Celernus Absolute Growth Fund Financial Statements · Cash flows from financing activities Proceeds from issuance of redeemable units Amounts paid on redemption of redeemable units

Celernus Absolute Growth Fund Financial Statements

For the year ended December 31, 2014

Celernus Absolute Growth Fund Financial Statements For the year ended December 31,2014

Independent Auditor's Report

Financial Statements

Contents

2

Statements of Financial Position 3

Statements of Comprehensive Income 4

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units 5

Statements of Cash Flows 6

Schedule of Investment Portfolio 7 - 8

Notes to Financial Statements 9 - 22

1800

To the Unitholders of

Tel: 905 639 9500 Fax: 905 633 4939 Toll·free: 8882362383 www.bdo.ca

Celernus Absolute Growth Fund

BOO Canada LLP 3115 Harvester Road, Suite 400 Burlington ON l7N 3N8 Canada

Independent Auditor's Report

We have audited the accompanying financial statements of Celernus Absolute Growth Fund (the "Fund"), which comprise the statements of financial position as at December 31, 2014, December 31 , 2013 and January 1, 2013, and the statements of comprehensive income, changes in net assets attributable to holders of redeemable units and cash flows for the years ended December 31,2014 and December 31, 2013, and 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 f ree from material misstatement, whether due to fraud or error.

Auditor's 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 audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund'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 Fund'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 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 the Fund as at December 31 , 2014, December 31,2013 and January 1, 2013 , and its financial performance and its cash flows for the yea rs ended December 31, 2014 and December 31, 2013, in accordance with International Financial Reporting Standards.

Chartered Professional Accountants, Licensed Public Accountants Burlington , Ontario March 31, 2015

2

BOO Canada lLP, ill Canadian limited liability partne!;hlp. IS a member of BOO International limited. a UK company limned by guarantee, and forms part of the international BOO

network of independent membef" firms.

Celernus Absolute Growth Fund Statements of Financial Position

December 31 December 31 2014 2013

Assets

Current assets Cash and cash equivalents $ - $ 1,786,423 Investments at fair value 36,617,384 23,526,350 Interest and dividends receivable 20,831 90,196 Due from related party (Note 5) 1,250,000 Subscriptions receivable

Total assets 37,888,215 25,402,969

Liabilities

Current liabilities Margin account (Note 6) 5,900,158 Accounts payable and accrued liabilities 48,009 175,697

Total liabilities (excluding net assets attributable to holders of redeemable units) 5,948,167 175,697

Net assets attributable to holders of redeemable units $ 31,940,048 $ 25,227,272

Number of redeemable units outstanding (Note 7) 2,597,089 2,092,514

Net assets attributable to holders of redeemable units per unit $ 12.30 $ 12.06

On behalf of the Fund, by the manager, Celernus Investment Partners Inc.

________________ Director

The accompanying notes are an integral part of these financial statements. 3

January 1 2013

$ 2,072,544 10,434,035

10,980

197,500

12,715,059

29,272

29,272

$ 12,685,787

1,272,195

$ 9.97

Celernus Absolute Growth Fund Statements of Comprehensive Income

For the ~ears ended December 31 2014

Income Interest $ 389,728 Dividends 223,101 Net realized gain on sale of investments 3,594,823 Net change in unrealized appreciation

(depreciation) of investments (569,112) Unrealized foreign currency loss (699,373)

2,939,167

Expenses Interest 247,351 Management fees (Note 8) 273,632 Operating expenses 116,806 Performance fees (Note 8) 595,316

1,233,105

Increase in net assets attributable to holders of redeemable units $ 1,706,062

Increase in net assets attributable to holders of redeemable units eer unit ~Note 11l $ 0.73


2013 (Note 13)

$ 192,877 185,012 995,944

4,361,664 (519,855)

5,215,642

160,188 189,459 98,904

1,041,741

1,490,292

$ 3,725,350

$ 2.09

Celernus Absolute Growth Fund Statements of Changes in Net Assets Attributable

to Holders of Redeemable Units

For the years ended December 31

Net assets attributable to holders of redeemable units, beginning of year (Note 13)

Increase in net assets attributable to holders of redeemable units

Distributions to holders of redeemable units

Redeemable unit transactions Proceeds from redeemable units issued Redemption of redeemable units Reinvestments of distributions to holders of redeemable units

Net increase in net assets attributable to holders of redeemable units for the year

Net assets attributable to holders of redeemable units, end of year

2014 2013 (Note 13) (Note 13)

$ 25,227,272 $ 12,685,787

1,706,062

(1,068,647)

6,377,546 (1,370,832)

