2017 Annual Financial Statements

ANNUAL FINANCIAL STATEMENTS

AUDITED ANNUAL FINANCIAL STATEMENTS DECEMBER 2017

EXEMPLAR GROWTH AND INCOME FUND | EXEMPLAR INVESTMENT GRADE FUND | EXEMPLAR LEADERS FUND | EXEMPLAR PERFORMANCE FUND | EXEMPLAR TACTICAL CORPORATE BOND FUND

EXEMPLAR GROWTH AND INCOME FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 ASSETS Current assets Financial assets designated at fair value through profit and loss $21,671,889 $11,531,290 Financial assets held for trading Warrants at fair value - 44,381 Unrealized gain on forward currency contracts 127,920 32,083 Cash and cash equivalents 2,737,271 1,029,568 Margin deposit 85,782 419,457 Accrued dividends receivable 30,993 9,331 Receivable for securities sold 754,923 690,230 Receivable for units issued 65,781 49,760 25,474,559 13,806,100

LIABILITIES Current liabilities Financial liabilities held for trading Investments sold short - 63,855 Unrealized loss on forward currency contracts 13,096 - Payable for securities purchased 474,069 674,127 Accrued dividends payable - 227 Payable for units redeemed 10,812 18,360 Other liabilities (Note10) 33,203 21,043 531,180 777,612

Net assets attributable to holders of redeemable units $24,943,379 $13,028,488

Continued on next page.

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

EXEMPLAR GROWTH AND INCOME FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016

Continued from previous page.

Net assets attributable to holders of redeemable units Series A $10,811,870 $3,849,743 Series AN $1,469,708 $1,757,300 Series F $2,309,251 $918,546 Series FN $8,580,515 $5,196,260 Series I $1,069,039 $927,236 Series L $464,543 $265,948 Series LN $238,453 $113,455

Number of redeemable units outstanding (Note7) Series A 1,017,162 369,276 Series AN 138,077 168,085 Series F 219,985 88,998 Series FN 793,393 489,600 Series I 102,227 90,330 Series L 44,531 26,060 Series LN 22,287 10,852

Net assets attributable to holders of redeemable units per unit Series A $10.63 $10.43 Series AN $10.64 $10.45 Series F $10.50 $10.32 Series FN $10.81 $10.61 Series I $10.46 $10.26 Series L $10.43 $10.21 Series LN $10.70 $10.45

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

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

EXEMPLAR GROWTH AND INCOME FUND

Statements of Comprehensive Income For the years ended December 31, 2017 2016 $ $ (Note 14) INCOME Net gains (losses) on investments and derivatives Interest income 10,014 2,129 Dividend income 403,150 169,070 Dividend expense on short sales (6,005) (6,778) Securities lending income (net) (Note 9) 47,715 693 Net realized gain (loss) on investments and derivatives 2,709,386 901,192 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 295,194 445,281 Net gains (losses) on investments and derivatives 3,459,454 1,511,587

Other income items: Interest on cash 403 3,979 Foreign exchange gain (loss) (190,684) (29,554) Net change in unrealized foreign exchange gain (loss) (15,821) (868) Total income (net) 3,253,352 1,485,144

EXPENSES Securityholder reporting fees 129,952 100,297 Management fees (Note 10) 277,356 158,391 Interest expense 3,190 2,369 Audit fees 20,593 17,943 Legal fees 4,873 6,468 Independent Review Committee fees 5,590 4,600 Custodial fees 1,825 1,121 Security borrowing expenses 231 1,766 Commissions and other portfolio transaction costs (Note 11) 186,393 130,238 Withholding tax expense 11,324 - Harmonized sales tax 26,810 12,882 Total expenses before manager absorption 668,137 436,075 Less: expenses absorbed by manager (Note 10) (107,806) (121,606) Total expenses after manager absorption 560,331 314,469

Increase (decrease) in net assets attributable to holders of redeemable units 2,693,021 1,170,675

Increase (decrease) in net assets attributable to holders of redeemable units (Note 13) Series A 1,005,701 345,830 Series AN 183,423 102,596 Series F 241,790 143,453 Series FN 1,033,965 449,678 Series I 150,026 99,042 Series L 51,732 20,716 Series LN 26,384 9,360

Increase (decrease) in net assets attributable to holders of redeemable units per unit (Note 13) Series A 1.41 0.95 Series AN 1.35 1.09 Series F 1.48 1.09 Series FN 1.59 1.10 Series I 1.62 1.16 Series L 1.45 1.02 Series LN 1.35 1.04

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

EXEMPLAR GROWTH AND INCOME FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 3,849,743 3,822,151 Series AN 1,757,300 388,601 Series F 918,546 1,179,853 Series FN 5,196,260 3,225,373 Series I 927,236 835,903 Series L 265,948 84,886 Series LN 113,455 51,178 13,028,488 9,587,945 Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,005,701 345,830 Series AN 183,423 102,596 Series F 241,790 143,453 Series FN 1,033,965 449,678 Series I 150,026 99,042 Series L 51,732 20,716 Series LN 26,384 9,360 2,693,021 1,170,675 Distributions to holders of redeemable units From net investment income Series A (54,454) - Series AN (8,781) - Series F (15,134) - Series FN (57,120) - Series I (7,499) - Series L (2,440) - Series LN (1,227) - (146,655) -

Return of capital Series A (47,347) - Series AN (22,035) - Series F (15,465) - Series FN (99,764) - Series I (18,928) - Series L (3,082) - Series LN (2,229) - (208,850) -

From net realized gains on investments and derivatives Series A (905,746) (206,108) Series AN (129,202) (96,856) Series F (218,533) (72,430) Series FN (799,678) (330,507) Series I (105,738) (67,706) Series L (38,547) (12,473) Series LN (20,250) (5,917) (2,217,694) (791,997)

Total distributions to holders of redeemable units (2,573,199) (791,997)

Continued on next page.

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

EXEMPLAR GROWTH AND INCOME FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $

Continued from previous page.

Redeemable unit transactions Proceeds from redeemable units issued Series A 9,764,357 332,213 Series AN 856,627 1,350,811 Series F 2,154,775 566,241 Series FN 3,267,060 3,354,041 Series I - - Series L 163,092 164,908 Series LN 100,763 64,300

Reinvestments of distributions to holders of redeemable units Series A 887,017 178,391 Series AN 155,619 96,232 Series F 184,678 65,986 Series FN 941,141 328,661 Series I 132,165 67,706 Series L 29,689 7,911 Series LN 21,557 4,862

Redemption of redeemable units Series A (3,687,401) (622,734) Series AN (1,323,243) (84,084) Series F (941,406) (964,557) Series FN (901,349) (1,830,986) Series I (8,223) (7,709) Series L (1,849) - Series LN - (10,328) Net increase (decrease) from redeemable unit transactions 11,795,069 3,061,865

Net increase (decrease) in net assets attributable to holders of redeemable units 11,914,891 3,440,543

Series A 10,811,870 3,849,743 Series AN 1,469,708 1,757,300 Series F 2,309,251 918,546 Series FN 8,580,515 5,196,260 Series I 1,069,039 927,236 Series L 464,543 265,948 Series LN 238,453 113,455 Net assets attributable to holders of redeemable units at end of year 24,943,379 13,028,488

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

EXEMPLAR GROWTH AND INCOME

StatementsFUND of Cash Flows For the years ended December 31, 2017 2016 $ $ (Note 14) Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 2,693,021 1,170,675 Adjustment for: Unrealized foreign exchange (gain) loss on cash (14,141) (2,062) Net realized (gain) loss on investments and derivatives (2,709,386) (901,192) Non-cash income from underlying funds (108,934) (69,721) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (295,194) (445,281) Purchase of investments (187,671,226) (106,110,608) Proceeds on sale of investments 180,277,175 104,526,662 Change in accrued dividends receivable (21,662) 1,181 Change in accrued dividends payable (227) 227 Change in other liabilities 12,160 5,919 Change in margin deposit 333,675 (419,457) Net cash from (used in) operating activities (7,504,739) (2,243,657)

Cash flows from (used in) financing activities Proceeds from redeemable units issued 15,696,726 5,664,094 Redemption of redeemable units (6,277,092) (3,392,845) Distributions paid to holders of redeemable units, net of reinvested distributions (221,333) (42,248) Net cash from (used in) financing activities 9,198,301 2,229,001

Net Increase (decrease) in cash 1,693,562 (14,656)

Cash at beginning of the year 1,029,568 1,042,162 Unrealized foreign exchange gain (loss) on cash 14,141 2,062 Cash at end of the year 2,737,271 1,029,568

Supplemental information: Interest received* 10,417 6,108 Dividends received, net of withholding tax* 370,164 170,251 Interest paid* 3,190 2,369 *Included as part of cash flows from operating activities

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

EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Long - 57.89% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - 6.56% Arcos Dorados Holdings Inc., Class A* USD 6,800 88,200 88,468 BYD Company Limited, Class H HKD 7,500 86,153 82,174 Canada Goose Holdings Inc. CAD 2,500 78,392 99,275 Lululemon Athletica Inc.* USD 1,700 162,739 167,939 Magna International Inc. CAD 1,500 107,454 106,860 Melco Resorts & Entertainment Limited, ADR USD 2,600 86,217 94,909 Park Lawn Corporation CAD 7,400 143,113 169,090 Potbelly Corporation USD 5,100 78,989 78,852 Quebecor Inc., Class B CAD 7,000 169,395 165,900 Red Rock Resorts, Inc., Class A* USD 2,000 70,960 84,822 RH USD 900 114,586 97,529 Spin Master Corp. CAD 1,500 72,194 81,030 Stars Group Inc. (The)* CAD 3,500 100,058 102,375 Tapestry, Inc. USD 3,900 210,609 216,829 1,569,059 1,636,052

Consumer Staples - 4.17% Alimentation Couche-Tard Inc., Class B CAD 3,500 212,301 229,565 Andrew Peller Limited, Class A CAD 4,500 61,075 70,200 Corby Spirit and Wine Limited* CAD 2,200 46,860 50,842 Goodfood Market Corp.* CAD 17,000 36,670 41,990 Jamieson Wellness Inc. CAD 11,500 216,363 256,910 Liquor Stores N.A. Ltd. CAD 10,000 100,217 106,800 Neptune Technologies & Bioressources Inc.* CAD 50,000 74,305 148,000 Wal-Mart Stores, Inc. USD 1,100 136,610 136,542 884,401 1,040,849

Energy - 12.33% Bellatrix Exploration Ltd.* CAD 20,200 46,579 43,430 Cameco Corporation CAD 4,400 57,825 51,084 Canadian Natural Resources Limited CAD 3,700 150,996 166,204 Cenovus Energy Inc. CAD 5,000 56,407 57,400 Enerplus Corporation CAD 20,000 232,251 246,200 Freehold Royalties Ltd. CAD 15,000 220,360 210,750 Gran Tierra Energy Inc. CAD 30,200 95,707 102,982 Husky Energy Inc. CAD 6,300 103,374 111,825 Inter Pipeline Ltd. CAD 10,000 266,742 260,300 NexGen Energy Ltd.* CAD 10,000 33,787 32,100 Noble Corporation PLC USD 12,100 68,655 68,748 NuVista Energy Ltd. CAD 10,000 86,484 80,200 Parex Resources Inc. CAD 4,100 67,013 74,456 Parkland Fuel Corporation CAD 6,400 168,548 171,840 Pembina Pipeline Corporation CAD 8,000 348,099 364,080 Spartan Energy Corp. CAD 13,000 92,326 93,470 STEP Energy Services Ltd. CAD 10,000 122,500 102,600 Suncor Energy Inc. CAD 5,000 221,317 230,750 TransCanada Corporation* CAD 5,500 345,019 336,490 Whitecap Resources Inc. CAD 19,000 164,381 170,050 Yangarra Resources Ltd. CAD 20,000 91,824 99,400 3,040,194 3,074,359

Financials - 7.68% Bank of America Corporation USD 4,000 142,666 148,427 Bank of Nova Scotia (The) CAD 2,000 163,594 162,240 Charles Schwab Corporation (The) USD 1,000 66,856 64,572 Citizens Financial Group, Inc. USD 2,000 98,313 105,538 ECN Capital Corp. CAD 35,000 139,556 137,550 Element Fleet Management Corp. CAD 10,000 104,643 95,000 GMP Capital Inc.* CAD 40,000 108,353 139,200 IGM Financial Inc. CAD 3,000 131,816 132,450

EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2017

JPMorgan Chase & Co. USD 1,000 129,479 134,424 Manulife Financial Corporation CAD 7,000 183,155 183,540 Royal Bank of Canada CAD 3,000 306,233 307,950 Toronto-Dominion Bank (The) CAD 3,000 217,857 220,950 VersaBank CAD 7,500 45,722 45,525 Westaim Corporation (The) CAD 12,500 40,214 38,875 1,878,457 1,916,241

Health Care - 1.43% Anthem, Inc. USD 400 119,819 113,135 Editas Medicine, Inc. USD 1,200 39,157 46,353 Sarepta Therapeutics, Inc.* USD 1,200 73,983 83,927 Teladoc, Inc.* USD 1,400 60,767 61,329 Valeant Pharmaceuticals International, Inc. CAD 2,000 52,033 52,400 345,759 357,144

Industrials - 8.58% Air Canada CAD 10,000 253,296 258,800 Bombardier Inc., Class B CAD 25,000 80,480 75,750 Canadian National Railway Company CAD 4,000 411,353 414,600 Canadian Pacific Railway Limited CAD 500 115,727 114,830 Chorus Aviation Inc. CAD 12,500 117,701 120,625 FedEx Corporation USD 400 117,881 125,469 Finning International Inc. CAD 3,000 95,458 95,160 Hardwoods Distribution Inc. CAD 2,000 39,975 40,400 Maxar Technologies Ltd. CAD 2,000 169,276 161,840 Morneau Shepell Inc. CAD 3,000 63,796 66,900 New Flyer Industries Inc. CAD 1,500 77,927 81,000 Northrop Grumman Corporation USD 300 116,887 115,736 SNC-Lavalin Group Inc. CAD 3,500 201,704 199,675 Spirit Airlines, Inc. USD 900 46,046 50,739 Textron Inc. USD 1,100 75,514 78,247 United Technologies Corporation USD 400 65,473 64,142 WesternOne Inc.* CAD 50,900 70,505 77,368 2,118,999 2,141,281

Information Technology - 2.64% BlackBerry Limited CAD 3,500 53,017 49,140 CGI Group Inc., Class A CAD 1,500 101,942 102,450 Cree, Inc.* USD 1,600 73,501 74,696 FireEye, Inc. USD 2,900 52,936 51,763 Legend Power Systems Inc. CAD 60,000 38,980 45,000 Microsoft Corporation USD 2,000 217,253 215,048 Twitter, Inc. USD 4,000 123,517 120,722 661,146 658,819

Materials - 10.96% Agnico Eagle Mines Limited CAD 3,500 203,170 203,140 Agrium Inc. CAD 2,500 351,731 361,450 Air Products and Chemicals, Inc. USD 1,200 248,447 247,498 Albemarle Corporation USD 700 115,505 112,530 Franco-Nevada Corporation CAD 2,000 197,945 200,920 Labrador Iron Ore Royalty Corporation CAD 6,000 143,902 163,200 Lithium Americas Corp.* CAD 50,000 293,624 559,000 Louisiana-Pacific Corporation USD 2,400 83,166 79,221 Lundin Mining Corporation CAD 20,000 157,317 167,200 Methanex Corporation CAD 1,400 101,389 106,624 North American Nickel Inc. CAD 123,400 11,822 9,255 Packaging Corporation of America USD 1,000 147,408 151,531 Sherritt International Corporation CAD 33,800 43,825 58,136 Sociedad Quimica y Minera de Chile S.A. ADR USD 2,800 199,770 208,959 Venator Materials PLC USD 3,800 109,390 105,658 2,408,411 2,734,322

EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2017

Real Estate - 0.51% Dream Hard Asset Alternatives Trust CAD 7,500 45,401 47,475 European Commercial REIT CAD 22,000 99,000 79,200 144,401 126,675

Utilities - 3.03% Brookfield Renewable Partners L.P. CAD 3,400 145,297 148,954 Emera Incorporated CAD 10,000 479,000 469,800 Maxim Power Corp. CAD 50,000 146,290 137,500 770,587 756,254

13,821,414 14,441,996

Funds - Long - 28.99% No. of Average Fair Security Name Currency Shares Cost ($) Value ($) Exemplar Investment Grade Fund ETF CAD 50,000 1,000,500 1,001,250 Exemplar Tactical Corporate Bond Fund Class I CAD 228,894 2,305,829 2,262,444 Health Care Select Sector SPDR Trust USD 4,000 418,494 415,715 iShares 20+ Year Treasury Bond ETF USD 3,500 559,973 558,121 iShares Russell 2000 ETF* USD 6,000 1,174,404 1,149,853 iShares S&P/TSX Capped Energy ETF CAD 10,000 118,387 122,700 iShares S&P/TSX Global Gold Index ETF* CAD 35,000 422,846 428,050 Materials Select Sector SPDR Trust USD 4,200 319,042 319,562 SPDR Gold Shares* USD 3,000 457,613 466,284 VanEck Vectors Junior Gold Miners ETF USD 4,400 182,631 188,766 VanEck Vectors Oil Services ETF* USD 6,500 210,181 212,842 Vanguard REIT ETF USD 1,000 103,805 104,306 7,273,705 7,229,893 Commissions and other portfolio transaction costs (8,391) - Total Investments - 86.88% 21,086,728 21,671,889 Derivatives (see schedule of derivative instruments) - 0.46% 114,824 Cash and Other Net Assets (Liabilities) - 12.66% 3,156,666 Net Assets Attributable to Holders of Redeemable Units - 100.00% 24,943,379

*Denotes all or part of securities on loan

Schedule of Derivative Instruments

Forward Currency Contracts - 0.46%

Purchased Sold Credit Contract Maturity Unrealized Notional Value Notional Value Counterparty Currency ($) Currency ($) Rating Rate Date Gain/(Loss) ($) BNY Mellon CAD 2,191,312 USD (1,725,000) A1 1.270325 01-04-18 23,021 BNY Mellon CAD 892,228 USD (700,000) A1 1.274611 01-04-18 12,341 BNY Mellon CAD 1,089,983 USD (850,000) A1 1.282332 01-04-18 21,550 BNY Mellon CAD 2,568,242 USD (2,000,000) A1 1.284121 01-04-18 54,281 BNY Mellon CAD 1,083,762 USD (850,000) A1 1.275014 01-04-18 15,329 BNY Mellon CAD 2,012,566 USD (1,600,000) A1 1.257854 01-04-18 1,398 Unrealized Gains 127,920 BNY Mellon USD 800,000 CAD (1,018,680) A1 0.78533 01-04-18 (13,096) Unrealized Losses (13,096) Total Forward Currency Contracts 114,824

10 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The investment objective of the Exemplar Growth and Income Fund is to achieve long term growth and preservation of capital. The Fund will invest up to all of its assets in a diversified mix of other mutual funds (in order to gain indirect exposure to securities that the Fund would otherwise directly invest in), and may also invest in common shares, preferred shares, treasury bills, short-term notes, debentures, and bonds. The Fund invests primarily in Canadian securities.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity and bond investments is limited to the fair value of those positions. The maximum loss on equities and debt sold short can be unlimited.

The management of these risks is carried out by the Manager in accordance with the Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk As of December 31, 2017, and 2016 the Fund did not hold any interest-bearing securities, and therefore was not subject to significant interest rate risk.

The Fund may participate in securities lending up to a maximum of 50% of the aggregate net asset value of the Fund, excluding the collateral held in respect to such loans, and is exposed to counterparty risk on all such loans, if any. The credit risk related to the securities lending program is limited as the Fund holds a minimum collateral equal to 102% of the fair value of the loaned securities. The collateral and loaned securities are marked to market on each valuation date. All counterparties have a credit rating equivalent to a Moody’s credit rating of not less than Aa3.

There are risks involved in dealing with custodians or brokers who settle trades with regard to the segregation of assets. It is expected that all securities and other assets deposited with custodians or brokers will be clearly identified as being assets of the Fund. Therefore, the Fund should not be exposed to credit risk with respect to such parties. However, it may not always be possible to achieve this segregation, so the portfolio of the Fund may experience increased exposure to credit risk associated with the applicable custodians or brokers.

The Fund is exposed to counterparty credit risk on margin on deposit, cash held at the broker and receivables for securities sold. The Fund’s brokerage agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's prime brokerage services are provided by BMO Nesbitt Burns which has a credit rating of A1 (2016: Aa3) as rated by Moody's bond rating services. Cash collateral has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the Statements of Financial Position.

The Fund is exposed to counterparty credit risk on cash and other receivable balances. The Fund’s broker and custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2016: A1).

The Fund is exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating services of Aa2 (2016: Aa1).

Liquidity Risk

All of the Fund’s liabilities are typically due in less than 3 months. Redeemable units are redeemable on demand at the holder’s option. However, holders of these instruments typically retain them for a longer period.

Market Risk

The following include sensitivity analyses that show how the net assets attributable to holders of redeemable units would have been affected by a reasonably possible change in the relevant risk variable at each reporting date. In practice, the actual results may differ and the differences could be material.

11 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

(a) Currency Risk

The table below indicates the Fund’s exposure to other currencies as at December 31, 2017 and 2016 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to each of the other currencies, with all other variables held constant. Non-monetary items include equities, funds and warrants. Monetary items include forward currency contracts, cash, margin deposit and other current receivables and payables.

December 31, 2017 Impact on net assets attributable to Exposure holders of redeemable units Non- Non- Monetary Monetary Total Monetary Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 3,238,959 7,015,041 10,254,000 323,896 701,504 1,025,400 United States Dollar - Short (10,123,864) - (10,123,864) (1,012,386) - (1,012,386) Hong Kong Dollar - Long 222,282 82,174 304,456 22,228 8,217 30,445 Japanese Yen - Long 51,928 - 51,928 5,193 - 5,193 Total (6,610,695) 7,097,215 486,520 (661,069) 709,721 48,652 % of net assets attributable to holders of redeemable units (26.5%) 28.5% 2.0% (2.7%) 2.8% 0.2%

December 31, 2016 Impact on net assets attributable to Exposure holders of redeemable units Non- Non- Monetary Monetary Total Monetary Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 2,296,606 1,546,536 3,843,142 229,661 154,654 384,315 United States Dollar - Short (2,748,178) (15,487) (2,763,665) (274,818) (1,549) (276,367) Total (451,572) 1,531,049 1,079,477 (45,157) 153,105 107,948 % of net assets attributable to holders of redeemable units (3.5%) 11.8% 8.3% (0.3%) 1.2% 0.8%

(b) Interest Rate Risk

As at December 31, 2017 and 2016 the Fund did not hold any interest-bearing securities, and therefore was not subject to significant interest rate risk.

The Fund's policy is to manage price risk through diversification and selection of investments within specified limits established by the investment restrictions within the prospectus, as summarized below.

