Formerly Purpose Tactical Investment Grade Bond

AUDITED ANNUAL FINANCIAL STATEMENTS PURPOSE HIGH INTEREST SAVINGS ETF PURPOSE US CASH ETF PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND) PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND) PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND) PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND) PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND) PURPOSE US DIVIDEND FUND PURPOSE INTERNATIONAL DIVIDEND FUND PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND) PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND) PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND) PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND PURPOSE GOLD BULLION FUND FOR THE FINANCIAL PERIOD ENDED DECEMBER 31, 2018 PURPOSE FUNDS

TABLE OF CONTENTS

Letter to investors 1 Independent auditor's report 2 Purpose High Interest Savings ETF 3 Purpose US Cash ETF 6 Purpose Global Bond Fund (formerly Purpose Tactical Investment Grade Bond Fund) 9 Purpose Strategic Yield Fund (formerly Redwood Strategic Yield Fund) 17 Purpose Energy Credit Fund (formerly Energy Credit Opportunities Income Fund) 25 Purpose Canadian Preferred Share Fund (formerly Redwood Canadian Preferred Share Fund) 32 Purpose US Preferred Share Fund (formerly Redwood US Preferred Share Fund) 39 Purpose US Dividend Fund 46 Purpose International Dividend Fund 54 Purpose Emerging Markets Dividend Fund (formerly Redwood Emerging Markets Dividend Fund) 61 Purpose Marijuana Opportunities Fund (formerly Marijuana Opportunities Fund) 67 Purpose Multi‑Asset Income Fund (formerly Redwood High Income Fund) 73 Purpose Multi-Strategy Market Neutral Fund 82 Purpose Gold Bullion Fund 89 Notes to the financial statements 93 Fund information Back cover

2018 ANNUAL REPORT ii PURPOSE FUNDS

LETTER TO INVESTORS DEAR INVESTOR, Purpose Investments has come a long way from where we started six years ago. You will likely start to hear more about what’s known as “alternative” investments Although time has passed, our focus remains squarely on creating investment in the near future, especially considering that, in 2018, the negative correlation products, each with a specific purpose, to help you build a resilient portfolio to between equity and debt markets broke down for the first time in 30 years. reach your financial goals. 2018 was a rocky year for markets, as the return of Changes to the rules that govern investment funds will open up new opportunities volatility reminded us all that the steady rise in asset prices seen in prior years to invest in alternatives, which typically include assets that are uncorrelated to is the exception, not the rule. traditional markets, such as commodities and real estate. It’s a space that we’re The challenging year tested us as investment managers. It showed us that comfortable with because we’ve been in it since our inception five years age. many of our optimized strategies and risk-management practices performed as In the months ahead, we will remain focused on continually iterating and designed, to protect your capital. While major benchmark indices such as the innovating our products to help drive the investment outcomes you are looking S&P/TSX Composite and the S&P 500 returned -11.6% and -6.2%, respectively, for. This includes enhancing our existing line-up with positive modifications many of our Funds avoided steep losses. Nearly all asset classes fell in 2018, to our strategies, providing access to new and exciting assets such as private an extremely rare occurrence. Cash was one of the few assets that performed debt and improving the experience of how you engage with our products. relatively well, and it was a trend many of you noticed, as inflows into the We’ve always believed that Canadians deserve to have the best strategies Purpose suite of cash and money market products were sustained throughout available to them, including those typically reserved for pensions and the year, especially during the volatile fourth quarter. institutional investors, and we will strive to continue delivering on this front. If you came to us through the Redwood Asset Management brand, you’ve likely To guide us in our mission to serve you, we focus on five core value: optimized noticed many changes over the past year. To reduce the costs to you and make investment strategies, risk management, transparency, accessibility and fair our entire product line-up easier to understand, we amalgamated the Redwood fees. These values apply to each and every one of our strategies, and to our banner completely into the Purpose brand. While it was certainly a busy time of product lineup as a whole. Our priority first and foremost is to you, the investor. change, we believe we are now in a better place to execute on our promise of We know that when you win, we win. We are humbled and honoured that you’ve providing you with the innovative funds and strategies to help you reach your placed your trust in us. We will continue to earn and strengthen those bonds financial goals. while striving to set the bar for the broader investment industry. We chose to unify our brands to simplify our products and bring our rules-based We would encourage you to learn more about Purpose and all of our and actively managed funds under a single banner. As investors, you should funds. More information about our products, including explanations about have access to the strategies that are optimized for their respective asset classes each of our funds’ investment objectives, risk-management techniques, to help you build a truly resilient portfolio. To meet the challenges of the rapidly performance, holdings and distribution history can be found on our website, moving market environment, we cannot be tied to legacies or certain practices www.purposeinvest.com. And remember, always Invest with Purpose. – we must always be refining our strategies, strengthening our processes and Sincerely yours, innovating for you, our clients. One example of how we’re thinking with you in mind is what we’ve done with our fixed income suite of products. We believe that the fixed income market will be very challenging to navigate in the years ahead, especially now that interest rates have begun to rise off historic lows. We have been saying for some time that you can’t simply invest passively in the space anymore. So, we transitioned more of our fixed income funds to active management to better navigate credit Som Seif and duration risks. We’ve done this by deepening our relationship with our great CEO partners at Neuberger Berman, an incredible firm with decades of experience Purpose Investments Inc. managing institutional assets.

2018 ANNUAL REPORT 1 PURPOSE FUNDS

INDEPENDENT AUDITOR'S REPORT

TO THE UNITHOLDERS OF AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE PURPOSE HIGH INTEREST SAVINGS ETF, PURPOSE US CASH ETF, FINANCIAL STATEMENTS PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL Our objectives are to obtain reasonable assurance about whether the financial INVESTMENT GRADE BOND FUND), PURPOSE STRATEGIC statements as a whole are free from material misstatement, whether due to fraud YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND), or error, and to issue an auditor’s report that includes our opinion. Reasonable PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT assurance is a high level of assurance, but is not a guarantee that an audit OPPORTUNITIES INCOME FUND), PURPOSE CANADIAN PREFERRED conducted in accordance with Canadian generally accepted auditing standards SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED will always detect a material misstatement when it exists. Misstatements can arise SHARE FUND), PURPOSE US PREFERRED SHARE FUND (FORMERLY from fraud or error and are considered material if, individually or in the aggregate, REDWOOD US PREFERRED SHARE FUND), PURPOSE US DIVIDEND they could reasonably be expected to influence the economic decisions of users FUND, PURPOSE INTERNATIONAL DIVIDEND FUND, PURPOSE taken on the basis of these financial statements. EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND), PURPOSE MARIJUANA As part of an audit in accordance with Canadian generally accepted auditing OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES standards, we exercise professional judgment and maintain professional FUND), PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY skepticism throughout the audit. We also: REDWOOD HIGH INCOME FUND), PURPOSE MULTI-STRATEGY • Identify and assess the risks of material misstatement of the financial MARKET NEUTRAL FUND, PURPOSE GOLD BULLION FUND statements, whether due to fraud or error, design and perform audit procedures (COLLECTIVELY THE “FUNDS”) responsive to those risks, and obtain audit evidence that is sufficient and OPINION appropriate to provide a basis for our opinion. The risk of not detecting a We have audited the financial statements of the Funds, which comprise the material misstatement resulting from fraud is higher than for one resulting statements of financial position as at December 31, 2018 and 2017, and the from error, as fraud may involve collusion, forgery, intentional omissions, statements of comprehensive income, statements of changes in financial position misrepresentations, or the override of internal control. and statements of cash flows for the years then ended, and notes to the financial • Obtain an understanding of internal control relevant to the audit in order to statements, including a summary of significant accounting policies. design audit procedures that are appropriate in the circumstances, but not In our opinion, the accompanying financial statements present fairly, in all material for the purpose of expressing an opinion on the effectiveness of the Funds’ respects, the financial position of the Funds as at December 31, 2018 and 2017, internal control. and their financial performance and their cash flows for the years then ended in • Evaluate the appropriateness of accounting policies used and the reasonableness accordance with International Financial Reporting Standards (IFRSs). of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern BASIS FOR OPINION basis of accounting and, based on the audit evidence obtained, whether We conducted our audit in accordance with Canadian generally accepted auditing a material uncertainty exists related to events or conditions that may cast standards. Our responsibilities under those standards are further described in significant doubt on the Funds’ ability to continue as a going concern. If we the Auditor’s Responsibilities for the Audit of the Financial Statements section conclude that a material uncertainty exists, we are required to draw attention of our report. We are independent of the Funds in accordance with the ethical in our auditor’s report to the related disclosures in the financial statements or, requirements that are relevant to our audit of the financial statements in Canada, if such disclosures are inadequate, to modify our opinion. Our conclusions are and we have fulfilled our other ethical responsibilities in accordance with these based on the audit evidence obtained up to the date of our auditor’s report. requirements. We believe that the audit evidence we have obtained is sufficient However, future events or conditions may cause the Funds to cease to continue and appropriate to provide a basis for our opinion. as a going concern. • Evaluate the overall presentation, structure, and content of the financial OTHER INFORMATION statements, including the disclosures, and whether the financial statements Management is responsible for the other information. The other information represent the underlying transactions and events in a manner that achieves comprises the Management Report of Fund Performance of the Funds. Our fair presentation. opinion on the financial statements does not cover the other information and We communicate with those charged with governance regarding, among other we do not express any form of assurance conclusion thereon. matters, the planned scope and timing of the audit and significant audit findings, In connection with our audit of the financial statements, our responsibility including any significant deficiencies in internal control that we identify during is to read the other information, and in doing so, consider whether the other our audit. information is materially inconsistent with the financial statements or our We also provide those charged with governance with a statement that we have knowledge obtained in the audit or otherwise appears to be materially misstated. complied with relevant ethical requirements regarding independence, and to We obtained the Management Report of Fund Performance of the Funds prior communicate with them all relationships and other matters that may reasonably be to the date of this auditor’s report. If, based on the work we have performed, we thought to bear on our independence, and where applicable, related safeguards. conclude that there is a material misstatement of this other information, we are The engagement partner on the audit resulting in this independent auditor’s required to report that fact in this auditor’s report. We have nothing to report in report is Fraser Whale. this regard.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, 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. Toronto, Canada In preparing the financial statements, management is responsible for assessing April 1, 2019 the Funds’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Funds or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Funds’ financial reporting process.

2018 ANNUAL REPORT 2 PURPOSE HIGH INTEREST SAVINGS ETF

ANNUAL FINANCIAL STATEMENTS

STATEMENTS OF FINANCIAL POSITION STATEMENTS OF COMPREHENSIVE INCOME As at: For the years ended:

December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Income Investments: Net gains (losses) on investments: Non-derivative financial assets 1,419,481,000 561,796,405 Interest income for distribution purposes 15,636,668 6,610,429 Cash and cash equivalents – 8,588 Net gains (losses) on investments 15,636,668 6,610,429 Receivables: Total revenue 15,636,668 6,610,429 Interest 3,373,222 1,368,840 Expenses Total assets 1,422,854,222 563,173,833 Management fees (note 5) 1,867,783 967,437 Liabilities Independent review committee fees (note 5) 6,504 6,504 Bank overdraft 10,962 – Transaction costs (note 9) 1,316 – Payables: Total expenses 1,875,603 973,941 Management fees (note 5) 190,196 57,520 Expense absorbed by manager (note 5) (622,594) (322,479) Independent review committee fees (note 5) 3,717 7,011 Net expenses 1,253,009 651,462 Distributions 2,621,320 558,000 Increase (decrease) in net assets attributable to holders of redeemable units 14,383,659 5,958,967 Total liabilities 2,826,195 622,531 Increase (decrease) in net assets attributable to holders of redeemable units Net assets attributable to holders of redeemable units 1,420,028,027 562,551,302 per class (note 8) Net assets attributable to holders of redeemable units per class ETF Unit 14,383,659 5,958,967 ETF Unit 1,420,028,027 562,551,302 Average number of units outstanding for the period per class (note 8) Number of units outstanding (note 4) ETF Unit 16,429,863 10,961,781 ETF Unit 28,400,000 11,250,000 Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 8) Net assets attributable to holders of redeemable units per unit ETF Unit 0.87 0.54 ETF Unit 50.00 50.00 The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and Manager of Purpose High Interest Savings ETF

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 3 PURPOSE HIGH INTEREST SAVINGS ETF

STATEMENTS OF CHANGES IN SCHEDULE OF INVESTMENTS FINANCIAL POSITION As at December 31, 2018 For the years ended: Average cost Fair Value December 31, December 31, Investments ($) ($) 2018 2017 Cash Equivalents – 99.96% ($) ($) Term Deposits – 12.42% ETF Unit Coast Capital Savings Term Deposit, 2019/10/25 10,130,356 10,130,356 Net assets attributable to holders of redeemable units at beginning of period 562,551,302 380,011,647 Coast Capital Savings Term Deposit, 2019/05/21 20,229,096 20,229,096 Increase (decrease) in net assets attributable to holders of redeemable units 14,383,659 5,958,967 Coast Capital Savings Term Deposit, 2019/10/25 29,121,929 29,121,929 Redeemable unit transactions First Calgary Financial Term Deposit, 2019/05/30 12,000,000 12,000,000 Proceeds from issuance of redeemable units 1,055,732,889 315,102,571 First Calgary Financial Term Deposit, 2019/04/19 20,000,000 20,000,000 Payments for redemption of redeemable units (197,500,000) (132,500,000) G&F Financial Group Term Deposit, 2019/10/25 5,000,000 5,000,000 Net increase (decrease) from redeemable unit transactions 858,232,889 182,602,571 G&F Financial Group Term Deposit, 2019/10/23 5,063,575 5,063,575 Distributions paid or payable to unitholders of redeemable units Prospera Credit Union Term Deposit, 2019/10/25 49,662,682 49,662,682 From investment income (14,516,335) (5,985,150) Westminster Savings Term Deposit, 2019/01/30 25,119,404 25,119,404 Return of capital (623,488) (36,733) Total Term Deposits – 12.42% 176,327,042 176,327,042 Total distributions to holders of redeemable units (15,139,823) (6,021,883) Money Markets – 87.54% Net increase (decrease) in net assets attributable to holders of redeemable units 857,476,725 182,539,655 Manulife Bank of Canada Cash Account 138,282,542 138,282,542 Net assets attributable to holders of redeemable units at end of period 1,420,028,027 562,551,302 National Bank of Canada Cash Account 604,468,905 604,468,905 The accompanying notes are an integral part of the financial statements. Scotiabank Cash Account 500,402,511 500,402,511 Total Money Markets – 87.54% 1,243,153,958 1,243,153,958 STATEMENTS OF CASH FLOWS Total Cash Equivalents – 99.96% 1,419,481,000 1,419,481,000 Total Investments – 99.96% 1,419,481,000 1,419,481,000 For the years ended: Bank Overdraft – 0.00% (10,962) December 31, December 31, Other Assets, Less Liabilities – 0.04% 557,989 2017 2018 Net Assets – 100.00% 1,420,028,027 ($) ($) The accompanying notes are an integral part of the financial statements.

Cash Flows from Operating Activities Increase (decrease) in net assets attributable to holders of redeemable units 14,383,659 5,958,967 Adjustments for: Purchase of investments (1,452,339,710) (521,935,406) Proceeds of investments sold 594,655,116 339,842,934 Net change in non-cash working capital balances (1,875,000) (729,304) (845,175,935) (176,862,809)

Cash Flows from Financing Activities Proceeds from issuance of units 1,055,732,889 315,102,571 Payments for units redeemed (197,500,000) (132,500,000) Distribution to holders, net of reinvestments (13,076,503) (5,775,482) 845,156,386 176,827,089

Net increase (decrease) in cash and cash equivalents (19,549) (35,720) Cash and cash equivalents, at beginning of period (note 16) 8,588 44,309 Cash and cash equivalents, at end of period (10,962) 8,588 Interest received 13,632,286 5,848,438 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 4 PURPOSE HIGH INTEREST SAVINGS ETF

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE HIGH INTEREST SAVINGS ETF

A) INVESTMENT OBJECTIVES (NOTE 2) The Purpose High Interest Savings ETF’s investment objective is to seek to maximize monthly income while preserving capital and liquidity by investing in high interest deposit accounts.

B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Changes in outstanding units during the period ended December 31, 2018 and 2017 are summarized as follows: Number of Units ETF Units Outstanding, December 31, 2016 7,600,000 Issued 6,300,000 Redeemed (2,650,000) Outstanding, December 31, 2017 11,250,000 Issued 21,100,000 Redeemed (3,950,000) Outstanding, December 31, 2018 28,400,000

C) MANAGEMENT FEES, SERVICE FEES AND OTHER EXPENSES (NOTE 5) Annual Management Fee (% of Net Asset Value of each unit) Units Management Fee ETF Units 0.15%

D) FINANCIAL RISKS (NOTE 11) Interest rate risk The majority of the Fund’s financial assets are bank deposits which are short term in nature and are not interest rate sensitive. As the Fund’s financial liabilities are primarily short term in nature and generally not interest bearing, the Fund’s exposure to interest rate risk is considered minimal. Credit risk The Fund is exposed to the credit risk that a bank with whom it has a deposit account will be unable to pay amounts in full when due. The value of investment balances as presented in the Schedule of Investments represents the maximum credit risk exposure of the Fund. The Standard and Poor’s credit ratings for the banks that the Fund has deposits with were as follows as at December 31, 2018: Manulife Bank of Canada A-1 National Bank of Canada A-1 G&F Financial Group A-1+ (1) Coast Capital Savings Credit Union A-1+ (1) First Calgary Financial Credit Union A-1+ (1) Prospera Credit Union A-1+ (1) Westminister Savings Credit Union A-1+ (1) 1. The deposits with credit unions are guaranteed by the respective provinces, and the provinces have the above credit rating.

The risk of default on these financial instruments is considered low.

E) INCOME TAXES As at December 31, 2018 and 2017, the Fund had no capital or non-capital losses for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 5 PURPOSE US CASH ETF

STATEMENTS OF FINANCIAL POSITION STATEMENTS OF COMPREHENSIVE INCOME (IN US DOLLARS) (IN US DOLLARS) As at: For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Income Investments: Net gains (losses) on investments: Non-derivative investments 88,360,723 40,732,040 Interest income for distribution purposes 1,529,909 253,658 Cash and cash equivalents 164,072 158,122 Net realized gain (loss) on foreign exchange transactions 9 – Receivables: Net gains (losses) on investments 1,529,918 253,658 Interest 22,700 3,819 Foreign exchange gain (loss) on cash (167) – Prepaid expenses 1,955 3,340 Total revenue 1,529,751 253,658 Total assets 88,549,450 40,897,321 Expenses Liabilities Management fees (note 5) 192,200 51,845 Payables: Independent review committee fees (note 5) 8,113 2,435 Management fees (note 5) – 7,116 Transaction costs (note 9) 459 – Independent review committee fees (note 5) 5,961 2,741 Total expenses 200,772 54,280 Distributions 184,652 35,335 Expense absorbed by manager (note 5) (81,120) (24,340) Total liabilities 190,613 45,192 Net expenses 119,652 29,940 Net assets attributable to holders of redeemable units 88,358,837 40,852,129 Increase (decrease) in net assets attributable to holders of redeemable units 1,410,099 223,718 Net assets attributable to holders of redeemable units per class Increase (decrease) in net assets attributable to holders of redeemable units ETF Unit 88,358,837 40,852,129 per class (note 8) Number of units outstanding (note 4) ETF Unit 1,410,099 223,718 ETF Unit 883,500 408,500 Average number of units outstanding for the period per class (note 8) Net assets attributable to holders of redeemable units per unit ETF Unit 811,925 244,015 ETF Unit 100.01 100.01 Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 8) The accompanying notes are an integral part of the financial statements. ETF Unit 1.73 0.92 The accompanying notes are an integral part of the financial statements. Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose US Cash ETF

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 6 PURPOSE US CASH ETF

STATEMENTS OF CHANGES IN FINANCIAL SCHEDULE OF INVESTMENTS POSITION (IN US DOLLARS) (IN US DOLLARS) For the years ended: As at December 31, 2018 December 31, December 31, Average cost Fair Value 2018 2017 Investments ($) ($) ($) ($) Cash Equivalents – 100.00% ETF Unit Term Deposits – 5.73% Net assets attributable to holders of redeemable units at beginning of period 40,852,129 15,000,202 Servus Credit Union Term Deposit, 2019/02/13 5,065,138 5,065,138 Increase (decrease) in net assets attributable to holders of redeemable units 1,410,099 223,718 Total Term Deposits – 5.73% 5,065,138 5,065,138 Redeemable unit transactions Money Markets – 94.27% Proceeds from issuance of redeemable units 70,048,058 25,864,166 National Bank of Canada US Cash Account, 2049/12/31 43,058,624 43,058,624 Payments for redemption of redeemable units (22,523,752) – Scotiabank US Cash Account, 2049/12/31 40,236,961 40,236,961 Net increase (decrease) from redeemable unit transactions 47,524,306 25,864,166 Total Money Markets – 94.27% 83,295,585 83,295,585 Distributions paid or payable to unitholders of redeemable units Total Cash Equivalents – 100.00% 88,360,723 88,360,723 From investment income (1,404,938) (223,232) Total Investments – 100.00% 88,360,723 88,360,723 Return of capital (22,759) (12,725) Cash – 0.19% 164,072 Total distributions to holders of redeemable units (1,427,697) (235,957) Other Assets, Less Liabilities – (0.19)% (165,958) Net increase (decrease) in net assets attributable to holders of redeemable units 88,358,837 25,851,927 Net Assets – 100.00% 88,358,837 Net assets attributable to holders of redeemable units at end of period 88,358,837 40,852,129 The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.

STATEMENTS OF CASH FLOWS (IN US DOLLARS) For the years ended: December 31, December 31, 2018 2017 ($) ($)

Cash Flows from Operating Activities Increase (decrease) in net assets attributable to holders of redeemable units 1,410,099 223,718 Adjustments for: Purchase of investments (114,929,642) (41,428,705) Proceeds of investments sold 67,300,959 15,702,114 Foreign exchange loss (gain) on cash 167 — Net change in non-cash working capital balances (21,392) 670 (46,239,809) (25,502,203)

Cash Flows from Financing Activities Proceeds from issuance of units 70,048,058 25,864,166 Payments for units redeemed (22,523,752) – Distribution to holders, net of reinvestments (1,278,380) (205,422) 46,245,926 25,658,744

Foreign exchange gain (loss) on cash (167) – Net increase (decrease) in cash and cash equivalents 6,117 156,541 Cash and cash equivalents, at beginning of period 158,122 1,581 Cash and cash equivalents, at end of period 164,072 158,122 Interest received 1,511,028 252,379 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 7 PURPOSE US CASH ETF

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE US CASH ETF

A) INVESTMENT OBJECTIVES (NOTE 2) The Purpose US Cash ETF’s investment objectives are to seek to maximize US dollar monthly income while preserving capital and liquidity by investing in high interest deposit accounts and high-quality money market securities denominated in US dollars.

B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Changes in outstanding units during the period ended December 31, 2018 and 2017 are summarized as follows: Number of Units ETF Units Outstanding, December 31, 2016 150,000 Issued 258,500 Outstanding, December 30, 2017 408,500 Issued 700,000 Redeemed (225,000) Outstanding, December 31, 2018 883,500

C) MANAGEMENT FEES, SERVICE FEES AND OTHER EXPENSES (NOTE 5) Annual Management Fee (% of Net Asset Value of each class) Class Management Fee ETF Units 0.20%

D) FINANCIAL RISKS (NOTE 11) Interest rate risk The majority of the Fund’s financial assets are bank deposits which are short term in nature and are not interest sensitive. As the Fund’s financial liabilities are primarily short term in nature and generally not interest bearing, the Fund’s exposure to interest rate risk is considered minimal. Credit risk The Fund is exposed to the credit risk that a bank with whom it has a deposit account will be unable to pay amounts in full when due. The value of investment balances as presented in the Schedule of Investments represents the maximum credit risk exposure of the Fund. The Standard and Poor’s credit ratings for the banks that the Fund has deposits with were as follows as at December 31, 2018 and 2017: Scotiabank A-1 National Bank of Canada A-1 Servus Credit Union A-1+ (1) 1. The deposits with credit unions are guaranteed by the respective provinces, and the provinces have the above credit rating.

The risk of default on these financial instruments is considered low.

E) INCOME TAXES As at December 31, 2018 and 2017, the Fund had no capital losses and no non- capital losses for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 8 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets: Net assets attributable to holders of redeemable units per class Investments: ETF Unit 41,613,260 77,961,304 Non-derivative financial assets 46,883,921 92,612,176 Class A 2,141,858 3,815,410 Cash and cash equivalents 2,726,229 3,170,702 Class F 5,723,274 15,601,984 Cash margin 356,907 753,380 Class D 1,041 6,292 Receivables: Total 49,479,433 97,384,990 Dividends 11,011 94,006 Number of units outstanding (note 4) Interest 308,141 702,183 ETF Unit 2,225,000 3,975,000 Prepaid expenses 4,969 3,041 Class A 116,488 196,815 Derivative assets: Class F 305,814 795,026 Unrealized gain on futures contracts – 204,580 Class D 56 321 Unrealized gain on forward currency contracts – 150,012 Net assets attributable to holders of redeemable units per unit Total assets 50,291,178 97,690,080 ETF Unit 18.70 19.61 Liabilities Class A 18.39 19.39 Payables: Class F 18.71 19.62 Management fees (note 5) 4,020 28,020 Class D 18.63 19.60 Independent review committee fees (note 5) 23,546 19,146 The accompanying notes are an integral part of the financial statements. Other accrued liabilities 2,145 4,553 Distributions 107,468 250,425 Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Global Bond Fund (formerly Purpose Capital units redeemed 9,366 – Tactical Investment Grade Bond Fund) Derivative liabilities: Options written, at fair value – 2,946 Unrealized loss on forward currency contracts 665,200 – Total liabilities 811,745 305,090 Net assets attributable to holders of redeemable units 49,479,433 97,384,990 Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 9 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives: redeemable units per class (note 8) Dividend income 364,921 681,456 ETF Unit (624,142) 1,316,202 Interest income for distribution purposes 2,015,189 2,827,357 Class A (43,796) 8,551 Early redemption fees 520 172 Class F (119,673) 233,923 Distribution from underlying funds 21,124 23,247 Class D (71) 90 Net realized gain (loss) on foreign exchange transactions (94,534) 15,527 Total (787,682) 1,558,766 Net realized gain (loss) on sale of investments (4,049,960) (138,725) Average number of units outstanding for the period per class (note 8) Net realized gain (loss) on forward currency contracts (1,222,573) 732,518 ETF Unit 2,767,808 4,030,616 Net realized gain (loss) on options 53,651 158,497 Class A 180,394 201,884 Net realized gain (loss) on futures 220,391 (678,271) Class F 521,169 855,321 Net change in unrealized appreciation (depreciation) in value of investments 3,119,983 (1,824,954) Class D 302 316 Net change in unrealized appreciation (depreciation) in value Increase (decrease) in net assets attributable to holders of of forward currency contracts (815,212) 136,143 redeemable units per unit (note 8) Net change in unrealized appreciation (depreciation) in value ETF Unit (0.23) 0.33 of futures contracts (204,580) 112,458 Class A (0.24) 0.03 Net change in unrealized appreciation (depreciation) in value Class F (0.23) 0.28 of options (11,670) 11,670 Class D (0.23) 0.28 Net change in unrealized appreciation (depreciation) in value of foreign exchange transactions 7,808 (2,851) Net gains (losses) on investments and derivatives (594,942) 2,054,244 (1) Soft dollar commission 300 – Securities lending income (2) (3) 6,078 27,282 (2) Securities lending The value of securities loaned and collateral received from securities lending at December 31 is as follows: Foreign exchange gain (loss) on cash 132,774 (30,966) Value of securities loaned 44,467 2,248,503 Total revenue (456,090) 2,050,560 Value of collateral received 46,738 2,382,389 Expenses (3) Securities Lending Income Management fees (note 5) 270,167 418,102 The table below shows a reconciliation of the gross amount generated from the securities lending transactions Independent review committee fees (note 5) 9,993 15,209 of the Fund to the revenue from the securities lending disclosed in the Statement of Comprehensive Income. Transaction costs (note 9) (1) 9,599 4,456 December 31, 2018 December 31, 2017 Interest on loan facility and related expenses 554 – $ % $ % Withholding taxes (note 7) 466 – Gross securities lending income 12,153 100.0 54,562 100.0 Other expenses (note 5) 40,813 54,027 Agent fees (6,075) 50.0 (27,280) 50.0 Total expenses 331,592 491,794 Securities lending income 6,078 50.0 27,282 50.0 Increase (decrease) in net assets attributable to holders of The accompanying notes are an integral part of the financial statements. redeemable units (787,682) 1,558,766

2018 ANNUAL REPORT 10 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Unit Class F Net assets attributable to holders of redeemable units at beginning of period 77,961,304 74,906,613 Net assets attributable to holders of redeemable units at beginning of period 15,601,984 9,904,612 Increase (decrease) in net assets attributable to holders of redeemable units (624,142) 1,316,202 Increase (decrease) in net assets attributable to holders of redeemable units (119,673) 233,923 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 3,337,822 12,990,084 Proceeds from issuance of redeemable units 848,922 12,455,523 Payments for redemption of redeemable units (37,029,607) (8,515,645) Unit exchanges 36,380 179,729 Net increase (decrease) from redeemable unit transactions (33,691,785) 4,474,439 Payments for redemption of redeemable units (10,580,445) (6,974,209) Distributions paid or payable to unitholders of redeemable units Reinvestment of distributions 315,511 386,580 From investment income (1,702,676) (2,445,600) Net increase (decrease) from redeemable unit transactions (9,379,632) 6,047,623 Return of capital (329,441) (290,350) Distributions paid or payable to unitholders of redeemable units Total distributions to holders of redeemable units (2,032,117) (2,735,950) From investment income (317,021) (507,487) Net increase (decrease) in net assets attributable to holders of redeemable units (36,348,044) 3,054,691 Return of capital (62,384) (76,687) Net assets attributable to holders of redeemable units at end of period 41,613,260 77,961,304 Total distributions to holders of redeemable units (379,405) (584,174) Net increase (decrease) in net assets attributable to holders of redeemable units (9,878,710) 5,697,372 Class A Net assets attributable to holders of redeemable units at end of period 5,723,274 15,601,984 Net assets attributable to holders of redeemable units at beginning of period 3,815,410 2,389,763 Increase (decrease) in net assets attributable to holders of redeemable units (43,796) 8,551 Class D Redeemable unit transactions Net assets attributable to holders of redeemable units at beginning of period 6,292 6,202 Proceeds from issuance of redeemable units 1,138,917 4,347,997 Increase (decrease) in net assets attributable to holders of redeemable units (71) 90 Unit exchanges (48,113) (500,134) Redeemable unit transactions Payments for redemption of redeemable units (2,701,395) (2,414,448) Payments for redemption of redeemable units (5,180) – Reinvestment of distributions 111,579 122,091 Reinvestment of distributions 229 215 Net increase (decrease) from redeemable unit transactions (1,499,012) 1,555,506 Net increase (decrease) from redeemable unit transactions (4,951) 215 Distributions paid or payable to unitholders of redeemable units Distributions paid or payable to unitholders of redeemable units From investment income (108,260) (96,173) From investment income (191) (179) Return of capital (22,484) (42,237) Return of capital (38) (36) Total distributions to holders of redeemable units (130,744) (138,410) Total distributions to holders of redeemable units (229) (215) Net increase (decrease) in net assets attributable to holders of redeemable units (1,673,552) 1,425,647 Net increase (decrease) in net assets attributable to holders of redeemable units (5,251) 90 Net assets attributable to holders of redeemable units at end of period 2,141,858 3,815,410 Net assets attributable to holders of redeemable units at end of period 1,041 6,292 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 11 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the years ended: As at December 31, 2018 December 31, December 31, Number of 2018 2017 Shares/Units/ Average cost Fair value ($) ($) Security Par Value ($) ($) Equities – 0.21% Cash Flows from Operating Activities United States Equities – 0.21% Increase (decrease) in net assets attributable to holders of Investment Grade – 0.21% redeemable units (787,682) 1,558,766 GMAC Capital Trust I, Preferred, Callable, Series '2', Variable Rate 3,000 101,285 103,823 Adjustments for: 101,285 103,823 Foreign exchange loss (gain) on cash (132,774) 30,966 Total United States Equities – 0.21% 101,285 103,823 Purchase of investments (56,832,859) (25,232,775) Total Equities – 0.21% 101,285 103,823 Proceeds from sale of investments 101,660,572 15,886,254 Fixed Income – 91.78% Net realized loss (gain) on sale of investments 4,049,960 138,725 Canadian Fixed Income – 7.20% Net realized loss (gain) on options (53,651) (158,497) Investment Grade – 7.20% Net change in unrealized depreciation (appreciation) in value Glencore Finance Canada Ltd., Callable, 4.95%, 2021/11/15 350,000 475,785 488,365 of investments (3,119,983) 1,824,954 Purpose Floating Rate Income Fund 225,000 1,961,077 1,883,250 Net change in unrealized depreciation (appreciation) in value of forward currency contracts 815,212 (136,143) Royal Bank of Canada, Floating Rate, 2.95%, 2021/04/30 350,000 463,098 473,973 Net change in unrealized depreciation (appreciation) in value Toronto-Dominion Bank (The), Floating Rate, 2.77%, 2021/01/25 350,000 461,800 475,273 of futures contracts 204,580 (112,458) TransCanada PipeLines Ltd., Callable, 3.80%, 2020/10/01 175,000 232,916 240,547 Net change in unrealized depreciation (appreciation) in value 3,594,676 3,561,408 of options 11,670 (11,670) Total Canadian Fixed Income – 7.20% 3,594,676 3,561,408 Net change in non-cash working capital balances 453,102 (75,657) International Fixed Income – 11.46% Margin 396,473 (390,741) Investment Grade – 11.46% Transaction costs (note 9) 9,599 1,806 ABN AMRO Bank NV, 3.40%, 2021/08/27 350,000 462,023 478,051 46,674,219 (6,676,470) AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, Callable, 4.63%, 2020/10/30 175,000 233,233 240,681 Cash Flows from Financing Activities Aircastle Ltd., 5.13%, 2021/03/15 175,000 235,073 242,927 Proceeds from issuance of units 5,325,661 29,833,604 Allergan Funding SCS, Callable, 3.00%, 2020/03/12 175,000 230,434 238,103 Unit exchanges (11,733) (320,405) Altice Luxembourg SA, Callable, 7.75%, 2022/05/15 250,000 317,848 311,863 Payments for units redeemed (50,307,261) (17,913,301) Credit Suisse of New York, 3.00%, 2021/10/29 250,000 325,716 337,108 Distribution to holders, net of reinvestments (2,258,133) (2,905,688) HSBC Holdings PLC, Floating Rate, Callable, 3.29%, 2021/05/18 700,000 925,172 941,779 (47,251,466) 8,694,210 National Australia Bank Ltd., Floating Rate, 3.49%, 2021/11/04 525,000 697,095 715,725 Santander UK PLC, Floating Rate, 3.40%, 2021/06/01 350,000 461,886 472,709 Foreign exchange gain (loss) on cash 132,774 (30,966) Siemens Financieringsmaatschappij NV, Floating Rate, 3.17%, Net increase (decrease) in cash and cash equivalents (577,247) 2,017,740 2020/03/16 350,000 464,100 477,786 Cash and cash equivalents, at beginning of period 3,170,702 1,183,928 Sumitomo Mitsui Banking Corp., Floating Rate, 2.79%, 2019/10/18 350,000 463,605 477,476 Cash and cash equivalents, at end of period 2,726,229 3,170,702 Total Capital International SA, Floating Rate, 3.20%, 2019/06/19 190,000 252,833 259,605 Interest received 2,409,231 2,772,253 Westpac Banking Corp., Floating Rate, 3.54%, 2021/08/19 350,000 467,491 479,544 Dividends received, net of withholding taxes 447,916 645,246 5,536,509 5,673,357 Interest paid 554 – Total International Fixed Income – 11.46% 5,536,509 5,673,357 The accompanying notes are an integral part of the financial statements. United States Fixed Income – 73.12% Investment Grade – 73.12% Abbott Laboratories, Callable, 2.90%, 2021/11/30 175,000 226,892 236,998 AbbVie Inc., Callable, 2.30%, 2021/05/14 350,000 448,594 466,891 AIG Global Funding, Floating Rate, 2.92%, 2020/07/02 525,000 696,659 716,450 Air Lease Corp., Callable, 3.38%, 2021/06/01 175,000 227,883 236,766 American Airlines 2013-2 Class A Pass Through Trust, Sinkable, 4.95%, 2024/07/15 199,920 270,729 277,324 American Express Co., Floating Rate, Callable, 3.21%, 2021/05/17 700,000 927,445 951,662 American Honda Finance Corp., Floating Rate, 3.00%, 2020/02/14 350,000 464,473 477,079 American Tower Corp., Callable, 3.30%, 2021/02/15 175,000 229,792 237,660 Amgen Inc., 3.45%, 2020/10/01 175,000 233,357 240,075 Antero Resources Finance Corp., Callable, 5.38%, 2021/11/01 150,000 200,194 198,381 Apache Corp., Callable, 3.25%, 2022/04/15 175,000 226,169 234,174 Apple Inc., 2.85%, 2021/05/06 175,000 230,265 239,283 AT&T Inc., Floating Rate, 3.43%, 2021/07/15 525,000 699,280 714,624 AT&T Inc., Floating Rate, 3.78%, 2020/06/30 175,000 233,504 238,745

2018 ANNUAL REPORT 12 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of Shares/Units/ Average cost Fair value Shares/Units/ Average cost Fair value Security Par Value ($) ($) Security Par Value ($) ($) Aviation Capital Group LLC, Callable, 7.13%, 2020/10/15 535,000 749,097 768,436 JPMorgan Chase & Co., Floating Rate, Callable, 3.92%, 2021/06/07 700,000 938,167 962,500 Bank of America Corp., Floating Rate, Callable, 3.17%, 2021/07/21 850,000 1,129,465 1,155,976 JPMorgan Chase & Co., Series 'I', Variable Rate, Perpetual, 6.07%, BAT Capital Corp., 2.30%, 2020/08/14 700,000 907,857 933,680 2049/12/31 250,000 333,857 337,034 Bayer US Finance II LLC, Floating Rate, Callable, 3.50%, Kroger Co. (The), Callable, 2.95%, 2021/11/01 175,000 227,296 234,820 2021/06/25 350,000 459,638 471,622 McDonald's Corp., Callable, 2.20%, 2020/05/26 175,000 228,361 236,323 Biogen Inc., 2.90%, 2020/09/15 175,000 229,144 237,228 Microsoft Corp., Callable, 2.00%, 2020/11/03 175,000 227,862 236,313 BMW US Capital LLC, Floating Rate, 3.03%, 2020/08/14 350,000 462,856 474,334 Morgan Stanley, Floating Rate, Callable, 3.21%, 2021/02/10 350,000 461,341 472,624 Broadcom Corp. / Broadcom Cayman Finance Ltd., Callable, Morgan Stanley, Floating Rate, Callable, 3.46%, 2020/02/14 500,000 667,680 682,630 3.00%, 2022/01/15 350,000 446,484 459,849 Nissan Motor Acceptance Corp., Floating Rate, 3.34%, 2019/09/13 450,000 597,827 612,906 Capital One Financial Corp., Floating Rate, Callable, 3.01%, Philip Morris International Inc., Floating Rate, 3.11%, 2020/02/21 350,000 464,124 477,237 2020/10/30 350,000 462,371 474,540 Phillips 66, Floating Rate, Callable, 3.23%, 2020/04/15 175,000 231,987 238,954 Caterpillar Financial Services Corp., Floating Rate, 3.09%, 2021/09/07 350,000 463,362 474,749 Prime Security Services Borrower LLC / Prime Finance Inc., Callable, 9.25%, 2023/05/15 250,000 351,546 352,819 CBS Corp., Callable, 4.30%, 2021/02/15 175,000 234,268 242,325 Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC / Charter Communications Operating LLC / Charter Reynolds Group Issuer (Luxembourg) SA, 5.75%, 2020/10/15 290,732 387,052 396,412 Communications Operating Capital Corp., Callable, 4.46%, 2022/07/23 175,000 232,517 241,393 Simon Property Group L.P., Callable, 2.20%, 2019/02/01 525,000 695,052 716,066 Chesapeake Energy Corp., Callable, 6.63%, 2020/08/15 150,000 202,191 199,148 Simon Property Group L.P., Callable, 4.38%, 2021/03/01 350,000 475,481 488,059 Cigna Corp., Floating Rate, Callable, 3.49%, 2021/09/17 500,000 661,216 673,218 Sprint Corp., 7.25%, 2021/09/15 250,000 347,386 350,174 Citibank NA, Floating Rate, 2.81%, 2020/10/20 375,000 497,929 508,469 Starwood Property Trust Inc., Callable, 3.63%, 2021/02/01 150,000 195,134 197,613 Citigroup Inc., Floating Rate, 3.80%, 2021/08/02 350,000 468,760 479,309 Tenet Healthcare Corp., 4.50%, 2021/04/01 150,000 198,197 200,172 Constellation Brands Inc., 2.25%, 2020/11/06 175,000 225,844 234,455 Toyota Auto Receivables Owner Trust, Series '2018-C', Callable, Class 'A2A', 2.77%, 2021/08/16 375,000 495,726 510,788 CVS Health Corp., 3.35%, 2021/03/09 700,000 919,073 953,409 U.S. Bank National Association, Floating Rate, Callable, 2.78%, Dell International LLC / EMC Corp., Callable, 4.42%, 2021/06/15 525,000 696,819 715,959 2020/07/24 350,000 462,734 476,784 Delta Air Lines, Series '2007-1', Callable, Class 'A', 6.82%, United Technologies Corp., 4.50%, 2020/04/15 700,000 941,208 968,850 2024/02/10 133,169 191,914 195,201 UnitedHealth Group Inc., Floating Rate, 3.09%, 2021/06/15 350,000 462,833 474,196 Devon Energy Corp., Callable, 4.00%, 2021/07/15 175,000 232,085 239,275 Verizon Communications Inc., Callable, 3.13%, 2022/03/16 175,000 228,732 237,497 DISH DBS Corp., Callable, 6.75%, 2021/06/01 250,000 337,817 338,638 Verizon Communications Inc., Floating Rate, 3.25%, 2020/05/22 700,000 929,974 953,746 Duke Energy Indiana LLC, 3.75%, 2020/07/15 400,000 536,961 553,401 Verizon Owner Trust, Series 'A1A', Callable, Class '17-3X', 2.06%, Energy Transfer Partners L.P., Callable, 4.65%, 2021/06/01 175,000 234,460 243,203 2022/04/20 400,000 522,500 540,196 Enterprise Products Operating L.P., 6.50%, 2019/01/31 350,000 466,005 478,880 Walgreens Boots Alliance Inc., Callable, 3.30%, 2021/11/18 175,000 228,926 237,973 Ford Credit Auto Owner Trust, Series '18-B', Callable, Class 'A2A', Wells Fargo & Co., 2.55%, 2020/12/07 175,000 227,294 235,609 2.96%, 2021/09/15 375,000 498,809 511,931 Wells Fargo Bank NA, Floating Rate, Callable, 3.02%, 2021/07/23 500,000 663,896 678,956 Ford Motor Credit Co. LLC, Series '1', Floating Rate, 3.66%, 2019/03/12 300,000 400,544 409,275 Williams Partners L.P., Callable, 3.60%, 2022/03/15 350,000 454,912 469,192 General Dynamics Corp., Floating Rate, 3.04%, 2021/05/11 350,000 465,068 476,364 World Omni Auto Receivables Trust, Series '2018-C', Callable, Class 'A2', 2.80%, 2022/01/18 210,000 277,541 286,180 General Electric Co., Floating Rate, 2.99%, 2019/01/14 525,000 698,674 716,635 35,247,415 36,179,723 General Mills Inc., Callable, 3.15%, 2021/12/15 175,000 227,493 237,154 Total United States Fixed Income – 73.12% 35,247,415 36,179,723 General Motors Financial Co. Inc., Callable, 3.20%, 2021/07/06 350,000 450,941 467,015 Total Fixed Income – 91.78% 44,378,600 45,414,488 Georgia-Pacific LLC, 5.40%, 2020/11/01 130,000 177,677 183,944 Money Market Funds – 2.76% GM Financial Securitized Term A, Series '18-3', Callable, Class 'A2A', 2.74%, 2021/07/16 350,000 462,768 477,052 Purpose US Cash ETF 10,000 1,340,419 1,365,610 Goldman Sachs Group Inc. (The), Floating Rate, 3.90%, Total Money Market Funds – 2.76% 1,340,419 1,365,610 2021/04/23 350,000 470,108 481,522 Transaction Costs (note 9) (2,176) – Goldman Sachs Group Inc. (The), Floating Rate, 4.52%, Total Investments – 94.75% 45,818,128 46,883,921 2021/02/25 500,000 679,072 693,362 Net Unrealized Gain (Loss) on Forward Currency Contracts Hewlett Packard Enterprise Co., Callable, 3.50%, 2021/10/05 175,000 232,637 239,720 (Schedule 1) – (1.34)% (665,200) Honda Auto Receivables Owner Trust, Series '18-3', Callable, Class Cash Held at Broker for Margin – 0.72% 356,907 'A2', 2.67%, 2020/12/21 350,000 462,804 476,696 Cash and Cash Equivalents – 5.51% 2,726,229 Infor Software Parent LLC / Infor Software Parent Inc., Callable, 7.13%, 2021/05/01 250,000 332,825 333,621 Other Assets, Less Liabilities – 0.36% 177,576 Net Assets – 100.00% 49,479,433

