Blue Ribbon Income Fund Interim Report 2021 - TSX: RBN.UN - Brompton Funds
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TSX : RBN.UN
Blue Ribbon
Income Fund
Interim Report 2021
Actively managed portfolio focused on
higher dividend paying Canadian securities.
VALUE
INTEGRITY
PERFORMANCE
THE FOUNDATION FOR EXCELLENCEBlue Ribbon Income Fund - Interim Report 2021
MANAGEMENT REPORT OF FUND PERFORMANCE
August 18, 2021
This interim management report of fund performance for Blue Ribbon Income Fund (the “Fund”) contains financial highlights but does
not contain the unaudited interim financial statements of the Fund. The unaudited interim financial statements follow this report. You
may obtain a copy of the audited annual or unaudited interim financial statements, at no cost, by calling 1‑866‑642‑6001 or by sending
a request to Investor Relations, Brompton Funds, Bay Wellington Tower, Brookfield Place, 181 Bay Street, Suite 2930, Box 793,
Toronto, Ontario, M5J 2T3, or by visiting our website at www.blueribbonincomefund.com or SEDAR at www.sedar.com. Unitholders
may also contact Brompton Funds by using one of these methods to request a copy of the Fund’s proxy voting policies and procedures,
proxy voting disclosure record, Independent Review Committee’s report, or quarterly portfolio disclosure.
THE FUND
The Fund is a closed‑end investment trust managed by Blue Ribbon Fund Management Ltd. (the “Administrator”). Brompton Funds
Limited (“Brompton”) is the sub‑administrator of the Fund and provides administrative services to the Fund on behalf of the
Administrator. The Fund’s portfolio is actively managed by Bloom Investment Counsel, Inc. (“Bloom” or the “Investment Manager”).
The units of the Fund trade on the Toronto Stock Exchange (“TSX”) under the symbol RBN.UN and are RRSP, DPSP, RRIF, RESP
and TFSA eligible.
INVESTMENT OBJECTIVES AND STRATEGIES
The Fund’s investment objectives are to provide unitholders with high monthly distributions, together with the opportunity for capital
appreciation.
RECENT DEVELOPMENTS
Market Volatility and COVID-19
The outbreak of the respiratory disease designated as COVID-19 had caused increased volatility and a major sell-off of equities in 2020.
With the development of effective vaccines, major stock market indices substantially recovered their losses by the end of the 2020 after
hitting their lowest point in March 2020. During the first half of 2021, governments of various countries have been easing restrictions
gradually. Until the pandemic is under control, there may still be continued volatility in the securities markets which would impact the
prices of the securities held in the portfolio of the Fund. The Fund’s Net Asset Value reflecting the value of the Fund’s portfolio based
on the most recent valuation date can be found on the Fund’s webpage at www.bromptongroup.com.
RISKS
Risks associated with an investment in the units of the Fund are discussed in the Fund’s 2020 annual information form, which is available
on the Fund’s website at www.blueribbonincomefund.com or on SEDAR at www.sedar.com. There were no changes during the period
ended June 30, 2021 that materially affected the risks associated with an investment in the units of the Fund as they were discussed.
RESULTS OF OPERATIONS
Distributions and Changes in Net Assets from Operations
Cash distributions amounted to $0.24 per unit for the six months ended June 30, 2021, which has decreased from $0.27 per unit for the
same period in 2020, reflecting a change in monthly distributions of $0.05 per unit to $0.04 per unit effective April 23, 2020. Since
inception in September 1997, the Fund has paid total cash distributions of $20.13 per unit.
The Fund has a distribution reinvestment plan which allows participating unitholders to automatically reinvest monthly distributions,
commission free, in additional units of the Fund. Pursuant to this plan, 19,004 units were acquired in the market at an average price of
$8.32 per unit and no units were issued from treasury during the six months ended June 30, 2021.
For the first six months of 2021, total revenue from the Fund’s portfolio was $0.15 per unit which decreased slightly from $0.16 per unit
for the same period in 2020. Expenses which were $0.06 per unit for the first six months of 2021, remained unchanged from the same
period in 2020.
1Blue Ribbon Income Fund - Interim Report 2021
Net Asset Value
The Net Asset Value per unit of the Fund was $8.88 at June 30, 2021, up from $7.71 at December 31, 2020. The increase was contributed
by the net gains on investments in the Fund. The aggregate Net Asset Value of the Fund increased to $99.0 million at June 30, 2021
from $86.5 million at December 31, 2020. The $12.5 million or 14.5% increase is reflected by $15.7 million of increase in Net Assets
from operations, partially off set by $2.7 million in distributions payment and unit repurchases of $0.5 million under the Fund’s normal
course issuer bid program.
Investment Portfolio
At June 30, 2021, the Fund owned 28 equities compared to 27 equities from December 31, 2020. The portfolio constituents changed
by one, where the Fund invested into Rogers Communications Inc. The Fund had net realized and change in unrealized gains of $14.7
million during the first six months of 2021.The increase was largely contributed by the Industrial, Consumer staples and discretionary,
Financial, and Pipes, power, utilities and infrastructure sectors. The largest gains came from TFI International Inc., Keyera Corp., Goeasy
Ltd. and Ag Growth International Inc. The portfolio’s investment weighting and detailed listing of the Fund’s security holdings is
provided in the financial statements.
Portfolio Sectors
Change in
% of Portfolio Realized Unrealized Total
Net Gains (Losses) by Sector (millions) as of 30-Jun-21 $ $ $
Communication services 1.3 - 0.1 0.1
Consumer staples and discretionary 22.1 (0.2) 3.9 3.7
Financial 21.0 - 3.3 3.3
Industrial 23.1 0.9 4.5 5.4
Materials 5.6 - 0.1 0.1
Oil and gas 3.6 - - -
Pipes, power, utilities and infrastructure 18.1 - 1.3 1.3
Real estate 5.2 - 0.8 0.8
Total 100.0 0.7 14.0 14.7
Liquidity and Capital Resources
The Fund has a 364‑day revolving credit facility which provides for maximum borrowings of $5 million, with borrowings in Canadian
currency at either the prime rate of interest or the bankers’ acceptance rate, plus a fixed percentage. The facility can be used to invest in
additional portfolio investments and for working capital purposes. During the first six months of 2021, there were no borrowings under
the facility.
