Financial Statements of
ACADIAN CORE INTERNATIONAL EQUITY FUND Years ended December 31, 2015 and 2014
KPMG LLP
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INDEPENDENT AUDITORS' REPORT To the Unitholders of Acadian Core International Equity Fund We have audited the accompanying financial statements of Acadian Core International Equity Fund, which comprise the statements of financial position as at December 31, 2015 and 2014, the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Acadian Core International Equity Fund as at December 31, 2015 and 2014, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.
Chartered Professional Accountants, Licensed Public Accountants March 22, 2016 Toronto, Canada KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP
ACADIAN CORE INTERNATIONAL EQUITY FUND Statements of Financial Position December 31, 2015 and 2014 2015
2014
Assets Cash Receivable for securities sold Subscriptions receivable Accrued dividend receivable Investments, at fair value
$
688,461 750,251 3,179 102,055 85,313,424 86,857,370
$
250,726 14,967,551 – 118,151 78,268,149 93,604,577
Liabilities Payable for securities purchased Redemptions payable Accrued expenses
Net assets attributable to holders of redeemable units
397,452 427,218 152,972 977,642
14,375,617 509,675 117,684 15,002,976
$ 85,879,728
$ 78,601,601
14,759,485
16,121,023
Redeemable units (note 3)
Net assets attributable to holders of redeemable units per unit
$
See accompanying notes to financial statements. On behalf of the Manager, Integra Capital Limited:
Director Graham Rennie
Director Craig Honey
1
5.82
$
4.88
ACADIAN CORE INTERNATIONAL EQUITY FUND Statements of Comprehensive Income Years ended December 31, 2015 and 2014 2015 Income: Interest income for distribution purposes Dividends Revenue from securities lending (note 7) Other changes in fair value of investments: Net realized gain on sale of investments Net foreign exchange loss on cash Net other loss Net change in unrealized appreciation of investments Total income
$
209 2,399,124 30,523
2014
$
8,484,704 (7,430) (59,109)
23,977,325 (9,635) (45,580)
6,462,836 17,310,857
Expenses: Custodial fees Operating fees Audit fees Legal fees Filing fees Investment performance monitoring fees Securityholder reporting fees Independent Review Committee fees (note 8) Transaction costs Withholding taxes Harmonized sales tax Total expenses
256 3,711,040 44,265
(19,543,298) 8,134,373
120,455 63,740 35,040 2,000 6,205 8,000 4,000 10,000 72,944 285,578 28,305 636,267
110,800 66,230 31,230 2,000 10,930 8,000 4,000 8,340 113,105 415,580 24,215 794,430
Increase in net assets attributable to holders of redeemable units
$ 16,674,590
$
7,339,943
Increase in net assets attributable to holders of redeemable units per unit (based on the weighted average number of units outstanding during the year)
$
$
0.34
See accompanying notes to financial statements.
2
1.04
ACADIAN CORE INTERNATIONAL EQUITY FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2015 and 2014 2015
2014
78,601,601
$ 126,115,164
Increase in net assets attributable to holders of redeemable units
16,674,590
7,339,943
Distributions paid or payable to holders of redeemable units: From net investment income
(1,703,499)
(3,425,612)
9,645,112 1,703,499 (19,041,575) (7,692,964)
9,044,378 3,425,612 (63,897,884) (51,427,894)
7,278,127
(47,513,563)
Net assets attributable to holders of redeemable units, beginning of year
$
Redeemable unit transactions (note 3): Issuance of units Reinvestment of distributions Redemption of units
Net increase (decrease) in net assets attributable to holders of redeemable units Net assets attributable to holders of redeemable units, end of year See accompanying notes to financial statements.
3
$
85,879,728
$
78,601,601
ACADIAN CORE INTERNATIONAL EQUITY FUND Statements of Cash Flows Years ended December 31, 2015 and 2014 2015 Cash flows from (used in) operating activities: Increase in net assets attributable to holders of redeemable units Change in non-cash operating working capital: Net foreign exchange loss on cash Net realized gain on sale of investments Net change in unrealized appreciation of investments Purchase of investments Proceeds from the sale of investments Accrued dividend receivable Accrued expenses Cash provided by operating activities
$ 16,674,590
Cash flows from (used in) financing activities: Amount received from the issuance of units Amount paid on redemptions of units Cash used in financing activities Increase (decrease) in cash
2014
$
7,430 (8,484,704)
9,635 (23,977,325)
(6,462,836) (76,769,598) 84,910,998 16,096 35,288 9,927,264
19,543,298 (66,176,116) 117,805,570 10,316 (29,003) 54,526,318
9,641,933 (19,124,032) (9,482,099)
9,044,378 (63,827,986) (54,783,608)
445,165
Net foreign exchange loss on cash
(257,290)
(7,430)
Cash, beginning of year
7,339,943
(9,635)
250,726
517,651
Cash, end of year
$
688,461
$
250,726
Supplemental information: Interest received Dividends received, net of withholding taxes
$
209 2,129,642
$
256 3,305,776
See accompanying notes to financial statements.
4
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments December 31, 2015 Number of shares
Average cost
Fair value
Common and preferred shares - 99.34% Australia - 1.60%: Caltex Australia Ltd. Capilano Honey Ltd. Data# 3 Ltd. Qantas Airways Ltd. SmartGroup Corp. Ltd. UXC Ltd. Watpac Ltd.
621 1,147 28,199 250,706 12,684 105,394 61,081
Austria - 0.44%: Austria Technologie & Systemtechnik AG C-QUADRAT Investment AG Kapsch TrafficCom AG PORR AG Strabag SE
$
18,244 19,075 21,079 550,197 23,524 89,253 49,277 770,649
$
23,661 25,387 30,209 1,036,297 65,505 129,416 63,891 1,374,366
2,719 269 671 5,048 1,362
59,851 17,562 20,429 192,122 44,005 333,969
59,226 19,029 37,863 212,904 48,452 377,474
40,887
161,468
323,296
600 221,750
17,053 1,036,202 1,053,255
11,671 961,569 973,240
Canada - 0.09%: Entertainment One Ltd.
23,808
155,415
81,403
China - 0.05%: JQW PLC Yangzijiang Shipbuilding Holdings Ltd.