2018 ANNUAL REPORT 13 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACTS For the period ended December 31, 2018 S&P Credit Rating Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty for Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) Bank of New York Mellon (The), New York A-1+ 2019/01/25 CAD 46,271,282 USD 34,401,545 0.7430 0.7330 (665,200) (665,200) The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 14 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) The following inputs were used in valuing the Fund’s investments and The Purpose Global Bond Fund (formerly Purpose Tactical Investment Grade derivatives at fair values as at December 31, 2017: Bond Fund) seeks to achieve a positive total return (including through both capital appreciation and distributions) in diverse market environments over Level 1 Level 2 Level 3 Total ($) ($) ($) ($) time by tactically allocating its assets primarily among a broad range of government and corporate investment grade fixed income securities. Financial assets Bonds – 81,327,482 – 81,327,482 B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Funds 11,284,694 – – 11,284,694 Changes in outstanding units during the periods ended December 31, 2018 and Fixed income futures 204,580 – – 204,580 2017 are summarized as follows: Forward currency contracts – 150,012 – 150,012 Number of Units Total financial assets 11,489,274 81,477,494 – 92,966,768 ETF Class A Class F Class D Units Units Units Units Financial liabilities Outstanding, December 31, 2016 3,750,000 120,386 495,590 310 Options 2,946 – – 2,946 Issued 650,000 218,234 631,185 – Total financial liabilities 2,946 – – 2,946 Reinvested Distributions – 6,200 19,425 11 Total financial assets and liabilities 11,486,328 81,477,494 – 92,963,822 Redeemed (425,000) (148,005) (351,174) – Outstanding, December 31, 2017 3,975,000 196,815 795,026 321 During the period ended December 31, 2018 and 2017, there were no transfers of assets between Level 1, Level 2 and Level 3. Issued 175,000 60,268 45,995 – Reinvested Distributions – 5,914 16,468 11 The Fund’s Level 2 investment in foreign currency contracts relies on the foreign exchange rate market data to fair value the foreign currency contract. Redeemed (1,925,000) (146,510) (551,675) (275) Outstanding, December 31, 2018 2,225,000 116,488 305,814 56 E) FINANCIAL RISKS (NOTE 11) Interest rate risk C) MANAGEMENT FEES, SERVICE FEES AND OTHER As at December 31, 2018 and 2017, the Fund had exposure to debt instruments EXPENSES (NOTE 5) by maturity as follows: Annual Management Fee 2018 % of 2017 % of (% of Net Asset Value of each units) Maturity fixed–income assets fixed–income assets Units Management Fee Less than 1 year 9.2 – ETF Units 0.35% 1 to 3 years 82.5 6.9 Class A Units* 0.85% 3 to 5 years 7.2 22.8 Class F Units 0.35% Greater than 5 years 1.1 70.3 Class D Units* 0.50% * Includes a service fee at an annual rate of 0.50% of the daily average Net Asset Value of the Class A and 0.15% of the Currency risk Class D Units. The table below summarizes the Fund’s direct exposure to the US dollar as at December 31, 2018 and 2017 including the underlying principal amount of D) FAIR VALUE INVESTMENTS (NOTE 10) forward currency contracts that is used to hedge the foreign currency risk: The following inputs were used in valuing the Fund’s investments and As at December 31, 2018 As at December 31, 2017 derivatives at fair values as at December 31, 2018: Fair Value % of Fair Value % of ($) Net Assets ($) Net Assets Level 1 Level 2 Level 3 Total ($) ($) ($) ($) Foreign currency and investments 48,513,071 23,297,942 Financial assets Forward currency agreement (46,936,482) (15,077,628) Bonds – 43,531,238 – 43,531,238 Net exposure 1,576,589 3.2 8,220,314 8.4 Equities 103,823 – – 103,823 If the Canadian dollar weakened or strengthened by 5% as at December 31, Funds 3,248,860 – – 3,248,860 2018 in relation to the US dollar, with all other variables held constant, Total financial assets 3,352,683 43,531,238 – 46,883,921 the Fund’s net assets would have increased or decreased, respectively, by approximately $0.1 million (2017 –$0.4 million). In practice, actual results may Financial liabilities differ from this sensitivity analysis and the difference could be material. Forward currency contracts – 665,200 – 665,200 Portfolio concentration risk Total financial liabilities – 665,200 – 665,200 The Manager manages the risk through diversification and a thorough Total financial assets and liabilities 3,352,683 42,866,038 – 46,218,721 understanding of each investment in the portfolio. Credit risk The Fund’s main exposure to credit risk is: (a) their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may enter into derivative contracts to hedge their exposure to foreign currencies. The unrealized gain (loss) on outstanding contracts with counterparties represents the maximum credit exposure. These contracts are carried out with

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 15 PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE GLOBAL BOND FUND (FORMERLY PURPOSE TACTICAL INVESTMENT GRADE BOND FUND) (continued) counterparties with a credit rating of at least “A-”. The exposure to credit risk on these contracts is considered minimal as there are few contracts outstanding at any one time and the transactions are settled and paid for upon delivery. The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income. As at December 31, 2018 and 2017 the Fund also invested in debt instruments and preferred shares with the following Standard & Poor’s credit ratings: 2018 2017 Rating % of NAV % of NAV AAA+ to AAA- 6.14 2.61 AA+ to AA- 5.79 16.04 A+ to A- 32.27 34.39 BBB+ to BBB- 37.96 30.47 Below BBB- 5.82 –

F) INTEREST IN UNDERLYING FUNDS The Fund invests in redeemable units of other investment funds (“underlying funds”) to gain exposure to the investment objectives and strategies of the underlying funds. Each underlying fund is generally financed through the capital invested by the Fund, along with other investors, which entitles unitholders to a proportionate share of the underlying fund’s net assets. The Fund does not provide additional financial or other support to the underlying funds. All underlying funds were established in and carry out their operations in Canada. The Fund’s interests in underlying funds are reported at fair value in “Investments” in its Statements of Financial Position and in its Schedule of Investments, which represents the Fund’s maximum exposure to financial loss. At December 31, 2018 At December 31, 2017 % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % BMO High Yield US Corporate Bond Hedged to CAD ETF – – 11.6 1.4 Purpose High Interest Savings ETF – – 0.6 0.1 Purpose Floating Rate Income Fund 3.81 1.18 – – Purpose US Cash ETF 2.76 1.55 – –

G) INCOME TAXES As at December 31, 2018, the Fund had no non-capital losses (2017 – $nil) but it had capital loss carry forward of $4,423,121 (2017 – $219,891) for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 16 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Net assets attributable to holders of redeemable units by class Investments: ETF Units 37,814,620 – Non-derivative financial assets 155,272,695 85,958,006 Class A 79,561,421 65,558,974 Cash and cash equivalents – 11,395,987 Class F 25,522,547 26,194,217 Cash held at broker for margin 1,071,562 – Class I 255,601 256,521 Receivables: Class X 3,456,418 4,269,073 Dividends 68,004 26,650 Class Y 501,813 576,744 Interest 2,483,199 1,438,069 Class UA 5,923,114 2,135,603 Capital units sold 321 223 Class UF 1,825,512 475,200 Other receivables 153,151 162,398 Class TA6 310,656 386,170 Derivative assets: Class TF6 165,242 202,778 Unrealized gain on forward currency contracts 145,400 1,641,602 Total 155,336,944 100,055,280 Total assets 159,194,332 100,622,935 Number of units outstanding (note 4) Liabilities ETF Units 2,025,000 – Investments sold short 558,975 – Class A 10,387,411 7,877,472 Bank overdraft 130,754 – Class F 3,112,215 2,975,233 Payables: Class I 22,841 21,869 Management fees (note 5) 141,307 120,790 Class X 458,369 521,293 Independent review committee fees (note 5) 9,311 – Class Y 53,828 57,137 Other accrued liabilities 303,994 101,189 Class UA 560,657 202,006 Distributions 193,402 – Class UF 165,293 43,405 Capital units redeemed 178,255 318,384 Class TA6 29,386 33,684 Derivative liabilities: Class TF6 15,115 17,250 Unrealized loss on forward currency contracts 2,341,390 27,292 Net assets attributable to holders of redeemable units per unit Total liabilities 3,726,634 567,655 ETF Units 18.67 – Net assets attributable to holders of redeemable units 155,336,944 100,055,280 Class A 7.66 8.32 Class F 8.20 8.80 Class I 11.19 11.73 Class X 7.54 8.19 Class Y 9.32 10.09 Class UA 10.56 10.57 Class UA (USD) 7.73 8.41 Class UF 11.04 10.95 Class UF (USD) 8.08 8.71 Class TA6 10.57 11.46 Class TF6 10.93 11.76 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Strategic Yield Fund (formerly Redwood Strategic Yield Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 17 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives redeemable units by class (note 8) Dividends 703,866 239,682 ETF Units (1,437,593) – Interest income for distribution purposes 7,904,250 8,017,082 Class A (2,089,958) 7,561,658 Other income – 37,964 Class F (314,107) 3,498,192 Net realized gain (loss) on sale of investments 8,141 5,407,760 Class I (920) 1,258,789 Realized gain (loss) on forward currency contracts (4,275,194) 4,086,227 Class X (52,559) 531,895 Change in unrealized appreciation (depreciation) in value Class Y (7,673) 73,261 of investments (2,117,052) (2,814,911) Class UA 151,151 134,395 Change in unrealized appreciation (depreciation) in value of Class UF 77,433 20,040 foreign cash – (161,450) Class TA6 (6,175) 20,129 Change in unrealized appreciation (depreciation) in value Class TF6 (1,765) 11,868 of forward currency contracts (3,810,300) 1,785,863 Total (3,682,166) 13,110,227 Change in unrealized appreciation (depreciation) in value of warrants (700) (16,100) Average number of units outstanding (note 8) Net gains (losses) on investments and derivatives (1,586,989) 16,582,117 ETF Units 1,546,429 – Securities lending income (1) (2) 91,140 13,828 Class A 9,101,465 8,303,387 Foreign exchange gain (loss) on cash 66,959 (1,296,389) Class F 2,900,533 3,400,245 Total revenue (1,428,890) 15,299,556 Class I 22,321 776,735 Expenses Class X 486,672 584,947 Management fees (note 5) 2,032,811 1,729,076 Class Y 56,444 65,562 Valuation and administrative fees (note 5) 293,213 326,673 Class UA 326,948 238,067 Custodial fees 44,800 14,121 Class UF 115,029 37,135 Audit fees 39,550 36,435 Class TA6 34,940 18,233 Legal fees 26,918 61,739 Class TF6 16,737 9,834 Transaction costs (note 9) 18,515 7,793 Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 8) Independent review committee fees (note 5) 12,001 11,016 ETF Units (0.93) – Withholding taxes (note 7) 10,840 358 Class A (0.23) 0.91 Transfer agent fees 10,131 – Class F (0.11) 1.03 Operating fees 9,412 – Class I (0.04) 1.61 Interest and borrowing costs 2,937 2,118 Class X (0.11) 0.91 Recordkeeping fees 2,406 – Class Y (0.14) 1.12 Other expenses (note 5) (21,490) – Class UA 0.46 0.56 Total expenses 2,482,044 2,189,329 Class UF 0.67 0.54 Expenses waived/absorbed by the Manager (228,768) – Class TA6 (0.18) 1.11 Net expenses 2,253,276 2,189,329 Class TF6 (0.11) 1.21 Increase (decrease) in net assets attributable to holders of redeemable units (3,682,166) 13,110,227 (1) Securities lending: The value of securities loaned and collateral received from securities lending at December 31 is as follows: Value of securities loaned 27,633,158 1,077,116 Value of collateral received 29,450,675 1,134,976 (2) Securities lending income The table below shows a reconciliation of the gross amount generated from securities lending transactions of the Fund to Securities lending income disclosed in the Statement of Comprehensive Income. December 31, 2018 December 31, 2017 $ % $ % Gross securities lending revenue 202,704 100.00 23,158 100.0 Withholding taxes (50,806) (25.1) (863) (3.7) Agent fees (60,758) (30.0) (8,467) (36.6) Securities lending income 91,140 44.9 13,828 59.7 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 18 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

Class F Class Y Net assets attributable to holders of redeemable units at beginning of year 26,194,217 33,926,836 Net assets attributable to holders of redeemable units at beginning of year 576,744 599,293 Increase (decrease) in net assets attributable to holders of redeemable units (314,107) 3,498,192 Increase (decrease) in net assets attributable to holders of redeemable units (7,673) 73,261 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 8,076,514 15,975,194 Proceeds from issuance of redeemable units 10,000 4,000 Exchange of redeemable units 901,291 – Payments for redemption of redeemable units (53,588) (185,521) Payments for redemption of redeemable units (8,679,476) (26,165,977) Units issued on merger – 119,576 Reinvestment of distributions 830,838 874,873 Reinvestment of distributions 11,213 10,328 Net increase (decrease) from redeemable unit transactions 1,129,167 (9,315,910) Net increase (decrease) from redeemable unit transactions (32,375) (51,617) Distributions paid or payable to holders of redeemable units Distributions paid or payable to holders of redeemable units From investment income (1,209,140) (1,576,977) From investment income (22,087) (34,775) Return of capital (277,590) (337,924) Return of capital (12,796) (9,418) Total distributions to holders of redeemable units (1,486,730) (1,914,901) Total distributions to holders of redeemable units (34,883) (44,193) Net increase (decrease) in net assets attributable to holders of redeemable units (671,670) (7,732,619) Net increase (decrease) in net assets attributable to holders of redeemable units (74,931) (22,549) Net assets attributable to holders of redeemable units at end of year 25,522,547 26,194,217 Net assets attributable to holders of redeemable units at end of year 501,813 576,744

2018 ANNUAL REPORT 19 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION (continued) For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Class UA Class TF6 Net assets attributable to holders of redeemable units at beginning of year 2,135,603 3,003,429 Net assets attributable to holders of redeemable units at beginning of year 202,778 110 Increase (decrease) in net assets attributable to holders of redeemable units 151,151 134,395 Increase (decrease) in net assets attributable to holders of redeemable units (1,765) 11,868 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 4,790,870 185,292 Exchange of redeemable units (8,311) – Exchange of redeemable units (452,772) – Payments for redemption of redeemable units (25,125) – Payments for redemption of redeemable units (472,470) (1,104,358) Units issued on merger – 192,397 Reinvestment of distributions 41,591 95,539 Reinvestment of distributions 9,225 5,195 Net increase (decrease) from redeemable unit transactions 3,907,218 (823,527) Net increase (decrease) from redeemable unit transactions (24,211) 197,592 Distributions paid or payable to holders of redeemable units Distributions paid or payable to holders of redeemable units From investment income (270,858) (133,145) From investment income (7,873) (6,792) Return of capital – (45,549) Return of capital (3,687) – Total distributions to holders of redeemable units (270,858) (178,694) Total distributions to holders of redeemable units (11,560) (6,792) Net increase (decrease) in net assets attributable to holders of redeemable units 3,787,511 (867,826) Net increase (decrease) in net assets attributable to holders of redeemable units (37,536) 202,668 Net assets attributable to holders of redeemable units at end of year 5,923,114 2,135,603 Net assets attributable to holders of redeemable units at end of year 165,242 202,778 The accompanying notes are an integral part of the financial statements. Class UF Net assets attributable to holders of redeemable units at beginning of year 475,200 466,838 Increase (decrease) in net assets attributable to holders of redeemable units 77,433 20,040 Redeemable unit transactions Proceeds from issuance of redeemable units 954,744 133,257 Exchange of redeemable units 452,774 – Payments for redemption of redeemable units (121,712) (138,256) Reinvestment of distributions 82,412 19,998 Net increase (decrease) from redeemable unit transactions 1,368,218 14,999 Distributions paid or payable to holders of redeemable units From investment income (86,804) (26,677) Return of capital (8,535) – Total distributions to holders of redeemable units (95,339) (26,677) Net increase (decrease) in net assets attributable to holders of redeemable units 1,350,312 8,362 Net assets attributable to holders of redeemable units at end of year 1,825,512 475,200

Class TA6 Net assets attributable to holders of redeemable units at beginning of year 386,170 109 Increase (decrease) in net assets attributable to holders of redeemable units (6,175) 20,129 Redeemable unit transactions Proceeds from issuance of redeemable units 82,963 177,589 Payments for redemption of redeemable units (135,108) (49,902) Units issued on merger – 247,792 Reinvestment of distributions 6,465 2,871 Net increase (decrease) from redeemable unit transactions (45,680) 378,350 Distributions paid or payable to holders of redeemable units From investment income (12,278) (12,418) Return of capital (11,381) – Total distributions to holders of redeemable units (23,659) (12,418) Net increase (decrease) in net assets attributable to holders of redeemable units (75,514) 386,061 Net assets attributable to holders of redeemable units at end of year 310,656 386,170

2018 ANNUAL REPORT 20 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the years ended: As at December 31, 2018 December 31, December 31, Number of 2018 2017 shares/units/ Average Cost Fair Value ($) ($) Security par value ($) ($) Long Positions – 100.0% Cash Flows from Operating Activities Equities – 22.0% Increase (decrease) in net assets attributable to holders of Financials – 3.1% redeemable units (3,682,166) 13,110,227 Brookfield Asset Management Inc., Preferred 2.727% Series 28 86,800 1,555,077 1,396,612 Adjustments for: Brookfield Asset Management Inc., Preferred Series 40 25,000 605,250 522,500 Foreign exchange loss (gain) on cash (66,959) 161,450 ECN Capital Corporation, Preferred 6.25% Series C 42,300 898,289 769,860 Purchase of investments (234,938,403) (84,577,980) ECN Capital Corporation, Preferred, Series A 1,800 39,417 34,056 Proceeds from sale of investments 159,779,368 129,490,781 Element Financial Corporation, Preferred 6.50% Series G 27,600 624,228 596,160 Net realized loss (gain) on sale of investments (8,141) (5,407,760) Element Fleet Management Corporation, Preferred 5.75% Series I 21,300 450,972 395,541 Net realized loss (gain) on forward currency contracts 4,275,194 (4,086,227) Power Financial Corporation, Preferred Series P 50,000 1,001,000 750,500 Change in unrealized depreciation (appreciation) in value Royal Bank of Canada, Preferred 4.00% Series AZ 15,000 351,600 296,850 of investments 2,117,052 2,814,911 5,525,833 4,762,079 Change in unrealized depreciation (appreciation) in value of foreign Industrials – 0.1% forward currency contracts 3,810,300 (1,785,863) UC Holdings Inc. 4,038 153,985 154,355 Change in unrealized depreciation (appreciation) on warrants 700 16,100 153,985 154,355 Net change in non-cash working capital balances (1,916,166) 1,764,463 Materials – 0.5% Transaction costs (note 9) 18,515 7,793 Champion Iron Limited 716,000 809,124 766,120 (69,539,143) 51,507,895 809,124 766,120 Pooled or Exchange Traded Funds – 16.2% (note G) Cash Flows from (used in) Financing Activities BlackRock Corporate High Yield Fund Inc. 40,001 536,134 506,775 Proceeds from issuance of units 101,503,177 33,067,528 iShares 7-10 Year Treasury Bond ETF 20,000 2,669,823 2,845,077 Unit exchanges 374,124 – iShares 20+ Year Treasury Bond ETF 32,000 4,872,447 5,308,334 Payment for units redeemed (38,329,514) (77,234,157) Purpose Energy Credit Fund 301,760 2,103,941 1,864,877 Distribution to holders, net of reinvestments (4,530,781) (2,510,408) Purpose High Interest Savings ETF 275,481 13,784,452 13,774,325 59,017,005 (46,677,037) Purpose US Cash ETF 6,900 909,686 942,271 24,876,483 25,241,659 Foreign exchange gain (loss) on cash 66,959 (161,450) Real Estate – 2.1% Increase (decrease) in cash and cash equivalents (11,593,700) 4,830,858 Slate Retail REIT 274,544 3,379,687 3,225,892 Cash and cash equivalents, at beginning of period 11,395,987 6,726,579 3,379,687 3,225,892 Bank overdraft, at end of period (130,754) 11,395,987 Total Equities – 22.0% 34,745,112 34,150,105 Interest received 6,859,120 9,244,734 Fixed Income – 78.0% Dividends received, net of withholding taxes 651,672 241,959 Canadian Corporate Bonds – 25.7% Interest paid 2,937 2,118 Air Canada Callable 4.75% October 06, 2023 2,000,000 2,035,092 2,020,000 The accompanying notes are an integral part of the financial statements. Athabasca Oil Corporation Callable 9.875% February 24, 2022 2,189,000 2,815,186 2,719,465 Baffinland Iron Corporation LP 8.75% June 15, 2026 2,000,000 2,653,279 2,450,534 Element Financial Corporation Convertible 4.25% June 30, 2020 2,000,000 1,872,470 1,925,500 Element Financial Corporation Convertible 5.125% June 30, 2019 4,338,000 4,337,250 4,318,783 Enbridge Inc. Callable 3.16% March 11, 2021 1,000,000 1,004,770 1,001,481 First Quantum Minerals Limited Callable 7.50% April 01, 2025 998,000 1,259,186 1,124,038 Gateway Casino & Entertainment Limited Callable 8.25% March 01, 2024 1,500,000 1,962,991 2,078,517 Largo Resources Limited Callable 9.25% June 01, 2021 3,592,000 4,533,614 5,155,118 Mattamy Group Corporation Callable 6.50% October 01, 2025 4,500,000 4,506,250 4,237,500 MEG Energy Corporation Callable 6.375% January 30, 2023 2,000,000 2,456,073 2,580,228 MEG Energy Corporation Callable 7.00% March 31, 2024 3,000,000 3,933,294 3,911,298 Millar Western Forest Products Limited Callable 9.50% June 20, 2023 1,000,000 1,000,000 1,003,240 NuVista Energy Limited Callable 6.50% March 02, 2023 500,000 500,000 474,583 Toronto-Dominion Bank 1.68% June 08, 2021 750,000 733,575 734,466 Vermilion Energy Inc. Callable 5.625% March 15, 2025 1,750,000 2,317,840 2,239,781 Vesta Energy Corporation Callable 8.125% July 24, 2023 2,000,000 2,007,500 1,908,860 39,928,370 39,883,392 Canadian Government Bond – 1.9% Government of Canada 2.00% June 01, 2028 3,000,000 2,937,900 3,008,845 2,937,900 3,008,845

2018 ANNUAL REPORT 21 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of shares/units/ Average Cost Fair Value shares/units/ Average Cost Fair Value Security par value ($) ($) Security par value ($) ($) Foreign Corporate Bonds – 50.4% Moss Creek Resources Holdings Inc. Callable 7.50% January 15, 24 Hour Holdings III LLC Callable 8.00% June 01, 2022 4,000,000 4,467,100 5,146,804 2026 2,000,000 2,561,225 2,361,796 Alliance One International Inc. Callable 8.50% April 15, 2021 500,000 655,645 674,067 Shelf Drilling Holdings Limited Callable 8.25% February 15, 2025 1,500,000 1,922,602 1,750,869 Alliance One International Inc. Callable 9.875% July 15, 2021 870,000 908,234 899,701 Tesla Inc. Callable 5.30% due August 15, 2025 500,000 634,150 593,009 Ally Financial Inc. 3.50% January 27, 2019 2,000,000 2,582,239 2,728,693 TMX Finance LLC / TitleMax Finance Corporation Callable 11.125% April 01, 2023 1,000,000 1,287,900 1,098,576 AV Homes Inc. Callable 6.625% May 15, 2022 1,000,000 1,372,043 1,366,906 Vector Group Limited Callable 6.125% February 01, 2025 1,000,000 1,332,694 1,160,420 Cedar Funding V CLO Limited July 17, 2031 1,000,000 1,316,400 1,275,229 Vine Oil & Gas LP / Vine Oil & Gas Finance Corporation Callable Crown Point CLO 5 Limited July 17, 2028 1,000,000 1,324,697 1,306,470 8.75% April 15, 2023 1,500,000 1,693,391 1,617,762 Curo Group Holdings Corporation Callable 8.25% Vine Oil & Gas LP / Vine Oil & Gas Finance Corporation Callable September 01, 2025 6,250,000 8,100,784 6,698,012 9.75% April 15, 2023 2,000,000 2,564,400 2,184,320 Emeco Pty Limited Callable 9.25% March 31, 2022 1 1 1 VistaJet Malta Finance PLC / VistaJet Co Finance LLC Callable Enova International Inc. Callable 8.50% September 01, 2024 3,500,000 4,548,633 4,157,034 7.75% June 01, 2020 4,550,000 5,583,527 5,947,664 Enova International Inc. Callable 8.50% September 15, 2025 2,000,000 2,596,200 2,218,450 Wand Merger Corporation Callable 8.125% July 15, 2023 3,000,000 3,976,704 3,993,210 EP Energy LLC / Everest Acquisition Finance Inc. Callable 7.75% Wynn Las Vegas LLC / Wynn Las Vegas Capital Corporation May 15, 2026 1,500,000 1,931,850 1,812,303 Callable 5.25% May 15, 2027 1,500,000 2,053,866 1,802,064 Extraction Oil & Gas Inc. Callable 5.625% February 01, 2026 500,000 625,716 498,298 81,014,590 78,230,353 Golden Nugget Inc. Callable 6.75% October 15, 2024 3,500,000 4,335,754 4,503,454 Total Fixed Income – 78.0% 123,880,860 121,122,590 Golden Nugget Inc. Callable 8.75% October 01, 2025 1,000,000 1,218,450 1,310,592 Total Long Positions – 100.0% 158,625,972 155,272,695 Greystar Real Estate Partners LLC Callable 5.75% Short Positions – (0.4%) December 01, 2025 1,000,000 1,267,850 1,334,483 Equities – (0.4%) Gulfport Energy Corporation Callable 6.375% January 15, 2026 500,000 628,525 590,449 Energy – (0.4%) Heartland Dental LLC Callable 8.50% May 01, 2026 500,000 641,200 614,340 MEG Energy Corporation (72,500) (766,205) (558,975) Hexion Inc. Callable 10.00% April 15, 2020 3,250,000 4,159,084 3,660,443 Total Equities – (0.4%) (766,205) (558,975) HLF Financing Sarl LLC / Herbalife International Inc. 7.25 % Total Short Positions – (0.4%) (766,205) (558,975) August 15, 2026 750,000 978,038 1,008,542 Transaction Costs (note 9) (11,643) – Hunt Cos Inc. Callable 6.25% February 15, 2026 1,000,000 1,232,600 1,166,427 Total Investments – 99.6% 157,859,767 154,713,720 Icahn Enterprises/Fin Callable 6.375% due December 15, 2025 3,250,000 4,123,446 4,270,516 Net Unrealized Gain (Loss) on Forward Currency Contracts Intrepid Aviation Group Holdings LLC / Intrepid Finance Company (Schedule 1) – (1.4%) (2,195,990) Callable 8.5% August 15, 2021 1,000,000 1,303,667 1,351,398 Warrants (Schedule 2) – 0.0% – Jefferies Finance LLC / JFIN Co-Issuer Corporation Callable 7.25% August 15, 2024 3,500,000 4,433,939 4,419,835 Bank Overdraft – (0.1%) (130,754) Mason Finance Sub Inc. Callable 6.875% August 15, 2023 500,000 649,250 655,296 Other assets, less liabilities – 1.9% 2,949,968 MGM Resorts International 5.25% March 31, 2020 1,500,000 2,002,786 2,052,920 Net Assets – 100.0% 155,336,944

SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACTS For the year ended December 31, 2018 Credit Rating for Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) CIBC A-1 1/11/19 CAD 104,157,392 USD (106,466,930) 1.335180 0.733 (2,309,538) CIBC A-1 1/11/19 CAD 1,332,934 USD (1,364,786) 1.332934 0.733 (31,852) CIBC A-1 1/11/19 USD 3,267,297 CAD (3,227,478) 0.741756 1.365 39,819 CIBC A-1 1/11/19 USD 505,653 CAD (499,323) 0.742005 1.365 6,330 CIBC A-1 1/25/19 USD 5,751,477 CAD (5,675,000) 0.742877 1.364 76,477 CIBC A-1 1/25/19 USD 1,712,774 CAD (1,690,000) 0.742877 1.364 22,774 (2,195,990)

SCHEDULE 2 – WARRANTS For the year ended December 31, 2018: Strike Price Shares Cost Fair Value Security Expiry Date ($) Currency or units ($) ($) UC Holdings Inc. July 29, 2020 26.41 USD 12,912 – – NYX Gaming Group Ltd. April 26, 2019 3.50 CAD 25,000 10,010 – NYX Gaming Group Ltd. June 30, 2019 3.50 CAD 259,300 – – – The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 22 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) D) FAIR VALUE INVESTMENTS (NOTE 10) The Purpose Strategic Yield Fund (formerly Redwood Strategic Yield Fund)’s The following inputs were used in valuing the Fund’s investments and investment objectives are to provide investors with a high yield by investing derivatives at fair values as at December 31, 2018: primarily in, or obtaining exposure primarily to, fixed income securities of corporate issuers located in Canada or the United States. Investments in fixed Level 1 Level 2 Level 3 Total ($) ($) ($) ($) income securities generally will be below investment grade. Financial assets B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Equities 33,053,479 942,271 154,355 34,150,105 Changes in outstanding units during the periods ended December 31, 2018 and Fixed income – 121,122,590 – 121,122,590 2017 are summarized as follows: Forward currency contracts – 145,400 – 145,400 Number of Units Total financial assets 33,053,479 122,210,261 154,355 155,418,095 ETF Class A Class F Class I Class X Units Units Units Units Units Financial liabilities Outstanding, December 31, 2016 – 8,594,476 4,060,321 2,017,762 666,187 Equities 558,975 – – 558,975 Issued – 1,900,648 1,851,451 40,583 – Forward currency contracts – 2,341,390 – 2,341,390 Redeemed – (3,029,530) (3,037,737) (2,072,128) (178,765) Total financial liabilities 558,975 2,341,390 – 2,900,365 Reinvested – 411,878 101,198 35,652 33,871 Total financial assets and liabilities 32,494,504 119,868,871 154,355 152,517,730 Outstanding, December 31, 2017 – 7,877,472 2,975,233 21,869 521,293 The following inputs were used in valuing the Fund’s investments and Issued 2,175,000 5,411,191 1,032,885 – – derivatives at fair values as at December 31, 2017: Redeemed (150,000) (3,191,003) (991,768) – (88,301) Reinvested – 289,751 95,865 972 25,377 Level 1 Level 2 Level 3 Total ($) ($) ($) ($) Outstanding, December 31, 2018 2,025,000 10,387,411 3,112,215 22,841 458,369 Financial assets Equities 4,295,843 – 142,121 4,437,964 Class Y Class UA Class UF Class TA6 Class TF6 Units Units Units Units Units Fixed income – 80,890,042 630,000 81,520,042 Outstanding, December 31, 2016 62,029 276,535 41,907 10 10 Forward currency contracts – 1,641,602 – 1,641,602 Issued 12,494 16,553 12,136 37,815 16,794 Total financial assets 4,295,843 82,531,644 772,121 87,599,608 Redeemed (18,423) (99,883) (12,433) (4,393) – Reinvested 1,037 8,801 1,795 252 446 Financial liabilities Outstanding, December 31, 2017 57,137 202,006 43,405 33,684 17,250 Forward currency contracts – 27,292 – 27,292 Issued 992 441,796 125,297 7,235 – Total financial liabilities – 27,292 – 27,292 Redeemed (5,434) (87,004) (10,768) (12,108) (2,931) Total financial assets and liabilities 4,295,843 82,504,352 772,121 87,572,316 Reinvested 1,133 3,859 7,359 575 796 During the period ended December 31, 2018 and 2017 there were no transfers of Outstanding, December 31, 2018 53,828 560,657 165,293 29,386 15,115 assets between Level 1, Level 2 and Level 3. The Manager obtains pricing from a third party pricing vendor, which is C) MANAGEMENT FEES, SERVICE FEES AND OTHER monitored and reviewed daily by the portfolio manager. Any adjustments to the EXPENSES (NOTE 5) prices or estimates provided by the third party pricing vendor are approved by Annual Management Fee the portfolio manager. (% of Net Asset Value of each class) The following table reconciles the Fund’s Level 3 fair value measurements for Class Management Fee the period ended December 31, 2018 and 2017. ETF Units 0.80% Class A 1.55% 2018 2017 ($) ($) Class F 0.80% Beginning of year 772,121 1,533,425 Class I 0.80% Realized gain (loss) (3,495,144) – Class X* 1.20% Net change in unrealized 2,877,378 (761,304) Class Y 1.20% End of year 154,355 772,121 Class UA 1.25% Class UF 0.80% Class TA6 1.55% Class TF6 0.80% * The Management Fee for Class X Units changed from 1.45% to 1.20% per annum in August 2018.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 23 PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE STRATEGIC YIELD FUND (FORMERLY REDWOOD STRATEGIC YIELD FUND) (continued) E) FINANCIAL RISKS (NOTE 11) G) INTEREST IN UNDERLYING FUNDS Market price risk The Fund invests in redeemable units of other investment funds (“underlying If equity prices for these securities had increased or decreased by 5% as at funds”) to gain exposure to the investment objectives and strategies of the December 31, 2018 with all other variables held constant, the Fund’s net assets underlying funds. Each underlying fund is generally financed through the capital would have increased or decreased, respectively, by approximately $1.7 million invested by the Fund, along with other investors, which entitles unitholders (2017 – $0.2 million). In practice, actual results may differ from this sensitivity to a proportionate share of the underlying fund’s net assets. The Fund does analysis and the difference could be material. not provide additional financial or other support to the underlying funds. Interest rate risk All underlying funds were established in and carry out their operations in Canada. The Fund’s interests in underlying funds are reported at fair value in 2018 $ exposure 2017 $ exposure “Investments” in its Statements of Financial Position and in its Schedule of Maturity fixed–income assets fixed–income assets Investments, which represents the Fund’s maximum exposure to financial loss. Less than 1 year 7,047,476 4,414,199 1 to 3 years 23,402,758 23,585,267 The fair value of the underlying fund included in the statements of financial position is as follows: 3 to 5 years 26,769,252 23,671,052 Greater than 5 years 63,903,104 29,849,524 At December 31, 2018 At December 31, 2017 Total exposure 121,122,590 81,520,042 % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % Currency risk BlackRock Corporate High Yield Fund Inc. 0.3 0.03 – – The table below summarizes the Fund’s direct exposure to the US dollar as Purpose Energy Credit Fund 1.2 8.97 – – at December 31, 2018 and 2017 including the underlying principal amount of Purpose High Interest Savings ETF 8.9 0.97 – – forward currency contracts that is used to hedge the foreign currency risk: Purpose US Cash ETF 0.6 1.10 – – December 31, 2018 December 31, 2017 iShares 7-10 Year Treasury Bond ETF 1.8 0.02 – – Net Exposure % of Net Exposure % of iShares 20+ Year Treasury Bond ETF 3.4 0.04 – – Currency ($) Net Assets ($) Net Assets U.S. Dollar 15,940,396 10.3 9,456,561 9.4 Total 15,940,396 10.3 9,456,561 9.4

If the Canadian dollar weakened or strengthened by 5% as at December 31, 2018 in relation to the US dollar, with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $0.8 million (2017 – $0.5 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. Credit risk The Fund’s main exposure to credit risk is their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers. As at December 31, 2018 and 2017 the Fund invested in debt instruments and preferred shares with the following Standard & Poor’s credit ratings: December 31, 2018 December 31, 2017 % of Total % of Net % of Total % of Net Bond Ratings Bonds Assets Bonds Assets AAA 3.1 2.4 – – BBB 0.8 0.6 – – BB 26.9 20.9 26.4 21.5 B 46.1 36.0 31.8 25.9 CCC 15.0 11.8 39.4 32.1 Not rated 8.1 6.3 2.4 2.0 Total 100.0 78.0 100.0 81.5

F) INCOME TAXES As at December 31, 2018 and 2017, the Fund had capital loss carry forward of $20,713,284 (2017 – $15,829,414) and $nil non-capital losses (2017 – $nil) for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 24 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Net assets attributable to holders of redeemable units per class Investments: ETF Unit 19,615,879 16,058,645 Non-derivative financial assets 21,041,587 24,485,952 ETF Unit (USD) 1,134,855 1,244,449 Cash and cash equivalents 112,778 – Class A 37,048 – Receivables: Class F 957 – Dividends 2,724 – Total 20,788,739 17,303,094 Interest 469,464 430,368 Number of units outstanding (note 4) Prepaid expenses 12,862 81,114 ETF Unit 3,182,988 2,232,951 Prepaid management fees (note 5) 2,372 – ETF Unit (USD) 132,699 132,699 Derivative assets: Class A 2,087 – Unrealized gain on forward currency contracts 15,052 182,529 Class F 53 – Total assets 21,656,839 25,179,963 Net assets attributable to holders of redeemable units per unit Liabilities ETF Unit 6.16 7.19 Bank overdraft – 1,289,498 ETF Unit (USD)* 6.26 7.46 Leverage (note 15) – 6,285,000 Class A 17.75 – Payables: Class F 18.10 – Independent review committee fees (note 5) 10,218 5,221 * All information is stated in Canadian dollars except net assets attributable to holders of redeemable units per unit for Other accrued liabilities 206,617 112,179 the Class ETF Units (USD) which are stated in US dollars. The accompanying notes are an integral part of the financial statements. Distributions 117,884 120,028 Capital units redeemed – 5,664 Approved on behalf of the Board of Directors of Purpose Investments Inc., Derivative liabilities: as trustee and manager of Purpose Energy Credit Fund (formerly Energy Credit Unrealized loss on forward currency contracts 533,381 59,279 Opportunities Income Fund) Total liabilities 868,100 7,876,879 Net assets attributable to holders of redeemable units 20,788,739 17,303,094

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 25 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives redeemable units per class (note 8) Dividend income 8,481 – ETF Unit (1,790,142) 1,053,362 Interest income for distribution purposes 1,299,664 1,852,190 ETF Unit (USD) (32,948) 2,635 Net realized gain (loss) on foreign exchange transactions 219,631 26,064 Class A (45,474) – Net realized gain (loss) on sale of investments (10,741) 331,085 Class F (43) – Net realized gain (loss) on forward currency contracts (904,302) 661,911 Total (1,868,607) 1,055,997 Net change in unrealized appreciation (depreciation) in value Average number of units outstanding (note 8) of investments (1,290,776) (2,016,588) ETF Unit 2,744,612 2,805,845 Net change in unrealized depreciation in value of forward ETF Unit (USD) 132,687 523,839 currency contracts (641,580) 423,123 Class A 31,496 – Net change in unrealized appreciation (depreciation) on foreign Class F 51 – exchange transactions (66,505) 422,647 Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives (1,386,128) 1,700,432 redeemable units per unit (note 8) (1) (2) Securities lending income 2,214 6,322 ETF Unit (0.65) 0.38 Foreign exchange gain (loss) on cash (15,887) (92,354) ETF Unit (USD)* (0.19) – Total revenue (1,399,801) 1,614,400 Class A (1.44) – Expenses Class F (0.84) – Management fees (note 5) 176,707 278,291 Legal fees 66,552 36,760 (1) Securities Lending: Unitholder reporting 39,462 22,046 The value of securities loaned and collateral received from securities lending at December 31 is as follows: Custodian and fund accounting fees 39,318 25,976 Value of securities loaned 892,002 823,261 Audit fees 32,931 28,559 Value of collateral received 948,855 865,076 Listing fees 29,481 28,496 (2) Securities lending income Recordkeeping fees 23,900 17,871 The table below shows a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from the securities lending disclosed in the Statements of Comprehensive Income. Independent review committee fees (note 5) 9,967 7,501 December 31, 2018 December 31, 2017 Interest on loan facility and related expenses (note 15) 9,288 92,798 $ % $ % Transaction costs (note 9) 5,001 8,667 Gross securities lending income 6,148 100.0 17,806 100.0 Other expenses (note 5) 36,199 11,438 Withholding taxes (1,720) 28.0 (5,162) 29.0 Total expenses 468,806 558,403 Agent fees (2,214) 36.0 (6,322) 35.5 Increase (decrease) in net assets attributable to holders of redeemable units (1,868,607) 1,055,997 Securities lending income 2,214 36.0 6,322 35.5 * All information is stated in Canadian dollars except Increase (decrease) in net assets attributable to holders of redeemable units per unit for the EFT Unit (USD), which is stated in US dollars. The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 26 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Unit Class A Net assets attributable to holders of redeemable units at beginning of period 16,058,645 21,234,910 Net assets attributable to holders of redeemable units at beginning of period – – Increase (decrease) in net assets attributable to holders of redeemable units (1,790,142) 1,053,362 Increase (decrease) in net assets attributable to holders of redeemable units (45,474) – Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 9,310,159 – Proceeds from issuance of redeemable units 863,214 – Unit exchanges – (112,073) Payments for redemption of redeemable units (751,674) – Payments for redemption of redeemable units (2,756,942) (3,925,101) Reinvestment of distributions 4,563 – Units purchased and cancelled under normal-course issuer bid – (534,165) Net increase (decrease) from redeemable unit transactions 116,103 – Net increase (decrease) from redeemable unit transactions 6,553,217 (4,571,339) Distributions paid or payable to holders of redeemable units Distributions paid or payable to holders of redeemable units From investment income (16,958) – From investment income (333,745) (619,840) Return of capital (16,623) – Return of capital (872,096) (1,038,448) Total distributions to holders of redeemable units (33,581) – Total distributions to holders of redeemable units (1,205,841) (1,658,288) Net increase (decrease) in net assets attributable to holders of redeemable units 37,048 – Net increase (decrease) in net assets attributable to holders of redeemable units 3,557,234 (5,176,265) Net assets attributable to holders of redeemable units at end of period 37,048 – Net assets attributable to holders of redeemable units at end of period 19,615,879 16,058,645 Class F ETF Unit (USD) Net assets attributable to holders of redeemable units at beginning of period – – Net assets attributable to holders of redeemable units at beginning of period 1,244,449 5,379,826 Increase (decrease) in net assets attributable to holders of redeemable units (43) – Increase (decrease) in net assets attributable to holders of redeemable units (32,948) 2,635 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 1,000 – Unit exchanges – 112,073 Reinvestment of distributions 58 – Payments for redemption of redeemable units – (3,717,598) Net increase (decrease) from redeemable unit transactions 1,058 – Units purchased and cancelled under normal-course issuer bid – (146,916) Distributions paid or payable to holders of redeemable units Net increase (decrease) from redeemable unit transactions – (3,752,441) From investment income (36) – Distributions paid or payable to holders of redeemable units Return of capital (22) – From investment income – (170,929) Total distributions to holders of redeemable units (58) – Return of capital (76,646) (214,642) Net increase (decrease) in net assets attributable to holders of redeemable units 957 – Total distributions to holders of redeemable units (76,646) (385,571) Net assets attributable to holders of redeemable units at end of period 957 – Net increase (decrease) in net assets attributable to holders of redeemable units (109,594) (4,135,377) The accompanying notes are an integral part of the financial statements. Net assets attributable to holders of redeemable units at end of period 1,134,855 1,244,449

