Healthcare Special Opportunities Fund : Financial Statements

Healthcare Special Opportunities Fund

Financial statements December 31, 2021

Independent auditor's report

To the Unitholders of

Healthcare Special Opportunities Fund

Opinion

We have audited the financial statements of the Healthcare Special Opportunities Fund [the "Fund"], which comprise the statements of financial position as at December 31, 2021 and 2020, and the statements of comprehensive income, statements of changes in net assets attributable to holders of redeemable units and statements of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ["IFRSs"].

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

Management is responsible for the other information. The other information comprises the Management Report of Fund Performance. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained the Management Report of Fund Performance prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Fund's financial reporting process.

-2-

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control.

• • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• • Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is David Tedesco.

Toronto, Canada

March 23, 2022

Statement of financial position

As at December 31

2021	2020
$	$
Assets
Current assets
Financial assets at fair value through profit or loss [note 3]	32,875,554	35,415,343
Cash	3,332,923	544,832
Accrued dividends	32,891	35,429
Accrued interest	22,492	25,707
Total assets	36,263,860	36,021,311
Liabilities
Current liabilities
Accrued performance fees	-	22,200
Accrued expenses	35,663	44,039
Management fees payable	38,094	39,382
Total liabilities [excluding net assets attributable to holders
of redeemable units]	73,757	105,621
Net assets attributable to holders of redeemable units [note 4]	36,190,103	35,915,690
Net assets attributable to holders of redeemable units per class
Class A	36,179,354	35,816,353
Class U	10,749	99,337
Net assets attributable to holders of redeemable units per class
per unit [note 4]
Class A	13.81	13.61
Class U	17.91	17.74
See accompanying notes

Approved on behalf of LDIC Inc., as manager of the Healthcare Special Opportunities Fund.

/s/ Michael B. Decter Michael B. Decter, Director

/s/ Ron Bailey

Ron Bailey, Director

Statements of comprehensive income

Years ended December 31

2021	2020
$	$
Dividend income	397,190	391,784
Interest for distribution purposes	19,491	20,473
Foreign exchange gain (loss)	44,467	200,416
Other changes in fair value on financial assets and financial liabilities
at fair value through profit or loss
Net realized gain (loss) on sale of investments	284,418	5,674,594
Change in unrealized appreciation (depreciation) in value of investments	1,252,358	(3,801,594)
Change in unrealized appreciation (depreciation) in value of foreign
exchange from currency	12,777	7,701
Net gain (loss) on financial instruments	2,010,701	2,493,374
Expenses [note 5]
Management fees	498,720	480,373
Transaction costs [note 7]	72,587	89,878
Securityholder reporting costs	46,195	31,470
Valuation fees	36,314	31,960
Other expenses	25,072	25,032
Audit fees	18,697	20,561
Legal fees	17,650	15,745
Filing fees	12,701	13,304
Custodian fees	8,283	8,340
Independent review committee fees	3,312	3,336
Performance fees (recoveries)	(18,256)	(104,071)
Total expenses	721,275	615,928
Increase in net assets attributable to holders of redeemable
units before tax	1,289,426	1,877,446
Withholding taxes [note 6]	(39,982)	(44,167)
Increase (decrease) in net assets attributable to holders of redeemable
units [excluding distributions]	1,249,444	1,833,279
Increase (decrease) in net assets attributable to holders of redeemable
units per class from operations [excluding distributions]
Class A	1,250,741	1,838,816
Class U	(1,297)	(5,537)
Average number of units outstanding for the year per class
Class A	2,629,798	2,674,535
Class U	1,614	10,586
Increase (decrease) in net assets attributable to holders of redeemable
units per unit from operations [excluding distributions]
Class A	0.48	0.69
Class U	(0.80)	(0.52)
See accompanying notes

Net gain (loss) on financial instruments