Our experts discuss their 2014 outlook

Transcription

1 January Edition 2014 For dealer use only MONTHLY REVIEW A new year Dear Advisor, By almost any definition, last year was an excellent one for global stock markets, and I hope your clients and your business have benefited from these gains. After such a strong 2013, and with the bull market entering its fifth year, the direction of the markets is naturally a prime concern. At CI, we believe that investors can deal with market unpredictability by remaining diversified and by investing with experienced and proven portfolio managers. We are fortunate to offer a wide lineup of talented portfolio management teams, including Cambridge Global Asset Management, Signature Global Asset Management, Harbour Advisors, Black Creek Investment Management and our latest addition to the lineup Marret Asset Management. In the roundtable discussion starting on this page, some of our leading portfolio managers provide their views on the coming year, and how they are positioning their portfolios. While they are mindful of a number of risks and issues, they generally expect to see moderate growth and continue to find investment opportunities for their funds. Our experts discuss their 2014 outlook Growth should support equities but rising interest rates may pose risks Five years after the financial crisis, the gradually improving global economic picture was reflected in the robust results posted by many global equity markets in 2013, and by the announcement that the U.S. Federal Reserve would begin to taper its monetary stimulus programs in With change on the horizon, CI Monthly Review recently spoke with five of CI s top portfolio managers about their outlook for the year ahead, and how those views are shaping their investment approach. The managers are: Also featured in this issue of Monthly Review is a guide to RSP solutions from CI in the categories of income, balanced, equity and managed solutions, starting on page 3. It was difficult to pick just four funds in each category to highlight a testament to the breadth and depth of our lineup. Information on all of our funds is available on and from your CI Sales Team. Regular communications designed to support your practice remains one of our top priorities. This newsletter should be reaching you about the time of CI s Digital Roadshow, running the afternoons of January and featuring more valuable insights from our portfolio managers. Please sign in at getconnected for details and registration information. Plans are also underway for our national Spring Roadshow in April, featuring our Signature Global Asset Management team, with details to be announced shortly. Finally, I would like to note that our new G5 20 Series is now available in Class F and in CI Private Investment Management (Class O), in addition to Class A. This gives you additional flexibility in offering this innovative product, which provides a 5% cash flow guaranteed for 20 years. One strategy to consider is how G5 20 can be used to manage downside risk in certain clients portfolios and help to protect the gains of recent years. In closing, I would like to reiterate our commitment to supporting you in growing your business. As always, if you need further information on any of our products or any other assistance, your CI Sales Team is here to help. I would like to thank you for your continued support and wish you a happy and healthy rely, Derek J. Green President CI Investments Eric Bushell, Chief Investment Officer, Signature Global Asset Management. Signature is among the largest portfolio management teams in Canada, managing more than $40 billion in assets across a full range of global and Canadian income, equity and balanced mandates. Roger Mortimer, who joined Harbour Advisors in October as Senior Portfolio Manager. Roger brings more than 18 years of investment experience to the Harbour team. Barry Allan, President of Marret Asset Management, a leading global fixed-income management firm in which CI recently acquired a majority interest. Marret will manage three new CI funds with a focus on high-yield corporate bonds and other income-oriented securities to be launched early this year. Robert Swanson, Principal and Portfolio Manager, Cambridge Global Asset Management. Robert is an award-winning manager who manages several of Cambridge s global and Canadian equity, income and balanced portfolios. Richard Jenkins, Managing Director and Portfolio Manager, Black Creek Investment Management. Richard is lead manager of Black Creek International Equity Fund, selected Best International Equity Fund at the 2013 Morningstar Awards. Some funds featured inside in our 2014 guide to RSP solutions Signature Diversified Yield II Fund Black Creek Global Balanced Fund Portfolio Series Income Fund Harbour Global Equity Corporate Class Signature Select Canadian Fund Cambridge American Equity Fund Outlook article continued on following page 2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I _E (01/14)

