Interim MRFP - Marquest Asset Management Inc.

Transcription

MARQUEST MUTUAL FUNDS INC.
EXPLORER SERIES FUND
INTERIM MANAGEMENT REPORT OF
FUND PERFORMANCE
Period ended June 30, 2016
INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE 2016
MARQUEST MUTUAL FUNDS INC. - EXPLORER SERIES FUND
INTERIM MANAGEMENT REPORT OF FUND PERFORMANCE | For the Period Ended June 30, 2016
A NOTE ON FORWARD-LOOKING STATEMENTS
This report contains forward looking statements. These statements primarily relate to assessments of future economic and
market conditions. Such information has been included to assist readers with assessing recent developments in the Fund’s
operating climate and possible future developments that may affect Fund performance. All forward looking statements are
based on management’s current beliefs and assumptions which are subject to numerous risks and uncertainties. Statements
with respect to future economic and market conditions are based on management’s beliefs and assumptions with respect to
a range of factors, including market conditions generally and within the sectors in which the Fund’s investments operate.
While management considers such beliefs and assumptions to be reasonable based on information currently available to it,
no assurance can be given that such beliefs and assumptions will prove to be correct. As a result, these forward looking
statements would typically include words such as “anticipates, believes, intended or estimated”. Events or circumstances
may cause actual results to differ materially from those expressed or implied by such forward looking statements as a result
of numerous known and unknown risks and uncertainties, including, but not limited to, those associated with economic and
market conditions, political stability and other risks identified in the Fund’s prospectus. Most of these factors are beyond the
control of the Fund and its Manager. Neither the Fund nor its Manager assumes any obligation to update any of the forward
looking statements made in this report.
This interim management report of fund performance contains financial highlights but does not contain the complete interim
financial statements of the Marquest Mutual Funds Inc. Explorer Series Fund (the “Fund”). You can get a copy of the interim
financial statements at your request, and at no cost, from Marquest Asset Management Inc. (the “Manager”) by calling 1-877777-1541, by writing to us at Suite 4420, 161 Bay Street, PO Box 204, Toronto, Ontario, M5J 2S1 or by visiting our website
at www.marquest.ca or SEDAR at www.sedar.com.
Securityholders may also contact us using one of these methods to request a copy of the Fund’s proxy voting policies and
procedures, proxy voting disclosure record, or quarterly portfolio disclosure.
Management Discussion of Fund Performance
Results of Operations
As at June 30, 2016, the Fund’s total NAV was $9,100,210, an increase of 68.20% since the prior year end (December 2015:
$5,410,397). The change is primarily due to net unrealized appreciation on investments of $2,081,564, net realized gain on
sale of investments of $1,110,127 and net subscriptions of $850,297.
During the period, sales and redemptions were as follows: Series A Rollover $15,102,372 and $14,250,142 respectively
(June 2015: $10,543,349 and $11,304,294); Series A Regular $0 and $2,439 respectively (June 2015: $0 and $0) and Series
F $4,060 and $3,554 respectively (June 2015: $5,251 and $0).
Sales and redemptions of Series A rollover shares are attributable to the rollover of Marquest Mining Québec 2015 - I Super
Flow Through LP, Marquest Mining Québec 2015 - II Super Flow Through LP and Marquest Mining 2015 - I Super Flow
Through LP. For more details please see the “Related Party Transactions” section of the MRFP.
The 52.0% return for the Fund during the first half of 2016 was due to the strong recovery in the resource sector, particularly
in the base metals and gold subsectors, in which the Fund has a significant position. The cash position in the Fund varied
significantly during the first half of 2016 due to the Fund’s liquidity requirements.
Recent Developments
The resource sector troughed in the fourth quarter of 2015 as investors gave up on any potential for a recovery in the
industry. The prevailing negative view at the time was based on concerns about slowing global growth and the abundance of
supply in the commodity markets. Valuations in the resource sector were at historically low levels reflecting the negative
sentiment of investors.
Led by gold bullion, commodity prices started to rally in early 2016, sparking interest in resource equities. During the first half
of 2016, the S&P/TSX Composite Index return was 8.11%, versus the return of the S&P/TSX Cdn. Energy, S&P/TSX Cdn.
Diversified Metals & Mining and the S&P/TSX Global Gold indexes of 17.0%, 66.9% and 95.0%, respectively.
Typically rallies of this magnitude by the resource sector occur prior to a reacceleration in global growth. Subsequent gains in
the resource and cyclical sectors of the equity markets are expected as investors anticipate an improvement in market
fundamentals.
1
Recent Developments (continued)
Taxation of Switch Fund Shares
On March 22, 2016, the federal government announced in its budget that, beginning after September 2016, an exchange of
shares of a mutual fund corporation that results in the holder of such shares switching between funds will be considered for
income tax purposes to be a disposition at fair market value (the “2016 Budget Proposal”). The 2016 Budget Proposal will not
apply to a switch where the shares received in exchange differ only in respect of management fees or expenses to be borne
by investors and otherwise derive their value from the same portfolio or fund within the mutual fund corporation. Accordingly,
if the 2016 Budget Proposal is enacted into law, the conversion by a holder of shares of one Corporate Fund to shares of
another Corporate Fund may result in that holder realizing a capital gain or a capital loss.