24,995 37,100
16,020 37,414 53,434
1,382 39,960 41,342
48
30,055
32,163
652 75 80
41,322 19,854 742 61,918
58,931 32,014 3,171 94,116
Belgium - 0.38%: Agfa Gevaert NV Brazil - 1.13%: BRF Brasil Foods SA JBS SA
Czech Republic - 0.04%: Philips Morris CR AS Denmark - 0.11%: BoConcept Holding AS Per Aarsleff A/S, Class 'B' Topdanmark A/S
5
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015 Number of shares
Average cost
Fair value
Finland - 5.47%: Atria OYJ Cramo OYJ F-Secure OYJ Finnair OYJ Kone OYJ, Class 'B' Lassila & Tikanoja OYJ Metso OYJ Neste Oil OYJ Okmetic OYJ Orion OYJ, Class 'B' Stora Enso OYJ, Series 'R' Tieto OYJ UPM-Kymmene Corp. OYJ
2,090 1,848 7,273 5,150 7,886 1,573 6,965 26,500 905 12,505 1,477 13,821 60,189
29,379 31,055 30,675 21,875 452,448 40,258 228,782 733,912 9,342 504,527 13,117 290,481 1,351,419 3,737,270
28,542 53,290 28,315 42,120 466,116 43,010 217,558 1,104,867 9,887 603,267 18,699 515,551 1,564,897 4,696,119
France - 4.83%: ABC arbitrage Aubay Axway Software SA Chargeurs SA Credit Agricole Toulouse 31 Devoteam SA Esso S.A.F. Groupe Crit Groupe Guillin SA Guerbet SA Ipsen SA Linedata Services PSA Peugeot Citroën SA PSB Industries Rothschild & Co. Synergie SA Technicolor SA Teleperformance Ubisoft Entertainment SA Vetoquinol SA
6,778 1,645 2,816 1,936 156 1,803 486 861 1,630 577 6,469 403 37,516 281 1,502 1,710 20,066 2,717 33,079 552
49,705 38,689 96,253 23,100 18,736 85,034 50,631 62,273 31,665 52,197 318,877 19,205 807,894 22,060 64,390 41,122 166,621 88,272 349,467 29,902 2,416,093
52,469 45,624 103,683 26,292 19,703 91,143 36,067 73,978 57,260 56,420 595,457 19,922 917,379 23,491 53,262 68,612 226,488 317,742 1,331,247 32,818 4,149,057
74
41,363
14,394
Gabon - 0.02%: Total Gabon SA
6
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015
Germany - 13.71%: All For One Steeb AG Allianz AG, Registered Atoss Software AG Audi AG Constantin Medien AG Deutsche Boerse AG Deutsche Lufthansa AG Dialog Semiconductor PLC Eckert & Ziegler AG ELMOS Semiconductor AG Evonik Industries AG Francotyp-Postalia Holding AG GfK SE H&R WASAG AG Hannover Rueckversicherungs SE Hochtief AG Hornbach Baumarkt Aktiengesellschaft Koenig & Bauer AG Krones AG KSB AG M.A.X. Automation AG Mensch und Maschine Software SE Merck KGaA Muenchener Rueckversicherungs-Gesellschaft AG, Registered Nordex AG ProSiebenSat.1 Media SE SAP AG Schloss Wachenheim AG TUI AG, Registered VERBIO Vereinigte BioEnergie AG Villeroy & Boch AG, Preferred Washtec AG
Greece - 0.04%: Aegean Airlines Hong Kong - 0.14%: Chuang's Consortium International Ltd. DMX Technologies Group Ltd. Hong Kong Ferry (Holdings) Co. Ltd. Miramar Hotel and Investment Co. Ltd. Sing Tao News Corp. Ltd.
Indonesia - 0.01%: PT Samudera Indonesia 7
Number of shares
Average cost
Fair value
678 7,609 321 73 6,895 9,458 47,748 1,051 675 1,878 23,680 7,196 470 1,764 3,912 9,075 1,759 124 871 42 2,420 4,071 12,392
55,633 1,805,444 27,125 71,853 17,066 1,010,965 903,282 56,293 21,716 19,150 1,097,467 49,328 23,451 21,015 487,450 787,111 83,300 4,485 95,266 23,426 18,173 56,076 799,082
75,310 1,877,851 33,340 74,685 18,520 1,161,592 1,049,419 49,346 19,724 43,925 1,093,954 46,649 21,911 24,590 623,665 1,175,903 75,063 6,156 144,575 23,488 20,997 57,395 1,674,894
494 4,984 4,869 4,914 874 25,803 43,394 896 649
129,344 84,074 316,686 507,930 20,193 445,469 280,914 13,626 18,171 9,350,564
137,570 246,305 343,703 544,122 19,789 653,544 392,556 16,531 29,869 11,776,941
3,263
25,718
33,630
108,000 131,000 11,000 21,000 106,000
12,751 28,798 13,387 38,022 18,369 111,327
16,454 13,982 18,139 51,641 20,519 120,735
2,600
3,326
1,288
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015 Number of shares
Average cost
Fair value
Ireland - 0.40%: ICON PLC
2,144
181,499
339,342
Israel - 0.09%: Knafaim Holdings Ltd. Tadiran Holdings Ltd. Taro Pharmaceutical Industries Ltd.