To provide liquidity for unitholders, units of the Fund are listed on the TSX under the symbol RBN.UN. The Fund’s normal course
issuer bid program allows it to purchase up to approximately 10% of its units for cancellation if they trade below Net Asset Value per
unit. As a result, purchases under the issuer bid program are accretive to the Net Asset Value per unit at the time of purchase. During
the first six months of 2021, 68,500 units were purchased for cancellation at an average price of $8.06 per unit. Investors may also
redeem their units at Net Asset Value, less applicable costs, in accordance with the Fund’s redemption provisions. During the first six
months of 2021, no units were redeemed.
RELATED PARTY TRANSACTIONS
Related party transactions consist of services provided by the Administrator and the Investment Manager pursuant to administration and
investment management agreements. See the Administration and Investment Management Fees section below.
2Blue Ribbon Income Fund - Interim Report 2021
ADMINISTRATION AND INVESTMENT MANAGEMENT FEES
Pursuant to an administration agreement, the Administrator provides management and administrative services to the Fund, for which it
is paid an administration fee equal to 0.50% per annum of the Net Asset Value of the Fund, plus applicable taxes. The Administrator is
also reimbursed for all general and administrative expenses that relate to the operation of the Fund. For the six months ended June 30,
2021, these expenses amounted to $0.1 million (2020 – $0.1 million). The administration fee is used by the Administrator to cover
certain costs to administer the Fund and for profit. For the six months ended June 30, 2021, administration fees amounted to $0.3 million
(2020 - $0.3 million).
Bloom Investment Counsel, Inc., the Investment Manager of the Fund, receives an investment management fee equal to 0.50% per
annum of the Net Asset Value of the Fund, plus applicable taxes. For the six months ended June 30, 2021, investment management fees
amounted to $0.3 million (2020 – $0.3 million).
FINANCIAL HIGHLIGHTS
The following tables show selected key financial information about the Fund and are intended to help readers understand the Fund’s
financial performance for the fiscal periods indicated. This information is derived from the Fund’s unaudited interim and audited annual
financial statements which have been prepared in accordance with International Financial Reporting Standards. The information in the
following tables is presented in accordance with National Instrument (“NI”) 81‑106 and, as a result, does not act as a continuity of
opening and closing Net Assets per unit. The increase (decrease) in Net Assets from operations is based on average units outstanding
during the period, and all other numbers are based on actual units outstanding at the relevant point in time.
Net Assets per Unit1
December 31
June 30, 2021 2020 2019 2018 2017 2016
For the period/year ended $ $ $ $ $ $
Net Assets per unit, beginning of period/year2 7.71 8.74 7.67 9.84 10.19 8.42
Increase (decrease) from operations:3
Total revenue 0.15 0.30 0.37 0.38 0.41 0.44
Total expenses (0.06) (0.11) (0.15) (0.16) (0.17) (0.16)
Realized gains (losses) 0.06 - (0.96) 0.03 0.64 0.85
Unrealized gains (losses) 1.25 (0.73) 2.40 (1.77) (0.64) 1.24
Total increase (decrease) in Net Assets 1.40 (0.54) 1.66 (1.52) 0.24 2.37
from operations
Distributions to unitholders:2,4
From net investment income n/a 0.16 0.19 0.18 0.17 0.18
Return of capital n/a 0.35 0.41 0.42 0.43 0.48
Total distributions to unitholders 0.24 0.51 0.60 0.60 0.60 0.66
Net Assets per unit, end of period/year2 8.88 7.71 8.74 7.67 9.84 10.19
1 Financial information was prepared in accordance with International Financial Reporting Standards.
2 Net Assets per unit and distributions per unit are based on the actual number of units outstanding at the relevant time.
3 The increase (decrease) in Net Assets from operations per unit is based on the weighted average number of units outstanding over the fiscal period.
4 Allocations for tax purposes for the period ended June 30, 2021 are not available until year end.
3Blue Ribbon Income Fund - Interim Report 2021
Ratios and Supplemental Data (Based on Net Asset Value)
December 31
As at June 30, 2021 2020 2019 2018 2017 2016
Net Asset Value ($) (000s) 98,977 86,531 111,887 110,078 164,953 194,079
Number of units outstanding (in 000s) 11,149 11,217 12,806 14,352 16,771 19,045
Management expense ratio (“MER”)1 1.48% 1.44% 1.76% 1.70% 1.73% 1.70%
Trading expense ratio2 0.01% 0.06% 0.05% 0.05% 0.05% 0.07%
Portfolio turnover rate3 1.51% 12.08% 15.73% 10.36% 14.55% 15.94%
Net Asset Value per unit ($) 8.88 7.71 8.74 7.67 9.84 10.19
Closing market price – units ($) 8.71 7.48 8.30 7.39 9.66 9.82
1 MER is based on the requirements of NI 81‑106 and includes the total expenses (excluding commissions and other portfolio transaction costs) of the Fund for the
stated period, including interest expense and issuance costs, and is expressed as an annualized percentage of the average Net Asset Value of the period. Please see the
Expense Ratio section following this table for further discussion of the calculation.
2 The trading expense ratio represents total commissions expressed as an annualized percentage of daily average Net Asset Value of the Fund during the period.
3 The Fund’s portfolio turnover rate indicates how actively the Fund’s Investment Manager manages its portfolio investments. A portfolio turnover rate of 100% is
equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund’s portfolio turnover rate in a year, the
greater the trading costs payable by the Fund in the year and the greater the chance of an investor receiving taxable capital gains in the year. There is not necessarily
a relationship between a high turnover rate and the performance of the Fund. Portfolio turnover rate is calculated by dividing the lesser of the cost of purchases and
the proceeds of sales of portfolio securities for the period, excluding cash and short‑term investments maturing in less than one year, by the average market value of
such investments during the period.
Expense Ratio
The Fund’s MER was 1.48% for the period ended June 30, 2021, up slightly from 1.44% in 2020.
4Blue Ribbon Income Fund - Interim Report 2021
PAST PERFORMANCE
The following chart and table show the past performance of the Fund. Past performance does not necessarily indicate how the Fund will
perform in the future. The information shown is based on Net Asset Value per unit and assumes that cash distributions made by the
Fund and deemed distributions based on the intrinsic value of the rights/warrants at approximately the exercise date of the rights/warrants
in the periods shown were reinvested (at Net Asset Value per unit) in additional units of the Fund.
The bar chart shows the Fund’s return for the years ended December 31, 2011 through June 30, 2021. The chart shows, in percentage
terms, how an investment held on the first day of each fiscal period would have changed by the last day of the fiscal period.
