CI Global High Dividend Advantage Fund

Transcription

1 This annual management report of fund performance contains financial highlights but does not contain the complete annual financial statements of the investment fund. You can get a copy of the annual financial statements at your request, and at no cost, by calling , by writing to us at CI Investments Inc., 2 Queen Street East, Twentieth Floor, Toronto, ON, M5C 3G7 or by visiting our website at or SEDAR at 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. INVESTMENT OBJECTIVE AND STRATEGIES The objective of the CI Global High Dividend Advantage Fund (the Fund ) is generate a consistently high level of dividend and interest income while preserving capital by investing, directly or indirectly, primarily in dividend-paying common and preferred shares, debentures, income trusts, equity-related securities and convertible securities of issuers anywhere in the world. Indirect investments can include derivatives and investments in other mutual funds. The portfolio advisor identifies companies that offer good value relative to its current price and how it is expected to perform. and March due to worries of a trade war, quantitative tightening, regulatory risks, and concerns about valuations. The best performing sectors were energy and telecommunication services, while cyclical sectors, real estate and materials posted the largest losses. The consumer staples and utilities sectors also declined more than the broader market. Most major currencies, including the euro, yen and sterling, appreciated at the U.S. dollar in light of trade concerns and worsening U.S. fiscal imbalances. The commodity-oriented currencies of Australia and Canada, however, declined. The portfolio advisor uses techniques such as fundamental analysis to assess value and growth potential. This means evaluating the financial condition and management of a company, its industry and the overall economy. The portfolio advisor analyzes financial data, assesses the quality of management, and conducts company interviews. The Fund may use derivatives to the extent permitted by securities regulations. In order to earn additional income, the Fund may also enter into securities lending transactions, repurchase transactions and reverse repurchase transactions, as permitted by securities regulations. The Fund may hold cash, or invest excess cash in any Canadian or U.S. dollar denominated debt security considered investment grade, and cash equivalents. The Fund may also invest in exchange traded funds and closed-end funds. RISK There were no changes to the Fund over the period of this report that materially affected the overall level of risk associated with the Fund. The Fund is suitable for investors who want to receive regular tax efficient distributions, are investing for the medium and/or long term, and can tolerate medium risk. RESULTS OF OPERATIONS The net asset value of the Fund decreased by $53.5 million to $388.4 million from March 31, 2017 to March 31, The Fund had net redemptions of $39.6 million during the year. The portfolio s performance increased assets by $9.4 million. The Fund paid distributions totalling $23.3 million. Class A units returned 0.4% after fees and expenses for the one-year period ended March 31, Over the same time period, the Fund s benchmark returned 11.2%. The benchmark is the MSCI All Country World Total Return Index. The performance of the Fund s other classes is substantially similar to that of Class A units, except for differences in the structure of fees and expenses. For the returns of the Fund s other classes, please refer to the Past performance section. Stocks had robust as represented by the MSCI World Index, helped by strong corporate results early in the period and further bolstered by a synchronized global recovery and strong economic activity going into Markets declined in February The portfolio provided positive returns for the 12-months ending March 31, 2018, driven by strong cash flows and sustainable shareholder yield, but trailed its benchmark. Stock selection in the energy sector was the most significant relative positive contributor, while stock selection in the telecommunications sector also contributed positively. Larger-than-benchmark weights in the consumer staples and utilities sectors were significant relative detractors. The largest individual contributors to performance during the period were AbbVie Inc., Statoil ASA, Royal Dutch Shell PLC Sponsored ADR Class A, Deutsche Post AG and Munich Reinsurance Co. The largest individual detractors were Imperial Brands PLC, PPL Corp., Welltower Inc., Micro Focus International PLC and AT&T Inc. Investments in Red Electrica Corp. SA, Intel Corp., MetLife Inc., Lloyds Banking Group PLC, Las Vegas Sands Corp., American Electric Power Co., Inc., FirstEnergy Corp., Pembina Pipeline Corp., Leggett & Platt Inc. and Nutrien Ltd. were made during the year. MetLife is a global provider of life insurance, annuities, employee benefits and asset management. It is the largest life insurance company based in the United States. Since the global financial crisis, MetLife has de-emphasized capital intensive businesses such as long-term care, variable annuities and certain universal life insurance policies. Today, the cash generating power of Met Life s assortment of businesses, many of them feegenerating, is more transparent and Met Life s cost of equity should decline over time. It is likely that Met Life s free cash flow will grow more rapidly than its earnings over the next few years as its business transformation continues. It has two billion of excess cash at its holding company. If permitted by the U.S. Federal Reserve (Fed), it will be able to return a meaningful portion of its free cash flow to shareholders. The company s results would also benefit from higher interest rates. The portfolio sold out of investments in Reynolds American Inc., Sky PLC, Telstra Corp., Ltd., Waste Inc., Microchip Technology Inc., Regal Entertainment Group, Automatic Data Processing Inc. and Agrium Inc. during the year. RECENT DEVELOPMENTS Growth in the U.S. is especially robust: the labour market is tight, solid domestic demand CIG - 28

