Semi-Annual Financial Statements – as at June 30, 2014 · Class F CAD 0414 Class F CAD 014 Class...

Semi-Annual Financial Statements – as at June 30, 2014

Marret Investment Grade Hedged Strategies Fund

Table of Contents

MARRET INVESTMENT GRADE HEDGED STRATEGIES FUND

Financial Statements

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

Statements of Comprehensive Income .................................... 5

Statements of Changes in Net Assets Attributable

to Holders of Redeemable Units ............................................ 8

Statements of Cash Flows ........................................................ 33

Fund Specific Notes to the Financial Statements .................... 34

Schedule of Investment Portfolio ............................................. 39

Notes to the Financial Statements ........................................... 43

Marret Asset Management Inc., the Manager of the Fund, appoints independent auditors to audit the Fund’s Annual Financial Statements. Under Canadian securities

laws (National Instrument 81-106), if an auditor has not reviewed the Semi-Annual Financial Statements, this must be disclosed in an accompanying notice.

The Fund’s independent auditors have not performed a review of these Semi-Annual Financial Statements in accordance with standards established by the Canadian

Institute of Chartered Accountants.

– 1 –Semi-Annual Financial Statements as at June 30, 2014


The accompanying notes are an integral part of these financial statements.

Statements of Financial Position (in $ except for per unit amounts)

Assets

Current assets

Investments*

Cash

Cash and cash equivalents held at broker

Margin

Receivable for investments sold

Receivable for unit subscriptions

Interest receivable

Dividends receivable

Other assets

Derivative assets

Liabilities

Current liabilities

Investments sold short**

Bank overdraft

Due to broker

Margin

Payable for investments purchased

Payable for unit redemptions

Management fees payable

Performance fees payable

Other accrued expenses

Distributions payable to holders of redeemable units

Dividends payable on investments sold short

Interest payable on investments sold short

Derivative liabilities

Net assets attributable to holders of redeemable units

Net assets attributable to holders of redeemable units per class:

Class F CAD 0111

Class F CAD 0211

Class F CAD 0311

Class F CAD 0411

Class F CAD 0611

Class F CAD 0711

Class F CAD 0811

Class F CAD 0911

Class F CAD 1011

Class F CAD 1111

Class F CAD 1211

Class F CAD 0112

Class F CAD 0212

Class F CAD 0312

Class F CAD 0412

Class F CAD 0512

Class F CAD 0712

Class F CAD 0812

Class F CAD 0912

Class F CAD 1012

Class F CAD 1112

Class F CAD 1212

Financial Statements (unaudited)

as at as at as at

June 30, 2014 December 31, 2013 January 1, 2013

153,741,350 107,226,606 68,399,050

10,167,674 16,027,170 25,615,999

46,830,264 40,479,192 11,470,188

378,108 209,178 55,244

47,665,314 18,713 -

- - -

1,218,338 965,332 558,119

18,093 - -

9,588 9,634 -

624,142 78,608 1,960

260,652,871 165,014,433 106,100,560

133,232,932 87,135,598 57,461,638

- - -

- - -

- - -

47,294,304 5,047,946 -

3,684 4,874 -

46,223 43,273 68,251

- 108,284 375,761

51,221 72,862 29,763

- - -

- - -

572,126 467,661 214,933

505,265 226,252 50,501

181,705,755 93,106,750 58,200,847

78,947,116 71,907,683 47,899,713

- - 26,199,886

- - 610,529

- - 96,132

- - 839,519

- - 339,820

- - 4,915

- - 1,792,157

- - 846,090

- - 684,008

- - 2,957,661

- - 693,945

- - 1,298,726

- - 3,102,967

- - 858,208

- - 687,517

- - 165,165

- - 3,742,091

- - 1,108,603

- - 1,152,064

- - 368,234

- - 225,152

- - 126,324

131M



Net assets attributable to holders of redeemable units per class: (cont’d)

Class F CAD

Class F CAD 0413

Class F CAD 0513

Class F CAD 0613

Class F CAD 0713

Class F CAD 0813

Class F CAD 0913

Class F CAD 1113

Class F CAD 1213

Class F CAD 0214

Class F CAD 0314

Class F CAD 0414

Class F CAD 0514

Class F CAD 0614

Class F USD

Class F USD 0913

Class F USD 1013

Class F USD 1113

Class F USD 1213

Class F USD 0214

Class F USD 0414

Class A CAD

Class A CAD 0613

Class A CAD 0713

Class A CAD 0314

Class A CAD 0514

Class I CAD

Net assets attributable to holders of redeemable units per unit:

Class F CAD 0111

Class F CAD 0211

Class F CAD 0311

Class F CAD 0411

Class F CAD 0611

Class F CAD 0711

Class F CAD 0811

Class F CAD 0911

Class F CAD 1011

Class F CAD 1111

Class F CAD 1211

Class F CAD 0112

Class F CAD 0212

Class F CAD 0312

Class F CAD 0412

Class F CAD 0512

Class F CAD 0712

Class F CAD 0812

Class F CAD 0912

Class F CAD 1012

Class F CAD 1112

Class F CAD 1212

Class F CAD

Class F CAD 0413

Class F CAD 0513


Statements of Financial Position (cont’d) (in $ except for per unit amounts)


as at as at as at


41,741,707 10,626,699 -

- 2,547,699 -

- 1,862,509 -

- 14,030,254 -

- 7,641,837 -

- 164,753 -

- 206,372 -

- 1,721,113 -

- 1,251,406 -

429,120 - -

951,447 - -

1,203,469 - -

- - -

317,246 - -

4,328,698 3,516,233 -

- 382,972 -

- 81,795 -

- 140,741 -

- 16,155 -

111,285 - -

218,428 - -

1,461,173 1,316,015 -

- 32,834 -

- 51,977 -

359,712 - -

138,326 - -

27,686,505 26,316,319 -

- - 11.08

- - 11.08

- - 11.09

- - 11.10

- - 11.12

- - 11.12

- - 11.14

- - 11.10

- - 11.08

- - 11.08

- - 11.08

- - 11.08

- - 11.11

- - 11.13

- - 11.14

- - 11.13

- - 11.12

- - 11.12

- - 11.11

- - 11.10

- - 11.09

- - 11.08

12.37 11.82 -

- 11.83 -

- 11.84 -






Net assets attributable to holders of redeemable units per unit: (cont’d)

Class F CAD 0613

Class F CAD 0713

Class F CAD 0813

Class F CAD 0913

Class F CAD 1113

Class F CAD 1213

Class F CAD 0214

Class F CAD 0314

Class F CAD 0414

Class F CAD 0514

Class F CAD 0614

Class F USD

Class F USD 0913

Class F USD 1013

Class F USD 1113

Class F USD 1213

Class F USD 0214

Class F USD 0414

Class A CAD

Class A CAD 0613

Class A CAD 0713

Class A CAD 0314

Class A CAD 0514

Class I CAD

Number of redeemable units outstanding:

Class F CAD 0111

Class F CAD 0211

Class F CAD 0311

Class F CAD 0411

Class F CAD 0611

Class F CAD 0711

Class F CAD 0811

Class F CAD 0911

Class F CAD 1011

Class F CAD 1111

Class F CAD 1211

Class F CAD 0112

Class F CAD 0212

Class F CAD 0312

Class F CAD 0412

Class F CAD 0512

Class F CAD 0712

Class F CAD 0812

Class F CAD 0912

Class F CAD 1012

Class F CAD 1112

Class F CAD 1212

Class F CAD

Class F CAD 0413

Class F CAD 0513

Class F CAD 0613

Class F CAD 0713

Class F CAD 0813

as at as at as at


- 11.84 -

- 11.82 -

- 11.83 -

- 11.82 -

- 11.83 -

- 11.83 -

12.37 - -

12.37 - -

12.37 - -

- - -

12.37 - -

11.49 10.99 -

- 10.96 -

- 10.97 -

- 10.97 -

- 10.97 -

11.50 - -

11.50 - -

10.85 10.40 -

- 10.40 -

- 10.38 -

10.85 - -

10.85 - -

11.07 10.53 -

- - 2,365,370

- - 55,119

- - 8,666

- - 75,659

- - 30,556

- - 442

- - 160,885

- - 76,213

- - 61,730

- - 267,019

- - 62,650

- - 117,250

- - 279,316

- - 77,076

- - 61,718

- - 14,842

- - 336,447

- - 99,733

- - 103,715

- - 33,174

- - 20,299

- - 11,396

3,374,915 898,858 -

- 215,417 -

- 157,330 -

- 1,185,160 -

- 646,630 -

- 13,929 -






Number of redeemable units outstanding: (cont’d)

Class F CAD 0913

Class F CAD 1113

Class F CAD 1213

Class F CAD 0214

Class F CAD 0314

Class F CAD 0414

Class F CAD 0514

Class F CAD 0614

Class F USD

Class F USD 0913

Class F USD 1013

Class F USD 1113

Class F USD 1213

Class F USD 0214

Class F USD 0414

Class A CAD

Class A CAD 0613

Class A CAD 0713

Class A CAD 0314

Class A CAD 0514

Class I CAD

as at as at as at


- 17,458 -

- 145,431 -

- 105,791 -

34,696 - -

76,924 - -

97,300 - -

- - -

25,649 - -

376,573 - 319,998

- - 34,958

- - 7,458

- - 12,876

- - 1,472

9,681 - -

18,999 - -

134,648 - 126,518

- - 3,157

- - 5,006

13,648 - -

12,747 - -

2,500,000 - 2,500,000





Income

Net gain (loss) on investments

Dividends

Interest for distribution purposes

Derivative income (loss)

Interest expense on investments sold short

Dividends expense on investments sold short

Net realized gain (loss) on sale of investments and derivatives

Change in unrealized appreciation (depreciation) in value of investments and derivatives

Total net gain (loss) on investments

Other income

Foreign exchange gain (loss)

Securities lending

Other income

Total income (net)

Expenses

Management fees

Operating fees

Performance fees

Fund administration expense

Audit fees

Legal fees

Trustee fees

Transfer agent fees

Custodial and administrative fees

Independent review committee fees

Unitholders reporting costs

Commissions and other portfolio transaction costs

Professional fees

Regulatory fees

Commission fees

Counterparty fees

Security borrowing fees

Service expense

Other expenses

Interest expense

Withholding taxes

Harmonized sales tax

Total expenses

Expenses absorbed by the manager

Increase (decrease) in net assets attributable to holders of redeemable units

2014 2013

- -

3,001,001 940,154

(60,869) (10,676)

