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roicapital.ca
As at December 31, 2010
AnnuAl RepoRt 2010
ROI Pooled Funds
Table of Contents
Management’s Responsibility for Financial Reporting ...........................................................1
Independent Auditor’s Report ...............................................................................................2
ROI High Yield Private Placement Fund ..............................................................................3
Statement of Investments ........................................................................................3
Statement of Net Assets ..........................................................................................5
Statement of Operations ..........................................................................................6
Statement of Changes in Net Assets ........................................................................7
Statement of Cash Flows .........................................................................................8
ROI Private Placement Fund .................................................................................................9
Statement of Investments ........................................................................................9
Statement of Net Assets ........................................................................................11
Statement of Operations ........................................................................................12
Statement of Changes in Net Assets ......................................................................13
Statement of Cash Flows .......................................................................................14
ROI Strategic Private Placement Fund ................................................................................15
Statement of Investments ......................................................................................15
Statement of Net Assets ........................................................................................17
Statement of Operations ........................................................................................18
Statement of Changes in Net Assets ......................................................................19
Statement of Cash Flows .......................................................................................20
ROI Institutional Private Placement Fund ..........................................................................21
Statement of Investments ......................................................................................21
Statement of Net Assets ........................................................................................22
Statement of Operations ........................................................................................23
Statement of Changes in Net Assets ......................................................................24
Statement of Cash Flows .......................................................................................25
Notes to Financial Statements .............................................................................................26
Corporate & Shareholder Information ..................................................................................50
1 ROI Pooled Funds
The accompanying financial statements have been prepared and approved by Return On Innovation Management Ltd.,
the manager of the Fund. The Fund’s manager is responsible for the information and representations contained in
these financial statements.
Return On Innovation Management Ltd. maintains appropriate processes to ensure that relevant and reliable financial
information is produced. The financial statements have been prepared in accordance with accounting principles generally
accepted in Canada and include certain amounts that are based on estimates and judgments. The significant accounting
policies, which management believes are appropriate for the Fund, are described in note 3 to the financial statements.
PricewaterhouseCoopers LLP is the external auditor of the Fund. They have audited the financial statements in
accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their
opinion on the financial statements. Their report is set out on the next page.
Management’s Responsibility for Financial Reporting
March 31, 2011
John Sterling David Dundas
Chief Executive Officer Chief Financial Officer
Return On Innovation Return On Innovation
Management Ltd. Management Ltd.
2ROI Pooled Funds
To the Unitholders of ROI High Yield Private Placement Fund, ROI Private Placement Fund, ROI Strategic Private Placement Fund, ROI Institutional Private Placement Fund (collectively, the Funds)
We have audited the accompanying financial statements of each of the Funds, which comprise the statements of investments as at December 31, 2010, the statements of net assets as at December 31, 2010 and December 31, 2009 and the statements of operations, changes in net assets and cash flows for the periods indicated in note 1 of the financial statements, and the related notes including a summary of significant accounting policies.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements of each of the Funds in accordance with Canadian generally accepted accounting principles, 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.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial statements of each of the Funds 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 an 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 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 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 is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements of the Funds present fairly, in all material respects, the financial position of each of the Funds as at December 31, 2010 and December 31, 2009 and the results of each of their operations, the changes in each of their net assets and each of their cash flows for the periods indicated in note 1 of the financial statements in accordance with Canadian generally accepted accounting principles.
Chartered Accountants, Toronto, Canada,
Licensed Public Accountants March 31, 2011
“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
Independent Auditor’s Report
ROI High Yield Private Placement Fund3
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Common Share Portfolio – 51.50% Energy – 2.12% Crew Energy Inc. 401,000 6,541,720 7,651,080 6,541,720 7,651,080Materials – 23.08% Canfor Corp. 993,148 10,259,219 11,023,943Hudbay Minerals Inc. 661,000 7,481,550 11,878,170Ivanhoe Mines Ltd. 683,159 7,503,652 15,562,362Ivanhoe Mines Ltd., Rights, January 2011 683,159 – 915,433Lundin Mining Corp. 1,249,730 7,602,031 9,048,045Osisko Mining Corp. 573,019 7,146,975 8,297,315Silver Wheaton Corp. 419,328 8,445,266 16,324,439Sino-Forest Corp., Class ‘A’ 450,275 7,576,810 10,477,899 56,015,503 83,527,606Industrials – 4.66% FirstService Corp. 300,000 8,088,000 9,015,000Stantec Inc. 283,015 7,391,224 7,848,006 15,479,224 16,863,006Consumer Discretionary – 2.73% Viterra Inc. 47,687 439,107 442,535Westport Innovations Inc. 516,000 10,289,040 9,442,800 10,728,147 9,885,335Financials – 3.57% Dundee Corp., Class ‘A’ 632,201 8,994,230 12,928,510 8,994,230 12,928,510Technology – 15.34% Celestica Inc. 1,022,834 8,982,766 9,839,663CGI Group Inc., Class ‘A’ 641,729 7,482,881 11,018,487MacDonald, Dettwiler and Associates Ltd. 204,247 7,723,625 10,318,558Open Text Corp. 164,487 7,167,424 7,502,252Research In Motion Ltd. 142,959 7,582,031 8,288,763SXC Health Solutions Corp. 200,000 7,888,000 8,502,000 46,826,727 55,469,723 Total Common Share Portfolio 144,585,551 186,325,260 Private Investment Portfolio – 29.19% Limited Partnerships – 6.54% 1900 Dickson Street LP 6,124,813 5,269,024 6,160,756219 Laurier Avenue West LP 6,970,064 6,157,662 6,307,1442810 Matheson Boulevard LP 3,043,835 2,729,461 3,295,020310 Hoffer Drive LP 675,922 613,368 675,922402 McDonald Street LP 1,358,687 1,244,078 998,881460 Two Nations Fredericton Inc., LP 1,600,531 1,453,987 1,850,38649 Ontario Street LP 2,672,731 2,272,757 3,012,308651 Henderson Drive LP 1,500,767 1,369,203 1,344,504 21,109,540 23,644,921
The accompanying notes are an integral part of these financial statements.
Statement of Investments
As at December 31, 2010
ROI High Yield Private Placement Fund 4
Debt – 22.65% Mortgages – 20.72% 2139654 Ontario (Novo Plastic), September 2013 1,377,034 1,377,034 1,375,24496 Spadina Avenue Inc., January 2015 2,000,000 2,000,000 2,016,400Dartmouth Crossing Hotel Ownership Trust et. al., December 2014 1,098,829 1,098,829 1,126,629Edmonton Cy Lodging Co., June 2013 2,982,107 2,982,107 3,032,206Frontenac Shopping Centre Inc., November 2014 1,000,000 1,000,000 1,007,400Hastings (Bancroft) Investments Inc., February 2020 1,500,000 1,500,000 1,517,250Main Lanes (Alexandria) Investments Inc., February 2020 1,500,000 1,500,000 1,517,250Northumberland Shopping Centre Inc., October 2013 11,000,000 11,000,000 11,000,000Plazacorp Property Holdings Inc. (Bedford Commons), August 2020 5,850,000 5,850,000 5,741,600Plazacorp Property Holdings Inc. (Granite Dr.), September 2020 4,000,000 4,000,000 3,891,720Plazacorp Property Holdings Inc. (Silverfox Plaza), November 2020 2,153,500 2,153,500 2,153,500Priyance Hospitality Inc., March 2011 2,178,658 2,178,658 2,178,658Sadler (Almonte) Investments Inc., February 2020 1,500,000 1,500,000 1,517,250Skyline – 66 Temperance Inc., May 2013 2,700,000 2,700,000 2,700,000Societe En Commandite G.H., July 2013 980,056 980,056 989,269SPN Group Inc., June 2015 500,000 500,000 500,000Whiterock 219 Laurier Avenue West Ottawa Inc., September 2017 22,721,089 22,721,089 22,721,089Whiterock 580 Grande Allee Inc., November 2016 3,993,231 3,993,231 3,993,231Whiterock Girouard St-Joseph Quebec Inc., April 2014 5,950,000 5,950,000 5,950,000 74,984,504 74,928,696Senior Secured Debenture – 1.03% Spinrite Limited Partnership, November 2012 3,713,993 3,713,993 3,713,993 3,713,993 3,713,993Subordinated Secured Debentures – 0.90% Asset Engineering Group LP, December 2011 25,000 25,000 5,000Centra Acquisition Inc., October 2012 395,355 395,355 395,355Clicksquared Inc., March 2013 1,941,061 1,941,061 1,797,810Lind Equipment Ltd., November 2013 1,018,393 1,018,393 1,019,412Vickers-Warnick Financial Ltd., April 2013 44,525 44,525 32,919 3,424,334 3,250,496Total Private Investment Portfolio 103,232,371 105,538,106 Convertible Bond – 1.46% Whiterock REIT, Series ‘F’, Convertible Debenture, 6.00%, July 2012 5,200,605 4,510,422 5,278,614 4,510,422 5,278,614Investment in Underlying Fund – 17.00% ROI Strategic Private Placement Fund, Series R 523,459 56,960,919 61,466,164 56,960,919 61,466,164Total Investments – 99.15% 309,289,263 358,608,144
Short-Term Investment – 0.10% CIBC Mellon Trust Demand Deposit, Variable Rate 353,793 353,793 353,793Total Portfolio – 99.25% 309,643,056 358,961,937
Transaction Costs included in Securities Cost – – Unrealized Gain on Forward Contract – 0.33% [note 9] 1,187,495Other Assets, Net of Liabilities – 0.42% 1,512,869Net Assets 361,662,301
The accompanying notes are an integral part of these financial statements.
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Statement of Investments – cont’d
As at December 31, 2010
ROI High Yield Private Placement Fund5
2010 2009 $ $
Assets
Cash – 19,495 Investments at fair value (cost $309,289,263; 2009 $119,270,007) 358,608,144 120,803,775 Short-term investments (cost $353,793; 2009 $3,111,311) 353,793 3,111,311 Interest receivable 765,244 321,546 Subscriptions receivable 2,836,279 2,238,837 Receivable for investments sold 22,450 309,567 Prepaid expenses [note 7] – 530,833 Unrealized gain on forward contract [note 9] 1,187,495 31,832,391 HST receivable 47,077 – 363,820,482 159,167,755
Liabilities
Distributions payable 337,541 195,549 Bank overdraft 15,438 – Unearned venture capital income 8,837 13,819 Performance fees payable 392,577 223,536 Redemptions payable 846,320 45,878 Accrued expenses 557,468 279,250 2,158,181 758,032 Net Assets 361,662,301 158,409,723
Series Net Assets [note 6] Class A 170,786,866 74,699,913 Class 5 12,509,007 2,547,166 Class 7 76,479,099 34,659,672 Class F 32,468,327 11,877,686 Class F-5 3,093,520 288,886 Class F-7 14,541,192 9,894,538 Class O 38,294,882 11,873,841 Class R 13,489,408 12,568,021
Net Assets per Unit [note 6 and 10] Class A 132.79 125.07 Class 5 109.20 107.85 Class 7 100.01 101.17 Class F 137.89 128.38 Class F-5 114.25 111.29 Class F-7 104.93 104.62 Class O 138.66 128.75 Class R 129.74 118.45
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
As at December 31
ROI High Yield Private Placement Fund 6
2010 2009 $ $
Investment Income
Interest 294,068 80,276 Dividends 66,100 – Distributions received from underlying funds 397,190 – Securities lending income [note 12] 262,590 74,225 Interest income from private investments 4,686,850 2,245,865 5,706,798 2,400,366
Expenses
Audit fees 124,090 39,461 Custodian fees 67,151 50,674 Forward contract fees – 80,706 Independent review committee 1,587 4,791 Legal fees 10,293 33,514 Management fees [note 7] 2,568,641 1,196,409 Operating services 287,761 105,812 Performance fees [note 7] 3,573,936 891,710 Shareholder reporting costs 36,150 46,677 Transfer agent 66,377 40,679 Total expenses 6,735,986 2,490,433 Net Investment Loss (1,029,188) (90,067)Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on sale of investments 3,010,649 (11,775,819)Transaction costs (2,399,976) (437,833)Change in unrealized appreciation in value of investments 47,785,113 33,817,854 Change in unrealized depreciation on value of forward contracts (30,644,896) (12,961,572)Net gain on investments 17,750,890 8,642,630 Increase in Net Assets from Operations 16,721,702 8,552,563 Increase in Net Assets from Operations Per Series Class A 6,992,768 3,976,142 Class 5 362,955 129,825 Class 7 3,254,060 2,139,383 Class F 1,476,440 698,544 Class F-5 97,503 17,462 Class F-7 875,520 763,002 Class O 1,536,227 661,195 Class R 2,126,229 167,010 Increase in Net Assets from Operations Per Unit Class A 7.59 8.23 Class 5 6.32 7.31 Class 7 5.85 6.91 Class F 9.34 9.73 Class F-5 7.85 8.41 Class F-7 7.42 8.26 Class O 9.92 9.71 Class R 10.84 13.44
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the years ended December 31
ROI High Yield Private Placement Fund7
Series ($)
A 5 7 F F-5 F-7 O R Total
Increase in Net Assets from Operations 6,992,768 362,955 3,254,060 1,476,440 97,503 875,520 1,536,227 2,126,229 16,721,702
Distributions to Unitholders
From net investment income – – – – – – – – – From capital gains – – – – – – – – – From return of capital – (315,775) (4,105,149) – (68,557) (860,251) – – (5,349,732) – (315,775) (4,105,149) – (68,557) (860,251) – – (5,349,732)Capital Unit Transactions
Sales of units 110,987,214 11,105,371 53,744,548 24,318,444 2,972,850 6,423,673 29,977,390 47,130,014 286,659,504 Units issued on reinvestment of distributions – 126,122 1,693,193 – 24,459 184,654 – – 2,028,428 Units redeemed (21,893,029) (1,316,832) (12,767,225) (5,204,243) (221,621) (1,976,942) (5,092,576) (48,334,856) (96,807,324) 89,094,185 9,914,661 42,670,516 19,114,201 2,775,688 4,631,385 24,884,814 (1,204,842) 191,880,608 Increase in Net Assets for the Year 96,086,953 9,961,841 41,819,427 20,590,641 2,804,634 4,646,654 26,421,041 921,387 203,252,578
Net Assets – Beginning of Year 74,699,913 2,547,166 34,659,672 11,877,686 288,886 9,894,538 11,873,841 12,568,021 158,409,723
Net Assets – End of Year 170,786,866 12,509,007 76,479,099 32,468,327 3,093,520 14,541,192 38,294,882 13,489,408 361,662,301
Statement of Changes in Net Assets
For the year ended December 31, 2010
Series ($)
A 5 7 F F-5 F-7 O R Total
Increase in Net Assets from Operations 3,976,142 129,825 2,139,383 698,544 17,462 763,002 661,195 167,010 8,552,563
Distributions to Unitholders
From net investment income – – – – – – – – – From capital gains – – – – – – – – – From return of capital – (94,150) (2,243,264) – (10,567) (664,079) – – (3,012,060) – (94,150) (2,243,264) – (10,567) (664,079) – – (3,012,060)Capital Unit Transactions
Sales of units 37,139,980 1,546,333 15,828,791 6,927,071 329,250 2,998,630 5,679,116 12,400,000 82,849,171 Units issued on reinvestment of distributions – 24,148 651,704 – 2,563 191,551 – – 869,966 Units redeemed (11,505,893) (648,566) (7,636,282) (3,433,643) (101,229) (4,162,929) (746,088) – (28,234,630) 25,634,087 921,915 8,844,213 3,493,428 230,584 (972,748) 4,933,028 12,400,000 55,484,507 Increase (Decrease) in Net Assets for the Year 29,610,229 957,590 8,740,332 4,191,972 237,479 (873,825) 5,594,223 12,567,010 61,025,010
Net Assets – Beginning of Year 45,089,684 1,589,576 25,919,340 7,685,714 51,407 10,768,363 6,279,618 1,011 97,384,713
Net Assets – End of Year 74,699,913 2,547,166 34,659,672 11,877,686 288,886 9,894,538 11,873,841 12,568,021 158,409,723
The accompanying notes are an integral part of these financial statements.