On August 3, 2016, the Department of Finance released an updated version of the Legislative Proposals Relating to Income
Tax, Sales Tax and Excise Duties which changed the effective date of the proposal to January 1, 2017.
Related Party Transactions
The Manager of the Fund is responsible for managing all of the Fund’s activities, including investment advisory and portfolio
management services under a Management Agreement. The Management Agreement does not have a fixed termination
date. The Management Agreement may be terminated on 60 days’ notice by the Manager if the Fund is not in breach or
default of its obligations under the Management Agreement or on 30 days’ notice if the Fund is in breach or default of its
obligations. The Manager may only be removed by the Fund if a certain specified events of default have occurred or by an
extraordinary resolution of unitholders. Management fees are paid by the Fund as set out under “Management Fees” below.
During the period, $94,484 in management fees (including HST) was paid to the Manager.
The table below summarizes the rollover transactions into the Fund for the period ended June 30, 2016.
Terminating fund
Marquest Mining Québec 2015 - I Super Flow
Through LP
Marquest Mining Québec 2015 - II Super Flow
Through LP
Marquest Mining 2015 - I Super Flow Through LP
Merger Date
03/31/2016
05/13/2016
06/17/2016
Continuing fund
Explorer Series
Fund
Explorer Series
Fund
Explorer Series
Fund
Series
Net Assets Acquired
Shares
Issued
Exchange
ratio
A-Rollover
$5,365,199
15,207,481
230.7660
A Rollover
$6,483,703
13,892,657
232.6688
A Rollover
$3,251,919
6,935,208
295.9969
During the period the Explorer Series Fund purchased securities pursuant to distributions where Marquest Capital Markets, a
division of Marquest Asset Management Inc. acted as a finder/agent. Marquest Capital Markets received customary advisory
fees of $4,054.95 in respect of such distributions as a result of purchases made by the fund and other arm’s length third
parties. The purchases were conducted in accordance with standing instructions provided by the Fund’s Independent Review
Committee.
2
Financial Highlights
The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's
financial performance for the past five years and the most recent interim period. The information is derived from the Fund’s unaudited
interim and audited annual financial statements.
Marquest Mutual Funds Inc. - Explorer Series Fund (Series A-Rollover)**
Net Assets per Share ($)
Net assets, beginning of the year
(2)
(1)
2016*
2015
2014
2013
2012
2011
0.31
0.59
0.86
2.01
3.37
7.33
0.01
0.01
0.02
0.03
Increase (decrease) from operations:
Total revenue
-
Total expenses
Realized gains (losses) for the year
Unrealized gains (losses) for the year
Total increase (decrease) from operations
(2)
-
(0.02)
(0.04)
(0.05)
(0.07)
(0.14)
(0.24)
0.06
(0.53)
(0.29)
(0.72)
(2.37)
(0.43)
0.11
0.28
0.06
(0.32)
0.97
(3.36)
0.15
(0.29)
(0.27)
(1.10)
(1.50)
(4.00)
Distributions:
From income (excluding dividends)
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
Total annual distributions
(3)
Net assets at December 31st of year shown
-
-
-
-
-
-
-
-
-
-
-
-
0.47
0.31
0.59
0.86
1.94
3.37
Notes:
(1)
This information is derived from the Fund’s audited annual and unaudited interim financial statements. The Fund adopted IFRS on January 1, 2014 and restated the year
ended December 31, 2013 under IFRS. Previously, the Fund prepared its financial statements in accordance with Canadian GAAP. Under Canadian GAAP, the Fund
measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short
positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its investments.
Accordingly, the opening net assets as at January 1, 2013 reflect the adjusted figure in accordance with IFRS.
(2)
Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the weighted
average number of units outstanding over the financial period.
(3)
Distributions were paid in cash or re-invested in additional units of the Fund.
*The financial information is for the six-month period ending June 30, 2016.
**Series A-Rollover shares were first issued on January 15, 2005.
3
Financial Highlights (continued)
Marquest Mutual Funds Inc. - Explorer Series Fund (Series A-Regular)**
Net assets, beginning of the year (2)
(1)
2016*
2015
2014
2013
2012
2011
0.35
0.63
0.92
2.14
3.60
7.67
0.01
0.01
0.03
0.03
Total revenue
-
Total expenses
(2)
-
(0.02)
(0.05)
(0.06)
(0.08)
(0.19)
(0.29)
0.05
(0.56)
(0.33)
(0.79)
(3.37)
(0.52)
0.15
0.32
0.14
(0.31)
1.37
(4.12)
0.18
(0.29)
(0.24)
(1.17)
(2.13)
(4.90)
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
(3)
0.51
0.35
0.63
0.92
-
-
2.07
3.60
Notes:
(1)
This information is derived from the Fund’s audited annual and unaudited interim financial statements. The Fund adopted IFRS on January 1, 2014 and restated the
year ended December 31, 2013 under IFRS. Previously, the Fund prepared its financial statements in accordance with Canadian GAAP. Under Canadian GAAP, the
Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for
short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its
investments. Accordingly, the opening net assets as at January 1, 2013 reflect the adjusted figure in accordance with IFRS.