(1,534,894) (451,715)

- -

1,653,960 2,153,545

891,024 (1,800,133)

3,950,222 831,175

246,478 258,325

- -

247 26

4,196,947 1,089,526

279,301 202,643

1,240 -

- -

- -

14,152 11,738

- -

- -

- -

18,886 28,128

- -

- -

- -

- -

- -

- -

- -

150,050 70,499

- -

11,348 2,899

150,440 1,598

5,567 -

- -

630,984 317,505

- -

3,565,963 772,021

Statements of Comprehensive Incomefor the six-month periods ended June 30 (in $ except for per unit amounts)





Increase (decrease) in net assets attributable to holders of redeemable units per class:

Class F CAD 0111

Class F CAD 0211

Class F CAD 0311

Class F CAD 0411

Class F CAD 0611

Class F CAD 0711

Class F CAD 0811

Class F CAD 0911

Class F CAD 1011

Class F CAD 1111

Class F CAD 1211

Class F CAD 0112

Class F CAD 0212

Class F CAD 0312

Class F CAD 0412

Class F CAD 0512

Class F CAD 0712

Class F CAD 0812

Class F CAD 0912

Class F CAD 1012

Class F CAD 1112

Class F CAD 1212

Class F CAD

Class F CAD 0413

Class F CAD 0513

Class F CAD 0613

Class F CAD 0713

Class F CAD 0813

Class F CAD 0913

Class F CAD 1113

Class F CAD 1213

Class F CAD 0214

Class F CAD 0314

Class F CAD 0414

Class F CAD 0514

Class F CAD 0614

Class F USD

Class F USD 0913

Class F USD 1013

Class F USD 1113

Class F USD 1213

Class F USD 0214

Class F USD 0414

Class A CAD

Class A CAD 0613

Class A CAD 0713

Class A CAD 0314

Class A CAD 0514

Class I CAD

2014 2013

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

1,858,652 747,648

- 17,816

- (493)

- (65,157)

- -

- -

- -

- -

- -

18,565 -

27,433 -

28,468 -

- -

2,245 -

190,802 34,047

- -

- -

- -

- -

95 -

(2,631) -

60,602 (2,027)

- (168)

- -

9,711 -

1,835 -

1,370,186 40,355

Statements of Comprehensive Income (cont’d)for the six-month periods ended June 30 (in $ except for per unit amounts)





Increase (decrease) in net assets attributable to holders of redeemable units per unit:

Class F CAD 0111

Class F CAD 0211

Class F CAD 0311

Class F CAD 0411

Class F CAD 0611

Class F CAD 0711

Class F CAD 0811

Class F CAD 0911

Class F CAD 1011

Class F CAD 1111

Class F CAD 1211

Class F CAD 0112

Class F CAD 0212

Class F CAD 0312

Class F CAD 0412

Class F CAD 0512

Class F CAD 0712

Class F CAD 0812

Class F CAD 0912

Class F CAD 1012

Class F CAD 1112

Class F CAD 1212

Class F CAD

Class F CAD 0413

Class F CAD 0513

Class F CAD 0613

Class F CAD 0713

Class F CAD 0813

Class F CAD 0913

Class F CAD 1113

Class F CAD 1213

Class F CAD 0214

Class F CAD 0314

Class F CAD 0414

Class F CAD 0514

Class F CAD 0614

Class F USD

Class F USD 0913

Class F USD 1013

Class F USD 1113

Class F USD 1213

Class F USD 0214

Class F USD 0414

Class A CAD

Class A CAD 0613

Class A CAD 0713

Class A CAD 0314

Class A CAD 0514

Class I CAD

2014 2013

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

0.54 0.38

- 0.08

- -

- (0.05)

- -

- -

- -

- -

- -

0.54 -

0.36 -

0.29 -

- -

0.08 -

0.51 0.11

- -

- -

- -

- -

0.01 -

(0.51) -

0.45 -

- (0.06)

- -

0.29 -

0.14 -

0.55 0.03

Statements of Comprehensive Income (cont’d)for the six-month periods ended June 30 (in $ except for per unit amounts)





Class F CAD 0111

Net assets attributable to holders of redeemable units at the beginning of period


Distributions to holders of redeemable units

From net investment income

From net realized gains on sale of investments and derivatives

Return of capital

Total distributions to holders of redeemable units

Redeemable unit transactions

Issue costs

Class consolidation

Proceeds from redeemable units issued

Reinvestment of distributions to holders of redeemable units

Redemption of redeemable units

Net increase (decrease) from redeemable unit transactions

Net increase (decrease) in net assets attributable to holders of redeemable units

Net assets attributable to holders of redeemable units at the end of period

Class F CAD 0211






Return of capital



Issue costs

Class consolidation







2014 2013

- 26,199,886

- -

- -

- -

- -

- -

- -

- (26,199,886)

- -

- -

- -

- (26,199,886)

- (26,199,886)

- -

- 610,529

- -

- -

- -

- -

- -

- -

- (610,529)

- -

- -

- -

- (610,529)

- (610,529)

- -

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units for the six-month periods ended June 30 (in $)





Class F CAD 0311






Return of capital



Issue costs

Class consolidation







Class F CAD 0411






Return of capital



Issue costs

Class consolidation







2014 2013

- 96,132

- -

- -

- -

- -

- -

- -

- (96,132)

- -

- -

- -

- (96,132)

- (96,132)

- -

- 839,519

- -

- -

- -

- -

- -

- -

- (839,519)

- -

- -

- -

- (839,519)

- (839,519)

- -

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units (cont’d)for the six-month periods ended June 30 (in $)





Class F CAD 0611






Return of capital



Issue costs

Class consolidation







Class F CAD 0711






Return of capital



Issue costs

Class consolidation







2014 2013

- 339,820

- -

- -

- -

- -

- -

- -

- (339,820)

- -

- -

- -

- (339,820)

- (339,820)

- -

- 4,915

- -

- -

- -

- -

- -

- -

- (4,915)

- -

- -

- -

- (4,915)

- (4,915)

- -






Class F CAD 0811






Return of capital



Issue costs

Class consolidation







Class F CAD 0911






Return of capital



Issue costs

Class consolidation







2014 2013

- 1,792,157

- -

- -

- -

- -

- -

- -

- (1,792,157)

- -

- -

- -

- (1,792,157)

- (1,792,157)

- -

- 846,090

- -

- -

- -

- -

- -

- -

- (846,090)

- -

- -

- -

- (846,090)

- (846,090)

- -






Class F CAD 1011






Return of capital



Issue costs

Class consolidation







Class F CAD 1111






Return of capital



Issue costs

Class consolidation







2014 2013

- 684,008

- -

- -

- -

- -

- -

- -

- (684,008)

- -

- -

- -

- (684,008)

- (684,008)

- -

- 2,957,661

- -

- -

- -

- -

- -

- -

- (2,957,661)

- -

- -

- -

- (2,957,661)

- (2,957,661)

- -






Class F CAD 1211






Return of capital



Issue costs

Class consolidation







Class F CAD 0112






Return of capital



Issue costs

Class consolidation







2014 2013

- 693,945

- -

- -

- -

- -

- -

- -

- (693,945)

- -

- -

- -

- (693,945)

- (693,945)

- -

- 1,298,726

- -

- -

- -

- -

- -

- -

- (1,298,726)

- -

- -

- -

- (1,298,726)

- (1,298,726)

- -






Class F CAD 0212






Return of capital



Issue costs

Class consolidation







Class F CAD 0312






Return of capital



Issue costs

Class consolidation







2014 2013

- 3,102,967

- -

- -

- -

- -

- -

- -

- (3,102,967)

- -

- -

- -

- (3,102,967)

- (3,102,967)

- -

- 858,208

- -

- -

- -

- -

- -

- -

- (858,208)

- -

- -

- -

- (858,208)

- (858,208)

- -






Class F CAD 0412






Return of capital



Issue costs

Class consolidation







Class F CAD 0512






Return of capital



Issue costs

Class consolidation







2014 2013

- 687,517

- -

- -

- -

- -

- -

- -

- (687,517)

- -

- -

- -

- (687,517)

- (687,517)

- -

- 165,165

- -

- -

- -

- -

- -

- -

- (165,165)

- -

- -

- -

- (165,165)

- (165,165)

- -






Class F CAD 0712






Return of capital



Issue costs

Class consolidation







Class F CAD 0812






Return of capital



Issue costs

Class consolidation







2014 2013

- 3,742,091

- -

- -

- -

- -

- -

- -

- (3,742,091)

- -

- -

- -

- (3,742,091)

- (3,742,091)

- -

- 1,108,603

- -

- -

- -

- -

- -

- -

- (1,108,603)

- -

- -

- -

- (1,108,603)

- (1,108,603)

- -






Class F CAD 0912






Return of capital



Issue costs

Class consolidation







Class F CAD 1012






Return of capital



Issue costs

Class consolidation







2014 2013

- 1,152,064

- -

- -

- -

- -

- -

- -

- (1,152,064)

- -

- -

- -

- (1,152,064)

- (1,152,064)

- -

- 368,234

- -

- -

- -

- -

- -

- -

- (368,234)

- -

- -

- -

- (368,234)

- (368,234)

- -






Class F CAD 1112






Return of capital



Issue costs

Class consolidation







Class F CAD 1212






Return of capital



Issue costs

Class consolidation







2014 2013

- 225,152

- -

- -

- -

- -

- -

- -

- (225,152)

- -

- -

- -

- (225,152)

- (225,152)

- -

- 126,234

- -

- -

- -

- -

- -

- -

- (126,234)

- -

- -

- -

- (126,234)

- (126,234)

- -






Class F CAD






Return of capital



Issue costs

Class consolidation







Class F CAD 0413






Return of capital



Issue costs

Class consolidation







2014 2013

10,626,699 -

1,858,652 747,648

- -

- -

- -

- -

- -

29,425,943 47,899,713

730,000 145,158

- -

(899,587) (38,569,076)

