41,019.87 41,787.29 106,273 PostmediaNetworkInc.(amort)8.25%Aug16,2017 110,133.35 110,458.86 195,000 Postmedia-SunMediaSubsReceipts8.25%Aug16,2017 195,975.00 195,975.00 90,000 RogersCommunicationInc6.68%Nov4,2039 105,007.50 115,440.29 8,000 RogersCommunicationInc.6.11%Aug25,2040 8,567.72 9,631.75 62,000 RogersCommunicationInc.6.56%Mar22,2041 77,125.96 78,903.27 40,000 RoyalBankofCanadaFRNJune29,2085(USD)(QLIMEAN+25) 32,205.88 34,125.55 338,000 ShawCommunicationsInc6.75%Nov9,2039 399,288.47 419,581.71 48,000 SNCLavalin6.19%Jul3,2019 54,089.96 55,223.53 825,000 TDDepNote.3.226%Jul24,2024 825,000.00 848,125.33 13,000 TransCanadaPipeline8.05%Feb17,2039 19,601.76 20,083.78 140,000 TuckamoreCapitalManagementInc.8%Mar232016 122,481.79 126,770.00 168,000 VideotronLteeSrNotes6.875%Jul15,2021 185,358.75 180,422.89 4,000 VideotronLteeSrNotes7.125%Jan15,2020 4,067.50 4,176.67 2,756 YPGFinancingInc.8.0%Nov30,2022 2,360.08 3,032.15 597,354 YPGFinancingInc.9.25%Nov30,2018 628,848.53 627,221.70 4,554,786 4,688,822

Canadian Equities (26.86%)

6,900 BaylinTechnologiesInc 37,967.94 22,149.00 247,000 BlackberryLtd. 2,268,231.36 3,146,780.00 212,800 BombardierInc. 834,777.60 883,120.00 161,900 BombardierInc.A 597,445.07 668,647.00 21,400 CanforPulpProductsInc. 302,225.20 311,584.00 21,100 ComDevInternationalLtd 64,863.92 84,189.00 32,742 Loblaws 1,479,801.36 2,035,570.14 153,701 ManulifeFinancialCorp. 3,202,037.56 3,409,088.18 402,900 PostmediaNetworkCanada 805,960.06 654,712.50 7,498 SNCLavalin 316,497.25 332,236.38 35,836 SunLifeFinancialInc. 1,278,247.44 1,502,245.16 196,840 TorstarCorp. 1,172,608.26 1,283,396.80 1,553,558 TuckamoreCapitalManagementInc. 766,202.57 978,741.54 180,835 YellowMediaLtd. 2,980,706.32 3,540,749.30 16,107,572 18,853,209

• 7 •


(Cont’d) Average Cost Fair ValuePar Value/Number of Shares $ $

European Equities (19.83%)

232,960 CommerzbankAG-ORD 3,604,568.60 3,590,781.14 67 Givaudan 65,594.10 140,264.96 2,407,400 LloydsBankingGroupPLC 3,203,651.95 3,298,482.79 422,250 Royal Bank of Scotland Group PLC - London 2,526,365.50 3,009,461.21 415,000 TSBBankingGroupPLC 1,952,239.23 2,087,851.06 239,931 UnicreditSPA 1,968,159.65 1,796,908.76 13,320,579 13,923,750

Foreign Fixed Income (8.22%)

65,000 BankofAmericaCorpFRNMar22,2018USD(QLIBOR+107) 73,188.63 76,017.14 111,000 CaisseFrancaisedeFinancementLocal4.625%May30,2017 119,133.33 118,361.52 170,000 CaisseFrancaisedeFinancementLocal5.0%Mar9,2020 191,648.10 193,534.80 8,000 CIEFinancementFoncier4.55%Apr28,2017 8,589.44 8,398.59 447,000 CommerzbankAGSub-debtFRNDec15,2016(QCDOR+88) 429,771.76 436,942.50 177,000 DepfaACSBank4.90%Aug24,2035 163,248.00 207,610.54 149,000 DepfaACSBank5.25%Mar31,2025 151,572.86 178,388.00 254,000 Eurofima4.55%Mar30,2027 284,441.90 281,435.00 636,000 GoldmanSachs5.0%May3,2018 688,105.81 689,629.81 215,000 HeathrowFundingLimited4.0%Jul3,2019 225,008.89 230,621.38 329,000 HeathrowFundingLimited3.0%Jun17,2021 327,152.62 336,137.62 5,000 HypothekenbankFRALUX4.38%Dec15,2015 5,051.00 5,074.38 8,000 IBMCorp2.20%Feb10,2017 8,082.24 8,099.73 157,000 KFW5.05%Feb4,2025 178,560.81 187,083.15 220,000 KimcoNorthTrustIII3.855%Aug04,2020 230,083.82 231,508.07 102,000 LloydsBankPLC10.125%December16,2016/2021 115,881.50 116,468.36 20,000 MetLifeFRNSep25,2017(QCDOR+102) 20,051.76 20,261.41 145,000 MetLifeGlobalFundingI2.3%April10,2019(144A)USD 158,871.11 169,021.59 155,000 MetLifeGlobalFundingI2.682%Apr16,2019 156,763.90 158,043.50 186,000 MetLifeGlobalFundingI3.107%Apr16,2021 186,000.00 191,200.56 37,000 MorganStanley4.90%Feb23,2017 38,930.99 39,215.35 28,000 NationalGridElectricityTransFRNJan25,2018(QCDOR+86) 28,075.60 28,257.60 264,000 NavientCorp5.5%Jan25,2023(USD) 282,381.26 294,015.74 8,000 NavientCorp5.625%Aug1,2033(USD) 7,003.43 7,030.21 147,000 NavientCorp7.25%Jan25,2022(USD) 164,352.91 185,456.49 81,000 NederWaterschapsbank4.55%Mar16,2029 84,194.64 90,595.75 33,000 NederWaterschapsbank5.20%Mar31,2025 36,862.98 38,137.82 235,000 RoyalBankofScotlandGroupTier16.666%Oct5,2017 225,061.45 260,850.00 248,000 RoyalBankofScotlandPLC5.37%May12,2016 235,592.75 240,560.00 204,000 RoyalBankofScotlandPLC5.875%May12,2016 220,982.02 213,955.06 264,000 RoyalBankofScotlandPLCSub10.50%Mar16,2017/22 310,743.25 303,153.39 220,000 UnicreditFRNMay29,2018(QCDOR+217) 223,323.53 226,267.80 5,578,712 5,771,333

