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STONE MUTUAL FUNDS

2014 Interim Financial ReportFor the period ended June 30, 2014

The auditors of the Funds have not performed a review of these financial statements.

STONE MUTUAL FUNDS

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TABLE OF CONTENTS

CORPORATE OVERVIEW Pg. 3

STONE & CO. DIVIDEND GROWTH CLASS CANADA Pg. 4Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. RESOURCE PLUS CLASS Pg. 11Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. FLAGSHIP GROWTH & INCOME FUND CANADA Pg. 18Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. FLAGSHIP STOCK FUND CANADA Pg. 27Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. FLAGSHIP GLOBAL GROWTH FUND Pg. 34Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. GROWTH INDUSTRIES FUND Pg. 41Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. FLAGSHIP MONEY MARKET FUND CANADA Pg. 49Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

STONE & CO. EUROPLUS DIVIDEND GROWTH FUND Pg. 55Statements of Financial Position and Comprehensive Income (Loss)Statements of Changes in Net Assets Attributable to Holders of Redeemable SecuritiesStatements of Cash Flows Schedule of Investment PortfolioFund Specific Notes on Financial Risk Management and Financial Instruments

NOTES TO THE FINANCIAL STATEMENTS Pg. 62

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STONE MUTUAL FUNDS

CORPORATE OVERVIEWThe Stone Mutual Funds (“the Funds”) were originally established by Richard G. Stone in 1995.

Stone Mutual Funds are offered by Stone Asset Management Limited (“SAM”) and are available through registered financial advisors in all provinces and territories of Canada. SAM, as the investment fund manager and the portfolio manager for all Stone Mutual Funds, is responsible for hiring and managing the relationships with our sub-advisors, and provides investment management services for these funds.

SAM has engaged its affiliate, Stone & Co. Limited (“SCL”) as administrator of the Funds and fund distributor. SCL is based in Toronto with regional sales offices in Canada established in the east coast, west coast and southwest Ontario.

Stone & Co. Limited, Stone Asset Management Limited and GaleForce Administration Services Inc. are wholly-owned subsidiaries of Stone Investment Group Limited, an independent, 100% Canadian-owned wealth management company. Collectively we refer to the companies as “Stone”.

OUR INVESTMENT PRODUCTSSAM currently offers the Canadian investor eight mutual funds, one TSX-listed investment fund, and since 2003, 17 resource flow-through limited partnerships, however only the Stone 2013 Flow-Through Limited Partnership remains active. Collectively we refer to them as the “Funds”.

Should you require any additional information on any of these products, please contact your financial advisor, review our information at www.stoneco.com or on SEDAR at www.sedar.com, or call us at 800 795 1142.

OUR CORPORATE GOVERNANCEAs part of our ongoing commitment we would like to advise you of our dedication to our corporate governance policies; the way we acknowledge trust. Corporate governance means having the appropriate policies, procedures and structures in place to ensure the independence of the board of directors of a corporation from its management to ensure that the corporation is appropriately managed and directed. The objective of good corporate governance is to ensure that companies are not only well run and profitably managed, but also adhere to high standards of legal and ethical principles as well as conduct.

In the mutual fund industry, good corporate governance is an important consideration for portfolio advisors in selecting the right companies in which to invest. The equivalent concept for mutual fund investors themselves is fiduciary responsibility; the obligation fund managers have to their securityholders to manage fund assets in a prudent fashion.

At Stone, we are committed to our responsibilities on behalf of all those who invest with us. In particular, we are committed to ensuring:

1. Preservation of investor capital through long-term growth exceeding the rate of inflation with an acceptable level of risk as defined by each Fund’s investment objective and strategy.

2. That each individual investment within the Fund portfolios reflects proper corporate governance standards, while still allowing management to maximize securityholder value.

STONE & CO. FUNDS

Stone & Co. Flagship Growth & Income Fund CanadaStone & Co. Flagship Stock Fund Canada

Stone & Co. Flagship Global Growth FundStone & Co. Growth Industries Fund

Stone & Co. Flagship Money Market Fund CanadaStone & Co. EuroPlus Dividend Growth Fund

STONE & CO. CORPORATE FUNDS LIMITED

Stone & Co. Dividend Growth Class CanadaStone & Co. Resource Plus Class

STONE FLOW-THROUGH LIMITED PARTNERSHIPS

Stone 2013 Flow-Through Limited Partnership

STONE STRUCTURED PRODUCTS

Stone Agribusiness Fund (HAY.UN – TSX)

Stone has established an Independent Review Committee whose primary role is to review conflicts of interest as they relate to investment fund management.

In everything we do at Stone, our goal is to provide investors with clarity, comfort and commitment by:

1. Protecting fund assets.

2. Ensuring that all regulatory requirements are satisfied.

3. Ensuring that the investment process and each fund’s Investment Mandate are adhered to.

4. Overseeing fund administration systems.

5. Ensuring that Stone’s Code of Business Conduct and Ethics is adhered to and that all staff go about their work with the interests of our investors first.

2014 INTERIM FINANCIAL STATEMENTS4

The accompanying Notes to the Financial Statements are an integral part of these financial statements.

STONE & CO. DIVIDEND GROWTH CLASS CANADA

STATEMENTS OF FINANCIAL POSITION (UNAUDITED)AS AT JUNE 30, 2014; DECEMBER 31, 2013 AND JANUARY 1, 2013

(in thousands of dollars; per security amounts are expressed in whole dollars)

June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets

Investments (Note 2) $ 533,354 $ 512,536 $ 472,131

Cash 17,894 14,201 21,014

Dividends receivable 1,632 1,380 1,642

Interest receivable – 4 –

HST refund receivable – 310 –

Subscriptions receivable 680 977 629

553,560 529,408 495,416

Liabilities

Current liabilities

Payable for investments purchased 5,176 – –

Redemptions payable 1,885 797 814

Accounts payable and accrued expenses (Note 8) 605 1 73

Dividends payable 811 – –

Derivative liabilities

Written options (Note 2) 58 649 –

8,535 1,447 887

Net assets attributable to holders of redeemable securities (Note 3) $ 545,025 $ 527,961 $ 494,529

Net assets attributable to holders of redeemable securities per series

Series A $ 243,974 $ 229,087 $ 201,148 Series B 95,586 98,634 103,191 Series C 27,367 29,719 36,523 Series F 33,120 27,455 20,278 Series L 18,162 13,856 6,957 Series T8A 36,915 33,713 27,440 Series T8B 85,820 90,988 94,248 Series T8C 4,081 4,509 4,744

545,025 527,961 494,529 Net assets attributable to holders of redeemable securities per security

Series A $ 10.99 $ 10.17 $ 8.91 Series B 10.34 9.58 8.43 Series C 10.35 9.59 8.43 Series F 12.68 11.66 10.09 Series L 13.34 12.34 10.80 Series T8A 9.01 8.56 7.90 Series T8B 8.70 8.30 7.70 Series T8C 8.72 8.31 7.71

Approved on behalf of Stone Asset Management Limited:

Richard G. Stone James Elliott Director Director

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(UNAUDITED)FOR THE PERIODS ENDED JUNE 30 (Note 1)

(in thousands of dollars; per security amounts are expressed in whole dollars) 2014 2013

Income

Net gains on investments and derivatives (Note 2):

Dividends $ 7,474 $ 7,993

Interest for distribution purposes 251 51

Net realized gain (loss) on sale of investments and derivatives 15,378 6,750

Change in unrealized appreciation (depreciation) of investments and derivatives 32,139 9,405

Net gains on investments and derivatives 55,242 24,199

Foreign exchange gain (loss) on cash (5) 1,027

Total income (net) 55,237 25,226

Expenses (Note 4)

Management fees 6,273 6,114

Securityholder reporting costs 766 826

Transfer agency fees 415 411

Custodian fees 89 74

Filing fees 72 70

Independent review committee fees 27 24

Audit fees 72 59

Legal fees 12 12

Performance fees – 8

Transaction costs (Note 2) 75 85

Foreign withholding taxes 153 126

Total expenses 7,954 7,809

Expenses waived/absorbed by the Manager – –

Total expenses (net) 7,954 7,809

Increase (decrease) in net assets attributable to holders of redeemable securities $ 47,283 $ 17,417

Increase (decrease) in net assets attributable to holders of redeemable securities per series

Series A $ 21,184 $ 7,276 Series B 8,277 3,485 Series C 2,455 1,274 Series F 2,784 821 Series L 1,387 196 Series T8A 3,147 963 Series T8B 7,667 3,235 Series T8C 382 167

47,283 17,417

Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.94 $ 0.32 Series B 0.86 0.29 Series C 0.86 0.31 Series F 1.16 0.39 Series L 1.11 0.25 Series T8A 0.79 0.27 Series T8B 0.74 0.28 Series T8C 0.75 0.29

2014 INTERIM FINANCIAL STATEMENTS 5



STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SECURITIES (UNAUDITED)FOR THE PERIODS ENDED JUNE 30 (Note 1)

2014 Series

In thousands (000’s) A B C F L T8A T8B T8C 2014 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 229,087 98,634 29,719 27,455 13,856 33,713 90,988 4,509 $ 527,961 Increase (decrease) in net assets attributable to holders of redeemable securities 21,184 8,277 2,455 2,784 1,387 3,147 7,667 382 47,283 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 42,017 8,998 1,212 9,866 3,694 12,462 27,713 131 106,093 Reinvestment of dividends to holders of redeemable securities 2,465 902 250 278 119 147 236 22 4,419 Redemption of redeemable securities (48,094) (20,224) (5,975) (6,955) (760) (11,173) (37,369) (795) (131,345)

Net securityholder transactions (3,612) (10,324) (4,513) 3,189 3,053 1,436 (9,420) (642) (20,833)Dividends to securityholders of redeemable securities

Dividends (2,685) (1,001) (294) (308) (134) (419) (1,037) (51) (5,929)Capital gains dividends – – – – – – – – –Return of capital – – – – – (962) (2,378) (117) (3,457)

Total dividends to securityholders of redeemable securities (2,685) (1,001) (294) (308) (134) (1,381) (3,415) (168) (9,386)Net assets attributable to holders of redeemable securities, end of period $ 243,974 95,586 27,367 33,120 18,162 36,915 85,820 4,081 $ 545,025

Securities issued and outstanding Securities, beginning of period 22,529 10,292 3,099 2,355 1,123 3,937 10,969 542 Securities issued for cash 3,932 893 121 802 288 1,396 3,201 16 Securities issued on reinvestment of dividends 231 90 25 23 9 17 28 3 Securities redeemed (4,499) (2,030) (600) (568) (59) (1,251) (4,334) (93)Securities, end of period 22,193 9,245 2,645 2,612 1,361 4,099 9,864 468

2013 Series

In thousands (000’s) A B C F L T8A T8B T8C 2013 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 201,148 103,191 36,523 20,278 6,957 27,440 94,248 4,744 $ 494,529 Increase (decrease) in net assets attributable to holders of redeemable securities 7,276 3,485 1,274 821 196 963 3,235 167 17,417 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 39,739 8,012 2,564 6,661 4,014 5,779 7,054 84 73,907Reinvestment of dividends to holders of redeemable securities 2,589 1,101 360 232 83 125 244 27 4,761 Redemption of redeemable securities (40,123) (17,354) (8,460) (4,920) (892) (3,128) (12,375) (542) (87,794)

Net securityholder transactions 2,205 (8,241) (5,536) 1,973 3,205 2,776 (5,077) (431) (9,126)Dividends to securityholders of redeemable securities

Dividends (2,745) (1,224) (416) (263) (88) (603) (1,889) (93) (7,321)Capital gains dividends – – – – – – – – – Return of capital – – – – – (562) (1,759) (86) (2,407)

Total dividends to securityholders of redeemable securities (2,745) (1,224) (416) (263) (88) (1,165) (3,648) (179) (9,728)Net assets attributable to holders of redeemable securities, end of period $ 207,884 97,211 31,845 22,809 10,270 30,014 88,758 4,301 $ 493,092

Securities issued and outstanding Securities, beginning of period 22,587 12,245 4,333 2,010 644 3,472 12,241 615 Securities issued for cash 4,318 917 291 636 358 711 886 11 Securities issued on reinvestment of dividends 274 126 41 22 7 15 31 3 Securities redeemed (4,357) (1,989) (965) (470) (80) (387) (1,557) (68)Securities, end of period 22,822 11,299 3,700 2,198 929 3,811 11,601 561



STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE PERIODS ENDED JUNE 30 (Note 1)

In thousands (000’s) 2014 2013

Cash flows from operating activities: $ $

Increase (decrease) in net assets attributable to holders of redeemable securities 47,283 17,417

Adjustments for:

Foreign exchange loss (gain) on cash 5 (1,027)

Net realized loss (gain) on sale of investments and derivatives (15,378) (6,750)

Change in unrealized depreciation (appreciation) of investments and derivatives (32,139) (9,405)

Purchases of investments (27,786) (37,413)

Proceeds from sale and/or maturity of investments 53,894 47,940

Dividends receivable (251) 3,586

Interest receivable 4 (1)

Investments sold receivable – (333)

Other assets 309 –

Accrued liabilities 605 502

Investments purchased payable 5,176 51

Net cash from operating activities 31,722 14,567

Cash flows from financing activities:

Proceeds from issue of redeemable securities 106,390 73,577

Amount paid on redemptions of redeemable securities (130,257) (86,523)

Dividends paid to holders of redeemable securities, net of reinvested dividends (4,157) (4,142)

Net cash from financing activities (28,024) (17,088)

Foreign exchange gain (loss) on cash (5) 1,027

Net increase (decrease) in cash and cash equivalents during the period 3,698 (2,521)

Cash and cash equivalents, beginning of period 14,201 21,014

Cash and cash equivalents, end of period $ 17,894 $ 19,520

Supplemental disclosure of cash flow information*:

Interest received $ 254 $ 50

Dividends received, net of withholding tax 7,071 11,454

Cash and cash equivalents are comprised of:

Cash $ 17,894 $ 14,182

Cash equivalents – 5,338

$ 17,894 $ 19,520

*Included as part of cash flows from operating activities.





SCHEDULE OF INVESTMENT PORTFOLIO (UNAUDITED)AS AT JUNE 30, 2014

Number of shares

or par value Security

Average cost

(000’s)

Carrying value

(000’s)

Consumer Discretionary (2.9%)

326,100 Aimia Inc. $ 3,925 $ 6,091

95,500 Matthews International Corp., Class ‘A’ 4,173 4,229

200,000 Shaw Communications Inc., Class ‘B’ 3,401 5,472

11,499 15,792

Consumer Staples (1.3%)

160,000 Coca-Cola Co. (The) 4,256 7,219

4,256 7,219

Energy (21.3%)

311,800 Bonavista Energy Corp. 5,176 5,104

270,000 Cameco Corp. 5,202 5,651

365,000 Canadian Natural Resources Ltd. 11,519 17,896

300,000 Cenovus Energy Inc. 7,534 10,377

145,000 Crescent Point Energy Corp. 5,239 6,857

190,000 Enbridge Inc. 3,559 9,620

250,000 Inter Pipeline Ltd. 6,138 8,280

100,000 Keyera Corp. 1,504 7,861

386,000 Pason Systems Inc. 4,752 11,580

500,000 Suncor Energy Inc. 17,260 22,750

199,400 TransCanada Corp. 6,195 10,155

74,078 116,131

Financial Services (22.7%)

365,000 Bank of Nova Scotia 15,164 25,966

300,000 Brookfield Asset Management Inc., Class ‘A’ 5,790 14,103

17,219 Brookfield Property Partners L.P. 155 384

244,432 Dream Industrial REIT 2,483 2,378

535,000 Power Financial Corp. 15,021 17,767

1,200,000 Pure Industrial Real Estate Trust 3,343 5,496

360,000 Royal Bank of Canada 15,324 27,461

550,000 Toronto-Dominion Bank (The) 16,037 30,212

73,317 123,767

Health Care (5.6%)

105,000 Abbott Laboratories 2,218 4,574

55,900 Johnson & Johnson 3,684 6,229

45,000 Medtronic Inc. 3,025 3,056

60,000 Stryker Corp. 3,079 5,389

46,000 Thermo Fisher Scientific Inc. 4,173 5,782

158,000 Zoetis Inc. 4,949 5,431

21,128 30,461

Industrials (12.7%)

230,000 Canadian National Railway Co. 5,401 15,962

75,000 Canadian Pacific Railway Ltd. 3,856 14,498

50,000 Caterpillar Inc. 4,939 5,787

730,000 CERF Inc. 1,823 2,628

80,000 Fluor Corp. $ 4,905 $ 6,553

118,582 Robert Half International Inc. 5,288 6,030

715,600 Transcontinental Inc., Class ‘A’ 10,042 10,727

285,400 TransForce Inc. 5,313 7,012

41,567 69,197

Information Technology (9.2%)

85,000 Accenture PLC, Class ‘A’ 3,161 7,319

265,000 Computer Modelling Group Ltd. 1,979 7,849

134,000 EMC Corp. 3,366 3,760

50,000 International Business Machines Corp. 6,784 9,654

260,000 Oracle Corp. 6,680 11,224

125,000 Qualcomm Inc. 7,371 10,545

29,341 50,351

Materials (12.7%)

110,000 Agrium Inc. 6,276 10,753

237,500 Canexus Corp. 1,330 1,164

365,000 Chemtrade Logistics Income Fund 5,210 7,665

70,000 Ecolab Inc. 3,342 8,301

240,000 Goldcorp Inc. 7,766 7,147

82,000 International Flavors and Fragrances Inc. 4,769 9,108

65,000 Monsanto Co. 4,713 8,636

102,000 Potash Corp. of Saskatchewan Inc. 1,594 4,139

50,000 Praxair Inc. 3,819 7,075

575,000 Yamana Gold Inc. 8,444 5,049

47,263 69,037

Telecommunication Services (3.7%)

155,000 BCE Inc. 4,201 7,502

155,000 Rogers Communications Inc., Class ‘B’ 4,492 6,656

156,000 TELUS Corp. 2,599 6,204

11,292 20,362

Utilities (5.7%)

460,000 Brookfield Infrastructure Partners L.P. 6,032 20,484

175,000 Brookfield Renewable Energy Partners L.P. 2,548 5,520

155,000 Fortis Inc. 4,075 5,033

12,655 31,037

Transaction Costs (338)

Total Investment Portfolio $ 326,058 533,354

Written Options (0.0%) (58)

Cash & Other Net Assets (Liabilities) (2.2%) 11,729

Total Net Assets (100.0%) $ 545,025

Percentages shown relate to investments at carrying value to total net assets of the Fund.

Schedule of Written Options

Underlying SecurityOption

TypeNumber of

OptionsNumber of

SharesExpiration

DateStrike

Price

Premium Received

(000s)

Current Liability

(000s)

Canadian Pacific Railway Ltd. Call (150) (15,000) 2014/07/19 200 CAD $ (72) $ (29)

Fluor Corp. Call (150) (15,000) 2014/07/19 80 USD (10) (4)

Johnson & Johnson Call (80) (8,000) 2014/07/19 105 USD (5) (8)

Thermo Fisher Call (50) (5,000) 2014/07/19 120 USD (10) (7)

TransForce Inc. Call (500) (50,000) 2014/07/19 25 CAD (20) (10)

$ (116) $ (58)

Number of shares


Average cost

(000’s)

Carrying value

(000’s)



FUND SPECIFIC NOTES ON FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (UNAUDITED)AS AT JUNE 30, 2014, DECEMBER 31, 2013 AND JANUARY 1, 2013(in thousands of dollars; per security amounts are expressed in whole dollars)

January 1, 2013

Currency Investments Cash Total% of net

assetsImpact on net assets

U.S. Dollar 92,977 15,905 108,882 22.1 5,444

Interest rate riskA Fund that invests in fixed income securities, such as bonds and money market instruments, is sensitive to changes in interest rates. In general, when interest rates are rising, the value of these investments fall; when interest rates are falling, the value of these investments rise. Moreover, fixed income securities with longer terms to maturity are usually more sensitive to changes in interest rates.

There is minimal sensitivity to changes in interest rates for money market securities since these are usually held to maturity and tend to be short-term in nature.

As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund did not have significant exposure to interest rate risk.

Liquidity riskLiquidity risk is defined as the risk that a Fund may not be able to settle or meet its obligations on time or at a reasonable price.

The Fund is exposed to daily cash redemptions of redeemable securities. The Fund retains sufficient cash and cash equivalent positions to maintain adequate liquidity. The Fund primarily invests in securities that are actively traded in public markets and can be readily disposed of to increase liquidity. The Schedule of Investment Portfolio identifies any securities that are not traded on an active market, being nil% of total net assets as at June 30, 2014 (December 31, 2013 – nil% and January 1, 2013 – nil%).