For the year ended December 31, 2009
ROI High Yield Private Placement Fund 8
2010 2009 $ $
Cash Provided By (Used In) Operating Activities Increase in net assets from operations 16,721,702 8,552,563 Non-cash items Net realized and unrealized loss on investments (20,150,866) (9,080,463) Net change in non-cash balances related to operations 329,969 (660,864)Prepaid expenses 439,483 (530,833)Proceeds from the sale of marketable securities 366,766,928 79,033,951 Proceeds from the sale of private debenture investments 7,977,935 9,176,624 Purchase of marketable securities (482,637,045) (119,765,555)Purchase of private investments (76,358,907) (19,479,643) (186,910,801) (52,754,220)
Financing Activities Proceeds from issuance of units 286,062,062 83,011,718 Amounts redeemed (96,006,882) (28,648,761)Distributions paid (5,207,740) (3,037,477)Reinvestment of distributions 2,028,428 869,966 186,875,868 52,195,446
Decrease in Cash During the Year (34,933) (558,774)Cash – Beginning of Year 19,495 578,269 Cash (Bank Overdraft) – End of Year (15,438) 19,495
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
For the years ended December 31
ROI Private Placement Fund9
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Common Share Portfolio – 88.53% Energy – 11.99% Celtic Exploration Ltd. 796,818 9,875,707 14,119,615 Crew Energy Inc. 488,152 8,767,500 9,313,940 Petrobank Energy & Resources Ltd. 193,464 7,461,906 8,830,355 26,105,113 32,263,910Materials – 26.61% Canfor Corp. 946,000 8,137,580 10,500,600 Hudbay Minerals Inc. 754,000 8,505,120 13,549,380 Quadra FNX Mining Ltd. 632,378 8,984,778 10,567,036 Sino-Forest Corp., Class ‘A’ 509,855 9,113,316 11,864,326 Teck Resources Ltd., Class ‘B’ 407,260 8,422,616 25,095,361 43,163,410 71,576,703Industrials – 7.25% FirstService Corp. 321,000 8,787,480 9,646,050 Stantec Inc. 355,855 8,941,566 9,867,859 17,729,046 19,513,909Consumer Discretionary – 9.87% Cott Corp. 1,112,642 9,312,814 9,935,893 Gildan Activewear Inc. 254,778 6,022,929 7,212,765 Westport Innovations Inc. 513,000 9,305,820 9,387,900 24,641,563 26,536,558Financials – 6.07% Dundee Corp., Class ‘A’ 798,153 11,403,622 16,322,229 11,403,622 16,322,229Technology – 26.74% Celestica Inc. 1,387,563 11,401,475 13,348,356 CGI Group Inc., Class ‘A’ 868,679 9,113,324 14,915,217 MacDonald, Dettwiler and Associates Ltd. 270,512 8,321,730 13,666,266 Open Text Corp. 200,000 9,280,000 9,122,000 Research In Motion Ltd. 197,683 9,665,381 11,461,660 SXC Health Solutions Corp. 221,225 8,879,409 9,404,275 56,661,319 71,917,774 Total Common Share Portfolio 179,704,073 238,131,083
The accompanying notes are an integral part of these financial statements.
Statement of Investments
As at December 31, 2010
ROI Private Placement Fund 10
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Private Investment Portfolio – 24.11%Mortgages – 24.11% 96 Spadina Avenue Inc., January 2015 9,000,000 9,000,000 9,073,800Edmonton Cy Lodging Co., June 2013 5,964,213 5,964,213 6,064,412First Gulf Brantford Shopping Centres Limited, June 2011 1,200,000 1,200,000 1,260,120Frontenac Shopping Centre Inc., November 2014 9,300,000 9,300,000 9,368,820Hastings (Bancroft) Investments Inc., February 2020 1,728,221 1,728,221 1,748,096Jardine Henderson Realty, March 2011 254,450 254,450 254,450Main Lanes (Alexandria) Investments Inc., February 2020 1,475,460 1,475,460 1,492,428Northumberland Shopping Centre Inc., October 2013 11,000,000 11,000,000 11,000,000Plazacorp Property Holdings Inc. (Bedford Commons), August 2020 3,900,000 3,900,000 3,827,733Plazacorp Property Holdings Inc. (Granite Dr.), September 2020 2,892,000 2,892,000 2,813,714Sadler (Almonte) Investments Inc., February 2020 1,096,319 1,096,319 1,108,927SPN Group Inc., June 2015 500,000 500,000 500,000Taline Investments Inc., et. al., August 2013 6,856,400 6,856,400 6,856,400Whiterock 580 Grande Allee Inc., November 2016 9,483,925 9,483,925 9,483,925Total Private Investment Portfolio 64,650,988 64,852,825 Investment in Underlying Fund – 1.93% ROI High Yield Private Placement Fund, Series R 39,981 5,046,884 5,186,949 5,046,884 5,186,949Total Investments – 114.57% 249,401,945 308,170,857
Short-Term Investment – 0.05% CIBC Mellon Trust Demand Deposit, Variable Rate 127,375 127,375 127,375Total Portfolio – 114.62% 249,529,320 308,298,232
Transaction Costs included in Securities Cost – – Unrealized Loss on Forward Contract [note 9] – (15.83%) (42,584,394)Other Assets, Net of Liabilities – 1.21% 3,266,585 Net Assets 268,980,423
The accompanying notes are an integral part of these financial statements.
Statement of Investments – cont’d
As at December 31, 2010
ROI Private Placement Fund11
2010 2009 $ $
Assets Cash – 26,467 Investments at fair value (cost $249,401,945; 2009 $111,080,929) 308,170,857 129,793,559 Short-term investments (cost $127,375; 2009 $2,535,175) 127,375 2,535,175 Interest and dividends receivable 577,882 155,787 Subscriptions receivable 3,259,442 843,211 Receivable for investments sold 36,824 26,668 Prepaid expenses [note 7] – 492,917 HST receivable 30,088 – 312,202,468 133,873,784
Liabilities Distributions payable 116,024 77,628 Accrued expenses 416,887 302,280 Performance fees payable – 56,284 Redemptions payable 104,740 115,545 Unrealized loss on forward contract [note 9] 42,584,394 5,116,766 43,222,045 5,668,503 Net Assets 268,980,423 128,205,281
Series Net Assets [note 6] Class A 163,712,223 77,250,584 Class F 20,052,874 5,790,765 Class 6 30,065,447 25,551,101 Class F-6 8,670,104 3,637,663 Class O 44,470,381 15,974,058 Class R 2,009,394 1,110
Net Assets per Unit [note 6 and 10] Class A 114.19 109.27 Class F 117.00 110.80 Class 6 99.48 100.15 Class F-6 102.14 101.68 Class O 118.98 111.90 Class R 116.62 109.16
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
As at December 31
ROI Private Placement Fund 12
2010 2009 $ $
Investment Income Interest – 84 Dividends 301,396 – Securities lending income [note 12] 346,809 134,295 Private investment interest income 2,499,113 737,016 3,147,318 871,395
Expenses Audit fees 93,430 32,528 Custodian fees 52,184 44,681 Forward contract fees – 151,764 Independent review committee 1,606 4,435 Legal fees 13,629 22,085 Management fees [note 7] 2,641,511 1,187,982 Operating services 335,398 128,033 Performance fees [note 7] 385,427 578,184 Shareholder reporting costs 36,341 50,062 Transfer agent 63,221 31,714 Total expenses 3,622,747 2,231,468 Expenses waived/paid by manager [note 7] (62,665) – Net Investment Loss (412,764) (1,360,073)Realized and Unrealized Gain (Loss) on Investments Net realized gain (loss) on sale of investments 6,957,380 (1,857,269)Change in unrealized appreciation in value of investments 40,056,282 28,803,714 Change in unrealized depreciation on value of forward contracts (37,467,628) (20,138,644)Net gain on investments 9,546,034 6,807,801 Increase in Net Assets from Operations 9,133,270 5,447,728 Increase in Net Assets from Operations Per Series Class A 5,315,150 2,586,315 Class F 685,344 341,794 Class 6 1,219,368 1,075,366 Class F-6 330,276 180,750 Class O 1,574,848 929,284 Class R 8,284 334,219 Increase in Net Assets from Operations Per Unit Class A 4.93 5.47 Class F 6.26 6.74 Class 6 4.42 5.25 Class F-6 5.56 6.37 Class O 7.16 7.35 Class R 8.68 8.47
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the years ended December 31
ROI Private Placement Fund13
Series ($)
A F 6 F-6 O R Total
Increase in Net Assets from Operations 5,315,150 685,344 1,219,368 330,276 1,574,848 8,284 9,133,270
Distributions to Unitholders
From net investment income – – – – – – – From capital gains – – – – – – – From return of capital – – (1,408,414) (308,682) – – (1,717,096) – – (1,408,414) (308,682) – – (1,717,096)Capital Unit Transactions
Sales of units 107,459,393 18,485,672 11,999,099 6,202,141 33,857,964 2,000,000 180,004,269 Units issued on reinvestment of distributions – – 401,341 112,871 – – 514,212 Units redeemed (26,312,904) (4,908,907) (7,697,048) (1,304,165) (6,936,489) – (47,159,513) 81,146,489 13,576,765 4,703,392 5,010,847 26,921,475 2,000,000 133,358,968 Increase in Net Assets for the Year 86,461,639 14,262,109 4,514,346 5,032,441 28,496,323 2,008,284 140,775,142
Net Assets – Beginning of Year 77,250,584 5,790,765 25,551,101 3,637,663 15,974,058 1,110 128,205,281 Net Assets – End of Year 163,712,223 20,052,874 30,065,447 8,670,104 44,470,381 2,009,394 268,980,423
Statement of Changes in Net Assets
For the year ended December 31, 2010
Series ($)
A F 6 F-6 O R Total
Increase in Net Assets from Operations 2,586,315 341,794 1,075,366 180,750 929,284 334,219 5,447,728
Distributions to Unitholders
From net investment income – – – – – – – From capital gains – – – – – – – From return of capital – – (1,043,652) (145,423) – – (1,189,075) – – (1,043,652) (145,423) – – (1,189,075)Capital Unit Transactions
Sales of units 56,811,713 4,127,320 14,833,500 2,187,725 6,206,555 8,233,500 92,400,313 Units issued on reinvestment of distributions – – 356,868 42,797 – – 399,665 Units redeemed (17,950,694) (3,176,000) (6,952,355) (870,979) (1,793,616) (12,873,543) (43,617,187) 38,861,019 951,320 8,238,013 1,359,543 4,412,939 (4,640,043) 49,182,791 Increase (Decrease) in Net Assets for the Year 41,447,334 1,293,114 8,269,727 1,394,870 5,342,223 (4,305,824) 53,441,444
Net Assets – Beginning of Year 35,803,250 4,497,651 17,281,374 2,242,793 10,631,835 4,306,934 74,763,837 Net Assets – End of Year 77,250,584 5,790,765 25,551,101 3,637,663 15,974,058 1,110 128,205,281
The accompanying notes are an integral part of these financial statements.
For the year ended December 31, 2009
ROI Private Placement Fund 14
2010 2009 $ $
Cash Provided By (Used In)
Operating Activities Increase in net assets from operations 9,133,270 5,447,728 Non-cash items Net realized and unrealized loss on investments (9,546,034) (6,807,801) Net change in non-cash balances related to operations (306,891) (7,720)Prepaid expenses 395,792 (492,917)Proceeds from the sale of marketable securities 283,289,792 96,675,832 Proceeds from the sale of private debenture investments 878,344 180,077 Purchase of marketable securities (366,031,972) (132,242,542)Purchase of private investments (47,092,000) (10,500,000) (129,279,699) (47,747,343)
Financing Activities Proceeds from issuance of units 177,588,038 91,780,102 Amounts redeemed (47,170,318) (43,511,284)Distributions paid (1,678,700) (1,192,586)Reinvestment of distributions 514,212 399,665 129,253,232 47,475,897
Decrease in Cash During the Year (26,467) (271,446)Cash – Beginning of Year 26,467 297,913 Cash – End of Year – 26,467
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
For the years ended December 31
ROI Strategic Private Placement Fund15
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Common Share Portfolio – 73.57% Consumer Discretionary – 5.61% Cott Corp. 529,982 4,444,409 4,732,739Viterra Inc. 229,865 2,004,423 2,133,147 6,448,832 6,865,886Energy – 5.52% Crew Energy Inc. 223,500 3,896,310 4,264,380Petrobank Energy & Resources Ltd. 54,602 2,417,231 2,492,221 6,313,541 6,756,601Financials – 5.50% Dundee Corp., Class ‘A’ 329,230 4,717,198 6,732,754 4,717,198 6,732,754Industrials – 6.37% Stantec Inc. 160,688 4,418,920 4,455,878WestJet Airlines Ltd. 238,088 2,763,296 3,340,375 7,182,216 7,796,253Materials – 35.47% Canfor Corp. 502,743 5,439,679 5,580,447Consolidated Thompson Iron Mines Ltd. 233,797 2,929,476 3,294,200Eldorado Gold Corp. 306,692 3,625,881 5,670,735Equinox Minerals Ltd. 847,000 4,880,290 5,175,170Ivanhoe Mines Ltd. 237,053 3,463,414 5,400,067Ivanhoe Mines Ltd., Rights, January 2011 237,053 – 317,651Quadra FNX Mining Ltd. 339,477 4,868,636 5,672,661Semafo Inc. 389,772 3,901,587 4,190,049Sino-Forest Corp., Class ‘A’ 159,450 3,369,166 3,710,402Taseko Mines Ltd. 853,387 3,916,768 4,429,079 36,394,897 43,440,461Technology – 15.11% Celestica Inc. 490,724 4,382,213 4,720,765CGI Group Inc., Class ‘A’ 277,933 3,355,915 4,772,110Open Text Corp. 80,000 3,420,000 3,648,800MacDonald, Dettwiler and Associates Ltd. 105,761 3,596,654 5,343,046Research In Motion Ltd. 270 19,303 15,655 14,774,085 18,500,376Total Common Share Portfolio 75,830,769 90,092,331
The accompanying notes are an integral part of these financial statements.