To achieve the investment objective, the Manager utilizes the following allocation guidelines: 30-90% equity securities, 10-50% fixed income securities and 0-50% money market instruments. Fixed income securities may include investment grade, non-investment grade and distressed fixed income securities, issued by Canadian or non-Canadian corporations, trusts and international agencies and governments. The Fund is also permitted to invest in convertible bonds and debentures, loans, preferred shares, exchange traded funds and equities. The Fund may also hold cash. To achieve these target ranges, the Fund may invest in either individual securities or the Manager may invest up to 100% of the assets of the Fund in underlying funds.

The Fund may invest in foreign securities to an extent that will vary from time to time but is not typically expected to exceed 49% of its assets at the time that foreign securities are purchased, however, as the Fund intends to invest certain of its assets in securities of other investment funds that may themselves invest in foreign securities, the actual exposure of the Fund to investments in foreign securities may exceed this amount.

12 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

As at December 31, 2017, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is $1,083,595 (2016: $575,591) (all other variables held constant). Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2017 and 2016:

December 31, 2017 December 31, 2016 Market Segment Long (%) Short (%) Long (%) Short (%) Consumer Discretionary 6.6 - 3.9 - Consumer Staples 4.2 - 4.3 - Energy 12.3 - 7.0 - Financials 7.7 - 2.5 (0.4) Funds 29.0 - 44.7 - Health Care 1.4 - 2.6 (0.1) Industrials 8.6 - 5.3 - Information Technology 2.6 - 4.9 - Materials 11.0 - 7.4 - Real Estate 0.5 - 3.0 - Telecommunication Services - - 0.2 - Utilities 3.0 - 2.6 - Derivatives 0.6 (0.1) 0.5 - Totals 87.5 (0.1) 88.9 (0.5)

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2017 and 2016:

December 31, 2017 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 14,441,996 - - 14,441,996 Funds 4,967,449 2,262,444 - 7,229,893 Derivatives - 127,920 - 127,920 19,409,445 2,390,364 - 21,799,809

Financial liabilities Derivatives - (13,096) - (13,096) - (13,096) - (13,096) Total 19,409,445 2,377,268 - 21,786,713

13 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Assets Equities 5,702,445 - - 5,702,445 Funds 37,170 5,791,675 - 5,828,845 Derivatives 44,381 32,083 - 76,464 5,783,996 5,823,758 - 11,607,754

Liabilities Equities sold short (63,855) - - (63,855) (63,855) - - (63,855) Total 5,720,141 5,823,758 - 11,543,899

All fair value measurements above are recurring. The carrying values of all of the Fund’s financial instruments not carried at FVTPL approximate their fair values due to their short-term nature. Fair values are classified as level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as level 1 subsequently ceases to be actively traded, it is transferred out of level 1. In such cases, instruments are reclassified into level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all level 3 fair value measurements, if applicable. a) Equities and Funds

The Fund's equity positions and some investments in funds are classified as Level 1 as the securities are actively traded on a recognized exchange and a quoted price is available. Equity positions which have resale restrictions but otherwise trade on the market are classified as Level 2. Funds that do not trade on an exchange are valued by valuation agents and are classified as Level 2. b) Derivatives

Derivatives consist of warrants and forward currency contracts. Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded warrants are classified as Level 1. When the inputs that are significant to valuation are generally observable, the warrants are classified as level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2017, the Fund did not hold any level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ended December 31, 2017 and 2016.

Financial Instruments by Category

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the years ended December 31, 2017 and 2016.

14 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2017 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 2,459,139 205,031 10,014 - 403,150 - 47,715 3,125,049 HFT 252,014 82,742 - - - - - 334,756 2,711,153 287,773 10,014 - 403,150 - 47,715 3,459,805 Financial liabilities at FVTPL: Designated as FVTPL HFT (1,767) 7,420 - - - (6,005) - (352) Total 2,709,386 295,193 10,014 - 403,150 (6,005) 47,715 3,459,453

Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2016 $ $ $ $ $ $ $ $ Financial asset at FVTPL: Designated as FVTPL 963,524 406,807 2,129 - 169,070 - 693 1,542,223 HFT 10,852 32,083 - - - - - 42,935 974,376 438,890 2,129 - 169,070 - 693 1,585,158 Financial liabilities at FVTPL: HFT (73,184) 6,391 - - - (6,778) - (73,571) (73,184) 6,391 - - - (6,778) - (73,571) Total 901,192 445,281 2,129 - 169,070 (6,778) 693 1,511,587

EXEMPLAR INVESTMENT GRADE FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 ASSETS Current assets Financial assets designated at fair value through profit and loss $147,194,996 $57,282,929 Financial assets held for trading Options at fair value - long - 105,735 Unrealized gain on swap contracts 1,627,849 463,424 Unrealized gain on futures contracts - long 201,221 - Unrealized gain on futures contracts - short 219,468 282,896 Unrealized gain on forward currency contracts - 579 Cash and cash equivalents 1,235,322 2,992,269 Margin deposits 1,071,828 1,075,998 Accrued dividends receivable 41,978 11,785 Accrued interest receivable 929,636 423,896 Receivable for securities sold 3,027 124,451 Receivable for redeemable units issued 368,873 275,441 152,894,198 63,039,403

LIABILITIES Current liabilities Financial liabilities held for trading Options at fair value - short - 23,893 Unrealized loss on swap contracts - 153,188 Unrealized loss on futures contracts - long - 106,435 Unrealized loss on futures contracts - short - 4,510 Unrealized loss on forward currency contracts 18,657 - Margin loan 616,658 296,921 Payable for securities purchased 390,572 - Accrued interest payable - 8,859 Payable for redeemable units redeemed 173,622 191,934 Other liabilities (Note 10) 157,830 65,156 1,357,339 850,896 Net assets attributable to holders of redeemable units $151,536,859 $62,188,507

Net assets attributable to holders of redeemable units Series A $32,007,181 $14,183,535 Series AI $4,575,260 $2,549,060 Series AN $5,292,300 $3,180,116 Series F $84,466,716 $34,960,710 Series FI $5,446,419 $4,103,761 Series FN $15,980,560 $3,149,854 Series I $5,521 $5,266 Series G $1,759,517 $56,205 Series ETF $2,003,385 $- Continued on next page.

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

EXEMPLAR INVESTMENT GRADE FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 Continued from previous page.

Number of redeemable units outstanding (Note 7) Series A 3,281,116 1,459,186 Series AI 500,780 274,643 Series AN 515,597 314,815 Series F 8,506,130 3,554,196 Series FI 584,286 436,032 Series FN 1,545,306 311,722 Series I 515 506 Series G 137,568 4,176 Series ETF 100,000 -

Net assets attributable to holders of redeemable units per unit Series A $9.75 $9.72 Series AI $9.14 $9.28 Series AN $10.26 $10.10 Series F $9.93 $9.84 Series FI $9.32 $9.41 Series FN $10.34 $10.10 Series I $10.72 $10.41 Series G - USD $10.18 $10.02 Series ETF $20.03 $-

USD/CAD Foreign Exchange Rate $0.79554 $0.74480

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

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

EXEMPLAR INVESTMENT GRADE FUND

Statements of Comprehensive Income For the years ended December 31, 2017 2016 $ $ (Note 14) INCOME Net gains (losses) on investments and derivatives Interest income 3,514,648 2,184,149 Interest expense on short sales (189,142) (69,579) Dividend income 324,009 214,828 Securities lending income (net) (Note 9) 942 2,264 Net realized gain (loss) on investments and derivatives 1,264,573 137,227 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 596,697 2,131,243 Net gains (losses) on investments and derivatives 5,511,727 4,600,132

Other income items: Interest on cash 9,134 5,734 Foreign exchange gain (loss) (599,978) (93,355) Net change in unrealized foreign exchange gain (loss) (11,738) (56,335) Total income (net) 4,909,145 4,456,176

EXPENSES Securityholder reporting fees 303,428 223,394 Management fees (Note 10) 1,053,508 522,627 Interest expense 2,636 2,680 Audit fees 22,495 19,272 Legal fees 4,873 6,945 Independent Review Committee fees 5,590 4,600 Custodial fees 10,841 4,835 Commissions and other portfolio transaction costs (Note 11) 43,451 29,509 Commissions on Futures (Note 11) 28,164 28,164 Harmonized sales tax 105,808 43,589 Total expense before manager absorption 1,580,794 885,615 Less: expenses absorbed by manager (Note 10) (123,518) (163,537) Total expenses after manager absorption 1,457,276 722,078

Increase (decrease) in net assets attributable to holders of redeemable units 3,451,869 3,734,098

Increase (decrease) in net assets attributable to holders of redeemable units (Note 13) Series A 669,291 937,545 Series AI 105,975 140,859 Series AN 135,960 184,880 Series F 2,138,078 2,095,711 Series FI 179,207 209,169 Series FN 288,819 153,018 Series I 255 10,665 Series G (69,025) 2,251 Series ETF 3,309 -

Series A 0.27 0.63 Series AI 0.28 0.64 Series AN 0.31 0.71 Series F 0.33 0.67 Series FI 0.35 0.65 Series FN 0.32 0.76 Series I 0.50 0.89 Series G (0.77) 0.49 Series ETF 0.05 -

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

EXEMPLAR INVESTMENT GRADE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $ Net assets attributable to holders of redeemable units at beginning of year Series A 14,183,535 14,295,352 Series AI 2,549,060 1,801,322 Series AN 3,180,116 1,990,671 Series F 34,960,710 34,249,772 Series FI 4,103,761 2,308,105 Series FN 3,149,854 1,429,487 Series I 5,266 - Series G 56,205 62,349 Series ETF - - 62,188,507 56,137,058

Increase (decrease) in net assets attributable to holders of redeemable units Series A 669,291 937,545 Series AI 105,975 140,859 Series AN 135,960 184,880 Series F 2,138,078 2,095,711 Series FI 179,207 209,169 Series FN 288,819 153,018 Series I 255 10,665 Series G (69,025) 2,251 Series ETF 3,309 - 3,451,869 3,734,098

Distributions to holders of redeemable units From net investment income Series A (501,152) (174,385) Series AI (72,533) (27,654) Series AN (92,956) (30,622) Series F (1,715,498) (437,458) Series FI (129,093) (52,332) Series FN (241,422) (39,398) Series I (101) (64) Series G (25,069) (882) Series ETF - - (2,777,824) (762,795)

From net realized gains on investments and derivatives Series A - (251,232) Series AI - (37,310) Series AN - (58,182) Series F - (538,981) Series FI - (53,593) Series FN - (54,551) Series I - (88) Series G - (836) Series ETF - - - (994,773)

Return of capital Series A (192,751) - Series AI (96,218) (35,116) Series AN - - Series F (141,883) - Series FI (100,854) (37,830) Series FN - - Series I - - Series G (5,918) - Series ETF - - (537,624) (72,946) Total distributions to holders of redeemable units (3,315,448) (1,830,514)

Continued on next page.

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

EXEMPLAR INVESTMENT GRADE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $ Continued from previous page.

Redeemable unit transactions Proceeds from redeemable units issued Series A 22,598,225 4,377,618 Series AI 2,319,227 1,034,447 Series AN 3,261,123 1,548,014 Series F 62,405,436 19,445,259 Series FI 1,955,217 2,413,642 Series FN 14,169,011 1,934,790 Series I - 505,016 Series G 1,785,095 33,591 Series ETF 2,000,076 -

Reinvestments of distributions to holders of redeemable units Series A 553,342 286,275 Series AI 58,691 29,126 Series AN 82,397 86,756 Series F 790,103 481,194 Series FI 54,394 39,229 Series FN 214,010 78,049 Series I 101 152 Series G 18,229 1,089 Series ETF - -

Redemption of redeemable units Series A (5,303,309) (5,287,638) Series AI (288,942) (356,614) Series AN (1,274,340) (541,401) Series F (13,970,230) (20,334,787) Series FI (616,213) (722,629) Series FN (1,599,712) (351,541) Series I - (510,415) Series G - (41,357) Series ETF - - Net increase (decrease) from redeemable unit transactions 89,211,931 4,147,865

Net increase (decrease) in net assets attributable to holders of redeemable units 89,348,352 6,051,449

Series A 32,007,181 14,183,535 Series AI 4,575,260 2,549,060 Series AN 5,292,300 3,180,116 Series F 84,466,716 34,960,710 Series FI 5,446,419 4,103,761 Series FN 15,980,560 3,149,854 Series I 5,521 5,266 Series G 1,759,517 56,205 Series ETF 2,003,385 - Net assets attributable to holders of redeemable units at end of year 151,536,859 62,188,507

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

EXEMPLAR INVESTMENT GRADE FUND

Statements of Cash Flows For the years ended December 31, 2017 2016 $ $ (Note 14) Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 3,451,869 3,734,098 Adjustment for: Unrealized foreign exchange (gain) loss on cash (10,454) (55,919) Net realized (gain) loss on investments and derivatives (1,264,573) (137,227) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (596,697) (2,131,243) Purchase of investments (788,423,249) (336,369,713) Proceeds on sale of investments and derivatives 699,419,175 332,796,050 Change in accrued interest receivable (505,740) (16,712) Change in accrued dividend receivable (30,193) 115 Change in accrued interest payable (8,859) (5,989) Change in other liabilities 92,674 4,975 Change in margin deposits 4,170 1,747,989 Change in margin loan 319,737 10,879 Net cash from (used in) operating activities (87,552,140) (422,697)

Cash flows from (used in) financing activities Proceeds from redeemable units issued (Note 1) 107,374,008 28,773,760 Redemption of redeemable units (20,045,088) (25,689,898) Distributions paid to holders of redeemable units, net of reinvested distributions (1,544,181) (828,644) Net cash from (used in) financing activities 85,784,739 2,255,218

Net Increase (decrease) in cash (1,767,401) 1,832,521

Cash at beginning of the year 2,992,269 1,103,829 Unrealized foreign exchange gain (loss) on cash 10,454 55,919 Cash at end of the year 1,235,322 2,992,269

Supplemental information: Interest received* 3,018,042 2,173,171 Dividends received* 293,816 214,943 Interest and dividends paid* 191,778 78,248 *Included as part of cash flows from operating activities

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

EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Long - 10.02% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Bank of Montreal, Preferred, 5.20%, Class B, Series 16(2) CAD 43,000 1,075,430 1,075,000 Bank of Montreal, Preferred, Class 'B', Series '25', Variable Rate, Perpetual(2) CAD 85,800 1,850,505 1,954,524 Bank of Montreal, Preferred, Series '40', Variable Rate, Perpetual(2) CAD 17,000 435,965 440,470 Bank of Montreal, Preferred, Class 'B', Series '42', Variable Rate, Perpetual(2) CAD 69,000 1,723,668 1,758,810 Bank of Nova Scotia (The), Preferred, Series 20, Variable Rate(1)(2) CAD 1,400 35,042 34,958 Bank of Nova Scotia, Preferred, Series '32', Variable Rate, Perpetual(1)(2) CAD 61,400 1,359,261 1,413,428 Bank of Nova Scotia (The), Preferred, Series 19, Variable Rate(2) CAD 53,000 1,329,240 1,323,410 Bank of Nova Scotia (The), Preferred, Series 21, Variable Rate(2) CAD 76,000 1,885,560 1,884,800 Canadian Imperial Bank of Commerce, Preferred, Series '45', Variable Rate, Perpetual(2) CAD 40,000 1,001,073 1,020,000 Enbridge Inc., Preferred, Series L, Variable Rate(2) USD 6,746 204,719 202,835 Enbridge Inc., Preferred, Series 'B', Variable Rate, Perpetual(2) CAD 60,600 1,111,864 1,133,220 Toronto-Dominion Bank (The), Preferred, Series S, Variable Rate(1)(2) CAD 14,300 358,310 358,930 Toronto-Dominion Bank (The), Preferred, Series Y, Variable Rate(1)(2) CAD 39,500 990,660 988,685 Toronto-Dominion Bank (The), Preferred, Series 16, Variable Rate(2) CAD 62,000 1,550,000 1,591,540 14,911,297 15,180,610 Fixed Income - Long - 87.12% Maturity Coupon Par Average Fair Security Name Date Rate (%) Currency Value ($) Cost ($) Value ($) Corporate Bonds - 87.12% Alimentation Couche-Tard Inc. (2) 07-26-24 3.06 CAD 3,000,000 3,008,880 2,986,203 Anheuser-Busch InBev Finance Inc. (2) 01-25-23 3.38 CAD 4,418,000 4,657,825 4,542,182 AT&T Inc., Series 'Maple', Restricted 11-25-20 3.83 CAD 4,618,000 4,919,899 4,778,523 Bank of Montreal, Variable Rate (2) 09-19-24 3.12 CAD 4,111,000 4,197,991 4,153,588 Bell Canada, (2) 09-11-23 4.70 CAD 1,051,000 1,144,886 1,145,282 Bruce Power L.P., Restricted(3) 06-23-21 2.84 CAD 4,628,000 4,724,815 4,662,241 Canadian Imperial Bank of Commerce, Variable Rate (2) 10-28-24 3.00 CAD 5,347,000 5,484,187 5,396,461 Canadian Natural Resources Ltd. 02-11-22 3.31 CAD 2,720,000 2,789,442 2,775,604 Cominar REIT 12-04-19 4.23 CAD 4,249,000 4,304,341 4,307,125 Cominar REIT, Series '7' 06-21-19 3.62 CAD 2,000,000 2,047,480 2,008,361 Enbridge Inc., Variable Rate (2) 09-27-77 5.38 CAD 4,679,000 4,679,000 4,663,223 Enbridge Inc. Discount Note 03-21-18 0.00 CAD 3,900,000 3,860,142 3,860,142 Fairfax Financial Holdings Ltd. (2) 05-15-21 5.80 USD 3,617,000 4,990,945 4,910,556 Fairfax Financial Holdings Ltd. 06-22-20 8.25 CAD 2,100,000 2,372,307 2,315,935 First Capital Realty Inc. (2) 04-30-20 5.60 CAD 3,559,000 3,949,744 3,802,897 Ford Credit Canada Co., Floating Rate 09-21-20 2.34 CAD 5,000,000 5,010,346 5,036,150 Ford Credit Canada Co. 05-07-20 2.45 CAD 5,341,000 5,351,310 5,322,501 Ford Credit Canada Company 05-10-21 2.58 CAD 1,400,000 1,390,144 1,389,923 Goldman Sachs Group Inc. (The)(3) 02-12-21 3.55 CAD 1,808,000 1,868,387 1,861,248 Goldman Sachs Group Inc. (The), Variable Rate, Restricted (2) 04-26-23 2.43 CAD 5,541,000 5,486,604 5,432,201 Goldman Sachs Group Inc. (The), Floating Rate (2) 10-31-22 2.16 USD 2,000,000 2,536,500 2,518,642 Inter Pipeline Ltd. (2) 02-02-21 4.97 CAD 5,295,000 5,750,742 5,658,070 MCAP Commercial L.P. 12-14-22 5.00 CAD 2,402,000 2,417,037 2,406,641 Merrill Lynch & Co. Inc., Variable Rate (2) 05-30-22 2.33 CAD 13,086,000 13,071,075 12,921,902 Molson Coors International L.P.(3) (2) 07-15-23 2.84 CAD 4,969,000 4,906,514 4,899,618 Molson Coors International LP, Series 2 (2) 09-18-20 2.75 CAD 300,000 301,584 301,386 Morgan Stanley, Floating Rate (2) 07-22-22 2.29 USD 1,339,000 1,686,337 1,697,502 Morgan Stanley, Floating Rate(3) (2) 01-20-22 2.54 USD 2,179,000 2,845,229 2,785,532 Morgan Stanley, Restricted 02-07-24 3.00 CAD 7,220,000 7,159,568 7,186,257 RioCan REIT 08-26-20 2.19 CAD 1,441,000 1,443,439 1,427,999 Shaw Communications Inc. 02-19-21 3.15 CAD 2,500,000 2,583,850 2,544,958 Shaw Communications Inc. (2) 12-07-20 5.50 CAD 675,000 751,964 732,101 SmartCentres REIT, Series 'R', Floating Rate 12-21-20 2.17 CAD 1,500,000 1,500,000 1,502,835 TransCanada Trust, Series '2017-A', Variable Rate (2) 05-18-77 4.65 CAD 6,182,000 6,186,941 6,175,429 Wells Fargo & Company 10-27-23 2.51 CAD 4,000,000 3,940,480 3,905,168 133,319,935 132,014,386 Commissions and other portfolio transaction costs (3,279) - Total Investments - 97.14% 148,227,953 147,194,996 Derivatives (see schedule of derivative instruments) - 1.34% 2,029,881 Cash and Other Net Assets (Liabilities) - 1.53% 2,311,982 Net Assets Attributable to Holders of Redeemable Units - 100.00% 151,536,859

EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at December 31, 2017

Schedule of Derivative Instruments

Futures Contracts - Long - 0.13% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($) Canadian Dollar Futures 1,000 03-20-18 USD 116 11,650,379 201,221

Futures Contracts - Short - 0.14% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($) Canada 5 Year Bond Futures 1,000 03-20-18 CAD (41) (4,894,990) 46,980 Canada 10 Year Bond Futures 1,000 03-20-18 CAD (131) (17,658,800) 161,440 US 5 Year Treasury Note Futures 1,000 03-29-18 USD (25) (3,650,456) 11,048 219,468

Swaps - 1.07% Notional Average Unrealized Security Name Currency Value ($) Cost ($) Gain/(Loss) ($) 3-Month CDOR, 9/27/2019, 0.8619% Interest Rate Swap CAD 6,720,000 - 133,295 3-Month CDOR, 9/27/2021, 0.9091% Interest Rate Swap CAD 9,181,000 - 427,001 3-Month CDOR, 9/1/2019,1.075% Interest Rate Swap CAD 5,500,000 - 83,994 3-Month CDOR, 9/1/2019, 1.1025% Interest Rate Swap CAD 2,300,000 3,387 34,081 3-Month CDOR, 9/1/2021,1.3225% Interest Rate Swap CAD 21,850,000 - 672,229 3-Month CDOR, 6/1/2022,1.3925% Interest Rate Swap CAD 3,350,000 - 117,783 3-Month CDOR, 8/23/2022, 1.855% Interest Rate Swap CAD 9,550,000 - 159,466 3,387 1,627,849 Forward Currency Contracts - (0.01%)

Purchased Sold Credit Contract Maturity Unrealized Counterparty Currency Notional Value ($) Currency Notional Value ($) Rating Rate ($) Date Gain/(Loss) ($) BNY Mellon USD 1,398,000 CAD (1,775,916) A1 0.79 01-04-18 (18,657) Total forward currency contracts (18,657)

Total Derivative Instruments at Fair Value 3,387 2,029,881

(1) Convertible (2) Callable (3) Restricted

23 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The investment objective of the Exemplar Investment Grade Fund is to generate income and capital preservation by investing in a diversified portfolio of primarily North American investment grade corporate bonds.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity, options, interest rate swaps, credit default swaps and debt securities is limited to the fair value of those positions. The maximum loss on equities, options and debt sold short can be unlimited and the maximum loss on futures contracts is the notional contract value of those positions.

