Canadian High Income Equity Fund Interim Report 2020 - TSX: CIQ.UN
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TSX : CIQ.UN
Canadian High Income
Equity Fund
Interim Report 2020
Actively managed portfolio focused on
higher-yielding Canadian securities.
VALUE
INTEGRITY
PERFORMANCE
THE FOUNDATION FOR EXCELLENCE
Canadian High Income Equity Fund - Interim Report 2020
MANAGEMENT REPORT OF FUND PERFORMANCE
August 10, 2020
This interim management report of fund performance for Canadian High Income Equity Fund (the “Fund”) contains financial highlights
but does not contain the unaudited interim financial statements of the Fund. The unaudited interim financial statements follow this report.
You may obtain a copy of the audited annual or unaudited interim financial statements, at no cost, by calling 1‑866‑642‑6001 or by
sending a request to Investor Relations, Brompton Funds, Bay Wellington Tower, Brookfield Place, 181 Bay Street, Suite 2930, Box
793, Toronto, Ontario, M5J 2T3, or by visiting our website at www.bromptongroup.com or SEDAR at www.sedar.com. Unitholders
may also contact Brompton Funds by using one of these methods to request a copy of the Fund’s proxy voting policies and procedures,
proxy voting disclosure record, Independent Review Committee’s report, or quarterly portfolio disclosure.
THE FUND
Canadian High Income Equity Fund is a closed‑end investment trust managed by Brompton Funds Limited (the “Manager”). The
investment manager of the Fund is Bloom Investment Counsel, Inc. (the “Investment Manager”). The units of the Fund trade on the
Toronto Stock Exchange (“TSX”) under the symbol CIQ.UN and are RRSP, DPSP, RRIF, RESP and TFSA eligible.
INVESTMENT OBJECTIVES AND STRATEGIES
Canadian High Income Equity Fund is designed to provide unitholders with a high monthly distribution and the opportunity for capital
appreciation through investment in an actively managed portfolio of publicly listed or traded Canadian securities. The Fund invests in
an actively managed portfolio of publicly listed or traded Canadian securities across a broad range of industries.
RECENT DEVELOPMENTS
Market Volatility and COVID-19
The recent outbreak of the respiratory disease designated as COVID-19 has caused increased volatility and disruptions in global financial
markets, which has resulted in losses for investors and the market in general. The economic impact of COVID-19 may be short-term or
may last for an extended period of time, and in either case, could result in a substantial downturn or recession. These risks could also
adversely affect securities markets, inflation and other factors relating to the securities held in the portfolios of the Fund. The Fund’s Net
Asset Value reflecting the value of the Fund’s portfolio based on the most recent valuation date can be found on the Fund’s webpage at
www.bromptongroup.com.
Monthly Distributions
On April 23, 2020, the Fund announced distributions in the amount of $0.04 per unit per month for record dates from April to June 2020,
which represented a change from the previous level of $0.05 per unit per month. The new distribution level is more appropriate given
current market conditions.
Independent Review Committee Members
In June 2020, Raj Kothari was appointed to the Independent Review Committee (IRC) of the Fund as a result of the passing of Arthur
R.A. Scace. Raj was a Partner and Vice Chair of PwC Canada and served as Managing Partner for Greater Toronto at PwC until
December 31, 2017. The IRC is comprised of a minimum of three members, each of whom must be independent of the Funds, the
Manager and any affiliate companies of the Manager. The function of the IRC is to provide decisions on conflict of interest matters that
the Manager has referred to the IRC and provide oversight on any conflict issues that IRC members identify in their own right.
RISKS
Risks associated with an investment in the units of the Fund are discussed in the Fund’s 2019 annual information form, which is available
on the Fund’s website at www.bromptongroup.com or on SEDAR at www.sedar.com. There were no changes to the Fund during the
period ended June 30, 2020 that materially affected the risks associated with an investment in the units of the Fund as they were discussed.
1Canadian High Income Equity Fund - Interim Report 2020
RESULTS OF OPERATIONS
Distributions and Changes in Net Assets from Operations (see Financial Highlights)
Cash distributions amounted to $0.27 per unit for the first six months of 2020, down from $0.30 per unit for the first six months of 2019,
reflecting a change in monthly distributions from $0.05 per unit to $0.04 per unit effective April 23, 2020. Since inception in February
2010, the Fund has paid total cash distributions of $7.55 per unit.
The Fund has a distribution reinvestment plan which allows participating unitholders to automatically reinvest monthly distributions,
commission free, in additional units of the Fund. Pursuant to this plan, 1,516 units were acquired in the market at an average price of
$6.68 per unit and 332 units were issued from treasury at an average price of $6.84 during the six months ended June 30, 2020.
The Fund earned revenue of $0.15 per unit in the first six months of 2020, compared to $0.18 per unit in the first six months of 2019,
while expenses were $0.08 per unit compared to $0.10 per unit in 2019.
Net Asset Value
The Net Asset Value per unit of the Fund at June 30, 2020 was $6.11, compared to December 31, 2019 at $7.89, a $1.78 per unit decrease
as a result of portfolio losses and net loss from operations. Aggregate Net Asset Value of the Fund was $11.5 million at June 30, 2020,
down from $15.0 million at December 31, 2019. The Fund had $3.0 million in net realized and change in unrealized losses in the
portfolio, a net income of $0.2 million, $0.5 million in cash distributions paid, and unit repurchases of $0.2 million under the Fund’s
issuer bid program.
Investment Portfolio
The Fund’s investments at June 30, 2020 included 24 publicly listed Canadian securities, compared to 27 securities at December 31,
2019. During the first six months of 2020, two positions were added: Canadian Tire Corporation Limited and Morneau Shepell Inc. Five
positions were sold: Andlauer Healthcare Group Inc., Extendicare Inc., ShawCor Ltd., Stingray Group Inc. and Wajax Corporation. The
portfolio’s investment weighting (excluding cash) and detailed listing of the Fund’s security holdings is provided in the financial
statements. The Fund had a net realized and change in unrealized loss of $3.0 million during the first six months of 2020, principally due
to losses in the Consumer staples and discretionary, Financial, and Industrial sectors.