Statement of Investments
As at December 31, 2010
ROI Strategic Private Placement Fund 16
Private Investment Portfolio – 31.23% Limited Partnerships – 8.24% 1900 Dickson Street LP 3,062,406 2,634,512 3,080,378219 Laurier Avenue West LP 2,323,355 2,052,554 2,102,3812810 Matheson Boulevard LP 1,638,988 1,469,710 1,774,242310 Hoffer Drive LP 225,307 204,456 225,307402 McDonald Street LP 452,896 414,693 332,961460 Two Nations Fredericton Inc., LP 533,510 484,662 616,79549 Ontario Street LP 1,336,365 1,136,378 1,506,154651 Henderson Drive LP 500,256 456,401 448,168 8,853,366 10,086,386Debt Mortgages – 22.99% 96 Spadina Avenue Inc., January 2015 1,000,000 1,000,000 1,008,200Dartmouth Crossing Hotel Ownership Trust et. al., December 2014 998,936 998,936 1,024,209Edmonton Cy Lodging Co., June 2013 1,988,071 1,988,071 2,021,471First Gulf Brantford Shopping Centres Limited, June 2011 400,000 400,000 420,040Frontenac Shopping Centre Inc., November 2014 1,000,000 1,000,000 1,007,400Hastings (Bancroft) Investments Inc., February 2020 500,000 500,000 505,750Main Lanes (Alexandria) Investments Inc., February 2020 500,000 500,000 505,750Northumberland Shopping Centre Inc., October 2013 5,000,000 5,000,000 5,000,000Plazacorp Property Holdings Inc. (Bedford Commons), August 2020 500,000 500,000 490,735Plazacorp Property Holdings Inc. (Granite Dr.), September 2020 4,000,000 4,000,000 3,891,720Plazacorp Property Holdings Inc. (Silverfox Plaza), November 2020 2,153,500 2,153,500 2,153,500Sadler (Almonte) Investments Inc., February 2020 500,000 500,000 505,750SPN Group Inc., June 2015 500,000 500,000 500,000Whiterock 141-175 Saint-Jean, November 2016 1,542,386 1,542,386 1,542,386Whiterock 219 Laurier Avenue West Ottawa Inc., September 2017 7,573,696 7,573,696 7,573,696 28,156,589 28,150,607 Total Private Investment Portfolio 37,009,955 38,236,993 Convertible Bond – 0.48% Whiterock REIT, Series ‘F’, Convertible Debenture, 6.00%, July 2012 581,395 500,000 590,116Total Investments – 105.28% 113,340,724 128,919,440
Transaction Costs included in Securities Cost – – Unrealized Loss on Forward Contract [note 9] – (5.50%) (6,729,201)Other Assets, Net of Liabilities – 0.22% 266,226 Net Assets 122,456,465
The accompanying notes are an integral part of these financial statements.
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Statement of Investments – cont’d
As at December 31, 2010
ROI Strategic Private Placement Fund17
2010 2009 $ $
Assets Cash – 24 Investments at fair value (cost $113,340,724; 2009 $29,507,523) 128,919,440 35,322,894 Short-term investments (cost $nil; 2009 $555,498) – 555,498 Interest and dividends receivable 317,079 63,967 Subscriptions receivable 1,679,081 – Receivable for investments sold 4,531 532 HST receivable 12,390 – 130,932,521 35,942,915
Liabilities
Distributions payable 25,578 1,978 Bank overdraft 1,495,724 – Performance fees payable 63,528 – Redemptions payable 375 – Unrealized loss on forward contract [note 9] 6,729,201 5,091,782 Accrued expenses 161,650 11,955 8,476,056 5,105,715 Net Assets 122,456,465 30,837,200
Series Net Assets [note 6] Class A 35,917,562 4,602,643 Class F 4,860,083 84,017 Class F-MG 393,191 2,109 Class MG 9,276,519 678,679 Class O 10,540,545 624,027 Class R 61,468,565 24,845,725
Net Assets per Unit [note 6 and 10] Class A 114.25 104.56 Class F 115.88 104.90 Class F-MG 106.93 101.32 Class MG 105.17 100.84 Class O 116.71 104.71 Class R 117.42 104.77
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
As at December 31
ROI Strategic Private Placement Fund 18
2010 2009 $ $
Investment Income Interest 33,945 6,941 Dividends 27,239 – Securities lending income [note 12] 75,315 – Interest income from private investments 1,215,540 58,241 1,352,039 65,182
Expenses Audit fees 16,599 40,000 Custodian fees 12,703 31,323 Independent review committee 1,392 – Legal fees 7,637 679 Management fees [note 7] 323,923 23,692 Operating services 89,874 4,982 Performance fees [note 7] 519,331 – Shareholder reporting costs 9,031 6,989 Transfer agent 2,479 687 Total expenses 982,969 108,352 Expenses waived/paid by manager [note 7] – (82,495)Net Investment Income 369,070 39,325 Realized and Unrealized Gain (Loss) on Investments Net realized gain on sale of investments 587,844 259,804 Transaction costs (1,002,550) (217,167)Change in unrealized appreciation in value of investments 9,763,345 5,815,371 Change in unrealized depreciation on value of forward contracts (1,637,419) (5,091,782)Net gain on investments 7,711,220 766,226 Increase in Net Assets from Operations 8,080,290 805,551 Increase in Net Assets from Operations Per Series Class A 1,440,420 76,856 Class F 153,493 2,256 Class F-MG 16,850 109 Class MG 296,627 14,649 Class O 450,060 17,956 Class R 5,722,840 693,725 Increase in Net Assets from Operations Per Unit Class A 9.87 5.43 Class F 11.22 5.99 Class F-MG 10.70 5.33 Class MG 9.21 5.43 Class O 12.86 6.24 Class R 14.55 7.00
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the year ended December 31, 2010
with comparative figures for the period from February 17, 2009 to December 31, 2009
ROI Strategic Private Placement Fund19
Series ($)
A F F-MG MG O R Total
Increase in Net Assets from Operations 1,440,420 153,493 16,850 296,627 450,060 5,722,840 8,080,290
Distributions to Unitholders
From net investment income – – – – – (397,204) (397,204) From capital gains – – – – (23,584) (441,426) (465,010) From return of capital – – (8,176) (168,560) – – (176,736) – – (8,176) (168,560) (23,584) (838,630) (1,038,950)Capital Unit Transactions
Sales of units 32,686,999 4,742,492 379,970 8,772,746 9,693,065 43,900,000 100,175,272 Units issued on reinvestment of distributions – – 2,438 62,856 23,584 838,630 927,508
Units redeemed (2,812,500) (119,919) – (365,829) (226,607) (13,000,000) (16,524,855) 29,874,499 4,622,573 382,408 8,469,773 9,490,042 31,738,630 84,577,925 Increase in Net Assets for the Year 31,314,919 4,776,066 391,082 8,597,840 9,916,518 36,622,840 91,619,265
Net Assets – Beginning of Year 4,602,643 84,017 2,109 678,679 624,027 24,845,725 30,837,200
Net Assets – End of Year 35,917,562 4,860,083 393,191 9,276,519 10,540,545 61,468,565 122,456,465
Series ($)
A F F-MG MG O R Total
Increase in Net Assets from Operations 76,856 2,256 109 14,649 17,956 693,725 805,551
Distributions to Unitholders
From net investment income – – – – – (20,987) (20,987) From capital gains (16,164) (412) – – (5,878) (232,548) (255,002) From return of capital – – (81) (12,321) – – (12,402) (16,164) (412) (81) (12,321) (5,878) (253,535) (288,391)Capital Unit Transactions
Sales of units 4,744,201 112,000 2,000 674,960 795,598 25,452,000 31,780,759 Units issued on reinvestment of distributions 15,114 412 81 1,491 5,878 253,535 276,511 Units redeemed (217,364) (30,239) – (100) (189,527) (1,300,000) (1,737,230) 4,541,951 82,173 2,081 676,351 611,949 24,405,535 30,320,040 Increase in Net Assets for the Period 4,602,643 84,017 2,109 678,679 624,027 24,845,725 30,837,200
Net Assets – Beginning of Period – – – – – – –
Net Assets – End of Period 4,602,643 84,017 2,109 678,679 624,027 24,845,725 30,837,200
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
For the year ended December 31, 2010
For the period from February 17, 2009 to December 31, 2009
ROI Strategic Private Placement Fund 20
2010 2009 $ $
Cash Provided By (Used In)
Operating Activities Increase in net assets from operations 8,080,290 805,551 Non-cash items Net realized and unrealized loss on investments (8,713,770) (983,393) Net change in non-cash balances related to operations (56,278) (52,544)Proceeds from the sale of marketable securities 127,011,610 45,893,547 Proceeds from the sale of private debenture investments 2,095,176 532 Purchase of marketable securities (179,806,097) (68,582,181)Purchase of private investments (31,990,548) (7,115,115) (83,379,617) (30,033,603)
Financing Activities Proceeds from issuance of units 98,496,191 31,780,759 Amounts redeemed (16,524,480) (1,737,230)Distributions paid (1,015,350) (286,413)Reinvestment of distributions 927,508 276,511 81,883,869 30,033,627
Increase (Decrease) in Cash During the Period (1,495,748) 24 Cash – Beginning of Period 24 – Cash (Bank Overdraft) – End of Period (1,495,724) 24
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
For the year ended December 31, 2010
with comparative figures for the period from February 17, 2009 to December 31, 2009
ROI Institutional Private Placement Fund21
Par value $ Average cost Fair valueDescription (or number of shares) $ $
Private Investment Portfolio Mortgages – 44.44% 96 Spadina Avenue Inc., January 2015 3,000,000 3,000,000 3,024,600Apex Sanitation Products Ltd., October 2015 1,100,000 1,100,000 1,100,000Edmonton Cy Lodging Co., June 2013 3,131,212 3,131,212 3,183,816First Gulf Brantford Shopping Centres Limited, June 2011 100,000 100,000 105,010Frontenac Shopping Centre Inc., November 2014 3,000,000 3,000,000 3,022,200King Edward Realty Inc., March 2015 3,227,671 3,227,671 3,227,671Koffman Enterprises Limited, December 2012 331,000 331,000 331,000Northumberland Shopping Centre Inc., October 2013 4,000,000 4,000,000 4,000,000Plazacorp Property Holdings Inc. (Bedford Commons), August 2020 500,000 500,000 490,735SPN Group Inc., June 2015 500,000 500,000 500,000Whiterock 1305 Ste-Foy Inc., November 2016 3,032,360 3,032,360 3,032,360 21,922,243 22,017,392Investment in Underlying Fund – 54.53% ROI Private Capital Trust Fund, Series R 249,957 27,369,093 27,019,081 27,369,093 27,019,081Total Investments – 98.97% 49,291,336 49,036,473
Short-Term Investment – 0.50% CIBC Mellon Trust Demand Deposit, Variable Rate 248,471 248,471 248,471Total Portfolio – 99.48% 49,539,807 49,284,944Other Assets, Net of Liabilities – 0.52% 259,701Net Assets 49,544,645
The accompanying notes are an integral part of these financial statements.
Statement of Investments
As at December 31, 2010
ROI Institutional Private Placement Fund 22
2010 2009 $ $
Assets Cash – 464,091 Investments at fair value (cost $49,291,336; 2009 $8,939,036) 49,036,473 8,658,753 Short-term investments (cost $248,471; 2009 $nil) 248,471 – Receivables for investments sold 6,299 – Interest receivable 121,249 435,059 Subscriptions receivable 233,064 67,600 HST receivable 7,181 – 49,652,737 9,625,503
Liabilities
Distributions payable 15,804 – Payable for investments purchased 24,027 – Performance fees payable 617 – Redemptions payable 9,000 – Accrued expenses 58,644 31,525 108,092 31,525 Net Assets 49,544,645 9,593,978
Series Net Assets [note 6] Class A 25,087,886 7,645,478 Class 9 987,256 2,111 Class F 5,559,269 1,484,499 Class O 3,554,326 459,774 Class R 14,355,908 2,116
Net Assets per Unit [note 6 and 10] Class A 104.35 104.54 Class 9 104.10 104.26 Class F 103.62 104.06 Class O 103.68 104.03 Class R 105.27 104.08
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
As at December 31
ROI Institutional Private Placement Fund23
2010 2009 $ $
Investment Income Distributions received from underlying funds 1,067,946 –Interest – 415,140 Private investment interest income 810,523 23,812 1,878,469 438,952
Expenses Audit fees 25,585 24,000 Custodian fees 50,534 31,571 Independent review committee 1,616 – Legal fees 12,500 3,520 Management fees [note 7] 252,549 56,022 Operating services 30,858 9,594 Performance fees [note 7] 23,502 11,524 Shareholder reporting costs 17,931 6,051 Transfer agent 7,887 1,143 Total expenses 422,962 143,425 Expenses waived/paid by manager [note 7] (126,515) (75,193)Net Investment Income 1,582,022 370,720 Realized and Unrealized Gain (Loss) on Investments Net realized gain on sale of investments 58,607 123,801 Change in unrealized appreciation (depreciation) in value of investments 25,420 (280,283)Net gain (loss) on investments 84,027 (156,482)Increase in Net Assets from Operations 1,666,049 214,238 Increase in Net Assets from Operations Per Series Class A 707,206 179,486 Class 9 26,893 111 Class F 154,403 25,656 Class O 106,605 8,869 Class R 670,942 116 Increase in Net Assets from Operations Per Unit Class A 5.00 4.82 Class 9 6.49 5.56 Class F 6.04 5.61 Class O 6.59 5.98 Class R 6.90 5.78
The accompanying notes are an integral part of these financial statements.
Statement of Operations
For the year ended December 31, 2010
with comparative figures for the period from February 17, 2009 to December 31, 2009
ROI Institutional Private Placement Fund 24
Statement of Changes in Net Assets
For the year ended December 31, 2010
Series ($)
A 9 F O R Total
Increase in Net Assets from Operations 707,206 26,893 154,403 106,605 670,942 1,666,049
Distributions to Unitholders
From net investment income (844,909) (43,929) (201,990) (154,370) (634,020) (1,879,218) From capital gains (48,196) (2,008) (8,932) (6,758) (28,070) (93,964) From return of capital – – – – – – (893,105) (45,937) (210,922) (161,128) (662,090) (1,973,182)Capital Unit Transactions
Sales of units 18,367,398 1,000,000 4,506,375 3,053,479 13,753,600 40,680,852 Units issued on reinvestment of distributions 878,373 4,189 159,582 149,377 662,090 1,853,611 Units redeemed (1,617,464) – (534,668) (53,781) (70,750) (2,276,663) 17,628,307 1,004,189 4,131,289 3,149,075 14,344,940 40,257,799 Increase in Net Assets for the Year 17,442,408 985,145 4,074,770 3,094,552 14,353,792 39,950,667
Net Assets – Beginning of Year 7,645,478 2,111 1,484,499 459,774 2,116 9,593,978
Net Assets – End of Year 25,087,886 987,256 5,559,269 3,554,326 14,355,908 49,544,645
Series ($)
A 9 F O R Total
Increase in Net Assets from Operations 179,486 111 25,656 8,869 116 214,238
Distributions to Unitholders
From net investment income – – – – – – From capital gains (10,876) (26) (15,820) (5,702) (34) (32,458) From return of capital – – – – – – (10,876) (26) (15,820) (5,702) (34) (32,458)Capital Unit Transactions
Sales of units 8,102,912 2,000 1,462,200 450,905 2,000 10,020,017 Units issued on reinvestment of distributions 10,876 26 13,338 5,702 34 29,976 Units redeemed (636,920) – (875) – – (637,795) 7,476,868 2,026 1,474,663 456,607 2,034 9,412,197 Increase in Net Assets for the Period 7,645,478 2,111 1,484,499 459,774 2,116 9,593,978
Net Assets – Beginning of Period – – – – – –
Net Assets – End of Period 7,645,478 2,111 1,484,499 459,774 2,116 9,593,978
The accompanying notes are an integral part of these financial statements.