• 8 •



Mortgage Backed Securities (4.59%)

171,976 BNSNHAMBS(99000110)1.7%July1,2018 171,273.90 172,849.12 24,824 BNSNHAMBS(99009730)3.85%July1,2019 26,689.78 26,814.27 186,023 ClaregoldTrust2007-2AA15.067%Jun15,2016 194,431.63 192,390.33 365,414 ConcentraNHAMBS(97503073)1.8842%May1,2019 365,085.10 366,948.35 126,357 ConcentraNHAMBS(97503166)2.025%Jun1,2019 126,367.57 127,495.44 25,130 EquitableTrustNHAMBS(96503636)4.35%Jan1,2018 27,284.12 27,034.35 386,358 FirstNationalNHAMBS(97501915)2.29%Oct1,2018 394,231.73 394,270.74 106,509 IGInvestmentNHAMBS(97502070)2.05%Nov.1,2018 107,228.25 107,862.72 290,266 MerrillLynchNHAMBS(97501046)2.05%Jun1,2018 293,206.22 294,022.73 5,406 MerrillLynchNHAMBS(97501847)2.29%Sep.01,2018 5,472.51 5,498.45 22,957 MerrillLynchNHAMBS(97501955)2.39%Oct.01,2017 23,455.81 23,480.98 27,897 MerrillLynchNHAMBS(97502259)Jul.01,2018 28,261.16 28,381.25 26,495 MerrillLynchNHAMBS(97502607)Feb.01,2018 27,344.19 27,315.18 64,859 MerrillLynchNHAMBS(97502903)1.9%April01,2019 64,815.49 65,314.09 88,053 MerrillLynchNHAMBS(97503038)1.79%May01,2019 87,630.80 88,340.97 472,012 MerrillLynchNHAMBS(97503640)1.75%Aug1,2019 468,967.87 472,151.60 248,424 MerrillLynchNHAMBS(97504122)1.85%Nov1,2019 246,998.14 248,998.20 249,364 MerrillLynchNHAMBS(97592513)1.85%Dec1,2017 250,972.21 251,368.83 1,294 MLFA2006-CA19A24.85%Dec12,2015/2039 979.32 1,322.51 592 MLFA2006-CA19B5.06%Jun12,2016/39 2,931.48 3,107.77 2,206 MLFA2006-CA20A24.659%Jul12,2016/2039 2,602.42 2,273.89 3,000 MLFA2007-CA22A24.711%Oct12,2016 596.71 615.11 7,703 PeoplesTrustNHAMBS(96505011)4.20%Oct1,2019 8,392.80 8,457.83 11,445 RBCNHAMBS(99009797)3.55%Sep1,2019 12,150.66 12,219.56 6,000 REALT2006-3B4.70%Dec12,2016 5,665.56 6,234.37 206,484 TDBankNHAMBS(99010498)2.05%Dec1,2022 200,653.06 206,082.17 58,301 TDSecuritiesNHAMBS(97593784)1.8%Nov1,2017 58,464.06 58,722.96 3,202,153 3,219,574

Preferred Shares (0.08%)

11,200 MSplitCorp7.5%Dec1,2019SeriesB 57,568 59,360 57,568 59,360

Private Placements (2.92%)