3,015 1,158 100
29,305 20,415 15,420 65,140
34,056 21,828 21,469 77,353
6,851 607 13,133 19,926 14,017 1,630 7,404 182,890 1,405
71,717 21,159 39,608 190,902 408,474 69,174 141,543 576,514 8,068 1,527,159
76,811 36,821 39,338 374,947 890,261 103,551 269,145 492,343 8,056 2,291,273
9,700 600 1,100 2,000 2,000 61,300 16,000 4,000 13,000 22,000 4,800 12,900 1,364 7,074 33,300 15,000 6,300 5,000 8,000 16,800 19,300 2,000 1,800 17,700 2,800 200 2,300
544,226 44,301 43,157 27,126 58,079 93,671 41,019 16,141 22,375 254,993 860,767 256,017 26,922 61,615 933,211 52,940 207,623 23,371 29,994 793,845 383,382 22,854 25,188 208,626 33,251 807 19,169
761,670 44,689 46,998 29,561 59,977 101,932 57,645 23,372 21,617 273,605 1,197,239 247,649 29,974 99,658 965,362 61,837 254,839 24,019 32,702 975,223 593,714 24,203 32,010 390,385 26,933 949 20,291
Italy - 2.67%: Digital Bros SPA El.En. SPA Elica SPA ERG SPA EXOR SPA Italmobiliare SPA Recordati SPA Saras Raffinerie Servizi Italia SPA
Japan - 24.01%: Adastria Co., Ltd. Aichi Bank Ltd. (The) Ajis Co. Ltd. Aoki Super Co. Ltd. Arata Corp. Arealink Co., Ltd. Asanuma Corp. Co. Ltd. Bando Chemical Industries Ltd. Bank of Kochi Ltd. (The) Calsonic Kansei Corp. Central Japan Railway Co. Chubu Electric Power Co. Inc. Coco's Japan Co. Ltd. Computer Engineering & Consulting Ltd. Daiichi Sankyo Co. Ltd. Daiken Corp. Daiwa House Industry Co. Ltd. Eidai Co. Ltd. Eighteenth Bank Ltd. (The) Fuji Heavy Industries Ltd. Fujisoft Inc. Fukoku Co. Ltd. G-7 Holdings Inc. GEO Holdings Corp. Golf Digest Online Inc. Grandy House Corp. Haruyama Trading Co. Ltd. 8
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015
HIRATA Corp. Hokkaido Coca - Cola Bottling Co. Ltd. Hurxley Corp. Iida Group Holdings Co. Ltd. JAFCO Co. Ltd. Japan Foundation Engineering Co. Ltd. JBCC Holdings Inc. Kaken Pharmaceutical Co. Ltd. Kamei Corp. Kanaden corp. Kanto Tsukuba Bank Ltd. (The) Kawaden Corp. Kawasumi Laboratories Inc. Kitamura co. Ltd. Kita-Nippon Bank Ltd. (The) Kohsoku Corp. Kyowa Leather Cloth Co. Ltd. Miroku Jhoyo Service Co. Ltd. Mitsubishi Chemical Holdings Corp. Mitsui High-tec Inc. Mitsui Home Co. Ltd. Mizuho Financial Group Inc. Nagano Bank Ltd. (The) NDS Co. Ltd. Nichiban Co. Ltd. Nihon Yamamura Glass Co. Ltd. Nippon Commercial Development Co. Ltd. Nippon Telegraph & Telephone Corp. Nisshin Fudosan Co. Ltd. NTT Data Corp. Obayashi Corp. Obayashi Road Corp. Otsuka Holdings Co. Ltd. San-Ai Oil Co. Ltd. Senshu Electric Co. Ltd. Sumitomo Mitsui Financial Group Inc. Suzuken Co. Ltd. Tayca Corp. Teijin Ltd. Tera Probe Inc. Toenec Corp. Token Corp. NPV Tokyo Electric Power Co. Inc. (The) Tokyo Sanyo Co. Ltd. Toyota Boshoku Corp. Toyota Motor Corp. Ube Industries Ltd. Uchida Yoko Co. Ltd.
9
Number of shares
Average cost
Fair value
2,300 3,000 4,500 14,800 7,300 5,000 3,500 2,500 6,900 3,300 12,300 600 8,000 2,600 4,100 2,100 2,500 2,400 76,700 2,400 8,000 530,600 11,000 9,000 3,000 14,000 5,500 27,300 10,900 13,900 22,000 15,000 15,000 4,622 900 28,700 4,300 10,000 20,000 1,900 4,000 1,400 99,200 3,000 10,000 7,700 127,000 9,000
27,614 20,581 61,753 302,052 296,741 22,764 28,126 161,583 73,116 28,349 57,358 18,237 75,901 21,282 134,611 20,920 19,479 11,679 670,495 17,505 36,931 1,417,081 21,640 28,354 15,736 28,607 114,347 1,150,396 49,720 833,360 241,482 35,570 712,104 28,739 12,283 1,326,853 174,542 48,215 94,274 56,694 26,410 85,532 812,264 10,828 285,764 639,085 288,213 28,734
38,272 20,889 74,464 386,239 401,251 29,100 30,837 239,898 94,975 37,726 57,524 19,171 80,555 24,619 157,184 25,947 26,646 26,162 685,789 21,063 51,178 1,491,943 26,294 36,063 21,409 29,585 113,177 1,524,526 52,487 943,796 284,275 142,207 747,755 52,785 18,052 1,526,482 229,650 67,899 95,844 25,933 36,952 151,156 800,709 17,564 283,374 665,798 376,897 47,599
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015 Number of shares
Average cost
Fair value
400 2,100 49,000 20,000
28,554 16,040 640,632 197,907 16,641,707
38,772 27,378 1,547,530 264,667 20,616,100
Malaysia - 0.26%: Malaysian Pacific Industries BHD Ta Ann Holdings BHD
25,100 93,400
62,618 127,686 190,304
75,604 151,696 227,300
Mexico - 0.68%: GRUMA SAB de CV, Class 'B' Industrias Bachoco SA, Series 'B' Organizacion Soriana SA de CV, Series 'B'
2,197 65,364 55,074
20,068 276,010 173,749 469,827
42,847 368,264 174,967 586,078
Netherlands - 3.79%: Accell Group NV DOCdata NV Heineken Holding NV Kas Bank NV Nederlandsche Apparatenfabriek NV Royal Dutch Shell PLC, Class 'A'
1,951 609 8,357 1,328 524 70,750
57,260 21,013 732,427 17,968 22,775 2,618,755 3,470,198
62,016 3,217 895,348 21,542 24,354 2,252,108 3,258,585
New Zealand - 0.29%: Air New Zealand Ltd.
89,655
142,541
251,943
Norway - 2.62%: DNB ASA Kvaerner ASA Spectrum ASA Statoil ASA
51,582 88,492 3,539 63,677
954,646 112,520 17,800 1,487,478 2,572,444
888,842 114,156 15,273 1,236,165 2,254,436
5,600
739
1,091
1,262 186 558 13,596 8,594
77,308 4,734 64,583 366,416 26,603 539,644
83,547 4,475 70,643 324,499 38,242 521,406
West Japan Railway Co. Yachiyo Industry Co. Ltd. Yamazaki Baking Co. Ltd. Yurtec Corp.
Philippines - 0.01%: Lopez Holdings Corp. Poland - 0.61%: AmRest Holdings SE Emperia Holding SA Neuca SA Polski Koncern Naftowy Orlen SA Trakcja SA
10
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015 Number of shares
Average cost
Fair value
Portugal - 0.15%: Altri SGPS SA
18,490
135,736
133,088
Qatar - 0.44%: Barwa Real Estate Co.
25,057
424,244
382,249
8,420
31,916
31,580
Singapore - 2.58%: DBS Group Holdings Ltd. Frencken Group Ltd. Low Keng Huat (Singapore) Ltd. NSL Ltd. QAF Ltd. Riverstone Holdings Ltd. Sing Investments & Finance Ltd. Singapore Airlines Ltd. Sunningdale Tech Ltd.
