md family of funds - june 2018 · interim unaudited financial statements for ... by calling the...

MD Family of Funds

2018 INTERIM FINANCIAL STATEMENTS

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Interim Unaudited Financial Statements for the Six-Month Period Ended June 30, 2018These Interim Unaudited Financial Statements do not contain the Interim Management Report of Fund Performance (“MRFP”) of the investment fund. If you have not received a copy of the Interim MRFP with this report, you may obtain a copy of the Interim MRFP at your request, and at no cost, by calling the toll-free number 1 800 267-2332, by writing to us at MD Financial Management Inc., 1870 Alta Vista Drive, Ottawa ON K1G 6R7, by visiting our website at md.cma.ca or by visiting the SEDAR website at sedar.com. Copies of the Annual Financial Statements or Annual MRFP may also be obtained, at no cost, using any of the methods outlined above. Securityholders may also contact us using one of these methods to request a copy of the investment fund’s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure.

NOTICE OF NO AUDITOR REVIEW OF THE INTERIM FINANCIAL STATEMENTSMD Financial Management Inc, the Manager of the Fund, appoints independent auditors to audit the Fund’s Annual Financial Statements. Under Canadian securities laws (National Instrument 81-106), if an auditor has not reviewed the Interim Financial Statements, this must be disclosed in an accompanying notice. The Fund’s independent auditors have not performed a review of these Interim Financial Statements in accordance with standards established by the Canadian Institute of Chartered Accountants.

MD Financial Management Inc. wholly owns or has a majority interest in its seven subsidiaries (the MD Group of Companies). It provides financial products and services, is the fund manager for the MD Family of Funds and offers investment counselling services. For a detailed list of the MD Group of Companies, visit md.cma.ca.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund. Standard performance data assumes reinvestment of distributions only and does not take into account sales, redemption, distribution or optional charges payable by any securityholder which would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. You may obtain a copy of the prospectus before investing by calling your MD Advisor or the MD Trade Centre at 1 800 267-2332.

A Message Regarding Your Financial Statements

Dear MD Family of Funds Investor:

As part of our commitment to keeping you informed about your MD fund investments, please find attached the 2018 Interim Financial Statements.

The Interim Financial Statements are produced on a fund-by-fund basis, and your report only includes information on the funds you owned as of June 30, 2018.

If you have any questions regarding these documents, please contact your MD advisor or the MD TradeCentre at 1 800 267-2332. We thank you for your continued investment in the MD Family of Funds.

MD Growth Investments LimitedSchedule of Investments as at June 30, 2018 (unaudited)

(in $000's except for number of shares)

Percentages shown in brackets relate investments at fair value to net assets of the Fund. The accompanying notes are an integral part of these financial statements.

Number of Shares

Average Cost ($)

Fair Value

($)

DOMESTIC EQUITIESConsumer Discretionary (0.34%)Alimentation Couche-Tard Inc. Cl. B 100,200 6,039 5,722Total for consumer Discretionary 6,039 5,722

Materials (0.88%)Goldcorp Inc. 247,288 8,440 4,455Nutrien Ltd. 144,455 9,464 10,324Total for Materials 17,904 14,779

Exchange Traded Funds (0.26%)iShares MSCI Canada ETF 114,820 4,145 4,302Total for Exchange Traded Funds 4,145 4,302Total for Domestic Equites (1.48%) 28,088 24,803

FOREIGN EQUITIESAustralia (1.23%)Brambles Limited 972,214 8,143 8,394CSL Limited 65,400 2,769 12,249Total for Australia 10,912 20,643

Austria (0.63%)Voestalpine AG 174,915 8,732 10,589Total for Austria 8,732 10,589

Belgium (0.98%)Anheuser-Busch InBev SA 124,038 13,099 16,465Total for Belgium 13,099 16,465

Bermuda (0.63%)Invesco, Ltd. 301,414 9,153 10,521Total for Bermuda 9,153 10,521

Brazil (0.16%)Petroleo Brasileiro SA - Petrobras ADR 76,806 1,493 1,013Vale SA ADR 99,678 804 1,679Total for Brazil 2,297 2,692

Cayman Islands (0.66%)China Biologic Products Holdings, Inc. 84,626 9,824 11,047Total for Cayman Islands 9,824 11,047

Curacao (0.73%)Schlumberger Limited 138,601 12,167 12,210Total for Curacao 12,167 12,210

Czech Republic (0.65%)Komercni Banka AS 196,825 10,249 10,870Total for Czech Republic 10,249 10,870

Denmark (0.67%)Novo Nordisk A/S Cl. B 184,300 6,532 11,236Total for Denmark 6,532 11,236

4 MD Family of Funds | Interim Financial Statements 2018




Number of Shares

Average Cost ($)

Fair Value

($)

Finland (0.39%)Kone OYJ Series B 96,700 6,225 6,479Total for Finland 6,225 6,479

France (3.79%)Arkema SA 4,116 405 640BNP Paribas SA 44,406 3,005 3,625Dassault Systemes SA 54,492 6,716 10,035Essilor International SA 72,293 6,885 13,413L'Oréal SA 39,000 5,182 12,658LVMH Moet Hennessy Louis Vuitton SA 28,600 6,135 12,517Schneider Electric SE 96,508 7,770 10,577Total for France 36,098 63,465

Germany (1.89%)Hannover Rueckversicherungs AG 82,461 9,045 13,515Henkel AG & Co. KGaA 123,360 11,564 18,031Total for Germany 20,609 31,546

Hong Kong (4.74%)AIA Group Limited 2,820,794 18,860 32,411China Mobile Limited 263,400 2,815 3,075CLP Holdings Limited 443,500 2,717 6,277CNOOC Limited 12,069,820 18,869 27,373Hong Kong & China Gas Company Limited 4,021,239 5,112 10,116Total for Hong Kong 48,373 79,252

Israel (0.34%)Teva Pharmaceutical Industries, Ltd. ADR 178,553 8,812 5,707Total for Israel 8,812 5,707

Japan (8.64%)Astellas Pharma Inc. 855,601 11,313 17,154Canon Inc. 154,584 6,241 6,663DENSO Corporation 165,900 5,966 10,658FANUC Corporation 42,900 5,730 11,206FUJIFILM Holdings Corporation 238,763 10,255 12,260Keyence Corporation 68,330 16,581 50,741Nippon Telegraph and Telephone Corporation 397,959 15,685 23,789Shin-Etsu Chemical Co., Ltd. 103,000 5,972 12,071Total for Japan 77,743 144,542

Jersey (0.46%)Experian PLC 239,200 5,975 7,777Total for Jersey 5,975 7,777

Netherlands (0.53%)ING Groep NV 467,323 7,412 8,841Total for Netherlands 7,412 8,841

Norway (0.01%)Fred Olsen Energy ASA 86,836 2,084 127Total for Norway 2,084 127

Singapore (0.43%)Keppel Corporation Limited 797,149 5,643 5,497

5MD Family of Funds | Interim Financial Statements 2018




Number of Shares

Average Cost ($)

Fair Value

($)

Keppel REIT Management Limited 183,164 196 194Singapore Press Holdings Limited 611,006 2,045 1,532Total for Singapore 7,884 7,223

South Korea (2.54%)Samsung Electronics Co., Ltd. GDR 27,524 17,949 37,800Shinhan Financial Group Co., Ltd. 90,748 5,201 4,633Total for South Korea 23,150 42,433

Spain (1.24%)Banco Santander, SA 596,616 4,946 4,204Industria de Diseno Textil, SA 369,955 8,667 16,612Total for Spain 13,613 20,816

Switzerland (5.56%)Chubb, Ltd. 212,396 23,423 35,455Nestlé SA 120,696 6,074 12,293Novartis AG 118,789 12,069 11,844Roche Holding AG 89,274 23,233 26,078SGS SA 2,122 5,805 7,425Total for Switzerland 70,604 93,095

Taiwan (0.79%)Taiwan Semiconductor Manufacturing Company, Ltd. ADR 274,001 6,371 13,165Total for Taiwan 6,371 13,165

Thailand (0.81%)Kasikornbank Public Company Limited 1,395,863 10,279 11,074PTT Exploration and Production Public Company Limited 450,783 2,186 2,513Total for Thailand 12,465 13,587

United Kingdom (3.81%)Compass Group PLC 440,300 10,072 12,359Lloyds Banking Group PLC 2,217,401 2,530 2,425Persimmon PLC 317,015 8,461 13,927Reckitt Benckiser Group PLC 93,941 5,336 10,165Royal Dutch Shell PLC Cl. B 307,112 10,959 14,453The Sage Group PLC 955,520 8,582 10,417Total for United Kingdom 45,940 63,746

United States (43.78%)AbbVie Inc. 157,354 12,825 19,159Adobe Systems Inc. 57,046 2,277 18,278AdvanSix Inc. 10,380 255 500AFLAC Incorporated 95,085 5,335 5,376AGCO Corporation 262,658 15,909 20,960Alphabet Inc. Cl. A 800 497 1,187Alphabet Inc. Cl. C 13,598 7,725 19,937Amphenol Corp. Cl. A 106,380 3,741 12,184AT&T Inc. 275,307 11,308 11,618Automatic Data Processing, Inc. 64,890 3,822 11,439Brighthouse Financial, Inc. 18,210 1,123 959Bristol-Myers Squibb Company 145,230 8,181 10,562Cerner Corporation 147,400 11,930 11,582Cisco Systems, Inc. 220,806 5,951 12,487Cognex Corp. 97,600 6,328 5,722





Number of Shares

Average Cost ($)

Fair Value

($)

