2001 Annual Report. BPI Global Equity Fund Annual Report

Transcription

1 2001 Annual Report BPI Global Equity Fund 2001 Annual Report

2 A MESSAGE FROM THE PRESIDENT The year 2001 was one of the most challenging for investors in recent memory. A prolonged economic downturn and the tragic events of September 11 affected financial markets around the world. Despite this difficult environment, we had a number of successes, including the outstanding results posted by the Harbour and Signature Fund groups. This excellence was recognized at the Canadian Mutual Fund Awards, where Gerald Coleman, lead portfolio manager of the Harbour Funds, was named Fund Manager of the Year. Mr. Coleman's CI Harbour Segregated Fund was also selected Best Segregated Canadian Equity Fund. As well, Signature Select Canadian Fund was named Best Canadian Equity Fund and Signature Dividend Fund was named Best Dividend Fund. Both are managed by Eric Bushell of our Signature Group and, not surprisingly, he was also a finalist for Fund Manager of the Year. While these honours are very gratifying, we also recognize that some of our largest and most popular funds struggled in 2001 as their growth-oriented management styles fell out of favour. However, we built our portfolio management teams from the best fund managers available based on their long-term records, their consistent investment discipline, and their strategic focus, and we remain confident in their ability to produce outstanding long-term performance. As part of this commitment, we have improved our website at with a more focused homepage and easier navigation. Up-to-date product information is now easier to find, as are fund manager's comments and investor resources such as Investment Basics and our Tax Centre. Also, you can now register to receive notification of your trade confirmations, annual statements, and much more through our CI e-service Centre. As well, My Account online account access has been expanded and now gives you instant access to your current account status, including daily balances and transaction history. These services join our CI Teleservice that provides automated account information by telephone at to give you industry-leading access to CI. Please feel free to contact our Client Services Team at if you have any questions about your account. As we start a new year, our promise to you has not changed. We pledge to provide innovating thinking, a broad selection of investments, and outstanding service. Thank you very much for investing with us and we will continue to do our best to help you reach your long-term financial goals. Successful investors have a long-term view and so do successful fund companies. With this in mind, we moved forward in 2001 with initiatives to continue to provide you with the best fund management and fund services for the future. Foremost is our commitment to open communication and providing you with comprehensive information. Peter W. Anderson President CI Mutual Funds Inc. pwa@cifunds.com February 1, 2002

3 A MESSAGE FROM BPI GLOBAL ASSET MANAGEMENT LLP In 2001, global equity markets posted their worst performance in over a decade, as the U.S. and global economies fell into recession and the technology and telecommunications sectors continued their collapse. Most importantly, the September 11 terrorist attacks on the United States had a devastating economic impact in addition to the shocking loss of life. However, as the year drew to a close, it was widely predicted that the U.S. economy will recover in In the last weeks of 2001, we saw an increasing number of data points that lend credence to that view. These developments include more stable, if not improving, business fundamentals for a number of companies, and a report in late December that U.S. consumer confidence surged during the month. Other reports indicated that sales of new and existing homes remained strong and the pace of layoffs had slowed. These details support the broader reasons to be more optimistic about the markets in A huge amount of stimulus has been put into the global economy through massive interest rate cuts, increased government spending, tax cuts and lower energy prices. Valuations for stocks in many sectors are now much more reasonable. In the fourth quarter, we began a gradual shift of the portfolio into more economically sensitive companies in sectors such as consumer discretionary and technology, while reducing holdings in more defensive sectors such as health care and consumer staples. Economically sensitive companies are those that benefit the most from economic growth; however, a recession is the time to purchase these companies at reduced prices. This change in emphasis in our portfolios has been and continues to be gradual, given the continued uncertainty about the timing and strength of a recovery. Under our investment approach, we seek highquality globally competitive companies trading at attractive valuations relative to their industry peers. Such companies are likely to come through the recession in an even stronger competitive position. U.S.