CANADIAN INVESTMENT GRADE PREFERRED SHARE FUND

INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE For the financial period ended June 30, 2021 CANADIAN INVESTMENT GRADE PREFERRED SHARE FUND

CAUTION REGARDING FORWARD-LOOKING TABLE OF CONTENTS STATEMENTS Interim management report of fund performance 1 This report may contain forward-looking statements about the Fund, including Financial highlights 2 its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer Summary of investment portfolio 3 to future events or conditions, or that include words such as “expects,” Corporate information Back cover “anticipates,” “intends,” “plans,” “believes,” “estimates,” or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties, and assumptions about the Fund and economic factors. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the abovementioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decisions, and urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance.

2021 INTERIM REPORT CANADIAN INVESTMENT GRADE PREFERRED SHARE FUND

INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE

The management report of fund performance presents the views of the Over the course of the first quarter, the fixed-income and credit markets manager and the portfolio management team concerning significant factors and wrestled with the forces of rising rates, dovish central banks, the reopening developments that have affected the Fund’s performance and outlook. of the global economy, and a reflationary backdrop. The first-quarter 2021 Please read the caution on the inside of the cover page regarding total return loss of -4.50% on US investment-grade corporate index was the forward‑looking statements. second-largest quarterly loss on record after -7.49% in the third quarter of 2008 during the global financial crisis. However, in April, the combination of a rallying INVESTMENT OBJECTIVES AND STRATEGIES US Treasury market and positive momentum on the earnings front provided a good backdrop for credit markets. In the second quarter, companies generally Canadian Investment Grade Preferred Share Fund seeks to: (i) provide holders reported good numbers, credit metrics were generally stable or improved, and of units with monthly cash distributions, and (ii) maximize the total return defaults, for the most part, were low by historical measures. to unitholders over time, by investing in an actively managed portfolio (the Envisioning the world beyond government and central bank stimulus efforts will “Portfolio”) comprised primarily of preferred shares of Canadian issuers. be the story of the second half of this year. Many programs will begin to be taken The Portfolio will be actively managed by the Manager and will seek to capitalize off post Labour Day, and by third quarter, earnings comparisons will be harder on historically attractive yields accessible in the preferred share market when for companies to achieve. compared to Government of Canada bonds of similar duration. Not less than Fund performance has been strong over the reporting period. Nearly all sectors 80% of the total assets will be invested in Canadian preferred securities, with a have contributed to returns, with financials, the fund’s largest allocation, minimum of 80% of the total assets invested in investment grade securities. bringing the majority of returns year to date. Utilities and energy were also The Fund uses the Unit Traded Fund (“UTF”) structure, which has been meaningful contributors, despite their smaller allocations. We’ve decreased our developed to accomplish two goals, namely (a) to enable the Fund to invest weighting in cash and cash equivalents year to date, the performance of which virtually all of the gross proceeds from the offering in the portfolio, and (b) to has been relatively flat this year. Excluding those, everything by region, sector, encourage the Fund’s Class T units to trade in the market at a price not less than and asset class has performed well so far this year. 98.50% of their throughout the life of the Fund. MANDATORY MARKET PURCHASE PROGRAM The Fund will invest primarily in Canadian preferred securities issued by In order to enhance liquidity and provide market support for the Class T units, companies in the sector, as well as energy, industrials, utilities, the Fund has the ability to repurchase Class T units under a mandatory market pipelines, health care and telecommunications sectors and other such sectors purchase program (“MMPP”). Under the MMPP, Class T units are repurchased at deemed appropriate by the Manager. their market price, the Fund has purchased 43,700 units at an average price of Purpose Investments Inc. (“Purpose”), is the manager of the Fund (the “Manager”). $25.23 over the period ended June 30, 2021. LEVERAGE RISK The Fund may employ leverage in an amount up to 25% of total assets for the purpose of: purchasing additional securities for the Portfolio, effecting market The risks of investing in the Fund are disclosed in the Fund’s prospectus and purchases of Class T units, maintaining liquidity and funding redemptions. there have been no significant changes during the period that affected the overall level of risk associated with the Fund. During the period ended June 30, 2021, the minimum and maximum amount borrowed was $nil and $3,749,422 (December 31, 2020 – $201,835 and RESULTS OF OPERATIONS $3,749,422), respectively; the percentage of total assets of the Fund that the borrowing represented at June 30, 2021 was not applicable (December 31, 2020 The Fund offers Class T units listed on the Aequitas NEO Exchange under the – 17.5%); and the terms of the borrowing were based on the Federal Funds rate ticker RIGP.UN and a class. plus a spread. As at June 30, 2021 and December 31, 2020, the interest rate was The net asset value per unit as at: not applicable. There was no related interest expense for the periods ended June 30, 2021 and December 31, 2020. The borrowings were used to purchase June 30, December 31, additional securities in the portfolio. Investments are used as collateral against 2021 2020 Class ($) ($) the borrowed funds. The Fund will bear the risk of loss of any investment of cash collateral. Class T 27.00 21.06