1,068,647

6,075,361

6,712,776

3,725,350

10,092,591 (1,276,456)

8,816,135

12,541,485

$ 31,940,048 $ 25,227,272


Celernus Absolute Growth Fund Statements of Cash Flows

For the years ended December 31

Cash flows from operating activities Increase in net assets attributable to holders of

redeemable units Adjustments for non-cash items:

Foreign exchange loss Net realized gain on sale of investments Change in unrealized appreciation (depreciation)

of investments Purchase of investments Proceeds on disposal of investments Interest and dividends receivable Subscriptions receivable Accounts payable and accrued liabilities

Cash flows from investing activity Advances to related party

Cash flows from financing activities Proceeds from issuance of redeemable units Amounts paid on redemption of redeemable units Advances in margin account

Foreign exchange loss on cash and cash equivalents

Net decrease in cash and cash equivalents during the year

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

2014

$ 1,706,062

699,373 (3,594,823)

569,112 (82,247,158) 72,181,835

69,365

(127,688)

(10,743,922)

(1,250,000)

6,377,546 (1,370,832) 5,900,158

10,906,872

(699,373)

(1,786,423)

1,786,423

$ -


2013

$ 3,725,350

519,855 (995,944)

(4,361,664) (37,515,171 ) 29,780,464

(79,216) 197,500 146,425

(8,582,401 )

10,092,591 (1,276,456)

8,816,135

(519,855)

(286,121)

2,072,544

$ 1,786,423

Celernus Absolute Growth Fund Schedule of Investment Portfolio

December 31 z 2014

Limited Partnership Units 7.83 % (Note 4) No. of Units/Shares

Name Avg. Cost ($) % of Net

Fair Value ($) Asset Value

100 Celernus London LP 215001000 215001000 7.83

Common Shares

Canadian Equities 1.880/0 60,000 2401318 Ontario Inc. 60,000 18,000 West jet Airlines L TD-VTG 519,577 599,580 1.88

600,000 WTS-BioExx Spclty 22JUL 15 5791577 5991580 1.88

Ireland Equities 5.59% 2,900 Actavis PLC 881,392 866,675 2.71 8,000 Mallinckrodt PLC 8001014 9181706 2.88

11681 1406 1 a1851381 5.59

United States Equities 99.34 % 42,900 Alcoa Inc. 777,955 786,339 2.46

3,580 Alexion Pharmaceuticals Inc. 659,894 768,833 2.41 16,800 American Airlines Group Inc. 756,897 1,045,232 3.27 6,900 Apple Inc. 809,074 883,958 2.77

15,100 Catamaran Corp. 817,085 907,963 2.84 11,700 Celanese Corporation Series-A 783,880 813,847 2.55 12,800 Citi Group Inc. 651,601 709,944 2.22 4,800 Costar Group Inc. 881,871 1,022,039 3.20 9,470 CVS Caremark Corp. 459,804 1,058,076 3.31

12,000 Darden Restaurants Inc. 655,143 816,478 2.57 17,400 Delta Air Lines Inc. 621,922 992,735 3.11 30,000 E-Trade Financial Corp. 711,176 843,973 2.64 22,100 East West Bancorp Inc. 918,366 992,711 3.11

6,200 Hanes Brands Inc. 797,186 802,840 2.51 9,800 HCA Holdings Inc. 769,378 834,483 2.61

16,000 Hexcel Corp. 698,597 769,935 2.41 4,200 lIIumina Inc. 769,144 899,790 2.82

26,000 Ingram Micro Inc. 809,535 833,393 2.61 17,400 Intel Corp. 665,538 732,541 2.29

3,600 Intercontinental Exchange 906,149 915,959 2.87 9,450 IPG Photonics Corp. 714,138 821,344 2.57

33,600 Jabil Circuit Inc. 723,809 850,530 2.66 5,000 Jones Lang Lasalle Inc. 787,736 870,597 2.73

11,800 Lifepoint Hospitals Inc. 896,566 984,526 3.08 12,400 Lincoln National Corp. 708,994 829,597 2.60 6,000 Lowes Companies Inc. 436,780 478,889 1.50

21,400 Micron Technology Inc. 734,278 869,411 2.72 3,900 Nike Inc. - Class B 435,454 434,839 1.36

36,300 Nvidia Corp. 750,502 844,338 2.64 10,400 Paccar Inc. 787,124 820,905 2.57 5,000 Pharmacyclics Inc. 649,938 709,169 2.22


Celernus Absolute Growth Fund Schedule of Investment Portfolio

December 31,2014

No. of Units/Shares Name Avg. Cost ($) Fair Value ($)