-based Staples is a good example of the attributes we seek. While one might think a recession is not a good time to buy an office supplies retailer, we point out that the industry in the United States has consolidated into two main players that, as a result, now possess some ability to increase prices. In addition, the company has reduced costs in part by slowing its construction of new stores, leading to higher returns on capital. It is a company that is not only well positioned to benefit from an improving economy, but is already displaying improving business fundamentals. In technology, we have been careful to avoid the more expensive stocks in favour of names such as EDS and Taiwan Semiconductor. These holding are benefiting from the continuing strong trend to outsourcing in tech, in both manufacturing and services. In our global portfolio, we continue to hold an overweight position in U.S. companies, while holding only a small position in Japan. We now hold some companies located in emerging markets, which offer a few globally competitive firm trading at very appealing prices. The BPI Opportunities Funds were about 20-40% invested at the end of December, reflecting our view that the outlook is improving but that a fully invested stance is not yet justified. We continue to research new ideas and are increasingly confident in putting the funds capital to work. BPI GLOBAL ASSET MANAGEMENT LLP Dan Jaworski Paul Holland Jon Sorensen February 1, 2002

4 Lead Manager: Daniel Jaworski, CFA Adviser: BPI Global Asset Management LLP Inception: December 1985 RSP/RIF Eligible: 30% (Also available as 100% RSP) Distribution: Paid annually Fund Code: CIG Front End DSC Class A Cdn 551 US 351 Cdn 751 US 451 Class F Cdn 120 US 520 Class I Cdn 914 Management Expense Ratio: Class A 2.54% Class F 1.47% Class I 0.04% Management Style: Sector analysis and bottom-up approach focusing on highquality, large-cap companies that are global leaders in their industries. Fund Snapshot Fund Assets: $1.45 billion NAV per Unit: Class A Cdn $23.53 US $14.78 Class F Cdn $6.89 US $4.33 Current Value of $10,000 Investment in Class A units $80,000 $60,000 $40,000 $40,291 Class I Cdn $11.39 N/A $20,000 Performance: $10,000 Class A Class F Class I Dec. '85'88 '91 '94 '97 '00 Dec. '01 1 year -21.7% -21.0% N/A 3 year -1.1% N/A N/A 5 year +8.5% N/A N/A 10 year +10.6% N/A N/A Market Exposure Since Inception +9.1% -22.3% N/A Developed Europe 30.0% Top 10 Equity Holdings: Citigroup Inc. 3.0% General Electric Co. 2.7% Microsoft Corp. 2.5% Pfizer Inc. 2.2% Philip Morris Companies Inc. 2.2% International Business Machines Corp. 2.0% Bank of America Corp. 1.8% Exxon Mobil Corp. 1.7% Alcoa Inc. 1.7% Vodafone Group PLC 1.6% Country Allocation Sector Allocation U.S.A. 58.5% Japan 5.3% Other* 3.6% Asia Ex-Japan 2.3% Cash & Equivalents 0.3% *Latin America 1.7%, Bermuda 1.2%, Canada 0.4%, Israel 0.3% Finance 23.4% Consumer Products & Services 30.8% Industrial Products 18.9% Communications & Media 13.7% Other* 7.7% Oil & Gas 5.2% Cash & Equivalents 0.3% * Utilities 2.8 %, Real Estate & Construction 1.2%, Pipelines 1.2%, Merchandising 1.2%,Transportation 1.0%, Mines & Metals 0.3%

5 Statements of Financial Highlights (for the years ended December 31) Class A Class F Class I 2001 $ 2000 $ 1999 $ 1998 $ 1997 $ 2001 $ 2000 $ (i) 2001 $ (ii) Net asset value per unit, beginning of year Distribution per unit: From net income From net realized gain (0.04) (0.60) (2.73) (3.27) (0.17) (0.60) (2.77) (3.27) (0.17) Net income (loss) per unit Net realized and unrealized appreciation (depreciation) of investments per unit (0.16) (0.50) (0.47) (0.29) (0.29) (0.05) (0.04) (6.54) (4.29) (1.90) (1.07) 1.06 (6.70) (4.79) (1.95) (1.11) 1.06 Surplus (deficiency) of capital transactions over original cost per unit 0.16 (0.07) (1.41) (0.05) Net asset value per unit, end of year Ratios & Supplemental Data Total return (%) (a) Average net assets ($000 s) (b) Management expense information (c) Management and operating expenses (%) Goods and services tax expenses (%) Total management expense ratio (%) Portfolio turnover rate (d) ,221,144 1,781, , , , , ,948 98, (a) (b) (c) (d) Total return is the historical rate of return of an investment for the year, assuming reinvestment of all distributions at net asset value. Average net assets are calculated based on the daily net assets outstanding. Management expense information is calculated based on total amount of respective expenses and expressed as an annualized percentage of average net assets during the year. Portfolio turnover rate equals the lesser of purchases or sales divided by the average value of the portfolio securities of the fund, excluding short-term securities. (i) Class F units were offered to investors commencing on July 17, amounts are for the period from inception to December 31, (ii) Class I units were offered to investors commencing on July 31, amounts are for the period from inception to December 31, The accompanying notes are an integral part of these financial statements.