During the period ended June 30, 2021, the Fund paid distributions as follows: RECENT DEVELOPMENTS Class T Units The continued spread of COVID-19 has sustained a high level of uncertainty Month ($) and volatility in the financial markets and has had an enormous impact on January 0.1146 businesses and consumers in all sectors. The continuous rollout of the COVID-19 February 0.1146 vaccines will help in the recovery towards normality. March 0.1146 There were no changes to the Manager of the Fund, nor were there any material April 0.1146 changes to the investment philosophy or process. The Manager actively May 0.1146 monitors the positioning of the Fund’s portfolio for changes in current market June 0.1146 conditions and the economic environment. Total 0.6876

The last 16 months will go down as one of the most volatile but profitable periods in investing history, with markets back to all-time highs, as the economy benefitted from the ongoing vaccine rollout, sizeable fiscal support from governments, and increasing retail sales. In the broader equities market, reflationary trades were favoured in the first two quarters of 2021 as value stocks outperformed growth stocks. However, large cap tech made a comeback as sinking bond yields breathed life back into the growth trade in June.

2021 INTERIM REPORT 1 CANADIAN INVESTMENT GRADE PREFERRED SHARE FUND

RELATED PARTY TRANSACTIONS FINANCIAL HIGHLIGHTS Purpose is deemed to be a related party as Manager of the Fund. Please refer The following tables show selected key financial information about the Fund below to the “Management Fee” section for fees paid to Purpose. Purpose and are intended to help you understand the Fund’s financial performance for has also appointed an Independent Review Committee (“IRC”) as required the years ended December 31, except 2021 which is provided as at June 30: by National Instrument 81-107 Independent Review Committee for Investment NET ASSETS PER UNIT 1 Funds. The mandate of the IRC is to review, and provide input on, the Manager’s 2021 a 2020 2019 2018 2017 2016 b written policies and procedures that deal with conflict of interest matters in Class T ($) ($) ($) ($) ($) ($) respect of the Funds. IRC members receive fees and reimbursement of expenses Net assets, beginning of period 21.06 21.04 23.10 29.44 25.06 25.00 c for services provided to the Fund and other Purpose managed funds and Agency and issue expense – – – (0.17) (0.16) (0.13) such costs are allocated among all the Funds on a fair and reasonable basis. The fees for services rendered to the Funds are reported in the Statements 21.06 21.04 23.10 29.27 24.90 24.87 of Comprehensive Income. There are no other related party transactions for Increase (decrease) from operations: the Fund. Total revenue 0.72 1.36 1.15 1.50 1.59 0.02 INDEPENDENT REVIEW COMMITTEE Total expenses (0.16) (0.22) (0.05) (0.79) (0.84) (0.03) The Manager is required to comply with the policies and procedures presented Realized gains (losses) for the period (0.03) (0.74) (3.00) 0.62 2.70 – to the IRC with respect to various potential conflicts of interest including Unrealized gains (losses) for the period 6.12 0.57 1.76 (5.61) 1.17 0.24 valuation and the allocation of operating expenses and to provide periodic Total increase (decrease) from operations 2 6.65 0.97 (0.14) (4.28) 4.62 0.23 reports to the IRC in accordance with NI 81-107. Distributions: The members of the Independent Review Committee as at June 30, 2021 were From investment income (0.69) (0.69) (1.07) – (0.93) – Douglas G. Hall (Chair), Randall C. Barnes, and Jean M. Fraser. From capital gains – – – (1.49) (2.02) – Return of capital – (0.69) (0.31) – (0.11) (0.05) Total distributions 3 (0.69) (1.38) (1.38) (1.49) (3.07) (0.05) Net assets, end of period 27.00 21.06 21.04 23.10 29.44 25.06 Notes: a) Information presented is for the period January 1, 2021 and June 30, 2021. b) Information presented is for the period December 19, 2016 to December 31, 2016. c) Initial offering price. 1) This information is derived from the Fund’s financial statements prepared in accordance with IFRS. For purposes of unitholder transactions, the Net Asset Value is calculated in accordance with the valuation rules as set out in the Fund’s prospectus. The Fund’s accounting policies for measuring the fair value of investments and derivatives are consistent with those used in measuring the Net Asset Value for transactions with unitholders. 2) Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase (decrease) from operations is based on the weighted-average number of units outstanding over the financial period. 3) Distributions were paid in cash or reinvested in additional units of the Fund.