93,100 70,300 19,700 9,200 21,000 41,500 40,200 43,200 15,720
662,809 19,576 13,624 17,349 20,567 94,246 50,986 436,301 12,385 1,327,843
1,521,473 13,079 11,767 13,242 21,694 97,525 48,022 473,762 14,392 2,214,956
South Africa - 0.54%: Absa Bank Ltd., Preferred Barclays Africa Group Ltd. FirstRand Ltd. Sasol Ltd.
236 3,675 99,162 693
21,244 71,040 504,744 30,330 627,358
14,873 47,272 376,645 26,055 464,845
South Korea - 2.71%: LG Display Co. Ltd. S&T Holdings Co. Ltd. Samsung Electronics Co. Ltd. Sewon Precision Industry Co. Ltd.
35,896 339 839 779
1,015,701 3,673 967,437 22,784 2,009,595
1,043,998 11,783 1,252,376 19,842 2,327,999
Spain - 2.55%: ACS Actividades de Construcción y Servicios SA Amadeus IT Holding SA, Class 'A' Faes Farma SA Gamesa Corporacion Tecnológica SA Papeles y Cartones de Europa SA
27,888 13,812 13,081 3,539 8,844
1,212,931 765,816 46,255 73,547 51,869 2,150,418
1,136,856 847,958 54,480 84,483 69,396 2,193,173
Russia - 0.04%: Nordgold NV, GDR
11
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015 Number of shares
Average cost
Fair value
Sweden - 5.39%: BillerudKorsnäs AB Biotage AB Boliden AB Catella AB CellaVision AB Duni AB Elanders AB Electrolux AB, Series 'B' Investor AB, Series 'B' Micronic Laser Systems AB Nolato AB, Series 'B' Peab AB Skandinaviska Enskilda Banken, Series 'A' SkiStar AB Svenska Cellulosa AB, Series 'B' Tethys Oil AB
19,469 15,366 5,686 25,445 6,377 1,578 2,600 9,016 22,578 9,776 584 17,705 42,002 1,919 29,557 2,582
345,624 47,392 131,625 50,088 32,010 27,220 18,496 259,799 556,548 87,725 5,820 146,241 404,333 27,819 1,099,347 24,523 3,264,610
504,279 62,283 133,880 90,140 73,288 36,791 29,345 304,836 1,162,919 132,487 24,778 189,182 618,703 39,208 1,200,473 24,462 4,627,054
Switzerland - 6.37%: Actelion Ltd., Registered Emmi AG Highlight Communications AG Lonza Group AG, Registered Nestlé SA, Registered, Series 'B' Orell Fuessli Holding AG, Registered Siegfried Holding AG, Registered STMicroelectronics NV Swiss Life Holding AG, Registered
9,393 94 2,970 4,454 22,095 192 96 15,207 206
1,021,462 37,325 15,946 748,294 2,203,312 27,973 17,809 137,730 34,346 4,244,197
1,819,655 58,733 25,044 1,008,100 2,285,814 29,868 26,071 141,836 77,556 5,472,677
4,723
23,470
19,092
23,841
169,636
169,231
34,541 298,486
936,676 766,940 1,896,722
1,091,566 779,499 2,059,388
9,383
31,062
31,021
18,536
303,909
313,627
Taiwan - 2.40%: AU Optronics Corp., ADR Hon Hai Precision Industry Co. Ltd., GDR, Registered Taiwan Semiconductor Manufacturing Co. Ltd., ADR United Microelectronics Corp., ADR
Turkey - 0.04%: Turkiye Garanti Bankasi AS, ADR Ukraine - 0.36%: Kernel Holding SA
12
ACADIAN CORE INTERNATIONAL EQUITY FUND Schedule of Investments (continued) December 31, 2015
United Kingdom - 12.28%: Associated British Foods PLC AstraZeneca PLC Berkeley Group Holdings PLC BP PLC BP PLC, ADR Carnival PLC CVS Group PLC Dart Group PLC Dechra Pharmaceuticals PLC entu UK PLC FDM Group Holdings PLC Fiat Chrysler Automobiles NV Greggs PLC H&T Group PLC Hargreaves Services PLC Inchcape PLC Indivior PLC Investec PLC Johnson Service Group PLC Lavendon Group PLC Matchtech Group PLC McColl's Retail Group PLC Mondi PLC Moneysupermarket.com Group PLC NWF Group PLC Pendragon PLC Polypipe Group PLC Quantum Pharmaceutical PLC Schroders PLC SkyePharma PLC Trinity Mirror PLC
Number of shares
Average cost
Fair value
4,681 12,475 1,385 133,164 29,721 4,991 11,101 29,616 11,857 6,700 1,644 58,900 8,950 4,431 10,640 7,685 6,792 86,140 24,023 7,050 1,776 5,430 53,603 43,148 8,123 119,348 8,110 7,079 10,380 23,362 20,610
127,770 682,534 94,661 1,250,416 1,280,471 264,869 70,611 95,821 160,898 17,051 15,445 459,351 143,219 17,501 82,725 93,643 30,507 859,489 25,618 26,303 20,636 18,948 533,806 279,624 22,222 109,382 54,949 22,000 631,328 155,630 20,863 7,668,291
320,292 1,179,112 104,578 965,143 1,290,583 395,049 187,507 356,841 265,336 7,682 17,587 1,149,543 240,780 17,872 56,203 123,514 26,115 845,482 43,159 21,399 18,635 15,008 1,464,017 324,211 32,181 114,235 57,949 15,725 632,458 189,053 70,047 10,547,296
68,222,927
85,313,424
Total equities - 99.34% Transaction costs
(45,449)
Total investment portfolio - 99.34%
$
–
68,177,478
85,313,424
Other assets, net of liabilities - 0.66%
566,304
Net assets attributable to holders of redeemable units - 100.00%
$
See accompanying notes to financial statements.
13
85,879,728
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures Years ended December 31, 2015 and 2014
1.
Financial instruments risk: Investment activities of the Acadian Core International Equity Fund (the "Fund") expose the Fund to some financial instrument risks. The Fund's overall risk management program seeks to minimize the potentially adverse effect of risk on the Fund's financial performance in a manner consistent with the Fund's investment objectives and long-term investment time horizon.
2.