2 has helped the production side of the economy pick up, and the recent corporate tax cuts will add an additional boost in the short-term. Europe is experiencing its best growth in a decade and even Japan is growing above trend. Increasing rhetoric and action around U.S. trade policy is a risk to the positive growth backdrop, but it remains to be seen if it will be enough to derail the global economy. Valuation multiples are unlikely to expand much further now that central banks in North America and Europe are moving from quantitative easing to quantitative tightening. Equity returns will instead rely on cash flow growth and dividends. We also expect more frequent bouts of volatility will accompany incrementally higher interest rates and waning liquidity. Volatility could be exacerbated by the shift from active to passive managers and the increased use of systematic strategies that sell on auto pilot. We believe our investment approach is well suited to this environment, where investment returns are more closely linked to company fundamentals. As always, we seek companies that can generate a growing stream of free cash flow and can allocate that cash effectively for the benefit of shareholders. Effective April 3, 2018, Karen Fisher became a member of the CI Board of Governors ( BOG ) and the Independent Review Committee ( IRC ) of the Fund. Meanwhile, Christopher Hopper resigned from the role as a member of the BOG and IRC. RELATED PARTY TRANSACTIONS Manager, Portfolio Advisor, Trustee and Registrar CI Investments Inc. is the Manager, Portfolio Advisor, Trustee and Registrar of the Fund. CI Investments Inc. is a subsidiary of CI Financial Corp. The Manager, in consideration for management fees, provides management services required in the day-to-day operations of the Fund. The Manager bears all of the operating expenses of the Fund (other than taxes, borrowing costs and new governmental fees) in return for a fixed administration fee. fee and fixed administration fee rates as at March 31, 2018, for each of the classes are shown below: Annual management fee rate (%) Annual fixed administration fee rate (%) Class A Class A Class A Class A Annual management fee rate (%) Annual fixed administration fee rate (%) Class I Paid directly by investor - Class O Paid directly by investor 0.15 The Manager received $3.5 million in management fees and $0.4 million in fixed administration fees for the year. Fees Approximately 26% of total management fees were used to pay for sales and trailing commissions. The remaining 74% of management fees were used for investment management and other general administration. Independent Review Committee The Fund received standing instructions from the Fund s Independent Review Committee 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; c) purchases or sales of other investment funds managed by the Manager or their affiliates; and d) mergers involving the Fund and another fund managed by the Manager that is subject to National Instrument Investment Funds. The applicable standing instructions require that related party transactions be conducted in accordance with the Manager s policies and procedures and that the Manager advise the IRC of any material breach of a condition of the standing instructions. The standing instructions require, among other things, that investment decisions in respect of related party transactions (a) are free from any influence by an entity related to the Manager and without taking into account any consideration relevant to an entity related to the Manager; (b) represent the business judgment of the Manager uninfluenced by considerations other than the best interests of the Fund; (c) are made in compliance with the Manager s policies and procedures; and (d) achieve a fair and reasonable result for the Fund. Transactions made by the Manager under the standing instructions are subsequently reviewed by the IRC on a quarterly basis to monitor compliance. The Fund relied on the IRC s standing instructions regarding related party transactions during this reporting year. Class A Class A Class E Class F Class F Class F Class F Class F Class F

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 five years, as applicable. Net Assets per Unit ($) (1) (2) (4) * Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding (decrease) from income (excluding From From capital Total at the end of the year of year (2) revenue distributions) the year the year operations (2) dividends) dividends (2, 3) Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class A Commencement of operations January 20, 2006 Mar. 31, (0.22) 0.52 (0.53) 0. (0.) (0.01) - (0.28) (0.39) 8.24 Mar. 31, (0.21) (0.16) (0.02) - (0.19) (0.37) 8.56 Mar. 31, (0.21) (0.48) (0.11) (0.02) - (0.23) (0.36) 8.34 Mar. 31, (0.21) 1.25 (0.48) (0.39) (0.39) 8.59 Mar. 31, (0.19) 2.29 (0.55) (0.41) (0.41) 8.05 Class A1 Mar. 31, (0.21) 0.54 (0.82) (0.19) (0.) (0.01) - (0.33) (0.44) 9.44 Class A2 Mar. 31, (0.21) 0.53 (1.01) (0.39) (0.11) (0.01) - (0.33) (0.45) 9.45 Class A3 Mar. 31, (0.20) 0.48 (0.78) (0.20) (0.11) (0.01) - (0.33) (0.45) 9.44 Class A4 Mar. 31, (0.19) 0.51 (1.27) (0.63) (0.12) (0.01) - (0.33) (0.46) 9.45 Class A5 Mar. 31, (0.18) 0.49 (1.78) (1.13) (0.13) (0.01) - (0.33) (0.47) 9.45 *Footnotes for the tables are found at the end of the Net Assets per Unit section of the Financial Highlights.