29,256,356 9,475,795

31,115,008 10,233,443

41,741,707 10,223,443

2,547,699 -

- 17,816

- -

- -

- -

- -

- -

(2,547,699) -

- 2,426,456

- -

- -

(2,547,699) 2,426,456

(2,547,699) 2,444,272

- 2,444,272






Class F CAD 0513






Return of capital



Issue costs

Class consolidation







Class F CAD 0613






Return of capital



Issue costs

Class consolidation







2014 2013

1,862,509 -

- (493)

- -

- -

- -

- -

- -

(1,862,509) -

- 1,790,366

- -

- -

(1,862,509) 1,790,366

(1,862,509) 1,789,873

- 1,789,873

14,030,254 -

- (65,157)

- -

- -

- -

- -

- -

(14,030,254) -

- 13,521,776

- -

- -

(14,030,254) 13,521,776

(14,030,254) 13,456,619

- 13,456,619






Class F CAD 0713






Return of capital



Issue costs

Class consolidation







Class F CAD 0813






Return of capital



Issue costs

Class consolidation







2014 2013

7,641,837 -

- -

- -

- -

- -

- -

- -

(7,641,837) -

- -

- -

- -

(7,641,837) -

(7,641,837) -

- -

164,753 -

- -

- -

- -

- -

- -

- -

(164,753) -

- -

- -

- -

(164,753) -

(164,753) -

- -






Class F CAD 0913






Return of capital



Issue costs

Class consolidation







Class F CAD 1113






Return of capital



Issue costs

Class consolidation







2014 2013

206,372 -

- -

- -

- -

- -

- -

- -

(206,372) -

- -

- -

- -

(206,372) -

(206,372) -

- -

1,721,113 -

- -

- -

- -

- -

- -

- -

(1,721,113) -

- -

- -

- -

(1,721,113) -

(1,721,113) -

- -






Class F CAD 1213






Return of capital



Issue costs

Class consolidation







Class F CAD 0214






Return of capital



Issue costs

Class consolidation







2014 2013

1,251,406 -

- -

- -

- -

- -

- -

- -

(1,251,406) -

- -

- -

- -

(1,251,406) -

(1,251,406) -

- -

- -

18,565 -

- -

- -

- -

- -

- -

- -

412,965 -

- -

(2,410) -

410,555 -

429,120 -

429,120 -






Class F CAD 0314






Return of capital



Issue costs

Class consolidation







Class F CAD 0414






Return of capital



Issue costs

Class consolidation







2014 2013

- -

27,433 -

- -

- -

- -

- -

- -

- -

924,014 -

- -

- -

924,014 -

951,447 -

951,447 -

- -

28,468 -

- -

- -

- -

- -

- -

- -

1,175,001 -

- -

- -

1,175,001 -

1,203,469 -

1,203,469 -






Class F CAD 0514






Return of capital



Issue costs

Class consolidation







Class F CAD 0614






Return of capital



Issue costs

Class consolidation







2014 2013

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

- -

2,245 -

- -

- -

- -

- -

- -

- -

315,001 -

- -

- -

315,001 -

317,246 -

317,246 -






Class F USD






Return of capital



Issue costs

Class consolidation







Class F USD 0913






Return of capital



Issue costs

Class consolidation







2014 2013

3,516,233 -

190,802 34,047

- -

- -

- -

- -

- -

621,663 -

- 3,308,458

- -

- -

621,663 3,308,458

812,465 3,342,505

4,328,698 3,342,505

382,972 -

- -

- -

- -

- -

- -

- -

(382,972) -

- -

- -

- -

(382,972) -

(382,972) -

- -






Class F USD 1013






Return of capital



Issue costs

Class consolidation







Class F USD 1113






Return of capital



Issue costs

Class consolidation







2014 2013

81,795 -

- -

- -

- -

- -

- -

- -

(81,795) -

- -

- -

- -

(81,795) -

(81,795) -

- -

140,741 -

- -

- -

- -

- -

- -

- -

(140,741) -

- -

- -

- -

(140,741) -

(140,741) -

- -






Class F USD 1213






Return of capital



Issue costs

Class consolidation







Class F USD 0214






Return of capital



Issue costs

Class consolidation







2014 2013

16,155 -

- -

- -

- -

- -

- -

- -

(16,155) -

- -

- -

- -

(16,155) -

(16,155) -

- -

- -

95 -

- -

- -

- -

- -

- -

- -

111,190 -

- -

- -

111,190 -

111,285 -

111,285 -






Class F USD 0414






Return of capital



Issue costs

Class consolidation







Class A CAD






Return of capital



Issue costs

Class consolidation







2014 2013

- -

(2,631) -

- -

- -

- -

- -

- -

- -

221,059 -

- -

- -

221,059 -

218,428 -

218,428 -

1,316,015 -

60,602 (2,027)

- -

- -

- -

- -

- -

84,811 -

- 1,662,245

- -

(255) -

84,556 1,662,245

145,158 1,660,218

1,461,173 1,660,218






Class A CAD 0613






Return of capital



Issue costs

Class consolidation







Class A CAD 0713






Return of capital



Issue costs

Class consolidation







2014 2013

32,834 -

- (168)

- -

- -

- -

- -

- -

(32,834) -

- 31,700

- -

- -

(32,834) 31,700

(32,834) 31,532

- 31,532

51,977 -

- -

- -

- -

- -

- -

- -

- -

(51,977) -

- -

- -

(51,977) -

(51,977) -

- -






Class A CAD 0314






Return of capital



Issue costs

Class consolidation







Class A CAD 0514






Return of capital



Issue costs

Class consolidation







2014 2013

- -

9,711 -

- -

- -

- -

- -

- -

- -

350,001 -

- -

- -

350,001 -

359,712 -

359,712 -

- -

1,835 -

- -

- -

- -

- -

- -

- -

136,491 -

- -

- -

136,491 -

138,326 -

138,326 -






Class I CAD






Return of capital



Issue costs

Class consolidation







Total Fund






Return of capital



Issue costs

Class consolidation







2014 2013

26,316,319 -

1,370,186 40,355

- -

- -

- -

- -

- -

- -

- 25,000,000

- -

- -

- 25,000,000

1,370,186 25,040,355

27,686,505 25,040,355

71,907,683 47,899,713

3,565,963 772,021

- -

- -

- -

- -

- -

- -

4,375,722 47,886,159

- -

(902,252) (38,569,076)

3,473,470 9,317,083

7,039,433 10,089,104

78,947,116 57,988,817



Marret Investment Grade Hedged Strategies FundFinancial Statements (unaudited)


Cash flows from (used in) operating activities


Adjustments for:

Net realized (gain) loss on sale of investments and derivatives

Change in unrealized (appreciation) depreciation in value of investments and derivatives

Proceeds from the sale and maturity of investments

Purchase of investments

Cash held at broker

Cash held at broker, margin deposits

Margins

(Increase) decrease in interest receivable

(Increase) decrease in dividends receivable

(Increase) decrease in other receivables

Increase (decrease) in interest payable on investments sold short

Increase (decrease) in dividends payable on investments sold short

Increase (decrease) in other liabilities

Net cash from (used in) operating activities

Cash flows from (used in) financing activities

Due to broker

Proceeds from issuance of redeemable units

Amount received from reinvestment of distributions to holders of redeemable units

Amount paid on redemptions of redeemable units

Distributions paid to holders of redeemable units, net of reinvested distributions

Issue costs

Net cash from (used in) financing activities

Net increase (decrease) in cash

Cash (bank overdraft), beginning of period

Cash (bank overdraft), end of period

Supplementary Information:

Dividends received, net of withholding taxes

Interest received

2014 2013

3,565,963 772,021

(2,115,216) (2,445,639)

(941,979) 1,877,580

850,576,529 463,037,808

(853,603,508) (453,557,245)

- -

(6,351,072) (11,382,855)

(168,930) (19,940)

(253,006) 229,393

(18,093) -

46 -

104,465 (45,838)

- -

(126,975) (410,149)

(9,331,776) (1,944,864)

- -

4,375,722 47,886,159

- -

(903,442) (38,569,076)

- -

- -

3,472,280 9,317,083

(5,859,496) 7,372,219

16,027,170 25,615,999

10,167,674 32,988,218

- -

2,729,902 1,169,547

Statements of Cash Flowsfor the six-month periods ended June 30 (in $)


Marret Investment Grade Hedged Strategies FundFund Specific Notes to the Financial Statements (unaudited)


Concentration Risk The Fund’s investments were concentrated in the following segments:

as at December 31, 2013

% of Net Assets Attributable to

Holders of Redeemable Units

Canadian Corporate Bonds - long positions 62.02

Canadian Provincial & Guaranteed - long positions 2.87

Canadian Municipal Bonds - long positions 1.41

Canadian Mortgage-Backed Bonds - long positions 0.49

Government of Canada & Guaranteed - short positions (69.44)

U.S. Corporate Bonds - long positions 35.75

U.S. Federal Bonds & Government Guaranteed - short positions (27.68)

U.S. Corporate Bonds - short positions (2.83)

International Bonds - long positions 46.80

International Bonds - short positions (21.71)

Total Investments 27.68

as at January 1, 2013

% of Net Assets Attributable to

Holders of Redeemable Units

Canadian Corporate Bonds - long positions 91.15

Canadian Municipal Bonds - long positions 4.60

Canadian Mortgage-Backed Bonds - long positions 3.71

Canadian Provincial & Guaranteed - long positions 3.30

Government of Canada & Guaranteed - long positions 0.37

Government of Canada & Guaranteed - short positions (94.91)

U.S. Corporate Bonds - long positions 21.57

U.S. Federal Bonds & Government Guaranteed - long positions 2.41

U.S. Federal Bonds & Government Guaranteed - short positions (20.73)

U.S. Corporate Bonds - short positions (2.83)

International Bonds - long positions 15.90

International Bonds - short positions (2.03)

Total Investments 22.51

Financial Instruments Risks (Note 8)


Marret Investment Grade Hedged Strategies FundFund Specific Notes to the Financial Statements (unaudited) (cont’d)


Credit Risk The Fund was invested in fixed income securities, preferred securities and derivative instruments, as applicable, with the following credit ratings:

as at June 30, 2014

% of Net Assets Attributable to Holders of Redeemable Units

Credit Ratings^* Long Short Net

AAA 2.95 (162.28) (159.33)

AA - (2.40) (2.40)

A 64.04 - 64.04

BBB 112.96 (4.08) 108.88

Below BBB 14.94 - 14.94

Total 194.89 (168.76) 26.13




AAA - (116.27) (116.27)

AA 3.83 (2.56) 1.27

A 32.94 (2.83) 30.11

BBB 98.03 - 98.03

Below BBB 14.54 - 14.54

Total 149.34 (121.66) 27.68




AAA 4.91 (115.64) (110.73)

AA 5.45 - 5.45

A 40.14 (4.87) 35.27

BBB 79.73 - 79.73

Below BBB 12.69 - 12.69

Total 142.92 (120.51) 22.41

^Credit ratings are obtained from Standard & Poor’s, where available, otherwise ratings are obtained from: Moody’s Investors Service or Dominion Bond Rating Services, respectively.