For the period from February 17, 2009 to December 31, 2009
ROI Institutional Private Placement Fund25
2010 2009 $ $
Cash Provided By (Used In)
Operating Activities Increase in net assets from operations 1,666,049 214,238 Non-cash items Net realized and unrealized gain (loss) on investments (84,027) 156,482 Net change in non-cash balances related to operations 352,093 (403,534)Proceeds from the sale of marketable securities 22,453,068 7,426,266 Proceeds from the sale of private debenture investments 23,928 – Purchase of marketable securities (44,172,989) (13,141,500)Purchase of private investments (18,846,171) (3,100,000) (38,608,049) (8,848,048)
Financing Activities Proceeds from issuance of units 40,515,388 9,952,416 Amounts redeemed (2,267,663) (637,795)Distributions paid (1,957,378) (32,458)Reinvestment of distributions 1,853,611 29,976 38,143,958 9,312,139
Increase (Decrease) in Cash During the Year (464,091) 464,091 Cash – Beginning of Year 464,091 – Cash – End of Year – 464,091
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
For the years ended December 31
with comparative figures for the period February 17, 2009 to December 31, 2009
26ROI Pooled Funds
1. THE FUNDS
The ROI High Yield Private Placement Fund, the ROI Private
Placement Fund, the ROI Strategic Private Placement Fund and
the ROI Institutional Private Placement Fund (the “Funds”) are
open-ended mutual fund trusts established under the laws of Ontario
pursuant to Declarations of Trust. Each of the Funds is authorized
to issue an unlimited number of units, issuable in series, which
are redeemable at the option of the unitholders at their respective
current net asset value per unit (“NAVPU”). Return On Innovation
Management Ltd. (the “Manager”) is the Manager and Trustee of the
Funds and Return On Innovation Advisors Ltd. (the “Advisor”) is the
adviser to the Manager.
The ROI High Yield Private Placement Fund has eight series –
Series A, 5, 7, F, F-5, F-7, O and R. The initial net asset value
(“NAV”) of all Series was $100. The ROI Private Placement Fund has
six series – Series A, F, 6, F-6, O and R. The initial NAV of all Series
was $100. The ROI Strategic Private Placement Fund has six series –
Series A, F, F-MG, MG, O and R. The initial NAV of all Series
was $100. The ROI Institutional Private Placement Fund has five
series – Series A, 9, F, O and R. The initial NAV of all Series was $100.
The Series of the Funds were established on the following dates:
Series A, F, O, Series F-5, F-7, 5, 7 Series 6, F-6 Series F-MG, MG Series 9 Series R
ROI High Yield Private Placement Fund
January 3, 2007 January 3, 2007 March 26, 2008
ROI Private Placement Fund
March 11, 2008 March 11, 2008 November 11, 2008
ROI Strategic Private Placement Fund
February 17, 2009 February 17, 2009 February 17, 2009
ROI Institutional Private Placement Fund
February 17, 2009 February 17, 2009 February 17, 2009
The financial statements of each of the Funds include the statements
of investments as at December 31, 2010, the statements of net assets
as at December 31, 2010 and 2009 and the statements of operations,
cash flows and changes in net assets for the years ended December 31,
2010 and 2009, except for ROI Strategic Private Placement Fund and
ROI Institutional Private Placement Fund, which are for the period
from February 17, 2009 to December 31, 2009.
2. INVESTMENT OBJECTIVES AND STRATEGY
OF THE FUND
ROI High Yield Private Placement Fund
The Fund’s investment objective is to provide investors with a high
after-tax current yield and long-term capital appreciation. The Fund’s
investment strategy is to obtain exposure to a portfolio of investments,
which consist primarily of higher-yield private investments and/or
equity securities issued by businesses seeking non-bank financing
loans. The Fund invests in a forward contract (see note 9), which
provides the Fund with a return referenced to and directly correlated
with the return of the ROI Private Trust (the Trust managed by the
Manager). Although the Fund has exposure to the ROI Private Trust,
neither the Fund nor its unitholders have any ownership interest in the
ROI Private Trust. In addition to exposure to the ROI Private Trust,
the Fund will hold common shares in the common share portfolio (see
note 9) and holds a certain portion of its assets directly in high-yield
private placements or in cash or cash equivalents, such as short-term
government debt. The Fund can also invest in other ROI Funds.
ROI Private Placement Fund
The Fund’s investment objective is to provide investors with a high
after-tax current yield and long-term capital appreciation. The Fund’s
investment strategy is to obtain exposure to a portfolio of investments,
which consist primarily of senior private investments and/or equity
securities issued by businesses seeking non-bank financing loans.
The Fund invests in a forward contract (see note 9), which provides
the Fund with a return referenced to and directly correlated with the
return of the ROI Private Capital Trust (also managed by the Manager).
Although the Fund has exposure to the ROI Capital Private Trust,
neither the Fund nor its unitholders will have any ownership interest
in the ROI Private Capital Trust. In addition to exposure to the
ROI Private Capital Trust, the Fund holds common shares in the
common share portfolio (see note 9) and may hold a certain portion of
its assets directly in high-yield private placements or in cash or cash
equivalents, such as short-term government debt. The Fund can also
invest in other ROI Funds.
ROI Strategic Private Placement Fund
The Fund’s investment objective is to provide investors with a
nominal after-tax current yield and long-term capital appreciation.
The Fund’s investment strategy is to obtain exposure to a portfolio
of investments, which consist primarily of private investments and/or
equity securities issued by businesses seeking non-bank financing.
The Fund invests in a forward contract (see note 9), which provides
the Fund with a return referenced to and directly correlated with
the return of the ROI Strategic Capital Trust (also managed by the
Manager). Although the Fund has exposure to the ROI Strategic
Capital Trust, neither the Fund nor its unitholders will have any
ownership interest in the ROI Strategic Capital Trust.
Notes To Financial Statements
December 31, 2010
27 ROI Pooled Funds
Notes To Financial Statements
In addition to exposure to the ROI Strategic Capital Trust, the Fund
holds common shares in the common share portfolio (see note 9) and
may hold a certain portion of its assets directly in private investments
or in cash or cash equivalents, such as short-term government debt.
The Fund can also invest in other ROI Funds.
ROI Institutional Private Placement Fund
The Fund’s investment objective is to provide unitholders with a high
current yield and potential for some long-term capital appreciation.
The Fund’s investment strategy is to obtain exposure to a portfolio
of investments, which consist primarily of senior private placement
of capital in debt obligations and/or equity securities issued by
businesses seeking non-bank financing.
Through the forward contracts, the ROI High Yield Private
Placement Fund, ROI Private Placement Fund and ROI Strategic
Private Placement Fund strategy are also able to generate
distributions to investors that consist primarily of capital gains and
returns of capital and, to a lesser extent, ordinary investment income.
Return of capital distributions are generally not subject to tax,
although a return of capital distribution reduces the adjusted cost base
of the units held by an investor. Distributions that are designated as
capital gains will generally be taxed at a lower rate than distributions
of interest and other investment income. The Fund can also invest in
other ROI Funds.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with Canadian
generally accepted accounting principles (“GAAP”). The significant
accounting policies followed by the Funds are as follows:
Valuation of Series and Units
A NAV is calculated for each series of units of the Funds daily.
The NAV of a particular series of units is computed by calculating
the value of the series’ proportionate share of the assets and liabilities
of the Funds common to all series, less the liabilities of the Funds
attributable only to that series. Expenses directly attributable to a
series are charged to that series. Other expenses, investment income,
realized and unrealized capital, and foreign exchange gains and losses
are allocated proportionately to each series based upon the relative net
assets of each series.
Units of the Funds are offered for sale on a continuous basis and
may be purchased or redeemed on any valuation date at the NAV
per series. A valuation date is each day on which the Toronto Stock
Exchange is open for business. The NAVPU of a series for the
purposes of subscription or redemption is computed by dividing the
NAV of the Funds attributable to the series by the total number of
units of the series of the Funds outstanding at such time.
Investment Valuation
Short-term investments represent overnight cash deposits.
Marketable securities are recorded at fair value, established as the
closing bid price for the security on the recognized exchange on which
it is publicly traded. Where securities are not traded on that date,
a valuation adjustment may be applied.
Investments which are not publicly traded or other assets for which
no public market exists are valued at estimated fair value. The fair
values of investments are determined using an appropriate valuation
methodology after considering: the history and nature of the business;
operating results and financial conditions; independent valuations
of the business; contractual rights relating to the investment;
public market comparable transactions and recent multiples, where
applicable, and other pertinent considerations. The process of
valuing private investments for which no published market or market
observable factors exist is subject to inherent uncertainties and the
resulting values may differ from values which would have been used
had a ready market existed for those investments. These differences
could be material to the fair values of the investments.
Securities and other assets for which market quotations are, in the
opinion of the Advisor, inaccurate, unreliable, not reflective of all
available material information or not readily available are valued at
their fair value, as determined by the Advisor. Fair value represents
the amount of consideration that would be agreed upon in an arm’s
length transaction between knowledgeable, willing parties who are
under no compulsion to act. The valuation procedures relating to
private company investments include preparation by management,
on at least a quarterly basis, of a comprehensive report which
includes a recommendation for the carrying value of the private
company investments.
Forward Contracts
The forward contracts are valued at an amount equal to the gain or loss
that would be realized if the position was to be closed out. On cash
settlement, the fair value of the forward contract shall equal the
difference between the fair value of the Funds’ common share portfolio
and the NAV of the number of units of the reference funds (ROI Private
Trust – reference fund to ROI High Yield Private Placement Fund,
ROI Private Capital Trust – reference fund to ROI Private Placement
Fund and ROI Strategic Capital Trust – reference fund to ROI Strategic
Private Placement Fund) specified in the forward contracts.
Investment Transactions, Income Recognition and
Transaction Costs
Investment transactions are accounted for on the trade date.
Interest income is recognized on an accrual basis. Dividend income
is recognized on the ex-dividend date. Realized gains and losses from
the sales of investments and unrealized appreciation (depreciation) in
28ROI Pooled Funds
Notes To Financial Statements
the value of investments are calculated with reference to the average
cost of the related investments, which exclude brokerage commissions
and other trading expenses.
Transaction costs, such as brokerage commissions, incurred in the
purchase and sale securities by the Funds are recognized in the
statements of operations.
Increase (Decrease) in Net Assets from Operations per Unit
Increase (decrease) in net assets from operations per unit is based on
the increase (decrease) in net assets from operations attributable to
the series, divided by the weighted average number of such series
outstanding during the period.
Cash
Cash comprises cash on deposit.
Loans and Receivables
Initially recognized at fair value and subsequently measured at amortized
cost which approximates fair value due to their short-term nature.
Other Financial Liabilities
Initially recognized at fair value and subsequently measured at amortized
cost which approximates fair value due to their short-term nature.
Income Taxes
The Funds qualify as mutual fund trusts within the meaning of the
Income Tax Act (Canada) (the “Act”). For tax purposes, the Funds
have a tax year end of December 15. In each tax year, the Funds will
distribute sufficient net taxable income and net capital gains, which
will result in the Funds not paying tax under Part I of the Act.
In addition, income taxes payable on net realized capital gains are
refundable on a formula basis when units of the Funds are redeemed.
Performance Fees
For the ROI High Yield Private Placement Fund, the Manager is
entitled to receive a performance fee equal to the greater of (a) up to
0.70% of the weighted NAV of each series (the “floating performance
fee”) as determined in the Manager’s sole discretion, and (b) up to the
aggregate of 25% of the increase in the NAVPU of each series over
the relevant period (after deducting all management fees and other
expenses charged to the Fund and adding any distributions of income
and capital during the relevant period) as determined in the Manager’s
sole discretion (the “fixed performance fee”), calculated daily and
payable monthly or upon redemption. The fixed performance fee is
subject to a “high water mark,” which ensures that the relevant series
regains any decline in the NAVPU (after adjustments for distributions
of income and capital during the relevant period) before fixed
performance fees will be charged in any subsequent 12-month period.
If the relevant series fails to attain or exceed the “high water mark”
during any 12-month period, a fixed performance fee will be payable
in any subsequent month based on the increase in the series NAVPU
from the date following the end of any such 12-month period to the
end of the relevant period.
For the ROI Private Placement Fund and the ROI Strategic Private
Placement Fund, the Manager is entitled to receive a performance fee
equal to the aggregate of up to 25% as determined in the Manager’s
sole discretion of the increase in the NAVPU of each series over the
relevant period. For the ROI Institutional Private Placement Fund,
the Manager will receive a performance fee equal to the aggregate
of up to 20% as determined in the Manager’s sole discretion of the
increase in the NAVPU of each series over the relevant period.
The performance fee is calculated daily and payable monthly or upon
redemption. The increase in the NAVPU of each series will reflect
a deduction of all management fees and other expenses charged to
the Funds and an increase for any distributions of income and capital
during the relevant period. The performance fee is subject to a
“high water mark,” which ensures that the relevant series regains any
decline in the NAVPU (after adjustments for distributions of income
and capital during the relevant period) before performance fees will
be charged in any subsequent 12-month period. If the relevant series
fails to attain or exceed the “high water mark” during any 12-month
period, a performance fee will be payable in any subsequent month
based on the increase in the series NAVPU from the date following
the end of any such 12-month period to the end of the relevant period.
Accounting Estimates
The preparation of financial statements in accordance with Canadian
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during
the reporting period. Actual results could differ from those estimates.
4. FINANCIAL INSTRUMENTS
The Fund’s financial instruments consist primarily of cash/bank
overdraft, short-term investments, marketable securities, private
investments, convertible bonds, investments in underlying funds,
interest and dividends receivable, HST receivable, subscriptions
receivable, receivable for investment sold, distributions payable,
performance fees payable, redemptions payable, accrued expenses,
bank overdraft and unrealized gain (loss) on forward contracts.
The investments in private companies consist of debt and equity
instruments. These investments are typically illiquid. The Funds
seek to reduce the risks typically associated with such investments by
diversifying the investment portfolio by investing in companies that
are in differing stages of development in a variety of high-growth-
potential industries and by working with investee companies through,
among other things, providing business advice and other services,
aiding in the recruitment process and helping in the process of raising
additional capital.
29 ROI Pooled Funds
Notes To Financial Statements
ROI High Yield Private Placement Fund
Assets
December 2010
$
Investments held for trading 360,149,432
Cash –
Receivables 3,671,050
Liabilities
Financial liabilities 2,149,344
ROI Private Placement Fund
Assets
December 2010
$
Investments held for trading 265,713,838
Cash –
Receivables 3,904,236
Liabilities
Financial liabilities 637,651
ROI Strategic Private Placement Fund
Assets
December 2010
$
Investments held for trading 122,190,239
Cash –
Receivables 2,013,081
Liabilities
Financial liabilities 1,746,855
ROI Institutional Private Placement Fund
Assets
December 2010
$
Investments held for trading 49,284,944
Cash –
Receivables 367,793
Liabilities
Financial liabilities 108,092
ROI High Yield Private Placement Fund
Assets
December 2009
$
Investments held for trading 155,747,477
Cash 19,495
Receivables 2,869,950
Liabilities
Financial liabilities 744,213
ROI Private Placement Fund
Assets
December 2009
$
Investments held for trading 127,211,968
Cash 26,467
Receivables 1,025,666
Liabilities
Financial liabilities 551,737
ROI Strategic Private Placement Fund
Assets
December 2009
$
Investments held for trading 30,786,610
Cash 24
Receivables 64,499
Liabilities
Financial liabilities 13,933
ROI Institutional Private Placement Fund
Assets
December 2009
$
Investments held for trading 8,658,753
Cash 464,091
Receivables 502,659
Liabilities
Financial liabilities 31,525
Financial Instruments
30ROI Pooled Funds
Notes To Financial Statements
Interest and other receivables are designated as loans and receivables.
Distributions payable, performance fees payable and redemptions
payable are designated as other financial liabilities. The carrying
value of these financial assets and liabilities approximates their fair
value due to their short-term nature.