2 2 CI Monthly Review January edition 2014 Our experts discuss their 2014 outlook continued from page 1 Q. What is your outlook for the global economy in the first half of 2014? Eric Bushell The U.S. remains the epicentre of the global economy, and we expect progressive healing through Employment gains and business investment should accelerate as financial conditions remain highly accommodative and the tail risks recede. The impact of government budget cuts on growth will also subside, perhaps significantly if a fiscal bargain emerges in Washington. However, despite the optimism in the housing and stock market recovery, there is growing angst in the social and political sphere over income and opportunity inequity. To me, Bruce Springsteen s new album Wrecking Ball captures the demoralized state of working class America. Record corporate profit margins could face risks from rising political and popular interests. Elsewhere, Europe faces more headwinds with the European Central Bank undertaking bank stress tests that could lead to a contraction in lending. A sustained credit crunch, along with the fact that fiscal adjustments still have a long way to go, means the outlook for growth in Europe remains poor. In China, we expect growth to be sustained but at a lower level than in the past. The leadership has signalled a reformist agenda in economic matters, and the past s of overinvestment in capital-intensive, export-oriented polluting heavy industry is being addressed. Emerging markets that have greater reliance on foreign capital than China face less certain prospects, especially with the U.S. Federal Reserve s decision to slow its bond purchase program. Robert Swanson We see slow to moderate growth in Canada and the U.S. in A slower housing market and weaker consumer spending could be potential headwinds for the Canadian economy, but a weaker Canadian dollar will be beneficial. In the U.S., consumer and business spending should help to offset lower government spending. The consensus real GDP forecast for the U.S. at 3.0% is the highest following the recession. We expect the European economic recovery to be positive but volatile, and Japan s recovery should also continue, led by Bank of Japan stimulus efforts and rising consumer sentiment. Richard Jenkins 2008, we have maintained that the global economy would need to rebalance away from the excesses that caused the deep downturn. Most countries are making progress consumption is declining as a percentage of overall GDP in mature economies, exports from emerging economies have been reduced, and vice versa. As long as that continues, the global economy should achieve about average growth rates. So growth in the U.S. should improve slightly to 2.5% to 3%, Europe should also improve from zero to about 1% and growth in China and the emerging markets will slow and change. Those emerging economies heavily reliant on commodities and exports will slow more than those with stronger domestic consumption stories. Q. Central bank policies have dictated global interest rates for several years. With the U.S. Federal Reserve announcing plans to taper its monetary stimulus, how is this scenario likely to play out in 2014? Roger Mortimer Central banks will continue to exert a powerful influence on interest rates, provided that markets remain confident in their actions. I We expect the Fed to keep rates lower for longer to mitigate any pronounced shock, but fundamentals will have to replace liquidity as the support for markets. Eric Bushell expect that 2014 will see continued and increasing focus on the pace and shape of central bank accommodation. The Fed s decision to begin tapering stimulus will bring increased investor scrutiny around both the Fed s actions and the rate of U.S. economic growth, which will likely result in increased volatility in both bonds and equities. Barry Allan The Fed s wind-down of its quantitative easing programs will probably be a long, slow, gradual process. The Fed will want to ensure that the economic recovery is intact and that inflation levels remain low. The challenge will be if growth accelerates much more quickly than expected, or if inflation spikes higher. Either scenario would likely panic the markets and be a negative catalyst for equities. Eric Economies and markets have fallen into a dependency on monetary stimulus to offset drags on growth in the five years since Lehman Brothers collapsed, and an important change is emerging in 2014 as the U.S. and China step back from monetary stimulus. We will see whether their economies can withstand the cost of higher rates a similar trial in the summer of 2013 failed, in our view. We expect the Fed to keep rates lower for longer to mitigate any pronounced shock, but fundamentals will have to replace liquidity as