The management of these risks is carried out by the Manager and Portfolio Sub-Advisor in accordance with the Fund’s Declaration of Trust.

The Fund's use of leverage and borrowings can increase the Fund's exposure to these risks, which in turn can also increase the potential returns the Fund can achieve. The Portfolio Sub-Advisor uses leverage against assets with satisfactory liquidity characteristics in order to increase return on capital subject to market conditions.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

The analysis below summarizes the credit quality of the Fund's debt portfolio at December 31, 2017 and 2016.

Percentage of total debt securities Credit Rating* December 31, 2017 December 31, 2016 % % AAA - - AA - - A 3.0 26.9 BBB 89.3 67.9 Below BBB - 5.2 Not Rated 7.7 - Total 100.0 100.0 * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund is exposed to counterparty credit risk on swaps, and futures contracts. The counterparties to the Fund’s swaps are Bank of America and JP Morgan Chase & Co. which have credit ratings as rated by Moody’s bond rating services of A3 and A3, respectively (2016: Baa1 and A3, respectively). Futures contracts are exchange traded. Cash collateral has been provided to JP Morgan Chase & Co. in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the Statements of Financial Position.

The Fund is exposed to counterparty credit risk on cash, margin deposits and other receivable balances. The Fund’s broker and custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2016: A1).

The Fund is exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating services of Aa2 (2016: Aa1).

24 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Liquidity Risk

From time to time, the Fund may use margin borrowings in one or more of its brokerage accounts. For the year ending December 31, 2017, the minimum margin borrowings used was $354,574 and the maximum margin borrowings used was $1,489,432 (2016: min: $359,370, max: $2,072,162).

Market Risk

(a) Currency Risk

The table below indicates the Fund’s exposure to USD as at December 31, 2017 and 2016 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to USD, with all other variables held constant. Non-monetary items include non-financial options. Monetary items include future contracts, forward currency contracts, bonds, cash, margin deposit, swaps and other current receivables and payables.

December 31, 2017 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 14,447,396 202,835 14,650,231 1,444,740 20,284 1,465,024 United States Dollar - Short (393,653) - (393,653) (39,365) - (39,365) Total 14,053,743 202,835 14,256,578 1,405,375 20,284 1,425,659 % of net assets attributable to holders of redeemable units 9.3% 0.1% 9.4% 0.9% 0.0% 0.9%

December 31, 2016 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 8,386,934 680,839 9,067,773 838,693 68,084 906,777 United States Dollar - Short 176,063 (22,825) 153,238 17,606 (2,283) 15,323 Total 8,562,997 658,014 9,221,011 856,299 65,801 922,100 % of net assets attributable to holders of redeemable units 13.8% 1.1% 14.8% 1.4% 0.1% 1.5%

(b) Interest Rate Risk

The table below summarizes the Fund's exposure to interest rate risk as at December 31, 2017 and 2016. The table also illustrates the potential impact, or sensitivity, on the net assets attributable to holders of redeemable units if the prevailing levels of market interest rates changed by 1.0%, assuming a parallel shift in the yield curve with all other variables held constant.

25 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Total Exposure Term to Maturity December 31, 2017 December 31, 2016 Less than 1 year $ 3,860,142 $ 5,596,000 1-3 years 46,055,813 21,903,317 3-5 years 81,518,372 32,012,341 Greater than 5 years 32,826,812 18,003,935 Total $ 164,261,139 $ 77,515,593 Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 2,970,428 +/- $ 1,470,314 Total % sensitivity to net assets attributable to holders of redeemable units 2.0% 2.4%

The Fund's policy is to manage price risk through pursuit of a diversified investment program that focuses on investment-grade fixed income securities while utilizing other assets such as options and credit default swaps, to extract relative value and to manage credit exposure.

The Fund engages in short selling activities, wherein it borrows securities and sells them to third parties. Until the Fund covers its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold, not yet purchased, at prices which may be significantly higher than the fair value reflected on the financial statements.

As at December 31, 2017, if the Fund's relevant benchmark index, FTSE TMX Canada Universe Bond Index, had increased or decreased by 5%, with all other variables held constant, the net assets attributable to holders of redeemable units of the Fund would have increased or decreased by $408,399 (2016: $217,660).

Concentration Risk Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2017 and 2016:

December 31, 2017 December 31, 2016 Market Segment Long (%) Short (%) Long (%) Short (%) Equities 10.0 - 11.6 - Corporate Bonds 87.1 - 77.8 - Funds - - 2.7 - Derivatives 1.2 0.1 0.9 - Totals 98.3 0.1 93.0 -

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2017 and 2016:

26 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2017 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 15,180,610 - - 15,180,610 Fixed income - 132,014,386 - 132,014,386 Derivatives 420,689 1,627,849 - 2,048,538 15,601,299 133,642,235 - 149,243,534

Financial liabilities Derivatives - (18,657) - (18,657) - (18,657) - (18,657) Total 15,601,299 133,623,578 - 149,224,877

December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 7,228,206 - - 7,228,206 Fixed income - 48,353,423 - 48,353,423 Funds 1,701,300 - - 1,701,300 Derivatives 388,631 464,003 - 852,634 9,318,137 48,817,426 - 58,135,563

Financial liabilities Derivatives (134,838) (153,188) - (288,026) (134,838) (153,188) - (288,026) Total 9,183,299 48,664,238 - 57,847,537

All fair value measurements above are recurring. The carrying values of all of the Fund’s financial instruments not carried at FVTPL approximate their fair values due to their short-term nature. Fair values are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as Level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the finance department. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements, if applicable.

a) Equities and Funds

The Fund's equity positions and investments in funds are classified as Level 1 as the securities are actively traded on a recognized exchange and a quoted price is available.

b) Bonds

The Fund's bond holdings are comprised of Canadian and US bonds. Bond pricing is obtained from bid and ask prices provided by independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Fund's bonds have been classified as Level 2.

27 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

c) Derivatives

Derivative assets and liabilities consist of futures contracts, options, interest rate swaps, credit default swaps and forward currency contracts. Long and short futures contracts and options are exchange traded and are classified as Level 1 as they are actively traded on a recognized exchange and a quoted price is available. Interest rate swaps are valued using indicative bid/ask prices from third party broker dealers while credit default swaps are valued based upon quotations from independent security pricing sources. The inputs that are significant to valuation are generally observable and therefore both interest rate swaps and credit default swaps have been classified as Level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2017 and 2016, the Fund did not hold any Level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ending December 31, 2017 and 2016.

Financial Instruments by Category

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the years ended December 31, 2017 and 2016.

Net realized Net change in Securities gains / unrealized Interest Interest Dividend Dividend lending (losses) gains / (losses) income expense income expense income Total December 31, 2017 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL (120,349) (1,237,442) 3,524,781 324,009 942 2,491,941 HFT 3,130,088 1,893,057 - - - - - 5,023,145 3,009,739 655,615 3,524,781 - 324,009 - 942 7,515,086 Financial liabilities at FVTPL: HFT (1,745,166) (58,918) (10,133) (189,142) - - (2,003,359) Total 1,264,573 596,697 3,514,648 (189,142) 324,009 - 942 5,511,727

Net realized Net change in Securities gains / unrealized Interest Interest Dividend Dividend Lending (losses) gains / (losses) income expense income expense Income Total December 31, 2016 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 257,960 895,949 1,855,109 - 214,828 - 2,264 3,226,110 HFT 788,016 227,319 329,040 - - - - 1,344,375 1,045,976 1,123,268 2,184,149 - 214,828 - 2,264 4,570,485 Financial liabilities at FVTPL: HFT (908,749) 1,007,975 - - - (69,579) - 29,647 Total 137,227 2,131,243 2,184,149 - 214,828 (69,579) 2,264 4,600,132

EXEMPLAR LEADERS FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 ASSETS Current assets Financial assets designated at fair value through profit and loss $38,548,511 $35,875,448 Financial assets held for trading Warrants at fair value 229,689 93,949 Cash and cash equivalents 684,291 1,455,785 Margin deposits 518,185 942,351 Accrued dividends receivable 81,785 77,498 Receivable for securities sold 187,050 33,029 Receivable for redeemable units issued 513 2,598 40,250,024 38,480,658

LIABILITIES Current liabilities Financial liabilities held for trading Investments sold short 352,230 717,277 Payable for securities purchased 330,158 397,560 Payable for redeemable units redeemed 23,691 47,264 Other liabilities (Note 10) 79,258 76,930 785,337 1,239,031

Net assets attributable to holders of redeemable units $39,464,687 $37,241,627

Net assets attributable to holders of redeemable units Series A $28,002,840 $27,576,099 Series F $11,461,847 $9,665,528

Number of redeemable units outstanding (Note 7) Series A 652,627 680,983 Series F 263,335 234,046

Net assets attributable to holders of redeemable units per unit Series A $42.91 $40.49 Series F $43.53 $41.30

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

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

EXEMPLAR LEADERS FUND

Statements of Comprehensive Income For the years ended December 31, 2017 2016 $ $ (Note 14)

INCOME Net gains on investments and derivatives Interest Income 30,140 39,479 Dividend income 928,380 960,083 Dividend expense on short sales - (5,882) Securities lending income (net) (Note 9) 37,922 4,469 Net realized gain (loss) on investments and derivatives 3,661,401 2,533,140 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 125,512 1,308,881 Net gains on investments and derivatives 4,783,355 4,840,170

Interest on cash 3,045 3,293 Foreign exchange gain (loss) (89,730) (1,646) Net change in unrealized foreign exchange gain (loss) (18,308) (88,152) Total income (net) 4,678,362 4,753,665

EXPENSES Securityholder reporting fees 190,816 176,095 Management fees (Note 10) 579,422 553,211 Performance fees (Note 10) 4,444 2,195 Interest expense - 41 Audit fees 18,523 18,076 Legal fees 4,873 7,121 Independent Review Committee fees 5,590 4,600 Custodial fees 4,321 3,603 Security borrowing expenses 10,147 63,325 Commissions and other portfolio transaction costs (Note 11) 58,157 40,461 Withholding tax expense 42,783 39,838 Harmonized sales tax 66,829 63,388 Total expenses 985,905 971,954

Increase (decrease) in net assets attributable to holders of redeemable units 3,692,457 3,781,711

Increase (decrease) in net assets attributable to holders of redeemable units (Note 13) Series A 2,599,279 2,694,192 Series F 1,093,178 1,087,519

Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A 3.96 3.94 Series F 4.58 4.83

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

EXEMPLAR LEADERS FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 27,576,099 28,508,038 Series F 9,665,528 8,851,024 37,241,627 37,359,062 Increase (decrease) in net assets attributable to holders of redeemable units Series A 2,599,279 2,694,192 Series F 1,093,178 1,087,519 3,692,457 3,781,711 Distributions to holders of redeemable units From net realized gains on investments and derivatives Series A (970,783) (1,541,468) Series F (569,819) (694,261) Total distributions to holders of redeemable units (1,540,602) (2,235,729)

Redeemable unit transactions Proceeds from redeemable units issued Series A 1,553,164 823,650 Series F 1,467,955 789,572

Reinvestments of distributions to holders of redeemable units Series A 957,143 1,522,856 Series F 494,782 625,148

Redemption of redeemable units Series A (3,712,062) (4,431,169) Series F (689,777) (993,474) Net increase (decrease) from redeemable unit transactions 71,205 (1,663,417)

Net increase (decrease) in net assets attributable to holders of redeemable units 2,223,060 (117,435)

Series A 28,002,840 27,576,099 Series F 11,461,847 9,665,528 Net assets attributable to holders of redeemable units at end of year 39,464,687 37,241,627

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

EXEMPLAR LEADERS FUND

Statements of Cash Flows For the years ended December 31, 2017 2016 $ $ (Note 14) Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 3,692,457 3,781,711 Adjustment for: Unrealized foreign exchange (gain) loss on cash (18,113) (87,289) Net realized (gain) loss on investments and derivatives (3,661,401) (2,533,140) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (125,512) (1,308,881) Purchase of investments (22,817,313) (17,183,151) Proceeds on sale of investments 23,208,953 20,246,259 Change in accrued dividends receivable (4,287) 14,488 Change in accrued dividends payable - (3,289) Change in other liabilities 2,328 41,461 Change in margin deposits 424,166 646,091 Net cash from (used in) operating activities 701,278 3,614,260

Cash flows from (used in) financing activities Proceeds from redeemable units issued 2,358,104 1,396,223 Redemption of redeemable units (3,760,312) (5,263,225) Distributions paid to holders of redeemable units, net of reinvested distributions (88,677) (87,725) Net cash from (used in) financing activities (1,490,885) (3,954,727)

Net Increase (decrease) in cash (789,607) (340,467)

Cash at beginning of the year 1,455,785 1,708,963 Unrealized foreign exchange gain (loss) on cash 18,113 87,289 Cash at end of the year 684,291 1,455,785

Supplemental information: Interest received* 33,185 42,772 Dividends received, net of withholding tax* 881,310 934,733 Interest paid* - (41) Dividends paid* - (9,171) *Included as part of cash flows from operating activities

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

EXEMPLAR LEADERS FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Long - 93.44% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - 10.05% Enercare Inc. CAD 28,000 428,585 574,280 Magna International Inc. CAD 23,400 631,417 1,667,016 Martinrea International Inc. CAD 39,100 338,365 627,164 QYOU Media Inc. CAD 325,000 120,250 108,875 Sleep Country Canada Holdings Inc. CAD 25,300 512,866 845,020 Uni-Select Inc. CAD 5,000 130,520 142,050 2,162,003 3,964,405

Energy - 20.59% AltaGas Ltd., Subscription Receipts CAD 13,000 400,649 368,810 Cameco Corporation CAD 19,600 258,187 227,556 Cardinal Energy Ltd.* CAD 51,400 244,219 261,626 Crescent Point Energy Corp. CAD 13,400 119,888 128,372 Enbridge Income Fund Holdings Inc.* CAD 4,800 133,989 143,088 Freehold Royalties Ltd. CAD 180,600 2,444,463 2,537,430 Gran Tierra Energy Inc. CAD 93,500 267,986 318,835 Granite Oil Corp.* CAD 28,500 128,157 88,920 High Arctic Energy Services Inc.* CAD 30,600 130,950 119,646 Inter Pipeline Ltd. CAD 14,900 398,575 387,847 International Frontier Resources Corporation CAD 185,500 51,940 34,318 Keyera Corp. CAD 9,500 333,976 336,490 Kinder Morgan Canada Limited CAD 9,400 159,800 159,894 Pembina Pipeline Corporation CAD 6,800 206,320 309,468 PentaNova Energy Corp. CAD 376,800 188,400 145,068 Pine Cliff Energy Ltd.* CAD 235,300 151,281 108,238 PrairieSky Royalty Ltd. CAD 10,700 332,821 343,042 ProPetro Holding Corp.* USD 4,200 89,403 106,433 Razor Energy Corp.* CAD 190,300 485,030 313,995 Source Energy Services Ltd. CAD 28,500 262,310 259,065 STEP Energy Services Ltd. CAD 19,500 238,875 200,070 Tamarack Valley Energy Ltd. CAD 65,400 144,113 187,044 Tidewater Midstream and Infrastructure Ltd. CAD 113,900 174,695 173,128 Trican Well Service Ltd. CAD 61,100 228,253 249,288 U.S. Silica Holdings, Inc.* USD 6,700 230,352 274,217 ZCL Composites Inc. CAD 30,600 235,950 343,026 8,040,582 8,124,914

Financials - 9.75% Alaris Royalty Corp. CAD 19,100 374,969 394,797 ECN Capital Corp. CAD 106,200 319,286 417,366 Element Fleet Management Corp. CAD 167,800 1,602,840 1,594,100 Fiera Capital Corporation, Class A CAD 7,000 91,000 91,000 Legg Mason, Inc.* USD 19,900 801,095 1,050,100 Santander Consumer USA Holdings Inc.* USD 12,900 225,802 301,929 3,414,992 3,849,292

Health Care - 10.62% Acasti Pharma Inc. USD 118,338 171,778 140,242 Acasti Pharma Inc. USD 194,000 247,727 290,191 Anthem, Inc. USD 8,600 1,747,454 2,432,403 Gilead Sciences, Inc. USD 2,200 225,462 198,113 Immunovaccine Inc.* (3) CAD 75,500 41,525 177,425 Opsens Inc. CAD 263,400 224,383 297,642 Profound Medical Corp.* CAD 199,900 188,991 167,916 Theratechnologies Inc.* CAD 67,800 213,526 486,804 3,060,846 4,190,736

EXEMPLAR LEADERS FUND Schedule of Investment Portfolio – As at December 31, 2017

Industrials - 10.05% CanWel Building Materials Group Ltd.* CAD 50,100 231,893 369,237 CanWel Building Materials Group Ltd., Subscription Receipts CAD 65,000 380,250 471,900 DIRTT Environmental Solutions Ltd.* CAD 75,700 422,856 510,218 FLYHT Aerospace Solutions Ltd. CAD 103,700 197,962 203,252 Generac Holdings Inc. USD 6,500 306,627 404,603 Nanotech Security Corp. CAD 98,000 112,700 145,040 United Parcel Service, Inc., Class B USD 9,500 1,216,108 1,422,830 WestJet Airlines Ltd. CAD 16,700 340,933 440,212 3,209,329 3,967,292

Information Technology - 16.70% AcuityAds Holding Inc. CAD 181,600 355,713 299,640 Alphabet Inc., Class A USD 340 376,146 450,202 BSM Technologies Inc. CAD 188,400 126,566 265,644 Cisco Systems, Inc. USD 18,600 741,454 895,462 Cortex Business Solutions Inc. CAD 5,700 23,367 25,080 Espial Group Inc.* CAD 224,200 226,465 450,642 Immersion Corporation* USD 16,600 184,832 147,315 Kinaxis Inc. CAD 3,100 44,037 238,049 Memex Inc., Subscription Receipts CAD 450,000 72,000 54,000 Microsoft Corporation USD 21,700 2,271,169 2,333,266 Pivot Technology Solutions, Inc.* CAD 16,500 37,890 36,300 Points International Ltd. CAD 10,900 112,859 141,700 Quarterhill Inc. CAD 160,100 401,305 371,432 Sierra Wireless, Inc. CAD 18,800 483,298 483,160 Smart Employee Benefits Inc. CAD 411,300 65,808 102,825 TECSYS Inc. CAD 5,300 57,001 88,934 TrackX Holdings Inc. CAD 110,000 41,800 31,900 VersaPay Corporation CAD 82,500 94,431 173,250 5,716,141 6,588,801

Materials - 4.58% Lithium Americas Corp.* CAD 6,640 24,555 74,235 LSC Lithium Corporation* CAD 259,400 337,220 425,416 Neo Performance Materials Inc. CAD 10,400 187,200 186,160 Nubeva Inc., Subscription Receipts CAD 129,000 77,400 77,400 Osisko Gold Royalties Ltd CAD 25,500 384,347 370,260 U.S. Concrete, Inc.* USD 6,400 459,724 672,948 1,470,446 1,806,419

Real Estate - 5.13% American Hotel Income Properties REIT LP CAD 30,700 307,387 286,738 Inovalis Real Estate Investment Trust* CAD 60,300 476,982 601,191 National Storage Affiliates Trust* USD 3,800 102,072 130,210 Pure Multi-Family REIT LP, Class A CAD 70,100 541,913 529,255 Slate Retail REIT, Class U CAD 10,500 151,230 136,710 Tricon Capital Group Inc.* CAD 29,600 216,532 341,880 1,796,116 2,025,984

Telecommunication Services - 1.62% Verizon Communications Inc. USD 9,600 532,591 638,717 532,591 638,717

Utilities - 4.35% National Fuel Gas Company* USD 5,700 368,389 393,425 Polaris Infrastructure Inc. CAD 76,000 652,920 1,321,640 1,021,309 1,715,065 30,424,355 36,871,625

EXEMPLAR LEADERS FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Short - (0.89%) No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - (0.89%) Tesla Inc. USD (900) (346,564) (352,230) (346,564) (352,230)

Funds - Long - 4.25% No. of Average Fair Security Name Currency Shares Cost ($) Value ($) Boyd Group Income Fund CAD 10,600 284,946 1,069,434 Crius Energy Trust CAD 66,900 583,852 607,452 868,798 1,676,886

Warrants - Long - 0.58% Strike Maturity Average Fair Security Name Currency Price ($) Date Quantity Cost ($) Value ($) Acasti Pharma Inc. CAD 1.50 03-12-18 205,000 - - Acasti Pharma Inc. CAD 2.15 02-21-22 70,500 - 16,679 Canada Zinc Metals Corp. CAD 0.55 12-15-18 64,500 - - Ceapro Inc. CAD 1.50 07-13-18 24,100 - - CVR Medical Corp. CAD 0.70 10-19-18 69,000 - - Eguana Technologies Inc. CAD 0.39 12-22-19 84,000 - - FLYHT Aerospace Solutions Ltd. CAD 0.25 05-20-18 21,800 - 24 Hudson Resources Inc. CAD 0.50 02-16-20 91,500 - 9,269 Immunovaccine Inc. CAD 0.72 06-08-18 59,000 - 96,170 Imperus Technologies Corp. CAD 0.55 01-28-18 72,000 - - Nemaska Lithium Inc. CAD 1.50 07-08-19 24,100 6,025 20,244 Pioneering Technologies Inc.(3) CAD 1.80 03-22-19 33,000 - - Prairie Provident Resources Inc. CAD 0.87 03-16-19 49,000 - 5,513 Primero Mining Corp. CAD 3.32 06-25-18 13,000 2,600 33 Profound Medical Corp. CAD 1.40 09-20-20 97,500 10,530 9,581 Profound Medical Corp. CAD 6.39 09-23-19 100,000 12,000 - QYOU Media Inc. CAD 0.55 11-21-19 162,500 - 8,206 Razor Energy Corp. CAD 3.50 05-24-18 65,000 - - Replicel Life Sciences Inc. CAD 2.00 02-24-20 64,000 - - Royal Nickel Corp. CAD 0.50 09-23-18 81,000 - - TAG Oil Ltd. CAD 0.90 03-20-19 96,000 192 10,560 Theralase Technologies Inc. CAD 0.38 11-10-21 258,000 2,580 22,236 Titan Medical Inc. CAD 0.75 09-20-21 195,000 9,750 23,400 Titan Medical Inc. CAD 0.40 03-16-19 32,500 - 2,966 Titan Medical Inc. CAD 0.50 03-16-21 32,500 - 4,216 TrackX Holdings Inc.(3) CAD 0.55 05-10-19 88,000 - 592 43,677 229,689

Commissions and other portfolio transaction costs (26,565) - Total Investments - 97.37% 30,963,701 38,425,970 Cash and Other Net Assets (Liabilities) - 2.63% 1,038,717 Net Assets Attributable to Holders of Redeemable Units - 100.00% 39,464,687

(1) Convertible (2) Callable (3) Restricted *Denotes all or part of securities on loan

35 EXEMPLAR LEADERS FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The investment objective of the Exemplar Leaders Fund is to maximize absolute returns on investments through securities selection and asset allocation. The Fund focuses on achieving growth of capital through superior securities selection and pursues a long-term investment program with the aim of generating capital gains. The Fund attempts to reduce volatility through diversifying the portfolio across both economic sectors and market capitalizations (company size and liquidity). The Fund invests primarily in equity and equity- related securities of North American companies. The Fund may also invest in international companies.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity, warrants and debt securities is limited to the fair value of those positions. The maximum loss on equities and debt sold short can be unlimited.