The Funds’ activities expose them to a variety of financial risks:
credit risk, liquidity risk, market risk (including interest rate risk,
currency risk and other price risk) and valuation risk of private
investments. The Manager and the Advisor seek to minimize
potential adverse effects of these risks on the Funds’ performance by
employing professional experience, daily monitoring of the Funds’
positions and market events, by diversifying the investment portfolios
within the constraints of the investment objectives and, for private
investments, by structuring investments to provide the Funds with
the maximum protection in the event of problems with the issuer of
the security.
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 the Funds. The Funds’ investments in debt instruments
and derivatives represent the main concentration of credit risk.
The fair value of debt instruments and derivatives includes
consideration of the creditworthiness of the issuer.
The ROI High Yield Private Placement Fund, ROI Private
Placement Fund and ROI Strategic Private Placement Fund are
each exposed to credit risk through forward contracts (see note 9).
The risks of forward contracts arise from the potential inability of
the counterparties to meet the terms of the contracts. The maximum
credit risk exposure is the aggregate of all contracts with a positive
value as disclosed in the statement of investments.
All transactions in listed securities are settled upon delivery using
approved brokers. The risk of default is considered minimal, as
delivery of securities sold is only made once the Funds have received
payment. Payment is made on a purchase once the securities have
been received by the Funds. Should either party not meet its
obligation, the trade will fail.
The credit risk related to interest and dividends receivable is subject
to the creditworthiness of the underlying investees. As of December 31,
2010, no allowance for doubtful accounts has been provided for.
The Funds and the ROI Private Trust, ROI Capital Private Trust and
ROI Strategic Capital Trust (see note 2) invest in debt obligations
that are secured, unsecured or subordinated to senior creditors.
The risks of debt obligations arise from the potential inability of
the issuer to make payments on the debt securities. The inability
of the issuer to meet its obligations will affect the fair value of the
investment and the Funds may suffer a loss.
ROI High Yield Private Placement Fund
The Fund invests in debt instruments and has entered into a forward
contract (see note 9). As at December 31, 2010, the Fund held
22.65% (2009 – 22.34%) of its net assets in debt securities through
its private investment portfolio and 0.33% (2009 – 20.09%) of its net
assets in a forward contract.
ROI Private Placement Fund
The Fund invests in debt instruments and has entered into a forward
contract (see note 9). As at December 31, 2010, the Fund held
24.11% (2009 – 14.28%) of its net assets in debt securities through
its private investment portfolio and (15.83%) (2009 – 3.99%) of its
net assets in a forward contract.
ROI Strategic Private Placement Fund
The Fund invests in debt instruments and has entered into a forward
contract (see note 9). As at December 31, 2010, the Fund held
22.99% (2009 – 23.84%) of its net assets in debt securities through
its private investment portfolio and 5.50% (2009 – 16.51%) of its net
assets in a forward contract.
ROI Institutional Private Placement Fund
The Fund invests in debt instruments. As at December 31, 2010,
the Fund held 44.44% (2009 – 32.26%) of its net assets in debt
securities through its private investment portfolio.
Liquidity Risk
Liquidity risk is the risk that the Funds will encounter difficulties in
meeting obligations associated with financial liabilities. The Funds’
exposure to liquidity risk is concentrated in the daily cash redemptions
of units. The Funds primarily invest in securities that are traded in
active markets and can be readily disposed. In addition, the Funds retain
sufficient cash and cash equivalent positions to maintain liquidity.
An illiquid asset is a security or other position that may not be disposed
of quickly in the normal course of business. While investments in
illiquid assets can present above-average growth opportunities, they
can be difficult to value and/or sell at the time and price preferred
by the Funds.
The liquidity risk associated with the daily cash redemptions of units
is managed in three ways: (1) maintaining a portion of the Funds’
portfolios in cash, marketable securities and short-term investments;
(2) through new subscriptions; and (3) the monthly repayment of
principal and interest on the Funds’ private investments.
31 ROI Pooled Funds
Notes To Financial Statements
ROI High Yield Private Placement Fund December 31, 2010 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash – – – – – – Interest receivable $765,244 – – – – $765,244 Unrealized gain on forward contract – – $1,187,495 – – 1,187,495 Subscriptions receivable 2,836,279 – – – – 2,836,279 Receivable for investments sold 22,450 – – – – 22,450HST receivable 47,077 – – – – 47,077 Private investments 2,183,658 $15,056,208 21,600,429 $43,052,890 $23,644,921 105,538,106 Investment in underlying fund 61,466,164 – – – – 61,466,164 Short-term investments 353,793 – – – – 353,793 Marketable securities 186,325,260 – – – – 186,325,260 Convertible bond – 5,278,614 – – – 5,278,614
$253,999,925 $20,334,822 $22,787,924 $43,052,890 $23,644,921 $363,820,482 Liabilities
Performance fees payable $392,577 – – – – $392,577 Redemptions payable 846,320 – – – – 846,320 Distributions payable 337,541 – – – – 337,541 Bank overdraft 15,438 – – – – 15,438 Accrued expenses 557,468 – – – – 557,468
$2,149,344 – – – – $2,149,344
ROI High Yield Private Placement Fund December 31, 2009 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash $19,495 – – – – $19,495 Interest receivable 321,546 – – – – 321,546 Unrealized gain on forward contract – – $31,832,391 – – 31,832,391 Subscriptions receivable 2,238,837 – – – – 2,238,837 Receivable for investments sold 309,567 – – – – 309,567 Private investments 4,912,849 $7,773,966 12,308,271 – $10,398,075 35,393,161 Investment in underlying fund 24,843,604 – – – – 24,843,604 Short-term investments 3,111,311 – – – – 3,111,311 Marketable securities 56,337,010 – – – – 56,337,010 Convertible bond – 4,230,000 – – – 4,230,000
$92,094,219 $12,003,966 $44,140,662 – $10,398,075 $158,636,922 Liabilities
Performance fees payable $223,536 – – – – $223,536 Redemptions payable 45,878 – – – – 45,878 Distributions payable 195,549 – – – – 195,549 Accrued expenses 279,250 – – – – 279,250
$744,213 – – – – $744,213
ROI High Yield Private Placement Fund
As at December 31, 2010, the Fund held 29.19% (2009 – 22.34%)
of net assets in private investments which are considered illiquid.
It also had 70.07% (2009 – 55.89%) of net assets in cash, marketable
securities and short-term investments that are traded in active
markets and can be readily disposed of.
The following table summarizes the maturity profile, as at
December 31, 2010 and December 31, 2009, of financial instruments
by contractual maturity or expected cash flow dates.
32ROI Pooled Funds
Notes To Financial Statements
ROI Private Placement Fund December 31, 2010 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash – – – – – – Interest and dividends receivable $577,882 – – – – $577,882 Subscriptions receivable 3,259,442 – – – – 3,259,442 HST receivable 30,088 – – – – 30,088 Receivable for investments sold 36,824 – – – – 36,824 Private investments 1,514,570 $23,920,812 $18,942,620 $20,474,823 – 64,852,825 Investment in underlying funds 5,186,949 – – – – 5,186,949 Short-term investments 127,375 – – – – 127,375 Marketable securities 238,131,083 – – – – 238,131,083
$248,864,213 $23,920,812 $18,942,620 $20,474,823 – $312,202,468 Liabilities
Performance fees payable – – – – – – Redemptions payable $104,740 – – – – $104,740 Distributions payable 116,024 – – – – 116,024 Unrealized loss on forward contract – – $42,584,394 – – 42,584,394 Accrued expenses 416,887 – – – – 416,887
$637,651 – $42,584,394 – – $43,222,045
ROI Private Placement Fund December 31, 2009 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash $26,467 – – – – $26,467 Interest receivable 155,787 – – – – 155,787 Subscriptions receivable 843,211 – – – – 843,211 Receivable for investments sold 26,668 – – – – 26,668 Private investments – $8,209,142 $10,093,950 – – 18,303,092 Investment in underlying funds 10,160,854 – – – – 10,160,854 Short-term investments 2,535,175 – – – – 2,535,175 Marketable securities 101,329,613 – – – – 101,329,613
$115,077,775 $8,209,142 $10,093,950 – – $133,380,867 Liabilities
Performance fees payable $56,284 – – – – $56,284 Redemptions payable 115,545 – – – – 115,545 Distributions payable 77,628 – – – – 77,628 Unrealized loss on forward contract – – $5,116,766 – – 5,116,766 Accrued expenses 302,280 – – – – 302,280
$551,737 – $5,116,766 – – $5,668,503
ROI Private Placement Fund
As at December 31, 2010, the Fund held 24.11% (2009 – 14.28%)
of net assets in private investments which are considered illiquid.
It also had 90.51% (2009 – 92.51%) of net assets in cash, marketable
securities and short-term investments that are traded
in active markets and can be readily disposed of.
The following table summarizes the maturity profile, as at
December 31, 2010 and December 31, 2009, of financial instruments
by contractual maturity or expected cash flow dates.
33 ROI Pooled Funds
ROI Strategic Private Placement Fund
As at December 31, 2010, the Fund held 31.23% (2009 – 23.84%)
of net assets in private investments which are considered illiquid.
It also had 74.05% (2009 – 76.00%) of net assets in cash, marketable
securities and short-term investments that are traded in active
markets and can be readily disposed of.
The following table summarizes the maturity profile, as at
December 31, 2010 and December 31, 2009, of financial instruments
by contractual maturity or expected cash flow dates.
Notes To Financial Statements
ROI Strategic Private Placement Fund December 31, 2010 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Interest and dividends receivable $317,079 – – – – $317,079 Subscriptions receivable 1,679,081 – – – – 1,679,081 HST receivable 12,390 – – – – 12,390 Receivable for investments sold 4,531 – – – – 4,531 Private investments 420,040 $7,021,471 $3,539,809 $17,169,287 $10,086,386 38,236,993 Marketable securities 90,092,331 – – – – 90,092,331 Convertible bonds 590,116 – – – – 590,116
$93,115,568 $7,021,471 $3,539,809 $17,169,287 $10,086,386 $130,932,521 Liabilities
Performance fees payable $63,528 – – – – $63,528 Bank overdraft 1,495,724 – – – – 1,495,724Redemptions payable 375 – – – – 375 Distributions payable 25,578 – – – – 25,578 Unrealized loss on forward contract – – – $6,729,201 – 6,729,201 Accrued expenses 161,650 – – – – 161,650
$1,746,855 – – $6,729,201 – $8,476,056
ROI Strategic Private Placement Fund December 31, 2009 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash $24 – – – – $24 Interest receivable 63,967 – – – – 63,967 Receivable for investments sold 532 – – – – 532 Private investments – $420,040 $1,999,468 – $4,932,281 7,351,789 Short-term investments 555,498 – – – – 555,498 Marketable securities 27,471,105 – – – – 27,471,105 Convertible bond – 500,000 – – – 500,000
$28,091,126 $920,040 $1,999,468 – $4,932,281 $35,942,915 Liabilities
Distributions payable $1,978 – – – – $1,978 Unrealized loss on forward contract – – – $5,091,782 – 5,091,782 Accrued expenses 11,955 – – – – 11,955
$13,933 – – $5,091,782 – $5,105,715
34ROI Pooled Funds
Notes To Financial Statements
ROI Institutional Private Placement Fund
As at December 31, 2010, the Fund held 44.44% (2009 – 32.36%)
of net assets in private investments which are considered illiquid.
It also had 55.04% (2009 – 62.73%) of net assets in cash, marketable
securities and short-term investments that are traded in active
markets and can be readily disposed of.
The following table summarizes the maturity profile, as at
December 31, 2010 and December 31, 2009, of financial instruments
by contractual maturity or expected cash flow dates.
ROI Institutional Private Placement Fund December 31, 2010 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash – – – – – – Interest receivable $121,249 – – – – $121,249 Subscriptions receivable 233,064 – – – – 233,064 HST receivable 7,181 – – – – 7,181 Receivables for investments sold 6,299 – – – – 6,299 Private investments 105,010 $3,674,551 $17,906,831 $331,000 – 22,017,392 Short-term investments 248,471 – – – – 248,471 Investments in underlying funds 27,019,081 – – – – 27,019,081
$27,740,355 $3,674,551 $17,906,831 $331,000 – $49,652,737 Liabilities
Performance fees payable $617 – – – – $617 Redemptions payable 9,000 – – – – 9,000 Distributions payable 15,804 – – – – 15,804 Payable for investments purchased 24,027 – – – – 24,027 Accrued expenses 58,644 – – – – 58,644
$108,092 – – – – $108,092
ROI Institutional Private Placement Fund December 31, 2009 Within 1 to 3 to Over No specific 1 year 3 years 5 years 5 years date TotalAssets
Cash $464,091 – – – – $464,091 Interest receivable 435,059 – – – – 435,059 Subscriptions receivable 67,600 – – – – 67,600 Private investments – $105,010 $3,000,000 – – 3,105,010 Investment in underlying funds 5,553,743 – – – – 5,553,743
$6,520,493 $105,010 $3,000,000 – – $9,625,503 Liabilities
Performance fees payable – – – – – – Redemptions payable – – – – – – Distributions payable – – – – – – Payable for investments purchased – – – – – – Accrued expenses $31,525 – – – – $31,525
$31,525 – – – – $31,525
Market Risk
Market risk comprises three main components: interest rate risk,
foreign currency risk and other price risk.
As at December 31, 2010, the Funds held the following percentages
of net assets in equities: ROI High Yield Private Placement Fund –
51.50% (2009 – 35.56%), ROI Private Placement Fund – 88.54%
(2009 – 79.04%), ROI Strategic Private Placement Fund – 73.57%
(2009 – 89.08%) and ROI Institutional Private Placement Fund –
nil% (2009 – nil%).
35 ROI Pooled Funds
Notes To Financial Statements
While the Funds have significant equity holdings in their common
share portfolios, the fair value fluctuations are driven by the forward
contract (see note 9).
Interest Rate Risk
Interest rate risk arises on fixed interest-bearing financial instruments
held by the Funds. The Funds are exposed to the risk that the
value of interest-bearing financial instruments will fluctuate due
to fluctuations in the prevailing levels of market interest rates.
If interest rates increase, the value of these securities will fall.
Conversely, a decrease in interest rates will lead to an increase in the
value of these securities. The Funds may also hold securities which
earn variable rates of interest. A decrease in interest rates will lead to
a decrease in interest earned on these securities.
ROI High Yield Private Placement Fund
As at December 31, 2010, had the prevailing interest rates raised
or lowered by 1%, with all other variables held constant, net assets
would have decreased or increased, respectively, by approximately
$6,030,447 (2009 – $1,256,003). The Fund held 1.46% (2009 –
2.67%) of its net assets in convertible bonds, which are subject to risk
of fluctuations in the prevailing levels of market interest rates and
0.11% (2009 – 1.96%) of its net assets in short-term investments,
which earn a variable rate of interest.
ROI Private Placement Fund
As at December 31, 2010, had the prevailing interest rates raised
or lowered by 1%, with all other variables held constant, net assets
would have decreased or increased, respectively, by approximately
$2,252,114 (2009 – $952,787). The Fund held 0.05% (2009 –
1.98%) of its net assets in short-term investments, which earn a
variable rate of interest.
ROI Strategic Private Placement Fund
As at December 31, 2010, had the prevailing interest rates raised
or lowered by 1%, with all other variables held constant, net assets
would have decreased or increased, respectively, by approximately
$1,268,186 (2009 – $378,890). The Fund held 0.48% (2009 –
1.62%) of its net assets in convertible bonds, which are subject to
risk of fluctuations in the prevailing levels of market interest rates
and nil% (2009 – 1.80%) of its net assets in short-term investments,
which earn a variable rate of interest.