258,000 ArrowLakesPowerCorp(amort)5.516%Apr5,2041SeriesB 298,423.44 304,749.96 20,089 GreenTimbersLP(amort)6.838%Jun30,2037 24,829.66 25,331.94 431,000 HondaCanadaFinanceIncFRNApril7,2017(QCDOR+33) 431,099.13 431,240.93 251,000 HondaCanadaFinanceIncFRNDec3,2018(QCDOR+65) 252,999.48 253,595.89 101,000 InpowerBCGP(AMORT)4.471%Mar31,2033 101,364.42 107,759.23 22,200 N.B.Highway6.47%Nov30,2027 26,957.35 27,377.54 65,356 ORNGEIssuerTrust(amort)5.727%Jun11,2034 71,165.67 75,380.60 50,000 StandardLifeFF3.938%Sep21,2017/2022 52,491.50 52,374.29 229,000 StantecInc.4.757%May10,2018 243,050.00 241,524.01 27,548 StraitCrossingDev.Inc.(amort)6.17%Sep15,2031 26,789.51 31,009.85 295,000 WTHCarRentalULC(AVIS)2.542%Aug20,2019 295,000.00 298,168.03 19,483 XplornetCommInc.144ASr.Sec.SeriesA13.0%May15,2017 19,530.00 20,359.74 18 XplornetCommInc.WarrantsSeriesAMay15,2017144A 0.00 0.18 178,000 XplornetSubsReceipts13%Oct25,2020 178,000.00 178,000.00 2,021,700 2,046,872

• 9 •



US Equities (25.36%)

30,731 AppleInc. 2,491,318.15 3,935,161.03 15,530 BankofAmericaCorp 171,848.18 322,312.56 97,100 GeneralElectric 2,724,675.20 2,846,557.09 5,930 GoldmanSachsGroupInc. 984,945.43 1,333,432.74 44,512 MorganStanley 1,372,903.22 2,003,568.80 56,500 NavientCorp 797,925.11 1,416,441.50 42,175 PfizerInc. 1,326,153.99 1,524,082.82 358,900 SLMCorp 3,654,137.77 4,242,707.28 1,635 StrykerCorp. 103,692.91 178,921.70 13,627,600 17,803,186

Totalinvestmentportfolio(96.49%) 59,984,101 67,735,074 Cashandcashequivalents(1.33%) 932,157Otherassetsnetliabilities(2.19%) 1,535,435Net assets 70,202,666

• 10 •

LYSANDER BALANCED FUNDNotestofinancialstatementsforDecember31,2014and2013

1. Formation of Fund

TheaddressoftheFund’sregisteredofficeis100YorkBoulevard,Suite501,RichmondHill,Ontario.

Lysander Funds Limited (the “Manager”) is the manager and trustee of the Fund and is responsible for providing or arranging the provision of all general management and administrative services required by the Fund in its day-to-day operations, includ-ing but not limited to, calculating and reporting the net asset value of the Fund and its series, preparing all offering documents, unitholderrecordkeepingandotheradministrativeservices.PleaserefertotheFundSpecificNotessection(a)forfurtherdetailsabout the Fund.

2. Basis of presentation and adoption of IFRS

ThesefinancialstatementshavebeenpreparedincompliancewithInternationalFinancialReportingStandards(“IFRS”)aspub-lished by the International Accounting Standards Board (“IASB”). The Fund adopted this basis of accounting in 2014 as required byCanadiansecuritieslegislationandtheCanadianAccountingStandardsBoard.Previously,theFundprepareditsfinancialstatementsinaccordancewithCanadiangenerallyacceptedaccountingprinciplesasdefinedbyPartVoftheCPAHandbook(“Canadian GAAP”). The Fund has consistently applied the accounting policies used in the preparation of its opening IFRS state-mentoffinancialpositionatJanuary1,2013andthroughoutallperiodspresented,asifthesepolicieshadalwaysbeenineffect.Note9disclosestheimpactofthetransitiontoIFRSontheFund’sreportedfinancialposition,financialperformanceandcashflows,includingthenatureandeffectofsignificantchangesinaccountingpoliciesfromthoseusedintheFund’sfinancialstate-mentsfortheyearendedDecember31,2013preparedunderCanadianGAAP.Thefinancialstatementshavebeenpreparedonthehistoricalcostbasis,exceptfortherevaluationofcertainfinancialinstruments.Historicalcostisgenerallybasedonthefairvalue of the consideration given in exchange for assets. Judgments made by management in the application of IFRS that have significanteffectsonthefinancialstatementsaredisclosed,whereapplicable,intherelevantnotestothefinancialstatements.

3. Significant accounting policies

ThesefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(“IFRS”).ThesignificantaccountingpoliciesoftheFundareasfollows:

Financial instruments

TheFundaccountsforitsfinancialinstrumentsinaccordancewithIAS39,Financialinstruments:recognitionandmeasurement(IAS39),whichincludecashandcashequivalents,investmentsatfairvaluethroughprofitorloss,accruedinterest,reimburse-ment receivable, subscriptions receivable, redemption payable, due to/from investment dealer , receivable/payable from forward exchange contracts and accrued expenses. Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term investments in an active market with original maturities of three months or less, bank overdrafts and money marketfundswithdailyliquidityandallhighlyliquidfinancialinstrumentsthatmaturewithinthreemonthsofbeingpurchased.Accrued interest are designated as loans and receivables and reported at amortized cost. Accrued expenses are designated asfinancialliabilitiesandreportedatamortizedcost.Duetotheirshorttermnature,thecarryingvalueofthesefinancialassetsand liabilities approximates fair value.

TheFund recognizesfinancial instrumentsat fair valueupon initial recognitionon tradedatebasis.TheFundclassifies itsinvestmentindebtandequitysecuritiesandderivativesasfinancialassetsorfinancialliabilitiesatfairvaluethroughprofitorloss.Thesefinancialassetsorfinancialliabilitiesareeitherheldfortradingordesignatedatfairvaluethroughprofitorlossatinception.

