Transamerica CI Growth Portfolio. Portfolio Review First Quarter 2013

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1 Transamerica CI Growth Portfolio Portfolio Review First Quarter 2013

2 Transamerica CI Growth Portfolio Portfolio Managers Economic Overview Income investors in the first quarter of 2013 favoured highyield corporate bonds, where yields declined amid robust issuance and strong demand. Although data showed signs of economic improvement, the U.S. Federal Reserve reiterated its commitment to its quantitative easing strategy until the country s unemployment rate declines to 6.5%. The Bank of Canada also kept rates on hold, based on tepid economic expansion and weaker housing prices. Canadian income trusts and real estate investment trusts were modestly positive for the period. Canadian stocks as reflected by the S&P/TSX Composite Index added 3.3% in the quarter, with health care, industrials and consumer discretionary sectors making the strongest gains. The overall advance was dampened, however, by negative results for the materials sector, as weaker commodity prices and sluggish global economic growth dragged down share prices. Meanwhile, U.S. stocks as measured by the S&P 500 Index reached a record high in the quarter, gaining 13.2% in Canadian dollar terms. U.S stocks were buoyed by better-than-expected earnings reports and stronger economic data, including firm job growth, a recovery in housing and higher GDP. Defensive sectors, such as health care, consumer staples and utilities, led the rise. Cyclical sectors including technology and materials lagged. Overseas equity markets posted mainly positive returns in the quarter. In Europe, gains were moderate. The 10 billion bailout of the Cypriot banking system penalized bond and large deposit holders, shook markets and dampened returns for financial stocks across the region. Markets in South Korea and Singapore were also positive, but results were negative in China and Hong Kong as investors remained wary of weaker growth in the region and the impact of expected economic reforms in China. Japan had the strongest global stock market returns, benefiting from strong monetary and fiscal stimulus aimed at raising inflation and weakening the yen to boost exports. Underlying Fund Allocations AEGON Capital Management Canadian Bond Pool 13.1% Cambridge Canadian Equity Corporate Class 8.4% Signature Select Canadian Corporate Class 8.2% CI International Value Corporate Class 7.3% CI American Value Corporate Class 6.3% Signature International Corporate Class 6.1% CI American Managers Corporate Class 5.8% Synergy Canadian Corporate Class 5.3% Cambridge Global Equity Corporate Class 5.3% CI Canadian Investment Corporate Class 5.3% Cambridge American Equity Corporate Class 4.8% Harbour Voyageur Corporate Class 4.4% CI Can-Am Small Cap Corporate Class 4.3% Harbour Corporate Class 4.3% Signature Emerging Markets Corporate Class 4.1% CI American Small Companies Fund 3.3% Synergy American Corporate Class 2.2% Cash 1.5% Top Ten Holdings Canada Govt 4% 01Jun41 1.0% The Toronto-Dominion Bank 1.0% Canada Govt 2.75% 01Jun22 0.9% Canadian Imperial Bank of Commerce 0.7% Roche 0.7% Canadian National Railway Company 0.7% Bank of Nova Scotia 0.7% Suncor Energy Inc. 0.7% Royal Bank of Canada 0.6% Tourmaline Oil Corp. 0.6%

3 Transamerica CI Growth Portfolio Portfolio Performance Transamerica CI Portfolios are available as Guaranteed Investment Portfolios within select Transamerica segregated funds contracts and as Managed Portfolio Index Interest Options within select Transamerica Universal Life Products. Segregated Fund Net Returns below are for the Transamerica Guaranteed Investment Funds (TGIF) product. Please refer to for the returns on other products. 3 Months 6 Months 1 Year 3 Years Since Inception Inception Date 7.8% 11.0% 9.7% 5.5% 6.1% October 2009 On September 21, 2012, the Transamerica TOP GIPs began investing in a new portfolio managed by CI Investments. The Transamerica TOP GIPs are now referred to as Transamerica CI GIPs. Asset Allocation Overview and Activity Different types of investments will respond differently to the markets, reinforcing the importance of a multi-level diversification strategy. A balanced asset mix ensures that investors are not dependent on any one asset class or security type to provide returns. This report is designed to provide you with an up-to-date portfolio overview of the Transamerica CI Growth Portfolio, including the allocations across asset class, geographic region, equity sector and market capitalization. The arrows indicate whether the allocation for each category has increased or decreased since the previous quarter-end. Asset Class Geographic Regions 33.0% 22.7% 12.3% 12.2% 8.3% 4.9% 4.5% 1.5% 0.6% U.S. equity Canadian equity Canadian bond European equity Cash Asian equity Emerging markets equity Other equity Foreign bond 35.0% 33.2% 14.0% 4.8% 3.3% 3.2% 2.7% 2.1% 1.1% 0.7% Canada U.S. Cash & Others Emerging markets U.K. Japan Switzerland Germany France Netherlands Equity Market Cap Equity Industry Sector 76.3% 19.3% 4.5% Large cap Mid-cap Small cap 20.8% 13.3% 11.9% 11.0% 10.6% 10.0% 9.5% 8.5% 2.4% 1.9% 0.1% Financial services Energy Industrials Information technology Consumer staples Health care Consumer discretionary Materials Utilities Telecommunications Other