6 Investment Portfolio (as at December 31, 2001) No. of Shares/ Average Market Face Amount Cost ($) Value ($) U.S.A. (58.5%) 47,700 Abbott Laboratories 3,719,089 4,233,571 89,600 AFLAC Inc. 3,798,197 3,503, ,000 Alcoa Inc. 23,405,621 24,619,114 75,500 American Express Co. 5,040,061 4,289, ,400 American Home Products Corp. 16,266,794 16,938, ,000 American International Group Inc. 16,062,384 15,674,213 35,900 American Standard Companies Inc. 3,206,276 3,899, ,900 Amgen Inc. 22,309,582 21,106, ,400 AMR Corp. 12,104,447 12,013, ,100 AOL Time Warner Inc. 25,292,591 17,789,044 38,100 Applied Materials Inc. 3,207,170 2,432, ,200 Baker Hughes Inc. 6,244,376 6,804, ,700 Bank of America Corp. 23,561,725 26,226, ,300 Best Buy Co. Inc. 14,576,937 15,687,114 32,200 Cardinal Health Inc. 3,702,363 3,314, ,520 Carnival Corp. 10,811,417 11,556,726 79,500 Caterpillar Inc. 6,038,433 6,612, ,600 China Mobile (Hong Kong) Ltd., ADR 6,148,328 7,140, ,100 Cisco Systems Inc. 12,596,187 12,544, ,733 Citigroup Inc. 39,238,123 43,696, ,100 Clear Channel Communications Inc. 14,318,348 12,651, ,200 Comcast Corp., Class A 8,478,220 7,462,031 45,400 Duke Energy Corp. 2,755,587 2,837, ,500 Electronic Data Systems Corp. 12,223,277 13,477,768 99,300 Eli Lilly and Co. 12,760,230 12,416, ,500 EMC Corp. 6,909,839 2,556, ,474 Exxon Mobil Corp. 25,814,013 25,055,924 87,700 First Data Corp. 8,864,357 10,953,076 75,500 General Dynamics Corp. 7,433,942 9,572, ,900 General Electric Co. 47,812,113 39,618,034 68,500 Goldman Sachs Group Inc. 10,448,692 10,114, ,800 Hartford Financial Services Group Inc. 14,704,470 16,184, ,400 Home Depot Inc. 15,025,489 17,086, ,600 Intel Corp. 10,242,956 9,643, ,500 International Business Machines Corp. 25,929,897 28,211, ,900 John Hancock Financial Services Inc. 7,508,961 7,817, ,800 Johnson & Johnson 18,527,259 21,150, ,600 Kinder Morgan Inc. 16,619,742 17,252, ,600 Liberty Media Corp., Class A 3,659,842 3,913, ,400 Lincoln National Corp. 7,153,404 8,304, ,900 Merck & Co., Inc. 13,472,293 11,879,072 43,700 Merrill Lynch & Company Inc. 4,289,355 3,626,013 50,000 Micron Technology Inc. 3,582,517 2,467, ,000 Microsoft Corp. 36,098,326 36,820, ,500 New York Times Co., Class A 6,947,981 7,401, ,400 Nucor Corp. 8,540,047 9,561,028 53,200 Omnicom Group Inc. 6,145,217 7,567, ,800 PepsiCo Inc. 8,530,946 9,751, ,350 Pfizer Inc. 32,531,040 32,123,488 54,300 Pharmacia Corp. 4,325,529 3,686,909 No. of Shares/ Average Market Face Amount Cost ($) Value ($) U.S.A. (cont d) 433,100 Philip Morris Company Inc. 29,710,957 31,613, ,100 Praxair Inc. 13,686,668 15,225,547 98,500 Proctor & Gamble Co. 9,705,677 12,408,547 50,500 Qualcomm Inc. 3,521,366 4,060,003 79,900 SBC Communications Inc. 5,228,805 4,982,461 94,599 Sempra Energy 3,460,648 3,697, ,200 Siebel Systems Inc. 4,437,046 4,997, ,000 Target Corp. 13,823,483 15,553, ,100 Texas Instruments Inc. 18,267,933 15,962, ,200 Unocal Corp. 13,063,666 13,333, ,300 Verizon Communications 14,548,933 12,867,256 96,300 Viacom Inc., Class B 7,899,485 6,768, ,200 Wal-Mart Stores Inc. 18,145,705 20,083, ,300 Walt Disney Co. 5,632,945 4,364,084 58,500 Washington Mutual Inc. 2,757,688 3,045, ,900 WorldCom Inc. -WorldCom Group 9,668,623 7,484,497 50,400 XL Capital Ltd. 7,431,213 7,330, ,974, ,028,295 DEVELOPED EUROPE (30.0%) U.K. (11.2%) 714,700 Amvescap PLC 16,356,788 16,420, ,200 Bass PLC 4,839,431 4,653, ,400 BP PLC 12,583,706 12,372,884 1,507,800 Compass Group PLC 17,963,692 18,002, ,000 GlaxoSmithKline PLC, ADR 15,219,924 14,435, ,047 HSBC Holdings PLC 16,913,801 16,930, ,000 Johnson Matthey PLC 4,536,413 3,914, ,636 Kingfisher PLC 8,267,583 7,620, ,000 Next PLC 7,202,656 