the support for markets. Q. Equity markets performed well in What sort of returns can investors expect in 2014? Robert Equities are pretty fairly valued right now. With multiples at about 15 times earnings, unless there is a significant ramp up in global growth, we are probably looking at total returns of about 7-10%, including dividends, in the Canadian and U.S. markets next year. s for European equities should be slightly better. A case could be made for multiple expansion given the level of interest rates and inflation, which would result in equities surpassing most expectations. We are still finding good opportunities in cyclical stocks within Europe, U.S. consumer staples companies and Japanese consumer and financial companies. Roger We expect equities to remain attractive. While interest rates are likely to rise somewhat during 2014, the risk for equities is primarily one of overall valuation. If the economy does not grow as expected, then there is a risk to the downside. We continue to invest in companies with franchise strength, free cash generation, strong capital structure and a focus on creating shareholder value, and we are finding these opportunities in several sectors, including energy, financial services, technology and industrials. Richard The rise in equity markets over the past few years is more a function of a rotation away from areas such as fixed income, where returns are not attractive, % 21.1% 14.2% 21.4% 52.0% 39.0% 17.3% 10.0% 17.6% 35.4% 35.0% 17.0% 8.3% 13.0% 35.1% Source: PALtrak 33.6% 16.0% 5.7% 9.8% 16.2% 15.6% 15.3% 4.4% 9.6% 12.5% 12.9% 13.5% -7.2% 9.3% 11.9% 11.3% 7.2% -8.3% 8.8% 9.1% 10.9% 6.0% -8.7% 6.9% 8.1% 4.1% 3.7% -9.5% 2.6% 5.2% -1.2% 3.4% -12.1% 0.0% -9.2% -23.1% 2.0% -16.1% -1.0% -9.7% than of an investment in value. Today, equity values are significantly less attractive than they were three to four years ago, but if you look historically at normalized earnings for this point in the investment cycle, the U.S. market looks expensive and most other markets look normal, or average. We don t invest in specific themes or markets, but in the last few months we have made significant investments in China and in the health care industry. We have also been looking a lot in Europe and in emerging countries like India and Brazil, which are going through a period of consolidation and reform. Q. Investors continue to seek yield from their investments. Where do you see the best opportunities for yield? Barry We don t see a dramatic rise in longer-term yields but some increase is likely. This favours high-yield bonds as they have been historically negatively correlated to interest rates. Quality investment-grade bonds with interest rate hedges should also do well, and high-quality equities with good dividend yields and some convertible bonds will be attractive. Eric Yield seekers have few compelling choices. Government and investmentgrade bond yields are low. High-yield bonds are more interesting given their low duration but yield spreads are narrow. One interesting corner where we see value is in the developing market for hybrid bank capital. New regulation is forcing banks to issue loss-absorbing capital securities that convert to equity in the event that a bank s equity falls below a stated threshold. Given the safer regulatory rules and repaired capital bases, we are attracted to these securities issued by Swiss and American banks. Roger We like higher-yielding, low payout-ratio equities, as they deliver the income attractiveness of bonds without the risk of sensitivity to higher interest rates. About half the equities in Harbour Growth & Income Fund, for example, have a dividend yield equal to 90% or more of the US 10-year bond, yet can achieve this with payout ratios of less than 60%. They are also pro-cyclical, meaning that they benefit from a recovering economy With interest rates set to rise, global equities strongly outperformed fixed-income and interest-sensitive securities in 2013 Canadian equity S&P/TSX Composite Total Index Gold London Fix Gold AM Index High-yield bonds Barclays Global High Yield Total Index Emerging Markets $C MSCI Emerging Markets Index Real Estate FTSE EPRA/REIT Index U.S. equity S&P 500 Total Index Japan MSCI Japan Index Canadian equity $C Gold $US High-yield bonds $C Emerging Markets $C Real Estate $C U.S. equity $C Japan $C Canadian bonds $C International $C Global bonds $C European equity $C Canadian bonds BofAML Canada Broad Market Total Index International $C MSCI EAFE Index Global bonds Barclays Global Aggregate Total Index European equity $C MSCI Europe Index as a substantial portion of their earnings is reinvested for growth. In a world where bond returns may be both lower and more volatile than investors have come to expect, we think that this group of income and growth companies is highly attractive for investors who wish to reduce their bond exposure and want the most conservative possible exposure to equities. Outlook article continued on page 5