As at June 30, 2014, December 31, 2013 and January 1, 2013, all existing liabilities of the Fund are to be settled within three months.

Credit riskWhen a company or government issues a fixed income or debt security, it has an obligation to pay interest and repay a specific amount on the maturity date. Credit risk is the risk that the company or government will not meet that obligation. Credit risk is lowest among issuers that have good credit ratings from recognized credit rating agencies and higher among issuers with a low credit rating or no credit rating at all. These securities usually offer high interest rates to compensate for the increased risk. Changes in the credit risk of a security can affect its liquidity making it more difficult to sell.

As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund did not have significant exposure to credit risk.

Concentration riskThe following table summarizes the portfolio investments held by the Fund:

% of Net Assets

SectorJune 30,

2014 December 31,

2013January 1,

2013

Consumer Discretionary 2.9 2.7 5.9

Consumer Staples 1.3 1.3 1.4

Energy 21.3 19.4 18.1

Financial Services 22.7 22.3 23.8

Health Care 5.6 6.3 4.2

Industrials 12.7 11.0 8.8

Information Technology 9.2 11.3 8.8

Materials 12.7 13.1 13.7

Telecommunication Services 3.7 4.2 5.4

Utilities 5.7 5.4 5.4

Written Options – (0.1) –

Cash & Other Net Assets (Liabilities) 2.2 3.1 4.5

Total net assets 100.0 100.0 100.0

Risk managementThe investment objective of the Stone & Co. Dividend Growth Class (the “Fund”) is to achieve above-average long-term capital growth that is consistent with a conservative investment philosophy encompassing a diversified portfolio approach. The Fund invests primarily in equity securities of Canadian companies that demonstrate financial strength and good growth potential.

The Fund’s investments may be exposed to a variety of financial instruments risks: market risk (comprised of other market price risk, foreign currency risk and interest rate risk), liquidity risk and credit risk.

The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors.

SAM also manages risk by ensuring the portfolio management activities of the Fund comply with its investment objectives and strategies and applicable securities legislation.

Market price riskThe value of securities in the Fund’s investment portfolio may be affected by factors specific to the individual securities. Market price fluctuations may also be caused by general economic and financial conditions or industry-specific matters. Political, social and environmental factors can also affect the value of any investment. The value of equity-related securities, such as warrants, options, and convertible securities is also affected by market price risk.

The most significant exposure to market price risk for the Fund arises from its investment in equity securities. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014 with all other factors remaining constant, net assets would have increased or decreased by approximately $22,340 (December 31, 2013 – $20,961 and January 1, 2013 – $18,616). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark. In practice, actual trading results may differ and the difference could be material.

Foreign currency riskCurrency risk arises when financial instruments are denominated in a currency other than the Canadian dollar, the functional currency of the Fund. When a Fund buys an investment priced in a foreign currency and the exchange rate between the Canadian dollar and the foreign currency changes unfavorably, it could reduce the value of the Fund’s investment.

The Fund had exposure to the foreign currencies shown below in Canadian dollar terms. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.

June 30, 2014



U.S. Dollar 135,902 9,402 145,304 26.7 7,265

December 31, 2013



U.S. Dollar 134,997 12,036 147,033 27.9 7,352



FUND SPECIFIC NOTES ON FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (UNAUDITED) (continued)

Fair value disclosureThe Funds classify fair value measurements within a hierarchy which gives 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: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data.

The following fair value hierarchy table presents information about the Fund’s assets measured at fair value on a recurring basis as of June 30, 2014, December 31, 2013 and January 1, 2013. There were no transfers between Level 1 and Level 2.

Financial Instruments by CategoryThe following table presents the carrying amounts of the Fund’s financial instruments by category as at June 30, 2014:

Assets Held for tradingFinancial assets at FVTPL Designated at inception Total

Financial assets at amortized cost Total

Investments (non-derivative financial assets) $ – $ 533,354 $ 533,354 $ – $ 533,354

Cash and cash equivalents – – – 17,894 17,894

Dividends receivable – – – 1,632 1,632

Subscriptions receivable – – – 680 680

Total Assets – 533,354 533,354 20,206 553,560 LiabilitiesPayable for investments purchased – – – 5,176 5,176

Redemptions payable – – – 1,885 1,885

Accounts payable and accrued expenses – – – 605 605

Dividends payable – – – 811 811

Derivative liabilities 58 – 58 – 58

Total Liabilities 58 – 58 8,477 8,535

The following table presents the carrying amounts of the Fund’s financial assets by category as at December 31, 2013.

All of the Fund’s financial liabilities, other than its net assets attributable to holders of redeemable securities, as at December 31, 2013 were carried at amortized cost.





Interest receivable – – – 4 4


HST refund receivable – – – 310 310


Total Assets – 512,536 512,536 16,872 529,408LiabilitiesRedemptions payable – – – 797 797



Total Liabilities 649 – 649 798 1,447

June 30, 2014

Level 1 Level 2 Level 3 Total

Equities $ 533,354 $ – $ – $ 533,354Total Investment Portfolio $ 533,354 $ – $ – $ 533,354Written Options $ (58) $ – $ – $ (58)

December 31, 2013


Equities $ 512,536 $ – $ – $ 512,536Total Investment Portfolio $ 512,536 $ – $ – $ 512,536Written Options (649) – – (649)

January 1, 2013


Equities $ 472,131 $ – $ – $ 472,131Total Investments Portfolio $ 472,131 $ – $ – $ 472,131




The following table presents the carrying amounts of the Fund’s financial assets by category as at January 1, 2013.

All of the Fund’s financial liabilities, other than its net assets attributable to holders of redeemable securities, as at January 1, 2013 were carried at amortized cost.







Total Assets – 472,131 472,131 23,285 495,416 LiabilitiesRedemptions payable – – – 814 814


Total Liabilities – – – 887 887

The following table presents the net gains (losses) on financial instruments at FVTPL by category for the periods ended June 30, 2014 and 2013:

Net gains (losses)

Category 2014 2013

Financial assets (liabilities) as FVTPL:

HFT $ 793 $ 501

Designated at inception 54,444 24,725

Total $ 55,237 $ 25,226



STONE & CO. RESOURCE PLUS CLASS


(in thousands of dollars; per security amountsare expressed in whole dollars)

June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets


Cash 185 198 461

Dividends receivable 32 35 40



13,863 10,256 13,269

Liabilities

Current liabilities

Redemptions payable 39 14 116

Accounts payable and accrued expenses (Note 8) 33 – –


Written options (Note 2) – – 21

72 14 137



Series A $ 13,272 $ 9,779 $ 12,580 Series B 474 455 535 Series C 3 4 16 Series L 42 4 1

13,791 10,242 13,132

Net assets attributable to holders of redeemable securities per security

Series A $ 3.60 $ 3.04 $ 3.00 Series B 3.67 3.10 3.09 Series C 3.42 2.89 2.88 Series L 10.40 8.91 8.86

Approved on behalf of Stone Asset Management Limited:

Richard G. Stone James Elliott Director Director


(in thousands of dollars; per security amounts are expressed in whole dollars) 2014 2013Income


Dividends $ 151 $ 160

Interest for distribution purposes 2 2 Net realized gain (loss) on sale of investments and derivatives (61) (449)Change in unrealized appreciation (depreciation) of investments and derivatives 2,441 (1,083)

Net gains on investments and derivatives 2,533 (1,370)

Foreign exchange gain (loss) on cash (6) (5)

Total income (net) 2,527 (1,375)

Expenses (Note 4)

Management fees 135 142



Custodian fees 8 9

Filing fees 3 3


Audit fees 8 7

Legal fees – 1

Performance fees – –


Foreign withholding taxes 1 –

Total expenses 230 237

Expenses waived/absorbed by the Manager (24) (25)

Total expenses (net) 206 212

Increase (decrease) in net assets attributable to holders of redeemable securities $ 2,321 $ (1,587)


Series A $ 2,239 $ (1,528)Series B 77 (57)Series C – (2)Series L 5 –

2,321 (1,587)Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.58 $ (0.35)Series B 0.56 (0.33)Series C 0.47 (0.32)Series L 1.56 (0.99)




STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SECURITIES (UNAUDITED) FOR THE PERIODS ENDED JUNE 30 (Note 1)

2014 Series

In thousands (000’s) A B C L 2014 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 9,779 455 4 4 $ 10,242 Increase (decrease) in net assets attributable to holders of redeemable securities 2,239 77 – 5 2,321

Redeemable securityholder transactions

Proceeds from issue of redeemable securities 7,458 80 3 37 7,578

Reinvestment of dividends to holders of redeemable securities – – – – –

Redemption of redeemable securities (6,204) (138) (4) (4) (6,350)

Net securityholder transactions 1,254 (58) (1) 33 1,228

Dividends to securityholders of redeemable securities

Dividends – – – – –

Capital gains dividends – – – – –

Return of capital – – – – –

Total dividends to securityholders of redeemable securities – – – – –Net assets attributable to holders of redeemable securities, end of period $ 13,272 474 3 42 $ 13,791

Securities issued and outstanding

Securities, beginning of period 3,222 146 2 –

Securities issued for cash 386 26 – 4

Securities issued for Stone FTLP assets (Note 3) 2,027 – – –

Securities issued on reinvestment of dividends – – – –

Securities redeemed (1,944) (43) (1) –

Securities, end of period 3,691 129 1 4

2013 Series

In thousands (000’s) A B C L 2013 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 12,580 535 16 1 $ 13,132 Increase (decrease) in net assets attributable to holders of redeemable securities (1,528) (57) (2) – (1,587)


Proceeds from issue of redeemable securities 5,723 – – – 5,723

Reinvestment of dividends to holders of redeemable securities – – – – –

Redemption of redeemable securities (6,314) (31) (1) – (6,346)

Net securityholder transactions (591) (31) (1) – (623)

Dividends to securityholders of redeemable securities

Dividends – – – – –

Capital gains dividends – – – – –


Total dividends to securityholders of redeemable securities – – – – –Net assets attributable to holders of redeemable securities, end of period $ 10,461 447 13 1 $ 10,922


Securities, beginning of period 4,198 173 6 –

Securities issued for cash 391 – – –

Securities issued for Stone FTLP assets (Note 3) 1,495 – – –

Securities issued on reinvestment of dividends – – – –

Securities redeemed (2,173) (10) (1) –

Securities, end of period 3,911 163 5 –





In thousands (000’s) 2014 2013Cash flows from operating activities: $ $Increase (decrease) in net assets attributable to holders of redeemable securities 2,321 (1,587)

Adjustments for:

Foreign exchange loss (gain) on cash 6 5 Net realized loss (gain) on sale of investments and derivatives 61 449 Change in unrealized depreciation (appreciation) of investments and derivatives (2,441) 1,083

Purchases of investments (5,998) (3,365)Proceeds from sale and/or maturity of investments 4,753 4,041

Dividends receivable 2 6

Interest receivable – –

Investments sold receivable – –

Other assets 16 –


Investments purchased payable – –

Net cash from operating activities (1,247) 647


Proceeds from issue of redeemable securities 7,566 5,831 Amount paid on redemptions of redeemable securities (6,325) (6,439)Dividends paid to holders of redeemable securities, net of reinvested dividends – –

Net cash from financing activities 1,241 (608)

Foreign exchange gain (loss) on cash (6) (5)Net increase (decrease) in cash and cash equivalents during the period (6) 39

Cash and cash equivalents, beginning of period 197 461

Cash and cash equivalents, end of period $ 185 $ 495



Dividends received, net of withholding tax 152 166


Cash $ 185 $ 495

Cash equivalents – –

$ 185 $ 495




Materials (16.2%)

400,000 Advanced Explorations Inc., Warrants, 2014/07/17* $ – $ –

250,000 Anconia Resources Corp., Warrants, 2014/08/22* – –

3,700 Axiall Corp. 166 186

5,883,333 Campbell Resources Inc.* 19 –

1,000,000 Canada Carbon Inc., Warrants, 2015/03/01* 38 18

450,000 Carlisle Goldfields Ltd., Warrants, 2014/07/18* – –

305,400 Castle Resources Inc. 14 9

7,500 Chemtrade Logistics Income Fund 143 158

237,200 Coastal Gold Corp. 9 4

300,000 DNI Metals Inc. 12 15

10,000 First Quantum Minerals Ltd. 262 228

200,000 Fletcher Nickel Inc.* 130 –

16,000 Goldcorp Inc. 624 477

30,000 Golden Predator Mining Corp., Warrants, 2014/09/19* – –

585,000 GWR Resources Inc., Warrants, 2014/07/31* – –

30,000 Hudbay Minerals Inc. 317 296

1,600 LyondellBasell Industries NV, Class ‘A’ 138 167

800,000 Mustang Minerals Corp. 59 20

320,000 NorthIsle Copper & Gold Inc. 11 11

2,150,000 Nuinsco Resources Ltd. 114 43

375,000 PC Gold Inc. 15 28

12,500 Primero Mining Corp., Warrants, 2014/11/19* – –

1,100,000 Red Pine Exploration Inc., Warrants, 2014/11/24* – –

80,000 Rubicon Minerals Corp. 120 126

40,000 Rubicon Minerals Corp., Warrants, 2015/03/12 5 5

400,000 Shear Diamonds Ltd.* – –

12,000 Teck Resources Ltd., Class ‘B’ 384 292

300,000 Wallbridge Mining Co. Ltd. 33 27

14,000 Yamana Gold Inc. 217 123

2,830 2,233

Exchange-Traded Funds (4.5%)

83,500 Stone Agribusiness Fund 395 624

395 624



Cash & Other Net Assets (Liabilities ) (1.2%) 160



*Denotes securities that are restricted and/or not traded on an active market.



Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Energy (78.1%)

45,000 Advantage Oil & Gas Ltd. $ 275 $ 323

600,000 Alston Energy Inc.* 3 –

15,000 Bellatrix Exploration Ltd. 122 139

95,000 Border Petroleum Ltd. 5 8

13,000 Cameco Corp. 329 272

200,000 Canada Coal Inc. 4 8

6,400 Canadian Natural Resources Ltd. 261 314

31,000 Canyon Services Group Inc. 371 586

14,000 Cenovus Energy Inc. 525 484

11,000 Crescent Point Energy Corp. 420 520

30,000 Crocotta Energy Inc. 88 140

20,000 DeeThree Exploration Ltd. 177 228

70,000 Fair Sky Resources Inc.* – –

17,500 Gibson Energy Inc. 382 596

380,000 Green Coal Canada Ltd.* – –

303,000 Gryphon Petroleum Corp.* 584 39

6,000 Husky Energy Inc. 162 207

4,500 Imperial Oil Ltd. 205 253

16,000 Inter Pipeline Ltd. 393 530

22,000 Legacy Oil + Gas Inc. 198 208

58,340 Long Run Exploration Ltd. 265 330

2,300 Marathon Petroleum Corp. 219 191

3,100,000 Nordic Oil and Gas Ltd., Class ‘A’ 68 47

5,000 Paramount Resources Ltd., Class ‘A’ 222 298

16,000 Pason Systems Inc. 206 480

60,000 Questor Technology Inc. 222 265

25,000 RMP Energy Inc. 155 236

10,000 Secure Energy Services Inc. 154 235

1,340,000 Shoal Point Energy Ltd. 27 20

1,000,000 Solara Exploration Ltd., Class ‘A’* – –

35,000 Spartan Energy Corp. 150 141

30,000 Storm Resources Ltd. 152 158

18,000 Suncor Energy Inc. 669 819

25,700 TORC Oil & Gas Ltd. 253 377

10,000 Total Energy Services Inc. 160 232

9,000 Tourmaline Oil Corp. 378 506

55,000 Uranerz Energy Corp. Warrants, 2016/03/06* 18 13

7,000 Vermilion Energy Inc. 345 520

725,000 West Hawk Development Corp.* 4 –

4,600 Western Refining Inc. 193 184

40,000 Whitecap Resources Inc. 417 659

53,334 Yangarra Resources Ltd. 194 208

8,975 10,774

Number of shares


Average cost

(000’s)

Carrying value

(000’s)




January 1, 2013



U.S. Dollar 697 43 740 5.6 37



The table below summarizes the exposure to interest rate risk of the Fund and the pro-rata share of the Underlying Exchange Traded Fund:

Debt Securities < 1 year 1-3 years 3-5 years > 5 years Total

June 30, 2014 – – – – –

December 31, 2013 – – – – –

January 1, 2013 112 – – – 112


The Fund is exposed to daily cash redemptions of redeemable securities. The Fund and the Underlying Stone Agribusiness Fund retain sufficient cash and cash equivalent positions to maintain adequate liquidity. The Fund and the Underlying Fund primarily invest in securities that are actively traded in public markets and can be readily disposed of to increase liquidity. The Schedule of Investment Portfolio identifies any securities that are not traded on an active market, being 0.5% of total net assets as at June 30, 2014 (December 31, 2013 – 1.1% and January 1, 2013 – 1.6%).

As at June 30, 2014, December 31, 2013 and January 1, 2013, all existing liabilities of the Fund and the Underlying Exchange Traded Fund are to be settled within three months.


As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund and the Underlying Exchange Traded Fund did not have significant exposure to credit risk.


% of Net Assets

SectorJune 30,

2014December 31,

2013January 1,

2013

Energy 78.1 71.2 50.5

Materials 16.2 20.8 34.8

Exchange-Traded Fund 4.5 5.7 11.1

Purchased Options* – – –

Written Options – – (0.2)


Total net assets 100.0 100.0 100.0*is less than 0.05%

Risk managementThe investment objective of the Stone & Co. Resource Plus Class (the “Fund”) is to provide above-average growth of capital by investing in equity securities of issuers with high growth potential with an emphasis on issuers operating in resource sectors, including oil and gas, mining, minerals and forest products, and in equity securities of companies which support these resource-based companies, as well as in securities of income trusts and royalty trusts in the resource sectors. The Fund may invest in other mutual funds where the other mutual funds are managed by Stone Asset Management Limited.


The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification within resource sectors.


Market price riskThe value of securities in the Fund’s investment portfolio may be affected by factors other than those specific to the individual securities. Market price fluctuations may be caused by general economic and financial conditions or industry-specific matters. Political, social and environmental factors can also affect the value of any investment. The value of equity-related securities, such as warrants, options, and convertible securities is also affected by market price risk.

The most significant exposure to market price risk for the Fund arises from its investment in equity securities. The Fund and the Underlying Stone Agribusiness Fund moderate this risk through a careful selection of securities within the parameters of the investment strategy. The Fund may be exposed to indirect market price through its pro-rata investment in the Underlying Stone Agribusiness Fund. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014 with all other factors remaining constant, net assets would have increased or decreased by approximately $759 (December 31, 2013 – $460 and January 1, 2013 – $727). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.

In practice, actual trading results may differ and the difference could be material.


The Fund had foreign currency risk from direct investments, as well as indirect foreign currency risk in its investments in the Exchange Traded Fund. The Fund’s exposure of currency risk is based on its direct investments and on the Fund’s pro-rata share of the Underlying Exchange Traded Fund at period end which is shown below in Canadian dollar terms. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.

June 30, 2014



U.S. Dollar 1,247 25 1,272 9.2 64

December 31, 2013



U.S. Dollar 663 34 697 6.8 35









June 30, 2014


Equities $ 12,936 $ – $ 71 $ 13,007

Exchange Traded Fund 624 – – 624Total Investment Portfolio $ 13,560 $ – $ 71 $ 13,631

December 31, 2013


Equities $ 9,315 $ 86 $ 24 $ 9,425

Exchange Traded Fund 580 – – 580Total Investment Portfolio $ 9,895 $ 86 $ 24 $ 10,005

January 1, 2013


Equities $ 11,004 $ – $ 199 $ 11,203

Exchange Traded Fund 1,457 – – 1,457Total Investment Portfolio $ 12,461 $ – $ 199 $ 12,660Written Options (21) – – (21)

During the periods ended June 30, 2014 and December 31, 2013 the reconciliation of investments categorized Level 3 as follows:

June 30, 2014

Beginning Balance $ 24

Purchases 60

Sales –

Net transfers into and/or out of Level 3 –

Realized gain (loss) –

Change in unrealized appreciation (depreciation) (13)

Ending Balance $ 71

Total change in unrealized appreciation (depreciation) during the period for assets held at June 30, 2014 $ (13)

December 31, 2013


Purchases 1

Sales (296)


Realized gain (loss) 36

Change in unrealized appreciation (depreciation) 84

Ending Balance $ 24

Total change in unrealized appreciation (depreciation) during the period for assets held at December 31, 2013 $ (9)

The Fund applies judgment in determining unobservable inputs to calculate the fair value of Level 3 financial instruments of $71 as of June 30, 2014 (December 31, 2013 – $24). The unobservable inputs used in the valuation of these financial instruments primarily include key variables related to the volatility of the underlying position, current market conditions and recent financings by the company, if any. These securities are affected by market activity in their relevant sectors and therefore generally fluctuate similarly. If relevant market-related inputs increased or decreased by 20%, with all other variables remaining constant, net assets would have possibly increased or decreased by approximately $14 (December 31, 2013 – $5).