Portfolio Sectors
Change in
% of Portfolio Realized Unrealized Total
Net Gains (Losses) by Sector (millions) as of 30-Jun-20 $ $ $
Consumer staples and discretionary 17.1 (0.2) (0.5) (0.7)
Financial 17.5 - (0.7) (0.7)
Healthcare - (0.1) - (0.1)
Industrial 17.4 (0.2) (0.4) (0.6)
Materials 2.1 (0.1) (0.2) (0.3)
Oil and gas 2.1 (0.5) 0.2 (0.3)
Pipes, power, utilities and infrastructure 19.1 0.4 (0.6) (0.2)
Real estate 6.2 0.2 (0.3) (0.1)
Cash and short-term investments 18.5 - - -
Total 100.0 (0.5) (2.5) (3.0)
Liquidity and Capital Resources
To provide liquidity for unitholders, units of the Fund are listed on the TSX under the symbol CIQ.UN. The Fund’s normal course issuer
bid program allows it to purchase up to approximately 10% of its units for cancellation if they trade below Net Asset Value per unit. As
a result, purchases under the issuer bid program are accretive to the Net Asset Value per unit at the time of purchase. During the first six
months of 2020, 26,000 units were purchased under this program at an average price of $7.61 per unit. Investors may also redeem their
units at Net Asset Value, less applicable costs, in accordance with the Fund’s redemption provisions. During the first six months of 2020,
no units were redeemed.
2Canadian High Income Equity Fund - Interim Report 2020
RELATED PARTY TRANSACTIONS
Related‑party transactions consist of services provided by the Manager pursuant to a management agreement. See the Management Fees
section below.
MANAGEMENT FEES
Pursuant to a management agreement, the Manager provides management, investment management and administrative services to the
Fund, for which it is paid a management fee equal to 1.25% per annum of the Net Asset Value of the Fund, plus applicable taxes. The
Manager is responsible for paying the fees of the Investment Manager. The management fee is used by the Manager to cover certain
costs to administer the Fund, the cost of the Investment Manager and for profit. Prior to January 1, 2020, the Fund also paid the Manager
a service fee equal to 0.40% per annum of the Net Asset Value of the Fund. The service fee was in turn paid by the Manager to the
investment dealers based on the proportionate number of units held by clients of each dealer at the end of each calendar quarter. During
the period June 30, 2019, the Fund paid $0.03 million in service fees. Effective January 1, 2020, the Manager discontinued the payment
of service fees. For the first six months of 2020, management fees amounted to $0.09 million (six-month period ended June 30, 2020 –
$0.11 million).
FINANCIAL HIGHLIGHTS
The following tables show selected key financial information about the Fund and are intended to help readers understand the Fund’s
financial performance for the fiscal periods indicated. This information is derived from the Fund’s unaudited interim and audited annual
financial statements which have been prepared in accordance with International Financial Reporting Standards. The information in the
following tables is presented in accordance with National Instrument (“NI”) 81‑106 and, as a result, does not act as a continuity of
opening and closing Net Assets per unit. The increase (decrease) in Net Assets from operations is based on average units outstanding
during the period, and all other numbers are based on actual units outstanding at the relevant point in time.
Net Assets per Unit1
December 31
June 30, 2020 2019 2018 2017 2016 2015
For the period/year ended $ $ $ $ $ $
Net Assets per unit, beginning of 7.89 7.14 9.63 10.04 8.37 10.50
period/year2
Increase (decrease) from operations:3
Total revenue 0.15 0.35 0.37 0.39 0.40 0.47
Total expenses (0.08) (0.20) (0.21) (0.22) (0.21) (0.22)
Realized gains (losses) (0.24) (0.47) (0.21) 0.35 1.12 (0.87)
Unrealized gains (losses) (1.34) 1.68 (1.67) (0.37) 1.00 (0.70)
Total increase (decrease) in Net Assets (1.51) 1.36 (1.72) 0.15 2.31 (1.32)
from operations
Distributions to unitholders:2,4
From net investment income n/a 0.10 0.10 0.12 0.12 0.08
Return of capital n/a 0.50 0.50 0.48 0.54 0.76
Total distributions to unitholders 0.27 0.60 0.60 0.60 0.66 0.84
Net Assets per unit, end of period/year2 6.11 7.89 7.14 9.63 10.04 8.37
1 Financial information was prepared in accordance with International Financial Reporting Standards.
2 Net Assets per unit and distributions per unit are based on the actual number of units outstanding at the relevant time.
3 The increase (decrease) in Net Assets from operations per unit is based on the weighted average number of units outstanding over the fiscal period.
4 Allocations for tax purposes for the period ended June 30, 2020 are not available until year end.
3Canadian High Income Equity Fund - Interim Report 2020
Ratios and Supplemental Data (Based on Net Asset Value)
December 31
As at June 30, 2020 2019 2018 2017 2016 2015
Net Asset Value ($) (000s) 11,482 15,043 15,012 25,690 32,131 37,645
Number of units outstanding (000s) 1,880 1,905 2,104 2,668 3,199 4,500
Management expense ratio (“MER”)1 2.39% 2.52% 2.33% 2.21% 2.17% 2.10%
Trading expense ratio2 0.11% 0.07% 0.08% 0.06% 0.11% 0.20%
Portfolio turnover rate3 9.18% 12.27% 9.62% 14.49% 23.61% 43.81%
Net Asset Value per unit ($) 6.11 7.89 7.14 9.63 10.04 8.37
Closing market price – units ($) 5.86 7.62 6.99 9.42 9.66 8.10
1 MER is based on the requirements of NI 81‑106 and includes the total expenses (excluding commissions and other portfolio transaction costs) of the Fund for the
stated period, including interest expense and issuance costs, and is expressed as an annualized percentage of the average Net Asset Value of the period. Please see
the Expense Ratio section following this table for further discussion of the calculation.
2 The trading expense ratio represents total commissions expressed as an annualized percentage of daily average Net Asset Value of the Fund during the period.
3 The Fund’s portfolio turnover rate indicates how actively the Fund’s Investment Manager manages its portfolio investments. A portfolio turnover rate of 100% is
equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund’s portfolio turnover rate in a year,
the greater the trading costs payable by the Fund in the year and the greater the chance of an investor receiving taxable capital gains in the year. There is not
necessarily a relationship between a high turnover rate and the performance of the Fund. Portfolio turnover rate is calculated by dividing the lesser of the cost of
purchases and the proceeds of sales of portfolio securities for the period, excluding cash and short‑term investments maturing in less than one year, by the average
market value of such investments during the period.