*Refer to Note 8 for Credit Rating Chart reference.

Other Price RiskAs at June 30, 2014, December 31, 2013 and January 1, 2013, the other price risk of this Fund was insignificant as the Fund was invested in fixed income securities.



Currency Risk The tables below summarize the Fund’s exposure to currency risk.

as at June 30, 2014

% of Net Assets

Net Currency Currency Risk Due Forward Currency Attributable to

Risk Investments Working Capital From (To) Broker Contracts Net Exposure Holders of

Currency ($) ($) ($) ($) ($) Redeemable Units

US Dollar 8,527,733 1,404,236 4,910,699 (9,864,765) 4,977,903 6.31

Euro 4,901,806 108,291 24,927 (4,890,625) 144,399 0.18

British Pound 152,882 59,008 70,855 (265,928) 16,817 0.02

Total 13,582,421 1,571,535 5,006,481 (15,021,318) 5,139,119 6.51


% of Net Assets




US Dollar 9,486,215 (4,193,563) 4,001,918 (8,601,235) 693,335 0.97

Euro 5,507,199 (60,212) 977 (5,265,456) 182,508 0.25

British Pound 161,194 11,621 6 (158,999) 13,822 0.02

Total 15,154,608 (4,242,154) 4,002,901 (14,025,690) 889,665 1.24


% of Net Assets




US Dollar 2,120,653 26,824 1,702,675 (3,783,470) 66,682 0.14

Total 2,120,653 26,824 1,702,675 (3,783,470) 66,682 0.14

As at June 30, 2014, had the Canadian dollar strengthened or weakened by 5% (December 31, 2013 and January 1, 2013 - 5%) in relation to all other foreign currencies held in the

Fund, with all other variables held constant, net assets attributable to holders of redeemable units of the Fund would have decreased or increased, respectively, by approximately

$256,956 (December 31, 2013 - $248,200 and January 1, 2013 - $3,334). In practice, the actual results may differ from this analysis and the difference may be material.

Interest Rate Risk The tables below summarize the Fund’s exposure to interest rate risk, categorized by the contractual maturity date.

as at June 30, 2014

Bonds Long ($) Short ($) Net ($)

< 1 year 2,791,442 (2,563,700) 227,742

1-3 years 8,849,045 (7,090,755) 1,758,290

3-5 years 28,503,833 (37,397,553) (8,893,720)

> 5 years 113,597,030 (86,180,924) 27,416,106

Total 153,741,350 (133,232,932) 20,508,418

Fund Specific Notes to the Financial Statements (unaudited) (cont’d)



Marret Investment Grade Hedged Strategies FundFund Specific Notes to the Financial Statements (unaudited) (cont’d)


Interest Rate Risk (cont’d)



< 1 year - - -

1-3 years 11,250,174 (10,336,443) 913,731

3-5 years 13,235,566 (17,191,671) (3,956,105)

> 5 years 82,509,610 (59,638,057) 22,871,553

Total 106,995,350 (87,166,171) 19,829,179



< 1 year 1,529,448 - 1,529,448

1-3 years 5,286,416 (4,484,940) 801,476

3-5 years 12,604,067 (13,841,109) (1,237,042)

> 5 years 48,798,943 (39,155,671) 9,643,272

Total 68,218,874 (57,481,720) 10,737,154

As at June 30, 2014, had the prevailing interest rates increased or decreased by 1% (December 31, 2013 and January 1, 2013 - 1%), with all other variables held constant, net

assets attributable to holders of redeemable units of the Fund would have indirectly decreased or increased, respectively, by approximately $1,553,675 (December 31, 2013 -

$504,942 and January 1, 2013 - $418,838). In practice, the actual results may differ from this analysis and the difference may be material.

Fair Value Hierarchy The tables below summarize the inputs used by the Fund in valuing the Fund’s investments and derivatives carried at fair value.

as at June 30, 2014

Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Bonds - 153,741,350 - 153,741,350

Foreign currency forward contracts - 624,142 - 624,142

Total Financial Assets - 154,365,492 - 154,365,492

Bonds - (133,232,932) - (133,232,932)

Credit default swaps - (276,322) - (276,322)

Foreign currency forward contracts - (228,943) - (228,943)

Total Financial Liabilities - (133,738,197) - (133,738,197)

Total Investments - 20,627,295 - 20,627,295



Bonds - 106,995,350 - 106,995,350

Foreign forward currency contracts - 78,608 - 78,608


Bonds - (87,166,171) - (87,166,171)

Foreign forward currency contracts - (75,713) - (75,713)

Credit default swap - (150,539) - (150,539)



There were no transfers between Level 1, 2 and 3 during the period ended June 30, 2014 and the year ended December 31, 2013.



Fair Value Hierarchy (cont’d)



Bonds - 68,218,874 - 68,218,874

Foreign forward currency contracts - 1,960 - 1,960


Bonds - (57,481,720) - (57,481,720)

Foreign forward currency contracts - (39,497) - (39,497)

Credit default swap - (11,004) - (11,004)



Fund Specific Notes to the Financial Statements (unaudited) (cont’d)



Marret Investment Grade Hedged Strategies FundSchedule of Investment Portfolio as at June 30, 2014 (unaudited)

CANADIAN BONDS

Canadian Convertible Bonds (91.22%)

920,000 407 International Inc., Callable, 4.190%, 2042/04/25 893,742 929,583



950,000 Aimia Inc., Callable, 6.950%, 2017/01/26 1,045,818 1,054,001

3,910,000 Aimia Inc., Callable, 5.600%, 2019/05/17 4,132,807 4,337,602

1,140,000 Algonquin Power Co., Callable, 4.650%, 2022/02/15 1,138,450 1,213,180

590,000 Alimentation Couche-Tard Inc., Callable, 4.214%, 2020/08/21 619,937 621,699

510,000 Alimentation Couche-Tard Inc., Series ‘3’, 3.899%, 2022/11/01 495,250 516,937

2,300,000 Brookfield Asset Management Inc., Callable, 4.820%, 2026/01/28 2,298,965 2,395,854

1,170,000 Canadian National Railway Co., Callable, 2.750%, 2021/02/18 1,162,325 1,185,787

490,000 Capital Power L.P., Callable, 4.600%, 2015/12/01 506,609 508,671

1,890,000 Central 1 Credit Union, Variable Rate, Callable, 2.890%, 2024/04/25 1,889,735 1,907,545

1,490,000 Choice Properties L.P., Series ‘10’, Restricted, Callable, 3.600%, 2022/09/20 1,464,491 1,486,436

1,040,000 Choice Properties REIT, 3.498%, 2021/02/08 1,040,000 1,058,783

1,800,000 Choice Properties REIT, 4.293%, 2024/02/08 1,802,347 1,861,070

1,810,000 Choice Properties REIT, Callable, 3.554%, 2018/07/05 1,814,311 1,886,687

350,000 Cogeco Cable Inc., Callable, 4.175%, 2023/05/26 333,324 360,376

2,010,000 Cominar REIT, Series ‘4’, Callable, 4.941%, 2020/07/27 2,031,648 2,100,732

5,040,000 Co-operators Financial Services Ltd., Callable, 5.778%, 2020/03/10 5,502,510 5,659,013

140,000 Corus Entertainment Inc., Callable, 4.250%, 2020/02/11 138,058 138,951

930,000 Dollarama Inc., Callable, 3.095%, 2018/11/05 929,834 949,759

610,000 Dream Office REIT, Series ‘A’, Callable, 3.424%, 2018/06/13 609,622 617,689

3,440,000 Dream Office REIT, Series ‘C’, 4.074%, 2020/01/21 3,440,722 3,512,473

2,280,000 EnerCare Solutions Inc., Callable, 4.600%, 2020/02/03 2,316,936 2,426,167

460,000 Fairfax Financial Holdings Ltd., Callable, 5.840%, 2022/10/14 476,923 505,910

2,730,000 First National Financial Corp., Callable, 5.070%, 2015/05/07 2,810,682 2,791,442

870,000 Ford Credit Canada Ltd., Callable, 7.500%, 2015/08/18 950,351 921,792

1,380,000 Ford Credit Canada Ltd., Callable, 3.320%, 2017/12/19 1,397,142 1,425,048

1,190,000 Goldcorp Inc., Callable, 3.625%, 2021/06/09 (USD) 1,299,468 1,286,864

1,790,000 Granite REIT Holdings L.P., Callable, 3.788%, 2021/07/05 1,790,000 1,805,394

2,140,000 Lower Mattagami Energy L.P., Series ‘2014-1’, Restricted, Callable, 3.416%, 2024/06/20 2,140,000 2,166,243

2,130,000 Manitoba Telecom Services Inc., Callable, 4.000%, 2024/05/27 2,128,594 2,156,348

1,750,000 Manufacturers Life Insurance Co. (The), Variable Rate, Callable, 2.811%, 2019/02/21 1,750,000 1,775,263

1,590,000 MCAP Commercial L.P., Callable, 3.955%, 2019/03/11 1,590,000 1,608,327

900,000 Pembina Pipeline Corp., Callable, 4.750%, 2043/04/30 880,737 928,095

1,440,000 Penske Truck Leasing Canada Inc., Callable, 3.650%, 2018/02/01 1,461,920 1,491,451

1,160,000 Shaw Communications Inc., Callable, 4.350%, 2024/01/31 1,159,722 1,210,831

130,000 Sherritt International Corp., Series ‘2’, Callable, 7.500%, 2020/09/24 130,020 132,110

930,000 TELUS Corp., 3.600%, 2021/01/26 927,390 967,485

3,450,000 TELUS Corp., Callable, 5.150%, 2043/11/26 3,447,091 3,735,171

2,000,000 Tim Hortons Inc., Callable, 4.520%, 2023/12/01 1,998,478 2,114,617

570,000 TransAlta Corp., 5.000%, 2020/11/25 567,358 603,948

550,000 Viterra Inc., Callable, 5.950%, 2020/08/01 (USD) 612,360 658,758

4,020,000 Wells Fargo Financial Canada Corp., 3.040%, 2021/01/29 4,018,231 4,083,249

1,590,000 Yamana Gold Inc., Callable, 4.950%, 2024/07/15 (USD) 1,700,626 1,712,000

69,959,715 72,013,667

Canadian Provincial & Guaranteed (2.79%)

660,000 OPB Finance Trust, Series ‘A’, Callable, 3.890%, 2042/07/04 631,971 640,810

1,580,000 OPB Finance Trust, Series ‘C’, Restricted, 2.900%, 2023/05/24 1,552,190 1,560,361

2,184,161 2,201,171

No. of Shares/ Average Fair

Par Value Description Cost ($) Value ($)

Percentages shown in brackets relate investments at fair value to net assets attributable to holders of redeemable units of the Fund.