4 Transamerica CI Growth Portfolio Portfolio Commentary The portfolio gained 7.8% during the quarter, significantly outperforming its benchmark (30% S&P/TSX Composite Index, 20% DEX Universe Bond Index, 50% MSCI World Index, C$), which rose 6.3%. Our overweight allocation to U.S. equities and underweight position in Canadian equities contributed the most to outperformance, as did strong performance from the Canadian equity managers. During the quarter, U.S. equities continued to strengthen, handily outperforming Canadian stocks, which were held back by weakness in the resource sectors. International equity markets were boosted by strength in Japan, Australia and some European countries, notably Switzerland. Emerging markets delivered limited gains, in contrast to a strong Government bonds had modest gains due to their low yields, while bonds with longer maturities incurred small losses. Meantime, high-yield and investment-grade corporate bonds continued to perform well, benefiting from capital appreciation and higher coupons. The U.S. dollar gained against the Canadian dollar, due to improving economic fundamentals south of the border. In the income section, our exposure to high-yield bonds through Signature High Yield Bond Corporate Class made the biggest contribution to performance, although we have been reducing our exposure to high-yield bonds due to high valuations. AEGON Capital Management Canadian Bond Pool outperformed its benchmark, but contributed the least due to its investment-grade bond holdings, which did not gain as much as high-yield bonds. A small government bond position detracted from performance. Government bonds offer little to no yield in real terms, but have historically proven to be an effective means of offsetting equity risk and therefore justify a modest allocation to help reduce volatility. We eliminated our allocation to Signature High Yield Bond Corporate Class Fund and invested the proceeds across the remaining equity funds, while modestly increasing our cash position. In the equity section, U.S. equity funds made the largest contribution to performance. Strong performance from the Canadian equity managers also added value. The sector allocation of the portfolio s overall equity portion is more diversified than that of the Canadian economy and the S&P/TSX Composite Index, which has over 75% of its value concentrated in three sectors: energy, materials and financials. We continue to focus on company fundamentals and valuations to add value and avoid undue concentration in any one sector. From a regional perspective, the equity portion continued to have an overweight allocation to the U.S. and an underweight position in Canada. U.S. equities are supported by a diverse economy, with large exposure to global markets and strong representation in all major industrial sectors, making it an attractive asset class on a risk-adjusted basis. The Canadian equity section, including its sector allocation, added value. Cambridge Canadian Equity Corporate Class was the biggest contributor to performance, significantly outperforming its benchmark due to stock selection in the energy sector and its underweight position in materials. The Canadian equity funds had an overall overweight allocation to information technology, health care, consumer staples and consumer discretionary sectors, and underweight positions in energy, materials and financials. Among the U.S. equity funds, CI American Small Companies Corporate Class was the biggest contributor to performance, benefiting from strong selection in materials and strength from the small-cap universe. The U.S. equity component was tilted toward sectors that are tied to economic growth, such as industrials, with underweight positions in defensive sectors, including consumer staples and utilities. In the international equity portion, CI International Value Corporate Class made the largest contribution, due to strong stock selection in financials and information technology. This portion of the portfolio had overweight allocations to information technology and energy, a significant cash position and underweight allocations to industrials, consumer discretionary and utilities. Geographically, it had an overweight position in emerging markets, mainly in Asia

5 Transamerica CI Growth Portfolio and Latin America, and was underweight in Australia, France, the U.K. and the peripheral countries of Europe. Our allocation to emerging markets detracted value due to muted performance following a strong calendar Our long-term outlook remains favourable for these countries, particularly China, where we expect to see businesses continuing to benefit from rising personal wealth and domestic consumption. Historically, emerging market equities have offered higher returns with additional volatility. While we expect this tradeoff to continue, we believe the long-term rewards justify the risks. Alfred Lam, CFA, Vice-President and Portfolio Manager Yoonjai Shin, CFA, Director Marchello Holditch, Senior Analyst Lewis Harkes, CFA, Senior Analyst Andrew Ashworth, Analyst