Risk management: The Fund's objective is to achieve long-term investment returns through a portfolio of international equities, which are sufficiently diversified to minimize investment risk. To achieve its objective, the Fund invests in equities issued by companies outside of North America, based primarily in Europe, Australia and the Far East. The Fund may hold an aggregate of up to 15% in Emerging Markets and up to 5% in cash or cash equivalents. Acadian Asset Management LLC, the Fund's sub-advisor (the "Sub-Advisor"), utilizes an active "bottom-up" strategy with a value orientation and focuses on attractive stocks across the range of the capitalization spectrum. Their strategy incorporates both active stock valuation and active country and sector valuation techniques to target a diverse array of under-valued stocks with positive earnings trends and prospects. The Fund may enter into securities lending transactions. Securities lending transactions will be used in conjunction with the Fund's other investment strategies in a manner considered most appropriate by Integra Capital Limited (the "Trustee" and "Manager") to achieve the Fund's investment objectives and to enhance the Fund's returns. To assist with managing risk, the Manager also maintains a governance structure that oversees the Fund's investment activities and monitors compliance with the Fund's stated investment strategy and securities regulations. The Fund invests in a range of investment strategies that exposes it to various types of risks, as follows: credit risk, counterparty credit risk, currency risk, derivatives, interest rate risk, liquidity risk, other market risk and concentration risk.
14
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): (a) Credit risk: Credit risk on financial instruments is the risk of a loss occurring as a result of the default of an issuer on its obligation to an investment fund. Credit risk is managed by dealing with issuers that are believed to be creditworthy and by regular monitoring of credit exposures. Additionally, credit risk is reduced by diversification of issuer, industry and geography. The carrying amount of the Fund's assets on the statements of financial position, represents the maximum exposures to credit risk relating to financial assets and liabilities. The Fund's activities may give rise to settlement risk. Settlement risk is the risk of loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractually agreed. For the majority of transactions, the Fund mitigates this risk by conducting settlements through a broker to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. As at December 31, 2015 and 2014, the Fund had no significant investments in debt instruments and/or derivatives. (b) Counterparty credit risk: Counterparty credit risk primarily emanates from the use of over-the-counter derivatives. This risk is minimized by selecting counterparties who have a minimum of "A" credit rating. Ongoing monitoring of credit events/rating developments occurs to ensure the sustainable credit quality of the counterparty. Various factors are considered in the assessment process including fundamental components of the counterparty's profile (such as capital adequacy, asset quality, profitability and liquidity) and credit ratings assigned to the counterparty. (c) Currency risk: Changes in the value of the Canadian dollar compared to foreign currencies will affect the value, in Canadian dollars, of any foreign securities and account balances held in the Fund. From time to time, the Fund may manage currency risk through foreign currency hedging strategies.
15
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): Currency risk arises on financial instruments denominated in foreign currencies. Fluctuations in foreign exchange rates impact the valuation of assets and liabilities denominated in foreign currencies. The tables below indicate the currencies to which the Fund had exposure directly on its trading monetary and non-monetary assets and liabilities as well as the underlying principal amount of foreign exchange contracts: Currency riskexposed holdings*
2015 Euro Japanese yen British pound Swiss franc Swedish krona U.S. dollar South Korean won Singapore dollar Norwegian krone Australian dollar Brazilian real Polish zloty Mexican peso South African rand Qatari rial New Zealand dollar Malaysian ringgit Hong Kong dollar Danish krone Israeli shekel Czech koruna Phillippine peso Thai baht Indonesian rupiah Peruvian nuevo sol
$
30,637,135 $ 20,638,050 8,049,815 5,308,465 4,627,055 4,000,995 2,362,629 2,269,130 2,254,436 1,374,380 973,330 838,091 697,287 649,733 382,249 251,943 232,666 118,307 94,116 55,884 32,274 15,980 10,241 1,393 112
Foreign exchange contracts
Net exposure
% of net assets
– – – – – – – – – – – – – – – – – – – – – – – – –
$ 30,637,135 20,638,050 8,049,815 5,308,465 4,627,055 4,000,995 2,362,629 2,269,130 2,254,436 1,374,380 973,330 838,091 697,287 649,733 382,249 251,943 232,666 118,307 94,116 55,884 32,274 15,980 10,241 1,393 112
35.67 24.03 9.37 6.18 5.39 4.66 2.75 2.64 2.63 1.60 1.13 0.98 0.81 0.76 0.45 0.29 0.27 0.14 0.11 0.07 0.04 0.02 0.01 – –
*Amounts reflect the carrying value of monetary and non-monetary items.
16
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued):
2014 Euro Japanese yen U.S. dollar British pound Swedish krona Australian dollar Singapore dollar Swiss franc South Korean won Norwegian krone New Zealand dollar Danish krone Mexican peso South African rand Polish zloty Hong Kong dollar Philippine peso Thai baht Brazilian real Indonesian rupiah Malaysian ringgit Peruvian nuevo sol
Currency riskexposed holdings* $ 22,634,756 12,855,724 8,516,188 7,686,969 6,478,162 4,567,932 4,335,141 3,418,244 2,573,613 2,231,189 782,063 734,189 569,400 521,945 311,431 245,017 204,384 49,022 22,074 17,500 1,735 107
$
Foreign exchange contracts
Net exposure
% of net assets
– – – – – – – – – – – – – – – – – – – – – –
$ 22,634,756 12,855,724 8,516,188 7,686,969 6,478,162 4,567,932 4,335,141 3,418,244 2,573,613 2,231,189 782,063 734,189 569,400 521,945 311,431 245,017 204,384 49,022 22,074 17,500 1,735 107
28.80 16.36 10.83 9.78 8.24 5.81 5.52 4.35 3.27 2.84 0.99 0.93 0.72 0.66 0.40
0.31 0.26 0.06 0.03 0.02 – –
*Amounts reflect the carrying value of monetary and non-monetary items.
As at December 31, 2015, had the Canadian dollar strengthened or weakened by 5% in relation to all currencies, with all other variables held constant, net assets attributable to holders of redeemable units would have decreased or increased, respectively, by $4,293,785 (2014 - $3,937,839). In practice, the actual trading results may differ from this sensitivity analysis and the difference could be material.
17
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): (d) Derivatives: The Fund may utilize foreign exchange forward contract hedging in the management of currency risk associated with its investment in foreign securities. The objective is to protect the Fund from the possibility of capital losses on foreign-currency-denominated investments due to increases in the value of the Canadian dollar. However, credit and market risks associated with foreign exchange forward contracts potentially expose the Fund to losses. In order to minimize the possibility of losses arising from credit risk, the Fund deals only with large financial institutions with a minimum of "A" credit rating. Currency risk relates to the possibility that foreign exchange forward contracts change in value due to fluctuations in currency prices. The foreign exchange forward contracts are marked to market daily and the resulting unrealized gains or losses are recognized in the statements of financial position. The result of employing foreign exchange forward contracts is that the foreign exchange gains and losses in the securities portfolio move substantially in opposite directions from the gains and losses in the hedging portfolio. As at December 31, 2015 and 2014, the Fund did not directly hold any foreign exchange forward contracts. (e) Interest rate risk: Changes in market interest rates expose fixed-income securities, such as bonds, to interest rate risk. Funds that hold income investments are exposed to this risk since changes in prevailing market interest rates will affect the value of fixed-income securities. Cash and cash equivalents comprise deposits with banks and highly liquid financial assets with maturities of three months or less, as a result, there is no significant risk of changes in their fair value and not subject to interest rate risk. The majority of the Fund's financial assets and liabilities are non-interest bearing. Accordingly, the Fund is not subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.