7,366, ,000 Pearson PLC 5,365,277 3,355, ,700 Reed International PLC 7,854,338 7,449, ,000 Reuters Group PLC 3,618,527 3,562, ,200 Rio Tinto PLC 4,240,819 4,216, ,900 Royal Bank of Scotland Group PLC 8,604,791 11,780, ,800 Standard Chartered PLC 9,130,130 7,562,562 5,472,200 Vodafone Group PLC 27,769,439 22,804, ,467,315162,449,093 FRANCE (4.3%) 48,600 Aventis S.A. 5,570,220 5,501,171 70,000 BNP Paribas S.A. 10,074,361 9,985,097 28,800 Lafarge S.A. 4,719,009 4,288,014 59,600 Pechiney S.A., Class A 4,724,376 4,897,935 53,600 PSA Peugeot Citroen S.A. 3,459,965 3,632,673 3,200 Societe Television Francaise 1 111, , ,800 Suez S.A. 8,999,615 8,918,033 59,300 Total Fina ELF S.A., Class B 12,632,234 13,500,419 55,600 Vivendi Environnement 3,643,321 2,956,179 55,600 Vivendi Environnement, Warrant 36,301 93,400 Vivendi Universal S.A. 8,884,761 8,152,864 62,819,29561,997,631 The accompanying notes are an integral part of these financial statements. All common shares unless otherwise noted. Percentages shown in brackets relate investments at market value to total net assets of the fund.

7 Investment Portfolio (as at December 31, 2001) No. of Shares/ Average Market Face Amount Cost ($) Value ($) NETHERLANDS (3.5%) 102,000 Aegon N.V. 4,260,227 4,401, ,700 Akzo Nobel N.V. 17,839,516 19,339, ,000 ING Groep N.V. 15,684,490 13,821, ,300 Koninklijke Ahold N.V. 13,394,216 13,650,875 51,178,449 51,212,660 SWITZERLAND (3.5%) 122,000 Credit Suisse Group 7,273,593 8,297,247 25,300 Holcim Ltd. 8,864,493 8,700,505 40,630 Nestle S.A. 12,890,396 13,816,276 35,000 Swiss Re6,084,042 5,614, ,010 Ubs Ag 13,939,706 13,443,966 49,052,230 49,872,680 GERMANY (3.3%) 19,200 Allianz AG 7,160,931 7,235,257 77,500 Bayerische Motoren Werke AG 4,192,606 4,306,472 49,300 E.On AG 4,079,076 4,086,467 53,400 Fresenius Medical Care AG 5,906,150 5,267,618 34,000 Muenchener Rueckversicherungs-Gesellschaft 14,672,070 14,718, ,300 Schering AG 11,615,374 11,952,991 47,626,207 47,567,420 ITALY (1.3%) 195,800 Assicurazioni Generali S.p.A. 8,988,557 8,665, ,600 Mediaset S.p.A. 5,131,602 5,594, ,000 Riunione Adriatica di Sicurta S.p.A. 5,092,685 5,246,696 19,212,844 19,506,777 PORTUGAL (0.8%) 943,500 Portugal Telecom S.A. 12,186,594 11,717,586 12,186,594 11,717,586 FINLAND (0.7%) 165,100 Nokia Corp., ADR 8,261,029 6,447,453 95,800 TietoEnator OYJ 3,581,971 4,045,206 11,843,000 10,492,659 IRELAND (0.6%) 391,700 Bank of Ireland 5,589,267 5,793,079 40,700 Elan Corp. PLC, ADR 2,963,020 2,919,639 8,552,287 8,712,718 BELGIUM (0.5%) 325,300 Dexia 7,035,832 7,479,753 SPAIN (0.3%) 122,500 Sogecable S.A. 3,520,569 4,520,616 JAPAN (5.3%) 564,000 Daiwa Securities Group Inc. 9,975,169 4,699,882 18,800 Fast Retailing Company Ltd. 3,489,811 2,651, ,000 Hitachi Ltd. 9,728,437 6,722, ,000 Honda Motor Company Ltd. 7,352,172 8,412, ,000 NEC Corp. 10,880,079 6,581,342 No. of Shares/ Average Market Face Amount Cost ($) Value ($) JAPAN (cont d) 19,860 Nippon Television Network Corp. 7,579,295 6,703,903 1,251,000 Nissan Motor Company Ltd. 13,381,539 10,515, ,000 Nomura Securities Company Ltd. 14,129,131 8,371, NTT DoCoMo Inc. 8,869,101 5,401, ,000 Ricoh Company Ltd. 4,436,142 4,426, ,100 Sega Enterprises Ltd. 9,817,158 9,396, ,000 Yamato Transport Company Ltd. 3,158,160 2,987, ,796,194 76,870,440 ASIA EX JAPAN (2.3%) SINGAPORE (0.8%) 285,500 Flextronics International Ltd. 9,874,629 10,903,851 SOUTH KOREA (0.5%) 79,500 Kookmin Bank 4,020,733 4,798,549 67,800 Korea Telecom Corp., ADR 2,242,336 2,194,374 6,263,069 6,992,923 TAIWAN (0.5%) 244,720 Taiwan Semiconductor Manufacturing Company 5,561,601 6,689,341 HONG KONG (0.5%) 1,167,900 China Mobile (Hong Kong) Ltd. 