Financialassetsorfinancialliabilitiesheldfortradingarethoseacquiredorincurredprincipallyforthepurposeofsellingorre-purchasinginthenearfutureoroninitialrecognitiontheyarepartofaportfolioofidentifiedfinancialinstrumentsthattheFundmanagestogetherandhasarecentactualpatternofshort-termprofit-taking.Allderivativesarealsoincludedinthiscategory.The Fund does not classify any derivatives as hedges in a hedging relationship.

• 11 •

Financialassetsorfinancial liabilitiesdesignatedatfairvaluethroughprofitor lossat inceptionarethosethataremanagedand their performance evaluated on a fair value basis in accordance with the Fund’s investment strategy as documented in its offeringmemorandum,and informationabout thesefinancialassetsand liabilitiesareevaluatedby themanagementof theFundonafairvaluebasistogetherwithotherrelevantfinancialinformation.Allotherfinancialassetsandliabilities,including redeemable units, are measured at amortized cost.

TheFundclassifiesfinancial instrumentscarriedatfairvalueusingafairvaluehierarchythatreflectsthesignificanceoftheinputsusedinmakingthemeasurements.Thehierarchyhasthefollowinglevels.PleaserefertotheFundspecific(e)fortheFair Value Hierarchy.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are 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 inputs for the asset or liability

AspartoftheadoptionofIFRS,themanagerre-assessedthelevelingofcertainfixedincomesecurities,whichwerepreviouslyclassifiedaslevel2.Fixedincomesecuritiesthatarepubliclyquotedinanactivelytradedmarketarenowclassifiedatlevel1.

Fair value measurements

ThesecuritiesintheFund’sPortfolioaremeasuredatFairValueThroughProfitorLoss(“FVTPL”).Thefairvalueoffinancialassets and liabilities traded in active markets (such as publicly traded derivatives and securities) are based on quoted market pricesatthecloseoftradingontheyear-enddate.Thequotedmarketpriceusedforfinancialassetsandfinancialliabilitiesofthe Fund is the last traded price provided such price is within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, management will determine the points within the bid-ask spread that are most representative of thefairvalue.Thefairvalueoffinancialassetsandliabilitiesthatarenottradedinanactivemarketisdeterminedusingvaluationtechniques. The Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent arms’ length transactions, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as littleaspossibleonentity-specificinputs.

Income recognition

Dividend income is recognized when the Fund’s right to receive the payment has been established, normally being the ex-divi-dend date. Dividend income is recognized gross of withholding tax, if any.

The interest income for distribution purposes shown on the statements of comprehensive income represents the coupon interest received by the Fund accounted for on an accrual basis. The Fund does not amortize premiums paid or discounts received on thepurchaseoffixedincomesecuritiesexceptforzerocouponbondswhichareamortizedonastraightlinebasis.Theinterestincome for distribution purposes is the tax basis of calculating the interest received and which is subject to tax.

Recognition, derecognition and measurement

Atinitialrecognition,financialassetsandliabilitiesaremeasuredatfairvalue.Transactioncostsonfinancialassetsandliabilitiesatfairvaluethroughprofitorlossareexpensedasincurredinthestatementofcomprehensiveincome.

Subsequenttoinitialrecognition,financialassetsandliabilitiesatfairvaluethroughprofitorlossaremeasuredatfairvalue.


• 12 •


Gains and losses arising from changes in their fair value are included in the statement of comprehensive income for the period inwhichtheyarise.Dividendorinterestearnedonfinancialassetsatfairvaluethroughprofitorlossanddividendorinterestexpenseonthefinancialliabilitiesatfairvaluethroughprofitorlossaredisclosedinaseparatelineiteminthestatementofcomprehensive income.

Financial assetsarederecognizedwhen the contractual rights to the cash flows from the investmentshaveexpiredor theFundhastransferredsubstantiallyallrisksandrewardsofownership.Financialliabilitiesatfairvaluethroughprofitorlossarederecognizedwhentheobligationspecifiedinthecontractisdischarged,cancelledorexpired.

Investment transactions are accounted for on a trade date basis. Interest income is recorded on an accrual basis. Realized gains and losses on the disposition of investments, and unrealized appreciation and depreciation of investments, are determined on an average cost basis and are included in the statement of comprehensive income.

Offsetting financial instruments

Financialassetsandliabilitiesareoffsetandthenetamountreportedinthestatementoffinancialpositionwhenthereisalegallyenforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Accounting estimates

In the application of the Fund’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily available from other sources. The estimates and as-sociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatareconsideredrelevant.Themostsignificantestimates relate to the valuation of investments. Actual results could differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Net assets attributable to holders of redeemable units

Units issued and outstanding represent the capital of the Fund, with units in each series representing an equal and rateable share in the assets allocated to each series. The management fee rates are different for each of the series. Please refer to Note 6fordiscussionofmanagementfeerates.Theredeemableunitsareclassifiedasfinancialliabilitiesandaremeasuredattheredemption amounts.

Units of the Fund may be purchased or redeemed at a price per unit equal to the net asset value of a unit of the applicable series of the Fund on each Valuation Date.

Net asset value

The net asset value per unit of each series of units of the Fund is computed by dividing the net asset value of a series of units by the total number of units of the series outstanding at the time. 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 holders of redeemable units.