The management of these risks is carried out by the Manager in accordance with Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

As at December 31, 2017 and 2016 the Fund had no investments in debt instruments and therefore was not subject to related credit risk.

The Fund is exposed to counterparty credit risk on margin on deposit and receivables for securities sold. The Fund’s brokerage agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's brokerage services are provided by BMO Nesbitt Burns which has a credit rating of A1 (2016: Aa3) as rated by Moody's bond rating services. Cash collateral has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is presented as “Margin deposits” in the Statements of Financial Position.

The Fund is exposed to counterparty credit risk on cash and other receivable balances. The Fund’s custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2016: A1).

The Fund is exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating services of Aa2 (2016: Aa1).

Liquidity Risk

All of the Fund’s liabilities are typically due in less than 3 months except for performance fees which are accrued daily and payable annually on December 31 (if applicable). Redeemable units are redeemable on demand at the holder’s option. However, holders of these instruments typically retain them for a longer period.

36 EXEMPLAR LEADERS FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Market Risk

(a) Currency Risk

The tables below indicate the Fund’s exposure to foreign currencies as at December 31, 2017 and 2016, in Canadian dollar terms. The tables also illustrate the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to foreign currencies, with all other variables held constant. Non-monetary items include equities, margin deposits, funds and warrants. Monetary items include cash and other current receivables and payables.

December 31, 2017 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 807,848 12,291,534 13,099,382 80,785 1,229,153 1,309,938 United States Dollar - Short (141,016) (352,230) (493,246) (14,102) (35,223) (49,325) Total 666,832 11,939,304 12,606,136 66,683 1,193,930 1,260,613 % of net assets attributable to holders of redeemable units 1.7% 30.3% 31.9% 0.2% 3.0% 3.2%

December 31, 2016 Impact on net assets attributable to holders of Exposure redeemable shares Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 1,764,380 12,582,581 14,346,961 176,438 1,258,258 1,434,696 United States Dollar - Short - (717,277) (717,277) - (71,728) (71,728) Total 1,764,380 11,865,304 13,629,684 176,438 1,186,530 1,362,968 % of net assets attributable to holders of redeemable units 4.7% 31.9% 36.6% 0.5% 3.2% 3.7%

(b) Interest Rate Risk

As at December 31, 2017 and 2016 the Fund did not hold any interest-bearing securities, and therefore was not subject to significant interest rate risk.

To achieve the investment objective of the Fund, the Manager: (i) makes long term investments of securities of issuers which the Manager believes present the greatest opportunity for capital appreciation; and (ii) manages the portfolio’s sector allocation, increasing and decreasing exposure to different sectors of the market as appropriate.

As at December 31, 2017, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is $1,921,299 (all other variables held constant) (2016: $1,762,606).

The Fund has the ability to take short positions, in total not exceeding 20% of the Net Asset Value of the Fund. Until the Fund covers its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold short at prices which may be significantly higher than the fair value reflected on the financial statements.

37 EXEMPLAR LEADERS FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The following is a summary of the Fund's concentration risk:

December 31, 2017 December 31, 2016 Market Segment Long (%) Short (%) Long (%) Short (%) Consumer Discretionary 10.0 (0.9) 8.7 (1.9) Consumer Staples - - 0.9 - Energy 20.6 - 13.4 - Financials 9.8 - 12.2 - Funds 4.2 - 3.0 - Health Care 10.6 - 14.1 - Industrials 10.1 - 11.2 - Information Technology 16.7 - 16.2 - Materials 4.6 - 4.6 - Real Estate 5.1 - 5.1 - Telecommunication Services 1.6 - 1.8 - Utilities 4.4 - 5.1 - Derivatives 0.6 - 0.3 - Totals 98.3 (0.9) 96.6 (1.9)

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2017 and 2016:

December 31, 2017 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 35,869,259 924,966 77,400 36,871,625 Funds 1,676,886 - - 1,676,886 Derivatives 220,396 9,293 - 229,689 37,766,541 934,259 77,400 38,778,200

Financial liabilities Equities sold short (352,230) - - (352,230) (352,230) - - (352,230) Total 37,414,311 934,259 77,400 38,425,970

38 EXEMPLAR LEADERS FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 34,519,005 251,217 - 34,770,222 Funds 1,105,226 - - 1,105,226 Derivatives 19,163 74,786 - 93,949 35,643,394 326,003 - 35,969,397

Financial liabilities Equities sold short (717,277) - - (717,277) (717,277) - - (717,277) Total 34,926,117 326,003 - 35,252,120

All fair value measurements above are recurring. The carrying values of all of the Fund’s financial instruments not carried at FVTPL approximate their fair values due to their short-term nature. Fair values are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as Level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements.

The following table presents the movement in Level 3 instruments for the years ended December 31, 2017 and 2016.

Equities December 31, 2017 ($) December 31, 2016 ($) Opening balance, beginning of year - - Net purchases and sales 77,400 - Net transfers in (out) - - Realized gain (loss) - - Unrealized gain (loss) - - Closing balance, end of year 77,400 -

There were no transfers from Level 2 to Level 1 during the year ended December 31, 2017 (2016: nil). a) Equities and Funds

Most of the Fund's equity positions and all investments in Funds are classified as Level 1 as the securities are actively traded on a recognized exchange and a quoted price is available. Equity positions which have resale restrictions but otherwise trade on the market are classified as Level 2.

On December 20, 2017, the Fund purchased 129,000 subscription receipts of Nubeva Inc., for a total cost of $77,400. As at December 31, 2017, the subscription receipts are valued at cost. Nubeva Inc. is a private company and is therefore classified as Level 3. b) Warrants

Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded warrants are classified as Level 1. When the inputs that are significant to valuation are generally observable, the warrants are classified as Level 2. Warrants that have significant unobservable inputs are classified as Level 3.

39 EXEMPLAR LEADERS FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Financial Instruments by Category

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the years ended December 31, 2017 and 2016. Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2017 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 3,944,724 (43,172) 30,140 - 928,380 - 37,922 4,897,994 HFT - 125,018 - - - - 125,018 3,944,724 81,846 30,140 - 928,380 - 37,922 5,023,012 Financial liabilities at FVTPL: HFT (283,323) 43,666 - - - - - (239,657) Total 3,661,401 125,512 30,140 - 928,380 - 37,922 4,783,355

Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2016 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 1,961,080 1,353,075 - - 999,562 - 4,469 4,318,186 HFT 626,766 (22,933) - - - - - 603,833 2,587,846 1,330,142 - - 999,562 - 4,469 4,922,019 Financial liabilities at FVTPL: HFT (54,706) (21,261) - - - (5,882) - (81,849) Total 2,533,140 1,308,881 - - 999,562 (5,882) 4,469 4,840,170

EXEMPLAR PERFORMANCE FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 ASSETS Current assets Financial assets designated at fair value through profit and loss $36,017,463 $31,254,792 Financial assets held for trading Unrealized gain on forward currency contracts 6,651 - Cash and cash equivalents 3,525,498 7,550,941 Margin deposits 1,641,625 1,637,454 Accrued dividends receivable 57,652 49,087 Receivable for securities sold 347,936 57,455 Receivable for redeemable units issued 1,150 46,109 41,597,975 40,595,838

LIABILITIES Current liabilities Financial liabilities held for trading Investments sold short 360,783 343,502 Unrealized loss on forward currency contracts 251 - Payable for securities purchased 413,428 116,876 Payable for redeemable units redeemed - 29,492 Accrued dividends payable 15 - Other liabilities (Note 10) 85,413 76,429 859,890 566,299

Net assets attributable to holders of redeemable units $40,738,085 $40,029,539

Net assets attributable to holders of redeemable units Series A $13,102,869 $12,339,997 Series AD $261,332 $254,875 Series F $22,712,803 $19,431,447 Series FD $486,644 $401,269 Series I $5,501 $2,458,712 Series L $3,696,761 $5,051,406 Series LD $472,175 $91,833

Continued on next page.

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

EXEMPLAR PERFORMANCE FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 Continued from previous page.

Number of redeemable units outstanding (Note 7) Series A 1,004,422 1,032,860 Series AD 24,830 25,946 Series F 1,686,003 1,591,950 Series FD 44,102 39,436 Series I 461 227,887 Series L 309,149 459,491 Series LD 44,217 9,179

Net assets attributable to holders of redeemable units per unit Series A $13.05 $11.95 Series AD $10.52 $9.82 Series F $13.47 $12.21 Series FD $11.03 $10.18 Series I $11.94 $10.79 Series L $11.96 $10.99 Series LD $10.68 $10.00

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

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

EXEMPLAR PERFORMANCE FUND

Statements of Comprehensive Income For the years ended December 31, 2017 2016 $ $ (Note 14) INCOME Net gains (losses) on investments and derivatives Interest Income 6,842 10,812 Dividend income 620,730 388,140 Dividend expense on short sales (4,971) (20,772) Securities lending income (net) (Note 9) 39,962 4,305 Net realized gain (loss) on investments and derivatives 1,315,487 (49,504) Net change in unrealized appreciation (depreciation) in value of investments and derivatives 2,789,073 1,922,737 Net gains (losses) on investments and derivatives 4,767,123 2,255,718

Other income items: Interest on cash 13,582 64,304 Foreign exchange gain (loss) (177,956) (175,692) Net change in unrealized foreign exchange gain (loss) (15,090) (27,053) Total income (net) 4,587,659 2,117,277

EXPENSES Securityholder reporting fees 200,290 187,629 Management fees (Note 10) 579,003 485,073 Performance fees (Note 10) 5,515 330 Interest expense 203 352 Audit fees 18,523 16,244 Legal fees 4,873 6,468 Independent Review Committee fees 5,590 4,600 Custodial fees 6,159 17,621 Security borrowing expenses 1,244 4,073 Commissions and other portfolio transaction costs (Note 11) 46,099 23,676 Withholding tax expense 15,827 6,667 Harmonized sales tax 91,822 80,941 Total expenses before manager absorption 975,148 833,674 Less: expenses absorbed by manager (Note 10) - (30,225) Total expenses after manager absorption 975,148 803,449

Increase (decrease) in net assets attributable to holders of redeemable units 3,612,511 1,313,828

Increase (decrease) in net assets attributable to holders of redeemable units (Note 13) Series A 1,084,789 402,041 Series AD 24,198 6,249 Series F 2,064,263 682,350 Series FD 43,694 13,526 Series I 15,872 58,612 Series L 347,805 149,255 Series LD 31,889 1,795

Increase (decrease) in net assets attributable to holders of redeemable units per unit (Note 13) Series A 1.11 0.42 Series AD 0.90 0.22 Series F 1.25 0.53 Series FD 1.02 0.37 Series I 0.80 0.21 Series L 0.87 0.36 Series LD 0.90 0.19

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

EXEMPLAR PERFORMANCE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 12,339,997 7,664,351 Series AD 254,875 225,063 Series F 19,431,447 10,828,387 Series FD 401,269 335,525 Series I 2,458,712 4,875,100 Series L 5,051,406 2,934,980 Series LD 91,833 99,846 40,029,539 26,963,252

Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,084,789 402,041 Series AD 24,198 6,249 Series F 2,064,263 682,350 Series FD 43,694 13,526 Series I 15,872 58,612 Series L 347,805 149,255 Series LD 31,889 1,795 3,612,510 1,313,828 Distributions to holders of redeemable units From return of capital Series A - - Series AD (5,352) (5,271) Series F - - Series FD (8,735) (7,279) Series I - - Series L - - Series LD (7,611) (1,915) Total distributions to holders of redeemable units (21,698) (14,465)

Redeemable unit transactions Proceeds from redeemable units issued Series A 2,822,430 6,855,701 Series AD 26,641 104,914 Series F 6,988,191 10,513,878 Series FD 78,030 101,300 Series I 5,000 480,000 Series L 118,409 1,970,302 Series LD 349,806 -

Reinvestments of distributions to holders of redeemable units Series A - - Series AD 4,621 4,541 Series F - - Series FD 1,776 2,270 Series I - - Series L - - Series LD 6,455 1,915

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

EXEMPLAR PERFORMANCE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2017 2016 $ $

Continued from previous page.

Redemption of redeemable units Series A (3,144,347) (2,582,096) Series AD (43,651) (80,621) Series F (5,771,098) (2,593,168) Series FD (29,390) (44,073) Series I (2,474,083) (2,955,000) Series L (1,820,859) (3,131) Series LD (197) (9,808)

Net increase (decrease) from redeemable unit transactions (2,882,266) 11,766,924

Net increase (decrease) in net assets attributable to holders of redeemable units 708,546 13,066,287

Series A 13,102,869 12,339,997 Series AD 261,332 254,875 Series F 22,712,803 19,431,447 Series FD 486,644 401,269 Series I 5,501 2,458,712 Series L 3,696,761 5,051,406 Series LD 472,175 91,833 Net assets attributable to holders of redeemable units at end of year 40,738,085 40,029,539

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

EXEMPLAR PERFORMANCE FUND

Statements of Cash Flows For the years ended December 31, 2017 2016 $ $ (Note 14) Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 3,612,511 1,313,828 Adjustment for: Unrealized foreign exchange (gain) loss on cash (14,308) (27,640) Net realized (gain) loss on investments and derivatives (1,315,487) 49,504 Change in unrealized (appreciation) depreciation in value of investments and derivatives (2,789,073) (1,922,737) Purchase of investments (29,279,724) (33,155,211) Proceeds on sale of investments 28,638,571 16,784,378 Change in accrued dividends receivable (8,565) (30,264) Change in accrued interest receivable - 7 Change in accrued dividends payable 15 (962) Change in other liabilities 8,984 53,738 Change in margin deposits (4,171) (873,827) Net cash from (used in) operating activities (1,151,247) (17,809,186)

Cash flows from (used in) financing activities Proceeds from redeemable units issued 8,981,837 18,918,407 Redemption of redeemable units (11,861,495) (7,123,778) Distributions paid to holders of redeemable units, net of reinvested distributions (8,846) (5,739) Net cash from (used in) financing activities (2,888,504) 11,788,890

Net Increase (decrease) in cash (4,039,751) (6,020,296)

Cash at beginning of the year 7,550,941 13,543,597 Unrealized foreign exchange gain (loss) on cash 14,308 27,640 Cash at end of the year 3,525,498 7,550,941

Supplemental information: Interest received* 20,424 75,123 Dividends received, net of withholding tax* 589,496 351,209 Interest paid* (203) (352) Dividends paid* (4,956) (21,734) *Included as part of cash flows from operating activities

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

EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Long - 80.80% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - 10.76% Amazon.com, Inc. USD 300 383,955 441,007 Canadian Tire Corporation, Limited, Class A CAD 2,600 334,275 426,140 DHX Media Ltd.* CAD 73,900 532,933 335,506 Diversified Royalty Corp. CAD 66,200 169,013 229,052 Dollarama Inc. CAD 3,500 432,257 549,675 Imvescor Restaurant Group Inc. CAD 36,900 128,166 159,777 Linamar Corporation CAD 1,700 126,380 124,457 McDonald's Corporation USD 600 120,240 129,813 Mohawk Industries, Inc. USD 300 98,943 104,042 Overstock.com, Inc.* USD 2,100 124,529 168,677 Park Lawn Corporation CAD 17,500 275,482 399,875 Sleep Country Canada Holdings Inc. CAD 12,000 290,068 400,800 Spin Master Corp. CAD 14,300 385,851 772,486 Stingray Digital Group Inc. CAD 10,600 77,586 105,152 Thor Industries, Inc. USD 200 38,055 37,891 3,517,733 4,384,350

Consumer Staples - 5.46% Alimentation Couche-Tard Inc., Class B CAD 2,500 143,050 163,975 Altria Group, Inc. USD 2,200 191,650 197,477 Constellation Brands, Inc., Class A USD 1,100 233,884 316,044 GreenSpace Brands Inc. CAD 46,800 66,273 65,988 Jamieson Wellness Inc. CAD 10,000 157,500 223,400 L'Oreal S.A. ADR USD 800 42,895 44,528 Liquor Stores N.A. Ltd. CAD 12,200 118,052 130,296 Loblaw Companies Limited CAD 5,800 409,768 395,676 Maple Leaf Foods Inc. CAD 600 20,977 21,492 Premium Brands Holdings Corporation CAD 2,500 107,463 257,900 Tyson Foods, Inc., Class A USD 4,000 348,145 407,620 1,839,657 2,224,396

Energy - 8.78% AltaGas Ltd., Subscription Receipts CAD 14,600 448,474 414,202 Enerflex Ltd. CAD 17,000 294,922 260,780 Freehold Royalties Ltd. CAD 14,300 219,408 200,915 Paramount Resources Ltd., Class A CAD 15,900 307,009 308,778 Parex Resources Inc. CAD 27,400 427,324 497,584 Parkland Fuel Corporation CAD 3,500 99,718 93,975 ShawCor Ltd. CAD 8,100 265,513 222,102 TransCanada Corporation CAD 15,100 803,178 923,818 Trican Well Service Ltd. CAD 30,900 145,145 126,072 Vermilion Energy Inc.* CAD 9,600 401,423 438,528 Whitecap Resources Inc. CAD 10,000 88,000 89,500 3,500,114 3,576,254

Financials - 9.81% Bank of Nova Scotia (The) CAD 5,500 447,235 446,160 Burford Capital Limited GBP 30,000 368,765 586,531 CME Group Inc. USD 600 113,553 110,151 Comerica Incorporated USD 1,400 126,891 152,768 E*TRADE Financial Corporation USD 1,800 97,722 112,157 ECN Capital Corp. CAD 89,300 291,994 350,949 GMP Capital Inc.* CAD 5,500 15,295 19,140 JPMorgan Chase & Co. USD 500 66,563 67,212 Manulife Financial Corporation CAD 7,500 185,903 196,650 National Bank of Canada CAD 1,800 96,747 112,896 Onex Corporation CAD 2,000 186,052 184,380 Royal Bank of Canada CAD 12,900 1,237,120 1,324,185 State Bank Financial Corporation USD 2,500 87,679 93,772 Thomson Reuters Corporation CAD 2,700 160,993 147,933

EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2017

TMX Group Limited CAD 1,300 90,705 91,572 3,573,217 3,996,456

Health Care - 2.22% Helius Medical Technologies, Inc.* CAD 72,500 92,999 231,275 Knight Therapeutics Inc. CAD 30,000 249,921 249,300 TSO3 Inc. CAD 2,200 6,013 5,742 UnitedHealth Group Incorporated USD 500 137,292 138,559 Zoetis Inc. USD 3,089 179,281 279,722 665,506 904,598

Industrials - 15.37% Aecon Group Inc. CAD 2,000 34,216 39,880 Ag Growth International Inc. CAD 8,600 405,745 458,724 CAE Inc. CAD 14,400 248,646 336,240 Canadian National Railway Company CAD 1,300 101,881 134,745 Canadian Pacific Railway Limited CAD 800 178,610 183,728 Caterpillar Inc. USD 700 113,558 138,655 Chorus Aviation Inc. CAD 700 6,206 6,755 CSX Corporation USD 700 47,516 48,403 Embraer S.A., ADR* USD 500 15,276 15,040 Honeywell International Inc. USD 2,400 448,764 462,656 Morneau Shepell Inc. CAD 10,900 181,970 243,070 New Flyer Industries Inc. CAD 16,400 717,529 885,600 Northrop Grumman Corporation USD 600 190,124 231,472 Raytheon Company USD 2,200 425,674 519,480 Richelieu Hardware Ltd. CAD 14,600 345,008 500,634 Rocky Mountain Dealerships Inc. CAD 29,500 304,725 404,150 SNC-Lavalin Group Inc. CAD 2,900 161,534 165,445 Textron Inc. USD 600 43,416 42,680 Toromont Industries Ltd. CAD 4,200 134,882 231,420 United Rentals, Inc. USD 2,200 342,523 475,400 United Technologies Corporation USD 1,200 174,505 192,427 Univar Inc.* USD 1,400 54,357 54,483 Waste Connections, Inc. CAD 3,400 287,354 303,144 WSP Global Inc.* CAD 3,100 124,003 185,721 5,088,022 6,259,952

Information Technology - 9.09% Adobe Systems Incorporated USD 600 133,497 132,166 Apple Inc. USD 400 87,259 85,089 Avigilon Corporation CAD 2,000 36,763 42,180 Blackhawk Network Holdings, Inc.* USD 1,277 65,241 57,225 Broadcom Limited USD 1,100 239,386 355,216 Computer Modelling Group Ltd. CAD 2,700 24,747 25,920 Constellation Software Inc. CAD 300 133,336 228,606 Descartes Systems Group Inc. (The) USD 10,821 237,518 386,297 Intel Corporation USD 400 23,620 23,209 Kinaxis Inc. CAD 3,400 118,814 261,086 Mastercard Incorporated, Class A USD 600 113,446 114,156 Micron Technology, Inc. USD 5,500 171,232 284,283 Microsoft Corporation USD 700 52,068 75,267 Oracle Corporation USD 4,900 320,043 291,212 PayPal Holdings, Inc. USD 2,100 182,858 194,335 Pure Technologies Ltd. CAD 2,400 14,413 21,552 QUALCOMM Incorporated USD 300 25,066 24,142 Red Hat, Inc. USD 100 15,526 15,097 salesforce.com, inc. USD 1,200 163,059 154,204 Shopify Inc., Class A USD 2,600 259,436 330,088 Solium Capital Inc. CAD 10,400 106,440 113,464 Square, Inc., Class A* USD 4,000 144,953 174,321 Visa Inc., Class A* USD 2,200 247,233 315,311 2,915,954 3,704,426

EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2017

Materials - 11.74% Agnico Eagle Mines Limited CAD 9,900 591,797 574,596 Albemarle Corporation USD 3,300 445,682 530,501 CCL Industries Inc., Class B CAD 23,900 1,302,203 1,388,112 Hudbay Minerals Inc. CAD 39,500 390,241 439,635 Interfor Corporation CAD 1,700 35,460 35,904 Kirkland Lake Gold Ltd. CAD 17,800 184,405 343,006 Lithium Americas Corp. CAD 7,220 35,140 80,720 LSC Lithium Corporation* CAD 199,100 258,830 326,524 Lucara Diamond Corp. CAD 85,500 295,713 240,255 Lundin Mining Corporation CAD 1,900 15,121 15,884 Methanex Corporation CAD 5,000 230,572 380,800 Neo Performance Materials Inc. CAD 16,000 288,000 286,400 Stella-Jones Inc. CAD 400 19,984 20,200 Trevali Mining Corporation CAD 80,300 50,159 122,056 4,143,307 4,784,593