2018 ANNUAL REPORT 27 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

STATEMENTS OF CASH FLOWS For the years ended: December 31, December 31, 2018 2017 ($) ($)

Cash Flows from Operating Activities Increase (decrease) in net assets attributable to holders of redeemable units (1,868,607) 1,055,997 Adjustments for: Foreign exchange loss (gain) on cash 15,887 92,354 Purchase of investments (21,600,553) (8,382,732) Proceeds from sale of investments 23,743,399 13,938,533 Net realized loss (gain) on sale of investments 10,741 (331,085) Net change in unrealized depreciation (appreciation) in value of investments 1,290,776 2,016,588 Net change in unrealized depreciation (appreciation) in value of forward currency contracts 641,580 (423,123) Net change in non-cash working capital balances 123,495 84,097 Transaction costs (note 9) – 3,666 2,356,718 8,054,295

Cash Flows from Financing Activities Proceeds from issuance of units 10,174,373 – Units purchased and cancelled under normal-course issuer bid (5,567) (681,081) Payments for units redeemed (3,508,713) (7,637,035) Distribution to holders, net of reinvestments (1,313,648) (2,103,054) Leverage (6,285,000) 243,075 (938,555) (10,178,095)

Foreign exchange gain (loss) on cash (15,887) (92,354) Net increase (decrease) in cash and cash equivalents 1,418,163 (2,123,800) Cash and cash equivalents, at beginning of period (1,289,498) 926,656 Cash and cash equivalents, at end of period 112,778 (1,289,498) Interest received 1,260,568 1,965,506 Dividends received, net of withholding taxes 5,757 – Interest paid 9,288 97,072 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 28 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Number of Shares/Units/ Average cost Fair value Shares/Units/ Average cost Fair value Security Par Value ($) ($) Security Par Value ($) ($) Fixed Income – 94.12% Parsley Energy LLC / Parsley Finance Corp., Callable, 5.25%, Canadian Fixed Income – 15.95% 2025/08/15 500,000 672,933 621,166 Athabasca Oil Corp., Callable, 9.88%, 2022/02/24 1,000,000 1,249,140 1,249,158 QEP Resources Inc., Callable, 5.38%, 2022/10/01 800,000 970,536 997,961 MEG Energy Corp., Callable, 6.38%, 2023/01/30 500,000 593,343 647,617 Range Resources Corp., Callable, 5.00%, 2022/08/15 300,000 399,512 368,092 Nuvista Energy Ltd., Callable, 6.50%, 2023/03/02 500,000 500,000 476,562 SemGroup Corp. / Rose Rock Finance Corp., Callable, 5.63%, 2022/07/15 300,000 369,042 388,058 Vesta Energy Corp., Callable, 8.13%, 2023/07/24 1,000,000 1,000,000 943,125 Shelf Drilling Holdings Ltd., Callable, 8.25%, 2025/02/15 750,000 951,882 879,274 Total Canadian Fixed Income – 15.95% 3,342,483 3,316,462 Transocean Inc., Callable, 9.00%, 2023/07/15 500,000 610,391 681,747 United States Fixed Income – 78.17% Vine Oil & Gas L.P. / Vine Oil & Gas Finance Corp., Callable, 8.75%, Andeavor Logistics L.P. / Tesoro Logistics Finance Corp., Callable, 2023/04/15 1,000,000 1,128,928 1,085,334 6.25%, 2022/10/15 466,000 620,448 650,497 Weatherford International Ltd., Callable, 8.25%, 2023/06/15 500,000 621,521 412,973 Antero Resources Corp., Series 'WI', Callable, 5.13%, 2022/12/01 500,000 595,786 644,204 Whiting Petroleum Corp., Callable, 5.75%, 2021/03/15 675,000 832,548 880,042 Ascent Resources Utica Holdings LLC / ARU Finance Corp., Callable, 7.00%, 2026/11/01 500,000 636,202 621,166 WPX Energy Inc., Callable, 6.00%, 2022/01/15 650,000 810,066 867,414 Curo Group Holdings Corp., Callable, 8.25%, 2025/09/01 500,000 652,645 539,254 Total United States Fixed Income – 78.17% 17,062,693 16,249,595 EP Energy LLC / Everest Acquisition Finance Inc., Callable, 8.00%, Total Fixed Income – 94.12% 20,405,176 19,566,057 2024/11/29 1,000,000 1,279,892 1,023,900 Money Market Funds – 7.10% Extraction Oil & Gas Inc., Callable, 5.63%, 2026/02/01 500,000 625,716 501,711 Purpose High Interest Savings ETF 29,510 1,477,477 1,475,530 Genesis Energy L.P. / Genesis Energy Finance Corp., Callable, Total Money Market Funds – 7.10% 1,477,477 1,475,530 6.00%, 2023/05/15 800,000 1,000,939 1,012,978 Total Investments – 101.22% 21,882,653 21,041,587 Gulfport Energy Corp., Callable, 6.00%, 2024/10/15 500,000 676,869 607,514 Net Unrealized Gain (Loss) on Forward Currency Contracts Hadrian Merger Sub Inc., Callable, ADR, 8.50%, 2026/05/01 500,000 641,200 616,047 (Schedule 1) – (2.49)% (518,329) Moss Creek Resources Holdings Inc., Callable, 7.50%, 2026/01/15 975,000 1,230,182 1,158,030 Cash – 0.54% 112,778 Murphy Oil Corp., Callable, 6.88%, 2024/08/15 758,000 1,062,136 1,031,817 Other Assets, Less Liabilities – 0.73% 152,703 Northern Oil and Gas Inc., Callable, 9.50%, 2023/05/15 500,000 673,319 660,416 Net Assets – 100.00% 20,788,739 The accompanying notes are an integral part of the financial statements.

SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACTS As at December 31, 2018 S&P Credit Rating Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty for Counterparty* Date Buys ($) Sells ($) Rate Rate (Loss) ($) Bank of New York Mellon (The), New York A-1+ 2019/01/11 CAD 16,870,938 USD 12,729,325 0.7550 0.7330 (503,301) Bank of New York Mellon (The), New York A-1+ 2019/01/11 CAD 574,506 USD 433,471 0.7550 0.7330 (17,139) Bank of New York Mellon (The), New York A-1+ 2019/01/11 CAD 544,015 USD 407,471 0.7490 0.7330 (12,142) Bank of New York Mellon (The), New York A-1+ 2019/01/11 CAD 34,713 USD 26,000 0.7490 0.7330 (775) Bank of New York Mellon (The), New York A-1+ 2019/01/11 CAD 818 USD 617 0.7550 0.7330 (24) Bank of New York Mellon (The), New York A-1+ 2019/01/11 USD 433,471 CAD 578,728 1.3350 1.3650 12,917 Bank of New York Mellon (The), New York A-1+ 2019/01/11 USD 380,000 CAD 516,553 1.3590 1.3650 2,108 Bank of New York Mellon (The), New York A-1+ 2019/01/11 USD 1,450 CAD 1,952 1.3460 1.3650 27 (518,329) * The forwards contracts are entered into with Bank of New York Mellon (the), New York having a Standard & Poor’s credit rating of A‑1+.

2018 ANNUAL REPORT 29 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

A) INVESTMENT OBJECTIVES The following inputs were used in valuing the Fund’s investments and Purpose Energy Credit Fund (formerly Energy Credit Opportunities Income derivatives at fair values as at December 31, 2017: Fund)'s investment objectives are to seek to achieve the following investment objectives: (i) to provide holders of units with a stable stream of monthly Level 1 Level 2 Level 3 Total ($) ($) ($) ($) distributions; (ii) to provide holders of units with the opportunity for growth in the net asset value per unit. Financial assets Bonds – 24,485,952 – 24,485,952 B) REDEEMABLE PARTICIPATING UNITS Forward currency contracts – 182,529 – 182,529 Changes in outstanding units during the periods ended December 31, 2018 Total financial assets – 24,668,481 – 24,668,481 and 2017: Number of Units Financial liabilities ETF ETF Class A Class F Forward currency contracts – 59,279 – 59,279 Units Units (USD) Units Units Total financial liabilities – 59,279 – 59,279 Outstanding, December 31, 2016 2,865,755 530,211 – – Total financial assets and liabilities – 24,609,202 – 24,609,202 Issued – 11,190 – – During the periods ended December 31, 2018 and 2017, there were no transfers Redeemed (632,804) (408,702) – – of assets between Level 1, Level 2 and Level 3. Outstanding, December 31, 2017 2,232,951 132,699 – – Issued 1,350,037 – 42,351 50 E) FINANCIAL RISKS (NOTE 11) Reinvested – – 232 3 Market price risk Redeemed (400,000) – (40,496) – Market price risk arises primarily from uncertainties about the future market Outstanding, December 31, 2018 3,182,988 132,699 2,087 53 prices of instruments held. Market price fluctuations may be caused by factors specific to an individual investment, or factors affecting all securities traded in a market or industry sector. All investments present a risk of loss of capital. The C) MANAGEMENT FEES, SERVICE FEES AND OTHER maximum risk resulting from financial instruments is equivalent to their fair EXPENSES (NOTE 5) value. The Fund does not have any significant exposure to equity securities as Annual Management Fee of December 31, 2018. (% of Net Asset Value of each units) Units Management Fee Interest rate risk Interest rate risk arises from interest-bearing financial instruments where the ETF Units 0.70% values of those instruments fluctuate due to changes in market interest rates. ETF Units (USD) 0.70% As at December 31, 2018 and 2017, the Fund had exposure to debt instruments Class A Units* 1.20% by maturity as follows: Class F Units 0.70% * This includes a service fee of 0.50% for Class A Units. 2018 % of 2017 % of Maturity fixed–income assets fixed–income assets 1 to 3 years 4.50 – D) FAIR VALUE INVESTMENTS 3 to 5 years 56.66 38.86 The following inputs were used in valuing the Fund’s investments and derivatives at fair values as at December 31, 2018: Greater than 5 years 38.84 61.14 Level 1 Level 2 Level 3 Total As at December 31, 2018 the overall portfolio duration was 3.06 (2017 – 2.88). ($) ($) ($) ($) If interest rates were to increase by 1% with all other variables held constant the Financial asset Fund would decrease by $0.6 million (2017 – $0.7 million) and if interest rates Bonds – 19,566,057 – 19,566,057 were to decrease by 1% the Fund would increase by $0.6 million. Funds 1,475,530 – – 1,475,530 Currency risk Forward currency contracts – 15,052 – 15,052 The table below summarizes the Fund’s direct exposure to the US dollar as at Total financial assets 1,475,530 19,581,109 – 21,056,639 December 31, 2018 and 2017 including the fair value of currency contracts that are used to hedge the foreign currency risk:

Financial liabilities December 31, 2018 December 31, 2017 Forward currency contracts – 533,381 – 533,381 Fair Value % of Fair Value % of Total financial liabilities – 533,381 – 533,381 ($) Net Assets ($) Net Assets Total financial assets and liabilities 1,475,530 19,047,728 – 20,523,258 Foreign currency and debt instruments* 18,697,971 16,441,626 Forward currency contracts (17,446,086) (14,480,915) Net exposure 1,251,885 6.0 1,960,711 11.3 * The Fund’s foreign investments are generally in US dollar securities even if the companies are non-US companies.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 30 PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE ENERGY CREDIT FUND (FORMERLY ENERGY CREDIT OPPORTUNITIES INCOME FUND) (continued)

Portfolio concentration risk H) RECENT DEVELOPMENTS Concentration indicates the relative sensitivity of the Fund’s performance On February 14, 2018, Energy Credit Opportunities Income Fund completed its to developments affecting a particular industry or geographical location. conversion into an actively managed open-end fund with ETF and mutual fund Concentrations of risk arise when a number of financial instruments or units. The Class A units of the Fund converted into ETF Currency Hedged Units contracts are entered into with the same counterparty, or where a number of of Redwood Energy Credit Fund. Redwood Energy Credit Fund changed names counterparties are engaged in similar business activities, or activities in the to Purpose Energy Credit Fund on June 18, 2018. same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. The Manager manages the risk through diversification and a thorough understanding of each investment in the portfolio. Credit risk Credit risk is the risk that a counterparty to a financial instrument fails to discharge an obligation or commitment that it has entered into with the Fund. The Fund is exposed to the risk that a security issuer or counterparty will be unable to pay amounts in full when due. The Fund’s main exposure to credit risk is its trading of listed securities. The risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers. As at December 31, 2018 and 2017 the Fund invested in debt instruments and preferred shares with the following Standard & Poor’s credit ratings: Rating 2018 % of NAV 2017 % of NAV BBB+ to BBB- 8.09 19.87 BB+ to BB- 27.87 77.22 B+ to B- 55.20 44.42 CCC+ to CCC- 2.96 –

The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income. Liquidity risk Liquidity risk is the risk of not being able to meet the Fund’s cash requirements in a timely manner and includes the risk of not being able to liquidate assets at reasonable prices. This risk mainly arises from the Fund’s exposure to monthly and annual redemptions. Sufficient notification is required for redemption requests to allow the Manager to sell investments to raise cash to fund redemptions. In addition, the Fund retains sufficient cash positions to meet its daily cash requirements. All liabilities are due within three months except for the loan facility.

F) INCOME TAXES As at December 31, 2018 and 2017, the Fund had capital losses carry forward of $7,595,556 (2017 – $6,870,222) and no non-capital losses for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the year in which they arise.

G) LEVERAGE The Fund may employ leverage in an amount up to 25% of total assets for the purpose of enhancing returns; maintaining liquidity; to fund margin requirements for the writing of foreign exchange options; for general working capital purposes; and for market purchases of units.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 31 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, 2018 2017 ($) ($) Assets Investments: Non–derivative financial assets 219,309,967 241,285,365 Cash and cash equivalents 479,285 2,322,184 Cash held at broker for margin 20,416 – Receivables: Dividends 285,518 446,759 Interest 77,202 – Capital units sold 1,221,186 10,110,261 Prepaid expenses 6,943 – Derivative assets: Warrants 4,909 53,574 Total assets 221,405,426 254,218,143 Liabilities Payables: Management fees (note 5) 128,482 136,184 Director & independent review committee fees (note 5) 43,342 16,803 Other accrued liabilities 66,681 55,935 Distributions 525,087 306,586 Capital units redeemed 2,048,297 228,200 Total liabilities 2,811,889 743,708 Net assets attributable to holders of redeemable units 218,593,537 253,474,435 Net assets attributable to holders of redeemable units by class ETF Units 116,483,054 82,185,836 Class A 38,232,003 40,156,573 Class F 63,878,480 131,132,026 Total 218,593,537 253,474,435 Number of units outstanding (note 4) ETF Units 5,552,225 3,227,225 Class A 4,398,603 3,775,141 Class F 9,673,702 16,367,047 Net assets attributable to holders of redeemable units per unit ETF Units 20.98 25.47 Class A 8.69 10.64 Class F 6.60 8.01 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Canadian Preferred Share Fund (formerly Redwood Canadian Preferred Share Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 32 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives redeemable units by class (note 8) Dividends 11,970,948 6,107,287 ETF Units (18,195,606) 1,708,891 Interest for distribution purposes 157,267 180,281 Class A (6,210,830) 3,318,983 Early redemption fees 22,979 11,060 Class F (12,497,565) 8,999,021 Net realized gain (loss) on foreign exchange (56,454) (5,484) Total (36,904,001) 14,026,895 Net realized gain (loss) on sale of investments (1,214,620) 6,907,970 Average number of units outstanding (note 8) Realized gain (loss) on warrants 4,954 – ETF Units 4,571,746 907,574 Net change in unrealized appreciation (depreciation) in value Class A 4,130,983 3,099,056 of investments (43,979,396) 3,508,697 Class F 15,429,230 11,133,342 Net change in unrealized appreciation (depreciation) in value Increase (decrease) in net assets attributable to holders of of warrants (48,665) (38,925) redeemable units per unit (note 8) Net change in unrealized appreciation (depreciation) in value ETF Units (3.98) 1.88 of foreign exchange transactions 2,747 (1) Class A (1.51) 1.06 Net gains (losses) on investments and derivatives (33,140,240) 16,670,885 Class F (0.81) 0.80 Securities lending income (1) (2) 17,899 1,635 Foreign exchange gain (loss) on cash 19,096 (203,700) (1) Securities lending: Total revenue (33,103,245) 16,468,820 The value of securities loaned and collateral received from securities lending at December 31 is as follows: Expenses Value of securities loaned 502,768 1,084,186 Management fees (note 5) 2,557,368 1,354,598 Value of collateral received 530,069 1,138,981 Transaction costs (note 9) 824,580 666,497 (2) Securities lending income Valuation and administrative fees (note 5) 271,310 176,741 The table below shows a reconciliation of the gross amount generated from securities lending transactions of the Fund to Securities lending income disclosed in the Statement of Comprehensive Income. Independent review committee fees (note 5) 81,410 38,809 December 31, 2018 December 31, 2017 Dividend expenses on short positions 31,838 121,075 $ % $ % Custodian and fund accounting fees 28,107 51,867 Gross securities lending revenue 28,260 100.0 1,635 100.0 Legal and regulatory fees 26,628 90,065 Agent fees (10,361) 36.7 – – Audit fees 17,554 29,813 Securities lending income 17,899 63.3 1,635 100.0 Stock borrow fees 6,370 34,987 The accompanying notes are an integral part of the financial statements. Withholding taxes (note 7) – 1,514 Interest and bank charges – (947) Other expenses (note 5) 625 – Total expenses 3,845,790 2,565,019 Expenses waived/absorbed by the Manager (45,034) (123,094) Net expenses 3,800,756 2,441,925 Increase (decrease) in net assets attributable to holders of redeemable units (36,904,001) 14,026,895

2018 ANNUAL REPORT 33 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

STATEMENTS OF CHANGES IN STATEMENTS OF CASH FLOWS FINANCIAL POSITION For the years ended: For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Units Cash Flows from Operating Activities Net assets attributable to holders of redeemable units at beginning of year 82,185,836 – Increase (decrease) in net assets attributable to holders of Increase (decrease) in net assets attributable to holders of redeemable units (18,195,606) 1,708,891 redeemable units (36,904,001) 14,026,895 Redeemable unit transactions Adjustments for: Proceeds from issuance of redeemable units 67,459,136 40,040,429 Foreign exchange loss (gain) on cash (19,096) 203,700 Units exchanges (1,285,427) 41,395,882 Net investments purchased (417,085,162) (331,749,993) Payments for redemption of redeemable units (8,379,723) – Proceeds from sale and maturity of investments 393,046,916 159,219,151 Reinvestment of distributions – 235,289 Net realized loss (gain) on sale of investments 1,214,620 (6,907,970) Net increase (decrease) from redeemable unit transactions 57,793,986 81,671,600 Net realized loss (gain) on warrants (4,954) – Distributions paid or payable to holders of redeemable units Net change in unrealized depreciation (appreciation) in value of investments 43,979,396 (3,508,697) From investment income (4,732,085) (260,858) Net change in unrealized depreciation (appreciation) on warrants 48,665 38,925 From capital gains – (829,501) Net change in non-cash working capital balances (20,416) (218,246) Return of capital (569,077) (104,296) Transaction costs (note 9) 824,580 665,572 Total distributions to holders of redeemable units (5,301,162) (1,194,655) (14,812,772) (168,230,663) Net increase (decrease) in net assets attributable to holders of redeemable units 34,297,218 82,185,836 Net assets attributable to holders of redeemable units at end of year 116,483,054 82,185,836 Cash Flows from (used in) Financing Activities Class A Proceeds from redeemable units issued 139,240,354 148,731,683 Net assets attributable to holders of redeemable units at beginning of year 40,156,573 21,136,521 Unit exchanges (1,296,645) 41,803,728 Increase (decrease) in net assets attributable to holders of redeemable units (6,210,830) 3,318,983 Payments for units redeemed (116,803,148) (23,563,926) Redeemable unit transactions Distributions to holders, net of reinvestments (8,189,784) (3,088,234) Proceeds from issuance of redeemable units 17,353,636 22,476,451 12,950,777 163,883,251 Unit exchanges (902,109) (1,641,452) Payments for redemption of redeemable units (11,322,394) (4,526,298) Foreign exchange gain (loss) on cash 19,096 (203,700) Reinvestment of distributions 1,131,092 1,345,183 Increase (decrease) in cash and cash equivalents (1,861,995) (4,347,412) Net increase (decrease) from redeemable unit transactions 6,260,225 17,653,884 Cash and cash equivalents, at beginning of period 2,322,184 6,873,296 Distributions paid or payable to holders of redeemable units Cash and cash equivalents, at end of period 479,285 2,322,184 From investment income (1,178,071) (454,861) Interest received 80,065 180,281 From capital gains – (1,261,050) Dividends received, net of withholding taxes 12,132,385 5,800,234 Return of capital (795,894) (236,904) Dividends paid 31,838 116,177 Total distributions to holders of redeemable units (1,973,965) (1,952,815) The accompanying notes are an integral part of the financial statements. Net increase (decrease) in net assets attributable to holders of redeemable units (1,924,570) 19,020,052 Net assets attributable to holders of redeemable units at end of year 38,232,003 40,156,573

Class F Net assets attributable to holders of redeemable units at beginning of year 131,132,026 44,892,936 Increase (decrease) in net assets attributable to holders of redeemable units (12,497,565) 8,999,021 Redeemable unit transactions Proceeds from issuance of redeemable units 45,538,507 95,952,320 Unit exchanges 890,891 2,049,298 Payments for redemption of redeemable units (98,921,128) (19,154,597) Reinvestment of distributions 3,182,948 3,470,734 Net increase (decrease) from redeemable unit transactions (49,308,782) 82,317,755 Distributions paid or payable to holders of redeemable units From investment income (2,361,257) (1,848,300) From capital gains – (2,622,541) Return of capital (3,086,942) (606,845) Total distributions to holders of redeemable units (5,447,199) (5,077,686) Net increase (decrease) in net assets attributable to holders of redeemable units (67,253,546) 86,239,090 Net assets attributable to holders of redeemable units at end of year 63,878,480 131,132,026 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 34 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Number of Shares/Units/ Average Cost Fair Value Shares/Units/ Average Cost Fair Value Security Par Value ($) ($) Security Par Value ($) ($) United States Fixed Income – 1.0% Brookfield Asset Management Inc., Preferred, Series '34', Corporate – 1.0% Variable Rate, Perpetual 158,880 3,623,102 3,306,293 Curo Group Holdings Corp., Callable, 8.250%, 2025/09/01 1,990,000 2,593,878 2,146,231 Brookfield Asset Management Inc., Preferred, Class 'A', Series '32', Variable Rate, Perpetual, Convertible 125,938 3,069,194 2,763,080 2,593,878 2,146,231 Brookfield Asset Management Inc., Preferred, Class 'A', Series Canadian Equities – 96.7% '30', Variable Rate, Convertible 2,500 49,762 55,000 Energy – 30.7% Brookfield Asset Management Inc., Preferred, Series '26', AltaGas Ltd., Preferred, Series 'A', Variable Rate, Perpetual, Variable Rate, Perpetual, Convertible 227,988 4,695,008 4,092,385 Convertible 133,052 2,565,952 1,951,873 Brookfield Asset Management Inc., Preferred, Class 'A', Series AltaGas Ltd., Preferred, Series 'E', Variable Rate, Perpetual 223,554 5,333,906 4,048,563 '24', Variable Rate, Convertible, Callable 12,388 208,212 221,126 Enbridge Inc., Preferred, Series 'C', Floating Rate, Perpetual 46,409 894,841 802,412 Brookfield Asset Management Inc., Preferred, Class 'A', Series '13', Floating Rate 103,909 1,769,089 1,433,944 Enbridge Inc., Preferred, Series '15', Variable Rate, Perpetual 238,825 5,023,212 4,026,590 Brookfield Asset Management Inc., Preferred, Class 'A', Series Enbridge Inc., Preferred, Series 'R', Variable Rate, Perpetual 96,093 1,984,983 1,557,668 '28', Variable Rate, Convertible 63,666 1,145,767 1,024,386 Enbridge Inc., Preferred, Series '13', Variable Rate, Perpetual 105,988 2,079,189 1,776,359 Brookfield Asset Management Inc., 4.40%, Preferred, Series '38', Enbridge Inc., Preferred, Series 'J', Variable Rate, Perpetual 41,684 1,017,327 1,086,924 Perpetual 123,375 2,665,324 2,413,215 Enbridge Inc., Preferred, Series 'L', Variable Rate, Perpetual 126,928 3,769,941 3,320,085 ECN Capital Corp., Preferred, Series 'A', Variable Rate, Perpetual 217,361 5,339,978 4,112,470 Enbridge Inc., Preferred, Series 'P', Variable Rate, Perpetual 188,935 3,896,512 3,072,083 ECN Capital Corp., Preferred, Series 'C', Variable Rate, Perpetual 122,156 2,835,273 2,223,239 Enbridge Inc., Preferred, Series 'B', Variable Rate, Perpetual 77,496 1,397,136 1,189,564 Fairfax Financial Holdings Ltd., Preferred, Series 'G', Variable Rate, Perpetual 85,077 1,682,806 1,429,294 Enbridge Inc., Preferred, Series 'F', Variable Rate, Perpetual 118,948 2,389,546 2,093,485 Fairfax Financial Holdings Ltd., Preferred, Series 'C', Enbridge Inc., Preferred, Series '11', Variable Rate, Perpetual 317,521 6,474,274 5,286,724 Variable Rate, Perpetual, Convertible 67,240 1,452,760 1,336,059 Enbridge Inc., Preferred, Series '3', Variable Rate, Perpetual 129,120 2,479,337 2,031,058 Fairfax Financial Holdings Ltd., Preferred, Series 'I', Variable Rate, Enbridge Inc., Preferred, Series '5', Variable Rate, Perpetual 30,222 876,606 797,951 Perpetual, Convertible 49,549 983,357 872,558 Enbridge Inc., Preferred, Series '7', Variable Rate, Perpetual 84,638 1,820,891 1,438,846 Industrial Alliance Insurance and Financial Services Inc., Enbridge Inc., Preferred, Series '9', Variable Rate, Perpetual 15,002 309,025 255,034 Preferred, Class 'A', Series 'G', Variable Rate, Convertible, Perpetual 65,041 1,530,655 1,333,341 Enbridge Inc., Preferred, Series '1', Variable Rate, Perpetual 62,673 1,925,818 1,796,785 Intact Financial Corp., Preferred, Class 'A', Series '3', Pembina Pipeline Corp., Preferred, Class 'A', Series 'Q', Variable Rate, Perpetual 26,714 632,190 519,053 Variable Rate, Perpetual 33,253 817,452 690,000 Manulife Financial Corp., Preferred, Class '1', Series '25', Pembina Pipeline Corp., Preferred, Series '1', Variable Rate, Variable Rate, Perpetual 104,932 2,588,924 2,230,854 Perpetual 214,235 4,349,378 3,877,654 Manulife Financial Corp., Preferred, Class '1', Series '13', Pembina Pipeline Corp., Preferred, Class 'A', Series 'O', Variable Rate, Perpetual 107,940 2,513,587 2,097,274 Variable Rate, Perpetual 67,067 1,445,515 1,285,004 Manulife Financial Corp., Preferred, Class '1', Series '9', Pembina Pipeline Corp., Preferred, Class 'A', Series '3', Variable Rate, Perpetual, Convertible 74,084 1,800,787 1,535,761 Variable Rate, Perpetual 295,039 6,709,342 5,384,461 Manulife Financial Corp., Preferred, Series '3', Variable Rate, Pembina Pipeline Corp., Preferred, Series '7', Variable Rate, Perpetual, Convertible 700 9,855 10,444 Perpetual 63,038 1,498,297 1,221,046 Manulife Financial Corp., Preferred, Class '1', Series '5', TransCanada Corp., Preferred, Series '2', Floating Rate, Perpetual 45,436 726,373 758,781 Variable Rate, Perpetual, Convertible 56,492 1,305,532 1,141,138 TransCanada Corp., Preferred, Series '1', Variable Rate, Perpetual, Manulife Financial Corp., Preferred, Class '1', Series '15', Convertible 64,713 1,284,246 1,071,647 Variable Rate, Perpetual 28,941 606,540 535,409 TransCanada Corp., Preferred, Series '9', Variable Rate, Perpetual 351,234 7,828,217 6,575,099 Manulife Financial Corp., Preferred, Class '1', Series '17', TransCanada Corp., Preferred, Series '3', Variable Rate, Perpetual, Variable Rate, Perpetual 115,962 2,573,001 2,127,903 Convertible 2,500 30,771 33,900 Manulife Financial Corp., Preferred, Series '21', Variable Rate, TransCanada Corp., Preferred, Series '5', Variable Rate, Perpetual, Perpetual 51,566 1,340,116 1,322,668 Convertible 246,091 4,293,516 3,489,570 National Bank of Canada, Preferred, Series '42', Variable Rate, TransCanada Corp., Preferred, Series '7', Variable Rate, Perpetual 337,598 7,192,523 6,211,802 Perpetual 86,294 2,153,219 1,888,113 80,414,126 67,130,968 National Bank of Canada, Preferred, Series '40', Variable Rate, Perpetual 200 3,871 4,226 Financials – 47.5% National Bank of Canada, Preferred, Series '38', Variable Rate, Bank of Montreal, 4.00%, Preferred, Class 'B', Series '27', Perpetual 1,200 26,044 26,580 Perpetual 187,147 4,448,241 3,690,539 National Bank of Canada, Preferred, Series '30', Variable Rate, Bank of Montreal, Preferred, Series '44', Variable Rate, Perpetual 7,100 143,977 160,318 Perpetual 58,227 1,378,511 1,150,566 Bank of Montreal, Preferred, Class 'B', Series '33', Variable Rate, Power Financial Corp., Preferred, Series 'T', Variable Rate, Perpetual 18,400 364,103 395,600 Perpetual 239,665 5,447,839 4,589,585 Bank of Montreal, Preferred, Series '31', Variable Rate, Perpetual 2,500 46,758 48,175 Power Financial Corp., Preferred, Series 'P', Variable Rate, Bank of Montreal, Preferred, Class 'B', Series '29', Variable Rate, Perpetual 169,645 3,305,695 2,546,371 Perpetual 32,024 732,268 611,979 Royal Bank of Canada, Preferred, Series 'BF', Variable Rate, Bank of Nova Scotia, Preferred, Series '40', Variable Rate, Perpetual 163,046 3,855,055 3,443,532 Perpetual 4,000 82,354 89,600 Royal Bank of Canada, Preferred, Series 'AZ', Variable Rate, Brookfield Asset Management Inc., Preferred, Class 'A', Series Perpetual 504,239 11,486,218 9,978,889 '40', Variable Rate, Perpetual 237,898 5,659,838 4,972,068

2018 ANNUAL REPORT 35 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of Shares/Units/ Average Cost Fair Value Shares/Units/ Average Cost Fair Value Security Par Value ($) ($) Security Par Value ($) ($) Royal Bank of Canada, Preferred, Series 'BD', Variable Rate, Utilities – 11.3% Perpetual 35,292 755,746 749,955 Brookfield Infrastructure Partners L.P., Preferred, Series '7', Royal Bank of Canada, Preferred, Series 'BB', Variable Rate, Variable Rate, Perpetual 21,924 500,705 500,306 Perpetual 314,571 7,165,610 6,187,611 Brookfield Infrastructure Partners L.P., Preferred, Series '11', Sun Life Financial Inc., Preferred, Class 'A', Series '10R', Variable Rate, Perpetual 60,834 1,517,431 1,359,640 Variable Rate, Perpetual, Convertible 133,216 2,948,935 2,444,514 Brookfield Renewable Power Preferred Equity Inc., Preferred, Sun Life Financial Inc., Preferred, Class 'A', Series '8R', Class 'A', Series '2', Floating Rate, Perpetual 147,020 3,059,790 2,381,724 Variable Rate, Perpetual 2,500 36,665 38,025 Brookfield Renewable Power Preferred Equity Inc., 5.00%, Toronto-Dominion Bank (The), Preferred, Series '1', Variable Rate, Preferred, Series '6', Perpetual 14,545 325,961 279,991 Perpetual 267,064 6,049,705 5,140,981 Brookfield Renewable Power Preferred Equity Inc., Preferred, Toronto-Dominion Bank (The), Preferred, Series '5', Series '1', Variable Rate, Convertible 7,800 117,238 125,502 Variable Rate, Perpetual 358,820 8,146,788 6,907,284 Capital Power Corp., Preferred, Series '1', Variable Rate, Toronto-Dominion Bank (The), Preferred, Series '3', Perpetual, Convertible 98,259 1,687,346 1,463,077 Variable Rate, Perpetual 517,981 11,890,530 10,126,528 Capital Power Corp., Preferred, Series '3', Variable Rate, Toronto-Dominion Bank (The), Preferred, Series '18', Perpetual 92,268 2,069,506 1,983,762 Variable Rate, Perpetual 2,600 53,893 57,850 Capital Power Corp., Preferred, Series '5', Variable Rate, Toronto-Dominion Bank (The), Preferred, Series '20', Perpetual 54,886 1,124,733 1,164,681 Variable Rate, Perpetual 14,600 294,358 322,514 Emera Inc., Preferred, Series 'F', Variable Rate, Perpetual 47,070 1,057,425 911,275 Toronto-Dominion Bank (The), Preferred, Series '16', Emera Inc., Preferred, Series 'A', Variable Rate, Perpetual, Variable Rate, Perpetual 2,500 53,045 55,400 Convertible 114,520 2,220,223 1,789,948 120,950,085 103,763,697 Fortis Inc., Preferred, Series 'K', Variable Rate, Perpetual 132,387 2,797,695 2,388,261 Industrials – 2.2% Fortis Inc., 4.25%, Preferred, Series 'H', Perpetual 62,672 1,156,708 944,467 Element Fleet Management Corp., Preferred, Series 'G', Fortis Inc., Preferred, Series 'M', Variable Rate, Perpetual 233,819 5,491,371 4,559,472 Variable Rate, Perpetual 173,089 4,284,364 3,738,722 Innergex Renewable Energy Inc., Variable Rate, Perpetual 83,167 1,191,890 1,266,633 Element Fleet Management Corp., Preferred, Series 'E', Variable Rate, Perpetual 6,976 139,992 134,986 TransAlta Corp., Preferred, Series 'A', Variable Rate, Perpetual, Convertible 58,448 703,994 693,193 Element Fleet Management Corp., Preferred, Series 'I', Variable Rate, Perpetual 55,210 1,035,924 1,025,250 TransAlta Corp., Preferred, Series 'C', Variable Rate, Perpetual, Convertible 29,830 469,066 426,867 5,460,280 4,898,958 TransAlta Corp., Preferred, Series 'E', Variable Rate, Perpetual 159,435 3,322,449 2,657,781 Mutual and Exchange Traded Funds – 4.0% 28,813,531 24,896,580 BMO Laddered Preferred Share Index ETF 314,300 3,184,452 3,196,431 Total Canadian Equities – 96.7% 247,270,039 211,283,514 Canadian Investment Grade Preferred Share Fund, Class 'T 156,628 4,391,511 3,524,130 International Equities – 0.1% iShares S&P/TSX Canadian Preferred Share Index ETF 154,000 1,949,640 1,929,620 Materials – 0.1% 9,525,603 8,650,181 Champion Iron Ltd. 100,100 116,501 107,107 Real Estate – 1.0% 116,501 107,107 Artis REIT, Preferred, Series 'A', Variable Rate, Perpetual 36,724 852,672 757,983 Total International Equities – 0.1% 116,501 107,107 Artis REIT, Preferred, Series 'E', Variable Rate, Perpetual 40,564 849,652 770,716 247,386,540 211,390,621 Purpose Alliance REIT 58,003 404,090 414,431 Money Market Funds – 2.6% 2,106,414 1,943,130 Purpose High Interest Savings ETF 115,460 5,778,144 5,773,115 5,778,144 5,773,115 Total Investments 255,758,562 219,309,967 Transaction Costs (note 9) (246,961) – Total Investments – 100.4% 255,511,601 219,309,967 Warrants (Schedule 1) – 0.0% 31,030 4,909 Cash – 0.2% 479,285 Other Assets, Less Liabilities – (0.6%) (1,200,624) Net Assets – 100% 218,593,537

SCHEDULE 1 – WARRANTS For the year ended December 31, 2018: Strike Price Shares Cost Fair Value Security Expiry Date ($) Currency or units ($) ($) Energy Fuels Inc. March 14, 2019 3.20 USD 35,000 – 4,909 Vista Gold Corp. August 8, 2019 1.92 USD 89,643 31,030 0 Warrants 31,030 4,909 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 36 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) The Manager obtains pricing from a third party pricing vendor, which is The Purpose Canadian Preferred Share Fund (formerly Redwood Canadian monitored and reviewed daily by the portfolio manager. Any adjustments to the Preferred Share Fund)’s investment objectives is principally to provide a prices or estimates provided by the third party pricing vendor are approved by consistent stream of income with potential for capital appreciation by investing the portfolio manager. in Canadian income producing securities and Canadian equities. E) FINANCIAL RISKS (NOTE 11) B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Interest rate risk Changes in outstanding units during the periods ended December 31, 2018 and As at December 31, 2018 and 2017, the Fund had no significant exposure to debt 2017 are summarized as follows: instruments. Number of Units Credit risk ETF Class A Class F The majority of the Fund’s financial assets are in preferred shares. Units Units Units Currency risk Outstanding, December 31, 2016 – 2,136,720 6,075,785 The table below summarizes the Fund’s direct exposure to the foreign currency Issued 3,277,225 2,199,959 12,460,975 as at December 31, 2018 and 2017: Reinvested – 74,239 273,811 December 31, 2018 December 31, 2017 Redeemed (50,000) (635,777) (2,443,524) Net Exposure % of Net Exposure % of Outstanding, December 31, 2017 3,227,225 3,775,141 16,367,047 Currency ($) Net Assets ($) Net Assets Issued 2,775,000 1,769,688 5,982,683 U.S. Dollar 9,242,987 4.2 3,843,037 1.5 Reinvested – 112,597 410,176 Net exposure 9,242,987 4.2 3,843,037 1.5 Redeemed (450,000) (1,258,823) (13,086,204) If the Canadian dollar weakened or strengthened by 5% as at December 31, Outstanding, December 31, 2018 5,552,225 4,398,603 9,673,702 2018, with all other variables held constant, the Fund’s net assets would have C) MANAGEMENT FEES, SERVICE FEES AND OTHER increased or decreased, respectively, by $0.5 million (2017 – $0.2 million). In EXPENSES (NOTE 5) practice, actual results may differ from this sensitivity analysis. Annual Management Fee (% of Net Asset Value of each class) F) INCOME TAXES As at December 31, 2018, the Fund had $1,082,214 (2017 – $nil) capital loss carry Class Management Fee forward and no non-capital losses (2017 – $nil) for income tax purposes. Capital ETF 0.75% losses may be carried forward indefinitely to be applied against future capital Class A Units 1.50% gains. Non-capital losses may be utilized to reduce taxable income over the Class F Units 0.75% twenty years following the tax year in which they arise.