(2)
(3)
**Series A-Regular shares were first issued on November 27, 2007
4
Marquest Mutual Funds Inc. - Explorer Series Fund (Series F)**
(1)
2016*
2015
2014
2013
2012
2011
0.31
0.55
0.79
1.82
3.02
6.49
0.01
0.01
0.02
0.02
Total revenue
-
Total expenses
(2)
-
(0.01)
(0.04)
(0.04)
(0.07)
(0.12)
(0.21)
0.08
(0.57)
(0.28)
(0.75)
(2.00)
(0.37)
0.09
0.35
0.07
(0.31)
0.81
(2.91)
0.16
(0.26)
(0.24)
(1.13)
(1.26)
(3.47)
Distributions:
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
-
-
-
-
-
-
Return of capital
(3)
0.46
0.31
0.55
0.79
-
-
-
1.76
3.02
Notes:
(1)
year ended December 31, 2013 under IFRS. Previously, the Fund prepared its financial statements in accordance with Canadian GAAP. Under Canadian GAAP, the Fund
measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for short
positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its investments.
Accordingly, the opening net assets as at January 1, 2013 reflect the adjusted figure in accordance with IFRS.
(2)
(3)
**Series F units were first issued on November 27, 2007.
5
Ratios and Supplemental Data
Series A-Rollover**
2016*
Total net asset value (000's) (1)
$
Number of shares outstanding (1)
9,085
2015
$
19,244,734
5,400
2014
$
17,390,822
12,630
2013
$
21,368,364
17,249
2012
$
19,984,646
39,857
2011
$
19,845,614
47,293
13,421,660
Management expense ratio (2)
5.21%
6.26%
5.14%
5.44%
3.80%
2.50%
Management expense ratio before waivers or absorption (5)
5.21%
6.26%
5.14%
5.44%
4.79%
2.50%
Trading expense ratio (3)
4.59%
1.32%
1.32%
1.15%
1.00%
2.10%
Portfolio turnover rate (4)
280.26%
282.70%
176.96%
130.60%
108.70%
225.80%
$2.01
$3.52
Net asset value per share (1)
$
Series A-Regular***
0.47
$
2016*
$
7
0.31
$
2015
$
13,090
6
0.59
$
2014
$
18,153
16
0.86
2013
$
24,749
30
2012
$
32,115
39
2011
$
13
18,347
3,583
6.27%
6.02%
5.07%
5.53%
4.30%
2.50%
6.27%
6.02%
5.07%
5.53%
5.58%
2.50%
4.59%
1.32%
1.32%
1.18%
1.40%
2.40%
280.26%
282.70%
176.96%
130.60%
108.70%
225.80%
$2.14
$3.76
$
Series F****
0.51
$
2016*
$
Management expense ratio
8
$
2015
$
17,847
(2)
0.35
4
0.63
$
2014
$
14,297
2
0.92
2013
$
2
2012
$
1
2,950
2,950
592
2011
$
2
592
3.40%
6.32%
3.98%
5.04%
2.60%
0.20%
3.40%
6.32%
3.98%
5.04%
3.49%
0.20%
4.59%
1.32%
1.32%
1.43%
0.00%
0.00%
Portfolio turnover rate
(4)
280.26%
$
0.46
282.70%
$
0.31
176.96%
$
0.55
130.60%
$
0.79
108.70%
$
1.82
225.80%
$
3.16
Notes:
(1)
The information is provided as at December 31st of the year shown.
(2)
Management expense ratio is based on total expenses (excluding commissions and other portfolio transaction costs) for the stated period and is expressed as an
annualized percentage of daily average net asset value during the period.
(3)
The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during
the period.
(4)
The Fund's portfolio turnover rate indicates how actively the Fund's portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to
the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund's portfolio turnover rate in a year, the greater the trading
costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between
a high turnover rate and the performance of a Fund.
(5)
Waivers and absorption of certain expenses associated with the Fund are at the Manager's discretion and may be terminated at any time.
**Series A-Rollover units were first issued on January 15, 2005.
***Series A-Regular units were first issued on November 27, 2007.
****Series F units were first issued on November 27, 2007.
6
Management and Performance Fees
The Management fees for each applicable series are calculated daily and are based on the Fund’s ending total NAV per
series; cumulative daily totals are then paid on a monthly basis. The Manager uses these management fees to pay sales and
trailing commissions to registered dealers on the distribution of the Fund shares, as well as for the general investment
management expenses.
As a percentage of Management fees
Maximum
Annual
Management Fee
Rate (%)
Sales & Trailer
Commissions
(%)
Investment
Advisory and
Portfolio
Management
Services (%)
Series A /Rollover Shares
2.00%
18.22%
81.78%
Series A/Regular Shares
2.00%
20.32%
79.68%
Series F Shares
1.00%
0.00%
100.00%
There are no performance fees or incentive fees in the case of the Fund.
Past Performance
The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in
additional securities of the Fund. The performance information does not take into account sales, redemptions, distributions or
other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not
necessarily indicate how it will perform in the future. Performance differences between classes of units are mainly attributable
to management fees charged to each class.
Year-by-Year Returns
The following bar charts show the Fund’s annual Series A Rollover, Series A Regular and Series F shares performance for
each of the periods shown, and illustrates how the Fund’s performance has changed from year to year. In percentage terms,
the bar chart shows how much an investment made on the first day of each financial year would have grown or decreased by
the last day of each financial year.