United States Equities (Continued) 34,000 Polycom Inc. 477,012 532,486 13,670 Raymond James Financial Inc. 801,408 908,537 14,300 Robert Half International Inc. 915,668 968,989 6,700 Signature Bank Inc. 888,517 978,501

36,500 Steel Dynamics, Inc. 890,657 835,864 5,950 Union Pacific Corp. 660,648 822,306

24,170 Veeva Systems Inc. Class - A 6981757 7401526 2718781181 31 1732A23

Transaction costs (24z440} Total investments 3216141724 36,617,384

Other net assets (4.677.336} Net Assets Attributable to Holders of

Redeemable Units 31 19401048


% of Net Asset Value

1.67 2.84 3.03 3.06 2.62 2.57 2.32

99.34

114.64 (14.64}

100.00

December 31,2014

1. The Fund

Celernus Absolute Growth Fund Notes to Financial Statements

Celernus Absolute Growth Fund (the "Fund") is a unit trust which was established on January 24, 2012 by a Trust Indenture under the laws of the Province of Ontario. The principal address of the Fund is 1300 Cornwall Road, Suite 204, Oakville, Ontario, L6J 7W5. The Fund is offered pursuant to prospectus exemptions to qualified investors in Canada, and offshore. In Canada investors must be "accredited investors", or purchase a sufficient amount of the Funds to qualify for a prospectus exemption. The minimum purchase amount for accredited investors or other exempt investors is $25,000.

The Fund aims to provide investors absolute returns over time using extensive quantitative, fundamental and technical research combined with proprietary macro market model to identify opportunities and manage risk. The Fund will be long and. short primarily North American equities. It may utilize futures or other derivative products to hedge equity market or currency risk.

Celernus Investment Partners Inc. (the "Manager") is the manager and portfolio adviser of the Fund.

The Fund is not a reporting issuer under securities legislation and therefore is relying on Part 2.11 of National Instrument 81-106 ("NI 81-106") for exemption from the requirement to file financial statements with the applicable securities regulatory authorities.

These financial statements for the year ended December 31, 2014 were authorized for issue by the Manager on March 31, 2015.

2. Basis of Presentation and Adoption of IFRS

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of annual financial statements, including IFRS 1, Firsttime Adoption of International Financial Reporting Standards. The Fund adopted this basis of accounting in 2014 as required by Canadian securities legislation and the Canadian Accounting Standards Board. Previously, the Fund prepared its financial statements in accordance with Canadian generally accepted accounting principles as defined in Part V of the CPA Handbook ("Canadian GAAplI). The comparative information has been restated from Canadian GAAP to comply with IFRS. The Fund has consistently applied the accounting policies used in the preparation of its opening IFRS Statement of Financial Position at January 1, 2013, and throughout all periods presented, as if these policies had always been in effect. Note 13 discloses the impact of the transition to IFRS on the Fund's reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting pOlicies from those used in the Fund's financial statements for the year ended December 31,2013 prepared under Canadian GAAP.

Basis of Measurement The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss, and are presented in Canadian dollars, which is the Fund's functional and presentation currency.

9

December 31,2014

3. Significant Accounting Policies


The following summarizes the accounting policies of the Fund:

Valuation of Investments The fair value of financial assets and financial liabilities traded in active markets (such as publicly traded derivatives and trading securities) is based on quoted market prices. In accordance with the provisions of the Fund's Offering Memorandum, investment positions are valued based on the last traded market price for the purpose of determining the net asset value per unit for subscriptions and redemptions. For financial reporting purposes, the Fund uses the last traded market price for both financial assets and financial liabilities where the last traded price falls within that 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.

Investments in the limited partnership units for which there is no active market are valued at fair value using comparisons with similar instruments for which observable market price exists. The output of the valuation technique is an estimate or approximation of a value that cannot be determined with certainty, and valuation techniques employed may not fully reflect all factors relevant to the positions held by the Fund. Valuations are therefore adjusted where appropriate, to allow for additional factors including liquidity and counterparty risk.

Classification The Fund classifies its investments as financial assets at fair value through profit or loss.

This category has two sub-categories: financial assets held for trading; and financial assets designated at fair value through profit or loss at inception.

(i) Financial assets held for trading A financial asset is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term or if on initial recognition is part of a portfolio of identifiable financial investments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking. Derivatives are also categorized as held for trading.

(ii) Financial assets designated at fair value through profit or loss at inception Financial assets designated at fair value through profit or loss at inception are financial instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Fund's documented investment strategy.

In accordance with exception under IFRS 10 Consolidated Financial Statements, the Fund does not consolidated subsidiaries in the financial statements. Investments in the subsidiaries are accounted for as financial instruments at fair value through profit or loss.