Real Estate - 3.98% Altus Group Limited CAD 4,000 141,623 147,720 Pure Multi-Family REIT LP, Class A CAD 55,600 500,892 419,780 StorageVault Canada Inc. CAD 400,000 340,000 1,052,000 982,515 1,619,500

Telecommunication Services - 0.22% Rogers Communications Inc., Class B CAD 1,400 92,246 89,670 92,246 89,670

Utilities - 3.37% Brookfield Infrastructure Partners L.P. CAD 3,700 153,659 208,606 Brookfield Infrastructure Partners L.P. USD 12,700 531,745 715,342 Northland Power Inc. CAD 19,200 455,156 448,320 1,140,560 1,372,268 27,458,831 32,916,463 Equities - Short - (0.89%) No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - (0.88%) Chipotle Mexican Grill, Inc., Class A USD (200) (72,272) (72,662) MTY Food Group Inc. CAD (5,100) (230,687) (286,110) (302,959) (358,772)

Consumer Staples - (0.01%) AGT Food and Ingredients Inc. CAD (100) (2,038) (2,011) (2,038) (2,011)

(304,997) (360,783) Funds - Long - 7.61% No. of Average Fair Security Name Currency Shares Cost ($) Value ($) BMO Equal Weight Banks Index ETF CAD 600 16,726 17,826 BMO Equal Weight US Banks Hedged to CAD Index ETF* CAD 900 26,450 26,712 Boyd Group Income Fund CAD 14,600 866,354 1,472,994 ETFMG Prime Cyber Security ETF USD 1,300 49,578 51,703 Financial Select Sector SPDR Fund USD 2,700 96,645 94,724 Global X Lithium & Battery Tech ETF Fund USD 3,500 166,179 170,525 Horizons Marijuana Life Sciences Index ETF, Class A CAD 2,000 26,165 37,860 Industrial Select Sector SPDR Fund USD 1,200 107,463 114,141 iShares Russell 2000 ETF USD 200 36,951 38,328 iShares S&P/TSX Capped Energy ETF CAD 4,500 53,433 55,215 iShares Silver Trust ETF USD 2,200 44,679 44,219 SPDR Gold Shares USD 1,000 158,092 155,428 SPDR S&P 500 ETF Trust USD 1,700 582,792 570,253

EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2017

SPDR S&P Oil & Gas Exploration and Production ETF* USD 900 41,258 42,062 VanEck Vectors Semiconductor ETF Fund* USD 1,700 222,866 209,010 2,495,631 3,101,000 Commissions and other portfolio transaction costs (13,185) - Total Investments - 87.53% 29,636,280 35,656,680 Derivatives (see schedule of derivative instruments) - 0.02% 6,400 Cash and Other Net Assets (Liabilities) - 12.45% 5,075,005 Net Assets Attributable to Holders of Redeemable Units - 100.00% 40,738,085

*Denotes all or part of securities on loan

Schedule of Derivative Instruments

Forward Currency Contracts - 0.02%

Purchased Sold Credit Contract Maturity Unrealized Notional Value Notional Value Counterparty Currency ($) Currency ($) Rating Rate ($) Date Gain/(Loss) ($) BNY Mellon CAD 400,153 USD (315,000) A1 1.270325 01-04-18 4,204 BNY Mellon CAD 398,003 USD (315,000) A1 1.263501 01-04-18 2,054 BNY Mellon CAD 484,330 USD (385,000) A1 1.257999 01-04-18 393 Unrealized Gains 6,651 BNY Mellon CAD 182,011 USD (145,000) A1 1.25525 01-04-18 (251) Unrealized Losses (251) Total Forward Currency Contracts 6,400

50 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The investment objective of the Exemplar Performance Fund is to achieve capital appreciation over both short and long term horizons primarily through the selection and management of shares of Canadian equity securities.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity and debt securities is limited to the fair value of those positions. The maximum loss on equities and debt sold short can be unlimited.

The management of these risks is carried out by the Manager in accordance with the Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk The analysis below summarizes the credit quality of the Fund’s debt portfolio at December 31, 2017 and 2016.

Percentage of total debt securities Credit Rating* December 31, 2017 December 31, 2016 % % Not Rated - 100.0 Total - 100.0 * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund is exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating services of Aa2 (2016: Aa1).

51 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Liquidity Risk

Market Risk

(a) Currency Risk

The table below indicates the Fund’s exposure to foreign currencies as at December 31, 2017 and 2016 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to the other currencies, with all other variables held constant. Non-monetary items include equities and funds. Monetary items include fixed income, cash, margin deposit, forward contracts and other current receivables and payables.

December 31, 2017 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 599,322 10,742,769 11,342,091 59,932 1,074,277 1,134,209 United States Dollar - Short (1,771,929) (72,662) (1,844,591) (177,193) (7,266) (184,459) British Pound - Long - 586,531 586,531 - 58,653 58,653 Total (1,172,607) 11,256,638 10,084,031 (117,261) 1,125,664 1,008,403 % of net assets attributable to holders of redeemable units (2.9%) 27.6% 24.7% (0.3%) 2.8% 2.5%

December 31, 2016 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 1,284,065 7,063,810 8,347,875 128,407 706,381 834,788 United States Dollar - Short (62,579) - (62,579) (6,258) - (6,258) British Pound - Long - 189,461 189,461 - 18,946 18,946 Total 1,221,486 7,253,271 8,474,757 122,149 725,327 847,476 % of net assets attributable to holders of redeemable units 3.1% 18.1% 21.2% 0.3% 1.8% 2.1%

52 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

(b) Interest Rate Risk

Total Exposure Term to Maturity December 31, 2017 December 31, 2016 Less than 1 year $ - $ - 1-3 years - - 3-5 years - 61,920 Greater than 5 years - - Total $ - $ 61,920 Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ - +/- $ 2,006 Total % sensitivity to net assets attributable to holders of redeemable units - 0.0%

To achieve the investment objective, the Fund will invest predominantly in large and mid capitalization Canadian companies. Generally, no more than 20% of the Fund is expected to be invested outside of this investment focus. The Fund may also invest in bonds and other debt instruments if warranted by financial conditions. The Fund will not specialize in any one industry other than to concentrate investments in those industries that offer the best opportunities for exceptional returns at each stage of the economic and market cycle.

The Fund may follow a more concentrated investment approach and, from time to time, over weight certain geographic regions and industry sectors when deemed appropriate by the Manager. This may result in the Fund’s portfolio weightings being substantially different from the weightings of the S&P/TSX Composite Total Return Index (or its successor index).

The Fund may hold cash or invest in short term securities for the purpose of preserving capital and/or maintaining liquidity, based upon the Manager’s ongoing evaluation of current and anticipated economic and market conditions. The Fund may also invest in foreign securities of the same type and characteristics as described above.

The Fund engages in short selling activities, wherein it borrows securities and sells them to third parties. Until the Fund covers its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold short at prices which may be significantly higher than the fair value reflected on the financial statements.

As at December 31, 2017, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is $1,782,834 (all other variables held constant) (2016: 1,542,469).

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2017 and 2016:

53 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2017 December 31, 2016 Market Segment Long (%) Short (%) Long (%) Short (%) Consumer Discretionary 10.8 (0.9) 9.3 (0.4) Consumer Staples 5.5 (0.0) 5.6 - Corporate Bonds - - 0.2 - Energy 8.8 - 10.9 - Financials 9.8 - 5.9 - Funds 7.6 - 8.9 - Health Care 2.2 - 2.6 - Industrials 15.4 - 10.6 (0.3) Information Technology 9.1 - 6.7 - Materials 11.7 - 11.6 (0.2) Real Estate 4.0 - 2.2 - Telecommunication Services 0.2 - 0.4 - Utilities 3.4 - 3.2 - Derivatives 0.0 (0.0) - - Totals 88.5 (0.9) 78.1 (0.9)

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2017 and 2016:

December 31, 2017 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 32,916,463 - - 32,916,463 Funds 3,101,000 - - 3,101,000 Derivatives - 6,651 - 6,651 36,017,463 6,651 - 36,024,114

Financial liabilities Equities sold short (360,783) - - (360,783) Derivatives - (251) - (251) (360,783) (251) - (361,034) Total 35,656,680 6,400 - 35,663,080

December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 27,623,590 - - 27,623,590 Fixed income - 61,920 - 61,920 Funds 3,569,282 - - 3,569,282 31,192,872 61,920 - 31,254,792

Financial liabilities Equities sold short (343,502) - - (343,502) (343,502) - - (343,502) Total 30,849,370 61,920 - 30,911,290

54 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

All fair value measurements above are recurring. The carrying values of all of the Fund’s financial instruments not carried at FVTPL approximate their fair values due to their short-term nature. Fair values are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as Level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements, if applicable. a) Equities and Funds

The Fund's equity positions and investments in funds (long and short) are all classified as Level 1 as each security is actively traded on a recognized exchange and a quoted price is available. b) Bonds

The Fund's bond holdings are comprised of Canadian corporate bonds. Bond pricing is obtained from bid and ask prices provided by independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Fund's bonds have been classified as Level 2. c) Derivatives

Derivatives consist of forward currency contracts. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2017 and 2016, the Fund did not hold any Level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ending December 31, 2017 and 2016.

Financial Instruments by Category

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the years ended December 31, 2017 and 2016. Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2017 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 1,383,454 2,773,016 6,842 - 620,730 - 39,962 4,824,004 HFT - 6,399 - - - - - 6,399 Financial liabilities at FVTPL: HFT (67,967) 9,658 - - - (4,971) - (63,280) Total 1,315,487 2,789,073 6,842 - 620,730 (4,971) 39,962 4,767,123

55 EXEMPLAR PERFORMANCE FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Net change in unrealized Securities Net realized gains / Interest Interest Dividend Dividend lending gains / (losses) (losses) income expense income expense income Total December 31, 2016 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 14,452 2,003,092 - - 398,952 - 4,305 2,420,801 Financial liabilities at FVTPL: HFT (63,956) (80,355) - - - (20,772) - (165,083) Total (49,504) 1,922,737 - - 398,952 (20,772) 4,305 2,255,718

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 ASSETS Current assets Financial assets designated at fair value through profit and loss $47,535,834 $33,803,306 Financial assets held for trading Options at fair value - long - 56,526 Unrealized gain on futures contracts - long 45,101 - Unrealized gain on futures contracts - short 124,880 - Unrealized gain on swaps contracts 288,945 - Unrealized gain on forward currency contracts - 777 Warrants at fair value - 148 Cash and cash equivalents 509,092 2,231,446 Margin deposits 676,399 981,823 Accrued interest receivable 267,038 260,384 Accrued dividend receivable 16,059 13,353 Receivable for securities sold - 155,562 Receivable for redeemable units issued 72,016 266,722 49,535,364 37,770,047

LIABILITIES Current liabilities Financial liabilities held for trading Options at fair value - short - 14,613 Unrealized loss on futures contracts - long - 70,065 Unrealized loss on futures contracts - short - 3,280 Unrealized loss on swap contracts - 387,006 Unrealized loss on forward currency contracts 2,017 - Margin loan 236,092 91,178 Payable for securities purchased 125,493 - Payable for redeemable units redeemed 15,347 193,539 Other liabilities (Note 10) 59,802 48,854 438,751 808,535

Net assets attributable to holders of redeemable units $49,096,613 $36,961,512

Net assets attributable to holders of redeemable units Series A $3,767,787 $3,827,739 Series AI $1,463,626 $348,277 Series AN $5,233,833 $7,471,716 Series F $23,518,710 $15,293,620 Series FI $2,339,339 $1,894,998 Series FN $9,216,984 $6,147,787 Series I $2,262,784 $950,838 Series L $1,113,987 $947,547 Series LI $5,204 $5,051 Series U $103,986 $59,006 Series G $69,013 $13,528 Series M $1,360 $1,405

Continued on next page.

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Financial Position As at As at December 31, December 31, 2017 2016 Continued from previous page.

Number of redeemable units outstanding (Note 7) Series A 417,942 417,810 Series AI 172,470 39,528 Series AN 524,377 758,683 Series F 2,537,428 1,638,737 Series FI 267,703 210,892 Series FN 915,271 620,805 Series I 228,894 96,477 Series L 122,815 102,475 Series LI 587 546 Series U 8,415 4,437 Series G 5,460 1,000 Series M 109 104

Net assets attributable to holders of redeemable units per unit Series A $9.02 $9.16 Series AI $8.49 $8.81 Series AN $9.98 $9.85 Series F $9.27 $9.33 Series FI $8.74 $8.99 Series FN $10.07 $9.90 Series I $9.89 $9.86 Series L $9.07 $9.25 Series LI $8.87 $9.25 Series U USD $9.83 $9.91 Series G USD $10.06 $10.08 Series M USD $9.93 $10.06

USD/CAD Foreign Exchange Rate 0.7955 0.7448

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Comprehensive Income For the periods ended December 31, 2017 2016 $ $ (Note 14) INCOME Net gains (losses) on investments and derivatives Interest income 1,579,121 1,821,630 Dividend income 157,437 112,638 Securities lending income (net) (Note 9) 134 - Net realized gain (loss) on investments and derivatives 695,162 291,357 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 76,351 817,674 Net gains (losses) on investments and derivatives 2,508,205 3,043,299

Other income items: Interest on cash 2,874 2,571 Foreign exchange gain (loss) (111,049) 76,594 Net change in unrealized foreign exchange gain (loss) (13,792) (24,139) Total income (net) 2,386,238 3,098,325

EXPENSES Securityholder reporting fees 185,042 177,790 Management fees (Note 10) 510,031 470,930 Interest expense 10,552 3,665 Audit fees 19,820 19,887 Legal fees 4,873 6,945 Independent Review Committee fees 5,590 4,600 Custodial fees 10,219 9,264 Commissions and other portfolio transaction costs (Note 11) 23,248 14,058 Commissions on Futures (Note 11) 10,655 8,347 Harmonized sales tax 49,253 46,659 Total expense before manager absorption 829,283 762,145 Less: expenses absorbed by manager (Note 10) (135,296) (147,883) Total expenses after manager absorption 693,987 614,262

Increase (decrease) in net assets attributable to holders of redeemable units 1,692,251 2,484,063

Series A 129,042 258,863 Series AI 18,844 18,692 Series AN 200,516 537,683 Series F 773,952 1,043,787 Series FI 86,743 108,112 Series FN 331,685 380,293 Series I 121,946 89,639 Series L 29,744 44,025 Series LI 153 392 Series U (53) 1,118 Series G (275) 476 Series M (46) 983

Continued on next page.

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Comprehensive Income For the periods ended December 31, 2017 2016 $ $

Continued from previous page.

Increase (decrease) in net assets attributable to holders of redeemable units per unit (Note 13) Series A 0.31 0.56 Series AI 0.21 0.55 Series AN 0.36 0.60 Series F 0.36 0.67 Series FI 0.36 0.65 Series FN 0.40 0.67 Series I 0.43 0.87 Series L 0.27 0.48 Series LI 0.27 0.50 Series U (0.01) 0.36 Series G (0.13) 0.25 Series M (0.43) 1.14

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the periods ended December 31, 2017 2016 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 3,827,739 4,369,884 Series AI 348,277 257,213 Series AN 7,471,716 10,313,894 Series F 15,293,620 11,641,816 Series FI 1,894,998 1,112,189 Series FN 6,147,787 6,653,587 Series I 950,838 1,131,199 Series L 947,547 939,352 Series LI 5,051 9,658 Series U 59,006 40,013 Series G 13,528 - Series M 1,405 16,904 36,961,512 36,485,709

Increase (decrease) in net assets attributable to holders of redeemable units Series A 129,042 258,863 Series AI 18,844 18,692 Series AN 200,516 537,683 Series F 773,952 1,043,787 Series FI 86,743 108,112 Series FN 331,685 380,293 Series I 121,946 89,639 Series L 29,744 44,025 Series LI 153 392 Series U (53) 1,118 Series G (275) 476 Series M (46) 983 1,692,251 2,484,063 Distributions to holders of redeemable units From return of capital Series A (119,282) - Series AI (39,286) (3,350) Series F (436,874) - Series FI (89,969) - Series L (35,108) - Series LI (294) (158) Series U (2,676) - Series G (349) - Series M (44) -

From net realized gains on investments and derivatives Series A - (125,075) Series AI - (5,695) Series AN - (178,109) Series F - (282,546) Series FI - (28,155) Series FN - (201,634) Series I - (19,665) Series L - (16,534) Series LI - (142) Series U - (731) Series G - (81) Series M - (207)

Continued on next page.

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the periods ended December 31, 2017 2016 $ $

Continued from previous page.

From net investment income Series A (70,902) (122,354) Series AI (15,927) (11,859) Series AN (102,327) (256,478) Series F (544,478) (621,601) Series FI (57,382) (75,191) Series FN (224,428) (219,425) Series I (108,934) (50,056) Series L (15,554) (25,353) Series LI (79) (221) Series U (1,833) (1,267) Series G (860) (251) Series M (23) (359) Total distributions to holders of redeemable units (1,866,609) (2,246,497)

Redeemable unit transactions Proceeds from redeemable units issued Series A 655,808 473,921 Series AI 1,356,566 160,255 Series AN 587,022 326,887 Series F 10,215,599 6,344,156 Series FI 886,772 896,243 Series FN 4,316,801 2,850,929 Series I 3,330,000 1,255,000 Series L 159,812 145,055 Series LI - - Series U 69,650 19,873 Series G 56,969 67,035 Series M - -

Reinvestments of distributions to holders of redeemable units Series A 78,677 107,220 Series AI 8,928 16,258 Series AN 100,459 430,408 Series F 492,358 312,771 Series FI 71,114 79,719 Series FN 182,109 378,869 Series I 108,934 69,721 Series L 40,236 33,451 Series LI 373 522 Series U - - Series G - - Series M 68 22

Continued on next page.

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the periods ended December 31, 2017 2016 $ $

Continued from previous page.

Redemption of redeemable units Series A (733,295) (1,134,720) Series AI (213,776) (83,237) Series AN (3,023,553) (3,702,569) Series F (2,275,467) (3,144,763) Series FI (452,937) (197,919) Series FN (1,536,970) (3,694,832) Series I (2,140,000) (1,525,000) Series L (12,690) (172,449) Series LI - (5,000) Series U (20,108) - Series G - (53,651) Series M - (15,938) Net increase (decrease) from redeemable unit transactions 12,309,459 238,237

Net increase (decrease) in net assets attributable to holders of redeemable units 12,135,101 475,803

Series A 3,767,787 3,827,739 Series AI 1,463,626 348,277 Series AN 5,233,833 7,471,716 Series F 23,518,710 15,293,620 Series FI 2,339,339 1,894,998 Series FN 9,216,984 6,147,787 Series I 2,262,784 950,838 Series L 1,113,987 947,547 Series LI 5,204 5,051 Series U 103,986 59,006 Series G 69,013 13,528 Series M 1,360 1,405 Net assets attributable to holders of redeemable units at end of year 49,096,613 36,961,512

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

EXEMPLAR TACTICAL CORPORATE BOND FUND

Statements of Cash Flows For the periods ended December 31, 2017 2016 $ $ (Note 14) Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 1,692,251 2,484,063 Adjustment for: Unrealized foreign exchange (gain) loss on cash (12,788) (16,410) Net realized (gain) loss on investments and derivatives (695,162) (291,357) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (76,351) (817,674) Purchase of investments (157,208,911) (67,828,812) Proceeds on sale of investments and derivatives 143,654,529 63,966,592 Change in accrued interest receivable (6,654) 158,873 Change in accrued dividend receivable (2,706) (13,353) Change in other liabilities 10,948 (3,729) Change in margin loan 144,914 77,066 Change in margin deposits 305,424 (12,530) Net cash from (used in) operating activities (12,194,506) (2,297,271)

Cash flows from (used in) financing activities Proceeds from redeemable units issued 18,967,763 10,285,879 Redemption of redeemable units (7,725,046) (11,500,280) Distributions paid to holders of redeemable units, net of reinvested distributions (783,353) (817,536) Net cash from (used in) financing activities 10,459,364 (2,031,937)

Net increase (decrease) in cash (1,735,142) (4,329,208)

Cash at beginning of the year 2,231,446 6,544,244 Unrealized foreign exchange gain (loss) on cash 12,788 16,410 Cash at end of the year 509,092 2,231,446

Supplemental information: Interest received* 1,575,341 1,983,074 Interest paid* (10,552) (3,665) Dividends received, net of withholding tax* 154,731 99,285 *Included as part of cash flows from operating activities

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

EXEMPLAR TACTICAL CORPORATE BOND FUND Schedule of Investment Portfolio – As at December 31, 2017

Equities - Long - 9.87% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Bank of Montreal, Preferred, 5.20%, Class B, Series 16 CAD 14,000 350,140 350,000 Bank of Montreal, Preferred, Class 'B', Series '25', Variable Rate, Perpetual CAD 18,600 406,032 423,708 Bank of Montreal, Preferred, Series '40', Variable Rate, Perpetual CAD 7,000 179,515 181,370 Bank of Montreal, Preferred, Class 'B', Series '42', Variable Rate, Perpetual CAD 28,000 699,491 713,720 Bank of Nova Scotia (The), Preferred, Series 20, Variable Rate CAD 1,000 25,030 24,970 Bank of Nova Scotia, Preferred, Series '32', Variable Rate, Perpetual CAD 31,100 669,471 715,922 Bank of Nova Scotia (The), Preferred, Series 19, Variable Rate CAD 17,000 426,360 424,490 Bank of Nova Scotia (The), Preferred, Series 21, Variable Rate CAD 24,000 595,440 595,200 Canadian Imperial Bank of Commerce, Preferred, Series '45', Variable Rate, Perpetual CAD 17,000 425,425 433,500 Enbridge Inc., Preferred, Series 'L', Variable Rate, Perpetual USD 6,340 157,850 190,628 Toronto-Dominion Bank (The), Preferred, Series Y, Variable Rate CAD 7,000 175,560 175,210 Toronto-Dominion Bank (The), Preferred, Series 16, Variable Rate CAD 24,000 600,000 616,080 4,710,314 4,844,798