3 Your 2014 guide to RSP solutions Income Funds CI offers a diverse range of income solutions designed to meet different client needs, including targeted and diversified income options, as well as funds that provide steady dividend income. Managers: Ryan Fitzgerald, Geof Marshall, Joe D Angelo and Eric Bushell 1 month 3 month 2 year (Feb/11) 0.8% 3.4% 5.5% 10.5% 12.1% 7.6% Managers: Ryan Fitzgerald, Geof Marshall, Joe D Angelo and Eric Bushell (Dec/96) 6.6% 8.6% 8.3% 13.8% 8.4% 9.7% Signature Diversified Yield II Fund Signature High Income Fund What: A Canadian-anchored diversified portfolio of high-yielding bonds and equity securities, including REITs and income trusts. Why: Recipient of a 2013 Lipper Fund Award, winner of four Morningstar Awards and a Morningstar five-star rated fund. Pays a consistent monthly distribution. What: A diversified global portfolio of high-yielding alternative asset classes including high-yield corporate bonds, infrastructure, REITs and other high-yielding equity securities. Why: Enhanced yield, a monthly distribution and award-winning active management. Signature Global Dividend Fund Managers: John Hadwen and Eric Bushell Cambridge High Income Fund (Jul/04) 8.3% 12.0% 8.3% 14.0% 10.6% 1 month 3 month (Dec/12) 1.2% 8.0% 11.4% 23.8% 23.2% Manager: Robert Swanson What: A portfolio of high-quality dividend-paying equity securities from around the world. Why: Provides income through a regular monthly distribution as well as capital gains. Award-winning management with extensive global investing expertise. What: A well-diversified portfolio of fixed-income securities and dividend-paying equities, with a dual focus on yield sustainability and capital growth. Why: Recipient of a 2013 Lipper Fund Award and a Morningstar five-star rated fund. Tactically managed to take advantage of economic and industry trends, with an emphasis on downside protection. A source of regular monthly income. Also consider: Signature Dividend Fund, Cambridge Global Dividend Fund. Balanced Funds CI s balanced fund offerings are designed to limit risk and provide the potential for growth through professional asset allocation, security selection, diversification and risk management. Signature Global Income & Growth Fund Managers: Eric Bushell and Geof Marshall Black Creek Global Balanced Fund Manager: Richard Jenkins (Feb/07) 18.1% 25.3% 11.4% 12.1% 5.5% (Feb/07) 7.1% 16.5% 7.5% 11.1% 2.8% What: A highly flexible balanced portfolio of equities and fixed-income instruments, including high-yield and investment-grade corporate bonds and government bonds. Why: Designed to provide long-term growth and a regular monthly distribution. A Morningstar five-star rated fund. What: Black Creek uses a flexible, go anywhere approach to create a concentrated, balanced portfolio of equities and fixed-income securities. Why: A Morningstar five-star rated fund. Black Creek uses intensive research to develop unique insights and proprietary ideas, which are subject to continuous rigorous scrutiny. Harbour Global Growth & Income Corporate Class Manager: Roger Mortimer Cambridge Canadian Asset Allocation Corporate Class Managers: Robert Swanson, Alan Radlo (Dec/07) 6.7% 18.6% 6.8% 11.3% 5.3% (Dec/02) 13.5% 24.8% 8.2% 11.6% 3.6% 4.3% What: An eclectic, diversified portfolio of equity and fixed-income securities from Canada and around the world. Why: A Morningstar five-star rated fund that invests mainly in blue-chip equities for lower volatility. Award-winning active management. What: A concentrated portfolio of equities and fixed-income securities from issuers around the world. Why: Harbour s focus on owning a prudent balance of income securities and established, well-known companies is designed to generate steady, long-term total returns. Also consider: Signature Canadian Balanced Fund, Signature Income & Growth Fund. Managed Solutions CI s managed solutions benefit from the expertise of CI Investment Consulting, which manages the portfolios using the comprehensive research and recommendations of State Street Global Advisors. The underlying funds are managed by award-winning portfolio management teams who add value through tactical decisions and security selection. Select 40i60e Corporate Class Manager: CI Investment Consulting Manager: CI Investment Consulting 9.4% 18.2% 7.8% 9.7% 3.5% Why: Part of Portfolio Select Series, winner of a 2013 Morningstar Award. (Dec/97) 5.0% 8.5% 6.3% 8.4% 5.3% 5.3% What: An optimized balanced portfolio of equities and income-generating securities from Canada and around the world. Portfolio Series Income Fund (Nov/06) What: A fund designed to emphasize income by investing primarily in income-oriented mutual funds, with some equity fund investment for capital appreciation Why: Recipient of 2013 Lipper Fund Award and part of Portfolio Series, a two-time Morningstar Award winner. Also consider: Select Income Managed Corporate Class