CANADIAN BONDS (cont’d)

Canadian Municipal Bonds (1.39%)

1,020,000 Greater Toronto Airports Authority, Callable, 4.530%, 2041/12/02 1,041,135 1,095,097

1,041,135 1,095,097

Canadian Mortgage-Backed Bonds (1.35%)

990,000 Institutional Mortgage Securities Canada Inc., Class ‘D’, Series ‘2011-1’, Callable,

5.276%, 2021/02/12 1,027,679 1,066,685

1,027,679 1,066,685

CANADIAN BONDS - SHORT POSITIONS

Government of Canada & Guaranteed (-91.75%)

(2,529,000) Government of Canada, 2.500%, 2015/06/01 (2,589,650) (2,563,700)

(436,000) Government of Canada, 3.000%, 2015/12/01 (453,972) (448,026)














(3,379,000) Government of Canada, Series ‘B865’, 1.750%, 2019/03/01 (3,388,436) (3,412,585)

(71,666,982) (72,431,501)

Total Canadian Bonds (5.00%) 2,545,708 3,945,119

UNITED STATES BONDS - LONG POSITIONS

U.S. Corporate Bonds (36.42%)

1,240,000 American Tower Corp., 5.000%, 2024/02/15 (USD) 1,288,227 1,440,611

5,000 Anheuser-Busch InBev Finance Inc., Series ‘Maple’, Callable, 3.375%, 2023/01/25 4,919 5,093

1,190,000 Assured Guaranty US Holdings Inc., 5.000%, 2024/07/01 (USD) 1,288,741 1,265,337

1,780,000 AT&T Inc., Callable, 2.400%, 2024/03/15 (EUR) 2,651,966 2,657,128

570,000 Bank of America Corp., 5.000%, 2044/01/21 (USD) 621,437 648,171

2,670,000 Citigroup Inc., 2.550%, 2019/04/08 (USD) 2,940,742 2,875,994



1,920,000 Glencore Funding LLC, 3.125%, 2019/04/29 (USD) 2,111,239 2,092,736

590,000 HSBC USA Inc., 3.500%, 2024/06/23 (USD) 637,541 632,994

590,000 Johnson Controls Inc., Callable, 3.625%, 2024/07/02 (USD) 640,820 633,951

1,190,000 Johnson Controls Inc., Callable, 4.625%, 2044/07/02 (USD) 1,285,647 1,276,554

1,720,000 Morgan Stanley, 2.500%, 2019/01/24 (USD) 1,880,239 1,858,831

815,000 NBC Universal Media LLC, Callable, 5.950%, 2041/04/01 (USD) 1,038,181 1,072,187

510,000 NiSource Finance Corp., Callable, 5.650%%, 2045/02/01 (USD) 524,894 615,386

2,070,000 Prudential Financial Inc., 3.500%, 2024/05/15 (USD) 2,243,529 2,207,853

1,390,000 Verizon Communications Inc., 4.500%, 2020/09/15 (USD) 1,452,650 1,634,574

590,000 Verizon Communications Inc., Callable, 5.050%, 2034/03/15 (USD) 653,524 674,387

895,000 Wells Fargo & Co., 2.250%, 2020/09/03 (EUR) 1,405,690 1,375,732

1,430,000 Wells Fargo & Co., 4.100%, 2026/06/03 (USD) 1,552,381 1,549,532

590,000 Williams Cos. Inc. (The), Callable, 5.750%, 2044/06/24 (USD) 633,752 637,578

28,287,612 28,756,004





Schedule of Investment Portfolio as at June 30, 2014 (unaudited) (cont’d)





UNITED STATES BONDS - SHORT POSITIONS

U.S. Federal Bonds & Guaranteed - Short (-40.92%)

(10,463,000) United States Treasury Bond, 1.500%, 2019/05/31 (USD) (11,345,724) (11,114,888)




U.S. Federal Bonds & Guaranteed - Short (-40.92%) (32,548,970) (32,304,978)

U.S. Corporate Bonds (-4.08%)

(2,970,000) Morgan Stanley, Series ‘1654’, 4.100%, 2023/05/22 (USD) (3,247,697) (3,222,432)

(3,247,697) (3,222,432)

Total U.S. Bonds (-8.58%) (7,509,055) (6,771,406)

INTERNATIONAL BONDS - LONG POSITIONS

International Bonds (61.57%)

1,140,000 Abbey National Treasury Services PLC, 2.000%, 2019/01/14 (EUR) 1,662,778 1,721,631

1,600,000 Banco Santander SA, Variable Rate, Perpetual, Callable, 6.375%, 2049/05/29 (USD) 1,741,119 1,720,972

2,580,000 BNP Paribas SA, 2.250%, 2021/01/13 (EUR) 3,757,472 3,890,950

1,190,000 BPCE SA, Variable Rate, 2.750%, 2026/07/08 (EUR) 1,726,588 1,722,942

590,000 Caixa Economica Federal, 4.250%, 2019/05/13 (USD) 640,601 637,443

1,770,000 Crédit Agricole SA, 3.875%, 2024/04/15 (USD) 1,926,339 1,919,460

1,180,000 EDP Finance BV, 2.625%, 2019/04/15 (EUR) 1,766,099 1,743,704

5,000 Federal Republic of Germany, Series ‘161’, 1.250%, 2016/10/14 (EUR) 7,531 7,495

1,150,000 FGA Capital Ireland PLC, 2.875%, 2018/01/26 (EUR) 1,715,842 1,739,183

2,970,000 Glencore Finance (Europe) SA, Perpetual, Callable, 7.500%, 2049/10/06 (USD) 3,504,090 3,412,386

1,490,000 Grupo Bimbo SAB de CV, 3.875%, 2024/06/27 (USD) 1,590,879 1,591,552

1,490,000 Grupo Bimbo SAB de CV, 4.875%, 2044/06/27 (USD) 1,568,755 1,566,496

1,130,000 Heathrow Funding Ltd., 4.625%, 2046/10/31 (GBP) 1,904,238 2,051,855

910,000 Heidelberg Cement Finance Luxembourg SA, 3.250%, 2020/10/21 (EUR) 1,270,261 1,399,816

1,320,000 Intesa Sanpaolo SPA, 5.017%, 2024/06/26 (USD) 1,421,112 1,428,666

1,150,000 Intesa Sanpaolo SPA, 5.250%, 2024/01/12 (USD) 1,275,143 1,345,135

3,130,000 Korea Gas Corp., Callable, Restricted, 4.580%, 2016/05/12 3,280,641 3,271,758

2,910,000 Lloyds TSB Bank PLC, 5.280%, 2016/04/19 3,101,119 3,085,328

1,860,000 Raiffeisen Bank International AG, 6.000%, 2023/10/16 (EUR) 2,657,649 2,975,757

590,000 Raiffeisen Bank International AG, Variable Rate, Callable, 4.500%, 2025/02/21 (EUR) 884,975 876,362

1,190,000 Royal Bank of Scotland Group PLC, 1.625%, 2019/06/25 (EUR) 1,753,878 1,742,482

1,190,000 Societe Generale SA, Variable Rate, Perpetual, 6.000%, 2049/10/27 (USD) 1,281,154 1,252,976

990,000 SUAM Finance BV, 4.875%, 2024/04/17 (USD) 1,080,374 1,080,705

830,000 Telecom Italia SPA, 4.875%, 2020/09/25 (EUR) 1,148,672 1,320,514

590,000 Telefonica Emisiones SAU, 2.242%, 2022/05/27 (EUR) 880,328 871,414

2,710,000 UniCredit SPA, 3.250%, 2021/01/14 (EUR) 3,939,591 4,231,744

47,487,228 48,608,726

INTERNATIONAL BONDS - SHORT POSITIONS

International Bonds - Short (-32.01%)

(1,121,000) Bundesobligation, Series ‘168’, 1.000%, 2019/02/22 (EUR) (1,720,097) (1,687,950)

(1,457,000) Bundesrepublik Deutschland, 2.250%, 2020/09/04 (EUR) (2,302,413) (2,346,424)


(606,000) Bundesrepublik Deutschland, 2.000%, 2022/01/04 (EUR) (971,712) (961,395)


(493,000) Bundesrepublik Deutschland, Series ‘09’, 3.250%, 2020/01/04 (EUR) (844,044) (830,630)

(1,014,000) Federal Republic of Germany, 3.750%, 2019/01/04 (EUR) (1,689,076) (1,712,650)








Schedule A

Foreign Currency Forward Contracts (0.5%)

Credit Rating for Settlement Currency Currency Forward Current Unrealized

Counterparty Counterparty‡ Date Buys Par Value Sells Par Value Rate Rate Gain (Loss) ($)

Royal Bank of Canada A-1+ 2014-07-08 EUR 350,000 CAD 516,129 1.475 1.459 (5,626)

Royal Bank of Canada A-1+ 2014-07-08 CAD 5,500,525 EUR 3,703,000 0.673 0.686 99,396