RATIOS AND SUPPLEMENTAL DATA Class T 2021 2020 2019 2018 2017 2016 Total net asset value ($) (000s) 1 17,762 17,318 25,058 23,656 42,389 18,061 Number of units outstanding (000s) 1 658 822 1,191 1,024 1,440 720 Management expense ratio 2 1.02% 1.24% 1.96% 2.45% 2.40% 1.35% Management expense ratio excluding issue costs and agency fees 2 0.99% 1.09% 1.86% 1.96% 1.85% 1.30% Trading expense ratio 3 0.11% 0.07% 0.26% 0.30% 0.58% 1.28% Portfolio turnover rate 4 0.14% 5.57% 40.30% 58.56% 112.23% 0.00% Closing market price ($) 26.76 19.75 20.95 22.50 28.93 25.57 Notes: 1) The financial information presented in the Ratios and Supplemental Data table is derived from the Fund’s Net Asset Value and is provided as at December 31 of the year shown except 2021 which is shown as at June 30. 2) The management expense ratio (“MER”) is calculated as the total expenses, excluding distributions, commissions and other portfolio transaction costs, for the stated period and is expressed as an annualized percentage of the average daily NAV of the Fund. The Manager, at its sole discretion, may waive management fees or absorb expenses. Such waivers and absorptions can be terminated at any time. 3) The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of the Fund’s daily average NAV. The trading expense ratio is calculated at the portfolio level and applies to all classes of units of the Fund. Without the cost of the leverage and excluding issue costs and agency fees, the MER would be 0.74% (2020 – 1.09%, 2019 – 1.75%, 2018 –1.54%, 2017 – 1.42%, 2016 – 1.35%). 4) The portfolio turnover rate is based on the lesser of purchases or proceeds of sales of securities for the period, excluding cash, short-term notes, and bonds having maturity dates at acquisition of one year or less, divided by the average value of the portfolio securities for the year. The Fund’s portfolio turnover rate indicates how actively the Fund’s investment advisor manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the portfolio turnover rate in a year, the greater the trading costs payable in the year and the greater the chance of taxable capital gains in the year. There is not necessarily a relationship between a high turnover rate and fund performance. The portfolio turnover rate is calculated at the portfolio level and applies to all classes of units of the Fund.

2021 INTERIM REPORT 2 CANADIAN INVESTMENT GRADE PREFERRED SHARE FUND

MANAGEMENT FEES taxes payable by any investor, which would have reduced the returns. The performance of the Fund in the past does not necessarily indicate how it Purpose manages and administers the business, operations and affairs of the will perform in the future. Fund. As compensation for the services it provides to the Fund, Purpose is entitled to receive an annual management fee in an amount equal to 0.70% YEAR-BY-YEAR RETURNS of the NAV of the Class T units and an amount equal to the Contingent Agents The bar charts show the performance of each class of units for the financial Fee, plus applicable taxes. The management fees are calculated daily and period in percentage terms, indicating how much an investment made on paid monthly in arrears. Purpose utilizes 100% of the management fees to pay the first day of the period would have grown or decreased by the last day of investment advisory fees, agency fees, general and administrative expenses and the period. earn revenue. Purpose is also entitled to an amount equal to the Contingent Agents Fee. Class T – NAV Class T The Contingent Agents Fee is the annual deferred compensation paid by Purpose to the Agents equal to 1.32% of the aggregate net asset value of all units 40.0% 31.8% that are purchased and cancelled by the Fund under the mandatory market 30.0% 23.4% purchase program. 20.0% 8.2% The Fund will pay the UTF Service Provider a fee of 0.25% of the Net Asset Value 10.0% 0.6% of the Class T units. The UTF Services Fee is accrued daily and paid quarterly 0. 0% until December 19, 2026. -10.0% -2.7% -20.0% -17.6% PAST PERFORMANCE -30.0% 2016 2017 2018 2019 2020 2021 Please note that the performance information shown in this section assumes that all distributions made by the Fund, if any, in the period shown were Return labelled 2021 is for the period from January 1, 2021 to June 30, 2021. reinvested in additional securities of the Fund. It does not take into account Return labelled 2016 is for the period from December 19, 2016 to December 31, 2016. sales, redemptions, distributions or other optional charges, or income