Cash and cash equivalents – – – 185 185

Dividends receivable – – – 32 32


Total Assets – 13,631 13,631 232 13,863

Liabilities

Redemptions payable – – – 39 39












Total Assets – 10,005 10,005 251 10,256

Liabilities











Total Assets – 12,660 12,660 609 13,269

Liabilities



Total Liabilities 21 – 21 116 137


Net gains (losses) Category 2014 2013


HFT $ (56) $ –

Designated at inception 2,583 (1,375)

Total $ 2,527 $ (1,375)



STONE & CO. FLAGSHIP GROWTH & INCOME FUND CANADA



June 30 2014

Dec, 31 2013

Jan, 1 2013

Assets

Current assets


Cash 1,202 275 1,656


Interest receivable 336 332 296

Receivable for investments sold 942 357 –



116,226 117,688 124,183

Liabilities

Current liabilities

Payable for investments purchased 1,234 – –

Redemptions payable 322 47 171Accounts payable and accrued expenses (Note 8) 120 6 –

Distributions payable 511 – –


Written options (Note 2) 2 47 –

2,189 100 171Net assets attributable to holders of redeemable securities (Note 3) $ 114,037 $ 117,588 $ 124,012


Series AA $ 8,245 $ 7,211 $ 5,503Series BB 3,782 4,045 4,739Series CC 954 1,242 1,529Series FF 990 864 433Series L 2,112 1,289 487Series T8A 15,545 13,712 12,537Series T8B 76,251 82,761 91,514Series T8C 6,158 6,464 7,270

114,037 117,588 124,012Net assets attributable to holders of redeemable securities per security

Series AA $ 16.67 $ 15.96 $ 14.04Series BB 16.19 15.55 13.75Series CC 16.20 15.55 13.75Series FF 17.40 16.61 14.54Series L 12.72 12.21 10.80Series T8A 8.28 8.25 7.84Series T8B 8.08 8.07 7.70Series T8C 8.06 8.04 7.67





Interest for distribution purposes 847 871 Net realized gain (loss) on sale of investments and derivatives 2,648 2,057 Net realized gain (loss) on forward currency contracts – (26) Change in unrealized appreciation (depreciation) of investments and derivatives 2,276 2,253


Foreign exchange gain (loss) on cash 2 75


Expenses (Note 4)

Management fees 1,026 1,239



Custodian fees 25 29

Filing fees 10 11


Audit fees 16 15

Legal fees 1 2




Total expenses 1,295 1,571


Total expenses (net) 1,293 1,568 Increase (decrease) in net assets attributable to holders of redeemable securities $ 4,950 $ 4,411


Series AA $ 335 $ 212Series BB 162 158 Series CC 49 54 Series FF 41 19 Series L 64 17 Series T8A 636 467 Series T8B 3,393 3,226 Series T8C 270 258

4,950 4,411 Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series AA $ 0.71 $ 0.48Series BB 0.67 0.54 Series CC 0.70 0.50 Series FF 0.71 0.55 Series L 0.47 0.26 Series T8A 0.36 0.28 Series T8B 0.34 0.28 Series T8C 0.34 0.28





2014 Series

In thousands (000’s) AA BB CC FF L T8A T8B T8C 2014 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 7,211 4,045 1,242 864 1,289 13,712 82,761 6,464 $ 117,588

Increase (decrease) in net assets attributable to holders of redeemable securities 335 162 49 41 64 636 3,393 270 4,950 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 2,223 239 109 765 995 3,882 8,108 48 16,369

Reinvestment of distributions to holders of redeemable securities 5 3 1 1 1 253 518 69 851 Redemption of redeemable securities (1,523) (664) (446) (680) (236) (2,354) (15,376) (440) (21,719)

Net securityholder transactions 705 (422) (336) 86 760 1,781 (6,750) (323) (4,499)

Distributions to securityholders of redeemable securities

Net investment income – – – – – – – – – Capital gains (6) (3) (1) (1) (1) (90) (485) (39) (626)Return of capital – – – – – (494) (2,668) (214) (3,376)

Total distributions to securityholders of redeemable securities (6) (3) (1) (1) (1) (584) (3,153) (253) (4,002)

Net assets attributable to holders of redeemable securities, end of period $ 8,245 3,782 954 990 2,112 15,545 76,251 6,158 $ 114,037

Securities issued and outstandingSecurities, beginning of period 452 260 80 52 106 1,663 10,262 804 Securities issued for cash 136 16 7 44 79 467 999 6 Securities issued on reinvestment of distributions – – – – – 30 64 8 Securities redeemed (93) (42) (28) (39) (19) (283) (1,891) (54)Securities, end of period 495 234 59 57 166 1,877 9,434 764

2013 Series

In thousands (000’s) AA BB CC FF L T8A T8B T8C 2013 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 5,503 4,739 1,529 433 487 12,537 91,514 7,270 $ 124,012

Increase (decrease) in net assets attributable to holders of redeemable securities 212 158 54 19 17 467 3,226 258 4,411 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 2,778 251 124 244 284 2,331 4,420 496 10,928

Reinvestment of distributions to holders of redeemable securities 5 3 1 – – 220 560 78 867 Redemption of redeemable securities (1,685) (1,293) (231) (81) (9) (1,914) (11,827) (1,273) (18,313)

Net securityholder transactions 1,098 (1,039) (106) 163 275 637 (6,847) (699) (6,518)


Net investment income – – – – – – – – – Capital gains (5) (3) (1) – (1) (123) (827) (64) (1,024)Return of capital – – – – – (397) (2,666) (208) (3,271)

Total distributions to securityholders of redeemable securities (5) (3) (1) – (1) (520) (3,493) (272) (4,295)

Net assets attributable to holders of redeemable securities, end of period $ 6,808 3,855 1,476 615 778 13,121 84,400 6,557 $ 117,610

Securities issued and outstandingSecurities, beginning of period 392 345 111 30 45 1,600 11,891 948 Securities issued for cash 191 17 9 16 26 290 562 63 Securities issued on reinvestment of distributions – – – – – 28 72 10 Securities redeemed (115) (91) (16) (5) (1) (239) (1,504) (162)Securities, end of period 468 271 104 41 70 1,679 11,021 859







Adjustments for:

Foreign exchange loss (gain) on cash (2) (75)


Net realized loss (gain) on forward currency contracts – 26

Change in unrealized depreciation (appreciation) of investments and derivatives (2,276) (2,253)



Dividends receivable (15) 358

Interest receivable (4) 11

Investments sold receivable (585) (1,161)

Other assets 46 –


Investments purchased payable 1,233 990





Distributions paid to holders of redeemable securities, net of reinvested distributions (2,642) (2,874)


Foreign exchange gain (loss) on cash 2 75

Net increase (decrease) in cash and cash equivalents during the period 925 (1,140)

Cash and cash equivalents, beginning of period 275 1,656

Cash and cash equivalents, end of period $ 1,202 $ 591



Dividends received, net of withholding tax 445 1,097


Cash $ 1,202 $ 152

Cash equivalents – 439

$ 1,202 $ 591





Technology (2.3%)

5,500 Accenture PLC, Class ‘A’ $ 183 $ 474

8,000 EMC Corp. 201 224

3,000 International Business Machines Corp. 303 579

14,500 Oracle Corp. 369 626

8,400 Qualcomm Inc. 495 709

1,551 2,612

Telecommunications Services (1.2%)

10,000 BCE Inc. 269 484

11,300 Rogers Communications Inc., Class ‘B’ 394 485

10,000 TELUS Corp. 281 398

944 1,367

Utilities (1.8%)

29,100 Brookfield Infrastructure Partners L.P. 458 1,296

22,500 Fortis Inc. 585 731

1,043 2,027

Bonds

Corporate Bonds (26.0%)

508,000 Algonquin Power Co., Callable, 5.500%, 2018/07/25 523 561

1,242,000 Algonquin Power Co., Restricted, 4.820%, 2021/02/15 1,262 1,343

519,000 AltaGas Ltd., Callable, 5.160%, 2044/01/13 518 566

448,000 Bank of Montreal, Callable, 2.390%, 2017/07/12 455 455

1,404,000 Bank of Montreal, Variable Rate, Callable, 3.979%, 2021/07/08 1,475 1,463 1,342,000 Bank of Nova Scotia, Variable Rate, Callable, 3.036%,

2024/10/18 1,344 1,376

1,314,000 Bell Canada, Callable, 3.500%, 2018/09/10 1,334 1,376

409,000 Bell Canada, Callable, 5.000%, 2017/02/15 443 441

1,320,000 BMW Canada Inc. Series ‘F’, 2.110%, 2016/05/26 1,332 1,332

897,000 BRP Finance ULC, Series ‘7’, Callable, 5.140%, 2020/10/13 972 997 2,113,000 Canadian Imperial Bank of Commerce, Variable Rate, Callable,

3.150%, 2020/11/02 2,174 2,154

226,000 Daimler Canada Finance Inc., 2.280%, 2017/02/17 226 229

427,000 Enbridge Inc., Callable, 5.120%, 2040/09/28 493 478

580,000 Enbridge Income Fund Holdings Inc., 5.000%, 2017/06/22 629 628

84,000 GE Capital Canada Funding Co., 4.400%, 2018/02/08 91 91

540,000 GE Capital Canada Funding Co., Series ‘A’, 5.530%, 2017/08/17 614 599 403,000 Greater Toronto Airports Authority, Callable, 4.530%,

2041/12/02 404 433 873,000 Goldman Sachs Group Inc. (The), Series ‘Maple’, 3.550%,

2021/02/12 872 886

459,000 Heathrow Funding Ltd., 3.000%, 2021/06/17 455 462

623,000 Inter Pipeline Ltd., Callable, 3.448%, 2020/07/20 635 646

222,000 JPMorgan Chase & Co., Series ‘Maple’, 2.920%, 2017/09/19 226 228 981,000 Manufacturers Life Insurance Co., Variable Rate, Callable,

2.926%, 2023/11/29 981 1,001

1,000,000 Morgan Stanley, Series ‘F’, 4.850%, 2016/02/03 1,060 1,047

235,000 Pembina Pipeline Corp., Callable, 4.750%, 2043/04/30 234 242

1,208,000 PSP Capital Inc., 3.030%, 2020/10/22 1,208 1,257

997,000 PSP Capital Inc., Series ‘7’, Restricted, 3.290%, 2024/04/04 996 1,022

803,000 Reliance L.P., Callable, 4.574%, 2017/03/15 803 845

665,000 RioCan REIT, Series ‘P’, Callable, 3.800%, 2017/03/01 691 695

439,000 Rogers Communications Inc., Callable, 3.000%, 2017/06/06 450 451 1,608,000 Royal Bank of Canada, Variable Rate, Callable, 2.990%,

2024/12/06 1,609 1,644 873,000 Sun Life Financial Inc., Variable Rate, Callable, 4.950%,

2036/06/01 928 922

1,206,000 TELUS Corp., Series ‘CG’, Callable, 5.050%, 2019/12/04 1,330 1,351 1,425,000 Toronto-Dominion Bank (The), Variable Rate, Callable, 3.367%,

2020/11/02 1,472 1,457

916,000 Veresen Inc., 3.060%, 2019/06/13 916 924

29,155 29,602

Federal Bonds (2.3%)

126,000 Government of Canada, 1.250%, 2016/02/01 127 126



1,475,000 Government of Canada, 4.000%, 2041/06/01 1,748 1,810

2,558 2,621



Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Equities & Investment Funds Consumer Discretionary (0.8%)

19,800 Aimia Inc. $ 347 $ 370

4,366 Matthews International Corp., Class ‘A’ 192 193

14,000 Shaw Communications Inc., Class ‘B’ 252 383

791 946


10,500 Coca-Cola Co. (The) 265 474

265 474

Energy (6.0%)

19,000 Bonavista Energy Corp. 315 311

25,000 Cameco Corp. 482 523

21,000 Canadian Natural Resources Ltd. 559 1,030


10,000 Crescent Point Energy Corp. 363 473

18,000 Enbridge Inc. 337 911

14,500 Inter Pipeline Ltd. 356 480

5,500 Keyera Corp. 90 432

22,000 Pason Systems Inc. 274 660

29,300 Suncor Energy Inc. 839 1,333

4,099 6,880


22,100 Bank of Nova Scotia 902 1,572

17,400 Brookfield Asset Management Inc., Class ‘A’ 624 818

1,721 Brookfield Property Partners L.P. 16 38

42,048 Community Lend P2P Notes* 42 42

24,667 Dream Industrial REIT 251 240

39,100 Power Financial Corp. 1,257 1,299

70,000 Pure Industrial Real Estate Trust 186 321

20,900 Royal Bank of Canada 758 1,594

28,700 Toronto-Dominion Bank 808 1,577

4,844 7,501

Health Care (1.7%)

7,200 Abbott Laboratories 169 314

2,900 Johnson & Johnson 192 323

2,600 Medtronic Inc. 175 177

4,000 Stryker Corp. 205 359

3,000 Thermo Fisher Scientific Inc. 272 377

11,000 Zoetis Inc. 345 378

1,358 1,928

Industrials (3.2%)

11,600 Canadian National Railway Co. 252 805

3,300 Canadian Pacific Railway Ltd. 137 638

3,000 Caterpillar Inc. 296 347

5,000 Fluor Corp. 307 409

7,000 Robert Half International Inc. 313 356

40,000 Transcontinental Inc., Class ‘A’ 689 600

21,000 TransForce Inc. 391 516

2,385 3,671

Materials (3.0%)

8,000 Agrium Inc. 473 782

60,000 Canexus Corp. 336 294

22,500 Chemtrade Logistics Income Fund 349 473

4,200 Ecolab Inc. 200 498

5,000 International Flavors and Fragrances Inc. 291 555

7,000 Potash Corp. of Saskatchewan Inc. 336 284

3,500 Praxair Inc. 253 495

2,238 3,381

Investment Funds (32.6%)

1,019,687 Stone & Co. EuroPlus Dividend Growth Fund, Series ‘A’ 10,155 11,739

3,956,545 Stone & Co. Flagship Global Growth Fund 18,816 25,480

28,971 37,219

Number of shares


Average cost

(000’s)

Carrying value

(000’s)



Provincial Bonds (11.6%) 160,000 Muskrat Falls / Labrador Transmission Assets Funding Trust,

Series ‘A’, Callable, 3.630%, 2029/06/01 $ 163 $ 172

829,000 Muskrat Falls / Labrador Transmission Assets Funding Trust, Series ‘C’, Callable, 3.860%, 2048/12/01 847 919

980,000 Province of British Columbia, 3.200%, 2044/06/18 917 919

557,000 Province of British Columbia, 4.950%, 2040/06/18 701 688

423,000 Province of Manitoba, 3.850%, 2021/12/01 463 460

700,000 Province of Manitoba, 4.100%, 2041/03/05 780 756

1,780,000 Province of Ontario, 3.150%, 2022/06/02 1,803 1,832

631,000 Province of Ontario, 4.000%, 2021/06/02 686 689


1,011,000 Province of Ontario, 6.200%, 2031/06/02 1,310 1,349


1,173,000 Province of Quebec, 3.000%, 2023/09/01 1,114 1,176

481,000 Province of Quebec, 3.500%, 2022/12/01 494 505

772,000 Province of Quebec, 5.000%, 2041/12/01 895 931

1,087,000 Province of Quebec, Series ‘B113’, 3.750%, 2024/09/01 1,125 1,147

345,000 Province of Saskatchewan, 3.400%, 2042/02/03 324 336

13,074 13,258



Written Options (0.0%) (2)

Cash & Other Net Assets (Liabilities) (0.5%) 552





SCHEDULE OF INVESTMENT PORTFOLIO (UNAUDITED) (continued)

AS AT JUNE 30, 2014

Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Schedule of Written Options

Underlying Security Option TypeNumber of

Options

Number of

SharesExpiration

DateStrike

Price

Premium Received

(000’s)Current Liability

(000’s)

Fluor Corp. Call (10) (1,000) 2014/07/19 80 USD $ (1) $ –

Thermo Fisher Scientific Inc. Call (10) (1,000) 2014/07/19 120 USD (2) (1)

TransForce Inc. Call (60) (6,000) 2014/07/19 25 CAD (2) (1)

$ (5) $ (2)




June 30, 2014


assets

Impact on net assets

British Pound 6,819 5 6,824 6.0 341Euro 8,415 37 8,452 7.4 423Hong Kong Dollar 519 – 519 0.5 26Norwegian Krone 687 – 687 0.6 34Singapore Dollar 544 – 544 0.5 27Swedish Krona 198 – 198 0.2 10Swiss Franc 1,059 – 1,059 0.9 53U.S. Dollar 24,135 109 24,244 21.3 1,212Totals 42,376 151 42,527 37.4 2,126

December 31, 2013


assets


British Pound 7,239 – 7,239 6.2 362Euro 8,487 2 8,489 7.2 424Hong Kong Dollar 684 – 684 0.6 34Norwegian Krone 797 – 797 0.7 40Singapore Dollar 428 – 428 0.4 21Swedish Krona 190 – 190 0.2 10Swiss Franc 900 – 900 0.8 45U.S. Dollar 25,598 158 25,756 21.9 1,288Totals 44,323 160 44,483 38.0 2,224

January 1, 2013


assets


British Pound 7,971 – 7,971 6.4 399Euro 7,928 – 7,928 6.4 396Hong Kong Dollar 388 – 388 0.3 19Norwegian Krone 1,083 – 1,083 0.9 54Swedish Krona 217 – 217 0.2 11Swiss Franc 786 – 786 0.6 39U.S. Dollar 16,923 613 17,536 14.2 877Totals 35,296 613 35,914 29.0 1,795

Risk managementThe investment objective of the Stone & Co. Flagship Growth & Income Fund Canada (the “Fund”) is to provide superior investment returns combined with a steady stream of current income by investing primarily in Canadian equity and fixed-income securities. The Fund may invest in other mutual funds where the other mutual funds are managed by Stone Asset Management Limited.


The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors. The fixed income component of the Fund is managed by a Portfolio Sub-advisor, Aviva Investors Canada Inc.



The most significant exposure to market price risk for the Fund arises from its investment in equity securities. The Fund and the Underlying Investment Funds moderate this risk through a careful selection of securities within the parameters of the investment strategy. The Fund may be exposed to indirect market price through its pro-rata investment in the Underlying Investment Funds. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014, with all other factors remaining constant, net assets would have increased or decreased by approximately $3,083 (December 31, 2013 – $2,892 and January 1, 2013 – $2,772). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.



The Fund had foreign currency risk from direct investments as well as indirect foreign currency risk in its investments in the Underlying Investment Funds. The Fund’s exposure of currency risk is based on its direct investment and on the Fund’s pro-rata share of the Underlying Investment Funds at period end which are shown below in Canadian dollar terms. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.





An increase or decrease of 1% in interest rates would increase or decrease fair value for the period ended June 30, 2014 by $3,759 (December 31, 2013 – $3,393 and January 1, 2013 – $4,140). The Fund’s sensitivity to interest rate changes was estimated using the weighted average duration of the bonds. In practice, actual results may differ from this sensitivity analysis and the difference could be material.

The table below summarizes the exposure to interest rate risks of the Fund and the pro-rata share of the Underlying Investment Funds:

Term of Bonds

Bonds < 1 year 1-3 years 3-5 years > 5 years Total

June 30, 2014 – 6,249 4,233 35,000 45,482

December 31, 2013 – 5,032 7,270 32,067 44,369

January 1, 2013 – 8,398 8,043 33,342 49,783


The Fund is exposed to daily cash redemptions of redeemable securities. The Fund and the Underlying Investment Funds retain sufficient cash and cash equivalent positions to maintain adequate liquidity. The Fund and the Underlying Investment Funds primarily invest in securities that are actively traded in public markets and can be readily disposed of to increase liquidity. The Schedule of Investment Portfolio identifies any securities that are not traded on an active market, being nil% of total net assets as at June 30, 2014 (December 31, 2013 – nil% and January 1, 2013 – 0.1%).

