Select 20i80e Managed Portfolio Corporate Class. Portfolio Review Third Quarter 2018

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1 Portfolio Review Third Quarter 2018 Q3

2 Portfolio Performance (Class F) 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years 10 Years Since Inception (November 2006) -0.8% 1.2% 2.8% 4.5% 6.9% 7.6% 7.5% 4.6% 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. CI Multi-Asset Management combines its portfolio construction expertise with ongoing comprehensive research and recommendations from State Street Global Advisors, a world leader in asset allocation, to create portfolios designed to capture evolving opportunities in the various asset classes. This report is designed to provide you with an up-to-date portfolio overview of the Select 20i80e Managed Portfolio, including the allocations across asset class, geographic region and equity sector. Asset Class Geographic Regions 30.2% 21.6% 16.1% 8.7% 6.6% 6.2% 4.3% 4.3% 2.0% U.S. equity Canadian equity European equity Canadian bond Cash Foreign bond Emerging markets equity Asian equity Other equity 34.4% 30.2% 14.7% 4.6% 4.0% 3.8% 2.3% 2.2% 2.2% 1.5% U.S. Canada Cash and other countries Emerging markets U.K. Japan Germany France Switzerland Bermuda Equity Industry Sector Equity Market Cap 22.3% 13.2% 11.6% 10.5% 10.1% 9.3% 8.5% 6.0% 3.4% 2.0% 1.8% 1.3% Financial services Information technology Industrials Health care Consumer discretionary Energy Consumer staples Materials Utilities Telecommunication services Other Real estate 86.2% 12.4% 1.4% Large-cap Mid-cap Small-cap Portfolio Select Series 29

3 Underlying Fund Allocations Select U.S. Equity Managed Fund 30.2% Select International Equity Managed Fund 26.1% Select Canadian Equity Managed Fund 23.5% CI Income Fund 19.1% Cash 1.1% Top Ten Holdings Toronto-Dominion Bank 1.4% Royal Bank of Canada 1.1% SPDR Gold Trust 1.0% Bank of Nova Scotia 0.9% Apple Inc. 0.7% Microsoft Corp. 0.7% Suncor Energy Inc. 0.7% Costco Wholesale Corp. 0.6% Danaher Corp. 0.6% Canadian Natural Resources Ltd. 0.6% 30 Portfolio Select Series

4 Performance Summary The portfolio gained 1.2% during the third quarter of 2018, underperforming its blended benchmark (20% FTSE Canada Universe Bond Index, 40% S&P/TSX Composite Index and 40% MSCI World Index), which rose 1.7%. Contributors to Performance In the fixed-income component of the portfolio, key contributors to outperformance during the quarter were high-yield bonds and diversified income equities, including global REITs and infrastructure stocks. Within the equity portion, an overweight allocation to Select U.S. Equity Fund added significant value over the quarter due to strong stock selection in industrials and consumer staples. Our currency hedging strategy added value over the quarter as the U.S. dollar depreciated 1.7% against its Canadian counterpart. We believe the U.S. currency is still overvalued at these levels and we are maintaining a 70% hedge ratio. Detractors from Performance Canadian government bonds and gold holdings detracted from relative performance. These assets remain an important component of portfolio construction as, respectively, they provide an offset to equity and inflation risk. Select Canadian Equity Fund made a negative contribution to return. While the fund benefited from strong stock selection in the consumer discretionary sector and an underweight allocation to materials, those gains were offset by our industrials and health care holdings. Select International Equity Fund also detracted from relative performance, but had a neutral effect to portfolio return on an absolute basis. An overweight allocation to emerging markets equity and consumer discretionary holdings had negative impacts on return. Portfolio Activity The portfolio s asset allocation at the end of the quarter was 14.9% fixed income, 78.5% equity and 6.6% cash. Over the quarter, we initiated a small position in First Asset Health Care Giants Covered Call ETF and increased our holding in ishares 20+ Year Treasury Bond ETF. Market Outlook Ten years ago, the global economy was thrown into turmoil amid the fallout from U.S. lenders high-risk housing loans. Central banks around the world reacted quickly to the resulting debt crisis with unprecedented tools that included zero interest rates and quantitative easing. These measures bailed out asset holders but penalized asset builders, which in turn created a wide wealth gap, resulting in low reported inflation and slow economic growth. The U.S. Federal Reserve s balance sheet has since ballooned to $4.2 trillion from less than $1 trillion, and it has made very little progress to retreat from that level. As government stimulus is gradually withdrawn, the global economy is expected to slow. However, it is unlikely quantitative easing will be unwound completely before the next recession. Corporate, government and individual debt levels will likely remain high, which limits future lending capacity. This increases the likelihood of tight credit conditions and recession. Investors should diversify their portfolios and avoid shares of companies with excessive debt. Our portfolios are focused on quality and value, and the managers are resisting temptation to buy at high prices. While many stocks at high multiples still offer good short-term upside, over the longer term, this tends to lead to wealth destruction. For example, last year s investor darling, the bitcoin cryptocurrency, has plunged 66% in less than a year. Our underweight exposure to the technology sector detracted from relative performance. Portfolio Select Series 31

5 Our portfolios asset mixes are generally equal to the benchmark in terms of equity weight. This assures we will participate on the upside. Our equity positioning favours countries that offer value and lower downside. As investors appear overly focused in U.S. technology companies, the Canadian stock market has quietly set itself up as a value investment, with high dividend, larger long-term return potential and low volatility. We have continued to increase our allocation to Canada. We are even more confident in the domestic market following the negotiation of the new USMCA trade agreement with the United States and Mexico. As a minimum, it removes uncertainty and investors are now able to re-focus on fundamentals. The current bull market is nearly a decade old yet it could run longer. While the odds for upside appear high, the high valuations suggest the downside potential may be greater. To manage that risk, we have designed and implemented a put-option strategy, which can be viewed as low-cost insurance that offers an asymmetric benefit. As with other forms of insurance, we are not aiming to realize a gain. Covering all the bases is representative of our investment outlook, which includes both constructive and defensive views. 32 Portfolio Select Series

6 Portfolio Management Teams In the Portfolio Select Series program 37 Portfolio Select Series Portfolio Select Series 37

7 For more information on Portfolio Select Series, please contact your CI Sales Representative or visit All commentaries are published by CI Investments Inc., the manager of all the funds described herein. They 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. Certain statements in this document are forward-looking. Forward-looking statements ( FLS ) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as may, will, should, could, expect, anticipate, intend, plan, believe, or estimate, or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what CI Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither CI Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise. 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, Harbour Advisors, Harbour Funds and Cambridge are registered trademarks of CI Investments Inc. Portfolio Select Series, Signature Funds, Signature Global Asset Management and CI Multi-Asset Management are trademarks of CI Investments Inc. First Asset is a trademark of First Asset Capital Corp., a wholly owned subsidiary of CI Financial Corp Asset Management L.P. and the 1832 Asset Management design are trademarks of The Bank of Nova Scotia, used under licence. All trademarks used under licence. All Rights Reserved. Each of Cambridge Global Asset Management, CI Multi-Asset Management, Harbour Advisors, and Signature Global Asset Management is a division of CI Investments Inc. Certain funds associated with Cambridge Global Asset Management and Harbour Advisors are sub-advised by CI Global Investments Inc., a firm registered with the U.S. Securities and Exchange Commission and an affiliate of CI Investments Inc. Certain portfolio managers of CI Global Investments Inc. are associated with Cambridge Global Asset Management or Harbour Advisors. Published October Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7 I Head Office / Toronto Calgary Montreal Vancouver Client Services _E (09/18)