Series A Rollover
*Inception date for Series A Rollover shares was January 5, 2005.
7
Past Performance (continued)
Series A Regular
*Inception date for Series A Regular shares was November 27, 2007.
Series F
*Inception date for Series F shares was November 27, 2007.
8
Summary of Investment portfolio
The tables below provide information about the investment portfolio of the Fund, including a breakdown of the Fund’s portfolio into
subgroups and the Top 25 positions held by the Fund as a percentage of NAV.
Total Net Asset Value:
$
9,100,210
Asset Mix
Base Metals
Precious Metals
Net Other Assets (Liabilities)
Energy
Cash
% of Fund's
Net Asset Value
50.31%
22.27%
10.48%
9.71%
7.23%
100.00%
Top 25 Holdings
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Wealth Minerals Ltd.
Cash
Appia Energy Corp.
Focus Graphite Inc.
Colorado Resources Ltd.
Red Pine Exploration Inc.
Encanto Potash Corp.
Copper Fox Metals Inc.
Aldrin Resource Corp.
Rogue Resources Inc.
Tantalex Resources Corp.
Balmoral Resources Ltd.
Canada Carbon Inc.
Avalon Advanced Materials Inc.
Commerce Resources Corp.
Saint Jean Carbon Inc.
Macdonald Mines Exploration Ltd.
Honey Badger Exploration Inc.
Harte Gold Corp.
Metanor Resources Inc.
Cartier Iron Corp.
Garibaldi Resources Corp.
Sandspring Resources Ltd.
MX Gold Corp.
Avalon Rare Metals Inc.
% of Fund's
Net Asset Value
10.08%
7.23%
6.54%
6.45%
5.84%
4.31%
3.63%
3.37%
3.17%
3.14%
2.84%
2.48%
2.35%
2.25%
2.05%
1.96%
1.58%
1.54%
1.54%
1.44%
1.41%
1.35%
1.35%
1.18%
1.15%
80.23%
This summary of investment portfolio may change due to the ongoing portfolio transactions of the Fund and a quarterly update is available
at www.marquest.ca . The weightings of the positions are calculated based on total NAV of the portfolio as at June 30, 2016. The Fund
does not hold short positions. The prospectus and other information of Marquest Mutual Fund Inc.- Explorer Series Fund are available on
the internet www.sedar.com .
9
TORONTO
161 Bay Street
Suite 4420, P.O. Box 204
Toronto, ON M5J 2S1
Phone 416.777.7350
Toll Free 1.877.777.1541
MONTREAL
1155 Robert-Bourassa Boulevard
Suite 905
Montreal, QC H3B 3A7
Phone 514.227.0666
Toll Free 1.866.687.9363
VANCOUVER
1055 West Hastings
Suite 300
Vancouver, BC V6E 2E9
Phone 604.895.7281
CLIENT SERVICES
Phone 416.365.4077
Toll free 1.888.964.3533
[email protected]
WWW.MARQUEST.CA
MARQUEST MUTUAL FUNDS, INC.
ENERGY SERIES FUND
FUND PERFORMANCE
Period ended June 30, 2016
MARQUEST MUTUAL FUNDS INC. - ENERGY SERIES FUND
no assurance can be given that such beliefs and assumptions will prove to be correct. As a result, these forward looking
statements would typically include words such as “anticipates, believes, intended or estimated”. Events or circumstances
may cause actual results to differ materially from those expressed or implied by such forward looking statements as a result
of numerous known and unknown risks and uncertainties, including, but not limited to, those associated with economic and
market conditions, political stability and other risks identified in the Fund’s prospectus. Most of these factors are beyond the
control of the Fund and its Manager. Neither the Fund nor its Manager assumes any obligation to update any of the forward
looking statements made in this report.
financial statements of the Marquest Mutual Funds Inc., Energy Series Fund (the “Fund”). You can get a copy of the interim
financial statements at your request, and at no cost, from the manager Marquest Asset Management Inc. (the “Manager”) by
calling 1-877-777-1541, by writing to us at Suite 4420, 161 Bay Street, PO Box 204, Toronto, Ontario, M5J 2S1 or by visiting
our website at www.marquest.ca or SEDAR at www.sedar.com.
As at June 30, 2016 the Fund’s total NAV was $420,371, a decrease of 15.45% since the prior year end (December 2015:
$497,189). The change is primarily due to net redemptions of $72,995.
The Fund has maintained a significant cash position during the period due to the challenging supply and demand conditions
for oil and to accommodate redemptions. As at June 30, 2016 the Fund held 26.4% of the portfolio in short term securities.
Fund positions were concentrated in companies that have quality assets, strong management teams and sound balance
sheets, all attributes that will position them to successfully manage the current challenges in the oil and gas sector.
Recent Developments
The resource sector troughed in the fourth quarter of 2015 as investors gave up on any potential for a recovery in the
industry. The prevailing negative view at the time was based on concerns about slowing global growth and the abundance of
supply in the commodity markets. Valuations in the resource sector were at historically low levels reflecting the negative
sentiment of investors.