4 FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (4) * Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding (decrease) from income (excluding From From capital Total at the end of the year of year (2) revenue distributions) the year the year operations (2) dividends) dividends (2, 3) Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class E Commencement of operations October 4, 2011 Mar. 31, (0.32) 0.84 (1.00) 0.05 (0.19) (0.02) - (0.47) (0.68) Mar. 31, (0.31) (0.28) (0.04) - (0.33) (0.65) Mar. 31, (0.32) (0.80) (0.19) (0.03) - (0.40) (0.62) Mar. 31, (0.31) 2.27 (0.75) (0.68) (0.68) Mar. 31, (0.28) 3.78 (0.84) (0.69) (0.69) Class F Commencement of operations January 20, 2006 Mar. 31, (0.12) 0.51 (0.49) 0.22 (0.18) (0.01) - (0.27) (0.46) 8.07 Mar. 31, (0.11) (0.21) (0.03) - (0.22) (0.46) 8.37 Mar. 31, (0.12) (0.48) (0.14) (0.02) - (0.27) (0.43) 8.15 Mar. 31, (0.12) 1.33 (0.35) (0.47) (0.47) 8.38 Mar. 31, (0.) 2.26 (0.51) (0.47) (0.47) 7.84 Class F1 Mar. 31, (0.11) 0.47 (1.08) (0.41) (0.20) (0.02) - (0.32) (0.54) 9.46 Class F2 Mar. 31, (0.11) 0.52 (0.70) 0.02 (0.20) (0.02) - (0.32) (0.54) 9.45 Class F3 Mar. 31, (0.) 0.71 (0.43) 0.46 (0.21) (0.02) - (0.32) (0.55) 9.46 Class F4 Mar. 31, (0.09) 0.46 (1.06) (0.37) (0.22) (0.02) - (0.32) (0.56) 9.45 *Footnotes for the tables are found at the end of the Net Assets per Unit section of the Financial Highlights.

5 FINANCIAL HIGHLIGHTS (cont d) Net Assets per Unit ($) (1) (2) (4) Increase (decrease) from operations: Distributions: Total Realized Unrealized Total increase From net investment Net assets Net assets at the beginning Total expenses (excluding (decrease) from income (excluding From From capital Total at the end of the year of year (2) revenue distributions) the year the year operations (2) dividends) dividends (2, 3) Return of capital distributions shown (2) $ $ $ $ $ $ $ $ $ $ $ $ Class F5 Mar. 31, (0.08) 0.61 (0.04) 0.78 (0.23) (0.02) - (0.32) (0.57) 9.45 Class I Commencement of operations May 15, 2006 Mar. 31, (0.62) 0.28 (0.31) (0.03) - (0.27) (0.61) 8.74 Mar. 31, (0.29) (0.04) - (0.27) (0.60) 9.05 Mar. 31, (0.50) (0.19) (0.03) - (0.36) (0.58) 8.79 Mar. 31, (0.41) (0.62) (0.62) 9.02 Mar. 31, (0.25) (0.59) (0.59) 8.43 Class O Commencement of operations October 4, 2011 Mar. 31, (0.02) 0.89 (1.00) 0.40 (0.48) (0.04) - (0.42) (0.94) Mar. 31, (0.02) (0.45) (0.06) - (0.41) (0.92) Mar. 31, (0.02) (0.94) (0.29) (0.05) - (0.55) (0.89) Mar. 31, (0.02) 2.16 (0.68) (0.96) (0.96) Mar. 31, (0.02) 3.80 (0.90) (0.91) (0.91) (1) This information is derived from the Fund s audited 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 year. (3) Distributions are automatically reinvested in additional units of the Fund. (4) This information is provided for the years ended March 31.

6 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) * Total net assets (5) Number of units outstanding (5) before taxes (2) after taxes (2) Effective HST rate for the year (2) Harmonized Trading Portfolio sales tax (2) (3) turnover rate (4) $000 s 000 s % % % % % % Class A Commencement of operations January 20, 2006 Mar. 31, ,474 12, Mar. 31, ,133 19, Mar. 31, ,922 45, Mar. 31, ,958 49, Mar. 31, ,652 33, Class A1 Mar. 31, ,450 2, Class A2 Mar. 31, , Class A3 Mar. 31, , Class A4 Mar. 31, Class A5 Mar. 31, *Footnotes for the tables are found at the end of the Financial Highlights section.