Cognizant Technology Solutions Corp. Cl. A 133,286 10,427 13,836Colgate-Palmolive Company 128,061 5,949 10,907Edwards Lifesciences Corporation 66,300 9,786 12,684EOG Resources, Inc. 116,458 7,131 19,044Exxon Mobil Corporation 166,860 15,419 18,142Fastenal Company 181,064 5,879 11,453Gilead Sciences, Inc. 94,813 11,119 8,827Honeywell International Inc. 258,257 26,448 48,891Huntington Ingalls Industries Inc. 28,248 3,594 8,048International Business Machines Corporation 20,625 3,597 3,787Intuitive Surgical, Inc. 19,546 3,033 12,291Johnson & Johnson 74,528 5,874 11,885JPMorgan Chase & Co. 272,241 18,170 37,281Lincoln National Corporation 49,932 2,334 4,085MasterCard Incorporated Cl. A 71,114 3,119 18,366MetLife, Inc. 236,612 11,843 13,558Microsoft Corporation 93,739 3,044 12,148Mondelez International, Inc. Cl. A 256,043 9,810 13,796Moodys Corporation 178,667 14,974 40,048Nike Inc. Cl. B 127,797 4,242 13,382Northrop Grumman Corporation 69,693 12,195 28,182Omnicom Group Inc. 174,068 13,492 17,448Oracle Corporation 220,131 5,411 12,746Praxair, Inc. 64,509 7,944 13,408Starbucks Corporation 178,540 11,668 11,462Stryker Corporation 56,312 3,845 12,496Synchrony Financial 150,694 5,817 6,611The Dun & Bradstreet Corporation 104,444 11,739 16,835The Kraft Heinz Company 85,012 5,757 7,018The TJX Companies Inc. 108,616 4,664 13,586The Walt Disney Company 95,543 12,788 13,160The Williams Companies, Inc. 402,681 11,946 14,347Unum Group 228,310 8,161 11,099Waste Management, Inc. 352,652 20,563 37,697Waters Corporation 26,200 6,867 6,666Western Digital Corporation 92,077 8,708 9,367WPX Energy Inc. Cl. A 255,253 3,515 6,048Total for United States 428,079 732,585

Exchange Traded Funds (11.08%)Franklin FTSE Japan ETF 619,091 21,583 20,948iShares MSCI China ETF 261,128 14,430 22,169iShares MSCI EAFE ETF 478,151 41,492 42,083iShares MSCI Italy Capped ETF 143,528 5,600 5,449iShares MSCI Singapore Capped ETF 485,883 16,218 15,319iShares MSCI South Korea Capped ETF 94,579 6,947 8,416SPDR S&P 500 ETF Trust 198,754 66,513 70,859Total for Exchange Traded Funds 172,783 185,243Total for Foreign Equities (97.17%) 1,077,185 1,625,902Total for Long-term investments (98.65%) 1,105,273 1,650,705





Maturity Date

Yield (%)

Principal Amount in Currency

of Issue

Average Cost ($)

Fair Value

($)

SHORT-TERM INVESTMENTSProvince of Quebec 08/03/2018 2.00% 500 USD 649 656Total for Short-term Investments (0.04%) 649 656Total for Investments (98.69%) $1,105,922 $1,651,361Cash and Other Net assets (1.31%) 21,883Total Net Assets Attributable to Holders of Redeemable Shares (100.00%) $1,673,244

Schedule of Derivative Instruments(in $000's)

FORWARD CURRENCY CONTRACTS

Contracts Pay ReceiveContract

Rate Due DateFair

Value ($) Counterparty

Rating of the

Counterparty*

1 8,792 Australian dollar 8,661 Canadian Dollar 0.985 09/13/2018 120 Royal Bank of Canada AA-1 1,105 Australian dollar 1,081 Canadian Dollar 0.978 09/13/2018 7 Toronto-Dominion Bank AA-1 7,545 Brazilian Real 1,982 U.S. Dollar 0.263 09/10/2018 52 Royal Bank of Canada AA-1 5,678 Canadian Dollar 3,745 Euro Currency 0.660 07/10/2018 71 State Street Bank and Trust Co. AA-1 2,180 Canadian Dollar 13,175 Hong Kong Dollar 6.044 09/06/2018 27 Toronto-Dominion Bank AA-1 2,908 Canadian Dollar 245,171 Japanese Yen 84.321 08/31/2018 11 Toronto-Dominion Bank AA-1 8,540 Canadian Dollar 135,710 Mexican Peso 15.891 07/10/2018 524 Goldman Sachs Bank USA A+1 14,557 Canadian Dollar 8,403 Pound Sterling 0.577 08/31/2018 41 State Street Bank and Trust Co. AA-1 8,846 Canadian Dollar 6,680 Swiss Franc 0.755 08/31/2018 36 State Street Bank and Trust Co. AA-1 67,799 Canadian Dollar 52,323 U.S. Dollar 0.772 09/13/2018 881 Toronto-Dominion Bank AA-1 167,140 Czech Koruna 10,341 Canadian Dollar 0.062 07/31/2018 467 Royal Bank of Canada AA-1 6,015 Danish Krone 1,266 Canadian Dollar 0.210 07/24/2018 26 Canadian Imperial Bank of Commerce A+1 25,842 Euro Currency 40,715 Canadian Dollar 1.576 07/10/2018 1,047 State Street Bank and Trust Co. AA-1 5,790 Euro Currency 8,988 Canadian Dollar 1.552 07/10/2018 100 Canadian Imperial Bank of Commerce A+1 2,450 Euro Currency 3,850 Canadian Dollar 1.571 07/10/2018 89 Toronto-Dominion Bank AA-1 6,140 Euro Currency 9,465 Canadian Dollar 1.542 07/10/2018 40 Royal Bank of Canada AA-1 3,905 Israeli Sheqel 1,429 Canadian Dollar 0.366 08/31/2018 22 Toronto-Dominion Bank AA-1 180,121 Japanese Yen 2,184 Canadian Dollar 0.012 08/31/2018 40 State Street Bank and Trust Co. AA-1 2,504,826 Japanese Yen 29,850 Canadian Dollar 0.012 08/31/2018 29 Royal Bank of Canada AA-1 348,241 New Taiwan Dollar 11,749 U.S. Dollar 0.034 09/06/2018 351 Bank of Montreal A+1 22,780 Polish Zloty 8,493 Canadian Dollar 0.373 07/10/2018 502 State Street Bank and Trust Co. AA-1 1,995 Pound Sterling 3,512 Canadian Dollar 1.761 08/31/2018 47 State Street Bank and Trust Co. AA-1 8,160 Singapore Dollar 7,966 Canadian Dollar 0.976 09/20/2018 94 State Street Bank and Trust Co. AA-1 44,473,740 South Korean Won 41,340 U.S. Dollar 0.001 08/31/2018 1,715 Royal Bank of Canada AA-1 3,210,100 South Korean Won 2,997 U.S. Dollar 0.001 08/31/2018 141 Bank of Montreal A+1 60,065 Swedish Krona 9,029 Canadian Dollar 0.150 07/24/2018 202 Canadian Imperial Bank of Commerce A+1 9,095 Swedish Krona 1,365 Canadian Dollar 0.150 07/24/2018 28 State Street Bank and Trust Co. AA-1 335,144 Thailand Baht 13,627 Canadian Dollar 0.041 08/31/2018 325 Toronto-Dominion Bank AA-1 9,245 U.S. Dollar 12,286 Canadian Dollar 1.329 09/13/2018 151 Royal Bank of Canada AA-1 1,080 U.S. Dollar 1,435 Canadian Dollar 1.329 09/13/2018 17 Bank of Montreal A+1 259 U.S. Dollar 7,900 New Taiwan Dollar 30.495 09/06/2018 2 Toronto-Dominion Bank AA-1 618 U.S. Dollar 689,675 South Korean Won 1,116.510 08/31/2018 4 Royal Bank of Canada AA-1 206 U.S. Dollar 228,625 South Korean Won 1,111.600 08/31/2018 - Bank of Montreal A+

7,2091 3,781 Canadian Dollar 2,450 Euro Currency 0.648 07/10/2018 (20) State Street Bank and Trust Co. AA-1 6,084 Canadian Dollar 3,900 Euro Currency 0.641 07/10/2018 (98) State Street Bank and Trust Co. AA-1 9,987 Canadian Dollar 6,390 Euro Currency 0.640 07/10/2018 (178) Royal Bank of Canada AA-



(in $000's)

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

Schedule of Derivative Instruments (continued)

Contracts Pay ReceiveContract

Rate Due DateFair

Value ($) Counterparty

Rating of the

Counterparty*

1 2,528 Canadian Dollar 15,000 Hong Kong Dollar 5.933 09/06/2018 (16) Canadian Imperial Bank of Commerce A+1 5,100 Canadian Dollar 30,065 Hong Kong Dollar 5.895 09/06/2018 (64) State Street Bank and Trust Co. AA-1 22,855 Canadian Dollar 1,911,352 Japanese Yen 83.628 08/31/2018 (100) Royal Bank of Canada AA-1 11,981 Canadian Dollar 986,482 Japanese Yen 82.334 08/31/2018 (237) Royal Bank of Canada AA-1 935 Canadian Dollar 1,010 New Zealand Dollar 1.081 07/18/2018 (36) Bank of Montreal A+1 9,186 Canadian Dollar 56,350 Norwegian Krone 6.134 07/24/2018 (96) Royal Bank of Canada AA-1 27,993 Canadian Dollar 171,810 Norwegian Krone 6.138 07/24/2018 (277) State Street Bank and Trust Co. AA-1 8,414 Canadian Dollar 23,460 Polish Zloty 2.788 07/10/2018 (184) Canadian Imperial Bank of Commerce A+1 25,109 Canadian Dollar 67,310 Polish Zloty 2.681 07/10/2018 (1,498) State Street Bank and Trust Co. AA-1 98 Canadian Dollar 100 Singapore Dollar 1.022 09/20/2018 (1) Toronto-Dominion Bank AA-1 93 Canadian Dollar 95 Singapore Dollar 1.020 09/20/2018 (1) Royal Bank of Canada AA-1 142 Canadian Dollar 145 Singapore Dollar 1.024 09/20/2018 (2) Royal Bank of Canada AA-1 3,388 Canadian Dollar 23,040 Swedish Krona 6.801 07/24/2018 (2) Bank of Montreal A+1 54,785 Canadian Dollar 362,455 Swedish Krona 6.616 07/24/2018 (1,519) Royal Bank of Canada AA-1 8,470 Canadian Dollar 6,260 Swiss Franc 0.739 08/31/2018 (146) Canadian Imperial Bank of Commerce A+1 114 Canadian Dollar 2,805 Thailand Baht 24.651 08/31/2018 (2) State Street Bank and Trust Co. AA-1 297 Canadian Dollar 225 U.S. Dollar 0.757 09/13/2018 (2) Canadian Imperial Bank of Commerce A+1 3,363 Canadian Dollar 2,530 U.S. Dollar 0.752 09/13/2018 (42) State Street Bank and Trust Co. AA-1 590 Euro Currency 900 Canadian Dollar 1.525 07/10/2018 (6) State Street Bank and Trust Co. AA-1 2,465 Euro Currency 3,720 Canadian Dollar 1.509 07/10/2018 (64) State Street Bank and Trust Co. AA-1 2,380 Euro Currency 3,588 Canadian Dollar 1.508 07/10/2018 (65) Royal Bank of Canada AA-1 624,029 Hong Kong Dollar 103,158 Canadian Dollar 0.165 09/06/2018 (1,358) State Street Bank and Trust Co. AA-1 466,822 Japanese Yen 5,521 Canadian Dollar 0.012 08/31/2018 (36) State Street Bank and Trust Co. AA-1 44,220 Norwegian Krone 7,060 Canadian Dollar 0.160 07/24/2018 (74) Goldman Sachs Bank USA A+1 20,390 Polish Zloty 7,058 Canadian Dollar 0.346 07/10/2018 (94) State Street Bank and Trust Co. AA-1 22,522 Swiss Franc 29,678 Canadian Dollar 1.318 08/31/2018 (270) State Street Bank and Trust Co. AA-1 3,350 U.S. Dollar 4,342 Canadian Dollar 1.296 09/13/2018 (55) Toronto-Dominion Bank AA-1 15,395 U.S. Dollar 1,049,335 Indian Rupee 68.161 09/05/2018 (269) Toronto-Dominion Bank AA-1 6,362 U.S. Dollar 89,089,210 Indonesian Rupiah 14,003.000 09/21/2018 (276) Toronto-Dominion Bank AA-1 13,371 U.S. Dollar 830,630 New Russian Ruble 62.121 07/23/2018 (187) Toronto-Dominion Bank AA-1 1,456 U.S. Dollar 44,125 New Taiwan Dollar 30.310 09/06/2018 (1) Bank of Montreal A+1 68 U.S. Dollar 75,000 South Korean Won 1,106.100 08/31/2018 - Royal Bank of Canada AA-1 604 U.S. Dollar 670,000 South Korean Won 1,109.100 08/31/2018 (1) Bank of Montreal A+1 477 U.S. Dollar 525,000 South Korean Won 1,099.750 08/31/2018 (6) Royal Bank of Canada AA-1 779 U.S. Dollar 860,000 South Korean Won 1,103.400 08/31/2018 (7) Canadian Imperial Bank of Commerce A+1 394 U.S. Dollar 425,000 South Korean Won 1,079.600 08/31/2018 (15) Canadian Imperial Bank of Commerce A+1 764 U.S. Dollar 823,560 South Korean Won 1,077.900 08/31/2018 (30) Bank of Montreal A+1 791 U.S. Dollar 850,785 South Korean Won 1,075.080 08/31/2018 (34) Bank of Montreal A+