Expense Ratio
The MER of the Fund for the first six months was 2.39%, compared to 2.52% in 2019. The decline in MER was primarily due to the
termination of service fees as of January 1, 2020.
4Canadian High Income Equity Fund - Interim Report 2020
PAST PERFORMANCE
The following chart and table show the past performance of the Fund. Past performance does not necessarily indicate how the Fund will
perform in the future. The information shown is based on Net Asset Value per unit and assumes that cash distributions made by the
Fund were reinvested (at Net Asset Value per unit) in additional units of the Fund.
The bar chart shows the Fund’s return for each period since inception to June 30, 2020. The chart shows, in percentage terms, how an
investment held on the first day of the fiscal period would have changed by the last day of the fiscal period.
Year‑by‑Year Returns
Returns (%)
1 Period from February 18, 2010 (commencement of operations) to December 31, 2010
2 Period from January 1, 2020 to June 30, 2020.
The following table shows the Fund’s compound return for each period indicated compared with the S&P/TSX Composite Index
(“Composite Index”) and the S&P/TSX Composite High Dividend Index ("Composite High Dividend Index"). The Composite Index
tracks the performance, on a market‑weight basis and a total return basis, of a broad index of large‑capitalization issuers listed on the
TSX. The Composite High Dividend Index tracks the performance, on a market-weight basis and a total return basis, of 50-75 highest
dividend yielding securities within the Composite Index. Since the Fund is actively managed, the sector weightings differ from those of
the two indices. For these reasons, it is not expected that the Fund’s performance will mirror that of the indices. Further, the indices are
calculated without the deduction of management fees, fund expenses, and trading commissions, whereas the performance of the Fund
is calculated after deducting such fees and expenses.
Compound Returns
Six Months Ended
June 30, 2020 Since Inception1
% %
Canadian High Income Equity Fund (19.3) 2.0
S&P/TSX Composite Dividend Index (21.3) 4.6
S&P/TSX Composite Index (7.5) 5.9
1 Period from February 18, 2010 (commencement of operations) to June 30, 2020 (annualized return).
The Fund performed in line with the Composite High Dividend Index in the first half of 2020 before the deduction of fees and expenses.
Please see the Portfolio Manager's report for a detailed discussion of the impact of COVID-19 on the economy markets, Fund
performance and outlook.
5Canadian High Income Equity Fund - Interim Report 2020
SUMMARY OF INVESTMENT PORTFOLIO
As at June 30, 2020
Total Net Asset Value $ 11,481,898
% of % of Net
Portfolio Composition Portfolio Asset Value
Cash and short-term investments 20.2 20.4
Pipes, power, utilities and infrastructure 18.7 18.8
Financial 17.1 17.2
Industrial 17.0 17.2
Consumer staples and discretionary 16.7 16.8
Real estate 6.1 6.2
Materials 2.1 2.1
Oil and gas 2.1 2.1
Total investment portfolio 100.0 100.8
Other net liabilities (0.8)
Total Net Asset Value 100.0
% of % of Net
Top 25 Holdings Portfolio Asset Value
Cash and short-term investments 20.2 20.4
Transcontinental Inc. Class A 4.6 4.7
Boralex Inc. 4.6 4.7
Ag Growth International Inc. 4.6 4.6
Superior Plus Corp. 4.6 4.6
Northland Power Inc. 4.5 4.5
Bank of Nova Scotia (The) 4.4 4.4
Park Lawn Corporation 4.0 4.0
Manulife Financial Corporation 3.7 3.7
Canadian Tire Corporation Limited 3.7 3.7
Enbridge Inc. 3.6 3.6
Sun Life Financial Inc. 3.5 3.6
Premium Brands Holdings Corp. 3.3 3.3
Intertape Polymer Group Inc. 3.2 3.3
Altus Group Limited 3.1 3.2
Gibson Energy Inc. 3.0 3.1
Toronto-Dominion Bank (The) 3.0 3.1
Allied Properties Real Estate Investment Trust 3.0 3.0
Keyera Corp. 2.9 2.8
TFI International Inc. 2.6 2.6
6Canadian High Income Equity Fund - Interim Report 2020
SUMMARY OF INVESTMENT PORTFOLIO (cont’d)
% of % of Net
Top 25 Holdings (cont’d) Portfolio Asset Value
Fiera Capital Corporation Class A 2.5 2.5
Chemtrade Logistics Income Fund 2.1 2.1
Parkland Corporation 2.1 2.1
Morneau Shepell Inc. 2.1 2.1
Cineplex Inc. 1.1 1.1
Total 100.0 100.8
The investment portfolio may change due to ongoing portfolio transactions of the investment fund. Quarterly updates are available on
the Fund's website at www.bromptongroup.com within 60 days of each quarter end.
INVESTMENT MANAGER
Bloom Investment Counsel, Inc.
Bloom Investment Counsel, Inc. (“Bloom”) was established in 1985 and specializes in the management of segregated investment
portfolios for wealthy individuals, corporations, institutions, charitable foundations and trusts. In addition to its conventional investment
management business, Bloom currently manages specialty high‑yield equity portfolios comprised of dividend‑paying common equity
securities, income trusts, and real estate investment trusts. Bloom currently manages four TSX‑listed, closed‑end portfolios and one
open‑ended mutual fund.
INVESTMENT MANAGER'S REPORT
July 2, 2020
Canadian Economy
Consensus economic forecasts for Canada have shown a slight improvement in the past month with the average forecast now predicting
a 6.6% GDP decline this year and a 5.1% rebound next year.
A key topic that has emerged is the gap that exists between private sector economic forecasts and those from official or government
bodies. Forecasts from official bodies and governments have been much more negative. Some observers attribute this to government
officials especially in central banks and on the monetary side maintaining this stance to ensure the needed fiscal stimulus is enacted by
government politicians and bureaucrats. The key point to keep in mind is that not only are economic data being released during a period
of virtually unprecedented volatility but the data is also highly unreliable in some cases given the difficulties imposed by COVID-19 on
collection and measurement.