18
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): (f) Liquidity risk: Liquidity risk is the possibility that investments of the Fund cannot be readily converted into cash when required. The Fund may be subject to liquidity constraints because of insufficient volume in the markets for the securities of the Fund or the securities may be subject to legal or contractual restrictions on their resale. In addition, holders of redeemable units may redeem their units on each valuation date. Liquidity risk is managed by investing in securities that are traded in active markets and can be readily disposed, and by retaining sufficient cash and cash equivalent positions to maintain liquidity. These liabilities are all current and are due within 90 days, with the exception of net assets attributable to holders of redeemable units which are due upon request by the unitholder (note 3). (g) Other market risk: Other market risk is the risk that the value of financial instruments will fluctuate as a result of changes in market prices, other than those arising from interest rate risk or currency risk, whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. All securities present a risk of loss of capital. The Sub-Advisor moderates this risk through a careful selection of investment strategies and selection of securities and other financial instruments within the parameters of the investment strategy developed by the Manager of the Fund. The impact on net assets attributable to holders of redeemable units of the Fund as at December 31, 2015, due to a 5% increase or decrease in the Fund's benchmark (MSCI EAFE ND Index), with all other variables held constant, would have been $4,144,985 (2014 - $3,818,859). This calculation is based on the beta of the Fund, over the past 36 months. In practice, the actual trading results may differ from the sensitivity analysis and indicated above the difference could be material.
19
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): (h) Concentration risk: Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type. The following is a summary of the Fund's concentration risk: As a % of net assets 2015 2014 Common and preferred shares Australia Austria Belgium Brazil Canada Chile China Czech Republic Denmark Finland France Gabon Germany Greece Hong Kong India Indonesia Ireland Israel Italy Japan Luxembourg Malaysia Mexico Netherlands New Zealand Norway
1.60 0.44 0.38 1.13 0.09 – 0.05 0.04 0.11 5.47 4.83 0.02 13.71 0.04 0.14 – 0.01 0.40 0.09 2.67 24.01 – 0.26 0.68 3.79 0.29 2.62
20
5.81 0.43 0.10 0.26 – 0.72 0.20 – 0.93 3.38 3.63 0.04 7.62 0.05 0.20 0.93 0.02 0.39 1.96 2.54 16.33 1.10 – 2.56 6.50 1.00 2.84
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
2.
Risk management (continued): As a % of net assets 2015 2014 Philippines Poland Portugal Qatar Russia Singapore South Africa South Korea Spain Sweden Switzerland Taiwan Turkey Ukraine United Kingdom
0.01 0.61 0.15 0.44 0.04 2.58 0.54 2.71 2.55 5.39 6.37 2.40 0.04 0.36 12.28
0.25 0.39 0.46 – – 5.30 0.66 3.23 1.76 8.19 4.29 2.87 – – 12.64
Total investment portfolio
99.34
99.58
0.66
0.42
100.00
100.00
Other assets, net of liabilities Net assets attributable to holders of redeemable units
3.
Capital risk management: The capital of the Fund is represented by issued redeemable units with no par value. The units of the Fund are entitled to distributions, if any, and any redemptions are based on the Fund's net asset value ("NAV") per unit. The Fund has no restrictions or specific capital requirements on the subscriptions and redemptions of units. The relevant movements are shown on the statements of changes in net assets attributable to holders of redeemable units. The Fund endeavours to invest its subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions.
21
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
4.
Fair value measurements: The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: The hierarchy of inputs is summarized below:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - 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 - inputs for the asset or liability not based on observable market data (unobservable inputs).
If inputs of different levels are used to measure an asset's or liability's fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement and changes in valuation methods may result in transfers into or out of an investment's assigned level. The tables below summarize the inputs used in valuing the Fund's financial assets carried at fair values:
2015 Financial assets: Equities
2014 Financial assets: Equities
Level 1
$ 85,298,060
Level 1
$ 78,268,149
22
Level 2
Level 3
Total
–
$ 15,364
$ 85,313,424
Level 2
Level 3
Total
–
$ 78,268,149
$
$
–
$
ACADIAN CORE INTERNATIONAL EQUITY FUND Risk Disclosures (continued) Years ended December 31, 2015 and 2014
4.
Fair value measurements (continued): All fair value measurements above are recurring. Fair values are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it is classified as Level 3. The Fund's equity positions are classified as Level 1 when the security is actively traded and a reliable price is observable. For the year ended December 31, 2015, no investments were transferred from level 1 to level 2 as a result of the securities no longer being traded in an active market (2014 - nil). No investments were transferred from any level as a result of the securities now being traded in an active market. During the year ended December 31, 2015, the reconciliation of investments measured at fair value using unobservable inputs (Level 3) is presented as follows: 2015
2014
Balance, beginning of year Purchases Sales Net transfers into and/or out of Level 3 Realized gains (losses) Change in unrealized appreciation (depreciation)
$
– – – 15,364 – –
$
– – – – – –
Balance, end of year
$ 15,364
$
–
Total change in unrealized appreciation during the year for assets held
$
$
–
–
As at December 31, 2015 and 2014, the potential impact of using reasonable possible alternative assumptions for valuing Level 3 financial instruments would have minimal impact on net assets.
23
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements Years ended December 31, 2015 and 2014
1.
Establishment of the Fund: The Acadian Core International Equity Fund is an open-ended investment unincorporated trust created under the laws of the Province of Ontario by a Declaration of Trust. The address of the Fund's registered office is 2020 Winston Park Drive, Oakville, Ontario. The Fund was established on March 3, 2000 and commenced operations on March 7, 2000. Integra Capital Limited is the Manager and Trustee of the Fund and is the corporate entity registered with the Canadian regulatory authorities. The Fund's assets are custodied at the Canadian Imperial Bank of Commerce. The Manager is registered in every province as a portfolio manager and exempt market dealer and is registered in the Provinces of Newfoundland and Labrador, Ontario and Quebec as an investment fund manager. In the Province of Ontario, the Manager is additionally registered as a commodity trading manager.