The oil price rallied strongly in the first half of the year, briefly hitting $50, reflecting gains in other commodity markets and
hope that the supply/demand situation for oil would improve. By June 30, 2016 the inventories of petroleum products
remained at very high levels throwing doubt into the sustainability of the recent gains in the energy sector.
extraordinary resolution of shareholders. Management fees are paid by the Fund as set out under “Management Fees”
below.
1
The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's
financial performance for the past five years and the most recent interim period. The information is derived from the Fund’s
unaudited interim and audited annual financial statements.
Marquest Mutual Funds Inc. - Energy Series Fund (Series A-Rollover)**
(1)
2016*
2015
2014
2013
2012
2011
0.22
0.29
0.35
0.50
0.70
1.46
Total revenue
Total expenses
Total increase (decrease) from operations (2)
(0.02)
0.02
-
-
0.01
0.01
(0.03)
(0.02)
(0.03)
(0.04)
(0.22)
0.01
(0.27)
(0.04)
(0.25)
0.19
(0.05)
0.12
(0.11)
(0.33)
(0.06)
(0.06)
(0.17)
(0.17)
(0.62)
(0.03)
-
-
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
Total annual distributions (3)
-
-
-
-
-
-
0.22
0.22
0.29
0.35
0.44
0.70
Notes:
(1)
This information is derived from the Fund’s audited annual and unaudited interim financial statements. The Fund adopted IFRS on January 1, 2014 and restated
the year ended December 31, 2013 under IFRS. Previously, the Fund prepared its financial statements in accordance with Canadian GAAP. Under Canadian GAAP,
the Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask
prices for short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing
price for its investments. Accordingly, the opening net assets as at January 1, 2013 reflect the adjusted figure in accordance with IFRS.
(2)
Net assets and distributions are based on the actual number of units outstanding at the relevant time. The increase/decrease from operations is based on the
weighted average number of units outstanding over the financial period.
(3)
**Series A-Rollover shares were first issued on May 1, 2006.
2
Marquest Mutual Funds Inc. - Energy Series Fund (Series A-Regular)**
Net Assets per share ($)
(2)
(1)
2016*
2015
2014
2013
2012
2011
0.28
0.38
0.45
0.64
0.66
1.38
0.01
0.01
(0.03)
(0.04)
(0.03)
(0.01)
(0.05)
(0.28)
0.04
(0.32)
(0.02)
(0.29)
0.21
(0.12)
0.15
(0.05)
(0.36)
(0.10)
(0.11)
(0.19)
(0.08)
(0.70)
Total revenue
-
Total expenses
(0.02)
-
0.02
(2)
-
-
-
-
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
(3)
0.28
0.28
0.38
0.45
-
-
0.57
0.66
Notes:
(1)
This information is derived from the Fund’s audited annual and unaudited interim financial statements. The Fund adopted IFRS on January 1, 2014 and restated
the year ended December 31, 2013 under IFRS. Previously, the Fund prepared its financial statements in accordance with Canadian GAAP. Under Canadian
GAAP, the Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions
and ask prices for short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the
closing price for its investments. Accordingly, the opening net assets as at January 1, 2013 reflect the adjusted figure in accordance with IFRS.
(2)
(3)
**Series A-Regular shares were first issued on September 9, 2010.
3
Series A-Rollover**
2016*
$
418
2015
$
1,905,760
495
2014
$
2,240,329
858
2013
$
2,981,909
1,151
2012
$
3,309,521
2,353
2011
$
4,724,201
1,104
1,570,871
14.77%
9.61%
6.11%
5.63%
4.80%
2.60%
14.77%
9.61%
6.11%
5.63%
5.71%
2.60%
0.20%
0.10%
0.96%
1.57%
1.00%
0.70%
11.19%
41.92%
148.29%
86.50%
111.80%
-
$0.22
$0.22
$0.50
$0.70
Series A-Regular***
2016*
$
2
2015
$
2
$
$0.29 $
0.35
2014
2013
3
$
2
2012
$
3
2011
$
4
7,524
7,524
7,524
5,267
5,267
5,267
14.37%
10.13%
5.96%
5.32%
2.60%
2.60%
14.37%
10.13%
5.96%
5.32%
2.74%
2.60%
0.20%
0.10%
0.96%
1.40%
0.10%
0.90%
11.19%
41.92%
148.29%
86.50%
111.80%
-
$0.28
$0.28
$0.64
$0.67
$0.38 $
0.45
Notes:
(1)
(2)
(3)
The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during
the period.
(4)
The Fund's portfolio turnover rate indicates how actively the Fund's portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to
the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund's portfolio turnover rate in a year, the greater the trading
costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between
a high turnover rate and the performance of a Fund.
(5)
**Series A-Rollover shares were first issued on May 1, 2006.
***Series A-Regular shares were first issued on September 9, 2010.
4
Maximum
Annual
Management
Fee
Rate (%)
Sales & Trailer
Commissions
(%)
Investment Advisory and
Portfolio Management
Services (%)
Series A /Rollover Shares
2.00%
20.95%
79.05%
Series A/Regular Shares
2.00%
22.85%
77.15%
There are no performance fees or incentive fees in the case of the Fund.
Past Performance
necessarily indicate how it will perform in the future. Performance differences between series of shares are mainly
attributable to management fees charged to each class.