ROI Institutional Private Placement Fund
As at December 31, 2010, had the prevailing interest rates raised
or lowered by 1%, with all other variables held constant, net assets
would have decreased or increased, respectively, by approximately
$1,407,195 (2009 – $260,479).
The private investments held by the Funds generate interest income
with varying rates of interest: ROI High Yield Private Placement
Fund – 3.90% to 15.50%, ROI Private Placement Fund – 4.82% to
8.75%, ROI Strategic Private Placement Fund – 4.82% to 12.00%
and ROI Institutional Private Placement Fund – 4.82% to 9.00%.
Currency Risk
Currency risk is the risk that the value of a financial instrument
will fluctuate due to changes in foreign exchange rates. Currency
risk arises from financial instruments (including cash) that are
denominated in a currency other than Canadian dollars, which
represents the functional currency of the Funds.
The Funds may enter into foreign exchange contracts for hedging
purposes to reduce their foreign currency exposure, or to establish
exposure to foreign currencies.
The Funds invest primarily in Canadian securities. As at
December 31, 2010 and December 31, 2009, the Funds did not have
any significant exposure to currency risk.
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 caused by
factors specific to an individual investment, its issuer, or all factors
affecting all instruments traded in a market or market segment.
All equity securities present a risk of loss of capital. The Manager
and the Advisor moderate this risk through careful selection of
securities and other financial instruments within the parameters of
the investment strategy. The maximum risk resulting from financial
instruments is equivalent to their fair value.
When a mutual fund invests in the securities of another mutual fund
(referred to in this context as an “underlying mutual fund”), the
mutual fund has the same risks as the underlying mutual fund in
which it invests. Equities are susceptible to market price risk arising
from uncertainties about future prices of those instruments.
ROI High Yield Private Placement Fund
As at December 31, 2010, 52.96% (2009 – 35.56%) of the Fund’s net
assets were traded on the Canadian stock exchange. The Fund is not
exposed to other price risk on its common share portfolio, given the
nature of the forward contract (note 9).
ROI Private Placement Fund
As at December 31, 2010, 88.53% (2009 – 79.04%) of the Fund’s net
assets were traded on the Canadian stock exchange. The Fund is not
exposed to other price risk on its common share portfolio, given the
nature of the forward contract (note 9).
ROI Strategic Private Placement Fund
As at December 31, 2010, 74.05% (2009 – 89.08%) of the Fund’s
net assets represents underlying investments, which were traded on
the Canadian stock exchange. The Fund is not exposed to other price
risk on its common share portfolio, given the nature of the forward
contract (note 9).
ROI Institutional Private Placement Fund
As at December 31, 2010 and December 31, 2009, the Fund did not
have any exposure to other price risk.
36ROI Pooled Funds
Notes To Financial Statements
Valuation Risk of Private Investments
The process of valuing investments for which no published market
exists is based on inherent uncertainties and will be influenced by the
time required to assess the impact of any particular event on value
from time to time. The resulting values may differ from values that
would have been used had a ready market existed for the investments.
This valuation process is subjective to a degree and, to the extent that
these valuations are inaccurate, investors in the Funds may gain a
benefit or suffer a loss when they purchase or redeem units.
The total amounts of the changes in fair value, recognized in
net income during the year that was estimated using a valuation
technique based on assumptions that are not supported by observable
market prices or rates, are as follows: ROI High Yield Private
Placement Fund – increase of $1,763,973 (2009 – increase of
$1,536,176); ROI Private Placement Fund – increase of $336,077
(2009 – decrease of $134,240); ROI Strategic Private Placement
Fund – increase of $989,831 (2009 – increase of $696,769); and
ROI Institutional Private Placement Fund $90,131 (2009 –
increase of $5,010).
5. FAIR VALUE HIERARCHY
During 2009, CICA Handbook Section 3862, Financial Instruments
– Disclosures (“Section 3862”), was amended to include enhanced
disclosures about inputs to fair value measurement, including their
classification within a hierarchy that prioritizes the inputs to fair value
measurement. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are:
Level 1 Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 Inputs other than quoted prices that are observable for the
asset or liability either directly or indirectly; and
Level 3 Inputs that are not based on observable market data.
If different levels of inputs are used to measure a financial instrument’s
fair value, the classification within the hierarchy is based on the lowest
level input that is significant to the fair value measurement.
The following tables illustrate the classification of the Funds’ financial
instruments within the fair value hierarchy as at December 31, 2010
and 2009:
ROI High Yield Private Placement Fund Assets at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalMarketable securities $247,791,424 – – $247,791,424 Short-term investments 353,793 – – 353,793 Private investments – – $105,538,106 105,538,106 Convertible bond – $5,278,614 – 5,278,614 Unrealized gain on forward contract – – 1,187,495 1,187,495 $248,145,217 $5,278,614 $106,725,601 $360,149,432
ROI High Yield Private Placement Fund Assets at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalMarketable securities $81,180,614 – – $81,180,614 Short-term investments 3,111,311 – – 3,111,311 Private investments – – $35,393,161 35,393,161 Convertible bond – $4,230,000 – 4,230,000 Unrealized gain on forward contract – – 31,832,391 31,832,391 $84,291,925 $4,230,000 $67,225,552 $155,747,477
ROI Private Placement Fund Assets at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalMarketable securities $243,318,032 – – $243,318,032 Short-term investments 127,375 – – 127,375 Private investments – – $64,852,825 64,852,825 $243,445,407 – $64,852,825 $308,298,232
Liabilities at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalUnrealized loss on forward contract – – $42,584,394 $42,584,394
37 ROI Pooled Funds
Notes To Financial Statements
ROI Private Placement Fund Assets at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalMarketable securities $111,490,467 – – $111,490,467 Short-term investments 2,535,175 – – 2,535,175 Private investments – – $18,303,092 18,303,092 $114,025,642 – $18,303,092 $132,328,734
Liabilities at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalUnrealized loss on forward contract – – $5,116,766 $5,116,766
ROI Strategic Private Placement Fund Assets at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalMarketable securities $90,092,331 – – $90,092,331 Private investments – – $38,236,993 38,236,993 Convertible bond – $590,116 – 590,116 $90,092,331 $590,116 $38,236,993 $128,919,440
Liabilities at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalUnrealized loss on forward contract – – $6,729,201 $6,729,201
ROI Strategic Private Placement Fund Assets at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalMarketable securities $27,471,105 – – $27,471,105 Short-term investments 555,498 – – 555,498 Private investments – – $7,351,789 7,351,789 Convertible bond – $500,000 – 500,000 $28,026,603 $500,000 $7,351,789 $35,878,392
Liabilities at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalUnrealized loss on forward contract – – $5,091,782 $5,091,782
ROI Institutional Private Placement Fund Assets at fair value as at December 31, 2010 Level 1 Level 2 Level 3 TotalInvestments in underlying fund $27,019,081 – – $27,019,081 Short-term investment 248,471 – – 248,471 Private investments – – $22,017,392 22,017,392 $27,267,552 – $22,017,392 $49,284,944
ROI Institutional Private Placement Fund Assets at fair value as at December 31, 2009 Level 1 Level 2 Level 3 TotalInvestments in underlying fund $5,553,743 – – $5,553,743 Private investments – – $3,105,010 3,105,010 $5,553,743 – $3,105,010 $8,658,753
38ROI Pooled Funds
Notes To Financial Statements
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
reclassified as Level 3. There were no transfers between levels during
the year.
Marketable Securities
The Funds’ marketable securities are classified as Level 1 when
the security is actively traded and a reliable quote is available.
Marketable securities include publicly traded equities and
investments in publicly available mutual funds.
Short-Term Investments
The Funds’ short-term investments are classified as Level 1 as they
represent overnight cash deposits and are considered to be equivalent
to cash.
Convertible Bonds
The Funds’ convertible bonds investments are classified as Level 2
when they are valued using observable inputs, including interest rates
curves, credit spreads and volatilities.
Private Investments
The Funds’ private investments are classified as Level 3 as the
determination of fair value requires significant unobservable data
and the application of valuation techniques. Private investments
include investments which are not publicly traded or other assets for
which no public market exists.
Forward Contracts
The Funds’ forward contracts are classified as Level 3 as the
determination of fair values are based on the reference funds which
invest only in private investments.
The following is a reconciliation of Level 3 fair value measurements
for the periods ended December 31, 2010 and 2009:
ROI High Yield Private Placement Fund Year endedDecember 31, 2010
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2009 $35,393,161 Purchases 76,358,907 Sales and principal payments (7,977,935)Change in unrealized gain 1,763,973 Balance at December 31, 2010 $105,538,106 Unrealized Gain on Forward ContractBalance at December 31, 2009 $31,832,391 Change in unrealized loss (30,644,896)
Balance at December 31, 2010 $1,187,495
The change in unrealized gain for private investments still held at
December 31, 2010 is $2,543,746.
ROI High Yield Private Placement Fund Year endedDecember 31, 2009
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2008 $24,578,325 Purchases 18,515,171 Sales and principal payments (9,236,511)Change in unrealized gain 1,536,176 Balance at December 31, 2009 $35,393,161 Unrealized Gain on Forward ContractBalance at December 31, 2008 $44,793,964 Change in unrealized loss (12,961,573)
Balance at December 31, 2009 $31,832,391
The change in unrealized gain for private investments still held at
December 31, 2009 is $1,506,233.
ROI Private Placement Fund Year endedDecember 31, 2010
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2009 $18,303,092 Purchases 47,092,000 Sales and principal payments (878,344)Change in unrealized gain 336,077 Balance at December 31, 2010 $64,852,825 Unrealized Gain (Loss) on Forward ContractBalance at December 31, 2009 ($5,116,766)Change in unrealized loss (37,467,628)
Balance at December 31, 2010 ($42,584,394)
The change in unrealized gain for private investments still held at
December 31, 2010 is $343,374.
ROI Private Placement Fund Year endedDecember 31, 2009
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2008 $8,117,409 Purchases 10,500,000 Sales and principal payments (180,077)Change in unrealized loss (134,240)Balance at December 31, 2009 $18,303,092 Unrealized Gain (Loss) on Forward ContractBalance at December 31, 2008 $15,021,878 Change in unrealized loss (20,138,644)
Balance at December 31, 2009 ($5,116,766)
The change in unrealized loss for private investments still held at December 31, 2009 is $134,240.
39 ROI Pooled Funds
ROI Strategic Private Placement Fund Year endedDecember 31, 2010
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2009 $7,351,789 Purchases 31,990,548 Sales and principal payments (2,095,176)Change in unrealized gain 989,832 Balance at December 31, 2010 $38,236,993 Unrealized Loss on Forward ContractBalance at December 31, 2009 ($5,091,782)Change in unrealized loss (1,637,419)
Balance at December 31, 2010 ($6,729,201)
The change in unrealized gain for private investments still held at December 31, 2010 is $1,079,947.
ROI Strategic Private Placement Fund Period endedDecember 31, 2009
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2008 – Purchases $6,655,552 Sales and principal payments (532)Change in unrealized gain 696,769 Balance at December 31, 2009 $7,351,789 Unrealized Loss on Forward ContractBalance at December 31, 2008 – Change in unrealized loss ($5,091,782)
Balance at December 31, 2009 ($5,091,782)
The change in unrealized gain for private investments still held at December 31, 2009 is $696,769.
ROI Institutional Private Placement Fund Year endedDecember 31, 2010
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2009 $3,105,010 Purchases 18,846,171 Sales and principal payments (23,928)Change in unrealized gain 90,139 Balance at December 31, 2010 $22,017,392
The change in unrealized gain for private investments still held at December 31, 2010 is $90,139.
ROI Institutional Private Placement Fund Period endedDecember 31, 2009
Fair value measurements using Level 3 inputs Private InvestmentsBalance at December 31, 2008 – Purchases $3,100,000 Change in unrealized gain 5,010 Balance at December 31, 2009 $3,105,010
The change in unrealized gain for private investments still held at December 31, 2009 is $5,010.
Notes To Financial Statements
For disclosure regarding sensitivity analysis on private investments, refer to note 4.
6. CAPITAL UNITS
The capital of the Funds is represented by issued redeemable units
with no par value. Unitholders are entitled to distributions, if any,
and to payment of a proportionate share based on the series’ NAVPU
upon redemption. The Funds have no restrictions or specific capital
requirements on the subscription and redemption of units other than
the minimum subscription requirements. Capital movements are
shown on the statements of changes in net assets. In accordance with
their investment strategies and risk management policies, the Funds
invest their subscriptions while maintaining sufficient liquidity to
meet redemptions.
The authorized capital of the Funds consists of an unlimited number
of units without nominal or par value. The unitholders have the
right under the Funds’ Declarations of Trust to require the Funds to
repurchase their units at their current NAV.
Some distributions made by the Funds are automatically reinvested in
additional units at the current NAVPU, without an acquisition charge
at the discretion of the unitholders. Unitholders may withdraw from
the automatic reinvestment plan by written notice to the Manager.
The Funds are mutual fund trusts which derive their capital from
investor subscriptions in the Funds. The objective of the Manager
and the Advisor is to invest the Funds’ capital in order to provide a
return to unitholders in accordance with the objectives and strategy
of the Funds. The Funds are not subject to any externally imposed
capital requirements.