4 Global Equity Funds CI s portfolio management teams are chosen for their expertise, long-term track records and global investment industry experience, making our global equity funds an excellent choice for diversifying client portfolios. Cambridge Global Equity Corporate Class anagers: Alan Radlo, Robert Swanson M and Brandon Snow (Dec/07) 17.2% 35.5% 11.1% 12.6% 6.8% Black Creek Global Leaders Fund Manager: Bill Kanko (Feb/05) 25.6% 41.1% 13.0% 14.8% 5.2% What: A concentrated portfolio of global equity securities. The fund invests in businesses that are market leaders, are gaining market share and have distinct competitive advantages. Why: Award-winning manager Bill Kanko invests with a 10-year time horizon. No attempt is made to time the market or trade for short-term gains. What: A well-diversified global portfolio of core holdings and current opportunities with no restrictions on geographic allocation. Why: Co-managed by Cambridge Chief Investment Officer Alan Radlo, who has more than 30 years of Canadian and global investing experience. Harbour Global Equity Corporate Class Manager: Stephen Jenkins (Dec/01) 14.2% 28.0% 10.1% 14.9% 3.9% 3.2% Black Creek International Equity Fund Manager: Richard Jenkins (Sep/08) 27.6% 38.1% 14.3% 16.2% 15.2% What: A concentrated portfolio of equity securities with operations primarily outside North America. The fund invests in businesses that are market leaders, are gaining market share and have distinct competitive advantages. What: A portfolio of large and mid-cap companies from developed markets around with world, with some exposure to emerging markets and economies. Why: Managed for value with securities only purchased at the right price. Portfolio Manager Stephen Jenkins has more than 2s of investment industry experience. Also consider: Signature Select Global Fund, CI Global Value Fund, CI Global Small Companies Fund. Why: A 2013 Morningstar Award winner and Morningstar five-star rated fund. Canadian Equity Funds CI s Canadian equity offerings feature some of the top portfolio management teams in the industry, making them a good choice for RRSP investors seeking to benefit from the long-term growth of their home market. Signature Select Canadian Fund Manager: Eric Bushell (May/98) 13.3% 19.2% 5.7% 10.7% 7.9% 9.8% Cambridge Canadian Equity Corporate Class Managers: Brandon Snow and Alan Radlo What: An equity portfolio with significant global content well diversified by industry sector. (Dec/07) 9.5% 27.2% 13.5% 15.3% 7.7% What: An equity fund well diversified by geography and market cap with a focus on achieving absolute returns. Why: A Morningstar five-star rated fund. The award-winning Cambridge Global Asset Management team pursues their best investment ideas without adhering to a particular benchmark. Why: Managed by Eric Bushell, named Morningstar Fund Manager of the Decade in 2010, backed by a strong team of global sector investment specialists. Cambridge Pure Canadian Equity Fund Managers: Brandon Snow, Greg Dean and Stephen Groff 1 month 3 month 2 year (Feb/11) 2.7% 12.6% 19.2% 47.2% 40.6% 27.1% Harbour Fund Manager: Stephen Jenkins (Jun/97) 8.8% 12.2% 3.5% 9.1% 7.4% 7.3% What: A portfolio of high-quality, large and mid-cap businesses with a focus on long-term performance. Why: Harbour s prudent investment approach has resulted in strong long-term performance relative to the market and is well suited to conservative investors. American Equity Funds CI offers a number of high-quality U.S. equity funds that offer the opportunity to diversify client portfolios and benefit from long-term growth in the world s largest investment market. What: A unique portfolio of small to mid-cap Canadian equities with an emphasis on growth. Why: Managed with an emphasis on flexibility and downside protection, the portfolio has strongly outperformed the benchmark and its peers since. Also consider: CI Canadian Investment Fund, Synergy Canadian Corporate Class. Cambridge U.S. Dividend Fund Managers: Brandon Snow and Alan Radlo* (Jun/06) 11.9% 33.2% 13.4% 9.8% 5.1% Cambridge American Equity Fund What: A diversified portfolio of mainly U.S.-based equities with an emphasis on dividend growth and quality. Manager: Alan Radlo (May/89) 21.0% 44.6% 12.1% 13.3% 2.5% 6.9% What: A flexible portfolio of small to large-cap U.S.-based equities managed for above-average long-term capital growth. Why: Strong active management by industry veteran Alan Radlo with an emphasis on risk-adjusted returns. Why: Now managed by the experienced Cambridge Global Asset Management team, the fund pays a regular monthly distribution in U.S. funds. * Formerly CI U.S. Dividend Growth Fund. Cambridge Global Asset Management became portfolio manager to the fund in December, Also consider: CI American Small Companies Fund, Synergy American Fund.