Fixed Income - Long - 86.95% Maturity Coupon Par Average Fair Security Name Date Rate (%) Currency Value Cost ($) Value ($) Corporate Bonds - 86.95% Anheuser-Busch InBev Finance Inc. (2) 01-25-23 3.38 CAD 2,133,000 2,260,102 2,192,955 Bank of Montreal, Variable Rate (2) 09-19-24 3.12 CAD 1,500,000 1,521,585 1,515,539 Bell Canada, Series 'M-26' (2) 03-22-23 3.35 CAD 1,461,000 1,506,875 1,496,409 Canadian Imperial Bank of Commerce (2) 10-28-24 3.00 CAD 1,234,000 1,264,381 1,245,415 Cominar REIT 12-04-19 4.23 CAD 1,751,000 1,774,299 1,774,953 Cominar REIT, Series '7' 06-21-19 3.62 CAD 1,000,000 1,023,740 1,004,180 Enbridge Inc., Variable Rate (2) 09-27-77 5.38 CAD 2,167,000 2,168,540 2,159,693 Enbridge Inc. Discount Note 03-21-18 0.00 CAD 1,100,000 1,088,758 1,088,758 Fairfax Financial Holdings Ltd. 06-22-20 7.25 CAD 1,400,000 1,581,538 1,543,957 Ford Credit Canada Co., Floating Rate 09-21-20 2.34 CAD 2,500,000 2,507,383 2,518,075 Ford Credit Canada Co. 05-07-20 2.45 CAD 1,822,000 1,819,055 1,815,690 Goldman Sachs Group Inc. (The), Variable Rate, Restricted (2) 04-26-23 2.43 CAD 2,357,000 2,355,111 2,310,720 Goldman Sachs Group, Inc. (The), Series P, Variable Rate (2) 12-31-49 5.00 USD 500,000 623,150 620,015 Goldman Sachs Group Inc. (The), Floating Rate* (2) 10-31-22 2.19 USD 500,000 634,125 629,660 Kraft Canada Inc., Restricted, (2) 07-06-20 2.70 CAD 958,000 972,456 961,097 MCAP Commercial L.P. 12-14-22 5.00 CAD 798,000 802,998 799,542 Medavie Inc., Series '1', Variable Rate, Restricted (2) 05-21-24 6.00 CAD 220,000 221,122 221,861 Merrill Lynch & Co. Inc., Variable Rate (2) 05-30-22 2.33 CAD 3,432,000 3,431,436 3,388,963 Molson Coors International L.P. (2) 07-15-23 2.84 CAD 2,000,000 1,966,360 1,972,074 Molson Coors International L.P., Series '2' 09-18-20 2.75 CAD 200,000 201,056 200,924 Morgan Stanley, Floating Rate (2) 01-20-22 2.58 USD 1,000,000 1,305,750 1,278,353 Morgan Stanley, Restricted 02-07-24 3.00 CAD 3,166,000 3,159,220 3,151,204 Postmedia Network Inc. (2) 07-15-21 8.25 CAD 1,000 1,033 1,000 Shaw Communications Inc. (2) 12-07-20 5.50 CAD 1,758,000 1,961,058 1,906,717 SmartCentres REIT, Series 'R', Floating Rate 12-21-20 2.17 CAD 1,000,000 1,000,000 1,001,890 TransCanada Trust, Series '2017-A', Variable Rate (2) 05-18-77 4.65 CAD 2,956,000 2,953,419 2,952,858 Wells Fargo & Company 10-27-23 2.51 CAD 2,000,000 1,946,400 1,952,584 WTH Car Rental ULC, Series 'A' 07-20-20 1.91 CAD 1,000,000 1,000,000 985,950 43,050,950 42,691,036

Commissions and other portfolio transaction costs (2,525) - Total Investments - 96.82% 47,758,739 47,535,834 Derivatives (see schedule of derivative instruments) - 0.93% 456,909 Cash and Other Net Assets (Liabilities) - 2.25% 1,103,870 Net Assets Attributable to Holders of Redeemable Units - 100.00% 49,096,613

(1) Convertible (2) Callable (3) Restricted *Denotes all or part of securities on loan

EXEMPLAR TACTICAL CORPORATE BOND FUND Schedule of Investment Portfolio – As at December 31, 2017

Schedule of Derivative Instruments

Futures Contracts - Long - 0.09% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value Gain/(Loss) ($) Canadian Dollar Futures 1,000 03-20-18 USD 26 2,611,292 45,101

Futures Contracts - Short - 0.25% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value Gain/(Loss) ($) Canada 5 Year Bond Futures 1,000 03-20-18 CAD (43) (5,133,770) 56,680 Canada 10 Year Bond Futures 1,000 03-20-18 CAD (62) (8,357,600) 68,200 124,880

Swaps - 0.59% Notional Average Unrealized Security Name Currency Value Cost ($) Gain/(Loss) ($) 3-Month CDOR, 9/1/2019,1.075% Interest Rate Swap CAD 1,250,000 - 19,090 3-Month CDOR, 9/1/2021,1.3225% Interest Rate Swap CAD 6,200,000 - 190,747 3-Month CDOR, 6/1/2022,1.3925% Interest Rate Swap CAD 2,250,000 - 79,108 - 288,945

Forward Currency Contracts - (0.00%)

Purchased Sold Credit Contract Maturity Unrealized Counterparty Currency Notional Value Currency Notional Value Rating Rate Date Gain/(Loss) ($) BNY Mellon USD 1,085 CAD (1,378) A1 0.79 01-04-18 (14) BNY Mellon USD 45,000 CAD (57,165) A1 0.79 01-04-18 (601) BNY Mellon USD 83,000 CAD (105,437) A1 0.79 01-04-18 (1,108) BNY Mellon USD 10,000 CAD (12,864) A1 0.78 01-04-18 (294) Total forward currency contracts (2,017)

Total Derivative Instruments at Fair Value 456,909

66 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

The investment objective of the Exemplar Tactical Corporate Bond Fund is to generate income and capital appreciation by primarily investing in a diversified portfolio of corporate bonds.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity, options, interest rate swaps, credit default swaps and debt securities is limited to the fair value of those positions. The maximum loss on equities, options and debt sold short can be unlimited and the maximum loss on futures contracts is the notional contract value of those positions.

The management of these risks is carried out by the Manager and Portfolio Sub-Advisor in accordance with the Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

The analysis below summarizes the credit quality of the Fund's debt portfolio at December 31, 2017 and 2016.

Percentage of total debt securities Credit Rating* December 31, 2017 December 31, 2016 % % AAA - - AA - 4.5 A 4.6 19.9 BBB 80.4 30.2 Below BBB 1.5 38.2 Not Rated 13.5 7.2 Total 100.0 100.0 * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund is exposed to counterparty credit risk on swaps and futures contracts. The counterparties to the Fund’s swaps are Bank of America and JP Morgan Chase & Co. which have credit ratings as rated by Moody’s bond rating services of A3 and A3, respectively (2016: Baa1 and A3, respectively). Futures contracts are exchange traded. Cash collateral has been provided to Bank of America in accordance with terms of derivative transaction agreements and is presented as “Margin deposits” in the Statements of Financial Position.

The Fund is also exposed to credit risk on cash deposits held at TD Canada Trust which has a credit rating as rated by Moody’s bond rating services of Aa2 (2016: Aa1).

67 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016 lending program is limited as the Fund holds a minimum collateral equal to 102% of the fair value of the loaned securities. The collateral and loaned securities are marked to market on each valuation date.

Liquidity Risk

From time to time, the Fund may use margin borrowings in one or more of its brokerage accounts. For the year ended December 31, 2017, the minimum margin borrowings used was $440,621 and the maximum margin borrowings used was $1,093,704 (2016: min: $59,397, max: $1,348,590).

Market Risk

(a) Currency Risk

The table below indicates the Fund’s exposure to USD as at December 31, 2017 and 2016 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to USD, with all other variables held constant. Monetary items include bonds, futures, swaps, forward currency contracts, cash and other current receivables and payables. Non-monetary items include equities, funds, warrants and options.

December 31, 2017 Impact on net assets attributable to holders Exposure of redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 3,029,476 190,628 3,220,104 302,948 19,063 322,011 United States Dollar - Short (190,094) - (190,094) (19,009) - (19,009) Total 2,839,382 190,628 3,030,010 283,939 19,063 303,002 Redeemable units issued in USD (174,359) (17,436) Net exposure to foreign currencies 2,855,651 285,566 % of net assets attributable to holders of redeemable units 5.8% 0.4% 6.2% 0.6% 0.0% 0.6% % of net assets attributable to units issued in USD (0.4%) (0.0%) % of net assets exposed to foreign currencies 5.8% 0.6%

68 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2016 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 9,211,532 1,141,832 10,353,364 921,153 114,183 1,035,336 United States Dollar - Short (98,967) (13,695) (112,662) (9,897) (1,370) (11,267) Total 9,112,565 1,128,137 10,240,702 911,256 112,813 1,024,069 Redeemable units issued in USD (73,939) (7,394) Net exposure to foreign currencies 10,166,763 1,016,675 % of net assets attributable to holders of redeemable units 24.7% 3.1% 27.8% 2.5% 0.3% 2.8% % of net assets attributable to units issued in USD (0.2%) (0.0%) % of net assets exposed to foreign currencies 27.6% 2.8%

(b) Interest Rate Risk

Total Exposure Term to Maturity December 31, 2017 December 31, 2016 Less than 1 year $ 1,088,758 $ 1,526,325 1-3 years 14,963,433 10,195,482 3-5 years 9,413,748 5,757,926 Greater than 5 years 13,433,727 8,038,833 Total $ 38,899,666 $ 25,518,566 Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 1,264,581 +/- $ 1,390,556 Total % sensitivity to net assets attributable to holders of redeemable units 2.6% 3.8%

The Fund's policy is to manage price risk through pursuit of a diversified investment program that focuses on fixed income securities while utilizing other assets such as options and credit default swaps, to extract relative value and to manage credit exposure.

As at December 31, 2017, if the Fund's relevant benchmark index, FTSE TMX Canada All Corporate Bond Index, had increased or decreased by 5%, with all other variables held constant, the net assets attributable to holders of redeemable units of the Fund would have increased or decreased by $470,731 (2016: $425,057). Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2017 and 2016:

69 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

December 31, 2017 December 31, 2016 Market Segment Long (%) Short (%) Long (%) Short (%) Equities 9.9 - 13.8 - Corporate Bonds 87.0 - 72.0 - Funds - - 5.5 - Derivatives 0.6 0.3 (1.0) - Totals 97.5 0.3 90.3 -

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2017 and 2016:

December 31, 2017 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 4,844,798 - - 4,844,798 Fixed income - 42,691,036 - 42,691,036 Derivatives 169,981 288,945 - 458,926 5,014,779 42,979,981 - 47,994,760

Financial liabilities Derivatives - (2,017) - (2,017) - (2,017) - (2,017) Total 5,014,779 42,977,964 - 47,992,743

December 31, 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 5,151,500 - - 5,151,500 Fixed income - 26,618,806 - 26,618,806 Funds 2,033,000 - - 2,033,000 Derivatives 56,526 925 - 57,451 Total 7,241,026 26,619,731 - 33,860,757

Financial liabilities Derivatives (87,958) (387,006) - (474,964) Total (87,958) (387,006) - (474,964)

70 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016 transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as Level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements, if applicable. a) Equities

The Fund’s equity positions are all classified as Level 1 as each security is actively traded on a recognized exchange and a quoted price is available. b) Bonds

The Fund's bond holdings are comprised of Canadian and US corporate and federal bonds. Bond pricing is obtained from bid and ask prices provided by independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Fund's bonds have been classified as Level 2. c) Derivatives

Derivative assets and liabilities consist of warrants, options, futures contracts, swaps and foreign currency contracts. Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded warrants are classified as Level 1. When the inputs that are significant to valuation are generally observable, the warrants are classified as Level 2. Warrants that have significant unobservable inputs are classified as Level 3. Futures contracts and options are exchange traded and are classified as Level 1 as they are actively traded on a recognized exchange and a quoted price is available. Credit default swaps are valued based upon quotations from independent security pricing sources. The inputs that are significant to valuation are generally observable and therefore credit default swaps have been classified as Level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2017 and 2016, the Fund did not hold any Level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ended December 31, 2017 and 2016.

Financial Instruments by Category

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the years ended December 31, 2017 and 2016.

Net change in Net realized unrealized Security gains / gains / Interest Interest Dividend Dividend lending (losses) (losses) income expense income expense income Total December 31, 2017 $ $ $ $ $ $ $ $ Financial assets at FVTPL: Designated as FVTPL 577,258 (705,911) 1,739,867 - 157,437 - 134 1,768,785 HFT 1,273,220 667,121 (160,746) - - - - 1,779,595 1,850,478 (38,790) 1,579,121 - 157,437 - 134 3,548,380 Financial liabilities at FVTPL: HFT (1,155,316) 115,141 - - - - - (1,040,175) Total 695,162 76,351 1,579,121 - 157,437 - 134 2,508,205

71 EXEMPLAR TACTICAL CORPORATE BOND FUND NOTES TO THE FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2017 and 2016

Net change in Net realized unrealized Interest Interest Dividend Dividend gains / (losses) gains / (losses) income expense income expense Total December 31, 2016 $ $ $ $ $ $ $ Financial asset at FVTPL: Designated as FVTPL 504,341 971,977 1,661,241 - 112,638 - 3,250,197 HFT - (55,620) 160,389 - - - 104,769 504,341 916,357 1,821,630 - 112,638 - 3,354,966 Financial liabilities at FVTPL: HFT (212,984) (98,683) - - - - (311,667) (212,984) (98,683) - - - - (311,667) Total 291,357 817,674 1,821,630 - 112,638 - 3,043,299

72 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

1. THE FUNDS

Exemplar Growth and Income Fund, Exemplar Investment Grade Fund, Exemplar Leaders Fund, Exemplar Performance Fund, and Exemplar Tactical Corporate Bond Fund (collectively the “Funds” and each a “Fund”) are open-ended mutual fund trusts created under the laws of the Province of Ontario pursuant to a declaration of trust dated August 27, 2007 (the “Declaration of Trust”) as amended and restated from time to time.

Arrow Capital Management Inc. (“Arrow”) is the manager (“Manager”) and Trustee of the Funds. The transfer agent and custodian of the Funds are RBC Investor Trust Inc. and CIBC Mellon Trust Company, respectively. The address of the Funds’ registered office is 36 Toronto Street, Suite 750, Toronto, Ontario.

The date of inception and series structure of the Funds are as follows:

Name of the Fund Date of Inception Series Information

A multi-series fund having Series A, AN, F, FN, I, L and LN Exemplar Growth and Income Fund March 16, 2015 units.

A multi-series fund having Series A, AI, AN, U, F, FI, FN, G, I Exemplar Investment Grade Fund June 27, 2014 and ETF units.

Exemplar Leaders Fund August 27, 2007 A multi-series fund having Series A and F units.

A multi-series fund having Series A, AD, F, FD, I, L and LD Exemplar Performance Fund March 6, 2014 units.

A multi-series fund having Series A, AI, AN, F, FI, FN, I, L, LI, Exemplar Tactical Corporate Bond Fund June 27, 2014 U, G and M units.

Arrow is the portfolio advisor of the Funds. Arrow has engaged East Coast Fund Management Inc. as a sub-advisor “Portfolio Sub-advisor” for the Exemplar Investment Grade Fund and Exemplar Tactical Corporate Bond Fund.

The Statements of Financial Position of each of the Funds are as at December 31, 2017 and December 31, 2016, unless otherwise noted. The Statements of Comprehensive Income (Loss), Statements of Changes in Net Assets Attributable to Holders of Redeemable Units and Statements of Cash Flows for each Fund is for the years ended December 31, 2017 and 2016, except for Funds or series of a Fund established during either period, in which case the information for that Fund or applicable series is provided for the period from inception of the Fund or start date of the series of the Fund to December 31 of the applicable year. The Schedule of Investment Portfolio for each Fund is as at December 31, 2017.

On December 1, 2017, Exemplar Investment Grade Fund listed Series ETF units on the Toronto Stock Exchange (the “TSX”) under the symbol CORP.

Fund Merger

Effective February 28, 2017, after receiving unitholder and regulatory approval, Exemplar U.S. High Yield Fund (the “Terminating Fund”) merged into Exemplar Growth and Income Fund (the “Continuing Fund”). Unitholders of the Terminating Fund received units of the Continuing Fund in exchange for their units of the Terminating Fund on a tax-deferred basis.

Details relating to the merger are as follows:

73 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Conversion Ratios (Terminating Fund) Net Assets acquired by Units issued by the the Continuing Fund Continuing Fund Series A Series F Series FN Series I Series A 5,213,286 494,429 1.1111 - - - Series F 1,120,283 107,457 - 0.9686 - - Series FN 212,116 19,777 - - 0.9850 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Presentation

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (IASB). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair value through profit or loss.

These financial statements were authorized for issue by the Manager on March 27, 2018. b) Financial Instruments

The Funds recognize financial instruments at fair value upon initial recognition, plus transaction costs in the case of financial instruments not measured at fair value through profit and loss (“FVTPL”). Regular way purchases and sales of financial assets are recognized at their trade date. The Funds’ long equity positions are designated at FVTPL. The Funds’ short investment positions, warrants, futures contracts, swaps and options, if applicable, are classified as held for trading (“HFT”) and are measured at FVTPL. The Funds’ obligation for net assets attributable to holders of redeemable units is 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 effective interest rate. The Funds’ accounting policies for measuring the fair value of its investments and derivatives are the same as those used in measuring its net asset value ("NAV") for transactions with unitholders. There were no differences between the net assets attributable to holders of redeemable units used for reporting purposes under IFRS and that used for transactions with unitholders as at December 31, 2017 or 2016.

Realized gains and losses on sale of investments and unrealized appreciation or depreciation in investments are determined on an average cost basis. Realized gains and losses on securities sold short and unrealized appreciation or depreciation on securities sold short are calculated with reference to the average proceeds of the related securities. Average cost does not include amortization of premiums or discounts on fixed income securities.

Interest for distribution purposes shown on the Statements of Comprehensive Income represents the coupon interest received by a Fund accounted for on an accrual basis. The Funds do not amortize premiums or discounts received on the purchase of fixed income securities.

Dividend income and dividend expense on short sales is recognized in the Statements of Comprehensive Income on the ex- dividend date. Distributions received from investment trust units are recorded as dividends, interest for distribution purposes, net realized gains (losses) on sale of investments or a return of capital, based on the best information available to the Manager. Due to the nature of those investments, actual allocations could vary from this information.

Securities lending income is recognized on an accrual basis.

Financial assets and liabilities are offset and the net amount reported in the Statements of Financial Position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. In the normal course of business, the Funds enter into various master netting agreements or similar agreements that do not meet the criteria for offsetting in the statements of financial position but still allow for the related amounts to be set off in certain circumstances, such as bankruptcy or termination of the contracts.

74 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Securities lending transactions are subject to master netting arrangements and the related offsetting disclosure is presented in Note 9. c) Financial Instruments - Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the reporting date. The Funds use the last traded market price for securities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. The fair value of bonds is determined using mid-market pricing derived from bid and ask prices provided by independent security pricing services or recognized investment dealers. The fair value of futures contracts is based on the settlement price assigned by the exchange. Gains and losses arising from changes in the fair value of financial assets or liabilities are presented in the Statements of Comprehensive Income. The Funds' policy is to recognize transfers into and out of the fair value hierarchy levels at the beginning of each period.

The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Funds may use a variety of methods and make assumptions that are based on market conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same and other commonly used methods by market participants which make the maximum use of observable inputs. d) Impairment of Financial Assets

At each reporting date, each Fund assesses whether there is objective evidence that a financial asset at amortized cost is impaired. If such evidence exists, the Fund recognizes an impairment loss as the difference between the amortized cost of the financial asset and the present value of future cash flows discounted using the asset’s original effective interest rate. Impairment losses on financial assets at amortized cost are reversed in subsequent years if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. e) Foreign Currency Translation

The Funds’ functional and presentation currency is the Canadian dollar.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates that transactions occur. Foreign currency assets and liabilities denominated in a foreign currency are translated into the functional currency using the exchange rate prevailing at the measurement date. Foreign exchange gains and losses relating to cash are presented as ‘Foreign exchange gain (loss)’ and those relating to investments and derivatives are presented within ‘Net realized gain (loss) on investments and derivatives’ and ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. f) Cash and Cash Equivalents

Cash and cash equivalents which includes cash deposited with financial institutions and short-term investments that are readily convertible to cash, are subject to an insignificant risk of changes in value, and are used by the Funds in the management of short-term commitments. Cash and cash equivalents are reported at fair value which closely approximates their amortized cost due to their nature of being highly liquid and having short terms to maturity. g) Margin Deposits

Cash collateral provided by each Fund to brokers for securities sold short and counterparties to derivative transactions is identified in that Fund’s Statements of Financial Position as ‘Margin Deposits’.

75 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016 h) Margin Loan

Margin loan represents cash amounts borrowed under a margin agreement with a Fund's broker and is payable upon demand (if applicable). i) Forward Currency Contracts

The Funds may enter into forward currency contracts for purposes of minimizing currency exposure or to establish an exposure to a particular currency. The value of forward currency contracts entered into by a Fund is recorded as the difference between the contract rate and the current forward rates at the measurement date, applied to the contract's notional amount and adjusted for counterparty risk. The change in the fair value of forward currency contracts is included in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. Upon closing of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income. j) Options

An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a predetermined price. When a Fund purchases an option, an amount equal to fair value which is based on the premium paid is recorded as an asset. When a Fund writes an option, an amount equal to fair value which is based on the premium received by the Fund is recorded as a liability. Options held by a Fund are exchange-traded. Subsequent to initial recognition, changes in fair value, the difference between the premium paid or received, and fair value, are presented in ‘Change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. When options are closed, the difference between the premium and the amount paid or received, net of brokerage commissions, or the full amount of the premium if the option expires worthless, is recognized as a gain or loss and is presented in the Statements of Comprehensive Income within ‘Net realized gain (loss) on investments and derivatives’. k) Futures Contracts

The Funds may purchase or sell exchange traded futures contracts. Futures contracts are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price established in an organized market. Subsequent to initial recognition, changes in fair value are presented in ‘Change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. When futures contracts are closed out, the gain or loss is presented in the Statements of Comprehensive Income within ‘Net realized gain (loss) on investments and derivatives’. l) Credit Default Swap Contracts

A credit default swap contract is an agreement to transfer credit risk from one party, a buyer of protection, to another party, a seller of protection. The Fund as a seller of protection would be required to pay a notional or other agreed upon value to the buyer of protection in the event of a default by a third party. In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default occurs. If no default occurs, the Fund would keep the stream of payments and would have no payment obligations.

The Fund as a buyer of protection would receive a notional or other agreed upon value from the seller of protection in the event of a default by a third party. In return, the Fund would be required to pay to the counterparty a periodic stream of payments over the term of the contract provided that no event of default occurs.

Premiums received or paid for entering into a credit default swap are included in the Statement of Financial Position as either an asset or liability. Credit default swap contracts are fair valued on each valuation day based upon quotations from independent security pricing sources. The change in the difference between the premium and the fair value is included in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. Upon closing or expiry of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income.