10,299,219 6,544,560 LATIN AMERICA (1.7%) MEXICO (1.6%) 139,800 Groupo Televisa S.A., GDR 7,657,638 9,610,221 4,000,000 Grupo Financiero Bancomer S.A. de C.V., Class 5,094,596 5,805, ,900 Telefonos de Mexico S.A. de CV, ADR 7,148,609 7,353,676 19,900,843 22,769,654 BRAZIL (0.1%) 17,700 Uniao de Bancos Brasileiros S.A., GDR 505, ,379 BERMUDA (1.2%) 163,000 Accenture Ltd., Class A 3,802,677 6,985, ,800 Tyco International Ltd. 8,709,370 9,920,750 12,512,047 16,906,390 CANADA (0.4%) 125,400 Royal Bank of Canada 4,954,311 6,499,482 ISRAEL (0.3%) 64,300 Check Point Software Technologies Ltd. 4,953,140 4,083,368 Total Investments (99.7%) 1,461,090,167 1,439,446,276 Other Assets (net) (0.3%) 6,264,011 Total Net Assets (100.0%) 1,445,710,287 The accompanying notes are an integral part of these financial statements. All common shares unless otherwise noted. Percentages shown in brackets relate investments at market value to total net assets of the fund.

8 Financial Statements Statements of Net Assets as at December 31 (in 000 s except for per unit amounts and units outstanding) 2001 $ 2000 $ Statements of Operations for the years ended December 31 (000 s) 2001 $ 2000 $ Statements of Changes in Net Assets for the years ended December 31 (000 s) 2001 $ 2000 $ Assets Income Net assets, beginning of year 1,942,206 1,444,283 Investments at market value (Note 2) 1,439,446 1,942,297 Dividends 22,517 18,693 Cash 4, ,267 Interest 4,522 3,819 Capital Transactions Income taxes recoverable Less foreign withholding taxes (3,537) (2,734) Proceeds from units issued Receivable for unit subscriptions 8,875 23,502 19,778 (including reinvested distributions) 2,000,955 2,856,936 Receivable for securities sold 1,993 47,110 Expenses Amounts paid for units redeemed (2,079,986) (2,018,464) Dividends and accrued interest receivable 1,345 1,333 Management fees (Note 5) 25,962 36,085 (79,031) 838,472 1,447,481 2,175,324 Administrative (Note 5) 5,367 8,406 Distributions to investors Liabilities Custody Distribution from net realized gains (39,368) Payable for securities purchased ,850 Legal Distribution from net income Payable for unit redemptions 1,542 44,268 Audit (39,368) Distributions Payable 3 Goods and services tax 2,204 3,092 Increase (decrease) in net assets 1, ,118 33,857 47,901 from operations (417,465) (301,181) Net assets and unitholders equity 1,445,710 1,942,206 Net income (loss) for the year (10,355) (28,123) Net assets, end of year 1,445,710 1,942,206 Net asset value per unit: Class A Class F Class I Number of units outstanding (Note 4) Class A Class F Class I 42,242,996 50,362,234 9,193,769 49,565,423 51,784,789 Approved on behalf of the Board of Directors: G. Raymond Chang Director William T. Holland Director Realized and unrealized gain (loss) on investments Realized gain (loss) on investments (a) Change in unrealized appreciation (depreciation) of investments Net gain (loss) on investments Increase (decrease) in net assets from operations (a) Realized gain (loss) on investments Proceeds from sale of investments including (317,029) (90,081) (407,110) (417,465) 21,363 (294,421) (273,058) (301,181) foreign exchange gain (loss) (b) Investments at cost, beginning of year Investments purchased Change in cost of short-term notes held 3,987,742 1,875,451 3,890,410 5,765,861 6,156,236 1,054,956 6,955,368 8,010,324 Investments at cost, end of year Cost of investments sold Realized gain (loss) on investments (b) Proceeds on sales of short-term notes sold during the year not included above 1,461,090 4,304,771 (317,029) 1,875,451 6,134,873 21,363 The accompanying notes are an integral part of these financial statements.

