Experience. Intelligent Investing.

D E C E M B E R 2 0 1 4

EXEMPLAR CANADIAN FOCUS PORTFOLIO

December was a disappointing month as the portfolio was slightly down at -0.95%. Overall, 2014 was a good year for the Exemplar Canadian
Focus Portfolio closing the year-to-date return at 11.3%, relative to a 10.6%^ return for the S&P/TSX TR Index.
Our active strategy worked particularly well during the turbulent September to December time period in which the portfolio meaningfully
outperformed the Canadian Index. The lack of significant market corrections during the first three quarters of the year made us cautious; we
raised cash levels and increased short positions as we approached the seasonally weak period.
Having watched the oil inventory build up and listened to the OPEC rhetoric, we correctly anticipated OPECs decision to allow economic
forces to restore oil market equilibrium by maintaining current oil production. Our energy exposure was small and focused primarily on the
defensive midstream companies. Even though we correctly anticipated the oil price correction, we were perhaps not sufficiently prepared for
the speed and severity of the sell-off. Our one error in judgment has been to liquidate shorts going into December, expecting a good Santa
Claus rally. The rally did not materialize until the very end of December, inflicting some performance pain (down 44 bps in December).

Looking Ahead to 2015

The only observation we would like to make at this stage is that the current steep oil price decline should act as a global fiscal stimulus. It is
worth recalling that almost every oil price correction of current magnitude EVENTUALLY translated into re-acceleration of global growth and
resurgence of stock markets around the world. During the waiting period, we favor a defensive portfolio. A heavy exposure to consumers,
especially in North America, makes the most sense to us at this stage, as consumers will be the largest beneficiaries of sustained low energy
prices. This is not a new strategy for us, as we have been favoring consumer growth stocks for a while. The one subtle change we are currently
making is to focus on the less wealthy consumers, who will benefit disproportionately from the savings at the gas pump. We are currently
adding to consumer stocks especially in US, where there is a significant selection of them.
We will flesh out the more significant themes and talk about some of our favorite stocks in subsequent commentaries.
Thank you for your continued interest in the Fund. For further information, please contact your regional Arrow Capital representative.
Sincerely,

Veronika Hirsch

Portfolio Manager
Arrow Capital Management Inc.

Unless otherwise stipulated Exemplar Portfolio returns are net of all fees, in Canadian dollars, reflect class A shares and assume
reinvestment of all distributions. Commissions, trailing commissions, management fees and expenses all may be associated with
Exemplar Portfolio investments. Please read the full prospectus before investing. Except as otherwise noted the indicated rates
of return are the historical annual compounded total returns including changes in share or unit value and the reinvestment of
all dividends or distributions and do not take into account the sales, redemption, distribution, or optional charges or income tax
payable by the unitholder or shareholder that would have reduced returns. Exemplar Portfolios are not insured or guaranteed by
Canada Deposit Insurance Corporation (CDIC) or any other insurer. Exemplar Portfolios are subject to risks of loss of capital and
income and their values change frequently. Past performance may not be repeated. Shares of the Portfolio are highly speculative
and involve a high degree of risk. You may lose a substantial portion or even all of the money you invest in a Portfolio.
^ Indices are denoted in US dollars.
36 Toronto Street, Suite 750 Toronto, Ontario Canada M5C 2C5 Tel: 416.323.0477 Tel: 1.877.327.6048 Fax: 416.323.3199 www.arrow-capital.com

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