D) FAIR VALUE INVESTMENTS (NOTE 10) G) INTEREST IN UNDERLYING FUNDS The following inputs were used in valuing the Fund’s investments and The Fund invests in redeemable units of other investment funds (“underlying derivatives at fair values as at December 31, 2018: funds”) to gain exposure to the investment objectives and strategies of the underlying funds. Each underlying fund is generally financed through the capital Level 1 Level 2 Level 3 Total invested by the Fund, along with other investors, which entitles unitholders ($) ($) ($) ($) to a proportionate share of the underlying fund’s net assets. The Fund does Financial assets not provide additional financial or other support to the underlying funds. Bonds – 2,146,231 – 2,146,231 All underlying funds were established in and carry out their operations in Equities 202,326,009 414,431 – 202,740,440 Canada. The Fund’s interests in underlying funds are reported at fair value in Funds 14,423,296 – – 14,423,296 “Investments” in its Statements of Financial Position and in its Schedule of Investments, which represents the Fund’s maximum exposure to financial loss. Warrants – 4,909 – 4,909 Total financial assets 216,749,305 2,505,571 – 219,314,876 Canadian Investment Grade Preferred Share Fund, Purpose High Interest Savings ETF and Purpose Alliance REIT are managed by the same manager. Total financial assets and liabilities 216,749,305 2,505,571 – 219,314,876

The following inputs were used in valuing the Fund’s investments and derivatives at fair values as at December 31, 2017: Level 1 Level 2 Level 3 Total ($) ($) ($) ($) Financial assets Equities 221,475,021 – – 221,475,021 Funds 19,810,344 – – 19,810,344 Warrants 34,629 18,945 – 53,574 Total financial assets 241,319,994 18,945 – 241,338,939 Total financial assets and liabilities 241,319,994 18,945 – 241,338,939

During the period ended December 31, 2018 and 2017 there were no transfers of assets between Level 1, Level 2 and Level 3.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 37 PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE CANADIAN PREFERRED SHARE FUND (FORMERLY REDWOOD CANADIAN PREFERRED SHARE FUND) (continued) The fair value of the underlying fund included in the statements of financial position is as follows:

At December 31, 2018 At December 31, 2017 % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % BMO Laddered Preferred Share Index ETF 1.5 0.2 – – Canadian Investment Grade Preferred Share Fund 1.6 10.9 2.2 9.9 Investment Grade Managed Duration Income Fund – – 1.0 9.6 iShares S&P/TSX Canadian Preferred Share Index ETF 0.9 0.1 – – Purpose High Interest Savings ETF 2.6 0.4 3.7 1.7 Purpose US Preferred Share Fund Non-Hedged – – 0.9 8.5 Purpose Alliance REIT 0.2 – – –

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 38 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Net assets attributable to holders of redeemable units by class Investments: ETF Units 56,204,723 6,893,511 Non-derivative financial assets 74,234,014 26,363,196 Class A 706,701 1,795,689 Cash and cash equivalents – 553,512 Class F 1,765,331 3,187,221 Receivables: ETF Non-Currency Hedged Units 5,480,453 5,875,577 Dividends 65,579 – Class A Non-Currency Hedged 1,818,411 1,962,982 Interest 772,542 280,528 Class F Non-Currency Hedged 5,216,595 7,629,421 Capital units sold 25,010 54,000 Total 71,192,214 27,344,401 Prepaid expenses 61,939 – Number of units outstanding (note 4) Derivative assets: ETF Units 2,504,099 275,000 Unrealized gain on forward currency contracts 56,114 191,264 Class A 32,630 73,412 Total assets 75,215,198 27,442,500 Class F 78,153 126,398 Liabilities ETF Non-Currency Hedged Units 240,370 250,000 Bank overdraft 1,322,236 – Class A Non-Currency Hedged 80,962 84,090 Payables: Class F Non-Currency Hedged 228,661 324,590 Management fees (note 5) 1,509 23,478 Net assets attributable to holders of redeemable units per unit Independent review committee fees (note 5) 18,355 2,209 ETF Units 22.45 25.07 Other accrued liabilities 447,063 5,440 Class A 21.66 24.46 Distributions 257,980 49,350 Class F 22.59 25.22 Capital units redeemed 98,622 – ETF Non-Currency Hedged Units 22.80 23.50 Derivative liabilities: ETF Non-Currency Hedged Units USD 17.60 18.70 Unrealized loss on forward currency contracts 1,877,219 17,622 Class A Non-Currency Hedged 22.46 23.34 Total liabilities 4,022,984 98,099 Class A Non-Currency Hedged USD 17.33 18.57 Net assets attributable to holders of redeemable units 71,192,214 27,344,401 Class F Non-Currency Hedged 22.81 23.50 Class F Non-Currency Hedged USD 17.61 18.70 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose US Preferred Share Fund (formerly Redwood US Preferred Share Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 39 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the period from March 15, 2017 to December 31, 2017 and the year ended December 31, 2018: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives redeemable units by class (note 8) Dividend income 337,046 – ETF Units (3,240,112) 191,752 Interest income for distribution purposes 3,082,495 776,643 Class A (88,225) 13,376 Early redemption fees 850 – Class F (147,025) 54,267 Net realized gain (loss) on foreign exchange transactions 38,066 39,401 ETF Non-Currency Hedged Units 111,441 (63,305) Net realized gain (loss) on sale of investments (506,113) (150,947) Class A Non-Currency Hedged 21,394 (62,943) Net realized gain (loss) on forward currency contracts (2,157,228) 438,668 Class F Non-Currency Hedged 113,867 (130,915) Net change in unrealized appreciation (depreciation) in value Total (3,228,660) 2,232 of investments (992,482) (976,711) Average number of units outstanding (note 8) Net change in unrealized appreciation (depreciation) in value ETF Units 1,714,476 213,171 of forward currency contracts (1,994,746) 173,642 Class A 61,768 55,374 Net change in unrealized appreciation (depreciation) on foreign Class F 101,983 70,449 exchange transactions 27,053 (2,385) ETF Non-Currency Hedged Units 308,762 170,805 Net gains (losses) on investments and derivatives (2,165,059) 298,311 Class A Non-Currency Hedged 81,239 64,051 Securities lending income (1) 123 – Class F Non-Currency Hedged 304,555 210,119 Foreign exchange gain (loss) on cash 92,172 (41,002) Increase (decrease) in net assets attributable to holders of Total revenue (2,072,764) 257,309 redeemable units per unit (note 8) Expenses ETF Units (1.89) 0.90 Management fees (note 5) 572,128 160,695 Class A (1.44) 0.24 Withholding taxes (note 7) 228,745 54,049 Class F (1.44) 0.77 Valuation and administrative fees (note 5) 81,566 43,484 ETF Non-Currency Hedged Units 0.36 (0.37) Audit fees 68,802 23,828 ETF Non-Currency Hedged Units (USD) 0.28 (0.29) Custodian and fund accounting fees 47,922 7,911 Class A Non-Currency Hedged 0.26 (0.99) Legal and regulatory fees 44,092 66,963 Class A Non-Currency Hedged (USD) 0.20 (0.79) Recordkeeping fees 20,377 – Class F Non-Currency Hedged 0.37 (0.63) Independent review committee fees (note 5) 19,959 5,063 Class F Non-Currency Hedged (USD) 0.29 (0.50) Transaction costs (note 9) 6,166 – Unitholder reporting 1,849 – (1) Securities lending income Trustee fees 202 – The table below shows a reconciliation of the gross amount generated from securities lending transactions of Interest and bank charges – 450 the Fund to Securities lending income disclosed in the Statement of Comprehensive Income. Other expenses (note 5) 64,088 – December 31, 2018 December 31, 2017 Total expenses 1,155,896 362,443 $ % $ % Expenses waived/absorbed by the Manager – (107,366) Gross securities lending revenue 351 100.0 – – Net expenses 1,155,896 255,077 Withholding taxes (105) 30.0 – – Increase (decrease) in net assets attributable to holders of Agent fees (123) 35.0 – – redeemable units (3,228,660) 2,232 Securities lending income 123 35.0 – – The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 40 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the period from March 15, 2017 to December 31, 2017 and the year ended December 31, 2018: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Units ETF Non-Currency Hedged Units Net assets attributable to holders of redeemable units at beginning of period 6,893,511 – Net assets attributable to holders of redeemable units at beginning of period 5,875,577 – Increase (decrease) in net assets attributable to holders of redeemable units (3,240,112) 191,752 Increase (decrease) in net assets attributable to holders of redeemable units 111,441 (63,305) Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 84,060,878 6,903,859 Proceeds from issuance of redeemable units 3,834,493 6,739,937 Payments for redemption of redeemable units (29,500,327) – Payments for redemption of redeemable units (3,993,084) (636,555) Reinvestment of distributions – 129,250 Net increase (decrease) from redeemable unit transactions (158,591) 6,103,382 Net increase (decrease) from redeemable unit transactions 54,560,551 7,033,109 Distributions paid or payable to holders of redeemable units Distributions paid or payable to holders of redeemable units From investment income (264,254) (117,781) From investment income (1,436,755) (156,790) Return of capital (83,720) (46,719) From capital gains – (101,912) Total distributions to holders of redeemable units (347,974) (164,500) Return of capital (572,472) (72,647) Net increase (decrease) in net assets attributable to holders of redeemable units (395,124) 5,875,577 Total distributions to holders of redeemable units (2,009,227) (331,350) Net assets attributable to holders of redeemable units at end of period 5,480,453 5,875,577 Net increase (decrease) in net assets attributable to holders of redeemable units 49,311,212 6,893,511 Net assets attributable to holders of redeemable units at end of period 56,204,723 6,893,511 Class A Non-Currency Hedged Net assets attributable to holders of redeemable units at beginning of period 1,962,982 – Class A Increase (decrease) in net assets attributable to holders of redeemable units 21,394 (62,943) Net assets attributable to holders of redeemable units at beginning of period 1,795,689 – Redeemable unit transactions Increase (decrease) in net assets attributable to holders of redeemable units (88,225) 13,376 Proceeds from issuance of redeemable units 103,797 2,053,218 Redeemable unit transactions Unit exchanges – (14,700) Proceeds from issuance of redeemable units 105,207 1,869,713 Payments for redemption of redeemable units (251,200) – Unit exchanges (113,129) 113,264 Reinvestment of distributions 72,877 49,979 Payments for redemption of redeemable units (973,647) (194,275) Net increase (decrease) from redeemable unit transactions (74,526) 2,088,497 Reinvestment of distributions 49,847 72,281 Distributions paid or payable to holders of redeemable units Net increase (decrease) from redeemable unit transactions (931,722) 1,860,983 From investment income (53,073) (30,531) Distributions paid or payable to holders of redeemable units Return of capital (38,366) (32,041) From investment income (41,309) (25,585) Total distributions to holders of redeemable units (91,439) (62,572) From capital gains – (39,028) Net increase (decrease) in net assets attributable to holders of redeemable units (144,571) 1,962,982 Return of capital (27,732) (14,058) Net assets attributable to holders of redeemable units at end of period 1,818,411 1,962,982 Total distributions to holders of redeemable units (69,041) (78,670) Net increase (decrease) in net assets attributable to holders of redeemable units (1,088,988) 1,795,689 Class F Non-Currency Hedged Net assets attributable to holders of redeemable units at end of period 706,701 1,795,689 Net assets attributable to holders of redeemable units at beginning of period 7,629,421 – Increase (decrease) in net assets attributable to holders of redeemable units 113,867 (130,915) Class F Redeemable unit transactions Net assets attributable to holders of redeemable units at beginning of period 3,187,221 – Proceeds from issuance of redeemable units 2,048,239 9,132,853 Increase (decrease) in net assets attributable to holders of redeemable units (147,025) 54,267 Unit exchanges – 84,240 Redeemable unit transactions Payments for redemption of redeemable units (4,428,385) (1,405,685) Proceeds from issuance of redeemable units 578,657 3,262,932 Reinvestment of distributions 191,565 151,499 Unit exchanges 107,150 101,050 Net increase (decrease) from redeemable unit transactions (2,188,581) 7,962,907 Payments for redemption of redeemable units (1,891,665) (202,017) Distributions paid or payable to holders of redeemable units Reinvestment of distributions 43,129 73,762 From investment income (265,866) (129,505) Net increase (decrease) from redeemable unit transactions (1,162,729) 3,235,727 Return of capital (72,246) (73,066) Distributions paid or payable to holders of redeemable units Total distributions to holders of redeemable units (338,112) (202,571) From investment income (93,072) (42,875) Net increase (decrease) in net assets attributable to holders of redeemable units (2,412,826) 7,629,421 From capital gains – (40,167) Net assets attributable to holders of redeemable units at end of period 5,216,595 7,629,421 Return of capital (19,064) (19,525) The accompanying notes are an integral part of the financial statements. Total distributions to holders of redeemable units (112,136) (102,773) Net increase (decrease) in net assets attributable to holders of redeemable units (1,421,890) 3,187,221 Net assets attributable to holders of redeemable units at end of period 1,765,331 3,187,221

2018 ANNUAL REPORT 41 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the period from March 15, 2017 to December 31, 2017 and the year ended As at December 31, 2018 December 31, 2018: Number of December 31, December 31, Shares/Units/ Average Cost 2018 2017 Security Par Value ($) Fair Value ($) ($) ($) $1000 par (or similar) Institutional Preferred Share – 92.6% Consumer Staples -0.4% Cash Flows from Operating Activities Dairy Farmers of America Inc., Perpetual, 7.125%, 2049/12/31 205,000 294,814 261,675 Increase (decrease) in net assets attributable to holders of redeemable units (3,228,660) 2,232 294,814 261,675 Adjustments for: Energy – 0.8% Foreign exchange loss (gain) on cash (92,172) 41,002 Dominion Resources Inc., Variable Rate, Callable, 5.750%, Purchase of investments (102,647,993) (32,383,658) 2054/10/01 400,000 544,610 547,997 Proceeds from sale of investments 53,272,415 4,892,804 544,610 547,997 Net realized loss (gain) on sale of investments 506,113 150,947 Financials – 87.9% Net change in unrealized depreciation (appreciation) in value of investments 992,482 976,711 Aegon NV, Variable Rate, Callable, 5.500%, 2048/04/11 390,000 493,807 485,841 Net change in unrealized depreciation (appreciation) in value of forward Allstate Corp. (The), Variable Rate, Callable, 5.750%, 2053/08/15 1,135,000 1,568,678 1,514,638 currency contracts 1,994,746 (173,642) American Express Co., Series 'B', Variable Rate, Perpetual, Net change in non-cash working capital balances (183,732) (249,401) 5.200%, 2049/12/31 605,000 813,675 814,589 Transaction costs (note 9) 6,166 – American International Group Inc., Series 'A-9', Variable Rate, Callable, 5.750%, 2048/04/01 790,000 1,011,882 940,998 (49,380,635) (26,743,005) Assurant Inc., Variable Rate, Callable, 7.000%, 2048/03/27 305,000 406,365 397,649 Assured Guaranty Municipal Holdings Inc., Variable Rate, Cash Flows from (used in) Financing Activities Callable, 6.400%, 2066/12/15 1,190,000 1,545,807 1,596,158 Proceeds from redeemable units issued 90,760,261 29,908,512 AXA SA, 8.600%, 2030/12/15 363,000 615,816 614,301 Unit exchanges (5,979) 283,854 Australia and New Zealand Banking Group Ltd. (United Payments for units redeemed (40,939,686) (2,438,532) Kingdom), Variable Rate, Perpetual, 6.750%, 2049/12/31 498,000 676,135 668,822 Distributions paid to holders, net of reinvestments (2,401,881) (416,315) Bank of America Corp., Series 'DD', Variable Rate, Perpetual, 6.300%, 2049/12/31 1,675,000 2,352,178 2,328,214 47,412,715 27,337,519 Bank of America Corp., Series 'Z', Variable Rate, Perpetual, 6.500%, 2049/12/31 1,225,000 1,749,802 1,695,365 Foreign exchange gain (loss) on cash 92,172 (41,002) Bank of New York Mellon Corp. (The), Series 'E', Variable Rate, Net increase (decrease) in cash and cash equivalents (1,967,920) 594,514 Perpetual, 4.950%, 2049/12/31 590,000 799,758 786,338 Cash and cash equivalents, at beginning of period 553,512 – Barclays Bank PLC, 10.179%, 2021/06/12 230,000 344,466 353,171 Cash and cash equivalents, at end of period (1,322,236) 553,512 BNP Paribas SA, Variable Rate, Perpetual, 7.375%, 2049/12/31 1,385,000 1,894,148 1,888,438 Interest received, net of withholding taxes 2,397,313 442,066 Capital One Financial Corp., Series 'E', Variable Rate, Perpetual, Dividends received, net of withholding taxes 235,890 – 5.550%, 2049/12/31 600,000 817,766 790,950 The accompanying notes are an integral part of the financial statements. CenterPoint Energy Inc., Series 'A', Variable Rate, Perpetual, 6.125%, 2049/12/31 1,618,000 2,144,732 2,156,432 Citigroup Inc., Series 'O', Variable Rate, Perpetual, 5.875%, 2049/12/31 870,000 1,170,207 1,147,638 Citigroup Inc., Series 'R', Variable Rate, Perpetual, 6.125%, 2049/12/31 2,000,000 2,702,804 2,668,966 CoBank ACB, Series 'I', Variable Rate, Perpetual, 6.250%, 2049/12/31 498,000 688,681 683,269 Cooperatieve Rabobank UA, Variable Rate, Perpetual, 11.000%, 2049/12/31 680,000 942,308 961,988 Credit Agricole SA, Variable Rate, Perpetual, 7.875%, 2049/12/31 400,000 553,834 547,063 Credit Agricole SA, Variable Rate, Perpetual, 8.125%, 2049/12/31 498,000 714,619 701,116 Credit Suisse Group AG, Variable Rate, Perpetual, 7.500%, 2049/12/31 600,000 832,513 835,093 Enterprise Products Operating LLC, Series 'E', Variable Rate, Callable, 5.250%, 2077/08/16 820,000 1,034,372 934,444 Enterprise Products Operating LLC, Variable Rate, Callable, 5.516%, 2067/06/01 585,000 755,397 714,785 Fifth Third Bancorp, Series 'J', Variable Rate, Perpetual, 4.900%, 2049/12/31 883,000 1,162,093 1,160,266 General Electric Co., Series 'D', Variable Rate, Perpetual, 5.000%, 2049/12/31 2,675,000 3,501,655 2,798,276 General Motors Financial Co. Inc., Series 'A', Variable Rate, Perpetual, 5.750%, 2049/12/31 1,250,000 1,600,710 1,365,200 Goldman Sachs Group Inc. (The), Series 'M', Variable Rate, Perpetual, 5.375%, 2049/12/31 565,000 765,174 746,285 Goldman Sachs Group Inc. (The), Series 'L', Variable Rate, Perpetual, 5.700%, 2049/12/31 1,315,000 1,724,645 1,752,781

2018 ANNUAL REPORT 42 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of Shares/Units/ Average Cost Shares/Units/ Average Cost Security Par Value ($) Fair Value ($) Security Par Value ($) Fair Value ($) HSBC Capital Funding (Dollar1) L.P., Variable Rate, Perpetual, UBS Group Funding (Switzerland) AG, Variable Rate, Perpetual, 10.176%, 2049/12/31 875,000 1,703,239 1,717,166 7.000%, 2049/12/31 200,000 276,488 278,501 JPMorgan Chase & Co., Series 'Z', Variable Rate, Perpetual, U.S. Bancorp, Series 'I', Variable Rate, Perpetual, 5.125%, 5.300%, 2049/12/31 2,840,000 3,746,459 3,838,395 2049/12/31 569,000 784,486 770,002 JPMorgan Chase & Co., Series 'S', Variable Rate, Perpetual, Wells Fargo & Co., Series 'U', Variable Rate, Perpetual, 5.875%, 6.750%, 2049/12/31 560,000 825,056 790,888 2049/12/31 2,095,000 2,889,987 2,830,636 KeyCorp, Series 'D', Variable Rate, Perpetual, 5.000%, 2049/12/31 1,255,000 1,631,829 1,569,835 Wells Fargo & Co., Series 'S', Variable Rate, Perpetual, 5.900%, Macquarie Bank Ltd. (London), Variable Rate, Perpetual, 6.125%, 2049/12/31 280,000 372,896 364,672 2049/12/31 250,000 299,214 292,238 64,343,477 62,565,350 M&T Bank Corp., Series 'F', Variable Rate, Perpetual, 5.125%, Utilities – 3.5% 2049/12/31 440,000 593,657 569,903 Electricite De France SA, Variable Rate, Perpetual, 5.250%, MetLife Inc., Series 'C', Variable Rate, Perpetual, Floating Rate, 2049/12/31 300,000 391,158 388,570 5.250%, 2049/12/31 725,000 983,674 953,643 Emera Inc., Series '2016-A', Variable Rate, Convertible, Callable, MetLife Inc., Callable, 9.250%, 2068/04/08 819,000 1,456,334 1,414,395 6.750%, 2076/06/15 1,525,000 2,169,937 2,096,337 Morgan Stanley, Series 'J', Variable Rate, Perpetual, 5.550%, 2,561,095 2,484,907 2049/12/31 2,258,000 3,044,528 2,995,537 67,743,996 65,859,929 Nordea Bank Abp, Variable Rate, Perpetual, 6.125%, 2049/12/31 638,000 817,548 819,826 $25 par (or similar) Retail Preferred Shares – 11.8% PNC Financial Services Group Inc. (The), Series 'S', Variable Rate, Consumer Staples – 0.8% Perpetual, 5.000%, 2049/12/31 1,670,000 2,199,808 2,103,193 Dairy Farmers of America, 7.88%, Perpetual 3,800 565,805 552,611 Provident Financing Trust 7.405%, 2038-03-15 600,000 858,681 843,694 565,805 552,611 Prudential Financial Inc., Variable Rate, Callable, 5.875%, 2042/09/15 780,000 1,123,482 1,076,836 Financials – 11.0% QBE Insurance Group Ltd., Variable Rate, Callable, 6.750%, AgriBank FCB, Variable Rate, Perpetual 10,398 1,465,713 1,455,023 2044/12/02 700,000 955,449 961,613 CoBank ACB, Variable Rate, Perpetual 14,846 2,045,021 2,048,260 QBE Insurance Group Ltd., Variable Rate, Callable, 7.500%, Compeer Financial ACA, Variable Rate, Perpetual 900 1,260,548 1,259,397 2043/11/24 805,000 1,146,560 1,177,288 Farm Credit Bank of Texas, Variable Rate, Perpetual 22,294 3,122,124 3,058,794 Societe Generale SA, Variable Rate, Perpetual, 7.375%, 2049/12/31 200,000 272,201 266,555 7,893,406 7,821,474 Societe Generale SA, Variable Rate, Perpetual, 8.000%, 2049/12/31 200,000 278,452 274,747 Total $25 par (or similar) Retail Preferred Shares – 11.8% 8,459,211 8,374,085 Standard Chartered PLC, Variable Rate, Perpetual, 7.500%, Total Investments – 104.4% 76,203,207 74,234,014 2049/12/31 585,000 796,514 802,635 Net Unrealized Gain (Loss) on Forward Currency State Street Corp., Series 'F', Variable Rate, Perpetual, 5.250%, Contracts (Schedule 1) – (2.6%) (1,821,105) 2049/12/31 820,000 1,127,874 1,101,273 Bank Overdraft – (1.9)% (1,322,236) SunTrust Banks Inc., Series 'G', Variable Rate, Perpetual, 5.050%, Other Assets, Less Liabilities – 0.1% 101,541 2049/12/31 585,000 775,034 702,805 Net Assets – 100% 71,192,214

SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACTS For the year ended December 31, 2018:

Credit Rating for Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) Bank of New York Mellon (The), New York A-1+ 1/11/19 CAD 62,690,393 USD 47,243,619 0.754 0.733 (1,792,362) Bank of New York Mellon (The), New York A-1+ 1/11/19 CAD 2,014,978 USD 1,518,492 0.754 0.733 (57,609) Bank of New York Mellon (The), New York A-1+ 1/11/19 CAD 924,584 USD 696,769 0.754 0.733 (26,434) Bank of New York Mellon (The), New York A-1+ 1/11/19 CAD 60,606 USD 45,000 0.743 0.733 (814) Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 1,704,804 CAD 2,285,546 1.341 1.365 41,340 Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 1,195,000 CAD 1,624,423 1.359 1.365 6,631 Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 180,000 CAD 242,382 1.347 1.365 3,300 Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 150,000 CAD 200,085 1.334 1.365 4,650 Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 31,500 CAD 42,820 1.359 1.365 174 Bank of New York Mellon (The), New York A-1+ 1/11/19 USD 3,500 CAD 4,758 1.359 1.365 19 (1,821,105) The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 43 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) D) FAIR VALUE INVESTMENTS (NOTE 10) The fundamental investment objective of the Fund is to provide unitholders The following inputs were used in valuing the Fund’s investments and with (i) with a regular stream of monthly distributions and (ii) opportunity derivatives at fair values as at December 31, 2018: for capital appreciation by investing primarily in U.S. dollar denominated investment grade preferred securities. Level 1 Level 2 Level 3 Total ($) ($) ($) ($) B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Financial assets Changes in outstanding units during the periods ended December 31, 2018 and $25 par retail preferred shares 8,374,085 – – 8,374,085 2017 are summarized as follows: $1000 par institutional preferred shares – 65,859,929 – 65,859,929 Forward currency contracts – 56,114 – 56,114 Number of Units Total financial assets 8,374,085 65,916,043 – 74,295,128 ETF Class A Class F Units Units Units Issued 275,000 83,470 132,801 Financial liabilities Reinvested – 1,903 1,565 Forward currency contracts – 1,877,219 – 1,877,219 Redeemed – (11,961) (7,968) Total financial liabilities – 1,877,219 – 1,877,219 Outstanding, December 31, 2017 275,000 73,412 126,398 Total financial assets and liabilities 8,374,085 64,038,824 – 72,412,909 Issued 3,479,100 4,395 28,060 The following inputs were used in valuing the Fund’s investments and Reinvested – 2,134 1,784 derivatives at fair values as at December 31, 2017: Redeemed (1,250,001) (47,311) (78,089) Level 1 Level 2 Level 3 Total Outstanding, December 31, 2018 2,504,099 32,630 78,153 ($) ($) ($) ($) Financial assets ETF Class A Class F Non–Currency Non–Currency Non–Currency Preferred shares – 26,363,196 – 26,363,196 Hedged Units Hedged Units Hedged Units Forward currency contracts – 191,264 – 191,264 Issued 275,000 82,608 377,192 Total financial assets – 26,554,460 – 26,554,460 Reinvested – 2,081 6,304 Redeemed (25,000) (599) (58,906) Financial liabilities Outstanding, December 31, 2017 250,000 84,090 324,590 Forward currency contracts – 17,622 – 17,622 Issued 165,372 4,495 87,924 Total financial liabilities – 17,622 – 17,622 Reinvested – 3,186 8,271 Total financial assets and liabilities – 26,536,838 – 26,536,838 Redeemed (175,002) (10,809) (192,124) During the period ended December 31, 2018 and 2017 there were no transfers of Outstanding, December 31, 2018 240,370 80,962 228,661 assets between Level 1, Level 2 and Level 3.

C) MANAGEMENT FEES, SERVICE FEES AND OTHER E) FINANCIAL RISKS (NOTE 11) EXPENSES (NOTE 5) Market price risk Annual Management Fee Market price risk arises primarily from uncertainties about the future market (% of Net Asset Value of each units) prices of instruments held. Market price fluctuations may be caused by factors Units Management Fee specific to an individual investment, or factors affecting all securities traded ETF Units 0.80% in a market or industry sector. All investments present a risk of loss of capital. Class A Units 1.55% The maximum risk resulting from financial instruments is equivalent to their fair value. The Fund’s most significant exposure to market price risk arises from Class F Units 0.80% its investment in preferred securities. If equity prices for these securities had ETF Non-Currency Hedged Units 0.80% increased or decreased by 5% as at December 31, 2018 with all other variables Class A Non-Currency Hedged Units 1.55% held constant, the Fund’s net assets would have increased or decreased, Class F Non-Currency Hedged Units 0.80% respectively, by approximately $3.7 million (2017 – $1.3 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. Interest rate risk As at December 31, 2018 and 2017, the Fund had no significant exposure to debt instruments. Currency risk The Fund holds assets denominated in currencies other than its functional currency. The Fund is therefore exposed to currency risk, as the value of the securities denominated in other currencies fluctuate due to the change in foreign exchange rates.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 44 PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE US PREFERRED SHARE FUND (FORMERLY REDWOOD US PREFERRED SHARE FUND) (continued) The table below summarizes the Fund’s direct exposure to the U.S. dollar as at December 31, 2018, including the fair value of currency contracts that are used to hedge the foreign currency risk: Gross Exposure Hedge Net Exposure % of Currency ($) ($) ($) Net Assets U.S. Dollar 75,160,305 (63,111,652) 12,048,653 16.9 Net exposure 75,160,305 (63,111,652) 12,048,653 16.9

The table below summarizes the Fund’s direct exposure to the U.S. dollar as at December 31, 2017, including the fair value of currency contracts that are used to hedge the foreign currency risk: Gross Exposure Hedge Net Exposure % of Currency ($) ($) ($) Net Assets U.S. Dollar 26,858,475 (11,273,200) 15,585,275 57.0 Net exposure 26,858,475 (11,273,200) 15,585,275 57.0

If the Canadian dollar weakened or strengthened by 5% as at December 31, 2018, with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $0.6 million (2017 – $0.8 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. Portfolio concentration risk The Manager manages the risk through diversification and a thorough understanding of each investment in the portfolio. Credit risk The Fund’s main exposure to credit risk is: (a) their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may enter into derivative contracts to hedge their exposure to foreign currencies. The unrealized gain (loss) on outstanding contracts with counterparties represents the maximum credit exposure. These contracts are carried out with counterparties with a credit rating of at least “A-”. The exposure to credit risk on these contracts is considered minimal as there are few contracts outstanding at any one time and the transactions are settled and paid for upon delivery. The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income.

F) INCOME TAXES As at December 31, 2018, the Fund had $1,682,170 (2017 – $nil) in capital losses and no non-capital losses (2017 – $nil). Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 45 PURPOSE US DIVIDEND FUND

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Number of units outstanding (note 4) Investments: ETF Unit 550,000 850,000 Non-derivative financial assets 33,469,152 80,219,432 Class A 27,994 55,212 Cash and cash equivalents 615,483 1,905,392 Class F 204,379 226,232 Receivables: Class D 56 3,192 Dividends 98,064 156,948 Class I 57 55 Prepaid expenses 485 647 ETF Non-Currency Hedged Unit 275,000 1,450,000 Prepaid management fees (note 5) 8,726 5,067 Class A – Non-Currency Hedged 79,903 223,374 Derivative assets: Class F – Non-Currency Hedged 355,024 507,231 Unrealized gain on forward currency contracts 35,260 222,518 Class I – Non-Currency Hedged 57 55 Total assets 34,227,170 82,504,290 Net assets attributable to holders of redeemable units per unit Liabilities ETF Unit 20.46 23.09 Payables: Class A 19.58 22.33 Independent review committee fees (note 5) 23,083 18,894 Class F 20.46 23.09 Distributions 56,650 162,115 Class D 20.29 22.86 Capital units redeemed 11,933 – Class I 20.78 23.31 Derivative liabilities: ETF Non-Currency Hedged Unit 25.10 25.83 Unrealized loss on forward currency contracts 396,607 – Class A – Non-Currency Hedged 24.04 25.00 Total liabilities 488,273 186,723 Class A – Non-Currency Hedged (USD) 17.61 19.89 Net assets attributable to holders of redeemable units 33,738,897 82,317,567 Class F – Non-Currency Hedged 25.15 25.87 Net assets attributable to holders of redeemable units per class Class F – Non-Currency Hedged (USD) 18.42 20.58 ETF Unit 11,252,936 19,623,576 Class I – Non-Currency Hedged 25.38 26.02 Class A 548,101 1,233,146 The accompanying notes are an integral part of the financial statements. Class F 4,181,586 5,223,052 Class D 1,136 72,974 Approved on behalf of the Board of Directors of Purpose Investments Inc., Class I 1,185 1,282 as trustee and manager of Purpose US Dividend Fund ETF Non-Currency Hedged Unit 6,903,351 37,457,049 Class A – Non-Currency Hedged 1,921,058 5,584,474 Class F – Non-Currency Hedged 8,928,096 13,120,583 Class I – Non-Currency Hedged 1,447 1,431 Total 33,738,897 82,317,567 Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 46 PURPOSE US DIVIDEND FUND

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Average number of units outstanding for the period per Net gains (losses) on investments and derivatives: class (note 8) Dividend income 1,717,274 2,703,239 ETF Unit 770,137 719,521 Early redemption fees – 1 Class A 39,008 89,454 Net realized gain (loss) on foreign exchange transactions 161,684 665 Class F 220,858 244,583 Net realized gain (loss) on sale of investments 2,991,057 1,441,309 Class D 2,017 3,142 Class I 56 54 Net realized gain (loss) on forward currency contracts (1,513,877) 969,531 ETF Non-Currency Hedged Unit 436,781 1,375,205 Net change in unrealized appreciation (depreciation) in value of investments (3,893,719) (897,555) Class A – Non-Currency Hedged 109,470 242,905 Net change in unrealized appreciation (depreciation) in value Class F – Non-Currency Hedged 386,322 472,593 of forward currency contracts (583,865) 202,907 Class I – Non-Currency Hedged 56 54 Net change in unrealized appreciation (depreciation) on foreign Increase (decrease) in net assets attributable to holders of exchange transactions 5,141 (3,468) redeemable units per unit (note 8) Net gains (losses) on investments and derivatives (1,116,305) 4,416,629 ETF Unit (1.89) 1.80 (2) (3) Securities lending income 3,488 5,309 Class A (1.70) 1.12 Foreign exchange gain (loss) on cash 40,714 (103,382) Class F (1.77) 1.69 Total revenue (1,072,103) 4,318,556 Class D 0.85 1.71 Expenses Class I (1.74) 1.95 Management fees (note 5) 322,042 537,475 ETF Non-Currency Hedged Unit 0.54 0.77 Withholding taxes (note 7) 223,592 343,386 Class A – Non-Currency Hedged (0.35) 0.45 (1) Transaction costs (note 9) 16,162 19,701 Class F – Non-Currency Hedged 0.08 0.77 Independent review committee fees (note 5) 9,546 15,350 Class I – Non-Currency Hedged 0.29 0.95 Interest expense 3,612 – Other expenses (note 5) 34,307 41,116 (1) Soft dollar commission 344 2,134 Total expenses 609,271 957,028 (2) Security lending Increase (decrease) in net assets attributable to holders of The value of securities loaned and collateral received from securities lending at December 31 is as follows: redeemable units (1,681,364) 3,361,528 Value of securities loaned 2,966,444 11,841,517 Increase (decrease) in net assets attributable to holders of Value of collateral received 3,122,936 12,480,012 redeemable units per class (note 8) (3) Securities lending Income ETF Unit (1,455,110) 1,304,117 The table below shows a reconciliation of the gross amount generated from the securities lending transactions Class A (66,329) 99,938 of the Fund to the revenue from the securities lending disclosed in the Statement of Comprehensive Income. Class F (391,165) 411,044 December 31, 2018 December 31, 2017 Class D 1,736 5,352 $ % $ % Class I (97) 106 Gross securities lending income 7,352 100.0 11,080 100.0 ETF Non-Currency Hedged Unit 237,201 1,067,620 Withholding taxes (485) 7.0 (463) 4.0 Class A – Non-Currency Hedged (38,234) 106,449 Agent fees (3,379) 46.0 (5,308) 48.0 Class F – Non-Currency Hedged 30,617 366,851 Securities lending income 3,488 47.0 5,309 48.0 Class I – Non-Currency Hedged 16 51 The accompanying notes are an integral part of the financial statements. Total (1,681,364) 3,361,528

2018 ANNUAL REPORT 47 PURPOSE US DIVIDEND FUND

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Unit Class D Net assets attributable to holders of redeemable units at beginning of period 19,623,576 13,167,755 Net assets attributable to holders of redeemable units at beginning of period 72,974 67,622 Increase (decrease) in net assets attributable to holders of redeemable units (1,455,110) 1,304,117 Increase (decrease) in net assets attributable to holders of redeemable units 1,736 5,352 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units – 7,260,813 Payments for redemption of redeemable units (73,574) – Payments for redemption of redeemable units (6,327,280) (1,638,684) Reinvestment of distributions 1,468 5,719 Reinvestment of distributions – 852,040 Net increase (decrease) from redeemable unit transactions (72,106) 5,719 Net increase (decrease) from redeemable unit transactions (6,327,280) 6,474,167 Distributions paid or payable to unitholders of redeemable units Distributions paid or payable to unitholders of redeemable units From investment income (1,127) (1,488) From investment income (430,737) (410,936) From capital gains (337) (4,011) From capital gains (121,763) (856,260) Return of capital (4) (220) Return of capital (35,750) (55,269) Total distributions to holders of redeemable units (1,468) (5,719) Total distributions to holders of redeemable units (588,250) (1,322,465) Net increase (decrease) in net assets attributable to holders of redeemable units (71,838) 5,352 Net increase (decrease) in net assets attributable to holders of redeemable units (8,370,640) 6,455,821 Net assets attributable to holders of redeemable units at end of period 1,136 72,974 Net assets attributable to holders of redeemable units at end of period 11,252,936 19,623,576 Class I Class A Net assets attributable to holders of redeemable units at beginning of period 1,282 1,176 Net assets attributable to holders of redeemable units at beginning of period 1,233,146 1,970,195 Increase (decrease) in net assets attributable to holders of redeemable units (97) 106 Increase (decrease) in net assets attributable to holders of redeemable units (66,329) 99,938 Redeemable unit transactions Redeemable unit transactions Reinvestment of distributions 44 104 Proceeds from issuance of redeemable units 51,374 476,396 Net increase (decrease) from redeemable unit transactions 44 104 Unit exchanges (46,397) (19,164) Distributions paid or payable to unitholders of redeemable units Payments for redemption of redeemable units (618,221) (1,282,239) From investment income (33) (29) Reinvestment of distributions 23,102 42,330 From capital gains (7) (71) Net increase (decrease) from redeemable unit transactions (590,142) (782,677) Return of capital (4) (4) Distributions paid or payable to unitholders of redeemable units Total distributions to holders of redeemable units (44) (104) From investment income (24,406) (28,029) Net increase (decrease) in net assets attributable to holders of redeemable units (97) 106 From capital gains (2,417) (22,772) Net assets attributable to holders of redeemable units at end of period 1,185 1,282 Return of capital (1,751) (3,509) Total distributions to holders of redeemable units (28,574) (54,310) ETF Non-Currency Hedged Net increase (decrease) in net assets attributable to holders of redeemable units (685,045) (737,049) Net assets attributable to holders of redeemable units at beginning of period 37,457,049 33,547,281 Net assets attributable to holders of redeemable units at end of period 548,101 1,233,146 Increase (decrease) in net assets attributable to holders of redeemable units 237,201 1,067,620 Redeemable unit transactions Class F Proceeds from issuance of redeemable units – 3,865,176 Net assets attributable to holders of redeemable units at beginning of period 5,223,052 4,776,679 Payments for redemption of redeemable units (30,443,821) – Increase (decrease) in net assets attributable to holders of redeemable units (391,165) 411,044 Reinvestment of distributions 687,500 437,030 Redeemable unit transactions Net increase (decrease) from redeemable unit transactions (29,756,321) 4,302,206 Proceeds from issuance of redeemable units 389,273 1,249,089 Distributions paid or payable to unitholders of redeemable units Unit exchanges 40,000 77,347 From investment income (277,373) (777,383) Payments for redemption of redeemable units (1,043,801) (1,264,723) From capital gains (730,036) (575,738) Reinvestment of distributions 136,106 320,328 Return of capital (27,268) (106,937) Net increase (decrease) from redeemable unit transactions (478,422) 382,041 Total distributions to holders of redeemable units (1,034,578) (1,460,058) Distributions paid or payable to unitholders of redeemable units Net increase (decrease) in net assets attributable to holders of redeemable units (30,553,698) 3,909,768 From investment income (122,866) (109,486) Net assets attributable to holders of redeemable units at end of period 6,903,351 37,457,049 From capital gains (35,763) (221,386) Return of capital (13,250) (15,840) Total distributions to holders of redeemable units (171,879) (346,712) Net increase (decrease) in net assets attributable to holders of redeemable units (1,041,466) 446,373 Net assets attributable to holders of redeemable units at end of period 4,181,586 5,223,052

2018 ANNUAL REPORT 48 PURPOSE US DIVIDEND FUND

STATEMENTS OF CHANGES IN STATEMENTS OF CASH FLOWS FINANCIAL POSITION (continued) For the years ended: For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Class A – Non-Currency Hedged Cash Flows from Operating Activities Net assets attributable to holders of redeemable units at beginning of period 5,584,474 5,293,926 Increase (decrease) in net assets attributable to holders of Increase (decrease) in net assets attributable to holders of redeemable units (38,234) 106,449 redeemable units (1,681,364) 3,361,528 Redeemable unit transactions Adjustments for: Proceeds from issuance of redeemable units 325,453 2,064,937 Foreign exchange loss (gain) on cash (40,714) 103,382 Unit exchanges (2,400,640) (105,943) Purchase of investments (27,129,984) (49,105,676) Payments for redemption of redeemable units (1,530,145) (1,741,000) Proceeds from sale of investments 72,961,440 36,582,941 Reinvestment of distributions 279,400 142,052 Net realized loss (gain) on sale of investments (2,991,057) (1,441,309) Net increase (decrease) from redeemable unit transactions (3,325,932) 360,046 Net change in unrealized depreciation (appreciation) in value Distributions paid or payable to unitholders of redeemable units of investments 3,893,719 897,555 From investment income (61,045) (107,643) Net change in unrealized depreciation (appreciation) in value of forward currency contracts 583,865 (202,907) From capital gains (226,302) (52,192) Net change in non-cash working capital balances 48,148 (58,267) Return of capital (11,902) (16,112) Transaction costs (note 9) 16,162 19,701 Total distributions to holders of redeemable units (299,250) (175,947) 45,660,215 (9,843,052) Net increase (decrease) in net assets attributable to holders of redeemable units (3,663,416) 290,548 Net assets attributable to holders of redeemable units at end of period 1,921,058 5,584,474 Cash Flows from Financing Activities Proceeds from issuance of units 1,898,545 19,834,381 Class F – Non-Currency Hedged Unit exchanges (5,460,645) 12,698 Net assets attributable to holders of redeemable units at beginning of period 13,120,583 10,634,897 Payments for units redeemed (42,142,161) (8,312,404) Increase (decrease) in net assets attributable to holders of redeemable units 30,617 366,851 Distribution to holders, net of reinvestments (1,286,577) (1,637,029) Redeemable unit transactions (46,990,838) 9,897,646 Proceeds from issuance of redeemable units 1,132,445 4,583,517 Unit exchanges (3,053,608) 60,458 Foreign exchange gain (loss) on cash 40,714 (103,382) Payments for redemption of redeemable units (2,117,252) (2,384,758) Net increase (decrease) in cash and cash equivalents (1,330,623) 54,594 Reinvestment of distributions 1,087,399 213,539 Cash and cash equivalents, at beginning of period 1,905,392 1,954,180 Net increase (decrease) from redeemable unit transactions (2,951,016) 2,472,756 Cash and cash equivalents, at end of period 615,483 1,905,392 Distributions paid or payable to unitholders of redeemable units Interest paid (3,612) (110) From investment income (230,735) (266,422) Dividends received, net of withholding taxes 1,552,566 2,309,333 From capital gains (1,008,993) (50,177) The accompanying notes are an integral part of the financial statements. Return of capital (32,360) (37,322) Total distributions to holders of redeemable units (1,272,088) (353,921) Net increase (decrease) in net assets attributable to holders of redeemable units (4,192,487) 2,485,686 Net assets attributable to holders of redeemable units at end of period 8,928,096 13,120,583

Class I – Non-Currency Hedged Net assets attributable to holders of redeemable units at beginning of period 1,431 1,380 Increase (decrease) in net assets attributable to holders of redeemable units 16 51 Redeemable unit transactions Reinvestment of distributions 153 53 Net increase (decrease) from redeemable unit transactions 153 53 Distributions paid or payable to unitholders of redeemable units From investment income (33) (29) From capital gains (115) (21) Return of capital (5) (3) Total distributions to holders of redeemable units (153) (53) Net increase (decrease) in net assets attributable to holders of redeemable units 16 51 Net assets attributable to holders of redeemable units at end of period 1,447 1,431 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 49 PURPOSE US DIVIDEND FUND