Royal Bank of Canada A-1+ 2014-07-08 CAD 165,034 GBP 90,000 0.545 0.549 1,106

Royal Bank of Canada A-1+ 2014-07-08 CAD 36,857 GBP 20,000 0.543 0.549 429



Bank of New York Mellon (The), New York A-1+ 2014-07-08 USD 3,977,919 CAD 4,354,628 1.095 1.068 (107,217)

Bank of New York Mellon (The), New York A-1+ 2014-07-08 USD 200,728 CAD 219,737 1.095 1.068 (5,410)

Bank of New York Mellon (The), New York A-1+ 2014-07-08 USD 102,267 CAD 111,952 1.095 1.068 (2,756)

Royal Bank of Canada A-1+ 2014-07-08 USD 6,000,000 CAD 6,514,416 1.086 1.068 (107,934)

Bank of New York Mellon (The), New York A-1+ 2014-07-08 CAD 15,878,641 USD 14,505,016 0.913 0.937 390,953

Bank of New York Mellon (The), New York A-1+ 2014-07-08 CAD 600,000 USD 551,775 0.920 0.937 10,844

Royal Bank of Canada A-1+ 2014-07-08 CAD 4,286,147 USD 3,911,000 0.912 0.937 110,188

Royal Bank of Canada A-1+ 2014-07-08 CAD 600,000 USD 551,983 0.920 0.937 10,622

Total Foreign Currency Forward Contracts Value 395,199

Schedule B

Credit Default Swap Contracts (-0.35%)

Underlying Security

Credit Rating‡ National Amount Expiry Date Fair Value ($)

Pay 1.00% quarterly times the notional amount

Receive a payment only upon a default event

of Markit CDX NA IG S22 Index A-1 13,125,000 2019-06-20 (276,322)

Total Credit Default Swap Contracts Value (276,322)

‡ Credit ratings are obtained from Standard & Poor’s, where available, otherwise ratings are obtained from: Moody’s Investors Service or Dominion Bond Rating Services.






INTERNATIONAL BONDS - SHORT POSITIONS (cont’d)

International Bonds - Short (-32.01%) (cont’d)

(1,190,000) Federal Republic of Germany, Series ‘169’, 0.500%, 2019/04/12 (EUR) (1,770,688) (1,748,020)

(894,000) United Kingdom Gilt, 4.250%, 2046/12/07 (GBP) (1,747,038) (1,898,973)

(24,610,686) (25,274,021)

Total International Bonds (29.56%) 22,876,542 23,334,705

Total Bonds (25.98%) 17,913,195 20,508,418

Investments, Long Positions 149,987,530 153,741,350

Investments, Short Positions (132,074,335) (133,232,932)

Total Investments (25.98%) 17,913,195 20,508,418

Margin (0.48%) 378,108

Unrealized gain on forward foreign currency contracts (0.79%) (see Schedule A) 624,142

Unrealized loss on forward foreign currency contracts (-0.29%) (see Schedule A) (228,943)

Unrealized loss on credit default swaps (-0.35%) (see Schedule B) (276,322)

Other Assets, Less Liabilities (73.39%) 57,941,713

Net Assets Attributable to Holders of Redeemable Units (100.00%) 78,947,116


Notes to the Financial Statements (unaudited)

1. FUND ACTIVITIESThe Marret Investment Grade Hedged Strategies Fund, formerly Kinsale Investment Grade Long/Short Fund (the Fund) is an investment trust established

under the laws of the Province of Ontario and is governed by a fund declaration dated July 27, 2010, as amended December 31, 2011 and April 11,

2013. Effective December 1, 2012, Kinsale Private Wealth Inc. (which was formerly the manager of the Fund) amalgamated with its parent company

Marret Asset Management Inc. (Marret) with Marret being the continuing entity. As a result of the amalgamation, Marret (the Manager) is the Fund

manager and the trustee of the Fund. The Fund is organized as an open-ended unincorporated trust and is authorized to issue an unlimited number of

units of multiple series. The Fund commenced operations on October 1, 2010. There was no activity between date of inception and commencement of

operations.

In December 2013, CI Financial Corp. completed its acquisition of 65% of the issued and outstanding common shares of the Manager. The effective

closing date of this transaction was November 29, 2013. CI Financial Corp. is a diversified wealth management company publically traded on the

Toronto Stock Exchange (the “TSX”) under the symbol CIX.

The address of the Fund’s registered office is 200 King Street West, M5H 3T4 Toronto, Ontario. These financial statements are authorized for issue by

the Manager on August 21, 2014.

The investment objective of the Fund is to seek yield and capital appreciation for holders of units (Unitholders) by predominantly investing long and

short in a broad range of public and private corporate debt securities. The Fund will invest predominantly in investment grade corporate debt, with an

average credit rating of BBB- and above. From time to time, the Fund may invest in corporate debt rated below BBB-.

The Fund may issue Class A units (to any investors who meet the minimum investment criteria), Class F units (available to investors who participate in

fee-based programs through their registered dealer) and Class I units (generally available to institutional clients of the Manager). Each class of units

are available in Canadian dollars and U.S. dollars.

The functional currency of the Fund is the Canadian dollar, however for U.S. dollar Classes of the Fund, subscriptions, redemptions and distributions are

processed in U.S. dollars. Hedging activities take place at two levels. Initially the Fund is hedged as though all investors invested in Canadian dollars

with the resulting hedges for specific non-Canadian dollar denominated securities attributing to all Classes of the Fund. The second level of hedging

consists of Class specific hedges that attribute only to a particular U.S. dollar Class of the Fund. The second level of hedging hedges 100% of the value

of the particular U.S. dollar Class (in Canadian dollars) back to U.S. dollars. Both the Fund level and U.S. dollar Class specific hedges are monitored

regularly and adjusted when necessary.

Until February 28, 2013, the Fund also acted as a vehicle to allow the Kinsale Investment Grade Strategies Fund to meet its investment objectives.

Contributions to the Kinsale Investment Grade Strategies Fund were used to prepay obligations under a forward purchase and sale agreement with The

Bank of Nova Scotia (the Counterparty). Such contributions were invested by the Counterparty into the Fund. The cash received by the Fund from the

Counterparty was used to purchase investments. Effective February 28, 2013, The Bank of Nova Scotia redeemed all of its holdings in connection with

the wind-up of the Kinsale Investment Grade Strategies Fund.

2. BASIS OF PRESENTATION AND ADOPTION OF IFRSThese financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”) applicable to the preparation

of interim financial statements, including IAS 34, Interim Financial Reporting and IFRS 1, First-time Adoption of International Financial Reporting

Standards. The Fund adopted this basis of accounting on January 1, 2014 as required by Canadian securities legislation and the Canadian Accounting

Standards Board. Previously, the Fund prepared its financial statements in accordance with Canadian generally accepted accounting principles as

defined in the Part V of the CICA Canada Handbook - Accounting (“Canadian GAAP”). The comparative information has been restated from Canadian

GAAP to IFRS. The Fund has applied accounting policies consistent with IFRS used in the preparation of its statement of financial position at January 1,

2013 and throughout all periods presented and as if these policies had always been in effect. Note 9 discloses the impact of the transition to IFRS on the

Fund’s reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting policies

from those used in the Fund’s financial statements for the year ended December 31, 2013 prepared under Canadian GAAP.


Notes to the Financial Statements (unaudited) (cont’d)

The policies applied in these interim financial statements are based on IFRS requirements applicable as of August 21, 2014. Any subsequent changes to

IFRS that are given effect in the Fund’s annual financial statements for the year ending December 31, 2014 could result in restatement of these interim

financial statements, including the transition adjustments recognized on transition to IFRS.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES These financial statements have been prepared in accordance with IFRS.

The following is a summary of the significant accounting policies of the Fund:

(a) Financial instruments

The Fund recognizes financial instruments at fair value upon initial recognition, inclusive of 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 or loss (“FVTPL”). The Fund’s obligations for net assets attributable to holders of redeemable

units are presented at the redemption amount. 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 stated rates of interest.

There were no differences between the net asset value (“NAV”) used for transactions with unitholders and the net assets attributable to holders of

redeemable units used for reporting purposes under IFRS.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Fund has a legal

right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. In the normal course

of business, the Fund enters into various master netting agreements or similar agreements that do not meet the criteria for offsetting in the statement

of financial position but still allow for the related amounts to be offset in certain circumstances, such as bankruptcy or termination of the contracts.

(b) Valuation of investments

At the financial reporting date, listed securities are valued based on the last traded market price for financial assets and financial liabilities where

the last traded price falls within the day’s 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 existing marked conditions. Unlisted securities

are valued based on price quotations from recognized investment dealers, or failing that, their fair value is determined by the Manager on the basis of

the latest reported information available. Fixed income securities, debentures and other debt instruments including short-term investments, are valued

at the quotation from recognized investment dealers. Underlying Funds are valued on each business day at their net asset value as reported by the

Underlying Fund’s manager.

(c) Financial assets and liabilities at fair value

The Fund classifies its investments in equity, fixed income securities, and derivatives as financial assets or financial liabilities at fair value through

profit or loss.

This category has two sub-categories: financial assets or financial liabilities held for trading; and those designated at fair value through profit or loss

at inception.

Financial assets or financial liabilities held for trading

A financial asset or financial liability is classified as held for trading (“HFT”) if it is acquired or incurred principally for the purpose of selling or

repurchasing in the near term or if on initial recognition is part of a portfolio of identifiable financial investments that are managed together and

for which there is evidence of a recent actual pattern of short-term profit taking. The Fund’s derivative instruments are categorized as HFT.

Financial assets or financial liabilities designated at fair value through profit or loss at inception

Financial assets and financial liabilities designated at fair value through profit or loss at inception are financial instruments that are not classified

as HFT but are managed, and their performance is evaluated on a fair value basis in accordance with the Fund’s documented investment strategy.

The Fund’s financial instruments excluding derivative instruments are designated as FVTPL.


(d) Commissions and other portfolio transaction Costs

Transaction costs, such as brokerage commissions, incurred in the purchase and sale of securities, are included in “Commissions and other portfolio

transaction costs” in the Statements of Comprehensive Income.

(e) Investment transactions and income recognition

Investment transactions are recorded on the trade date – the date on which the Fund commits to purchase or sell the investment.

The interest for distribution purposes shown on the Statements of Comprehensive Income represents the coupon interest received by the Fund and is

accounted for on an accrual basis. The Fund does not amortize premiums paid or discounts received on the purchase of fixed income securities except

for zero coupon bonds which are amortized on a straight line basis.