76 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016 m) Interest Rate Swap Contracts

An interest swap contract is a contractual agreement entered into between the Fund and a counterparty under which each party agrees to exchange periodic fixed or variable payments, based upon a stated notional amount, over the stated life of the agreement. The net differential paid or received is recognized over the life of the agreement as a realized gain or loss on investments. Interest rate swap contracts are fair valued on each valuation day using indicative bid/ask prices from third party broker dealers. The change in fair value is included in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income. Upon closing or expiry of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income. n) Commissions and Other Portfolio Transaction Costs

Commissions and other portfolio transaction costs are incremental costs that are directly attributable to the acquisition or disposal of an investment, which include fees and commissions paid to agents, advisors, brokers and dealers. Such costs are expensed when incurred. o) Income and Expense Allocation

The net assets of each series of each Fund are computed by calculating the value of that series’ proportionate share of that Fund’s assets less that series’ proportionate share of that Fund’s common liabilities less series specific liabilities, if any. Expenses directly attributable to a series are charged to that series. Other income, expenses and gains/losses are allocated based on a reasonable allocation methodology which will include allocations based on the assets of the Funds or the number of unitholders in the Funds or other methodology the Manager determines is fair. p) Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units per Unit

The increase (decrease) in net assets attributable to holders of redeemable units per unit is calculated by dividing the increase (decrease) in net assets attributable to the series by the weighted average number of redeemable units outstanding in that series during the period. Refer to Note 13 for the calculation. q) Classification of Redeemable Units

The Funds’ redeemable units contain multiple contractual obligations and multiple series of units have been issued which do not have identical features. Consequently, the units do not meet the conditions in IAS 32 to be classified as equity. As a result, the Funds’ obligations for net assets attributable to holders of redeemable units are presented at the redemption amounts. r) Investments in Structured Entities

The Funds may invest in underlying investment vehicles ("Structured Entities") that are managed by their respective Investment Advisors and whose investment objectives may range from achieving short-term to long-term income and capital growth. Structured Entities may use leverage in a manner consistent with their respective objectives and as permitted by their respective governing regulatory authorities. Structured Entities finance their operations by issuing redeemable units which are puttable at the holder’s option and entitles the holder to a proportionate stake in the respective fund’s net assets. The Funds' interest in Structured Entities as at December 31, 2017 and 2016, held the form of redeemable units, which are included at their fair value in the Statements of Financial Position which represents the Funds’ maximum exposure in these Structured Entities. Refer to Note 6. The Funds do not provide, and have not committed to provide, any additional significant financial or other support to the Structured Entities. The change in fair value of each of the Structured Entities during the periods is included in ‘Change in unrealized appreciation (depreciation) of value of investments and derivatives’ and ‘Net gains (losses) on investments and derivatives’ in the Statements of Comprehensive Income. s) Series ETF Units and Unit Transactions

Arrow, on behalf of the Series ETF, has entered into a designated broker agreement with one or more designated brokers pursuant to which the designated broker has agreed to perform certain duties relating to the ETF including, without limitation: (i) to subscribe for a sufficient number of units to satisfy the TSX’s original listing requirements; (II) to subscribe for units on an

77 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

ongoing basis in connection with any rebalancing event, as applicable, and when cash redemptions of units occur; and (iii) to post a liquid two-way market for the trading of units on the TSX. In accordance with the designated broker agreement, Arrow may from time to time require the designated broker to subscribe for units of the ETF for cash.

The number of units issued for subscription orders (the “Prescribed Number of Units”) is determined by Arrow. On any trading day, a designated broker may place a subscription or redemption order for an integral multiple of the Prescribed Number of Units of Series ETF based on the NAV per unit determined on the applicable trading day. A trading day is each day on which the TSX is open for business.

Generally, all orders to purchase Series ETF units must be placed by a designated broker or a dealer. The Fund reserves the right to reject any subscription order placed by a designated broker or dealer in connection with the issuance of Series ETF units. No fees will be payable Series ETF to a designated broker or a dealer in connection with the issuance of units. On the issuance of units, an amount may be charged to a designated broker or a dealer to offset the expenses incurred in issuing units.

For each Prescribed number of Series ETF units issued, a dealer must deliver payment consisting of (1) cash in an amount equal to the aggregate net asset value per unit of the Prescribed Number of Series ETF units next determined following the receipt of the subscription order; (ii) a group of securities or assets representing the constituents of, and their weightings in, the Fund (“Basket of Securities”) or a combination of a Basket of Securities and cash, as determined by us, in an amount sufficient so that the value of the securities and cash received is equal to the aggregate net asset value per unit of the Prescribed Number of ETF Series Units next determined following the receipt of the subscription order; or (iii) securities other than Baskets of Securities or a combination of securities other than Baskets of Securities and cash, as determined by us, in an amount sufficient so that the value of the securities and cash received is equal to the aggregate NAV per unit of the Prescribed Number of Units next determined following the receipt of the subscription order. t) Securities Lending

The Funds may enter into securities lending arrangements. These transactions involve the temporary exchange of securities for collateral with a commitment to deliver the same securities at a future date. Income is earned from these transactions in the form of fees paid by the counterparty and, in certain circumstances, interest paid on cash or securities held as collateral. Income earned from these transactions is included in ‘Securities lending income (net)’ in the Statements of Comprehensive Income.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions about the future. The following discusses the most significant accounting judgments and estimates that the Manager has made in preparing the financial statements:

Use of Estimates Fair Value measurement of derivatives and securities not quoted in an active market

The Funds may hold financial instruments that are not quoted in active markets, including derivatives. Fair value of such instruments is determined using valuation techniques and may be determined using reputable pricing sources (such as pricing agencies) or indicative prices from market makers. Broker quotes as obtained from the pricing sources may be indicative and not executable or binding. Where no market data is available, a Fund may value positions using its own models, which are usually based on valuation methods and techniques generally recognized as standard within the industry. The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Manager, independent of the party that created them.

Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require the Manager to make estimates. Changes in assumptions about these factors could affect the reported fair values of financial instruments. The Funds consider observable data to be market data that is readily available, regularly distributed and updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Refer to Note 6 for further information about the fair value measurement of the Fund's financial instruments.

78 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

As at December 31, 2017, the investments in the Underlying Funds represented 16.7% (15.4% Exemplar Tactical Corporate Bond Fund – Series I, and 1.3% East Coast Investment Grade Income Fund) (2016: 44.5% (18.9% Exemplar Performance Fund – Series I, 7.3% Exemplar Tactical Corporate Bond Fund – Series I, and 18.3% Exemplar U.S. High Yield Fund – Series I) of net assets attributable to holders of redeemable units of Exemplar Growth and Income Fund. The fair values of the Underlying Funds are determined primarily by reference to the latest available net asset value per unit of the Underlying Funds’ units as reported by the respective administrators of the Underlying Funds. The Fund may make adjustments to the values based on considerations such as; liquidity of the Underlying Funds or their underlying investments, the value date of the net asset values provided, any restrictions on redemptions and the basis of accounting. Redemptions can only be made on the redemption dates and subject to the required notice periods specified in the respective offering documents. As a result, the carrying values of the Underlying Funds may not be indicative of the values ultimately realized on redemption. Series I unitholders of the Underlying Funds have the right to redeem any or all of their Series I shares effective each business day of each month.

Refer to Note 6 for further information about the fair value measurement of the Fund's financial instruments and to Note 7 for further information about the Fund’s Structured Entities.

Use of Judgments Classification and Measurement of Investments and Application of the Fair Value Option

In classifying and measuring financial instruments held by the Funds, the Manager is required to make significant judgments about whether or not the business of the Funds is to invest on a total return basis for the purpose of applying the fair value option for financial assets under IAS 39, Financial Instruments - Recognition and Measurement (IAS 39). The most significant judgments made include the determination that certain investments are held-for-trading and that the fair value option can be applied to those which are not. Assessment as Investment Entity

Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them. Each Fund meets the definition of investment entity as it obtains funds from one or more investors for the purpose of providing those investors with professional investment management services and commit to their investors that their business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Each Fund measures and evaluates the performance of substantially all of its investments on a fair value basis. Determination if Underlying Funds Meet the Structured Entity Definition

The Funds have concluded that their investments in the Underlying Funds are investments in unconsolidated structured entities. This represents a significant judgment by the Funds that is based generally on the fact that the decision making about the Underlying Funds investing activities is not governed by voting rights held by the Funds and other investors.

4. FINANCIAL INSTRUMENTS – RISK MANAGEMENT

In the normal course of business, each Fund is exposed to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk), concentration risk and capital risk. Please refer to Notes to the Financial Statements – Fund Specific Information for each Fund’s specific risk disclosure.

Credit Risk

The Funds may be exposed to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Where a Fund invests in debt instruments and derivatives, this represents the main concentration of credit risk. The Funds are also exposed to counterparty credit risk on cash, margin deposits and other receivable balances. The Funds may also participate in securities lending and: therefore, be exposed to counterparty risk on all such loans, if any.

All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other

79 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016 assets deposited with the custodian or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing a Fund's rights to its assets in the case of an insolvency of any such party.

Liquidity Risk

Liquidity risk is the risk that a Fund will encounter difficulty in meeting obligations associated with financial liabilities. Each Fund is exposed to daily cash redemptions and as such, retains sufficient cash to fund anticipated redemptions. Each Fund aims to retain sufficient cash to maintain adequate liquidity including coverage of obligations related to short sales (if applicable) and all current liabilities. In addition, each Fund generally invests in securities that are highly liquid and where there is an observable market price that is quoted by multiple dealers.

Market Risk

The Funds’ investments are subject to market risk which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. a) Currency Risk

The Funds invest in financial instruments and enter into transactions that are denominated in currencies other than the Canadian dollar. Consequently, the Funds are exposed to currency risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Funds may enter into foreign exchange currency contracts to reduce their foreign currency exposure. b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A Fund may hold securities with fixed interest rates that expose that Fund to fair value interest rate risk. c) Price Risk

The Funds are exposed to price risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Funds’ investments are subject to the risk of changes in the prices of equity securities, bonds and derivatives.

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

Capital Risk Management

Units issued and outstanding are considered to be the capital of the Funds. The Funds do not have any specific capital requirements on the subscription and redemption of units, other than certain minimum subscription requirements. Unitholders are entitled to require payment of the net asset value per unit of a Fund for all or any of the units of such unitholder by giving written notice to the Manager. The written notice is irrevocable and must be received no later than 4:00 p.m., EST, on the valuation day upon which the units are to be redeemed (a "Redemption Date"). The redeeming unitholder will receive payment in respect of any units surrendered for redemption on or before the 3rd business day immediately following a Redemption Date, subject to the Manager’s right to suspend redemptions in certain circumstances.

5. FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT

Each Fund classifies fair value measurements within a hierarchy which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Please refer to Notes to the Financial Statements – Fund Specific Information for each Fund’s specific risk disclosure.

The three levels of the fair value hierarchy are:

80 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that a Fund can access at the measurement date,

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly; and

Level 3: Inputs that are unobservable for the asset or liability.

If inputs of different levels are used to measure an asset's or liability's fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement.

The Funds may participate in securities lending and; therefore, receive collateral categorized as Level 1 or 2 as defined above. Such collateral is not considered significant to the financial instrument hierarchy of the securities owned by the Funds.

6. INVESTMENT IN STRUCTURED ENTITIES

Information related to investments in Structured Entities is as follows:

Exemplar Growth and Income Fund – December 31, 2017 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % Exemplar Investment Grade Fund ETF 1,001,250 4.0 0.7 Exemplar Tactical Corp Bond Fund Class I 2,262,444 9.1 4.6 Health Care Select Sector SPDR Trust 415,715 1.7 0.0 iShares 20+ Year Treasury Bond ETF 558,121 2.2 0.0 iShares Russell 2000 ETF 1,149,853 4.6 0.0 iShares S&P/TSX Capped Energy ETF 122,700 0.5 0.0 iShares S&P/TSX Global Gold Index ETF 428,050 1.7 0.1 Materials Select Sector SPDR Trust 319,562 1.3 0.0 SPDR Gold Shares 466,284 1.9 0.0 VanEck Vectors Junior Gold Miners ETF 188,766 0.8 0.0 VanEck Vectors Oil Services ETF 212,842 0.9 0.0 Vanguard Real Estate Income Trust ETF 104,306 0.4 0.0

Exemplar Growth and Income Fund – December 31, 2016 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % A&W Revenue Royalties Income Fund 37,170 0.3 0.0 Exemplar Performance Fund - Class I 2,458,746 18.9 6.1 Exemplar Tactical Corporate Bond Fund - Class I 950,792 7.3 2.6 Exemplar US High Yield Fund - Class I 2,382,137 18.3 21.7

Exemplar Investment Grade Fund – December 31, 2017 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % n/a n/a n/a n/a

81 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Investment Grade Fund – December 31, 2016 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % BMO Laddered Preferred Share Index ETF 1,701,300 2.7 0.1

Exemplar Leaders Fund – December 31, 2017 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % Boyd Group Income Fund 1,069,434 2.7 0.1 Crius Energy Trust 607,452 1.5 0.1

Exemplar Leaders Fund – December 31, 2016 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % Boyd Group Income Fund 881,268 2.4 0.1 Noranda Income Fund 223,958 0.6 0.2

Exemplar Performance Fund – December 31, 2017 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % BMO Equal Weight Banks Index ETF 17,826 0.0 0.0 BMO Equal Weight US Banks Hedged to CAD Index ETF 26,712 0.1 0.0 Boyd Group Income Fund 1,472,994 3.6 0.1 ETFMG Prime Cyber Security ETF 51,703 0.1 0.0 Financial Select Sector SPDR Fund 94,724 0.2 0.0 Global X Lithium & Battery Tech ETF Fund 170,525 0.4 0.0 Horizons Marijuana Life Sciences Index ETF, Class A 37,860 0.1 0.0 Industrial Select Sector SPDR Fund 114,141 0.3 0.0 iShares Russell 2000 ETF 38,328 0.1 0.0 iShares S&P/TSX Capped Energy ETF 55,215 0.1 0.0 iShares Silver Trust ETF 44,219 0.1 0.0 SPDR Gold Shares 155,428 0.4 0.0 SPDR S&P 500 ETF Trust 570,253 1.4 0.0 SPDR S&P Oil & Gas Exploration and Production ETF 42,062 0.1 0.0 VanEck Vectors Semiconductor ETF Fund 209,010 0.5 0.0

82 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Performance Fund – December 31, 2016 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % A&W Revenue Royalties Income Fund 538,965 1.3 0.1 BMO S&P/TSX Equal Weight Banks Index ETF 161,100 0.4 0.0 Boyd Group Income Fund 1,129,392 2.8 0.1 iShare Russell 2000 ETF 307,796 0.8 0.0 iShares S&P/TSX 60 Index ETF 489,024 1.2 0.0 iShares S&P/TSX Capped Energy Index ETF 440,228 1.1 0.0 iShares S&P/TSX Capped REIT Index ETF 60,800 0.2 0.0 iShares U.S. Broker-Dealers & Sec. Exchanges ETF 44,046 0.1 0.0 PowerShares DB US Dollar Index Bullish Fund 138,553 0.3 0.0 SPDR S&P Oil & Gas Exploration & Production ETF 111,225 0.3 0.0 VanEck Vectors Russia ETF 148,153 0.4 0.0

Exemplar Tactical Corporate Bond Fund – December 31, 2017 Fair Value of Net Assets Attributable Fund's Investment in to Holders of Ownership of Underlying Fund Redeemable Units Underlying Fund $ % % n/a n/a n/a n/a

Exemplar Tactical Corporate Bond Fund – December 31, 2016 Fair Value of Fund's Net Assets Attributable Investment in Underlying to Holders of Ownership of Fund Redeemable Units Underlying Fund $ % % BMO Laddered Preferred Share Index ETF 2,033,000 5.5 0.1

7. REDEEMABLE UNITS

During the years ended December 31, 2017 and 2016, the number of units issued, redeemed and outstanding was as follows:

Exemplar Growth and Income Fund - for the year ended December 31, 2017

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 369,276 912,780 83,720 (348,614) 1,017,162 Series AN 168,085 78,651 14,681 (123,340) 138,077 Series F 88,998 204,084 17,642 (90,739) 219,985 Series FN 489,600 297,132 87,412 (80,751) 793,393 Series I 90,330 - 12,686 (789) 102,227 Series L 26,060 15,782 2,856 (167) 44,531 Series LN 10,852 9,412 2,023 - 22,287

83 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Growth and Income Fund - for the year ended December 31, 2016 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 380,417 32,350 17,297 (60,788) 369,276 Series AN 38,453 128,378 9,280 (8,026) 168,085 Series F 118,491 56,668 6,450 (92,611) 88,998 Series FN 314,537 310,118 31,227 (166,282) 489,600 Series I 84,458 - 6,633 (761) 90,330 Series L 8,642 16,636 782 - 26,060 Series LN 5,062 6,325 469 (1,004) 10,852

Exemplar Investment Grade Fund - for the year ended December 31, 2017 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 1,459,186 2,307,633 56,631 (542,334) 3,281,116 Series AI 274,643 250,883 6,366 (31,112) 500,780 Series AN 314,815 316,130 8,031 (123,379) 515,597 Series F 3,554,196 6,278,935 79,647 (1,406,648) 8,506,130 Series FI 436,032 207,618 5,794 (65,158) 584,286 Series FN 311,722 1,366,711 20,708 (153,835) 1,545,306 Series I 506 - 9 - 515 Series G 4,176 131,979 1,413 - 137,568 Series ETF - 100,000 - - 100,000

Exemplar Investment Grade Fund - for the year ended December 31, 2016 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 1,526,674 459,077 30,314 (556,879) 1,459,186 Series AI 197,676 112,818 3,199 (39,050) 274,643 Series AN 205,057 155,755 8,596 (54,593) 314,815 Series F 3,627,975 2,018,063 50,859 (2,142,701) 3,554,196 Series FI 251,235 260,705 4,263 (80,171) 436,032 Series FN 147,719 191,347 7,732 (35,076) 311,722 Series I - 50,491 15 (50,000) 506 Series G 4,691 2,515 85 (3,115) 4,176

Exemplar Leaders Fund - for the year ended December 31, 2017

84 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Leaders Fund - for the year ended December 31, 2016

Exemplar Performance Fund - for the year ended December 31, 2017 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 1,032,860 225,978 - (254,416) 1,004,422 Series AD 25,946 2,661 454 (4,231) 24,830 Series F 1,591,950 547,009 - (452,956) 1,686,003 Series FD 39,436 7,247 167 (2,748) 44,102 Series I 227,887 461 - (227,887) 461 Series L 459,491 10,415 - (160,757) 309,149 Series LD 9,179 34,432 625 (19) 44,217

Exemplar Performance Fund - for the year ended December 31, 2016 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 657,788 595,007 - (219,935) 1,032,860 Series AD 23,041 10,704 471 (8,270) 25,946 Series F 919,575 890,514 - (218,139) 1,591,950 Series FD 33,506 10,156 229 (4,455) 39,436 Series I 474,210 46,232 - (292,555) 227,887 Series L 272,741 187,039 - (289) 459,491 Series LD 10,010 - 195 (1,026) 9,179

85 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Tactical Corporate Bond Fund - for the year ended December 31, 2017 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 417,810 71,512 8,617 (79,997) 417,942 Series AI 39,528 156,380 1,030 (24,468) 172,470 Series AN 758,683 58,326 10,067 (302,699) 524,377 Series F 1,638,737 1,088,812 52,809 (242,930) 2,537,428 Series FI 210,892 99,441 7,989 (50,619) 267,703 Series FN 620,805 427,171 18,092 (150,797) 915,271 Series I 96,477 329,996 11,027 (208,606) 228,894 Series L 102,475 17,347 4,372 (1,379) 122,815 Series LI 546 - 41 - 587 Series U 4,437 5,475 - (1,497) 8,415 Series G 1,000 4,460 - - 5,460 Series M 104 - 5 - 109

Exemplar Tactical Corporate Bond Fund - for the year ended December 31, 2016 Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 478,057 52,467 11,769 (124,483) 417,810 Series AI 28,942 18,172 1,857 (9,443) 39,528 Series AN 1,048,750 32,283 43,793 (366,143) 758,683 Series F 1,257,444 686,373 33,687 (338,767) 1,638,737 Series FI 123,815 100,208 8,967 (22,098) 210,892 Series FN 671,979 278,519 38,341 (368,034) 620,805 Series I 115,268 125,861 7,091 (151,743) 96,477 Series L 102,488 15,793 3,667 (19,473) 102,475 Series LI 1,031 - 56 (541) 546 Series U 2,940 1,497 - - 4,437 Series G - 5,013 - (4,013) 1,000 Series M 1,250 102 2 (1,250) 104

8. OFFSETTING OF FINANCIAL INSTRUMENTS

In the normal course of business, the Funds enter into various master netting arrangements or other similar agreements that do not meet the criteria for offsetting in the Statements of Financial Position, but still allow for the related amounts to set off in certain circumstances, such as bankruptcy or termination of the contracts. The following tables show financial instruments that may be eligible for offset, if such conditions were to arise, as at December 31, 2017 and 2016. The “Net Amount” column displays what the net impact would be on the Fund’s Statements of Financial Position if all amounts were set off.