Foreign currency translation

The Fund’s subscriptions and redemptions are denominated in Canadian Dollars (“CAD”), which is also its functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the measurement date.

• 13 •


Assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the prevailing rate of exchange on each valuation date. Purchases and sales of investments are translated at the rate of exchange prevailing on the respective dates of such transactions.

Foreign currency forward contracts

The value of the foreign currency forward contracts is the gain or loss that would be realized if the position in the forward contract was closed out in accordance with its terms. The unrealized gains or losses on the forward contract are reported as part of the change in unrealized appreciation or depreciation on investments in the statement of comprehensive income. Forward currency contracts manage exposure to foreign currency gains and losses arising from short and long-term investments denominated in foreign currencies.

Taxation

The Fund is a unit trust within the meaning of the Income Tax Act (Canada) (the “Act”). The Fund is subject to tax on its net taxable income, including net realized capital gains, for the calendar year which is not paid or payable to its unitholders as of the end of the calendar year. It is the intention of the Fund to pay all of its net taxable income and net realized capital gains so that the Fund will not be subject to income taxes other than foreign withholding taxes, if applicable. Therefore, no provision for income taxeshasbeenmadeinthesefinancialstatements.PleaserefertotheFundSpecificNotessection(i).

Distributions

The Fund makes distributions of net income quarterly and any net realized capital gains annually. These are recognized in the Statements of Changes in Net Assets Attributable to Holders of Redeemable Units.

Future changes in accounting standards

IFRS 9, Financial Instruments:

In November 2009, the IASB issued IFRS 9 as part of its plan to replace IAS 39, Financial Instruments: Recognition and Mea-surement.IFRS9requiresfinancialassets,includinghybridcontracts,tobemeasuredateitherfairvalueoramortizedcost.InOctober2010,theIASBaddedtoIFRS9therequirementsforclassificationandmeasurementoffinancialliabilitiespreviouslyincluded in IAS 39. In November 2013, the IASB introduced a new hedge accounting model, and allowed early adoption of the own credit provisions of IFRS 9. It also removed the mandatory effective date of January 1, 2015 and the new effective date is January1,2018.

TheManageriscurrentlyevaluatingtheimpactofIFRS9onthefinancialstatementsoftheFund.

4. Expenses

The Fund is responsible for the payment of all expenses related to its operations, including but not limited to audit fees, IndependentReviewCommitteefees,fundadministrationfees,filingfees,redeemableunitholderreportingandcustodianfees plus harmonized sales tax. At their discretion, the Manager or a portfolio manager may pay certain of the expenses of the Fund but any such payments shall not oblige the Manager or a portfolio manager to make similar future payments. All expenses are recognized in the statement of comprehensive income on the accrual basis.

Service fees may be paid by the Manager from the management fees it receives from the Fund. Service fees may be paid to brokers and dealers to compensate them for providing ongoing services to redeemable unitholders holding Series A units. PleaserefertotheFundSpecificNotessection(b).

• 14 •


5. Issuance and redemption of units

TheFundisauthorizedtoissueanunlimitednumberoftransferable,redeemableunitsofbeneficialinterest,eachofwhichrep-resents an equal undivided interest in the net assets of the Fund. Each unit entitles the holder to the same rights and obligations as a holder of any other unit and no holder of units is entitled to any privilege, priority or preference in relation to any other holder of units. Each holder of units is entitled to one vote for each whole unit held and is entitled to participate equally with respect to anyandalldistributionsmadebytheFund,includingdistributionsofnetincomeandnetrealizedcapitalgains,ifany.Ontermi-nation or liquidation of the Fund, the holders of outstanding units of record are entitled to receive on a pro rata basis all of the assets of the Fund remaining after payment of all debts, liabilities and liquidation expenses of the Fund. The units of the Fund areissuedandredeemedattheirNetAssetValue.PleaserefertotheFundSpecificNotessection(c).

6. Related party transactions

The Manager is responsible for the day to day management of the fund and its investment portfolio in compliance with the Fund’s constating documents. The Manager pays for the investment management services and provides all administrative services required by the Fund. As compensation for its services the Manager is entitled to receive a management fee as disclosed in the FundSpecificNotessection(d).

The Manager is entitled to receive from the Fund a management fee which is calculated daily and payable monthly at an annual-ized rate, based on the net asset value of each respective series. The Manager may offer a reduced management fee to selected investors in Series A and Series F Units who (among other considerations) hold large investments in the Fund. This is achieved by reducing the management fee charged to the Fund based on the assets held by such investors and the Fund distributing the amountofthereductioninadditionalunitsofthesameseriesoftheFundtotheinvestor.PleaserefertotheFundSpecificNotessection (d) for other related party transactions.

7. Fair Value Hierarchy The Fund’s assets recorded at fair value have been categorized based upon the fair value hierarchy described in Note 3. The fol-lowingfairvaluehierarchytable,intheFundSpecificNotessection(f),presentsinformationabouttheFund’sassetsmeasuredat fair value as at December 31, 2014, December 31, 2013 and January 1, 2013 and there have been no transfers between levels during the year.