(7,369)Total Forward Currency Contracts (160)



(in $000's)


Schedule of Derivative Instruments (continued)FUTURES CONTRACTS

Description Type Contracts Expiration dateNotional Amount

Fair Value ($)

S+P 500 E-Mini Index Futures Long 17 09/21/2018 USD 3,040 (73)Total Futures Contracts (73)Total for Schedule of Derivative Instruments (233)

* Source: Standard & Poor's Credit Rating Agency


MD Growth Investments LimitedFinancial Statements


Statement of Financial Position (unaudited)(in $000's except for shares outstanding and per share amounts)

June 30, 2018

December 31, 2017

AssetsCurrent assetsInvestments $ 1,651,361 $ 1,640,099Cash 18,607 19,401Dividends and interest receivable 5,789 3,581Financial derivative instruments 4,793 4,722Net margin and collateral due from broker

on futures contracts 87 112Receivable for investment transactions 894 2,615Refundable income taxes 225 152Subscriptions receivable 3,872 131

1,685,628 1,670,813

LiabilitiesCurrent liabilitiesPayable for investment transactions 1,002 -Deferred income taxes 2,771 1,725Redemptions payable 3,585 417Financial derivative instruments 5,026 5,410

12,384 7,552

Net assets attributable to holders of redeemable shares $ 1,673,244 $ 1,663,261

Net assets attributable to holders of redeemable shares per series

Series A $ 1,332,049 $ 1,650,768Series D $ 99 $ -Series F $ 336,711 $ 7,788Series I $ 4,385 $ 4,705

Number of redeemable shares outstanding (see Supplementary Schedules)

Series A 70,531,000 90,221,882Series D 9,967 -Series F 30,973,419 743,332Series I 218,539 243,939

Net assets attributable to holders of redeemable shares per share, per series

Series A $ 18.89 $ 18.30Series D $ 9.90 $ -Series F $ 10.87 $ 10.48Series I $ 20.07 $ 19.29

Statement of Comprehensive Income (unaudited)for the periods ended June 30 (in $000’s except for per share amounts)

2018 2017

IncomeNet gain (loss) on investments

Dividends $ 22,629 $ 23,354Interest for distribution purposes 42 27Net realized gain (loss) on sale of investments 75,391 60,680Change in unrealized appreciation (depreciation) of

investments (14,951) 47,832Net gain (loss) on investments 83,111 131,893

Net gain (loss) on derivative instrumentsNet realized gain (loss) on derivative instruments (6,445) 2,230Change in unrealized appreciation (depreciation) of

derivative instruments 455 (327)Net gain (loss) on derivatives instruments (5,990) 1,903

Other IncomeForeign exchange gain (loss) on cash (5,189) (206)Early redemption fee 4 -Securities lending (see Supplementary Schedules) 54 71Other 7 121

Total other income (5,124) (14)Total income (loss) 71,997 133,782

ExpensesManagement fees (Note 4) 10,690 11,077Administration fees 1,834 1,765Interest expense 4 1Withholding tax on foreign income 2,666 2,659Transaction costs 284 301Total expenses 15,478 15,803

Income before provision for income taxes 56,519 117,979Provision for income taxes

Current 1,532 631Deferred 492 1,200

2,024 1,831

Increase (decrease) in net assets attributable to holders of redeemable shares $ 54,495 $ 116,148

Increase (decrease) in net assets attributable to holders of redeemable shares per series

Series A $ 53,360 $ 115,764Series D $ - $ -Series F $ 951 $ -Series I $ 184 $ 384

Increase (decrease) in net assets attributable to holders of redeemable shares per share, per series

Series A $ 0.66 $ 1.21Series D $ (0.07) $ -Series F $ 0.07 $ -Series I $ 0.79 $ 0.22




Statement of Changes in Net Assets Attributable to Holders of Redeemable Shares ("Net Assets") (unaudited)for the periods ended June 30 (in $000’s)

2018 2017

SERIES ANet assets - beginning of period $ 1,650,768 $ 1,569,468

Add (deduct) changes during the period:Operations

Increase (decrease) in net assets attributable to holders of redeemable shares 53,360 115,764

Redeemable share transactionsProceeds from issue of redeemable shares 35,406 55,108Cash paid for redemption of redeemable shares (407,485) (128,399)

(372,079) (73,291)Net assets - end of period $ 1,332,049 $ 1,611,941

SERIES DNet assets - beginning of period $ - $ -


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

Redeemable share transactionsProceeds from issue of redeemable shares 99 -

99 -

Net assets - end of period $ 99 $ -

SERIES FNet assets - beginning of period $ 7,788 $ -


Increase (decrease) in net assets attributable to holders of redeemable shares 951 -

Redeemable share transactionsProceeds from issue of redeemable shares 334,225 -Cash paid for redemption of redeemable shares (6,253) -

327,972 -Net assets - end of period $ 336,711 $ -

2018 2017

SERIES INet assets - beginning of period $ 4,705 $ 19,193


Increase (decrease) in net assets attributable to holders of redeemable shares 184 384

Redeemable share transactionsProceeds from issue of redeemable shares 62 53,247Cash paid for redemption of redeemable shares (566) (223)

(504) 53,024Net assets - end of period $ 4,385 $ 72,601

TOTAL FUNDNet assets - beginning of period $ 1,663,261 $ 1,588,661


Increase (decrease) in net assets attributable to holders of redeemable shares 54,495 116,148

Redeemable share transactionsProceeds from issue of redeemable shares 369,792 108,355Cash paid for redemption of redeemable shares (414,304) (128,622)

(44,512) (20,267)Net assets - end of period $ 1,673,244 $ 1,684,542




Statement of Cash Flows (unaudited)for the periods ended June 30 (in $000’s)

2018 2017

Cash flows from (used in) operating activities

Increase (decrease) in net assets attributable to holders of redeemable shares $ 54,495 $ 116,148

Adjustments for:Proceeds from sale of investments 273,305 233,411Purchase of investments (221,392) (212,640)Amortization income (12) (7)Unrealized foreign exchange (gain) loss on cash (34) 398Net realized (gain) loss on sale of investments (75,391) (60,680)Change in unrealized (appreciation) depreciation

of investments 14,951 (47,832)Change in unrealized (appreciation) depreciation

of derivative instruments (455) 327

Net change in non-cash working capital (1,210) (1,097)

Net cash from (used in) operating activities 44,257 28,028

Cash flows from (used in) financing activities

Proceeds from issue of redeemable shares 45,402 108,908Cash paid for redemption of redeemable shares (90,487) (128,625)

Net cash from (used in) financing activities (45,085) (19,717)

Unrealized foreign exchange gain (loss) on cash 34 (398)

Net increase (decrease) in cash during the period (794) 7,913

Cash, beginning of period 19,401 21,890

Cash, end of period $ 18,607 $ 29,803

Interest received 56 28Dividends received, net of withholding taxes 17,740 18,284


MD Growth Investments LimitedFinancial Statements – Supplementary Schedules (unaudited)


Share CapitalMD Growth Investments Limited’s authorized share capital comprises an unlimited number of non-voting mutual fund shares (Series A, F, D and I) and 2,656 common shares. The common shares participate equally in the income, distribution and net asset valuations of the Fund. Note that due to their negligible value these common shares do not appear in the financial statements or supplementary schedules.

for the periods ended June 30

2018 2017

SERIES AOutstanding, beginning of period 90,221,882 98,134,139Issued 2,929,945 3,258,683Redeemed (22,620,827) (7,612,663)Outstanding, end of period 70,531,000 93,780,159

SERIES DOutstanding, beginning of period - -Issued 18,934 -Redeemed (8,967) -Outstanding, end of period 9,967 -

SERIES FOutstanding, beginning of period 743,332 -Issued 31,952,777 -Redeemed (1,722,690) -Outstanding, end of period 30,973,419 -

SERIES IOutstanding, beginning of period 243,939 1,156,705Issued 3,136 2,894,819Redeemed (28,536) 12,097Outstanding, end of period 218,539 4,063,621

Soft dollar commissionsSoft dollar commissions refers to the portion of total brokerage commissions paid to certain brokers that was available for payment to third party vendors for providing research, statistical or investment decision making services. These services assist the investment managers with their investment decision making for the Fund.