7 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) * Total net assets (5) Number of units outstanding (5) before taxes (2) Harmonized sales tax (2) after taxes (2) Effective HST rate for the year (2) Trading (3) Portfolio turnover rate (4) $000 s 000 s % % % % % % Class E Commencement of operations October 4, 2011 Mar. 31, , Mar. 31, , Mar. 31, , Mar. 31, , Mar. 31, , Class F Commencement of operations January 20, 2006 Mar. 31, ,376 1, Mar. 31, ,4 3, Mar. 31, ,071 2, Mar. 31, ,491 2, Mar. 31, ,603 2, Class F1 Mar. 31, , Class F2 Mar. 31, Class F3 Mar. 31, Class F4 Mar. 31, *Footnotes for the tables are found at the end of the Financial Highlights section.

8 FINANCIAL HIGHLIGHTS (cont d) Ratios and Supplemental Data (1) (5) Total net assets (5) Number of units outstanding (5) before taxes (2) Harmonized sales tax (2) after taxes (2) Effective HST rate for the year (2) Trading (3) Portfolio turnover rate (4) $000 s 000 s % % % % % % Class F5 Mar. 31, Class I Commencement of operations May 15, 2006 Mar. 31, ,947 25, Mar. 31, ,981 26, Mar. 31, ,688 3, Mar. 31, ,389 3, Mar. 31, ,792 3, Class O Commencement of operations October 4, 2011 Mar. 31, , Mar. 31, , Mar. 31, , Mar. 31, , Mar. 31, , (1) This information is derived from the Fund s audited annual financial statements. (2) 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 year, including the Fund s proportionate share of any underlying fund(s) expenses, if applicable. The Effective HST tax rate is calculated using the attribution percentage for each province based on unitholder residency and can be different from 13%. (3) The trading represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net assets during the year, including the Fund s proportionate share of such expenses of any underlying fund(s), if applicable. (4) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. A portfolio turnover rate of 0% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the fiscal year. The higher a Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater the chance of an investor receiving taxable capital in the year. 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 year, 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 year. (5) This information is provided for the years ended March 31.

9 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 years 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 annual performance for each of the years shown and illustrate how the Fund s performance has changed from year to year. In percentage terms, the charts show how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year, except where noted. Class A Class E Class F Class I Mar Mar Mar Mar Mar Mar Mar Mar Mar. 20 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar. 20 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar. 20 Mar Mar Mar Mar Mar Mar Mar Mar Class O return is for the period from October 4, 2011 to March 31, 2012.

10 Annual Compound Returns The following table shows the Fund s annual compound returns for each year indicated, compared to the MSCI All Country World Total Return Index. The MSCI All Country World Total Return Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 47 country indices comprising 23 developed and 24 emerging markets. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States of America. The emerging market country indices included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. A discussion of the performance of the Fund as compared to the benchmark is found in the Results of Operations section of this report. One Year (%) Three Years (%) Five Years (%) Ten Years (%) Since Inception (%) Class A n/a MSCI All Country World Total Return Index n/a Class E n/a.2 MSCI All Country World Total Return Index n/a 14.6 Class F n/a MSCI All Country World Total Return Index n/a Class I n/a MSCI All Country World Total Return Index n/a Class O n/a 12.7 MSCI All Country World Total Return Index n/a 14.6

11 SUMMARY OF INVESTMENT PORTFOLIO as at March 31, 2018 Category % of Net Assets Category % of Net Assets Top 25 Holdings % of Net Assets Country allocation U.S.A U.K Germany France Canada Switzerland Italy Australia Norway Spain Cash & Equivalents Singapore Ireland Sweden Taiwan Other Net Assets (Liabilities) Foreign Currency Forward Contracts... (0.8) Sector allocation Financials Utilities Consumer Staples Telecommunication Services Energy....7 Health Care....4 Industrials Information Technology Real Estate Consumer Discretionary Materials Cash & Equivalents Private Placements Other Net Assets (Liabilities) Foreign Currency Forward Contracts... (0.8) Total S.A Vodafone Group PLC GlaxoSmithKline PLC Royal Dutch Shell PLC, Class A, ADR Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen AG, Registered Shares BCE Inc Verizon Communications Inc Altria Group Inc AstraZeneca PLC, ADR AT&T Inc Terna Rete Elettrica Nazionale SpA AXA S.A Duke Energy Corp Imperial Brands PLC Philip Morris International Inc National Grid PLC Allianz S.E Pfizer Inc Cisco Systems Inc Cash & Equivalents Deutsche Telekom AG BAE Systems PLC British American Tobacco PLC Welltower Inc Entergy Corp Total Net Assets (in $000 s) $388,420 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. 11