This semi-annual management report of fund performance contains financial highlights but does not contain the complete semi-annual or annual financial statements of the investment fund. You can get a copy of the semi-annual or annual financial statements at your request, and at no cost, by calling 1-888-664-4784, by writing to us at United Financial, 2 Queen Street East, Twentieth Floor, Toronto, ON, M5C 3G7 or by visiting our website at www.assante.com/unitedfinancial or SEDAR at www.sedar.com. Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. RESULTS OF OPERATIONS The Fund s net assets increased by $75.2 million to $65.7 million from December 31, 14 to June, 15. The Fund had net sales of $48.2 million for the period, while the portfolio s performance increased assets by $27. million. The Fund s six-month return for Class A units was 3.8%, Class E units was 4.%, Class F units was 4.4%, Class I units was 5.1% and Class W units was 4.9%, compared to the return of the benchmark of 4.1% for the same period. The benchmark is the J.P. Morgan Global Government Bond Total Return Index. Signature Global Asset Management, a division of CI Investments Inc. The normalization of long-end rates in Europe was the dominant story over the period with the spillover to global fixed-income markets. The process was violent with intra-day moves well in excess of historical volatility, which was blamed in part on (leveraged) positioning and the lack of liquidity. The German 1-year bund yield climbed.58% to reach.76% on June, 15. The increase was.43% and.33% for the U.S. and Canadian benchmark 1-year rates respectively. The Canadian dollar weakened by 7.5% in the time period. In Europe, quantitative easing has achieved modest success by lowering borrowing costs across the region and boosting the competitiveness of European exporters. The cyclical forces in Europe remain favourable but they are occurring in the context of a secular decline. The Japanification of Europe is well underway. In Japan, the main channel of stimulus is monetary policy. The longer the Abenomics experimentation continues, the more difficult it will be to achieve the 2% inflation target although Bank of Japan Governor Haruhiko Kuroda continuously reaffirms his commitment to achieving that target. In Canada, the drop in commodity prices has led to substantial softness in economic activity in oil-producing provinces and, by extension, across the country. The Bank of Canada was correct in lowering rates in January as the economic performance in Canada revealed weakness in the economy. However, the bank dampened expectations for further rate cuts on the basis that the weakness was front-loaded and the economy would recover in the remainder of the year. The subsequent performance of the economy has proved otherwise (as we expected) and the Canadian fixed-income market remains one of the best performing markets globally. U.S. during the period under review is expected to be below 2% (i.e. subpar) in the context of a weak and fragile global economy, which makes the environment unprepared for tightening. In addition, the economy is slowing down into the second half despite consensus forecast of a rebound. The Fed s desire for a rate hike seems more philosophical than economic at this stage. The yield curve flattens when the Fed rate hike rhetoric increases and the credit markets have not been able to make new lows in spread, which is consistent with late cycle behaviour in the fixed-income universe. Broader emerging market interest rates were fairly well behaved relative to the extreme volatility experienced in developed rates markets. Although a less hawkish Fed provided some support to the asset class at the beginning of the quarter, the normalization of European rates and the Greek situation resumed the selloff of the emerging market asset class amid broader risk reduction across markets. JPMorgan EMCI, a tradable benchmark for emerging market currencies versus the U.S. dollar, lost.8% over the second quarter. The portfolio posted a positive return during the period and performed in line with its benchmark. In terms of emerging market investments against five-year U.S. treasuries, our hard currency (U.S. dollar) positions in Brazil, Mexico, and Indonesia added +.5% and our local currency investments in Brazil, Chile, Malaysia, Mexico, and Philippines added +.2% from active return. Local emerging market currency exposure (including FX hedges) subtracted -.5% from active return. In total, emerging market activities underperformed -.25%. In our valuations, the U.S. benchmark 1-year bonds are trading in the middle of the range of about 1.85% - 2.75%. The Fund remains underweight the euro and yen relative to the portfolio benchmark but the magnitude of the active currency positioning has been reduced significantly in the second quarter after the large declines in