The soft dollar portion of the commissions paid to dealers for executing portfolio transactions is not ascertainable for the first six months of 2018 and 2017.

Securities on Loan

(in $000’s) June 30, 2018 December 31, 2017

Fair value of securities loaned $ 32,505 $ 7,466Fair value of collateral (non-cash) $ 34,181 $ 7,861

State Street Bank and Trust Co. is entitled to receive payments out of the gross amount generated from the securities lending transactions of the Fund and bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification.

The table below sets out a reconciliation of the gross amount generated from the securities lending transactions of the Fund to the revenue from securities lending disclosed under securities lending income in the Fund’s Statements of Comprehensive Income.

for the period ended June 30 (in $000's) 2018 2017

Gross amount generated from the securities lending transactions $ 71 $ 87

Amounts paid to State Street Bank and Trust Co. $ (17) $ (16)

Net securities lending income as reported in the Statement of Comprehensive Income $ 54 $ 71

Investment in Unconsolidated Structured Entities(in $000's)

As at Structure Type

Number of Investee

Funds

Net Asset Value of Investee Funds

(Range and Weighted Average)

in Billions

Fair Value of Fund's

Investment in Underlying Funds

(in thousands)

June 30, 2018Exchange Traded

Funds 70.63 - 338.61

(167.04) 185,243December 31,

2017Exchange Traded

Funds 90.5 - 340.13

(145.09) 181,093

TaxesThe Fund is a mutual fund corporation for federal income tax purposes and, accordingly, it is subject to tax at normal corporate rates applicable to mutual fund corporations on foreign dividends received and interest income, net of expenses. The Fund is subject to a tax on taxable dividends received from taxable Canadian corporations. This tax is recorded as refundable income taxes on the Statement of Financial Position because it is refundable at a rate determined by a formula when taxable dividends are paid. The Fund is subject to a tax on capital gains. However, this tax is refundable if sufficient capital gains are distributed to shareholders either as capital gains dividends or through the redemption of shares. The provision for income taxes in the Statement of Comprehensive Income is stated after deducting applicable refundable capital gains taxes.

Income taxes are calculated using the liability method of tax accounting. Temporary differences between the carrying values of assets and liabilities for accounting and income tax purposes give rise to deferred income tax assets and liabilities. Deferred income tax liabilities or assets are calculated using substantively enacted tax rates expected to apply in the period that the temporary differences are expected to reverse.

As at June 30, 2018, the Fund has accumulated net realized capital losses of $408,879 available for utilization against net realized gains in future years. Capital losses have no expiry. No benefit has been recorded by the Fund in the financial statements in respect of the unused losses as at June 30, 2018.


MD Growth Investments LimitedFinancial Statements – Supplementary Schedules (unaudited)


Tax Loss Carry Forwardsas at June 30 (in $000's)

2018

Net capital loss carried forward $ 408,879

Non-capital losses expiring:2018 $ -2019 -in 2020 and thereafter -Total $ -

Income Tax Rate Reconciliationas at June 30 (% of income before provision for income taxes)

2018 2017

Statutory income tax rate 39.50 39.50Non-taxable mark-to-market adjustment 10.13 (15.90)Income on account of capital offset by losses

and/or capital gains refund (48.18) (21.06)Foreign exchange loss (gain) 3.63 0.07Foreign tax credit (2.35) (1.01)Other (1.00) (0.93)Withholding tax 1.86 0.89E�ective income tax rate 3.59 1.56

Amounts Subject to Master Netting Arrangements(in $000's)

In the normal course of business, the Fund enters into various enforceable master netting arrangements with its derivative counterparties.

The following tables present the Fund's financial assets and liabilities subject to enforceable master netting arrangements. The tables are presented by financial instrument type.

FINANCIAL ASSETS

Gross Asset

Gross Liabilities

O�set

Net Amounts

Presented

Financial Instruments Eligible for

O�set Net

June 30, 2018Derivative assets $ 7,209 $ 2,416 $ 4,793 $ 2,988 $ 1,805December 31, 2017Derivative assets $ 5,913 $ 1,191 $ 4,722 $ 1,484 $ 3,238

FINANCIAL LIABILITIES

Gross Liability

Gross Asset O�set

Net Amounts

Presented

Financial Instruments Eligible for

O�set Net

June 30, 2018Derivative liabilities $ 7,442 $ 2,416 $ 5,026 $ 2,988 $ 2,038December 31, 2017Derivative liabilities $ 6,601 $ 1,191 $ 5,410 $ 1,484 $ 3,926

Management and administration fees (Note 4)As at June 30

2018 2017

Management fee*Series A 1.25% 1.25%Series D 0.85% NASeries F 0.30% 0.30%Series I NA NA

Administration fee*Series A 0.20% 0.20%Series D 0.20% NASeries F 0.20% 0.20%Series I NA NA

*Series I shareholders pay a separately negotiated management fee and administration fee directly to MD Financial Management Inc. Series D is a new series created on May 16, 2018.


MD Growth Investments LimitedFinancial Instruments Risks (unaudited)

(in $000's)


Financial InstrumentsMD Growth Investments Limited (the “Fund”) invests in a diversified portfolio of global equity securities as well as forward and futures contracts as shown in the Schedule of Investment Portfolio. The Fund invests excess cash in high grade short-term notes with maturities of less than one year. These investments expose the Fund to risks associated with financial instruments. The Fund’s exposure and sensitivity to these risks are presented below. A description of the risks and how the Fund manages these risks is discussed in Note 7 of the Notes to the Financial Statements.

Credit RiskThe Fund’s credit risk is concentrated in investments in short-term investments, debt instruments and derivative instruments. The Fund’s maximum exposure to credit risk from short-term investments and debt instruments is the carrying value as presented on the Schedule of Portfolio Investments and from cash is presented on the Statement of Financial Position. The Fund’s maximum exposure to credit risk from derivative instruments is the carrying value of financial derivative instrument asset as presented on the Statement of Financial Position.

As at June 30, 2018 and December 31, 2017, the Fund invested in preferred shares and short-term debt instruments with the following credit ratings:

Credit Rating

% of Net Assets Attributable to

Holders of Redeemable Units

June 30, 2018

% of Net Assets Attributable to

Holders of Redeemable Units December 31, 2017

Debt InstrumentsAA / R-1 (Mid) 0.0% 0.2%Total 0.0% 0.2%

All credit ratings are from external credit rating agencies such as Dominion Bond Rating Service, Standard & Poor’s and Moody’s.

Currency RiskExposures to foreign currencies as at June 30, 2018 and December 31, 2017 are presented in the table below. Short-term investments and debt instruments, which are monetary in nature, are included in the Investments at Fair Value column.

Currency

Cash and Other Net

Assets Attributable to Holders

of Redeemable

SharesInvestments at Fair Value

Derivative Exposure

Net Currency Exposure

% of Net Assets

Attributable to Holders

of Redeemable

Shares

June 30, 2018U.S. Dollar $ 14,010 $ 1,066,161 $ 75,543 $ 1,155,714 69.07%European Euro 451 158,202 (44,496) 114,157 6.82%Australian Dollar (27) 20,643 (9,587) 11,029 0.66%Brazilian Real - - (2,549) (2,549) (0.15)%Czech Koruna (35) 10,870 (9,839) 996 0.06%Danish Krone 95 11,236 (1,240) 10,091 0.60%Hong Kong Dollar 1,015 79,252 (95,173) (14,906) (0.89)%

Currency

Cash and Other Net

Assets Attributable to Holders

of Redeemable

SharesInvestments at Fair Value

Derivative Exposure

Net Currency Exposure

% of Net Assets

Attributable to Holders

of Redeemable

Shares

Indian Rupee - - 19,942 19,942 1.19%Indonesian

Rupiah - - 8,075 8,075 0.48%Israeli Shekel - - (1,407) (1,407) (0.08)%Japanese Yen 86 144,542 133 144,761 8.65%Mexican Peso - - 9,064 9,064 0.54%New Russian

Ruble - - 17,379 17,379 1.04%New Taiwan Dollar - - (12,821) (12,821) (0.77)%New Zealand

Dollar - - 899 899 0.05%Norwegian Krone - 127 29,673 29,800 1.78%Polish Zloty - - 16,697 16,697 1.00%British Pound 1,078 71,523 10,739 83,340 4.98%Singapore Dollar (24) 7,223 (7,521) (322) (0.02)%South Korean

Won (15) 4,633 (50,255) (45,637) (2.73)%Swedish Krona - - 46,488 46,488 2.78%Swiss Franc 2,104 57,640 (12,691) 47,053 2.81%Thailand Baht (44) 13,587 (13,146) 397 0.02%Total $ 18,694 $ 1,645,639 $ (26,093) $ 1,638,240 97.89%

December 31, 2017U.S. Dollar $ 16,041 $ 1,032,286 $ 120,828 $ 1,169,155 70.29%European Euro 602 176,713 (46,798) 130,517 7.85%Australian Dollar - 21,206 (5,948) 15,258 0.92%Brazilian Real - - (1,610) (1,610) (0.10)%Czech Koruna - 10,146 (9,858) 288 0.02%Danish Krone 72 12,422 (3,388) 9,106 0.55%Hong Kong Dollar - 78,965 (87,135) (8,170) (0.49)%Indian Rupee - - 20,456 20,456 1.23%Indonesian

Rupiah - - 7,950 7,950 0.48%Japanese Yen 119 143,100 (42,689) 100,530 6.04%Malaysian Ringgit - - 8,293 8,293 0.50%New Russian

Ruble - - 25,247 25,247 1.52%New Taiwan Dollar - - (15,287) (15,287) (0.92)%New Zealand

Dollar - - 897 897 0.05%Norwegian Krone - 279 17,822 18,101 1.09%Polish Zloty - - 25,556 25,556 1.54%British Pound - 79,151 9,955 89,106 5.36%Singapore Dollar - 6,894 (6,577) 317 0.02%South Korean

Won - - (46,559) (46,559) (2.80)%Swedish Krona - 4,621 54,513 59,134 3.56%Swiss Franc 1,704 60,039 (38,886) 22,857 1.37%Thailand Baht - 7,705 (15,161) (7,456) (0.45)%Total $ 18,538 $ 1,633,527 $ (28,379) $ 1,623,686 97.63%



(in $000's)


As at June 30, 2018, if the Canadian Dollar had strengthened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Shares of the Fund could have decreased by approximately $163,824 or 9.79% of Net Assets Attributable to Holders of Redeemable Shares (December 31, 2017 - $162,369 or 9.76%). Conversely, had the Canadian Dollar weakened against all other currencies by 10%, the Net Assets Attributable to Holders of Redeemable Shares of the Fund could have increased by approximately $163,824 or 9.79% of Net Assets Attributable to Holders of Redeemable Shares (December 31, 2017 - $162,369 or 9.76%). These sensitivities are estimates. Actual results may vary and the variance may be material.