The Fund recognizes financial instruments at fair value upon initial recognition, plus transaction costs in the case of financial instruments measured at amortized cost. Regular way purchases and sales of financial assets are recognized at their trade date. The Fund's investments have been designated at fair value through profit or loss (FVTPL). The Fund's obligation for net assets attributable to holders of redeemable units is presented at the redemption amount.

10

December 31,2014


3. Significant Accounting Policies (Continued)

Classification (continued) Cash and cash equivalents, interest and dividends receivable, due from ~elated party, subscriptions receivable, margin account and accounts payable and accrued liabilities are measured at amortized cost. Under this method, the amount required to be received or paid, is discounted, when appropriate, at the contract's effective interest rate. The Fund's accounting policies for measuring the fair value of its investments and derivatives are identical to those used in measuring its net asset value (Trading NAV) for transactions with unitholders.

Fair Value Measurements The Fund's investments held are each classified into one of three fair value levels.

The hierarchy of inputs is summarized below: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 ); • Inputs other than quoted prices included in Level 1 that are observable for the asset or

liability, either directly (Le., as prices) or indirectly (Le., derived from prices) (Level 2); and

• Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The Fund's investments in common shares were classified as Level 1 at December 31,2014, December 31, 2013 and January 1, 2013, and the Fund's investments in limited partnership units were classified as Level 3 at December 31,2014.

Investment Transactions and Income Recognition Investment transactions are accounted for on the trade date and any unsettled sales or purchases of investments are reflected as receivable for investment securities sold or payable for investment securities purchased. Interest income is accrued daily and dividend income is recognized on the ex-dividend date. Realized gains and losses from investment transactions are calculated as the difference between the proceeds and average cost of the investments. The unrealized appreciation (depreciation) of investments are calculated as the difference between the fair value and average cost of the investments.

Offsetting Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the Statements of Financial Position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. In the normal course of business, the Fund enters into various master netting agreements or similar agreements that do not meet the criteria for offsetting in the Statements of Financial Position, but still allows for the related amounts to be offset in certain circumstances.

Recognition/decrecognition The Fund recognizes financial assets or financial liabilities deSignated as trading securities on the trade date, the date it commits to purchase or sell short the instruments. From this date, any gains and losses arising from changes in fair value of the assets or liabilities are recognized in the Statements of Comprehensive Income.

11

December 31,2014



Recognition/decrecognition (continued) Other financial assets are derecognized only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Fund derecognizes financial liabilities when the Fund's obligations are discharged, cancelled or they expire. Financial liabilities ariSing from the redeemable units issued by the Fund are presented at the redemption amount representing the investors' right to a residual interest in the Fund's assets.

Impairment of Financial Assets The Fund assesses at each reporting date whether a financial asset or group of financial assets measured at amortized cost is impaired. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's amortized cost and the present value of estimated future cash flows discounted using the asset's original effective interest rate. Impairment losses on assets measured at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

Translation of Foreign Currencies Transactions in currencies other than the Canadian dollar are translated at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in currencies other than the Canadian dollar are translated at the applicable exchange rates prevailing at the reporting date. Resulting exchange differences are recognized in the Statements of Comprehensive Income.

Valuation of the Redeemable Units The Fund's units are issued and redeemed at the net asset value per unit, which is determined on a daily basis as of the close of business. The net asset value per unit of the Fund is determined by dividing the total market value of the Fund's net assets by the number of units outstanding.

Net asset value per unit for each class is calculated at 4:00 p.m. (Eastern time) each business week by dividing the net assets of each class by its outstanding units. The net assets of each class is computed by calculating the value of that class's proportionate share of the Fund's assets less that class's proportionate share of the Fund's common liabilities, and less class specific liabilities. Expenses directly attributable to a class are charged to that class while common fund expenses are allocated to each class in a reasonable manner as determined by the Manager. Other income, and realized and unrealized gains and losses, are allocated to each class of the Fund based on that class's pro rata share of total net assets value of the Fund.

For each unit sold, the Fund receives an amount equal to the net asset value per unit on the date of sale, which is included in unitholders' equity. Units are redeemable at the option of the unitholders at their net asset value on the redemption date. For each unit redeemed, the number of issued and outstanding units is reduced and the equity in the Fund is reduced by the related net asset value on the date of redemption.

12

December 31, 2014



Net Assets Attributable to Holders of Redeemable Units per Unit The net assets attributable to holders of redeemable units per unit is calculated by dividing the net assets attributable to holders of redeemable units of a particular class of units by the total number of units of that particular class outstanding at the end of the year.