the euro and yen. We remain flat duration relative to the benchmark overall. Our long duration assets are in Europe and Japan to benefit from the certainty of additional quantitative easing. In the U.S. and the U.K., we are concentrated in medium-term maturities that offer the best risk-adjusted return globally. In the U.S., the Federal Reserve has been caught in an uncomfortable situation. Despite the desire by some influential members to raise interest rates from the current emergency levels, the majority of tightening has already occurred through the currency channel and higher U.S. real rates in our assessment. The window of opportunity for rate hikes was in the second half of 14. GDP growth in the The major change in the second quarter has been to allocate to Spain and Italy in the front-end, partially taking advantage of widening of sovereign spreads during the Greek crisis. This exposure is hedged together with long duration assets in core European countries. CIG - 964
In emerging markets, a major theme going forward is infrastructure investment as part of expansionary fiscal policy and its contribution to global growth. A common concern is the consistency of policy delivery and the sluggish pace of disbursements. These hurdles need to be overcome for infrastructure to drive growth in the coming quarters. We are cautiously optimistic that larger government outlays and a pickup in construction and related sectors are due in the second half of 15, particularly in Asia. The window for monetary easing is closing as inflation dynamics become less benign after oil price stabilization, favourable base year calculation effects, and regions where currency depreciation occurred in the first half of 15 begin to import price inflation. A second half Fed hiking cycle may prove to be disruptive to most emerging market central banks, and thus we acknowledge that the emerging market interest rate complex remains a challenged one into the second half of 15 and beyond. RECENT DEVELOPMENTS Signature Global Asset Management, a division of CI Investments Inc. The general narrative for investors in the last few years has been to chase higher yielding assets relative to risk-free government bonds. Although this strategy results in better yield, it does so by introducing new risks (equity risk, credit risk, etc.) into the portfolio. This strategy worked in recent years as risk premia in the markets have fallen since their peak during the Great Financial Crisis ( GFC ). One clear example of this phenomenon is the fall in credit spreads over the years since the GFC, which made yield seeking strategies outperform government bonds handsomely. It is worth noting that this strategy was aligned with the Fed s desired portfolio re-balancing channel of the quantitative easing program as long as the program was in place. The outlook for these yield seeking portfolio postures that are widespread today are less certain looking forward. The bulk of risk premia tightening is behind us as major asset classes have normalized relative to bonds and yield-seeking strategies no longer look like a one way bet. Add to that, the technicalities caused by the shortage of liquidity in most segments of the fixed-income market and the popular yield seeking strategies of the last few years are substantially riskier today and do not compensate investors for liquidity and market risks. It is in this environment that constructing well-diversified portfolios in duration, curve, credit and currencies is critical. Looking ahead, unlike the last few years where the performance of credit spreads masked the deficiencies in duration and curve portfolio construction, interest rate positioning is going to differentiate relative performance. We remain long select corporate credit exposure to collect better income but since the cycle is well advanced and liquidity is poor, we use curve and duration as a hedge against liquidity events. expenses of the Fund (other than taxes, borrowing costs and new governmental fees) in return for a fixed administration fee. Management fee and fixed administration fee rates as at June, 15, for each of the classes are shown below: Annual management fee rate (%) The Manager received $1.6 million in management fees and $.2 million in fixed administration fees for the period. Management Fees Approximately 22% of total management fees were used to pay for sales and trailing commissions and other services required. The remaining 78% of management fees were used to pay for investment management and other general administration. Principal Distributor The Manager has the exclusive right to arrange for the distribution of units of the Fund. Pursuant to a series of agreements, the right to distribute such units has been granted, on a collective basis, to the following dealers, each of which is an affiliate of the Manager. Assante Capital