As at June 30, 2014, December 31 and January 1, 2013, all existing liabilities of the Fund and the Underlying Investment Funds are to be settled within three months.


The Fund and Underlying Investment Funds were invested in debt securities with the following credit ratings:

June 30, 2014 December 31, 2013 January 1, 2013

Rating*As percent ofnet assets (%)

As percent ofnet assets (%)

As percent ofnet assets (%)

AAA 7.0 7.6 10.8

AA 6.3 5.3 7.2

A 13.7 14.2 15.5

BBB 12.9 10.7 6.7

Total 39.9 37.8 40.2*Credit ratings obtained from the Bloomberg Composite.


% of Net Assets

SectorJune 30,

2014December 31,

2013January 1,

2013



Corporate Bonds 26.0 24.0 18.1

Energy 6.0 6.1 6.7

Federal Bonds 2.3 2.3 9.0


Health Care 1.7 2.0 1.7


Materials 3.0 3.4 4.4

Municipal Bonds – – 0.5

Investment Funds 32.6 31.9 22.5

Provincial Bonds 11.6 11.4 12.5


Telecommunications Services 1.2 1.4 2.9

Utilities 1.8 1.8 2.1

Written Options* – – –


Total net assets 100.00 100.0 100.0*% is less than 0.05%

The following table summarizes the portfolio investments by asset type which are held by the Fund:

% of Net Assets

Asset TypeJune 30,

2014December 31,

2013January 1,

2013

Equities 59.6 61.4 58.3

Bonds 39.9 37.7 40.1

Cash & Other Net Assets (liabilities) 0.5 0.9 1.6







June 30, 2014


Equities $ 30,745 $ – $ 42 $ 30,787Bonds – 45,481 – 45,481Investment Funds 37,219 – – 37,219Total Investment Portfolio $ 67,964 $ 45,481 $ 42 $ 113,487Written Options $ – $ (2) $ – $ (2)


December 31, 2013


Equities $ 34,607 $ – $ 42 $ 34,649Bonds – 44,369 – 44,369Investment Funds 37,562 – – 37,562Total Investment Portfolio $ 72,169 $ 44,369 $ 42 $ 116,580Written Options $ (47) $ – $ – $ (47)

January 1, 2013


Equities $ 44,278 $ – $ 163 $ 44,441Bonds – 49,784 – 49,784Investment Funds 27,825 – – 27,825Total Investment Portfolio $ 72,103 $ 49,784 $ 163 $ 122,050

During the periods ended June 30, 2014 and December 31, 2013, the reconciliation of investments categorized Level 3 as follows:

June 30, 2014

Beginning Balance $ 42Purchases –Sales –Net transfers into and/or out of Level 3 –Realized gain (loss) –Change in unrealized appreciation (depreciation) –Ending Balance $ 42

Total change in unrealized appreciation (depreciation) during the period for assets held at June 30, 2014 $ –










Receivable for investments sold – – – 942 942


Total Assets – 113,487 113,487 2,739 116,226

Liabilities

Payable for investments purchased – – – 1,234 1,234



Distributions payable – – – 511 511


Total Liabilities 2 – 2 2,187 2,189

December 31, 2013

Beginning Balance $ 163Purchases –Sales (121)Net transfers into and/or out of Level 3 –Realized gain (loss) –Change in unrealized appreciation (depreciation) –

Ending Balance $ 42

Total change in unrealized appreciation (depreciation) during the period for assets held at December 31, 2013 $ –

The Fund applies judgment in determining unobservable inputs to calculate the fair value of Level 3 financial instruments of $42 as of June 30, 2014 (December 31, 2013 – $42). The unobservable inputs used in the valuation of these financial instruments primarily include key variables, related to the volatility of the underlying position, current market conditions and recent financings by the company, if any. These securities are affected by market activity in their relevant sectors and therefore generally fluctuate similarly. If relevant market-related inputs increased or decreased by 5%, with all other variables remaining constant, net assets would have possibly increased or decreased by approximately $2 (December 31, 2013 – $2).












Receivable for investments sold – – – 357 357



Total Assets – 116,580 116,580 1,108 117,688

Liabilities














Total Assets – 122,050 122,050 2,133 124,183

Liabilities




Category 2014Net gains (losses)

2013


HFT $ 61 $ –


Total $ 6,243 $ 5,979



STONE & CO. FLAGSHIP STOCK FUND CANADA



June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets


Cash 1,257 129 1,272


Subscriptions receivable 1 – 22

24,920 24,566 24,393

Liabilities

Current liabilities

Redemptions payable 67 4 77




Written options (Note 2) – – 34

197 5 142



Series A $ 5,438 $ 5,283 $ 5,186Series B 7,579 7,823 8,228Series C 298 299 300Series F 609 524 569Series L 40 36 21Series T8A 1,742 1,451 1,089Series T8B 8,123 8,289 8,072Series T8C 894 856 786

24,723 24,561 24,251Net assets attributable to holders of redeemable securities per security

Series A $ 9.92 $ 9.05 $ 7.09Series B 9.20 8.41 6.62Series C 9.86 9.01 7.09Series F 11.74 10.67 8.29Series L 13.44 12.30 9.69Series T8A 5.39 5.11 4.31Series T8B 5.21 4.95 4.19Series T8C 5.21 4.95 4.19



Income



Interest for distribution purposes 2 – Net realized gain (loss) on sale of investments and derivatives 2,208 (762)Change in unrealized appreciation (depreciation) of investments and derivatives 292 3,419




Expenses (Note 4)




Custodian fees 5 7

Filing fees 4 3


Audit fees 15 14

Legal fees – 1






Increase (decrease) in net assets attributable to holders of redeemable securities $ 2,230 $ 2,437


Series A $ 492 $ 523 Series B 689 815 Series C 27 31 Series F 55 60 Series L 3 1 Series T8A 146 126 Series T8B 739 801 Series T8C 79 80

2,230 2,437 Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.88 $ 0.77 Series B 0.78 0.71 Series C 0.84 0.76 Series F 1.06 0.96 Series L 1.13 0.61 Series T8A 0.47 0.42 Series T8B 0.46 0.46 Series T8C 0.46 0.44





2014 Series

In thousands (000’s) A B C F L T8A T8B T8C 2014 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 5,283 7,823 299 524 36 1,451 8,289 856 $ 24,561 Increase (decrease) in net assets attributable to holders of redeemable securities 492 689 27 55 3 146 739 79 2,230 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 252 488 – 620 11 762 2,918 – 5,051 Reinvestment of distributions to holders of redeemable securities – – – – – 11 21 4 36 Redemption of redeemable securities (589) (1,421) (28) (590) (10) (563) (3,527) (11) (6,739)

Net securityholder transactions (337) (933) (28) 30 1 210 (588) (7) (1,652)Distributions to securityholders of redeemable securities

Net investment income – – – – – – – – – Capital gains – – – – – – – – – Return of capital – – – – – (65) (317) (34) (416)

Total distributions to securityholders of redeemable securities – – – – – (65) (317) (34) (416)

Net assets attributable to holders of redeemable securities, end of period $ 5,438 7,579 298 609 40 1,742 8,123 894 $ 24,723

Securities issued and outstandingSecurities, beginning of period 584 930 33 49 3 284 1,675 173 Securities issued for cash 26 55 – 53 1 143 568 – Securities issued on reinvestment of distributions – – – – – 2 4 1 Securities redeemed (62) (161) (3) (50) (1) (106) (687) (2)Securities, end of period 548 824 30 52 3 323 1,560 172

2013 Series

In thousands (000’s) A B C F L T8A T8B T8C 2013 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 5,186 8,228 300 569 21 1,089 8,072 786 $ 24,251 Increase (decrease) in net assets attributable to holders of redeemable securities 523 815 31 60 1 126 801 80 2,437 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 301 640 2 309 19 521 49 24 1,865 Reinvestment of distributions to holders of redeemable securities – – – – – 9 17 3 29 Redemption of redeemable securities (1,018) (1,890) (18) (396) (13) (271) (846) (84) (4,536)

Net securityholder transactions (717) (1,250) (16) (87) 6 259 (780) (57) (2,642)



Total distributions to securityholders of redeemable securities – – – – – (52) (300) (30) (382)Net assets attributable to holders of redeemable securities, end of period $ 4,992 7,793 315 542 28 1,422 7,793 779 $ 23,664

Securities issued and outstandingSecurities, beginning of period 732 1,244 42 69 2 253 1,927 188 Securities issued for cash 40 90 – 35 2 113 11 5 Securities issued on reinvestment of distributions – – – – – 2 4 1 Securities redeemed (136) (268) (2) (45) (1) (59) (193) (19)Securities, end of period 636 1,066 40 59 3 309 1,749 175





Cash flows from operating activities: $ $Increase (decrease) in net assets attributable to holders of redeemable securities 2,230 2,437

Adjustments for:

Foreign exchange loss (gain) on cash 38 27 Net realized loss (gain) on sale of investments and derivatives (2,208) 762 Change in unrealized depreciation (appreciation) of investments and derivatives (292) (3,419)

Purchases of investments (4,528) (6,887)Proceeds from sale and/or maturity of investments 7,809 9,213

Dividends receivable (6) 254



Accrued liabilities 66 –




Proceeds from issue of redeemable securities 5,051 1,866 Amount paid on redemptions of redeemable securities (6,676) (4,568)Distributions paid to holders of redeemable shares, net of reinvested distributions (318) (295)


Foreign exchange gain (loss) on cash (38) (27)Net increase (decrease) in cash and cash equivalents during the period 1,166 (611)

Cash and cash equivalents, beginning of period 129 1,272



Interest received $ 2 $ –



Cash $ 1,257 $ 634


$ 1,257 $ 634







Number of shares


Average cost

(000’s)

Carrying value

(000’s)


40,000 Amaya Gaming Group Inc. $ 266 $ 924

1,000 AutoZone Inc. 350 571

10,000 BorgWarner Inc. 414 694

150,000 DHX Media Ltd. 704 1,006

1,833,333 Fold-A-Tools Management Inc.* 1,000 –

33,000 Ford Motor Co. 539 606

60,000 Intertain Group Ltd. (The) 447 410

6,000 Magna International Inc., Class ‘A’ 408 689

4,128 4,900

Energy (11.7%)

10,000 Baytex Energy Corp. 482 493

17,000 Canadian Natural Resources Ltd. 756 834


9,000 Tesoro Corp. 258 562

9,000 Valero Energy Corp. 270 480

2,339 2,888


45,000 Bank of America Corp. 559 737

15,000 Citigroup Inc. 709 753

12,000 JPMorgan Chase & Co. 726 736

16,000 Wells Fargo & Co. 577 896

2,571 3,122

Health Care (14.5%)

3,000 Actavis PLC 136 713

6,000 Celgene Corp. 563 549

70,865 CHX Technologies Inc.* 800 71

12,000 Gilead Sciences Inc. 310 1,060

5,000 UnitedHealth Group Inc. 285 435

7,600 Vertex Pharmaceuticals Inc. 758 766

2,852 3,595


6,000 Accenture PLC, Class ‘A’ $ 365 $ 517

500 Google Inc., Class ‘A’ 300 311

500 Google Inc., Class ‘C’ – 306

5,000 MasterCard Inc., Class ‘A’ 378 391

14,000 Microsoft Corp. 446 622

666,666 Obsidian Strategics Inc.* 750 –

14,600 Open Text Corp. 650 747

9,000 Seagate Technology 315 545

1,800 Visa Inc., Class ‘A’ 380 404

3,584 3,843

Materials (2.2%)

8,000 Celanese Corp., Series ‘A’ 400 548

400 548

Investment Funds (19.2%)

506,933 Stone & Co. Flagship Global Growth Fund, Series ‘A’ 2,674 3,265

200,000 Stone Agribusiness Fund 1,418 1,494

4,092 4,759



Cash & Other Net Assets ( Liabilities) (4.4%) 1,068




Number of shares


Average cost

(000’s)

Carrying value

(000’s)




June 30, 2014


assets


British Pound 420 1 421 1.7 21Euro 433 – 433 1.8 22Hong Kong Dollar 67 – 67 0.3 3Norwegian Krone 88 – 88 0.4 4Singapore Dollar 70 – 70 0.3 4U.S. Dollar 16,498 759 17,257 69.8 863Totals 17,576 760 18,336 74.3 917

December 31, 2013


assets


British Pound 619 – 619 2.5 31 Euro 558 – 558 2.3 28 Hong Kong Dollar 110 – 110 0.4 6 Norwegian Krone 128 – 128 0.5 6 Singapore Dollar 69 – 69 0.3 3 U.S. Dollar 19,648 48 19,696 80.2 985 Totals 21,132 48 21,180 86.2 1,059

January 1, 2013


assets


British Pound 907 – 907 3.8 45Euro 571 – 571 2.4 29Hong Kong Dollar 62 – 62 0.3 3Norwegian Krone 174 – 174 0.7 9U.S. Dollar 14,541 997 15,538 64.8 777Totals 16,255 997 17,252 72.0 863



The table below summarizes the exposure to interest rate risk of the Fund and the pro-rata share of the Underlying Investment & Exchange Traded Funds:


June 30, 2014 – – – – –December 31, 2013 – – – – –January 1, 2013 269 – – – 269

Risk managementThe investment objective of the Stone & Co. Flagship Stock Fund Canada (the “Fund”) is to provide superior investment returns through capital growth by investing primarily in Canadian equity securities. Current income is a secondary investment objective. The Fund may invest in other mutual funds where the other mutual funds are managed by Stone Asset Management Limited.


The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors. The Fund may also invest in foreign equity securities which may range from 0% to 100% from time to time.



The most significant exposure to market price risk for the Fund arises from its investment in equity securities. The Fund and the Underlying Investment & Exchange Traded Funds moderate this risk through a careful selection of securities within the parameters of the investment strategy. The Fund may be exposed to indirect market price risk through its pro-rata investment in the Underlying Investment & Exchange Traded Funds. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014, with all other factors remaining constant, net assets would have increased or decreased by approximately $1,263 (December 31, 2013 – $1,172 and January 1, 2013 – $1,086). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.



The Fund had foreign risk from direct investments as well as indirect foreign currency risk in its investments in the Underlying Investment & Exchange Traded Funds. The Fund’s exposure of currency risk is based on its direct investments and on the Fund’s pro-rata share of the Underlying Investment & Exchange Traded Funds at period end which are shown below in Canadian dollar terms. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.




The Fund is exposed to daily cash redemptions of redeemable securities. The Fund and the Underlying Funds retain sufficient cash and cash equivalent positions to maintain adequate liquidity. The Fund and the Underlying Funds primarily invest in securities that are actively traded in public markets and can be readily disposed of to increase liquidity. The Schedule of Investment Portfolio identifies any securities that are not traded on an active market, being 0.3% of total net assets as at June 30, 2014 (December 31, 2013 – 0.3% and January 1, 2013 – 2.6%).

As at June 30, 2014, December 31, 2013 and January 1, 2013, all existing liabilities of the Fund and the Underlying Investment & Exchange Traded Funds are to be settled within three months.


As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund and the Underlying Investment & Exchange Traded Funds did not have significant exposure to credit risk.


% of Net Assets

SectorJune 30,

2014December 31,

2013January 1,

2013


Energy 11.7 9.5 21.2

Financial Services 12.6 12.6 –

Health Care 14.5 13.3 18.2



Investment & Exchange-Traded Funds 19.2 22.9 23.0

Purchased Options – – 0.2

Written Options – – (0.1)

Cash and Other Net Assets (Liabilities) 4.4 0.5 5.0







June 30, 2014


Equities $ 18,825 $ – $ 71 $ 18,896Investment & Exchange Traded Funds 4,759 – – 4,759Total Investment Portfolio $ 23,584 $ – $ 71 $ 23,655

December 31, 2013


Equities $ 18,750 $ – $ 71 $ 18,821

Investment & Exchange Traded Funds 5,613 – – 5,613Total Investment Portfolio $ 24,363 $ – $ 71 $ 24,434

January 1, 2013


Equities $ 16,759 $ 58 $ 640 $ 17,457

Investment & Exchange Traded Funds $ 5,573 $ – $ – $ 5,573Total Investment Portfolio $ 22,332 $ 58 $ 640 $ 23,030

Purchased Options $ 45 $ – $ – $ 45Written Options $ (34) $ – $ – $ (34)


June 30, 2014


Purchases –

Sales –



Change in unrealized appreciation (depreciation) –

Ending Balance $ 71


December 31, 2013


Purchases –

Sales –


Realized gain (loss) (1,236)


Ending Balance $ 71

Total change in unrealized appreciation (depreciation) during the period for assets held at December 31, 2013 $ (319)

The Fund applies judgment in determining unobservable inputs to calculate the fair value of Level 3 financial instruments of $71 as of June 30, 2014 (December 31, 2013 – $71). The unobservable inputs used in the valuation of these financial instruments primarily include key variables, related to the volatility of the underlying position, current market conditions and recent financings by the company, if any. These securities are affected by market activity in their relevant sectors and therefore generally fluctuate similarly. If the assumption around the estimated cash flows fluctuated, the impact on net assets would be within a range of $0 to $71. (December 31, 2013 – $0 to $71).























Total Assets – 24,434 24,434 132 24,566

Liabilities












Total Assets – 23,075 23,075 1,318 24,393

Liabilities



Derivative liabilities 34 – 34 - 34




2013


HFT $ – $ –


Total $ 2,609 $ 2,825



STONE & CO. FLAGSHIP GLOBAL GROWTH FUND



June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets


Cash 1,407 777 736


Subscriptions receivable 42 99 –

43,966 44,312 26,587

Liabilities

Current liabilities

Redemptions payable 42 – –



124 105 32



Series A $ 34,988 $ 35,977 $ 24,700 Series B 4,290 4,754 1,063 Series C 156 187 95 Series F 2,054 1,154 112 Series L 1,335 863 64 Series T8A 874 1,093 298 Series T8B 67 90 104 Series T8C 78 89 119


Series A $ 6.44 $ 6.38 $ 4.60 Series B 6.09 6.05 4.38 Series C 6.10 6.05 4.38 Series F 7.25 7.15 5.10 Series L 15.75 15.65 11.33 Series T8A 7.79 8.03 6.21 Series T8B 7.50 7.76 6.02 Series T8C 7.51 7.76 6.02



Income



Interest for distribution purposes 1 – Net realized gain (loss) on sale of investments and derivatives 3,060 1,313 Change in unrealized appreciation (depreciation) of investments and derivatives (2,501 ) 2,466




Expenses (Note 4)




Custodian fees 13 8

Filing fees 6 4


Audit fees 11 8

Legal fees 1 1






Increase (decrease) in net assets attributable to holders of redeemable securities $ 368 $ 3,502


Series A $ 333 $ 3,251 Series B 28 141 Series C 1 13 Series F (4) 20 Series L (5) 11 Series T8A 13 40 Series T8B 1 13 Series T8C 1 13

368 3,502 Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.06 $ 0.60 Series B 0.04 0.56 Series C 0.05 0.56 Series F (0.01) 0.61 Series L (0.08) 1.13 Series T8A 0.10 0.76 Series T8B 0.12 0.77 Series T8C 0.08 0.84





2014 Series

In thousands (000’s) A B C F L T8A T8B T8C 2014 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 35,977 4,754 187 1,154 863 1,093 90 89 $ 44,207

Increase (decrease) in net assets attributable to holders of redeemable securities 333 28 1 (4) (5) 13 1 1 368 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 1,822 439 – 2,059 600 31 – – 4,951 Reinvestment of distributions to holders of redeemable securities – – – – – 15 – 1 16 Redemption of redeemable securities (3,144) (931) (32) (1,155) (123) (241) (21) (10) (5,657)

Net securityholder transactions (1,322) (492) (32) 904 477 (195) (21) (9) (690)




Net assets attributable to holders of redeemable securities, end of period $ 34,988 4,290 156 2,054 1,335 874 67 78 $ 43,842


Securities, beginning of period 5,640 786 31 162 55 136 12 11 Securities issued for cash 279 71 – 281 38 4 – – Securities issued on reinvestment of distributions – – – – – 2 – – Securities redeemed (486) (152) (5) (160) (8) (30) (3) (1)Securities, end of period 5,433 705 26 283 85 112 9 10

2013 Series

In thousands (000’s) A B C F L T8A T8B T8C 2013 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 24,700 1,063 95 112 64 298 104 119 $ 26,555 Increase (decrease) in net assets attributable to holders of redeemable securities 3,251 141 13 20 11 40 13 13 3,502 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 1,427 978 85 80 116 148 – 104 2,938

Reinvestment of distributions to holders of redeemable securities – – – – – 5 – 2 7 Redemption of redeemable securities (582) (290) (81) (13) (1) (83) (8) (150) (1,208)

Net securityholder transactions 845 688 4 67 115 70 (8) (44) 1,737




Net assets attributable to holders of redeemable securities, end of period $ 28,796 1,892 112 199 190 394 105 84 $ 31,772

Securities issued and outstandingSecurities, beginning of period 5,370 242 22 22 6 48 17 20 Securities issued for cash 284 203 16 14 9 21 – 16 Securities issued on reinvestment of distributions – – – – – 1 – – Securities redeemed (114) (62) (16) (2) – (12) (1) (23)Securities, end of period 5,540 383 22 34 15 58 16 13



STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE PERIODS ENDED JUNE 30 (Note 1)



Increase (decrease) in net assets attributable to holders of redeemable securities 368 3,502

Adjustments for:

Foreign exchange loss (gain) on cash 43 31


Change in unrealized depreciation (appreciation) of investments and derivatives 2,501 (2,466)



Dividends receivable (17) (16)



Accrued liabilities (27) 7


Net cash from operating activities 1,302 (1,443)




Distributions paid to holders of redeemable securities, net of reinvested distributions (22) (12)

Net cash from financing activities (629) 1,514


Net increase (decrease) in cash and cash equivalents during the period 673 71







Cash $ 1,407 $ 776


$ 1,407 $ 776 *Included as part of cash flows from operating activities.






Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Bermuda (2.4%)

9,000 Signet Jewelers Ltd. $ 638 $ 1,060

638 1,060

China (2.0%)

55,000 Tencent Hldgs Limi HKD 249 894

249 894

France (1.7%)

3,000 Virbac SA 373 738

373 738

Germany (7.7%)

22,500 Aurelius AG 381 875

2,150 Rational AG 423 740

100,000 Sky Deutschland AG 185 981

17,000 Wirecard AG 860 782

1,849 3,378

Hong Kong (2.1%)

800,000 Noble Group Ltd. 720 936

720 936

Italy (2.0%)

14,000 Luxottica Group SPA 793 863

793 863

Norway (2.7%)

30,000 Cermaq ASA 385 440

51,000 Marine Harvest 316 741

701 1,181

Spain (1.9%)

5,100 Industria de Diseño Textil SA 749 836

749 836

United Kingdom (12.9%)

192,012 AA PLC 877 867

8,000 ASOS PLC 228 431

23,000 Associated British Foods PLC 395 1,277

250,000 Booker Group PLC 677 591

36,000 Dignity PLC 516 899

35,000 Hargreaves Lansdown PLC 948 789

20,000 Rightmove PLC 203 781

3,844 5,635

Number of shares


Average cost

(000’s)

Carrying value

(000’s)

United States (61.4%)

15,000 A.O. Smith Corp. $ 766 $ 792

3,000 Alliance Data Systems Corp. 491 899

2,400 Amazon.com Inc. 394 830

10,000 B/E Aerospace Inc. 462 985

17,000 CarMax Inc. 430 942

16,000 Cognizant Technology Solutions Corp., Class ‘A’ 831 834

4,000 Concho Resources Inc. 400 616

11,000 Constellation Brands Inc., Class ‘A’ 735 1,033

18,000 Crown Holdings Inc. 705 954

5,500 Cummins Inc. 664 904

8,000 Deckers Outdoor Corp. 612 736

11,000 Dollar Tree Stores Inc. 530 638

8,000 EOG Resources Inc. 556 996

14,000 Facebook Inc. 484 1,003

50,000 Kodiak Oil & Gas Corp. 520 775

11,000 Las Vegas Sands Corp. 795 893

22,000 MasTec Inc. 413 722

12,000 MasterCard Inc., Class ‘A’ 508 939

12,000 McCormick & Co. Inc. 574 915

14,000 Micros Systems Inc. 589 1,013

18,000 Mondelez International Inc., Class ‘A’ 556 721

22,000 PolyOne Corp. 669 988

4,000 PPG Industries Inc. 691 895

3,500 Precision Castparts Corp. 473 941

25,000 Quanta Services Inc. 770 921

11,000 Restoration Hardware Holdings Inc. 710 1,090

14,000 Sotheby’s Holdings Inc., Class ‘A’ 484 626

25,000 Springleaf Holdings Inc. 670 691

8,000 Tiffany & Co. 758 854

4,000 Vipshop Holdings Ltd. 747 800

4,400 Visa Inc., Class ‘A’ 380 988

18,367 26,934



Cash & Other Net Assets (Liabilities) (3.2%) 1,387





December 31, 2013


assets


British Pound 6,480 – 6,480 14.7 324Euro 5,839 – 5,839 13.2 291Hong Kong Dollar 1,152 – 1,152 2.6 58Norwegian Krone 1,343 – 1,343 3.0 67Singapore Dollar 720 – 720 1.6 36U.S. Dollar 27,854 – 27,854 63.0 1,393Totals 43,389 – 43,389 98.1 2,169

January 1, 2013


assets


British Pound 7,910 – 7,910 29.8 395Euro 4,978 – 4,978 18.8 249Hong Kong Dollar 544 – 544 2.1 27Norwegian Krone 1,519 – 1,519 5.7 76U.S. Dollar 10,865 4 10,869 40.9 543Totals 25,816 4 25,820 97.3 1,290



As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund did not have significant exposure to interest rate risk.






Risk managementThe investment objective of the Stone & Co. Flagship Global Growth Fund (the “Fund”) is to provide superior long–term investment returns through capital growth. To achieve this objective, the Fund will invest primarily in common shares and debt obligations anywhere in the world other than Canada. The portfolio will predominately consist of large capitalized growth companies anywhere in the world other than Canada.


The Portfolio Sub–Advisor, Rathbone Unit Trust Management Limited, aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors.

The Manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk by ensuring the portfolio management activities of the Fund comply with its investment objectives and strategies and applicable securities legislation.

Market price riskThe value of securities in the Fund’s investment portfolio may be affected by factors other than those specific to the individual securities. Market price fluctuations may be caused by general economic and financial conditions or industry–specific matters. Political, social and environmental factors can also affect the value of any investment. The value of equity–related securities, such as warrants, options, and convertible securities is also affected by market price risk.

The most significant exposure to market price risk for the Fund arises from its investment in equity securities. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014, with all other factors remaining constant, net assets would have increased or decreased by approximately $2,381 (December 31, 2013 – $2,353 and January 1, 2013 – $1,501). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.



The Fund had significant exposure to the foreign currencies shown below in Canadian dollar terms. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.

June 30, 2014


assets


British Pound 5,635 8 5,643 12.9 282Euro 5,816 – 5,816 13.3 291Hong Kong Dollar 893 – 893 2.0 45Norwegian Krone 1,181 – 1,181 2.7 59Singapore Dollar 936 – 936 2.1 47U.S. Dollar 27,992 – 27,992 63.8 1,400Totals 42,455 8 42,462 96.9 2,124





% of Net Assets

SectorJune 30,

2014December 31,

2014January 1,

2013Bermuda 2.4 1.7 –China 2.0 2.6 2.0France 1.7 1.5 7.0Germany 7.7 8.3 11.1Hong Kong 2.1 3.5 –Italy 2.0 1.5 –Norway 2.7 3.0 5.7Papua New Guinea – – 1.2Singapore* – – 0.2Spain 1.9 1.8 –United Kingdom 12.9 14.6 26.5United States 61.4 59.6 42.8Cash & Other Net Assets (Liabilities) 3.2 1.9 2.8Total net assets 100.0 100.0 100.0

* % is less than 0.05%






June 30, 2014


Equities $ 42,455 $ – $ – $ 42,455Total Investment Portfolio $ 42,455 $ – $ – $ 42,455

December 31, 2013



January 1, 2013























Total Assets – 43,390 43,390 922 44,312

Liabilities








Investments (non-derivative financial assets) $ – $ 25,816 $ 25,816 $ – 25,816



Total Assets – 25,816 25,816 771 26,587

Liabilities





2013


HFT $ – $ –


Total $ 1,156 $ 3,971





STONE & CO. GROWTH INDUSTRIES FUND



June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets


Cash 841 465 92



Derivative assets

Purchased options (Note 2) 255 135 –

3,740 3,454 1,852

Liabilities

Current liabilities

Redemptions payable – 9 1


9 13 4 Net assets attributable to holders of redeemable securities (Note 3) $ 3,731 $ 3,441 $ 1,848


Series A $ 1,607 $ 1,437 $ 667 Series B 627 653 440 Series C 96 97 208 Series F 928 830 526 Series L 473 424 7


Series A $ 11.83 $ 11.87 $ 8.11 Series B 11.24 11.30 7.76 Series C 11.19 11.26 7.73 Series F 13.23 13.21 8.94 Series L 13.38 13.45 9.28



Income


Dividends $ 11 $ 14

Net realized gain (loss) on sale of investments and derivatives 313 29

Change in unrealized appreciation (depreciation) of investments and derivatives (254) 345

Net gains on investments and derivatives 70 388

Foreign exchange gain (loss) on cash (12) 7

Total income (net) 58 395

Expenses (Note 4)




Custodian fees 6 3

Filing fees 2 1

Audit fees 7 6


Foreign withholding taxes – 1




Increase (decrease) in net assets attributable to holders of redeemable securities $ (15) $ 360


Series A $ (12) $ 134 Series B (3) 83 Series C (1) 25 Series F 3 116 Series L (2) 2

(15) 360 Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ (0.09) $ 1.82 Series B (0.05) 1.54 Series C (0.07) 1.33 Series F 0.04 1.87 Series L (0.06) 1.88





2014 Series

In thousands (000’s) A B C F L 2014 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 1,437 653 97 830 424 $ 3,441

Increase (decrease) in net assets attributable to holders of redeemable securities (12) (3) (1) 3 (2) (15)


Proceeds from issue of redeemable securities 524 52 – 1,238 92 1,906

Reinvestment of distributions to holders of redeemable securities – – – – – –

Redemption of redeemable securities (342) (75) – (1,143) (41) (1,601)

Net securityholder transactions 182 (23) – 95 51 305


Net investment income – – – – – –

Capital gains – – – – – –

Return of capital – – – – – –

Total distributions to securityholders of redeemable securities – – – – – –

Net assets attributable to holders of redeemable securities, end of period $ 1,607 627 96 928 473 $ 3,731


Securities, beginning of period 121 58 9 63 32

Securities issued for cash 44 5 – 93 6

Securities issued on reinvestment of distributions – – – – –

Securities redeemed (29) (7) – (86) (3)

Securities, end of period 136 56 9 70 35

2013 Series

In thousands (000’s) A B C F L 2013 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 667 440 208 526 7 $ 1,848

Increase (decrease) in net assets attributable to holders of redeemable securities 134 83 25 116 2 360


Proceeds from issue of redeemable securities 263 18 – 542 2 825

Reinvestment of distributions to holders of redeemable securities – – – – – –

Redemption of redeemable securities (241) (52) (123) (498) – (914)

Net securityholder transactions 22 (34) (123) 44 2 (89)


Net investment income – – – – – –

Capital gains – – – – – –

Return of capital – – – – – –

Total distributions to securityholders of redeemable securities – – – – – –

Net assets attributable to holders of redeemable securities, end of period $ 823 489 110 686 11 $ 2,119


Securities, beginning of period 82 57 27 59 1

Securities issued for cash 30 2 – 56 –

Securities issued on reinvestment of distributions – – – – –

Securities redeemed (28) (7) (15) (52) –

Securities, end of period 84 52 12 63 1







Increase (decrease) in net assets attributable to holders of redeemable securities (15) 360

Adjustments for:

Foreign exchange loss (gain) on cash 12 (7)

Net realized loss (gain) on sale of investments and derivatives (313) (29)

Change in unrealized depreciation (appreciation) of investments and derivatives 254 (345)

Purchases of investments (2,250) (709)


Dividends receivable – –



Other assets – (27)



Net cash from operating activities 89 293


Proceeds from issue of redeemable securities 1,909 821

Amount paid on redemptions of redeemable securities (1,610) (915)

Distributions paid to holders of redeemable securities, net of reinvested distributions – –

Net cash from financing activities 299 (94)

Foreign exchange gain (loss) on cash (12) 7

Net increase (decrease) in cash and cash equivalents during the period 388 199


Cash and cash equivalents, end of period $ 841 $ 298


Interest received $ – $ –



Cash $ 841 $ 298


$ 841 $ 298




Materials (4.2%)

11,000 AK Steel Holding Corp. $ 85 $ 93

40,000 Lake Shore Gold Corp. 40 39

4,400 Walter Energy Inc. 69 26

194 158

Exchange Traded Fund (1.4%)

7,000 Stone Agribusiness Fund 28 52

28 52



Purchased Options (6.8%) 263 255

Cash & Other Net Assets (Liabilities) (22.3%) 836






Number of shares


Average cost

(000’s)

Carrying value

(000’s)


2,000 Apollo Education Group Inc., Class ‘A’ $ 49 $ 67

1,200 AutoCanada Inc. 18 95

1,700 Brinker International Inc. 94 88

900 Capella Education Co. 29 52

15,000 Career Education Corp. 55 75

8,000 J.C. Penney Co. Inc. 77 77

322 454


3,000 Alimentation Couche-Tard Inc., Class ‘B’ 72 88

72 88

Energy (20.5%)

10,500 Alpha Natural Resources Inc. 80 42

14,000 Arch Coal Inc. 60 54

14,000 Bankers Petroleum Ltd. 61 95

2,800 Bill Barrett Corp. 89 80

5,500 Canyon Services Group Inc. 89 104

10,000 Key Energy Services Inc. 93 97

9,000 Raging River Exploration Inc. 67 98

6,600 TORC Oil & Gas Ltd. 92 97

1,700 Tourmaline Oil Corp. 91 96

722 763


7,000 Janus Capital Group Inc. 93 93

93 93

Industrials (9.4%)

4,400 ATS Automation Tooling Systems Inc. 36 69

2,800 Badger Daylighting Ltd. 90 98

2,200 Boyd Group Income Fund 91 96

1,300 Stantec Inc. 86 86

303 349


833,000 Active Control Technology Inc., Warrants, 2014/11/16* 13 –

21,000 Advanced Micro Devices Inc. 83 94

900 DST Systems Inc. 91 88

5,000 Mitel Networks Corp. 62 56

10,000 Monster Worldwide Inc. 69 70

2,000 NetApp Inc. 99 78

6,000 Polycom Inc. 86 80

3,400 Rovi Corp. 92 87

1,100 Seagate Technology 36 66

9,000 SMART Technologies Inc., Class ‘A’ 41 27

25,000 ViXS Systems Inc. 36 37

708 683

Number of shares


Average cost

(000’s)

Carrying value

(000’s)




SCHEDULE OF INVESTMENT PORTFOLIO (UNAUDITED) (continued)

AS AT JUNE 30, 2014

Schedule of Purchased Options

Underlying SecurityOption

TypeNumber of

OptionsNumber of

SharesExpiration

DateStrike

Price

Premium Paid

(000s)

Current Value

(000s)

Aeropostale Inc. Call 150 15,000 2014/07/19 9.00 USD $ 8 $ –

Alliance Data Systems Corp. Call 6 600 2014/12/20 260.00 USD 8 20

Amkor Technology Inc. Call 150 15,000 2014/12/20 11.00 USD 8 21

Apollo Education Group Inc., Class ‘A’ Call 30 3,000 2014/08/16 35.00 USD 8 1

ARRIS Group Inc. Call 40 4,000 2014/11/22 35.00 USD 10 9

Brocade Communications Systems Inc. Call 145 14,500 2015/01/17 12.00 USD 9 2

Cabela’s Inc., Class ‘A’ Put 25 2,500 2014/09/20 60.00 USD 9 6

Cliffs Natural Resources Inc. Call 15 1,500 2015/01/17 30.00 USD 7 0

Cliffs Natural Resources Inc. Call 50 5,000 2015/01/17 20.00 USD 9 3

Comstock Resources Inc. Call 37 3,700 2014/12/20 30.00 USD 9 9

Electronic Arts Inc. Call 36 3,600 2015/01/17 37.00 USD 10 11

F5 Network Inc. Call 10 1,000 2015/01/17 115.00 USD 9 10

GrafTech International Ltd. Call 55 5,500 2014/09/20 12.50 USD 5 1

Intersil Corp., Class ‘A’ Call 120 12,000 2014/10/18 14.00 USD 9 19

ITT Educational Services Inc. Call 20 2,000 2014/07/19 35.00 USD 7 0

Juniper Networks Inc. Call 60 6,000 2015/01/17 27.00 USD 9 6

Juniper Networks Inc. Call 30 3,000 2014/07/19 29.00 USD 7 –

Logitech International SA, Registered Call 75 7,500 2015/01/17 15.00 USD 9 7

Lumber Liquidators Holdings Inc. Put 11 1,100 2014/11/22 75.00 USD 9 9

Micron Technology Inc. Call 30 3,000 2015/01/17 36.00 USD 8 8

Newfield Exploration Co. Call 40 4,000 2015/01/17 39.00 USD 9 29

OmniVision Technologies Inc. Call 45 4,500 2015/01/17 22.00 USD 9 12

Peabody Energy Corp. Call 25 2,500 2015/01/17 23.00 USD 7 1

Peabody Energy Corp. Call 40 4,000 2015/01/17 20.00 USD 6 2

Polypore International Inc. Call 25 2,500 2015/01/17 50.00 USD 9 11

Rambus Inc. Call 100 10,000 2015/01/17 12.00 USD 11 32

Riverbed Technology Inc. Call 75 7,500 2014/09/20 22.00 USD 10 3

Skyworks Solutions Inc. Call 25 2,500 2015/01/17 50.00 USD 9 9

Ulta Salon, Cosmetics & Fragrance Inc. Put 8 800 2014/09/20 85.00 USD 9 3

Ultra Petroleum Corp. Call 45 4,500 2015/01/17 32.00 USD 10 9

United States Steel Corp. Call 30 3,000 2015/01/17 32.00 USD 8 2

$ 263 $ 255



January 1, 2013


assets


U.S. Dollar 873 18 891 48.2 45


There is minimal sensitivity to changes in interest rates for money market securities since these are usually held to maturity and tend to be short–term in nature.

The table below summarizes the exposure to interest rate risk of the Fund and the pro-rata share of the Underlying Exchange Traded Fund:


June 30, 2014 – – – – –

December 31, 2013 – – – – –

January 1, 2013 9 – – – 9


The Fund is exposed to daily cash redemptions of redeemable securities. The Fund and the Underlying Fund retain sufficient cash and cash equivalent positions to maintain adequate liquidity. The Fund and the Underlying Fund primarily invest in securities that are actively traded in public markets and can be readily disposed of to increase liquidity. The Schedule of Investment Portfolio identifies any securities that are not traded on an active market, being nil% of total net assets as at June 30, 2014 (December 31, 2013 – nil% and January 1, 2013 – nil%).

As at June 30, 2014, December 31, 2013 and January 1, 2013, all existing liabilities of the Fund and the Underlying Exchange Traded Fund are to be settled within three months.


As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund and the Underlying Exchange Traded Fund did not have significant exposure to credit risk.

Risk managementThe investment objective of the Stone & Co. Growth Industries Fund (the “Fund”) is to provide superior capital growth by investing primarily in a diversified portfolio of Canadian equity securities. Current income is a secondary investment objective. The Fund may invest in other mutual funds where the other mutual funds are managed by Stone Asset Management Limited.

The Fund and the Underlying Stone Agribusiness Fund may also invest in foreign equity securities in order to achieve its objective.


The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors. The Fund may also invest in foreign equity securities which may range from 0% to 100% from time to time.


Market price riskThe value of securities in the Fund’s investment portfolio may be affected by factors other than those specific to the individual securities. Market price fluctuations may be caused by general economic and financial conditions or industry – specific matters. Political, social and environmental factors can also affect the value of any investment. The value of equity–related securities, such as warrants, options, and convertible securities is also affected by market price risk.

The most significant exposure to market price risk for the Fund arises from its investment in securities. The Fund and the Underlying Stone Agribusiness Fund moderate this risk through a careful selection of securities within the parameters of the investment strategy. The Fund may be exposed to indirect market price risk through its pro-rata investment in the Underlying Exchange Traded Fund. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014, with all other factors remaining constant, net assets would have increased or decreased by approximately $152 (December 31, 2013 – $149 and January 1, 2013 – $85). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.


Foreign currency riskThe Fund had foreign currency risk from direct investments as well as indirect foreign currency risk in its investments in the Underlying Exchange Traded Fund. The Fund’s exposure of currency risk is based on its direct investments and on the Fund’s pro–rata share of the Underlying Exchange Traded Fund at period end which is shown below in Canadian dollar terms, the functional currency of the Fund. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.