The housing sector data being released are surprising to the upside in relation to what official bodies were expecting. CMHC recently
estimated home prices could fall as much as 12% in the next 18 months, whereas they predicted an 18% decline over 12 months just
weeks prior. Since listings and sales (supply and demand) have been trending together, the impact on price of the steep declines in
volume thus far has been minor. The housing shortage that existed prior to March could return when conditions normalize, but a
significant consideration will be the timing and resumption of strong immigration trends.
7Canadian High Income Equity Fund - Interim Report 2020
The direction of interest rates received a great deal of attention until recently. The reality of current circumstances surrounding COVID-
19 will put this conversation on hold for some time as central banks will not be required to contemplate rate increases in the near-term.
Economic realities brought on by this current crisis will increase deflationary risks. Stay-at-home and decreased travel caused a steep
drop in fuel prices, but May saw a 20% surge as the economy began to re-open and prices continued to rise in June. Retail items such
as apparel are pressuring prices down while food prices and alcohol remain strong. Retail Sales dropped 26.4% in April but are expected
to be sharply higher in June as phased economic re-openings began. Supply chains adjusting to source more goods domestically could
be a factor in upward price pressure in the medium-term.
Another topic that had been receiving much attention was Canada’s trade with China and the United States. This appears to be receiving
much less attention for the time-being or has been de-prioritized. This is most likely a structural issue and as conditions normalize should
regain prominence.
The consumer indebtedness of Canadians was high going into this recession and increased unemployment and lower incomes will put
further adverse pressure on this metric. The risk of rising interest rates and therefore decreased debt affordability is likely to be lessened
considerably if rates, as expected, continue to be lower for longer, providing some offset.
Reminiscent of the financial crisis in 2008-2009, economists and market participants are grappling with the shape of an economic
recovery. The same language and symbols are being used – “V-shaped”, “L”, “U”, “W” and square root. Also, the often used phrase of
green-shoots meaning any positive sign of a recovery has made a return. Taking this into consideration would seem prudent: better to
be approximately right and acknowledge heightened uncertainty (and position accordingly) with regard to the economic recovery rather
than be precisely wrong in trying to achieve pinpoint accuracy.
Canadian Investment Markets
The S&P/TSX Composite Total Return Index year-to-date returned -7.5% at the end of June. The comparative return for the S&P/TSX
High Dividend Total Return Index was –21.3%. The Financials and Energy sectors remain two of the largest sectors in both the
Composite and High Dividend Index despite the fact that the non-dividend paying technology stock, Shopify, represents roughly 6% of
the Composite Index.
Insights that can be inferred from sector weights are that capitalization has been a more significant contributor to performance than
sector. Going forward, we expect that smaller and mid-capitalization companies could have relative outperformance upside. The High
Dividend Index’s performance is generally supported in low interest rate environments such as the one we are in now as investors seek
alternative forms of income. The fact that this Index has underperformed recently in the short-term would also suggest the potential for
a relative performance opportunity. Precious metals and gold (Materials) have been particularly strong with low real interest rates and
weakening government credit worthiness due to higher projected deficits and debt.
Increased volatility returned to the markets on June 11th following a negative outlook from the Federal Reserve in the United States.
Consistent with this, the Fed indicated interest rates would remain near zero through 2022. High reported cases globally of COVID-19
and concerns over a second wave also contributed to weakness. By the end of the week the U.S. market had fallen 7%. Much of this
pullback was attributed to the rally in the preceding weeks and markets being overbought on positive sentiment concerning monetary
stimulus, fiscal stimulus and economic re-opening. However, on June 16th markets reversed course and resumed their ascent on positive
news that the Fed would buy individual corporate bonds having previously only purchased corporate credit Exchange Traded Funds
(ETFs) under a secondary market facility. This was further supported by news of a U.S. administration $1 trillion infrastructure spending
program. The U.S. Labor Department reporting employers adding 2.5 million jobs in May against an expectation for a loss of 8 million
jobs was also a catalyst. We expect this volatility to continue for some time.
A fair amount of repositioning in investment portfolios has also characterized this market. Money has flowed to stocks that were the
most obvious beneficiaries of the current environment with investors trying to determine what is more short-term in nature and what
changes are more structural. Examples of areas expected to benefit include an acceleration of the trend towards eCommerce, cloud-
related technology, the wide range of work-from-home (WFH) related businesses in addition to outdoor home improvement, personal
sports, and in-home leisure businesses as people spend an increased amount of time around their homes. At other times money rushes
to other areas that are considered recovery or re-opening trades, which include some of the hardest hit businesses such as energy, travel,
entertainment and hospitality.
The S&P/TSX Composite Total Return Index for the last quarter returned 17.0%. The best performing sectors last quarter were
Information Technology (up 68.3%), Materials (up 42.0%) and Consumer Discretionary (up 32.8%). The worst performing sectors for
the quarter were Communication Services (down 1.0%), Utilities (up 3.8%) and Financials (up 6.2%).
Bonds performed very well with interest rates falling to record lows, but underperformed equities in the quarter. Long-term (30-year)
Government of Canada Bonds returned +8.1%, mid-term (10-year) bonds provided a +2.4% return, while shorter-term (5-year) bonds
returned +1.3% for the quarter. 90-Day Treasury Bills returned +0.1% for the last quarter.
8Canadian High Income Equity Fund - Interim Report 2020
The Canadian dollar appreciated against the U.S. dollar during the quarter by 3.5% but has fallen against the U.S. dollar by 3.7% over
the trailing 12-months.
Canadian High Income Equity Fund Performance
For the first six months of the year Canadian High Income Equity Fund outperformed the S&P TSX High Dividend Total Return Index
on a relative basis. However, performance did trail behind that of the S&P TSX/Composite Total Return index.
The Financials and Energy sectors are the largest sectors in most Canadian equity benchmarks. The Fund has no Energy Exploration,
Development & Production (oil & gas) stocks; rather, any exposure to the sector is in the form of infrastructure or distribution. The
market has discounted concern over higher credit losses and defaults into valuations of financial stocks like banks, and the Fund is
therefore underweight in this area.
Underperforming stocks in the Fund for the first half of the year were Cineplex Inc., Shawcor Ltd. and Chemtrade Logistics. The sectors
that detracted most from performance were consumer discretionary, energy and financials.