Management Ltd. Assante Financial Management Ltd. Annual fixed administration fee rate (%) Class A 2..18 Class E 1.75.18 Class F 1..18 Class I paid directly by investor - Class W paid directly by investor.18 Independent Review Committee The Fund received standing instructions from the Board of Governors ( BoG ) in its capacity as the Independent Review Committee ( IRC ) with respect to the following Related Party Transactions: a) trades in securities of CI Financial Corp.; b) purchases or sales of securities of an issuer from or to another investment fund managed by the Manager (referred to as Inter-Fund Trades ); and c) mergers of funds with another fund that is subject to National Instrument 812 ( Fund Mergers ). RELATED PARTY TRANSACTIONS Manager, Trustee and Portfolio Advisor CI Investments Inc. is the Manager, Trustee and Portfolio Advisor of the Fund. CI Investments Inc. is a subsidiary of CI Financial Corp. The Manager, in consideration of management fees, provided management services required in the day-to-day operations of the Fund. The Manager bears all of the operating The applicable standing instructions require that Related Party Transactions be conducted in accordance with the Manager s policies and procedures. The Manager is required to advise the BoG of any material breach of a condition of the standing instructions. The standing instructions require, among other things, that the investment decision in respect to Related Party Transactions (a) are made by the Manager free from any influence by any entities related
to the Manager and without taking into account any consideration to any affiliate of the Manager; (b) represent the business judgment of the Manager uninfluenced by considerations other than the best interests of the Fund; and (c) are made in compliance with the Manager s policies and procedures. Transactions made by the Manager under the standing instructions are subsequently reviewed by the BoG on a quarterly basis to monitor compliance. The Fund relied on the BoG s standing instructions regarding Related Party Transactions during this reporting period. 3
FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the past six periods, as applicable. Net Assets per Unit ($) (1) (2) (8) * Class A Commencement of operations December 28, 6 Total net assets ($ s) (8) Number of units outstanding ( s) (8) Jun., 15 Dec. 31, 14 Dec. 31, 13 Dec. 31, 12^ Dec. 31, 11^ Dec. 31, 1^ 12.47 11.66 11.77 11.48 11.14 11.19.16.32.35.39.47.47 (.15) (.29) (.29) (.28) (.27) (.26).27.23 -.6 (.12).4.27.58 (.16).13.37 (.28).55.84 (.1)..45 (.3) 12.95 12.47 11.66 11.77 11.48 11.14 5,729 6,387 7,514 11,475 14,477 9,7 443 512 644 975 1,261 826 37.68 69.71 138.7 12.75 282.71 51.37.1.1.1.1.1.7 2.18 2.19 2.19 2.18 2.18 2.18.19..21.22.23.17 2.37 2.39 2. 2. 2.41 2.35 8.85 9.14 9.47 1.9 1.33 7.76 Class E Commencement of operations September 19, 8 Total net assets ($ s) (8) Number of units outstanding ( s) (8) Jun., 15 Dec. 31, 14 Dec. 31, 13 Dec. 31, 12^ Dec. 31, 11^ Dec. 31, 1^ 12.64 11.79 11.88 11.55 11.18 11.19.16.32.36.39.46.47 (.14) (.27) (.27) (.25) (.24) (.24).28.25 (.2).2 (.1) (.4).18.49 (.16).15.44 (.38).48.79 (.9).31.56 (.19) 13.14 12.64 11.79 11.87 11.55 11.18 181,937 16,766 116,9 72,733 48,4 11,952 13,851 12,721 9,914 6,125 4,183 1,69 37.68 69.71 138.7 12.75 282.71 51.37.1.1.1.1.1.7 1.93 1.94 1.94 1.93 1.93 1.93.22.22.22...16 2.15 2.16 2.16 2.13 2.13 2.9 11.38 11.23 11.52 1.24 1.6 5.39 * Footnotes for the tables are found at the end of the Financial Highlights section. ^ Historical figures are based on Canadian GAAP, for more details refer to footnote 7.
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (8) * Class F Commencement of operations July 15, 8 Total net assets ($ s) (8) Number of units outstanding ( s) (8) Jun., 15 Dec. 31, 14 Dec. 31, 13 Dec. 31, 12^ Dec. 31, 11^ Dec. 31, 1^ 13.55 12.54 12.52 12.7 11.59 11.51.17.34.38.41.51.49 (.9) (.17) (.18) (.16) (.16) (.15)..26 (.1).3 (.12).6 (.41).58 (.18).5 (.8) (.6) (.3) 1.1.1.33.15.34 14.14 13.55 12.54 12.52 12.7 11.59 34 12 11 11 6 25 2 1 1 1 1 2 37.68 69.71 138.7 12.75 282.71 51.37.1.1.1.1.1.7 1.18 1.19 1.18 1.18 1.18 1.18.13.13.14.12.15.9 1.31 1.32 1.32 1. 1.33 1.27 1.51 1.45 11.17 9.98 12. 8.91 Class I Commencement of operations September 26, 8 Total net assets ($ s) (8) Number of units outstanding ( s) (8) Jun., 15 Dec. 31, 14 Dec. 31, 13 Dec. 31, 12^ Dec. 31, 11^ Dec. 31, 1^ 14.83 13.55 13.36 12.72 12.5 11.82.19.37.41.44.48.5 - - (.1) - - -.32. (.1).4.1.9.22.58 (.19).16.24 (.22).73 1.25..64.73.37 15.58 14.83 13.55 13.36 12.72 12.5 367,872 319,532 218,497 164,469 135,545 8,17 23,69 21,542 16,123 12,312 1,659 678 37.68 69.71 138.7 12.75 282.71 51.37.1.1.1.1.1.7 -.1.1 - - - -.1.1 - - - * Footnotes for the tables are found at the end of the Financial Highlights section. ^ Historical figures are based on Canadian GAAP, for more details refer to footnote 7.
FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (8) Class W Commencement of operations June 24, 1994 Total net assets ($ s) (8) Number of units outstanding ( s) (8) Jun., 15 Dec. 31, 14 Dec. 31, 13 Dec. 31, 12^ Dec. 31, 11^ Dec. 31, 1^ 12.79 11.7 11.56 11.2 1.47 1.29.16.32.35.38.45.44 (.1) (.3) (.4) (.2) (.2) (.2).28.24 (.1).4 (.11).3.22.54 (.16).14.38 (.27).65 1.7.14.54.7.18 13.42 12.79 11.7 11.56 11.2 1.47 95,17 88,88 8,374 8,26 75,786 46,122 7,87 6,945 6,868 6,925 6,876 4,6 37.68 69.71 138.7 12.75 282.71 51.37.1.1.1.1.1.7.18.19.19.18.18.18.2.2.2.2.2.1..21.21...19 1.75 1.85 1.73 1.45 1.73 7.86 ^ Historical figures are based on Canadian GAAP, for more details refer to footnote 7. (1) This information is derived from the Fund s semi-annual and annual financial statements. (2) Net assets per unit and distributions per unit are based on the actual number of units outstanding for the relevant class at the relevant time. The increase (decrease) in net assets from operations per unit is based on the weighted average number of units outstanding for the relevant class over the fiscal period. (3) Distributions are automatically reinvested in additional units of the Fund. (4) Management expense ratio is calculated based on expenses charged to the Fund (excluding commissions and other portfolio transaction costs) and is expressed as an annualized percentage of daily average net assets for the period. As of July 1, 1, Ontario combined the federal goods and services tax ( GST - 5%) with the provincial retail sales tax ( PST - 8%). The combination resulted in a Harmonized sales tax ( HST ) rate of 13%. The Effective HST tax rate is calculated using the attribution percentage for each province based on unitholder residency and can be different from 13%. For any particular period, the rate shown will be prorated based on the different rates in effect during that period. For the year ended December 31, 1, the rate applied is 5% for the period January 1, 1 to June, 1 and the Fund s Effective HST rate for the period from July 1, 1 to December 31, 1. The rate shown for the year ended December 31, 1 is the time weighted average of these rates. Beginning January 1, 11, the HST rate is based on the residency of the unitholder. (5) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 1% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the fiscal period. The higher a Fund s portfolio turnover rate in a period, the greater the trading costs payable by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a higher turnover rate and the performance of a Fund. Portfolio turnover rate is calculated by dividing the lesser of the cost of purchases and the proceeds of sales of portfolio securities for the period, and excluding cash and short-term investments maturing in less than one year, and before assets acquired from a merger, if applicable, by the average of the monthly fair value of investments during the period. (6) The trading expense ratio represents total commissions and other portfolio transaction costs disclosed in the statements of comprehensive income expressed as an annualized percentage of daily average net assets of the Fund during the period. (7) For financial periods beginning on or after January 1, 13 the financial highlights are derived from the financial statements prepared in accordance with International Financial Reporting Standards ( IFRS ). IFRS allows net assets to be calculated based on the last traded market price for financial assets and financial liabilities where the last traded price falls within the day s bid-ask spread. There are no differences between the net assets calculated for purpose of processing unitholders transactions and the net assets attributable to holders of redeemable units used for financial statement reporting purposes as at June, 15, December 31, 14 and December 31, 13. For financial years before January 1, 13, the financial highlights are derived from the financial statements prepared in accordance with Canadian GAAP. Under Canadian GAAP net assets for financial statement purposes were calculated based on bid/ask price while for purpose of processing unitholder transactions net assets were calculated based on the closing market price. (8) This information is provided for the period ended June, 15 and the years ended December 31. 6
PAST PERFORMANCE This section describes how the Fund has performed in the past. Remember, past returns do not indicate how the Fund will perform in the future. The information shown assumes that distributions made by the Fund in the periods shown were reinvested in additional units of the relevant classes of the Fund. In addition, the information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. Year-by-Year Returns The following charts show the Fund s semi-annual and annual performance for each of the periods shown and illustrate how the Fund s performance has changed from period to period. In percentage terms, the charts show how much an investment made on the first day of each financial period would have grown or decreased by the last day of each financial period, except where noted. Class A Class E Class F Class I 35.4 25.8 3 28.4 2.2 4 1.7 1-7.5-11.3 -.4 3.1 2.5 -.9 6.9 3.8 1-11. -.1 3.3 2.9 -.8 7.2 4. 1.4.7 4.1 3.7.2 8.1 4.4 1-9.2 1.9 5.6 5. 1.4 9.4 5.1 - - - - Class W 38.2 1-8.5 4.8-5.5-9.3 1.7 5.3 4.9 1.2 - Dec. 5 Dec. 6 Dec. 7 Dec. 8 Dec. 9 Dec. 1 Dec. 11 Dec. 12 Dec. 13 Dec. 14 9.3 Jun. 15 Dec. 6 Dec. 7 Dec. 8 Dec. 9 Dec. 1 Dec. 11 Dec. 12 Dec. 13 4.9 Dec. 14 Jun. 15 Dec. 8 Dec. 9 Dec. 1 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Dec. 8 Dec. 9 Dec. 1 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Dec. 8 Dec. 9 Dec. 1 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Jun. 15 Jun. 15 Jun. 15 1 For the period from December 28, 6 to December 31, 6. 2 For the period from July 15, 8 to December 31, 8. 3 For the period from September 19, 8 to December 31, 8. 4 For the period from September 26, 8 to December 31, 8.