9 Notes to the Financial Statements 1. THE FUND BPI Global Equity Fund (the Fund ) is an open-ended mutual fund trust created under the laws of Ontario by declaration of trust on December 9, On July 31, 2001, the Fund commenced the offering of a new class of units which are referred to as Class I units. Class I units are available to institutional clients and investors who have entered into a Class I Account Agreement with CI Mutual Fund Inc. Class F units, which were launched on July 17, 2000, are available to certain investors including those who participate in fee-based programs through their financial advisers or who are members of certain groups. Class A units are available to all investors. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies of the Fund: 3. INCOME TAXES The Fund qualifies as a mutual fund trust under the provisions of the Income Tax Act (Canada) and, accordingly, is not subject to tax on its net income, including net realized capital gains for its taxation year, which is paid or payable to its unitholders at the end of its taxation year. However, such part of the Fund s taxable income and net realized capital gains that is not so paid or payable will be taxable to the Fund. Income tax on net realized capital gains not paid or payable will be generally recoverable by virtue of refunding provisions contained in the Income Tax Act (Canada) and provincial income tax legislation, as redemptions occur. It is the intention of the Fund to pay all net taxable income and sufficient net realized capital gains so that the Fund will not be subject to income taxes. Occasionally, the Fund will distribute more than it earns. This excess distribution is a return of capital and is not taxable to unitholders. Derivative investments are recorded in the same manner for tax purposes as for accounting purposes. (a) (b) Valuation of Investments Listed securities are valued on each business day at their latest available sale price. In the absence of recorded sales on that day, they are valued at the average of the last recorded bid and ask prices where appropriate. Unlisted securities are valued on each business day based on price quotations from recognized investment dealers, or failing that, management s best estimate. Short-term fixed income securities are valued at cost which, together with accrued interest, approximates market value. Foreign Exchange Foreign currency amounts are translated into Canadian dollars as follows: market value of investments, forward currency contracts, other assets and liabilities at the closing rate of exchange on each business day; income, expenses and, purchases, sales and settlements of investments at the rate of exchange prevailing on the respective dates of such transactions. The Fund has the following tax losses carried forward as at December 31, Net capital losses may be carried forward indefinitely to reduce future net realized capital gains. Non-capital losses may be applied against future taxable income. These non-capital losses will expire December 31 of the years indicated unless previously applied. (in 000 s) Net capital loss $ 364,661 By year of expiration (in 000 s) 2008 Non-capital loss $ 11,525 (c) (d) Investment Transactions and Income Recognition Investment transactions are accounted for on trade date and any realized gains and losses from such transactions are calculated on an average cost basis. Dividend income is recognized on the ex-dividend date and interest income on the accrual basis. Stock dividends are recorded as dividend income determined by reference to market value. Net Asset Value Per Unit Net asset value per unit for each class is calculated at the end of each day on which the Fund s manager is open for business by dividing the net assets of each class by its outstanding units. The net asset value of each class is computed by calculating the value of that class s proportionate share of the Fund s assets less that class s proportionate share of the Fund s common liabilities and less class specific liabilities. Expenses directly attributable to a class are charged to that class. Other income and expenses are allocated to each class proportionately based upon the relative net asset value of each class. 4. UNITS ISSUED AND OUTSTANDING For the years ended December 31, the following numbers of units were issued or redeemed: 2001 Class A Class F Class I Balance, beginning of year 49,565,423 51,784,789 Units issued for cash including re-invested distributions 73,720,214 10,544,111 9,643,841 Units redeemed (81,042,640) (11,966,666) (450,072) Balance, end of year 42,242,996 50,362,234 9,193, Class A Class F Balance, beginning of year 40,645,213 Units issued for cash including re-invested distributions 66,453,416 55,196,336 Units redeemed (57,533,206) (3,411,547) Balance, end of year 49,565,423 51,784,789