The following bar charts show the Fund’s annual Series A Rollover and Series A Regular shares performance for each of the
periods shown, and illustrates how the Fund’s performance has changed from year to year. In percentage terms, the bar
chart shows how much an investment made on the first day of each financial year would have grown or decreased by the last
day of each financial year.
Series A Rollover
*Inception date for Series A Rollover shares was November 27, 2007
5
Series A Regular
*Inception date for Series A Regular shares was November 27, 2007.
6
The tables below provide information about the investment portfolio of the Fund, including a breakdown of the Fund’s portfolio into subgroups
and the Top 25 positions held by the Fund as a percentage of NAV. The Fund held less than 25 holdings as at the end of the period.
$
420,371
Asset Mix
Oil & Gas
Cash
Uranium
Oil & Gas Services
% of Fund's
Net Asset Value
46.21%
24.30%
20.01%
5.70%
3.78%
100.00%
Top 25 Holdings
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Cash
Seven Generations Energy Ltd.
Fission Uranium Corp.
Spartan Energy Corp.
Tamarack Valley Energy Ltd.
Crew Energy Inc.
TransCanada Corp.
Whitecap Resources Inc.
Keyera Corp.
Suncor Energy Inc.
Kelt Exploration Ltd.
Canadian Energy Services & Technology Corp.
Raging River Exploration Inc.
RMP Energy Inc.
Birch Lake Energy Inc.
Golden Coast Energy Corp.
% of Fund's
Net Asset Value
20.01%
6.40%
5.70%
5.36%
5.32%
5.05%
4.77%
3.89%
3.78%
3.67%
2.90%
2.85%
2.72%
2.09%
0.99%
0.20%
75.70%
This summary of investment portfolio may change due to the ongoing portfolio transactions of the Fund and a quarterly update is available at
www.marquest.ca . The weightings of the positions are calculated based on total NAV of the portfolio as at June 30, 2016. The Fund does not
hold short positions. The prospectus and other information of Marquest Mutual Fund Inc.- Energy Series Fund are available on the internet
www.sedar.com .
7
TORONTO
161 Bay Street
Toronto, ON M5J 2S1
Phone 416.777.7350
Toll Free 1.877.777.1541
MONTREAL
Suite 905
Phone 514.227.0666
Toll Free 1.866.687.9363
VANCOUVER
1055 West Hastings
Suite 300
Phone 604.895.7281
CLIENT SERVICES
Phone 416.365.4077
Toll free 1.888.964.3533
[email protected]
WWW.MARQUEST.CA
MARQUEST MUTUAL FUNDS, INC.
FLEX DIVIDEND AND INCOME
GROWTH™ SERIES FUND
FUND PERFORMANCE
Year ended June 30, 2016
MARQUEST MUTUAL FUNDS INC. FLEX DIVIDEND AND INCOME GROWTH ™ SERIES FUND
no assurance can be given that such beliefs and assumptions will prove to be correct. Events or circumstances may cause
actual results to differ materially from those expressed or implied by such forward looking statements as a result of numerous
known and unknown risks and uncertainties, including, but not limited to, those associated with economic and market
conditions, political stability and other risks identified in the Fund’s prospectus. Most of these factors are beyond the control
of the Fund and its Manager. Neither the Fund nor its Manager assumes any obligation to update any of the forward looking
statements made in this report.
1
financial statements of the Marquest Mutual Funds Inc. Flex Dividend and Income Growth ™ Series Fund (the “Fund”). You
can get a copy of the interim financial statements at your request, and at no cost, from the manager Marquest Asset
Management Inc. (the “Manager”) by calling toll-free 1-877-777-1541, by writing to us at Suite 4420, 161 Bay Street, PO Box
204, Toronto, Ontario, M5J 2S1 or by visiting our website at www.marquest.ca or SEDAR at www.sedar.com.
As at June 30, 2016 the Fund’s total NAV was $9,848,108, an increase of 0.14% since the prior year end (December 2015:
$9,834,402).The change is primarily due to net unrealized appreciation of investments of $593,575 partially offset by net
realized loss on sale of investment of $181,496, foreign exchange loss on cash of $153,737, net redemptions of $145,525
and management fees of $101,509.
The relatively weak performance of the Fund in the first half of 2016 was due to the Fund’s significant underweight position in
resource equities. In addition, the Manager raised cash following the first strong quarter in the equity markets which proved
premature. As at June 30, 2016 the Fund held 29.0% of the portfolio in short term securities.
Recent Developments
For the first time in this economic recovery there is a synchronized easing of monetary policies by all the major economies.
While global growth is expected to remain low, the combined easing of monetary policy is expected to create reacceleration
of global growth over time. This return of global growth will be particularly positive for the cyclical areas of the economy.
The Canadian equity market outperformed the US in the first half of 2016 due to the strong rally in the cyclical sectors. Up
until this rally, investors have held a negative view of cyclical and resource sectors based on concerns about slowing global
growth and the abundance of supply in the commodity markets. Consequently, valuations have been at historically low levels
but have provided the base for the recent strong performance.
Typical rallies of this magnitude by the cyclical sectors occur prior to a reacceleration in global growth, providing further gains
in the equity markets as investors anticipate an improvement in the fundamentals. A reacceleration in global growth will have
a positive impact on corporate earnings and provide a catalyst for further gains in the equity markets, particularly the small
cap companies that tend to have more operating leverage on an expansion of economic growth. This environment is
particularly positive for the Canadian equity markets.