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Number of Shares/Units/ Average cost Fair value Shares/Units/ Average cost Fair value Security Par Value ($) ($) Security Par Value ($) ($) Equities – 99.20% Industrials – 9.51% United States Equities – 99.20% Eaton Corp. PLC 5,778 532,759 541,599 Communication Services – 5.37% Emerson Electric Co. 6,418 462,299 523,521 AT&T Inc. 10,653 434,600 415,071 KAR Auction Services Inc. 7,626 512,632 496,814 Omnicom Group Inc. 7,059 668,416 705,810 Lockheed Martin Corp. 1,490 645,169 532,621 Verizon Communications Inc. 9,005 605,027 691,147 MSC Industrial Direct Co. Inc., Class 'A' 5,603 631,963 588,378 1,708,043 1,812,028 United Parcel Service Inc., Class 'B' 3,957 611,060 526,866 Consumer Discretionary – 11.09% 3,395,882 3,209,799 Carnival Corp. 7,919 653,793 532,983 Information Technology – 8.14% Ford Motor Co. 51,793 810,035 540,915 Cisco Systems Inc. 10,335 401,746 611,358 Garmin Ltd. 7,079 439,277 611,940 HP Inc. 19,798 363,442 552,998 Home Depot Inc. (The) 2,374 645,286 556,866 International Business Machines Corp. 3,340 628,091 518,309 Interpublic Group of Cos. Inc. (The) 13,504 436,786 380,328 Leidos Holdings Inc. 6,887 581,398 495,680 Kohl's Corp. 6,036 482,810 546,665 Texas Instruments Inc. 4,406 629,873 568,424 Wyndham Destinations Inc. 11,709 638,880 572,907 2,604,550 2,746,769 4,106,867 3,742,604 Materials – 8.19% Consumer Staples – 10.31% Bemis Co. Inc. 9,711 580,534 608,517 Altria Group Inc. 8,044 677,384 542,385 Celanese Corp., Series 'A' 4,232 641,587 519,804 Campbell Soup Co. 12,197 658,123 549,328 International Paper Co. 9,427 564,174 519,423 J.M. Smucker Co. (The) 4,454 662,895 568,475 LyondellBasell Industries NV, Class 'A' 4,354 493,983 494,310 Kellogg Co. 6,637 513,085 516,558 Sonoco Products Co. 8,553 541,720 620,375 Kimberly-Clark Corp. 4,217 723,294 655,958 2,821,998 2,762,429 Walmart Inc. 5,066 567,466 644,235 Utilities – 13.48% 3,802,247 3,476,939 Allete Inc. 6,402 633,387 666,163 Energy – 10.67% CenterPoint Energy Inc. 16,912 552,911 651,782 ConocoPhillips 6,921 640,605 589,117 Consolidated Edison Inc. 6,010 585,405 627,343 Exxon Mobil Corp. 6,076 669,012 565,633 Exelon Corp. 11,021 585,290 678,569 Marathon Petroleum Corp. 5,907 438,788 475,871 Portland General Electric Co. 10,315 560,377 645,661 Occidental Petroleum Corp. 6,297 636,212 527,663 PPL Corp. 15,805 771,503 611,276 Phillips 66 4,190 481,736 492,794 WEC Energy Group Inc. 7,057 583,856 667,266 Valero Energy Corp. 4,216 383,663 431,504 4,272,729 4,548,060 Williams Cos. Inc. (The) 17,145 562,508 516,110 Total United States Equities – 99.20% 33,704,154 33,469,152 3,812,524 3,598,692 Total Equities – 99.20% 33,704,154 33,469,152 Financials – 8.87% Transaction Costs (note 9) (6,187) – Fidelity National Financial Inc. 12,132 575,496 520,728 Total Investments – 99.20% 33,697,967 33,469,152 First American Financial Corp. 8,491 561,300 517,463 Net Unrealized Gain (Loss) on Forward Currency Contracts Gaming and Leisure Properties Inc. 9,635 433,335 424,996 (Schedule 1) – (1.07)% (361,347) Old Republic International Corp. 21,698 542,911 609,327 Cash and Cash Equivalents – 1.82% 615,483 Umpqua Holdings Corp. 22,692 569,688 492,568 Other Assets, Less Liabilities – 0.05% 15,609 WP Carey Inc. 4,806 433,257 428,706 Net Assets – 100.00% 33,738,897 3,115,987 2,993,788 Health Care – 13.57% AbbVie Inc. 5,214 659,924 656,223 Amgen Inc. 2,493 567,685 662,549 Bristol-Myers Squibb Co. 8,022 600,765 569,266 Johnson & Johnson 3,570 618,413 628,959 Medtronic PLC 5,065 528,361 628,964 Merck & Co. Inc. 7,047 581,291 735,107 Pfizer Inc. 11,696 506,888 696,976 4,063,327 4,578,044

2018 ANNUAL REPORT 50 PURPOSE US DIVIDEND FUND

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACT For the year ended December 31, 2018

S&P Credit Rating Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty for Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) Canadian Imperial Bank of Commerce A-1 2019/02/27 CAD 21,144,508 USD 15,800,000 0.7470 0.7330 (396,607) Canadian Imperial Bank of Commerce A-1 2019/02/27 USD 3,000,000 CAD 4,072,350 1.3570 1.3630 17,735 Canadian Imperial Bank of Commerce A-1 2019/02/27 USD 1,000,000 CAD 1,345,837 1.3460 1.3630 17,525 (361,347) The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 51 PURPOSE US DIVIDEND FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE US DIVIDEND FUND

A) INVESTMENT OBJECTIVES (NOTE 2) D) FAIR VALUE INVESTMENTS (NOTE 10) The Purpose US Dividend Fund seeks to provide unitholders with (i) long-term The following inputs were used in valuing the Fund’s investments and capital appreciation through investment in a portfolio of high quality U.S. listed derivatives at fair values as at December 31, 2018: dividend-paying equity securities; and (ii) monthly cash distributions. Level 1 Level 2 Level 3 Total ($) ($) ($) ($) B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Changes in outstanding units during the periods ended December 31, 2018 and Financial assets 2017 are summarized as follows: Equities 33,469,152 – – 33,469,152 Forward currency contracts – 35,260 – 35,260 Number of Units Total financial assets 33,469,152 35,260 – 33,504,412 ETF Class A Class F Class D Class I Units Units Units Units Units Outstanding, December 31, 2016 600,000 91,770 217,618 3,102 54 Financial liabilities Issued 325,000 21,699 59,563 – – Forward currency contracts – 396,607 – 396,607 Reinvested – 1,951 5,796 90 1 Total financial liabilities – 396,607 – 396,607 Redeemed (75,000) (60,208) (56,745) – – Total financial assets and liabilities 33,469,152 (361,347) – 33,107,805 Outstanding, December 31, 2017 850,000 55,212 226,232 3,192 55 The following inputs were used in valuing the Fund’s investments and Issued – 2,394 18,752 – – derivatives at fair values as at December 31, 2017: Reinvested – 1,071 6,103 66 2 Level 1 Level 2 Level 3 Total Redeemed (300,000) (30,683) (46,708) (3,202) – ($) ($) ($) ($) Outstanding, December 31, 2018 550,000 27,994 204,379 56 57 Financial assets Equities 80,219,432 – – 80,219,432 ETF Class A Class F Class I Forward currency contracts – 222,518 – 222,518 Non-Currency Non-Currency Non-Currency Non-Currency 80,219,432 222,518 – 80,441,950 Hedged Units Hedged Units Hedged Units Hedged Units Total financial assets 80,219,432 222,518 – 80,441,950 Outstanding, December 31, 2016 1,300,000 209,704 411,535 53 Total financial assets and liabilities Issued 150,000 85,202 185,372 – During the period ended December 31, 2018 and 2017, there were no transfers Reinvested – 5,714 8,343 2 of assets between Level 1, Level 2 and Level 3. Redeemed – (77,246) (98,019) – The Fund’s Level 2 investment in foreign currency contracts relies on the foreign Outstanding, December 31, 2017 1,450,000 223,374 507,231 55 exchange rate market data to fair value the foreign currency contract. Issued – 13,050 46,877 – Reinvested – 2,811 5,964 2 E) FINANCIAL RISKS (NOTE 11) Redeemed (1,175,000) (159,331) (205,048) – Market price risk If equity prices for these securities had increased or decreased by 5% as at Outstanding, December 31, 2018 275,000 79,903 355,024 57 December 31, 2018 with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $1.7 million C) MANAGEMENT FEES, SERVICE FEES AND OTHER (2017 – $4.0 million). In practice, actual results may differ from this sensitivity EXPENSES (NOTE 5) analysis and the difference could be material. Annual Management Fee Interest rate risk (% of Net Asset Value of each units) As the Fund’s financial liabilities are primarily short term in nature and generally Units Management Fee not interest bearing, the Fund’s exposure to interest rate risk in relation thereto ETF Units 0.55% is considered low. Class A Units* 1.55% Class F Units 0.55% Class D Units* 0.80% Class I Units negotiable and paid directly to the Manager ETF Non-Currency Hedged 0.55% Class A – Non-Currency Hedged* 1.55% Class F – Non-Currency Hedged 0.55% Class I – Non-Currency Hedged negotiable and paid directly to the Manager * Includes a service fee at an annual rate of 1.00% of the daily average Net Asset Value of the Class A and Class A – Non- Currency Hedged, and 0.25% of the Class D Units

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 52 PURPOSE US DIVIDEND FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE US DIVIDEND FUND (continued) Currency risk The table below summarizes the Fund’s direct exposure to the US dollar as at December 31, 2018 and 2017 including the underlying principal amount of forward currency contracts that are used to hedge the foreign currency risk: As at December 31, 2018 As at December 31, 2017 Fair Value % of Fair Value % of ($) Net Assets ($) Net Assets Foreign currency and investments 34,060,686 81,856,589 Forward currency agreement (16,087,668) (22,365,148) Net exposure 17,973,018 53.3 59,491,441 72.3

If the Canadian dollar weakened or strengthened by 5% as at December 31, 2018, with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $0.9 million (2017 – $3.0 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. Portfolio concentration risk The Manager manages the risk through diversification and a thorough understanding of each investment in the portfolio. Credit risk The Fund’s main exposure to credit risk is: (a) their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may enter into derivative contracts to hedge their exposure to foreign currencies. The unrealized gain (loss) on outstanding contracts with counterparties represents the maximum credit exposure. These contracts are carried out with counterparties with a credit rating of at least “A-”. The exposure to credit risk on these contracts is considered minimal as there are few contracts outstanding at any one time and the transactions are settled and paid for upon delivery. The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income.

F) INCOME TAXES As at December 31, 2018 and 2017, the Fund had no capital and no non- capital losses for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 53 PURPOSE INTERNATIONAL DIVIDEND FUND

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, 2018 2017 ($) ($) Assets Investments: Non-derivative financial assets 137,545,923 128,147,434 Cash and cash equivalents 6,827,382 1,695,703 Receivables: Dividends 828,852 582,415 Capital units sold 77,507 21,200 Total assets 145,279,664 130,446,752 Liabilities Payables: Management fees (note 5) 54,166 50,641 Independent review committee fees (note 5) 49,417 26,520 Other accrued liabilities 4,806 4,500 Distributions 505,050 543,900 Capital units redeemed 1,980 – Total liabilities 615,419 625,562 Net assets attributable to holders of redeemable units 144,664,245 129,821,189 Net assets attributable to holders of redeemable units per class ETF Unit 130,085,389 115,517,025 Class A 4,916,491 4,898,462 Class F 9,650,254 9,403,413 Class D 10,934 1,130 Class I 1,177 1,159 Total 144,664,245 129,821,189 Number of units outstanding (note 4) ETF Unit 6,475,000 5,550,000 Class A 255,798 243,191 Class F 482,138 453,331 Class D 552 55 Class I 59 56 Net assets attributable to holders of redeemable units per unit ETF Unit 20.09 20.81 Class A 19.22 20.14 Class F 20.02 20.74 Class D 19.81 20.55 Class I 20.25 20.70 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose International Dividend Fund

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 54 PURPOSE INTERNATIONAL DIVIDEND FUND

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2017 2018 2017 2018 ($) ($) ($) ($) Increase (decrease) in net assets attributable to holders of Income redeemable units per class (note 8) Net gains (losses) on investments and derivatives: ETF Unit 514,102 9,585,869 Dividend income 7,110,403 5,184,399 Class A (3,568) 471,336 Interest income for distribution purposes 10,970 57,990 Class F 102,413 813,657 Early redemption fees 7 62 Class D (2,029) 115 Net realized gain (loss) on foreign exchange transactions (39,838) 4,016 Class I 18 128 Net realized gain (loss) on sale of investments 319,027 2,891,742 Total 610,936 10,871,105 Net realized gain (loss) on forward currency contracts 17,155 – Average number of units outstanding for the period per class Net change in unrealized appreciation (depreciation) in value (note 8) of investments (5,022,141) 4,367,568 ETF Unit 6,078,356 4,935,274 Net change in unrealized appreciation (depreciation) on foreign Class A 262,707 248,097 exchange transactions 16,501 4,873 Class F 490,129 412,317 Net gains (losses) on investments and derivatives 2,412,084 12,510,650 Class D 1,146 54 Securities lending income (2) – 17,321 Class I 57 55 Foreign exchange gain (loss) on cash 160,916 44,995 Increase (decrease) in net assets attributable to holders of Total revenue 2,573,000 12,572,966 redeemable units per unit (note 8) Expenses ETF Unit 0.09 1.95 Management fees (note 5) 932,207 747,977 Class A (0.01) 1.89 Withholding taxes (note 7) 676,435 512,242 Class F 0.21 1.97 (1) Transaction cost (note 9) 228,097 355,663 Class D (1.77) 2.15 Independent review committee fees (note 5) 28,752 22,794 Class I 0.32 2.36 Other expenses (note 5) 96,573 63,185 Total expenses 1,962,064 1,701,861 (1) Soft dollar commission 2,182 24,011 Increase (decrease) in net assets attributable to holders of (2) Securities lending Income redeemable units 610,936 10,871,105 The table below shows a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from the securities lending disclosed in the Statement of Comprehensive Income. December 31, 2018 December 31, 2017 $ % $ % Gross securities lending income – – 34,641 100.0 Agent fees – – (17,320) 50.0 Securities lending income – – 173,221 50.0 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 55 PURPOSE INTERNATIONAL DIVIDEND FUND

Class A Class I Net assets attributable to holders of redeemable units at beginning of period 4,898,462 4,257,597 Net assets attributable to holders of redeemable units at beginning of period 1,159 1,031 Increase (decrease) in net assets attributable to holders of redeemable units (3,568) 471,336 Increase (decrease) in net assets attributable to holders of redeemable units 18 128 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 1,472,151 1,676,395 Reinvestment of distributions 54 75 Unit exchanges (113,601) (371,011) Net increase (decrease) from redeemable unit transactions 54 75 Payments for redemption of redeemable units (1,278,779) (1,084,509) Distributions paid or payable to unitholders of redeemable units Reinvestment of distributions 179,844 212,767 From investment income (44) (41) Net increase (decrease) from redeemable unit transactions 259,615 433,642 From capital gains (5) (31) Distributions paid or payable to unitholders of redeemable units Return of capital (5) (3) From investment income (189,394) (171,905) Total distributions to holders of redeemable units (54) (75) From capital gains (22,597) (75,850) Net increase (decrease) in net assets attributable to holders of redeemable units 18 128 Return of capital (26,027) – Net assets attributable to holders of redeemable units at end of period 1,177 1,159 Total distributions to holders of redeemable units (238,018) (264,113) The accompanying notes are an integral part of the financial statements. Net increase (decrease) in net assets attributable to holders of redeemable units 18,029 640,865 Net assets attributable to holders of redeemable units at end of period 4,916,491 4,898,462

Class F Net assets attributable to holders of redeemable units at beginning of period 9,403,413 9,136,282 Increase (decrease) in net assets attributable to holders of redeemable units 102,413 813,657 Redeemable unit transactions Proceeds from issuance of redeemable units 2,810,388 2,807,609 Unit exchanges 166,304 365,805 Payments for redemption of redeemable units (2,625,292) (3,606,318) Reinvestment of distributions 250,669 274,794 Net increase (decrease) from redeemable unit transactions 602,069 (158,110) Distributions paid or payable to unitholders of redeemable units From investment income (369,667) (305,954) From capital gains (40,884) (55,218) Return of capital (47,089) (27,245) Total distributions to holders of redeemable units (457,641) (388,416) Net increase (decrease) in net assets attributable to holders of redeemable units 246,841 267,131 Net assets attributable to holders of redeemable units at end of period 9,650,254 9,403,413

2018 ANNUAL REPORT 56 PURPOSE INTERNATIONAL DIVIDEND FUND

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the years ended: As at December 31, 2018 December 31, December 31, Number of 2018 2017 shares/units/ Average cost Fair value ($) ($) Security par value ($) ($) Equities – 94.87% Cash Flows from Operating Activities International Equities – 94.87% Increase (decrease) in net assets attributable to holders of redeemable units 610,936 10,871,105 Australia – 13.27% Adjustments for: Communication Services – 2.40% Foreign exchange loss (gain) on cash (160,916) (44,995) Telstra Corp. Ltd. 1,264,469 3,460,172 3,465,276 Purchase of investments (71,300,456) (122,586,734) 3,460,172 3,465,276 Proceeds from sale of investments 56,970,754 69,018,941 Financials – 2.21% Net realized loss (gain) on sale of investments (319,027) (2,891,742) Mirvac Group 1,485,096 3,138,011 3,198,802 Net change in unrealized depreciation (appreciation) in value of investments 5,022,141 (4,367,568) 3,138,011 3,198,802 Net change in non–cash working capital balances (219,709) (213,260) Materials – 4.60% Transaction costs (note 9) 228,097 355,663 BHP Group PLC 121,316 2,943,632 3,486,528 (9,168,180) (49,858,590) Fortescue Metals Group Ltd. 784,628 3,688,711 3,161,277 6,632,343 6,647,805 Cash Flows from Financing Activities Real Estate – 4.06% Proceeds from issuance of units 29,889,817 65,031,676 Stockland 804,266 3,399,536 2,722,245 Unit exchanges 52,703 (5,206) Vicinity Centres 1,261,956 3,454,687 3,155,022 Payments for units redeemed (9,791,932) (12,991,669) 6,854,223 5,877,267 Distribution to holders, net of reinvestments (6,011,645) (3,522,473) Total Australia Equities- 13.27% 20,084,749 19,189,150 14,138,943 48,512,328 China – 6.46% Energy – 4.25% Foreign exchange gain (loss) on cash 160,916 44,995 China Petroleum & Chemical Corp., Series 'H', Class 'H' 2,800,000 3,066,202 2,728,831 Net increase (decrease) in cash and cash equivalents 4,970,763 (1,346,262) CNOOC Ltd. 1,621,000 3,374,152 3,419,599 Cash and cash equivalents, at beginning of period 1,695,703 2,996,970 6,440,354 6,148,430 Cash and cash equivalents, at end of period 6,827,382 1,695,703 Financials – 2.21% Interest received 10,970 57,990 Bank of China Ltd., Class 'H' 5,413,000 3,519,634 3,189,786 Dividends received, net of withholding taxes 6,187,531 4,416,969 3,519,634 3,189,786 The accompanying notes are an integral part of the financial statements. Total China Equities- 6.46% 9,959,988 9,338,216 France – 14.12% Communication Services – 2.31% Orange SA 150,797 3,194,267 3,338,787 3,194,267 3,338,787 Energy – 2.04% TOTAL SA 40,850 2,759,539 2,950,748 2,759,539 2,950,748 Financials – 1.95% Klépierre SA 66,736 3,616,651 2,814,273 3,616,651 2,814,273 Health Care – 2.40% Sanofi SA 29,387 3,302,456 3,477,825 3,302,456 3,477,825 Insurance – 2.83% SCOR SE 66,439 3,223,810 4,094,543 3,223,810 4,094,543 Utilities – 2.59% Electricite de France SA 173,894 2,646,615 3,753,616 2,646,615 3,753,616 Total France Equities- 14.12% 18,743,338 20,429,792 Hong Kong – 5.14% Communication Services – 2.66% China Mobile Ltd. 292,500 3,703,373 3,842,518 3,703,373 3,842,518

2018 ANNUAL REPORT 57 PURPOSE INTERNATIONAL DIVIDEND FUND

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of shares/units/ Average cost Fair value shares/units/ Average cost Fair value Security par value ($) ($) Security par value ($) ($) Financials – 2.48% Switzerland – 11.53% Link REIT 260,000 2,828,958 3,594,623 Consumer Staples – 2.34% 2,828,958 3,594,623 Nestlé SA, Registered, Series 'B' 30,521 3,092,912 3,382,895 Total Hong Kong Equities- 5.14% 6,532,331 7,437,141 3,092,912 3,382,895 Japan – 20.66% Financials – 2.33% Communication Services – 2.09% Zurich Insurance Group AG 8,291 3,188,122 3,375,279 NTT DOCOMO INC. 98,300 3,153,597 3,027,302 3,188,122 3,375,279 3,153,597 3,027,302 Health Care – 2.47% Consumer Discretionary – 5.93% Roche Holding AG Genusscheine 10,562 3,369,226 3,570,703 Nissan Motor Co. Ltd. 273,100 3,512,357 2,994,459 3,369,226 3,570,703 Sekisui House Ltd. 148,400 3,349,249 2,992,586 Industrials – 2.05% Subaru Corp. 43,800 2,012,021 1,287,514 SGS SA, Registered 967 2,774,227 2,968,286 Toyota Motor Corp. 16,300 1,298,951 1,300,590 2,774,227 2,968,286 10,172,578 8,575,149 Materials – 2.34% Financials – 2.04% Givaudan SA, Registered 1,071 2,749,587 3,385,701 Sumitomo Mitsui Financial Group Inc. 65,100 3,099,394 2,955,592 2,749,587 3,385,701 3,099,394 2,955,592 Total Switzerland Equities- 11.53% 15,174,074 16,682,864 Industrials – 6.59% United Kingdom – 12.97% ITOCHU Corp. 143,500 2,724,065 3,337,045 Consumer Discretionary – 1.76% Marubeni Corp. 330,300 2,558,921 3,177,728 Persimmon PLC 75,647 2,874,348 2,540,500 Sumitomo Corp. 154,600 2,590,759 3,006,889 2,874,348 2,540,500 7,873,745 9,521,662 Consumer Staples – 3.39% Information Technology – 2.00% British American Tobacco PLC 23,682 1,630,462 1,030,217 Canon Inc. 77,600 3,198,650 2,900,639 Imperial Brands PLC 28,379 1,164,644 1,173,806 3,198,650 2,900,639 J Sainsbury PLC 587,347 2,549,658 2,708,388 Materials – 2.01% 5,344,764 4,912,411 JFE Holdings Inc. 133,100 3,482,415 2,912,834 Industrials – 1.57% 3,482,415 2,912,834 BAE Systems PLC 285,060 2,862,242 2,277,762 Total Japan Equities- 20.66% 30,980,379 29,893,178 2,862,242 2,277,762 Luxembourg – 2.42% Insurance – 2.01% Communication Services – 2.42% Legal & General Group PLC 722,499 2,897,647 2,904,153 SES SA 134,112 3,540,621 3,505,341 2,897,647 2,904,153 3,540,621 3,505,341 Materials – 2.14% Total Luxembourg Equities- 2.42% 3,540,621 3,505,341 Rio Tinto PLC 47,579 2,706,600 3,088,121 Netherlands – 6.26% 2,706,600 3,088,121 Communication Services – 2.40% Utilities – 2.10% Koninklijke KPN NV 868,279 3,325,550 3,476,846 National Grid PLC 113,676 1,612,281 1,511,632 3,325,550 3,476,846 United Utilities Group PLC 118,973 1,834,067 1,524,103 Energy – 2.04% 3,446,348 3,035,735 Royal Dutch Shell PLC, Class 'A' 73,521 3,260,521 2,952,047 Total United Kingdom Equities- 12.97% 20,131,949 18,758,682 3,260,521 2,952,047 Total International Equities – 94.87% 137,606,908 137,245,917 Financials – 1.82% Total Equities – 94.87% 137,606,908 137,245,917 Aegon NV 412,677 3,064,353 2,632,995 Money Market Funds – 0.21% 3,064,353 2,632,995 Purpose High Interest Savings ETF 6,000 300,332 300,006 Total Netherlands Equities- 6.26% 9,650,424 9,061,888 Total Money Market Funds – 0.21% 300,332 300,006 Portugal – 2.04% Transaction Costs (note 9) (341,353) – Utilities – 2.04% Total Investments – 95.08% 137,565,887 137,545,923 Energias de Portugal SA 618,485 2,809,055 2,949,665 Cash – 4.72% 6,827,382 2,809,055 2,949,665 Other Assets, Less Liabilities – 0.20% 290,940 Total Portugal Equities- 2.04% 2,809,055 2,949,665 Net Assets – 100.00% 144,664,245 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 58 PURPOSE INTERNATIONAL DIVIDEND FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE INTERNATIONAL DIVIDEND FUND

A) INVESTMENT OBJECTIVES (NOTE 2) E) FINANCIAL RISKS (NOTE 11) The Purpose International Dividend Fund seeks to provide unitholders with (i) Market price risk long-term capital appreciation through investment in a portfolio of high quality If equity prices for these securities had increased or decreased by 5% as at international dividend-paying equity securities; and (ii) monthly distributions. December 31, 2018 with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $6.8 million B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) (2017 – $6.4 million). In practice, actual results may differ from this sensitivity Changes in outstanding units during the periods ended December 31, 2018 and analysis and the difference could be material. 2017 are summarized as follows: Interest rate risk Number of Units The majority of the Fund’s financial assets are equity shares, which are not ETF Class A Class F Class D Class I interest bearing. As the Fund’s financial liabilities are primarily short term in Units Units Units Units Units nature and generally not interest bearing, the Fund’s exposure to interest rate Outstanding, December 31, 2016 2,975,000 225,291 474,634 53 53 risk in relation thereto is considered low. Issued 2,975,000 84,774 155,974 – – Currency risk Reinvested – 6,473 9,520 2 3 The Fund holds assets denominated in currencies other than its functional Redeemed (400,000) (73,346) (186,797) – – currency. The Fund is therefore exposed to currency risk, as the value of the securities denominated in other currencies fluctuate due to the change in Outstanding, December 31, 2017 5,550,000 243,191 453,331 55 56 foreign exchange rates. Issued 1,200,000 74,509 146,814 2,992 – The table below summarizes the Fund’s direct exposure to foreign securities as Reinvested – 8,894 11,932 52 3 at December 31, 2018 and 2017: Redeemed (275,000) (70,796) (129,939) (2,547) – Outstanding, December 31, 2018 6,475,000 255,798 482,138 552 59 As at December 31, 2018 As at December 31, 2017 Fair Value % of Fair Value % of ($) Net Assets ($) Net Assets C) MANAGEMENT FEES, SERVICE FEES AND OTHER EXPENSES (NOTE 5) British Pound 29,562,981 20.4 28,203,688 21.7 Euro 33,504,146 23.2 27,371,315 21.1 Annual Management Fee (% of Net Asset Value of each units) Japanese Yen 30,562,515 21.1 30,174,766 23.2 Units Management Fee Australian Dollar 15,982,804 11.0 14,238,974 11.0 ETF Units 0.55% Swiss Franc 16,879,824 11.7 14,527,989 11.2 Class A Units* 1.55% Hong Kong Dollar 16,861,693 11.7 13,896,428 10.7 Class F Units 0.55% United States Dollar 4,817 0.0 4,435 0.0 Class D Units* 0.80% Net exposure 143,358,780 99.1 128,417,595 98.9 Class I Units negotiable and paid directly to the Manager If the Canadian dollar weakened or strengthened by 5% as at December 31, * Includes a service fee at an annual rate of 1.00% of the daily average Net Asset Value of the Class A and 0.25% of the 2018, with all other variables held constant, the Fund’s net assets would have Class D units. increased or decreased, respectively, by approximately $7.2 million (2017 – $6.4 million). In practice, actual results may differ from this sensitivity analysis D) FAIR VALUE INVESTMENTS (NOTE 10) and the difference could be material. The following inputs were used in valuing the Fund’s investments and Portfolio concentration risk derivatives at fair values as at December 31, 2018: The Manager manages the risk through diversification and a thorough Level 1 Level 2 Level 3 Total understanding of each investment in the portfolio. ($) ($) ($) ($) Credit risk Financial assets The Fund’s main exposure to credit risk is: (a) their trading of listed securities Equities 137,245,917 – – 137,245,917 – the risk of default is considered minimal as all transactions are settled Funds 300,006 – – 300,006 and paid for upon delivery using approved brokers and (b) the Fund may Total financial assets 137,545,923 – – 137,545,923 enter into derivative contracts to hedge their exposure to foreign currencies. Total financial assets and liabilities 137,545,923 – – 137,545,923 The unrealized gain (loss) on outstanding contracts with counterparties represents the maximum credit exposure. These contracts are carried out with The following inputs were used in valuing the Fund’s investments and counterparties with a credit rating of at least “A-”. The exposure to credit risk on derivatives at fair values as at December 31, 2017: these contracts is considered minimal as there are few contracts outstanding at any one time and the transactions are settled and paid for upon delivery. Level 1 Level 2 Level 3 Total ($) ($) ($) ($) The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the Financial assets securities held as collateral by the Fund in connection with these transactions is Equities 127,147,412 – – 127,147,412 at least 105% of the fair value of the securities loaned. The collateral and loaned Funds 1,000,022 – – 1,000,022 securities are marked to market on each business day. Further information Total financial assets 128,147,434 – – 128,147,434 regarding the collateral and securities on loan can be found in the footnotes to Total financial assets and liabilities 128,147,434 – – 128,147,434 the Statements of Comprehensive Income.

During the period ended December 31, 2018 and 2017, there were no transfers of assets between Level 1, Level 2 and Level 3.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 59 PURPOSE INTERNATIONAL DIVIDEND FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE INTERNATIONAL DIVIDEND FUND (continued) F) INTEREST IN UNDERLYING FUNDS The Fund invests in redeemable units of other investment funds (“underlying funds”) to gain exposure to the investment objectives and strategies of the underlying funds. Each underlying fund is generally financed through the capital invested by the Fund, along with other investors, which entitles unitholders to a proportionate share of the underlying fund’s net assets. The Fund does not provide additional financial or other support to the underlying funds. All underlying funds were established in and carry out their operations in Canada. The Fund’s interests in underlying funds are reported at fair value in “Investments” in its Statements of Financial Position and in its Schedule of Investments, which represents the Fund’s maximum exposure to financial loss. At December 31, 2018 At December 31, 2017 % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % Purpose High Interest Savings ETF 0.2 0.0 0.8 0.2

G) INCOME TAXES As at December 31, 2018 and 2017, the Fund had no non-capital losses and no capital loss carry forward for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 60 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, 2018 2017 ($) ($) Assets Investments: Non-derivative financial assets 60,501,223 58,628,730 Cash 6,243,116 10,229,250 Receivables: Dividends 205,944 239,152 Capital units sold 139,225 93,302 Investment securities sold 274,265 1,083,567 Total assets 67,363,773 70,274,001 Liabilities Payables: Management fees (note 5) 67,514 22,996 Independent review committee fees (note 5) 10,254 5,503 Other accrued liabilities 24,843 318,921 Distributions 6,981 2,015 Capital units redeemed 64,771 7,119 Investment securities purchased 119,793 2,166,685 Total liabilities 294,156 2,523,239 Net assets attributable to holders of redeemable units 67,069,617 67,750,762 Net assets attributable to holders of redeemable units by class ETF Units 6,947,485 1,049,651 Class A 4,251,764 4,096,033 Class F 55,870,368 62,605,078 Total 67,069,617 67,750,762 Number of units outstanding (note 4) ETF Units 375,000 50,000 Class A 405,112 340,551 Class F 4,864,148 4,812,788 Net assets attributable to holders of redeemable units per unit ETF Units 18.53 20.99 Class A 10.50 12.03 Class F 11.49 13.01 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Emerging Markets Dividend Fund (formerly Redwood Emerging Markets Dividend Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 61 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives redeemable units by class (note 8) Dividends 2,132,891 1,497,034 ETF Units (657,861) 56,696 Early redemption fees 4,324 2,793 Class A (581,221) 767,509 Other income – 535 Class F (5,912,182) 10,646,995 Net realized gain (loss) on foreign exchange (150,023) (34,470) Total (7,151,264) 11,471,200 Net realized gain (loss) on sale of investments (261,166) 645,840 Average number of units outstanding (note 8) Realized gain (loss) on forward currency contracts (2,835) 2,047 ETF Units 255,616 50,000 Realized gain (loss) on warrants – 1,209 Class A 406,477 335,050 Net change in unrealized appreciation (depreciation) in value Class F 4,928,823 4,156,305 of investments (7,458,783) 10,647,768 Increase (decrease) in net assets attributable to holders of Net change in unrealized appreciation (depreciation) in value redeemable units per unit (note 8) of warrants – (1,212) ETF Units (2.58) 1.13 Net change in unrealized appreciation (depreciation) in value of Class A (1.43) 2.29 foreign exchange 4,895 (1,514) Class F (1.20) 2.57 Net gains (losses) on investments and derivatives (5,730,697) 12,760,030 (1) (2) Security lending income 23,739 12,808 (1) Securities lending: Foreign exchange gain (loss) on cash 12,645 4,108 The value of securities loaned and collateral received from securities lending at December 31 is as follows: Total revenue (5,694,313) 12,776,946 Value of securities loaned 8,156,147 2,277,135 Expenses Value of collateral received 8,642,620 2,404,091 Management fees (note 5) 644,062 673,820 (2) Securities lending income Withholding taxes (note 7) 287,352 167,371 The table below shows a reconciliation of the gross amount generated from securities lending transactions of the Fund to Securities lending income disclosed in the Statement of Comprehensive Income. Custodian and fund accounting fees 258,105 259,123 December 31, 2018 December 31, 2017 Valuation and administrative fees (note 5) 135,040 102,900 $ % $ % Transaction costs (note 9) 71,491 10,966 Gross securities lending revenue 39,960 100.0 21,346 100.0 Legal and regulatory fees 29,612 60,865 Withholding taxes (397) 1.0 – – Independent review committee fees (note 5) 21,053 13,083 Agent fees (15,824) 39.6 (8,538) 40.0 Audit fees 19,814 26,333 Securities lending income 23,739 59.4 12,808 60.0 Total expenses 1,466,529 1,314,461 The accompanying notes are an integral part of the financial statements. Expenses waived/absorbed by the Manager (9,578) (8,715) Net expenses 1,456,951 1,305,746 Increase (decrease) in net assets attributable to holders of redeemable units (7,151,264) 11,471,200

2018 ANNUAL REPORT 62 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

STATEMENTS OF CHANGES IN STATEMENTS OF CASH FLOWS FINANCIAL POSITION For the years ended: For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Units Cash Flows from Operating Activities Net assets attributable to holders of redeemable units at beginning of year 1,049,651 – Increase (decrease) in net assets attributable to holders of Increase (decrease) in net assets attributable to holders of redeemable units (657,861) 56,696 redeemable units (7,151,264) 11,471,200 Redeemable unit transactions Adjustments for: Proceeds from issuance of redeemable units 6,684,655 1,000,000 Foreign exchange loss (gain) on cash (12,645) (4,108) Net increase (decrease) from redeemable unit transactions 6,684,655 1,000,000 Net investments purchased (29,854,608) (6,353,065) Distributions paid or payable to holders of redeemable units Proceeds from sale and maturity of investments 18,953,085 3,069,159 From investment income (36,654) (2,681) Net realized loss (gain) on sale of investments 261,166 (645,840) Return of capital (92,306) (4,364) Net realized loss (gain) on warrants – (1,209) Total distributions to holders of redeemable units (128,960) (7,045) Change in unrealized depreciation (appreciation) in value of investments 7,458,783 (10,647,768) Net increase (decrease) in net assets attributable to holders of redeemable units 5,897,834 1,049,651 Net change in unrealized depreciation (appreciation) on warrants – 1,212 Net assets attributable to holders of redeemable units at end of year 6,947,485 1,049,651 Net change in non-cash working capital balances (211,601) 80,551 Transaction costs (note 9) 71,491 10,966 Class A (10,485,593) (3,018,902) Net assets attributable to holders of redeemable units at beginning of year 4,096,033 3,505,917 Increase (decrease) in net assets attributable to holders of redeemable units (581,221) 767,509 Cash Flows from (used in) Financing Activities Redeemable unit transactions Proceeds from redeemable units issued 24,050,736 21,446,475 Proceeds from issuance of redeemable units 1,046,435 579,875 Unit exchanges 522,197 35,000 Unit exchanges 223,922 (54,314) Redemption of redeemable units (17,458,607) (10,044,208) Payments for redemption of redeemable units (516,943) (689,577) Distributions paid to holders of redeemable units, Reinvestment of distributions 96,588 69,926 net of reinvested distribution (627,512) (323,407) Net increase (decrease) from redeemable unit transactions 850,002 (94,090) 6,486,814 11,113,860 Distributions paid or payable to holders of redeemable units Return of capital (113,050) (83,303) Foreign exchange gain (loss) on cash 12,645 4,108 Total distributions to holders of redeemable units (113,050) (83,303) Increase (decrease) in cash and cash equivalents (3,998,779) 8,094,958 Net increase (decrease) in net assets attributable to holders of redeemable units 155,731 590,116 Cash and cash equivalents, at beginning of period 10,229,250 2,130,184 Net assets attributable to holders of redeemable units at end of year 4,251,764 4,096,033 Cash and cash equivalents, at end of period 6,243,116 10,229,250 Dividends received, net of withholding taxes 1,878,747 1,222,361 Class F The accompanying notes are an integral part of the financial statements. Net assets attributable to holders of redeemable units at beginning of year 62,605,078 41,471,595 Increase (decrease) in net assets attributable to holders of redeemable units (5,912,182) 10,646,995 Redeemable unit transactions Proceeds from issuance of redeemable units 16,365,569 19,948,931 Unit exchanges 298,275 89,314 Payments for redemption of redeemable units (16,999,316) (9,331,416) Reinvestment of distributions 1,078,282 853,141 Net increase (decrease) from redeemable unit transactions 742,810 11,559,970 Distributions paid or payable to holders of redeemable units From investment income (503,134) (276,951) Return of capital (1,062,204) (796,531) Total distributions to holders of redeemable units (1,565,338) (1,073,482) Net increase (decrease) in net assets attributable to holders of redeemable units (6,734,710) 21,133,483 Net assets attributable to holders of redeemable units at end of year 55,870,368 62,605,078 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 63 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Number of Shares/Units/ Average Cost Fair Value Shares/Units/ Average Cost Fair Value Security Par Value ($) ($) Security Par Value ($) ($) Equities – 90.2% Russia – 7.6% Brazil – 7.6% iShares MSCI Russia ADR / GDR UCITS ETF USD (Acc) 21,596 2,846,562 2,930,988 Ambev SA 524,814 3,368,501 2,843,166 iShares MSCI Russia Capped ETF 10,332 472,641 434,442 Porto Seguro SA 122,332 1,662,371 2,247,165 X5 Retail Group NV, GDR 50,411 2,262,435 1,705,387 5,030,872 5,090,331 5,581,638 5,070,817 Chile – 3.0% South Africa – 4.3% Administradora de Fondos de Pensiones Habitat SA 368,809 687,147 660,134 Sanlam Ltd. 253,947 1,397,557 1,922,901 Compania Cervecerias Unidas SA, ADR 11,221 342,030 384,964 Shoprite Holdings Ltd. 54,223 829,425 978,342 Compania Cervecerias Unidas SA 56,729 822,132 994,930 2,226,982 2,901,243 1,851,309 2,040,028 South Korea – 12.6% China – 4.1% NCsoft Corp. 491 175,669 280,248 CNOOC Ltd. 612,355 1,352,573 1,291,800 Nexen Tire Corp. 55,370 803,419 621,232 Tencent Holdings Ltd. 26,900 1,285,358 1,472,613 Samsung Electronics Co. Ltd. 60,270 2,373,362 2,853,790 Tencent Music Entertainment, ADR 8 146 146 Samsung Fire & Marine Insurance 4,975 1,507,702 1,637,402 2,638,077 2,764,559 SK Hynix Inc. 41,966 1,918,513 3,106,440 Greece – 1.7% 6,778,665 8,499,112 Alpha Bank SA 573,134 1,581,469 986,132 Switzerland – 4.9% Piraeus Bank SA 116,950 258,117 153,662 Coca-Cola HBC AG 36,295 1,201,372 1,548,594 1,839,586 1,139,794 Transocean Ltd. 180,738 2,323,034 1,712,400 Hong Kong – 4.5% 3,524,406 3,260,994 AIA Group Ltd. 153,500 1,599,816 1,739,516 Taiwan – 5.5% Henderson Land Development Co. Ltd. 187,100 1,272,361 1,272,170 eMemory Technology Inc. 21,000 286,605 244,374 2,872,177 3,011,686 Formosa International Hotels Corp. 55,840 455,422 334,822 Hungary – 7.7% Nanya Technology Corp. 234,000 553,402 571,628 MOL Hungarian Oil & Gas PLC 125,304 1,223,433 1,879,146 President Chain Store Corp. 60,000 369,319 828,794 OTP Bank Nyrt. 59,216 1,390,813 3,257,317 Taiwan Semiconductor Manufacturing Co. Ltd. 97,876 728,536 980,297 2,614,246 5,136,463 Win Semiconductors Corp. 134,266 492,181 703,692 India – 17.0% 2,885,465 3,663,607 iShares MSCI India ETF 147,287 6,229,330 6,703,880 Turkey – 1.7% iShares S&P India Nifty 50 Index Fund 96,633 3,659,949 4,659,533 Aksa Akrilik Kimya Sanayii AS 278,307 850,157 535,548 9,889,279 11,363,413 Anadolu Hayat Emeklilik 404,819 693,881 627,582 Indonesia – 1.7% 1,544,038 1,163,130 PT AKR Corporindo TBK 2,824,600 1,629,003 1,150,407 United Arab Emirates – 3.2% 1,629,003 1,150,407 First Abu Dhabi Bank PJSC 329,077 706,999 1,724,544 Nigeria – 0.6% Union National Bank PJSC 251,568 452,041 438,516 Access Bank PLC 16,267,228 486,473 415,446 1,159,040 2,163,060 486,473 415,446 United Kingdom – 0.8% Philippines – 0.2% HSBC Holdings PLC 50,156 502,318 566,637 Aboitiz Power Corp. 113,200 113,476 103,154 502,318 566,637 113,476 103,154 Total Equities – 90.2% 53,928,208 60,501,223 Poland – 1.5% Transaction Costs (note 9) (59,970) – Powszechny Zaklad Ubezpieczen SA 62,277 761,158 997,342 Total Investments – 90.2% 53,868,238 60,501,223 761,158 997,342 Cash – 9.3% 6,243,116 Other Assets, Less Liabilities – 0.5% 325,278 Net Assets – 100% 67,069,617 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 64 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) E) FINANCIAL RISKS (NOTE 11) The Purpose Emerging Markets Dividend Fund (formerly Redwood Emerging Market price risk Markets Dividend Fund)’s is to generate capital appreciation by investing in a If equity prices for these securities had increased or decreased by 5% as at basket of emerging market equities, while mitigating downside risk. A secondary December 31, 2018 with all other variables held constant, the Fund’s net assets objective of the Fund is to generate a high level of dividend income from those would have increased or decreased, respectively, by approximately $3.0 million investments. (2017 – $2.9 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Interest rate risk Changes in outstanding units during the periods ended December 31, 2018 and As at December 31, 2018, the Fund had no significant exposure to debt 2017 are summarized as follows: instruments. Number of Units Currency risk ETF Class A Class F The Fund holds assets denominated in currencies other than its functional Units Units Units currency. The Fund is therefore exposed to currency risk, as the value of the Outstanding, December 31, 2016 – 350,906 3,888,570 securities denominated in other currencies fluctuate due to the change in Issued 50,000 49,471 1,618,442 foreign exchange rates. Reinvested – 6,167 69,839 The table below summarizes the Fund’s direct exposure to foreign securities as Redeemed – (65,993) (764,063) at December 31, 2018 and 2017: Outstanding, December 31, 2017 50,000 340,551 4,812,788 At December 31, 2018 At December 31, 2017 Issued 325,000 120,348 1,321,840 Net Exposure % of Net Exposure % of Reinvested – 8,590 88,099 Currency ($) Net Assets ($) Net Assets Redeemed – (64,377) (1,358,579) UAE Dirham 2,163,060 3.2 1,481,601 2.2 Outstanding, December 31, 2018 375,000 405,112 4,864,148 Brazilian Real 5,217,428 7.8 2,994,772 4.4 Chilean Peso 1,656,045 2.5 2,669,221 3.9 C) MANAGEMENT FEES, SERVICE FEES AND OTHER Euro 1,142,241 1.7 1,627,845 2.4 EXPENSES (NOTE 5) British Pound 1,548,594 2.3 1,623,445 2.4 Annual Management Fee Hong Kong Dollar 6,342,737 9.5 3,804,272 5.6 (% of Net Asset Value of each units) Hungarian Forint 5,136,462 7.7 5,026,177 7.4 Units Management Fee Indonesian Rupiah 1,150,407 1.7 1,593,064 2.4 ETF Units 0.90% South Korean Won 8,626,160 12.9 11,446,317 16.9 Class A Units* 2.50% Malaysian Ringgit 17 0.0 16 0.0 Class F Units* 1.50% Nigeria Naira 424,495 0.6 399,153 0.6 * However, the Manager currently charges an annual rate of 1.90% of Class A Units and 0.90% of the Class F Units. Philippine Peso 137,744 0.2 1,107,179 1.6 Polish Zloty 997,342 1.5 2,303,870 3.4 D) FAIR VALUE INVESTMENTS (NOTE 10) New Turkish Lira 1,163,130 1.7 3,726,847 5.5 The following inputs were used in valuing the Fund’s investments and Taiwan Dollar 3,850,177 5.7 5,634,070 8.3 derivatives at fair values as at December 31, 2018: U.S. Dollar 18,554,370 27.7 10,426,412 15.4 Level 1 Level 2 Level 3 Total South African Rand 2,901,243 4.3 3,026,858 4.5 ($) ($) ($) ($) Net exposure 61,011,652 91.0 58,891,119 86.9 Financial assets Equities 45,772,380 – – 45,772,380 If the Canadian dollar weakened or strengthened by 5% as at Funds 14,728,843 – – 14,728,843 December 31, 2018, with all other variables held constant, the Fund’s net assets Total financial assets 60,501,223 – – 60,501,223 would have increased or decreased, respectively, by approximately $3.1 million (2017 – $2.9 million). In practice, actual results may differ from this sensitivity Total financial assets and liabilities 60,501,223 – – 60,501,223 analysis and the difference could be material. The following inputs were used in valuing the Fund’s investments and Portfolio concentration risk derivatives at fair values as at December 31, 2017: The Manager manages the risk through diversification and a thorough understanding of each investment in the portfolio. Level 1 Level 2 Level 3 Total ($) ($) ($) ($) Credit risk Financial assets The Fund’s main exposure to credit risk is: (a) their trading of listed securities Equities 51,637,205 – – 51,637,205 – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may Funds 6,991,525 – – 6,991,525 enter into derivative contracts to hedge their exposure to foreign currencies. Total financial assets 58,628,730 – – 58,628,730 The unrealized gain (loss) on outstanding contracts with counterparties Total financial assets and liabilities 58,628,730 – – 58,628,730 represents the maximum credit exposure. These contracts are carried out with counterparties with a credit rating of at least “A-”. The exposure to credit risk on During the period ended December 31, 2018 and 2017, there were no transfers these contracts is considered minimal as there are few contracts outstanding at of assets between Level 1, Level 2 and Level 3. any one time and the transactions are settled and paid for upon delivery.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 65 PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE EMERGING MARKETS DIVIDEND FUND (FORMERLY REDWOOD EMERGING MARKETS DIVIDEND FUND) (continued) The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income.