10 Notes to the Financial Statements 5. MANAGEMENT FEES AND OTHER EXPENSES CI Mutual Funds Inc. is the manager of the Fund and, in consideration of management fees received, provides management services required in the day-to-day operations of the Fund including management of the investment portfolio of the Fund. 8. PORTFOLIO TRANSACTIONS A copy of the Statement of Portfolio Transactions (unaudited) for any Fund for the year ended December 31, 2001 is available without charge upon written request to the manager, CI Mutual Funds Inc., CI Place, 151 Yonge Street, Eleventh Floor, Toronto, Ontario M5C 2W7. The management fee is calculated on the net assets of each class of units of the Fund at the end of each business day and is paid daily. The Fund also bears all operating and administrative expenses including audit and legal fees, registry and transfer agency fees, custody fees, expenses relating to reporting and making distributions to unitholders, all other costs and fees imposed by statute or regulation, and expenses of all communications with unitholders. To encourage large purchases in the Fund, the manager may reduce the management fee that it would otherwise be entitled to receive from the Fund with respect to an investment in the Fund provided that the amount of the management fee reduction is distributed to the investor for whose benefit the fees were reduced. 6. BROKERAGE COMMISSIONS Total commissions paid to dealers for the years ended December 31 in connection with portfolio transactions were (in 000 s): $ 10,519 $ 13, SECURITIES LENDING The Fund has entered into a securities lending program with its custodian, Royal Trust Company of Canada ( Royal Trust ). The aggregate market value of all securities loaned by the Fund cannot exceed 50% of the assets of the Fund. The Fund will receive collateral of at least 102% of the value of 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 by the United States government or its agencies, but may include obligations of other governments with appropriate credit ratings. Royal Trust has indemnified the Fund against the credit risk of the borrowers. As at December 31, 2001, the Fund has loaned $170,421,246 in securities, received $180,820,000 in collateral, and recognized $305,000 in securities lending income. Income from securities lending is included in Interest Income in the Statement of Operations of the Fund.

11 Management and Audit Reports MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements have been prepared by CI Mutual Funds Inc., the manager of the Fund, and approved by the Board of Directors of the manager. The Fund s manager is responsible for the information and representations contained in these financial statements and other sections of the Annual Report. CI Mutual Funds Inc. maintains appropriate processes to ensure that relevant and reliable financial information is produced. The financial statements have been prepared in accordance with accounting principles generally accepted in Canada and include certain amounts that are based on estimates and judgments. The significant accounting policies which management believes are appropriate for the Fund are described in Note 2 to the financial statements. PricewaterhouseCoopers LLP are the external auditors of the Fund, appointed by the unitholders. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out at the right. President CI MUTUAL FUNDS INC. Chief Financial Officer CI MUTUAL FUNDS INC. AUDITORS REPORT To the unitholders of BPI Global Equity Fund (the Fund ): We have audited the Investment Portfolio of the Fund as at December 31, 2001, the Statements of Net Assets as at December 31, 2001 and 2000, the Statements of Operations and Changes in Net Assets for the years then ended and the Statements of Financial Highlights for each of the periods in the five-year period ended December 31, These financial statements are the responsibility of the Fund s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2001 and 2000, the results of its operations and changes in its net assets for the years then ended and its financial highlights for each of the periods in the five-year period ended December 31, 2001 in accordance with Canadian generally accepted accounting principles. Toronto, Ontario February 1, 2002 PRICEWATERHOUSECOOPERS LLP Chartered Accountants

12 Board of Governors Letter Your CI Funds Board of Governors is pleased to report on its activities in respect of the year ended December 31, The Governors are appointed pursuant to the Declarations of Trust governing the Funds that are trusts, and constitute the board of directors of CI Sector Fund Limited. The Governors mandate is to consult with CI Mutual Funds Inc. (the Manager ) and any investment advisers (referred to as "Subadvisers") in matters pertaining to investment policy; receive and review periodic reports concerning the investment of the Funds' assets, the issue and redemption of securities and distributions to securityholders; and to review and advise or consent, if appropriate, with respect to any other matter required by the Declarations of Trust and by applicable securities laws, regulations and rules. The Governors have met at least semi-annually. The Governors have reviewed, commented on and approved the CI Code of Ethics