Year‑by‑Year Returns
Returns (%)
1 Period from January 1, 2021 to June 30, 2021.
5Blue Ribbon Income Fund - Interim Report 2021
SUMMARY OF INVESTMENT PORTFOLIO
As at June 30, 2021
Total Net Asset Value $ 98,976,699
% of Net
Portfolio Composition Asset Value
Industrial 22.8
Consumer staples and discretionary 22.0
Financial 20.6
Pipes, power, utilities and infrastructure 17.9
Materials 5.5
Real estate 5.2
Oil and gas 3.6
Cash and short-term investments 1.5
Communication services 1.3
Other net liabilities (0.4)
Total Net Asset Value 100.0
% of Net
Top 25 Holdings Asset Value
Intertape Polymer Group Inc. 6.0
Transcontinental Inc. Class A 5.9
Ag Growth International Inc. 5.5
Superior Plus Corp. 5.4
Canadian Tire Corporation Limited 5.3
Park Lawn Corporation 5.1
Bank of Nova Scotia (The) 4.5
Keyera Corp. 4.4
Premium Brands Holdings Corp. 4.1
TFI International Inc. 4.1
Toronto-Dominion Bank (The) 3.7
Enbridge Inc. 3.7
Manulife Financial Corporation 3.6
Parkland Corporation 3.6
Goeasy Ltd. 3.5
Northland Power Inc. 3.5
Boralex Inc. 3.4
Sun Life Financial Inc. 3.2
Gibson Energy Inc. 2.9
Allied Properties Real Estate Investment Trust 2.8
6Blue Ribbon Income Fund - Interim Report 2021
SUMMARY OF INVESTMENT PORTFOLIO (cont’d)
% of Net
Top 25 Holdings (cont’d) Asset Value
Altus Group Limited 2.4
Chemtrade Logistics Income Fund 2.4
Fiera Capital Corporation. Class A 2.1
Noranda Income Fund 2.0
Lifeworks Inc. 1.8
Total 94.9
The investment portfolio may change due to ongoing portfolio transactions of the investment fund. Quarterly updates are available on the Fund's website at
www.bromptongroup.com within 60 days of each quarter end.
INVESTMENT MANAGER
Bloom Investment Counsel, Inc.
Bloom Investment Counsel, Inc. (“Bloom”) was established in 1985 and specializes in the management of segregated investment
portfolios for wealthy individuals, corporations, institutions, charitable foundations and trusts. In addition to its conventional investment
management business, Bloom currently manages specialty high‑yield equity portfolios comprised of dividend‑paying common equity
securities, income trusts, and real estate investment trusts. Bloom currently manages four TSX‑listed, closed‑end portfolios and one
open‑ended mutual fund.
INVESTMENT MANAGER'S REPORT
July 2, 2021
Canadian Economy
The Canadian economy started the year on a solid footing only to be derailed in April 2021 with further COVID-19 restrictions amidst
the third wave. Real GDP growth in Q1 2021 came in roughly 1% below expectations increasing at a 5.6% annual rate. The majority
of the surprise came from a drop in inventories. As expected, the biggest driver of GDP growth was the housing market as residential
construction continued to soar past all expectations resulting in this sector making up 10.3% of nominal GDP in the quarter, 3 percentage
points above pre-pandemic levels. Consumer spending was slightly stronger in the quarter, however, business investment, equipment
spending in particular, declined in the quarter.
Looking at the monthly figures, 2021 March’s GDP figures were slightly raised from their estimates to 1.1% as the economy commenced
its reopening following the second wave of the pandemic. However, this was short lived with a 0.3% decline in April as the third wave
started. April 2021 signified the first monthly setback in the Canadian economy since April 2020 which at the time broke an 11-month
streak of gains. May is expected to remain soft with an expectation for a stronger June resulting in Q2 GDP to be flat with the potential
for a small increase.
While the Q1 real GDP figure was only recently published and may seem somewhat irrelevant as we have now completed Q2, it is
important to look at the bigger picture which demonstrates the Canadian economy’s ability to rapidly recover even with only a partial
reopening. This bodes well for Q3 and we expect a similar bounce back over the summer months. GDP estimates for the year remain
in the 6% range, following a significant setback of 5.3% last year.
7Blue Ribbon Income Fund - Interim Report 2021
Not a surprise, the third wave of the pandemic negatively impacted the labour force with a substantial drop in employment in May
following an already significant drop in April. The 68,000 employment drop in May was worse than consensus and resulted in a slight
increase in the unemployment rate from 8.1% to 8.2%. Job losses in May were largely driven by workers in the private sector with
employment in the goods sector declining the most followed by manufacturing and construction. These losses were very slightly offset
by an increase in employment in the resources sector. On the bright side, almost 80% of job losses occurred for part-time work which
tends to be concentrated in sectors that are most impacted by sanitary measures such as restaurants and should bounce back in the
summer months as the pandemic measures are further relaxed.
Similar to other parts of the economy, Canadian retail sales were significantly impacted by the third wave of the pandemic with sales
plunging 5.7% and expectations for May retail sales to decline 3.2% from this already weak level. It should be noted that the April drop
in sales is the largest drop that has been recorded in the past 30 years with the exception of 2020. While retail sales were negatively
impacted across the country, Ontario, with the most stringent restrictions experienced the largest drop at 13.4% followed by Manitoba
at 8.0%. This is not surprising given these were the two hardest hit provinces by the third wave. Excluding these two provinces, the
rest of Canada saw a much more subdued sales drop of 0.7%. One factor that may be supporting retail sales is the lack of travel due to
border restrictions resulting in more domestic purchases. However, despite the big decline in April and the expectation for continued
weakness in May, retail sales volumes remain above pre-pandemic levels implying that a rebound in retail sales in the summer months
may not fully reverse the negative impacts experienced earlier this year.
Continuing the pullback witnessed earlier in the year, Canadian existing home sales fell 7.4% in seasonally-adjusted terms in May.
While this may have been a surprise to some, despite this decline, the current level of activity remains 33% stronger than the 10-year
average. Some reasons for this pullback can be attributed to an increase in the mortgage qualification rate and a general increase in
mortgage rates, albeit remaining at extremely low levels. There is also a sense of general fatigue in the market as buyers are getting
tired of the competitive landscape with multiple-offers and a lack of transparency of the true price for a home. Finally, the housing
market started to slow down slightly in April, coinciding with the timing of the Bank of Canada publicly acknowledging the strength in
the housing market. New listings also declined in May falling 6.4% which helped balance out the national sales-to-new listings ratio
which fell to 75.4% in the month indicating that despite these declines a tight sellers’ market remains.
Housing starts in Canada rose to 275,900 annualized units in May highlighting the rampant level of construction activity across the
country. Over the past six months, housing starts have averaged an annualized pace of 280,000 which is the highest level since the late
1970s. The Prairies and Atlantic Canada showed significant strength as did multi-unit starts.