The best performing stocks in the Fund for the first half of the year were Boralex Inc., Northland Power Inc. and Canadian Tire Corp.
Sectors that contributed the greatest positive performance to the Fund were utilities, consumer staples and health care.
The most recent measure of Active Share for Canadian High Income Equity Fund was a very high 85.1%. Active Share is a measure of
the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index. We believe this high Active Share
gives the Fund a greater ability to take advantage of upside opportunities or protect against downside risk very distinctly in comparison
to the great number of less active manager’s with performance that closely follows the benchmark.
Canadian High Income Equity Fund Portfolio Changes
In a turbulent quarter we moved to guard against volatility and protect capital while at other times selectively taking advantage of
opportunities. In April, positions in several stocks were sold outright as conditions altered the outlook for the underlying businesses.
Sentiment also began to shift more positively towards the end of April as markets turned more optimistic about promising developments
underway in the pharmaceutical industry to combat the virus. We added to positions in certain stocks around this time. Subsequently,
as the market continued to recover in May, during the middle part of the month, some positions were trimmed and some cash was again
raised. At this point risk/reward had become more balanced, in our view.
Sales of stocks took place across many of the holdings where downside risk was determined to be greater and to protect capital by raising
cash. We sold entire positions in Extendicare Inc. and Shawcor Ltd. during the quarter. In the case of Extendicare, future prospects
changed greatly for retirement homes and long-term care facilities as a result of the pandemic. The backlog build and recovery that was
taking place in Shawcor’s pipe coating business was abruptly halted by greatly curtailed capital spending in the energy sector.
A number of existing positions were added to, putting cash to work tactically and when we perceived opportunities to have emerged.
New positions were initiated in Canadian Tire Corp. and Morneau Shepell Inc.
Canadian Tire includes well-recognized banners like SportChek and Mark’s Work Warehouse in addition to the namesake stores.
Canadian Tire also owns a stake in CT REIT. With an increased number of Canadians staying at home since mid-March the company’s
banners have seen a significant spike in demand for sporting goods items such as bikes and outdoor basketball nets in addition to home
and garden items. Canadian Tire stores were declared as essential services and therefore saw their stores only closed for a very short
period of time but were able to maintain their eCommerce services providing curbside pickup. We think Canadian Tire is quickly
improving and positioning its eCommerce platform to drive increased shareholder value. Around the time the stock was being purchased
it had a very attractive yield approaching 5% which has now declined to closer to 4% due to significant price appreciation.
Morneau Shepell provides human resources consulting and outsourcing services focusing on pension and benefits, employee and family
assistance programs and enhanced health and absence management services. The business offers attractive defensive characteristics with
a combination of high recurring revenue, long-term contracts and customer relationships and high switching costs that drive stable
earnings. As a result of more people working from home the company is seeing an increase in several of its services such as mental
health assistance and programs.
Outlook
At present, reactionary and short-term actions continue to guide the investments of many market participants with their investment
orientation solely chasing certain recovery stocks or beneficiaries from the current crisis. Though changes must be understood and
incorporated and we have taken such actions, we think that most aspects of our approach are enduring and should be adhered to.
Considerations like fundamentals, valuation and a history that has shown higher yielding stocks to outperform remain core to our
discipline and should not be lost sight of during challenging markets like the ones we are currently navigating on behalf of the Funds.
9Canadian High Income Equity Fund - Interim Report 2020
FORWARD‑LOOKING STATEMENTS
Some of the statements contained herein including, without limitation, financial and business prospects and financial outlook may be
forward‑looking statements which reflect management’s expectations regarding future plans and intentions, growth, results of
operations, performance and business prospects and opportunities. Words such as “may,” “will,” “should,” “could,” “anticipate,”
“believe,” “expect,” “intend,” “plan,” “potential,” “continue” and similar expressions have been used to identify these
forward‑looking statements. These statements reflect management’s current beliefs and are based on information currently available to
management. Forward‑looking statements involve significant risks and uncertainties. A number of factors could cause actual results to
differ materially from the results discussed in the forward‑looking statements including, but not limited to, changes in general economic
and market conditions and other risk factors. Although the forward‑looking statements contained herein are based on what management
believes to be reasonable assumptions, we cannot assure that actual results will be consistent with these forward‑looking statements.
Investors should not place undue reliance on forward‑looking statements. These forward‑looking statements are made as of the date
hereof and we assume no obligation to update or revise them to reflect new events or circumstances, except as required by law.
10Canadian High Income Equity Fund - Interim Report 2020
NOTICE
The accompanying unaudited interim financial statements of Canadian High Income Equity Fund (the “Fund”) for the period ended
June 30, 2020 have been prepared by management and have not been reviewed by the external auditors of the Fund.
(Signed) “Mark A. Caranci” (Signed) “Craig T. Kikuchi”
Mark A. Caranci Craig T. Kikuchi
Chief Executive Officer Chief Financial Officer
Brompton Funds Limited Brompton Funds Limited
August 10, 2020
11Canadian High Income Equity Fund - Interim Report 2020
STATEMENTS OF FINANCIAL POSITION (Unaudited)
STATEMENTS OF FINANCIAL POSITION
As at June 30, 2020 December 31, 2019
Assets
Current assets
Investments $ 11,334,483 $ 15,141,223
Cash 241,950 15,672
Income receivable 26,786 46,460
Total assets 11,603,219 15,203,355
Liabilities
Current liabilities
Distributions payable to unitholders (note 6) 75,191 95,273
Accounts payable and accrued liabilities 46,130 64,607
Total liabilities 121,321 159,880
Unitholders' equity
Unitholders' capital 22,136,495 22,440,505
Contributed surplus 10,873,488 10,765,005
Deficit (21,528,085) (18,162,035)
Total equity 11,481,898 15,043,475
Net Assets representing unitholders' equity $ 11,481,898 $ 15,043,475
Units outstanding (note 4) 1,879,784 1,905,452
Net Assets per unit $ 6.11 $ 7.89
The accompanying notes are an integral part of these financial statements. 11Canadian High Income Equity Fund - Interim Report 2020
STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
STATEMENTS OF COMPREHENSIVE INCOME
For the six months ended June 30 2020 2019
Income
Securities lending income (note 9) $ 614 $ 1,171
Net gain (loss) on investments:
Interest income for distribution purposes 6,436 1,325
Dividend income 272,070 380,666
Net realized gain (loss) on sale of investments (note 8) (462,451) (1,279,904)