Interest Rate RiskThe majority of the Fund’s financial assets are non-interest bearing. The maturity dates of the interest-bearing assets held by the Fund are less than one year. Therefore, the Fund’s exposure to interest rate risk is not significant.

Liquidity RiskThe Fund’s financial liabilities are all due within one year. Redeemable shares are redeemable on demand at the holder’s option; however, the Fund does not expect the contractual maturity will be representative of the actual cash outflows, as holders of these instruments typically retain them for a longer period.

Other Price RiskAs at June 30, 2018, 98.7% (December 31, 2017, 98.4%) of the Fund’s Net Assets Attributable to Holders of Redeemable Shares were invested in equity financial instruments traded in active markets. If prices of securities traded on these markets decrease by 10%, with all other factors remaining constant, Net Assets Attributable to Holders of Redeemable Shares could fall by approximately $165,071 (December 31, 2017 - $163,723). Conversely, if prices increase by 10%, Net Assets Attributable to Holders of Redeemable Shares could rise by approximately $165,071 (December 31, 2017 - $163,723). These sensitivities are estimates. Actual results may vary and the variance may be significant.

Concentration RiskConcentration risk arises as a result of the concentration of exposures within the same category. The following table summarizes the Fund’s concentration risk as a percentage of net assets attributable to holders of redeemable units:

Market Segment June 30, 2018 December 31, 2017

Domestic EquitiesConsumer Discretionary 0.34% 0.40%Exchange Traded Funds 0.26% 0.24%Materials 0.88% 0.76%

Foreign EquitiesAustralia 1.23% 1.28%Austria 0.63% 0.75%Belgium 0.98% 1.00%Bermuda 0.63% 0.81%Brazil 0.16% 0.15%Cayman Islands 0.66% 0.48%Curacao 0.73% 0.70%Czech Republic 0.65% 0.61%Denmark 0.67% 0.75%Finland 0.39% 0.39%France 3.79% 4.08%Germany 1.89% 2.39%Hong Kong 4.74% 4.75%Israel 0.34% 0.24%Italy 0.00% 0.26%Japan 8.64% 8.60%Jersey 0.46% 0.40%Netherlands 0.53% 0.62%Norway 0.01% 0.02%Singapore 0.43% 0.41%South Korea 2.54% 2.37%Spain 1.24% 1.13%Sweden 0.00% 0.28%Switzerland 5.56% 5.90%Taiwan 0.79% 0.93%Thailand 0.81% 0.46%United Kingdom 3.81% 4.37%United States 43.78% 42.42%Exchange Traded Funds 11.08% 10.49%Short Term Investments 0.04% 0.17%Cash and Other Net Assets (Liabilities) 1.31% 1.39%Total 100.00% 100.00%



(in $000's)


Fair Value HierarchyThe following is a summary of the Fund’s use of quoted market prices (Level 1), internal models using observable market information as inputs (Level 2), and internal models without observable market information (Level 3) in the valuation of the Fund’s securities. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

Quoted Prices in Active Markets

for Identical Assets

Significant Other

Observable Inputs

(Level 1) (Level 2) Total*

June 30, 2018Domestic Equities 24,804 - 24,804Foreign Equities 1,625,901 - 1,625,901Short-Term Investments - 656 656Financial Derivative Instruments –

Assets - 7,209 7,209Financial Derivative Instruments –

Liabilities (73) (7,369) (7,442)Total $ 1,650,632 $ 496 $ 1,651,128

December 31, 2017Domestic Equities $ 23,276 $ - $ 23,276Foreign Equities 980,935 633,015 1,613,950Short-Term Investments - 2,873 2,873Financial Derivative Instruments –

Assets 17 4,705 4,722Financial Derivative Instruments –

Liabilities - (5,410) (5,410)Total $ 1,004,228 $ 635,183 $ 1,639,411

*The Fund does not hold any Level 3 investments.

For the period from January 1, 2018 to June 30, 2018, equity investments of approximately $616,602 were transferred from Level 2 to Level 1. For the period from January 1, 2017 to December 31, 2017, equity investments of approximately $531,743 were transferred from Level 1 to Level 2. Transfers are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements


Notes to Financial StatementsFor the periods ended June 30, 2018 and 2017

1. Name and formation of the FundsESTABLISHMENT OF THE FUNDS

The MD Family of Mutual Funds (individually a “Fund” and collectively the “Funds”) are unincorporated mutual fund trusts formed under the laws of the province of Ontario pursuant to the Declarations of Trust, and the creation dates are as follows:

Series A Series I Series D Series F2 Series F

MD Precision Canadian Balanced Growth Fund (formerly MD Balanced Fund)

September 9, 1992 October 30, 2009 March 19, 2018 May 10, 2017

MD Bond Fund April 6, 1988 October 30, 2009 March 19, 2018 May 10, 2017

MD Short-Term Bond Fund September 19, 1995 October 30, 2009 March 19, 2018 May 10, 2017

MD Precision Canadian Moderate Growth Fund (formerly MD Dividend Income Fund)

September 9, 1992 October 30, 2009 March 19, 2018 May 10, 2017

MD Equity Fund March 1, 1966 October 30, 2009 March 19, 2018 May 10, 2017

MD Dividend Growth Fund January 4, 2007 October 30, 2009 March 19, 2018 May 10, 2017

MD International Growth Fund July 19, 2000 October 30, 2009 March 19, 2018 May 10, 2017

MD International Value Fund January 5, 2004 October 30, 2009 March 19, 2018 May 10, 2017

MD Money Fund July 12,1983 March 19, 2018 May 24, 2017

MD Select Fund October 29, 1993 October 30, 2009 March 19, 2018 May 10, 2017

MD American Growth Fund September 9, 1992 October 30, 2009 March 19, 2018 May 10, 2017

MD American Value Fund July 10, 2000 October 30, 2009 March 19, 2018 May 10, 2017

MD Strategic Yield Fund January 30, 2014 January 30, 2014 March 19, 2018 May 10, 2017

MD Strategic Opportunities Fund January 30, 2014 January 30, 2014 March 19, 2018 May 10, 2017

MD Precision Conservative Portfolio January 6, 2010 March 19, 2018 May 24, 2017 May 10, 2017

MD Precision Balanced Income Portfolio March 27, 2012 March 19, 2018 May 24, 2017 May 10, 2017

MD Precision Moderate Balanced Portfolio January 6, 2010 March 19, 2018 May 24, 2017 May 10, 2017

MD Precision Moderate Growth Portfolio March 27, 2012 March 19, 2018 May 24, 2017 May 10, 2017

MD Precision Balanced Growth Portfolio January 6, 2010 March 19, 2018 May 24, 2017 May 10, 2017

MD Precision Maximum Growth Portfolio January 6, 2010 March 19, 2018 May 24, 2017 May 10, 2017

MD Fossil Fuel Free Bond Fund May 11, 2016 May 11, 2016 March 19, 2018 May 10, 2017

MD Fossil Fuel Free Equity Fund May 11, 2016 May 11, 2016 March 19, 2018 May 10, 2017

On June 1, 2018, the name of MD Balanced Fund was changed to MD Precision Canadian Balanced Growth Fund and the name of MD Dividend Income Fund was changed to MD Precision Canadian Moderate Growth Fund.

MD Growth Investments Limited is a mutual fund corporation incorporated under the laws of Ontario pursuant to the Letters Patent and the series creation dates are as follows:

Series A Series I Series D Series F

MD Growth Investments Limited July 18, 1969 October 30, 2009 May 16, 2018 May 10, 2017



MD Financial Management Inc. (“the Manager”) is the Manager and Trustee of the Funds. The address of the Funds’ registered office is 1870 Alta Vista Drive, Ottawa, ON K1G 6R7.

Throughout these Notes to the Financial Statements, the shares of MD Growth Investments Limited have been referred to as “units” to simplify the presentation.

The financial statements of the Funds include the Statement of Financial Position as of June 30, 2018 and December 31, 2017, and the Statement of Comprehensive Income, the Statement of Changes in Net Assets Attributable to Holders of Redeemable Units and the Statement of Cash Flows for the period June 30, 2018 and June 30, 2017, except for Funds established during either period, in which case the information provided relates to the period from commencment of operations to June 30, 2018 or June 30, 2017.

These financial statements were authorized for issue by the Manager on August 8, 2018.

SERIES OF UNITS

Each of the MD Funds offer “Series A” units which are available to all MD Management Ltd. clients who are qualified eligible investors.

"Series D" units are available to all MD Management Ltd. clients who are qualified eligible investors and who have an MD Direct Trade™ account with MD Management Ltd.

"Series F" units are available to all MD Management Ltd. clients who are qualified eligible investors and who have a fee-based account with MD Management Ltd. Series F units of MD Money Fund was terminated May 24, 2018.

"Series F2" units are available only to qualified eligible investors who open an MD ExO® Direct account with MD Management Ltd.

“Series I” units were established to support the MD Precision Conservative Portfolio, the MD Precision Moderate Balanced Portfolio, the MD Precision Balanced Growth Portfolio, the MD Precision Maximum Growth Portfolio, the MD Precision Balanced Income Portfolio and the MD Precision Moderate Growth Portfolio. These units are only available to the six Funds listed above and certain institutional investors, and are not charged management fees.

"Series T" units were terminated August 25, 2017.

2. Basis of presentationThese financial statements have been prepared in compliance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB).