and Conduct, which establishes rules of conduct designed to ensure fair treatment of the Funds securityholders and that, at all times, the interests of the the Funds and their securityholders are placed above personal interests of employees, officers and directors of the Manager and each of its subsidiaries and affiliates, the Subadvisers, and the Governors, through application of the highest standards of integrity and ethical business conduct. The objective is not only to remove any potential for real conflict of interest but to avoid any perception of conflict. The independent Governors report that management has been open and cooperative, permitting the Governors to meet with subadvisers of the Funds, to meet with individual department heads and personnel to review control mechanisms and compliance procedures, including those relating to the personal securities trading activity of employees, and to consider other matters that affect the Funds, such as customer complaints. The personal trading rules under the CI Code of Ethics and Conduct require prior clearance of personal trades and restrict the ability of staff to trade any securities held by the Funds. The three independent Governors comprise the Audit Committee of the Board of Governors. The Audit Committee independently reviewed, with the Fund s auditors, the planning, scope and results of the audit of the financial statements of the Funds for the year 2001, and reported to the Board of Governors. The Board of Governors has received and accepted the 2001 Annual Reports of the Funds. The Manager s year 2001 compliance report, and reports on compliance with the CI Code of Ethics and Conduct have been provided to the Governors in a timely and satisfactory manner. Jasmine Herlt CHAIR, CI MUTUAL FUNDS INC. BOARD OF GOVERNORS March 6, 2002 Members of the Board of Governors Jasmine Herlt, Chair Stephen T. Moore Paul J. Perrow G. Raymond Chang, Chairman, C.I. Fund Management Inc. William T. Holland, President and Chief Executive Officer, C.I. Fund Management Inc. Legal Notice NOTICE: Should you require additional copies of this Annual Report or have received more than one copy, please contact CI Mutual Funds Inc. or your financial adviser. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The commentaries contained herein are provided as a general source of information and should not be considered personal investment advice or an offer or solicitation to buy or sell securities. Every effort has been made to ensure that the material contained in these commentaries is accurate at the time of publication. However, CI Mutual Funds Inc. cannot guarantee its accuracy or completeness and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. SIMPLIFIED PROSPECTUS: The Simplified Prospectus and Annual Information Form of a Fund are renewed annually. CI Mutual Funds Inc. would be pleased to provide, without charge, the most recent Simplified Prospectus upon request to its Toronto office. DISTRIBUTION OR DIVIDEND REINVESTMENT: Distributions or dividends from the Funds are automatically reinvested, free of any sales commissions or charges, in additional securities of the relevant Fund, unless you otherwise direct. You may withdraw from participation in the reinvestment plan at any time by delivering a written request to your financial adviser or to CI Mutual Funds Inc. REDEMPTION OF SECURITIES: Securities may be redeemed by securityholders on any business day by delivering to your financial adviser or CI Mutual Funds Inc. (the Manager ) a redemption request in writing, or in such other form as permitted by your financial adviser. If your redemption request is received by the Manager on any Valuation Date prior to 4:00 p.m. (Eastern time), then your securities being redeemed will be priced at the next valuation time following receipt by the Manager of the redemption request. If the proceeds of redemption exceed $10,000 or are to be paid to someone other than the registered owner, your signature must be guaranteed by a bank, trust company, investment dealer, or broker. If certificates representing the securities to be redeemed have been issued, the redemption request must be accompanied by the certificates, properly endorsed for redemption with the signature guaranteed in the manner described above. If the registered owner is a corporation, partnership, agent, fiduciary or surviving joint owner, additional documentation may be required. Boomernomics and Harbour Fund are registered trade mark of CI Mutual Funds Inc. CI Funds and the CI Funds logo design, Landmark Funds, Harbour Funds, Signature Funds, BPI Funds, CI Sector Funds, Global Managers and American Managers are trademarks of CI Mutual Funds Inc.

13 Head Office CI Place, 151 Yonge Street, Eleventh Floor Toronto, Ontario M5C 2W7 Tel: Toll Free: English Client Services Team: French Client Services Team: Sales Offices Calgary Tel: Toll Free: Halifax Tel: Toll Free: Montreal Tel: Toll Free: Vancouver Tel: Toll Free: CI Teleservice: Automated telephone account information BPI Global Equity-03/02 E