Increase in Net Assets Attributable to Holders of Redeemable Units per Unit Increase in net assets attributable to holders of redeemable units per unit is based on the increase in net assets attributable to holders of redeemable units attributed to each class of units, divided by the weighted average number of units outstanding of that class during the year.

Income Taxes The Fund qualifies as a unit trust under the Income Tax Act (Canada). All of the Fund's net income for tax purposes and sufficient capital gains realized in any period are required to be distributed to unitholders such that no tax is payable by the Fund. As a result, the Fund does not record income taxes. Since the Fund does not record income taxes, the tax benefit of capital and non-capital losses has not been reflected in the statements of financial position as a deferred income tax asset.

Critical Estimates and Judgments In the application of the Fund's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily available from other sources.

The most significant estimates that the Fund is required to make relate to the fair value of the investment in limited partnership units. The estimates may include: assumptions regarding local real estate market conditions; interest rates and the availability of credit; cost and terms of financing; the impact of present or future legislation or regulation; prior encumbrances and other factors affecting the limited partnership and underlying assets held by the limited partnership.

These assumptions are limited by the availability of reliable comparable data, economic uncertainty, ongoing geopolitical concerns and the uncertainty of predictions concerning the future events. Credit markets, equity markets and consumer spending are factors in the uncertainty inherent in such estimates and assumptions. Accordingly, by their nature, estimates of fair value are subjective and do not necessarily result in precise determinations. Should the underlying assumptions change, the estimate fair value could change by a material amount.

The Fund has concluded that the unlisted limited partnership in which it invests, but that it does not consolidate, meets the definition of structured entity because: the voting rights in the limited partnership is not dominate rights in deciding who controls it as it relates to administrative tasks only; the limited partnership's activities are restricted by the limited partnership agreement; and the limited partnership has narrow and well-defined objectives to provide investment opportunities to investors.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects that period, or in the period of the revision and future periods if the revision affects both current and future periods.

13

December 31,2014



New Standards, Interpretations and Amendments not yet Adopted The following new standards and amendments to existing standards were issued by the International Accounting Standards Board ("lASS"):

The final version of IFRS 9, Financial instruments, was issued by the lASS in July 2014 and will replace lAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a model for classification and measurement, a single, forward-looking 'expected loss' impairment model and a substantially reformed approach to hedge accounting. The new single principle based approach for determining the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments, which will require more timely recognition of expected credit losses. It also includes changes in respect of own credit risk in measuring liabilities elected to be measured at fair value, so that gains caused by the deterioration of an entity's own credit risk on such liabilities are no longer recognized in profit or loss. IFRS 9 is effective for annual periods beginning on or after January 1, 2018; however, is available for early adoption. In addition, the own credit changes can be early applied in isolation without otherwise changing the accounting for financial instruments. The Fund is in the process of assessing the impact of IFRS 9 and has not yet determined when it will adopt the new standard.

IFRS 15, Revenue from Contracts with Customers, is based on the core prinCiple to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 focuses on the transfer of control. IFRS 15 replaces all of the revenue guidance that previously existed in IFRSs. The effective date of IFRS 15 is January 1, 2017. The Fund is in the process of evaluating the impact of the new standard.

Adoption of New Standards

Amendments to lAS 32 Offsetting Financial Assets and Financial Liabilities The amendments are effective for annual periods beginning on or after January 1, 2014. These amendments clarify the offsetting criteria in lAS 32 and address inconsistencies in their application. This includes clarifying the meaning of 'currently has a legally enforceable right of set-off' and that some gross settlement systems may be considered equivalent to net settlement. The amendments did not have any impact on the Fund's financial position or performance.

14

December 31,2014


4. Reconciliation of Level 3 Fair Value Measurements of Financial Assets

Limited partnership units, beginning of year Units purchased

Limited partnership units, end of year

2014 2013

$ - $ 2,500,000

$ 2,500,000 $

There were no transfers into or out of Level 3 for the years ending December 31, 2014 or 2013.

5. Related Party Transactions

As at December 31,2014,144,612 (December 31,2013 -156,056, January 1,2013 -165,018) units of the Fund were held by directors or immediate family members of the Manager. The market value of these units is approximately $1,778,499 (December 31, 2013 - $1,881,402, January 1, 2013 - $1,645,492).

The Fund has a loan receivable from the Celemus Mortgage Income and Trust Fund, which is related through common management. The loan bears interest at 3.00% per annum, is unsecured and is due on demand. During the year, interest income of $15,563 was earned from the related fund.

6. Margin Account

The Fund maintains a margin account with which it is able to borrow to purchase securities up to 70% of the value of the securities. Interest is charged on borrowings at the US federal funds rate plus 1.10%. The borrowings are secured by the purchased securities.