Dividends and distributions from investments are recognized on the ex-dividend/ex-distribution date.

Distributions received from income trust holdings are recorded as income, capital gains or a return of capital, based on the best information available

to the Manager. Due to the nature of these investments, actual allocations could vary from this information. Distributions from income trusts that are

treated as a return of capital for income tax purposes reduce the average cost of the underlying income trust.

(f) Foreign exchange

The Fund subscriptions and redemptions are denominated in Canadian dollars, which is also the Fund’s functional and presentation currency. Foreign

currency amounts are translated into the functional currency as follows: fair value of investments, foreign currency forward contracts and other assets

and liabilities at the closing rate of exchange on each business day; income and expenses, purchases and sales and settlements of investments at the

rate of exchange prevailing on the respective dates of such transactions. Foreign exchange gains (losses) relating to cash are presented as “Foreign

exchange gain (loss)” and those relating to other financial assets and liabilities are presented within “Net realized gain (loss) on sale of investments

and derivatives” and “Change in unrealized appreciation (depreciation) in value of investments and derivatives” in the Statements of Comprehensive

Income.

(g) Foreign currency forward contracts

The Fund may, from time to time, enter into forward contracts. Forward foreign currency contracts are valued on each valuation day based on the

difference between the value of the contract on the date the contract originated and the value of the contract on the valuation day.

All unrealized gains (losses) arising from forward foreign currency contracts are recorded as part of “Change in unrealized appreciation (depreciation)

in value of investments and derivatives” in the Statements of Comprehensive Income and “Derivative assets/liabilities” in the Statements of Financial

Position until the contracts are closed out or expire, at which time the gains (losses) are realized and reported as “Net realized gain (loss) on investments

and derivatives” in the Statements of Comprehensive Income.

(h) Credit default swaps

Credit default swaps are agreements to mitigate credit risk exposure to certain issuing entities (Referenced Entity) held by the Fund or to increase

credit risk exposure to the Referenced Entity by creating a notional investment position for the Fund. Where a notional investment position is created,

the credit risk exposure of the Fund is comparable to the exposure that would have resulted if the Fund had invested directly in the Referenced Entity.

Under a credit default swap agreement, the protection buyer, whose intention is to reduce its credit risk exposure to the Referenced Entity, pays a

premium to the protection seller, who assumes the credit risk of a default of the bond of a Referenced Entity. This premium is paid at regular intervals

over the term of the credit default swap agreement. In return for the premium paid, the protection buyer is entitled to receive from the protection seller

full payment for a loss arising from a credit default event of the Referenced Entity. A credit default event may be triggered by bankruptcy, failure to pay

or restructuring of the Referenced Entity. If a credit default event occurs, the credit default swap may be settled by either the physical delivery of the

bond for proceeds equal to par value, or a cash payment equal to the loss amount. Credit default swaps are valued based on dealer-supplied valuations.

Changes in value of credit default swap agreements are recorded as unrealized appreciation (depreciation). Premiums paid or received from credit

default swap agreements are included in investment income. When credit default swap agreements expire or are closed out, gains or losses are

included in net realized gain or loss on sale of credit default swap agreements.



(i) Cash

Cash is comprised of cash on deposit.

(j) Unit valuation

Net asset value per unit is calculated at the close of business on every valuation date as the net asset value attributable to each series of units divided

by its outstanding units. A valuation date is the last business day of each month or such other business day or days as the Manager may determine.

(k) 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 in the Statements of Comprehensive Income represents the

increase (decrease) in net assets attributable to holders of redeemable units of each series, divided by its weighted average number of outstanding

units of the relevant series during the period.

(l) Allocation of income and expenses

With the exception of management fees and forward currency contracts, expenses, and gains and losses are allocated to each series on a pro rata basis

based on the net asset value attributable to each series of units.

(m) Issuance costs

Issue costs associated with the offering have been recorded as a reduction to unitholders’ equity during the period in which they were incurred. The

amount represents a one-time charge in connection with the offering and was paid out of the gross proceeds of the offering.

4. LEVERAGEThe Fund expects to use leverage in its investment program when deemed appropriate by the Manager. Net exposure of the Fund will not exceed 300%

on a daily marked-to-market basis, with net exposure calculated as the absolute value of long positions, excluding cash and cash equivalents, minus

the absolute value of short positions, divided by the net assets of the Fund.

5. REDEEMABLE UNITSUnits issued and outstanding represent the capital of the Fund.

The Manager is responsible for managing the Fund’s Portfolio in line with its mandate and the affairs of the Fund, including the receipt of revenues and

the payment of distributions to Unitholders. In accordance with its investment strategies and risk management policies, the Fund endeavours to invest

its subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Capital movements are shown on the

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

The Fund is organized as an open-ended unincorporated trust and is authorized to issue an unlimited number of units of multiple series, each of which

represents a pro rata interest in the Fund. All units have equal rights and privileges. Each whole unit of a series is entitled to one vote at all meetings

of Unitholders and is entitled to participate equally with respect to any and all distributions made by the Fund to that series and distributions on the

termination of the Fund to that series.

Subscriptions

Additional units may be purchased at the beginning of each month. Subscriptions are recorded by series. A series is an individual subscription that has

a net asset value depending on the subscription period. Subscriptions (other than the first subscription to a new class of shares which are made at $10

in the currency of the class) made in a particular month are made at a price equal to the net asset value per unit of the Class as at the last business

day of the prior month.

Series consolidation

Series within each class that have a net asset value per unit at the end of the fiscal period higher than the previous high watermark are consolidated

on the first day following the fiscal period. This combined series (Lead Series) has one ending net asset value per unit and Unitholders in the series are

allocated units of the new series effective January 1 in proportion to their ending net asset value per unit. Series that do not have a net asset value

per unit at the end of the fiscal period higher than the high watermark are not normally consolidated.



Redemptions

Each Unitholder will be entitled, at any valuation date, to require the Fund to redeem all or any part of the units registered in the Unitholder’s name

on the register. The Unitholder will deliver a written request to the Manager, no later than 12:00 p.m. (Toronto time), five business days prior to the

valuation date on which the redemption is to be effected or otherwise as permitted by the Manager, requiring the Manager to pay to it from the property

of the Fund the series net asset value for each such unit to be redeemed on the related valuation date. If the redemption request is received by the

Manager at a time that is later than 12:00 p.m. (Toronto time) five business days prior to a valuation date, the redemption will not, unless the Manager

decides otherwise, at its sole discretion, be effected as of such valuation date but instead will be processed on the valuation date next following that

valuation date. The Manager will have the right to redeem on request of the Unitholder sufficient units to satisfy any professional service fee owed by

such Unitholder. Unitholders will receive payment in respect of any units surrendered for redemption within 30 business days from the valuation date.

For the periods ended June 30, net capital transactions of the Fund consisted of the following:

2014

Class F Class F Class F Class F Class F Class F Class F Class F

CAD 0111 CAD 0211 CAD 0311 CAD 0411 CAD 0611 CAD 0711 CAD 0811 CAD 0911

Redeemable units at the,

beginning of period - - - - - - - -

Redeemable units issued for cash - - - - - - - -

Series consolidation of

redeemable units - - - - - - - -

Redeemable units issued

on reinvested distributions - - - - - - - -

Redeemable units redeemed - - - - - - - -



2014







redeemable units - - - - - - - -








2014


CAD 0712 CAD 0812 CAD 0912 CAD 1012 CAD 1112 CAD 1212 CAD CAD 0413


beginning of period - - - - - - 898,858 215,417

Redeemable units issued for cash - - - - - - 61,749 -


redeemable units - - - - - - 2,489,064 (215,417)



Redeemable units redeemed - - - - - - (74,756) -


beginning of period - - - - - - 3,374,915 -

2014




beginning of period 157,330 1,185,160 646,630 13,929 17,458 145,431 105,791 -

Redeemable units issued for cash - - - - - - - 34,893


redeemable units (157,330) (1,185,160) (646,630) (13,929) (17,458) (145,431) (105,791) -



Redeemable units redeemed - - - - - - - (197)


beginning of period - - - - - - - 34,696

2014


CAD 0314 CAD 0414 CAD 0514 CAD 0614 USD USD 0913 USD 1013 USD 1113


beginning of period - - - - 319,998 34,958 7,458 12,826

Redeemable units issued for cash 76,924 97,300 - 25,649 - - - -


redeemable units - - - - 56,575 (34,958) (7,458) (12,826)





beginning of period 76,924 97,300 - 25,649 376,573 - - -



2014

Class F Class F Class F Class A Class A Class A Class A Class A

USD 1213 USD 0214 USD 0414 CAD CAD 0613 CAD 0713 CAD 0314 CAD 0514


beginning of period 1,472 - - 126,518 3,157 5,006 - -

Redeemable units issued for cash - 9,681 18,999 - - - 33,147 12,747


redeemable units (1,472) - - 8,154 (3,157) (5,006) - -



Redeemable units redeemed - - - (24) - - - -


beginning of period - 9,681 18,999 134,648 - - 33,147 12,747

2014

Class I

CAD


beginning of period 2,500,000

Redeemable units issued for cash -


redeemable units -


on reinvested distributions

Redeemable units redeemed -


beginning of period 2,500,000

2013




beginning of period 2,365,370 55,119 8,666 75,659 30,556 442 160,885 76,213



redeemable units (2,365,370) (55,119) (8,666) (75,659) (30,556) (442) (160,885) (76,213)








2013




beginning of period 61,730 267,019 62,650 117,250 279,316 77,076 61,718 14,842



redeemable units (61,730) (267,019) (62,650) (117,250) (279,316) (77,076) (61,718) (14,842)






2013


CAD 0712 CAD 0812 CAD 0912 CAD 1012 CAD 1112 CAD 1212 CAD CAD 0413


beginning of period 336,447 99,734 103,715 33,173 20,299 11,396 - -

Redeemable units issued for cash - - - - - - 13,106 215,417


redeemable units (336,447) (99,734) (103,715) (33,173) (20,299) (11,396) 4,324,554 -



Redeemable units redeemed - - - - - - (3,436,630) -


beginning of period - - - - - - 901,030 215,417

2013

Class F Class F Class F Class A Class A Class I

CAD 0513 CAD 0613 USD CAD CAD 0613 CAD


beginning of period - - - - - -

Redeemable units issued for cash 157,741 1,186,017 319,998 166,225 3,157 2,500,000


redeemable units - - - - - -


on reinvested distributions - - - - - -

Redeemable units redeemed - - - - - -


beginning of period 157,741 1,186,017 319,998 166,225 3,157 2,500,000



6. FEES AND EXPENSESEach class and series of units of the Fund pays a management fee to the Manager based on a percentage of the net asset value of the class and

series (before performance fees, if any, and plus applicable taxes), calculated on the last business day of each calendar month and payable monthly

in arrears. Until March 1, 2013, there was only one class of units outstanding, and the management fee on that class was 1.5% per annum. The fee

structure was amended in conjunction with the offering of additional classes of units. Since March 1, 2013, Class A CAD and Class A USD series pay

a management fee of 1.5% per annum, Class F CAD and Class F USD series pay a management fee of 1% per annum and Class I CAD and Class I USD

pay management fees outside the Fund.