Canada saw the release of the federal budget during the second quarter outlining $100 billion of stimulus into the economy with nearly
half of the new spending aimed at the current fiscal year. This includes some additional spending to support labour force participation,
including child care, which since the onset of the pandemic has been one of the primary reasons for a decline in women in the workforce.
However, as one would expect, the medium-term fiscal outlook is very much dependent on a strong recovery over the remainder of the
year without a significant increase in borrowing costs.
Canadian Investment Markets
The Bank of Canada (BoC) and the Federal Reserve continue to view inflation as transitory; however, there is too much uncertainty in
the economy at present to know where inflation is heading and to say whether we will continue to see a firmer level of inflation. We do
believe, however, that with its current accommodative monetary policy, the BoC will eventually become less comfortable should the
strength in inflation persist. Unlike our U.S. counterparts we believe that inflation in Canada will be easier to contain with interest rates,
however, the market at present appears to be pricing in a more aggressive response. With a strong loonie that is being contained by
import prices, less of an impact from used car prices on Canada’s CPI than on its U.S. counterpart and a delayed reopening of the
Canadian economy to some degree insulating affected sectors, Canada’s inflation rate is much lower than that of the U.S. Accordingly,
we do not believe that the BoC will lead the Fed in aggressively tempering inflation.
Canada is now ahead of the U.S. in terms of its vaccination rollout for first doses. This has provided a sense of hopefulness amongst
Canadians with the expectation for increased consumer demand as the country continues to reopen. While this optimism has been
somewhat priced into the market we believe there is still room for growth in the more “value” oriented sectors of the market. The
S&P/TSX Composite Total Return Index had a return of 8.5% in the second quarter. However, the S&P/TSX High Dividend Total
Return Index had a return of 9.8% in the quarter. For the first six months of the year the S&P/TSX Composite Total Return Index had
a return of 17.3% and the S&P/TSX High Dividend Total Return Index had a return of 25.6%.
8Blue Ribbon Income Fund - Interim Report 2021
During the second quarter the Canadian high dividend market experienced a significant boost due to oil prices hitting multiyear highs
after OPEC and its allies forecasted higher demand and boosted output. This move resulted in a further unwinding of significant cuts
made at the beginning of the pandemic. We continue to believe that this area of the market is extremely volatile during this period and
at present we do not hold any oil & gas stocks in client portfolios. Oil & gas stocks comprise close to 15% (roughly half of the Energy
weighting) of the S&P/TSX High Dividend Index and can be largely attributed to our underperformance relative to this index in the
quarter despite our outperformance of this index on a one year basis.
The rotation to more “value” oriented stocks weakened to some degree in the second quarter but nevertheless was still evident due to
the anticipation of a further loosening of pandemic restrictions. The three worst performing sectors in the second quarter were:
Healthcare (-11.6%), Industrials (+0.2%) and Utilities (+1.4%). For the six month period both Industrials (+6.8%) and Utilities (+4.9%)
were two of the worst performing sectors, however, the other poor performing sector during this period was Materials (-0.4%).
The best performing sectors in the quarter were: Information Technology (+23.0%), Energy (+13.9%) and Real Estate (+10.7%). The
technology sector received a boost in the second quarter given the prospect of 10-year bond yields declining due to thoughts surrounding
inflation being transitory which is positive for growth stocks. Energy stocks were positively impacted by the increase in oil and gas
prices and the Real Estate sector benefited from further hopes of reopening the economy. Year-to-date, the Energy (+37.0%), Financials
(+23.4%) and Health Care (+22.0%) sectors have outperformed the other sectors of the S&P/TSX Composite Index benefitting from
higher oil and gas prices, a steepening of the yield curve earlier in the year and positive U.S. legislation surrounding the Healthcare
sector.
The inflation fears prevalent in the prior quarter somewhat subsided during the last quarter allowing the Canadian bond market to register
positive returns though negative returns persisted for the year-to-date. Nevertheless returns for the last quarter substantially
underperformed those of the S&P/TSX Composite Total Return Index as long-term (30-year) Government of Canada Bonds returned
3.7%. Mid-term (10-year) bonds provided a 1.9% return for the same period, while short-term (5-year) bonds returned 0.3% for the
quarter. 90-Day Treasury Bills returned 0.0% for the last quarter.
The Canadian dollar ended the quarter 1.4% stronger than it began against its U.S. counterpart. In the last twelve months the Loonie
has appreciated 9.1% against the Greenback.
Blue Ribbon Income Fund Performance
For the first six months of the year Blue Ribbon Income Fund’s performance exceeded that of the S&P/TSX Composite Total Return
index but underperformed the S&P/TSX High Dividend Total Return Index mainly due to its lack of oil & gas holdings.
The best performing stocks in the Fund for the first half of the year were TFI International Inc., Keyera Corp. and Ag Growth
International Inc. Sectors that contributed the greatest positive performance to the Fund were Industrials, Financials and Consumer
Discretionary.
The most recent measure of Active Share for Blue Ribbon Income Fund was a very high 81.8%. Active Share is a measure of the
percentage of stock holdings in a manager’s portfolio that differs from the benchmark index. We believe this high Active Share gives
the Fund a greater ability to take advantage of upside opportunities or protect against downside risk very distinctly in comparison to the
great number of less active manager’s with performance that closely follows the benchmark.
Blue Ribbon Income Fund Portfolio Changes
With the majority of government funding initiatives concluding in June, there appears a sense of optimism amongst Canadians that
better times are on the horizon. This continues to fuel investor sentiment and to support the current market given an anticipation of
increased spending in the latter half of the year.
While the overall market remained strong during the first half of the year, we remain of the belief that many of the stocks in the Fund
continue to have room for growth. Where we believed that valuation metrics indicated that a position was ahead of its fundamental
value we took the opportunity to trim the name and likewise add to an existing position when we believed that the market was overly
punitive on a name. A new position was initiated in Rogers Communications Inc. Class B.
9Blue Ribbon Income Fund - Interim Report 2021
Rogers Communications Inc. is a technology and media company operating under three segments: Wireless, Cable & Business and
Media. The company’s wireless division services close to 11 million subscribers across Canada through three brands: Rogers, fido and
chatr MOBILE. Rogers is well positioned in its wireless division with its first to market 5G network and large roaming revenue stream
which we expect will see growth later this year and going into 2022 with increased business and personal travel. Covering approximately
4.5 million homes, Rogers provides high-speed Internet, television, voice communication and smart home monitoring services across
Ontario, New Brunswick and Newfoundland servicing consumers, businesses, government and wholesale resellers. The smallest of
these three divisions, Rogers media division focuses on live sports and local content. We believe several parts of Rogers’ business have
been negatively impacted by the pandemic, in particular its wireless and media divisions, and we expect to see increased momentum in
these areas in the latter part of this year and into next year with a slowdown in the pandemic.