Net change in unrealized gain (loss) on investments (2,518,077) 3,013,213
Total net gain (loss) on investment (2,702,022) 2,115,300
Total income (loss), net (2,701,408) 2,116,471
Expenses
Management fees (note 7) 85,296 109,111
Service fees (note 7) - 32,027
Audit fees 12,978 12,741
Trustee fees 1,622 1,615
Independent Review Committee fees (note 7) 1,243 992
Custodial fees 1,434 2,047
Legal fees 1,246 802
Unitholder reporting costs 4,607 6,305
Other administrative expenses 40,632 41,423
Transaction costs 6,616 4,650
Total expenses 155,674 211,713
Net comprehensive income (loss) $ (2,857,082) $ 1,904,758
Earnings per unit1 $ (1.51) $ 0.91
1 Based on the weighted average number of redeemable units outstanding during the period (note 4).
The accompanying notes are an integral part of these financial statements. 12Canadian High Income Equity Fund - Interim Report 2020
STATEMENTS OF CASH FLOWS (Unaudited)
STATEMENTS OF CASH FLOWS
For the six months ended June 30 2020 2019
Cash flows from operating activities:
Total comprehensive income (loss) $ (2,857,082) $ 1,904,758
Adjustments for:
Net realized (gain) loss on sale of investments (note 8) 462,451 1,279,904
Net change in unrealized (gain) loss on investments 2,518,077 (3,013,213)
Decrease (increase) in income receivable 19,674 (7,202)
Increase (decrease) in accounts payable and accrued liabilities (18,477) 4,749
Purchase of investments (note 8) (4,738,519) (1,226,431)
Proceeds from sale of investments (note 8) 5,564,731 1,800,245
Cash provided by (used in) operating activities 950,855 742,810
Cash flows from financing activities:
Amounts paid for repurchase of units (note 4) (197,797) (288,946)
Distributions paid to unitholders (note 6) (529,050) (627,226)
Proceeds from distribution reinvestment plan 2,270 -
Cash provided by (used in) financing activities (724,577) (916,172)
Net increase (decrease) in cash 226,278 (173,362)
Cash, beginning of period 15,672 342,839
Cash, end of period $ 241,950 $ 169,477
Supplemental information:1
Interest received ($) 8,883 1,796
Dividends received ($) 289,297 372,993
1 Included in cash flows from operating activities.
The accompanying notes are an integral part of these financial statements. 13Canadian High Income Equity Fund - Interim Report 2020
STATEMENTS OF CHANGES IN EQUITY (Unaudited)
STATEMENTS OF CHANGES IN EQUITY
Unitholders' Contributed
Capital Deficit Surplus Total
Balance at January 1, 2019 $ 24,774,547 $ (19,715,015) $ 9,952,298 $ 15,011,830
Total comprehensive income (loss) for the period - 1,904,758 - 1,904,758
Transactions with unitholders, recognized directly in equity
Repurchase of units (454,708) - 165,762 (288,946)
Distributions paid to unitholders - (625,296) - (625,296)
Total transactions with unitholders (454,708) (625,296) 165,762 (914,242)
Balance at June 30, 2019 24,319,839 (18,435,553) 10,118,060 16,002,346
Balance at January 1, 2020 22,440,505 (18,162,035) 10,765,005 15,043,475
Total comprehensive income (loss) for the period - (2,857,082) - (2,857,082)
Transactions with unitholders, recognized directly in equity
Repurchase of units (306,280) - 108,483 (197,797)
Distributions paid to unitholders - (508,968) - (508,968)
Reinvestment of units 2,270 - 2,270
Total transactions with unitholders (304,010) (508,968) 108,483 (704,495)
Balance at June 30, 2020 $ 22,136,495 $ (21,528,085) $ 10,873,488 $ 11,481,898
The accompanying notes are an integral part of these financial statements. 14Canadian High Income Equity Fund - Interim Report 2020
SCHEDULE OF INVESTMENT PORTFOLIO (Unaudited)
As at June 30, 2020
SCHEDULE OF INVESTMENT PORTFOLIO
Number of
Shares/Units Cost Carrying Value % of
Par Value $ $ $ Portfolio
Consumer staples and discretionary
Cineplex Inc. 16,200 498,555 130,248
Premium Brands Holdings Corp. 4,400 240,954 381,040
Canadian Tire Corporation Limited 3,600 338,264 423,504
Park Lawn Corporation 20,600 451,788 461,852
Transcontinental Inc. Class A 35,500 559,297 536,050
2,088,858 1,932,694 17.1
Financial
Fiera Capital Corporation Class A 29,900 359,697 284,050
Toronto-Dominion Bank (The) 5,800 301,227 351,422
Sun Life Financial Inc. 8,200 321,153 409,098
Manulife Financial Corporation 23,200 434,781 428,504
Bank of Nova Scotia (The) 9,000 519,511 505,620
1,936,369 1,978,694 17.5
Industrial
Ag Growth International Inc. 19,300 863,360 527,276
Intertape Polymer Group Inc. 31,300 583,858 374,974
Morneau Shepell Inc. 7,500 236,554 237,675
Superior Plus Corp. 47,400 523,573 527,088
TFI International Inc. 6,300 164,533 303,597
2,371,878 1,970,610 17.4
Materials
Chemtrade Logistics Income Fund 44,500 504,485 242,080
504,485 242,080 2.1
Oil and gas
Parkland Corporation 7,100 239,605 239,341
239,605 239,341 2.1
Pipes, power, utilities and infrastructure
Boralex Inc. 17,300 243,537 534,570
Enbridge Inc. 10,200 461,181 421,056
Gibson Energy Inc. 16,700 264,052 352,871
Keyera Corp. 16,300 240,446 336,921
Northland Power Inc. 15,300 240,415 519,894
1,449,631 2,165,312 19.1
15Canadian High Income Equity Fund - Interim Report 2020
SCHEDULE OF INVESTMENT PORTFOLIO (Unaudited) (cont’d)
As at June 30, 2020
Number of
Shares/Units Cost Carrying Value % of
Par Value $ $ $ Portfolio
Real estate
Allied Properties Real Estate Investment Trust 8,400 255,629 344,064
Altus Group Limited 8,900 176,505 363,031
432,134 707,095 6.2
Short‑term investments
RBC Bankers' Acceptance, 0.30%, due September 22, 2020 $ 1,000,000 999,240 999,240
TD Bankers' Acceptance, 0.30%, due August 4, 2020 $ 1,100,000 1,099,417 1,099,417
2,098,657 2,098,657 18.5
Embedded Broker Commission (11,141)
Total Investments 11,110,476 11,334,483 100.0
16Canadian High Income Equity Fund - Interim Report 2020
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
June 30, 2020 and 2019
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Canadian High Income Equity Fund (the “Fund”) is a closed‑end investment fund created under the laws of the Province of Ontario
pursuant to a declaration of trust dated as of January 1, 2010 and as amended and restated on January 27, 2010. The address of the
Fund’s registered office is Bay Wellington Tower, Brookfield Place, Suite 2930, 181 Bay Street, Toronto, Ontario, M5J 2T3. TSX Trust
Company is the Trustee, and Brompton Funds Limited (the “Manager”) is responsible for managing the affairs of the Fund. Bloom
Investment Counsel, Inc. manages the Fund’s portfolio. CIBC Mellon Trust Company is the custodian of the Fund’s assets and prepares
the weekly valuations of the Fund. The Fund is listed on the Toronto Stock Exchange under the symbol CIQ.UN and commenced
operations on February 18, 2010.