3. Significant accounting policiesFUNCTIONAL AND PRESENTATION CURRENCY

The financial statements are presented in Canadian dollars, which is the Funds’ functional currency. Cash, investments and other assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing on each valuation date. Transactions during the year in currencies other than Canadian dollars are translated into Canadian dollars at the rate of exchange prevailing on the trade date of the transaction. The difference in the foreign exchange rate between trade date and settlement date of a transaction is recognized in income on the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash are presented as “Foreign exchange gain (loss) on cash” and those relating to other financial assets and liabilities are presented within net gains or losses on the sale of investments or derivatives.

All financial information is presented in Canadian dollars and has been rounded to the nearest thousand, unless otherwise stated.

FINANCIAL INSTRUMENTS

The Funds classify and measure financial instruments in accordance with IFRS 9 "Financial Instruments" (IFRS 9). All financial assets and liabilities are recognized in the Statement of Financial Position when the Funds become party to the contractual requirements of the instrument. Financial instruments are derecognized when the right to receive cash flows from the instrument has expired or the Funds have transferred substantially all the risks and rewards of ownership. As such, investment purchase and sale transactions are recorded as of the trade date.

The Funds classify investments, including derivatives, as fair value through profit or loss (FVTPL), as these financial assets and liabilities are managed together and their performance is evaluated on a fair value basis in accordance with the Funds’ investment strategy. Subsequent to initial recognition, investments, including derivatives, are measured at FVTPL. Gains and losses arising from changes in the fair value are presented in the Statement of Comprehensive Income.

The Funds' obligation for net assets attributable to holders of redeemable units is measured at FVTPL, with fair value being the redemption amount at the reporting date.

Cash is measured at fair value upon recognition and subsequently at amortized cost.

Other financial assets and liabilities, such as accrued interest and dividends receivable, accounts receivable for investment transactions, subscriptions receivable, amounts receivable for securities lending transactions, distributions payable, accounts payable for investment transactions and redemptions payable are recognized initially at fair value, net of transaction costs, and subsequently stated at amortized cost using the effective interest rate method. Under this method, these financial assets and liabilities reflect the amount required to be received or paid, discounted, when appropriate, at the contracts' effective interest rate.

The Funds’ accounting policies for measuring the fair value of their investments and derivatives are identical to those used in measuring the net asset value (NAV) for transactions with unitholders.



INCOME RECOGNITION

The interest for distribution purposes shown on the Statement of Comprehensive Income represents the coupon interest received by the Funds accounted for on an accrual basis. Dividend income and distributions to unitholders are recorded on the ex-dividend date. Distributions from underlying funds out of interest, foreign income and related withholding taxes, Canadian dividends and net realized capital gains are recognized when declared. Realized gains or losses from investment transactions and the unrealized appreciation or depreciation of investments are computed on an average cost basis, which exclude brokerage commissions and other trading expenses. Brokerage commissions and other trading expenses are charged to income as incurred.

OFFSETTING FINANCIAL INSTRUMENTS

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

Transactions with counterparties are governed by separate master netting agreements. Each agreement allows for net settlement of certain open contracts where the Fund and respective counterparty both elect to settle on a net basis. In the absence of such an election, contracts will be settled on a gross basis. However, each party to the master netting agreement will have the option to settle all open contracts on a net basis in the event of default of the other party.

FAIR VALUE MEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are categorized as FVTPL and are recorded at fair value. In the case of securities traded in an active market, fair value is based on quoted market prices at the close of trading on the reporting date as provided by independent pricing services. The Funds use the last traded market price for both financial assets and financial liabilities where the last traded price falls within the day’s bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. In the case of investments not traded in an active market, or for those securities for which the Manager feels the latest market prices are not reliable, fair value is estimated based on valuation techniques established by the Manager. Valuation techniques established by the Manager are based on observable market data except in situations where there is no relevant or reliable market data. The value of securities estimated using valuation techniques not based on observable market data, if any, is disclosed in the Financial Instruments Risks section of the financial statements.

FINANCIAL DERIVATIVES INSTRUMENTS

A derivative is a financial contract between two parties, the value of which is derived from the value of an underlying asset such as equity, bond, commodity, interest rate or currency. Certain Funds may use derivatives, such as options, futures, forward contracts, swap contracts, and other similar instruments, in a manner considered appropriate to achieving the Fund’s investment objectives. Derivatives may be used to protect a security price, currency exchange rate or interest rate from negative changes (hedging) or to provide exposure to securities, indices, or currencies without investing in them directly (non-hedging). Derivatives contain various risks including the potential inability for the counterparty to fulfil their obligations under the terms of the contract, the potential for illiquid markets and the potential price risk which may expose the Funds to gains and/or losses in excess of the amounts shown on the Statement of Financial Position. Derivatives with unrealized gains are reported as financial derivative instruments under current assets and derivatives with unrealized losses are reported as financial derivative instruments under current liabilities.

Forward Currency Contracts

Certain Funds may enter into forward currency contracts for either hedging or non-hedging purposes where such activity is consistent with their investment objectives and as permitted by the Canadian securities regulatory authorities. A forward currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. Investments in forward currency contracts are entered into with approved counterparties and are recorded at fair value. The fair value of a forward currency contract fluctuates with changes in foreign currency exchange rates. The fair value of forward currency contracts is reported as financial derivative instruments in the Statement of Financial Position. Forward currency contracts are marked to market daily and the changes in fair value of forward currency contracts are recorded in “Change in unrealized appreciation (depreciation) of derivatives”. Upon closing of the contracts, the accumulated gains or losses are reported in “Net realized gain (loss) on sale of derivative instruments”. The contractual amounts of open contracts are disclosed in the Schedule of Investment Portfolio in the Schedule of Derivative Instruments.

Futures Contracts

Futures contracts are valued on each valuation day using the closing market price posted on the related public exchange. The fair value of future contracts is reported as “Financial Derivative Instruments” in the Statement of Financial Position. All gains or losses arising from futures contracts are recorded as part of “Change in unrealized appreciation (depreciation) of derivatives” in the Statement of Comprehensive Income until the contracts are closed out or expire, at which time the gains or losses are realized and reported as “Net realized gain (loss) on derivative instruments”.



Credit Default Swaps

Certain Funds may enter into credit default swap contracts, primarily to manage and/or gain exposure to credit risk where such activity is consistent with their investment objectives and as permitted by the Canadian securities regulatory authorities. A credit default swap is an agreement between the Fund and a counterparty whereby the buyer of the contract receives credit protection and the seller of the contract guarantees the credit worthiness of a referenced debt obligation. The credit risk exposure of a Fund to the referenced asset is comparable to the exposure that would have resulted if the Fund were invested directly in the referenced debt obligation. In the event of a default of the underlying referenced debt obligation, the buyer of the contract is entitled to receive the notional amount of the credit default swap contract from the seller in exchange for the referenced debt obligation, a net settlement amount equal to the notional amount of the credit default swap contract less the recovery amount of value of the referenced debt obligation, or other agreed upon amount.

Over the term of the contract, the buyer pays the seller a periodic stream of payments, provided that no event of default has occurred. Such periodic payments paid or received are accrued daily and are included in the Statement of Comprehensive Income in Net Interest Income (Expense) from Swap Contracts. Credit Default Swaps are disclosed in the Schedule of Derivative Instruments. The change in value of a credit default swap contract and any upfront premium paid or received is included in the Statement of Financial Position as Financial Derivative Instruments. When the credit default swap contracts are closed out, gains or losses, including upfront premiums, are realized and included in the Statement of Comprehensive Income in “Net realized gain (loss) on derivatives instruments”. Pursuant to the terms of the credit default swap contract, cash or securities may be required to be deposited as collateral.

Interest Rate Swaps

Certain Funds may enter into interest rate swap contracts, primarily to manage and/or gain exposure to fluctuations in interest rates. An interest rate swap is an agreement between the Fund and a counterparty whereby the parties agree to exchange a fixed payment for a floating payment that is linked to an interest rate and an agreed upon notional amount.

Over the term of the contract, each party will pay to the other party a periodic stream of payments. Such periodic payments paid or received are accrued daily and are included in the Statement of Comprehensive Income in Net Interest Income (Expense) from Swap Contracts. Interest Rate Swaps are disclosed in the Schedule of Derivative Instruments. The change in value of an interest rate swap contract and any upfront premium paid or received is included in the Statement of Financial Position as Financial Derivative Instruments. When the interest rate swap contracts are closed out, gains or losses, as well as any upfront premiums, are realized and included in the Statements of Comprehensive Income in Net realized gain (loss) on derivatives instruments.

Total Return Swaps

Certain Funds may enter into total return swap contracts primarily to manage and/or gain exposure to the underlying reference. An total return swap is an agreement between the Fund and a counterparty where single or multiple cash flows are exchanged based on the price of an underlying reference and based on a fixed or variable rate.

Over the term of the contract, the Funds will pay to the counterparty a periodic stream of payments based on fixed or variable rate. Such periodic payments paid are accrued daily and are included in the Statement of Comprehensive Income in Net Interest Income (Expense) from Swap Contracts. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference asset less a financing rate, if any. As a receiver, the Funds would receive payments based on any net positive total return and would owe payments in the event of a net negative total return. Total return swaps are disclosed in the Schedule of Derivative Instruments. The change in value of an total return swap contract is included in the Statement of Financial Position as Financial Derivative Instruments. When the total return swap contracts are closed out, gains or losses are realized and included in the Statements of Comprehensive Income in Net realized gain (loss) on derivatives instruments.

Cross Currency Swaps

Certain Funds may enter into cross currency swap contracts, primarily to manage and/or gain exposure to currency risk. A cross currency swap is an agreement between the Fund and a counterparty whereby the parties agree to exchange interest payments and principal on loans denominated in two different currencies.

Over the term of the contract, each party will pay to the other party a periodic stream of payments. Such periodic payments paid or received are accrued daily and are included in the Statement of Comprehensive Income in Net Interest Income (Expense) from Swap Contracts. Cross currency swaps are disclosed in the Schedule of Derivative Instruments. The change in value of a cross currency swap contract and any upfront premium paid or received is included in the Statement of Financial Position as Financial Derivative Instruments. When the cross currency swap contracts are closed out, gains or losses, as well as any upfront premiums, are realized and included in the Statements of Comprehensive Income in Net realized gain (loss) on derivatives instruments.

Foreign Currency Option Contracts

Certain Funds may purchase foreign currency options. Purchasing foreign currency options gives the Fund the right, but not the obligation to buy or sell the currency and will specify the amount of currency and a rate of exchange that may be exercised by a specified date. These options may be used as a hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies.