June 30, 2014


assets


U.S. Dollar 1,704 490 2,194 58.8 110

December 31, 2013


assets


U.S. Dollar 2,221 81 2,302 66.9 115



December 31, 2013


Equities $ 2,798 $ – $ – $ 2,798

Exchange Traded Fund 49 – – 49Total Investment Portfolio $ 2,847 $ – $ – $ 2,847Purchased Options 135 – – 135

January 1, 2013


Equities $ 1,713 $ – $ – $ 1,713

Exchange Traded Fund 42 – – 42Total Investments Portfolio $ 1,755 $ – $ – $ 1,755


June 30, 2014

Beginning Balance $ –

Purchases –Sales –



Change in unrealized appreciation (depreciation) –

Ending Balance $ –


December 31, 2013

Beginning Balance $ –

Purchases –

Sales –


Realized gain (loss) (85)


Ending Balance $ –

Total change in unrealized appreciation (depreciation) during the period for assets held at December 31, 2013 $ –


% of Net Assets

SectorJune 30,

2014December 31,

2013January 1,

2013



Energy 20.5 14.0 2.6


Health Care – 1.1 4.6




Exchange Traded Fund 1.4 1.4 2.3

Purchased Options 6.8 3.9 –








June 30, 2014


Equities $ 2,588 $ – $ – $ 2,588

Exchange Traded Fund 52 – – 52Total Investment Portfolio $ 2,640 $ – $ – $ 2,640Purchased Options $ 225 $ 30 $ – $ 255


FUND SPECIFIC NOTES ON FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (UNAUDITED)

(continued)









Derivative assets 255 – 255 – 255

Total Assets 255 2,640 2,895 845 3,740 LiabilitiesAccounts payable and accrued expenses – – – 9 9










Derivative assets 135 – 135 – 135

Total Assets 135 2,847 2,982 472 3,454

Liabilities












Total Assets – 1,755 1,755 97 1,852

Liabilities






2013

Financial assets (liabilities) as FVTPL: $ $

HFT (18) 1

Designated at inception 76 394

Total $ 58 $ 395



(continued)



STONE & CO. FLAGSHIP MONEY MARKET FUND CANADA



June 30 2014

Dec. 31 2013

Jan.1 2013

Assets

Current assets

Cash equivalents (Note 2) $ 3,848 $ 3,597 $ 5,695

Cash 2 749 174


3,852 4,356 5,881

Liabilities

Current liabilities

Redemptions payable 6 – 10

Distributions payable 2 2 3

8 2 13



Series A $ 1,726 $ 1,611 $ 2,219 Series B 1,622 2,132 3,027 Series C 252 290 544 Series L 244 321 78


Series A $ 10.00 $ 10.00 $ 10.00 Series B 10.00 10.00 10.00 Series C 10.00 10.00 10.00 Series L 10.00 10.00 10.00



Income

Net gains on investments (Note 2):

Interest for distribution purposes $ 16 $ 21

Total income (net) 16 21

Expenses (Note 4)




Custodian fees 1 2

Filing fees 2 2

Independent review committee fees – –

Audit fees 8 7



Total expenses (net) – –

Increase (decrease) in net assets attributable to holders of redeemable securities $ 16 $ 21


Series A $ 7 $ 8 Series B 7 10 Series C 1 2 Series L 1 1

16 21

Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.04 $ 0.04 Series B 0.04 0.04 Series C 0.04 0.04 Series L 0.04 0.04





2014 Series

In thousands (000’s) A B C L 2014 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 1,611 2,132 290 321 $ 4,354

Increase (decrease) in net assets attributable to holders of redeemable securities 7 7 1 1 16


Proceeds from issue of redeemable securities 847 411 – – 1,258

Reinvestment of distributions to holders of redeemable securities 6 1 – – 7

Redemption of redeemable securities (738) (922) (38) (77) (1,775)

Net securityholder transactions 115 (510) (38) (77) (510)


Net investment income (7) (7) (1) (1) (16)

Capital gains – – – – –


Total distributions to securityholders of redeemable securities (7) (7) (1) (1) (16)

Net assets attributable to holders of redeemable securities, end of period $ 1,726 1,622 252 244 $ 3,844


Securities, beginning of period 161 213 29 32

Securities issued for cash 85 41 – –

Securities issued on reinvestment of distributions 1 – – –

Securities redeemed (74) (92) (4) (8)

Securities, end of period 173 162 25 24

2013 Series

In thousands (000’s) A B C L 2013 Total

Net assets attributable to holders of redeemable securities, beginning of period $ 2,219 3,027 544 78 $ 5,868

Increase (decrease) in net assets attributable to holders of redeemable securities 8 10 2 1 21


Proceeds from issue of redeemable securities 323 326 46 203 898

Reinvestment of distributions to holders of redeemable securities 8 2 – – 10

Redemption of redeemable securities (673) (886) (196) (3) (1,758)

Net securityholder transactions (342) (558) (150) 200 (850)


Net investment income (8) (10) (2) (1) (21)

Capital gains – – – – –


Total distributions to securityholders of redeemable securities (8) (10) (2) (1) (21)

Net assets attributable to holders of redeemable securities, end of period $ 1,877 2,469 394 278 $ 5,018


Securities, beginning of period 222 303 54 8

Securities issued for cash 32 33 5 20

Securities issued on reinvestment of distributions 1 – – –

Securities redeemed (67) (89) (20) –

Securities, end of period 188 247 39 28







Increase (decrease) in net assets attributable to holders of redeemable securities 16 21

Net cash from operating activities 16 21





Net cash from financing activities (512) (900)

Net increase (decrease) in cash and cash equivalents during the period (496) (879)






Cash $ 2 $ 293

Cash equivalents 3,848 4,697

$ 3,850 $ 4,990






Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Cash Equivalents (100.0%)

2,100,000 Government of Canada Treasury Bill, 0.88%, 2014/07/03 $ 2,100 $ 2,100

400,000 Government of Canada Treasury Bill, 0.88%, 2014/08/28 400 400




3,848 3,848

Transaction Costs –


Cash & Other Net Assets (Liabilities) (0.0%) (4)


Percentages shown relate to investments at carrying value to total net assets of the Fund




The Fund invested in debt securities with the following credit ratings:

Ratings* % of Net AssetsJune 30, 2014 R-1 (High) 100.0December 31, 2013 R-1 (High) 82.6January 1, 2013 R-1 (High) 97.0

*Credit ratings obtained from Dominion Bond Rating Services.





The following fair value hierarchy table presents information about the Fund’s assets measured at fair value on a recurring basis as of June 30, 2014, December 31, 2013 and January 1, 2013.

June 30, 2014Level 1 Level 2 Level 3 Total

Cash Equivalents $ – $ 3,848 $ – $ 3,848Total Investment Portfolio $ – $ 3,848 $ – $ 3,848

December 31, 2013Level 1 Level 2 Level 3 Total


January 1, 2013Level 1 Level 2 Level 3 Total


Risk managementThe investment objective of the Stone & Co. Flagship Money Market Fund Canada (the “Fund”) is to earn income at current interest rates, while providing preservation of capital and liquidity by investing primarily in high-quality short-term money market instruments.

The manager of the Fund, Stone Asset Management Limited (SAM), aims to manage risk by investing in fixed income securities with high credit quality.



As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund was not exposed to market price risk.


As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund did not have any foreign currency exposure.



The table below summarizes the Fund’s exposure to interest rate risk:


June 30, 2014 3,848 – – – 3,848

December 31, 2013 3,597 – – – 3,597

January 1, 2013 5,695 – – – 5,695


The Fund is exposed to daily cash redemptions of redeemable securities. The Fund retains sufficient cash and cash equivalent positions to maintain adequate liquidity.

The Fund primarily invests in short-term investments that are traded in an active market and can be readily disposed of to increase liquidity.

As at June 30, 2014, December 31, 2013 and January 1, 2013, the Fund did not hold any illiquid securities.









Investments (non-derivative financial assets) $ – $ – $ – $ 3,848 $ 3,848

Cash – – – 2 2


Total Assets – – – 3,852 3,852 LiabilitiesRedemptions payable – – – 6 6








Cash – – – 749 749


Total Assets – 3,597 3,597 759 4,356

Liabilities

Distributions payable – – 2 2







Cash – – – 174 174


Total Assets – 5,695 5,695 186 5,881

Liabilities






2013


HFT $ – $ –

Designated at inception 16 21

Total $ 16 $ 21



STONE & CO. EUROPLUS DIVIDEND GROWTH FUND


(in thousands of dollars; per security amountsare expressed in whole dollars)

June 30 2014

Dec. 31 2013

Jan. 1 2013

Assets

Current assets


Cash 4,259 2,955 1,362



26,817 19,344 10,232

Liabilities

Current liabilities



69 24 15



Series A $ 15,715 $ 13,364 $ 9,260 Series B 947 949 309 Series C 39 42 47 Series F 3,235 1,497 235 Series L 6,552 3,229 185 Series T8A 240 211 150 Series T8B 20 28 30 Series T8C* n/a n/a 1

26,748 19,320 10,217

Net assets attributable to holders of redeemable securities per security

Series A $ 11.51 $ 11.11 $ 8.73 Series B 11.17 10.80 8.55 Series C 11.16 10.80 8.54 Series F 12.23 11.73 9.13 Series L 14.87 14.38 11.36 Series T8A 6.91 6.94 5.87 Series T8B 6.77 6.81 5.78 Series T8C* n/a n/a 5.74

*On March 7, 2013 all T8C securities were liquidated.





Interest for distribution purposes 1 –

Net realized gain (loss) on sale of investments and derivatives (55) 59

Change in unrealized appreciation (depreciation) of investments and derivatives 733 870




Expenses (Note 4)




Custodian fees 9 5

Filing fees 4 2


Audit fees 8 7









Series A $ 496 $ 920 Series B 31 28 Series C 1 2 Series F 75 27 Series L 109 18 Series T8A 7 15 Series T8B 1 3 Series T8C n/a –

720 1,013 Increase (decrease) in net assets attributable to holders of redeemable securities per security

Series A $ 0.38 $ 0.86 Series B 0.38 0.82 Series C 0.42 1.08 Series F 0.37 0.95 Series L 0.32 1.03 Series T8A 0.24 0.58 Series T8B 0.26 0.55 Series T8C n/a 1.22





2014 Series

In thousands (000’s) A B C F L T8A T8B T8C* 2014 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 13,364 949 42 1,497 3,229 211 28 – $ 19,320 Increase (decrease) in net assets attributable to holders of redeemable securities 496 31 1 75 109 7 1 – 720 Redeemable securityholder transactions

Proceeds from issue of redeemable securities 2,369 109 3 3,113 3,424 67 – – 9,085

Reinvestment of distributions to holders of redeemable securities – – – – – 3 1 – 4 Redemption of redeemable securities (514) (142) (7) (1,450) (210) (39) (9) – (2,371)

Net securityholder transactions 1,855 (33) (4) 1,663 3,214 31 (8) – 6,718 Distributions to securityholders of redeemable securities

Net investment income – – – – – – – – –

Capital gains – – – – – – – – –

Return of capital – – – – – (9) (1) – (10)

Total distributions to securityholders of redeemable securities – – – – – (9) (1) – (10)Net assets attributable to holders of redeemable securities, end of period $ 15,715 947 39 3,235 6,552 240 20 – $ 26,748

Securities issued and outstandingSecurities, beginning of period 1,203 88 4 128 225 30 4 –Securities issued for cash 207 10 – 256 230 11 – – Securities issued on reinvestment of distributions – – – – – – – – Securities redeemed (45) (13) (1) (119) (14) (6) (1) – Securities, end of period 1,365 85 3 265 441 35 3 –

2013 Series

In thousands (000’s) A B C F L T8A T8B T8C* 2013 TotalNet assets attributable to holders of redeemable securities, beginning of period $ 9,260 309 47 235 185 150 30 1 $ 10,217 Increase (decrease) in net assets attributable to holders of redeemable securities 920 28 2 27 18 15 3 – 1,013

Redeemable securityholder transactionsProceeds from issue of redeemable securities 158 6 2 160 45 – – – 371

Reinvestment of distributions to holders of redeemable securities – – – – – 2 – – 2 Redemption of redeemable securities (21) (44) (35) (148) (14) – – (1) (263)

Net securityholder transactions 137 (38) (33) 12 31 2 – (1) 110


Net investment income – – – – – – – – – Capital gains – – – – – – – – – Return of capital – – – – – (6) (1) – (7)

Total distributions to securityholders of redeemable securities – – – – – (6) (1) – (7)Net assets attributable to holders of redeemable securities, end of period $ 10,317 299 16 274 234 161 32 – $ 11,333

Securities issued and outstandingSecurities, beginning of period 1,060 36 5 26 16 26 5 – Securities issued for cash 17 1 – 16 4 – – – Securities issued on reinvestment of distributions – – – – – – – – Securities redeemed (2) (5) (3) (15) (1) – – – Securities, end of period 1,075 32 2 27 19 26 5 –

*On March 7, 2013 all T8C securities were liquidated






Cash flows from operating activities:


Adjustments for:

Foreign exchange loss (gain) on cash 23 2

Net realized loss (gain) on sale of investments and derivatives 55 (59)

Change in unrealized depreciation (appreciation) of investments and derivatives (733) (870)

Purchases of investments (6,051) (441)

Proceeds from sale and/or maturity of investments 529 471

Dividends receivable (69) (48)




Investments purchased payable – 3

Net cash from operating activities (5,483) 73



Amount paid on redemptions of redeemable securities (2,370) (249)


Net cash from financing activities 6,810 110


Net increase (decrease) in cash and cash equivalents during the period 1,327 183







Cash $ 4,259 $ 1,543


$ 4,259 $ 1,543




Sweden (1.7%)

35,000 Telefonaktiebolaget LM Ericsson, Series ‘B’ $ 401 $ 450

401 450

Switzerland (9.0%)

13,500 Novartis AG, Registered 940 1,302

3,500 Roche Holding AG Genusscheine 756 1,112

1,696 2,414

United Kingdom (30.1%)

70,000 Aberdeen Asset Management PLC 561 579

80,000 BAE Systems PLC 522 631

30,000 GlaxoSmithKline PLC 727 854

47,247 Headlam Group PLC 264 359

75,000 Jupiter Fund Management PLC 534 546

14,500 Reckitt Benckiser Group PLC 1,156 1,347

40,000 Restaurant Group PLC 209 438

11,000 Rio Tinto PLC, Registered 498 623

120,000 Sage Group PLC (The) 802 839

106,000 Tarsus Group PLC 285 438

110,000 William Hill PLC 526 657

33,000 WPP PLC 726 766

6,810 8,077



Cash & Other Net Assets ( Liabilities) (16.2%) 4,333






Number of shares


Average cost

(000’s)

Carrying value

(000’s)

Belgium (7.7%)

5,600 Anheuser-Busch InBev* $ – $ –

11,000 Anheuser-Busch InBev NV 1,024 1,346

3,500 Kinepolis 255 708

1,279 2,054

Finland (1.0%)

8,000 KCI Konecranes OYJ 250 275

250 275

France (12.2%)

6,500 Neopost SA 474 518

10,500 Sanofi SA 990 1,188

13,500 Total SA 925 1,039

19,633 Vivendi SA 516 512

2,905 3,257

Germany (5.5)

5,000 Henkel AG & Co. KGaA 410 536

6,500 SAP AG 452 535

20,000 Takkt AG NPV 347 390

1,209 1,461

Italy (4.6%)

60,000 Davide Campari-Milano SPA 499 553

23,000 Eni SPA 647 670

1,146 1,223

Netherlands (12.0%)

31,384 Koninklijke Ahold NV 458 627

32,000 Reed Elsevier NV 736 782

18,500 Royal Dutch Shell PLC, Class ‘A’ 703 816

21,000 Unilever NV 741 979

2,638 3,204

Number of shares


Average cost

(000’s)

Carrying value

(000’s)



December 31, 2013


assets


British Pound 5,788 – 5,788 30.0 289

Euro 8,567 3 8,570 44.4 428

Swedish Krona 325 – 325 1.7 16

Swiss Franc 1,535 – 1,535 7.9 77

Totals 16,215 3 16,218 84.0 811

January 1, 2013


assets


British Pound 2,672 – 2,672 26.1 134

Euro 5,017 – 5,017 49.1 251

Swedish Krona 249 – 249 2.4 12

Swiss Franc 900 – 900 8.8 45

Totals 8,838 – 8,838 86.4 442


There is minimal sensitivity to changes in interest rates for money market securities since these are usually held to maturity and tend to be short–term in nature.

As at June 30, 2014, December 31, 2013 and January 1, 2013 the Fund did not have significant exposure to interest rate risk.






Risk managementThe investment objective of the Stone & Co. EuroPlus Dividend Growth Fund (the “Fund”) is two-fold: (i) to provide a sustainable stream of income; and (ii) to provide long-term capital growth. The Fund will invest primarily in equity securities of companies in Europe and other developed countries around the world. The Fund will generally have significant investment in European markets. There is no restriction on the economic sectors or geographic areas in which the Fund may invest.


The Portfolio Sub-advisor, Rathbone Unit Trust Management Limited, aims to manage risk as part of its investment process through the thorough analysis and careful selection of securities and diversification across asset classes and industry sectors.

The Manager of the Fund, Stone Asset Management Limited, aims to manage risk by ensuring the portfolio management activities of the Fund comply with its investment objectives and strategies and applicable securities legislation.


The most significant exposure to market price risk for the Fund arises from its investment in equity securities. If equity prices on the respective stock exchanges had increased or decreased by 5%, as at June 30, 2014 with all other factors remaining constant, net assets would have increased or decreased by approximately $776 (December 31, 2013 – $566 and January 1, 2013 – $332). This change is estimated using the weighted average beta of the Fund’s equity portfolio which is calculated internally based on the correlation to the benchmark.


Foreign currency riskCurrency risk arises when financial instruments are denominated in a currency other than the Canadian dollar. When a Fund buys an investment priced in a foreign currency and the exchange rate between the Canadian dollar and the foreign currency changes unfavorably, it could reduce the value of the Fund’s investment.

The Fund had significant exposure to the foreign currencies shown below in Canadian dollar terms, the functional currency of the Fund. Also shown below is the potential impact to the Fund’s net assets, all other variables held constant, as a result of 5% changes in these currencies relative to the Canadian dollar. In practice, actual trading results may differ and the difference could be material.

June 30, 2014


assets


British Pound 8,077 – 8,077 30.2 404 Euro 11,474 85 11,559 43.2 578 Swedish Krona 450 – 450 1.7 23 Swiss Franc 2,414 – 2,414 9.0 121 Total 22,415 85 22,500 84.1 1,126




(continued)






June 30, 2014Level 1 Level 2 Level 3 Total


December 31, 2013Level 1 Level 2 Level 3 Total


January 1, 2013Level 1 Level 2 Level 3 Total



% of Net Assets

SectorJune 30,

2014December 31,

2013January 1,

2013

Belgium 7.7 7.4 6.2

Finland 1.0 1.6 1.0

France 12.2 13.0 20.3

Germany 5.5 6.8 8.5

Italy 4.6 4.2 4.5

Netherlands 12.0 11.4 8.7

Sweden 1.7 1.7 2.4

Switzerland 9.0 7.9 8.8

United Kingdom 30.1 29.9 26.1











Total Assets – 22,415 22,415 4,402 26,817 LiabilitiesAccounts payable and accrued expenses – – – 66 66











Total Assets – 16,215 16,215 3,129 19,344

Liabilities












Total Assets – 8,838 8,838 1,394 10,232

Liabilities





2013


HFT $ – $ –


Total $ 1,165 $ 1,213


(continued)



STONE MUTUAL FUNDS

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)FOR THE PERIOD ENDED JUNE 30, 2014 (in thousands of dollars; per security amounts are expressed in whole dollars)

the Funds’ transfer agent is International Financial Data Services and the Funds’ administrator is Stone & Co. Limited.

The Schedule of Investment Portfolio of each of the Funds is as at June 30, 2014. The Statements of Financial Position are as at June 30, 2014, December 31, 2013, and January 1, 2013. The Statements of Comprehensive Income (Loss), Changes in Net Assets Attributable to Holders of Redeemable Securities, and Cash Flows are for the six-month periods ended June 30, 2014 and 2013. For Funds or series that started during either period, the information presented is for the period from the Fund or series inception date, respectively, to June 30, 2014 and 2013, as applicable. Throughout these financial statements, reference to the reporting period refers to the reporting period described above.