8. Risk management

TheFund’sactivitiesexposeittoavarietyoffinancialrisksinthenormalcourseofoperations.Theseincludecreditrisk,liquidityrisk,andmarketrisk.ThevalueoftheinvestmentsintheFund’sportfoliocanfluctuateasaresultofchangesininterestrates,generaleconomicconditions,supplyanddemandconditionsrelatingtospecificsecurities,ornewsrelatingtoaspecificissuer.Inordertomanagerisk,thePortfolioManagerwilldiversifytheportfoliobasedonindustryandcreditratingcategory.Significantrisks that are relevant to the fund are discussed below.

Credit risk

Creditriskistheriskoffinanciallossthatcouldarisefromasecurityissuerorcounterpartytoafinancialinstrumentnotbeingabletomeetitsfinancialobligations.TheFund’smainexposuretocreditriskconsistsofinvestmentsindebtinstruments,suchas bonds. The Fund is also exposed to counterparty risk from other assets, such as amounts due from brokers or subscriptions receivable. To manage this risk, the Portfolio Manager monitors the Fund’s credit exposure and counterparty ratings. Please refertotheFundSpecificNotessection(g).

• 15 •


Liquidity risk

LiquidityriskistheriskthattheFundwillencounterdifficultyinmeetingobligations,includinganyredemptionofunitsforcash.The Fund is exposed to possible daily redemptions at the then current net asset value per unit. Liquidity risk is managed by in-vestingasignificantportionoftheFund’sassetsininvestmentsthataretradedinanactivemarketandthatcanbereadilysold.AllliabilitiesoftheFundareduewithinoneyear.PleaserefertotheFundSpecificNotessection(g).

Market risk

Interest rate risk

Interestrateriskistheriskthatthefairvalueorfuturecashflowsofafundassetwillfluctuatebecauseofchangesinmarketinter-est rates. To manage interest rate risk, the Portfolio Manager monitors exposures and maintains the portfolio duration within the limitsspecifiedintheinvestmentpoliciesandobjectivesofthefund.Inpractice,theactualresultsmaydifferfromthissensitivityanalysisandthedifferencecouldbematerial.PleaserefertotheFundSpecificNotessection(g).

Currency risk

Currencyriskariseswhenthevalueof investmentsdenominated incurrenciesother thanCanadiandollarsfluctuatedue tochanges in exchange rates. The currency risk will typically be hedged by entering into foreign currency forward contracts if re-quired,howeversomemoderatecurrencyexposuremaybeassumedifdeemedtobebeneficialtotheFund.Inpractice,actualresultscoulddifferfromthissensitivityanalysisandthedifferencecouldbematerial.PleaserefertotheFundSpecificNotessection (g).

Price risk

Priceriskistheriskthatthevalueoffinancialinstrumentswillfluctuateasaresultofchangesinmarketprices,whethercausedby factorsspecific toan individual investment, its issuerorall factorsaffectingall instruments traded inamarketormarketsegment.Thisriskismanagedthroughacarefulselectionofsecuritiesandotherfinancialinstrumentswithintheparametersoftheinvestmentstrategyandbymaintainingawell-diversifiedportfolio.Exposuretopriceriskarisesfrominvestmentsinequitysecurities. In practice, actual results will differ from this sensitivity analysis and the difference could be material. Please refer to theFundSpecificNotessection(g).

9. Transition to IFRS

The effect of the Fund’s transition to IFRS is summarized in this note as follows:

Transition elections

TheonlyvoluntaryexemptionadoptedbytheFundupontransitionwastheabilitytodesignateafinancialassetorfinancialliabil-ityatfairvaluethroughprofitandlossupontransitiontoIFRS.AllfinancialassetsandliabilitiesdesignatedatfairvaluethroughprofitandlossupontransitionwerepreviouslycarriedatfairvalueunderCanadianGAAPasrequiredbyAccountingGuideline18,InvestmentCompanies.OtherexemptionsavailableunderIFRS1,whicharenotdiscussedhere,areeithernotmaterialornot relevant to the business.

Statement of cash flows

UnderCanadianGAAP,theFundwasexemptfromprovidingastatementofcashflows.IAS1requiresthatacompletesetoffinancialstatementsincludeastatementofcashflowsforthecurrentandcomparativeperiods,withoutexception.

Reconciliation of net assets and comprehensive income as previously reported under Canadian GAAP to IFRS.PleaserefertotheFundSpecificNotessection(h).

• 16 •


Classification of redeemable units issued by the Fund

Under Canadian GAAP, the Fund accounted for its redeemable units as equity. Under IFRS, IAS 32 requires that units or shares ofanentitywhichincludeacontractualobligationfortheissuertorepurchaseorredeemthemforcashoranotherfinancialassetbeclassifiedasfinancialliability.TheFund’sunitsdonotmeetthecriteriainIAS32forclassificationasequityandtherefore,havebeenreclassifiedasfinancialliabilitiesontransitiontoIFRSandarerepresentedontheStatementsoffinancialpositioninthe net assets attributable to holders of redeemable units line item.

Revaluation of investments at FVTPL

UnderCanadianGAAP,theFundmeasuredthefairvalueofitsinvestmentsinaccordancewithSection3855,FinancialInstru-ments – Recognition and Measurement, which required the use of bid prices for long positions and ask prices for short positions, to the extent such prices are available. Under IFRS, the Fund measures the fair values of its investments using the guidance in IFRS 13, Fair Value Measurement (IFRS 13), which requires that if an asset or a liability has a bid price and an ask price, then its fair value is to be based on a price within the bid-ask spread that is most representative of fair value. It also allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurementswithinabid-askspread.PleaserefertotheFundSpecificNotessection(h).