The Fund invests in an actively managed portfolio of publicly listed or traded securities across a broad range of industries.
These financial statements were approved on behalf of Canadian High Income Equity Fund by the Board of Directors of Brompton
Funds Limited, the Manager, on August 10, 2020.
2. BASIS OF PRESENTATION
These condensed interim financial statements have been prepared in compliance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial
statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These financial statements should be
read in conjunction with the annual financial statements for the year ended December 31, 2019, which have been prepared in accordance
with IFRS. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities at fair value through profit or loss.
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been
consistently applied.
a) Financial Instruments
The Fund’s portfolio of investments is managed, and performance is evaluated, on a fair value basis. The Fund is primarily focused on
fair value information and uses that information to assess the assets’ performance and to make decisions. The Fund has not taken the
option to irrevocably designate any equity securities as fair value through other comprehensive income (“FVOCI”). The contractual
cash flows of the Fund’s debt securities that are solely principal and interest are neither held for the purpose of collecting contractual
cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to
achieving the Fund’s business model’s objective. Consequently, all investments are measured at fair value through profit or loss
(“FVTPL”). Derivative assets and liabilities are also measured at FVTPL.
The Fund’s obligation for Net Assets attributable to holders of redeemable units is measured assuming the redemption of units at Net
Asset Value on the valuation date. All other financial assets and liabilities are initially recognized at fair value and subsequently
measured at amortized cost. Under this method, financial assets and liabilities reflect the amounts required to be received or paid,
discounted when appropriate, at the financial instrument’s effective interest rate. The Fund’s accounting policies for measuring the fair
value of its investments and derivatives are identical to those used in measuring its published Net Asset Value. The carrying values of
the Fund’s financial assets and liabilities that are not carried at FVTPL approximate their fair values due to their short‑term nature.
b) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the Statements of Financial Position when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or to realize the asset and settle the
liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the Fund or the counterparty.
17Canadian High Income Equity Fund - Interim Report 2020
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2020 and 2019
c) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded
marketable securities) is based on quoted market prices at the close of trading on the measurement date. The Fund uses the last traded
market price for both financial assets and financial liabilities where the last traded price falls within that day’s bid‑ask spread. In
circumstances where the last traded price is not within the bid‑ask spread, the Manager determines the point within the bid‑ask spread
that is most representative of fair value based on the specific facts and circumstances. The Fund’s policy is to recognize transfers into
and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The
Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each measurement date. Valuation
techniques include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same
and option pricing models. Refer to note 11 for further information about the Fund’s fair value measurements.
d) Cash
Cash is comprised of demand deposits with financial institutions.
e) Transaction Costs
Transaction costs directly attributable to the acquisition or disposal of an investment are expensed in the period incurred and disclosed
as “Transaction costs” in the Statements of Comprehensive Income.
f) Investment Transactions and Income and Expense Recognition
Investment transactions are accounted for on the trade date. The interest for distribution purposes shown on the Statements of
Comprehensive Income represents the coupon interest received by the Fund accounted for on an accrual basis. The Fund does not
amortize premiums paid or discounts received on the purchase of fixed income securities.
Net realized gain (loss) on sale of investments and net change in unrealized gain (loss) on investments are determined on an average
cost basis. Average cost does not include amortization of premiums or discounts on fixed income securities. Investment transactions are
accounted for as of the trade date and any realized gains or losses from such transactions are calculated on an average cost basis.
Dividend income and dividend expense on securities sold short are recognized on the ex‑dividend date and interest income for
distribution purposes is accrued as earned.
g) Income Taxes
The Fund qualifies as a mutual fund trust under the Income Tax Act (Canada). The Fund distributes to its unitholders sufficient net
income and net capital gains so that it is not subject to income taxes and, in substance, is exempt from Canadian taxes on these sources
of income. Accordingly, the Fund does not record any Canadian income taxes. Since the Fund does not record income taxes, the tax
benefit of capital and non‑capital losses has not been reflected in the Statements of Financial Position as a deferred income tax asset.
When the Fund incurs withholding taxes imposed by certain countries on investment income and capital gains, such income and gains
are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the Statements of Comprehensive
Income.
h) Foreign Exchange
The financial statements are presented in Canadian dollars, which is the functional currency of the Fund. The market values of
investments and other assets and liabilities that are denominated in foreign currencies are translated into Canadian dollars at the 4:00
p.m. (Toronto time) rate of exchange on each valuation date. Purchases and sales of investments and income derived from investments
are translated at the rate of exchange prevailing at the time of such transactions.
i) Securities Lending
The Fund may enter into securities lending transactions. These transactions involve the temporary exchange of securities for collateral
with a commitment to deliver the same securities on a future date. Income is earned from these transactions in the form of fees paid by
the counterparty and, in certain circumstances, interest paid on securities held as collateral. Income earned from these transactions is
recognized on an accrual basis and included in the Statements of Comprehensive Income.