5 5 CI Monthly Review January edition 2014 Our experts discuss their 2014 outlook continued from page 2 Q. Are there any particular themes, sectors or regions you are avoiding? Richard The Black Creek funds benefited from investments in Europe and cyclical businesses in 2013, so we have been reducing our weightings in those two areas. We continue to think that dividend-yielding companies in the consumer staples sector are somewhat overvalued, and we see a mini-bubble forming in the area of Internet technology today, equity values are significantly less attractive than they were three to four years ago, but if you look historically at normalized earnings for this point in the investment cycle, the U.S. market looks expensive and most other markets look normal, or average. Richard Jenkins or cloud computing. Japan s outlook for exports is slightly better given the devaluation of the yen, but the currency devaluation must be followed up with significant domestic reforms, and we are still waiting to see those changes, which will require strong political will. So we have been reducing our exposure to Japan. Eric Japan is conducting the greatest economic experiment of all time. Prime Minister Abe has undertaken a shock therapy program to jerk the economy out of its deflationary liquidity trap. The fiscal and monetary stimulus has been delivered to great effect. The yen has devalued and economic growth is accelerating. Equity markets are up sharply. But we doubt the program will succeed as long-term success hinges on unpalatable political reforms and immigration. Barry We are cautious on gold. The price of gold has declined a lot, but with the strengthening of the U.S. dollar it could go lower. Companies that are leveraged to interest rates will also struggle as long-term rates gradually rise. Roger Investing successfully is a combination of what you buy and how much you pay. Our process at Harbour is very stock-specific -- we look to make investments in high-quality companies at attractive valuations, so we don t exclude sectors. But right now, some of the more defensive areas of the market such as utilities are trading near historical highs and we are not finding compelling investments there. Robert With interest rates set to rise, we are avoiding bonds, as well as interestsensitive and high-yielding stocks such as those in the telecommunications and utilities sectors. We have also reduced our exposure to real estate investment trusts. Although we avoided the materials sector, including gold, for most of 2013, we will start to look at these companies again in Thank you. Best in class Managed solutions from CI Investments Once again, CI s managed solutions have been recognized as industry leaders. Portfolio Select Series was named Best Fund of Funds at the 2013 Morningstar Awards, marking the third consecutive year that CI has received this distinction. Portfolio Series was the winner in 2012 and in 2011, the first year that an award was presented for this category. CI s managed solutions are comprehensive investment programs that offer fully diversified portfolios tailored to specific investor needs. Their excellence stems from two levels of expertise: CI s outstanding lineup of portfolio managers, who are responsible for security selection in the underlying funds, and CI Investment Consulting, which adds significant value through portfolio construction, asset allocation, currency hedging and risk management. The same talent, philosophy and process are applied across all of our managed solutions. For our investors, this means strong, consistent and award-winning results over the long term. Awards: Lipper Fund Awards are given by Lipper, Inc. to recognize funds that have provided superior consistency and risk-adjusted returns when compared to a group of similar funds. Awards are given to the fund with the highest value within its category for the time periods of one, three five and s according to the Lipper Leader ratings for Consistent, which reflect funds historic returns, adjusted for volatility, relative to peers. Lipper Leader ratings change monthly. For more information, see lipperweb.com. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user s own risk. This is not an offer to buy or sell securities. The Lipper Fund Awards are part of the Thomson Reuters Awards for Excellence. For more information, visit excellence.thomsonreuters.com. Portfolio Series Income Fund (Class A) was named Best Global Fixed Income Balanced Fund in February 2013 for the three and five-year periods ending Oct. 31, 2012, out of a category total of 26 and 19 funds, respectively. Signature High Income Fund (Class A) was named Best Global Neutral Balanced Fund in February 2013 for the three, five and 10-year periods ending Oct. 31, 2012, out of a category total of 98, 68 and 31 funds, respectively. Cambridge High Income Fund was named Best Canadian Equity Balanced Fund in February 2013 for the five-year period ending Oct. 31, 2012 out of a category total of 54 funds. Morningstar Awards. Morningstar Inc. All Rights Reserved. Awarded to Signature High Income Fund for Best Global Balanced Fund, 2012, 2011, 2010, and for Best Canadian Income Trust Fund, Awarded to Portfolio Series for Best Fund of Funds 2011 and Awarded to Black Creek International Equity Fund for Best International Equity Fund, and to Portfolio Select Series for Best Fund of Funds, Ratings: 2012 Morningstar Research Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Morningstar Ratings reflect performance as of Nov. 30, 2013 and are subject to change monthly. The ratings are calculated from a fund s 3, 5 and 10-year returns (if available) measured against 91-day Treasury bill and peer group returns. The top 10% of the funds in a category get five stars. The Overall Rating is a weighted combination of the 3, 5 and 10-year ratings. For greater detail see The star ratings and number of global neutral balanced funds for Signature High Income Fund for each period are as follows: three years five stars, 400 funds, five years five stars, 296 funds, s five stars, 68 funds. The star ratings and number of global neutral balanced funds for Signature Global Income & Growth Fund for each period are as follows: three years four stars, 400 funds; five years five stars, 296 funds. The star ratings and number of global equity balanced funds for Black Creek Global Balanced Fund for each period are as follows: three years five stars, 266 funds; five years five stars, 200 funds. The star ratings and number of international equity funds for Black Creek International Equity Fund for each period are as follows: three years five stars, 457 funds; five years five stars, 398 funds. The star ratings and number of Canadian focused equity funds for Cambridge Canadian Equity Corporate Class for each period are as follows: three years five stars, 368 funds; five years five stars, 312 funds. The star ratings and number of tactical balanced funds for Cambridge Canadian Asset Allocation Corporate Class for each period are as follows: three years four stars, 88 funds; five years five stars, 50 funds. The star ratings and number of Canadian equity balanced funds for Cambridge High Income Fund for each period are as follows: three years four stars, 263 funds; five years five stars, 203 funds.

6 6 CI Monthly Review January edition 2014 CI Fund Codes CLASS A Mutual Fund Trust Corporate Class Mandate Management Group ISC DSC LL ISC DSC LL $C $US $C $US $C $US $C $US $C $US $C $US Fixed Income Signature Global Bond Signature Global Asset Management Signature Canadian Bond Signature Global Asset Management Signature Corporate Bond Signature Global Asset Management Diversified Income Cambridge High Income Cambridge Global Asset Management CI Income CI Investment Consulting Select Income Managed Corporate Class CI Investment Consulting Signature Dividend Signature Global Asset Management Signature Diversified Yield II Signature Global Asset Management Signature High Income Signature Global Asset Management Canadian Balanced Signature Income & Growth Signature Global Asset Management Cambridge Canadian Asset Allocation Corporate Class Cambridge Global Asset Management Harbour Growth & Income Harbour Advisors Signature Canadian Balanced Signature Global Asset Management Portfolio Series Portfolio Series Income CI Investment Consulting Portfolio Series Conservative CI Investment Consulting Portfolio Series Conservative Balanced CI Investment Consulting Portfolio Series Balanced