• 17 •

LYSANDER BALANCED FUNDFundspecificnotestothefinancialstatementsforDecember31,2014and2013

(a) Formation of Fund

LysanderBalancedFund(the“Fund”)isanopen-endfundformedunderthelawsoftheProvinceofOntariobyadeclarationoftrustdatedMarch27,2009.TheFundcommencedoperationsonMarch31,2009anddistributedunitsunderaprospectusexemption.

The Fund has been established by the Manager for the purposes of acquiring and holding a portfolio (the “Portfolio”) consisting primarilyofaportfoliooffixedincomesecuritiesandequities.

The portfolio manager (“Portfolio Manager”) of the Fund is Canso Investment Counsel, a company under common control.

(b) Service Fees

Themaximumservicefeeis0.75%ontheSeriesAunits,exclusiveofanyapplicabletaxes.

(c) Issuance and redemption of units

During the period ended December 31, 2014 and 2013, the number of units issued, redeemed and outstanding were as follows:

Series A December 31, 2014 December 31, 2013

Unitsoutstandingatbeginningofperiod 572,554 15,190 Redeemableunitsissued 2,440,191 568,928 Redeemable units redeemed (103,011) (12,204) Redeemableunitsissuedonreinvestments 5,819 640 Unitsoutstandingatendofperiod 2,915,553 572,554

Series F December 31, 2014 December 31, 2013

Unitsoutstandingatbeginningofperiod 578,238 186,542 Redeemableunitsissued 760,612 419,697 Redeemableunitsredeemed (130,388) (30,911) Redeemable units issued on reinvestments 4,956 2,910 Unitsoutstandingatendofperiod 1,213,418 578,238

• 18 •


(d) Related party transactions

At December 31, 2014, the shareholders of the Manager and Portfolio Manager, together with certain immediate family mem-bersofsuchshareholdershadanownershipinterestintheFundamountingto12.3%(December31,2013–33.4%,January1,2013-81.2%).

TheManagerpaidthePortfolioManager,anaffiliateoftheManager$149,176(December31,2013-$13,864)formanagingthePortfoliooftheFund.AsatDecember31,2014theamountpayabletothePortfolioManagerwas$21,280(December31,2013-$2,711,January1,2013-$402).

The Manager is entitled to receive from the Fund a management fee which is calculated daily and payable monthly at an annu-alizedrateofupto1.50%onSeriesAunitsandupto0.75%onSeriesFunits,exclusiveofapplicabletaxes,basedonthenetasset value of each respective series.

(e) Fair Value Hierarchy

ThefollowingtablespresentthecarryingamountsoftheFund’sfinancialinstrumentsbycategoryasatDecember31,2014,December 31, 2013 and January 1, 2013:

Financial assets at fair value as at December 31, 2014 Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Cashandcashequivalents 932,157 - - 932,157Investments Equities 52,008,473 - - 52,008,473 Fixedincome 15,548,601 178,000 - 15,726,601 68,489,231 178,000 - 68,667,231

Financial assets at fair value as at December 31, 2013 Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Cashandcashequivalents 238,698 - - 238,698 Investments Equities 13,244,373 - - 13,244,373 Options - 213 - 213 Fixedincome 3,768,577 20,038 - 3,788,615 17,251,648 20,251 - 17,271,899

Financial liabilities at fair value as at January 1, 2013 Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Cashandcashequivalents 32,819 - - 32,819Investments Equities 1,758,263 - - 1,758,263 Fixedincome 634,568 - - 634,568 2,425,650 - - 2,425,650

• 19 •


(f) Financial Instruments by Category

ThefollowingtablespresentthecarryingamountsoftheFund’sfinancialinstrumentsbycategoryasatDecember31,2014:

Financial assets at Loans and FVTPL at Receivables Assets inception ($) ($) Total ($)

-Fixedincomesecurities 15,726,601 - 15,726,601 -Equitysecurities 52,008,473 - 52,008,473 -Cashandcashequivalents 932,157 - 932,157 -Subscriptionsreceivable - 1,765,188 1,765,188 -Accruedinterest - 140,717 140,717Total 68,667,231 1,905,905 70,573,136

Financial liabilities at FVTPL at Other Financial Liabilities inception ($) Liabilities ($) Total ($)

-Redemptionpayable - 34,082 34,082 - Due to investment dealer - 116,421 116,421 -Accruedexpenses - 219,967 219,967Total - 370,470 370,470

ThefollowingtablespresentthecarryingamountsoftheFund’sfinancialinstrumentsbycategoryasatDecember31,2013:

Financial Financial assets assets at Loans and Held for FVTPL at Receivables Assets Trading ($) inception ($) ($) Total ($)

-Fixedincomesecurities - 3,788,615 - 3,788,615 -Equitysecurities - 13,244,373 - 13,244,373 -Options 213 - - 213 -Cashandcashequivalents - 238,698 - 238,698 -Reimbursementreceivable - - 38,829 38,829 - Accrued interest and dividends - - 62,296 62,296 Total 213 17,271,686 101,125 17,373,024