These financial statements were authorized for issue by the Board of Directors of Stone Asset Management Limited on August 28, 2014.

These interim financial statements have not been audited or reviewed by the Funds’ independent auditors.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance and adoption of IFRSThese financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”), as published by the International Accounting Standards Board (“IASB”), using a transition date of January 1, 2013. The Funds adopted this basis of accounting on January 1, 2014 as required by Canadian securities legislation and the Canadian Accounting Standards Board. The financial statements for the six months ended June 30, 2014, including the required comparative information, have been prepared in accordance with IFRS 1, First-time Adoption of International Financial Reporting Standards, and with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the IASB and using the accounting policies the Funds expect to adopt in their financial statements as at and for the year ending December 31, 2014. These interim financial statements do not include all the necessary annual disclosures in accordance with IFRS. Previously, the Funds prepared interim and annual financial statements in accordance with Canadian Generally Accepted Accounting Principles (“Canadian GAAP”) as defined in Part V of the CPA CANADA Handbook. The comparative information has been restated from Canadian GAAP to comply with IFRS. The Funds have consistently applied the accounting policies used in the preparation of their IFRS statement of financial position at January 1, 2013 and throughout all periods presented, as if these policies had always been in effect. Note 9 discloses the impact of the transition to IFRS on the Fund’s reported financial position, financial performance and cash flows, including the nature and effect of significant changes in accounting policies from those used in the Fund’s financial statements for the year ended December 31, 2013 prepared under Canadian GAAP. The policies applied in these interim financial statements are based on IFRS issued and outstanding as of June 30, 2014, which is the date on which the interim financial statements were authorized for issue by the Manager. Any subsequent changes to IFRS that are given effect in the Funds’ annual financial statements for the year ending December 31, 2014 could result in restatement of these interim financial statements, including the transition adjustments recognized on transition to IFRS. These financial statements should be read in conjunction with the Funds’ Canadian GAAP annual financial statements for the year ended December 31, 2013.

An explanation of the transition to IFRS is presented in Note 9 to these financial statements and includes an explanation of initial elections made upon first-time adoption of IFRS and a reconciliation of amounts previously reported under Canadian GAAP to amounts reported under IFRS for comparative financial information. The adoption of IFRS has not had a material impact on the Fund’s operations, investment objectives and financial statements.

(b) Basis of presentationThese financial statements are prepared in accordance with IFRS and have been prepared on a historical-cost basis, except financial instruments that have been measured at fair value.

The financial statements are presented in Canadian dollars and all values are rounded to the nearest thousand dollars ($000), except where otherwise indicated.

(c) Financial instruments

(i) ClassificationThe Funds classify their financial assets and financial liabilities at initial recognition in accordance with IAS 39 Financial Instruments: Recognition and Measurement, into the following categories:

• Financial assets and liabilities at fair value through profit and loss – this category has two sub-categories:

1. THE FUNDS

The Funds are comprised of six open-ended mutual fund trusts (the “Trusts”) and Stone & Co. Corporate Funds Limited, a mutual fund corporation with two classes of shares (“SCFL” or the “Corporation”). The Trusts and the classes of the Corporation are collectively referred to as the “Funds” and individually, a “Fund”. The Trusts were established under the laws of the Province of Ontario pursuant to a Declaration of Trust and are authorized for each series to issue an unlimited number of securities without par value. SCFL is a corporation continuing under the laws of Canada, having authorized capital consisting of an unlimited number of common securities and twenty-five classes of special securities; currently, only two classes have been established. Each class of special securities may, in turn, issue an unlimited number of securities.

The Funds’ registered office is 36 Toronto Street, Suite 710, Toronto, Ontario.

The Funds were established on the following dates:

Fund Series Inception date

Stone & Co. Dividend Growth Class Canada A November 14, 1957

B, C, F August 1, 2003T8A, T8B, T8C September 1, 2007

L September 1, 2011

Stone & Co. Resource Plus Class A, B, C July 29, 2005

L September 1, 2011

Stone & Co. Flagship Growth & Income Fund Canada

T8A, T8B, T8C September 1, 2007

AA, BB, CC, FF January 5, 2009

L September 1, 2011

Stone & Co. Flagship Stock Fund Canada A November 1, 1995

B, C, F August 1, 2003


L September 1, 2011

Stone & Co. Flagship Global Growth Fund A December 31, 1998



L September 1, 2011

Stone & Co. Growth Industries Fund A July 1, 1993


L September 1, 2011

Stone & Co. Flagship Money Market Fund Canada

A B, C

December 31, 1996 August 1, 2003

L September 1, 2011

Stone & Co. EuroPlus Dividend Growth Fund A, B, C, F May 2, 2008

T8A, T8B, T8C May 2, 2008

L September 1, 2011

Series A, Series AA, Series T8A, Series B, Series BB, Series T8B, Series C, Series CC, Series T8C and Series L securities are available to retail investors. Series F and Series FF securities are offered to investors enrolled in a dealer sponsored fee-for-service or wrap program.

Effective December 4, 2009, Series T8B and T8C securities are no longer available for purchase; however, existing Series T8B and T8C securities of a Stone Fund may be exchanged into Series T8B or T8C securities of another Stone fund.

Effective August 31, 2011, Series B, BB, C and CC securities are no longer available for purchase; however, existing Series B, BB, C, and CC securities of a Stone Fund may be exchanged into Series B, BB, C, or CC securities of another Stone Fund.

On September 7, 2012, all issued Series F securities of the Stone & Co. Flagship Growth & Income Fund Canada were re-designated as Series FF securities.

On March 7, 2013, all issued Series T8C securities of the Stone & Co. EuroPlus Dividend Growth Fund were liquidated.

The Funds’ investment activities are managed by Stone Asset Management Limited (the “Investment Fund Manager” or “IFM”). The Funds’ custodian is CIBC Mellon,


STONE MUTUAL FUNDS

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (continued)

interest rate, the Fund estimates cash flows considering all contractual terms of the financial instruments, but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and other premiums or discounts.

The Funds’ obligation for net assets attributable to holders of redeemable securities is recognized on trade date and is presented in the redemption of redeemable securities amount on the Statements of Changes in Net Assets Attributable to Holders of Redeemable Securities. The Fund’s outstanding redeemable securities’ entitlements include a contractual obligation to distribute any net income and net realized capital gains annually in cash (at the request of the security holder) and therefore the ongoing redemption feature is not the securities’ only contractual obligation. Consequently, the Fund’s outstanding redeemable securities are classified as financial liabilities in accordance with the requirements of IAS 32, “Financial Instruments: Presentation”. The Fund’s obligations for net assets attributable to holders of redeemable securities are presented at their redemption amounts.

In the normal course of business each Fund is exposed to a variety of financial instruments risks: market risk (comprised of market price risk, foreign currency risk and interest rate risk), credit risk and liquidity risk. The value of investments in a Fund’s portfolio can fluctuate on a daily basis as a result of changes in interest rates, market and economic conditions and factors specific to individual securities within the Fund. The level of risk depends on the Fund’s investment objectives and the type of securities it invests in. See the individual “Fund Specific Notes on Financial Risk Management and Financial Instruments” for each Fund for consideration of the financial instrument risks inherent in the financial instruments held by each Fund.

The Funds classify fair value measurements within a hierarchy which gives 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:




Additional quantitative disclosures are required for Level 3 securities. These are shown in each Fund Specific Notes on Financial Risk Management and Financial Instruments.

Valuation of investments Fair value is price at which an orderly transaction to sell an asset or paid to transfer a liability would take place between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and marketable securities) are based on quoted market prices at the close of trading on the reporting date. The Funds use the last traded price market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread.

The fair value of financial assets and liabilities that are not traded in an active market, including over-the counter derivatives, is determined using valuation techniques. The Funds use a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and other techniques commonly used by market participants and which make the maximum use of observable inputs.

The fair value of investments as at the financial reporting date is determined as follows:

i) Equities and Exchange Traded Funds

Each listed investment security is valued at the latest close price reported by the principal securities exchange on which the investment is traded. Securities which are traded over-the-counter are priced at the close price quoted by a major dealer in such securities.

ii) Investments in Underlying Investment Funds

Investments in Underlying Investment Funds are valued at the closing Net Asset Value per security (“NAVPS”) of the units owned as calculated by the administrator of the Underlying Investment Funds at the valuation date.

• Financial assets and liabilities held for trading: financial assets or financial liability are classified as held for trading if they are acquired principally for the purpose of selling and/or repurchasing in the near term and there is evidence of recent actual pattern of short-term profit taking from price fluctuations. Derivatives are also categorized as held for trading. The Funds do not classify any derivatives as hedges in a hedging relationship. The Funds classify forward currency contracts and written options as held for trading due to the near term nature of these investments and recent pattern of selling/repurchasing in the near term.

• Financial assets and liabilities designated at fair value through profit or loss at initial recognition: Financial assets and financial liabilities designated at fair value through profit or loss upon initial recognition are financial instruments that are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Funds’ documented investment strategy. The Funds classify equities, debentures and other interest bearing investments as financial assets and liabilities designated at fair value through profit and loss as the Funds’ policy requires the IFM and the Board of Directors of the IFM to evaluate the information about these financial assets on a fair value basis together with other related financial information to ensure the Funds are being managed in accordance with their documented investment strategy.

• �Loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are non-derivative financial assets that include interest, dividends, investments sold, subscriptions and HST receivables.

• Other financial liabilities – this category includes all financial liabilities, other than those classified as held for trading. The Funds classify payable for investments purchased, redemptions payable, accounts payable and accrued liabilities, dividends payable as other financial liabilities.

(ii) Recognition, derecognition and measurement

The Funds recognize a financial asset or a financial liability when it becomes a party to the contractual provisions of the instrument.

Purchases and sales of investments are recognized on the trade date which is the date on which the Fund commits to purchase or sell the investment. Financial assets and financial liabilities classified as fair value through profit or loss are initially recognized at fair value. Transaction costs related to financial instruments are expensed as incurred on the Statements of Comprehensive Income (Loss).

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when the obligation under the liability is discharged, cancelled or expired.

After initial measurement, the Funds measure financial instruments which are classified at fair value through profit or loss, at fair value. Gains and losses arising from changes in the fair value of the financial instruments classified at fair value through profit or loss category are presented in the Statements of Comprehensive Income (Loss). Interest and dividends earned on financial assets are recorded separately in interest income or dividend income. Interest is recognized as income on the debt instrument’s stated rates of interest. Dividends are recognized as income on ex-dividend date.

Loans and receivables are carried at amortized cost using the effective interest rate method less any allowance for impairment. Gains and losses are recognized in profit or loss when the loans and receivables are derecognized or impaired.

Financial liabilities, other than those classified as fair value through profit or loss, are measured at amortized cost using the effective interest rate method. Gains and losses are recognized in profit or loss when the liabilities related to financial instruments are derecognized.

The effective interest rate method is a method of calculating the amortized cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective


STONE MUTUAL FUNDS


Measurement (“IFRS 13“) methodologies. The fair values of certain securities are determined using valuation models that are based, in part, on assumptions that are not supported by observable market inputs. These methods and procedures may include, but are not limited to, performing comparisons with prices of comparable or similar securities, obtaining valuation related information from issuers, significant market or security-specific events, and/or other analytical data relating to the investment and using other available indication of value. The fair values of such securities are also affected by the perceived credit risks of the issuer, predictability of cash flows and length of time to maturity. These values are independently assessed internally to ensure that they are reasonable. However, because of the inhere uncertainty of valuation, the estimated fair values for the aforementioned securities may be materially different from the values that would be used had a ready market for the security existed. The frequency with which these procedures are used is unpredictable and may be utilized to a significant extent. The value of securities used for net asset value (“NAV”) calculations under fair value pricing may differ from published prices for the same securities.

Cost of investmentsThe cost of investments represents the amount paid for each security, excluding transaction costs, and is determined on an average cost basis.

Cash and cash equivalentsCash is comprised of cash on deposit with financial institutions and bank overdrafts. Cash equivalents are comprised of highly liquid investments having terms to maturity of 90 days or less.

Transaction costsTransaction costs such as brokerage commissions incurred in the purchase and sale of securities at FVTPL by the Funds are included in the Statements of Comprehensive Income (Loss) in the period in which they are incurred.

Investment transactions and income recognitionInvestment transactions are accounted for on the trade date. Realized gains and (losses) from the sale of investments and unrealized appreciation or (depreciation) of investments are calculated on an average cost basis. Investment income is recorded on an accrual basis. Interest income and expense is recorded as incurred and dividend income is recorded on the ex-dividend date. Distributions received from investment trusts and Underlying Investment Funds are recorded as income, dividends, capital gains or a return of capital as the case may be. Distributions treated as a return of capital reduce the average cost of the underlying investment.

Foreign currency translation The reporting currency for the Funds is the Canadian dollar which is the functional currency of the Funds. Any currency other than Canadian dollars represents foreign currency to the Funds. Foreign currency transactions are translated into Canadian dollars at the rate of exchange prevailing at the date the transactions occur. Realized foreign currency gains (losses) on investments are included in the Statements of Comprehensive Income (Loss) in “Net realized gain (loss) on sale of investments and derivatives”. Unrealized foreign currency gains (losses) on investments are included in the Statements of Comprehensive Income (Loss) in “Change in unrealized appreciation (depreciation) of investments and derivatives”. Realized and unrealized exchange gains (losses) on assets (other than investments and derivatives), liabilities and investment income denominated in foreign currencies are included in “Net realized and change in unrealized foreign exchange gain (loss)” in the Statements of Comprehensive Income (Loss).Foreign currency assets and liabilities are translated into Canadian dollars at the prevailing exchange rate at the measurement date.

Securities valuationThe series of securities of the Funds are offered for sale on a continuous basis and may be purchased or redeemed on any valuation date at the Net Asset Value (NAV) per security (NAVPS). A valuation date is each day on which the Toronto Stock Exchange is open for business. The NAV of each series of a Fund is the value of the series’ proportionate share of the assets of the Fund less proportionate share of common liabilities and specifically allocated liabilities. The NAVPS of a series of securities of a Fund is calculated by dividing the NAV of the series of the Fund by the total number of securities outstanding in that series.

Increase (decrease) in net assets attributable to holders of redeemable securities per security“Increase (decrease) in net assets attributable to holders of redeemable securities per security” is disclosed in the Statements of Comprehensive Income (Loss) and represents, for each series of securities, the increase or decrease in net assets for the period attributable to that series divided by the weighted average number of securities of the series outstanding during the period.

iii) Unlisted warrants

Unlisted warrants are valued based on a pricing model which considers factors such as the market value of the underlying security, strike price, volatility and terms of the warrant.

iv) Options

An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a pre-determined price. The seller (writer) receives a premium from the purchaser in consideration for the assumption of a future securities price.Purchased options that are exchange traded are valued at the latest close price reported by the principal securities exchange on which the investment traded; any purchased options that are over the counter are valued at the close price as quoted by a major dealer. The premium paid for purchased options is included in the average costs on the Schedule of Investment Portfolio. When a purchased option expires without being exercised the premium paid will be treated in as a loss and included in the Statements of Comprehensive Income (Loss) as “Net realized gain (loss) on sale of investments and derivatives”. If the purchased option is exercised the Fund will realize a gain or loss depending on whether the proceeds are greater or less than the premium paid at the time of purchase. When a purchased option is exercised, the cost of the underlying security purchased is increased by the premium paid at the time of purchase. Written option premiums received by the Funds are, so long as the options are outstanding at period end, reflected in the Statements of Financial Position as “Written options”. The liability for written options gets revalued at an amount equal to the current fair value of an option that would have the effect of closing the position. Written options that are exchange traded are valued at the latest close price reported by the principal securities exchange on which the investment traded; any written options that are over-the counter are valued at the ask price as quoted by a major dealer. If the option expires without being exercised, the premium received will be treated as gains and is included in the Statements of Comprehensive Income (Loss) as “Net realized gain (loss) on sale of investments and derivatives”. If the option is exercised, in the case of a call option the premium received will be added to the proceeds of disposition of the underlying security and included in the Statements of Comprehensive Income (Loss) as “Net realized gain (loss) on sale of investments and derivatives”. If the option is exercised, in the case of a put option the cost of the underlying security will be reduced by the amount of premium received and included in the Schedule of Investment Portfolio.

v) Bonds

Bonds are valued based on the latest close prices obtained from recognized independent brokers. The difference between the total fair value and the total cost of securities in (i) to (v) is included in the “Change in unrealized appreciation (depreciation) of investments and derivatives” on the Statements of Comprehensive Income (Loss).

vi) Short-term investments

Short-term investments are accounted for at fair value, which generally approximates amortized cost. For the Money Market Fund, the cost of short-term investments together with interest accrued approximates their fair value.

vii) Forward currency contracts

A forward currency contract is an agreement between two parties (the Fund and the counterparty) to purchase or sell a currency against another currency at a set price on a future date.Open forward currency contracts are valued at the gain or (loss) that would arise as a result of closing the position on the valuation date. The unrealized gain or loss on forward currency contracts is reflected in the Statements of Financial Position as “Unrealized gain on forward currency contracts” or “Unrealized loss on forward currency contracts”. The unrealized gain or (loss) for the period is reflected in the Statements of Comprehensive Income (Loss) as “Change in unrealized appreciation (depreciation) of forward currency contracts”. The realized gain or (loss) on forward currency contracts arises as a result of closing the position on settlement date. The realized gain or (loss) is reflected in the Statements of Comprehensive Income (Loss) as “Realized gain (loss) on forward currency contracts”. The value of any security for which, in the opinion of the Investment Manager, the published market quotations are not readily available shall be the fair value as determined by the Investment Manager in accordance with IFRS 13 Fair Value


STONE MUTUAL FUNDS

Use of judgments

Classification and measurement of investments and application of the fair value option In classifying and measuring financial instruments held by the Funds, SAM is required to make significant judgments about whether or not the business of the Funds is to invest on a total return basis for the purpose of applying the fair value option for financial assets under IAS 39. The most significant judgments made include the determination that certain investments are held-for-trading and that the fair value option can be applied to those which are not.

Investment entity In determining whether the Funds are an investment entity, SAM may be required to make significant judgments about whether the Funds have the typical characteristics of an investment entity. The Funds primarily obtain capital from one or more investors for the purpose of providing investment management services, commit to their investors that the business purpose is to invest the capital solely for returns from capital appreciation, investment income or both, and measure and evaluate the performance of their investments on a fair value basis.

Use of estimatesThe preparation of the financial statements requires SAM to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Key areas of estimation where SAM has made difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain include those relating to fair value of financial instruments. Therefore, the actual results could differ from these estimates. Estimates are reviewed on a regular basis and, as adjustments become necessary, they are reported in the period which they become known. SAM believes that the potential significant areas where judgment is necessarily applied are those which relate to fair value of financial instruments. When the fair value of financial assets and liabilities recorded on the Statements of Financial Position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models which are usually based on valuation methods and techniques generally recognized as standard within the industry. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of liquidity and model inputs such as volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

3. REDEEMABLE SECURITIES

Securities issued and outstanding represent the redeemable securities of the Funds. Redeemable securities of the Funds are issued and redeemed at the then current NAVPS at the option of the securityholder. Securityholders are entitled to dividends/distributions when declared. Dividends/distributions on securities of the Funds are reinvested in additional securities or at the option of the securityholders, paid in cash, or both.

The Fund’s redeemable securities are classified as financial liabilities due to its ongoing obligation to pay redemptions at the securityholders request and also distribute net income & net realized capital gains annually.

The Statements of Changes in Net Assets Attributable to Holders of Redeemable Securities identify changes in the Funds’ capital during the period. The capital of each of the Funds is managed in accordance with each of the Funds’ investment objectives, including managing the liquidity in order to be able to meet redemptions as discussed in the respective Fund Specific Notes on Financial Risk Management and Financial Instruments.

The Manager acted as the Administrator of Stone 2012 Flow-Through Limited Partnership, and Stone 2011 Flow-Through Limited Partnership, (collectively the “Stone FTLPs”). During the periods ended June 30, 2014 and December 31, 2013, as applicable, all outstanding securities of each of these Stone FTLPs were exchanged for Series A securities of Stone & Co. Resource Plus Class. The assets of the Stone FTLPs were transferred on a tax deferred basis. The following table summarizes the details of those transactions:

Stone FTLPDate of transaction

Number of Resource Plus securities issued

Value of Resource Plus securities issued Exchange ratio

Stone 2012 FTLP February 7, 2014 2,027 $ 6,195 3.6606

Stone 2011 FTLP February 1, 2013 1,495 $ 4,579 3.9863

4. EXPENSES

Management feesThe Manager is paid a management fee for managing the Funds’ overall business and day to day operational services.