Outlook
The extreme volatility that we witnessed earlier in the pandemic appears to have subsided for the time being. At present, the market
appears to be more focused on the possible impact from fiscal and monetary measures than the pandemic. Our strategy of taking a
longer term approach has benefitted the Funds in the past and we believe that it will result in continued strength going forward.
We continue to see “value” oriented stocks gain momentum despite a slight cooling off in the latter part of the quarter due to market
frenzy over inflation. This sector of the market remains to be somewhat undervalued and with increased focus on an economic recovery
we believe these stocks will gain momentum. As pandemic restrictions are eased across the country and Canadians have increased
mobility we expect the economy to positively react to these changes leading us to remain cautiously optimistic for the remainder of the
year.
FORWARD‑LOOKING STATEMENTS
Some of the statements contained herein including, without limitation, financial and business prospects and financial outlook may be
forward‑looking statements which reflect management’s expectations regarding future plans and intentions, growth, results of
operations, performance and business prospects and opportunities. Words such as “may,” “will,” “should,” “could,” “anticipate,”
“believe,” “expect,” “intend,” “plan,” “potential,” “continue” and similar expressions have been used to identify these
forward‑looking statements. These statements reflect management’s current beliefs and are based on information currently available to
management. Forward‑looking statements involve significant risks and uncertainties. A number of factors could cause actual results to
differ materially from the results discussed in the forward‑looking statements including, but not limited to, changes in general economic
and market conditions and other risk factors. Although the forward‑looking statements contained herein are based on what management
believes to be reasonable assumptions, we cannot assure that actual results will be consistent with these forward‑looking statements.
Investors should not place undue reliance on forward‑looking statements. These forward‑looking statements are made as of the date
hereof and we assume no obligation to update or revise them to reflect new events or circumstances, except as required by law.
10Blue Ribbon Income Fund - Interim Report 2021
NOTICE
The accompanying unaudited interim financial statements of Blue Ribbon Income Fund (the ‘‘Fund’’) for the period ended June 30,
2021 have been prepared by management and have not been reviewed by the external auditors of the Fund.
(Signed) “Mark A. Caranci” (Signed) “Ann P. Wong”
Mark A. Caranci Ann P. Wong
President Chief Financial Officer
Blue Ribbon Fund Management Ltd. Blue Ribbon Fund Management Ltd.
August 18, 2021
11Blue Ribbon Income Fund - Interim Report 2021
STATEMENTS OF FINANCIAL POSITION (Unaudited)
STATEMENTS OF FINANCIAL POSITION
As at June 30, 2021 December 31, 2020
Assets
Investments $ 97,881,623 $ 85,805,642
Cash 1,529,340 1,175,777
Income receivable 219,794 256,498
Total assets 99,630,757 87,237,917
Liabilities
Distributions payable to unitholders (note 6) 445,946 448,686
Accounts payable and accrued liabilities 208,112 257,784
Total liabilities (excluding Net Assets attributable to holders of redeemable units) 654,058 706,470
Net Assets attributable to holders of redeemable units $ 98,976,699 $ 86,531,447
Redeemable units outstanding (note 4) 11,148,640 11,217,140
Net Assets attributable to holders of redeemable units per unit $ 8.88 $ 7.71
The accompanying notes are an integral part of these financial statements. 12Blue Ribbon Income Fund - Interim Report 2021
STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
STATEMENTS OF COMPREHENSIVE INCOME
For the six months ended June 30 2021 2020
Income
Securities lending income (note 9) $ 34,430 $ 5,093
Net gain (loss) on foreign exchange on cash (17) -
Net gain (loss) on investments:
Interest income for distribution purposes 2,384 12,945
Dividend income 1,606,025 2,018,643
Net realized gain (loss) on sale of investments (note 8) 689,102 (2,631,308)
Net change in unrealized gain (loss) on investments 14,054,538 (22,223,218)
Total net gain (loss) on investments 16,352,049 (22,822,938)
Total income (loss), net 16,386,462 (22,817,845)
Expenses
Administration and investment management fees (note 7) 521,498 502,838
Audit fees 14,359 16,435
Trustee fees 5,486 3,781
Independent Review Committee fees (note 7) 10,760 10,791
Custodial fees 5,057 7,129
Legal fees 1,063 1,246
Unitholder reporting costs 10,008 8,124
Other administrative expenses 132,994 114,975
Interest and bank charges 4,681 4,709
Transaction costs 4,454 46,980
Total expenses 710,360 717,008
Increase (decrease) in Net Assets attributable to holders of redeemable units $ 15,676,102 $ (23,534,853)
Increase (decrease) in Net Assets attributable to holders of redeemable units per unit1 $ 1.40 $ (1.84)
1 Based on the weighted average number of redeemable units outstanding during the period (note 4).
The accompanying notes are an integral part of these financial statements. 13Blue Ribbon Income Fund - Interim Report 2021
STATEMENTS OF CASH FLOWS (Unaudited)
STATEMENTS OF CASH FLOWS
For the six months ended June 30 2021 2020
Cash flows from operating activities:
Increase (decrease) in Net Assets attributable to holders of redeemable units $ 15,676,102 $ (23,534,853)
Adjustments for:
Net realized (gain) loss on sale of investments (note 8) (689,102) 2,631,308
Net change in unrealized (gain) loss on investments (14,054,538) 22,223,218
Decrease (increase) in income receivable 36,704 190,346
Increase (decrease) in accounts payable and accrued liabilities (49,672) (220,096)
Purchase of investments (note 8) (12,206,302) (23,521,410)
Proceeds from sale of investments (note 8) 14,873,961 27,146,955
Cash provided by (used in) operating activities 3,587,153 4,915,468
Cash flows from financing activities:
Amounts paid for repurchase of redeemable units (note 4) (551,984) (616,212)
Distributions paid to holders of redeemable units (note 6) (2,681,606) (3,573,158)
Proceeds from reinvestment of distributions to holders of redeemable units (note 6) - 38,030
Cash provided by (used in) financing activities (3,233,590) (4,151,340)