40ROI Pooled Funds
Notes To Financial Statements
ROI Private Placement Fund Year ended December 31, 2010
Series A Series F Series 6 Series F-6 Series O Series R
# of units # of units # of units # of units # of units # of units
Balance – Beginning of Year 706,959 52,263 255,118 35,777 142,750 10
Issued:
For cash 960,916 161,625 120,028 60,772 290,023 17,220
On reinvestment of distributions – – 4,023 1,107 – –
Repurchased for cash (234,239) (42,503) (76,947) (12,773) (59,024) –
Balance – End of Year 1,433,636 171,385 302,223 84,883 373,750 17,230
ROI Private Placement Fund Year ended December 31, 2009
Series A Series F Series 6 Series F-6 Series O Series R
# of units # of units # of units # of units # of units # of units
Balance – Beginning of Year 345,474 43,260 173,125 22,392 101,747 42,824
Issued:
For cash 529,986 38,506 147,641 21,545 57,403 78,967
On reinvestment of distributions – – 3,559 422 – –
Repurchased for cash (168,501) (29,503) (69,207) (8,582) (16,400) (121,781)
Balance – End of Year 706,959 52,263 255,118 35,777 142,750 10
ROI High Yield Private Placement Fund Year ended December 31, 2010
Series A Series 5 Series 7 Series F Series F-5 Series F-7 Series O Series R
# of units # of units # of units # of units # of units # of units # of units # of units
Balance – Beginning of Year 597,265 23,618 342,597 92,520 2,596 94,577 92,223 106,105
Issued:
For cash 857,101 101,870 532,165 181,363 26,226 61,036 221,819 382,695
On reinvestment of distributions – 1,158 16,858 – 216 1,761 – –
Repurchased for cash (168,192) (12,100) (126,914) (38,415) (1,962) (18,794) (37,860) (384,824)
Balance – End of Year 1,286,173 114,547 764,706 235,468 27,076 138,580 276,181 103,976
ROI High Yield Private Placement Fund Year ended December 31, 2009
Series A Series 5 Series 7 Series F Series F-5 Series F-7 Series O Series R
# of units # of units # of units # of units # of units # of units # of units # of units
Balance – Beginning of Year 385,987 15,045 255,606 64,761 477 103,928 52,728 10
Issued:
For cash 306,726 14,422 155,658 55,818 3,005 28,689 45,533 106,095
On reinvestment of distributions – 226 6,430 – 23 1,839 – –
Repurchased for cash (95,448) (6,075) (75,097) (28,059) (909) (39,879) (6,038) –
Balance – End of Year 597,265 23,618 342,597 92,520 2,596 94,577 92,223 106,105
Changes in issued units per series are summarized as follows:
41 ROI Pooled Funds
ROI Strategic Private Placement Fund Year ended December 31, 2010
Series A Series F Series F-MG Series MG Series O Series R
# of units # of units # of units # of units # of units # of units
Balance – Beginning of Year 44,021 801 21 6,730 5,959 237,154
Issued:
For cash 295,492 42,212 3,633 84,357 86,152 392,881
On reinvestment of distributions – – 23 607 202 7,159
Repurchased for cash (25,144) (1,074) – (3,491) (1,998) (113,714)
Balance – End of Year 314,369 41,939 3,677 88,203 90,316 523,480
Notes To Financial Statements
ROI Strategic Private Placement Fund Year ended December 31, 2009
Series A Series F Series F-MG Series MG Series O Series R
# of units # of units # of units # of units # of units # of units
Balance – Beginning of Year – – – – – –
Issued:
For cash 45,962 1,087 20 6,716 7,771 247,371
On reinvestment of distributions 145 4 1 15 56 2,433
Repurchased for cash (2,086) (290) – (1) (1,868) (12,650)
Balance – End of Year 44,021 801 21 6,730 5,959 237,154
ROI Institutional Private Placement Fund Year ended December 31, 2009
Series A Series 9 Series F Series O Series R
# of units # of units # of units # of units # of units
Balance – Beginning of Year – – – – –
Issued:
For cash 79,160 20 14,146 4,365 20
On reinvestment of distributions 104 – 128 55 –
Repurchased for cash (6,129) – (8) – –
Balance – End of Year 73,135 20 14,266 4,420 20
ROI Institutional Private Placement Fund Year ended December 31, 2010
Series A Series 9 Series F Series O Series R
# of units # of units # of units # of units # of units
Balance – Beginning of Year 73,135 20 14,266 4,420 20
Issued:
For cash 174,272 9,424 42,922 28,943 130,758
On reinvestment of distributions 8,364 40 1,527 1,428 6,266
Repurchased for cash (15,350) – (5,067) (508) (667)
Balance – End of Year 240,421 9,484 53,648 34,283 136,377
42ROI Pooled Funds
Notes To Financial Statements
7. MANAGEMENT FEES AND OPERATING EXPENSES
ROI High Yield Private Placement Fund
The Manager is responsible for the day-to-day management of
the Fund. In consideration, the Manager is entitled to receive a
management fee based on the average NAV of the Fund, calculated
daily and payable monthly at the following annualized rates:
Series A, 5 and 7 – 1.30%; Series F, F-5, F-7, O and R – nil%.
In addition, the Manager is entitled to a performance fee of up to
the aggregate of 25% of the increase in the NAVPU of each series
(excluding Series R) over the relevant year (after deducting all
management fees and other expenses charged to the Fund), calculated
daily and payable monthly. During the year ended December 31, 2010,
the Fund incurred $2,568,641 (2009 – $1,196,409) in management
fees and $3,573,936 (2009 – $891,710) in performance fees.
ROI Private Placement Fund
The Manager is responsible for the day-to-day management of
the Fund. In consideration, the Manager is entitled to receive a
management fee based on the average NAV of the Fund, calculated
daily and payable monthly at the following annualized rates:
Series A and 6 – 1.60%; Series F and F-6 – 0.60%; Series O and
R – nil%. In addition, the Manager is entitled to a performance fee
of up to the aggregate of 25% of the increase in the NAVPU of each
series (excluding Series R) over the relevant year (after deducting all
management fees and other expenses charged to the Fund), calculated
daily and payable monthly. During the year ended December 31, 2010,
the Fund incurred $2,641,511 (2009 – $1,187,982) in management
fees and $385,427 (2009 – $578,184) in performance fees.
ROI Strategic Private Placement Fund
The Manager is responsible for the day-to-day management of
the Fund. In consideration, the Manager is entitled to receive a
management fee based on the average NAV of the Fund, calculated
daily and payable monthly at the following annualized rates:
Series A and MG – 1.50%; Series F and F-MG – 0.50%; Series O and
R – nil%. In addition, the Manager is entitled to a performance fee
of up to the aggregate of 25% of the increase in the NAVPU of each
series (excluding Series R) over the relevant year (after deducting all
management fees and other expenses charged to the Fund), calculated
daily and payable monthly. During the year ended December 31, 2010,
the Fund incurred $323,923 (2009 – $23,692) in management fees
and $519,331 (2009 – $nil) in performance fees.
ROI Institutional Private Placement Fund
The Manager is responsible for the day-to-day management of
the Fund. In consideration, the Manager is entitled to receive a
management fee based on the average NAV of the Fund, calculated
daily and payable monthly at the following annualized rates:
Series A – 1.50%; Series F – 0.50%; Series I, O and R – nil%.
In addition, the Manager is entitled to a performance fee of up to
the aggregate of 25% of the increase in the NAVPU of each series
(excluding Series R) over the relevant year (after deducting all
management fees and other expenses charged to the Fund), calculated
daily and payable monthly. During the year ended December 31, 2010,
the Fund incurred $252,549 (2009 – $56,022) in management fees
and $23,502 (2009 – $11,524) in performance fees.
The Advisor is responsible for managing the investment portfolios.
The Advisor is compensated by the Manager.
The operating expenses of the Funds, which include, but are
not limited to, legal, audit, custodial, transfer agency and fund
administration expenses and the cost of financial statements and other
reports, are the direct responsibility of the Funds. The Manager
pays certain of these expenses on behalf of the Funds and is then
reimbursed by the Funds.
The Manager may waive or absorb certain expenses of the Funds.
The decision to do so is reviewed annually and determined at the
sole discretion of the Manager. The Manager intends to continue
this reduction for the foreseeable future, but reserves the right to
discontinue this practice at any time without notice.
In the prior year, subject to applicable regulatory requirements,
the ROI High Yield Private Placement Fund and the ROI Private
Placement Fund arranged to prepay a portion of the annual expenses
applicable to a series in exchange for a discount from the Manager.
During the year ended December 31, 2010, all prepaid amounts
were repaid.
ROI Capital Ltd., an affiliate of the Manager, may be paid work fees
(“work fees”) by companies in which the Funds invest. The work
fees are paid for work done in connection with the financing of such
companies. Such financing work may include sourcing investment
opportunities, structuring investments, due diligence and preparation
of loan participation agreements or other investment documentation.
For the year ended December 31, 2010, the work fees paid to
ROI Capital Ltd. as a result of investments of the Funds totalled
approximately: ROI High Yield Private Placement Fund $2,685,758
(2009 – $550,123); ROI Private Placement Fund $3,433,244
(2009 – $886,521); ROI Strategic Private Placement Fund
$1,111,416 (2009 – $159,950); and ROI Institutional Private
Placement Fund $134,634 (2009 – $98,231).
In addition, ROI Capital may be paid a monitoring fee or commitment,
renewal, extension, discharge, prepayment or other administrative fee
by companies in which the Funds invest. For the financial year ended
December 31, 2010, such fees paid to ROI Capital Ltd. as a result of
investments of the Funds totalled approximately: ROI High Yield
Private Placement Fund $190,289 (2009 – $172,762); ROI Private
Placement Fund $30,772 (2009 – $13,077); ROI Strategic Private
Placement Fund $7,041 (2009 – $46,140); and ROI Institutional
Private Placement Fund $2,250 (2009 – $42).
43 ROI Pooled Funds
8. SALES CHARGES
The sales charge incurred by unitholders is dependent on the purchase
option selected at the time of purchase. Series A, 5, 6, 7, 9 and MG
may be purchased by one of three options: the Initial Sales Charge
Option (“ISC”), Low Load Sales Charge Option (“LL”) or Super Low
Load Sales Charge Option (“SLL”). Under the ISC Option,
a negotiable fee of up to 5% of the purchase price is payable by
Series A, 5, 6, 7, 9 and MG investors to their dealer. No redemption
fee is payable when investors redeem Series A, 5, 6, 7, 9 or MG units
purchased under the ISC Option (subject to a short-term trading fee,
where applicable). Under the LL and SLL Options, no fee is payable
by Series A, 5, 6, 7, 9 and MG investors to their dealer. Investors may
be subject to a redemption fee if they redeem Series A, 5, 6, 7, 9 or
MG units purchased under the LL or SLL Options, depending upon
how long they have held the units to be redeemed.
No sales charges are payable in respect of Series F, F-5, F-7, F-6,
F-MG, O and R units of the Funds.
Investors may switch units of one series into units of another series
within a Fund or between Funds, if they meet the requirements for
the new series that they wish to switch into. A fee may be payable at
the time investors switch Series A, 5, 6, 7, 9 or MG units, depending
upon how long they have held the units to be switched.
9. FORWARD CONTRACTS
ROI High Yield Private Placement Fund
The Fund has entered into a forward purchase and sale contract
with a Canadian chartered bank (the “Counterparty”) that has a
maturity date of January 16, 2017. The Fund has purchased and
pledged to the Counterparty the common share portfolio listed on the
statement of investments. Under the terms of the forward contract,
the Counterparty has agreed to pay the Fund an amount equal to the
redemption proceeds of the number of units of the ROI Private Trust
Series O specified in the forward contract, in exchange for the Fund
common share portfolio at fair market value. As at December 31, 2010,
the NAV of the ROI Private Trust was $187,513,972 (2009 –
$88,169,402), consisting mainly of private placement investments
with a fair value of $184,062,974 (2009 – $84,060,747).
ROI Private Placement Fund
The Fund has entered into a forward purchase and sale contract with
a Canadian chartered bank (the “Counterparty”) that has a maturity
date of May 6, 2013. The Fund has purchased and pledged to the
Counterparty the common share portfolio listed on the statement
of investments. Under the terms of the forward contract, the
Counterparty has agreed to pay the Fund an amount equal to the
redemption proceeds of the number of units of the ROI Private Capital
Trust Series A specified in the forward contract, in exchange for the Fund
common share portfolio at fair market value. As at December 31, 2010,
the NAV of the ROI Private Capital Trust was $222,566,934
(2009 – $96,212,847), consisting mainly of private placement
investments with a fair value of $219,509,691 (2009 – $97,253,754).
ROI Strategic Private Placement Fund
The Fund has entered into a forward purchase and sale contract with
a Canadian chartered bank (the “Counterparty”) that has a maturity
date of March 25, 2019. The Fund has purchased and pledged to the
Counterparty the common share portfolio listed on the statement of
investments. Under the terms of the forward contract, the Counterparty
has agreed to pay the Fund an amount equal to the redemption
proceeds of the number of units of the ROI Strategic Capital Trust
Series A specified in the forward contract, in exchange for the Fund
common share portfolio at fair market value. As at December 31, 2010,
the NAV of the ROI Strategic Capital Trust was $83,366,372
(2009 – $22,379,323), consisting mainly of private placement
investments with a fair value of $82,741,125 (2009 – $22,027,760).
The common share portfolios subject to the forward contracts are
agreed to between the Funds and the Counterparty and is pledged
to the Counterparty as security for the Funds’ obligations under
the forward contract. In order to permit the Funds to pay monthly
distributions, redemptions of units, operating expenses or other
liabilities of the Funds, the terms of the forward contract provide
that the forward contract may be settled in whole or in part at any
time prior to the settlement date by the Funds, either in cash or
by tendering to the Counterparty securities in the common share
portfolios at the Funds’ discretion.
The Funds are exposed to the credit risk of the Counterparty. If the
Counterparty to the forward contract is unable to meet the terms
of the forward contract, a loss may occur. The Counterparty to the
forward contract has a credit rating of AA. The creditworthiness of
the Counterparty was reviewed prior to entering into the forward
contract and is monitored on a regular basis. The fees on the forward
contract are paid by the Funds.