Foreign currency option contracts are disclosed in the Schedule of Derivative Instruments. The change in value of a foreign currency option contract and any premiums paid are included in the Statement of Financial Position as Financial Derivative Instruments. When the foreign currency option contracts are closed out, gains or losses, as well as any premiums paid, are realized and included in the Statements of Comprehensive Income in Net realized gain (loss) on derivatives instruments.



CAPITAL RISK MANAGEMENT

Units issued and outstanding are considered to be the capital of the Funds. The Funds do not have any specific capital requirements on the subscription and redemption of units, other than certain minimum subscription. The Funds’ units are offered for sale on any business day and may be redeemed or issued at the Net Asset Value (NAV) per unit for the respective series on that business day. A business day refers to any day the Toronto Stock Exchange is open for business. The NAV for each series is computed daily by calculating the value of that series’ proportionate share of net assets and liabilities of the Fund common to all series less liabilities attributable to that series. Expenses directly attributable to a series are charged to that series. Assets, common liabilities, revenues and other expenses are allocated proportionately to each series based upon the relative NAVs of each series. The NAV per unit is determined by dividing the NAV of each series of a Fund by the total number of units of that series outstanding.

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

“Increase (decrease) in net assets attributable to holders of redeemable units per unit” in the Statement of Comprehensive Income represents the increase or decrease in net assets attributable to holders of redeemable units attributable to each series of units for the period, divided by the weighted average units outstanding in that series during the period.

SECURITIES LENDING TRANSACTIONS

A Fund may lend portfolio securities to earn additional income through a securities lending agreement with its custodian. The aggregate market value of all securities loaned by the Fund cannot exceed 50% of the assets of the Fund. The Fund receives collateral in the form of securities deemed acceptable under National Instrument 81-102, “Mutual Funds” (“NI81-102”) of at least 102% of the fair value of securities on loan. Collateral held is typically government and corporate bonds.

Income from securities lending is recorded as “Securities lending” on a monthly basis when it is receivable. Securities lending details are listed in Securities on Loan included in the supplementary schedules to the financial statements.

REDEEMABLE UNITS

Certain Funds issue different series of redeemable units, which are redeemable at the holder’s option and do not have identical rights. Such units are classified as financial liabilities. Redeemable units can be put back to the Funds at any date for cash equal to a proportionate share of the Funds’ net asset value attributable to the series. The redeemable units are carried at the redemption amount that is payable at the Statement of Financial Position date if the holder exercises the right to put the unit back to the Funds. Funds with only one series do not meet the criteria to be classified as equity as they impose on the Fund the obligation to deliver cash other than on redemption. Each such Fund must distribute its taxable income to unitholders annually and has provided unitholders the option to receive such distributions in cash.

INVOLVEMENT IN UNCONSOLIDATED STRUCTURED ENTITIES

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.

Certain Funds’ investment strategy entails trading in other funds on a regular basis. The Funds consider all of their investments in other funds (“Investee Funds”) to be investments in unconsolidated structured entities. The Funds invest in Investee Funds whose objectives range from conserving principal to maximizing dividend income to long-term capital growth and whose investment strategies do not include leverage. The Investee Funds finance their operations by issuing redeemable units which are puttable at the holder’s option and entitle the holder to a proportionate stake in the respective Investee Fund’s net assets. The Funds hold redeemable units in each of their Investee Funds and the Funds have the right to request redemption of their investment in Investee Funds daily. The Funds’ investments in Investee Funds are subject to the terms and conditions of the respective Investee Fund’s offering documentation. The change in fair value of each Investee Fund is included in the Statement of Comprehensive Income in “Change in unrealized appreciation (depreciation) of investments”. The Funds’ maximum exposure to loss from their interest in Investee Funds is equal to the fair value of their investments in Investee Funds. Once a Fund has disposed of its shares in an Investee Fund the Fund ceases to be exposed to any risk from that investee fund.

Certain Funds invest in Exchange Traded Funds (“ETFs”) which are disclosed on the Schedule of Investment Portfolio and these Funds have determined that their investments in such ETFs are deemed unconsolidated structured entities. These ETFs replicate, to the extent possible, the performance of the applicable benchmark indices, or seek to provide long-term capital growth or income, as applicable, by investing primarily in and holding the constituent securities of the applicable benchmark indices in substantially the same proportion as they are reflected in the applicable benchmark indices or seek to track the investment results of applicable benchmark indices. The ETFs finance their operations by issuing redeemable shares which are puttable at the holder’s option and entitle the holder to a proportional stake in the respective ETF’s net asset value. The underlying ETFs are listed on a recognized public stock exchange.

Certain Funds invest in mortgage-related and other asset-backed securities (“MBS”). These securities include mortgage pass-through securities, collateralized mortgage obligations, commercial mortgage-backed securities, asset-backed securities, collateralized debt obligations and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The debt and equity securities issued by these securities may include tranches with varying levels of subordination. These securities may provide a monthly payment which consists of both interest and principal payments. Mortgage-related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Asset-backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. The Funds’ maximum exposure to loss from their interest in MBS is equal to the fair value of their investments in such securities as disclosed on the Schedule of Investment Portfolio.

A table has been included in the “Supplementary Schedules” section of the financial statements which describes the types of structured entities that the Funds do not consolidate but in which they hold an interest.

4. Expenses and other related party transactionsThe management and administration fees are unique to each Fund and are unique to each series of units and are disclosed in the Funds’ Simplified Prospectus or in the case of Series F2, in the managed account agreement with MD Management Ltd.



The Manager provides the Funds with investment management and administrative services, including providing key management personnel to the Funds. In return, the Manager receives a management fee and an administration fee based on the NAV of the Funds calculated on a daily basis. Management and administration fees are reported in the Statement of Comprehensive Income.

No management or administration fee, or operating expenses are charged in respect of Series I units. Series I unitholders pay a separately negotiated management and administration fee directly to the Manager.

The Manager bears certain operating expenses of the Funds in return for administration fees, calculated as a fixed annual percentage of the Funds’ NAV.

INDEPENDENT REVIEW COMMITTEE

The Manager has established an Independent Review Committee (“IRC”) as required under National Instrument 81-107, “Independent Review Committee for Investment Funds” (“81-107”). The IRC reviews conflict of interest matters related to the operations of the Funds. In addition, in some circumstances, in place of obtaining unitholder approval, a Fund may be reorganized with or its assets transferred to another mutual fund managed by the Manager or an affiliate. This requires IRC approval, and that unitholders are sent a written notice at least 60 days before the effective date. The approval of the IRC is also required for a change of auditor.

The IRC is composed of three persons who are independent of the Manager, the Funds and entities related to the Manager.

SHORT-TERM TRADING/EARLY REDEMPTION FEE

Clients who redeem or switch units or shares of an MD Fund are charged an early redemption fee equal to 2.00% of the amount redeemed or switched if the redemption or switch occurs within thirty (30) days of the date that the units or shares were purchased or switched. Redemption fees are recorded as income in the period of early redemption.

The early redemption fee does not apply to redemptions or switches:

• of units of MD Money Fund;• made in connection with any systematic and scheduled withdrawal program;• where the amount of the redemption or switch is less than $10,000; or• made as a result of the recommendation of an MD Financial Consultant or MD

Portfolio Manager related to a financial plan.

5. Redeemable unitsWith the exception of MD Growth Investments Limited, the Funds’ capital is represented by an unlimited number of authorized units without nominal or par value. All series of units are redeemable on demand by unitholders at the redemption amount represented by respective NAV of that series. Each unit entitles the unitholder to one vote at unitholder meetings and participates equally, with respect to other units of the same series, in any dividends or distributions, liquidation or other rights of that series.

The relevant movements in redeemable units for the period have been presented in the Statement of Changes in Net Assets Attributable to Holders of Redeemable Units. The Funds invest proceeds from subscriptions in financial instruments in accordance with the policies and risk management practices of the Funds, while maintaining sufficient liquidity to meet unitholder redemptions. The Funds’ investment policies are set out in the prospectus and the risk management and liquidity management practices are disclosed in Note 7.

MD Growth Investments Limited is an incorporated company as opposed to a mutual fund trust and, as such, has issued share capital.

6. Critical accounting estimates and judgmentsThe preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions about the future. The following discusses the most significant accounting judgments and estimates that the Funds have made in preparing the financial statements:

FAIR VALUE MEASUREMENT OF SECURITIES AND DERIVATIVES NOT QUOTED IN AN ACTIVE MARKET

The Funds may, from time to time, hold financial instruments that are not quoted in active markets. The fair value of such securities may be determined by the Funds using reputable pricing sources or indicative prices from market makers. Broker quotes obtained from pricing sources may be indicative but not executable or binding. Where no market data is available, the Fund may value positions using internal valuation models as determined appropriate by the Manager and based on valuation methods and techniques generally recognized as standard within the industry. Models use observable data to the extent practicable; however, the Manager may be required to make certain assumptions and/or estimates regarding risks, volatility and correlations as required. Changes in assumptions and estimates could affect the reported fair values of financial instruments. The Funds consider observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable and provided by independent sources that are actively involved in the relevant market.

CLASSIFICATION AND MEASUREMENT OF FINANCIAL INSTRUMENTS

In classifying and measuring financial instruments held by the Funds, the Manager is required to make judgments in determining the most appropriate classification in accordance with IFRS 9. The Manager has assessed the Funds' business model and considered that the Funds' investments, including deriviatives, are managed and performance evaluated as a group on a fair value basis. The Manager has concluded that FVTPL in accordance with IFRS 9 provides the most appropriate measurement and presentation for the Funds' investments.

7. Financial instrument riskThe Funds use financial instruments in order to achieve their respective investment objectives. The Funds’ investments are presented in the respective Schedule of Investment Portfolio, which groups securities by asset type, geographic region and/or market segment.

The use of financial instruments subjects the Funds to a variety of financial instrument risks. The Funds’ risk management practices include setting investment policies to limit exposures to financial instrument risks and employing experienced and professional investment advisors to invest the Funds’ capital in securities within the constraints of investment policies. The Manager regularly monitors the Fund advisors’ performance and compliance with the investment policies.

The significant financial instrument risks, to which the Funds are exposed, along with the specific risk management practices related to those risks, are presented below. Fund specific disclosures are presented in the “Financial Instruments Risks” section of the financial statements.



