Notes to Financial Statements December 31, 2010 and 2009 Core Canadian Dividend Trust [cdd.un] For unitholders whose units are redeemed on any other Valuation Date, the redemption price per unit will be equal to the lesser of: Option premiums received are reflected as deferred credits in investments so long as the options are outstanding. Any difference resulting from revaluation is included in the change in unrealized appreciation/depreciation of investments. The premiums received on written put options that are exercised are included in the cost of the security purchased. Dividend income is recorded on the ex-dividend date. Interest income is recorded daily as it is earned. 4. Net Asset Value The net asset value of the Fund is calculated using the fair value of investments at the close or last trade price. The net assets per unit is calculated using the fair value of investments at the closing bid price. The net assets per unit for financial reporting purposes and net asset value per unit for pricing purposes will not be the same due to the use of different valuation techniques. The difference between the net asset value per unit for pricing purposes and the net assets per unit reflected in the financial statements is as follows: The Fund is authorized to issue an unlimited number of transferable, redeemable trust units of one class, each of which represents an equal, undivided interest in the net assets of the Fund. All units have equal voting rights and privileges. Each whole unit is entitled to one vote at all meetings of unitholders and is entitled to participate equally with respect to any and all distributions made by the Fund including distributions of net income and net realized capital gains, and distributions upon the termination of the Fund. Any unpaid distribution payable on or before the applicable Valuation Date in respect of units tendered for redemption on such Valuation Date will also be paid on the applicable Redemption Payment Date. 5. Unitholders’ Equity In June 2010, the Toronto Stock Exchange (“TSX”) accepted a normal course issuer bid filed by the Fund. Under the terms of the normal course issuer bid, the Fund proposes to purchase, if considered advisable, up to a maximum of 235,205 or 10 percent of its public float as determined in accordance with the rules of the TSX. The Fund may not purchase more than 47,041 of its units (representing approximately 2 percent of the Fund’s issued and outstanding units as of May 31, 2010) in any 30-day period under the bid. The purchases would be made in the open market through facilities of the TSX. The normal course issuer bid will remain in effect until the earlier of June 9, 2011, the termination of the bid by the Fund or when the Fund has purchased the maximum number of units permitted under the bid. As at December 31, 2010, nil units have been purchased by the Fund. Unit transactions during the year are as follows: Units may be surrendered at any time for redemption to Computershare Investor Services Inc., the Fund’s registrar and transfer agent, but will be redeemed only on the monthly Valuation Date (as defined below). units surrendered for redemption by a unitholder at least 20 business days prior to the end of the year (the ‘‘December Valuation Date’’) will be redeemed on such December Valuation Date and the unitholder will receive payment on or before the fifteenth day following such December Valuation Date (the ‘‘Redemption Payment Date’’). Units surrendered for redemption by a unitholder at least 10 business days prior to the last day of any other month (a ‘‘Valuation Date’’) will be redeemed on such Valuation Date and the unitholder will receive payment on or before the fifteenth day following such Valuation Date. Unitholders whose units are redeemed on the December Valuation Date in each year will be entitled to receive a redemption price per unit (the ‘‘Unit Redemption Price’’) equal to the NAV per unit determined as of such Valuation Date. The Fund issued 2,949,146 warrants to unitholders of record outstanding at the close of business on November 19, 2009 (the “Offering”) at a cost of $156,065. Unitholders received warrants on a Warrants 15 Annual Report 2010 2010 2009 Units outstanding, beginning of year 2,335,451 2,949,146 Units redeemed (521,350) (613,695) Units issued upon exercise of warrants 17,193 – Units outstanding, end of year 1,831,294 2,335,451 2010 2009 Net Asset Value per unit (for pricing purposes) $7.6252 $7.4028 Difference (0.0116) (0.0160) Net Assets per unit (for financial statement purposes) $7.6136 $7.3868 b) 100 percent of the Closing Market Price of the units on the applicable Valuation Date, minus an amount equal to the aggregate of all brokerage fees, commissions and other costs incurred by the Fund in connection with such payment, including, but not limited to, costs incurred in liquidating securities held in the Fund’s portfolio. For such purposes, the ‘‘Closing Market Price’’ means the closing price of the units on the principal stock exchange on which the units are listed (or, if the units are not listed on any stock exchange, on the principal market on which the units are quoted for trading) or, if there was no trade on the relevant date, the average of the last bid and the last asking prices of the units on the principal stock exchange on which the units are listed (or, if the units are not listed on any stock exchange, on the principal market on which the units are quoted for trading). a) 95 percent of the Market Price. For such purposes ‘‘Market Price’’ is the weighted average trading price of the units on the principal stock exchange on which the units are listed (or, if the units are not listed on any stock exchange, on the principal market on which the units are quoted for trading) for the ten trading days immediately preceding the applicable Valuation Date, and