The Manager will also receive, for each fiscal period of the Fund, a performance fee (the Performance Fee). The Performance Fee is calculated and

paid annually (plus any applicable taxes). The Performance Fee will be calculated on a series-by-series and class-by-class basis. The amount of the

Performance Fee for a given year will be an amount for each unit of the Fund then outstanding equal to 15% of the amount by which the sum of (i) the

net asset value per unit of that series of that class on the last business day of the applicable fiscal year and (ii) the distributions paid on such unit during

the previous 12 months or since the last Performance Fee was paid (or, if no Performance Fee has yet become due with respect to such unit, since the

date of the initial offering), exceeds (iii) the performance threshold.

The performance threshold is calculated as 105% of the prior high net asset value. The prior high net asset value per unit of a series of a class is the

greater of: (i) the highest net asset value per unit of that series of that class on the last business day of a fiscal period (after determination and accrual of

the Performance Fee, if applicable); (ii) the net asset value per unit of that series of that class immediately following its initial offering. The performance

threshold is prorated for partial fiscal periods and performance fees are crystallized on redemption of units if applicable.

All other reasonable expenses in connection with the administration of the Fund are paid by the Fund.

7. INCOME TAXESThe Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) and is not subject to taxes on net income including net

realized taxable gains for the taxation year, which is paid or payable to Unitholders at the end of the taxation year. However, such part of the Fund’s

taxable income and net realized capital gains that is not paid or payable will be taxable to the Fund. Income taxes on net realized capital gains not

paid or payable will generally be recoverable by virtue of refunding provisions contained in the Income Tax Act (Canada) and provincial income tax

legislation, as redemptions occur. It is the intention of the Fund to distribute all net income and sufficient net realized capital gains so that the Fund

will not generally be liable for income taxes thereon. Occasionally, the Trust may distribute more than it earns. This excess distribution is a return of

capital and is not taxable to Unitholders.

8. FINANCIAL INSTRUMENT RISK MANAGEMENTIn the normal course of business, the Fund is exposed to a variety of financial risks: credit risk, liquidity risk and market risk (including other price

risk, currency risk and interest rate risk). The Fund’s overall risk management program focuses on compliance and execution of the Fund’s investment

objectives.

The Manager seeks to minimize potential adverse effects of these risks on the Fund’s performance by employing professional, experienced portfolio

managers, daily monitoring of the Fund’s positions and market events and by diversifying the investment portfolio of the Fund within the constraints of

the investment strategy. To assist in managing risks, the Manager also uses internal guidelines that identify the target exposure for each type of risk,

maintains a governance structure that oversees the Fund’s investment activities and monitors compliance with the Fund’s stated investment strategy

and securities regulations.

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is a geographical allocation, product type,

industry sector or counterparty.



Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with

the Fund. The main concentration of credit risk would be investments in debt securities and derivatives. The Fund maintains all of its cash and cash

equivalents at its custodian, CIBC Mellon. Within the cash and cash equivalents and cash held at broker account balances, the Fund has investments

in bankers’ acceptances or term deposits with financial institutions having a minimum debt rating of A and short-term government of Canada (rating

AAA) notes.

All transactions are made through approved brokers and are settled on delivery using the Fund’s prime brokers TD Securities Inc. (until March 2013),

Scotia Capital Inc. (from March 2013) and JP Morgan (from April 2013), or custodian CIBC Mellon. The risk of default is considered minimal as delivery

of investments sold is made only when the Fund has received payment. Payment is made on purchases once the investments have been received by

the Fund. Should either party not meet its obligation, the trade will fail.

Credit ratings for fixed income securities, preferred securities and derivative instruments are obtained from Standard & Poor’s, where available,

otherwise ratings are obtained from: Moody’s Investors Service or Dominion Bond Rating Services.

Credit ratings can be either long-term or short-term. Short-term credit ratings are generally assigned to those obligations and derivative instruments

considered short-term in nature.

The table below provides a cross-reference between the long-term credit ratings disclosed in the Credit Rating table inclusive of the short-term credit

ratings disclosed in the derivatives schedules in the Schedule of Investment Portfolio.

Credit Rating as per Credit Risk table Credit Rating as per Derivatives Schedules

AAA/Aaa/A++ A-1+

AA/Aa/A+ A-1, A-2, A-3

A B, B-1

BBB/Baa/B++ B-2

BB/Ba/B+ B-3

B C

CCC/Caa/C++ -

CC/Ca/C+ -

C and Lower D

Not Rated WR

Liquidity Risk

The Fund is exposed to liquidity risk through its monthly redemptions. The Fund invests a substantial portion of its assets in investments that are traded

in an active market and can be readily disposed of. There can be no assurance that an adequate market for the investments will exist at all times or

that the prices at which the investments trade accurately reflect their net asset values. Low trading volumes of the investments will make it difficult

to liquidate holdings quickly. All liabilities other than derivatives are due in less than three months.

Market Risk

The Fund’s investments are subject to market risk which is the risk that the fair value of future cash flows of a financial instrument will fluctuate due

to changes in market conditions.

Other Price Risk

Other price risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices (other than those arising from

interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments

traded in a market or market segment.

The value of the investments can fluctuate on a daily basis as a result of factors outside of the Fund’s control, including financial performance

of the issuers of the underlying securities, operational risks relating to the specific business activities of the respective issuers, quality of assets

owned by respective issuers, commodity prices, foreign currency exchange rates, interest rates, environmental risks, political risks, issues relating

to governmental regulation and taxation, composition of the portfolio and other financial market conditions.



Currency Risk

Currency risk is the risk that the value of investments will fluctuate due to changes in foreign currency exchange rates. This risk arises when

financial instruments (including cash and cash equivalents) are denominated in a currency other than Canadian dollars, which represents the Fund’s

functional currency.

Interest Rate Risk

Interest rate risk arises from changes in the prevailing levels of market interest rates, resulting in fluctuations in the value of interest bearing

financial instruments.

Fair Value Hierarchy

The Fund classifies its financial instruments that are carried at fair value using a fair value hierarchy that prioritizes the inputs to valuation techniques

used to measure fair value into three broad levels. Inputs may be based on independent market data (“observable inputs”) or they may be internally

developed (“unobservable inputs”). The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or

liabilities and the lowest priority to unobservable inputs.

The three levels of the hierarchy are as follows:

Level (1) - quoted prices (unadjusted) in active markets for identical assets or liabilities

Level (2) - investments with inputs other than quoted prices that are observable for the asset or liability either directly or indirectly

Level (3) - inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Changes in valuation methods may result in transfers into or out of an investment’s assigned level.

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.

Details of the Fund’s exposure to financial instruments risks including the fair value hierarchy classification are available in the “Fund Specific Notes

to Financial Statements”.

9. TRANSITION TO IFRS The effects of the Fund’s transition to IFRS are as follows:

Transition elections

The only voluntary exemption adopted by the Fund upon transition was the ability to designate a financial asset or financial liability at fair value

through profit and loss. All financial assets designated at FVTPL upon transition were previously carried at fair value under Canadian GAAP as required

by Accounting Guideline 18, Investment Companies.

Classification of redeemable units issued by the Fund

Under Canadian GAAP, the Fund accounted for its redeemable units as equity. Under IFRS, IAS 32, Financial Instruments: Presentation, units of an entity

that include a contractual obligation for the Issuer to repurchase or redeem the units for cash or another financial asset are required to be classified as

financial liability. The Fund units have been reclassified as financial liabilities on transition to IFRS.

Revaluation of investments at FVTPL

Under Canadian GAAP, the Fund measured the fair values of its investments in accordance with Section 3855, Financial Instruments – Recognition and

Measurement, which required the use of bid prices for long positions and ask prices for short positions; to the extent such prices were available. Under

IFRS, the Fund measures the fair values of its investments using the guidance in IFRS 13, Fair Value Measurement, 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.

As a result, upon adoption of IFRS an adjustment was recognized to adjust the carrying amount of the Fund’s investments as well as to adjust the Fund’s

increase (decrease) in net assets attributable to holder of redeemable units.



Reconciliation of equity and comprehensive income as previously reported under Canadian GAAP to IFRS

Equity Reconciliation

December 31, 2013 June 30, 2013 January 1, 2013

(in $) (in $) (in $)

Equity as reported under Canadian GAAP 71,645,854 57,844,267 47,699,455

Revaluation of investments at FVTPL 261,829 144,550 200,258

Net assets attributable to holders of redeemable units 71,907,683 57,988,817 47,899,713

Comprehensive Income Reconciliation

December 31, 2013 June 30, 2013

(in $) (in $)

Comprehensive income as reported under Canadian GAAP 3,800,788 827,730

Revaluation of investments at fair value through profit or loss 61,571 (55,709)

Increase (decrease) in net assets attributable to holders of redeemable units 3,862,359 772,021

Reclassification adjustments

The Fund did not have any reclassified amounts to its financial statements presentation upon transition to IFRS.

10. FILING EXEMPTIONThe Fund is relying on the exemption pursuant to Section 2.11 of National Instrument 81-106 not to file its financial statements with the applicable

provincial securities commission.


MARETT_131_SA_08/14E

200 King Street West, Suite 1902, Toronto, Ontario M5H 3T4 I www.marret.ca

Tel: 416-214-5800Fax: [email protected]

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