CREDIT RISK

Credit risk is the risk that a counterparty to a financial instrument will not honour its obligation under the terms of the instrument, resulting in a loss. The Funds are exposed to credit risk through domestic and foreign bonds, preferred shares, derivative contracts, cash and short-term investments, amounts due from brokers, dividends and interest receivable and other receivables. A Fund may engage in securities lending pursuant to the terms of an agreement which includes restrictions as set out in the Canadian Securities Legislation. Collateral held is in the form of highly rated fixed income instruments. All securities under lending agreements are fully collateralized.

Credit risks arising from short-term investments and fixed income securities, including domestic and foreign bonds and preferred shares, are generally limited to the fair value of the investments as shown in the Schedule of Investment Portfolio. The Funds limit exposure to individual issuers/sectors and credit quality ratings. The credit worthiness of issuers in which the Funds invest are reviewed regularly and the portfolios are adjusted as required to match the minimum requirement as set forth in each Fund’s prospectus. Each individual Fund’s exposure to credit risk, if any, is presented in the Financial Instruments Risk section of the Financial Statements.

Credit risks arising from cash are limited to the carrying value as shown on the Statement of Financial Position, except in the case of MD Money Fund, where the credit risk is limited to the fair value of investments as shown on the Schedule of Investment Portfolio. The Funds manage credit risk on cash and short-term investments by investing in high grade short-term notes with credit ratings of R-1 (low) or higher as well as limiting exposure to any single issuer.

Derivative contracts are subject to netting arrangements whereby if one party to a derivative contract defaults, all amounts with the counterparty are terminated and settled on a net basis. As such, the maximum credit loss on derivative contracts is the financial derivative instrument asset in the Statement of Financial Position. Each Fund manages credit risk on derivatives by only entering into agreements with counterparties that have an approved credit rating.. Credit risk on amounts due from brokers is minimal since transactions are settled through clearinghouses where securities are only delivered for payment when cash is received.

Credit risk related to securities lending transactions is limited by the fact that the value of cash or securities held as collateral by the Funds in connection with these transactions is at least 102% of the fair value of the securities loaned. The collateral and loaned securities are marked to market each business day. The aggregate dollar value of portfolio securities lent and collateral held is presented in the Financial Statement–Supplementary Schedules.

LIQUIDITY RISK

Liquidity risk is the risk that the Funds will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. All Funds’ financial liabilities come due within one year. In addition, the Funds’ units are redeemable on demand. In accordance with NI81-102, the Funds must provide payment for redeemed units within two business days of receipt of a redemption order. To manage this liquidity requirement, the Funds invest primarily in liquid securities that can readily be sold in active markets and each Fund may borrow up to 5% of its NAV. At year end, no Fund had borrowed against its respective line of credit.

CURRENCY RISK

Currency risk is the risk that the values of financial assets and liabilities denominated in foreign currencies fluctuate due to changes in foreign exchange rates. To the extent the Funds hold assets and liabilities denominated in foreign currencies, the Funds are exposed to currency risk. The Funds may also use forward contracts at the discretion of the Manager. Each individual Fund’s exposure to currency risk, if any, is presented in the “Financial Instruments Risks” section of the financial statements.

INTEREST RATE RISK

Interest rate risk is the risk that the fair value (measured as the present value) of cash flows associated with interest bearing financial instruments will fluctuate due to changes in the prevailing market rates of interest. In general, as interest rates rise, the fair value of interest bearing financial instruments will fall. Financial instruments with a longer term to maturity will generally have a higher interest rate risk.

The Funds’ interest-bearing financial instruments that subject the Funds to interest rate risk include domestic and foreign bonds and mortgage related and other asset back securities. The Funds' may also be exposed indirectly to interest rate risk through their position in interest rate swaps presented in the Schedule of Derivative Instruments. Short-term money market instruments are also interest bearing and therefore subject to interest rate risk. However, due to the short-term nature of the securities, the interest rate risk is generally not significant.

Interest rate risk management practices employed by the Funds include setting target durations based on the appropriate benchmark indices and monitoring the Funds’ durations relative to the benchmarks. If interest rates are anticipated to rise, the Funds’ durations can be shortened to limit potential losses. Conversely, if interest rates are anticipated to fall, the durations can be lengthened to increase potential gains. Each individual Fund’s exposure to interest rate risk, if any, is presented in the “Financial Instruments Risks” section of the financial statements.

OTHER PRICE RISK

Other price risk is the risk that the fair value of financial instruments may decline because of changes in market prices of the financial instruments, other than declines due to interest rate risk and currency risk. Other price risk stems from financial instruments’ sensitivity to changes in the overall market (market risk) as well as factors specific to the individual financial instrument. Other price risk attributable to individual investments is managed through diversification of the portfolio and security selection and adjustments to fair value when there is significant volatility in international markets after markets are closed. Each individual Fund’s exposure to other price risk, if any, is presented in the “Financial Instruments Risks” section of the financial statements.

Details of each Fund’s exposure to financial instruments risks including fair value hierarchy classification are available in the “Financial Instruments Risks” section of the financial statements of each Fund.



FINANCIAL RISKS FROM UNDERLYING MUTUAL FUNDS

Certain Funds may invest in other mutual funds. The Funds’ investments in mutual funds are subject to the terms and conditions of the respective mutual fund’s offering documentation and are susceptible to the risks related to the underlying mutual funds’ financial instruments. The Funds’ maximum exposure to loss from their interests in mutual funds is equal to the total fair value of their investment in mutual funds. Once the Funds dispose of their shares in an underlying mutual fund, the Funds cease to be exposed to any risk from that mutual fund. The exposure to underlying mutual fund investments is disclosed in the “Financial Instruments Risks” section of the financial statements of each Fund.

8. Fair value measurementThe Funds classify fair value measurements within a hierarchy that prioritizes the inputs to Funds’ valuation techniques used in measuring fair value. Under these provisions, an entity is required to classify each financial instrument into one of three fair value levels as follows:

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

Level 2 - for inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and,

Level 3 - for inputs that are based on unobservable market data.

The classification of a financial instrument is based on the lowest level of input that is significant to the determination of fair value.

All fair value measurements are recurring. The carrying values of cash, receivable for investment transactions, dividends and interest receivable, subscriptions receivable, payable for investment transactions, redemptions payable, distributions payable and the Fund’s obligation for net assets attributable to holders of redeemable units approximate their fair values due to their short-term nature. Fair values of securities and derivatives are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 ceases to be actively traded, it is transferred out of Level 1. In such cases, fair value is determined using observable market data (eg. transactions for similar securities of the same issuer) and the instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3. Changes in valuation methods may result in transfers into or out of the assets’ or liabilities’ assigned levels. The level summary based on the hierarchy inputs is disclosed in the "Financial Instrument Risks" section of each Fund.

Level 3 financial instruments are reviewed by the Funds’ fair valuation committee. The fair valuation committee considers the appropriateness of the valuation model inputs, as well as the valuation result, using valuation methods recognized as standard within the industry. Quantitative information about the unobservable inputs, sensitivity of the fair value measurements to changes in unobservable inputs and interrelationships between those inputs are disclosed in the supplementary schedules under “Fair value measurement” if significant unobservable inputs are used when valuing Level 3 financial instruments.

EQUITIES

The Funds’ equity positions are classified as Level 1 when the security is actively traded and a reliable price is observable. The Funds subscribe to the services of a third-party valuation service provider to provide fair value adjustments, when a defined threshold is met, to the prices of foreign securities due to changes in the value of securities in North American markets following the closure of the foreign markets. The parameters used to apply the fair value adjustments are based on observable market data. Where applicable, the foreign securities will be considered Level 2 priced securities. The Funds do not hold any securities classified as Level 3.

BONDS AND SHORT-TERM INVESTMENTS

Debt securities generally trade in the OTC market rather than on a securities exchange. Bonds including government, corporate, convertible and municipal bonds and notes, bank loans, US and Canadian treasury obligations, sovereign issues and foreign bonds are normally valued by pricing service providers that use broker-dealer quotations, reported trades and valuations from their internal pricing models. These internal pricing models use inputs which are observable including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Funds’ bonds and short-term investments have been classified as Level 2, unless the determination of fair value requires significant unobservable input, in which the measurement is classified as Level 3.

INVESTMENTS IN MUTUAL FUNDS AND EXCHANGE TRADED FUNDS

The Funds’ positions in the mutual funds and exchange traded funds are typically in positions that are actively traded and a reliable price is observable and as such is classified as Level 1.

FINANCIAL DERIVATIVE INSTRUMENTS

Derivatives consisting of foreign currency forward contracts, interest rate swaps, credit default swaps and foreign currency options which are valued based primarily on the contract notional amount, the difference between the contract rate and the forward market rate for the same currency, interest rate and credit spreads. These derivative financial instruments have been classified as Level 2.

Futures contracts that are traded on a national securities exchange are stated at the last reported sale or settlement price on the day of valuation. To the extent these financial derivative instruments are actively traded they are categorized as Level 1.

FAIR VALUATION OF INVESTMENTS (INCLUDING UNLISTED SECURITIES)

If the valuation methods described above are not appropriate, the Funds will estimate the fair value of an investment using established fair valuation procedures, such as consideration of public information, broker quotes, valuation models, discounts from market prices of similar securities or discounts applied due to restrictions on the disposition of securities, and external fair value service providers.

The extent of Funds’ use of quoted market prices (Level 1), internal models using observable market information as inputs (Level 2), and internal models without observable market information (Level 3) in the valuation of securities is summarized in each Fund’s ”Financial Instruments Risks” section of the financial statements.



9. Transition to IFRS 9Effective January 1, 2018, the Funds adopted IFRS 9, the standard replacing IAS 39, Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 relates to the classification and measurement of financial assets and financial liabilities in the Funds and requires financial assets to be classified at amortized cost, FVTPL or fair value through other comprehensive income (FVOCI) based on the Funds business model for managing financial instruments and the related contractual cash flow characteristics. The classification and measurement of financial liabilities remains generally unchanged. Assessment and decision on the business model approach is an accounting judgment (see note 6).

Upon transition to IFRS 9, the Funds’ financial assets and financial liabilities previously classified as FVTPL under IAS 39 continue to be categorized as FVTPL and those previously classified as loans and receviable or other liabilities are now categorized as amortized cost. There were no changes in the measurement attributes for any of the financial assets or financial liabilities upon transition to IFRS 9.


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