7. Redeemable Units

The Fund may issue an unlimited number of units of each class. The Units of the Fund shall be issued without nominal or par value and shall be issued as fully paid and non-assessable and voting. Each Unit of the Fund shall represent an undivided beneficial interest in the assets of the Fund, Units are non-transferable, no Unit shall have any conversion, exchange or preemptive right. Each Unit shall entitle the holder thereof to participate equally with respect to all payments made to Unitholders of the Fund whether by way of interest, dividend or capital and, on liquidation, to participate equally in the net assets of the Fund remaining after satisfaction of all outstanding liabilities.

15

December 31,2014

7. Redeemable Units (Continued)


Each Unitholder of the Fund shall be entitled at any time and from time to time, to require the Fund to redeem all or any of his or her Units by giving written notice to the Manager. Such notice shall contain a clear request that a specified number or dollar amount of Units be redeemed, shall be irrevocable and the signature thereon shall be guaranteed by a Canadian chartered bank, a trust company or an investment dealer if required by the Manager. The redemption of Units in respect of which a duly completed redemption request has been received by the Manager at least five (5) days prior to a Valuation Day will be redeemed on such Valuation Day and, in all other cases, will be redeemed on the second Valuation Day following the day on which such redemption request was received by the Manager. The Manager may, in its sole discretion, waive the foregoing five (5) day notice requirement in respect of any redemption request. There are 2,597,089 units issued and outstanding as of December 31,2014 (December 31,2013 - 2,092,514, January 1,2013 - 1,272,195).

The Manager may instruct the Trustee to suspend the right of Unitholders to require the Fund to redeem Units and the obligation of the Trustee to make payment; therefore, during a designated period in which normal trading is suspended on any exchange on which any security owned or held by the Fund is traded, provided that such right shall not be suspended unless securities owned by the Fund and representing, in the aggregate, more than 50% by value of the total assets of the Fund without allowance for liabilities are listed or traded on any such exchange and are not traded on any exchange on which normal trading is not suspended, or during any period in which the Manager determines that conditions exist which render impractical the sale of the assets of the Fund or impair the ability of the Manager to determine the value of the assets held by the Fund. The Manager has a general discretion to instruct the Trustee to suspend the right of Unitholders to require the Fund to redeem Units and the obligation of the Trustee to make payment therefore in any event where the Manager determines that processing such redemption(s) will have a material negative effect on the Fund. The Trustee shall, at the direction of the Manager, apply the suspension to all requests for redemption received prior to the suspension but as to which payment has not been made, as well as to all requests received while the suspension is in effect.

All Unitholders making such requests shall (unless the suspension lasts for less than 48 hours) be given notice by the Manager advising of the suspension, that redemptions will be effected on the basis of the Net A~set Value Per Unit determined on the first Valuation Day following the termination of the suspension and that they have the right to withdraw their requests for redemption prior to the termination of the suspension. Any declaration of suspension or termination of suspension made by the Manager shall be final and conclusive. Notwithstanding the foregoing, the suspension shall terminate in any event on the first Business Day after the circumstances which gave rise to the suspension cease to exist.

The Manager reserves the right to instruct the Trustee to withhold the amount of four per cent (4%) from redemption proceeds payable to a Unitholder in the event the redemption request is made during the first 12 months after acquisition of the Units being redeemed.

Units issued and outstanding represent the capital of the Fund. The Fund does not have any specific capital requirements on the subscription and redemption of units, other than minimum subscription requirements. Changes in the Fund's capital during the period are reflected in the Statements of Changes in Net Assets.

The Manager is responsible for managing the capital of the Fund in accordance with their investment objectives and in managing their liquidity in order to meet redemption requests.

16


December 31,2014

7. Redeemable Units (Continued)

There are no differences between the NAV per unit of the Fund and Net Assets Attributable to Holders of Redeemable Units per Unit of the Fund.

Summary of sale and redemption of redeemable units for the years ended December 31:

Redeemable units outstanding, beginning of year Redeemable units issued Redeemable units issued on reinvestment Redeemable units redeemed

Redeemable units outstanding, end of year

8. Management Fees and Expenses

2014 2013

2,092,514 527,149 90,076

(112,650)

2,597,089

1,272,195 936,923

(116,604)

2,092,514

The Fund pays the Manager an annual management fee of 0.85% of the NAV of the Fund, which is calculated and charged to the Fund monthly. The Fund is responsible for the payment of all fees and expenses relating to its operations, including record keeping, audit, accounting and administrative costs, legal fees, custody and safekeeping charges, bank charges and interest expenses, brokerage commissions and other fees relating to the purchase and sale of assets of the Fund.