Financial Other liabilities at Financial FVTPL at Liabilities Liabilities inception ($) ($) Total ($)

- Redemption payable - 30,000 30,000 -Duetoinvestmentdealer - 25,839 25,839 - Accrued interest - 49,642 49,942 Total - 105,481 105,481

• 20 •


ThefollowingtablespresentthecarryingamountsoftheFund’sfinancialinstrumentsbycategoryasatJanuary1,2013:

Financial assets at Loans and FVTPL at Receivables Assets inception ($) ($) Total ($)

-Fixedincomesecurities 634,568 - 634,568 -Equitysecurities 1,758,263 - 1,758,263 -Cashandcashequivalents 32,819 - 32,819 -Reimbursementreceivable - 28,813 28,813 -Accruedinterestanddividends - 7,530 7,530Total 2,425,650 36,343 2,461,993

Financial Other liabilities at Financial FVTPL at Liabilities Liabilities inception ($) ($) Total ($)

- Accrued interest - 19,102 19,102 Total - 19,102 19,102

(g) Risk Management

Credit risk

As at December 31, 2014, December 31, 2013 and January 1, 2013 the Fund had directly invested in debt instruments with the following credit ratings:

December31,2014(%) December31,2013(%) January1,2013(%)

AAA 5.3 0.5 0.5 AA 3.5 1.0 2.9 A 5.3 9.5 11.5 BBB 3.1 5.1 5.7 BB 2.4 3.8 4.4 B 1.7 0.1 0.4 CCC - 1.1 - Not Rated 1.2 1.0 0.6

• 21 •


Liquidity risk

The following table presents the liabilities according to their maturity date as at December 31, 2014, December 31, 2013 andJanuary 1, 2013:

December 31, 2014 Less Than One Month 1-3 Months 3 Months – 1 Year

RedemptionPayable 34,082 - -Accrued Expense Payable - 116,421 -Duetoinvestmentdealer 219,967 - -

December 31, 2013 Less Than One Month 1-3 Months 3 Months – 1 Year

Redemption Payable 30,000 - -AccruedExpensePayable 18,172 - 31,470Duetoinvestmentdealer 25,839 - -

January 1, 2013 Less Than One Month 1-3 Months 3 Months – 1 Year

Redemption Payable - - -AccruedExpensePayable 2,272 - 16,830Due to investment dealer - - -

Market risk

Interest rate risk

The table below summarizes the Fund’s exposure to interest rate risks based on the remaining term to maturity of the investments.

Less than More than 1 year ($) 1-5 years ($) 5 years ($)

Interestrateexposure December31,2014 52,120,760 9,085,374 6,469,580 December31,2013 147,188 2,382,070 1,259,357 January 1, 2013 - 420,902 213,666

If interest rateshad increasedordecreasedby1%atDecember31,2014,withallothervariablesremainingconstant,net assetsoftheportfoliowouldhavedecreasedorincreasedbyapproximately$3,045,407or4.5%(December31,2013-$142,288or 3.7%,January1,2013-$8,249or1.3%).

• 22 •


Currency risk

The table below summarizes the Fund’s net exposure (after hedging, if any) to currency risk as at:

Currency December 31, 2014 December 31 2013 January 1, 2013

US Dollars 27% 26% 34%

Other 21% 22% 19%

AsatDecember31,2014,iftheCanadiandollarhadstrengthenedorweakenedby1%inrelationtotheabovecurrencies,withallotherfactorskeepconstant,theFund’snetassetswouldhavedecreasedorincreased,respectively,by0.5%(December31,2013:0.47%,January1,2013:0.53%).

Price risk

AsatDecember31,2014,74%(December31,2013-76%,January1,2013-72%)oftheFund’snetassetswereinvestedinequitysecurities.Ifpricesoftheseinvestmentshadincreasedordecreasedby5%withallotherfactorsremainingconstant,netassetswouldhaveincreasedordecreased,byapproximately$2,600,424(December31,2013-$658,182,January1,2013-$87,690).

(h) Transition to IFRS

Reconciliation of net assets and comprehensive income as previously reported under Canadian GAAP to IFRS:

December 31, January 1, Net Assets 2013 ($) 2013 ($)

NetAssetsasreportedunderCanadianGAAP 17,230,394 2,436,382 RevaluationofinvestmentsatFVTPL 37,149 6,509 Netassetsattributabletoholdersofredeemableunits 17,267,543 2,442,891

Year ended December 31, Comprehensive income 2013 ($)

ComprehensiveincomeasreportedunderCanadianGAAP 2,176,278 Revaluation of investments at FVTPL 30,640 Increaseinnetassetsattributabletoholdersofredeemableunits 2,206,918

Revaluation of investments at FVTPL

As a result, upon adoption of IFRS an adjustment was recognized to increase the carrying amount of the Fund’s investments by$6,509asatJanuary1,2013and$37,149asatDecember31,2013.Theimpactofthisadjustmentwastoincreasethe Fund’s increase in net assets attributable to holders of redeemable units by $30,640 for the year ended December 31, 2013.

(i) Taxation

TheFundhas$4,158innetcapitallossesavailabletobeappliedagainstcapitalgainsoffutureyears.

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