2.
Basis of preparation: (a) Basis of accounting: The financial statements have been prepared in compliance with International Financial Reporting Standards ("IFRS"). These financial statements were authorized for issue by the Manager on March 22, 2016. (b) Basis of measurement: These financial statements have been prepared on a historical cost basis, except for financial assets and financial liabilities at fair value through profit or loss ("FVTPL") which are presented at fair value. (c) Functional and presentation currency: These financial statements are presented in Canadian dollars, which is the Fund's functional currency.
24
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies: (a) Financial instruments (i) Recognition, initial measurement and classification: Financial assets and financial liabilities at fair value through profit or loss ("FVTPL") are initially recognized on the trade date, which is the date on which the Fund becomes a party to the contractual provisions of the instrument. Other financial assets and financial liabilities are recognized on the date on which they are originated. Financial assets and financial liabilities at FVTPL are initially recognized at fair value, with transaction costs recognized in statements of comprehensive income. Financial assets or financial liabilities not at FVTPL are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue. The Fund classifies financial assets and financial liabilities into the following categories: Financial assets at FVTPL:
Held for trading ("HFT"): derivative financial instruments;
Designated as FVTPL: debt securities and equity investments; and
Financial assets at amortized cost: all other financial assets are classified as loans and receivables.
Financial liabilities at FVTPL:
HFT: derivative financial instruments; and
Financial liabilities at amortized cost: all other financial liabilities are classified as other financial liabilities.
25
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): (ii) 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 in the principal or, in its absence, the most advantageous market to which the Fund has access at that date. The fair value of a liability reflects its non-performance risk. When available, the Fund measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The Fund measures instruments quoted in an active market at last sale or close price, where the close price falls within the day's bid-ask spread. In circumstances where the close price is not within the day's bid-ask spread, the Manager determines the point within bid-ask spread that is most representative of fair value based on specific facts and circumstances. Investments held include equities, listed warrants, options, short-term notes, treasury bills, bonds, asset-backed securities and other debt instruments. Investments held that are not traded in an active market are valued based on the results of valuation techniques using observable market inputs where possible, on such basis and in such manner established by the Manager. Investments in other pooled funds are valued at the NAV per unit reported by each pooled fund. See risk disclosures for more information about the Fund's fair value measurements. The fair value of a forward contract is the gain or loss that would be realized if, on the valuation date, the positions were closed out. The forward contract is valued using an interpolation of the foreign exchange rate based on the length of the forward contract. The change in fair value on forward contracts are reflected in the statements of comprehensive income as change in unrealized appreciation (depreciation) on derivatives. When the forward contracts are closed out, any gains or losses realized are included in net realized gain (loss) on derivatives. The fair values of foreign currency denominated investments and other foreign currency denominated assets and liabilities are translated into Canadian dollars at exchange rates prevailing on the reporting date.
26
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): The fair values of other financial assets and liabilities approximate their carrying values due to the short-term nature of these instruments. (iii) Offsetting: Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis for gains and losses from financial instruments at fair value through profit or loss and foreign exchange gains and losses. (b) Cash and cash equivalents: Cash and cash equivalents consist of cash on deposit and short-term, interest-bearing notes with a term to maturity of less than three months from the date of purchase. (c) Investment transactions and income recognition: The Fund follows the accrual method of recording investment income and expenses. Security transactions are recorded on the trade date. Dividends are accrued as of the exdividend date. Stock dividends are recorded in income based on the fair value of the security on the ex-dividend date. The interest for distribution purposes shown on the statements of comprehensive income represents the coupon interest received by the Fund accounted for on an accrual basis. The Fund does not amortize premiums paid or discounts received on the purchase of fixed income securities except for zero coupon bonds which are amortized on a straight-line basis. Realized gain (loss) on sale of investments and unrealized appreciation (depreciation) in investments are determined on an average cost basis. Average cost does not include amortization of premiums or discounts on fixed income securities with the exception of zero coupon bonds.
27
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): The Fund generally incurs withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the statements of comprehensive income. (d) Cost of investments: The cost of investments represents the amount paid for each security and is determined on an average cost basis excluding commissions and other transaction costs. (e) Transaction costs: Commissions and other transaction costs are incremental costs that are directly attributable to the acquisition, issue, or disposal of an investment, which include fees and commissions paid to agents, advisors, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Commissions and transaction costs are included as expenses in the statements of comprehensive income. (f) Securities lending transactions: The Fund is permitted to enter into securities lending transactions. These transactions involve the temporary exchange of securities for collateral with a commitment to re-deliver the same securities at a future date. Income is earned from these transactions in the form of fees paid by the counterparty. Income earned from these transactions is recognized on an accrual basis and included in the statements of comprehensive income. (g) Foreign currency translation: The fair values of foreign currency denominated investments are translated into Canadian dollars, using the prevailing rate of exchange on each valuation date. Income, expenses and investment transactions in foreign currencies are translated into Canadian dollars at the rate of exchange prevailing on the respective dates of such transactions. Foreign exchange gains and losses are presented as net realized gain (loss) on foreign exchange, except for those arising from financial instruments at FVTPL which are recognized as a component within net realized gain (loss) on sale of investments and change in net unrealized appreciation (depreciation) in the statements of comprehensive income.
28
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): (h) Income taxes: The Fund presently qualifies as a unit trust under the provisions of the Income Tax Act (Canada), and accordingly, is not taxed on that portion of its taxable income, which is paid or payable to unitholders at the end of the taxation year. The Fund has elected for a December 31 taxation year end. The Fund pays out sufficient net income and net realized capital gains so that it will not be subject to income taxes. Accordingly, no provision for income taxes has been made in these financial statements. Capital losses and non-capital losses incurred by the Funds cannot be allocated to unitholders but capital losses may be carried forward indefinitely to reduce future realized capital gains and non-capital losses may be carried forward for 20 taxation years to reduce future net income for tax purposes. As at December 31, 2015, the Fund had no non-capital losses (2014 - nil) and net capital losses carryforward of $22,002,568 (2014 - $26,797,166). Certain dividend and interest income received by the Fund are subject to withholding tax imposed in the country of origin. (i) Redeemable units: For each Fund unit sold, the Fund receives an amount equal to the NAV per unit at the date of sale, which amount is included in net assets attributable to holders of redeemable units. Units are redeemable at the option of unitholders at their NAV on the redemption date. For each unit redeemed, net assets attributable to holders of redeemable units are reduced by the NAV of the unit at the date of redemption. The redeemable shares are measured at the present value of the redemption amounts and are considered a residual amount of the net assets attributable to holders of redeemable units. The capital of the Fund is represented by issued redeemable units with no par value. The units of the Fund are entitled to distributions, if any, and any redemptions are based on the Fund's net asset attributable to holders of redeemable shares per unit. The Fund has no restrictions or specific capital requirements on the subscriptions and redemptions of the units. The relevant movements are shown on the statements of changes in net assets attributable to holders of redeemable units. The Fund endeavours to invest its subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions.