F) INCOME TAXES As at December 31, 2018 and 2017, the Fund had capital loss carry forward of $440,929 (2017 – $440,929) and no non-capital losses (2017 – $nil) for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

G) INTEREST IN UNDERLYING FUNDS The Fund invests in redeemable units of other investment funds (“underlying funds”) to gain exposure to the investment objectives and strategies of the underlying funds. Each underlying fund is generally financed through the capital invested by the Fund, along with other investors, which entitles unitholders to a proportionate share of the underlying fund’s net assets. The Fund does not provide additional financial or other support to the underlying funds. All underlying funds were established in and carry out their operations in India and Russia. The Fund’s interests in underlying funds are reported at fair value in “Investments” in its Statements of Financial Position and in its Schedule of Investments, which represents the Fund’s maximum exposure to financial loss. The fair value of the underlying fund included in the statements of financial position is as follows: At December 31, 2018 At December 31, 2017 % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % iShares MSCI India ETF 10.0 0.1 3.8 0.0 iShares MSCI Russia ADR / GDR UCITS ETF USD (Acc) 4.4 1.2 1.8 0.3 iShares MSCI Russia Capped ETF 0.7 0.1 – – iShares S&P India Nifty 50 Index Fund 7.0 0.6 4.7 0.2

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 66 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

STATEMENT OF FINANCIAL POSITION As at: December 31, 2018 ($) Assets Investments: Non-derivative financial assets 21,389,992 Receivables: Dividends 1,198 Interest 3,313 Capital units sold 47,228 Investment securities sold 1,948,701 Derivative assets: Warrants 94,286 Total assets 23,484,718 Liabilities Bank overdraft 192,121 Payables: Management fees (note 5) 23,304 Other accrued liabilities 2,854 Distributions 262 Capital shares redeemed 2,195,151 Total liabilities 2,413,692 Net assets attributable to holders of redeemable units 21,071,026 Net assets attributable to holders of redeemable units per class ETF Unit 10,414,722 Class A 7,517,697 Class F 3,138,607 Total 21,071,026 Number of units outstanding (note 4) ETF Unit 475,000 Class A 345,777 Class F 142,415 Net assets attributable to holders of redeemable units per unit ETF Unit 21.93 Class A 21.74 Class F 22.04 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Marijuana Opportunities Fund (formerly Marijuana Opportunities Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 67 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

STATEMENT OF COMPREHENSIVE INCOME For the period from February 1, 2018 to December 31, 2018: December 31, December 31, 2018 2018 ($) ($) Income Increase (decrease) in net assets attributable to holders of redeemable units per Net gains (losses) on investments and derivatives: class (note 8) Dividend income 9,112 ETF Unit 2,281,144 Interest income for distribution purposes 39,948 Class A (1,099,221) Early redemption fees 1,066 Class F (186,864) Net realized gain (loss) on foreign exchange transactions 256,509 Total 995,059 Net realized gain (loss) on sale of investments 3,438,787 Average number of units outstanding for the period per class (note 8) Net realized gain (loss) on options (12,421) ETF Unit 486,866 Net realized gain (loss) on warrants 45,273 Class A 145,062 Net change in unrealized appreciation (depreciation) in value of investments (2,499,074) Class F 89,921 Net change in unrealized appreciation (depreciation) in value of warrants 94,286 Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 8) Net change in unrealized appreciation (depreciation) on foreign exchange transactions 120 ETF Unit 4.68 Net gains (losses) on investments and derivatives 1,373,606 Class A (7.59) Securities lending income (1) (2) 311,624 Class F (2.08) Foreign exchange gain (loss) on cash (260,513) Total revenue 1,424,717 (1) Security lending Expenses The value of securities loaned and collateral received from securities lending at December 31 is as follows: Transaction costs (note 9) 234,395 Value of securities loaned 8,088,095 Management fees (note 5) 157,953 Value of collateral received 9,613,023 Valuation and administrative fees (note 5) 28,987 (2) Securities lending Income Legal and regulatory fees 26,628 The table below shows a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from the securities lending disclosed in the Statement of Comprehensive Income. Audit fees 17,554 December 31, 2018 Stock borrow fees 15,128 $ % Custodian and fund accounting fees 3,646 Gross securities lending income 311,624 100.0 Independent review committee fees (note 5) 1,756 Securities lending income 311,624 100.0 Interest and bank charges 25 The accompanying notes are an integral part of the financial statements. Total expenses 486,072 Expenses waived/absorbed by the Manager (56,414) Net expenses 429,658 Increase (decrease) in net assets attributable to holders of redeemable units 995,059

2018 ANNUAL REPORT 68 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

STATEMENT OF CHANGES IN STATEMENT OF CASH FLOWS FINANCIAL POSITION For the period from February 1, 2018 to December 31, 2018: For the period from February 1, 2018 to December 31, 2018: December 31, December 31, 2018 2018 ($) ($) ETF Unit Cash Flows from Operating Activities Net assets attributable to holders of redeemable units at beginning of period – Increase (decrease) in net assets attributable to holders of redeemable units 995,059 Increase (decrease) in net assets attributable to holders of redeemable units 2,281,144 Adjustments for: Redeemable unit transactions Foreign exchange loss (gain) on cash 260,513 Proceeds from issuance of redeemable units 16,959,428 Purchase of investments (82,641,596) Payments for redemption of redeemable units (8,750,600) Proceeds from sale of investments 60,041,073 Reinvestment of distributions 1,921,500 Net realized loss (gain) on sale of investments (3,438,787) Net increase (decrease) from redeemable unit transactions 10,130,328 Net realized loss (gain) on options 12,421 Distributions paid or payable to holders of redeemable shares Net realized loss (gain) on warrants (45,273) From capital gains (1,996,750) Net change in unrealized depreciation (appreciation) in value of investments 2,499,074 Total distributions to holders of redeemable shares (1,996,750) Net change in unrealized depreciation (appreciation) on warrants (94,286) Net increase (decrease) in net assets attributable to holders of redeemable units 10,414,722 Net change in non–cash working capital balances 21,647 Net assets attributable to holders of redeemable units at end of period 10,414,722 Transaction costs (note 9) 234,395 (22,155,760) Class A Net assets attributable to holders of redeemable units at beginning of period – Cash Flows from Financing Activities Increase (decrease) in net assets attributable to holders of redeemable units (1,099,201) Proceeds from issuance of units 31,945,802 Redeemable unit transactions Unit exchanges 189,678 Proceeds from issuance of redeemable units 9,087,890 Payments for units redeemed (9,826,237) Unit exchanges (5,683) Distributions to holders, net of reinvestments (85,111) Payments for redemption of redeemable units (455,167) 22,224,132 Reinvestment of distributions 1,347,100 Net increase (decrease) from redeemable unit transactions 9,974,140 Foreign exchange gain (loss) on cash (260,513) Distributions paid or payable to holders of redeemable shares Net increase (decrease) in cash and cash equivalents 68,372 From capital gains (1,357,242) Cash and cash equivalents, at beginning of period 20 Total distributions to holders of redeemable shares (1,357,242) Bank overdraft, at end of period (192,121) Net increase (decrease) in net assets attributable to holders of redeemable units 7,517,677 Interest received 36,635 Net assets attributable to holders of redeemable units at end of period 7,517,697 Dividends received, net of withholding taxes 7,914 The accompanying notes are an integral part of the financial statements. Class F Net assets attributable to holders of redeemable units at beginning of period – Increase (decrease) in net assets attributable to holders of redeemable units (186,864) Redeemable unit transactions Proceeds from issuance of redeemable units 5,945,712 Unit exchanges 195,361 Payments for redemption of redeemable units (2,815,621) Reinvestment of distributions 581,415 Net increase (decrease) from redeemable unit transactions 3,906,867 Distributions paid or payable to holders of redeemable shares From capital gains (581,396) Total distributions to holders of redeemable shares (581,396) Net increase (decrease) in net assets attributable to holders of redeemable units 3,138,607 Net assets attributable to holders of redeemable units at end of period 3,138,607 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 69 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Number of Shares/Units/ Average cost Fair value Shares/Units/ Average cost Fair value Security Par Value ($) ($) Security Par Value ($) ($) United States Fixed Income – 0.4% MariCann Group Inc. 282,855 463,987 260,227 Corporate – 0.4% MPX Bioceutical Corp. 191,222 183,748 168,275 *Panaxia Pharmaceutical Industries Ltd., 8.000%, 2019/06/30 60,000 80,199 81,912 National Access Cannabis Corp. 383,310 345,904 203,154 80,199 81,912 OrganiGram Holdings Inc. 449,360 2,515,409 2,174,902 Canadian Equities – 79.1% *PharmaCielo Ltd. 75,000 251,250 251,250 Consumer Discretionary – 2.1% Tetra Bio-Pharma Inc. 272,509 259,952 223,457 *Fire & Flower Inc., Subscription Receipts 225,000 337,500 337,500 Trulieve Cannabis Corp. 53,276 698,935 586,036 *Hemp Hydrate International Holdings Ltd. 200,000 100,000 100,000 WeedMD Inc. 214,487 419,787 280,978 437,500 437,500 15,800,401 13,479,595 Financials – 13.1% Total Canadian Equities – 79.1% 19,399,399 16,658,103 Acreage Holdings Inc. 18,930 507,924 491,332 United States Equities – 18.9% *Canaccord Genuity Growth Inc., Subscription Receipts 100,000 302,105 350,000 Health Care – 18.9% Cannabis Strategies Acquisition Corp., Class 'A', Restricted 9,560 147,954 142,157 Charlotte's Web Holdings Inc. 96,165 1,072,652 1,458,823 CannaRoyalty Corp. 41,722 248,571 269,107 *Columbia Care NY LLC 4,750 500,664 639,147 Canopy Rivers Inc. 293,482 1,316,087 900,989 Green Thumb Industries Inc. 89,876 1,248,510 984,142 *Cansortium Inc., Subscription Receipts 57,200 260,981 273,313 IntelGenx Technologies Corp. 209,582 189,049 154,506 iAnthus Capital Holdings Inc. 39,591 258,736 217,751 Tilray Inc., Class '2' 7,936 789,039 764,246 Mjardin Group Inc. 18,354 119,140 96,359 3,799,914 4,000,864 3,161,498 2,741,008 Total United States Equities – 18.9% 3,799,914 4,000,864 Health Care – 63.9% 23,199,313 20,658,967 Aphria Inc. 213,844 1,872,525 1,678,675 Money Market Funds – 3.1% Aurora Cannabis Inc. 106,790 1,068,306 724,036 Purpose High Interest Savings ETF 12,982 649,541 649,113 CannTrust Holdings Inc. 122,016 1,036,508 801,645 649,541 649,113 Canopy Growth Corp. 46,541 2,146,060 1,703,866 Total Investments 23,929,053 21,389,992 Cresco Labs Inc. 88,918 445,514 822,491 Transaction Costs (note 9) (39,987) – Curaleaf Holdings Inc. 71,710 529,684 463,247 Total Investments – 101.5% 23,889,066 21,389,992 Emerald Health Therapeutics Inc. 57,891 279,023 163,832 Warrants (Schedule 1) – 0.5% – 94,286 Eviana Health Corp. 189,656 220,094 115,690 Bank Overdraft – (0.9)% (192,121) Flower One Holdings Inc. 114,732 153,683 166,361 Other Assets, Less Liabilities – (1.1%) (221,131) Harvest Health & Recreation Inc. 64,538 509,518 464,674 Net Assets – 100% 21,071,026 HEXO Corp. 411,173 2,205,078 1,936,625 * Private securities classified as level 3. Khiron Life Sciences Corp. 189,656 195,436 290,174 The accompanying notes are an integral part of the financial statements.

SCHEDULE 1 – WARRANTS As at December 31, 2018: Strike Price Shares Cost Fair Value Security Expiry Date ($) Currency or units ($) ($) CannTrust Holdings Inc. October 10, 2020 12.00 CAD 8,800 – 4,191 Green Organic Dutchman Holdings Ltd. (The) May 2, 2020 7.00 CAD 55,615 – – IntelGenx Technologies Corp. October 22, 2021 1.00 CAD 109,600 – 13,600 MariCann Group Inc. August 10, 2020 1.75 CAD 200,000 – 11,236 MedMen Enterprises Inc. September 27, 2021 6.87 CAD 64,290 – 57,204 Valens GroWorks Corp. October 10, 2020 2.54 CAD 32,500 – 8,055 Warrants – 94,286 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 70 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) The table below presents a reconciliation of financial instruments measured The Purpose Marijuana Opportunities Fund (formerly Marijuana Opportunities at fair value using unobservable inputs (Level 3) for the period ended Fund) seeks to provide unitholders with an attractive long-term capital December 31, 2018: appreciation by investing in global issuers with interest in the marijuana or marijuana related industries. 2018 ($) B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Beginning of year – Changes in outstanding units during the period ended December 31, 2018 are Acquisitions 1,832,698 summarized as follows: Net change in unrealized 200,424 End of period 2,033,122 Number of Units ETF Class A Class F Units Units Units E) FINANCIAL RISKS (NOTE 11) Issued 825,000 363,457 252,205 Market price risk If equity prices for these securities had increased or decreased by 5% as at Reinvested – 1,083 821 December 31, 2018 with all other variables held constant, the Fund’s net assets Redeemed (350,000) (18,764) (110,611) would have increased or decreased, respectively, by approximately $1.0 million. Outstanding, December 31, 2018 475,000 345,777 142,415 In practice, actual results may differ from this sensitivity analysis and the difference could be material. C) MANAGEMENT FEES, SERVICE FEES AND OTHER Interest rate risk EXPENSES (NOTE 5) As at December 31, 2018 the Fund had exposure to debt instruments by maturity Annual Management Fee as follows: (% of Net Asset Value of each units) Units 2018 $ of exposure Maturity fixed-income assets ETF Units 0.75% Less than 1 year 81,912 Class A units* 1.75% Total Exposure 81,912 Class F Units 0.75% * Includes a service fee at an annual rate of 1.00% of the daily average Net Asset Value of the Class A units. Currency risk The table below summarizes the Fund’s direct exposure to the US dollar as D) FAIR VALUE INVESTMENTS (NOTE 10) at December 31, 2018 including the underlying principal amount of forward The following inputs were used in valuing the Fund’s investments and currency contracts that is used to hedge the foreign currency risk: derivatives at fair values as at December 31, 2018: At December 31, 2018 Level 1 Level 2 Level 3 Total Net Exposure % of ($) ($) ($) ($) Currency ($) Net Assets Financial assets U.S. Dollar 3,394,559 16.1 Equities 18,707,757 – 1,951,210 20,658,967 Net exposure 3,394,559 16.1 Bonds – – 81,912 81,912 Portfolio concentration risk Money market funds 649,113 – – 649,113 The Manager manages the risk through diversification and a thorough Warrants – 94,286 – 94,286 understanding of each investment in the portfolio. Total financial assets 19,356,870 94,286 2,033,122 21,484,278 Credit risk Total financial assets and liabilities 19,356,870 94,286 2,033,122 21,484,278 The Fund’s main exposure to credit risk is: (a) their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid During the period ended December 31, 2018, there were no transfers of assets for upon delivery using approved brokers, (b) the Fund may enter into derivative between Level 1, Level 2 and Level 3. contracts to hedge their exposure to foreign currencies, and (c) their trading of The Manager obtains pricing from a third party pricing vendor, which is non‑listed securities. The unrealized gain (loss) on outstanding contracts with monitored and reviewed daily by the portfolio manager. Any adjustments to the counterparties represents the maximum credit exposure. These contracts are prices or estimates provided by the third party pricing vendor are approved by carried out with counterparties with a credit rating of at least “A-”. The exposure the portfolio manager. to credit risk on these contracts is considered minimal as there are few contracts The Fund’s policy is to recognize transfers into and transfers out of fair value outstanding at any one time and the transactions are settled and paid for upon hierarchy levels as of the date of the event or change in circumstances that delivery. caused the transfer. The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income.

DECEMBER 31, 2018 2018 ANNUAL REPORT 71 PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MARIJUANA OPPORTUNITIES FUND (FORMERLY MARIJUANA OPPORTUNITIES FUND) (continued)

As at December 31, 2018 the Fund also invested in debt instruments with the following Standard & Poor’s credit rating: December 31, 2018 Market % of Rating Value Net Assets Unrated 81,912 0.39 Total 81,912 0.39

F) INCOME TAXES As at December 31, 2018, the Fund had no non-capital losses and no capital loss carry forward for income tax purposes. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the tax year in which they arise.

G) INTEREST IN UNDERLYING FUNDS The Fund invests in redeemable units of other investment funds (“underlying funds”) to gain exposure to the investment objectives and strategies of the underlying funds. Each underlying fund is generally financed through the capital invested by the Fund, along with other investors, which entitles unitholders to a proportionate share of the underlying fund’s net assets. The Fund does not provide additional financial or other support to the underlying funds. All underlying funds were established in and carry out their operations in Canada. The Fund’s interests in underlying funds are reported at fair value in “Investments” in its Statements of Financial Position and in its Schedule of Investments, which represents the Fund’s maximum exposure to financial loss. At December 31, 2018 % of Ownership Underlying Funds Net Assets Interest % Purpose High Interest Savings ETF 3.1 0.0

DECEMBER 31, 2018 2018 ANNUAL REPORT 72 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Net assets attributable to holders of redeemable units by class Investments: ETF Units 128,862,172 – Non-derivative financial assets 243,149,400 117,616,998 Class A 83,094,758 90,146,576 Cash and cash equivalents – 805,146 Class F 14,644,172 20,479,567 Cash held at broker for margin 322 – Class I 971 11,752 Receivables: Class P 8,165,798 – Dividends 1,062,814 344,598 Class X 3,947,989 5,374,591 Interest 228,944 594,780 Class UA 163,223 198,882 Capital units sold 53,218 1,431 Class UF 32,515 31,381 Investment securities sold 218,665 – Class TA6 801,347 2,523,862 Tax reclaims 8,379 – Class TF6 51,657 363,469 Prepaid expenses 183,880 226,181 Total 239,764,602 119,130,080 Derivative assets: Number of units outstanding (note 4) Warrants 4,663 – ETF Units 7,053,835 – Unrealized gain on forward currency contracts 2,542 – Class A 9,153,767 8,787,664 Total assets 244,912,505 119,589,134 Class F 1,554,264 1,946,219 Liabilities Class I 99 1,091 Bank overdraft 1,280,881 – Class P 918,432 – Payables: Class X 422,802 515,717 Management fees (note 5) 204,853 158,470 Class UA 13,279 15,534 Independent review committee fees (note 5) 2,609 – Class UF 2,572 2,421 Other accrued liabilities 645,505 105,621 Class TA6 90,930 251,286 Distributions 2,645,520 – Class TF6 5,947 37,087 Capital units redeemed 145,655 191,231 Net assets attributable to holders of redeemable units per unit Derivative liabilities: ETF Units 18.27 – Unrealized loss on forward currency contracts 223,203 3,732 Class A 9.08 10.26 Total liabilities 5,147,903 459,054 Class F 9.42 10.52 Net assets attributable to holders of redeemable units 239,764,602 119,130,080 Class I 9.85 10.77 Class P 8.89 – Class X 9.34 10.42 Class UA 12.29 12.80 Class UA (USD) 9.00 10.19 Class UF 12.64 12.96 Class UF (USD) 9.30 10.31 Class TA6 8.81 10.04 Class TF6 8.69 9.80 The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors of Purpose Investments Inc., as trustee and manager of Purpose Multi‑Asset Income Fund (formerly Redwood High Income Fund)

Som Seif Jeff Bouganim Director Director April 1, 2019

2018 ANNUAL REPORT 73 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Average number of units outstanding (note 8) Net gains (losses) on investments and derivatives ETF Units 6,741,861 – Dividends 8,981,716 4,346,758 Class A 9,556,507 10,035,269 Interest for distribution purposes 1,796,737 3,983,339 Class F 1,691,749 2,325,601 Other income – 165,648 Class I 217 1,012,011 Net realized gain (loss) on sale of investments 551,554 6,799,283 Class P 459,259 – Net realized gain (loss) on foreign currency forward contracts (832,898) (24,248) Class X 465,506 601,130 Net realized gain (loss) on options – 4 Class UA 15,129 16,905 Net realized gain (loss) on warrants (235) (489,601) Class UF 2,487 22,822 Change in unrealized appreciation (depreciation) in value Class TA6 139,406 162,752 of investments (23,982,790) (1,676,243) Class TF6 18,722 152,745 Change in unrealized appreciation (depreciation) in value Increase (decrease) in net assets attributable to holders of of foreign currency forward contracts (216,930) (5,522) redeemable units per unit (note 8) Change in unrealized appreciation (depreciation) in value ETF Units (1.36) – of warrants (2,647) 489,599 Class A (0.66) 0.65 Net gains (losses) on investments and derivatives (13,705,493) 13,589,017 Class F (0.53) 0.68 Securities lending income (1) (2) 117,716 4,753 Class I (1.08) 1.64 Foreign exchange gain (loss) on cash 193,850 (2,303) Class P (1.13) – Total revenue (13,393,927) 13,591,467 Class X (0.51) 0.80 Expenses Class UA 0.41 0.11 Management fees (note 5) 2,715,455 2,392,901 Class UF 0.46 (0.13) Transaction costs (note 9) 356,900 211,090 Class TA6 (0.47) 0.16 Valuation and administrative fees (note 5) 344,709 8,656 Class TF6 (0.03) (0.84) Interest and borrowing costs 178,253 13,385 Withholding taxes (note 7) 140,428 192,280 (1) Securities lending: Legal fees 48,880 13,823 The value of securities loaned and collateral received from securities lending at December 31 is as follows: Custodial fees 39,550 20,892 Value of securities loaned 9,249,336 11,827,035 Unitholder reporting costs 29,777 – Value of collateral received 9,713,292 12,433,144 Audit fees 16,951 76,872 (2) Securities lending income Recordkeeping fees 7,930 13,677 The table below shows a reconciliation of the gross amount generated from securities lending transactions of Operating fees 4,658 415,502 the Fund to Securities lending income disclosed in the Statement of Comprehensive Income. Listing fees 3,381 – December 31, 2018 December 31, 2017 Independent review committee fees (note 5) 2,524 – $ % $ % Filing fees – 24,283 Gross securities lending revenue 191,774 100.0 7,922 100.0 Other expenses (note 5) (28,448) – Withholding taxes (1,525) (0.8) – – Total expenses 3,860,948 3,383,361 Agent fees (72,532) (37.8) (3,169) (40.0) Expenses waived/absorbed by the Manager (59,651) – Securities lending income 117,717 61.4 4,753 60.0 Net expenses 3,801,297 3,383,361 The accompanying notes are an integral part of the financial statements. Increase (decrease) in net assets attributable to holders of redeemable units (17,195,224) 10,208,106 Increase (decrease) in net assets attributable to holders of redeemable units by class (note 8) ETF Units (9,138,204) – Class A (6,345,100) 6,568,908 Class F (899,126) 1,591,860 Class I (235) 1,668,353 Class P (517,700) – Class X (235,913) 482,724 Class UA 6,246 1,781 Class UF 1,134 (2,881) Class TA6 (65,808) 26,310 Class TF6 (518) (128,949) Total (17,195,224) 10,208,106

2018 ANNUAL REPORT 74 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Units Class I Net assets attributable to holders of redeemable units at beginning of year – – Net assets attributable to holders of redeemable units at beginning of year 11,752 26,636,815 Increase (decrease) in net assets attributable to holders of redeemable units (9,138,204) – Increase (decrease) in net assets attributable to holders of redeemable units (235) 1,668,353 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 1,000,000 – Proceeds from issuance of redeemable units 922 6,327,937 Payments for redemption of redeemable units (42,743,015) – Payments for redemption of redeemable units (11,464) (34,632,668) Units issued on merger 184,798,568 – Units issued on merger – 11,324 Net increase (decrease) from redeemable unit transactions 143,055,553 – Reinvestment of distributions 93 514,619 Distributions paid or payable to holders of redeemable units Net increase (decrease) from redeemable unit transactions (10,449) (27,778,788) From investment income (3,001,183) – Distributions paid or payable to holders of redeemable units Return of capital (2,053,994) – From investment income (53) – Total distributions to holders of redeemable units (5,055,177) – Return of capital (44) (514,628) Net increase (decrease) in net assets attributable to holders of redeemable units 128,862,172 – Total distributions to holders of redeemable units (97) (514,628) Net assets attributable to holders of redeemable units at end of year 128,862,172 – Net increase (decrease) in net assets attributable to holders of redeemable units (10,781) (26,625,063) Net assets attributable to holders of redeemable units at end of year 971 11,752 Class A Net assets attributable to holders of redeemable units at beginning of year 90,146,576 122,546,321 Class P Increase (decrease) in net assets attributable to holders of redeemable units (6,345,100) 6,568,908 Net assets attributable to holders of redeemable units at beginning of year – – Redeemable unit transactions Increase (decrease) in net assets attributable to holders of redeemable units (517,700) – Proceeds from issuance of redeemable units 2,221,933 5,074,509 Redeemable unit transactions Unit exchanges (1,457,521) – Proceeds from issuance of redeemable units 9,877,986 – Payments for redemption of redeemable units (39,246,956) (61,442,919) Payments for redemption of redeemable units (1,172,755) – Units issued on merger 38,987,470 16,848,040 Reinvestment of distributions 102,371 – Reinvestment of distributions 3,588,147 5,625,032 Net increase (decrease) from redeemable unit transactions 8,807,602 – Net increase (decrease) from redeemable unit transactions 4,093,073 (33,895,338) Distributions paid or payable to holders of redeemable units Distributions paid or payable to holders of redeemable units From investment income (124,104) – From investment income (2,337,345) (4,087,493) Total distributions to holders of redeemable units (124,104) – Return of capital (2,462,446) (985,822) Net increase (decrease) in net assets attributable to holders of redeemable units 8,165,798 – Total distributions to holders of redeemable units (4,799,791) (5,073,315) Net assets attributable to holders of redeemable units at end of year 8,165,798 – Net increase (decrease) in net assets attributable to holders of redeemable units (7,051,818) (32,399,745) Net assets attributable to holders of redeemable units at end of year 83,094,758 90,146,576 Class X Net assets attributable to holders of redeemable units at beginning of year 5,374,591 6,840,812 Class F Increase (decrease) in net assets attributable to holders of redeemable units (235,913) 482,724 Net assets attributable to holders of redeemable units at beginning of year 20,479,567 30,145,292 Redeemable unit transactions Increase (decrease) in net assets attributable to holders of redeemable units (899,126) 1,591,860 Proceeds from issuance of redeemable units 4 2,474 Redeemable unit transactions Payments for redemption of redeemable units (1,006,306) (1,703,566) Proceeds from issuance of redeemable units 584,209 4,369,297 Reinvestment of distributions 52,886 53,149 Unit exchanges 1,427,449 – Net increase (decrease) from redeemable unit transactions (953,416) (1,647,943) Payments for redemption of redeemable units (8,983,668) (22,973,760) Distributions paid or payable to holders of redeemable units Units issued on merger 2,307,552 7,652,083 From investment income (182,142) (258,862) Reinvestment of distributions 586,845 852,663 Return of capital (55,131) (42,140) Net increase (decrease) from redeemable unit transactions (4,077,613) (10,099,717) Total distributions to holders of redeemable units (237,273) (301,002) Distributions paid or payable to holders of redeemable units Net increase (decrease) in net assets attributable to holders of redeemable units (1,426,602) (1,466,221) From investment income (642,128) (972,609) Net assets attributable to holders of redeemable units at end of year 3,947,989 5,374,591 Return of capital (216,528) (185,259) Total distributions to holders of redeemable units (858,656) (1,157,868) Net increase (decrease) in net assets attributable to holders of redeemable units (5,835,395) (9,665,725) Net assets attributable to holders of redeemable units at end of year 14,644,172 20,479,567

2018 ANNUAL REPORT 75 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

STATEMENTS OF CHANGES IN FINANCIAL POSITION (continued) For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Class UA Class TF6 Net assets attributable to holders of redeemable units at beginning of year 198,882 256,044 Net assets attributable to holders of redeemable units at beginning of year 363,469 – Increase (decrease) in net assets attributable to holders of redeemable units 6,246 1,781 Increase (decrease) in net assets attributable to holders of redeemable units (518) (128,949) Redeemable unit transactions Redeemable unit transactions Payments for redemption of redeemable units (41,905) (58,943) Proceeds from issuance of redeemable units – 141,310 Reinvestment of distributions 11,860 10,976 Payments for redemption of redeemable units (303,618) (3,336,414) Net increase (decrease) from redeemable unit transactions (30,045) (47,967) Units issued on merger – 3,726,483 Distributions paid or payable to holders of redeemable units Reinvestment of distributions 2,730 7,229 From investment income (5,409) (9,878) Net increase (decrease) from redeemable unit transactions (300,888) 538,608 Return of capital (6,451) (1,098) Distributions paid or payable to holders of redeemable units Total distributions to holders of redeemable units (11,860) (10,976) From investment income (4,017) (17,520) Net increase (decrease) in net assets attributable to holders of redeemable units (35,659) (57,162) Return of capital (6,389) (28,670) Net assets attributable to holders of redeemable units at end of year 163,223 198,882 Total distributions to holders of redeemable units (10,406) (46,190) Net increase (decrease) in net assets attributable to holders of redeemable units (311,812) 363,469 Class UF Net assets attributable to holders of redeemable units at end of year 51,657 363,469 Net assets attributable to holders of redeemable units at beginning of year 31,381 578,861 The accompanying notes are an integral part of the financial statements. Increase (decrease) in net assets attributable to holders of redeemable units 1,134 (2,881) Redeemable unit transactions Payments for redemption of redeemable units – (538,166) Reinvestment of distributions 1,983 7,628 Net increase (decrease) from redeemable unit transactions 1,983 (530,538) Distributions paid or payable to holders of redeemable units From investment income (1,337) (8,155) Return of capital (646) (5,906) Total distributions to holders of redeemable units (1,983) (14,061) Net increase (decrease) in net assets attributable to holders of redeemable units 1,134 (547,480) Net assets attributable to holders of redeemable units at end of year 32,515 31,381

Class TA6 Net assets attributable to holders of redeemable units at beginning of year 2,523,862 134,276 Increase (decrease) in net assets attributable to holders of redeemable units (65,808) 26,310 Redeemable unit transactions Proceeds from issuance of redeemable units – 575,112 Unit exchanges (58,421) – Payments for redemption of redeemable units (1,530,856) (344,103) Units issued on merger – 2,214,968 Reinvestment of distributions 13,316 17,718 Net increase (decrease) from redeemable unit transactions (1,575,961) 2,463,695 Distributions paid or payable to holders of redeemable units From investment income (26,144) (100,419) Return of capital (54,602) – Total distributions to holders of redeemable units (80,746) (100,419) Net increase (decrease) in net assets attributable to holders of redeemable units (1,722,515) 2,389,586 Net assets attributable to holders of redeemable units at end of year 801,347 2,523,862

2018 ANNUAL REPORT 76 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the years ended: As at December 31, 2018 December 31, December 31, Number of 2018 2017 Shares/Units/ Average Cost Fair Value ($) ($) Security Par Value ($) ($) Long Positions – 101.4% Cash Flows from Operating Activities Equities – 97.5% Increase (decrease) in net assets attributable to holders of Communication Services – 0.9% redeemable units (17,195,224) 10,208,106 AT&T Inc. 41,400 1,710,730 1,613,060 Adjustments for: Cenoplex Inc. NPV, Private Placement 2,340,287 – – Foreign exchange loss (gain) on cash (193,850) 2,303 QYOU Media Inc. 119,232 25,182 10,135 Purchase of investments (516,084,016) (17,683,491) Shaw Communications Inc. Class 'B' 25,000 649,250 617,750 Proceeds from investments sold 365,704,369 116,661,157 2,385,162 2,240,945 Net realized loss (gain) on sale of investments (551,554) (6,799,283) Consumer Discretionary – 1.7% Net realized loss (gain) on forward currency contracts 832,898 – *Cooltech Corporation 29,051 76,605 81,304 Net realized loss (gain) on warrants 235 489,601 Park Lawn Corporation 176,890 2,733,406 4,079,083 Change in unrealized depreciation (appreciation) in value *Proventus Auto Partner LP 19,595 19,595 19,595 of investments 23,982,790 1,676,243 Skylink Aviation Inc., Private Placement 52,700 – – Change in unrealized depreciation (appreciation) in value of foreign currency forward contracts 216,930 5,522 *WG Limited 312 – – Change in unrealized depreciation (appreciation) in value of warrants 2,647 (489,599) 2,829,606 4,179,982 Net change in non-cash working capital balances 270,096 3,503,057 Consumer Staples – 0.3% Transaction costs (cost 9) 356,900 211,090 Alcanna Inc. 195,821 2,018,921 824,406 (142,657,457) 107,784,706 Crumbs Bake Shop Inc. 8,492 132 47 2,019,053 824,453 Cash Flows from (used in) Financing Activities Energy – 8.9% Proceeds from redeemable units issued 239,726,857 13,298,169 AltaGas Limited 300,500 7,172,477 4,176,950 Units exchanges (88,493) – Gibson Energy Inc. 70,300 1,448,464 1,313,204 Redemption of redeemable units (95,086,119) (122,114,106) Inception Exploration Limited, Private Placement 241,576 – – Distributions paid to holders of redeemable units, *Iskander Energy Corporation 320,000 3,200 – net of reinvested distribution (4,174,342) (129,445) Keyera Corporation 62,000 1,802,359 1,600,220 140,377,903 (108,945,382) Parkland Fuel Corporation 105,700 3,153,573 3,735,438 Pembina Pipeline Corporation 141,044 5,882,666 5,713,692 Foreign exchange gain (loss) on cash 193,850 (2,303) Pinnacle Renewable Holdings Inc. 117,000 1,546,135 1,404,000 Increase (decrease) in cash and cash equivalents (2,279,877) (1,160,676) Sunoco 42,700 1,470,517 1,585,015 Cash and cash equivalents, at beginning of period 805,146 1,968,125 Tidewater Midstream and Infrastructure Limited 1,316,600 1,955,309 1,711,580 Bank overdraft, at end of period (1,280,881) 805,146 24,434,700 21,240,099 Interest received 2,162,573 4,610,538 Financials – 10.5% Dividends received, net of withholding taxes 8,123,072 4,262,778 Bank of Montreal 52,267 5,278,838 4,661,694 Interest paid 7,930 13,677 Canadian Imperial Bank of Commerce 44,503 4,974,646 4,525,065 The accompanying notes are an integral part of the financial statements. *Carta Solutions Holding Corporation 331,818 331,818 16,591 *GMS Investco LP, Restricted 550,000 66,000 66,000 Royal Bank of Canada 59,040 5,650,330 5,516,697 The Bank of Nova Scotia 74,030 5,765,573 5,037,741 The Toronto-Dominion Bank 79,410 5,647,776 5,388,763 27,714,981 25,212,551 Health Care – 1.2% Medical Facilities Corporation 190,000 2,976,679 2,857,600 2,976,679 2,857,600 Industrials – 1.1% Ag Growth International Inc. 53,800 2,927,506 2,517,840 2,927,506 2,517,840 Information Technology – 0.1% *Calgary Scientific 66,667 250,001 250,001 *iON Worldwide LLC 80,000 – – *Mobidia Technology Inc. Class A Series 4 120,000 12 12 Stratus Tech Ordinary Shares, Private Placement 101,160 – – 250,013 250,013

2018 ANNUAL REPORT 77 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 Number of Number of Shares/Units/ Average Cost Fair Value Shares/Units/ Average Cost Fair Value Security Par Value ($) ($) Security Par Value ($) ($) Materials – 0.0% Fixed Income – 3.9% First Cobalt Corporation 58,056 31,620 9,870 Canadian Corporate Bonds – 1.3% 31,620 9,870 *Purpose Alliance REIT 8.00% January 31, 2019 1,014,650 1,014,650 1,014,650 Pooled or Mutual Funds – 52.3% Crailar Technologies Inc. September 30, 2017 700,000 – – *Purpose Alliance Real Estate Investment Trust 76,717 515,659 548,143 *Cricket Acquisition Group Limited Convertible 5.00% Purpose Canadian Preferred Share Fund 1,078,580 27,292,845 22,704,109 June 30, 2019 792,400 – – Purpose Emerging Markets Dividend Fund 70,000 1,327,900 1,301,300 Cricket Media Group Limited Convertible 5.00% January 21, 2020 339,600 34,750 37,090 Purpose Energy Credit Fund 1,218,750 8,523,620 7,531,875 *Data & Audio-Visual 15.00% September 25, 2018 212,740 – – Purpose Floating Rate Income Fund 600,518 5,656,813 5,339,226 *Delavaco Properties Inc. Convertible 7.00% July 31, 2019 14,906 19,320 20,350 Purpose High Interest Savings ETF 26,100 1,306,232 1,305,026 Element Financial Corporation Convertible 5.125% June 30, 2019 2,000,000 2,000,000 1,991,140 Purpose International Dividend Fund 700,000 15,085,971 14,042,000 *Ivanhoe Energy Inc. 5.75% June 30, 2016 348,000 – – Purpose Managed Duration Investment Grade Bond 25,000 501,250 483,750 Skylink Aviation Inc., 12.25% May 10, 2018 735,000 – – Purpose Premium Yield Fund 1,378,109 26,115,267 25,495,017 3,068,720 3,063,230 Purpose Strategic Yield Fund 1,470,000 29,410,505 27,591,900 Foreign Corporate Bonds – 2.6% Purpose US Cash ETF 100 12,171 13,656 Crumbs Bake Shop Inc., Private Placement August 10, 2019 810,000 – – Purpose Tactical Bond Fund 2,028,727 20,169,283 19,500,121 Curo Group Holdings Corporation Callable 8.25% September 01, 2025 2,000,000 2,610,578 2,143,364 135,917,516 125,856,123 Enova International Inc. Callable 8.50% September 15, 2025 2,000,000 2,596,200 2,218,450 Real Estate – 13.7% *Great Basin Gold Limited Convertible 8.00% November 30, 2014 3,353,083 – – American Hotel Income Properties Real Estate Investment Trust L.P. 332,100 2,874,331 2,105,514 *Imprimis Pharmaceuticals Convertible 6.00% May 8, 2015 42,000 – – Apple Hospitality Real Estate Investment Trust Inc. 64,800 1,539,705 1,261,510 Intrepid Aviation Group Holdings LLC / Intrepid Finance Company Callable 8.5% August 15, 2021 500,000 663,436 675,699 Automotive Properties Real Estate Investment Trust 297,400 3,057,444 2,667,678 Vine Oil & Gas LP / Vine Oil & Gas Finance Corporation Callable Brookfield Property Partners L.P. 88,900 1,838,034 1,957,578 9.75% April 15, 2023 1,000,000 1,282,200 1,092,160 BSR Real Estate Investment Trust 162,300 2,017,292 1,772,576 7,152,414 6,129,673 Cominar Real Estate Investment Trust 167,300 2,027,646 1,873,760 Total Fixed Income – 3.9% 10,221,134 9,192,903 Invesque Inc. 460,600 5,835,266 4,483,423 Total Long Positions – 101.4% 260,870,155 243,149,400 Plaza Retail REIT 50,230 238,499 194,892 Transaction Costs (note 9) (73,149) – *PowerOne Industrial Properties LP 2,000 1,534,753 2,730,400 Total Investments – 101.4% 260,797,006 243,149,400 Pure Multi-Family REIT LP 398,888 3,262,154 3,362,626 Foreign Currency Forward Contracts – (0.1%) Retail Opportunity Investments Corporation 61,700 1,463,656 1,337,618 Net Unrealized Gain (Loss) on Forward Contracts – Schedule 1 – (220,661) SmartCentres Real Estate Investment Trust 69,300 2,029,241 2,136,519 Warrants – Schedule 2 – 0.0% 4,663 StorageVault Canada Inc. 1,382,877 1,670,248 3,277,419 Bank Overdraft – (0.5%) (1,280,881) WPT Industrial Real Estate Investment Trust 180,281 2,810,844 3,024,810 Other Assets, Less Liabilities – (0.8%) (1,887,920) 32,714,772 32,734,466 Net Assets – 100.0% 239,764,602 Utilities – 6.9% *Private securities classified as Level 3. Brookfield Infrastructure Partners L.P. 39,400 1,906,811 1,857,710 Brookfield Renewable Partners L.P. 83,000 3,229,430 2,934,050 Capital Power Corporation 131,200 3,293,143 3,488,608 Northland Power Inc. 221,964 5,230,403 4,816,619 Pattern Energy Group Inc. 137,100 3,303,285 3,483,711 16,963,072 16,580,698 Total Equities – 97.5% 250,649,021 233,956,497

SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACTS For the year ended December 31, 2018 Credit Rating for Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) CIBC Capital Markets A-1 2019/01/11 CAD 11,445,714 USD (11,668,917) 1.3387 0.7330 (223,203) CIBC Capital Markets A-1 2019/01/25 USD 157,123 CAD (155,000) 0.7430 1.3640 2,123 CIBC Capital Markets A-1 2019/01/25 USD 31,019 CAD (30,600) 0.7430 1.3640 419 (220,661)

2018 ANNUAL REPORT 78 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 SCHEDULE 2 – WARRANTS For the year ended December 31, 2018: Strike Price Shares Cost Fair Value Security Expiry Date ($) Currency or units ($) ($) Colossus Minerals Inc. April 23, 2019 0.00 CAD 321,012 – – Committed Capital Acquisition Corporation II April 19, 2019 2.50 USD 113,100 2,189 695 Data & Audio-Visual Enterprises September 25, 2018 0.00 CAD 2,025 – – Data & Audio-Visual Enterprises Class B September 25, 2018 0.00 CAD 4,725 – – Emblem Corporation November 16, 2020 2.15 CAD 10,200 – – EnWave Corporation November 15, 2022 1.50 CAD 12,800 5,120 3,968 NYX Gaming Group Limited April 26, 2019 3.50 CAD 250,000 – – Organic Garage Limited February 28, 2019 0.35 CAD 134,200 – – PolyMet Mining Corporation October 25, 2017 1.00 USD 133,350 – – QYOU Media Inc. November 21, 2019 0.55 CAD 17,450 – – Timeplay Inc. September 27, 2018 0.00 CAD 211,947 – – Venzee Technologies Inc. December 11, 2019 0.75 CAD 45,000 – – 4,663 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 79 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

A) INVESTMENT OBJECTIVES (NOTE 2) C) MANAGEMENT FEES, SERVICE FEES AND OTHER The Purpose Multi‑Asset Income Fund (formerly Redwood High Income Fund)’s EXPENSES (NOTE 5) investment objectives is to provide Unitholders with the benefit of monthly Annual Management Fee distributions together with long‑term capital appreciation through investment (% of Net Asset Value of each class) in a portfolio of high‑quality North American dividend‑paying equity securities. Class Management Fee On April 23, 2018, Redwood Monthly Income Fund (formerly LOGiQ VIP Income ETF Units 0.90% Fund), Redwood Advantage Monthly Income Fund (formerly LOGiQ Advantage Class A 1.55% VIP Income Fund), Redwood Global Balanced Income Fund (formerly LOGiQ Class F 0.80% Global Balanced Income Class), and Redwood Balanced Income Fund (formerly Class I negotiable and paid directly to the Manager LOGiQ Balanced Monthly Income Class) have been merged into Purpose Multi- Class P 0.95% Asset Income Fund (formerly Redwood High Income Fund). Both Security holder and Regulators approved the mergers. Class X 0.75% Class UA 1.85% On June 2, 2017, LOGiQ High Income Class merged into LOGiQ High Income Fund. Both Security holder and Regulators approved the mergers. Net assets Class UF 0.80% including cash and securities were transferred at fair value to the LOGiQ High Class TA6 1.55% Income Fund in return for units of the LOGiQ High Income Fund. Class TF6 0.80% On December 15, 2017, LOGiQ Millennium Fund merged into Redwood High Income Fund. Both Security holder and Regulators approved the mergers. D) FAIR VALUE INVESTMENTS (NOTE 10) The following inputs were used in valuing the Fund’s investments and B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) derivatives at fair values as at December 31, 2018: Changes in outstanding units during the periods ended December 31, 2018 and Level 1 Level 2 Level 3 Total 2017 are summarized as follows: ($) ($) ($) ($) Number of Units Financial assets ETF Class A Class F Class I Class P Equities 198,688,629 31,555,822 3,712,046 233,956,497 Units Units Units Units Units Fixed income – 8,120,813 1,072,090 9,192,903 Outstanding, December 31, 2016 – 12,136,534 2,944,776 2,572,176 – Warrants – 4,663 – 4,663 Issuance of units upon fund merger Forward currency contracts – 2,542 – 2,542 (note A) – 1,606,832 714,126 1,039 – Total financial assets 198,688,629 39,683,840 4,784,136 243,156,605 Issued – 492,321 416,087 591,073 – Redeemed – (5,995,933) (2,210,462) (3,211,386) – Financial liabilities Reinvested – 547,910 81,692 48,189 – Forward currency contracts – 223,203 – 223,203 Outstanding, December 31, 2017 – 8,787,664 1,946,219 1,091 – Total financial liabilities – 223,203 – 223,203 Issued 9,178,835 4,090,363 426,242 95 1,030,680 Total financial assets and liabilities 198,688,629 39,460,637 4,784,136 242,933,402 Redeemed (2,125,000) (4,086,580) (875,543) (1,096) (123,446) Reinvested – 362,320 57,346 9 11,198 The following inputs were used in valuing the Fund’s investments and Outstanding, December 31, 2018 7,053,835 9,153,767 1,554,264 99 918,432 derivatives at fair values as at December 31, 2017: Level 1 Level 2 Level 3 Total Class X Class UA Class UF Class TA6 Class TF6 ($) ($) ($) ($) Units Units Units Units Units Financial assets Outstanding, December 31, 2016 675,415 18,975 42,823 13,460 – Equities 74,646,592 – 8,095,820 82,742,412 Issuance of units upon fund merger Fixed income – 30,067,936 4,806,650 34,874,586 (note A) – – – 213,905 370,658 74,646,592 30,067,936 12,902,470 117,616,998 Issued 239 – – 56,739 14,450 Total financial assets Redeemed (165,081) (4,272) (40,974) (34,581) (348,766) Reinvested 5,144 831 572 1,763 745 Financial liabilities Forward currency contracts – 3,732 – 3,732 Outstanding, December 31, 2017 515,717 15,534 2,421 251,286 37,087 – 3,732 – 3,732 Issued – – – – – Total financial liabilities 74,646,592 30,064,204 12,902,470 117,613,266 Redeemed (98,135) (3,176) – (161,729) (31,423) Total financial assets and liabilities Reinvested 5,220 921 151 1,373 283 During the period ended December 31, 2018 and 2017 there were no transfers of Outstanding, December 31, 2018 422,802 13,279 2,572 90,930 5,947 assets between Level 1, Level 2 and Level 3. The Manager obtains pricing from a third party pricing vendor, which is monitored and reviewed daily by the portfolio manager. Any adjustments to the prices or estimates provided by the third party pricing vendor are approved by the portfolio manager.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 80 PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND)

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MULTI‑ASSET INCOME FUND (FORMERLY REDWOOD HIGH INCOME FUND) (continued) The following table reconciles the Fund’s Level 3 fair value measurements for credit risk on these contracts is considered minimal as there are few contracts the period ended December 31, 2018 and 2017. outstanding at any one time and the transactions are settled and paid for upon delivery. 2018 2017 ($) ($) As at December 31, 2018 and 2017 the Fund invested in debt instruments and Beginning of year 12,902,470 16,238,828 preferred shares with the following Standard & Poor’s credit ratings: Acquisitions 4,900,775 – December 31, 2018 December 31, 2017 Dispositions (8,225,000) (2,200,572) % of Total % of Net % of Total % of Net Realized gain (loss) (1,886,111) – Bond Ratings Bonds Assets Bonds Assets Net change in unrealized (2,907,998) (1,135,786) A – – 6.5 1.9 End of year 4,702,832 12,902,470 BB – – 11.9 3.5 B 7.4 0.3 30.7 9.0 E) FINANCIAL RISKS (NOTE 11) B- 59.3 2.3 – – Market price risk CCC – – 31.7 9.3 If equity prices for these securities had increased or decreased by 5% as at Not rated 33.3 1.3 19.1 5.6 December 31, 2018 with all other variables held constant, the Fund’s net assets Total 100.0 3.9 100.00 29.3 would have increased or decreased, respectively, by approximately $11.7 million (2017 – $4.1 million). In practice, actual results may differ from this sensitivity analysis and the difference could be material. F) INCOME TAXES As at December 31, 2018 and 2017, the Fund had capital loss carry forward Interest rate risk of $1,857,486 (2017 – $1,216,316) and no non-capital losses (2017 – $nil) for 2018 $ exposure 2017 $ exposure income tax purposes. Capital losses may be carried forward indefinitely to be Maturity fixed–income assets fixed–income assets applied against future capital gains. Non-capital losses may be utilized to reduce Less than 1 year 3,026,140 772,500 taxable income over the twenty years following the tax year in which they arise. 1 to 3 years 712,789 12,092,463 3 to 5 years 1,092,160 9,830,714 G) INTEREST IN UNDERLYING FUNDS Greater than 5 years 4,361,814 12,178,909 The Fund invests in redeemable units of other investment funds (“underlying funds”) to gain exposure to the investment objectives and strategies of the Total exposure 9,192,903 34,874,586 underlying funds. Each underlying fund is generally financed through the capital Currency risk invested by the Fund, along with other investors, which entitles unitholders The table below summarizes the Fund’s direct exposure to the foreign to a proportionate share of the underlying fund’s net assets. The Fund does currencies as at December 31, 2018 including the underlying principal amount not provide additional financial or other support to the underlying funds. of forward currency contracts that is used to hedge the foreign currency risk: All underlying funds were established in and carry out their operations in Canada. The Fund’s interests in underlying funds are reported at fair value in Gross Exposure Hedge Net Exposure % of “Investments” in its Statements of Financial Position and in its Schedule of Currency ($) ($) ($) Net Assets Investments, which represents the Fund’s maximum exposure to financial loss. Euro 7,068 – 7,068 – The fair value of the underlying fund included in the statements of financial US Dollar 25,981,883 (11,480,775) 14,501,108 6.1 position is as follows: Total 25,988,951 (11,480,775) 14,508,176 6.1 At December 31, 2018 At December 31, 2017 The table below summarizes the Fund’s direct exposure to the foreign % of Ownership % of Ownership currencies as at December 31, 2017 including the underlying principal amount Underlying Funds Net Assets Interest % Net Assets Interest % of forward currency contracts that is used to hedge the foreign currency risk: Alerian MLP ETF – – 2.5 – Gross Exposure Hedge Net Exposure % of Purpose Alliance REIT 0.2 9.8 – – Currency ($) ($) ($) Net Assets Purpose Tactical Bond Fund 8.1 44 – – Euro 6,815 – 6,815 – Purpose Canadian Preferred Share Fund 9.5 10.4 – – US Dollar 42,800,783 371,522 42,172,304 36.2 Purpose Emerging Markets Dividend Fund 0.5 1.9 – – Total 42,807,598 371,522 42,179,119 36.2 Purpose Floating Rate Income Fund 2.2 3.3 – – Purpose Energy Credit Fund 3.1 36.2 – – If the Canadian dollar weakened or strengthened by 5% as at December 31, Purpose High Interest Savings ETF 0.5 0.1 – – 2018 in relation to the US dollar, with all other variables held constant, Purpose International Dividend Fund 5.9 9.7 – – the Fund’s net assets would have increased or decreased, respectively, by approximately $0.7 million (2017 – $2.1 million). In practice, actual results may Purpose Managed Duration Investment Grade Bond Fund 0.2 1.9 – – differ from this sensitivity analysis and the difference could be material. Purpose Premium Yield Fund 10.6 10.7 – – Credit risk Purpose Strategic Yield Fund 11.5 17.8 – – The Fund’s main exposure to credit risk is: (a) their trading of listed securities – Purpose US Cash ETF 0.0 0.0 – – the risk of default is considered minimal as all transactions are settled and paid upon delivery using approved brokers, (b) the Fund may enter into a derivative contract to hedge their exposure to foreign currencies, and (c) their trading of non‑listed securities. The unrealized gain (loss) on outstanding contracts are with counterparties with a credit rating of at least “A-“. The exposure to

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 81 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

STATEMENTS OF FINANCIAL POSITION As at: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Assets Net assets attributable to holders of redeemable units per class Investments: ETF Unit 34,683,502 19,329,405 Non-derivative financial assets 64,801,451 41,741,916 Class A 5,479,310 4,451,599 Cash and cash equivalents 1,182,230 1,390,118 Class F 28,214,470 22,112,584 Cash margin 2,915,729 2,640,642 Class D 261,161 71,425 Receivables: Total 68,638,443 45,965,013 Distributions 99,910 44,110 Number of units outstanding (note 4) Capital units sold 164,133 28,974 ETF Unit 1,575,000 850,000 Investment securities sold 55 – Class A 258,600 202,767 Derivative assets: Class F 1,285,476 971,287 Unrealized gain on futures contracts 706,600 851,490 Class D 12,036 3,177 Unrealized gain on forward currency contracts 1,173,300 354,819 Net assets attributable to holders of redeemable units per unit Total assets 71,043,408 47,052,069 ETF Unit 22.02 22.74 Liabilities Class A 21.19 21.95 Payables: Class F 21.95 22.77 Management fees (note 5) 7,801 3,038 Class D 21.70 22.48 Independent review committee fees (note 5) 11,282 7,269 The accompanying notes are an integral part of the financial statements. Other accrued liabilities 1,091 369 Distributions 315,000 471,750 Approved on behalf of the Board of Directors of Purpose Investments Inc., as Capital units redeemed 74,833 4,403 trustee and manager of Purpose Multi-Strategy Market Neutral Fund Investment securities purchased 55 – Derivative liabilities: Unrealized loss on futures contracts 1,148,889 567,043 Unrealized loss on forward currency contracts 846,014 33,184 Total liabilities 2,404,965 1,087,056 Som Seif Jeff Bouganim Net assets attributable to holders of redeemable units 68,638,443 45,965,013 Director Director April 1, 2019

2018 ANNUAL REPORT 82 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

STATEMENTS OF COMPREHENSIVE INCOME For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) Income Increase (decrease) in net assets attributable to holders of Net gains (losses) on investments and derivatives: redeemable units per class (note 8) Dividend income 45,736 36,692 ETF Unit (1,209,544) 1,186,661 Interest income for distribution purposes 431,395 188,104 Class A (229,994) 231,379 Early redemption fees 285 1,580 Class F (827,549) 1,382,164 Net realized gain (loss) on foreign exchange transactions (41,985) 8,198 Class D (13,205) 4,062 Net realized gain (loss) on sale of investments 15,822 33,466 Total (2,280,292) 2,804,266 Net realized gain (loss) on forward currency contracts 405,960 268,133 Average number of units outstanding (note 8) Net realized gain (loss) on futures (1,628,888) 1,006,861 ETF Unit 1,190,205 907,877 Net change in unrealized appreciation (depreciation) in value Class A 214,400 222,529 of investments (493,169) 977,509 Class F 1,259,646 930,570 Net change in unrealized appreciation (depreciation) in value Class D 12,552 2,748 of forward currency contracts 539,510 (716,728) Increase (decrease) in net assets attributable to holders of Net change in unrealized appreciation (depreciation) in value redeemable units per unit (note 8) of futures contracts (1,260,594) 1,299,865 ETF Unit (1.03) 1.30 Net gains (losses) on investments and derivatives (1,985,928) 3,103,680 Class A (1.07) 1.05 (1) (2) Securities lending income 22,108 51,109 Class F (0.66) 1.50 Foreign exchange gain (loss) on cash 155,581 17,942 Class D (1.06) 1.48 Total revenue (1,808,239) 3,172,731 Expenses (1) Securities lending: Management fees (note 5) 391,470 313,811 The value of securities loaned and collateral received from securities lending at December 31 is as follows: Broker commissions 28,741 – Value of securities loaned 2,500 1,818,848 Independent review committee fees (note 5) 9,201 6,793 Value of collateral received 2,632 1,910,296 Transaction cost (note 9) 3,216 23,235 (2) Securities lending Income Other expenses (note 5) 39,425 24,626 The table below shows a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from the securities lending disclosed in the Statement of Comprehensive Income. Total expenses 472,053 368,465 December 31, 2018 December 31, 2017 Increase (decrease) in net assets attributable to holders of redeemable units (2,280,292) 2,804,266 $ % $ % Gross securities lending income 44,215 100.0 102,216 100.0 Agent fees (22,107) 50.0 (51,107) 50.0 Securities lending income 22,108 50.0 51,109 50.0 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 83 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

STATEMENTS OF CHANGES IN FINANCIAL POSITION For the years ended: December 31, December 31, December 31, December 31, 2018 2017 2018 2017 ($) ($) ($) ($) ETF Unit Class F Net assets attributable to holders of redeemable units at beginning of period 19,329,405 17,986,248 Net assets attributable to holders of redeemable units at beginning of period 22,112,584 19,571,435 Increase (decrease) in net assets attributable to holders of redeemable units (1,209,544) 1,186,661 Increase (decrease) in net assets attributable to holders of redeemable units (827,549) 1,382,164 Redeemable unit transactions Redeemable unit transactions Proceeds from issuance of redeemable units 16,878,641 4,391,485 Proceeds from issuance of redeemable units 19,436,441 5,942,312 Payments for redemption of redeemable units – (3,763,239) Unit exchanges 626,316 560,878 Net increase (decrease) from redeemable unit transactions 16,878,641 628,246 Payments for redemption of redeemable units (13,017,718) (5,254,467) Distributions paid or payable to unitholders of redeemable units Reinvestment of dividends 252,444 422,869 From investment income (275,868) (452,371) Net increase (decrease) from redeemable unit transactions 7,297,483 1,671,592 From capital gains (24,211) (16,206) Distributions paid or payable to unitholders of redeemable units Return of capital (14,921) (3,173) From investment income (302,455) (463,790) Total distributions to holders of redeemable units (315,000) (471,750) From capital gains (40,583) (16,615) Net increase (decrease) in net assets attributable to holders of redeemable units 15,354,097 1,343,157 Return of capital (25,010) (32,202) Net assets attributable to holders of redeemable units at end of period 34,683,502 19,329,405 Total distributions to holders of redeemable units (368,048) (512,607) Net increase (decrease) in net assets attributable to holders of redeemable units 6,101,886 2,541,149 Class A Net assets attributable to holders of redeemable units at end of period 28,214,470 22,112,584 Net assets attributable to holders of redeemable units at beginning of period 4,451,599 5,018,311 Increase (decrease) in net assets attributable to holders of redeemable units (229,994) 231,379 Class D Redeemable unit transactions Net assets attributable to holders of redeemable units at beginning of period 71,425 42,475 Proceeds from issuance of redeemable units 2,689,814 989,152 Increase (decrease) in net assets attributable to holders of redeemable units (13,205) 4,062 Unit exchanges (432,207) (526,113) Redeemable unit transactions Payments for redemption of redeemable units (998,408) (1,235,217) Proceeds from issuance of redeemable units 486,664 24,888 Reinvestment of dividends 11,624 84,495 Payments for redemption of redeemable units (283,723) – Net increase (decrease) from redeemable unit transactions 1,270,823 (687,683) Reinvestment of dividends 2,385 1,706 Distributions paid or payable to unitholders of redeemable units Net increase (decrease) from redeemable unit transactions 205,326 26,594 From investment income – (56,097) Distributions paid or payable to unitholders of redeemable units From capital gains (8,116) (2,010) From investment income (1,918) (1,184) Return of capital (5,002) (52,301) From capital gains (289) (42) Total distributions to holders of redeemable units (13,118) (110,408) Return of capital (178) (479) Net increase (decrease) in net assets attributable to holders of redeemable units 1,027,711 (566,712) Total distributions to holders of redeemable units (2,385) (1,706) Net assets attributable to holders of redeemable units at end of period 5,479,310 4,451,599 Net increase (decrease) in net assets attributable to holders of redeemable units 189,736 28,950 Net assets attributable to holders of redeemable units at end of period 261,161 71,425 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 84 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

STATEMENTS OF CASH FLOWS SCHEDULE OF INVESTMENTS For the years ended: As at December 31, 2018 December 31, December 31, Number of 2018 2017 shares/units/ Average cost Fair value ($) ($) Security par value ($) ($) Equities – 51.74% Cash Flows from Operating Activities Canadian Equities – 38.94% Increase (decrease) in net assets attributable to holders of redeemable units (2,280,292) 2,804,266 Mutual Fund Corp & Trust – 38.94% Adjustments for: Purpose Tactical Hedged Equity Fund 1,051,770 25,062,710 26,725,476 Foreign exchange loss (gain) on cash (155,581) (17,942) 25,062,710 26,725,476 Purchase of investments (31,033,410) (7,163,411) Total Canadian Equities – 38.94% 25,062,710 26,725,476 Proceeds from sale of investments 7,493,312 4,274,875 International Equities – 12.80% Net realized loss (gain) on sale of investments (15,822) (33,466) Mutual Fund Corp & Trust – 12.80% Net change in unrealized depreciation (appreciation) in value of investments 493,169 (977,509) Purpose International Tactical Hedged Equity Fund 458,408 9,038,445 8,785,389 Net change in unrealized depreciation (appreciation) in value of forward 9,038,445 8,785,389 currency contracts (539,510) 716,728 Total International Equities – 12.80% 9,038,445 8,785,389 Net change in unrealized depreciation (appreciation) in value Total Equities – 51.74% 34,101,155 35,510,865 of futures contracts 1,260,595 (1,299,865) Money Market Funds – 42.67% Net change in non-cash working capital balances (46,302) (11,752) Purpose High Interest Savings ETF 585,800 29,294,078 29,290,586 Margin (275,087) (1,248,096) Total Money Market Funds – 42.67% 29,294,078 29,290,586 Transaction costs (note 9) 3,216 – Transaction Costs (note 9) (6,570) – (25,095,712) (2,956,172) Total Investments – 94.41% 63,388,663 64,801,451 Net Unrealized Gain (Loss) on Forward Currency Contracts Cash Flows from Financing Activities (Schedule 1) – 0.48% 327,286 Proceeds from issuance of units 39,356,401 13,946,785 Net Unrealized Gain (Loss) on Futures Contracts Unit exchanges 194,109 34,765 (Schedule 2) – (0.65)% (442,289) Payments for units redeemed (14,229,419) (10,256,186) Cash Held at Broker for Margin – 4.25% 2,915,729 Distribution to holders, net of reinvestments (588,848) (115,651) Cash – 1.72% 1,182,230 24,732,243 3,609,713 Other Assets, Less Liabilities – (0.21)% (145,964) Net Assets – 100.00% 68,638,443 Foreign exchange gain (loss) on cash 155,581 17,942 The accompanying notes are an integral part of the financial statements. Net increase (decrease) in cash and cash equivalents (363,469) 653,541 Cash and cash equivalents, at beginning of period 1,390,118 718,635 Cash and cash equivalents, at end of period 1,182,230 1,390,118 Interest received 431,395 188,104 Dividends received (paid), net of withholding taxes (10,064) 27,839 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 85 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

SCHEDULE OF INVESTMENTS (continued) As at December 31, 2018 SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACT For the year ended December 31, 2018 S&P Credit Rating Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty for Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) Canadian Imperial Bank of Commerce A-1 2019/01/17 BRL 17,976,960 USD 4,800,000 0.2670 0.2580 (225,966) Canadian Imperial Bank of Commerce A-1 2019/01/17 CHF 397,660 USD 400,000 1.0060 1.0190 6,984 Canadian Imperial Bank of Commerce A-1 2019/01/17 EUR 529,202 USD 600,000 1.1340 1.1470 9,673 Canadian Imperial Bank of Commerce A-1 2019/01/17 IDR 65,880,000,000 USD 4,500,000 0.0001 0.0001 94,515 Canadian Imperial Bank of Commerce A-1 2019/01/17 INR 288,120,000 USD 4,000,000 0.0140 0.0140 176,011 Canadian Imperial Bank of Commerce A-1 2019/01/17 MXN 87,396,640 USD 4,300,000 0.0490 0.0510 186,707 Canadian Imperial Bank of Commerce A-1 2019/01/17 RUB 286,948,200 USD 4,200,000 0.0150 0.0140 (123,182) Canadian Imperial Bank of Commerce A-1 2019/01/17 SEK 4,520,345 USD 500,000 0.1110 0.1130 14,524 Canadian Imperial Bank of Commerce A-1 2019/01/17 TRY 26,153,300 USD 4,600,000 0.1760 0.1870 409,613 Canadian Imperial Bank of Commerce A-1 2019/01/17 TWD 159,328,000 USD 5,187,303 0.0330 0.0330 22,210 Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 1,100,000 BRL 4,303,200 3.9120 3.8790 (12,766) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 5,100,000 CHF 5,091,636 0.9980 0.9820 (118,892) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 5,300,000 EUR 4,645,753 0.8770 0.8720 (40,261) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 4,301,841 MXN 87,396,640 20.3160 19.6980 (184,194) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 4,700,000 NOK 40,491,910 8.6150 8.6410 18,766 Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 4,281,422 RUB 286,948,200 67.0220 69.8220 234,297 Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 5,200,000 SEK 46,848,100 9.0090 8.8520 (125,851) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 300,000 TRY 1,640,361 5.4680 5.3370 (10,020) Canadian Imperial Bank of Commerce A-1 2019/01/17 USD 5,200,000 TWD 159,328,000 30.6400 30.6190 (4,882) 327,286

SCHEDULE 2 – FUTURES CONTRACTS* For the year ended December 31, 2018 Contracted Value Number of Contracted Current Unrealized Gain ($) Name of Future Expiry Date Contracts Currency Price ($) Value ($) (Loss) ($) 3,379,459 Brent Crude Oil Commodity January 2019 41 USD 60.38 3,011,358 (368,101) 3,464,968 Cocoa Commodity March 2019 111 USD 2,286.55 3,661,139 196,171 (2,622,214) Coffee 'C' Commodity March 2019 (43) USD 119.12 (2,242,111) 380,103 659,989 Copper Commodity March 2019 7 USD 276.25 628,572 (31,417) (2,284,884) Corn Commodity March 2019 (87) USD 384.75 (2,226,982) 57,902 (2,085,809) Lean Hogs Commodity February 2019 (64) USD 59.68 (2,131,023) (45,214) (476,291) Live Cattle Commodity April 2019 (7) USD 124.60 (482,598) (6,307) 3,343,341 Low Sulphur Gas Oil Commodity February 2019 44 USD 556.59 3,071,017 (272,323) 3,375,213 NY Harbor ULSD Commodity January 2019 32 USD 183.95 3,081,411 (293,802) (2,260,771) Soybean Commodity March 2019 (36) USD 920.00 (2,199,337) 61,434 (1,787,907) Soybean Meal Commodity March 2019 (42) USD 311.82 (1,776,917) 10,990 2,673,761 Wheat Commodity March 2019 74 USD 529.33 2,542,037 (131,725) 5,378,855 4,936,566 (442,289) * The futures contracts are entered into with Morgan Stanley & Co LLC having a Standard & Poor’s credit rating of A+.

2018 ANNUAL REPORT 86 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

A) INVESTMENT OBJECTIVES (NOTE 2) The following inputs were used in valuing the Fund’s investments and The Purpose Multi-Strategy Market Neutral Fund’s investment objective is to derivatives at fair values as at December 31, 2017: provide positive absolute returns that are not correlated to the broader equity or bond markets. The Fund will utilize a multi-strategy approach by allocating Level 1 Level 2 Level 3 Total ($) ($) ($) ($) its assets across various asset classes including equities, currencies and commodities. Financial assets Funds 41,741,916 – – 41,741,916 B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Equity index futures 851,490 – – 851,490 Changes in outstanding units during the periods ended December 31, 2018 and Forward currency contracts – 364,819 – 364,819 2017 are summarized as follows: Total financial assets 42,593,406 364,819 – 42,958,225 Number of Units ETF Class A Class F Class D Financial liabilities Units Units Units Units Equity index futures 33,184 – – 567,043 Outstanding, December 31, 2016 825,000 235,617 897,377 1,964 Forward currency contracts – 567,043 – 33,184 Issued 200,000 46,221 296,541 1,137 Total financial liabilities 33,184 567,043 – 600,227 Reinvested – 3,834 18,504 76 Total financial assets and liabilities 42,560,222 331,635 – 42,357,998 Redeemed (175,000) (82,905) (241,135) – During the period ended December 31, 2018 and 2017, there were no transfers Outstanding, December 31, 2017 850,000 202,767 971,287 3,177 of assets between Level 1, Level 2 and Level 3. Issued 725,000 120,648 875,423 21,322 Reinvested – 556 11,662 111 The Fund’s Level 2 investment in foreign currency contracts relies on the foreign exchange rate market data to fair value the foreign currency contract. Redeemed – (65,371) (572,896) (12,574) Outstanding, December 31, 2018 1,575,000 258,600 1,285,476 12,036 E) FINANCIAL RISKS (NOTE 11) Market price risk C) MANAGEMENT FEES, SERVICE FEES AND OTHER If equity prices for these securities had increased or decreased by 5% as at EXPENSES (NOTE 5) December 31, 2018 with all other variables held constant, the Fund’s net assets Annual Management Fee would have increased or decreased, respectively, by approximately $3.3 million (% of Net Asset Value of each units) (2017 – $2.1 million). In practice, actual results may differ from this sensitivity Units Management Fee analysis and the difference could be material. ETF Units 0.95% Interest rate risk Class A Units* 1.95% As the Fund’s financial liabilities are primarily short term in nature and generally Class F Units 0.95% not interest bearing, the Fund’s exposure to interest rate risk In relation thereto is considered low. Class D Units* 1.20% * Includes a service fee at an annual rate of 1.00% of the daily average Net Asset Value of the Class A and 0.25% of the Currency risk Class D units The table below summarizes the Fund’s direct exposure to foreign currencies as at December 31, 2018: D) FAIR VALUE INVESTMENTS (NOTE 10) Gross Exposure Hedge Net Exposure % of The following is a summary of the inputs used as of December 31, 2018 in ($) ($) ($) Net Assets valuing the Fund’s financial assets and financial liabilities carried at fair value: Brazilian Real – 4,810,556 4,810,556 7.0 Level 1 Level 2 Level 3 Total British Pound 7,133 – 7,133 0.0 ($) ($) ($) ($) Euro (55) (6,444,494) (6,444,549) (9.4) Financial assets Hungarian Forint 85,512 – 85,512 0.1 Funds 64,801,451 – – 64,801,451 Indonesian Rapiah – 6,235,542 6,235,542 9.1 Equity index futures 706,600 – – 706,600 Indian Rupee – 5,634,702 5,634,702 8.2 Forward currency contracts – 1,173,300 – 1,173,300 Japanese Yen 11,967 – 11,967 0.0 Total financial assets 65,508,051 1,173,300 – 66,681,351 Norwegian Krone – (6,395,196) (6,395,196) (9.3) Polish Zloty 116,290 – 116,290 0.2 Financial liabilities South African Rand 200 – 200 0.0 Equity index futures 1,148,889 – – 846,014 Swedish Krona 79,584 (6,525,288) (6,445,704) (9.4) Forward currency contracts – 846,014 – 1,148,889 Swiss Franc 400,586 (6,525,869) (6,125,283) (8.9) Total financial liabilities 1,148,889 846,014 – 1,994,903 New Turkish Lira – 6,267,685 6,267,685 9.1 Total financial assets and liabilities 64,359,162 327,286 – 64,686,448 United States Dollar (1,277,242) 3,269,648 1,992,406 2.9 Net exposure (576,025) 327,286 (248,739) (0.4)

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 87 PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE MULTI-STRATEGY MARKET NEUTRAL FUND (continued) The table below summarizes the Fund’s direct exposure to foreign currencies as F) INCOME TAXES at December 31, 2017: As at December 31, 2018 and 2017, the Fund had no capital losses and no non-capital losses carry forward for income tax purposes. Capital losses may Gross Exposure Hedge Net Exposure % of ($) ($) ($) Net Assets be carried forward indefinitely to be applied against future capital gains. Non- capital losses may be utilized to reduce taxable income over the twenty years British Pound 1,697 – 1,697 0.0 following the year in which they arise. Chile Preso – 5,417,532 5,417,532 11.8 Hungarian Forint 124,665 (5,314,134) (5,189,469) (11.3) G) INTEREST IN UNDERLYING FUNDS Indonesian Rapiah – 4,149,035 4,149,035 9.0 The Fund invests in redeemable units of other investment funds (“underlying Japanese Yen 256,302 – 256,302 0.6 funds”) to gain exposure to the investment objectives and strategies of the Malaysian Ringgit – 5,428,844 5,428,844 11.8 underlying funds. Each underlying fund is generally financed through the capital Mexican Peso 14,276 – 14,276 0.0 invested by the Fund, along with other investors, which entitles unitholders to a proportionate share of the underlying fund’s net assets. The Fund does Polish Zloty 115,114 – 115,114 0.3 not provide additional financial or other support to the underlying funds. South African Rand 1 – 1 0.0 All underlying funds were established in and carry out their operations in Swedish Krona 14,027 (5,554,144) (5,540,117) (12.1) Canada. The Fund’s interests in underlying funds are reported at fair value in Swiss Franc 261,819 (5,503,823) (5,242,004) (11.4) “Investments” in its Statements of Financial Position and in its Schedule of United States Dollar 1,959,922 1,164,466 3,124,388 6.8 Investments, which represents the Fund’s maximum exposure to financial loss. Net exposure 2,747,823 (212,224) 2,535,599 5.5 At December 31, 2018 At December 31, 2017 If the Canadian dollar weakened or strengthened by 5% as at December 31, 2018, % of Ownership % of Ownership Underlying Funds Net Assets Interest % Net Assets Interest % with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately $0.0 million (2017 – $0.1 million). Purpose High Interest Savings ETF 42.7 2.1 43.9 3.6 In practice, actual results may differ from this sensitivity analysis and the Purpose Tactical Hedged Equity Fund 38.9 48.8 36.4 26.2 difference could be material. Purpose International Tactical Hedged Equity Fund 12.8 27.4 10.6 15.6 Credit risk The Fund’s main exposure to credit risk is: (a) their trading of listed securities – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may enter into derivative contracts to hedge their exposure to foreign currencies. The unrealized gain (loss) on outstanding contracts with counterparties represents the maximum credit exposure. These contracts are carried out with counterparties with a credit rating of at least “A-”. The exposure to credit risk on these contracts is considered minimal as there are few contracts outstanding at any one time and the transactions are settled and paid for upon delivery. The Fund may engage in securities lending transactions. The credit risk related to securities lending transactions is limited by the fact that the value of the securities held as collateral by the Fund in connection with these transactions is at least 105% of the fair value of the securities loaned. The collateral and loaned securities are marked to market on each business day. Further information regarding the collateral and securities on loan can be found in the footnotes to the Statements of Comprehensive Income. Portfolio Concentration Risk The Manager manages the risk through diversification and a thorough understanding of each investment in the portfolio.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 88 PURPOSE GOLD BULLION FUND

STATEMENT OF FINANCIAL POSITION STATEMENT OF COMPREHENSIVE INCOME As at: For the period from October 10, 2018 to December 31, 2018: December 31, December 31, 2018 2018 ($) ($) Assets Income Investments Net gains (losses) on investments and derivatives: Non-derivative financial assets 19,179,289 Dividend income 13,200 Receivables: Net realized gain (loss) on foreign exchange transactions (552,299) Prepaid expenses 60,576 Net realized gain (loss) on forward currency contracts (96,007) Total assets 19,239,865 Net change in unrealized appreciation (depreciation) in value of investments 1,447,078 Liabilities Net change in unrealized appreciation (depreciation) in value of forward currency contracts (3,206) Bank overdraft 99,214 Net gains (losses) on investments and derivatives 808,766 Payables: Foreign exchange gain (loss) on cash 570,034 Management fees (note 5) 3,353 Total revenue 1,378,800 Director & independent review committee fees (note 5) 503 Expenses Other accrued liabilities 61,279 Audit fees 28,900 Derivative liabilities: Transaction costs (note 9) 14,960 Unrealized loss on forward currency contracts 3,206 Legal fees 14,291 Total liabilities 167,555 Unitholder reporting 6,337 Net assets attributable to holders of redeemable units 19,072,310 Management fees (note 5) 5,389 Net assets attributable to holders of redeemable units per class Recordkeeping fees 2,202 ETF Unit 3,084,117 Custodian and fund accounting fees 1,429 Class F 79,149 Interest and bank charges 930 ETF Non-Currency Hedged Unit 14,500,191 Independent review committee fees (note 5) 503 ETF Non-Currency Hedged Unit (USD) 1,408,853 Other expenses (note 5) 7,191 Total 19,072,310 Total expenses 82,132 Number of units outstanding (note 4) Expenses waived/absorbed by the Manager (61,362) ETF Unit 150,000 Net expenses 20,770 Class F 3,868 Increase (decrease) in net assets attributable to holders of redeemable units 1,358,030 ETF Non-Currency Hedged Unit 675,000 Increase (decrease) in net assets attributable to holders of redeemable units per class (note 8) ETF Non-Currency Hedged Unit (USD) 50,000 ETF Unit 105,506 Net assets attributable to holders of redeemable units per unit Class F 3,654 ETF Unit 20.56 ETF Non-Currency Hedged Unit 1,148,467 Class F 20.46 ETF Non-Currency Hedged Unit (USD) 100,403 ETF Non-Currency Hedged Unit 21.48 Total 1,358,030 ETF Non-Currency Hedged Unit (USD) 20.64 Average number of units outstanding for the period per class (note 8) The accompanying notes are an integral part of the financial statements. ETF Unit 90,625 Class F 2,077 Approved on behalf of the Board of Directors of Purpose Investments Inc., as ETF Non-Currency Hedged Unit 530,469 trustee and Manager of Purpose Gold Bullion Fund. ETF Non-Currency Hedged Unit (USD) 50,000 Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 8) ETF Unit 1.17 Class F 1.76 ETF Non-Currency Hedged Unit 2.17 ETF Non-Currency Hedged Unit (USD) 1.54 Som Seif Jeff Bouganim The accompanying notes are an integral part of the financial statements. Director Director April 1, 2019

2018 ANNUAL REPORT 89 PURPOSE GOLD BULLION FUND

STATEMENT OF CHANGES IN STATEMENT OF CASH FLOWS FINANCIAL POSITION For the period from October 10, 2018 to December 31, 2018: For the period from October 10, 2018 to December 31, 2018: December 31, December 31, 2018 2018 ($) ($) ETF Unit Cash Flows from Operating Activities Net assets attributable to holders of redeemable units at beginning of period – Increase (decrease) in net assets attributable to holders of redeemable units 1,358,030 Increase (decrease) in net assets attributable to holders of redeemable units 105,506 Adjustments for: Redeemable unit transactions Foreign exchange loss (gain) on cash (570,034) Proceeds from issuance of redeemable units 2,978,611 Purchase of investments (17,732,211) Net increase (decrease) from redeemable unit transactions 2,978,611 Net change in unrealized depreciation (appreciation) in value of investments (1,447,078) Net increase (decrease) in net assets attributable to holders of redeemable units 3,084,117 Net change in unrealized depreciation (appreciation) in value of forward currency contracts 3,206 Net assets attributable to holders of redeemable units at end of period 3,084,117 Net change in non-cash working capital balances 4,559 (18,383,528) Class F Cash Flows from Financing Activities Net assets attributable to holders of redeemable units at beginning of period – Proceeds from issuance of units 17,715,270 Increase (decrease) in net assets attributable to holders of redeemable units 3,654 Payments for units redeemed (990) Redeemable unit transactions 17,714,280 Proceeds from issuance of redeemable units 76,485 Payments for redemption of redeemable units (990) Foreign exchange gain (loss) on cash 570,034 Net increase (decrease) from redeemable unit transactions 75,495 Net increase (decrease) in cash and cash equivalents (669,248) Net increase (decrease) in net assets attributable to holders of redeemable units 79,149 Cash and cash equivalents, at beginning of period – Net assets attributable to holders of redeemable units at end of period 79,149 Bank overdraft, at end of period (99,214) Dividends received, net of withholding taxes 13,200 ETF Non–Currency Hedged Unit Interest paid 930 Net assets attributable to holders of redeemable units at beginning of period – The accompanying notes are an integral part of the financial statements. Increase (decrease) in net assets attributable to holders of redeemable units 1,148,467 Redeemable unit transactions Proceeds from issuance of redeemable units 13,351,724 Net increase (decrease) from redeemable unit transactions 13,351,724 Net increase (decrease) in net assets attributable to holders of redeemable units 14,500,191 Net assets attributable to holders of redeemable units at end of period 14,500,191

U.S. Dollar Denominated ETF Non-Currency Hedged Unit Net assets attributable to holders of redeemable units at beginning of period – Increase (decrease) in net assets attributable to holders of redeemable units 100,403 Redeemable unit transactions Proceeds from issuance of redeemable units 1,308,450 Net increase (decrease) from redeemable unit transactions 1,308,450 Net increase (decrease) in net assets attributable to holders of redeemable units 1,408,853 Net assets attributable to holders of redeemable units at end of period 1,408,853 The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 90 PURPOSE GOLD BULLION FUND

SCHEDULE OF INVESTMENTS As at December 31, 2018 Number of Average cost Fair value Security Ounces ($) ($) Gold Holdings – 100.56% Gold Bars 10,958 17,732,211 19,179,289 17,732,211 19,179,289 Gold Holdings – 100.56% 17,732,211 19,179,289 Total Investments – 100.56% 17,732,211 19,179,289 Net Unrealized Gain (Loss) on Forward Currency Contracts (Schedule 1) – (0.02)% (3,206) Bank Overdraft – (0.52)% (99,214) Other Assets, Less Liabilities – (0.02)% (4,559) Net Assets – 100.00% 19,072,310 The accompanying notes are an integral part of the financial statements.

SCHEDULE 1 – FORWARD FOREIGN CURRENCY CONTRACT For the period ended December 31, 2018

S&P Credit Rating Settlement Currency Par Value Currency Par Value Forward Current Unrealized Gain Counterparty for Counterparty Date Buys ($) Sells ($) Rate Rate (Loss) ($) Canadian Imperial Bank of Commerce A-1 2019/03/29 CAD 2,995,292 USD 2,200,641 0.7350 0.7340 (3,125) Canadian Imperial Bank of Commerce A-1 2019/03/29 CAD 77,547 USD 56,974 0.7350 0.7340 (81) (3,206) The accompanying notes are an integral part of the financial statements.