The Manager is also entitled to receive a performance fee of 20% of the change in NAV of the Fund between a new high-water mark and the. previous high-water mark for which a performance fee was earned by the Manager and charged to the Fund. A performance fee will only be earned at such time as the compound annual return of the Fund is greater or equal to 6%. Performance fees of $595,316 (2013 - $1,041,741) were earned during the year.

9. Financial Instruments and Risk Management

Financial Risk Factors The Fund may be exposed to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk, currency risk, and other price risk). The level of risk depends on the Fund's investment objectives and the type of securities it invests in. The Schedule of Investment Portfolio presents the investments held by the Fund as at December 31, 2014, and group the investments by asset type, geographic region and/or market segment.

Cash and cash equivalents, subscriptions receivable, interest and dividends receivable, due from related party, margin account and accounts payable and accrued liabilities are carried at amortized cost; their carrying values are a reasonable approximation of fair value.

17


December 31,2014

9. Financial Instruments and Risk Management (Continued)

The following is a summary of the Fund's main risks:

Credit Risk Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with a fund. The Fund does not have a Significant credit risk exposure as at December 31,2014, December 31,2013 and January 1, 2013. The risk of default on transactions in listed securities is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase when the securities have been received by the broker.

Liquidity Risk Liquidity risk is defined as the risk that the Fund may not be able to settle or meet its obligations on time or at a reasonable price. The Fund is exposed to weekly cash redemptions of redeemable units.

The Units of the Fund are issued and redeemed on demand at the then current Trading NAV per unit at the option of the Unitholder. All liabilities are payable within a year. The Fund's assets are invested in securities that are traded in an active market and can be readily disposed of as liquidity needs arise.

December 31,2014 Financial liabilities Margin account Accounts payable and accrued liabilities Redeemable units

December 31,2013 Financial liabilities Margin account Accounts payable and accrued liabilities Redeemable units

January 1, 2013 Financial liabilities Margin account Accounts payable and accrued liabilities Redeemable units

Interest Rate Risk

On demand $ 5,900,158 $

31,940,048 $ 37 ,840,206 $

On demand $ - $

25,227,272 $ 25,227,272 $

On demand $ - $

12,685,787 $ 12,685,787 $

< 3 months

- $ 48,009

48,009 $

< 3 months - $

175,697

175,697 $

< 3 months - $

29,272

29,272 $

Total 5,900,158

48,009 31,940,048 37,888,215

Total

175,697 25,227,272 25,402,969

Total

29,272 12,685,787 12,715,059

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values of financial instruments. The Fund is exposed to interest rate risk from its margin account, which bears interest at a floating interest rate of the United States federal funds rate plus 1.10%. The objective of the Fund's interest rate management activities is to minimize the volatility of the Fund's earnings.

18

December 31,2014


9. Financial Instruments and Risk Management (Continued)

Currency Risk Currency risk arises from financial instruments (including cash and cash equivalents) that are denominated in a currency other than Canadian dollars. Exposures to foreign currencies as at December 31, 2014, December 31, 2013 and' January 1, 2013 are summarized in the table below:

% of Net Assets Attributable to

Non- Total Holders of Currency Monetary Monetary Exposure Redeemable Units

December 31, 2014

U.S. Dollar $ POI639,393~ $ 3315171804 $ 2.8781411 9.01%

December 31.2013

U.S. Dollar $ '12.317.576~ $ 15,609,452 $ 3,291,876 13.05%

January 1. 2013

U.S. Dollar $ ,8.830, 724~ $ 9.020.360 $ 189.636 1.49%

If the exchange rate with the Canadian dollar increased or decreased by 5%, with all variables held constant, net asset attributable to holders of redeemable units would have increased or decreased. respectively, by approximately $143,920 (December 31, 2013 - $164.594, January 1, 2013 - $9,482). Actual results may differ from this sensitivity analysis and the difference could be material.

Other Price Risk Other price 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 those changes are caused by factors specific to the individual financial instrument or it's issuer, or factors affecting all similar financial instruments traded in a market. All investments present a risk of loss of capital. The Manager manages the Fund's market risk on a daily basis in accordance with the Fund's investment objective and policies. The maximum risk resulting from financial instruments is equivalent to their f~ir value.

The impact on net assets attributable to holders of redeemable units of the Fund due to a 5% change in market value as at December 31. 2014, with all other variables held constant, is $1,830,869 (December 31, 2013 - $1,176,318, January 1, 2013 - $634,289). In practice, the actual results may differ and the difference could be material.