2
1
extraordinary resolution of unitholders. Management fees are paid by the Fund as set out under “Management Fees” below.
2
3
The following tables show selected key financial information about the Fund and are intended to help you understand the Fund's financial
performance for the past five years and the most recent interim period. The information is derived from the Fund’s unaudited interim and
audited annual financial statements.
Marquest Mutual Funds Inc. - Flex Dividend and Income Growth Series Fund (Series A-Regular)**
2016*
(2)
13.80
(1)
2015
13.85
2014
14.08
2013
12.82
2012
12.57
2011
13.23
Total revenue
0.14
0.35
0.41
0.47
0.47
0.55
Total expenses
(0.32)
(1.02)
(1.00)
(0.53)
(0.55)
(0.36)
(0.47)
0.17
1.80
0.30
(0.22)
(0.42)
0.89
0.32
(1.41)
0.93
0.44
(0.49)
0.24
(0.18)
(0.20)
1.17
0.26
(0.72)
(2)
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
-
-
-
-
-
-
14.06
13.80
13.85
14.08
12.80
12.57
(3)
Notes:
(1)
Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices for
short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its
investments. Accordingly, the opening net assets as at January 1, 2013 reflects the adjusted figure in accordance with IFRS.
(2)
(3)
**Series A shares were first issued on May 19, 2009.
3
Marquest Mutual Funds Inc. - Flex Dividend and Income Growth Series Fund (Series F)*
2016*
(2)
13.00
(1)
2015
12.83
2014
12.89
2013
11.61
2012
11.28
2011
11.73
Total revenue
0.14
0.30
0.38
0.75
0.69
0.29
Total expenses
(0.23)
(0.76)
(0.77)
(0.84)
(0.81)
(0.19)
(0.41)
0.08
1.60
0.47
(0.32)
(0.22)
0.70
0.57
(1.39)
1.50
0.66
(0.25)
0.20
0.19
(0.18)
1.88
0.39
(0.37)
(2)
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
-
-
-
-
-
-
13.31
13.00
12.83
12.89
11.60
11.28
(3)
Notes:
(1)
Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices
for short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its
(2)
(3)
*Series F shares were first issued on November 13, 2009.
4
Marquest Mutual Funds Inc. - Flex Dividend and Income Growth Series Fund (Series I)**
2016*
(2)
15.92
(1)
2015
15.59
2014
15.49
2013
13.80
2012
13.25
2011
13.65
Total revenue
0.17
0.37
0.46
0.64
0.95
0.29
Total expenses
(0.25)
(0.86)
(0.75)
(0.72)
(1.11)
(0.19)
(0.55)
0.11
1.98
0.40
(0.44)
(0.22)
1.04
0.71
(1.59)
1.27
0.90
(0.26)
0.41
0.33
0.10
1.59
0.53
(0.38)
(2)
Distributions:
-
-
-
-
-
-
From dividends
-
-
-
-
-
-
From capital gains
-
-
-
-
-
-
Return of capital
-
-
-
-
-
-
-
-
-
-
-
-
16.32
15.92
15.59
15.49
13.78
13.25
(3)
Notes:
(1)
Fund measured the fair values of its investments in accordance with CICA Handbook Section 3855 which required the use of bid prices for long positions and ask prices
for short positions. Under IFRS, the Fund measures the fair value of its investments using the guidance in IFRS 13 which allows the fund to use the closing price for its
(2)
(3)
**Series I share were first issued on October 28, 2008.
5
Series A-Regular**
2016*
Total net asset value (000's)
(1)
Number of shares outstanding
(1)
(3)
(4)
Net asset value per share
(5)
(1)
Series F***
(1)
Trading expense ratio
(3)
(4)
$
(1)
(5)
Series I****
(1)
(3)
(4)
$
(1)
(2)
Management expense ratio before waivers or absorption
2015
$
(5)
7,374
2014
$
534,273
7,200
2013
$
519,896
7,595
2012
$
539,535
10,897
2011
$
849,931
11,881
942,996
4.23%
6.51%
6.30%
4.32%
3.80%
2.40%
4.23%
6.51%
6.30%
4.32%
4.78%
2.40%
0.48%
0.21%
0.56%
1.12%
0.50%
0.40%
85.74%
167.18%
163.24%
168.56%
66.10%
42.10%
$14.06
$13.80
$12.82
$12.60
2016*
2015
2,162
$
162,414
(2)
7,604
540,936
(2)
$
2,380
$13.85 $
2014
$
183,172
2,371
14.07
2013
$
184,864
2,144
2012
$
166,301
184
2011
$
15,804
214
18,972
3.26%
5.16%
5.19%
4.66%
3.50%
1.30%
3.26%
5.16%
5.19%
4.66%
4.93%
1.30%
0.48%
0.21%
0.56%
1.96%
0.80%
0.20%
85.74%
167.18%
163.24%
168.56%
66.10%
42.10%
$13.31
$13.00
$11.61
$11.29
2016*
2015
82
$
80
$12.83 $
2014
$
78
12.88
2013
$
77
2012
$
83
2011
$
80
5,000
5,000
5,000
5,000
6,000
6,000
2.84%
4.79%
4.06%
2.55%
2.70%
0.10%
2.84%
4.79%
4.06%
2.55%
4.36%
0.10%
0.48%
0.21%
0.56%
1.40%
0.90%
0.20%
85.74%
167.18%
163.24%
168.56%
66.10%
42.10%
$16.32
$15.92
$13.80
$13.27
$15.59 $
15.48
Notes:
(1)
(2)
(3)
The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during the
period.