29
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): Redeemable unit transactions during the years were as follows: 2015 Number of Fund units Redeemable units issued Redeemable units redeemed Redeemable units issued on reinvestments
1,735,281 (3,399,125)
302,306
$
2014 Amount
Number of Fund units
Amount
9,645,112
1,843,662
$ 9,044,378
(19,041,575)
(13,008,579)
1,703,499
707,809
(63,897,884)
3,425,612
The number of issued and outstanding units as at December 31, 2015 is 14,759,485 (2014 - 16,121,023). Net assets attributable to holders of redeemable units is calculated for each unit of the Fund by taking the proportionate share of the Fund's net assets attributable to holders of redeemable units and dividing by the number of units outstanding on the valuation date. The increase in net assets attributable to holders of redeemable units per unit in the statements of comprehensive income represents the change in net assets attributable to holders of redeemable units divided by the weighted average number of units outstanding during the reporting year. Income, expenses other than management fees, and realized and unrealized capital gains (losses) are distributed in proportion to the amount invested in them. The weighted average number of units outstanding for the year ended December 31, 2015 is 15,971,932 (2014 - 21,751,473). The Fund's units are classified as a liability under International Accounting Standard ("IAS") 32, Financial Instruments - Presentation ("IAS 32") as there is a requirement to make cash distributions to unitholders, if requested. The units are measured at the present value of the redemption amount and are considered a residual amount. As at December 31, 2015 and 2014, there is no difference between net assets attributable to holders of redeemable units and NAV attributable to holders of redeemable units.
30
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
3.
Significant accounting policies (continued): (j) Receivable or payable for securities sold or purchased: In accordance with the Fund's policy of trade date accounting for regular way sale and purchase transactions, sales or purchase transactions awaiting settlement represent amounts receivable or payable for securities sold/purchased, but not yet settled as at the reporting date. (k) Future accounting changes: The International Accounting Standards Board ("IASB") has issued the following new standards and amendments to existing standards that are not yet effective. IFRS 9, Financial Instruments ("IFRS 9"): IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments - Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on financial instruments from IAS 39. IFRS is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. The Manager is currently assessing the impact of this new standard on the Fund's financial statements.
4.
Critical accounting estimates and judgments: In preparing these financial statements, the Manager has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively. The most significant accounting judgment and estimate that the Fund has made in preparing the financial statements is determining the fair value measurement of derivatives and investments not quoted in an active market, if any. See note 3 for more information on the fair value measurement of the Fund's financial instruments.
31
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
5.
Net changes from financial instruments at FVTPL: Net changes in fair value on financial assets and financial liabilities at FVTPL are presented in the statements of comprehensive income and are comprised of the following: net realized gain (loss) on sale of investments, net change in unrealized appreciation (depreciation) of investments, interest income for distribution purposes and dividends. Their classifications between held for trading and designated at fair value are presented in the following table: Total income 2015 2014 Financial assets at FVTPL: Designated at inception
6.
$ 17,346,873
$ 8,145,323
Brokerage commissions: Brokerage commissions on portfolio transactions may also include research services provided to the Sub-Advisors. The value of the research services paid to certain brokers for the years ended December 31, 2015 and 2014 was nil.
7.
Securities lending: The Fund lends portfolio securities from time to time in order to earn additional income. The Fund has entered into a securities lending program with Bank of New York Mellon. The aggregate market value of all securities cannot exceed 50% of the net assets attributable to holders of redeemable units of the Fund. The Fund receives collateral in the form of debt obligations of the Government of Canada and any other Sovereign States and Canadian provincial governments, against the loaned securities. The Fund maintains a minimum collateral requirement of 102% for North American equities and 105% for Non-North American equities of the market value of the loaned securities during the period of the loan. As at December 31, 2015, certain securities shown in the statements of financial position with a market value of $10,170,957 (2014 - $4,207,939) had been loaned as part of the securities lending program. The counterparty has pledged securities with a market value of $10,748,216 (2014 - $4,426,219) as collateral for such loans. Under the terms of the program, the Fund may instruct that securities be returned within three days.
32
ACADIAN CORE INTERNATIONAL EQUITY FUND Notes to Financial Statements (continued) Years ended December 31, 2015 and 2014
8.
Related party transactions and fund expenses: The Manager administers and regulates the day-to-day operations of the Fund. In return for the services provided, the Manager receives management fees from the Fund's holders of redeemable units, based on the NAV of the Fund. These management fees are paid either by a redemption of units or the unitholder, if an institution, may be invoiced and payment will be delivered to the Manager. Integra Capital Limited and its parent company Integra Capital Management Corporation allocate various operating costs to the Fund. These expenses include a portion of the expenses related to trust accounting, compliance, fund accounting and administration functions that are performed by the Manager and its parent company on behalf of the Fund. These costs are reported in the operating expenses of the Fund reported in the statements of comprehensive income. The Fund is responsible for its operating expenses relating to the carrying on of its business, including custodial services, legal, Independent Review Committee fees, audit fees, transfer agency services relating to the issue and redemption of units, and the cost of financial and other reports in compliance with all applicable laws, regulations and policies. The Manager pays for such expenses on behalf of the Fund, except for certain expenses such as interest and taxes, and is then reimbursed by the Fund. The Manager at its discretion may agree to waive or absorb certain expenses associated with the Fund. For the year ended December 31, 2015, expenses absorbed by the Manager in the amount of nil (2014 - nil) are shown in the statements of comprehensive income. Such absorption or waiver, where applicable, may be terminated by the Manager at any time without notice. The Independent Review Committee (the "IRC") for the Fund consists of three industry professionals, none of whom have an interest in the Fund Manager or have an interest in the Fund outside of their roles as members of the IRC. For the year ended December 31, 2015, the fees paid to the IRC are disclosed in the statements of comprehensive income in the amount of $10,000 (2014 - $8,340). Employees of the Manager may hold interests in the Fund via the Company's group retirement plan or through a broker. However, the employees' interests cumulatively represent less than 5% of the Fund's outstanding units.
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