19

December 31,2014

10. Capital Management


The capital of the Fund is represented by issued redeemable units with no par value. The Unitholders are entitled to distributions, if any, and to payment of a proportionate unit of the Fund's net asset value per unit upon redemption. The relevant movements of Fund units are shown on the Statements of Changes in Net Assets Attributable to Holders of Redeemable Units. In accordance with its investment objectives and strategies and the risk management practices outlined in Note 9, the Fund endeavours to invest the subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions, such liquidity being augmented by disposal of investments where necessary.

11. Increase in Net Assets Attributable to Holders of Redeemable Units per Unit

The increase in net assets attributable to holders of redeemable units per unit for the years ended December 31,2014 and 2013 is calculated as follows:

2014

2013

Increase in net assets attributable to holders

of redeemable units

$ 1,706,062

3,725,350

Weighted average of redeemable units outstanding

during the year

2,332,244

1,784,476

12. Involvement with Unconsolidated Structured Entity

Increase in net assets attributable to holders of

redeemable units per unit

$ 0.73

2.09

The Fund has determined that the Limited Partnership in which it owns 100% of the issued and outstanding limited partnership units, is an unconsolidated structured entity. This represents a significant judgment by the Fund and generally because decision making about the Limited Partnership's investing activities is not governed by voting rights held by the Fund and other investors.

The Limited Partnership finances its operations by issuing redeemable units which are puttable at the holder's option, and entitle the holder to a proportional stake in the Limited Partnership's net assets. The Fund holds redeemable shares in the Limited Partnership.

The change in fair value of the Limited Partnership is included in the Statements of Comprehensive Income in 'Net gains!(losses) on financial instruments held at fair value through profit or loss'.

During the year, the Fund did not provide financial support the unconsolidated structured entity and has no intention of providing financial or other support.

20

December 31,2014

13. Transition to IFRS


The effect of the Fund's transition to IFRS is summarized as follows:

Transition Elections The only voluntary exemption adopted by the Fund upon transition was the ability to designate a financial asset or financial liability at fair value through profit or loss upon transition to IFRS. All financial assets designated at FVTPL upon transition were previously carried at fair value under Canadian GMP as required by Accounting Guideline 18, Investment Companies.

Statement of Cash Flows Under Canadian GMP, the Fund was exempt from providing a statement of cash flows. lAS 1 requires that a complete set of financial statements include a statement of cash flows for the current and comparative periods, without exception.

Reconciliation of Equity and Comprehensive Income as Previously Reported Under Canadian GAAP to IFRS

Equity Equity as reported under Canadian GMP Revaluation of investments at FVTPL

Net assets attributable to holders of redeemable units

Comprehensive income Comprehensive income as reported under

Canadian GMP Revaluation of investments at FVTPL

Increase in net assets attributable to holders of redeemable unit

Classification of Redeemable Units Issued by the Fund

December 31 2013

January 1 2013

$ 25,230,683 $ 12,681,376 (3,411) 4,411

$ 25,227,272 $ 12,685,787

December 31 2013

$ 3,733,172 (7,822)

$ 3,725,350

Under Canadian GMP, the Fund accounted for its redeemable units as equity. Under IFRS, lAS 32 requires that units or shares of an entity which include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset be classified as a financial liability. The Fund's units do not meet the criteria in lAS 32 for classification as equity and, therefore, have been reclassified as financial liabilities on transition to IFRS.

21

December 31,2014

13. Transition to IFRS (Continued)

Revaluation of Investments at FVTPL


Under Canadian GAAP, the Fund measured the fair values of its investments in accordance with Section 3855, Financial Instruments - Recognition and Measurement, which required the use of bid prices for long positions and ask prices for short positions, to the extent such prices are available. Under IFRS, the Fund measures the fair values of its investments using the guidance in IFRS 13, Fair Value Measurement (IFRS 13), which requires that if an asset or a liability has a bid price and an ask price, then its fair value is to be based on a price within the bid-ask spread that is most representative of fair value. It also allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid-ask spread. As a result, upon adoption of IFRS, an adjustment was recognized to increase (decrease) the carrying amount of the Fund's investments by $(3,411) at December 31, 2013 and $4,411 at January 1, 2013. The impact of this adjustment was to restate the Fund's increase in net assets attributable to holders of redeemable units by $(7,822) for the year ended December 31, 2013.

In addition, other statements presented have been renamed as follows:

Canadian GAAP Statements of Net Assets Statements of Operations Statements of Changes in Net Assets

Statement of Investment Portfolio

IFRS Statements of Financial Position Statements of Comprehensive Income Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Schedule of Investment Portfolio

22

Celernus Absolute Growth Fund Financial Statements · Cash flows from financing activities Proceeds from issuance of redeemable units Amounts paid on redemption of redeemable units

Documents