SUMMARY OF INVESTMENT PORTFOLIO As at June 30, 2021 SECTOR MIX TOP 25 HOLDINGS % of Fund’s % of Fund’s Net Asset Value Net Asset Value Long Positions Toronto-Dominion Bank (The), Preferred, Series '3', Variable Rate, Perpetual 9.1 Financials 80.9 AltaGas Ltd., Preferred, Series 'E', Perpetual 8.4 Utilities 26.1 TC Energy Corp., Preferred, Series '9', Variable Rate, Perpetual 8.3 Energy 19.3 Royal Bank of Canada, Preferred, Series 'AZ', Variable Rate, Perpetual 7.7 Real Estate 1.3 ECN Capital Corp., Preferred, Series 'C', Variable Rate, Perpetual 7.6 Cash and Cash Equivalents (26.0) Fortis Inc., Preferred, Series 'K', Variable Rate, Perpetual 7.1 Net Other Assets (1.6) Brookfield Asset Management Inc., Preferred, Series '38', Perpetual 6.3 Total Net Asset Value 100.0 Toronto-Dominion Bank (The), Preferred, Series '1', Variable Rate, Perpetual 5.7 Brookfield Asset Management Inc., Preferred, Class 'A', Series '40', Perpetual, 5.5 Royal Bank of Canada, Preferred, Series 'BB', Variable Rate, Perpetual 4.9 Financial Corp., Preferred, Class '1', Series '15', Variable Rate, Perpetual 3.4 Pembina Pipeline Corp., Preferred, Series '1', Variable Rate, Perpetual 3.2 ECN Capital Corp., Preferred, Series 'A', Variable Rate, Perpetual 3.1 Brookfield Infrastructure Partners L.P., Preferred, Series '7', Variable Rate, Perpetual 3.1 Brookfield Asset Management Inc., Preferred, Series '24', Variable Rate, Perpetual 3.1 Power Financial Corp., Preferred, Series 'T', Variable Rate, Perpetual 2.8 Brookfield Asset Management Inc., Preferred, Series '34', Perpetual, 2.8 Brookfield Asset Management Inc., Preferred, Series '32', Perpetual 2.7 Toronto-Dominion Bank (The), Preferred, Series '5', Variable Rate, Perpetual 2.6 Capital Power Corp., Preferred, Series '1', Variable Rate, Perpetual, Convertible 2.3 Manulife Financial Corp., Preferred, Class '1', Series '17', Variable Rate, Perpetual 2.2 Enbridge Inc., Preferred, Series 'F', Variable Rate, Perpetual 2.1 Manulife Financial Corp., Preferred, Class '1', Series '13', Variable Rate, Perpetual 1.9 Bank of , Preferred, Series '27', Perpetual 1.8 Brookfield Asset Management Inc., Preferred, Class 'A', Series '26', Variable Rate, Perpetual 1.7 The investment portfolio may change due to ongoing portfolio transactions. An updated listing is available quarterly.

2021 INTERIM REPORT 3 CORPORATE INFORMATION

MANAGER AND Purpose Investments Inc. INDEPENDENT REVIEW COMMITTEE 130 Adelaide Street West Suite 3100, P.O. Box 109 SOM SEIF Toronto, ON M5H 3P5 Chief Executive Officer, Chairman of the Board of Directors and Director AUDITOR Ernst & Young LLP DOUGLAS G. HALL EY Tower Director, Chair of the Independent Review Committee 100 Adelaide Street West, P.O. Box 1 RANDALL C. BARNES Toronto, ON M5H 0B3 Director, Member of the Independent Review Committee CUSTODIAN JEAN M. FRASER NBCN Inc. Director, Member of the Independent Review Committee 130 King Street W. Toronto, ON M5X 1G9

REGISTRAR AND TRANSFER AGENT TSX Trust Company OFFICERS AND DIRECTORS OF PURPOSE INVESTMENTS INC. 100 Adelaide Street West, Suite 301 Toronto, ON M5H 4H1 SOM SEIF UNITHOLDER AND RECORDKEEPING Chief Executive Officer, Chairman of the Board of Directors CIBC Mellon Global Securities Company and Director 1 York Street, Suite 700 VLADIMIR TASEVSKI Toronto, ON M5J 0B6 Chief Operating Officer, Interim Chief Compliance Officer AEQUITAS NEO EXCHANGE LISTING and Director Ticker Symbol JEFF BOUGANIM Class T units – RIGP.UN Chief Financial Officer, Director

Front cover photo by Adrien Olichon on Unsplash.

Purpose Investments Inc. T 416 583-3850 www.purposeinvest.com 130 Adelaide St. W, Suite 3100 TF 877 789-1517 [email protected] P.O. Box 109, Toronto, ON M5H 3P5 F 416 583-3851