Summary of Investment Portfolio as at June, 15 Portfolio Breakdown Percentage of Category Net Assets (%) Country allocation U.S.A....4 Japan... 15.3 France... 11.2 U.K... 9.2 Italy... 4.5 Spain... 3.9 Canada... 2.7 Mexico... 2.6 Australia... 2.4 Norway... 1.6 Cash & Equivalents... 1.1 Brazil... 1. Sweden....9 New Zealand....8 Ireland....7 Netherlands....5 Other Net Assets (Liabilities)....5 Jersey Island....4 Indonesia....3 Portfolio Breakdown (cont d) Percentage of Category Net Assets (%) Sector allocation Foreign Government Bonds... 84.6 Corporate Bonds... 11.4 Provincial Bonds... 1.9 Cash & Equivalents... 1.1 Financials....5 Other Net Assets (Liabilities)....5 Top 25 Holdings Percentage of Security Name Net Assets (%) United States Treasury Note/Bond 3.125% 5/15/21... 5.7 United States Treasury Note/Bond 1.75% 2/28/22... 5.6 Government of Japan, Twenty Year Bond 1.5% 6//34... 5.5 France Government Bond OAT 3.25% 5/25/45... 4.7 United States Treasury Note/Bond 2% 1/31/21... 4.4 Spain Government Bond 1.4% 1/31/... 3.9 United States Treasury Note/Bond 1.625% 8/31/19... 3.9 Italy Buoni Poliennali Del Tesoro 1.5% 12/1/19... 3.6 United States Treasury Note/Bond 1.625% 11/15/22... 2.6 Government of Japan, Five Year Bond.1% 3//... 2.5 France Government Bond OAT 2.25% 5/25/24... 2.5 United States Treasury Note/Bond 1.25% 11//18... 2.4 United Kingdom, Treasury Gilt 1.75% 7/22/19... 2.2 United States Treasury Note/Bond 1.75% 5/15/23... 2.1 Province of Quebec 4.5% 12/1/19... 1.9 United States Treasury Inflation Indexed Bonds.125% 4/15/18... 1.8 United Kingdom, Treasury Gilt 2.25% 9/7/23... 1.8 Government of Japan, Ten Year Bond.6% 6//24... 1.7 Government of Japan, Ten Year Bond 1.2% 12//... 1.7 United States Treasury Note/Bond 2% 7/31/... 1.6 United Kingdom, Treasury Gilt, Inflation Linked Note, 1.66454% 11/22/17... 1.6 Government of Japan, Ten Year Bond.4% 3//25... 1.6 France Government Bond OAT.5% 5/25/25... 1.6 United States Treasury Note/Bond 1.5% 1/31/22... 1.5 Government of Japan, Ten Year Bond.3% 12//24... 1.4 Total Net Assets (in $ s) $65,679 The summary of investment portfolio may change due to ongoing portfolio transactions of the Fund and updates will be available on a quarterly basis. A NOTE ON FORWARD-LOOKING STATEMENTS This report may contain forward-looking statements about the Fund, its future performance, strategies or prospects, and possible future Fund action. The words may, could, should, would, suspect, outlook, believe, plan, anticipate, estimate, expect, intend, forecast, objective, and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties, both about the Fund and general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement made by the Fund. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchanges rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.