Notes To Financial Statements
44ROI Pooled Funds
Notes To Financial Statements
ROI Private TrustPrivate Investments Cost Fair Value Units
%
Limited Partnerships
181, 191 & 195 The West Mall LP $12,901,752 $18,036,163 14,708,371 9.62%
300, 302 & 304 The East Mall LP 8,106,930 8,234,287 9,168,240 4.39%
401 & 405 West Mall LP 6,129,064 9,516,285 7,233,235 5.07%
80 Whitehall Drive LP 1,128,738 1,264,848 1,322,312 0.67%
Bayfield Retail (2009) LP 1,813,900 2,068,495 1,870,000 1.10%
Bayfield Mill Woods Limited Partnership 2,570,500 2,572,885 2,650,000 1.37%
$32,650,884 $41,692,963 36,952,158 22.23%
Debt – Mortgages
2088013 Ont. Inc. (Empire Communities – Brampton) $18,777,561 $18,777,561 18,777,561 10.01%
2154580 Ontario Inc. (LCHD) 1,549,806 1,549,806 1,549,806 0.83%
2176847 Ontario Inc. (Decorstone) 555,195 555,195 555,195 0.30%
4171624 Canada Inc. (Quality Hotel and Suites) 995,920 995,920 995,920 0.53%
6750915 Canada Inc. (CBIA) 2,766,529 1,839,235 2,766,529 0.98%
9126-7393 Quebec Inc. (Gym-max & Conference Centre) 497,960 497,960 497,960 0.27%
Applewood II Hotel Holdings Inc. & Combo Construction Limited
1,034,513 1,034,513 1,034,513 0.55%
Bedford Commons 2 Property Holdings Inc. 1,800,000 1,800,000 1,800,000 0.96%
Blackwood Realty Fund LP 1,000,000 1,011,600 1,000,000 0.54%
Digital Specialty Chemicals Limited 838,182 853,012 906,364 0.45%
Distinctive Design Furniture Inc. 1,050,000 210,000 1,050,000 0.11%
Empire (Estates of Wyndance) Ltd. 2,834,750 2,834,750 2,834,750 1.51%
Empire Fovere Inc. 4,064,317 4,064,317 4,064,317 2.17%
Hilldale Gardens Developments Ltd. 7,500,000 7,500,000 7,500,000 4.00%
IBRANS Developments Ltd. 1,800,000 1,801,260 1,800,000 0.96%
Marquee Hotels, Brampton Inc. 3,980,000 3,980,000 3,980,000 2.12%
Masterfile Corporation 335,664 332,173 335,664 0.18%
McCowan Manufacturing Ltd. 4,750,000 3,323,575 4,750,000 1.77%
MMS Investments Inc. 6,035,137 6,035,137 6,035,137 3.22%
2139654 Ontario Inc. (Novo Plastic Jr.) 3,111,448 3,181,145 3,111,448 1.70%
Parkbridge Lifestyles Communities Inc. 7,500,000 7,500,000 7,500,000 4.00%
Pier 27 Toronto (North) Inc. 2,000,000 2,028,200 2,000,000 1.08%
PQB Shopping Centre Inc. 1,500,000 1,500,000 1,500,000 0.80%
Prowinko Canada Ltd. 5,000,000 5,000,000 5,000,000 2.67%
Reefer Mississauga 667,500 665,898 667,500 0.36%
Reefer Sales & Service (Toronto) Inc. 1,408,000 1,407,296 1,408,000 0.75%
Roybridge Holdings Ltd. 6,712,395 6,815,095 6,712,395 3.63%
Skyline 66 – Temperance Inc. 9,300,000 9,300,000 9,300,000 4.96%
St. Jacobs Country Inn Inc. 7,500,000 7,500,000 7,500,000 4.00%
Strathroy Land Corporation (Villarboit) 4,800,000 4,800,000 4,800,000 2.56%
Summit Energy LP 2,689,277 2,689,277 2,689,277 1.43%
Uxbridge Industrial Ltd. 1,272,832 1,272,832 1,272,832 0.68%
Villamark Inc. 7,350,000 7,350,000 7,350,000 3.92%
Whiterock 200 Ste-Foy Inc. 4,500,000 4,500,000 4,500,000 2.40%
$127,476,986 $124,505,757 127,545,168 66.40%
The private investments held by the reference funds as at December 31, 2010 are as follows:
45 ROI Pooled Funds
Notes To Financial Statements
ROI Private Capital Trust Private Investments Cost Fair Value Units
%
Limited Partnerships
181, 191 & 195 The West Mall LP $4,227,939 $5,910,499 4,819,973 2.66%
300, 302 & 304 The East Mall LP 1,389,759 1,411,592 1,571,698 0.63%
Bayfield Retail (2009) LP 1,813,900 2,068,495 1,870,000 0.93%
7,431,598 9,390,586 8,261,671 4.22%
Debt – Mortgages
1710 Kingsway Holdings Inc. 5,644,226 5,644,226 5,644,226 2.54%
2088013 Ont. Inc. (Empire Communities – Brampton) 6,697,330 6,697,330 6,697,330 3.01%
2154580 Ontario Inc. (LCHD) 1,937,253 1,937,253 1,937,253 0.87%
4171624 Canada Inc. (Quality Hotel and Suites) 995,920 995,920 995,920 0.45%
7013094 Canada Inc. (Quality Inn Hotels Montreal) 3,530,846 3,566,154 3,530,846 1.60%
9126-7393 Quebec Inc. (Gym-max & Conference Centre) 497,960 497,960 497,960 0.22%
Applewood II Hotel Holdings Inc. & Combo Construction Limited
1,034,513 1,034,513 1,034,513 0.46%
Bedford Commons 2 Property Holdings Inc. 1,000,000 1,000,000 1,000,000 0.45%
Blackwood Realty Fund LP 4,000,000 4,046,400 4,000,000 1.82%
Clarion Hotel Gatineau 4,116,235 4,154,928 4,116,235 1.87%
Empire (Estates of Wyndance) Ltd. 5,625,001 5,625,001 5,625,001 2.53%
Empire Fovere Inc. 4,064,317 4,064,317 4,064,317 1.83%
Infante Bros. General Contractors Limited 3,137,052 3,210,773 3,137,052 1.44%
Instorage (10345 Keele St.) 6,505,653 6,505,653 6,505,653 2.92%
Instorage (144 Norseman St.) 5,447,640 5,447,640 5,447,640 2.45%
Instorage (605 Alden Rd.) 6,122,967 6,122,967 6,122,967 2.75%
Instorage (81 Arrow Rd.) 7,505,135 7,505,135 7,505,135 3.37%
Instorage Kennedy 7,418,605 7,418,605 7,418,605 3.33%
Isabella Developments Inc. 3,982,564 3,982,564 3,982,564 1.79%
Marquee Hotels Ltd. 4,964,161 5,014,796 4,964,161 2.25%
MMS Investments Inc. 8,046,849 8,046,849 8,046,849 3.62%
MMV Financial Inc. 13,236,116 13,236,116 13,236,116 5.95%
Palm Holdings Inc. 11,500,000 11,500,000 11,500,000 5.17%
ROI Private TrustPrivate Investments Cost Fair Value Units
%
Subordinated Secured Debentures
Asset Engineering Group LP $2,000,000 $400,000 2,000,000 0.21%
Centra Acquisition Inc. 17,464,254 17,464,254 17,464,254 9.31%
$19,464,254 $17,864,254 19,464,254 9.53%
$179,592,124 $184,062,974 183,961,580 98.16%
Private Investments – 98.16% $184,062,974 Short-Term Investments – 1.18% 2,218,694 Other Assets, Net of Liabilities – 0.66% 1,232,304 Net Assets as at December 31, 2010: $187,513,972
46ROI Pooled Funds
ROI Private Capital Trust Private Investments Cost Fair Value Units
%
Parkbridge Lifestyles Communities Inc. 2,000,000 2,000,000 2,000,000 0.90%
Pier 27 Toronto (North) Inc. 12,000,000 12,169,200 12,000,000 5.47%
Best Western Dawson Creek (Pomeroy Lodging LP) 11,137,896 11,137,896 11,137,896 5.00%
Best Western Prince George (Pomeroy Lodging LP) 2,014,300 2,014,300 2,014,300 0.91%
Holiday Inn Express Grande Prairie (Pomeroy Lodging LP) $9,301,328 $9,301,328 9,301,328 4.18%
Motel 6 (Pomeroy Lodging LP) 4,443,309 4,443,309 4,443,309 2.00%
Pomeroy Inn & Suites Chetwynd (Pomeroy Lodging LP) 4,858,018 4,858,018 4,858,018 2.18%
Pomeroy Inn & Suites Dawson Creek (Pomeroy Lodging LP) 9,479,060 9,479,060 9,479,060 4.26%
Pomeroy Inn & Suites Fort St. John (Pomeroy Lodging LP) 6,931,563 6,931,563 6,931,563 3.11%
Pomeroy Inn & Suites Grimshaw (Pomeroy Lodging LP) 2,665,986 2,665,986 2,665,986 1.20%
Ramada Grande Prairie Clairmont (Pomeroy Lodging LP) 7,168,539 7,168,539 7,168,539 3.22%
Prowinko Canada Ltd. 2,000,000 2,000,000 2,000,000 0.90%
Roybridge Holdings Ltd. 5,389,514 5,471,974 5,389,514 2.46%
Skyline 66 – Temperance Inc. 1,000,000 1,000,000 1,000,000 0.45%
Strathroy Land Corporation (Villarboit) 3,200,000 3,200,000 3,200,000 1.44%
Uxbridge Industrial Ltd. 1,272,832 1,272,832 1,272,832 0.57%
Villamark Inc. 2,650,000 2,650,000 2,650,000 1.19%
Whiterock 200 Ste-Foy Inc. 4,500,000 4,500,000 4,500,000 2.02%
$209,022,688 $209,519,105 209,022,688 94.14%
Subordinated Secured Debentures – 0.90%
Asset Engineering Group LP $3,000,000 $600,000 3,000,000 0.27%
$219,454,286 $219,509,691 220,284,359 98.63%
Private Investments – 98.63% $219,509,691 Short-Term Investments – 0.88% 1,906,732 Other Assets, Net of Liabilities – 0.52% 1,150,511 Net Assets as at December 31, 2010: $222,566,934
Notes To Financial Statements
47 ROI Pooled Funds
Notes To Financial Statements
ROI Strategic Capital Trust Private Investments Cost Fair Value Units
%
Limited Partnerships
181, 191 & 195 The West Mall LP $4,663,809 $6,519,829 5,316,877 7.82%
300, 302 & 304 The East Mall LP 2,084,639 2,117,388 2,357,547 2.54%
401 & 405 West Mall LP 6,129,064 9,516,285 7,233,235 11.42%
310 Henderson LP 5,641,913 7,455,180 6,034,310 8.94%
80 Whitehall Drive LP 1,128,738 1,264,848 1,322,312 1.52%
Bayfield Mill Woods Limited Partnership 2,570,500 2,572,885 2,650,000 3.09%
$22,218,663 $29,446,415 24,914,281 35.32%
Debt – Mortgages
1162117 Ontario Ltd. (Magnum) $1,800,000 $1,800,000 1,800,000 2.16%
2088013 Ont. Inc. (Empire Communities – Brampton) 4,172,791 4,172,791 4,172,791 5.01%
310 Henderson Senior 4,088,432 4,057,360 4,088,432 4.87%
4171624 Canada Inc. (Quality Hotel and Suites) 348,572 348,572 348,572 0.42%
9126-7393 Quebec Inc. (Gym-max & Conference Centre) 199,184 199,184 199,184 0.24%
Applewood II Hotel Holdings Inc. & Combo Construction Limited
1,034,513 1,034,513 1,034,513 1.24%
Bedford Commons 2 Property Holdings Inc. 1,000,000 1,000,000 1,000,000 1.20%
Blackwood Realty Fund LP 1,000,000 1,011,600 1,000,000 1.21%
Empire (Estates of Wyndance) Ltd. 1,171,875 1,171,875 1,171,875 1.41%
Empire Fovere Inc. 623,696 623,696 623,696 0.75%
Hilldale Gardens Developments Ltd. 5,200,000 5,200,000 5,200,000 6.24%
JB Sons Hospitality Corp. 3,400,000 3,400,000 3,400,000 4.08%
Marquee Hotels Ltd. 2,422,511 2,447,220 2,422,511 2.94%
Marquee Hotels, Brampton Inc. 3,980,000 3,980,000 3,980,000 4.77%
MMS Investments Inc. 4,023,425 4,023,425 4,023,425 4.83%
Parkbridge Lifestyles Communities Inc. 2,000,000 2,000,000 2,000,000 2.40%
Pier 27 Toronto (North) Inc. 4,000,000 4,056,400 4,000,000 4.87%
PQB Shopping Centre Inc. 500,000 500,000 500,000 0.60%
Prowinko Canada Ltd. 2,000,000 2,000,000 2,000,000 2.40%
Roybridge Holdings Ltd. 636,943 646,688 636,943 0.78%
St. Jacobs Country Inn Inc. 7,500,000 7,500,000 7,500,000 9.00%
Uxbridge Industrial Ltd. 2,121,386 2,121,386 2,121,386 2.54%
$53,223,328 $53,294,710 53,223,328 63.93%
$75,441,991 $82,741,125 78,137,610 99.25%
Private Investments – 99.25% $82,741,125 Short-Term Investments – 0.09% 72,905 Other Assets, Net of Liabilities – 0.66% 552,342 Net Assets as at December 31, 2010: $83,366,372
48ROI Pooled Funds
10. RECONCILIATION OF PRICING NAV TO GAAP
NET ASSETS
In accordance with Accounting Guideline 18, Investment Companies,
investments are deemed to be categorized as held for trading,
and are required to be recorded at fair value as defined in CICA
Handbook Section 3855 “Financial Instruments – Recognition and
Measurement.” Section 3855 requires that the fair value of financial
instruments which are traded in active markets be measured based on
the bid price for long securities and the ask price for short securities
(Net Assets). For the purposes of calculating its NAVPU for
purchases and redemptions, the Funds will continue to measure the
fair value of financial instruments which are traded in active markets
based on the last traded price for the day, but will apply Canadian
GAAP for the purposes of its financial statements.
The following tables present the reconciliation between net asset
value and net assets. Comparative figures are for December 31, 2009.
ROI High Yield Private Placement FundPer Unit $
2010 2009
SeriesNet Asset
ValueNet Assets
Net Asset Value
Net Assets
A 132.79 132.79 125.07 125.07
5 109.20 109.20 107.85 107.85
7 100.01 100.01 101.17 101.17
F 137.89 137.89 128.38 128.38
F-5 114.25 114.25 111.29 111.29
F-7 104.93 104.93 104.62 104.62
O 138.66 138.66 128.75 128.75
R 129.74 129.74 118.45 118.45
ROI Private Placement FundPer Unit $
2010 2009
SeriesNet Asset
ValueNet Assets
Net Asset Value
Net Assets
A 114.19 114.19 109.27 109.27
F 117.00 117.00 110.80 110.80
6 99.48 99.48 100.15 100.15
F-6 102.14 102.14 101.68 101.68
O 118.98 118.98 111.90 111.90
R 116.62 116.62 109.16 109.16
Notes To Financial Statements
ROI Strategic Private Placement FundPer Unit $
2010 2009
SeriesNet Asset
ValueNet Assets
Net Asset Value
Net Assets
A 114.25 114.25 104.56 104.56
F 115.88 115.88 104.90 104.90
F-MG 106.93 106.93 101.32 101.32
MG 105.17 105.17 100.84 100.84
O 116.71 116.71 104.71 104.71
R 117.42 117.42 104.77 104.77
ROI Institutional Private Placement FundPer Unit $
2010 2009
SeriesNet Asset
ValueNet Assets
Net Asset Value
Net Assets
A 104.35 104.35 104.54 104.54
9 104.10 104.10 104.26 104.26
F 103.62 103.62 104.06 104.06
O 103.68 103.68 104.03 104.03
R 105.27 105.27 104.08 104.08
49 ROI Pooled Funds
Notes To Financial Statements
11. INCOME TAXES
Non-capital losses are available to be carried forward for 20 years.
Capital losses for income tax purposes may be carried forward
indefinitely and applied against capital gains realized in future
years. The non-capital losses may be utilized to reduce future years’
taxable income and expire up to 2029 for the ROI High Yield Private
Placement Fund and ROI Private Placement Fund. No benefit has
been recognized for these unused losses in these financial statements.
As at December 31, 2010, the Funds had non-capital and net capital
losses available from the December 15, 2010 tax year ended as follows.
ROI High Yield Private Placement Fund 2010 2009Non-Capital Losses $686,216 $686,216
Net Capital Losses $8,039,194 $8,039,194
ROI Private Placement Fund 2010 2009Non-Capital Losses $1,382,140 $1,382,140
Net Capital Losses $2,759,527 $2,759,527
ROI Strategic Private Placement Fund 2010 2009Non-Capital Losses Nil Nil
Net Capital Losses Nil Nil
ROI Institutional Private Placement Fund 2010 2009Non-Capital Losses Nil Nil
Net Capital Losses Nil Nil
12. SECURITIES LENDING
The ROI High Yield Private Placement Fund, ROI Private Placement
Fund and ROI Strategic Private Placement Fund lend portfolio
securities from time to time in order to earn additional income.
The aggregate market value of all securities loaned cannot exceed
100% of the net assets of the Funds. The Funds receive collateral in
the form of debt obligations issued by the U.S. Treasury against the
loaned securities and maintain such collateral in an amount equal
to or greater than 105% of the market value of the loaned securities
during the period of the loan. At December 31, 2010, certain
securities shown on the statements of net assets had been loaned as
part of the securities lending program. The following table shows
the market value of the securities loaned and the market value of the
collateral for such loans. Under the terms of the program, the Funds
may instruct that securities be returned within three days.
13. COMPARATIVE FINANCIAL STATEMENTS
Certain 2009 comparative figures have been reclassified from
statements previously presented to conform to the presentation
of the 2010 financial statements.
14. EXEMPTION FROM REGULATORY FILING
Under the exemption in Section 2.11 of NI 81-106, the Funds
have not and will not be filing their financial statements with
regulatory authorities.
Fund Market Value $ Collateral Value $ROI High Yield Private Placement Fund 185,782,584 195,562,300ROI Private Placement Fund 238,441,431 246,818,229ROI Strategic Private Placement Fund 89,916,296 93,514,852
50ROI Pooled Funds
Corporate & Shareholder Information
Sales Head Office
ROI Capital Ltd.
37 Front Street East
4th Floor
Toronto ON
M5E 1B3
Auditor
PricewaterhouseCoopers LLP
Suite 3000, Box 82
Royal Trust Tower, TD Centre
Toronto ON
M5K 1G8
Legal Counsel
Borden Ladner Gervais LLP
World Exchange Plaza
100 Queen Street, Suite 1100
Ottawa ON
K1P 1J9
Client Services & Back Office
ROI Capital Ltd.
c/o Citigroup Funds Services Canada Inc.
2920 Matheson Boulevard East
Mississauga ON
L4W 5J4
ROI Capital Ltd. 37 Front Street East, 4th Floor, Toronto, Ontario M5E 1B3
Phone: 416 361-6162 Fax: 416 361-3013
roicapital.ca
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