18Canadian High Income Equity Fund - Interim Report 2020
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2020 and 2019
j) Unitholders’ Capital
As required under International Account Standard (“IAS”) 32, Financial Instruments: Presentation, the Fund classifies its redeemable
units as equity. Units of the Fund are considered to be equity as this single class of units is the most subordinate class and the units’
annual redemption feature is the Fund’s only contractual obligation to its unitholders.
4. UNITS OF THE FUND
Authorized
The Fund is authorized to issue an unlimited number of units, each of which consists of one transferable, redeemable unit, which
represents an equal, undivided interest in the Net Asset Value of the Fund. Each unit entitles the holder to one vote and to participate
equally with respect to any and all distributions made by the Fund. Units may be redeemed at the option of holders of redeemable units
by tendering units of the Fund by the last business day of August for redemption on the second last business day of September (“Annual
Redemption Date”). Redemptions of tendered units are settled based on the Net Asset Value per unit on the Annual Redemption Date,
less associated costs of the redemptions, including brokerage costs. Units tendered for redemption are redeemed effective the Annual
Redemption Date of each period and are settled on or before the tenth business day in October, subject to the Manager’s right to suspend
redemptions in certain circumstances. For purposes of calculating the Net Asset Value per unit in respect of the redemptions, the value
of the securities that make up the portfolio is equal to the weighted average trading price of such securities over the last three business
days of September.
The Fund received approval from the Toronto Stock Exchange for a normal course issuer bid program for the period from March 14,
2019 to March 13, 2020, which allowed the Fund to purchase up to 209,200 units for cancellation. The Fund renewed the issuer bid
program from March 14, 2020 to March 13, 2021, which allows the Fund to purchase up to 188,600 units for cancellation. The Fund
may purchase units for cancellation at a price per unit not exceeding the most recently calculated Net Asset Value per unit immediately
prior to the date of any such purchase of units.
Issued
2020 2019
Number Number
of Units of Units
Units, outstanding at January 1 1,905,452 2,103,588
Repurchase of units (26,000) (38,600)
Reinvestment of units 332 -
Units, outstanding at June 30 1,879,784 2,064,988
Weight average number of units outstanding 1,889,336 2,090,711
For the period ended June 30, 2020, 26,000 units were repurchased for cancellation pursuant to the normal course issuer bid program at
an average cost of $7.61 per unit (six-month period ended June 30, 2019 – 38,600 units at an average cost of $7.49 per unit).
During the period ended June 30, 2020, 332 (six-month period ended June 30, 2019 – nil) units were issued pursuant to the distribution
reinvestment plan (note 6).
On June 30, 2020, the Fund’s closing market price per unit was $5.86 (December 31, 2019 ‑ $7.62).
5. CAPITAL MANAGEMENT
The Fund’s objectives in managing its capital are to provide unitholders with monthly cash distributions and the opportunity for capital
appreciation. The Fund’s capital includes unitholders’ equity and loans payable. The Fund manages its capital taking into consideration
the risk characteristics of its holdings. In order to manage its capital structure, the Fund may adjust the amount of distributions paid to
unitholders, return capital to unitholders, increase or decrease its level of borrowing, or purchase units for cancellation.
19Canadian High Income Equity Fund - Interim Report 2020
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2020 and 2019
6. DISTRIBUTIONS TO UNITHOLDERS
Distributions, as declared by the Manager, are made on a monthly basis to unitholders of record on the last business day of each month.
The distributions are payable by the tenth business day of the following month. On April 23, 2020, the Fund announced a change in
monthly distributions from the previously paid $0.05 per unit per month to $0.04 per unit per month. For the period ended June 30,
2020, the Fund declared total distributions of $0.27 per unit (six-month period ended June 30, 2019 – $0.30 per unit), which amounted
to $508,968 (six-month period ended June 30, 2019 – $625,296). For the period ended June 30, 2020, 332 (six-month period ended June
30, 2019 – nil) units were issued pursuant to the distribution reinvestment plan.
On July 24, 2020, the Fund declared $0.04 per unit of monthly distributions for record dates July 31, 2020, August 31, 2020, September
30, 2020, respectively.
7. RELATED PARTY TRANSACTIONS
a) Management and Service Fees
Pursuant to a management agreement, the Manager provides management and administrative services, including the provision of key
management personnel, to the Fund. In consideration for these services, the Fund pays a management fee equal to 1.25% per annum of
the Net Asset Value of the Fund, plus applicable taxes. These fees are calculated and payable monthly. Prior to 2020, the Fund also paid
to the Manager a service fee equal to 0.40% per annum of the Net Asset Value of the Fund. The service fee was in turn paid by the
Manager to the investment dealers in proportion to the number of units held by clients of each dealer at the end of each calendar quarter.
The Manager is responsible for paying the fees to Bloom Investment Counsel, Inc., the Investment Manager of the Fund. Effective
January 1, 2020, the Manager discontinued the payment of service fees. For the period ended June 30, 2020, the management fee
amounted to $85,296 (six-month period ended June 30, 2019 ‑ $109,111), with $13,126 payable as of June 30, 2020 (December 31,
2019 – $199). For the period ended June 30, 2019, the service fee amounted to $32,027, with $15,012 payable as of December 31, 2019.
The Fund is responsible for the payment of all expenses relating to its operations and the carrying on of its business.
b) Independent Review Committee Fees
The total remuneration paid to members of the Independent Review Committee during the period ended June 30, 2020 was $1,243 (six-
month period ended June 30, 2019 – $992) and consisted only of fees. As at June 30, 2020, there were $1,030 Independent Review
Committee fees payable (December 31, 2019 – nil).
8. INVESTMENT TRANSACTIONS
2020 2019
For the periods ended June 30 $ $
Proceeds from sale of investments 5,564,731 1,800,245
Less cost of investments sold:
Investments at cost, beginning of period 12,399,139 15,452,337
Investments purchased during the period 4,738,519 1,226,431
Investments at cost, end of period (11,110,476) (13,598,619)
Cost of investments sold during the period 6,027,182 3,080,149
Net realized gain (loss) on sale of investments (462,451) (1,279,904)
For the periods ended June 30, 2020 and 2019, no soft dollar amounts were paid.
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