Net increase (decrease) in cash 353,563 764,128
Cash, beginning of period 1,175,777 386,433
Cash, end of period $ 1,529,340 $ 1,150,561
Supplemental information:1
Interest paid ($) 6 9
Interest received ($) 3,565 9,347
Dividends received ($) 1,641,548 2,212,587
1 Included in cash flows from operating activities.
The accompanying notes are an integral part of these financial statements. 14Blue Ribbon Income Fund - Interim Report 2021
STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS (Unaudited)
STATEMENTS OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS
For the six months ended June 30 2021 2020
Net Assets attributable to holders of redeemable units, beginning of period $ 86,531,447 $ 111,886,555
Operations:
Increase (decrease) in Net Assets attributable to holders of redeemable units 15,676,102 (23,534,853)
Distributions to holders of redeemable units (note 6):
Distributions paid to holders of redeemable units (2,678,866) (3,442,361)
Redeemable unit transactions:
Repurchase of redeemable units (note 4) (551,984) (616,212)
Reinvestment of distributions to holders of redeemable units (note 6) - 38,030
Net increase (decrease) from redeemable unit transactions (551,984) (578,182)
Net increase (decrease) in Net Assets attributable to holders of redeemable units 12,445,252 (27,555,396)
Net Assets attributable to holders of redeemable units, end of period $ 98,976,699 $ 84,331,159
The accompanying notes are an integral part of these financial statements. 15Blue Ribbon Income Fund - Interim Report 2021
SCHEDULE OF INVESTMENT PORTFOLIO (Unaudited)
As at June 30, 2021
SCHEDULE OF INVESTMENT PORTFOLIO
Number of Cost Carrying Value % of
Units/Shares $ $ Portfolio
Communication services
Rogers Communications Inc. Class B 20,000 1,241,648 1,318,000
1,241,648 1,318,000 1.3
Consumer staples and discretionary
Canadian Tire Corporation Limited 26,500 2,489,100 5,198,240
Cineplex Inc. 105,900 3,253,346 1,577,910
Park Lawn Corporation 150,900 3,421,769 5,031,006
Premium Brands Holdings Corp. 32,200 1,750,262 4,054,946
Transcontinental Inc. Class A 250,200 3,748,300 5,824,656
14,662,777 21,686,758 22.1
Financial
Bank of Nova Scotia (The) 55,800 3,425,433 4,498,596
Fiera Capital Corporation. Class A 188,400 2,260,800 2,049,792
Goeasy Ltd. 22,100 1,398,479 3,505,723
Manulife Financial Corporation 146,200 2,782,916 3,567,280
Sun Life Financial Inc. 49,800 2,110,410 3,183,216
Toronto-Dominion Bank (The) 42,300 1,963,235 3,674,601
13,941,273 20,479,208 21.0
Industrials
Ag Growth International Inc. 141,600 6,309,323 5,454,432
Intertape Polymer Group Inc. 206,700 4,383,468 5,940,558
Lifeworks Inc. 54,700 1,723,520 1,828,074
Superior Plus Corp. 347,200 4,256,495 5,301,744
TFI International Inc. 35,600 544,833 4,028,852
17,217,639 22,553,660 23.1
Materials
Barrick Gold Corporation 41,500 1,391,537 1,064,060
Chemtrade Logistics Income Fund 349,900 3,636,146 2,344,330
Noranda Income Fund 1,828,800 8,395,548 2,011,680
13,423,231 5,420,070 5.6
Oil and gas
Parkland Corporation 89,000 3,218,085 3,565,340
3,218,085 3,565,340 3.6
16Blue Ribbon Income Fund - Interim Report 2021
SCHEDULE OF INVESTMENT PORTFOLIO (Unaudited) (cont’d)
As at June 30, 2021
Number of Cost Carrying Value % of
Units/Shares $ $ Portfolio
Pipes, power, utilities and infrastructure
Boralex Inc. 90,400 1,263,884 3,412,600
Enbridge Inc. 73,000 3,295,552 3,622,990
Gibson Energy Inc. 122,200 2,530,980 2,902,250
Keyera Corp. 130,000 1,819,233 4,330,300
Northland Power Inc. 81,300 1,254,669 3,438,177
10,164,318 17,706,317 18.1
Real estate
Allied Properties Real Estate Investment Trust 61,700 1,908,868 2,779,585
Altus Group Limited 41,300 996,901 2,372,685
2,905,769 5,152,270 5.2
Total Investments 76,774,740 97,881,623 100.0
17Blue Ribbon Income Fund - Interim Report 2021
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
June 30, 2021 and 2020
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Blue Ribbon Income Fund (the “Fund”) is a closed‑end investment trust created under the laws of the Province of Ontario on July 11,
1997, pursuant to an amended and restated declaration of trust. The address of the Fund’s registered office is Bay Wellington Tower,
Brookfield Place, Suite 2930, 181 Bay Street, Toronto, Ontario, M5J 2T3. Computershare Trust Company of Canada is the Trustee and
Blue Ribbon Fund Management Ltd. (the “Administrator”) is responsible for managing the affairs of the Fund. Bloom Investment
Counsel, Inc. manages the Fund’s portfolio. CIBC Mellon Trust Company is the custodian of the Fund’s assets and prepares the weekly
valuations of the Fund. The Fund is listed on the Toronto Stock Exchange under the symbol RBN.UN and commenced operations on
September 17, 1997. The Fund aims to provide a high level of monthly distributions and the opportunity to participate in capital gains
by actively managing a portfolio of publicly listed or traded securities, including income trusts, royalty trusts, real estate investment
trusts, common shares, preferred securities and debt instruments.
These financial statements were approved on behalf of Blue Ribbon Income Fund by the Board of Directors of Blue Ribbon Fund
Management Ltd., the Administrator, on August 5, 2021.
2. BASIS OF PRESENTATION
These interim financial statements have been prepared in compliance with International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including
International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These financial statements should be
read in conjunction with the annual financial statements for the year ended December 31, 2020, which have been prepared in accordance
with IFRS. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities at fair value through profit or loss.
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the financial statements are set out below. These policies have been
consistently applied.
a) Financial Instruments
The Fund’s portfolio of investments is managed, and performance is evaluated, on a fair value basis. The Fund is primarily focused on
fair value information and uses that information to assess the assets’ performance and to make decisions. The Fund has not taken the
option to irrevocably designate any equity securities as fair value through other comprehensive income (“FVOCI”). The contractual
cash flows of the Fund’s debt securities that are solely principal and interest are neither held for the purpose of collecting contractual
cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is only incidental to
achieving the Fund’s business model’s objective. Consequently, all investments are measured at fair value through profit or loss
(“FVTPL”). Derivative assets and liabilities are also measured at FVTPL.