86 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Growth and Income Fund - December 31, 2017 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 127,920 - 127,920 (13,096) - 114,824 127,920 - 127,920 (13,096) - 114,824 Financial liabilities: Counterparty 1 (13,096) - (13,096) 13,096 - - (13,096) - (13,096) 13,096 - -

Exemplar Growth and Income Fund - December 31, 2016 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 32,083 - 32,083 - - 32,083 32,083 - 32,083 - - 32,083 Financial liabilities: Counterparty 1 ------

Exemplar Investment Grade Fund - December 31, 2017 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 2,048,538 - 2,048,538 - - 2,048,538 Counterparty 2 - - - - - Counterparty 3 ------2,048,538 - 2,048,538 - - 2,048,538 Financial liabilities: Counterparty 1 ------Counterparty 2 ------Counterparty 3 (18,657) - (18,657) - - (18,657) (18,657) - (18,657) - - (18,657)

87 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Investment Grade Fund - December 31, 2016 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 734,187 - 734,187 (157,749) - 576,438 Counterparty 2 12,133 - 12,133 (12,133) - - Counterparty 3 579 - 579 - - 579 746,899 - 746,899 (169,882) - 577,017 Financial liabilities: Counterparty 1 (157,749) - (157,749) 157,749 - - Counterparty 2 (106,385) - (106,385) 12,133 94,252 - Counterparty 3 ------(264,134) - (264,134) 169,882 94,252 -

Exemplar Tactical Corporate Bond Fund - December 31, 2017 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 458,926 - 458,926 - - 458,926 Counterparty 2 ------Counterparty 3 ------458,926 - 458,926 - - 458,926 Financial liabilities: Counterparty 1 ------Counterparty 2 ------Counterparty 3 (2,017) - (2,017) - - (2,017) (2,017) - (2,017) - - (2,017)

88 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Tactical Corporate Bond Fund - December 31, 2016 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 ------Counterparty 2 777 - 777 - - 777 777 - 777 - - 777 Financial liabilities: Counterparty 1 (430,434) - (430,434) - 430,434 - Counterparty 2 ------Counterparty 3 (29,917) - (29,917) - - (29,917) (460,351) - (460,351) - 430,434 (29,917)

Exemplar Performance Fund - December 31, 2017 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Cash collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 6,651 - 6,651 (251) 6,400 6,651 - 6,651 (251) - 6,400 Financial liabilities: Counterparty 1 (251) (251) 251 (251) - (251) 251 - -

Exemplar Performance Fund - December 31, 2016 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments Statement of Financial Gross amounts eligible for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 ------Financial liabilities: Counterparty 1 ------

89 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

9. SECURITIES LENDING

The Funds’ have entered into a security lending program administered by BNY Mellon, in its capacity as Lending Agent. The tables below summarize the securities loaned and collateral held as at December 31, 2017 and 2016 and the security lending income for the years ended December 31, 2017 and 2016:

As at December 31, 2017 Exemplar Exemplar Exemplar Exemplar Exemplar Tactical Growth and Investment Leaders Performance Corporate Income Fund Grade Fund Fund Fund Bond Fund $ $ $ $ $ Non-Cash Collateral Coverage Collateral received for securities on loan 2,854,214.00 750,509.00 4,875,392.00 4,336,989.00 129,540.00 Market value of securities loaned 2,715,165.00 714,158.00 4,631,108.00 4,124,913.00 123,250.00 Collateral in excess of securities loaned 139,049.00 36,351.00 244,284.00 212,076.00 6,290.00 Collateral as a percentage of securities loaned 105.1% 105.1% 105.3% 105.1% 105.1%

Non-Cash Collateral Exposure CAD 723,684 750,509 2,462,420 3,159,978 129,540 USD 2,130,530 - 2,412,972 1,177,011 - 2,854,214 750,509 4,875,392 4,336,989 129,540

As at December 31, 2016 Exemplar Exemplar Exemplar Exemplar Exemplar Tactical Growth and Investment Leaders Performance Corporate Income Fund Grade Fund Fund Fund Bond Fund $ $ $ $ $ Non-Cash Collateral Coverage Collateral received for securities on loan 276,448 - 3,014,781 2,792,775 - Market value of securities loaned (263,121) - (2,851,916) (2,654,441) - Collateral in excess of securities loaned 13,327 - 162,865 138,334 Collateral as a percentage of securities loaned 105.1% - 105.7% 105.2%

Non-Cash Collateral Exposure CAD 224,776 - 1,766,869 2,640,420 - USD 51,672 - 1,247,912 152,355 - 276,448 - 3,014,781 2,792,775 -

As at December 31, 2017 Exemplar Exemplar Exemplar Exemplar Exemplar Tactical Growth and Investment Leaders Performance Corporate Income Fund Grade Fund Fund Fund Bond Fund $ $ $ $ $

Income Securities lending income 100,805 1,570 65,438 72,033 223 Withholding taxes (21,286) - (2,244) (5,436) - BNY Mellon lending agent fees (31,804) (628) (25,272) (26,635) (89) Securities lending income (net) 47,715 942 37,922 39,962 134

90 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

As at December 31, 2016 Exemplar Exemplar Exemplar Exemplar Exemplar Tactical Growth and Investment Leaders Performance Corporate Income Fund Grade Fund Fund Fund Bond Fund $ $ $ $ $

Income Securities lending income 1,205 3,774 7,507 7,229 - Withholding taxes (50) - (59) (55) - BNY Mellon lending agent fees (462) (1,510) (2,979) (2,869) - Securities lending income (net) 693 2,264 4,469 4,305 -

10. RELATED PARTY TRANSACTIONS

The Manager is responsible for making decisions relating to the investment of the Funds’ assets and providing key management personnel.

The Exemplar Growth and Income Fund invests in units of other funds managed by Arrow. The number of units owned by Exemplar Growth and Income Fund is summarized as follows:

% of net assets attributable to holders December 31, 2017 Number of units Fair Value ($) of redeemable units Exemplar Tactical Corporate Bond Fund – Series I 228,894 2,263,762 9.1 Exemplar Investment Grade Fund - Series ETF 50,000 1,001,250 4.0

% of net assets attributable to holders December 31, 2016 Number of units Fair Value ($) of redeemable units Exemplar Performance Fund – Series I 227,887 2,458,746 18.9 Exemplar Tactical Corporate Bond Fund – Series I 96,477 950,792 7.3 Exemplar U.S. High Yield Fund - Series I 224,768 2,382,137 18.3

As of December 31, 2017, the number of units owned by the Manager of each Fund is summarized as follows:

% of net assets attributable to holders Number of units Fair Value ($) of redeemable units Exemplar Growth and Income Fund – AN 3,973 42,233 0.2 Exemplar Growth and Income Fund – FN 400,303 4,327,275 17.3 Exemplar Investment Grade Fund – Series I 515 5,521 0.0 Exemplar Leaders Fund – Series A 900 38,619 0.1 Exemplar Leaders Fund – Series F 704 30,645 0.1 Exemplar Performance Fund - Series F 871 11,732 0.0 Exemplar Performance Fund - Series I 461 5,504 0.0 Exemplar Tactical Corporate Bond Fund – Series F 4,926 45,664 0.1 Exemplar Tactical Corporate Bond Fund – Series LI 587 5,207 0.0 Exemplar Tactical Corporate Bond Fund – Series M (USD) 109 1,082 0.0

As of December 31, 2016, the number of units owned by the Manager of each Fund is summarized as follows:

91 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

% of net assets attributable to holders Number of units Amount ($) of redeemable units Exemplar Growth and Income Fund - FN 246,782 2,618,357 20.1 Exemplar Investment Grade Fund - Series I 506 5,265 0.0 Exemplar Leaders Fund - Series A 1,037 41,988 0.1 Exemplar Leaders Fund - Series F 669 27,630 0.1 Exemplar Performance Fund - Series F 979 11,954 0.0 Exemplar Tactical Corporate Bond Fund - Series F 4,692 43,776 0.1 Exemplar Tactical Corporate Bond Fund - Series LI 546 5,051 0 Exemplar Tactical Corporate Bond Fund - Series M 104 1,047 0.0

Management and Performance Fees

Management fees are calculated and accrued daily and paid monthly and are subject to HST (and any other applicable taxes). The management fee rates are as follows:

Fund Exemplar Exemplar Tactical Exemplar Growth Investment Grade Exemplar Leaders Exemplar Corporate Bond Series and Income Fund Fund Fund Performance Fund Fund A 2.00 1.30 1.80 2.00 1.75 AD n/a n/a n/a 2.00 n/a AI n/a 1.30 n/a n/a 1.75 AN 2.00 1.30 n/a n/a 1.75 U n/a n/a n/a n/a 1.75 F 1.00 0.80 0.80 1.00 1.00 FD n/a n/a n/a 1.00 n/a FI n/a 0.80 n/a n/a 1.00 FN 1.00 0.80 n/a n/a 1.00 G n/a 0.80 n/a n/a 1.00 L 2.30 n/a n/a 2.30 2.00 LD n/a n/a n/a 2.30 n/a LI n/a n/a n/a n/a 2.00 LN 2.30 n/a n/a n/a n/a M n/a n/a n/a n/a 2.00 ETF n/a 0.80 n/a n/a n/a

A holder of Series I units of a Fund, if applicable, pays a negotiated management fee directly to Arrow. The management fee in respect of Series I units will be different for each investor and will not exceed 2.50% per year.

In addition, Exemplar Leaders Fund and Exemplar Performance Fund pay the Manager an annual performance fee (the “Performance Fee”), equal to 20% of the amount by which the Funds outperform their respective indices. The Performance Fee is calculated and accrued daily and paid annually on a calendar year basis and is subject to HST (and any other applicable taxes). If the performance of a series of a Fund in any year is less than the performance of the indices described below (the “Return Deficiency”), then no Performance Fee will be payable in any subsequent year until the performance of the applicable series, on a cumulative basis calculated from the first of such subsequent years, has exceeded the amount of the Return Deficiency. Exemplar Leaders Fund

The Exemplar Leaders Fund will pay Arrow an annual Performance Fee equal to a percentage of the average net asset value of Series A units and Series F units of the Fund. Such percentage will be equal to 20% of the difference by which the return in the net asset value per unit of the applicable series from January 1 to December 31 exceeds the greater of: (i) 0%; and (ii) the percentage return of the S&P/TSX Composite Total Return Index for the same period.

92 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Performance Fund

A Performance Fee will be payable in all circumstances where the performance of the Fund exceeds that of the S&P/TSX Composite Total Return Index, even in circumstances where the overall performance of the Fund has declined in a particular year, but as long as the performance of the Fund is positive since the last date that a performance fee was paid by the Fund. The S&P/TSX Composite Total Return Index is comprised of most of the largest companies on the Toronto Stock Exchange as measured by market capitalization with any distributions reinvested.

Exemplar Growth and Income Fund does not charge a performance fee directly, although funds it invests in may be charged a performance fee.

Each Fund is responsible for all operating expenses incurred by or on behalf of that Fund. At the discretion of the Manager, certain fees may be absorbed by the Manager.

Accrued management fees and performance fees (excluding HST) included in other liabilities on the statements of financial position are as follows:

December 31, 2017 December 31, 2016 Management Fees Performance Fees Management Fees Performance Fees $ $ $ $ Exemplar Growth and Income Fund 30,469 n/a 15,105 n/a Exemplar Investment Grade Fund 119,164 n/a 49,906 n/a Exemplar Leaders Fund 50,308 4,444 48,267 2,420 Exemplar Performance Fund 50,130 5,515 47,895 332 Exemplar Tactical Corporate Bond Fund 46,971 n/a 38,789 n/a

11. BROKERAGE COMMISSIONS

Total commissions paid to dealers for the years ended December 31, 2017 and 2016 in connection with portfolio transactions are as follows:

December 31, 2017 December 31, 2016 $ $ Exemplar Growth and Income Fund 147,860 88,713 Exemplar Investment Grade Fund 41,773 44,064 Exemplar Leaders Fund 41,919 25,908 Exemplar Performance Fund 30,920 23,676 Exemplar Tactical Corporate Bond Fund 26,652 18,622

Soft Dollar Commissions

Total commissions used to purchase market data services by the Funds for the years ended December 31, 2017 and 2016 are as follows: December 31, 2017 December 31, 2016 $ $ Exemplar Growth and Income Fund 12,027 3,024 Exemplar Investment Grade Fund - - Exemplar Leaders Fund 19,028 8,646 Exemplar Performance Fund 19,642 9,292 Exemplar Tactical Corporate Bond Fund - -

93 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

12. TAXATION

The Funds qualify as mutual fund trusts under the Income Tax Act (Canada) (“Tax Act”). All of the Funds' net income for tax purposes and sufficient net capital gains realized in any year are required to be distributed to unitholders such that no income tax is payable by the Funds. As a result, the Funds do not record income taxes. Since the Funds do not record income taxes, the tax benefit of capital and non-capital losses would not be reflected in the Statements of Financial Position as a deferred income tax asset.

Non-Capital Loss* Capital Loss** $ $ Exemplar Growth and Income Fund nil nil Exemplar Investment Grade Fund 23,569 211,985 Exemplar Leaders Fund nil nil Exemplar Performance Fund 494,638 224,898 Exemplar Tactical Corporate Bond Fund 54,320 76,474 * Non-capital losses can be offset against income in future years for up to 20 years. ** Net Capital losses can be carried forward indefinitely for offset against gains in future periods.

13. INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS PER UNIT

The increase (decrease) in net assets attributable to holders of redeemable units per unit for the years ended December 31, 2017 and 2016 is calculated as follows:

Increase (decrease) in Weighted average Increase (decrease) in net assets attributable to redeemable units net assets attributable to holders of redeemable outstanding during the holders of redeemable December 31, 2017 units ($) year units per unit ($) Exemplar Growth and Income Fund – Series A 1,005,701 711,370 1.41 Exemplar Growth and Income Fund – Series AN 183,423 135,452 1.35 Exemplar Growth and Income Fund – Series F 241,790 163,370 1.48 Exemplar Growth and Income Fund – Series FN 1,033,965 649,363 1.59 Exemplar Growth and Income Fund – Series I 150,026 92,701 1.62 Exemplar Growth and Income Fund – Series L 51,732 35,639 1.45 Exemplar Growth and Income Fund – Series LN 26,384 19,546 1.35 Exemplar Investment Grade Fund – Series A 669,078 2,434,963 0.27 Exemplar Investment Grade Fund – Series AI 105,976 374,670 0.28 Exemplar Investment Grade Fund – Series AN 135,959 433,340 0.31 Exemplar Investment Grade Fund – Series F 2,136,915 6,540,697 0.33 Exemplar Investment Grade Fund – Series FI 179,208 506,882 0.35 Exemplar Investment Grade Fund – Series FN 288,819 899,550 0.32 Exemplar Investment Grade Fund – Series I 255 506 0.50 Exemplar Investment Grade Fund – Series G (69,025) 89,153 (0.77) Exemplar Investment Grade Fund – Series ETF 3,309 68,750 0.05 Exemplar Leaders Fund – Series A 2,599,279 656,793 3.96 Exemplar Leaders Fund – Series F 1,093,178 238,758 4.58 Exemplar Performance Fund – Series A 1,084,789 973,651 1.11 Exemplar Performance Fund – Series AD 24,198 26,896 0.90 Exemplar Performance Fund – Series F 2,064,263 1,657,949 1.25 Exemplar Performance Fund – Series FD 43,694 42,636 1.02 Exemplar Performance Fund – Series I 15,872 19,776 0.80 Exemplar Performance Fund – Series L 347,805 399,741 0.87 Exemplar Performance Fund – Series LD 31,889 35,528 0.90 Exemplar Tactical Corporate Bond Fund – Series A 129,042 416,793 0.31 Exemplar Tactical Corporate Bond Fund – Series AI 18,844 91,703 0.21

94 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

Exemplar Tactical Corporate Bond Fund – Series AN 200,516 560,111 0.36 Exemplar Tactical Corporate Bond Fund – Series F 773,952 2,159,562 0.36 Exemplar Tactical Corporate Bond Fund – Series FI 86,743 239,172 0.36 Exemplar Tactical Corporate Bond Fund – Series FN 331,685 834,543 0.40 Exemplar Tactical Corporate Bond Fund – Series I 121,946 285,811 0.43 Exemplar Tactical Corporate Bond Fund – Series L 29,744 111,313 0.27 Exemplar Tactical Corporate Bond Fund – Series LI 153 567 0.27 Exemplar Tactical Corporate Bond Fund – Series U (53) 7,238 (0.01) Exemplar Tactical Corporate Bond Fund – Series G (275) 2,043 (0.13) Exemplar Tactical Corporate Bond Fund – Series M (46) 106 (0.43)

Increase (decrease) in Weighted average Increase (decrease) in net assets attributable to redeemable units net assets attributable to holders of redeemable outstanding during the holders of redeemable December 31, 2016 units ($) year units per unit ($) Exemplar Growth & Income Fund - Series A 345,830 363,850 0.95 Exemplar Growth & Income Fund - Series AN 102,596 93,884 1.09 Exemplar Growth & Income Fund - Series F 143,453 132,183 1.09 Exemplar Growth & Income Fund - Series FN 449,678 407,127 1.10 Exemplar Growth & Income Fund - Series I 99,042 85,183 1.16 Exemplar Growth & Income Fund - Series L 20,716 20,253 1.02 Exemplar Growth & Income Fund - Series LN 9,360 9,020 1.04 Exemplar Investment Grade Fund – Series A 937,545 1,480,974 0.63 Exemplar Investment Grade Fund – Series AI 140,859 221,072 0.64 Exemplar Investment Grade Fund – Series AN 184,880 259,322 0.71 Exemplar Investment Grade Fund – Series F 2,095,711 3,138,056 0.67 Exemplar Investment Grade Fund – Series FI 209,169 319,770 0.65 Exemplar Investment Grade Fund – Series FN 153,018 200,800 0.76 Exemplar Investment Grade Fund – Series I 10,665 12,042 0.89 Exemplar Investment Grade Fund – Series G 2,251 4,548 0.49 Exemplar Leaders Fund – Series A 2,694,192 683,036 3.94 Exemplar Leaders Fund – Series F 1,087,519 225,194 4.83 Exemplar Performance Fund – Series A 402,041 946,232 0.42 Exemplar Performance Fund – Series AD 6,249 27,807 0.22 Exemplar Performance Fund – Series F 682,350 1,281,933 0.53 Exemplar Performance Fund – Series FD 13,526 36,162 0.37 Exemplar Performance Fund – Series I 58,612 276,605 0.21 Exemplar Performance Fund – Series L 149,255 414,420 0.36 Exemplar Performance Fund – Series LD 1,795 9,572 0.19 Exemplar Tactical Corporate Bond Fund – Series A 258,863 460,209 0.56 Exemplar Tactical Corporate Bond Fund – Series AI 18,692 33,916 0.55 Exemplar Tactical Corporate Bond Fund – Series AN 537,683 895,202 0.60 Exemplar Tactical Corporate Bond Fund – Series F 1,043,787 1,547,809 0.67 Exemplar Tactical Corporate Bond Fund – Series FI 108,112 166,207 0.65 Exemplar Tactical Corporate Bond Fund – Series FN 380,293 566,799 0.67 Exemplar Tactical Corporate Bond Fund – Series I 89,639 103,314 0.87 Exemplar Tactical Corporate Bond Fund – Series L 44,025 92,128 0.48 Exemplar Tactical Corporate Bond Fund – Series LI 392 787 0.50 Exemplar Tactical Corporate Bond Fund – Series U 1,118 3,108 0.36 Exemplar Tactical Corporate Bond Fund – Series G 476 1,906 0.25 Exemplar Tactical Corporate Bond Fund – Series M 983 861 1.14

95 EXEMPLAR FUNDS GENERAL NOTES TO THE FINANCIAL STATEMENTS For the years ended December 31, 2017 and 2016

14. REVISION OF COMPARATIVE FIGURES

Certain comparative figures in the Financial Statements have been reclassified.

For the year ended December 31, 2016, certain custodial transaction costs related to the purchase and sale of securities has been reclassified from “Custodial Fees” to “Commissions and other portfolio transactions” on the Statements of Comprehensive Income. The reclassified amount for Exemplar Growth and Income Fund is $41,525, Exemplar Investment Grade Fund is $13,609, Exemplar Leaders Fund is $14,553, Exemplar Performance Fund is $22,423 and Exemplar Tactical Corporate Bond Fund is $3,783. This change was made to more appropriately reflect the nature of these transaction costs in the Statements of Comprehensive Income.

For the year ended December 31, 2016, proceeds related to total return swaps has been reclassified in the Statements of Cash Flow to ‘Purchase of Investments’ from ‘Proceeds on sale of investments and derivatives’ in order to more appropriately reflect the nature of the cash flows. The reclassified amount for Exemplar Investment Grade Fund is $558,943 and Tactical Corporate Bond Fund is $565,513.

15. FUTURE ACCOUNTING CHANGES

IFRS 9, Financial Instruments

IFRS 9, Financial Instruments, addresses the classification, measurement and derecognition of financial assets and liabilities. It replaces the multiple classification and measurement models in IAS 39 and is effective for reporting periods beginning on or after January 1, 2018.

Classification and measurement of debt assets will be driven by the Fund’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. A debt instrument is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows and the contractual cash flows under the instrument solely represent payments of principal and interest (SPPI). A debt instrument is measured at fair value through other comprehensive income if the objective of the business model is to hold the financial asset both to collect contractual cash flows from SPPI and to sell. All other debt instruments must be recognized at fair value through profit and loss. An entity may however, at initial recognition, irrevocably designate a financial asset as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency. Derivative and equity instruments are measured at fair value through profit or loss unless, for equity instruments not held for trading, an irrevocable option is taken to measure at fair value through other comprehensive income. IFRS 9 also introduces a new expected credit loss (ECL) impairment model.

On adoption of IFRS 9 the Funds’ investment portfolio will continue to be classified as fair value through profit or loss. Other financial assets which are held for collection will continue to be measured at amortized cost with no material impact expected from adoption of the new impairment model. As a result, the adoption of IFRS 9 is not expected to have a material impact on the Funds’ financial statements.

In addition to the above, a number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January 1, 2017 and have not been applied in preparing these financial statements. None of these are expected to have a material effect on the financial statements of the Funds.

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

March 27, 2018

TO THE UNITHOLDERS AND TRUSTEE OF EXEMPLAR GROWTH AND INCOME FUND, EXEMPLAR INVESTMENT GRADE FUND, EXEMPLAR LEADERS FUND, EXEMPLAR PERFORMANCE FUND, AND EXEMPLAR TACTICAL CORPORATE BOND FUND (COLLECTIVELY THE “FUNDS”)

The accompanying audited financial statements have been prepared by Arrow Capital Management Inc. (“Arrow” or the “Manager” of the Funds) and approved by the Board of Directors of the Manager. The Manager is responsible for the information and representations contained in these financial statements.

The Manager maintains appropriate processes to ensure that reliable financial information is produced. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and include certain amounts that are based on estimates and judgments. The significant accounting policies which management believes are appropriate for the Funds are described in Note 2 to the financial statements.

PricewaterhouseCoopers LLP is the external auditor of the Funds, appointed by the unitholders. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out on the following page.

“James L. McGovern” “Robert W. Maxwell”

JAMES L. MCGOVERN ROBERT W. MAXWELL Managing Director & CEO Managing Director & CFO ARROW CAPITAL MANAGEMENT INC. ARROW CAPITAL MANAGEMENT INC.

97 Independent Auditor’s Report

To the Unitholders of

Exemplar Growth & Income Fund, Exemplar Investment Grade Fund, Exemplar Leaders Fund, Exemplar Performance Fund, and Exemplar Tactical Corporate Bond Fund (collectively the Funds)

We have audited the accompanying financial statements of each of the Funds, which comprise the Statements of Financial Position, Comprehensive Income, Changes in Net Assets Attributable to Holders of Redeemable Units and Cash Flows as at and for the Periods indicated in Note 1 of the Notes to the Financial Statements. The Funds’, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial statements of each of the Funds based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in each of our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position, financial performance and cash flows of each of the Funds as at and for the periods indicated in Note 1 of the Notes to the Financial Statements in accordance with International Financial Reporting Standards.

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario March 27, 2018

98 FUND INFORMATION

MANAGER AND PRINCIPAL DISTRIBUTOR

Arrow Capital Management Inc. 36 Toronto Street Suite 750 Toronto, ON M5C 2C5 Telephone: (416) 323-0477 Fax: (416) 323-3199 Toll Free: 1 (877) 327-6048

REGISTRAR RBC Investor Services 155 Wellington Street West, 5th Floor Toronto, ON M5V 3L3

CUSTODIAN CIBC Mellon 1 York Street, Suite 900 Toronto, ON M5J 0B6

AUDITOR

PricewaterhouseCoopers LLP PwC Tower 18 York Street, Suite 2600 Toronto, ON M5J 0B2

Arrow Capital Management Inc. 36 Toronto Street, Suite 750 ● Toronto, Ontario ● Canada M5C 2C5 ● Tel: 416.323.0477 ● Tel: 1.877.327.6048 ● Fax: 416.323.3199 ● www.arrow-capital.com