6 Transamerica CI Portfolios Portfolio Management Teams Aegon Capital Management (ACM) oversees more than $8 billion in institutional, third party and asset liability matching investments. ACM is backed by the strength of Aegon Asset Management which manages more than US$300 billion in assets. ACM s focus is to provide exceptional income and capital preservation solutions for our clients. Altrinsic Global Advisors, LLC follows a fundamental value approach in which the team seeks out high-quality undervalued companies worldwide. Founded by John Hock and associates, Altrinsic is based in Greenwich, Connecticut, and manages over US$13 billion in assets. Cambridge Global Asset Management manages over $6 billion in assets and is led by Chief Investment Officer Alan Radlo and Portfolio Managers Robert Swanson and Brandon Snow. Combined, they have over 65 years of investment experience and have managed a number of multi-billion-dollar mutual fund portfolios. Cambridge Global Asset Management is a division of CI Investments and has offices in Boston and Toronto. Epoch Investment Partners, Inc. is a New York-based investment management firm founded by Wall Street veteran William Priest and associates. Epoch uses a unique value-based approach that focuses on companies with superior shareholder yield. It manages over US$24 billion. Harbour Advisors, a division of CI Investments, is led by Portfolio Managers Gerry Coleman and Stephen Jenkins. Harbour s approach entails buying high-quality businesses at a sensible price, and following a patient, long-term outlook. Mr. Coleman s expertise has been recognized by his selection as Fund Manager of the Year in 2008 and Harbour manages over $13 billion. Signature Global Advisors advantage is its approach in which asset class and sector specialists combine their research to develop a comprehensive picture of a company and its securities. The team of 32 investment professionals is led by Chief Investment Officer Eric Bushell, who was named Morningstar Fund Manager of the Decade in Signature manages over $40 billion. Picton Mahoney Asset Management is a portfolio management firm led by David Picton and Michael Mahoney. The use of quantitative analysis is the foundation of their approach. Picton Mahoney maintains a disciplined focus on fundamental change, coupled with strong risk controls and portfolio construction techniques. The firm manages about $7 billion. Tetrem Capital Management is an employee-owned investment management firm founded by Chief Investment Officer Daniel Bubis. It is based in Winnipeg and has an office in Boston. Tetrem uses a disciplined investment approach to invest in undervalued Canadian and U.S. companies. The firm manages about $5 billion.

7 Strength and experience The Transmerica CI Portfolios are managed by CI Investments Inc. on behalf of Transamerica Life Canada. Transamerica Life Canada is a leading life insurance company in Canada. Through a number of distribution channels, resulting in a national network of thousands of independent advisors, Transamerica provides a full spectrum of individual life insurance and protection products, designed to help Canadians take responsibility for their financial future. Transamerica Life Canada is an Aegon company. CI Investments has been managing money for over four decades and today is one of Canada s largest investment fund companies. CI manages approximately $80 billion on behalf of two million Canadian investors. CI provides the industry s widest selection of investment funds and leading portfolio managers on a variety of platforms, including mutual and segregated funds, managed solutions and alternative investments. Aegon Capital Management (ACM) oversees more than $8 billion in institutional, third party and asset liability matching investments. ACM is backed by the strength of Aegon Asset Management which CI is a subsidiary of CI Financial Corp. (TSX: CIX), an independent, Canadian-owned wealth management firm with approximately $105 billion in assets as at March 31, manages more than US$300 billion in assets. ACM s focus is to provide exceptional income and capital preservation solutions for its clients.

8 For more information on Transamerica CI Portfolios, please contact your advisor or visit All commentaries are published by CI Investments Inc., CI Investments Inc. is the Manager of all the funds described herein, other than Aegon Capital Management Canadian Bond Pool which is managed by Aegon Capital Management. The commentaries 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 the commentaries is accurate at the time of publication. However, CI Investments Inc. cannot guarantee their accuracy or completeness and accepts no responsibility for any loss arising from any use of or reliance on the information contained herein. SUBJECT TO ANY APPLICABLE DEATH AND MATURITY GUARANTEE, ANY PART OF THE PREMIUM OR OTHER AMOUNT THAT IS ALLOCATED TO A SEGREGATED FUND IS INVESTED AT THE RISK OF THE CONTRACT HOLDERS AND MAY INCREASE OR DECREASE IN VALUE ACCORDING TO FLUCTUATIONS IN THE MARKET VALUE OF THE ASSETS OF THE SEGREGATED FUND. If you wish to obtain a copy of the simplified prospectus and/or financial statements of any of the underlying funds, please contact the appropriate mutual fund company. Transamerica Life Canada is the issuer and guarantor of the Transamerica CI Guaranteed Investment Portfolio contract. CI Investments, the CI Investments design, Synergy Mutual Funds, Harbour Advisors, Harbour Funds, Cambridge and American Managers are registered trademarks of CI Investments Inc. Signature Funds and Signature Global Advisors are trademarks of CI Investments Inc. Cambridge Global Asset Management is the business name of CI Global Invesments Inc. Certain portfolio managers of Cambridge Global Asset Management are registered with CI Investments Inc. Aegon and the Aegon logo are registered trademarks of Aegon N.V. Aegon Canada ULC and its subsidiary companies are licensed to use such marks. Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. First published January Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I Head Office / Toronto Calgary Montreal Vancouver Client Services English: French: _E (04/13)