The management fee for each series is an annualized fee plus applicable taxes based on the Net Asset Value of the respective series of the Fund and is accrued daily and paid monthly. There is no duplication of fees if a Fund invests in an Underlying Stone Investment/Exchange Traded Fund.

The series of securities issued by the Funds have the following annual management fees:

Annual Management Fee (%) Series*

FundA, AA,

T8AB, BB,

T8BC, CC,

T8CF,

FF L

Stone & Co. Dividend Growth Class Canada 2.00 2.50 2.50 1.00 2.50

Stone & Co. Resource Plus Class 2.00 2.50 2.50 n/a 2.50

Stone & Co. Flagship Growth & Income Fund Canada 2.00 2.50 2.50 1.00 2.50

Stone & Co. Flagship Stock Fund Canada 2.00 2.50 2.50 1.00 2.50

Stone & Co. Flagship Global Growth Fund 2.00 2.50 2.50 1.00 2.50

Stone & Co. Growth Industries Fund 2.00 2.50 2.50 1.00 2.50

Stone & Co. Flagship Money Market Fund Canada 0.75 0.75 0.75 n/a 0.75

Stone & Co. EuroPlus Dividend Growth Fund 2.00 2.50 2.50 1.00 2.50

*If applicable

Performance feesUnder the terms of the Investment Management Agreement, the Portfolio Manager, for all Funds except the Stone & Co. Flagship Money Market Fund Canada, is entitled to receive a performance fee (plus applicable taxes) from each Series of securities of the Fund equal to 10 percent of the amount by which the Fund’s Series rate of return exceeds the return of each Fund’s established benchmark since the last time a Performance fee was paid multiplied by the Fund’s average Series NAV during the calendar year. There is no duplication of fees if a Fund invests in an Underlying Stone Investment/Exchange Traded Fund. Performance fees are reported on the Statements of Comprehensive Income (Loss). The Fund’s established benchmark is disclosed in the following table. For all Funds other than the Stone & Co. Resource Plus Class, Stone & Co. EuroPlus Dividend Growth Fund, and Stone & Co. Growth Industries Fund, performance fees are limited to a maximum of 0.30 percent (plus applicable taxes) of the Funds’ Series average Net Asset Value during the calendar year. Such fees are accrued monthly, if applicable, and paid annually.

Fund Name Performance Fee BenchmarkStone & Co. Dividend Growth Class Canada

(i) 80% of the percentage gain or loss of the S&P/TSX Composite (Total Return) Index; plus(ii) 20% of the percentage gain or loss of the S&P 500 (Total Return) Index.

Stone & Co. Resource Plus Class

(i) 50% of the percentage gain or loss of the S&P/TSX Capped Energy (Total Return) Index; plus(ii) 50% of the percentage gain or loss of the S&P/TSX Capped Materials (Total Return) Index.


(i) 40% of the percentage gain or loss of the S&P/TSX Composite (Total Return) Index; plus(ii) 20% of the percentage gain or loss of the S&P 500 (Total Return) Index; plus(iii) 40% of the percentage gain or loss of the DEX Universe Bond Index.

Stone & Co. Flagship Stock Fund Canada

(i) 80% of the percentage gain or loss of the S&P/TSX Composite (Total Return) Index; plus(ii) 20% of the percentage gain or loss of the S&P 500 (Total Return) Index.

Stone & Co. Flagship Global Growth Fund MSCI World (Total Return) Index.Stone & Co. Growth Industries Fund

(i) 80% of the percentage gain or loss of the S&P/TSX Completion (Total Return) Index; plus(ii) 20% of the percentage gain or loss of the S&P 400 MidCap (Total Return) Index.

Stone & Co. EuroPlus Dividend Growth Fund MSCI Europe (Total Return) Index.



STONE MUTUAL FUNDS


Other expensesThe Funds pay all of the expenses relating to their operation and the carrying on of their business, including legal and audit fees, independent review committee fees, interest, taxes, administrative and overhead costs charged by the Manager, as well as the cost of financial and other reports and compliance with all applicable laws, regulations and policies. Expenses incurred by the Funds are allocated among the series on a reasonable basis as determined by the Manager.

At its sole discretion, the Manager may waive or absorb expenses otherwise payable by the Funds. The amount of waivers and absorptions can fluctuate from time to time and may be terminated at any time. Amounts absorbed or waived are reported in the Statements of Comprehensive Income (Loss).

5. SOFT DOLLAR COMMISSIONS

Brokerage commissions paid to certain brokers may, in addition to paying for the cost of brokerage services in respect of security transactions, also provide for the cost

of investment research goods and services and order execution goods and services provided to the investment manager.

The value of such research services included in commissions paid to brokers for the periods ended June 30, 2014 and 2013 is as follows:

Soft Dollar Commissions

Fund 2014 2013

Stone & Co. Dividend Growth Class Canada 16 22

Stone & Co. Resource Plus Class – –

Stone & Co. Flagship Growth & Income Fund Canada 9 3

Stone & Co. Flagship Stock Fund Canada 6 15

Stone & Co. Flagship Global Growth Fund – –

Stone & Co. Growth Industries Fund – 1

Stone & Co. Flagship Money Market Fund Canada – –

Stone & Co. EuroPlus Dividend Growth Fund – –6. TAXATION

The Trusts qualify as mutual fund trusts under the Income Tax Act (Canada) and the Corporation qualifies as Mutual Fund Corporations under the Income Tax Act (Canada). All of the Trusts and Corporation’s net income for tax purposes and realized net capital gains in any taxation year are required to be distributed to securityholders such that no income tax is payable by the Trusts or Corporation. Since the Trusts and Corporation do not record income tax expense, deferred tax assets associated with the tax benefits of capital and non-capital losses will not be recognized on the Statements of Financial Position.

Withholding taxes imposed by certain countries on investment income and capital gains are recorded as an separate expense item on the Statements of Comprehensive Income (Loss).

a) The Trusts

Capital losses realized by the Trust may be carried forward indefinitely to reduce future realized capital gains. Non-capital losses may be carried forward up to twenty years and applied against net taxable capital gains and net income in future years.

As at December 31, 2013, the Funds had the following capital and non-capital losses for income tax purposes, as applicable:

Non-Capital Losses that Expire In:

FundCapital Losses

Total Non-Capital Losses 2014 2015 2026 2027 2028 2029 2030 2031 2032 2033

Stone & Co. Flagship Growth & Income Fund Canada $ – $ – – – – – – – – – – –

Stone & Co. Flagship Stock Fund Canada 39,478 2,133 – – – – 1,065 328 – – 360 380

Stone & Co. Flagship Global Growth Fund 21,654 1,344 – – – – 83 219 551 – 491 –

Stone & Co. Growth Industries Fund 1,389 50 – – – – – – – 24 26 –

Stone & Co. Flagship Money Market Fund Canada – – – – – – – – – – – –

Stone & Co. EuroPlus Dividend Growth Fund 1,783 33 – – – – – – – – – 33

b) The Corporation

The Corporation is subject to a tax of 331⁄3% under Part IV of the Act on in the amount of taxable dividends received from taxable Canadian corporations in the year. This tax is fully refundable upon payment of sufficient dividends. As a result, the Corporation does not anticipate that it will be subject to any material non-refundable net Canadian income tax.Interest and foreign dividends received are taxed at normal corporate rates subject to permitted deductions for expenses of the Corporation and applicable credits or deductions of foreign taxes paid.Income taxes (if any) are allocated to each class of special shares of the Corporation, as applicable, on a reasonable basis.Capital losses realized by the Corporation may be carried forward indefinitely to reduce future realized capital gains.Non-capital losses arising for taxation years after March 22, 2004 may be carried forward up to ten years. Non-capital losses arising for taxation years after December 31, 2005 may be carried forward up to twenty years. Non-capital losses can be used to reduce future taxable income or taxable capital gains.

As at December 31, 2013, the Corporation had available tax losses as presented below:

Non-Capital Losses that Expire In:

Fund Capital Losses Total Non-Capital Losses 2014 2015 2026 2027 2028 2029 2030 2031 2032 2033

SCFL $ – $ 23,967 255 – – – 225 3,811 9,186 4,887 4,159 1,444

7. INVESTMENTS IN OTHER INVESTMENT ENTITIES

Some of the Funds (“Top Funds”) invest in other Stone Funds (“Underlying Funds”), in accordance with IFRS 10-Consolidated Financial Statements (“IFRS 10”); these Underlying Funds are not consolidated by the Top Funds but instead carried at FVTPL. The change in fair value for these Underlying Funds is included in the Top Fund’s Statements of Comprehensive Income (Loss) under “Change in unrealized appreciation (depreciation) of investments and derivatives”. IFRS 10 allows for an exemption to consolidate provided that the Top Fund meets the definition of an “investment entity” The Top Fund has determined that it meets the definition of an investment entity and as a result, it measures subsidiaries at FVTPL. An investment entity is an entity that: obtains funds from one or more investors for the purpose of providing them with investment management services, commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both, and measures and evaluates the performance of substantially all of its investments on a fair value basis. The most significant judgment that the Top Fund has made in determining that it meets this definition is that fair value is the primary measurement attribute used to measure and evaluate the performance of substantially all of its investments. The Fund’s investments may also include associates and structured entities which are designated at FVTPL.


STONE MUTUAL FUNDSSTONE MUTUAL FUNDS

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

(continued)

In addition to meeting the definition of an investment entity; the Top Fund has also concluded that it meets the typical characteristics of an investment entity, which include holding more than one investment as well as having more than one securityholder and finally the Top Fund issue ownership interests in form of securities to its securityholders.

June 30, 2014

Top Funds Underlying FundsPrincipal Place of Business

Ownership of Interest %

Voting Rights %

Fair Value of Investment ($)

Stone & Co. Resource Plus Class Stone Agribusiness Fund Canada 4.5 4.5 624

Stone & Co. Flagship Stock Fund Canada Stone & Co. Flagship Global Growth Fund (Series A) Canada 13.2 13.2 3,265

Stone & Co. Flagship Stock Fund Canada Stone Agribusiness Fund Canada 6.0 6.0 1,494

Stone & Co. Growth Industries Fund Stone Agribusiness Fund Canada 1.4 1.4 52

Stone & Co. Flagship Growth & Income Fund Canada Stone & Co. Flagship Global Growth Fund (Series A) Canada 22.3 22.3 25,480

Stone & Co. Flagship Growth & Income Fund Canada Stone & Co. EuroPlus Dividend Growth Fund (Series A) Canada 10.3 10.3 11,739

8. RELATED PARTY TRANSACTIONS

Management Fees

SAM provides investment management services to each fund and is remunerated based on the NAV of each Fund’s units. The fees are accrued daily and paid monthly to SAM.

Management Fees Paid For the six month period

Ended June 30, 2014Management Fees Payable

as at June 30, 2014

Management Fees PaidFor the six month period

Ended June 30, 2013Management Fees Payable

as at June 30, 2013

Stone & Co. Dividend Growth Class Canada $ 5,919 $ 354 $ 5,789 $ 325

Stone & Co. Resource Plus Class 112 23 135 8

Stone & Co. Flagship Growth & Income Fund 957 69 1,169 70

Stone & Co. Flagship Stock Fund Canada 219 41 254 18

Stone & Co. Flagship Global Growth Fund 494 54 327 22

Stone & Co. Growth Industries Fund 34 6 17 3

Stone & Co. Flagship Money Market Fund – – – –

Stone & Co. EuroPlus Dividend Growth Fund 236 49 123 9

Fund Operating and Administration Fees

Stone & Co. Limited (“SCL”) provides fund operations and administration services for each Fund. SCL is paid fund operating and administration fees from each fund to cover third party fund operating costs and SCL’s fund administration costs. The fees are accrued daily and paid monthly to SCL.

Administration Fees PaidFor the six month period

Ended June 30, 2014Administration Fees Payable

as at June 30, 2014

Administration Fees PaidFor the six month period

Ended June 30, 2013Administration Fees Payable

as at June 30, 2013

Stone & Co. Dividend Growth Class Canada $ 1,204 $ 249 $ 1,241 $ 236

Stone & Co. Resource Plus Class 42 9 46 7

Stone & Co. Flagship Growth & Income Fund Canada 195 52 262 44

Stone & Co. Flagship Stock Fund Canada 78 27 96 13

Stone & Co. Flagship Global Growth Fund 138 24 88 17

Stone & Co. Growth Industries Fund 16 3 8 2

Stone & Co. Flagship Money Market Fund Canada – – – –

Stone & Co. EuroPlus Dividend Growth Fund 82 17 39 7

Independent Review Committee Fees

The total remuneration paid to members of the Independent Review Committee during the six month period ended June 30, 2014 was $23 (2013 – $23).

The Manager held units/shares of the Stone Funds as set out in the table below:

Fund

Fair Value of Investment

June 30, 2014 Dec. 31, 2013 Jan. 1, 2013Stone & Co. Dividend Growth Class Canada $ 0.1 $ 0.1 $ 0.1Stone & Co. Resource Plus Class 0.1 0.1 0.1 Stone & Co. Flagship Growth & Income Fund Canada 0.1 0.1 0.1 Stone & Co. Flagship Stock Fund Canada 0.1 0.1 0.1 Stone & Co. Flagship Global Growth Fund 0.2 0.2 0.1 Stone & Co. Growth Industries Fund 0.1 0.1 0.1 Stone & Co. Flagship Money Market Fund Canada 98.6 107.0 122.2Stone & Co. EuroPlus Dividend Growth Fund 0.2 0.1 0.1


STONE MUTUAL FUNDS


(continued)

The Manager’s executive staff held units/shares of the Stone Funds as set out in the table below:

Fund

Fair Value of Investments

June 30, 2014 Dec. 31, 2013 Jan. 1, 2013Stone & Co. Dividend Growth Class Canada $ 127 $ 112 $ 87Stone & Co. Resource Plus Class 23 69 68Stone & Co. Flagship Growth & Income Fund Canada 58 56 49Stone & Co. Flagship Stock Fund Canada 385 350 273Stone & Co. Flagship Global Growth Fund 112 110 79Stone & Co. Growth Industries Fund 69 69 47Stone & Co. Flagship Money Market Fund Canada 19 18 42Stone & Co. EuroPlus Dividend Growth Fund 224 211 158

9. TRANSITION TO IFRS

The effect of the Funds’ transition to IFRS is summarized below:

Transition elections

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

Statements of Cash Flows

Under Canadian GAAP, the Funds were exempt from providing Statements of Cash Flows. IAS 1 requires that a complete set of financial statements include a Statements of Cash Flows for the current and comparative periods.

Reconciliation of equity as previously reported under Canadian GAAP to IFRS

Stone & Co. Dividend Growth Class Canada – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013

Equity as reported under Canadian GAAP $ 527,622 $ 492,400 $ 493,692

Revaluation of investments at FVTPL 339 693 837

Net assets attributable to holders of redeemable securities $ 527,961 $ 493,092 $ 494,529

Stone & Co. Resource Plus Class – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013




Stone & Co. Flagship Growth & Income Fund Canada – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013




Stone & Co. Flagship Stock Fund Canada – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013




Stone & Co. Flagship Global Growth Fund – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013



Net assets attributable to holders of redeemable securities

$ 44,207 $ $31,772 $ 26,555

Stone & Co. Growth Industries – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013

Equity as reported under Canadian GAAP $ 3,425 $ 2,112 $ 1,843Revaluation of investments at FVTPL 16 7 5


Stone & Co. Flagship Money market Fund Canada – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013


Revaluation of investments at FVTPL nil nil nil


Stone & Co. Europlus Dividend Growth – Equity

Dec. 31, 2013 Jun. 30, 2013 Jan. 1, 2013





STONE MUTUAL FUNDS

Classification of redeemable securities by the Funds

Under Canadian GAAP, the Funds accounted for their redeemable securities as equity. Under IFRS, IAS 32 requires that the securities of equity which include a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset be classified as financial liability. The Funds’ redeemable securities do not meet the criteria in IAS 32 for classification as equity and therefore, have been reclassified as financial liabilities on transition to IFRS.

Revaluation of investments at FVTPL

Under Canadian GAAP, the Funds measured the fair values of their investments as defined in the CPA Canada Handbook – Accounting Section 3855, Financial Instruments – Recognition and Measurement (“Section 3855”). Under Section 3855, investments that are quoted in active markets shall be measured based on the bid price for long positions and the ask price for short positions. Under IFRS, the Funds measure the fair values of their investments using the guidance in IFRS 13. IFRS 13 requires the use of a price within the bid-ask spread that is most representative of fair value in the circumstances. Therefore IFRS 13 allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurement within the bid-ask spread.

As a result, upon adoption of IFRS an adjustment was recognized to increase the carrying amount of the Funds investments as per below:

Fund Name Dec. 31, 2013 Jan. 1, 2013

Stone & Co. Dividend Growth Class Canada $ 339 $ 837

Stone & Co. Resource Plus Class $ 31 $ 32


$ 89 $ 127

Stone & Co. Flagship Stock Fund Canada $ 35 $ 255

Stone & Co. Flagship Global Growth Fund $ 36 $ 23

Stone & Co. Growth Industries Fund $ 16 $ 5

Stone & Co. Flagship Money Market Fund Canada

nil nil

Stone & Co. EuroPlus Dividend Growth Fund $ 10 $ 11

Reconciliation of comprehensive income (loss) as previously reported under Canadian GAAP to IFRS

Stone & Co. Dividend Growth Class Canada – Equity

Year ended Dec.31, 2013

Six months ended

Jun.30, 2013

Comprehensive income (loss) reported under Canadian GAAP 79,830 17,561

Revaluation of investments at FVTPL (498) (144)


Stone & Co. Resource Plus Class – Equity


Six months ended

Jun.30, 2013

Comprehensive income (loss) reported under Canadian GAAP (226) (1,595)

Revaluation of investments at FVTPL (1) 8

Increase (decrease) in net assets attributable to holders of redeemable securities (227) (1,587)


(continued)Stone & Co. Flagship Growth & Income Fund Canada – Equity


Six months ended

Jun.30, 2013




Stone & Co. Flagship Stock Fund Canada – Equity


Six months ended

Jun.30, 2013




Stone & Co. Flagship Global Growth Fund – Equity


Six months ended

Jun.30, 2013


Revaluation of investments at FVTPL 13 14


Stone & Co. Growth Industries – Equity


Six months ended

Jun.30, 2013

Comprehensive income (loss) reported under Canadian GAAP 862 358

Revaluation of investments at FVTPL 11 2


Stone & Co. Flagship Money market Fund Canada – Equity


Six months ended

Jun.30, 2013

Comprehensive income (loss) reported under Canadian GAAP 42 21

Revaluation of investments at FVTPL nil nil


Stone & Co. Europlus Dividend Growth – Equity


Six months ended

Jun.30, 2013


Revaluation of investments at FVTPL (1) 1



STONE MUTUAL FUNDS

As a result, upon adoption of IFRS an adjustment was recognized to increase (decrease) the Fund’s increase (decrease) in net assets attributable to holders of redeemable securities as per below:

Fund NameYear ended

Dec. 31, 2013

Six months ended

Jun. 30, 2013

Stone & Co. Dividend Growth Class Canada $ (498) $ (144)

Stone & Co. Resource Plus Class $ (1) $ 8


$ (38) $ (26)

Stone & Co. Flagship Stock Fund Canada $ (220) $ (188)

Stone & Co. Flagship Global Growth Fund $ 13 $ 14

Stone & Co. Growth Industries $ 11 $ 2

Stone & Co. Flagship Money market Fund Canada

nil nil

Stone & Co. Europlus Dividend Growth $ (1) $ 1

Reclassification adjustments

Foreign withholding taxes were previously disclosed separately as part of investment income; under IFRS they are still presented separately however they are now reclassified as an expense. Similarly Transaction costs which were previously disclosed separately as part of the gain (loss) on investments are now reclassified as a separate expense.

10. SUBSEQUENT EVENTS

Future accounting changes

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


(continued)

STONE MUTUAL FUNDS

2014 Interim Financial ReportFor the period ended June 30, 2014

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including but not limited to market and general economic conditions, interest rates, regulatory and statutory developments, the effects of competition in the geographic and business areas in which the Fund may invest and the risks detailed from time to time in the Fund’s simplified prospectus or offering memorandum. We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respects to investing in the Fund, investors and others should carefully consider these factors, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, the Fund does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

STONE ASSET MANAGEMENT LIMITED

36 Toronto Street, Suite 710 | Toronto, Ontario M5C 2C5 | P: 416 364 9188 or 800 336 9528 F: 416 364 8456 | [email protected] | www.stoneco.com

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