The Fund’s obligation for Net Assets attributable to holders of redeemable units is measured assuming the redemption of units at Net
Asset Value on the valuation date. All other financial assets and liabilities are measured at amortized cost. Under this method, financial
assets and liabilities reflect the amounts required to be received or paid, discounted when appropriate, at the financial instrument’s
effective interest rate. The Fund’s accounting policies for measuring the fair value of its investments are the same as those used in
measuring its published Net Asset Value. The carrying values of the Fund’s financial assets and liabilities that are not carried at FVTPL
approximate their fair value amounts due to their short‑term nature.
b) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the Statements of Financial Position when there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or to realize the asset and settle the
liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or bankruptcy of the Fund or the counterparty.
18Blue Ribbon Income Fund - Interim Report 2021
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2021 and 2020
c) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value of financial assets and liabilities traded in active markets (such as publicly traded
marketable securities) is based on quoted market prices at the close of trading on the measurement date. The Fund uses the last traded
market price for both financial assets and financial liabilities where the last traded price falls within that day’s bid‑ask spread. In
circumstances where the last traded price is not within the bid‑ask spread, the Administrator determines the point within the bid‑ask
spread that is most representative of fair value based on the specific facts and circumstances. The Fund’s policy is to recognize transfers
into and out of the fair value hierarchy levels as of the date of the event or change in circumstances giving rise to the transfer.
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The
Fund uses a variety of methods and makes assumptions that are based on market conditions existing at each measurement date. Valuation
techniques include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same
and option pricing models. Refer to note 12 for further information about the Fund’s fair value measurements.
d) Cash
Cash is comprised of demand deposits with financial institutions.
e) Transaction Costs
Transactions costs directly attributable to the acquisition or disposal of an investment are expensed in the period incurred and disclosed
as “Transaction costs” in the Statements of Comprehensive Income.
f) Investment Transactions and Income and Expense Recognition
Investment transactions are accounted for on the trade date. The interest for distribution purposes shown on the Statements of
Comprehensive Income represents the coupon interest received by the Fund accounted for on an accrual basis. The Fund does not
amortize premiums paid or discounts received on the purchase of fixed income securities.
Net realized gain (loss) on sale of investments and net change in unrealized gain (loss) on investments are determined on an average
cost basis. Average cost does not include amortization of premiums or discounts on fixed income securities. Dividend income and
dividend expense on securities sold short are recognized on the ex‑dividend date and interest income for distribution purposes is accrued
as earned.
g) Income Taxes
The Fund qualifies as a mutual fund trust under the Income Tax Act (Canada). The Fund distributes to its unitholders sufficient net
income and net capital gains so that it is not subject to income taxes and, in substance, is exempt from Canadian taxes on these sources
of income. Accordingly, the Fund does not record any Canadian income taxes. Since the Fund does not record income taxes, the tax
benefit of capital and non‑capital losses has not been reflected in the Statements of Financial Position as a deferred income tax asset.
The Fund may incur withholding taxes imposed by certain countries on investment income and capital gains. Such income and gains
are recorded on a gross basis and the related withholding taxes are shown as a separate expense in the Statements of Comprehensive
Income.
h) Foreign Exchange
The financial statements are presented in Canadian dollars, which is the functional currency of the Fund. The fair values of investments
and other assets and liabilities that are denominated in foreign currencies are translated into Canadian dollars at the 4:00 p.m. (Toronto
time) rate of exchange on each valuation date. Investments, income and expenses denominated in foreign currencies are translated at the
rate of exchange prevailing on the date of such transactions.
i) Securities Lending
The Fund may enter into securities lending transactions. These transactions involve the temporary exchange of securities for collateral
with a commitment to deliver the same securities on a future date. Income is earned from these transactions in the form of fees paid by
the counterparty and, in certain circumstances, interest paid on securities held as collateral. Income earned from these transactions is
recognized on an accrual basis and included in the Statements of Comprehensive Income.
19Blue Ribbon Income Fund - Interim Report 2021
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2021 and 2020
j) Redeemable Units
As required under International Accounting Standard (“IAS”) 32, Financial Instruments: Presentation, units of an entity which include
a contractual obligation for the issuer to repurchase or redeem them for cash or another financial asset must be classified as financial
liabilities. The Fund’s units have multiple redemption features and therefore are considered to have more than one contractual obligation
to its unitholders. As a result, the Fund’s units do not meet the criteria in IAS 32 for classification as equity and have been classified as
financial liabilities.
4. REDEEMABLE UNITS OF THE FUND
Authorized
The Fund is authorized to issue an unlimited number of transferable, redeemable units of beneficial interest, each of which represents
an equal, undivided interest in the Net Asset Value of the Fund. Each unit entitles the holder to one vote and to participate equally with
respect to any and all distributions made by the Fund. Units may be redeemed at the option of unitholders by tendering units of the Fund
by the last business day of October for redemption on the second last business day of November (“Redemption Valuation Date”).
Redemption of tendered units is settled based on the Net Asset Value per unit on the Redemption Valuation Date, less associated costs
of the redemption, including brokerage costs. Units tendered for redemption are redeemed effective the Redemption Valuation Date of
each year and are settled on or before the tenth business day in December, subject to the Administrator’s right to suspend redemptions
in certain circumstances. For purposes of calculating the Net Asset Value per unit, the value of the securities that make up the portfolio
is equal to the weighted average trading price of such securities over the last three business days of November.
The Fund received approval from the Toronto Stock Exchange for a normal course issuer bid program for the period from December 5,
2019 to December 4, 2020. Pursuant to this issuer bid, the Fund was permitted to purchase up to 1,400,900 units for cancellation. The
Fund renewed the issuer bid program for the period from December 5, 2020 to December 4, 2021, which allows the Fund to purchase
up to 1,258,500 units for cancellation. The Fund may only repurchase units when the Net Asset Value per unit exceeds the trading price
per unit.
Issued
2021 2020
Number Number
of Units of Units
Redeemable units, outstanding at January 1 11,217,140 12,806,066
Redeemable units issued under the distribution reinvestment plan - 5,076
Repurchase of redeemable units (68,500) (73,500)
Redeemable units, outstanding at June 30 11,148,640 12,737,642
Weighted average number of redeemable units outstanding 11,171,725 12,761,629
During the period ended June 30, 2021, 68,500 (six-month period ended June 30, 2020 – 73,500) units were repurchased for cancellation
pursuant to the normal course issuer bid program at an average cost of $8.06 (six-month period ended June 30, 2020 – $8.38) per unit.