2018 ANNUAL REPORT 91 PURPOSE GOLD BULLION FUND

NOTES TO THE FINANCIAL STATEMENTS – SPECIFIC INFORMATION – PURPOSE GOLD BULLION FUND

A) INVESTMENT OBJECTIVES (NOTE 2) Interest rate risk Purpose Gold Bullion Fund (“the Fund”) has been created to buy and hold Interest rate risk arises from interest-bearing financial instruments where the substantially all of its assets in gold bullion and, incidental thereto, minor values of those instruments fluctuate due to changes in market interest rates. amounts of gold certificates, if any. The Fund will not change its fundamental As the Fund’s financial liabilities are primarily short term in nature and generally investment objectives unless the consent of a majority of the Fund’s unitholders not interest bearing, the Fund’s exposure to interest rate risk in relation thereto has been obtained. is considered low. B) REDEEMABLE PARTICIPATING UNITS (NOTE 4) Credit risk Changes in outstanding units during the period ended December 31, 2018 are The Fund’s main exposure to credit risk is: (a) their trading of gold bullion and summarized as follows: certificates – the risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers and (b) the Fund may Number of Units enter into derivative contracts to hedge their exposure to foreign currencies. U.S. Dollar The unrealized gain (loss) on outstanding contracts with counterparties Denominated ETF represents the maximum credit exposure. These contracts are carried out with ETF Non–Currency Non-Currency counterparties with a credit rating of at least “A-”. The exposure to credit risk on ETF Unit Class F Hedged Unit Hedged Unit these contracts is considered minimal as there are few contracts outstanding at Outstanding, October 10, 2018 – – – – any one time and the transactions are settled and paid for upon delivery. Issued 150,000 3,919 675,000 50,000 Currency Risk Redeemed – (51) – – The table below summarizes the Fund’s direct exposure to the US dollar as at Outstanding, December 31, 2018 150,000 3,868 675,000 50,000 December 31, 2018 and 2017 including the fair value of currency contracts that are used to hedge the foreign currency risk. C) MANAGEMENT FEES, SERVICE FEES AND OTHER December 31, 2018 EXPENSES (NOTE 5) Fair Value % of Annual Management Fee ($) Net Assets (% of Net Asset Value of each class) Foreign currency and equities 19,179,289 Class Management Fee Forward currency agreement (3,076,046) ETF Units 0.20% Net exposure 16,103,243 84.4 Class F 0.20% ETF Non-Currency Hedged Units 0.20% If the Canadian dollar weakened or strengthened by 5% as at December 31, U.S. Dollar Denominated ETF Non-Currency Hedged Unit 0.20% 2018 in relation to the US dollar, with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by D) FAIR VALUE INVESTMENTS (NOTE 10) approximately $0.8 million. In practice, actual results may differ from this The following inputs were used in valuing the Fund’s investments and sensitivity analysis and the difference could be material. derivatives at fair values as at December 31, 2018: Liquidity risk Liquidity risk is the risk of not being able to meet the Fund’s cash requirements Level 1 Level 2 Level 3 Total in a timely manner and includes the risk of not being able to liquidate assets at ($) ($) ($) ($) reasonable prices. This risk mainly arises from the Fund’s exposure to monthly Assets and annual redemptions. The Fund maintains sufficient liquidity by managing Gold 19,179,289 – – 19,179,289 its cash balances, and utilizing bank overdraft protection when appropriate, Total assets 19,179,289 – – 19,179,289 to meet its daily cash requirements. All liabilities are due within three months. The Manager regards all of the Fund's assets as liquid. Furthermore, over 99% Financial liabilities of its net assets are in the form of gold bullion or gold certificates, which are Currency forward contracts – 3,206 – 3,206 readily marketable. Total financial liabilities – 3,206 – 3,206 F) INCOME TAXES Total assets and financial liabilities 19,179,289 (3,206) – 19,176,083 The Fund qualifies and intends to continue to qualify as a mutual fund trust under the Income Tax Act (Canada) and, accordingly, is subject to tax on its During the period ended December 31, 2018 there were no transfers of assets investment income, including net realized capital gains, for any tax year in which between Level 1, Level 2 and Level 3. its net investment income or sufficient net realized capital gains are not paid E) FINANCIAL RISKS (NOTE 11) or payable to its unitholders as at the end of its tax year. It is the intention of Market price risk the Manager that all annual net investment income and sufficient net taxable capital gains will be distributed to unitholders on a tax year basis such that The Fund’s most significant exposure to market price risk arises from its no Canadian income taxes are payable by the Fund. As a result thereof, no investment in gold bullion. If gold bullion prices increased or decreased by provision for income taxes is made in these financial statements. 5% as at December 31, 2018 with all other variables held constant, the Fund’s net assets would have increased or decreased, respectively, by approximately As at December 31, 2018, the Fund had capital losses carry forward of $78,300 $1.0 million. In practice, actual results may differ from this sensitivity analysis and had non-capital losses carry forward of $nil for income tax purposes. and the difference could be material. Capital losses may be carried forward indefinitely to be applied against future capital gains. Non-capital losses may be utilized to reduce taxable income over the twenty years following the year in which they arise.

DECEMBER 31, 2018 2018 ANNUAL REPORT 92 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS

1. THE FUNDS The following table sets out the Funds’ Investment Sub-Advisors (collectively, Purpose High Interest Savings ETF, Purpose US Cash ETF, Purpose Global Bond the “Investment Sub-Advisors”) and the date of commencement of operations Fund (formerly Purpose Tactical Investment Grade Bond Fund), Purpose Strategic of each Fund: Yield Fund (formerly Redwood Strategic Yield Fund), Purpose Energy Credit Fund (formerly Energy Credit Opportunities Income Fund), Purpose Canadian Date of commencement Preferred Share Fund (formerly Redwood Canadian Preferred Share Fund), Fund Investment sub-advisor of operations Purpose US Preferred Share Fund (formerly Redwood US Preferred Share Fund), Purpose High Interest Savings ETF N/A October 15, 2013 Purpose US Dividend Fund, Purpose International Dividend Fund, Purpose Purpose US Cash ETF Neuberger Berman Breton Hill ULC February 23, 2016 Emerging Markets Dividend Fund (formerly Redwood Emerging Markets Dividend Fund), Purpose Marijuana Opportunities Fund (formerly Marijuana Opportunities Purpose Global Bond Fund Neuberger Berman Breton Hill ULC October 28, 2015 (formerly Purpose Tactical Investment Grade Fund), Purpose Multi‑Asset Income Fund (formerly Redwood High Income Fund), Bond Fund) Purpose Multi-Strategy Market Neutral Fund and Purpose Gold Bullion Fund Purpose Strategic Yield Fund N/A December 31, 2011 (the “Funds”, and individually a “Fund”) are investment funds established by (formerly Redwood Strategic Yield Fund) declaration of trust under the laws of the Province of Ontario. Purpose Energy Credit Fund N/A June 19, 2015 The manager of the Funds is Purpose Investments Inc. (the “Manager” or (formerly Energy Credit Opportunities Income Fund) “Purpose”). On March 31, 2018, a wholly-owned affiliate, Redwood Asset Purpose Canadian Preferred Share Fund N/A October 22, 2004 Management Inc. (“Redwood”) was amalgamated into Purpose. As a result, (formerly Redwood Canadian Preferred Share Fund) the funds managed by Redwood were assigned to Purpose, and the names Purpose US Preferred Share Fund Nuveen Asset Management, LLC March 15, 2017 of the Funds were changed effective May 2, 2018 and August 24, 2018, as (formerly Redwood US Preferred Share Fund) indicated below. Purpose US Dividend Fund Neuberger Berman Breton Hill ULC November 24, 2014 Fund Mergers Purpose International Dividend Fund Neuberger Berman Breton Hill ULC April 21, 2015 During 2018, the following fund mergers (“the Mergers”) were implemented: Purpose Emerging Markets Dividend Fund Somerset Capital Management November 5, 2010 (formerly Redwood Emerging Markets Dividend Fund) Terminating Fund Continuing Fund Purpose Marijuana Opportunities Fund N/A February 1, 2018 May 2, 2018 mergers (formerly Marijuana Opportunities Fund) Redwood Global Balanced Income Fund Purpose Multi-Asset Income Fund Purpose Multi‑Asset Income Fund N/A November 2, 2015 (formerly Redwood High Income Fund) Redwood Balanced Income Fund Purpose Multi-Asset Income Fund Purpose Multi-Strategy Market Neutral Fund N/A October 10, 2014 Redwood Monthly Income Fund Purpose Multi-Asset Income Fund Purpose Gold Bullion Fund N/A October 10, 2018 Redwood Advantage Monthly Income Fund Purpose Multi-Asset Income Fund Redwood Global Financials Income Fund Purpose U.S. Preferred Share Fund Each Fund’s financial statements include the Schedule of Investments August 24, 2018 mergers at December 31, 2018 and the Statements of Financial Position at Limited Duration Investment Grade Preferred Securities Fund Purpose U.S. Preferred Share Fund December 31, 2018 and 2017 as applicable, the Statements of Comprehensive Income, Changes in Financial Position and Cash Flows for the periods ended The Mergers were approved by all securityholders and regulatory authorities. December 31, 2018 and 2017 as applicable (the “financial statements”). Pursuant to the Mergers, each holder of units of a Terminating Fund These financial statements were authorized by Purpose on April 1, 2019. automatically received units of its corresponding Continuing Fund held on the effective date of the Merger. 2. INVESTMENT OBJECTIVES During 2018, the Manager announced name changes for each of the following The purpose of each Fund is to invest the assets attributable to that Fund Funds as set out below: in accordance with the investment objectives attributable to that Fund. The investment objectives for each Fund are set out in note A in the Specific Former Fund Name Name change date Current Fund Name Information for each Fund. Redwood US Preferred Share Fund May 2, 2018 Purpose US Preferred Share Fund Redwood High Income Fund May 4, 2018 Purpose Multi-Asset Income Fund 3. SUMMARY OF SIGNIFICANT Energy Credit Opportunities Income Fund* June 18, 2018 Purpose Energy Credit Fund ACCOUNTING POLICIES Redwood Canadian Preferred Share Fund June 18, 2018 Purpose Canadian Preferred Share Fund BASIS OF PREPARATION Redwood Emerging Markets Dividend Fund June 18, 2018 Purpose Emerging Markets Dividend Fund These financial statements have been prepared in accordance with International Redwood Strategic Yield Fund June 18, 2018 Purpose Strategic Yield Fund Financial Reporting Standards (“IFRS”) as issued by the International Accounting Marijuana Opportunities Fund June 18, 2018 Purpose Marijuana Opportunities Fund Standards Board (“IASB”). Purpose Tactical Investment Grade Bond Fund December 3, 2018 Purpose Global Bond Fund The financial statements have been prepared on a going concern basis using * On February 14, 2018, Energy Credit Opportunities Income Fund completed its conversion into an actively managed the historical cost convention. However, each Fund is an investment entity and open-end fund with ETF and mutual fund units. The Class A units of the Fund converted into ETF Currency Hedged Units primarily all financial assets and financial liabilities are measured at fair value in of Redwood Energy Credit Fund. Subsequently, Redwood Energy Credit Fund changed names to Purpose Energy Credit accordance with IFRS. Accordingly, the Funds’ accounting policies for measuring Fund on June 18, 2018. the fair value of investments and derivatives are consistent with those used in measuring the Net Asset Value for transactions with unitholders. The registered office of the Funds is located at 130 Adelaide Street, Suite 1700, Toronto, Ontario, M5H 3P5.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 93 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

In applying IFRS, management may make estimates and assumptions that Other financial liabilities affect the reported amounts of assets, liabilities, income and expenses during This category includes all financial liabilities, other than those classified as fair the reporting periods. Actual results may differ from such estimates. The value through profit or loss. The Funds include in this category amounts relating preparation of the Fund’s financial statements requires management to make to payables in respect of amounts payable for portfolio securities purchased judgments, estimates and assumptions that affect the reported amounts and other accrued liabilities. recognized in the financial statements and disclosure of contingent liabilities. A financial asset or a financial liability is recognized when a Fund becomes a However, uncertainty about these assumptions and estimates could result in party to the contractual provisions of the instrument. Purchases or sales of outcomes that could require a material adjustment to the carrying amount of financial assets that require delivery of assets within the time frame generally the asset or liability affected in future periods. established by regulation or convention in the market place (regular way trades) Purpose has concluded that the Funds met the additional characteristics of are recognized on the trade date. an investment entity within IFRS 10, Consolidated Financial Statements, with Premiums received from writing options are included in derivative liabilities and the exception of Purpose US Cash ETF, whose functional and presentational subsequently measured at fair value on the Statements of Financial Position as currency is the U.S. dollar. initial reductions in the value of investments. Premiums received from writing The financial statements have been presented in Canadian dollars, which is the options that expire unexercised are recorded as realized gains and reported Funds’ functional currency, with the exception of Purpose US Cash ETF, whose as Net gain (loss) on sale of investments and derivatives on the Statements functional and presentational currency is the U.S. dollar. of Comprehensive Income. For a closing transaction, if the cost of closing the transaction exceeds the premium received, a Fund will record a realized loss or, FINANCIAL INSTRUMENTS if the premium received at the time the option was written is greater than the IFRS 9 – Financial Instruments amount paid, a Fund will record a realized gain and are reported as Net gain On July 24, 2014, the IASB issued the new financial instrument standard, IFRS 9 – (loss) on sale of investments and derivatives. If a written put option is exercised, Financial Instruments (“IFRS 9”). IFRS 9 prescribes requirements for recognition and the cost for the security delivered is reduced by the premiums received at the measurement of financial instruments, including impairment, derecognition, and time the option was written. hedge accounting. Financial instruments include financial assets and liabilities Valuation of financial instruments such as debt and equity securities, open-ended investment funds and derivatives. Financial assets and financial liabilities at fair value through profit or loss Each Fund adopted IFRS 9 in the Fund’s financial statements for the annual period are recorded in the Statements of Financial Position at fair value upon initial beginning January 1, 2018 2018 (or in the case of Purpose Marijuana Opportunities recognition. All transaction costs such as brokerage commissions, incurred in Fund and Purpose Gold Bullion Fund, February 1, 2018 and October 10, 2018 the purchase and sale of securities for such instruments are recognized directly respectively). On initial adoption of IFRS 9, there was no impact to the financial in profit or loss. Loans and receivables and other financial liabilities (other than statements of the Funds. Upon initial recognition, financial instruments are those classified as fair value through profit and loss) are measured initially at classified as fair value through profit or loss (“FVTPL”). All financial instruments their fair value plus any directly attributable incremental costs of acquisition are recognized in the Statement of Financial Position when a Fund becomes a or issue. party to the contractual requirements of the instrument. Financial assets are After initial measurement, the Funds measure financial instruments that derecognized when the right to receive cash flows from the instrument has expired are classified as fair value through profit or loss, at fair value. Subsequent or the Funds have transferred substantially all risks and rewards of ownership. changes in the fair value of those financial instruments are recorded in Financial liabilities are derecognized when the obligation is discharged, cancelled unrealized appreciation (depreciation) on investments. The applicable and expires. As such, investment purchase and sale transactions are recorded as period change in unrealized appreciation (depreciation) of investments is of the trade date. Financial instruments are subsequently measured at FVTPL with included on the Statements of Comprehensive Income. The average cost of changes in fair value recognized in the Statement of Comprehensive Income – portfolio investments represents the sum of the average cost of each portfolio Net unrealized gain (loss). investment. For the purposes of determining the average cost of each portfolio Financial instruments include financial assets and liabilities such as debt and investment, the purchase price of the portfolio investment acquired by a Fund equity securities, open-ended investment funds and derivatives. Each Fund is added to the average cost of the particular portfolio investment immediately classifies and measures financial instruments in accordance with IFRS 9, Financial prior to the purchase. The average cost of a portfolio investment is reduced Instruments (“IFRS 9”). On initial adoption of IFRS 9, there was no impact to the by the number of shares or units sold multiplied by the average cost of the financial statements of each Fund. Upon initial recognition, financial instruments portfolio investment at the time of the sale. The average cost per share or unit of are classified as fair value through profit or loss (“FVTPL”). All financial instruments each portfolio investment sold is determined by dividing the average cost of the are recognized in the Statement of Financial Position when a Fund becomes a portfolio investment by the number of shares or units held immediately prior party to the contractual requirements of the instrument. Financial assets are to the sale transaction. Transaction costs incurred in portfolio transactions are derecognized when the right to receive cash flows from the instrument has excluded from the average cost of investments and are recognized immediately expired or a Fund has transferred substantially all risks and rewards of ownership. in net income and are presented as a separate expense item in the financial Financial liabilities are derecognized when the obligation is discharged, cancelled statements. Realized gains and losses from the sale of portfolio investments are and expires. As such, investment purchase and sale transactions are recorded as also calculated based on the average costs, excluding transaction costs, of the of the trade date. Financial instruments are subsequently measured at FVTPL with related investment. changes in fair value recognized in the Statement of Comprehensive Income – Net Loans and receivables, and other assets and liabilities (other than those unrealized gain (loss). classified as fair value through profit or loss) are measured at amortized cost. Cash and Cash Equivalents The Funds’ obligation for net assets attributable to holders of redeemable units Cash and cash equivalents are comprised of cash and short-term investments. is presented at the redemption amount before discount. Loans and receivables The Funds measure their financial instruments, such as equities, bonds Loans and receivables are non-derivative financial assets with fixed or and other interest-bearing investments and derivatives, at fair value at each determinable payments that are not quoted in an active market. The Funds reporting date. Fair value is the price that would be received to sell an asset or include in this category amounts relating to receivables in respect of amounts paid to transfer a liability in an orderly transaction between market participants receivable for portfolio securities sold and other short-term receivables. at the measurement date. The fair value measurement is based on the

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 94 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

presumption that the transaction to sell the asset or transfer the liability takes Other derivatives and margin are fair valued in a manner that the Manager place either in the principal market for the asset or liability. determines to represent their fair value. The fair values of each specific type of investment and derivative are determined Valuation of warrants in the following manner: Unlisted warrants are valued using the Black Scholes option valuation model. Portfolio Investments The model factors in the time value of money and volatility. Portfolio investments listed on recognized public securities exchanges are Other financial assets and liabilities valued using their last traded market price on the securities exchange when the All trade receivables and other accounts receivable are designated as price falls within the day’s bid-ask spread. In the circumstance when the close or receivables. They are recorded at amortized cost, which approximates their last traded price falls outside of the bid-ask spread, then fair value is determined fair value. Similarly, all trade payables and accrued expenses are designated as by using bid price for long positions and ask price for short positions or a financial liabilities and are recorded at amortized cost, which approximates their different point within the bid-ask spread that management determines to be fair value. more representative of fair value. INCOME RECOGNITION Securities that are not listed on any recognized public securities exchanges Interest income for distribution purposes are reviewed individually, and the Manager uses in-house pricing models to The interest income for distribution purposes shown on the Statements of price such securities. Manually priced securities are reviewed and approved Comprehensive Income represents the interest received by the Fund accounted by the valuations committee on a quarterly basis. The pricing models used by for on an accrual basis. The Funds do not amortize premiums paid or discounts the Manager are generally based on discounted cash flow valuation approach, received on the purchase of fixed income securities except for zero coupon financial statement review, and review of comparable transactions. Other bonds which are amortized on a straight line basis. The interest for distribution valuation techniques may be used where applicable. purposes is the tax basis of calculating the interest received and which is subject Derivatives to tax. Derivative instruments are financial contracts that derive their value from Dividend revenue underlying changes in equity prices, interest rates, foreign exchange rates or Dividend revenue is recognized when the Funds’ right to receive the payment other financial or commodity prices or indices. Derivative instruments are either is established. Dividend revenue is presented gross of any non-recoverable regulated exchange-traded contracts or negotiated over-the-counter contracts. withholding taxes, which are disclosed separately in the Statements of Funds may use these instruments for trading purposes, as well to manage a Comprehensive Income. Fund’s risk exposure. Securities lending Derivatives are measured at fair value. Realized and unrealized gains and losses The Funds may lend portfolio securities in order to earn additional revenue are recorded in the Statements of Comprehensive Income. from fees paid by the counterparty, which is included on the Statements of Valuation of forward currency contracts Comprehensive Income. These transactions involve the temporary exchange The Funds may enter into forward currency contracts for hedging purposes or of qualified securities as collateral with a commitment to deliver the same to establish an exposure to a particular currency. Forward currency contracts securities on a future date. are valued based on the difference between the contract forward rate and the The market value of the loaned securities is determined on the close of any forward bid rate (for currency held) or the forward ask rate (for currency sold valuation date and any additional required collateral is delivered to the Funds short) on the valuation date. Upon the closing of a contract, the gain or loss is on the next business day. The securities on loan continue to be included on the included in the Statements of Comprehensive Income. Schedule of Investments and are included in the total value on the Statements Valuation of future contracts of Financial Position in investments at fair value. The margin deposits with brokers relating to futures contracts are included The Funds may engage in securities lending transactions. The credit risk related in cash held at broker for margin on the Statements of Financial Position. Any to securities lending transactions is limited by the fact that the value of the change in the margin requirement is settled daily and is included in cash held at securities held as collateral by the Funds in connection with these transactions broker for margin on the Statements of Financial Position. is at least 105% of the fair value of the securities loaned. The collateral and Any difference between the settlement value at the close of business on loaned securities are marked to market on each business day. The securities each valuation date and the settlement value at the close of business lending agent of the Funds is the Bank of New York Mellon. Further information on the previous valuation date is recorded as net change in unrealized regarding the collateral and securities on loan can be found in the footnotes to appreciation/depreciation in value of futures contracts on the Statements of the Statements of Comprehensive Income. Comprehensive Income. IFRS 15 – Revenue Recognition Valuation of options On May 28, 2014, the IASB issued the new revenue standard, IFRS 15 – Revenue When any option is written by any Fund, the premium received by the Funds will from Contracts with Customers. IFRS 15 provides for a unified, principles- be reflected as a liability that will be valued at an amount equal to the current based model to be applied to all contracts with customers, and allows for two fair value of the option that would have the effect of closing the position. Any approaches for recognizing revenue – at a point in time or over time. The new difference resulting from revaluation shall be treated as an unrealized gain or standard specifies how and when revenue will be recognized, and introduces loss on investment; the liability shall be deducted in arriving at the net assets new estimates and threshold for judgements, which may affect the amount and/ attributable to holders of redeemable units of the Funds. The securities that are or timing of revenue to be recognized. the subject of a written option, if any, will be valued in the manner described The Funds have adopted IFRS 15 in each of their financial statements for the above for listed securities. annual period beginning January 1, 2018 (or in the case of Purpose Marijuana Valuation of margin Opportunities Fund and Purpose Gold Bullion Fund, February 1, 2018 and Margin paid or deposited in respect of futures contracts and forward contracts October 10, 2018 respectively). Since each Fund meets the definition of will be reflected as cash, and margin consisting of assets other than cash will be an investment entity, the revenues earned during the year are considered noted as held as collateral. investment income. Investment income is not in scope of IFRS 15, and therefore, the application of the new standard had no overall impact on the Funds’ financial statements.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 95 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

REDEEMABLE PARTICIPATING UNITS Classification and measurement of investments and application of the fair value option Redeemable participating units are classified as financial liabilities and are In classifying and measuring financial instruments held by the Funds, Purpose redeemable at the unitholder’s option at prices based on the Funds’ NAV per is required to make significant judgments in order to determine the most unit at the time of redemption. The amounts are continuously measured at their appropriate classification in accordance with IFRS 9. Purpose has assessed redemption value prior to discounts. The Funds’ units do not meet the criteria the Funds’ business model, the manner in which all financial instruments are in IAS 32 for classification as equity and therefore, have been reclassified and managed and performance evaluated as a group on a fair value basis, and presented as a financial liability. concluded that FVTPL in accordance with IFRS 9 provides the most appropriate FOREIGN CURRENCY TRANSLATIONS measurement and presentation of the Funds’ financial instruments. Transactions during the year, including purchases and sales of securities, TAXES income and expenses, are translated into Canadian dollars at the rate of Uncertainties exist with respect to the interpretation of complex tax regulations exchange prevailing on the date of the transaction. Assets and liabilities and changes in tax laws on foreign withholding tax. Given the wide range of denominated in foreign currencies are retranslated at the functional currency international investments, differences arising between the actual investment rate of exchange at the reporting date. income and the assumptions made, or future changes to such assumptions Foreign currency transaction gains and losses on financial instruments classified could necessitate future adjustments to tax expense already recorded. as fair value through profit or loss are included in profit or loss in the Statements The Funds establish provisions, based on reasonable estimate for possible of Comprehensive Income as part of the “net change in unrealized appreciation consequences of audits by the tax authorities of the respective countries in (depreciation) in value of investments”. which it invests. The amounts of such provisions are based on various factors, such as experience of previous tax audits and differing interpretations of CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS tax regulations by the taxable entity and the responsible tax authority. Such The key assumptions concerning the future and other key sources of estimation differences of interpretation may arise on a wide variety of issues depending on uncertainty at the reporting date, which have a significant risk of causing a the conditions prevailing in the respective investment’s domicile. As the Funds material adjustment to the carrying amounts of assets and liabilities within assess the probability for litigation and subsequent cash outflow with respect to the next financial year, are discussed below. The Funds based the assumptions taxes as remote, no contingent liability has been recognized. and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future 4. REDEEMABLE PARTICIPATING UNITS developments may change due to market changes or circumstances arising The Funds are authorized to issue an unlimited number of classes of units beyond the control of the Funds. Such changes are reflected in the assumptions and an unlimited number of units of each class. The units are redeemable and when they occur. transferable. Each unit of a Class entitles the holder to the same rights and Fair value of financial instruments privileges in relation to any other unitholder of that class, subject to the terms When the fair values of financial assets and financial liabilities recorded in the and conditions of the declaration of trust. Unitholders are entitled to vote at all Statements of Financial Position cannot be derived from active markets, their meetings of all unitholders and at all meetings of unitholders of the same Class fair value is determined using a variety of valuation techniques that include the as the units held. All ETF and Mutual Fund Unit Classes rank equally with respect use of valuation models. The inputs to these models are taken from observable to the payment of distributions. The realized and unrealized gains or losses and markets where possible, but where this is not feasible, estimation is required income and common expenses of the Funds are allocated on each valuation in establishing fair values. The estimates include consideration of liquidity and date to the unitholders in proportion to the respective prior day net asset value model inputs related to items such as credit risk (both own and counterparty’s), of each Class of units at the date on which the allocation is made. All Class correlation and volatility. Changes in assumptions about these factors could specific expenses do not require an allocation. affect the reported fair value of financial instruments in the Statements of Financial Position and the level where the instruments are disclosed in the fair value hierarchy. The models are tested for validity by calibrating to prices from any observable current market transactions in the same instrument (without modification or repackaging) when available.

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 96 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

ETF Units and Mutual Fund Units The Funds have issued ETF units, traded on the Toronto Stock Exchange (“TSX”) and Aequitas Neo (“NEO”) exchanges, and mutual fund units as set out below: ETF Units ETF Non-Currency Fund ETF Units (USD Purchase Option) Hedged Units Mutual Fund Units Purpose High Interest Savings ETF TSX: PSA Purpose US Cash ETF TSX: PSU.U Purpose Global Bond Fund TSX: BND Class A, Class F, Class D (formerly Purpose Tactical Investment Grade Bond Fund) Purpose Strategic Yield Fund TSX: SYLD Class A, Class F, Class I, Class X, Class Y, Class UA, Class UF, Class TA6, Class TF6 (formerly Redwood Strategic Yield Fund) Purpose Energy Credit Fund NEO: PCF NEO: PCF.U Class A, Class F (formerly Energy Credit Opportunities Income Fund) Purpose Canadian Preferred Share Fund NEO: RPS Class A, Class F (formerly Redwood Canadian Preferred Share Fund) Purpose US Preferred Share Fund NEO: RPU NEO: RPU.U NEO: RPU.B Class A, Class A (Non-Currency Hedged), Class F, Class F (Non-Currency Hedged) (formerly Redwood US Preferred Share Fund) Purpose US Dividend Fund TSX: PUD TSX: PUD.B Class A, Class A (Non-Currency Hedged), Class F, Class F (Non-Currency Hedged) Class D, Class I, Class I (Non-Currency Hedged) Purpose International Dividend Fund TSX: PID Class A, Class F, Class D, Class I Purpose Emerging Markets Dividend Fund NEO: REM Class A, Class F (formerly Redwood Emerging Markets Dividend Fund) Purpose Marijuana Opportunities Fund NEO: MJJ Class A, Class F (formerly Marijuana Opportunities Fund) Purpose Multi Asset Income Fund TSX: PINC Class A, Class F, Class I, Class X, Class UA, Class UF, Class TA6, Class TF6 (formerly Redwood High Income Fund) Purpose Multi-Strategy Market Neutral Fund TSX: PMM Class A, Class F, Class D Purpose Gold Bullion Fund TSX: KILO TSX: KILO.U TSX: KILO.B Class F, Class F (Non-Currency Hedged)

ETF units may be redeemed on any trading day at 95% of their closing price on regulatory reports, regulatory filing fees, exchange listing fees (if applicable) and the TSX or the NEO, however, they will generally be able to sell ETF units at the other operating and administrative expenses. market price through a registered broker or dealer. Mutual Fund units may be The Manager, may, in its discretion, determine to increase the amount of the redeemed daily, subject to certain minimum amounts, by sending a redemption Administrative Fees payable by a Fund or cease paying any of the Administrative request to the unitholder’s registered broker or dealer. Fees. However, Administrative Fees do not include, and each Fund is responsible for paying additional expenses: the costs and expenses incurred in complying with 5. MANAGEMENT FEES, ADMINISTRATIVE FEES, NI 81-107 (including any expenses related to the implementation and on-going AND OTHER EXPENSES operation of an independent review committee), transfer agent fees and expenses, Management fees brokerage expenses and commissions, income and withholding taxes as well as Each Fund pays the Manager a management fee for portfolio management and all other applicable taxes, including HST, bank charges and interest expenses, distribution services, as well as oversight of portfolio sub-advisory services. The the costs of complying with any new governmental or regulatory requirement management fee is based on the average daily net asset value of the units of introduced after each Fund was established and extraordinary expenses including the applicable classes. The management fee, plus applicable HST, is accrued any costs associated with the printing and distribution of any documents that the daily and paid monthly in arrears. The Manager may, from time to time in its securities regulatory authorities require be sent or delivered to investors in a Fund. discretion, waive all or a portion of the management fee charged at any given The Administrative Fees payable by a Fund, plus applicable HST, is calculated and time. In addition, the Manager may reduce the management fee borne by certain accrued daily and paid monthly in arrears. unitholders who have signed an agreement with the Manager. The Funds will pay out the amount of the reduction in the form of a management fee distribution to The Manager has agreed to pay all of the Administrative Fees in respect of the the eligible unitholder. Class I units. The Funds can invest in underlying funds managed by the Manager or an affiliate The Manager may, from time to time, in its sole discretion, pay all or a portion of of the Manager or by third parties in which case the Manager cannot charge any costs and expenses which would otherwise be payable by the Funds (i.e. those management fees to both the Funds and the underlying funds where that would operating expenses which are not described as Administrative Fees above). result in the duplication of a fee for the same services. 6. INTERESTS IN UNDERLYING FUNDS Administrative fees The Funds may invest in other investment funds (“underlying funds”). The Manager has agreed to pay the operating and administrative expenses Where applicable, a Fund’s interests in underlying funds are reported in its incurred by each Fund in respect of the Class A units, Class F units, Class D Units Schedule of Investment Portfolio at fair value, which represent the Funds’ and ETF Units which exceed 0.05% per annum of the net asset value (“Net Asset maximum exposure on these investments. Investment income earned from Value”) of each such Class of units. This means the Funds pay only up to 0.05% underlying funds is included in net gains on investments in the Statements of per annum of the Net Asset Value of each such Class of units for administrative Comprehensive Income. The Funds do not provide any additional significant expenses, plus the other costs and expenses referred to below. The administrative financial or other support to underlying funds. fees (“Administrative Fees”) include accounting, audit and legal fees, safekeeping and custodial fees, investor reporting cost for annual and semi-annual financial The interest in underlying funds is included in the Fund-Specific Notes. statements, expenses in connection with the preparation of prospectus and other

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 97 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

7. INCOME TAXES AND WITHHOLDING TAXES The Funds’ fair value hierarchy classification of its assets and liabilities is The Funds qualify and intend to continue to qualify as mutual fund trusts included in Fair value measurements in the Fund-Specific Notes. under the Income Tax Act (Canada) and, accordingly, are subject to tax on their investment income, including net realized capital gains, for any tax year in which 11. FINANCIAL RISKS its net investment income or sufficient net realized capital gains are not paid In the normal course of business the Funds are exposed to a variety of financial or payable to its unitholders as at the end of its tax year. It is the intention of risks: market price risk, interest rate risk, currency risk, portfolio concentration the Manager that all annual net investment income and sufficient net taxable risk, credit risk and liquidity risk. The Funds’ primary risk management objective capital gains will be distributed to unitholders on a tax year basis such that is to protect earnings and cash flow and, ultimately, unitholder value. Risk no Canadian income taxes are payable by the Funds. As a result thereof, no management strategies, as discussed below, are designed and implemented provision for income taxes is made in these financial statements. to ensure the Funds’ risks and related exposures are consistent with their objectives and risk tolerance. The income taxes for each specific fund are included in the Fund-Specific Notes. Most of the Funds’ risks are derived from their investments. The value of the The Funds may incur withholding taxes imposed by certain countries on investments within the Funds’ portfolios can fluctuate on a daily basis as a result investment income and capital gains. Such income and gains are recorded on a of changes in interest rates, economic conditions, commodity prices, and the gross basis and the related withholding taxes are shown as a separate expense market and company news related to specific securities held by a Fund. The in the Statements of Comprehensive Income. investments are made in accordance with the Funds’ risk management policies. The policies establish investment objectives, strategies, criteria and restrictions. 8. INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ATTRIBUTABLE TO HOLDERS OF The objectives of these policies are to identify and mitigate investment risk REDEEMABLE UNITS PER UNIT through a disciplined investment process and the appropriate structuring of Increase (decrease) in net assets from operations attributable to holders each transaction. Each Funds’ financial risk disclosure is included in the Fund- of redeemable units per unit of each class is calculated by dividing the Specific Notes. Increase (decrease) in net assets attributable to holders of redeemable units Market price risk from operations (excluding distributions), as reported in the Statement of Market price risk arises primarily from uncertainties about the future market Comprehensive Income, by the weighted average number of units in issue prices of instruments held. Market price fluctuations may be caused by factors during the related period. specific to an individual investment, or factors affecting all securities traded in a market or industry sector. All investments present a risk of loss of capital. 9. BROKERAGE COMMISSIONS The maximum risk resulting from financial instruments is equivalent to their The Investment Sub-Advisor makes decisions, including the selection of markets fair value. There is a significant exposure to market price risk arising from and dealers and the negotiation of commissions, with respect to the purchase investment in equity securities. and sale of portfolio securities, certain derivative products (including futures) and the execution of portfolio transactions. Commissions paid to brokers in Interest rate risk connection with portfolio transactions are included in transaction costs in the Interest rate risk arises from interest-bearing financial instruments where the Funds’ Statements of Comprehensive Income. Brokerage business is allocated values of those instruments fluctuate due to changes in market interest rates. based on which broker can deliver to the Funds the best trade execution. Currency risk Soft dollar arrangements are when trades are allocated to brokers that provide Currency risk arises from financial instruments that are denominated in or pay for, in addition to transaction execution, investment research, statistical a currency other than the Canadian dollar, which is the Funds’ functional or other similar services. Any soft dollar commissions are identified in the currency. The Funds are exposed to the risk that the value of financial referenced footnote on the Statements of Comprehensive Income and refer to instruments denominated in other currencies will fluctuate due to changes in amounts paid to dealers. exchange rates. Forward currency contracts and options may be utilized by the Funds to hedge against currency fluctuations. The Funds’ exposure to currency 10. FAIR VALUE INVESTMENTS risk relates primarily to cash and investments which are denominated in foreign IFRS 13 requires disclosures relating to fair value measurements using a three- currencies, primarily US dollars. level fair value hierarchy. The level within which the fair value measurement is Portfolio concentration risk categorized in its entirety is determined on the basis of the lowest level input Concentration indicates the relative sensitivity of the Funds’ performance that is significant to the fair value measurement. Assessing the significance of to developments affecting a particular industry or geographical location. a particular input requires judgment, considering factors specific to the asset Concentrations of risk arise when a number of financial instruments or or liability. The Funds’ hierarchy for disclosing the fair value of its financial contracts are entered into with the same counterparty, or where a number of instruments is based on the inputs summarized below: counterparties are engaged in similar business activities, or activities in the • Level 1 – valuation based on quoted prices (unadjusted) observed in active same geographical region, or have similar economic features that would cause markets for identical assets or liabilities. their ability to meet contractual obligations to be similarly affected by changes • Level 2 – valuation techniques based on inputs that are quoted prices of in economic, political or other conditions. similar instruments in active markets; quoted prices for identical or similar The Manager manages the risk through diversification and a thorough instruments in markets that are not active; inputs other than quoted prices understanding of each investment in the portfolio. used in a valuation model that are observable for that instrument; and inputs Credit risk that are derived from or corroborated by observable market data by correla- Credit risk is the risk that a counterparty to a financial instrument fails to tion or other means. discharge an obligation or commitment it has entered into with a Fund. • Level 3 – valuation techniques with significant unobservable market inputs. For assets and liabilities that are recognized in the financial statements on a The Funds’ main exposure to credit risk is: (a) their trading of listed securities – recurring basis, the Funds determine whether transfers have occurred between the risk of default is considered minimal as all transactions are settled and paid levels in the hierarchy by re-assessing the categorization (based on the lowest for upon delivery using approved brokers; (b) their investment in debt securities level input that is significant to the fair value measurement as a whole) at the through exchange traded funds because the issuer of an instrument that the beginning of each reporting period. exchange traded fund invests in may be unable to make interest payments

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 98 PURPOSE FUNDS

NOTES TO THE FINANCIAL STATEMENTS (continued)

or repay the principal amount on maturity. The concentration of credit risk of 14. RELATED PARTY TRANSACTION investments in debt instruments is minimal since the Funds invest in a variety of Purpose and Redwood are deemed to be related parties as current and former debt instruments issued by numerous issuers included in an exchange traded Manager of the Funds. Please refer to note 5 above for fees paid to Purpose fund, (c) their exposure to non-listed securities; and (d) the Funds may enter (and Redwood prior to the amalgamation with Purpose). At the inception of the into derivative contracts to hedge their exposure to foreign currencies. The Funds, the Manager purchased shares of each Fund. unrealized gain loss on outstanding contracts with counterparties represents the The Manager has appointed an Independent Review Committee as required maximum credit exposure. These contracts are carried out with counterparties by National Instrument 81-107 Independent Review Committee for Investment with a credit rating of at least “A-”. The exposure to credit risk on these contracts Funds. The mandate of the IRC is to review, and provide input on, the Manager’s is considered minimal as there are few contracts outstanding at any one time written policies and procedures that deal with conflict of interest matters in and the transactions are settled and paid for upon delivery. respect of the Fund. The fees for services rendered to the Fund are reported Liquidity risk in the Statements of Comprehensive Income. There are no other related party Liquidity risk is the risk of not being able to meet the Funds’ cash requirements transactions for the Fund. in a timely manner and includes the risk of not being able to liquidate assets at reasonable prices. This risk mainly arises from the Funds’ exposure to daily 15. LEVERAGE redemptions. Sufficient notification is required for redemption requests to allow The Funds may employ leverage in an amount up to 25% of total assets the Manager to sell investments to raise cash to fund redemptions. In addition, for the purpose of enhancing returns; maintaining liquidity; to fund margin the Funds retain sufficient cash positions to meet their daily cash requirements. requirements for the writing of foreign exchange options; for general working All liabilities are due within three months. capital purposes; and for market purchases of units.

12. CAPITAL MANAGEMENT 16. COMPARATIVE FIGURES The Funds considers their capital to consist of their issued and outstanding Certain figures from the prior years have been re-classified to confirm with the units. The Funds are not subject to externally imposed capital requirements and current year presentation. have no legal restrictions on the issue, repurchase or resale of redeemable units beyond those included in the Funds’ prospectus. The capital received by a Fund is managed to achieve its investment objective of the Fund while maintaining liquidity to satisfy unitholder redemptions. The Funds manage their capital in accordance with their investment objectives and strategies and the risk management practices outlined in note 11 while maintaining sufficient liquidity to meet distributions and redemptions. In order to manage its capital structure, the Funds may adjust the amount of dividends paid to unitholders. Changes in the units issued and outstanding of each Class of each Fund for the periods ended December 31, 2018 and 2017 as applicable are reported in Fund-Specific note B, Redeemable Participating units.

13. DISTRIBUTIONS The Funds expect to pay cash dividends of excess income as indicated below:

Purpose High Interest Savings ETF monthly Purpose US Cash ETF monthly Purpose Global Bond Fund (formerly Purpose Tactical Investment Grade Bond Fund) monthly Purpose Strategic Yield Fund (formerly Redwood Strategic Yield Fund) monthly Purpose Energy Credit Fund (formerly Energy Credit Opportunities Income Fund) monthly Purpose Canadian Preferred Share Fund (formerly Redwood Canadian Preferred Share Fund) monthly Purpose US Preferred Share Fund (formerly Redwood US Preferred Share Fund) monthly Purpose US Dividend Fund monthly Purpose International Dividend Fund monthly Purpose Emerging Markets Dividend Fund (formerly Redwood Emerging Markets Dividend Fund) monthly Purpose Marijuana Opportunities Fund (formerly Marijuana Opportunities Fund) annually if any Purpose Multi‑Asset Income Fund (formerly Redwood High Income Fund) monthly Purpose Multi-strategy Market Neutral fund annually if any Purpose Gold Bullion fund annually if any

DECEMBER 31, 2018 AND 2017 2018 ANNUAL REPORT 99 FUND INFORMATION

MANAGER BOARD OF DIRECTORS AND Purpose Investments Inc. INDEPENDENT REVIEW COMMITTEE 130 Adelaide Street West OF PURPOSE FUNDS Suite 1700, P.O. Box 83 Toronto, ON M5H 3P5 SOM SEIF Chief Executive Officer, Chairman of the Board of Directors AUDITOR and Director Ernst & Young LLP EY Tower DOUGLAS G. HALL 100 Adelaide Street West, P.O. Box 1 Chair of the Independent Review Committee Toronto, ON M5H 0B3 RANDALL C. BARNES CUSTODIAN Member of the Independent Review Committee CIBC Mellon Trust Company JEAN M. FRASER 1 York Street, Suite 700 Member of the Independent Review Committee Toronto, ON M5J 0B6

REGISTRAR AND TRANSFER AGENT TSX Trust Company 100 Adelaide Street West, Suite 301 OFFICERS AND DIRECTORS OF Toronto, ON M5H 4H1 PURPOSE INVESTMENTS INC.

UNITHOLDER AND RECORDKEEPING SOM SEIF CIBC Mellon Global Securities Company Chief Executive Officer, Chairman of the Board of Directors 1 York Street, Suite 700 and Director Toronto, ON M5J 0B6 RASHAY JETHALAL STOCK EXCHANGE LISTINGS President Ticker Symbols: VLADIMIR TASEVSKI Purpose High Interest Savings ETF TSX: PSA Vice President Purpose US Cash ETF TSX: PSU.U Purpose Global Bond Fund TSX: BND JEFF BOUGANIM (formerly Purpose Tactical Investment Grade Bond Fund) Chief Financial Officer, Director Purpose Strategic Yield Fund TSX: SYLD (formerly Redwood Strategic Yield Fund) CAITLIN GOSSAGE Purpose Energy Credit Fund NEO: PCF, PCF.U (formerly Energy Credit Opportunities Income Fund) Chief Compliance Officer Purpose Canadian Preferred Share Fund NEO: RPS (formerly Redwood Canadian Preferred Share Fund) JEFF MITELMAN Purpose US Preferred Share Fund NEO: RPU, RPU.B, RPU.U Director (formerly Redwood US Preferred Share Fund) Purpose US Dividend Fund TSX: PUD, PUD.B Purpose International Dividend Fund TSX: PID Purpose Emerging Markets Dividend Fund NEO: REM (formerly Redwood Emerging Markets Dividend Fund) Purpose Marijuana Opportunities Fund NEO: MJJ (formerly Marijuana Opportunities Fund) Purpose Multi‑Asset Income Fund TSX: PINC (formerly Redwood High Income Fund) Purpose Multi-Strategy Market Neutral Fund TSX: PMM Purpose Gold Bullion Fund TSX: KILO, KILO.B, KILO.U

Purpose Investments Inc. T 416 583-3850 www.purposeinvest.com 130 Adelaide St. W, Suite 1700 TF 877 789-1517 [email protected] P.O. Box 83, Toronto, ON M5H 3P5 F 416 583-3851