CI Investment Consulting Portfolio Series Balanced Growth CI Investment Consulting Portfolio Series Growth CI Investment Consulting Portfolio Series Maximum Growth CI Investment Consulting Canadian Equity Cambridge Canadian Equity Corporate Class Cambridge Global Asset Management Cambridge Canadian Growth Companies Cambridge Global Asset Management CI Canadian Dividend Tetrem Capital Management Cambridge Canadian Dividend Cambridge Global Asset Management CI Canadian Investment Tetrem Capital Management Harbour Harbour Advisors Harbour Voyageur Corporate Class Harbour Advisors Signature Select Canadian Signature Global Asset Management Synergy Canadian Corporate Class Picton Mahoney Asset Management U.S. Equity Cambridge American Equity Cambridge Global Asset Management CI American Managers Corporate Class CI Investment Consulting CI American Value Epoch Investment Partners Cambridge U.S. Dividend Cambridge Global Asset Management Global Equity Black Creek Global Leaders Black Creek Investment Management Black Creek International Equity Black Creek Investment Management Cambridge Global Equity Corporate Class Cambridge Global Asset Management CI Global Value Altrinsic Global Advisors Harbour Global Equity Corporate Class Harbour Advisors Signature Global Dividend Signature Global Asset Management Signature Select Global Signature Global Asset Management Global Balanced Black Creek Global Balanced Black Creek Investment Management Harbour Global Growth & Income Corporate Class Harbour Advisors Signature Global Income & Growth Signature Global Asset Management YTD 1 Month 3 Month 6 Month 1YR 3YR 5YR 10YR Inception Fixed Income Signature Global Bond (AUG. 92) Signature Canadian Bond (JAN. 93) Signature Corporate Bond (DEC. 01) Diversified Income Cambridge High Income N/A 10.6 (JUL. 04) Select Income Managed Corporate Class N/A N/A 4.0 (SEP. 10) Signature Diversified Yield N/A N/A 7.2 (NOV. 09) Signature Dividend (OCT. 96) Signature Diversified Yield II N/A N/A N/A 7.6 (FEB. 11) Signature High Income (DEC. 96) Canadian Balanced Signature Income & Growth (NOV. 00) Cambridge Canadian Asset Allocation Corporate Class N/A 5.3 (DEC. 07) Harbour Growth & Income (JUN. 97) Signature Canadian Balanced (JUN. 97) Portfolio Series Portfolio Series Income (DEC. 97) Portfolio Series Conservative (DEC. 97) Portfolio Series Conservative Balanced (DEC. 01) Portfolio Series Balanced (NOV. 88) Portfolio Series Balanced Growth (DEC. 01) Portfolio Series Growth (DEC. 01) Portfolio Series Maximum Growth (DEC. 01) Canadian Equity Cambridge Canadian Equity Corporate Class N/A 7.7 (DEC. 07) Cambridge Canadian Growth Companies N/A N/A N/A 28.6 (FEB. 11) CI Canadian Dividend N/A 6.8 (FEB. 05) Cambridge Canadian Dividend N/A 6.9 (FEB. 05) CI Canadian Investment (NOV. 32) Harbour (JUN. 97) Harbour Voyageur Corporate Class N/A N/A N/A 14.5 (AUG. 11) Signature Select Canadian (MAY 98) Synergy Canadian Corporate Class (DEC. 97) U.S. Equity Cambridge American Equity (MAY 89) CI American Managers Corporate Class (JUL. 00) CI American Value (MAY 57) Cambridge U.S. Dividend N/A 5.1 (JUN. 06) Global Equity Black Creek Global Leaders N/A 5.2 (FEB. 05) Black Creek International Equity N/A 15.2 (SEP. 08) Cambridge Global Equity Corporate Class N/A 6.8 (DEC. 07) CI Global High Dividend Advantage N/A 3.9 (JAN. 06) CI International Value (JUN. 96) Harbour Global Equity Corporate Class (DEC. 01) Signature Select Global N/A N/A 11.0 (JUL. 10) Global Balanced Black Creek Global Balanced N/A 5.5 (FEB. 07) Harbour Global Growth & Income Corporate Class (DEC. 02) Signature Global Income & Growth N/A 2.8 (FEB. 07) Class A Performance as at December 31, 2013 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. CI Investments, the CI Investments design, Signature Global Asset Management, Harbour Advisors, Harbour Funds and Cambridge are registered trademarks of CI Investments Inc. Portfolio Series and the Portfolio Select Series design are trademarks of CI Investments Inc. Cambridge Global Asset Management is a business name of CI Investments Inc. used in connection with its subsidiary, CI Global Investments Inc. Certain portfolio managers of Cambridge Global Asset Management are registered with CI Investments Inc. Published January 2014.