(4)
The Fund's portfolio turnover rate indicates how actively the Fund's portfolio adviser manages its portfolio investments. A portfolio turnover rate of 100% is equivalent to the
Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher a Fund's portfolio turnover rate in a year, the greater the trading costs
payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high
turnover rate and the performance of a Fund.
(5)
**Series A shares were first issued on May 19, 2009.
***Series F shares were first issued on November 13, 2009.
****Series I shares were first issued on October 28, 2008.
6
Maximum Annual
Management Fee
Rate (%)
Sales & Trailer
Commissions
(%)
Investment Advisory
and Portfolio
Management Services
(%)
Series A /Regular Shares
2.00%
43.56%
56.44%
Series F Shares
1.00%
0.00%
100.00%
Series I Shares
Negotiated
0.00%
100.00%
The Fund will incur a performance fee equal to 20% x (Series % gain minus Benchmark % gain) x (Series Average NAV).
The benchmark is 5% 60 day Canadian treasury bill rate, 10% BMO Nesbitt Burns Preferred Share index, 10% S&P TSX
Utilities Index, 15% S&P TSX Income Trust Index, 20% S&P TSX Capped Financials Index and 40% S&P TSX 60 Index.
See Simplified Prospectus for details. No performance fees were paid during the period ended June 30, 2016.
Past Performance
necessarily indicate how it will perform in the future. Performance differences between series of units are mainly attributable
to management fees charged to each series.
The following bar charts show the Fund’s annual Series A, Series F and Series I units performance for each of the periods
shown, and illustrates how the Fund’s performance has changed from year to year. In percentage terms, the bar chart shows
how much an investment made on the first day of each financial year would have grown or decreased by the last day of each
financial year.
4
7
Series A Regular
*Inception date for Series A Regular shares was December 1, 2008.
Series F
*Inception date for Series F shares was December 1, 2008.
8
5
Series I
*Inception date for Series I shares was December 1, 2008.
6
9
The tables below provide information about the investment portfolio of the Fund, including a breakdown of the Fund’s portfolio into subgroups and the
Top 25 positions held by the Fund as a percentage of NAV.
$
9,848,108
Asset Mix
Cash
Energy
Industrials
Consumer Staples
Utilities
Consumer Discretionary
Telecommunication Services
Financials
Healthcare
Materials
Call Options
% of Fund's
Net Asset Value
27.57%
14.08%
10.83%
9.39%
8.19%
7.25%
6.60%
5.04%
5.00%
4.13%
2.08%
-0.16%
100.00%
Top 25 Holdings
Long Position
1 Cash
2 Whitecap Resources Inc.
3 Bonterra Energy Corp.
4 Johnson & Johnson
5 New Flyer Industries Inc.
6 Kinder Morgan Inc.
7 Manitoba Telecom Services Inc.
8 Boralex Inc.
9 Fortis Inc.
10 Clearwater Seafoods Inc.
11 Alimentation Couche-Tard Inc.
12 Magna International Inc.
13 Uni-Select Inc.
14 Air Canada
15 Manulife Financial Corp.
16 Bank of America Corp.
17 Canadian Energy Services & Technology Corp.
18 WSP Global Inc.
19 CAE Inc.
20 Barrick Gold Corp.
21 TransAlta Corp.
22 BCE Inc.
23 Amaya Inc.
24 Starbucks Corp.
25 CWC Energy Services Corp.
Long Position as a Percentage of Total Net Asset Value
Short Position
1 Manitoba Telecom Services Inc., Call options, July 2016, $34
Short Position as a Percentage of Total Net Asset Value
% of Fund's
Net Asset Value
27.57%
5.87%
5.75%
4.13%
3.94%
3.70%
3.55%
3.54%
3.02%
2.94%
2.75%
2.62%
2.55%
2.52%
2.51%
2.49%
2.45%
2.21%
2.17%
2.08%
1.62%
1.49%
1.11%
0.98%
0.00%
93.56%
-0.16%
-0.16%
This summary of investment portfolio may change due to the ongoing portfolio transactions of the Fund and a quarterly update is available at
www.marquest.ca . The weightings of the positions are calculated based on total NAV of the portfolio as at June 30, 2016. The Fund does not hold
short positions. The prospectus and other information of Marquest Mutual Fund Inc.- Flex Dividend and Income Growth ™ Fund are available on the
internet www.sedar.com .
10
TORONTO
161 Bay Street
Toronto, ON M5J 2S1
Phone 416.777.7350
Toll Free 1.877.777.1541
MONTREAL
Suite 905
Phone 514.227.0666
Toll Free 1.866.687.9363
VANCOUVER
1055 West Hastings
Suite 300
Phone 604.895.7281
CLIENT SERVICES
Phone 416.365.4077
Toll free 1.888.964.3533
[email protected]
WWW.MARQUEST.CA

Interim MRFP - Marquest Asset Management Inc.

Transcription

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