On June 30, 2021, the Fund’s market price was represented by the average of the last bid/ask price of $8.71 (December 31, 2020 – $7.48
closing price).
5. CAPITAL MANAGEMENT
The Fund’s objective in managing its capital is to seek long‑term capital appreciation by investing in an actively managed portfolio
consisting primarily of North American exchange‑listed equities. The Fund’s capital is comprised of Net Assets attributable to holders
of redeemable units and securities sold short. In order to manage its capital structure, the Fund may return capital to unitholders, increase
or decrease its level of leverage or purchase units for cancellation.
20Blue Ribbon Income Fund - Interim Report 2021
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2021 and 2020
6. DISTRIBUTIONS TO UNITHOLDERS
Distributions, as declared by the Administrator, are made on a monthly basis to unitholders of record on the last business day of each
month. The distributions are payable by the tenth business day of the following month. For the period ended June 30, 2021, the Fund
declared total distributions of $0.24 (six-month period ended June 30, 2020 – $0.27) per unit, which amounted to $2,678,866 (six-month
period ended June 30, 2020 – $3,442,361). Under the Fund’s distribution reinvestment plan, unitholders may elect to reinvest monthly
distributions by purchasing additional units of the Fund, which may be issued from treasury or purchased in the open market. For the
period ended June 30, 2021, no units were issued by the Fund pursuant to the distribution reinvestment plan (six-month period ended
June 30, 2020 – 5,076).
On July 23, 2021, the Fund declared $0.04 per unit monthly distributions for record dates July 30, 2021, August 31, 2021 and September
30, 2021, respectively.
7. RELATED PARTY TRANSACTIONS
a) Administration and Investment Management Fees
Pursuant to a management agreement, the Administrator provides management and administrative services to the Fund, for which it is
paid an administration fee equal to 0.50% per annum of the Net Asset Value of the Fund, plus applicable taxes. For the period ended
June 30, 2021, the management fees amounted to $260,749 (six-month period ended June 30, 2020 ‑ $251,419), with $45,153 payable
to the Administrator as of June 30, 2021 (December 31, 2020 ‑ $39,398).
The Administrator is also reimbursed for all of its general and administrative expenses that relate to the operations of the Fund. These
expenses amounted to $74,275 and $70,569 for the periods ended June 30, 2021 and 2020, respectively.
Bloom Investment Counsel, Inc. is the Investment Manager of the Fund and is paid an investment management fee equal to 0.50% per
annum of the Net Asset Value of the Fund, plus applicable taxes. For the period ended June 30, 2021, the investment management fees
amounted to $260,749 (six-month period ended June 30, 2020 ‑ $251,419), with $45,153 payable to the Investment Manager as of June
30, 2021 (December 31, 2020 ‑ $39,398).
b) Independent Review Committee Fees
The total remuneration paid to members of the Independent Review Committee during the period ended June 30, 2021 was $10,760
(six-month period ended June 30, 2020 ‑ $10,791) and consisted only of fees. As at June 30, 2021, there was $2,317 Independent Review
Committee fees prepaid (December 31, 2020 – nil).
8. INVESTMENT TRANSACTIONS
2021 2020
For the periods ended June 30 $ $
Proceeds from sale of investments 14,873,961 27,146,955
Less cost of investments sold:
Investments at cost, beginning of period 78,753,297 95,861,304
Investments purchased during the period 12,206,302 23,521,410
Investments at cost, end of period (76,774,740) (89,604,451)
Cost of investments sold during the period 14,184,859 29,778,263
Net realized gain (loss) on sale of investments 689,102 (2,631,308)
9. SECURITIES LENDING
The Fund has entered into a securities lending program with its custodian, CIBC Mellon Trust Company (and certain of its affiliates).
The aggregate market value of all securities loaned by the Fund cannot exceed 50% of the assets of the Fund. The Fund receives collateral
of at least 102% of the value of the securities on loan. Collateral will generally be comprised of cash and obligations of, or guaranteed
by, the Government of Canada or a province thereof, or the United States Government or its agencies.
21Blue Ribbon Income Fund - Interim Report 2021
NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (cont’d)
June 30, 2021 and 2020
The market values of the securities on loan and the related collateral at June 30, 2021 were $12.9 million (December 31, 2020 – $10.3
million) and $13.6 million (December 31, 2020 – $10.8 million), respectively. Securities lending income reported in the Statements of
Comprehensive Income is net of a securities lending charge which the Fund’s custodian, CIBC Mellon Trust Company (and certain of
its affiliates), is entitled to receive.
For the periods ended June 30, securities lending income was as follows:
2021 2020
$ $
Gross securities lending income 60,461 7,274
Securities lending charges (18,137) (2,181)
Net securities lending income 42,324 5,093
Withholding taxes on securities lending income (7,894) -
Net securities lending income received by the Fund 34,430 5,093
During the period ended June 30, 2021, securities lending charges represented 30% (six-month period ended June 30, 2020 – 30%) of
the gross securities lending income.
10. LOAN PAYABLE
Effective February 17, 2015, pursuant to an agreement with a Canadian chartered bank, the Fund has a 364‑day renewable revolving
credit facility. The revolving credit facility provides funding for working capital and investment purposes. It provides for maximum
borrowings of $5.0 million at either the prime rate of interest or the bankers’ acceptance rate plus a fixed percentage. There were no
borrowings under this facility at June 30, 2021. The credit facility is secured by a first‑priority security interest over all of the Fund’s
assets. There were no amounts drawn against this facility in the periods ended June 30, 2021 and 2020.
11. FINANCIAL RISK MANAGEMENT
The Fund’s investment activities expose it to a variety of financial risks. The Schedule of Investment Portfolio presents the securities
held by the Fund as at June 30, 2021, and groups the securities by market segment. The following summary presents the market segments
held by the Fund as at December 31, 2020. Significant risks that are relevant to the Fund are discussed below.
As at December 31, 2020
Investment Sector % of Portfolio
Consumer staples and discretionary 21.3
Financial 20.0
Industrial 21.1
Materials 5.6
Oil and gas 2.5
Pipes, power, utilities, and infrastructure 19.1
Real estate 5.1
Short-term investments 5.3
Total 100.0
The Administrator attempts to minimize the potential adverse effects of these risks on the Fund’s performance by employing a
professional, experienced investment manager who diversifies the investment portfolio within the constraints of the investment
objectives. To assist in managing risks, the Administrator also maintains a governance structure that oversees the Fund’s investment
activities and monitors compliance with the Fund’s stated investment strategy and restrictions, internal guidelines, and securities
regulations.
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